exv10w1







Exhibit 10.1




 





 





Third Amended And Restated

Plasticizers Production Agreement




Between




Sterling Chemicals, Inc.




and




BASF Corporation




 





April 1, 2008




 















 





Third Amended And Restated

Plasticizers Production Agreement




Table of Contents




	 	 	 	 	 
	 	 	Page
	Article I — Definitions and Interpretation 
	 	 	1	 
	 
	 	 	 	 
	Section 1.01. Certain Defined Terms 
	 	 	1	 
	Section 1.02. Interpretation 
	 	 	13	 
	 
	 	 	 	 
	Article II — Production and Delivery of Products 
	 	 	13	 
	 
	 	 	 	 
	Section 2.01. Production and Delivery 
	 	 	13	 
	Section 2.02. Raw Materials and Ancillary Raw Materials 
	 	 	16	 
	Section 2.03. Deliveries; Title and Risk of Loss 
	 	 	16	 
	Section 2.04. Warranties 
	 	 	17	 
	Section 2.05. Quality Testing 
	 	 	17	 
	Section 2.06. Quantity Measurement and Testing 
	 	 	18	 
	Section 2.07. Storage of Raw Materials and Products 
	 	 	19	 
	Section 2.08. Hours of Operation 
	 	 	19	 
	Section 2.09. Termination of Obligations with Respect to the PA Unit 
	 	 	19	 
	Section 2.10. Termination of Obligations with Respect to the Oxo Unit 
	 	 	20	 
	 
	 	 	 	 
	Article III — Payments; Capital Expenditures 
	 	 	20	 
	 
	 	 	 	 
	Section 3.01. Payment for Termination of PA Unit Obligations 
	 	 	20	 
	Section 3.02. Payments 
	 	 	21	 
	Section 3.03. Esters Facility Fee 
	 	 	22	 
	Section 3.04. Capital Expenditures and Expansion Capital Expenditures 
	 	 	23	 
	Section 3.05. Maintenance Expenditures 
	 	 	26	 
	Section 3.06. Cost Savings; Manpower Reductions 
	 	 	26	 
	Section 3.07. Taxes 
	 	 	29	 
	Section 3.08. Wire Transfers, Etc.
	 	 	29	 
	Section 3.09. Late Payments 
	 	 	29	 
	 
	 	 	 	 
	Article IV — Operation of the Esters Unit and Related Matters 
	 	 	30	 
	 
	 	 	 	 
	Section 4.01. Operational Practices 
	 	 	30	 
	Section 4.02. Plant Visits; BASF Liaison 
	 	 	30	 
	Section 4.03. Insurance 
	 	 	31	 
	Section 4.04. Damage or Destruction 
	 	 	31	 
	Section 4.05. Hazards 
	 	 	32	 
	Section 4.06. Compliance with Laws 
	 	 	33	 






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	 	 	Page
	Article V — Additional Agreements 
	 	 	33	 
	 
	 	 	 	 
	Section 5.01. Title 
	 	 	33	 
	Section 5.02. Sale or Transfer of Interest in the Esters Unit 
	 	 	34	 
	Section 5.03. Books and Records; Audits 
	 	 	34	 
	Section 5.04. Meetings 
	 	 	35	 
	Section 5.05. Technical Advice 
	 	 	35	 
	Section 5.06. Confidentiality 
	 	 	36	 
	Section 5.07. Restriction on Transfer of Information 
	 	 	38	 
	Section 5.08. Public Statements 
	 	 	38	 
	Section 5.09. SEC Reports 
	 	 	38	 
	 
	 	 	 	 
	Article VI — Indemnification; Limitation of Liability; Remedies 
	 	 	38	 
	 
	 	 	 	 
	Section 6.01. Indemnification 
	 	 	38	 
	Section 6.02. Force Majeure 
	 	 	40	 
	Section 6.03. Limitations on Damages 
	 	 	42	 
	Section 6.04. Remedies 
	 	 	43	 
	 
	 	 	 	 
	Article VII — Term; Effect of Termination 
	 	 	43	 
	 
	 	 	 	 
	Section 7.01. Term and Termination 
	 	 	43	 
	Section 7.02. Effect of Termination 
	 	 	44	 
	 
	 	 	 	 
	Article VIII — Miscellaneous 
	 	 	44	 
	 
	 	 	 	 
	Section 8.01. Notices 
	 	 	44	 
	Section 8.02. Counterparts 
	 	 	45	 
	Section 8.03. Benefit and Burden 
	 	 	45	 
	Section 8.04. No Third Party Rights 
	 	 	45	 
	Section 8.05. No Partnership or Agency 
	 	 	46	 
	Section 8.06. Amendments and Waiver 
	 	 	46	 
	Section 8.07. Assignments 
	 	 	46	 
	Section 8.08. Severability 
	 	 	46	 
	Section 8.09. Dispute Resolution Procedures 
	 	 	46	 
	Section 8.10. Applicable Law 
	 	 	49	 
	Section 8.11. Submission to Jurisdiction 
	 	 	49	 
	Section 8.12. Prevailing Party Costs 
	 	 	49	 
	Section 8.13. Entire Agreement 
	 	 	49	 
	 
	 	 	 	 
	Exhibits:
	 	 	 	 
	 
	 	 	 	 
	Exhibit A  —  Esters Unit Fixed Costs Categories
	 	 	 	 
	Exhibit B  —  Esters Unit Variable Costs Categories
	 	 	 	 
	Exhibit C — Marine Provisions
	 	 	 	 






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Third Amended and Restated

Plasticizers Production Agreement




          This Third Amended and Restated Plasticizers Production Agreement dated effective as
of April 1, 2008 (the “Effective Date”) is by and between Sterling Chemicals,
Inc., a Delaware corporation (“Sterling”), and BASF Corporation, a Delaware
corporation (“BASF” and, together with Sterling, the “Parties”).




Preliminary Statements





	 	1.	 	Sterling and BASF are parties to that certain Second Amended and Restated
Plasticizers Production Agreement dated as of January 1, 2006 (as amended, the
“Existing Agreement”).
	 
	 	2.	 	The Parties desire to amend the Existing Agreement in certain respects and to
restate the Existing Agreement, as so amended, in its entirety.





          Now, Therefore, in consideration of their mutual promises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, effective as of the
Effective Date, the Existing Agreement is amended and restated in its entirety to read as follows:




Article I




Definitions and Interpretation




          Section 1.01. Certain Defined Terms. Capitalized terms used in this Agreement shall
have the following respective meanings, except as otherwise provided herein or as the context shall
otherwise require:




          “AAA” has the meaning specified in Section 8.09(c).





     “Affiliate” means, with respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is under common
control with such Person. The term “control” (including, with correlative meaning,
the terms “controlling”, “controlled by” and “under common control
with”) means the possession, directly or indirectly, of the power to direct or cause
direction of the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise; provided, however, that in no event shall either Party
be deemed an Affiliate of the other Party.




     “Agreement” means this Third Amended and Restated Plasticizers Production
Agreement, as amended, supplemented or modified from time to time in accordance with the terms
hereof.



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     “Allocated Fixed Costs” means the Fixed Costs for the Esters Unit included in the
Allocated Fixed Costs Table.




     “Allocated Fixed Costs Amount” means (i) with respect to any Year, the aggregate
of all amounts listed under the column “Initial Annual Amount” in the Allocated Fixed Costs
Table; provided, however, that:




	 	(A)	 	with respect to each General Category of Allocated Fixed Costs that are
also PPI Adjusted Fixed Costs, as of December 31 of each Year, beginning with
December 31, 2008, the amount specified in such column for such General Category of
Allocated Fixed Costs shall be deemed to be (1) the amount for such General
Category of Allocated Fixed Costs then in effect plus (2) the amount, if any, by
which (x) the amount for such General Category of Allocated Fixed Costs then in
effect times the PPI Factor exceeds (y) the amount for such General Category of
Allocated Fixed Costs then in effect;
	 
	 	(B)	 	with respect to Insurance Premium Charges, the amount specified in such
column shall be deemed to be the amount determined for such Year under the
definition thereof; and
	 
	 	(C)	 	with respect to the Environmental General Category of Allocated Fixed
Costs, the amount determined under clause (A) above shall also be increased by an
amount equal to any additional costs or expenses incurred by Sterling in connection
with any Environmental Law adopted or amended after the Effective Date that is not
exclusively applicable to the manufacture or handling of products at the Site that
are not Products hereunder and is allocated on a fair and reasonable basis to the
Esters Unit; and






(ii) with respect to any Month, (A) 1/12 of the Allocated Fixed Costs Amount for the Year in
which such Month occurs (excluding Insurance Premium Charges) plus (B) the Insurance Premium
Charges for such Month.




     “Allocated Fixed Costs Table” means the table on Exhibit A titled “Allocated
Fixed Costs”.




     “Ancillary Raw Materials” means any materials (other than Raw Materials),
including utilities and other services required in the manufacture of Products, which are to
be provided by Sterling pursuant to the terms of this Agreement, in each case, meeting the
applicable Raw Materials Specifications in effect from time to time pursuant to this
Agreement.




     “Applicable Interest Rate” means, with respect to any Day, an annual rate equal
to the lesser of (i) 2% over the rate of interest in effect for such Day as most recently
publicly announced or established by The Chase Manhattan Bank (National Association) in New



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     York, New York as its “prime rate” and (ii) the maximum non-usurious rate of interest which
may charged under Laws applicable to the Person to whom such interest is payable.




     “Arbitrator” has the meaning specified in Section 8.09(e).




     “BASF” has the meaning specified in the introductory paragraph hereof.




     “BASF Indemnified Persons” has the meaning specified in Section 6.01(a).




     “BASF Liaison” has the meaning specified in Section 4.02(b).




     “Bulk Storage Tanks” means the bulk storage tanks at the Site that have
historically been used in connection with the storage of Raw Materials and Products numbered
53T703, 56T13-1, 56T13-2, 56T13-4, 56T501-1, 56T501-2, 56T502, 56T503, 56T504, 56T505, 56T507,
56T803-1 and 56T803-2.




     “Business Day” means any day that is not a Saturday, Sunday or legal holiday or a
day on which banking institutions in Houston, Texas are authorized or required by Law to
close.




     “Capital Budget” has the meaning specified in Section 3.04(a).




     “Capacity” means ***** pounds per year, as such capacity may be increased as a
result of any Expansion Project; provided, however, that (i) BASF acknowledges and agrees that
the relative mix of Products nominated by BASF during any Year may cause the actual production
capacity for such Year to be less than the stated Capacity, in which event, the Capacity for
such Year shall be reduced to such actual production capacity, (ii) in the event that
production capacity is limited due to the failure of BASF to invest capital in the Esters Unit
to the extent such investment of capital is required under this Agreement, Capacity shall
automatically be reduced to the effective capacity at such time and (iii) in the event that
production capacity is increased through any expansion, upgrade or change in design, layout or
configuration, including any change in catalyst, Capacity shall be increased by an amount
equal to the increase in annual production capacity realized from such expansion, upgrade or
change.




     “Capital Expenditure” means any expenditure with respect to the Esters Unit in
excess of $5,000 which, in accordance with GAAP (consistently applied), should be classified
as a capital expenditure.




     “Capital Project” means a project that requires Capital Expenditures.




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



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     “Competitor” means a manufacturer or marketer of phthalate esters or phthalic
plasticizers.




     “Component Fixed Costs” has the meaning specified in Section 3.02(c).




     “Continuing PA Unit Allocated Fixed Costs” means with respect to any Year, an
amount equal to $*****; and, with respect to any Month, an amount
equal to $*****.




     “Cost Savings” has the meaning specified in Section 3.06(a).




     “Damages” means any and all Claims, Liabilities, Losses, clean-up or remedial
costs, shut-down costs, repairs or reconstruction costs, costs of investigation and operating,
extraordinary or business interruption losses (including any such matters arising from Spills
or Releases Requiring Response Action).




     “Day” means a 24-hour period commencing at 7:00 a.m. Houston, Texas time on a
calendar day and ending at 7:00 a.m. Houston, Texas time on the following calendar day, with
the date of such Day being the calendar day on which such Day commenced.




     “Delivery, Shipment and Storage Instructions” has the meaning specified in
Section 2.01(b).




     “Dependent Facility” means any facility, operating unit, pipe line, service or
other thing or matter on which the Esters Unit depends for its operation to the extent that
its absence or impairment would cause the Esters Unit to be incapable of operating or to be
only capable of operating at or below 50% of Capacity.




     “Direct Fixed Costs” means the Fixed Costs for the Esters Unit included in the
Direct Fixed Costs Table.




     “Direct Fixed Costs Table” means the table on Exhibit A titled “Direct Fixed
Costs”.




     “Dispute” has the meaning specified in Section 8.09(a).




     “Early Termination Fee” means (i) with respect to any termination of this
Agreement at the election of BASF pursuant to Section 3.02(c) or Section 7.01(b) on or before
December 31, 2010, *****, (ii) with respect to any termination of this Agreement at the
election of BASF pursuant to Section 3.02(c) or Section 7.01(b) after December 31, 2010 but on
or before December 31, 2011, *****, (iii) with respect to any termination of this Agreement at
the election of BASF pursuant to Section 3.02(c) or Section 7.01(b) after
December 31, 2011 but on or before December 31, 2012, ***** and (iv) with respect to any other
termination or expiration of this Agreement, *****.




     “Effective Date” has the meaning specified in the introductory paragraph hereof.



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     “Environmental Laws” means any and all Laws, including any judgment, permit,
approval, decision or determination, pertaining to the environment now or hereafter in effect,
including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. § 9601 et seq., as amended by the Superfund Amendment and Reauthorization Act of 1986
and as further amended, the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., as
amended, the Solid Waste Disposal Act of 1976, 42 U.S.C. § 6901 et seq., as amended, the Clean
Air Act, 42 U.S.C. § 7401 et seq., as amended, the Toxic Substances Control Act, 15 U.S.C.
§ 2601 et seq., as amended, the Hazardous Materials Transportation Act, 49 Ap. U.S.C.A. § 1801
et seq., as amended, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136 et
seq., as amended, and comparable state and local Laws, and other environmental conservation
and protection Laws.




     “Esters Facility Fee” means, subject to any adjustments thereto pursuant to
Section 3.03, Section 4.04(d), Section 4.04(e) or Section 6.02(f), a fee for the Esters Unit
in the amount of ***** per Quarter; provided, however, that (i) the Esters Facility Fee shall
be pro rated for any partial Quarter by multiplying the Esters Facility Fee by a fraction, the
numerator of which is the number of Days in such Quarter during which this Agreement is in
effect, and the denominator of which is the actual number of Days in such Quarter, and (ii)
the Esters Facility Fee shall not be increased based on the number of pounds of Products
produced (irrespective of the product mix) unless:




	 	(A)	 	no Expansion Project related to the Esters Unit has been conducted and
the number of pounds of Products produced in any Year exceeds ***** pounds, in
which event BASF shall pay Sterling a supplemental Esters Facility Fee for such
Year (but only for such Year) in an amount equal to the amount by which (1) *****
times a fraction, the numerator of which is the number of pounds of Products
produced in such Year and the denominator of which is *****, exceeds (2) *****,
such supplemental Esters Facility Fee to be paid by BASF to Sterling within 30 Days
after the end of such Year; or
	 
	 	(B)	 	an Expansion Project related to the Esters Unit is conducted, in which
event the Esters Facility Fee for each Quarter, commencing with the first Quarter
beginning after such Expansion Project has achieved mechanical completion, shall be
an amount equal to the Esters Facility Fee then in effect times a fraction, the
numerator of which is the expected Capacity of the Esters Unit following such
Expansion Project and the denominator of which is the Capacity of the Esters Unit
immediately prior to the commencement of such Expansion Project.






     “Esters Unit” means the plasticizers esters production unit at the Site, together
with all replacements and substitutions thereof, all deletions therefrom and all additions or
other changes thereto during the term of this Agreement.




     “Estimated Delivery, Shipment and Storage Instructions” has the meaning specified
in Section 2.01(b).



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     “Existing Agreement” has the meaning specified in the Preliminary Statements.




     “Expansion Capital Expenditures” means any Capital Expenditure made with respect
to the Esters Unit in connection with an Expansion Project.




     “Expansion Project” means any Capital Project requested by BASF pursuant to
Section 3.04(c) that (i) requires Capital Expenditures, (ii) is intended to expand the
Capacity of the Esters Unit beyond its then existing capabilities and (iii) is intended to
improve or upgrade the Esters Unit from its historical condition.




     “Fixed Costs” means (i) any and all actual fixed costs or expenses incurred,
sustained or paid by Sterling in connection with the Esters Unit, the receipt or storage of
Ancillary Raw Materials or Raw Materials or the production, storage, sale or delivery of
Products, including those costs and expenses for the Esters Unit in the General Categories
listed on Exhibit A in the table “Direct Fixed Costs,” (ii) those costs and expenses for the
Esters Unit included in the Allocated Fixed Costs Table, (iii) the Continuing PA Unit
Allocated Fixed Costs and (iv) any and all other costs and expenses allocated to the Esters
Unit, the receipt or storage of Ancillary Raw Materials or Raw Materials or the production,
storage, sale or delivery of Products but only to the extent such costs and expenses are
allocated by Sterling among its different product lines generally, are not exclusively
applicable to the manufacture or handling of products at the Site that are not Products
hereunder, are not costs or expenses currently incurred by Sterling and are not of the same
type or character as any of the Allocated Fixed Costs included in the Allocated Fixed Costs
Table; provided, however, that (A) any costs or expenses allocated under clause (iv) above
shall be allocated by Sterling on a fair and reasonable basis and (B) for purposes of this
Agreement, (x) the actual costs and expenses for the Allocated Fixed Costs for any Month shall
be deemed to equal the Allocated Fixed Costs Amount for such Month and (y) the actual costs
and expenses for the Allocated Fixed Costs for any Year shall be deemed to equal the Allocated
Fixed Costs Amount for such Year.




     “Force Majeure Event” has the meaning specified in Section 6.02(c).




     “GAAP” means generally accepted United States accounting principles, applied on a
consistent basis (except for changes in which the independent auditors of both Parties concur)
as in effect from time to time.




     “General Category” means all Fixed Costs or Variable Costs listed in the same row
in any of the tables on Exhibit A or Exhibit B, including all subcategories.




     “Governmental Authority” means (i) any nation or government, (ii) any federal,
state, county, province, city, town, municipality, local or other political subdivision
thereof or thereto, (iii) any court, tribunal, department, commission, board, bureau,
instrumentality, agency, council, arbitrator or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to government
and (iv) any other



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governmental entity, agency or authority having or exercising jurisdiction
over any relevant Person, item or matter.




     “Hazardous Materials” means any hazardous or toxic substances or contaminated
material including asbestos (friable, non-friable or any other form), polychlorinated
biphenyls and any flammable materials, explosives, radioactive materials, hazardous materials,
hazardous waste, hazardous or toxic or regulated substances or related materials defined in or
under any Environmental Law, and any other substance, waste, pollutant, contaminant or
material, including petroleum products and derivatives, crude oil or fractions thereof or any
chemical which causes cancer or reproductive effects, which are defined by applicable Law as
hazardous or toxic or the use, transport, disposal, storage, treatment, recycling, handling,
discharge, Release or emission of which is regulated or governed by any applicable Law.




     “Indemnified Person” has the meaning specified in Section 6.01(c).




     “Indemnifying Party” has the meaning specified in Section 6.01(c).




     “Insurance Premium Charges” means (i) with respect to any Year, the aggregate of
the Property Damage/Business Interruption Insurance Premium Charges and the Liability
Insurance Premium Charges for each Month during such Year, and (ii) with respect to any Month,
the Property Damage/Business Interruption Insurance Premium Charges for such Month plus the
Liability Insurance Premium Charges for such Month.




     “Invoice” has the meaning specified in Section 3.02(b).




     “Laws” means all laws, statutes, rules, regulations, ordinances, orders, writs,
injunctions or decrees and other pronouncements having the effect of law of any Governmental
Authority.




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




     “Liability Insurance Premium Charges” means with respect to the Esters Unit, (i)
for each 12-month period commencing on July 1 of each Year, an amount equal to *****;
provided, however, that as of July 1 of each Year, beginning with July 1, 2008, the Liability
Insurance Premium Charges shall be adjusted by multiplying the Liability Insurance Premium
Charges then in effect by a fraction (A) the numerator of which is the premium rate assessed
for the 12-month period commencing on that date under Sterling’s liability insurance policy
and (B) the denominator of which is the premium rate assessed for the immediately preceding
12-month period under Sterling’s liability insurance policy, and (ii) with respect to any
Month, 1/12 of the Liability Insurance Premium Charges in effect for the 12-month period
(commencing on July 1 of each Year) in which such Month occurs. The premium rate under
Sterling’s liability insurance policy for the 12-month period from July 1, 2007 through July
1, 2008 is ***** of liability coverage.



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     “Lien” means (i) any mortgage, lien, charge, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, security interest, assessment, adverse claim, levy,
preference or priority or other security agreement of any kind or nature whatsoever (whether
voluntary or involuntary, affirmative or negative, and whether imposed or created by contract,
operation of Law or otherwise) in, on, of or with respect to any assets or properties, whether
now owned or hereafter acquired, (ii) any other interest in assets or properties designed to
secure the repayment of indebtedness or any other Liability, whether arising by contract,
operation of Law or otherwise, (iii) any contract to give any of the foregoing and (iv) any
conditional sale or other title retention agreement and any financing lease having
substantially the same effect as any of the foregoing.




     “Losses” means any and all damages (including consequential, punitive and
exemplary to the extent not excluded pursuant to Section 6.03), fines, penalties, judgments,
deficiencies, losses, costs and expenses, including court costs, reasonable fees of attorneys,
accountants and other experts and other reasonable expenses of any Claim.




     “Maintenance Budget” has the meaning specified in Section 3.05.




     “Marine Provisions” means the marine provisions attached hereto as Exhibit C;
provided, however, that Sterling shall have the right, at any time and from time to time, to
revise the Marine Provisions and, upon delivery of any such revised Marine Provisions to BASF,
the Marine Provisions shall be deemed to be amended without further action by either of the
Parties so long as (i) such revised Marine Provisions apply to all of Sterling’s customers
generally, (ii) such amendment does not materially adversely affect BASF’s rights and
obligations under the Marine Provisions and (iii) such revised Marine Provisions do not
violate any applicable Law.




     “Measuring Equipment” means the shore tanks and scales located at the Site for
measuring deliveries and receipts of Products and Raw Materials to be loaded into or
off-loaded from, as applicable, ships, barges, other inland water or marine vessels, rail
cars, tank trucks or other conveyances.




     “Month” means the period beginning on the first Day of a calendar month until the
first Day of the next succeeding calendar month.




     “Monthly Contract Capacity” means, with respect to any Product, the Capacity for
such Product divided by 12.




     “Oxo Unit” means the oxo-alcohols production unit at the Site, together with all
replacements and substitutions thereof, all deletions therefrom and all additions or other
changes thereto during the term of this Agreement.




     “PA” means phthalic anhydride.



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     “PA Unit” means the PA production unit at the Site, together with all
replacements and substitutions thereof, all deletions therefrom and all additions or other
changes thereto during the term of this Agreement.




     “PA Unit Decontamination Payments” has the meaning specified in Section 3.01(b).




     “PA Unit Termination Payments” means payments by BASF to Sterling in the total
amount of $3,205,000 for the termination of BASF’s obligations under the Existing Agreement
with respect to the operation of the PA Unit.




     “Parties” has the meaning specified in the introductory paragraph hereof.




     “Permitted Encumbrances” means any and all (i) Liens for taxes if the same shall
at the time not be delinquent or thereafter may be paid without penalty or if such taxes are
being contested in good faith by appropriate proceedings promptly initiated and diligently
conducted; provided, however, that reserves or other appropriate provisions (if any) as shall
be required by GAAP shall have been made therefor, (ii) Liens consisting of easements, zoning
restrictions or other restrictions on the use of real property that do not materially affect
the value of the assets or properties encumbered thereby or materially impair the ability of
the owner of such assets or properties to use such assets or properties in its business, (iii)
Liens of landlords, mechanics, materialmen, warehousemen, carriers or other statutory Liens
securing obligations that are not yet due and are incurred in the ordinary course of business,
(iv) Liens resulting from deposits to secure payments of workmen’s compensation or other
social security programs or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids or contracts in the ordinary course of business and (v) Liens
existing on the date hereof or created after the date hereof in accordance with the terms of
this Agreement.




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




     “Plant” means the petrochemicals manufacturing facility owned by Sterling that is
located at the Site, including the Esters Unit.




     “Plant Disposition” has the meaning specified in Section 5.02(a).




     “Point of Delivery” means (i) with respect to any Raw Materials, the point
specified in Section 2.03(b), and (ii) with respect to any Product, the point specified in
Section 2.03(c).




     “PPI Adjusted Fixed Costs” means, with respect to the Esters Unit, all General
Categories of Fixed Costs that have the word “Yes” under the column titled “PPI Adjustment” in
any of the tables on Exhibit A.



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     “PPI Adjusted Fixed Costs Amount” means, with respect to any Year, the aggregate
of all amounts listed under the column “Initial Annual Amount” in each of the tables on
Exhibit A for all General Categories of PPI Adjusted Fixed Costs; provided, however, as of
December 31 of each Year, beginning with December 31, 2008, the amount specified in such
tables for each General Category of PPI Adjusted Fixed Costs shall be deemed to be (i) the
amount for such General Category of PPI Adjusted Fixed Costs then in effect plus (ii) the
amount, if any, by which (A) the amount for such General Category of PPI Adjusted Fixed Costs
Amount then in effect times the PPI Factor exceeds (B) the amount for such General Category of
PPI Adjusted Fixed Costs then in effect.




     “PPI Factor” means, with respect to any Year, a fraction, the numerator of which
is the average of the monthly Producer Price Index — Commodities (Chemicals and allied
products) as published by the United States Department of Labor, Bureau of Labor Statistics
for such Year, and the denominator of which is 214.8.




     “Product Specifications” means the specifications for the Products set forth in
the Quality Assurance Manual.




     “Products” means plasticizers esters meeting the applicable Product
Specifications.




     “Property Damage/Business Interruption Insurance Premium Charges” means, with
respect to the Esters Unit, (i) for each 12-month period commencing on July 1 of each Year, an
amount equal to *****; provided, however, that as of July 1 of each Year, beginning with July
1, 2008, the Property Damage/Business Interruption Insurance Premium Charges shall be adjusted
by multiplying the Property Damage/Business Interruption Insurance Premium Charges then in
effect by a fraction (A) the numerator of which is the premium rate assessed for the 12-month
period commencing on that date under Sterling’s property damage/business interruption
insurance policy and (B) the denominator of which is the premium rate assessed for the
immediately preceding 12-month period under Sterling’s property damage/business interruption
insurance policy, and (ii) with respect to any Month, 1/12 of the Property Damage/Business
Interruption Insurance Premium Charges in effect for the 12-month period (commencing on July 1
of each Year) in which such Month occurs. The premium rate under Sterling’s property
damage/business interruption insurance policy for the 12-month period from July 1, 2007
through July 1, 2008 is ***** of property value.




     “Quality Assurance Manual” means the Quality Assurance Manual dated January 1,
2006 setting forth the Raw Materials Specifications, the Product Specifications, and
procedures for inspecting, sampling and testing Ancillary Raw Materials, Raw Materials and
Products, the contents of which are incorporated herein by reference. BASF may, from time to
time, propose deletions from or changes or additions to the Quality Assurance Manual and, if
Sterling makes no objection to such deletion, change or addition within 30 Days after receipt
thereof, the Quality Assurance Manual shall be deemed amended as of the last Day of such
30-Day period without further action of the Parties; provided, however, that, unless Sterling
and BASF consent otherwise in writing, (i) no change in the Quality Assurance Manual shall
amend any of the terms or conditions of this Agreement,



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(ii) no change in the Quality
Assurance Manual shall be effective if such change would result in a material adverse effect
with respect to the Esters Unit or either Party unless BASF adequately compensates Sterling
for such adverse effects and (iii) no change in the Quality Assurance Manual shall be
effective as to any Ancillary Raw Materials or Raw Materials delivered or Products produced
prior to the date of such change.




     “Quarter” means the period beginning on the first Day of a calendar quarter until
the first Day of the next succeeding calendar quarter; provided, however, that (i) the first
Quarter hereunder shall commence on the Effective Date and continue thereafter until the first
Day of the next Quarter and (ii) the final Quarter hereunder shall end on the date that this
Agreement expires or otherwise terminates.




     “Quarterly Meeting” means a meeting of representatives of the Parties to be held
during the first two weeks of January, April, July and October of each Year, commencing with
April of 2008, or at such other times as may be agreed to by the Parties.




     “Raw Materials” means the catalysts and raw materials specified in the Quality
Assurance Manual that are used in the production of Products, which are to be provided by BASF
pursuant to the terms of this Agreement, in each case, meeting the applicable Raw Materials
Specifications in effect from time to time pursuant to this Agreement.




     “Raw Materials Specifications” means the specifications for Raw Materials and
Ancillary Raw Materials set forth in the Quality Assurance Manual.




     “Reduction Factor” means an amount equal to the Capacity of the Esters Unit after
the event or circumstances that caused a reduction in the Capacity of the Esters Unit divided
by the Capacity of the Esters Unit immediately prior to such event or circumstances.




     “Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing into the environment
(including the abandonment or discarding of barrels, containers and other closed receptacles).




     “Site” means the real estate and improvements in Texas City, Texas owned by
Sterling.




     “Spills or Releases Requiring Response Action” means any Release or threatened
Release of Hazardous Materials into or upon ambient air, surface water, ground water, land
or subsurface strata relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials in connection with the
ownership or operation of the Oxo Unit, the PA Unit or the Esters Unit, any ship, barge, other
inland water or marine vessel, rail car, tank truck or other conveyance, or the production,
delivery, storage, shipment, sale, resale, use, disposal or transportation of Products, Raw
Materials, Ancillary Raw Materials, waste or other materials used in or resulting from the
production of Products.



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     “Sterling” has the meaning specified in the introductory paragraph hereof.




     “Sterling Indemnified Persons” has the meaning specified in Section 6.01(b).




     “Third Party Claim” has the meaning specified in Section 6.01(c).




     “Threshold Fixed Costs Amount” means, subject to any adjustments thereto pursuant
to Section 2.01(e), Section 3.04(c) or Section 4.02(b), ***** plus (i) the aggregate amount of
Fixed Costs directly attributable to producing more than ***** pounds of Products in any Year
prior to the completion of any Expansion Project pertaining to the Esters Unit, plus (ii) as
of December 31 of each Year, beginning with December 31, 2008, the aggregate amount, if any,
by which all of the General Categories of PPI Adjusted Fixed Costs Amount are increased on
such date pursuant to the definition of PPI Adjusted Fixed Costs Amount.




     “Variable Costs” means (i) any and all variable costs or expenses incurred,
sustained or paid by Sterling in connection with the Esters Unit, the purchase, supply,
receipt or storage of Ancillary Raw Materials, Raw Materials or other materials or the
production, storage, sale or delivery of Products, including those costs and expenses in the
categories listed on Exhibit B, in each case, net of steam credits for any Day when steam is
being sold to third parties or consumed by Sterling at the Site.




     “Year” means a period of 12 consecutive months beginning on the first Day of
January of each calendar year during the term of this Agreement; provided, however, that (i)
the first Year hereunder shall commence on the Effective Date and continue thereafter until
the first Day of the next Year and (ii) the final Year hereunder shall end on the date that
this Agreement expires or otherwise terminates.



          Section 1.02. Interpretation. In this Agreement, unless a clear contrary intention
appears:





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




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




     (c) reference to any entity includes such entity’s successors and assigns; provided,
however, that nothing contained in this clause (c) is intended to authorize any assignment not
otherwise permitted by this Agreement;




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




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




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




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




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




     (i) no provision of this Agreement shall be interpreted or construed against either Party
hereto solely because that Party or its legal representative drafted such provision.



Article II




Production and Delivery of Products




          Section 2.01. Production and Delivery. (a) Commencing on the Effective Date, on the
terms and subject to the conditions of this Agreement:





     (i) Sterling shall (A) manufacture Products for BASF in the amounts requested by BASF in
accordance with the terms hereof and hold available any excess capacity at the Esters Unit for
BASF, (B) receive Raw Materials, (C) provide Ancillary Raw Materials, (D) store Raw Materials,
Ancillary Raw Materials and Products, (E) ship Products in bulk, (F) provide BASF with any and
all toxicological and ecological data regarding Products and any and all technology acquired
by Sterling regarding the manufacture of Products
received from Monsanto Company (other than information licensed from a party other than BASF
or Monsanto Company), (G) during the hours of operation referenced in Section 2.08, assist in
the scheduling of deliveries and shipments and the proper documentation thereof, whether into
or out of the Site, of Raw Materials or Products, (H) affix labels supplied by BASF to
Products, (I) provide a reasonable number of samples of Products to BASF’s customers according
to BASF’s instructions and (J) provide any other services typically performed by a
manufacturer of products similar to the Products for its customers; and




     (ii) BASF shall deliver Raw Materials to Sterling, receive Products from Sterling and
make the payments contemplated by this Agreement.


The amount of Products delivered by Sterling to BASF, and received and purchased by BASF, in any
Month shall be determined in accordance with paragraph (b) below.




          (b) Subject to the terms and conditions of this Agreement, BASF may nominate volumes for each
Product and determine the total Product mix in its sole discretion; provided,




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however, that BASF
may only nominate *****in any given Month. BASF shall be solely responsible for any and all costs
and expenses incurred in connection with any modification of the Esters Unit or related activities
performed in connection with any substantial variations in the volumes of the various Products
nominated by BASF or material changes in campaign frequencies, and such costs and expenses shall be
excluded from any calculation of Costs Savings or the Component Fixed Costs under this Agreement
and, to the extent such costs and expenses are Allocated Fixed Costs, shall be paid separately
from, and in addition to, the Allocated Fixed Costs Amount. On or before October 31 of each Year,
BASF shall provide Sterling with a written forecast of its requirements for each Product for the
following Year. At least five Days prior to the beginning of each Month, BASF will provide
Sterling with a written rolling forecast of its deliveries of Raw Materials and requirements for
Products for the next three Months, with the forecast for the immediately ensuing Month being
referred to in this Agreement as the “Estimated Delivery, Shipment and Storage
Instructions”. BASF shall provide Sterling with written notice setting forth BASF’s requested
dates and volumes of deliveries and shipping of Raw Materials and Products, and its storage
requirements for Raw Materials and Products, (i) at least 72 hours prior to the desired loading or
unloading date in the case of deliveries by ship, barge or other inland water or marine vessel,
(ii) at least 48 hours prior to the desired loading or unloading date and at least 72 hours prior
to the desired shipping date in the case of deliveries by rail car and (iii) at least 48 hours
prior to the desired loading or unloading date or shipping date in the case of deliveries by tank
truck and deposits of Products into storage (the “Delivery, Shipment and Storage
Instructions”). Sterling shall be entitled to rely upon any Estimated Delivery, Shipment and
Storage Instructions unless superseded by Delivery, Shipment and Storage Instructions. Sterling
shall use reasonable efforts to comply with the Estimated Delivery, Shipment and Storage
Instructions and the Delivery, Shipment and Storage Instructions, and shall give BASF the same
rights of priority and scheduling with respect thereto that it uses for deliveries and shipments of
its own raw materials and products and those of Sterling’s other suppliers and customers. BASF may
also deliver to Sterling from time to time additional delivery, shipment and storage instructions
and Sterling shall use reasonable efforts to
receive Raw Materials, deliver Products and store Raw Materials and Products at the times specified
in such instructions; provided, however, that if such additional delivery, shipment and storage
instructions cause Sterling to incur additional expense, BASF shall reimburse Sterling for such
additional expense. All such additional delivery, shipment and storage instructions shall be given
as early as is practicable prior to the requested delivery, shipment or storage date but, in any
event, at least as far in advance of the requested date of delivery, shipment or storage as is
required for Delivery, Shipment and Storage Instructions. If BASF fails to provide any ship,
barge, other inland water or marine vessel, rail car, tank truck or other conveyance at the times
specified in the applicable Estimated Delivery, Shipment and Storage Instructions, Delivery,
Shipment and Storage Instructions or additional delivery, shipment and storage instructions, the
applicable ship, barge, other inland water or marine vessel, rail car or tank truck will not be
loaded or unloaded until the next available window for such method of transportation at the Site.




          (c) If BASF fails to take delivery of any Product that meets the applicable Product
Specifications and is tendered to it by Sterling pursuant to the Estimated Delivery, Shipment and
Storage Instructions, the Delivery, Shipment and Storage Instructions or additional delivery,
shipment and storage instructions, Sterling shall have the right to reduce or curtail production of
Products if (i) such failure to take delivery will result in the exceedance of storage capacity at
the




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Site and BASF does not provide for, or agree to allow and to pay for, outside storage, or (ii)
BASF’s failure to take delivery will result in the need to shut down the Esters Unit. Except to
the extent otherwise provided in this Agreement, a failure to take delivery of any Products by BASF
shall not limit its payment obligations hereunder. The taking of delivery of Products by BASF
shall not prejudice the right of BASF to dispute or question the quantity or quality of any
Products delivered hereunder pursuant to Sections 2.05 and 2.06 or limit or otherwise affect the
indemnity obligations of Sterling under Section 6.01(a).




          (d) Notwithstanding anything to the contrary contained in this Agreement, (i) BASF shall not,
in any Estimated Delivery, Shipment and Storage Instructions, Delivery, Shipment and Storage
Instructions or additional delivery, shipment and storage instructions, request the delivery of,
and Sterling shall not be required to deliver, Products in quantities in excess of the Monthly
Contract Capacity, and (ii) except as otherwise provided in Section 6.02(a), Sterling shall not be
required to purchase any Product from any other source in order to supply such Product to BASF
hereunder; provided, however, that, notwithstanding anything to the contrary contained in clause
(i) above, BASF may request delivery of Products in excess of the Monthly Contract Capacity if the
Esters Unit is capable of producing such Products in quantities in excess of the Monthly Contract
Capacity, in which event BASF shall be solely responsible for any and all incremental costs and
expenses incurred by Sterling in connection with producing such Product in quantities in excess of
the Monthly Contract Capacity, and such costs and expenses shall be excluded from any calculation
of Costs Savings or the Component Fixed Costs under this Agreement and, to the extent such costs
and expenses are Allocated Fixed Costs, shall be paid separately from, and in addition to, the
Allocated Fixed Costs Amount. Prior to any material expansion, upgrade or change in design,
layout, configuration or capacity of the Esters Unit, including any change in catalyst, the Parties
shall discuss such expansion, upgrade or change.




          (e) In the event that BASF desires to substitute a different Product for *****then being
produced, (i) the Threshold Fixed Costs Amount shall be increased by an amount equal to the actual
increase in Direct Fixed Costs and Allocated Fixed Costs resulting from such change, (ii) such
additional Direct Fixed Costs and Allocated Fixed Costs shall thereafter be included in the
calculation of the Component Fixed Costs and (iii) to the extent such costs and expenses are
Allocated Fixed Costs, shall be paid separately from, and in addition to, the Allocated Fixed Costs
Amount. In the event that BASF desires to produce more than in the Esters Unit in any given Month,
the Parties will negotiate in good faith appropriate increases in the Threshold Fixed Costs Amount,
the Allocated Fixed Costs Amount and the impact on any calculation of Costs Savings, and, in the
absence of agreement on such matters, Sterling shall not be required to produce such additional
Products. If BASF desires to add other products or substitute a product for any Product, Sterling
will produce such other products so long as (i) either no modification of the Esters Unit is
required or BASF pays for all such modifications, (ii) neither such production nor any required
modifications to the Esters Unit will unreasonably affect the operations of the Plant and (iii) any
required amendment to Sterling’s air permit has been obtained. Sterling shall use commercially
reasonable efforts to expeditiously obtain any required amendment to the air permit.




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          Section 2.02. Raw Materials and Ancillary Raw Materials. (a) BASF shall furnish to
Sterling, or cause to be furnished to Sterling, all Raw Materials used in the production of
Products in such quantities and at such times as are required for Sterling to perform its
production and delivery obligations to BASF; provided, however, that (i) Sterling shall notify BASF
in writing of its requirements for Raw Materials at such times as will allow BASF to supply such
Raw Materials in the ordinary course and permit Sterling to fulfill its production and delivery
obligations hereunder, and (ii) the failure by Sterling to provide such notice to BASF shall not
relieve Sterling of any of its obligations under this Agreement. BASF shall provide Sterling with
written notice of the expected dates of arrival of each shipment of Raw Materials in accordance
with Section 2.01(b).




          (b) Sterling shall supply all Ancillary Raw Materials and any other materials (other than Raw
Materials) used in the production of Products.




          (c) Sterling shall supply all sample packaging (excluding drums), as specified by BASF for
shipment of Products, in such quantities and at such times as are necessary for Sterling to perform
its manufacturing and delivery obligations under this Agreement. BASF may, at its option, elect to
supply any or all sample packaging by providing Sterling with at least 30 Days’ prior written
notice of its election to do so.




          Section 2.03. Deliveries; Title and Risk of Loss. (a) All deliveries of Raw Materials
and shipments of Products by ship, barge or other inland water or marine vessel shall be made in
conformance with the Marine Provisions. Unless Sterling otherwise consents, BASF shall supply all
ships, barges, other inland water and marine vessels, rail cars, tank trucks or other conveyances
required for all deliveries of Raw Materials and shipments of Products under this Agreement. BASF
shall be solely responsible for arranging and providing any emergency response measures required in
connection with any ship, barge, other inland water or marine
vessel, rail car, tank truck or other conveyance (except that Sterling shall provide emergency
response measures, at the cost and expense of BASF, if the applicable ship, barge, other inland
water or marine vessel, rail car, tank truck or other conveyance is physically located at the
Site).




          (b) The Point of Delivery for all Raw Materials shall be the point of transfer of custody of
such Raw Materials from BASF to Sterling, and shall be at the Plant’s loading-arm flange from which
such Raw Materials are received by Sterling. Risk of loss to Raw Materials shall pass to Sterling
at such flange (irrespective of whether BASF owns or has provided any ship, barge, other inland
water or marine vessel, rail car, tank truck or other conveyance from which such Raw Materials are
transferred). As between Sterling and BASF, except as otherwise provided herein, (i) BASF shall be
in control and possession of all Raw Materials delivered hereunder and responsible for any damage
or injury thereto or caused thereby until risk of loss with respect thereto has passed to Sterling,
and (ii) Sterling shall be in control and possession of all Raw Materials received hereunder and
responsible for any damage or injury thereto or caused thereby after risk of loss with respect
thereto has passed to Sterling.




          (c) The Point of Delivery of all Products shall be the point of transfer of custody of such
Products from Sterling to BASF, and shall be at the Plant’s loading-arm flange from which such
Products are loaded into the applicable ship, barge, other inland water or marine vessel, rail




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car,
tank truck or other conveyance for shipment. Risk of loss to such Products shall pass to BASF at
such flange (irrespective of whether Sterling owns or has provided any ship, barge, other inland
water or marine vessel, rail car, tank truck or other conveyance into which such Products are
stored or loaded). As between Sterling and BASF, except as otherwise provided herein, (i) Sterling
shall be in control and possession of Products produced hereunder and responsible for any damage or
injury thereto or caused thereby until risk of loss with respect thereto has passed to BASF and
(ii) BASF shall be in control and possession of Products produced hereunder and responsible for any
damage or injury thereto or caused thereby after risk of loss with respect thereto has passed to
BASF.




          Section 2.04. Warranties. BASF warrants that all Raw Materials delivered to Sterling
pursuant to this Agreement will meet the applicable Raw Materials Specifications. Sterling
warrants that (a) any Raw Materials not rejected by Sterling pursuant to Section 2.05(b) will meet
the applicable Raw Materials Specifications (excluding any failure to meet the Raw Materials
Specifications caused by the storage of such Raw Materials beyond their shelf life), (b) all
Ancillary Raw Materials used in the production of Products will meet the applicable Raw Materials
Specifications, (c) all Products delivered to BASF pursuant to this Agreement will meet the
applicable Product Specifications, (d) Sterling will convey good title to all Products delivered to
BASF hereunder and (e) such Products shall be delivered free from any lawful Lien. Except For
The Representations And Warranties Expressly Provided Herein, Neither Party Makes, And Each Party
Hereby Expressly Disclaims And Negates, Any Representation Or Warranty With Respect To Any Product,
Raw Materials Or Ancillary Raw Materials Delivered Or Used Pursuant To This Agreement (Express,
Implied, Common Law, Statutory Or Otherwise), Including Any Warranty Of Merchantability Or Fitness
For A Particular Purpose Or Use Or Any Other Matter With Respect To Any Products, Raw Materials Or
Ancillary Raw Materials
Delivered Or Used Hereunder, Whether Used Alone Or In Combination With Any Other Material.




          Section 2.05. Quality Testing. (a) During the hours of operation referenced in
Section 2.08, Sterling shall (i) inspect, sample and test each lot of Raw Materials, Ancillary Raw
Materials and Products under the procedures set forth in the Quality Assurance Manual, (ii) code to
identify Raw Materials and Ancillary Raw Materials to specific Products produced and shipped and
(iii) perform such additional testing, statistical process control and statistical quality control
for Products as may be reasonably requested by BASF. BASF shall also have the right to further
test Products prior to shipment hereunder. Sterling shall cooperate in any such test, and shall
have the right to be represented and to participate in any such test, and to inspect any equipment
used in determining the nature or quality of any Product. The cost of all inspecting, sampling,
testing and coding hereunder shall be included in Fixed Costs. All records or certifications shall
be kept for a period of not less than one year (or for the duration of any contest with respect
thereto, if longer), and all samples shall be kept for a period of not less than 90 Days (or for
the duration of any contest with respect thereto, if longer), with the procedures for taking
samples at the unloading flange for Raw Materials and the procedures for taking samples of Products
as of the date of shipment to be mutually agreed upon by the Parties. All records, certifications
and samples shall be made available to BASF on request. The retained sample for any Raw Materials
or Ancillary Raw Materials shall be the exclusive source for




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determining whether any Raw Materials
or Ancillary Raw Materials meet the applicable Raw Materials Specifications, and the retained
sample for any Product shall be the exclusive source for determining whether any Product meets the
applicable Product Specifications.




          (b) Subject to the terms of this Agreement, Sterling shall accept any and all deliveries of
Raw Materials; provided, however, that Sterling may reject any delivery of Raw Materials if
Sterling notifies BASF in writing, within 10 Business Days after the delivery of such Raw Materials
to Sterling, of the failure of such Raw Materials to meet the applicable Raw Materials
Specifications. In the event that Sterling rejects any delivery of Raw Materials, BASF may object
to such rejection in writing within five Business Days after receipt of the relevant notice from
Sterling, in which event the Parties will meet within three Business Days after delivery of such
objection to resolve the question of whether such Raw Materials meet the applicable Raw Materials
Specifications. If the Parties are unable to resolve the matter during such meeting, either Party
may refer the matter to an independent surveyor or chemical laboratory mutually agreeable to the
Parties, which agreement will not be unreasonably withheld, for testing the retained sample of such
Raw Materials under the agreed upon procedure. The findings of the independent surveyor or
chemical laboratory will be conclusive and binding upon the Parties. If any Raw Materials fail to
meet the applicable Raw Materials Specifications and BASF does not timely make available other Raw
Materials meeting the applicable Raw Materials Specifications, Sterling’s manufacturing and
delivering obligations hereunder shall be reduced accordingly.




          (c) Subject to the terms of this Agreement, BASF shall accept any and all deliveries of
Products; provided, however, that BASF may reject any delivery of Products if BASF notifies
Sterling in writing, within 45 Business Days after the later of delivery of such Products to BASF
or delivery of such Products to a BASF customer (if shipped directly from the Site to such
customer), of the failure of such Product to meet the applicable Product Specifications as of the
date of shipment. In the event that BASF rejects any delivery of Products, Sterling may object to
such rejection in writing within five Business Days after receipt of the relevant notice from BASF,
in which event the Parties will meet within three Business Days after delivery of such objection to
resolve the question of whether such Products meets the applicable Product Specifications. If the
Parties are unable to resolve the matter during such meeting, either Party may refer the matter to
an independent surveyor or chemical laboratory mutually agreeable to the Parties, which agreement
will not be unreasonably withheld, for testing the retained sample of such Product under the agreed
upon procedure. The findings of the independent surveyor or chemical laboratory will be conclusive
and binding upon the Parties. If any Products fail to meet the applicable Products Specifications,
Sterling shall reprocess such Products to meet the applicable Products Specifications or deliver
replacement Products that meet the applicable Products Specifications.




          Section 2.06. Quantity Measurement and Testing. (a) The unit of measurement of
Products and Raw Materials shall be one pound (avoirdupois). All quantities referred to herein,
unless otherwise expressly stated, are in terms of such unit of measurement.




          (b) Quantities of Raw Materials and Products delivered by ship, barge or other inland water or
marine vessel shall be determined by taking the opening and closing inventory of




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Sterling’s
properly calibrated shore tanks before and after loading or unloading such shipment, unless
otherwise provided hereunder. Quantities of Raw Materials and Products delivered by rail car or
tank truck shall be determined by weighing the applicable rail cars or tank trucks on Sterling’s
certified scales before and after unloading or loading.




          (c) Sterling shall maintain and operate the Measuring Equipment in accordance with customary
practice in the industry, and all Measuring Equipment, including all scales, meters and
thermometers, shall be certified for accuracy at least once every Year by an independent service.
BASF may, at its option and expense, install measuring equipment for checking the Measuring
Equipment, so long as such installation does not unreasonably interfere with the operation of the
Esters Unit or the Plant. Each Party shall have the right to be present at the time of any
calibrating, installing, reading, cleaning, changing, repairing, inspecting, testing or adjusting
of the Measuring Equipment or any measuring equipment used to check the Measuring Equipment. Each
Party will maintain all records, charts and weigh tickets pertaining to deliveries of Raw Materials
and Products hereunder for a period of at least one year (or for the duration of any contest with
respect thereto, if longer). The records from the Measuring Equipment shall remain the property of
Sterling and the records of any additional measuring equipment installed by BASF shall remain the
property of BASF; provided, however, that, upon request, each Party will submit to the other Party
copies of its records, charts and weigh tickets, together with calculations therefrom. If any of
the Measuring Equipment is found to be inaccurate to any degree, Sterling shall repair, calibrate
and certify such Measuring Equipment to measure accurately.




          Section 2.07. Storage of Raw Materials and Products. Sterling shall use the Bulk
Storage Tanks for the storage of Raw Materials and Products, as designated by BASF in the Estimated
Delivery, Shipment and Storage Instructions and the Delivery, Shipment and Storage Instructions, or
as otherwise determined by Sterling. Should any Bulk Storage Tank be taken out of service by
Sterling for repair or service, Sterling will repair such Bulk Storage Tank and place it back in
service as soon as practicable and, pending the completion of such repair, Sterling shall make
available for the storage of Raw Materials and Products any other suitable bulk storage tanks it
then has available at the Plant. Sterling shall, at all times, physically segregate all Raw
Materials furnished by BASF and all Products produced by Sterling for BASF at the Site or other
storage facilities from all chemicals, packaging materials and products owned by Sterling or third
parties.




          Section 2.08. Hours of Operation. Each Party acknowledges and agrees that (a)
materials handling services will be provided by Sterling on a 24-hours a Day, 365/366 Days a year
basis, (b) laboratory services will be provided by Sterling only between the hours of 6:30 a.m. and
11:30 p.m. (Houston, Texas time), Monday through Friday, and (c) customer and scheduling services
will be provided by Sterling only between the hours of 7:30 a.m. and 4:00 p.m. (Houston, Texas
time), Monday through Friday.




          Section 2.09. Termination of Obligations with Respect to the PA Unit. (a) Except as
otherwise provided in this Agreement, BASF’s obligations with respect to the operation of the PA
Unit under the Existing Agreement are terminated as of the Effective Date; provided, however, that
(i) in the event that BASF fails to pay Sterling the PA Unit Termination Payments




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on or before the
dates specified in Section 3.01(a), then, without further action of the Parties, this Agreement
shall automatically be rescinded and deemed null and void for all purposes and the Existing
Agreement shall be reinstated in accordance with its terms prior to the execution of this
Agreement, (ii) in the event that Sterling restarts the PA Unit and produces PA for, or sells PA
to, any Person other than BASF during the period from the Effective Date through December 31, 2008,
then Sterling will refund 75% of the PA Unit Termination Payments to BASF on the date that the PA
Unit is restarted, (iii) in the event that Sterling restarts the PA Unit and produces PA for, or
sells PA to, any Person other than BASF during the period from January 1, 2009 through December 31,
2009, then Sterling will refund 50% of the PA Unit Termination Payments to BASF on the date that
the PA Unit is restarted and (iv) in the event that Sterling restarts the PA Unit and produces PA
for, or sells PA to, any Person other than BASF during the period from January 1, 2010 through
December 31, 2010, then Sterling will refund 25% of the PA Unit Termination Payments to BASF on the
date that the PA Unit is restarted. Sterling may, in its sole discretion, restart the PA Unit and
produce PA for, and sell PA to, itself or any other Person at any time on or after January 1, 2011
and Sterling shall not be obligated to pay or reimburse BASF for any amount in connection with such
restart and production.




          (b) As of the Effective Date, Sterling owns the PA Unit and is not subject to any restrictions
on its use or disposition pursuant to this Agreement other than the conditions stated in paragraph
(a) above.




          Section 2.10. Termination of Obligations with Respect to the Oxo Unit. Effective July
31, 2006, BASF exercised its right to terminate its obligations with respect to the operation of
the Oxo Unit under the Existing Agreement. Subsequently, Sterling provided written notification to
BASF pursuant to the Existing Agreement of its election to permanently close the Oxo Unit.
Sterling will use commercially reasonable efforts to eliminate all costs associated with the Oxo
Unit; provided, however, that (i) any fixed costs associated with the Oxo Unit that are not
eliminated shall be reallocated proportionately across all operating units at the Site, including
the Esters Unit and the PA Unit and (ii) such costs shall be excluded from any calculation of Costs
Savings or the Component Fixed Costs under this Agreement and, to the extent such costs and
expenses are Allocated Fixed Costs, shall be paid separately from, and in addition to, the
Allocated Fixed Costs Amount.




Article III




Payments; Capital Expenditures




          Section 3.01. Payment for Termination of PA Unit Obligations. (a) In addition to the
other amounts payable by BASF under this Agreement, BASF shall pay Sterling the PA Unit Termination
Payments consisting of (i) the amount of $3,000,000 being due and payable on or before May 31,
2008, and (ii) the amount of $205,000 being due and payable on or before August 15, 2008.




          (b) BASF
shall pay Sterling $***** on each of April 15, 2008, May 15, 2008, June 15, 2008
and July 15, 2008 (collectively, the “PA Unit Decontamination Payments”). The PA Unit
Decontamination Payments are intended by the Parties to reimburse Sterling in full for




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all direct
fixed costs and variable costs associated with the shut down and decontamination of the PA Unit.
Other than the PA Unit Decontamination Payments and the Continuing PA Unit Allocated Fixed Costs,
from and after the Effective Date, BASF will have no further obligation to reimburse Sterling for
any costs associated with the PA Unit.




          Section 3.02. Payments. (a) On or before January 1, 2006, BASF paid ***** to Sterling
as a prepayment towards certain Fixed Costs. Except as otherwise provided in this paragraph (a),
such prepayment shall not be applied towards the payment of any invoice issued to BASF pursuant to
this Agreement other than the invoice for Fixed Costs for the final Month of this Agreement (with
any excess being refunded by Sterling to BASF on or before 15 Days after the expiration or
termination of this Agreement). Under no circumstances shall any interest be payable to BASF by
Sterling on the ***** prepayment (unless Sterling wrongfully refuses to apply such amount towards
the final Fixed Costs invoice or refund any excess). In the event that BASF fails to pay any
undisputed invoice hereunder within five Business Days after receipt of written notice from
Sterling of such delinquent payment, Sterling shall apply all or any portion of such prepayment
towards the payment of such invoice and, if BASF fails to replenish the prepayment fund within five
Business Days after receiving written notice from Sterling of any such application, Sterling shall
be entitled to immediately cease all production of Products at the Esters Unit and withhold
shipment of any Products until such time as BASF replenishes the
***** prepayment fund through the payment of such invoice in full, and Sterling shall not have any
liability whatsoever to BASF as a result of such cessation of production and shipping.




          (b) Sterling shall, within 15 Days after the end of each Month, submit an invoice to BASF (an
“Invoice”) showing (i) the quantity of each Product produced during the immediately
preceding Month, (ii) the amount of Fixed Costs and Variable Costs incurred during such Month,
(iii) the amount of Capital Expenditures and Expansion Capital Expenditures made during such Month
and (iv) any other amounts due Sterling at that time pursuant to Section 3.04. Except as otherwise
provided in Section 3.09(b), BASF shall pay each Invoice on or before the 15th Day after receipt
thereof (or if such Day is not a Business Day, then on the next Business Day), irrespective of
whether any Products were produced in such Month; provided, however, that if no Products are
produced in any Month, Sterling will use reasonable efforts to minimize the amount of Variable
Costs incurred during such Month. Notwithstanding anything to the contrary contained in this
Agreement, if, in any Year, Sterling’s cost of providing the engineering services referred to in
the Engineering General Category of Allocated Fixed Costs exceed the amount attributable to such
General Category of Allocated Fixed Costs in the calculation of the Allocated Fixed Costs Amount
for such Year, Sterling may, in its sole discretion, cease providing engineering services pursuant
to this Agreement in such Year unless and until BASF agrees in writing to reimburse Sterling for
the cost of all such engineering services in such Year.




          (c) From and after the Effective Date, if the aggregate Fixed Costs charged by Sterling for
the Esters Unit in any Year (excluding catalyst amortization, maintenance turnaround expense and
any severance costs connected with the Esters Unit paid by BASF pursuant to Section 3.06(e)) (the
“Component Fixed Costs”) exceed the Threshold Fixed Costs Amount by more than *****, BASF
may elect to terminate this Agreement; provided, however, that:




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     (i) no such termination will be effective unless BASF has given written notice to
Sterling of its election to terminate this Agreement within 30 Days after the end of such
Year;




     (ii) such termination will become effective on the date specified in such notice (which
may not be prior to 12 months after the date of receipt of such notice by Sterling) or, if no
such date is specified, 12 months after the date on which such notice is received by Sterling;
and




     (iii) BASF pays Sterling the applicable Early Termination Fee on the effective date of
the termination of this Agreement, as determined under clause (ii) above, provided, however,
that:




	 	(A)	 	if the Component Fixed Costs for such Year exceed the Threshold Fixed
Costs Amount by at least ***** but less than *****, the applicable Early
Termination Fee shall be reduced by an amount equal to ***** of such excess;
	 
	 	(B)	 	if the Component Fixed Costs for such Year exceed the Threshold Fixed
Costs Amount by at least ***** but less than *****, the applicable Early
Termination Fee shall be reduced by an amount equal to ***** of such excess; and
	 
	 	(C)	 	if the Component Fixed Costs for such Year exceed the Threshold Fixed
Costs Amount by at least *****, BASF shall not be obligated to pay an Early
Termination Fee.




Notwithstanding anything to the contrary in this paragraph (c), in the event that (x) BASF provides
Sterling with a written notice of its election to terminate this Agreement and (y) Sterling, by
providing written notice to BASF within 30 Days after its receipt of the termination notice from
BASF, elects to cap BASF’s reimbursement obligation for Component Fixed Costs for such Year at the
Threshold Fixed Costs Amount, then such termination notice from BASF shall be null and void and of
no further force or effect. In such event, Sterling shall reimburse BASF for any Component Fixed
Costs previously paid by BASF in excess of the Threshold Fixed Costs Amount in that Year and BASF
shall not be required to reimburse Sterling for any Component Fixed Costs beyond the Threshold
Fixed Costs Amount for that Year that remain unpaid.




          Section 3.03. Esters Facility Fee. In addition to the other amounts payable by BASF
under this Agreement, on the first Day of each Quarter, commencing with the Quarter commencing on
the Effective Date, BASF shall pay Sterling the Esters Facility Fee for such Quarter. Except to
the extent otherwise provided in Section 4.04, the Esters Facility Fee shall be payable in full
irrespective of whether any production occurs at the Esters Unit during such Quarter or the level
of production at the Esters Unit during such Quarter; provided, however, that if Sterling fails
(unless such failure is excused pursuant to Section 6.02 or is caused by a breach of the Agreement
by BASF) to maintain the production capacity of the Esters Unit over any period of at least *****
consecutive Days at a level of at least ***** of the relevant Monthly Contract Capacity and BASF
requires production in excess of the available capacity, then the




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Esters Facility Fee shall be
reduced for each Quarter (or portion thereof) that Sterling so fails to maintain the Monthly
Contract Capacity. In such cases, the Esters Facility Fee payable for such Quarter shall be
determined by (a) dividing the Esters Facility Fee by 90 to determine the amount of the Esters
Facility Fee payable for each Day during such Quarter, (b) reducing the amount determined under
clause (a) for each Day during such Quarter when Sterling so failed to maintain the Monthly
Contract Capacity for the relevant Product by multiplying such amount by the Reduction Factor
applicable to such Day and (c) deducting the aggregate reductions under clause (b) for such Quarter
from the Esters Facility Fee otherwise payable for such Quarter. If the Esters Facility Fee for
any Quarter is reduced pursuant to this Section 3.03 after BASF has paid such Esters Facility Fee,
BASF may deduct the amount overpaid from the next Esters Facility Fee payable hereunder or, if no
further Esters Facility Fees are payable hereunder, Sterling shall refund such amount to BASF
within 15 Days after receipt of an invoice therefore from BASF.




          Section 3.04. Capital Expenditures and Expansion Capital Expenditures. (a) By June
30th of each Year, Sterling shall provide a good faith estimate to BASF of the expected
Capital Expenditures and Expansion Capital Expenditures for the following Year. At least 30
Days prior to the Quarterly Meeting to be held in October of each Year, Sterling shall submit to
BASF a capital budget, prepared by Sterling in good faith and upon realistic assumptions, for the
next succeeding Year (each, a “Capital Budget”) for those Capital Projects that Sterling
deems necessary (i) to maintain the reliable and safe operation of the Esters Unit at Capacity, and
(ii) to maintain the Esters Unit in compliance with all applicable Laws and permits. Each Capital
Budget shall include a description of each Capital Project in reasonable detail and an estimate of
the Capital Expenditures anticipated to be made in connection with such Capital Project. Prior to
commencing any Capital Project, Sterling shall, to the extent practicable under the circumstances,
consult with BASF and give BASF the opportunity to comment on such proposed Capital Project or
propose alternative approaches to such Capital Project; provided, however, that (A) except as
otherwise provided in paragraph (b) below, in the event that Sterling and BASF disagree on whether
a Capital Project should be pursued or on the approach to any Capital Project, *****, and (B)
except as otherwise specifically provided in this Agreement, BASF shall not be liable to Sterling
for any Damages directly or indirectly arising out of Sterling’s use or implementation of BASF’s
comments to such Capital Project. In addition, in the event of an emergency, Sterling may conduct
Capital Projects and make Capital Expenditures, irrespective of whether or not any such Capital
Project was included in any previous Capital Budget, if Sterling, in its sole discretion, deems
such Capital Project and Capital Expenditures necessary to maintain the Esters Unit in accordance
with the standards provided in this paragraph (a) or the standard of care described in Section
4.01; provided, however, that Sterling shall inform BASF via facsimile or E-Mail of the nature of
the emergency and the expected expenditures within 72 hours after it makes such determination.
BASF shall reimburse Sterling for ***** of all Capital Expenditures made for each Capital Project.
In the event that Sterling’s engineering services are required in connection with any Capital
Project or Expansion Project, Sterling shall provide such engineering services at BASF’s sole cost
and expense, and such engineering services shall not be considered as being among the engineering
services referred to in the Allocated Fixed Costs Table.




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          (b) Notwithstanding anything to the contrary contained in this Section 3.04, during the period
commencing on January 1, 2011 and continuing thereafter until the expiration or termination of this
Agreement, BASF shall have the right to elect to not proceed with any Capital Project the primary
purpose of which is to maintain the reliable operation of the Esters Unit at Capacity; provided,
however, that BASF elects to not renew this Agreement for an Additional Term prior to January 1,
2011 and, provided further, that if BASF elects to not proceed with any such Capital Project,
Sterling shall have the option to either:





     (i) proceed with such Capital Project, in which event BASF shall reimburse Sterling for,
(A) if such Capital Project was initially submitted for approval at any time before January 1,
2011, ***** of the actual Capital Expenditures made to complete such Capital Project, (B) if
such Capital Project was initially submitted for approval at any time on or after January 1,
2011 but before January 1, 2012, ***** of the actual Capital Expenditures made to complete
such Capital Project, or (C) if such Capital Project was initially submitted for approval at
any time on or after January 1, 2012 but before January 1, 2013, ***** of the actual Capital
Expenditures made to complete such Capital Project, in each case, irrespective of whether such
Capital Expenditures are made during the Year used
to determine the applicable percentage of reimbursement and irrespective of whether such
Capital Expenditures are made prior to or after the expiration of this Agreement (but
excluding any Capital Expenditures made on or after January 1, 2014); or




     (ii) not proceed with such Capital Project, in which event BASF shall make a one-time
payment to Sterling in an amount equal to (A) if such Capital Project was initially submitted
for approval at any time before January 1, 2011, ***** of the estimated Capital Expenditures
required to complete such Capital Project, (B) if such Capital Project was initially submitted
for approval at any time on or after January 1, 2011 but before January 1, 2012, ***** of the
estimated Capital Expenditures required to complete such Capital Project, or (C) if such
Capital Project was initially submitted for approval at any time on or after January 1, 2012
but before January 1, 2013, ***** of the estimated Capital Expenditures required to complete
such Capital Project; provided, however, that if BASF disputes the necessity of any such
Capital Project or the estimated Capital Expenditures required to complete any such Capital
Project, such dispute shall be resolved in accordance with the dispute resolution procedures
set forth in Section 8.09.


Any payments made by BASF pursuant to this paragraph (b) shall be excluded from the obligation of
Sterling to reimburse BASF for undepreciated capital pursuant to paragraph (d) below.




          (c) At any time during the term of this Agreement, BASF may, at its option and at its sole
cost and expense, elect to increase the Capacity of the Esters Unit through Expansion Projects.
BASF shall be responsible for any and all Expansion Capital Expenditures and other costs associated
with each such Expansion Project and, to the extent such costs and expenses are Allocated Fixed
Costs, shall be paid separately from, and in addition to, the Allocated Fixed Costs Amount;
provided, however, that any payments made to Sterling by BASF for Expansion Capital Expenditures
under this paragraph (c) shall be excluded from the obligation of Sterling to reimburse BASF for
undepreciated capital pursuant to paragraph (d) below. BASF shall also be




-24-









 







responsible for any and
all Fixed Costs directly attributable to the increased Capacity of the Esters Unit by virtue of any
Expansion Project and (i) the Threshold Fixed Costs Amount shall be increased by the aggregate
amount of such Fixed Costs, (ii) to the extent such costs and expenses are Allocated Fixed Costs,
the portion of the Allocated Fixed Costs Amount pertaining to each relevant General Category of
Allocated Fixed Costs shall be increased by the applicable portion of such costs and expenses and
(iii) to the extent such additional Fixed Costs are not otherwise excluded from the definition of
Component Fixed Costs, such additional Fixed Costs shall thereafter be included in the calculation
of the Component Fixed Costs. Upon mechanical completion of any Expansion Project, the Esters
Facility Fee shall be increased as provided in the definition of the Esters Facility Fee.




          (d) Subject to Section 7.01(d), within 90 Days after the expiration or termination of this
Agreement, Sterling shall pay BASF an amount equal to the undepreciated capital paid by BASF for
each Capital Project (excluding any amounts paid by BASF pursuant to paragraphs (b) or (c) above),
based on a straight line, ***** life, mid-year convention depreciation as defined by
the U.S. Federal Income Tax Code, calculated from the completion date of each relevant Capital
Project; provided, however, that:





     (i) if (A) BASF elects to terminate this Agreement pursuant to Section 3.02(c), (B)
either Party elects to terminate this Agreement pursuant to Section 6.02(e) or (C) Sterling
elects to terminate this Agreement pursuant to Section 7.01(c) based on a breach by BASF of
any material covenant, agreement, term, provision or condition of this Agreement, the amount
of undepreciated capital paid by BASF for all Capital Projects shall be deemed to be zero and
no amount shall be payable by Sterling to BASF pursuant to this paragraph (d);




     (ii) if BASF elects to terminate this Agreement pursuant to Section 7.01(b), (A) the
amount of undepreciated capital shall be the lower of (x) the amount of the applicable Early
Termination Fee and (y) the amount of undepreciated capital that would have existed on
December 31, 2013 if this Agreement had continued until that date and (B) on each anniversary
of the actual date of termination of this Agreement, Sterling shall pay BASF an amount equal
to the depreciation of such capital that would have been recognized during the immediately
preceding 12-month period (using the ***** depreciation schedule described above) if the first
such payment had occurred on December 31, 2014 until such time as the total amount payable by
Sterling under clause (A) above has been paid in full;




     (iii) if BASF elects to terminate this Agreement pursuant to Section 7.01(c) based on a
breach by Sterling of any material covenant, agreement, term, provision or condition of the
Agreement, Sterling shall pay BASF an amount equal to such undepreciated capital as of the
date of termination within 30 Days after the date of such termination; and




     (iv) if either Party elects to terminate this Agreement pursuant to Section 4.04(e), the
amount of undepreciated capital payable to BASF in connection with the termination of this
Agreement shall be determined pursuant to that Section.



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In the event that Sterling fails to pay any amount when due under this paragraph (d), such amount
shall bear interest at the Applicable Interest Rate, accruing each Day from the Day such amount was
originally due until the Day such amount is paid in full.




          Section 3.05. Maintenance Expenditures. By June 30th of each Year,
Sterling shall provide a good faith estimate to BASF of the expected maintenance expenses for the
following Year. At least 30 Days prior to the Quarterly Meeting to be held in October of each
Year, Sterling shall submit to BASF a maintenance expense budget, prepared by Sterling in good
faith and upon realistic assumptions, for the next succeeding Year (each, a “Maintenance
Budget”) for such maintenance as Sterling determines is required to maintain the Esters Unit in
accordance with the standard of care described in Section 4.01. Sterling shall provide BASF with
monthly reports regarding maintenance expenses. Unless otherwise agreed by the Parties, all
maintenance expenses shall be included in Fixed Costs for purposes of this Agreement.




          Section 3.06. Cost Savings; Manpower Reductions. (a) The Parties shall cooperate in
investigating, evaluating and implementing mutually agreeable methods to reduce Direct Fixed
Costs, Variable Costs, Capital Expenditures and Expansion Capital Expenditures. On or before
January 31 of each year, commencing with January 31, 2009, Sterling shall submit a statement to
BASF showing in reasonable detail any reductions in Direct Fixed Costs or Variable Costs (“Cost
Savings”) achieved in the immediately preceding calendar year compared to the Direct Fixed
Costs in the Maintenance General Category and the Direct Fixed Costs in the Materials Handling
General Category for the Esters Unit incurred when such costs were at their lowest in any calendar
year after 2003, the Direct Fixed Costs in the Personnel General Category and the Direct Fixed
Costs in the Other Direct General Category for the Esters Unit incurred during 2005, and the
Variable Costs for the Esters Unit incurred when such costs were at their lowest in any calendar
year after 2006; provided, however, that:





     (i) for purposes of determining whether any Cost Savings attributable to PPI Adjusted
Fixed Costs were achieved in any Year, the aggregate amount of PPI Adjusted Fixed Costs
incurred in the earlier period shall be adjusted as of December 31 of each year after such PPI
Adjusted Fixed Costs were actually incurred by the PPI Factor for such subsequent year (e.g.,
if PPI Adjusted Fixed Costs incurred in 2010 were being compared to PPI Adjusted Fixed Costs
incurred in 2008, the PPI Adjusted Fixed Costs incurred in 2008 would be adjusted based on the
PPI Factor for 2009 and adjusted again based on the PPI Factor for 2010);




     (ii) the amounts shown in each such statement shall be split into the General Categories
of Direct Fixed Costs and Variable Costs and Cost Savings shall be determined for each General
Category of Direct Fixed Costs and each General Category of Variable Costs independently;




     (iii) the Variable Costs for each calendar year shall be based on per pound usages for
each component of Variable Costs with the Cost Savings derived from any improvements in usages
being calculated using current market prices at the time of determination; and



-26-









 






     (iv) the initial per pound usages for each component of Variable Costs for the Esters
Unit will be determined under paragraph (c) below.


Each statement delivered by Sterling shall set forth (A) the amount of Direct Fixed Costs in each
General Category of Direct Fixed Costs during the immediately preceding year, (B) the amount of
Variable Costs in each General Category of Variable Costs during the immediately preceding year,
(C) the amount of Direct Fixed Costs in each of the Maintenance General Category and the Materials
Handling General Category when the Direct Fixed Costs in that General Category were at their lowest
in any calendar year after 2003, (D) the amount of Direct Fixed Costs in each of the Personnel
General Category and the Other Direct General Category for 2005, and (E) the amount of Variable
Costs in each General Category of Variable Costs for the Esters Unit when the Variable Costs in
that General Category were at their lowest in any calendar year after 2006, in each case, subject
to the adjustments described above. For example, the statement delivered on or before January 31,
2010 will (1) compare the amount of Direct Fixed Costs in the Maintenance General Category of
Direct Fixed Costs and the Materials Handling General Category of Direct Fixed Costs (by General
Category) in 2009 to the lowest amount of such
Direct Fixed Costs (by General Category) in any calendar year after 2003 (after the above-described
adjustments), which may be different calendar years for different General Categories of Direct
Fixed Costs, (2) compare the amount of Variable Costs (by General Category) for the Esters Unit in
2009 to the lowest amount of Variable Costs (by General Category) in any calendar year after 2006
(after the above-described adjustments), which may be different calendar years for different
General Categories of Variable Costs, and (3) compare the amount of Direct Fixed Costs in the
Personnel General Category of Direct Fixed Costs and the Other Direct General Category of Direct
Fixed Costs (by General Category) in 2009 to the Direct Fixed Costs in those General Categories in
2005 (after the above-described adjustments).




          (b) Within 15 Days after receipt of such statement, BASF will pay Sterling an amount equal to
(i) ***** of the amount by which the Direct Fixed Costs included in the Maintenance General
Category in the earlier calendar year shown in the statement exceed the Direct Fixed Costs included
in the Maintenance General Category in the later calendar year shown in such statement, plus (ii)
***** of the amount by which the Direct Fixed Costs included in the Materials Handling General
Category in the earlier calendar year shown in the statement exceed the Direct Fixed Costs included
in the Materials Handling General Category in the later calendar year shown in such statement, plus
(iii) ***** of the amount by which the Direct Fixed Costs included in the Personnel General
Category in 2005 exceed the Direct Fixed Costs included in the Personnel General Category in the
later calendar year shown in such statement plus (iv) ***** of the amount by which the Direct Fixed
Costs included in the Other Direct General Category in 2005 exceed the Direct Fixed Costs included
in the Other Direct General Category in the later calendar year shown in such statement plus (v)
***** of the amount by which the per pound usage of any component of Variable Costs in the earlier
calendar year shown in the statement exceeds the per pound usage of such component of Variable
Costs in the later calendar year shown in such statement times the market price for such component
of Variable Costs at the time of determination. Sterling shall employ consistent accounting
practices from year to year.




-27-









 








          (c) Notwithstanding anything to the contrary contained in this Section 3.06, the per pound
usage of each component of Variable Costs for the Esters Unit for calendar year 2007 shall be
deemed to be (i) the per pound usage of such component of Variable Costs experienced during January
2008 (or if any Raw Material or Ancillary Raw Material was not consumed during January 2008, the
per pound usage of such Raw Material or Ancillary Raw Material experienced during the most recent
Month prior to January, 2008 during which such Raw Material or Ancillary Raw Material was consumed)
or (ii) such other per pound usage as the Parties shall mutually agree; provided, however, that if
the Parties fail to agree on an alternative per pound usage of any component of Variable Costs for
the Esters Unit under this clause (ii) on or before May 31, 2008, the per pound usage of such
component of Variable Costs shall be the per pound usage determined under clause (i).




          (d) For purposes of calculating Cost Savings under this Section 3.06, if a Force Majeure Event
results in the suspension of all or any of the operations at the Esters Unit in any Month (whether
in the current Year or any prior Year), the Direct Fixed Costs and Variable Costs for such Month
shall be deemed to be the same as the Direct Fixed Costs and Variable Costs
experienced in the most recent preceding full Month that was not affected by a Force Majeure Event.




          (e) In addition to the amounts (if any) payable by BASF hereunder for Cost Savings, in the
event that any manpower reduction occurs at the Site, (i) BASF shall pay Sterling an amount equal
to ***** of the severance costs incurred in connection with such manpower reduction that will
result in direct labor costs savings for the Esters Unit and (ii) BASF shall pay Sterling its
allocable portion of any severance costs incurred in connection with such manpower reduction that
will result in lower Direct Fixed Costs for the Esters Unit, such allocation to be based on the
same percentages as are then used to allocate other Direct Fixed Costs to the Esters Unit;
provided, however, that any reduction in salaries and employee benefits resulting from any such
manpower reduction shall be excluded from any subsequent comparisons of Direct Fixed Costs and
Variable Costs.




          (f) Notwithstanding anything to the contrary contained in this Section 3.06, if any Cost
Savings are achieved in any Year due to a reduction in the Direct Fixed Costs to the Esters Unit
following the commissioning of a new operating unit at the Site, for purposes of any subsequent
calculations of Cost Savings, each prior Year that benefited from such reduction in Direct Fixed
Costs shall be calculated as if such reduction in Direct Fixed Costs had not occurred. For
example, if a ***** reduction in the Maintenance General Category of Direct Fixed Costs occurred
due to such a reallocation in 2009 and in 2010 the amount of Direct Fixed Costs in the Maintenance
General Category also reflected such ***** reduction, then, for purposes of calculating Cost
Savings in 2011, the amount of Direct Fixed Costs in the Maintenance General Category incurred in
both 2009 and 2010 would be deemed to be ***** higher than those actually incurred.




          (g) Notwithstanding anything to the contrary contained in this Agreement, the per pound usages
of each component of Variable Costs shall be used solely for purposes of determining whether
Sterling has achieved any Cost Savings in a given Year and BASF shall pay the actual amounts of
Variable Costs incurred during each Month.




-28-









 








          Section 3.07. Taxes. In addition to the other amounts payable by BASF under this
Agreement, all sales, use and excise taxes and other taxes and similar charges which Sterling may
be required to pay and which are levied directly upon the receipt or storage by Sterling of Raw
Materials, the production or storage of Products or the sale or delivery of Products hereunder
(including any “Superfund” tax and any other environmental tax or like charge assessed or imposed
by any Governmental Authority but excluding franchise tax or any tax levied against the income or
gross receipts of Sterling) shall be paid by BASF (or if paid by Sterling, reimbursed by BASF
within 15 Days after receipt of an invoice therefore, or if such Day is not a Business Day, then on
the next Business Day).




          Section 3.08. Wire Transfers, Etc. All sums and amounts payable under this Agreement
shall be paid in United States dollars by wire transfer or electronic funds transfer of immediately
available funds to such bank or account in the continental United States for the account of the
payee as from time to time the payee shall have directed to the payor in writing
(or, if no such direction shall have been given, by check of the payor payable to the order of the
payee and mailed to the payee in the manner and at the address set forth in Section 8.01).
Whenever in this Agreement BASF is required to pay or reimburse Sterling upon receipt of invoice,
or otherwise when no due date for payment is specifically provided, payment shall be due as
provided in Section 3.02(b) and shall be made in the manner set forth in this Section 3.08.




          Section 3.09. Late Payments. (a) In the event that either Party fails to pay any
amount when due hereunder, such amount shall bear interest at the Applicable Interest Rate,
accruing each Day from the Day such amount was originally due until the Day such amount is paid in
full. With respect to any delinquent payment by BASF, unless such amount is the subject of a good
faith dispute between the Parties pursuant to paragraph (b) below, Sterling shall have the rights
provided in Section 3.02(a). Sterling may exercise its rights under Section 3.02(a), and either
Party may exercise its rights under this paragraph (a), at any time and from time to time during
the continuance of this Agreement.




          (b) Notwithstanding anything to the contrary contained in paragraph (a) above, BASF may, in
good faith, contest the validity or amount of any amount included in any invoice submitted by
Sterling pursuant to this Article III, and may defer the payment of any contested portion thereof
during the pendency of such contest without defaulting under this Agreement; provided, however,
that BASF gives written notice to Sterling of its contest of such amount prior to the time the
relevant invoice is due and payable. In the event that BASF withholds the payment of any contested
amount and it is ultimately determined that such amount is due and payable to Sterling, BASF shall
pay such amount to Sterling immediately after such determination, together with interest thereon at
the Applicable Interest Rate accruing each Day from the Day such amount was originally due until
the Day such amount is paid in full. Payment of any amount under this Article III shall not
prejudice the right of BASF to dispute or question the correctness thereof so long as BASF notifies
Sterling that it is contesting the correctness of such amount prior to its payment thereof.




-29-









 








Article IV




Operation of the Esters Unit and Related Matters




          Section 4.01. Operational Practices. Sterling shall operate and maintain the Esters
Unit and perform its other obligations hereunder, including material handling and distribution,
using operating procedures equivalent to or better than (a) the standard of care it uses in
operating and conducting manufacturing at the Plant and performing obligations for its own account
and (b) the standard of care a prudent operator would use in operating and manufacturing at a unit
similar to the Esters Unit. Subject to the terms and conditions of this Agreement, Sterling shall
operate the Esters Unit in a manner designed to fulfill its obligations to deliver Products
hereunder that meet the Product Specifications in accordance with the Estimated Delivery, Shipment
and Storage Instructions, the Delivery, Shipment and Storage Instructions and any additional
delivery, shipment and storage instructions issued by BASF pursuant to Section 2.01(b); provided,
however, that such operational practices do not violate this Agreement or any applicable Law and
are not inconsistent with the prudent operation of the Esters Unit.
Except for amounts being contested in good faith, Sterling shall pay, as they become due, all costs
and expenses incurred to trade creditors in the operation of the Esters Unit which, if remaining
unpaid, might become a Lien on the Esters Unit.




          Section 4.02. Plant Visits; BASF Liaison. (a) Sterling shall grant BASF personnel
access to the Esters Unit at reasonable times and on reasonable notice; provided, however, that
such visits are consistent with Sterling’s contractual obligations under licenses or sublicenses to
which it is a party. BASF shall cause all of its personnel to comply with Sterling’s safety and
reasonable confidentiality procedures and policies.




          (b) BASF shall have the option, at its sole cost and expense, to appoint a liaison person (the
“BASF Liaison”) for the Esters Unit, and the BASF Liaison shall be entitled to make
recommendations to Sterling regarding the maintenance, upkeep and operations of the Esters Unit;
provided, however, that Sterling shall not be under any obligation to adopt or implement any
recommendations made by the BASF Liaison that Sterling, in its sole discretion, believes may
adversely affect the health, safety or environmental performance of the Esters Unit or may increase
Sterling’s costs to operate or maintain the Esters Unit. If Sterling does not wish to adopt or
implement any recommendation made by the BASF Liaison solely because Sterling believes that such
adoption or implementation may increase Sterling’s costs to operate or maintain the Esters Unit,
Sterling shall adopt or implement such recommendation but (i) any increase in costs resulting from
such adoption or implementation shall be paid by BASF, (ii) the Threshold Fixed Costs Amount shall
be increased by the amount of such costs, (iii) such costs shall be excluded from any calculation
of Costs Savings, (iv) to the extent such costs and expenses are Allocated Fixed Costs, the portion
of the Allocated Fixed Costs Amount pertaining to each relevant General Category of Allocated Fixed
Costs shall be increased by the applicable portion of such costs and expenses, and (v) to the
extent such additional Fixed Costs are not otherwise excluded from the definition of Component
Fixed Costs, such additional Fixed Costs shall thereafter be included in the calculation of the
Component Fixed Costs. Sterling shall provide the BASF Liaison with office space at the Site and
grant the BASF Liaison access to the Esters Unit at all reasonable times to observe and inspect,
and to perform safety, manufacturing




-30-









 







and quality studies; provided, however, that such activities
do not materially disrupt the operation of the Esters Unit or Sterling’s other operations at the
Site.




          Section 4.03. Insurance. During the term of this Agreement, Sterling shall maintain
property damage and liability insurance on the Esters Unit and those parts of the Plant which serve
the Esters Unit in types and amounts, and against such risks, substantially similar to those
carried and insured against as of the Effective Date; provided, however, that in any event Sterling
shall not be required to maintain business interruption or terrorism insurance coverage. BASF
shall reimburse Sterling for any amounts paid by Sterling that are credited towards the deductible
under Sterling’s liability insurance policy or property damage/business interruption policy to the
extent the underlying event (a) is directly related to the Esters Unit, any Raw Material, Ancillary
Raw Material or Product or any other matter under this Agreement and (b) Sterling is not required
to indemnify BASF for such underlying event pursuant to Section 6.01(a). Any payments required to
be made by BASF pursuant to this Section 4.03 (i) shall be made by BASF within 15 Days after
receipt of an invoice therefore from Sterling, or if such Day is not a
Business Day, then on the next Business Day, (ii) shall be excluded from any calculation of Costs
Savings or the Component Fixed Costs under this Agreement and (iii) to the extent such costs and
expenses are Allocated Fixed Costs, shall be paid separately from, and in addition to, the
Allocated Fixed Costs Amount. BASF may carry additional insurance, at its sole discretion and
cost.




          Section 4.04. Damage or Destruction. (a) If, at any time during the term of this
Agreement, if all or any part of the Esters Unit or any Dependent Facility is damaged or destroyed
by fire explosion, flood, hurricane, windstorm or other casualty of any kind or nature (including
any insured or uninsured casualty), ordinary or extraordinary, foreseen or unforeseen, Sterling
shall either (i) at its sole cost and expense, and irrespective of whether the insurance proceeds,
if any, are sufficient for such purpose, within ***** Days after the date of such damage or
destruction, commence repairing, altering, restoring, replacing or rebuilding the Esters Unit or
such Dependent Facility to substantially the same condition as existed immediately prior to such
damage or destruction, and thereafter continue with such work with reasonable diligence, or (ii)
elect, by providing BASF with written notice of such election within ***** Days after the date of
such damage or destruction, not to repair, alter, restore, replace or rebuild the Esters Unit or
such Dependent Facility.




          (b) If Sterling elects to repair, alter, restore, replace or rebuild the Esters Unit or such
Dependent Facility, (i) Sterling shall have the right to require that all insurance proceeds from
policies maintained by Sterling and BASF providing coverage for the relevant casualty be applied to
the payment of all costs and expenses related thereto, and (ii) the Parties’ respective obligations
under this Agreement shall continue, but Sterling shall bear all costs of such repair in excess of
the proceeds of insurance and shall have the right to fully depreciate such repair costs.




          (c) If Sterling elects not to repair, alter, restore, replace or rebuild the Esters Unit or
such Dependent Facility, BASF may elect, at its sole cost and expense, to pay the cost to repair,
alter, restore, replace or rebuild the Esters Unit or such Dependent Facility; provided, however,
that BASF exercises such right within 120 Days following receipt of written notice of Sterling’s
election not to do so and, provided further, that, notwithstanding any such payment, BASF shall





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not
acquire any right, title or interest in or to the Esters Unit or such Dependent Facility. If BASF
exercises such election, Sterling shall apply all insurance proceeds from policies maintained by
Sterling that provided coverage for the relevant casualty to the payment of all costs and expenses
related to such repair, alteration, restoration, replacement or rebuilding.




          (d) In the event that all or any portion of the Esters Unit or any Dependent Facility is
damaged or destroyed after the Effective Date by fire or other casualty, and either (i) neither
Party has elected to repair, alter, restore, replace or rebuild the Esters Unit, such Dependent
Facility or relevant portion thereof or (ii) Sterling has elected to repair, alter, restore,
replace or rebuild the Esters Unit, such Dependent Facility or relevant portion thereof but has not
begun to repair, alter, restore, replace or rebuild the Esters Unit, such Dependent Facility or
relevant portion thereof within six months following such damage or destruction (or at any time
thereafter fails to use reasonable efforts to continue to repair, alter, restore, replace or
rebuild the Esters Unit, such Dependent Facility or relevant portion thereof), then the Esters
Facility Fee shall be
reduced for each Quarter, or portion thereof, during which Sterling fails to maintain the Monthly
Contract Capacity. In such cases, the Esters Facility Fee payable for each such Quarter shall be
determined by (A) dividing the Esters Facility Fee by 90 to determine the amount of the Esters
Facility Fee payable for each Day during such Quarter, (B) reducing the amount determined under
clause (A) for each Day during such Quarter when Sterling so failed to maintain the Monthly
Contract Capacity by multiplying such amount by the Reduction Factor applicable to such Day and (C)
deducting the aggregate reductions under clause (B) for such Quarter from the Esters Facility Fee
otherwise payable for such Quarter. If the Esters Facility Fee for any Quarter is reduced pursuant
to this paragraph (d) after BASF has paid such Esters Facility Fee, BASF may deduct the amount
overpaid from the next Esters Facility Fee payable hereunder or, if no further Esters Facility Fees
are payable hereunder, Sterling shall refund such amount to BASF within 15 Days after receipt of an
invoice therefore from BASF.




          (e) If neither Party elects to repair, alter, restore, replace or rebuild the Esters Unit,
such Dependent Facility or the relevant portion thereof and the damage or destruction involves more
than ***** of the Esters Unit or causes the Esters Unit to be incapable of producing Products at
greater than ***** of Capacity, either Party may terminate this Agreement with 30 Days’ prior
written notice to the other Party and BASF may cease paying the Esters Facility Fee after the
occurrence of the relevant damage or destruction. In the event of any such termination of this
Agreement, the amount of undepreciated capital paid by BASF for all Capital Projects shall be
deemed to be an amount equal to the lesser of (i) the amount of such undepreciated capital as of
the date of such damage or destruction and (ii) the amount recovered by Sterling under its
insurance policies attributable to the damage to or destruction of the Esters Unit minus the
portion of the deductible under such insurance policies attributable to such damage to or
destruction of the Esters Unit times a fraction, the numerator of which is the amount of such
undepreciated capital and the denominator of which is the value of the Esters Unit prior to such
damage or destruction.




          Section 4.05. Hazards. Each Party acknowledges that Ancillary Raw Materials, Raw
Materials and Products may be, or become, considered Hazardous Materials, and that it is familiar
with the hazards of Ancillary Raw Materials, Raw Materials and Products, their respective
applications and the containers in which they are shipped. Each Party shall inform




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and train its
employees and customers with respect to all such hazards. In addition, Sterling shall (a) warn all
persons at the Plant, including its employees, agents and invitees, of the health and environmental
hazards associated with Ancillary Raw Materials, Raw Materials and Products, their respective
applications and the containers in which they are shipped (including proper disposal methods), (b)
advise all such persons at the Plant who handle or might otherwise come into contact with such
materials of all applicable precautions and safety measures to be employed at the Plant when
handling or storing such materials and (c) cause such precautions and safety measures to be
employed at the Plant in accordance with all safety, health and environmental regulations.




          Section 4.06. Compliance with Laws. Nothing in this Agreement is intended to, or
shall be deemed or construed as being intended to, authorize or require Sterling to violate any Law
(including any Environmental Law). Each Party shall comply with all Laws (including
Environmental Laws) applicable to the Parties, the transactions contemplated by this Agreement or
the preservation of public or Plant health or safety, including the Occupational Safety and Health
Act of 1970, and the regulations issued thereunder, as the same may be amended from time to time.
In accordance with the foregoing provision, but not by way of limitation, it is specifically
understood that BASF is an Equal Opportunity Employer and Sterling warrants that Sterling complies
with the Fair Labor Standard Act of 1938, as amended. Sterling agrees that, if this Agreement is
construed to be a subcontract within the meaning of the Rules and Regulations approved by the
United States Secretary of Labor pursuant to Executive Order 11246, as amended, the Vietnam Era
Veterans Readjustment Assistance Act of 1974, as amended, or the Rehabilitation Act of 1973, as
amended, or of the regulations issued pursuant to Executive Order 11625, the provisions of the
applicable regulations as well as the Equal Opportunity and Nondiscrimination provision of
Section 202 of Executive Order 11246 shall be incorporated herein by reference and shall be binding
upon Sterling as part of this Agreement. Sterling shall label and placard all shipments of
Products in compliance with all applicable Laws.




Article V




Additional Agreements




          Section 5.01. Title. (a) Sterling expressly does not by the terms of this Agreement,
sell, transfer or assign to BASF any right, title or interest in the Esters Unit, the PA Unit or
the Plant or any assets or properties of Sterling, and nothing in this Agreement shall be deemed to
convey to BASF any legal or beneficial ownership in or to all or any portion of the Esters Unit,
the PA Unit, the Plant or any other assets or properties of Sterling. Title to all Raw Materials
and Product shall at all times remain in BASF. Title to Product shall vest in BASF as of the time
of its production. Sterling shall not impose or permit to be imposed upon any of the Raw Materials
or Products within the custody and control of Sterling any Liens other than those created by,
through or in favor of BASF. Notwithstanding anything to the contrary contained in any prior
agreement or any understanding between the Parties (including the Existing Agreement), upon the
execution of this Agreement, title to any Raw Materials or Product on hand (at the Site, at
terminals, in route and elsewhere) shall vest in BASF as if such Raw Materials or Product were
supplied pursuant to the terms of this Agreement.




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          (b) Sterling hereby authorizes BASF to file any and all UCC financing statements that are
necessary to evidence or perfect BASF’s ownership of all rights, title and interests in the Raw
Materials and Products referred to in Section 5.01(a). Upon the request of BASF, Sterling shall
execute and deliver to BASF any other notices as may be reasonably requested by BASF to reflect and
file of record BASF’s ownership of all rights, title and interests in and to all Raw Materials and
Products referred to in Section 5.01(a).




          Section 5.02. Sale or Transfer of Interest in the Esters Unit. During the term of
this Agreement, Sterling may not sell or transfer an interest in all or any part of the Esters Unit
to a Competitor without the prior written consent of BASF, which consent will not be unreasonably
withheld, conditioned or delayed. Notwithstanding the foregoing, (a) Sterling may sell or
otherwise dispose of the Esters Unit to a Competitor as part of the sale, transfer or other
disposition of all or substantially all of the Plant’s assets, directly or indirectly, or as a part
of the merger, consolidation, reorganization or sale of all or substantially all of the assets or
equity of Sterling (each, a “Plant Disposition”), and (b) except as set forth in Section
5.01, Sterling may grant Permitted Encumbrances and other Liens in or on the Esters Unit to secure
any indebtedness of Sterling, now existing or hereafter arising, and any holder of such
indebtedness may foreclose upon all or any portion of the Esters Unit, sell such assets in lieu of
foreclosure and otherwise exercise all rights or remedies they may have with respect thereto,
without restriction hereunder, and any purchaser on foreclosure or sale in lieu of foreclosure may
take such assets free from such restrictions.




          Section 5.03. Books and Records; Audits. Sterling shall maintain accurate records and
books of account with regard to the operation of the Esters Unit and the transactions contemplated
by this Agreement, and furnish a report thereon to BASF, in a form reasonably acceptable to BASF,
within 21 Days following the end of each Month. All accounting and reporting for the operation of
the Esters Unit and the transactions contemplated by this Agreement will be in accordance with
GAAP. Upon reasonable request, each Party shall provide the other Party with copies of all
purchase orders, invoices and other backup data pertaining to any costs or expenses related to this
Agreement, and the Party receiving such information shall maintain the confidentiality of all such
documents and information in accordance with the provisions of Section 5.06.




          (b) Upon reasonable request, Sterling shall provide BASF with access to all records pertaining
to the operation of the Esters Unit and the transactions contemplated by this Agreement, which
records shall be subject to audit by an independent certified public accounting firm reasonably
acceptable to Sterling at any reasonable time during, or within the two years following, the period
being audited. Any audit will be at BASF’s expense. In no event shall BASF initiate more than one
audit each Year. Each auditing firm will maintain the confidentiality of Sterling’s accounts and
records, and will either verify the correctness thereof or advise both Parties of the composite
adjustments required to correct discrepancies for the period audited. Any discrepancies shall be
corrected by appropriate payments or credits, as the case may be, at the earliest practicable time,
in the amount thereof. If the total amount of such discrepancies exceeds ***** for any Year, the
Party owing such amount shall also pay the other Party interest on the amount of such discrepancies
at the Applicable Interest Rate accruing each




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Day from the Day such amount was originally due (or
paid) until the Day such amount is paid (or refunded) in full.




          (c) Upon the written request of BASF, Sterling shall provide BASF reasonable suitable
temporary office accommodations at the Site for a limited number of BASF personnel or
representatives to audit or review records maintained by Sterling pursuant to this Agreement.




          Section 5.04. Meetings. (a) At each Quarterly Meeting, representatives of the Parties
shall review the operations of the Esters Unit and such other matters as may be determined to be
appropriate by the Parties. At the Quarterly Meeting to be held in October of each Year, the
Parties shall (i) review the Capital Budget and the Maintenance Budget for the ensuing Year, (ii)
review the Fixed Costs and Variable Costs for the immediately preceding 12-month period and (iii)
establish a budget for Fixed Costs and Variable Costs for the following 12-month period; provided,
however, that no Capital Budget, Maintenance Budget or budget for Fixed Costs or Variable Costs
shall reduce, modify or limit in any way BASF’s obligation to pay the actual Capital Expenditures,
Expansion Capital Expenditures, maintenance expenditures, Fixed Costs or Variable Costs incurred
pursuant to this Agreement.




          (b) Sterling shall make its employees and other representatives available to BASF on
reasonable request to discuss the present or proposed operations of the Esters Unit, so long as
such availability does not disrupt the operation of the Esters Unit or the Plant. Representatives
of the Parties shall meet at a mutually acceptable time and place if either Party gives reasonable
prior written notice to the other Party of its request for a meeting.




          Section 5.05. Technical Advice. (a) BASF shall advise Sterling regarding technical
questions arising in connection with the operation of the Esters Unit, and shall provide assistance
to Sterling in the event of any disturbances at the Esters Unit. Any advice given by BASF pursuant
to this Section 5.05 shall utilize BASF’s technical knowledge and experience, to the extent that
they are suitable for the operation of the Esters Unit; provided, however, that BASF shall not be
obligated to provide Sterling with technical knowledge or experience acquired by BASF during the
term of this Agreement which BASF, in its reasonable judgment, considers to be a considerable
improvement or in respect of which BASF has filed a patent application. Notwithstanding anything
to the contrary contained in this Section 5.05, BASF shall be under no obligation to provide
technical advice that would require in-house work by BASF or its representatives, including
laboratory or pilot plant tests. BASF shall be available to discuss important technical questions
at a meeting between technical experts of BASF and Sterling, either in Ludwigshafen, Germany or in
Texas City, Texas by mutual agreement and at suitable intervals. In the event that engineering
services of BASF are required in connection with Capital Projects or Expansion Projects, BASF
shall, at its sole option and at its sole cost and expense, provide such engineering services.




          (b) BASF shall render the services contemplated by this Section 5.05 in the best interests of
Sterling and shall apply the same standard of care in rendering such services as it applies in its
own affairs. In the event that BASF fails to fulfill its obligation with such care, (i) BASF shall
be obligated to re-perform such services free of charge, (ii) such re-performance





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shall be
Sterling’s exclusive remedy for such breach and (iii) BASF shall not incur any further liability
whatsoever related to such matter.




          Section 5.06. Confidentiality. (a) For purposes of this Section 5.06, the following
terms have the following respective meanings:





     “Furnishing Party” means, with respect to any Information, the Party that
furnished, or whose Representatives furnished, such Information to the Receiving Party
pursuant to this Agreement.




     “Information” means (i) all information (whether written or oral) furnished
(whether before or after the date hereof) by the Furnishing Party or any of its
Representatives, to the Receiving Party or any of its Representatives for or relating to the
transactions contemplated by this Agreement, including all information relating to the
business, products, assets and finances of the Furnishing Party, including financial
statements and related books and records, minute books, personnel records, lists of customers
and potential customers, lists of suppliers and potential suppliers, price and cost data,
computer programs, computer hardware, patents, patent applications, apparatus, equipment,
drawings, reports, processes, methods and techniques of manufacture, know-how, trade secrets,
specifications of materials, manuals, technical information plans, drawings and other data and
similar information and records, and (ii) all other information of or concerning the
Furnishing Party or any of its Representatives; provided, however, that the term
“Information” does not include information which (A) is or becomes publicly available
other than as a result of a disclosure by the Receiving Party or any of its Representatives in
violation of this Section 5.06, (B) is known by, is in the possession of or is or becomes
available to the Receiving Party or any of its Representatives from a source (other than the
Furnishing Party or any of its Representatives) which, to the knowledge of the Receiving
Party, is not prohibited from disclosing such information by a legal, contractual or fiduciary
obligation to the Furnishing Party or any of its Representatives, or (C) has been
independently developed by the Receiving Party without violating any of its obligations under
this Section 5.06 and, provided further, that the fact that information is included in other
information which is or becomes otherwise available to the Receiving Party or its
Representatives pursuant to clause (A) or (B) shall not exclude the balance of such
information from the term “Information.”


     “Received Information” means (a) with respect to Sterling, all Information
furnished by, of or concerning BASF or any of its Representatives to Sterling or any of its
Representatives pursuant to this Agreement, and all analyses, compilations, forecasts, studies
or other documents prepared by Sterling or any of its Representatives which contain or reflect
any of such Information, and (b) with respect to BASF, all Information furnished by, of or
concerning Sterling or any of its Representatives to BASF or any of its Representatives
pursuant to this Agreement and all analyses, compilations, forecasts, studies or other
documents prepared by BASF or any of its Representatives which contain or reflect any of such
Information.




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     “Receiving Party” means, with respect to any Information, the Party that received
such Information from the Furnishing Party or any of the Furnishing Party’s Representatives
pursuant to this Agreement.




     “Representatives” means, with respect to each Party, such Party’s directors,
officers, employees, partners, agents, Affiliates and non-employee representatives (including
attorneys, accountants, potential sources of financing, underwriters or other financial
advisors, bankers or agents); provided, however, that neither Party shall be deemed to be a
Representative of the other Party.



          (b) The Receiving Party (i) shall keep all Received Information confidential and will not,
except as otherwise provided in this Section 5.06 or with the prior written consent of the
Furnishing Party, disclose any Received Information in any manner or to any Person whatsoever, and
(ii) will not use any Received Information other than in connection with the transactions
contemplated by this Agreement; provided, however, that the Receiving Party may reveal the Received
Information to its Representatives (A) who need to know the Received Information in connection with
the transactions contemplated by this Agreement, (B) who are informed by the Receiving Party of the
confidential nature of the Received Information and (C) who agree to abide by and act in accordance
with the terms of this Section 5.06 to the same extent as if they were parties to this Agreement.
The Receiving Party will cause its Representatives to observe the terms of this Section 5.06 and
will be responsible for any breach of this Section 5.06 by any of its Representatives to the same
extent as if the Receiving Party had breached this Section 5.06 directly.




          (c) Nothing in this Section 5.06 shall prohibit the Receiving Party or any of its
Representatives from disclosing any Received Information to the extent required by applicable Law,
legal process or other legal compulsion. If the Receiving Party or any of its Representatives are
requested pursuant to, or are required by, applicable Law, legal process or other legal compulsion
to disclose any Received Information, the Receiving Party will give the Furnishing Party prompt
written notice of such request or requirement so that the Furnishing Party may seek a protective
order or other appropriate remedy or waive compliance with the terms of this Section 5.06, and the
Receiving Party will provide reasonable cooperation to the Furnishing Party (at the expense of the
Furnishing Party) to obtain such protective order. If no such protective order or other remedy is
obtained, or the Furnishing Party waives compliance with the terms of this Section 5.06, the
Receiving Party (or such other Person who is requested or required to make such disclosure) will
furnish only that portion of the Received Information which it is advised by its counsel is legally
required to be disclosed and, upon the Furnishing Party’s request and at the expense of the
Furnishing Party, will exercise all commercially reasonable efforts to obtain assurances that
confidential treatment will be afforded the Received Information.




          (d) At any time upon the written request of the Furnishing Party, the Receiving Party will
promptly (i) destroy or deliver to the Furnishing Party, at the Receiving Party’s expense, all
copies of the written Received Information which is in its or its Representatives’ possession, (ii)
destroy all copies of Received Information internally generated by it or materials which are based
upon or incorporate Received Information and (iii) deliver to the Furnishing




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Party a certificate
executed by one of its duly authorized officers indicating that the requirements of this paragraph
(d) have been satisfied in full; provided, however, that notwithstanding anything to the contrary
contained in this Section 5.06, the Receiving Party may retain one copy of the Received Information
in the files of its legal department, which copy may only be used in case of questions raised as to
the Receiving Party’s compliance with the terms of this Section 5.06. Notwithstanding the return
or destruction of Received Information, the Receiving Party and its Representatives will continue
to be bound by its obligations under this Section 5.06.




          (e) The obligations of the Receiving Party under this Section 5.06 shall terminate with
respect to any given Received Information ten years after the date on which such Received
Information was originally disclosed to the Receiving Party.




          Section 5.07. Restriction on Transfer of Information. Except in connection with a
Plant Disposition, a foreclosure, a sale in lieu of foreclosure or other transfer of the Esters
Unit permitted hereby, Sterling shall not sell, assign or otherwise transfer any right, title or
interest in or to use (except for production of Products at the Esters Unit) its intellectual
property related to the production, sale or marketing of Products without the prior written consent
of BASF.




          Section 5.08. Public Statements. Neither Party shall issue any public announcement or
statement with respect to the transactions contemplated hereby without the prior written consent of
the other Party, unless such announcement or statement is required by Law or the rules of any
securities exchange on which the securities of such Party are traded.




          Section 5.09. SEC Reports. Sterling shall, at the same time that Sterling makes such
reports available to its stockholders, furnish to BASF all quarterly reports on Form 10-Q, annual
reports on Form 10-K and current reports on Form 8-K filed by Sterling with the Securities and
Exchange Commission.




Article VI




Indemnification; Limitation of Liability; Remedies




          Section 6.01. Indemnification. (a) Except as otherwise provided herein, from and
after the Effective Date, Sterling shall defend, indemnify and hold harmless BASF, its Affiliates,
their respective present, former and future directors, officers, stockholders, employees and agents
and their respective heirs, executors, personal representatives, administrators, successors and
assigns (the “BASF Indemnified Persons”), from and against any and all Damages suffered or
incurred by any BASF Indemnified Person on account of or arising from or related to:





     (i) the negligence or intentional misconduct of Sterling or any of its employees,
contractors, agents or representatives;




     (ii) any Raw Materials, Ancillary Raw Materials or Products during any period when
Sterling had risk of loss to such Raw Materials, Ancillary Raw Materials or Products;



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     (iii) any Liability or alleged Liability to any third Person, whether incurred under Law
or in tort, to the extent such Liability or alleged Liability is based on (A) the Product
delivered being a completely different Product than the Product specified in BASF’s Delivery,
Shipment and Storage Instructions; provided, however, that for purposes of this clause (A) a
Product shall not be deemed or considered to be a different Product solely because the
material delivered fails to meet the applicable Product Specifications, or (B) the Product
delivered failing to meet the Product Specifications if (but only if) either (x) Sterling
failed to test the quality of the Product prior to shipment or (y) the test of the
quality of the Product performed by Sterling showed that the Product failed to meet the
Product Specifications in any material respect and Sterling did not inform BASF of such
failure and obtain BASF’s express written approval to ship such Product notwithstanding such
deficiency prior to the arrival of such Product at its intended destination; or




     (iv) any Liability or alleged Liability to any third Person, whether incurred under Law
or in tort, or any environmentally related Claim, arising directly or indirectly from the
operations conducted by or on behalf of Sterling at or in connection with the Esters Unit, or
arising out of Spills or Releases Requiring Response Action at the Site occurring before,
during or after the term of this Agreement (except to the extent such Liability, alleged
Liability or Claim is based on the negligence or intentional misconduct of BASF or any of its
employees, contractors, agents or representatives).



          (b) Except as otherwise provided herein, from and after the Effective Date, BASF shall defend,
indemnify and hold harmless Sterling, its Affiliates, their respective present, former and future
directors, officers, stockholders, employees and agents and their respective heirs, executors,
personal representatives, administrators, successors and assigns (the “Sterling Indemnified
Persons”), from and against any and all Damages suffered or incurred by any Sterling
Indemnified Person on account of or arising from or related to:





     (i) the negligence or intentional misconduct of BASF or any of its employees,
contractors, agents or representatives;




     (ii) any Raw Materials or Products during any period when Sterling does not have risk of
loss to such Raw Materials or Products (excepting *****); or




     (iii) any Liability or alleged Liability to any third Person, ***** in each case, to the
extent such Liability, alleged Liability or Claim is based on the negligence or intentional
misconduct of BASF or any of its employees, contractors, agents or representatives.



          (c) Within a reasonable period of time after a Sterling Indemnified Person or a BASF
Indemnified Person (whether one or more, an “Indemnified Person”) receives actual notice of
any Damages covered by paragraph (a) or (b) above, as applicable, the Indemnified Person shall, if
a claim in respect thereof is to be made pursuant to paragraph (a) or (b) above, as applicable,
notify the Party from whom indemnification is sought (the “Indemnifying Party”) in writing
of such Damages; provided, however, that the failure to so notify the Indemnifying Party will not
relieve the Indemnifying Party from any obligation it may have to indemnify the Indemnified Person
pursuant to paragraph (a) or (b) above, except to the extent of material




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detriment suffered by the
Indemnifying Party as a result of such failure. In the event that any Damages arise out of or
result from matters with respect to third parties (a “Third Party Claim”), the Indemnifying
Party will undertake the defense thereof by attorneys chosen by it; provided, however, that if the
Indemnifying Party, within a reasonable time after notice of any such Third Party Claim, fails to
defend such Third Party Claim actively and in good faith, the Indemnified Person will (upon further
notice) have the right to undertake the defense, compromise or settlement of such Third Party
Claim, or consent to the entry of a judgment with respect to such
Third Party Claim, on behalf of and for the account and risk of the Indemnifying Party, and the
Indemnifying Party will thereafter have no right to challenge the Indemnified Person’s defense,
compromise, settlement or consent to judgment. No consent order shall be entered into or Third
Party Claim settled unless the Indemnified Person has given its prior written consent thereto,
which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that
the Indemnified Person shall consent to any settlement, compromise or discharge of such Third Party
Claim that the Indemnifying Party may recommend that by its terms fully releases the Indemnified
Person from any further Claims, Liabilities and Losses with respect to the matters giving rise to
such Third Party Claim. So long as the Indemnifying Party is defending any Third Party Claim
actively and in good faith, the Indemnified Person will not settle such Third Party Claim without
the consent of the Indemnifying Party. Each of the Indemnifying Party and the Indemnified Person
will be entitled to consult with each other, to the extent it reasonably requests, in respect of
the defense of such Third Party Claim and will cooperate in the defense of any such Third Party
Claim, including making its officers, directors, employees and books and records available for use
in such Third Party Claim, and will take those actions reasonably within its power which are
reasonably necessary to preserve any legal defenses to such matters, without the necessity of
formal subpoena or court action.




          (d) The Indemnifying Party will promptly pay each Indemnified Person any amount due under this
Section 6.01 upon demand therefore, and reimburse each Indemnified Person for all reasonable
expenses (including reasonable attorneys’ fees and costs of court) for which the Indemnified Person
is entitled to be indemnified hereunder as they are incurred by such Indemnified Person. Upon
judgment, determination, settlement or compromise of any Third Party Claim, the Indemnifying Party
will, upon demand therefor, promptly pay on behalf of the Indemnified Person, and/or will promptly
reimburse the Indemnified Person for its payment of, the amount so determined by such judgment,
determination, settlement or compromise and all other claims of the Indemnified Person with respect
thereto, unless, in the case of a judgment or determination, an appeal is made therefrom; provided,
however, that if the Indemnifying Party desires to appeal from an adverse judgment or
determination, then the Indemnifying Party will post and pay the cost of the security or bond to
stay execution of the judgment or determination pending appeal. Upon the payment in full by the
Indemnifying Party of all of such amounts, the Indemnifying Party will succeed to the rights of the
Indemnified Person, to the extent such rights are not waived in settlement, against the third party
who made such Third Party Claim. Any amounts which are not paid when due hereunder will bear
interest at a rate equal to the Applicable Interest Rate, accruing each Day from the Day such
amount was originally due until the Day such amount is paid in full.




          Section 6.02. Force Majeure. (a) If, as the result of the occurrence of a Force
Majeure Event, a Party is rendered unable, in whole or in part, to carry out its obligations under




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this Agreement (other than any obligation to make payment of any amount when due and payable
hereunder), the obligations of such Party, insofar as they are affected by such Force Majeure
Event, shall be suspended during the continuance of such Force Majeure Event provided that the
Party prevented from performing by such Force Majeure Event (i) provides the other Party with
written notice of the occurrence or likely occurrence of such Force Majeure Event within a
reasonable time, which notice shall describe such Force Majeure Event in reasonable detail and,
to the extent practicable, include an estimate of the anticipated duration thereof, (ii) takes all
actions reasonable necessary to remedy such Force Majeure Event or its resulting effects, or
otherwise remove the basis for non-performance, with all reasonable dispatch, and (iii) upon such
remedy or removal resumes performance of its obligations under this Agreement. Upon receipt of any
notice of the occurrence or likely occurrence of a Force Majeure Event, the Parties will consult
with each other regarding how such circumstances affect this Agreement and the measures to be
taken, and each of the Parties will use commercially reasonable efforts to avoid or reduce the
detrimental effects of such Force Majeure Event as much as possible. If by reason of any Force
Majeure Event, supplies of any Product deliverable hereunder or Raw Materials or Ancillary Raw
Materials are curtailed or cut off, Sterling shall not be required to increase the amount of any
Raw Materials or Ancillary Raw Materials acquired from any source of supply or to purchase
Products, Raw Materials or Ancillary Raw Materials to replace the Products, Raw Materials or
Ancillary Raw Materials so curtailed or cut-off unless BASF agrees to pay incremental costs or
expenses associated therewith, in which event such costs and expenses shall be excluded from any
calculation of Cost Savings or the Component Fixed Costs and, to the extent such costs and expenses
are Allocated Fixed Costs, shall be paid separately from, and in addition to, the Allocated Fixed
Costs Amount.




          (b) The settlement of strikes or lockouts shall be entirely within the discretion of the Party
having the difficulty, and the above requirement that the Party prevented from performing remedy
the applicable Force Majeure Event or its resulting effects or otherwise remove the basis for
non-performance as soon as practicable shall not require the settlement of strikes or lockouts by
acceding to the demands of the opposing party when such course is deemed inadvisable, in the sole
discretion of the Party having the difficulty.




          (c) For purposes of this Agreement, the term “Force Majeure Event” means acts of God,
wars, blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
storms, hurricanes, floods, high water, washouts, arrests, restraints of government and people,
civil disturbances, explosions, lack of adequate supplies of fuel, power, raw materials, labor,
containers or transportation facilities, breakage or accident to wells, machines, equipment,
apparatus or lines of pipe or property, freezing of wells, machines, equipment, apparatus or lines
of pipe or property, partial or entire failure of any wells, machinery, equipment, apparatus or
lines of pipe or other property, strikes, work stoppages, labor difficulties, other industrial
disturbances, acts of public enemy, sabotage, governmental controls (including price and allocation
controls), Laws (including those dealing with pollution, health, ecology, tariffs, duties or other
governmental assessments or restrictions or environmental matters), embargoes, unavailability or
shortages of ships, barges, other inland water or marine vessels or other conveyance or, without
limitation, any other causes or contingencies (whether or not of the same nature as those
hereinbefore specified) beyond the reasonable control of the Party claiming force majeure.





-41-









 








          (d) The failure by a Party to perform any of its obligations under this Agreement shall be
deemed to have not been caused by a Force Majeure Event or circumstances reasonably outside its
control if such failure results from the shortage of cash or anything reasonably attributable to a
Party’s own actions or preventable by a Party, including through the expenditure
of sums which are reasonable in light of the likelihood of the event occurring or the probable
effect if is such event were to occur.




          (e) In the event that, at any time during the term of this Agreement, any Governmental
Authority adopts any Law and takes any other action or enters any order which directly or
indirectly materially and adversely affects the rights or obligations of either Party in this
Agreement, then the Party affected by such action shall notify the other Party thereof and the
Parties shall enter into good faith negotiations to modify this Agreement to ameliorate the effects
of such governmental action. In the event that the Parties fail to agree upon such modifications
within 30 Days after receipt of the notice of such action, the Party giving such notice may, upon
further written notice, terminate this Agreement. In the event of any such termination of this
Agreement, the amount of undepreciated capital paid by BASF for all Capital Projects shall be
deemed to be zero and no amount shall be payable by Sterling to BASF pursuant to Section 3.04(d).




          (f) If a Force Majeure Event results in all or substantially all of the operations of the
Esters Unit being suspended for a period of at least six consecutive Months, (i) Sterling shall use
reasonable efforts to reduce Direct Fixed Costs and Variable Costs at the Esters Unit during the
pendency of such Force Majeure Event, (ii) BASF shall not be obligated to pay Sterling any Fixed
Costs or the Esters Facility Fee for the period commencing with the first Day of the seventh Month
of such Force Majeure Event and continuing thereafter until the recommencement of operations at the
Esters Unit, and (iii) each date specifically referenced in the definition of Early Termination Fee
and Section 7.01(b), and the last Day of the Initial Term (if there is no Additional Term) or the
final Additional Term, as applicable, shall automatically, without further action of either Party,
be deemed to be a later date that is determined by adding to the original date a number of Days
equal to the number of Days for which no Esters Facility Fee was payable by BASF pursuant to this
paragraph (f). If a Force Majeure Event results in all or substantially all of the operations of
the Esters Unit being suspended for a period of at least nine consecutive Months, either Party may,
at any time thereafter during the continuance of such Force Majeure Event, terminate this Agreement
by providing written notice of such termination to the other Party, such termination to be
effective 15 Days after the receipt of such notice by the non-terminating Party.




          Section 6.03. Limitations on Damages. (a) In The Event That Sterling Shall Be
Liable To BASF For Any Matter Relating To The Quantity Or Quality Of Any Products Delivered By
Sterling To BASF Hereunder, Whether Based Upon An Action Or Claim In Contract, Equity, Negligence
Or Otherwise, The Amount Of Damages Recoverable By BASF For All Events, Acts Or Omissions Will Not
Exceed, In The Aggregate, An Amount Equal To *****; Provided, However, That Such Limitation Shall
Not Apply To Any Liability For Which *****.




-42-









 








          (b) Notwithstanding Anything To The Contrary Contained In This Agreement, Neither Of The
Parties Will Be Liable To The Other Party For Any Consequential, Indirect, Special Or Punitive
Damages (Including Loss Of Use Of Property Or Lost Profits Or Revenues) From Any Cause Whatsoever,
Whether Based
In Contract, Tort (Including Negligence), Strict Liability Or Any Other Legal Theory Unless
(i) Such Damages Result From The Gross Negligence Or Intentional Misconduct Of Such Party,
(ii) Such Damages Result From Any Breach Of Section 5.06 Or (iii) Such Damages
Are Payable By An Indemnified Person Pursuant To A Third Party Claim For Which Indemnification Is
Available Hereunder.




          Section 6.04. Remedies. If either Party breaches or otherwise fails to perform its
obligations hereunder, the other Party shall be entitled to pursue all legal and equitable remedies
for such breach or failure (including specific performance, whether or not such remedy is otherwise
normally available).




Article VII




Term; Effect of Termination




          Section 7.01. Term and Termination. (a) This Agreement shall commence on the
Effective Date and, unless terminated earlier in accordance with the terms of this Agreement,
continue thereafter until December 31, 2013 (the “Initial Term”); provided, however, that
upon expiration of the Initial Term, this Agreement shall automatically renew for successive
three-year terms thereafter (each, an “Additional Term”) unless this Agreement is
terminated earlier in accordance with the terms hereof or either Party gives written notice to the
other Party of its intention to not renew this Agreement for an Additional Term at least one year
prior to the expiration of the Initial Term or an Additional Term, as the case may be.




          (b) Notwithstanding anything to the contrary contained in paragraph (a) above, BASF shall have
the right to terminate this Agreement as of December 31, 2010, December 31, 2011 or December 31,
2012 by (i) providing Sterling with at least one year’s prior written notice of its election to
terminate this Agreement and (ii) paying Sterling, on the termination date, the applicable Early
Termination Fee.




          (c) This Agreement may also be terminated by mutual prior written consent of the Parties at
any time or by either Party if the other Party is in breach of any material covenant, agreement,
term, provision or condition of this Agreement, and has failed to cure such breach within 30 Days
after receipt from the non-defaulting Party of a written notice of such breach. In the event that
Sterling terminates this Agreement based on the breach by BASF of any material covenant, agreement,
term, provision or condition of this Agreement, the amount of undepreciated capital paid by BASF
for all Capital Projects shall be deemed to be zero and no amount shall be payable by Sterling to
BASF pursuant to Section 3.04(d).




          (d) If, within 90 Days after the expiration or termination of this Agreement for any reason,
Sterling provides written notice to BASF of its decision to permanently close the Esters Unit, the
amount of undepreciated capital paid by BASF for all Capital Projects associated with





-43-











 




the Esters Unit shall be deemed to be zero and no payment shall be made to BASF by Sterling pursuant to Section 3.04(d).




          Section 7.02. Effect of Termination. (a) In the event of any termination of this
Agreement, this Agreement will immediately become void; provided, however, that each provision of
this Agreement that is required to ensure the full exercise or performance of the rights and
obligations of the Parties hereunder will survive any such termination and (ii) except as otherwise
expressly provided in this Agreement, neither Party shall have any liability to the other Party as
a result of a termination of this Agreement for any reason; provided, however, that no such
termination shall affect any rights or remedies of either Party arising out of any breach of this
Agreement prior to such termination or the right of either of the Parties to receive any amount
earned or accrued hereunder prior to such termination or otherwise payable with respect to any
period prior to such termination.




          (b) Within 30 Days after the expiration or termination of this Agreement, all Raw Materials
and Products remaining in Sterling’s possession or custody shall, at the sole cost and expense of
BASF, be loaded on ships, barges, other inland water or marine vessels, rail cars, tank trucks or
other conveyances, all of which shall be supplied by BASF, for delivery to BASF, with BASF bearing
all packing, loading and transportation costs.




Article VIII




Miscellaneous




          Section 8.01. Notices. Any and all notices, requests or other communications
hereunder shall be given in writing and delivered by (a) regular, overnight or registered or
certified mail (return receipt requested), with first class postage prepaid, (b) hand delivery, (c)
facsimile or electronic transmission or (d) overnight courier service, to the Parties at the
following addresses or numbers:





	 	(i)	 	if to Sterling, to:
	 
	 	 	 	Sterling Chemicals, Inc.

Attn: Senior Vice President — Commercial

333 Clay Street, Suite 3600

Houston, TX 77002-4312

Fax: (713) 654-9551

Phone: (713) 654-9591




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	 	 	 	With a copy to:






	 	 	 	Sterling Chemicals, Inc.

Attn: General Counsel

333 Clay Street, Suite 3600

Houston, TX 77002-4312

Fax: (713) 654-9577

Phone: (713) 654-9502






	 	(ii)	 	if to BASF, to:
	 
	 	 	 	BASF Corporation, Petrochemicals

Attn: Group Vice President, Petrochemicals RBU

1111 Bagby Street, Suite 2600

Houston, Texas 77002Florham Park, New Jersey 07932

Fax: (973) 245-6798

Phone: (713) 759-3084
	 
	 	 	 	With a copy to:






	 	 	 	BASF Corporation

Attn: General Counsel

100 Campus Drive

Florham Park, New Jersey 07932

Fax: (973) 245-6711

Phone: (973) 245-6048




or at such other address or number as shall be designated by either Party in a notice to the other
Party given in accordance with this Section. Except as otherwise provided in this Agreement, all
such communications shall be deemed to have been duly given, (A) in the case of a notice sent by
regular mail, on the date actually received by the addressee, (B) in the case of a notice sent by
registered or certified mail, on the date receipted for (or refused) on the return receipt, (C) in
the case of a notice delivered by hand, when personally delivered, (D) in the case of a notice sent
by facsimile or electronic transmission, upon transmission subject to telephone confirmation of
receipt, and (E) in the case of a notice sent by overnight mail or overnight courier service, the
date delivered at the designated address, in each case given or addressed as aforesaid.




          Section 8.02. Counterparts. This Agreement may be executed by the Parties in any
number of counterparts, each of which shall be deemed an original instrument, but all of which
together shall constitute but one and the same agreement.




          Section 8.03. Benefit and Burden. This Agreement shall inure to the benefit of, and
shall be binding upon, the Parties and their respective successors and permitted assigns.




          Section 8.04. No Third Party Rights. Nothing in this Agreement shall be deemed to
create any right in any creditor or other person or entity not a Party hereto (other than the



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Indemnified Persons) and this Agreement shall not be construed in any respect to be a contract in
whole or in part for the benefit of any other third party.




          Section 8.05. No Partnership or Agency. This Agreement shall not be construed to
create a partnership, joint venture, association or other entity or business organization or to
create a principal-agent relationship between the Parties.




          Section 8.06. Amendments and Waiver. No amendment, modification, restatement or
supplement of this Agreement shall be valid unless the same is in writing and signed by the
Parties. No amendment or modification of this Agreement shall be effected by the sending,
acknowledgment or acceptance of any purchase order, acknowledgment or other form containing terms
or conditions at variance with or in addition to those set forth in this Agreement. No waiver of
any provision of this Agreement shall be valid unless in writing and signed by the Party against
whom that waiver is sought to be enforced. No failure or delay on the part of either Party in
exercising any right, power or privilege hereunder, and no course of dealing between the Parties,
shall operate as a waiver of any right, power or privilege hereunder. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. No notice to or demand
on either Party in any case shall entitle such Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of either Party to any other or
further action in any circumstances without notice or demand.




          Section 8.07. Assignments. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned by either Party without the prior written consent of the other
Party and any attempt to do so shall be null and void; provided, however, (a) that no such consent
shall be required for assignment for collateral purposes or to a successor in interest of all or
substantially all of the assets or business of either Party to which this Agreement relates and (b)
no assignment by either Party of any of its rights, interests or obligations hereunder shall
relieve such Party of its obligations under this Agreement unless the other Party expressly agrees
otherwise in writing.




          Section 8.08. Severability. Should any clause, sentence, paragraph, subsection or
Section of this Agreement be judicially declared to be invalid, unenforceable or void, such
decision will not have the effect of invalidating or voiding the remainder of this Agreement, and
the Parties agree that (a) the part or parts of this Agreement so held to be invalid, unenforceable
or void will be deemed to have been stricken herefrom as if such stricken part or parts had never
been included herein and (b) the Parties shall substitute a valid, lawful and enforceable
provision, with economic effects that are as equivalent as reasonably possible, for such invalid,
unenforceable or void part or parts of this Agreement.




          Section 8.09. Dispute Resolution Procedures. (a) As used in this Section 8.09,
“Dispute” means any and all questions, claims controversies or disputes arising out of or
relating to this Agreement, including the validity, construction, meaning, performance, effect or
breach of this Agreement, other than any questions, claims, controversies or disputes relating to
the breach or alleged breach of Section 5.06. Each Party agrees that the procedures set forth in
this Section 8.09 shall be the sole and exclusive remedy in connection with any Dispute and



-46-









 






irrevocably waives any right to commence any action, suit or proceeding in or before any
governmental authority, except as expressly provided in this Section 8.09.




          (b) In the event of any Dispute between the Parties, the Parties shall promptly and in good
faith attempt to resolve such Dispute through negotiations. A disputing Party shall give written
notice of the Dispute to the other Party that shall contain a brief statement of the nature of
the Dispute. If the Parties are unable to resolve the Dispute within 30 Days after receipt of such
notice by the other Party, the Parties shall submit the Dispute to mediation as set forth in
paragraph (c) below.




          (c) The mediation of any Dispute hereunder shall be conducted in accordance with the
Commercial Mediation Rules and Procedures of the American Arbitration Association (“AAA”).
Each Party shall have the right to be represented by counsel in any mediation. The Parties shall
attempt to agree upon an impartial mediator to mediate the Dispute, but if they are unable or fail
to appoint a mediator within ten Days of the filing of a written request for mediation with the
AAA, the AAA will appoint a qualified mediator to serve unless the Parties mutually agree to extend
such time period. The mediation shall be held in New York, New York within 30 Days of appointment
of the mediator unless the Parties mutually agree to hold the mediation at some other time or
place. Any opinion expressed by the mediator shall be strictly advisory and shall not be binding
on the Parties, nor shall any opinion expressed by the mediator be admissible or be made known to
the arbitrator in any arbitration proceedings. Costs of the mediation shall be borne equally by
the Parties, except that each Party shall be responsible for its own expenses.




          (d) If the Parties are unable or fail to settle their Dispute through mediation as provided in
paragraph (c) within 10 Days after the commencement of the mediation, the Dispute shall be settled
by binding arbitration administered by the AAA in accordance with its Commercial Arbitration Rules
and Procedures unless the Parties mutually agree in writing that such Dispute shall no longer be
subject to this Section 8.09. Either Party who fails or refuses to submit to such binding
arbitration shall bear all costs and expenses incurred by such other Party in compelling
arbitration of such Dispute. With respect to a Dispute in which the claims or amounts in
controversy do not exceed $200,000, a single arbitrator shall be chosen and shall resolve the
Dispute. In such case, the arbitrator shall have authority to render an award up to but not
exceeding $200,000. With respect to a Dispute in which the claims or amounts in controversy exceed
$200,000, such Dispute shall be decided by a majority vote of a panel of three arbitrators, with
each Party appointing one arbitrator, and with the Party-appointed arbitrators appointing the
third, neutral arbitrator, who will act as chairperson of the tribunal. For any Dispute being
decided by a panel of three arbitrators, the determination of any two of the three arbitrators will
constitute the determination of the arbitration panel; provided, however, that all three
arbitrators on the arbitration panel must actively participate in all hearings and deliberations.
Each arbitrator selected pursuant to this paragraph (d) (i) shall be qualified by training,
education and experience to rule on the issues presented, (ii) shall an AAA approved arbitrator and
(iii) shall not be an employee, agent or representative of either Party or of an Affiliate of
either Party. The arbitration shall be held in New York, New York unless the Parties mutually
agree in writing to hold the arbitration at some other place. The Parties expressly agree to
consolidation of arbitral proceedings that concern common issues of fact or law. The award



-47-









 






shall be in writing and shall state the reasoning on which the award rests. A judgment on the award may
be entered in any court of competent jurisdiction.



          (e) In the event that a Dispute is submitted to arbitration pursuant to paragraph (d) above,
either Party may request limited document production from the other Party of specific and
expressly relevant documents, with the reasonable expenses of the producing Party incurred in such
production paid by the requesting Party. Any such discovery (which rights to documents shall be
substantially less than document discovery rights prevailing under the Federal Rules of Civil
Procedure) shall be conducted expeditiously. Depositions, interrogatories or other forms of
discovery (other than the document production, set forth above) shall not occur except by consent
of the Parties. All discovery requests will be subject to the Parties’ rights to claim any
applicable privilege. The arbitrator or the arbitration panel, as the case may be (in either case,
the “Arbitrator”), will adopt procedures to protect the proprietary rights of the Parties
and to maintain the confidential treatment of the arbitration proceedings (except as may be
required by Law). Subject to the foregoing, the Arbitrator shall have the power to issue subpoenas
to compel the production of documents relevant to the Dispute, to impose sanctions, to permit or
order depositions and discovery and to take such other actions as the Arbitrator deems necessary to
the same extent a judge could pursuant to the Federal Rules of Civil Procedure and applicable Law.




          (f) The Arbitrator shall have full power and authority to determine issues of arbitrability
but shall otherwise be limited to interpreting or construing the applicable provisions of this
Agreement, and will have no authority or power to limit, expand, alter, amend, modify, revoke or
suspend any condition or provision of this Agreement or to award damages in excess of the amount or
other than the types allowed by this Agreement. In addition, the Arbitrator may not, in any event,
make any ruling, finding or award that does not conform to the terms and conditions of this
Agreement. If a Party fails or refuses to appear at and participate in an arbitration hearing
after due notice, the Arbitrator may hear and determine the controversy upon evidence produced by
the appearing Party.




          (g) At any time after submission of a written notice of Dispute, either Party may request a
court of competent jurisdiction to grant interim measures of protection (i) to preserve the status
quo pending resolution of the Dispute, (ii) to prevent the destruction of documents and other
information or things related to the Dispute, or (iii) to prevent the transfer, dissipation or
hiding of assets. A request for such interim measures to a judicial authority shall not be deemed
incompatible with the provisions of this Section 8.09 or a waiver of a Party’s right to arbitrate.




          (h) By submitting a written notice of Dispute pursuant to paragraph (b) above, all applicable
statutes of limitations and defenses based on the passage of time shall be tolled while
negotiation, mediation and arbitration proceedings are diligently conducted pursuant to this
Section 8.09. The Parties will take such action, if any, required to effectuate such tolling.




          (i) The costs of the arbitration (including the Arbitrator) shall be borne equally by the
Parties, except that each Party shall be solely responsible for its own costs and expenses,
including the costs of legal representation and assistance and for experts.





-48-









 








          (j) Except as required by Law, the Parties shall hold, and shall cause their respective
officers, directors, employees, agents and other representatives to hold, the existence, content
and result of mediation or arbitration in confidence except as may be required by Law or in order
to enforce any award. Each of the Parties shall request that any mediator or arbitrator comply
with such confidentiality requirement.




          (k) Unless otherwise agreed in writing, the Parties will continue to provide service and honor
all other commitments under this Agreement during the course of dispute resolution pursuant to the
provisions of this Section 8.09 with respect to all matters not subject to such Dispute.




          (l) The interpretation of the provisions of this Section 8.09, only insofar as they relate to
the agreement to arbitrate and any procedures pursuant thereto, shall be governed by the United
States Arbitration Act, 9 U.S.C., §§ 1-14, as the same may be amended from time to time, and other
applicable federal Law.




          Section 8.10. Applicable Law. This Agreement And The Rights And Obligations Of
The Parties Hereunder Shall Be Governed By And Construed In Accordance With The Laws Of The State
Of New Jersey, Without Giving Effect To The Conflict Of Law Principles Thereof.




          Section 8.11. Submission to Jurisdiction. Each Party hereby irrevocably submits to
the non-exclusive personal jurisdiction of any state or federal court sitting in the State of New
Jersey, over any claim or dispute arising out of or relating to this Agreement. Each Party hereby
irrevocably agrees that service of process may be made on it by mailing, by certified mail, a copy
of such process to such Party’s registered agent for service of process. Each Party agrees that a
final non-appealable judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.
Nothing in this Section 8.11 shall affect the right of either Party to serve legal process in any
other manner permitted by Law or affect the right of either Party to bring any action or proceeding
in the courts of any other jurisdictions, domestic or foreign.




          Section 8.12. Prevailing Party Costs. Except as otherwise provided in Section 8.09,
if either Party commences an action against the other Party to enforce any of the terms, covenants,
conditions or provisions of this Agreement or because of a breach by a Party of its obligations
under this Agreement, the prevailing Party in any such action shall be entitled to recover its
costs and expenses, including reasonable attorneys’ fees and costs of court, incurred in connection
with the prosecution or defense of such action, from the losing Party.




          Section 8.13. Entire Agreement. This Agreement sets forth all of the promises,
agreements, conditions, understandings, warranties and representations between the Parties with
respect to the matters contemplated hereby, and supersedes all prior agreements, arrangements and
understandings between the Parties, whether written, oral or otherwise. There are no promises,
agreements, conditions, understandings, warranties or representations, oral or written, express or
implied, between the Parties concerning the subject matter hereof except as set forth herein.




-49-









 








          In Witness Whereof, the Parties have caused this Agreement to be executed by their
duly authorized representatives as of the date first above written.




	 	 	 	 	 	 	 
	 	 	Sterling Chemicals, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ JOHN R. BEAVER 	 	 
	 

	 	 	 	 	 	 
	 

	 	Printed Name:	 	John R. Beaver 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	SVP-Finance & Chief Financial
Officer 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	May 20, 2008 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	BASF Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ PETER L. CELLA 	 	 
	 

	 	 	 	 	 	 
	 

	 	Printed Name:	 	Peter L. Cella 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	May 22, 2008 	 	 
	 

	 	 	 	 	 	 






-50-









 








Exhibit A




Esters Unit Fixed Costs Categories




Direct Fixed Costs:




	 	 	 	 	 	 	 
	 	 	 	 	PPI Adjustment	 	 
	 	 	 	 	(for use only in	 	 
	 	 	 	 	determining the	 	 
	 	 	 	 	Threshold Fixed	 	Initial Annual Amount
	General Category	 	Subcategories	 	Costs Amount)	 	(for Year 2008)
	Personnel

	 	• Wages
	 	*****
	 	*****
	 

	 	• Wages Overtime	 	 	 	 
	 

	 	• Wages Overhead	 	 	 	 
	 

	 	• AS/PS Coverage	 	 	 	 
	 

	 	• Salaries	 	 	 	 
	 

	 	• Salaries Overtime	 	 	 	 
	 

	 	• Salaries Overhead	 	 	 	 
	 
	 	 	 	 	 	 
	Maintenance

	 	• Repair M&E
	 	*****
	 	*****
	 

	 	• I&E Repair	 	 	 	 
	 

	 	• Zone Overhead	 	 	 	 
	 

	 	• Analyzer	 	 	 	 
	 

	 	• Repair Other	 	 	 	 
	 
	 	 	 	 	 	 
	Other Direct

	 	• Supplies
	 	*****
	 	*****
	 

	 	• Freight	 	 	 	 
	 

	 	• Training	 	 	 	 
	 

	 	• Minor Start-Up Expenses	 	 	 	 
	 

	 	• Rental Equipment	 	 	 	 
	 

	 	• Fee-Legal	 	 	 	 
	 

	 	• Fee-Other	 	 	 	 
	 

	 	• Memberships/Subscriptions	 	 	 	 
	 

	 	• Outside Contractors	 	 	 	 
	 

	 	• Consultants	 	 	 	 
	 

	 	• Travel	 	 	 	 
	 

	 	• Employees Meals	 	 	 	 
	 

	 	• Sales Taxes	 	 	 	 
	 

	 	• Demurrage	 	 	 	 
	 
	 	 	 	 	 	 
	Materials Handling

	 	 	 	*****
	 	*****






A-i









 






Allocated Fixed Costs:




	 	 	 	 	 	 	 
	 	 	 	 	 	 	Initial Annual Amount
	General Category	 	Subcategories	 	PPI Adjustment	 	(for Year 2008)
	Data Processing

	 	• Data Processing
	 	*****
	 	*****
	 

	 	• Data Processing Innovation	 	 	 	 
	 

	 	• ICS Application Development	 	 	 	 
	 
	 	 	 	 	 	 
	Laboratory

	 	 	 	*****
	 	*****
	 
	 	 	 	 	 	 
	Environmental(1)

	 	• Biological Treatment
	 	*****
	 	*****
	 

	 	• Waste Management	 	 	 	 
	 

	 	• Primary Waste Treatment	 	 	 	 
	 

	 	• Secondary Waste Treatment	 	 	 	 
	 

	 	• Solid Waste	 	 	 	 
	 
	 	 	 	 	 	 
	Factory Indirect Expense

	 	• FIE Allocation
	 	*****
	 	*****
	 

	 	• Janitorial Services	 	 	 	 
	 

	 	• PSM/RC Engineering	 	 	 	 
	 
	 	 	 	 	 	 
	Telephones

	 	 	 	*****
	 	*****
	 
	 	 	 	 	 	 
	Indirect Depreciation

	 	 	 	*****
	 	*****
	 
	 	 	 	 	 	 
	SG&A

	 	 	 	*****
	 	*****
	 
	 	 	 	 	 	 
	Property Taxes

	 	 	 	*****
	 	*****
	 
	 	 	 	 	 	 
	Shipping

	 	 	 	*****
	 	*****
	 
	 	 	 	 	 	 
	Insurance

	 	• Property Damage/Business Interruption
	 	*****)
	 	*****
	 

	 	• Liability	 	 	 	 
	 
	 	 	 	 	 	 
	Routine Engineering

	 	• Inspection & Corrosion
	 	*****
	 	*****
	 

	 	• Plant Engineering	 	 	 	 
	 

	 	• Process Engineering	 	 	 	 








 




			
	(1)	 	Environmental costs will be adjusted if new Laws increase the cost of compliance.
	 
	(2)	 	See separate adjustment mechanism included in definitions of Liability Insurance Premium
Charges and Property Damage/Business Interruption Insurance Premium Charges.






A-ii









 








Exhibit B




Esters Unit Variable Costs Categories




	 	 	 	 	 
	 	 	 	 	2007 Usage per Pound of
	Category	 	Engineering Units	 	Product
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****
	 
	 	 	 	 
	*****

	 	*****
	 	*****







B-i











 





Exhibit C




Marine Provisions


          Section 1. Definitions. Capitalized terms used in these Marine Provisions shall have
the following respective meanings, except as otherwise provided herein or as the context shall
otherwise require:





     “Agreement” means the sales, purchase, supply, exchange, conversion, processing,
production or other agreement to which these Marine Provisions are attached or into which
these Marine Provisions are incorporated by reference.




     “Arrival Date” means, with respect to any Vessel, the calendar day (commencing at
0001 of such calendar day) on which such Vessel is scheduled to arrive at the Terminal in
accordance with Section 2 below.




     “Cargo” means, with respect to any Vessel, the goods, raw materials or products
which are to be loaded onto or unloaded from such Vessel.




     “ETA” means, with respect to any Vessel, the estimated time of arrival of such
Vessel.




     “NOR” means, with respect to any Vessel, Notice of Readiness of such Vessel.




     “Party” has the meaning specified in the Agreement.




     “Ship” means a boat, ship, tanker or other inland or marine water vessel.




     “Sterling” means Sterling Chemicals, Inc.




     “Terminal” means a plant or terminal facility delivering or receiving Cargo.




     “Terminal Party” means the Party responsible for delivering the Cargo onto or for
receiving the Cargo from a Vessel.




     “Tow” means any combination of Vessels functioning as a single unit.




     “Vessel” means a barge or Ship.




     “Vessel Party” means the Party responsible for providing the Vessel, irrespective
of whether such Vessel is delivering or receiving the Cargo.



          Section 2. Vessel Nomination. (a) Ships. Not less than seven days prior to
the ETA of a Ship, the Vessel Party shall provide a written nomination for such Ship to the
Terminal Party. The Terminal Party shall confirm the nomination in writing based on the dock
availability and approval by Sterling’s vetting process. If the Terminal Party does not accept the
Ship then





C-i









 







the Terminal Party shall indicate each unacceptable item in writing. Once all of the items are
resolved, the Terminal Party shall accept the Ship.




          (b) Barges. Not less than five days prior to the ETA of a barge, the Vessel Party
shall provide the nomination for such barge to the Terminal Party with an arrival window of no more
than three days. The Terminal Party shall confirm the nomination in writing based on the dock
availability and approval by Sterling’s vetting process. If the Terminal Party does not accept the
barge then the Terminal Party shall indicate each unacceptable item in writing. Once all of the
items are resolved, the Terminal Party shall accept the barge.




          Section 3. Notice of Arrival. The Notice of Arrival shall be given by the Vessel to
the Terminal Party by telephone or radio not less than 72 hours (or within reason for a given
Cargo) prior to the ETA of such Vessel for purposes of fixing the berthing time. The ETA shall be
reconfirmed daily until the Vessel arrives for loading. When the Vessel’s ETA is within 24 hours
then the master of the Vessel shall promptly notify the Terminal Party of the new ETA if the ETA
has changed by three hours or more (plus or minus). In no event shall notice of arrival time
constitute an agreement to alter the laycan or the arrival window.




          Section 4. Vessel Requirements. Each Vessel nominated by a Vessel Party shall meet
the general vessel requirements of the Terminal. In no event will nomination or acceptance of
confirmation of a Vessel be deemed or constitute a waiver of such requirements.




          Section 5. Notice of Readiness. (a) Ships. After a Ship has received all
port clearances and arrived at the anchorage or other place of waiting, and is otherwise in all
respects ready to receive or discharge the goods or products, the master of the Ship (or his agent)
shall tender NOR of the Ship to the Terminal by letter, telegraph, telex, facsimile or electronic
message means or other written communication. The Terminal shall attempt to berth the Ship on an
equal basis with all other Vessels arriving at the port to load or discharge cargoes in the same
order as the order in which the Terminal receives NORs from the Ship and all other Vessels. The
giving or acceptance of NOR shall not be deemed or construed to constitute an acceptance or change
in the Ship’s laycan. If a Ship tenders NOR prior to 0001 hours, local time, of the first day of
the laycan, such NOR shall not be effective until 0001 hours, local time, of the first day of the
laycan, unless the Terminal elects to accept the Ship earlier, in which case used laytime shall
commence when the Ship is all fast. Unless the Terminal Party consents otherwise in writing, in no
event will laytime commence prior to 0600 on the first day of the laycan.




          (b) Barges. When the barge is four hours from arriving at the Terminal, the barge
owner, agent or pilot shall notify the Terminal. The Terminal shall attempt to berth the barge on
an equal basis with all other Vessels arriving at the port to load or discharge cargoes in the same
order in which the Terminal receives the four hour notifications or NORs from the barge or Ship,
respectively.




          Section 6. Vessel Berths. The Terminal shall provide a berth for the Vessel at which
the Vessel can always lie safely afloat (within the specified maximum drafts and specified minimum
water depths, free of all wharfage and dockage dues. All duties and other charges on
the Vessel, including, without limitation, those incurred for tugs and pilots, mooring masters,




C-ii









 







other port costs and tax on services for Cargo transfer, shall be borne by the Vessel. Neither the
Terminal nor the Terminal Party shall be deemed to warrant the safety of any channel, fairway,
anchorage or other waterway used in approaching the designated berth or be liable for any loss,
damage, injury or delay to Vessel resulting from the use of such waterways not caused by its fault
or neglect. The Terminal Party shall have the right to shift the Vessel from one berth to another,
or to anchorage; provided, however, that the Terminal Party shall be responsible for all costs and
expenses incurred in such shifting or anchoring of the Vessel, with the time consumed in the
shifting counted as used laytime. Expenses incurred for any shifting of the Vessel within a port
by one of the Parties hereto for the sole convenience of such Party shall be for that Party’s
account.




          Section 7. Laytime. (a) Ships. The allowed laytime shall be either a
specified number of hours or at a pumping rate as defined in the Agreement, subject to a 12-hour
minimum. If allowed laytime is not specified in the Agreement, then laytime allowed shall be the
number of hours or at the pumping rate (in metric tons per hour) set forth below and based on Cargo
lot size, or as may otherwise be mutually agreed between the Parties. If the Terminal will not
permit loading or discharging of Cargo within the specified time or at the agreed pumping rate,
then the additional time necessary therefore shall be deemed to be used laytime.




	 	 	 	 	 
	Cargo Lot Size	 	Loading/Unloading Rate
	3 6,000 MTs
	 	*****
	3 2,000 but < 6,000 MTs
	 	*****
	3 1,000 but < 2,000 MTs
	 	*****
	< 1,000 MTs
	 	*****





If a Vessel arrives on the first day of the laycan, laytime shall commence on the later of (i) six
hours after acceptance of NOR from the Terminal to load or discharge, and (ii) Vessel arrival and
completion of mooring at berth (all fast). The Terminal Party shall always be entitled to the six
hours tendering allowance, if needed, whether or not allowed laytime has expired and whether or not
the Ship is on demurrage. In the event a Ship arrives prior to the commencement of laydays,
laytime shall not commence before 0600 hours local time on the date of commencement of laydays
unless the Ship is berthed prior to this time with the Terminal Party’s consent. In the event the
Terminal Party agrees to load the Ship prior to commencement of laydays, all such time to be
credited against any time the Ship is on demurrage. For purposes of this clause, time to count
when the Ship commences loading.




          (b) Barges. The allowed laytime shall be either a specified number of hours or at a
pumping rate as defined in the Agreement, subject to an 8-hour minimum. If allowed laytime is not
specified in the Agreement, then laytime allowed shall be the number of hours or at the pumping
rate (in metric tons per hour) set forth below and based on Cargo lot size, or as may otherwise be
mutually agreed between the Parties. If the Terminal will not permit loading or discharging of
Cargo within the specified time or at the agreed pumping rate, then the additional time necessary
therefore shall be deemed to be used laytime.




C-iii









 








	 	 	 	 	 
	Cargo Lot Size	 	Loading/Unloading Rate
	3 30,000 BBLs
	 	*****
	3 20,000 but < 30,000 BBLs
	 	*****
	< 20,000 BBLs
	 	*****





If the barge arrives on the first day of the arrival window, laytime shall commence when the barge
is spotted at the dock and the mooring at berth (all fast) is completed but no earlier than 0400
hrs.





     (c) Time consumed due to any of the following shall not count as used laytime:




     (i) any delay to the Vessel in reaching or departing the berth (including weather delays)
caused by any reason or condition not reasonably within the Terminal Party’s control;




     (ii) any time consumed by the Vessel in moving from port anchorage to all fast in berth
including, but not limited to, awaiting daylight, tide, tug boats or pilots or time consumed
by the Vessel lining up;




     (iii) any delay due to the Vessel’s condition, breakdown or failure to maintain agreed
pumping rates, or inability of the Vessel’s facilities to load or discharge Cargo;




     (iv) any delay due to prohibition of loading or discharging at any time by the owner or
operator of the Vessel or by the port authorities, unless such prohibition is caused by the
Terminal’s failure to comply with applicable laws or regulations;




     (v) any delay due to Vessel bunkering or provisioning;




     (vi) any delay due to Vessel discharging or shifting of ballast, slops or contaminated
cargo;




     (vii) any delay due to pollution or threat thereof caused by any defect in the Vessel, or
any act or omission of the master or crew of the Vessel;




     (viii) any delay due to the Vessel’s violation of the operating and/or safety regulations
of the Terminal, noncompliance with federal or state law or Coast Guard or other applicable
regulations, or failure to obtain or maintain an oil pollution responsibility certificate;




     (ix) any delay caused by strike, lockout, work stoppage or restraint of labor of master,
officers or crew of the Vessel, or of tugboats or pilots; and




     (x) any time spent awaiting customs and immigration clearance.


Used laytime shall cease upon disconnection of hoses or cargo arms after all Cargo has been loaded
or discharged. The Vessel shall vacate the berth expeditiously, consistent with safe operating
practices (unless permission to remain is given).




C-iv









 








          Section 8. Demurrage. Demurrage will be paid for all time that used laytime exceeds
the allowed laytime at the rate specified in the Agreement. If the demurrage rate is not specified
in the Agreement, demurrage shall be paid based upon parcel size and at the applicable charter
party rate, provided that the Vessel Party gave the Terminal Party the laytime and demurrage rate
information with the vessel nomination. If the Terminal Party has this information and accepts the
vessel nomination, the demurrage, if any, will be paid at the charter party rate. If the demurrage
rate was not provided, then the Terminal Party may elect to pay based on the schedule below.




	 	 	 	 	 
	Ship Size	 	Rate
	3 40,000 DWT
	 	*****
	3 25,000 but < 40,000 DWT
	 	*****
	3 10,000 but < 25,000 DWT
	 	*****
	< 10,000 DWT
	 	*****





For Ships with parcel sizes less than 1,000 MT, the Terminal Party shall pay demurrage, if any, at
$7,500/day prorated unless mutually agreed otherwise.




	 	 	 	 	 
	Barge Size	 	Rate
	3 30,000 BBLs
	 	*****
	3 20,000 but < 30,000 BBLs
	 	*****
	3 10,000 but < 20,000 BBLs
	 	*****





For barges with parcel sizes less than 1,000 MTs, the Terminal Party shall pay 50% of any
applicable demurrage. Demurrage incurred in port by reason of fire, explosion, storm, weather,
strike, lockout, work stoppage or restraint of labor or by breakdown of machinery or equipment in
or about the Terminal shall be paid for at one-half the rate otherwise provided for demurrage. The
Terminal Party will be responsible for demurrage if such failure results from the Terminal Party’s
shortage of cash or anything reasonably attributable to the Terminal Party’s own actions (including
delays at the Terminal causing loading or unloading to exceed the allowed laytime) or preventable
by the Terminal Party, including through the expenditure of sums which are reasonable in light of
the likelihood of the event occurring or the probable effect is such event were to occur and, if
such demurrage has been paid by the Vessel Party, the Terminal Party will reimburse the Vessel
Party for such demurrage. Demurrage claims must be submitted within 90 days from the date of
completion of discharge of the Cargo and must be accompanied by the Notice of Readiness, the
Master’s Port Log with Pumping Record, the Agent’s Port Log, the Laytime Statement, the Charter
Party Agreement and telexes or other documentation supporting original Ship nomination. Any claim
for demurrage which is not accompanied by such documentation shall be deemed waived and forever
barred.




          Section 9. Delivery, Title and Risk. Delivery of Cargo shall be to or from the
Terminal designated by the Terminal Party onto or from the Vessel nominated by the Vessel Party in
accordance with the terms of the Agreement. Unless otherwise specified in the






C-v









 







Agreement, title to,
and risk of loss of, all or any of the Cargo shall pass at the flange connection between the
Vessel’s cargo manifold and the hose connection at the Terminal.




          Section 10. Quantity and Quality. Unless otherwise provided in the Agreement, Cargo
quantity and quality shall be determined by an independent and mutually acceptable inspector, the
cost of which shall be shared equally between the Parties, and whose determinations as to quantity
and quality shall be conclusive and binding upon the Parties.




          Section 11. Cargo Vulnerable To Heating (Styrene Monomer Only). The Vessel Party
shall not stow the Cargo in tanks adjacent to tanks which contain heatable cargoes or are otherwise
subject to heating.




          Section 12. Hoses. The Terminal Party agrees to connect the hose at the shore and to
use the shore facility crane to lift the hose to the Vessel’s manifold where the Vessel Party
agrees to connect and disconnect hoses to the Vessel’s manifold.




          Section 13. Cleaning. The Vessel shall arrive at the Terminal with all cargo tanks,
pumps and pipes suitably clean to the satisfaction of the Terminal Party’s Inspector. The Vessel
Party shall ensure that all traces of sediment, tank washings or chemicals, if used, are removed
from tanks, pumps and pipes intended for carriage of designated Cargo. Any delays as a result of
the Vessel arriving at the Terminal and not being suitable condition to load the designated Cargo,
shall be for the Vessel Party’s account and the laytime shall not count.




          Section 14. Gangway. The Terminal Party shall not be responsible for providing or
assisting in the set up of the gangway. Any time lost shall be for the Vessel Party’s account.




          Section 15. Texas City Terminal Restrictions. No Vessel shall be allowed to lighter,
engage in slop disposal, clean tanks while on berth or bunker.




          Section 16. Excess Berth Occupancy. If, after disconnection of cargo hoses, the
Vessel remains at the berth exclusively for the Ship’s purposes, other than by reasons of Force
Majeure, the Vessel Party shall be responsible for direct costs incurred by the Terminal Party.




          Section 17. Conflict. In the event of any conflict between these Marine Provisions
and the provisions of the Agreement, the provisions of the Agreement shall prevail and be given
effect.




          Section 18. Pollution Prevention. Regardless of the nature of the Cargo carried, all
Vessels and all towboats and barges transporting any of the Cargo shall have pollution liability
insurance coverage that is sufficient to at least meet all applicable statutory pollution liability
limits.




          Section 19. Damage and Injury. The Vessel and the Vessel Party assume full
responsibility for any injury to and/or death of persons, as well as damage sustained by wharves,
berths or docks owned, operated or maintained by the Terminal and the Terminal Party arising out of
the negligent or improper operation of the Vessel, tows, barges, or any other waterborne





C-vi









 







craft,
either owned or operated by the Vessel or the Vessel Party, or being operated by subcontractors by
the Vessel or the Vessel Party. The Vessel and the Vessel Party shall fully indemnify the Terminal
and the Terminal Party for any such injury, death or damage.




          Section 20. Terminal Regulations. All Vessels will comply with any regulations
specific to the Terminal. Any Vessel not in compliance with such regulations may not be permitted
to dock or may be directed to disconnect and leave the dock or berth, with all and any resulting
costs and expenses borne solely by, and for the account of, the Vessel Party.





C-vii