Capital Securities of the Borrowers or any Restricted Subsidiaries, or the making ofany payment or distribution on account of, or setting apart assets for a sinking orother analogous fund for, the purchase, redemption, defeasance, retirement or otheracquisition of any class of Capital Securities of the Borrowers or any RestrictedSubsidiary or any warrants or options to purchase any such Capital Securities,whether now or hereafter outstanding, or the making of any other distribution inrespect thereof, either directly or indirectly, whether in cash or property,obligations of the Borrowers or any Restricted Subsidiary or otherwise, other thanany such dividends, payments or distributions that are payable to any Borrower orany Restricted Subsidiary (so long as such dividend, payment or distribution payableto a Restricted Subsidiary is not payable from a Borrower).     “Unrestricted Subsidiary” means (a) any Subsidiary of the Company thatis designated by the Board of Directors of the Company as an Unrestricted Subsidiarypursuant to a resolution of the Board of Directors of the Company and (b) anySubsidiary of an Unrestricted Subsidiary, but, in the case of each of (a) and (b)above, only to the extent that such Subsidiary:          (i) has no Indebtedness other than Non-Recourse Debt;          (ii) except as permitted by Section 7.2.12, is not party to any agreement,contract, arrangement or understanding with the Company or any Restricted Subsidiaryof the Company unless the terms of any such agreement, contract, arrangement orunderstanding are, in the good faith judgment of the Board of Directors of theCompany no less favorable to the Company or such Restricted Subsidiary than thosethat might be obtained at the time from Persons who are not Affiliates of theCompany;          (iii) is a Person with respect to which neither the Company nor any of itsRestricted Subsidiaries has any direct or indirect obligation (A) to subscribe foradditional Capital Securities or (B) to maintain or preserve such Person’s financialcondition; and          (iv) is not a guarantor of, or otherwise directly or indirectly obligated toprovide credit support, for the Senior Secured Notes, the Loans or any otherIndebtedness of the Borrowers or any Restricted Subsidiary.     (b) Section 1.1 of the Credit Agreement is hereby amended by adding thereto each ofthe following definitions in the correct alphabetical order:     “Liquidity Requirements” means, with respect to any SubjectTransaction, (a) that both immediately before and immediately after giving effect toall or any part of such Subject Transaction:          (i) no Default or Event of Default exists;
 

 
          (ii) the sum of (A) Excess Availability plus (B) the Borrowers’ cash on handwhich is on deposit with Approved Depository Banks that are subject to ControlAgreements is not less than $50,000,000;          (iii) there are no outstanding Loans; and          (iv) no accounts payable of the Borrowers and their Restricted Subsidiaries(including open accounts extended by suppliers on normal trade terms in connectionwith purchases of goods and services) are overdue other than (A) such accountspayable with respect to which a good faith dispute exists and adequate reserves inconformity with GAAP have been established on the books of such Borrower or suchRestricted Subsidiary (in an aggregate amount not to exceed $1,000,000) and (B) anyother accounts payable (in an aggregate amount not to exceed $500,000); and     (b) if such Subject Transaction involves an amount in excess of $1,000,000, theCompany has, concurrently with the consummation of such Subject Transaction,delivered to the Administrative Agent an Officers’ Certificate, in form andsubstance reasonably satisfactory to the Administrative Agent, certifying that, inthe opinion of the signers, each of the requirements set forth in clause (a) abovehave been satisfied in connection with such Subject Transaction.     “Preferred Stock Amendments” is defined in Section 7.2.11.     “Subject Transaction” means a Preferred Stock Amendment or anytransaction or series of transactions described in Section 7.2.4(n)(ii),Section 7.2.5(b), Section 7.2.7, Section 7.2.8(b)(ii) orSection 7.2.11.     “Tolling Arrangement” means any transaction or series of transactionsbetween a Borrower and any other Person pursuant to which such Borrower providessuch other Person with raw materials that are processed by such Person intobiodiesel which will be owned by such Borrower.”     (c) The definition of “Net Disposition Proceeds” in Section 1.1 of the CreditAgreement is hereby amended by adding the following phrase immediately after the words “PermittedDisposition” in the fourth line therein:     or the Dispositions permitted under Section 7.2.10(c) or (d),     (d) Section 7.2.1 of the Credit Agreement is hereby amended and restated in itsentirety to read as follows:     7.2.1 Business Activities. No Borrower will, nor will any Borrowerpermit any of its Restricted Subsidiaries to, engage in any business activity except
 

 
(a) the manufacturing and distributing of selected petrochemicals, (b) any businessor activity similar, ancillary or reasonably related thereto or a reasonableextension, expansion or development of, such businesses or ancillary thereto, (c)any business or activity carried out or performed utilizing any of the Non-FacilityAssets or (d) the Tolling Arrangement.     (e) Section 7.2.4(n) of the Credit Agreement is hereby amended and restated in itsentirety to read as follows:     (n) (i) the Borrowers may make other Investments (including Investments inUnrestricted Subsidiaries and Restricted Subsidiaries) that do not exceed $3,000,000in the aggregate at any time outstanding, and (ii) provided that each of theLiquidity Requirements is satisfied, the Borrowers may make any other Investments(including Investments in Unrestricted Subsidiaries and Restricted Subsidiaries) (x)that do not exceed $25,000,000 individually (or when taken together with any seriesof related Investments) or (y) that exceed $25,000,000 individually (or when takentogether with any series of related Investments) with the prior written consent ofthe Lenders; and     (f) Section 7.2.5 of the Credit Agreement is hereby amended and restated in itsentirety to read as follows:     7.2.5 Restricted Payments, etc. The Borrowers will not, and will notpermit any of their Restricted Subsidiaries to, declare or make a RestrictedPayment, or make any deposit for any Restricted Payment, other than RestrictedPayments made by any Borrower to another Borrower or by any Restricted Subsidiariesto any Borrowers, except that (a) the Company may declare and deliver dividendspayable solely in (i) shares of its Capital Securities or in options, warrants orrights to purchase shares of its Capital Securities or (ii) any cash in lieu offractional shares which is payable on its preferred stock in accordance with theterms of the Company’s Organic Documents as in effect as of the Closing Date and (b)provided that each of the Liquidity Requirements is satisfied, the Company maydeclare and make any Restricted Payment.     (g) Section 7.2.7 of the Credit Agreement is hereby amended by adding the followingsentence to the end thereof:Notwithstanding anything to the contrary contained in this Section 7.2.7, theBorrowers may redeem, retire, purchase, defease or otherwise acquire any of theSenior Secured Notes or refinance or make any payment or prepayment of principal of,or premium or interest on, the Senior Secured Notes if (A) such redemption,retirement, purchase, defeasance, acquisition, refinancing, payment or prepayment ispermitted under Section 7.2.4 or (B) each of the Liquidity Requirements issatisfied.     (h) Section 7.2.8 of the Credit Agreement is hereby amended and restated in itsentirety to read as follows:
 

 
     7.2.8 Capital Securities. The Borrowers will not, and will notpermit any of their Restricted Subsidiaries to, (a) authorize or issue any CapitalSecurities (whether for value or otherwise) to any Person, other than (i) to anyBorrower and (ii) any issuances of Capital Securities of the Company if no Change inControl results therefrom, (b) become liable in respect of any obligation(contingent or otherwise) to purchase, redeem, retire, acquire or make any otherpayment in respect of any Capital Securities of any Borrower or any Subsidiary ofany Borrower or any option, warrant or other right to acquire any such CapitalSecurities unless (i) permitted to do so under Section 7.2.5 or (ii) each ofthe Liquidity Requirements is satisfied; or (c) authorize or issue any preferredstock or other equity securities having a mandatory redemption right in favor of theholder thereof unless such redemption right is not so exercisable (in the absence ofa contingency) on or prior to one year after the Maturity Date.     (i) Section 7.2.10 of the Credit Agreement is hereby amended and restated in itsentirety to read as follows:     7.2.10. Permitted Dispositions. The Borrowers will not, and willnot permit any of their Restricted Subsidiaries to, Dispose of any Properties(including Accounts, inventory and Capital Securities) to any Person in onetransaction or series of transactions other than (a) Permitted Dispositions, (b)Dispositions permitted by Section 7.2.9, (c) Dispositions of other property(real, mixed or personal, but excluding Accounts, inventory and Capital Securitiesof any Borrower or any Restricted Subsidiary) having an aggregate fair market valuenot to exceed $2,500,000 in the aggregate in any calendar year and so long as noDefault has occurred and is continuing or (d) Dispositions of Properties notconstituting either Capital Securities of the Borrowers or their RestrictedSubsidiaries (other than Dispositions permitted under Sections 7.2.5 or7.2.8) or the Company’s acetic acid manufacturing facility located in TexasCity, Texas (and improvements thereto) if, in the case of this clause (d), bothbefore and immediately after giving effect to such Disposition (i) no Default orEvent of Default exists and (ii) there are no outstanding Loans.     (j) Section 7.2.11 of the Credit Agreement is hereby amended and restated in itsentirety to read as follows:     7.2.11 Modification of Certain Agreements. The Borrowers will not,and will not permit any of their Restricted Subsidiaries to, consent to anyamendment, supplement, waiver or other modification of, or enter into anyforbearance from exercising any rights with respect to the terms or provisionscontained in the Existing Indenture, the Existing Senior Secured Notes, theIndenture, the Senior Secured Notes, any other Senior Secured Note Document or theterms of any preferred stock, if any, in any manner that is adverse to the Lendersin any material respect, provided, that if each of the Liquidity Requirements issatisfied, the Company may amend the terms of its preferred stock in order toeliminate or reduce the dividend payable thereunder and provide for the payment offees and
 

 
other amounts by the Company in connection therewith (the “Preferred StockAmendments”).     (k) Section 7.2.12 of the Credit Agreement is hereby amended and restated in itsentirety to read as follows:     7.2.12 Transactions With Affiliates. The Borrowers will not, and willnot permit any of their Restricted Subsidiaries to, enter into or cause or permit toexist any arrangement, transaction or contract (including for the purchase, lease orexchange of Properties or the rendering of services) with any Affiliate of any ofthem (other than with respect to the Preferred Stock Amendments in accordance withSection 7.2.11 or between Borrowers or as listed on Item 7.2.12 of theDisclosure Schedule) unless such arrangement, transaction or contract (a) (i) is onfair and reasonable terms no less favorable to the Borrowers or such RestrictedSubsidiary than they could obtain in an arm’s-length transaction with a Person thatis not an Affiliate and (ii) is of the kind which would be entered into by a prudentPerson in the position of the Borrowers or such Restricted Subsidiary with a Personthat is not one of their Affiliates, (b) is an Investment permitted by Section7.2.4, (c) is a non-recourse pledge of Capital Securities of an UnrestrictedSubsidiary of the Company for the benefit of lenders of an Unrestricted Subsidiaryof the Company, (d) is an operating or similar agreement with an Affiliate pursuantto which a Borrower or a Restricted Subsidiary operates the properties or assets ofany Affiliate in exchange for reimbursement of costs, with or without any additionalconsideration or (e) is a ground lease of Non-Facility Assets for nominal or noconsideration.     **Section 2. CONDITIONS PRECEDENT.**The parties hereto agree that this Amendment and theamendments to the Credit Agreement contained herein shall not be effective until the satisfactionof each of the following conditions precedent:     (a) **Execution and Delivery of this Amendment**. The Administrative Agent shall have receivedcounterparts of this Amendment, duly executed and delivered by the Borrower, the AdministrativeAgent and the Lenders.     (b) **Representations and Warranties**. Each of the representations and warranties made in thisAmendment shall be true and correct on and as of the date hereof and the Amendment Effective Dateas if made on and as of such dates, both before and after giving effect to this Amendment.     (c) **Fees**. The Administrative Agent shall have received payment of all outstanding fees andexpenses incurred by the Lender in connection with this Amendment, including, without limitation, anon-refundable amendment fee of $100,000, for the ratable benefit of the Lenders.
 

 
     (d) **Further Assurances**. Such further instruments and documents as may be necessary oradvisable, in the opinion of the Administrative Agent, to obtain the full benefits of thisAmendment and the Loan Documents.     **Section 3. REPRESENTATIONS AND WARRANTIES.**To induce the Administrative Agent and the Lendersto enter into this Amendment and to agree to the amendments contained herein, the Borrowerrepresents and warrants to the Administrative Agent and the Lenders as follows:     (a) **No Contravention, etc.**The execution, delivery and performance by the Borrower of thisAmendment have been duly authorized by all necessary corporate action and do not and will not(i) contravene the terms of any charter document of the Borrower, (ii) conflict with or resultin any breach or contravention of, or the creation of any Lien under, any document evidencingany contractual obligation to which the Borrower is a party or any order, injunction, writ ordecree of any governmental authority to which the Borrower is a party or its property issubject, or (iii) violate any requirement of law.     (b) **Governmental Authorization.**No approval, consent, exemption, authorization or otheraction by, or notice to, or filing with or approvals required under state blue sky securitieslaws or by any governmental authority is necessary or required in connection with the execution,delivery, performance or enforcement of this Amendment.     (c) **Binding Effect**. This Amendment, the Credit Agreement as amended hereby, and the otherLoan Documents constitute the legal, valid and binding obligation of the Borrower, enforceablein accordance with their terms, except as enforceability may be limited by applicablebankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generallyor by equitable principles relating to enforceability.     (d) **No Default**. No Default or Event of Default exists under any of the Loan Documents. Asof the date hereof, the Borrower is not in default under or with respect to (i) its charterdocuments or (ii) any material contractual obligation of the Borrower. The execution, deliveryand performance of this Amendment shall not result in any default under any contractualobligation of the Borrower in any respect.     (e) **Full Disclosure**. As of the date hereof, all information that has been made availableto the Administrative Agent and the Lenders by or on behalf of the Borrower in connection withthe transactions contemplated herein is true and correct in all material respects and does notcontain any untrue statement of a material fact or omit to state a material fact necessary inorder to make the statements maintained therein not materially misleading in light of thecircumstances under which such statements were made.     (f) **Representations and Warranties**. The representations and warranties set forth in theCredit Agreement and the other Loan Documents are true and correct on and as of the date hereof andthe Amendment Effective Date, except to the extent that any such representation or warranty relatesto a specific date, both before and after giving effect to the amendments
 

 
contemplated in this Amendment, as if such representations and warranties were being made on and asof the date hereof and the Amendment Effective Date.     **Section 4. MISCELLANEOUS**     (a) **Ratification and Confirmation of Loan Documents, etc**. Except for the specific amendmentsexpressly set forth in this Amendment, the terms, provisions, conditions and covenants of theCredit Agreement and the other Loan Documents remain in full force and effect and are herebyratified and confirmed, and the execution, delivery and performance of this Amendment shall notin any manner operate as a waiver of, consent to or amendment of any other term, provision,condition or covenant of the Credit Agreement or any other Loan Document. Without limiting thegenerality of the foregoing, nothing in this Amendment shall be deemed (i) to constitute a waiverof compliance or consent to noncompliance by the Borrower with respect to any term, provision,condition or covenant of the Credit Agreement or any other Loan Document; (ii) to prejudice anyright or remedy that the Administrative Agent or any Lender may now have or may have in thefuture under or in connection with the Credit Agreement or any other Loan Document; or (iii) toconstitute a waiver of compliance or consent to noncompliance by the Borrower with respect to theterms, provisions, conditions and covenants of the Credit Agreement made the subject hereof. Asa material inducement to the Administrative Agent and the Lenders to execute this Amendment, theBorrower hereby (i) acknowledges and confirms the continuing existence, validity andeffectiveness of the Liens granted under the Loan Documents, (ii) agrees that the execution,delivery and performance of this Amendment shall not in any way release, diminish, impair, reduceor otherwise affect such Liens, and (iii) acknowledges and agrees that the Liens granted underthe Loan Documents secure the payment of the Obligations under the Loan Documents, in the samepriority as on the date such Liens were created and perfected, and the performance and observanceby the Borrower of the covenants, agreements and conditions to be performed and observed by theBorrower under the Credit Agreement and the other Loan Documents, respectively.     (b) **Headings**. Section and subsection headings in this Amendment are included herein forconvenience of reference only and shall not constitute a part of this Amendment for any otherpurpose or be given any substantive effect.     (c) **APPLICABLE LAW**. **THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED ANDINTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OFLAW PRINCIPLES.**     (d) **Counterparts and Amendment Effective Date**. This Amendment may be executed in any numberof counterparts and by different parties hereto in separate counterparts, each of which when soexecuted and delivered shall be deemed an original (whether such counterpart is originally executedor an electronic or facsimile copy of an executed original), but all such counterparts togethershall constitute but one and the same instrument; signature pages may be detached from multipleseparate counterparts and attached to a single counterpart so that all signature pages arephysically attached to the same document. Delivery of this Amendment may be made by telecopy orelectronic transmission of a duly executed counterpart copy hereof;
 

 
provided that any such delivery by electronic transmission shall be effective only iftransmitted in .pdf format, .tif format or other format in which the text is not readily modifiableby any recipient thereof. This Amendment shall become effective when each of the conditionsprecedent set forth in Section 2 of this Amendment have been satisfied (the “AmendmentEffective Date”).     (e) **Loan Document**. This Amendment is a Loan Document and all of the provisions of the CreditAgreement which apply to Loan Documents apply hereto.     (f) **Fees and Expenses**. The Borrower agrees to pay on demand all costs and expenses of theAdministrative Agent in connection with the preparation, reproduction, execution, and delivery ofthis Amendment and the other documents prepared in connection herewith, including, withoutlimitation, the fees and out-of-pocket expenses of counsel for the Administrative Agent.     (g) **FINAL AGREEMENT. THIS AMENDMENT, TOGETHER WITH THE CREDIT AGREEMENT AND OTHER LOANDOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BYEVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARENO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.**[*Remainder of Page Intentionally Left Blank; Signature Pages Follow*]
 

 
     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed anddelivered by their proper and duly authorized officers as of the date first above written.      STERLING CHEMICALS, INC.,