Document:

exv4w20

 

Exhibit 4.20

July 30, 2003

U S Liquids Inc.

411 N. Sam Houston Pkwy. E.

Houston, TX 77060

Attention: Treasurer

     Re: Sixteenth Amendment, Waiver and Consent

Ladies and Gentlemen:

     Please refer to (a) the Second Amended and Restated Credit Agreement dated
as of February 3, 1999 (as previously amended, the “Credit Agreement”) among U
S Liquids Inc. (the “Company”), various financial institutions and Bank of
America, N.A. (formerly known as Bank of America National Trust and Savings
Association), as Agent; and (b) each of the following documents: the waiver
dated October 4, 2002, the waiver dated October 25, 2002, the waiver and
amendment dated as of December 23, 2002, the waiver and amendment dated January
14, 2003, the waiver and amendment dated as of January 31, 2003 (the “1/31/03
Waiver”), the waiver and amendment dated as of March 31, 2003 (the “3/31/03
Waiver”), the amendment and consent dated as of June 30, 2003, and the letter
agreement dated as of July 15, 2003 regarding the deferral of interest
(collectively, the “Prior Waiver Letters”).

     Capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Credit Agreement.

     1.     Introduction. The Company has requested that the Banks (a) consent to
a corporate restructuring transaction, (b) waive an existing covenant default,
(c) defer an upcoming required interest payment and (d) extend the Termination
Date.

     2.     Agreements Requiring the Consent of all Banks.

     (a)  Three Cities APA. The Banks consent to (i) the disposition of Romic
Environmental Technologies Corporation, Parallel Products of Kentucky, Inc., U
S Liquids of La., L.P. and USL Parallel Products of California (collectively
the “Released Subsidiaries”) contemplated by the Merger and Partnership
Purchase Agreement dated July 21, 2003 among ERP Environmental Services, Inc.,
the Company and various Subsidiaries, substantially in the form presented to
the Banks on July 21, 2003 (the “Three Cities APA”), and (ii) the release by
the Agent of the Released Subsidiaries from their obligations under the Loan
Documents upon consummation of such disposition; provided that (A) the Net Cash
Proceeds payable to the Company and its Subsidiaries under the Three Cities APA
shall not be less than $65,871,668 and (B) promptly upon the receipt thereof by
the Company or any Subsidiary, (I) such Net Cash Proceeds (excluding (i) the
ESRP Amount (as defined in Section 3(c)) and (ii) the Three Cities Escrow
Amount (as defined in this Section 2(a)) shall be applied to pay amounts then
due under the Credit Agreement in the following order of application: first, to
all costs and expenses of the Agent, second, to all Deferred Interest (as
defined in the 3/31/03 Waiver), third, to all unpaid waiver and amendment fees
(including, without limitation, the fee payable pursuant to Section 7), fourth,
to all other accrued and unpaid interest under the Credit Agreement, fifth, to
prepay

 

 

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July 30, 2003

Page 2

Loans and, sixth, to any other amount then payable under the Credit
Agreement; and (II) the Commitment Amount shall be reduced by an amount equal
to such Net Cash Proceeds minus the sum of (w) $2,256,273 plus (x) the ESRP
Amount plus (y) an amount equal to the $2,000,000 required to be escrowed by
the Company under the provisions of the Three Cities APA (the “Three Cities
Escrow Amount”) plus (z) all amounts described in clauses “first” through
“fourth” under the preceding clause (I).

     (b)  Deferral of Interest Payment. The Banks agree that the Company may
defer, to the earlier of August 29, 2003 and the date of the consummation of
the sale contemplated by the Three Cities APA (such earlier date, the “Deferred
Payment Date”), the payments of interest on the Loans (including previously
deferred interest) that are currently scheduled to be paid on July 31, 2003.
Such deferred interest shall be capitalized, shall bear interest at a per annum
rate equal to the sum of the Reference Rate plus 7.0% and, together with the
interest earned on such amount, shall constitute “Deferred Interest” under and
as defined in the 3/31/03 Waiver.

     (c)  Deferral of Commitment Reductions. The Banks agree that the Company
may defer to August 29, 2003 the $2,100,000 and $3,400,000 reductions in the
Commitment Amount that are currently scheduled to occur on July 31, 2003.

     (d)  Extension of Termination Date. The definition of “Termination Date”
set forth in Section 1.1 of the Credit Agreement is amended by deleting the
reference to “July 31, 2003” therein and substituting “August 29, 2003”
therefor.

     3.     Agreements Requiring the Consent of the Required Banks.

     (a)  Deferral of Waiver/Amendment Fees. The Banks agree that,
notwithstanding anything to the contrary contained in the 1/31/03 Waiver the
3/31/03 Waiver, the Company may defer payment of the waiver/amendment fees for
the 1/31/03 Waiver and the 3/31/03 Waiver until the Deferred Payment Date.

     (b)  Waiver. The Required Banks waive through August 29, 2003 any Event of
Default arising from the failure of the Company to comply with Section 10.26 of
the Credit Agreement for the month ended April 30, 2003.

     (c)  Application of Certain Proceeds under Three Cities APA. The Required
Banks agree that a portion of the Net Cash Proceeds (the “ESRP Amount”) payable
to the Company or any Subsidiary under the Three Cities APA shall be used to
fund officer and employee severance payments pursuant to the terms of an
Employee Severance and Retention Plan (the “ESRP”) maintained by the Company
and the Released Subsidiaries; provided that (i) the ESRP Amount shall not
exceed the lesser of (x) the maximum amount required under the terms of the
ESRP and (y) $2,460,000; and (ii) such proceeds shall (A) prior to the
execution of an escrow agreement or a trust agreement satisfactory to the Agent
(the “Escrow Agreement”), be delivered to and held by the Agent as cash
collateral, and (B) upon execution of the Escrow Agreement, be deposited into
an escrow account or a trust account (as applicable) maintained with a
financial institution (other than the Agent or any Bank) reasonably acceptable
to the Agent. The Escrow Agreement shall provide that the Company acknowledges
that such proceeds constituted the identifiable

 

 

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July 30, 2003

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collateral proceeds of the Agent at the time of their deposit into such
escrow or trust and that the Agent shall retain a lien and security interest
in, to, and on all rights of the Company to receive any funds from the escrow
or trust account and that the lien of the Agent in the ESRP Amount shall be
released only as and to the extent that any portion of the ESRP Amount is
properly paid to officers and employees pursuant to the ESRP, and that, upon
the determination that any officer or employee is not eligible to receive his
or her designated portion of the ESRP Amount pursuant to the ESRP, such portion
shall promptly be delivered to the Agent for application pursuant to Section
3(e) of the 3/31/03 Waiver.

     4.     Limitation on Outstandings. During the period from the date hereof
through the Termination Date, the Company shall not request, and the Banks
shall have no obligation to make (and the Issuing Bank shall have no obligation
to issue), any Loan or Letter of Credit.

     5.     Security Interest in Payments under Three Cities APA. The Company
acknowledges and agrees and shall undertake to further confirm (to the extent
requested by the Agent’s counsel) that the Agent shall have a continuing
perfected security interest in all amounts payable to the Company or any
Subsidiary under the Three Cities APA. Consistent with, but without limiting
the generality of any of the other provisions of this letter, upon each
determination that any portion of the Three Cities Escrow Amount is payable to
the Company, such amount promptly shall be delivered to the Agent for
application pursuant to Section 3(e) of the 3/31/03 Waiver.

     6.     Effectiveness. This letter shall become effective upon receipt by the
Agent of the following:

     (a)  counterparts hereof (or facsimiles thereof) executed by the Company
and the Required Banks; provided that the agreements set forth in Section 2
shall not become effective until receipt by the Agent of counterparts hereof
(or facsimiles thereof) executed by the Company and each Bank;

     (b)  a confirmation of the Guarantors substantially in the form of Exhibit
A;

     (c)  copies of certificates evidencing liability and casualty insurance of
the Company and its Subsidiaries, in form and substance acceptable to the
Agent;

     (d)  a copy of the operative documents governing the ESRP, which shall be
in form and substance acceptable to the Required Banks; and

     (e)  evidence that the Company has paid all fees and expenses of the Agent
(including all attorneys’ fees and charges) incurred on or prior to the date
hereof).

     7.     Amendment Fee. In consideration of the execution and delivery hereof
by the Banks, the Company agrees that it will pay to the Agent, for the account
of the Banks according to their respective Percentages, an amendment fee of
$200,000. Such fee shall be fully earned upon the effectiveness of this letter
and shall be payable on the Deferred Payment Date.

 

 

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July 30, 2003

Page 4

     8.     Miscellaneous.

     (a)  This letter is limited to the matters specifically set forth herein
and shall not be deemed to constitute a waiver or consent with respect to any
other matter whatsoever. The Agent and the Banks hereby reserve all of their
rights, powers and remedies under the Credit Agreement and applicable law.

     (b)  This letter may be executed in counterparts and by the parties hereto
on separate counterparts.

     (c)  This letter shall be governed by the laws of the State of Illinois
applicable to contracts made and to be performed entirely within such State.

     (d)  Except as otherwise expressly amended or modified herein, the Credit
Agreement and the Prior Waiver Letters (including the representations,
warranties, covenants and Events of Default contained therein) shall remain in
full force and effect and are hereby ratified and confirmed in all respects.

     (e)  The Agent and the Banks do not waive any, but instead hereby expressly
reserve all, claims, rights, power and remedies available to the Agent and the
Banks under the Credit Agreement and/or applicable law, including with respect
to (i) the Events of Default relating to the failure by the Company to comply
with the provisions of Sections 10.6.1, 10.6.3 and 10.27 of the Credit
Agreement and (ii) any other event (whether now existing or hereafter arising)
that constitutes an Event of Default or Unmatured Event of Default.

     (f)  The Company shall deliver to the Agent not later than August 4, 2003
copies of resolutions of the Board of Directors of the Company authorizing the
execution and delivery by the Company of this letter and the performance by the
Company of its obligations hereunder.

[Signature Pages Follow]

 

 

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Page 5

     Please acknowledge the foregoing by signing a copy of this letter and
returning it to the Agent.

	 	 	 	 	 
	 	 	Very truly yours,
	 	 	 	 	 
	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as Agent
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as a Bank
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	FLEET NATIONAL BANK
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	BANK ONE, NA
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	THE BANK OF NOVA SCOTIA
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	UNION BANK OF CALIFORNIA
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

 

 

U S Liquids Inc.

July 30, 2003

Page 6

	 	 	 	 	 
	 	 	COMERICA BANK
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	WELLS FARGO BANK, N.A.
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	BNP PARIBAS
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	ACKNOWLEDGED AND AGREED:	 	 
	 	 	 	 	 
	U S LIQUIDS INC.	 	 
	 	 	 	 	 
	By:	 	 	 	 
	 	 	

	 	 
	Title:	 	 	 	 
	 	 	

	 	 

 

 

U S Liquids Inc.

July 30, 2003

Page 7

CONFIRMATION

July      , 2003

	To:	 	Bank of America, N.A., individually and as Agent,

and the other financial institutions party to the

Credit Agreement referred to below

     Please refer to the amendment, waiver and consent letter dated as of the
date hereof (the “Amendment and Consent”) with respect to the Second Amended
and Restated Credit Agreement dated as of February 3, 1999 (as amended, the
“Credit Agreement”) among U S Liquids Inc., various financial institutions (the
“Banks”) and Bank of America, N.A. (formerly known as Bank of America National
Trust and Savings Association), as Agent (the “Agent”).

     Each of the undersigned hereby confirms to the Agent and the Banks that
such undersigned has received a copy of the Amendment and Consent and that,
after giving effect to the Amendment and Consent and the transactions
contemplated thereby, each Loan Document to which such undersigned is a party
continues in full force and effect and is the legal, valid and binding
obligation of such undersigned, enforceable against such undersigned in
accordance with its terms.

	 	 	 
	 	 	
EARTH BLENDS, INC.

MBO, INC.

THE NATIONAL SOLVENT EXCHANGE CORP.

PARALLEL PRODUCTS OF FLORIDA, INC.

PARALLEL PRODUCTS OF KENTUCKY, INC.

RE-CLAIM ENVIRONMENTAL LOUISIANA, L.L.C.

ROMIC ENVIRONMENTAL TECHNOLOGIES CORPORATION

USL FIRST SOURCE, INC.

U S LIQUIDS GREAT LAKES, INC.

U S LIQUIDS OF HOUSTON, L.L.C.

U S LIQUIDS OF DALLAS, L.L.C.

U S LIQUIDS OF CENTRAL TEXAS, L.L.C.

U S LIQUIDS OF CONNECTICUT, INC.

U S LIQUIDS OF GREATER CHICAGO, INC.

U S LIQUIDS OF PENNSYLVANIA, INC.

U S LIQUIDS OF TEXAS, INC.

U S LIQUIDS LP HOLDING CO.

U S LIQUIDS NORTHEAST, INC.

U S LIQUIDS TERMINAL SERVICES, INC.

U S LIQUIDS OF DETROIT, INC.

 

 

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July 30, 2003

Page 8

	 	 	 	 	 
	 	 	U S LIQUIDS OF FLORIDA, INC.

USL ENVIRONMENTAL SERVICES, INC.

USL GENERAL MANAGEMENT, INC.

USL PARALLEL PRODUCTS OF CALIFORNIA

WASTE RESEARCH AND RECOVERY, INC.

WASTE STREAM ENVIRONMENTAL, INC.
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	U S LIQUIDS OF LA., L.P.
	 	 	 	 	 
	 	 	By: MBO, Inc., its General Partner
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	USL MANAGEMENT LIMITED PARTNERSHIP
	 	 	 	 	 
	 	 	By: USL General Management, Inc., its General Partner
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	GEM MANAGEMENT, INC.
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:<PAGE>
* THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT, WHICH HAVE BEEN REMOVED AND
  REPLACED WITH ONE OR MORE ASTERISKS, HAVE BEEN OMITTED AND FILED SEPARATELY
  WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
  CONFIDENTIAL TREATMENT.

                       Acrylonitrile Expanded Relationship
                                       and
                          Master Modification Agreement

This Acrylonitrile Expanded Relationship and Master Modification Agreement (this
"ER Agreement") is entered into by and between BP Chemicals Inc. ("BP"), an Ohio
corporation, and Sterling Chemicals, Inc. ("Sterling"), a Delaware corporation,
effective as of June 19, 2003 (the "Effective Date"), with reference to the
following facts:

         A. Sterling owns a plant in Texas City, Texas (the "AN Plant") for the
production of acrylonitrile ("AN") that has not been in operation since February
2001. Sterling filed voluntary petitions for relief under Chapter 11 of Title 11
of the United States Code in the United States Bankruptcy Court for the Southern
District of Texas, Houston Division (the "Bankruptcy Court") on July 16, 2001.

         B. Sterling and BP are parties to the following agreements which
together with this ER Agreement are referred to collectively as the "AN
Agreements:" (i) an Amended and Restated Production Agreement dated effective as
of March 31, 1998 (as amended, the "Production Agreement"); (ii) a Joint Venture
Agreement dated effective as of March 31, 1998 (as amended, the "ANEXCO JV
Agreement"); (iii) a Limited Liability Company Agreement of ANEXCO, LLC dated
effective as of March 31, 1998 (the "ANEXCO LLC Agreement"); (iv) a Catalyst
Sales Contract dated effective as of March 31, 1998 (as amended, the "Catalyst
Agreement"); and (v) a Letter Agreement dated April 23, 1998 (the "Letter
Agreement").

         C. It is the intent of the parties that the AN Agreements, as amended
or otherwise affected hereby, will collectively constitute one integrated
agreement governing their relationship outside the European Union with respect
to AN-related matters.

         D. Sterling and BP are parties to * * * * and a License Agreement dated
effective as of April 15, 1988 (the "License Agreement").

         E. Consistent with its Joint Plan of Reorganization (the
"Reorganization Plan") confirmed by order of the Bankruptcy Court entered on
November 21, 2002 and the business plan and financial projections attached
thereto, and to facilitate the subsequent restart of the AN Plant, the parties
have

<PAGE>

entered into this ER Agreement to amend and integrate the AN Agreements as
set forth herein which will result in an expanded AN relationship between the
parties everywhere but the European Union.

NOW THEREFORE, the parties hereto, intending to be bound, agree as follows:

1.       INTEGRATION

1.1      The AN Agreements, as amended and otherwise affected by this ER
         Agreement, will be co-terminous, and, notwithstanding anything to the
         contrary contained herein or in any of the AN Agreements, if any AN
         Agreement is terminated, rescinded, rejected, or otherwise ceases to be
         in effect for any reason, then all of the other AN Agreements will
         immediately and automatically terminate without the need for any other
         action or notice. This ER Agreement is entered into in reliance on the
         fact that the AN Agreements will collectively constitute one and the
         same agreement.

1.2      For the avoidance of doubt, the parties acknowledge and agree that * *
         * and the License Agreement are not AN Agreements and are not subject
         to Section 1.1 above. The termination or expiration, for any reason, of
         the AN Agreements will not cause the termination or expiration of * * *
         the License Agreement. The termination or expiration of either * * * or
         the License Agreement will not cause the termination or expiration of
         any of the AN Agreements. * * * and the License Agreement will
         terminate only in accordance with their respective terms.

2.       TERM

         Each of the AN Agreements will be for an initial term ending on
         December 31, 2009, but continuing thereafter unless either party gives
         the other party twenty four (24) months prior written notice of
         termination, such termination to be effective only on December 31, 2009
         or any anniversary thereof. Notwithstanding the foregoing, however, (i)
         if any of the AN Agreements is earlier terminated, for any reason, all
         the AN Agreements will terminate on the same date, (ii) if ANEXCO, LLC,
         a Delaware limited liability company in which Sterling and BP are
         members ("ANEXCO"), is dissolved and liquidated for any reason, the AN
         Agreements will terminate as of the date such dissolution and
         liquidation is completed, and (iii) if the term of any of the AN
         Agreements is extended in writing by the mutual written agreement of
         the parties, this ER Agreement and all of the other AN Agreements will
         likewise be extended.

3.       TERMINATION

3.1      Effect on Termination Clauses in AN Agreements. It is the intent of the
         parties that none of the AN Agreements may be terminated in any manner

                                       2

<PAGE>

         or for any reason except as set forth in Section 2 above or in this
         Section 3. Without limiting the foregoing, the parties agree that the
         term and termination clauses in the AN Agreements will be amended as
         set forth in Section 4 below.

3.2      Termination if AN Plant does not Start Up. The "AN Plant Start Up" will
         be defined to occur when Sterling restarts the AN Plant and begins
         producing and delivering AN to BP and to ANEXCO in accordance with the
         terms and conditions of the AN Agreements and * * * . In the event that
         the AN Plant Start Up has not occurred by August 31, 2003, the AN
         Agreements will terminate as of September 1, 2003. If the AN Agreements
         are terminated pursuant to this Section 3.2, the provisions of Section
         3.7.2 of this ER Agreement will apply.

3.3      Termination by Sterling upon AN Plant Shut Down. If (i) after the
         Effective Date hereof, the AN Plant Start Up has occurred, and (ii)
         thereafter Sterling has elected, in its sole discretion, to permanently
         shut down the AN Plant and to cease manufacturing AN at the AN Plant,
         Sterling may, at any time and in its sole discretion, elect to
         terminate all the AN Agreements by giving BP at least twelve (12)
         months prior written notice of such termination, such notice (the "Shut
         Down Notice") to include the date on which the AN Plant is to shut down
         (the "Proposed Shut Down Date"); provided, however, if Sterling
         delivers a Shut Down Notice to BP:

         3.3.1    BP has the right to require Sterling to continue to produce AN
                  for a period not to exceed twelve (12) months after the
                  Proposed Shut Down Date (the "Extension Right"). If BP
                  exercises the Extension Right, the AN Agreements will
                  terminate on the Proposed Shut Down Date but Sterling will not
                  shut down the AN Plant and will instead produce and sell AN
                  solely to BP or its designee, pursuant to BP's instructions,
                  during the period that begins on the Proposed Shut Down Date
                  and ends on such date that BP determines, at its sole option
                  (the "Extension Period"), provided that such ending date
                  cannot extend beyond the date that is twelve (12) months after
                  the Proposed Shut Down Date. During the Extension Period, BP
                  will reimburse Sterling for * * of Sterling's Fixed Costs and
                  Variable Costs (as such terms are defined in the Production
                  Agreement) and * * of such other costs that Sterling currently
                  can charge to BP under the Production Agreement; provided,
                  however, that in the event that Sterling becomes aware that,
                  to continue to operate the AN Plant, it will be required to
                  incur any unusual or unexpected item of cost or expense that
                  is directly related to the production of AN, the reimbursement
                  for which is not specifically addressed by the Production
                  Agreement, Sterling will, as soon as is reasonably possible
                  after it becomes aware of such requirement but, in any event,
                  prior to incurring such cost or expense, notify BP, in
                  writing,

                                       3

<PAGE>

                  of the specifics of such cost or expense (the "Expense
                  Notice") including the reason for the cost or expense, an
                  estimate of the amount, and the anticipated date on which
                  Sterling will need to start incurring such cost or expense.
                  Promptly after BP's receipt of any Expense Notice, Sterling
                  and BP will discuss such cost or expense and the parties will
                  work together, in good faith, to explore any potential actions
                  that might be taken to avoid or mitigate such cost or expense.
                  In addition, Sterling will provide BP with reasonable
                  documentation that supports the information that Sterling
                  included in the Expense Notice. Promptly after the conclusion
                  of these discussions, BP may elect whether it will reimburse
                  Sterling for such cost or expense. In the event that BP elects
                  to not reimburse Sterling for such cost or expense, or if BP
                  fails to make an election prior to the anticipated date for
                  incurring such cost or expense referenced in the Expense
                  Notice, Sterling will have the right to shut down the AN Plant
                  and discontinue production of AN immediately prior to the time
                  that such cost or expense would have been required to have
                  been incurred and, in such event, the Extension Period shall
                  be deemed to have ended on the date of such shut down of the
                  AN Plant.

         3.3.2    Except as otherwise provided in Section 3.3.1 above, Sterling
                  will permanently shut down the AN Plant on the Proposed Shut
                  Down Date or, if applicable, at the expiration of the
                  Extension Period, whichever is later, and, thereafter, neither
                  Sterling nor any of its affiliated, subsidiary, or parent
                  companies will use the AN Plant to manufacture AN, and
                  Sterling will not market, distribute, or sell AN manufactured
                  at the AN Plant anywhere in the world (other than any
                  inventory on hand at the AN Plant as of the Proposed Shut Down
                  Date). Neither Sterling nor any of its affiliates, subsidiary,
                  or parent companies will, at any time after the Proposed Shut
                  Down Date or the expiration of the Extension Period (if
                  applicable), whichever is later, start up the AN Plant without
                  BP's express, prior written consent.

         3.3.3         (i) Sterling will not sell, transfer, lease, convey, or
                  dispose of (each, a "Transfer") the AN Plant, or any equipment
                  or fixtures that are a part of the AN Plant, unless such
                  Transfer is in compliance with this Section 3.3.3; provided,
                  however that this Section 3.3.3 does not apply to any
                  transaction involving the Transfer of all or substantially all
                  of (a) the capital stock, or (b) the business, operations, or
                  assets of Sterling (whether direct or indirect, by purchase,
                  merger, consolidation, or otherwise) if, in the case of (a),
                  the entity whose capital stock is being Transferred owns
                  assets with a significant monetary value in addition to the AN
                  Plant or, in the case of (b), such Transfer includes assets
                  with a significant

                                       4

<PAGE>

                  monetary value other than the AN Plant. In no event is this
                  Section 3.3.3(i) to be used to circumvent the intent of the
                  provisions set forth below in this Section 3.3.3. In the event
                  of any such Transfer permitted by this Section 3.3.3(i),
                  Sterling will require the transferee in such Transfer to agree
                  in writing to comply with the restrictions and obligations set
                  forth in this Section 3.3.3.

                       (ii) During the period commencing with BP's receipt
                  of a Shut Down Notice and continuing thereafter until the
                  Proposed Shut Down Date or the expiration of the Extension
                  Period, whichever is later, and during any Response Period (as
                  defined below), (a) Sterling will cooperate with BP in its
                  performance of a due diligence investigation and will provide
                  BP access to all information, including, but not limited to,
                  all records, documents, personnel interviews, site visits, and
                  equipment inspections, as may be reasonably necessary for BP
                  to evaluate whether it desires to make an offer for the
                  Transfer of the AN Plant or any part thereof or to make a
                  Proposal (as defined below), and (b) Sterling will cooperate
                  with BP and will work with BP, in good faith, as BP may
                  request to prepare the terms, conditions, structure, and
                  similar matters related to any offer that BP may be
                  considering making for the Transfer of the AN Plant or any
                  part thereof.

                       (iii) On or before the Proposed Shut Down Date or the
                  expiration of the Extension Period, whichever is later, BP
                  will have the right to make an offer to Sterling for the
                  Transfer of the AN Plant or any part thereof. Any offer from
                  BP pursuant to this clause (iii) must be in writing and
                  contain all relevant terms and conditions of the proposed
                  Transfer. The failure of BP to make an offer pursuant to this
                  clause (iii) on or before the Proposed Shut Down Date or the
                  expiration of the Extension Period, whichever is later, will
                  be deemed to be an election by BP to decline to make any offer
                  pursuant to this clause (iii).

                           (iv) In the event that BP makes an offer for the
                  Transfer of the entire AN Plant or any portion thereof
                  pursuant to clause (iii) above, Sterling must notify BP in
                  writing whether Sterling accepts or declines such offer within
                  ninety (90) days after Sterling receives such offer from BP,
                  and Sterling's failure to make an election within such ninety
                  (90) day period will be deemed to be an election by Sterling
                  to decline such offer. If Sterling declines or is deemed to
                  have declined any such offer from BP, Sterling may then
                  Transfer all of the assets that were the subject of the offer
                  in a single transaction or a series of related transactions to
                  a third party, without BP's consent, if, and only if, (a) the
                  consideration being provided by the third party to Sterling
                  for the Transfer of such

                                       5

<PAGE>

                  assets is greater than the consideration set forth in the
                  offer from BP, (b) the terms of the third party Transfer,
                  taken as a whole, are no more favorable to the third party
                  than those set forth in the offer from BP were to BP, and (c)
                  the Transfer is concluded no later than twelve (12) months
                  after Sterling declined or is deemed to have declined such
                  offer from BP. If Sterling does not Transfer all of the assets
                  that were the subject of the offer from BP in a single
                  transaction or a series of related transactions within such
                  twelve (12) month period, Sterling may not thereafter Transfer
                  such assets, in any form or in any combination, to a third
                  party unless Sterling first extends BP another opportunity to
                  make an offer for the Transfer of such assets pursuant to
                  clause (vi) below and BP's right contained in this Section
                  3.3.3 will continue to apply to such assets.

                      (v) If any offer from BP pursuant to clause (iii) above
                  does not contemplate a Transfer of the entire AN Plant,
                  or if BP declines, or is deemed to have declined, to make an
                  offer for the Transfer of the entire AN Plant pursuant to
                  clause (iii) above, Sterling may thereafter Transfer the AN
                  Plant in its entirety (but not a portion thereof) to any
                  person or entity on such terms as Sterling deems acceptable,
                  in its sole discretion.

                      (vi) If Sterling desires to Transfer the AN Plant in
                  its entirety or any portion thereof, and such Transfer is not
                  otherwise permitted under clause (iv) or (v) above, Sterling
                  will not Transfer such assets to a third party without first
                  offering to Transfer such assets to BP. Such offer to BP will
                  be in writing and must contain a detailed description of the
                  assets Sterling desires to Transfer (the "Offer"). After it
                  receives any such Offer, BP will have sixty (60) days in the
                  case of an Offer for the AN Plant in its entirety or any
                  substantial portion thereof, or thirty (30) days in the case
                  of any other Offer, within which to conduct a due diligence
                  review of the Offer (the "Response Period"). No later than the
                  end of the Response Period, BP will have the right to make a
                  proposal for the Transfer of any of the assets described in
                  the Offer (a "Proposal"). Any Proposal from BP must be in
                  writing and contain all relevant terms and conditions of the
                  proposed Transfer. The failure of BP to make a Proposal prior
                  to the expiration of the Response Period will be deemed to be
                  an election by BP to decline to make a Proposal. In the event
                  that BP declines, or is deemed to have declined, to make a
                  Proposal, Sterling may then Transfer any of the assets that
                  were described in the Offer to a third party, without BP's
                  consent, for such consideration as is acceptable to Sterling,
                  in its sole discretion, provided that the Transfer must be
                  concluded no later than twelve (12) months after the end of
                  the Response Period. If Sterling does

                                       6

<PAGE>

                  not Transfer all of such assets within this twelve (12) month
                  period, Sterling may not thereafter Transfer such assets, in
                  any form or in any combination, to a third party unless
                  Sterling again extends an Offer to BP pursuant to this clause
                  (vi), and BP's right contained in this Section 3.3.3 will
                  continue to apply to such assets. In the event that BP makes a
                  Proposal for the Transfer of any of the assets described in
                  the Offer, Sterling must notify BP, in writing, whether
                  Sterling accepts or declines the Proposal no later than thirty
                  (30) days after Sterling received the Proposal. The failure of
                  Sterling to make an election within such thirty (30) day
                  period will be deemed to be an election by Sterling to decline
                  the Proposal. If Sterling declines or is deemed to have
                  declined the Proposal, Sterling may then Transfer any of the
                  assets described in the Offer to a third party, without BP's
                  consent, if, and only if, (a) the consideration being provided
                  by the third party to Sterling for the Transfer of such assets
                  is greater than the consideration set forth in the Proposal,
                  (b) the terms of the third party Transfer are no more
                  favorable to the third party, taken as a whole, than those set
                  forth in the Proposal were to BP, and (c) the Transfer is
                  concluded no later than twelve (12) months after Sterling
                  declined or is deemed to have declined the Proposal. If
                  Sterling has the right to Transfer all of the assets that were
                  described in the Offer to a third party pursuant to the terms
                  of this clause (vi), and Sterling fails to complete the
                  Transfer of such assets within such twelve (12) month period,
                  Sterling may not thereafter Transfer such assets, in any form
                  or in any combination, to a third party unless Sterling again
                  extends an Offer to BP pursuant to this clause (vi), and BP's
                  right contained in this Section 3.3.3 will continue to apply
                  to such assets.

         3.3.4    If Sterling is Transferring any assets to a third party
                  pursuant to Section 3.3.3 above (other than a Transfer
                  pursuant to clause (v) above or a Transfer pursuant to clause
                  (vi) above for which BP declined, or is deemed to have
                  declined, to make a Proposal), Sterling will provide BP with
                  (i) in the case of a proposed Transfer of a portion of the AN
                  Plant, at least ten (10) calendar days prior written notice
                  before the expected Transfer is to take place, or (ii) in the
                  case of a proposed Transfer of the entire AN Plant, at least
                  thirty (30) calendar days prior written notice before the
                  expected Transfer is to take place. Subject to the receipt by
                  Sterling of appropriate confidentiality agreements, BP has the
                  right to have an independent third party auditor selected by
                  BP (the "Auditor) audit the books and records of Sterling, at
                  reasonable times during normal business hours, to determine
                  whether Sterling has complied with, and any Transfer is in
                  accordance with, the terms of Section 3.3.3 hereof, except as
                  such access may be prohibited by law or third party
                  confidentiality agreements existing as of the date this ER
                  Agreement is executed. The Auditor will thereupon have the
                  right

                                       7

<PAGE>

                  to make copies of and abstracts from such books, records, and
                  accounts, at BP's expense, which copies may be removed from
                  the premises of Sterling and retained by the Auditor, subject
                  to the terms of any confidentiality agreement between Sterling
                  and BP regarding the use of such information. It is agreed
                  that the Auditor may report to BP only its conclusions
                  resulting from such Auditor's review of Sterling data, and
                  nothing else. In the event that the auditor determines that
                  any proposed Transfer would not be in compliance with the
                  terms of Section 3.3.3 hereof, Sterling will not Transfer such
                  assets without first complying with the terms and conditions
                  of Section 3.3.3 hereof.

         3.3.5    If the AN Agreements are terminated pursuant to this
                  Section 3.3, the provisions of Section 3.7.3 will apply.

3.4      Termination for Material Breach. In the event that a party has
         committed a material breach of an AN Agreement and has not cured the
         material breach within ninety (90) days after the non-breaching party
         provided the breaching party with written notice of such material
         breach, the non-breaching party may provide written notice to the
         breaching party that it is terminating the AN Agreements, such
         termination to be effective twelve (12) months after the date the
         breaching party received the notice of termination. For purposes of
         this ER Agreement, a "material breach" means (i) the failure of either
         party or ANEXCO to supply or accept a material quantity of raw
         materials, finished products, or services as and when required under
         the terms and conditions of any of the AN Agreements (except to the
         extent such nonperformance is excused due to force majeure or the
         express terms of this ER Agreement or the relevant AN Agreement), (ii)
         the failure of a party to obey any order of the arbitrators when such
         order was made as a part of the Dispute Resolution Process set forth in
         Section 11 of this ER Agreement; provided, however, that if the matter
         in dispute involves less than two million dollars ($2,000,000) during
         any twelve (12) month period, the failure by either party to comply
         with such arbitrator's order will not be considered a material breach
         hereunder so long as the party that did not comply with such
         arbitrator's order pays the other party any damages associated with the
         non-complying party's failure to comply with the arbitrator's order if,
         as, and when such damages are incurred by the other party, (iii) the
         failure to pay within thirty (30) days of the date when due any amount
         in excess of $250,000 that is not disputed in good faith by such party
         or (iv) any breach of any of the AN Agreements that is likely to have
         an adverse effect, in an amount that will exceed two million dollars
         ($2,000,000) during any twelve (12) consecutive month period, on the
         business, financial position, results of operations, or cash flows of
         Sterling, if BP is the breaching party, or of BP's Nitriles Business
         Unit, if Sterling is the breaching party. If the AN

                                       8

<PAGE>

         Agreements are terminated pursuant to this Section 3.4, the provisions
         of Section 3.7.4 of this ER Agreement will apply.

3.5      Termination due to Court Order. All the AN Agreements will terminate if
         any of the AN Agreements is terminated due to a final order of a court
         or governmental agency of competent jurisdiction that is not the
         subject of an existing appeal and, for any reason whatsoever, can no
         longer be appealed. If the AN Agreements are terminated pursuant to
         this Section 3.5, the provisions of Section 3.7.5 of this ER Agreement
         will apply.

3.6      Termination for Force Majeure. In the event that either party declares
         force majeure under any AN Agreement, and the force majeure event
         remains in effect for a period of six (6) months or more, the
         non-declaring party may give the declaring party written notice that
         the non-declaring party is terminating the AN Agreements. Such notice
         will include the date upon which the AN Agreements will terminate,
         provided that, such termination may be effective no earlier than three
         (3) months, nor later than twelve (12) months, after the date the
         non-terminating party received the termination notice. If the
         non-declaring party fails to specify a date in its notice, the AN
         Agreements will terminate on the date that is three (3) months after
         the date the non-terminating party receives the notice. If the AN
         Agreements are terminated pursuant to this Section 3.6, the provisions
         of Section 3.7.6 of this ER Agreement will apply.

3.7      Effect of Termination.

         3.7.1    Optional Termination. If the AN Agreements are terminated
                  pursuant to the first sentence of Section 2 hereof, the
                  provisions of Section 5 of this ER Agreement will apply and BP
                  will continue to offer AN Catalyst for sale to Sterling and
                  Sterling will continue to buy AN catalyst from BP in the
                  manner set forth in Section 3.7.9 below.

         3.7.2    AN Plant does not Start Up. If the AN Agreements are
                  terminated pursuant to Section 3.2 hereof, Sterling will
                  promptly refund, no later than September 30, 2003, to BP: (i)
                  any and all payments, for both expense and capital items, made
                  by BP in connection with the restart of the AN Plant and BP
                  will have no liability to Sterling for any restart costs
                  thereafter, including any such costs invoiced but not yet due;
                  (ii) * * of the Fixed Costs that BP paid Sterling each month
                  since April 1, 2003 in accordance with Section 6.2.2 of this
                  ER Agreement; and (iii) the refund of cure costs payment of
                  seven hundred seventy thousand dollars ($770,000) BP made to
                  Sterling as required by the Order Authorizing Assumption of
                  Acrylonitrile Agreements on Negotiated Terms and Approving
                  Compromise of Controversies Presented by Negotiated Terms that
                  the Bankruptcy

                                       9

<PAGE>

                  Court entered on November 20, 2002 (the "Assumption Order").
                  In addition, if the AN Agreements are terminated pursuant to
                  Section 3.2 hereof, (a) BP has the right to elect to purchase
                  from Sterling at a cost of * * all of Sterling's interest in
                  ANEXCO (including all contract rights) and, if BP elects to
                  purchase such interest in ANEXCO, Sterling will sell its
                  interest in ANEXCO to BP, on the date the AN Agreements
                  terminate, free and clear of all liens, claims, encumbrances,
                  pledges, hypothecations, security interests, options, charges
                  and any other adverse claims of any third party of any sort
                  whatsoever, whether voluntarily incurred or arising by
                  operation of law (each, a "Lien"), (b) BP will continue to
                  offer AN Catalyst for sale to Sterling and Sterling will
                  continue to buy AN catalyst from BP in the manner set forth in
                  Section 3.7.9 below, and (c) if Sterling Permanently Shuts
                  Down the AN Plant, BP has the right to elect to purchase from
                  Sterling at a cost of * * all AN catalyst supplier by BP that
                  is located at the AN Plant by providing Sterling with written
                  notice of such election within thirty (30) days after the date
                  on which Sterling Permanently Shuts Down the AN Plant, the
                  failure of BP to provide Sterling with written notice of such
                  election by such time being deemed an election by BP to
                  purchase such AN catalyst. In the event that BP elects or is
                  deemed to have elected to purchase such AN catalyst, the sale
                  of such AN catalyst will occur promptly after BP elects to
                  purchase such AN catalyst or Sterling shuts down the AN Plant,
                  whichever is later, free and clear of all Liens. "Permanently
                  Shuts Down the AN Plant" is defined to occur on the earliest
                  of (A) the date BP receives written notice from Sterling that
                  it is permanently shutting down the AN Plant, (B) the date
                  Sterling publicly announces that it is permanently shutting
                  down the AN Plant, or (C) the date on which both of the
                  following have occurred (x) the AN Plant is not operating and
                  (y) Sterling has laid off, fired, or otherwise terminated, a
                  majority of its employees assigned to work at the AN Plant or
                  has reassigned a majority of such employees for a period of
                  more than twenty four (24) months; provided, however, that in
                  the case of each of (A), (B), or (C) above, such event occurs
                  within five (5) years after the date the AN Agreements
                  terminate. In the event BP elects not to buy Sterling's
                  interest in ANEXCO, or fails to make an election on or before
                  the date on which the AN Agreements terminate, the parties
                  will * * * (as defined in Section 3.7.8.1 below) in the manner
                  set forth in Section 3.7.8 below.

         3.7.3    AN Plant Shut Down. If the AN Agreements are terminated
                  pursuant to Section 3.3 hereof: (i) BP has the right to elect
                  to purchase from Sterling at a cost of * * all of Sterling's
                  interest in ANEXCO (including all contract rights) and, if BP
                  elects to purchase such interest in ANEXCO, Sterling will sell
                  its interest in ANEXCO

                                       10

<PAGE>

                  to BP, on the date the AN Agreements terminate, free and clear
                  of all Liens; (ii) BP has the right to elect to purchase from
                  Sterling at a cost of * * all AN catalyst supplied by BP that
                  is located at the AN Plant by providing Sterling with written
                  notice of such election within thirty (30) days prior to the
                  date on which the AN Agreements terminate or the expiration of
                  the Extension Period (if applicable), whichever is later, the
                  failure of BP to provide Sterling with written notice of such
                  election by such time being deemed an election by BP to
                  purchase such AN catalyst, and in the event that BP elects, or
                  is deemed to have elected, to purchase such AN catalyst, such
                  sale will occur on the date the AN Agreements terminate, free
                  and clear of all Liens; (iii) Sterling will pay BP, within
                  sixty (60) days after the date the AN Agreements terminate,
                  the BP Net Unrecouped Investment Amount (as such term is
                  defined in the Production Agreement), as of the date the AN
                  Plant shuts down; and (iv) BP will pay Sterling either * * of
                  Sterling's actual costs and expenses of shutting down the AN
                  Plant or * * , whichever amount is less, as BP's sole and
                  exclusive obligation to pay Sterling for any and all costs and
                  expenses of shutting down the AN Plant. In the event BP elects
                  not to buy Sterling's interest in ANEXCO, or fails to make an
                  election on or before the date on which the AN Agreements
                  terminate, the applicable provisions of Section 3.7.8 below
                  will apply.

         3.7.4    Material Breach. If the AN Agreements are terminated pursuant
                  to Section 3.4 hereof: (i) BP will act as Sterling's agent in
                  the Joint Venture Territory (as such term is defined in the
                  ANEXCO JV Agreement) in the manner set forth in Section 3.7.7
                  hereof; (ii) the parties will * * in the manner set forth in
                  Section 3.7.8 below; and (iii) BP will continue to offer AN
                  Catalyst for sale to Sterling and Sterling will continue to
                  buy AN catalyst from BP in the manner set forth in Section
                  3.7.9 below. In addition, if Sterling terminates the AN
                  Agreements pursuant to Section 3.4 hereof, BP will pay to
                  Sterling, on the date the AN Agreements terminate, as
                  liquidated damages and not as a penalty, the applicable amount
                  set forth in Exhibit A attached hereto, and if BP terminates
                  the AN Agreements pursuant to Section 3.4 hereof, Sterling
                  will pay to BP, on the date the AN Agreements terminate, as
                  liquidated damages and not as a penalty, the applicable amount
                  set forth in Exhibit A attached hereto.

         3.7.5    Court Order. If the AN Agreements are terminated pursuant to
                  Section 3.5 hereof: (i) BP will act as Sterling's agent in the
                  Joint Venture Territory in the manner set forth in Section
                  3.7.7 hereof unless and except to the extent such arrangement
                  is barred by the court or agency order; (ii) the parties will
                  * * in the manner set forth

                                       11

<PAGE>

                  in Section 3.7.8 below; and (iii) BP will continue to offer AN
                  Catalyst for sale to Sterling and Sterling will continue to
                  buy AN catalyst from BP in the manner set forth in Section
                  3.7.9 below. In addition, if this Agreement is terminated
                  pursuant to Section 3.5 hereof, Sterling will pay to BP,
                  quarterly, an amount equal to the Net Margin (if any) on
                  Product (as such terms are defined in the Production
                  Agreement) produced from the AN Plant during each calendar
                  quarter after the date of termination in excess of * * of the
                  Rated Capacity (as such term is defined in the Production
                  Agreement) then in effect which is sold or otherwise provided
                  to a third party during such calendar quarter. Such payments
                  will be made for each calendar quarter during the period from
                  the date of termination until the earlier to occur of: (a) the
                  date on which the aggregate amount of such payments equals the
                  BP Net Unrecouped Investment Amount as of the date the AN
                  Agreements terminate, or (b) the earliest possible date the AN
                  Agreements could have been terminated pursuant to the first
                  sentence of Section 2 of this ER Agreement. Nothing herein
                  requires Sterling to pay to BP, in the aggregate, a sum
                  greater than the BP Net Unrecouped Investment Amount as of the
                  date the AN Agreements terminate or requires Sterling to
                  produce any amount of Product.

         3.7.6    Force Majeure. If Sterling terminates the AN Agreements
                  pursuant to Section 3.6 hereof: (i) BP will act as Sterling's
                  agent in the Joint Venture Territory in the manner set forth
                  in Section 3.7.7 hereof; (ii) upon termination of the AN
                  Agreements, the parties will * * in the manner set forth in
                  Section 3.7.8 below; and (iii) BP will continue to offer AN
                  Catalyst for sale to Sterling and Sterling will continue to
                  buy AN catalyst from BP in the manner set forth in Section
                  3.7.9 below. If BP terminates the AN Agreements pursuant to
                  Section 3.6 hereof: (a) BP has the right to elect to purchase
                  from Sterling at a cost of * * all of Sterling's interest in
                  ANEXCO (including all contract rights) and, if BP elects to
                  purchase such interest in ANEXCO, Sterling will sell its
                  interest in ANEXCO to BP, on the date the AN Agreements
                  terminate, free and clear of all Liens, (b) Sterling will pay
                  BP, within sixty (60) days after the date the AN Agreements
                  terminate, the BP Net Unrecouped Investment Amount, as of the
                  date the AN Agreements terminate, (c) unless Sterling
                  Permanently Shuts Down

                                       12

<PAGE>

                  the AN Plant, BP will continue to offer AN Catalyst for sale
                  to Sterling and Sterling will continue to buy AN catalyst from
                  BP in the manner set forth in Section 3.7.9 below, and (d) if
                  Sterling Permanently Shuts Down the AN Plant, BP has the right
                  to elect to purchase from Sterling at a cost of * * all AN
                  catalyst supplier by BP that is located at the AN Plant by
                  providing Sterling with written notice of such election within
                  thirty (30) days after the date on which Sterling Permanently
                  Shuts Down the AN Plant, the failure of BP to provide Sterling
                  with written notice of such election by such time being deemed
                  an election by BP to purchase such AN catalyst. In the event
                  that BP elects or is deemed to have elected to purchase such
                  AN catalyst, the sale of such AN catalyst will occur promptly
                  after BP elects or is deemed to have elected to purchase such
                  AN catalyst, or Sterling has laid off, fired, or otherwise
                  terminated, a majority of its employees assigned to work at
                  the AN Plant or has reassigned a majority of such employees
                  for a period of more than twenty four (24) months, whichever
                  is later, free and clear of all Liens. In the event BP elects
                  not to buy Sterling's interest in ANEXCO, or fails to make an
                  election on or before the date on which the AN Agreements
                  terminate, the parties will * * in the manner set forth in
                  Section 3.7.8 below.

         3.7.7    Agency. If the AN Agreements are terminated pursuant to
                  Section 3.4, Section 3.5, or Section 3.6 hereof, for twelve
                  (12) months after the date the AN Agreements terminate, BP
                  will act as Sterling's agent for the sale of AN in the Joint
                  Venture Territory, with the intent but not the obligation, to
                  sell volumes of AN no less than the Sterling Maximum AN Volume
                  (as defined in Section 9.2.3.3 hereof). The parties
                  acknowledge and agree that (i) BP's sole obligation under this
                  Section 3.7.7 is to use commercially reasonable efforts to
                  sell Sterling's AN at such volumes, (ii) BP is not required to
                  preferentially sell Sterling AN in lieu of selling BP AN, and
                  (iii) BP will have no liability to Sterling whatsoever if BP
                  is unable to sell Sterling's AN at such volumes, whether such
                  liability is based on contract, tort, negligence, strict
                  liability, indemnity, or otherwise. If the AN Agreements are
                  terminated pursuant to Section 3.4, Section 3.5, or Section
                  3.6 hereof, Sterling will have the right to elect to have the
                  agency relationship with BP be on an exclusive or a
                  non-exclusive basis by providing BP with written notice of
                  such election (i) within ninety (90) days after the date on
                  which the applicable notice of termination is received by the
                  non-terminating party or (ii) in the case of a termination
                  pursuant to Section 3.5, within ninety (90) days after the
                  date on which Sterling becomes aware that the AN Agreements
                  will be terminating pursuant to that Section, or, if the AN
                  Agreements will be terminating prior to such time, within ten
                  (10) calendar days after the AN Agreements terminate or by the
                  ninetieth (90th) day after the date on which Sterling becomes
                  aware that the AN Agreements will be terminating, whichever
                  occurs first, and the failure of Sterling to provide BP with
                  written notice of such election by the applicable time being
                  deemed an election by Sterling to have such agency
                  relationship be on a non-exclusive basis. If Sterling elects
                  to have such agency relationship be on an exclusive basis,
                  Sterling will not

                                       13

<PAGE>

                  directly or indirectly sell AN into the Joint Venture
                  Territory nor will Sterling knowingly sell AN to third parties
                  who intend to sell or resell the AN into the Joint Venture
                  Territory, and for all Sterling AN sold into the Joint Venture
                  Territory during such period, Sterling will pay BP a
                  commission equal to * * of the net invoice price, or * * per
                  metric ton, whichever amount is greater, on all sales BP makes
                  on behalf of Sterling to customers that are * * * or * * of
                  the net invoice price, or * * per metric ton, whichever amount
                  is greater, on all other sales BP makes on behalf of Sterling,
                  in either case, with such price adjusted to be on a FOB Texas
                  City, Texas, basis for purposes of calculating the commission
                  and, in addition, Sterling will reimburse BP for all relevant
                  costs to service such sales, including, but not limited to,
                  all fixed and variable logistics costs and all customer
                  fulfillment costs, with the precise calculation of the exact
                  amount of such costs to be mutually agreed upon. If Sterling
                  elects to have such agency relationship be on a non-exclusive
                  basis, (a) for all Sterling AN sold into the Joint Venture
                  Territory during such period in transactions arranged by BP,
                  Sterling will pay BP a commission equal to * * of the net
                  invoice price of such sales, or * * per metric ton, whichever
                  amount is greater, with such price adjusted to be on a FOB
                  Texas City, Texas, basis for purposes of calculating the
                  commission, and (b) if Sterling elects to have BP service any
                  such sales of Sterling AN, BP will service such sales and
                  Sterling will reimburse BP for all relevant costs to service
                  such sales, including, but not limited to, all fixed and
                  variable logistics costs and all customer fulfillment costs,
                  with the precise calculation of the exact amount of such costs
                  to be mutually agreed upon.

                   3.7.8   * * * * * * * * * * * * * * * * (Approximately three
                           and one-half pages have been omitted pursuant to the
                           request for confidential treatment.)

                  3.7.8.2  From and after the completion of * * pursuant to this
                           Section 3.7.8 until the termination of the AN
                           Agreements, the parties will cause and direct ANEXCO
                           to no longer enter into any new or additional AN
                           Sales Contract.

                           3.7.8.3 Notwithstanding anything to the contrary
                           contained herein or in any of the AN Agreements, from
                           and after the time that this Section 3.7.8 applies
                           until the termination of the AN Agreements, ANEXCO
                           will no longer have the sole and exclusive
                           responsibility for the marketing, sale or
                           distribution of AN in the Joint Venture Territory on
                           behalf of BP and Sterling, and both Sterling and BP
                           may market, sell and distribute AN in the Joint
                           Venture Territory

                                       14

<PAGE>

                           but only with respect to (i) any volume a party might
                           make to a customer pursuant to * * * , (ii) any
                           volume to a customer that replaces volume that such
                           customer previously purchased under an AN Sales
                           Contract that terminated in accordance with its
                           terms after this Section 3.7.8 became applicable or
                           that was terminated, canceled or lapsed after this
                           Section 3.7.8 became applicable, (iii) any additional
                           AN volumes that a customer under any AN  Sales
                           Contract * * * may wish to purchase in excess
                           of the maximum volume specified in its AN Sales
                           Contract, (iv) any volumes that any customer in the
                           Joint Venture Territory may wish to buy, without a
                           written, countersigned agreement, or (v) any volume
                           to any customer that is not then a party to an AN
                           Sales Contract. In addition, notwithstanding anything
                           to the contrary contained herein or in any of the
                           other AN Agreements, both parties will be entitled,
                           during such period, to solicit orders from customers
                           in the Joint Venture Territory (including ANEXCO
                           customers) for delivery of AN after the termination
                           of the AN Agreements. Either party may request that
                           ANEXCO continue to service, under the terms of the AN
                           Agreements to the extent applicable, * * * any other
                           sales of AN that such party makes in the Joint
                           Venture Territory, in either case, until such time
                           that the requesting party determines ANEXCO's
                           services are no longer required or until the
                           termination of the AN Agreements, whichever comes
                           first. If a party elects to use ANEXCO to service * *
                           any other sales of AN in the Joint Venture Territory,
                           ANEXCO will service such AN sales and the requesting
                           party will pay ANEXCO a commission equal to * * * ,
                           whichever amount is greater, on all such sales ANEXCO
                           services on behalf of that party to customers who are
                           buying AN from the requesting party pursuant to a
                           written, countersigned contract, or * * * , whichever
                           amount is greater, on all other sales ANEXCO services
                           on behalf of the requesting party, in either case,
                           with such price adjusted to be on a FOB Texas City,
                           Texas, basis for purposes of calculating the
                           commission and, in addition, that party will
                           reimburse ANEXCO for all relevant costs to service
                           such sales, including, but not limited to, all fixed
                           and variable logistics costs and all customer
                           fulfillment costs, with the precise calculation of
                           the exact amount of such costs to be mutually agreed
                           upon.

                  3.7.8.4  * * * * * * * * * * * * * * *

                                       15

<PAGE>

         3.7.9    Catalyst Supply. If the AN Agreements are terminated pursuant
                  to the first sentence of Section 2 hereof or pursuant to
                  Section 3.2, Section 3.4, Section 3.5, or Section 3.6 hereof,
                  for a * * * period after termination of the AN Agreements, BP
                  will continue to offer AN Catalyst for sale to Sterling and
                  Sterling will continue to buy AN catalyst from BP pursuant to
                  the terms and conditions set forth in the Catalyst Agreement
                  as that agreement existed just prior to its termination
                  hereunder (hereinafter the "Reinstated Catalyst Agreement"),
                  except that Paragraph (i) of Part Two of the Reinstated
                  Catalyst Agreement will be amended, with such amendment
                  effective as of the termination of the AN Agreements, to read
                  in its entirety as follows:

                           (i) Term: The term of the Contract will continue for
                           * * and then from year to year thereafter unless
                           either party gives the other party twenty four (24)
                           months prior written notice of its election to
                           terminate this Contract, such termination to be
                           effective only on the * * anniversary of the
                           Effective Date or any anniversary thereafter;
                           provided, however, no such termination of this
                           Contract will relieve Buyer of its obligation to pay
                           for any Product delivered by Seller to Buyer prior to
                           such termination.

                  In addition, the "Effective Date" as set forth in Paragraph
                  (j) of Part Two of the Reinstated Catalyst Agreement will at
                  the same time be amended to be, in its entirety, the date of
                  termination of the AN Agreements.

        3.7.10    Wind Up and Dissolution. If the AN Agreements are terminated
                  for any reason, the provisions of Article XI of the ANEXCO LLC
                  Agreement will apply unless BP has exercised its right to
                  purchase Sterling's interest in ANEXCO for * * pursuant to
                  Section 3.7.2, Section 3.7.3, or Section 3.7.6 hereof.

        3.7.11    Survival; Effect on Other Rights. All provisions of this ER
                  Agreement that may reasonably be interpreted as surviving the
                  termination of this ER Agreement will survive such
                  termination. Notwithstanding anything to the contrary
                  contained herein or in any of the AN Agreements, the
                  termination of the AN Agreements for any reason will not
                  affect any rights or remedies of either party arising out of
                  any breach of any of the AN Agreements prior to such
                  termination or the right of either of the parties to receive
                  any amount earned or accrued thereunder prior to such
                  termination or otherwise payable with respect to any period
                  prior to such termination. Except as otherwise provided in
                  this Section 3, neither party will be obligated to make any
                  payment to the other party

                                       16

<PAGE>

                  solely in connection with or as a result of the termination of
                  the AN Agreements.

4.       AMENDMENTS TO AN AGREEMENTS AS A RESULT OF SECTIONS 1, 2, AND 3 ABOVE

4.1      Amendments to Production Agreement. Effective as of the Effective Date
         of this ER Agreement, the Production Agreement is modified as set forth
         in this Section 4.1.

         4.1.1    Section 2.1 of the Production Agreement is hereby amended to
                  read in its entirety as follows:

                           2.1      The term of this Agreement, the rights of
                                    the parties to terminate this Agreement and
                                    the effects of the expiration or termination
                                    of this Agreement will be as set forth in
                                    that certain Acrylonitrile Expanded
                                    Relationship and Master Modification
                                    Agreement dated as of June 19, 2003 between
                                    BP and Sterling (the "ER Agreement").

         4.1.2    Section 2.2 and Section 2.3 of the Production Agreement are
                  hereby amended to respectively read in their entirety as
                  follows:

                           2.2      [Intentionally Omitted].

                           2.3      [Intentionally Omitted].

         4.1.3    Section 13.5 and Section 13.6 of the Production Agreement are
                  hereby amended to respectively read in their entirety as
                  follows:

                           13.5     Solely for the valuation purposes under this
                                    Agreement, any Capital Project for which BP
                                    has reimbursed Sterling for a portion of the
                                    Capital Expenditures in accordance with the
                                    terms of this Agreement shall, unless
                                    otherwise agreed by the parties, be deemed
                                    to have a useful life of ten years and the
                                    Capital Expenditures associated therewith
                                    shall be amortized on a straight-line basis.

                           13.6     Prior to the expiration or termination of
                                    this Agreement, BP shall be entitled to the
                                    benefit of any and all depreciation and
                                    amortization or expense deductions with
                                    respect to the portion of any Capital
                                    Expenditures for which BP has reimbursed
                                    Sterling, and Sterling shall be entitled to
                                    the benefit of any and

                                       17

<PAGE>

                                    all depreciation and amortization or expense
                                    deductions with respect to the portion of
                                    any Capital Expenditures which has not been
                                    reimbursed by BP. Following the expiration
                                    or termination of this Agreement, (a) BP
                                    shall be entitled to the benefit of any and
                                    all depreciation and amortization or expense
                                    deductions with respect to the portion of
                                    any Capital Expenditures for which BP has
                                    reimbursed Sterling minus the amount that
                                    Sterling has paid to BP if Sterling is
                                    required to pay the BP Net Unrecouped
                                    Investment Amount and (b) Sterling shall be
                                    entitled to the benefit of any and all other
                                    depreciation and amortization or expense
                                    deductions with respect to the AN Plant,
                                    including, if Sterling is required to and
                                    has paid the BP Net Unrecouped Investment
                                    Amount, any future depreciation and
                                    amortization or expense deduction with
                                    respect to any portion of any Capital
                                    Expenditures for which Sterling has paid the
                                    BP Net Unrecouped Investment Amount.

         4.1.4    Section 19.2 of the Production Agreement is hereby amended by
                  replacing the phrase "during the Initial Term or any
                  Additional Term" appearing therein with the phrase "during the
                  term of this Agreement."

         4.1.5    Section 22.1 and Section 22.2 of the Production Agreement are
                  hereby amended by replacing the phrase "At the termination of
                  the Initial Term or any Additional Term" appearing therein
                  with the phrase "At the termination of this Agreement."

         4.1.6    Exhibit A to the Production Agreement is hereby amended by
                  deleting the definitions of "Additional Term," Cross
                  Termination Right," "Initial Term," and "Termination Notice"
                  therefrom.

         4.1.7    The definition of "BP Net Unrecouped Investment Amount"
                  appearing in Exhibit A to the Production Agreement is hereby
                  amended to read in its entirety as follows:

                                    BP Net Unrecouped Investment Amount means
                           the actual Project Cost plus the sum of the Capital
                           Expenditures funded by BP prior to termination of
                           this Agreement under Section 2.3, less depreciation
                           thereon, based on amortization over ten years. As of
                           March 31, 2003, the BP Net Unrecouped Investment
                           Amount is * * * .

                                       18

<PAGE>

         4.1.8    In Exhibit A to the Production Agreement, the definition of
                  "Catalyst Sales Contract" is hereby amended to read in its
                  entirety as follows:

                                    Catalyst Sales Contract means that certain
                           Catalyst Sales Contract dated as of March 31, 1998
                           between BP and Sterling.

         4.1.9    In Exhibit A to the Production Agreement, the definition of
                  "Contract Year" is hereby amended to read in its entirety as
                  follows:

                                    Contract Year means a period of 12
                           consecutive Months beginning on the first Day of
                           January next following the Effective Date, and
                           beginning on the first Day of January of each
                           subsequent year during the term of this Agreement.
                           The period of time from the Effective Date until the
                           first day of the January next following the Effective
                           Date, and the period of time from the first day of
                           January last occurring during the term of this
                           Agreement until the termination of this Agreement
                           shall each be considered to be a Contract Year,
                           provided that in each such period the Minimum Annual
                           Contract Quantity and the Maximum Annual Contract
                           Quantity shall be prorated.

4.2      Amendments to ANEXCO JV Agreement. Effective as of the Effective Date
         of this ER Agreement, the ANEXCO JV Agreement is modified as set forth
         in this Section 4.2.

         4.2.1    Section 6.1 of the ANEXCO JV Agreement is hereby amended to
                  read in its entirety as follows:

                                    6.1 Term, Termination and Effect of
                           Termination. The term of this Agreement, the rights
                           of the parties to terminate this Agreement and the
                           effects of the expiration or termination of this
                           Agreement will be only as set forth in the ER
                           Agreement.

         4.2.2    Section 6.2, Section 6.3, Section 6.4, and Section 6.5 of the
                  ANEXCO JV Agreement are hereby amended to respectively read in
                  their entirety as follows:

                                    6.2     [Intentionally Omitted].

                                    6.3     [Intentionally Omitted].

                                    6.4     [Intentionally Omitted].

                                       19

<PAGE>
                                    6.5     [Intentionally Omitted].

         4.2.3    Section 10.2 of the ANEXCO JV Agreement is hereby amended to
                  read in its entirety as follows:

                                    10.2 Rights and Obligations upon Default.
                           Upon the occurrence of any Default, the
                           non-defaulting Party may, at its option, make a claim
                           for damages pursuant to Section 10.3 hereof and, to
                           the extent such Default triggers any rights or
                           remedies under the ER Agreement, exercise any of its
                           rights available under the ER Agreement.

4.3      Amendments to ANEXCO LLC Agreement. Effective as of the Effective Date
         of this ER Agreement, the ANEXCO LLC Agreement is modified as set forth
         in this Section 4.3.

         4.3.1    Section 2.05(c) of the ANEXCO LLC Agreement is hereby amended
                  to read in its entirety as follows:

                                    (c) the occurrence of any event that, under
                           the terms of that certain Acrylonitrile Expanded
                           Relationship and Master Modification Agreement dated
                           as of June 19, 2003 between BP and Sterling (the "ER
                           Agreement"), results in a termination of the AN
                           Agreements (as defined in the ER Agreement);

         4.3.2    Section 2.05(d) and Section 2.05(e) of the ANEXCO LLC
                  Agreement are hereby amended to respectively read in their
                  entirety as follows:

                                    (d)     [Intentionally Omitted];

                                    (e)     [Intentionally Omitted];

4.4      Amendments to Catalyst Agreement. Effective as of the Effective Date of
         this ER Agreement, Paragraph (i) of Part Two of the Catalyst Agreement
         is hereby amended to read in its entirety as follows:

                           (i) The term of this Contract, the rights of the
                  parties to terminate this Contract and the effects of the
                  expiration or termination of this Contract will be as set
                  forth in that certain Acrylonitrile Expanded Relationship and
                  Master Modification Agreement dated as of June 19, 2003
                  between BP and Sterling (the "ER Agreement"). Termination of
                  this Contract will be without prejudice to outstanding orders.

                                       20

<PAGE>

5.       WINDING UP OF ANEXCO

5.1      This Section 5 will apply only if the AN Agreements are terminated
         pursuant to the first sentence of Section 2 of this ER Agreement. For
         purposes of this ER Agreement, the "Wind up Period" means the period
         commencing on the date that is twenty four (24) months prior to the
         intended termination date of the AN Agreements and continuing
         thereafter until the termination of the AN Agreements.

5.2      From and after * * * 5 until the termination of the AN Agreements, the
         parties will cause and direct ANEXCO to no longer enter into any new or
         additional AN Sales Contracts.

5.3      Notwithstanding anything to the contrary contained herein or in any of
         the AN Agreements, during the Wind up Period, ANEXCO will no longer
         have the sole and exclusive responsibility for the marketing, sale, or
         distribution of AN in the Joint Venture Territory on behalf of BP and
         Sterling, and both Sterling and BP may market, sell, and distribute AN
         in the Joint Venture Territory but only with respect to (i) any volume
         a party might make to a customer pursuant to * * * , (ii) any volume to
         a customer that replaces volume that such customer previously purchased
         under an AN Sales Contract that terminated in accordance with its terms
         during the Wind up Period or that was terminated, canceled, or lapsed
         during the Wind up Period, (iii) any additional AN volumes that a
         customer under any AN Sales Contract * * * may wish to purchase in
         excess of the maximum volume specified in its AN Sales Contract, (iv)
         any volumes that any customer in the Joint Venture Territory may wish
         to buy, without a written, countersigned agreement in place, during the
         last twelve (12) months of the Wind up Period, or (v) any volume to any
         customer that is not then a party to an AN Sales Contract. In addition,
         notwithstanding anything to the contrary contained herein or in any of
         the other AN Agreements, both parties will be entitled, during the Wind
         up Period, to solicit orders from customers in the Joint Venture
         Territory (including ANEXCO customers) for delivery of AN after the
         termination of the AN Agreements. Either party may request that ANEXCO
         * * * service any other sales of AN that such party makes in the Joint
         Venture Territory, in either case, until such time that the requesting
         party determines ANEXCO's services are no longer required or until the
         termination of the AN Agreements, whichever comes first. If a party
         elects to use ANEXCO to service * * any other sales of AN in the Joint
         Venture Territory, ANEXCO will service such AN sales and the requesting
         party will pay ANEXCO a commission equal to * * * , whichever amount is
         greater, on all such sales ANEXCO services on behalf of that party to
         customers who are buying AN from the requesting party pursuant to a
         written, countersigned contract, or * * * , whichever amount is
         greater, on all other sales ANEXCO services on behalf of the requesting
         party, in either case, with such price adjusted to be on a FOB Texas
         City, Texas,

                                       21

<PAGE>

         basis for purposes of calculating the commission, and, in addition,
         that party will reimburse ANEXCO for all relevant costs to service such
         sales, including, but not limited to, all fixed and variable logistics
         costs and all customer fulfillment costs, with the precise calculation
         of the exact amount of such costs to be mutually agreed upon.

5.4      * * * * * * * * * * * * *

5.5      * * * * * * * * * * * * *

5.6      * * * * * * * * * * * * *

5.7      * * * * * * * * * * * * *

5.8      * * * * * * * * * * * * *

5.9      * * * * * * * * * * * * *

5.10     * * * * * * * * * * * * * (An aggregate of approximately two pages have
         been omitted from Sections 5.4 through 5.10 pursuant to the request for
         confidential treatment.)

6.       AMENDMENTS TO THE PRODUCTION AGREEMENT RELATED TO INCREASE IN CAPACITY
         RIGHTS, START-UP COSTS, AND ANNUAL AND QUARTERLY MEETINGS

6.1      BP and Sterling agree to increase BP's Right (as defined in the
         Production Agreement), and corresponding reimbursement obligations,
         from * * to * * . Accordingly, effective as of April 1, 2003, the
         Production Agreement is modified as set forth in this Section 6.1:

         6.1.1    Section 13.1 of the Production Agreement is hereby amended by
                  replacing the word " * * " appearing therein with the word " *
                  * ."

         6.1.2    Exhibit A of the Production Agreement is hereby amended by (i)
                  replacing the word * * with the word * * and (ii) replacing
                  the figure * * with the figure * * in each instance such word
                  and figure appear in the definitions of "Fixed Cost
                  Component," "Maximum Annual Contract Quantity," and "Right"
                  contained therein.

         6.1.3    Exhibit A of the Production Agreement is hereby further
                  amended by replacing the figure * * appearing in the
                  definition of "Minimum Annual Contract Quantity" contained
                  therein with the figure * *

         6.1.4    Exhibit A of the Production Agreement is hereby further
                  amended by replacing the figure * * appearing in the
                  definition of "Minimum Quarterly Contract Quantity" contained
                  therein with the figure * *

                                       22

<PAGE>

6.2      BP and Sterling agree that provisions in the Production Agreement
         governing the division of costs and expenses do not reflect the
         parties' intent as to how they should share the costs and expenses
         solely related to the restart of the AN Plant that might occur prior to
         August 31, 2003. Consequently, notwithstanding anything to the contrary
         contained in this ER Agreement or the Production Agreement, the
         responsibility of BP to reimburse Sterling for such costs and expenses
         will be determined solely by reference to the following provisions:

         6.2.1             During the period from November 20, 2002 (the date of
                           the Assumption Order) until April 1, 2003 (the "Start
                           Up Period"), BP will pay Sterling * * of the
                           aggregate Fixed Costs for each month up to a maximum
                           payment of * * per month, with such amount prorated
                           for any partial month.

         6.2.2             After April 1, 2003, BP will pay Sterling * * of the
                           aggregate Fixed Costs for each month in accordance
                           with the terms of the Production Agreement.

         6.2.3             BP will pay Sterling * * of Sterling's actual Capital
                           Expenditures (as such term is defined in the
                           Production Agreement) (i) associated with compliance
                           of the AN Plant with the "Chronic Excessive Emissions
                           Event" rules of the Texas Commission on Environmental
                           Quality, (ii) associated with its recent installation
                           of the T-11 tank at the AN Plant, and (iii) to
                           complete the installation of chillers at the AN
                           Plant.

         6.2.4             BP will pay * *   of Sterling's costs for make-up
                           catalyst and, if necessary, * *   of Sterling's
                           replacement costs for catalyst.

         6.2.5             BP will pay * * of Sterling's costs that it incurs
                           during the Start Up Period that are associated with
                           the replacement of equipment, motors, valves,
                           instrumentation, or similar items for the AN Plant,
                           up to a maximum amount of * * .

6.3      Effective as of April 1, 2003, the title to Article 3 of the Production
         Agreement is hereby amended to read in its entirety "Article 3 -
         Technology and Annual Meetings."

6.4      Effective as of the April 1, 2003, Article 3 of the Production
         Agreement is hereby amended by adding a new Section 3.6 thereto to read
         in its entirety as follows:

                                       23

<PAGE>

         3.6      As soon as reasonably possible after the Effective Date (as
                  defined in the ER Agreement), and on or before each September
                  1st of each Contract Year thereafter, BP and Sterling will
                  hold a meeting (each such meeting, an "Annual Meeting") and
                  engage, in good faith, in a comprehensive annual budgetary
                  review and discuss the organizational, operating, Capital
                  Expenditure and health, safety, and environmental parameters
                  for the operation of the AN Plant for the next calendar year.
                  Such review will include discussions regarding (i) cost
                  budgets for direct fixed, direct variable, and indirect costs
                  for the ensuing year, (ii) sustaining and growth capital
                  budgets for maintenance, health safety, environment, and
                  Capital Expenditures and (iii) co-products revenue streams
                  budget for the ensuing year. The parties will mutually agree
                  upon the specific types of information that will be included
                  in each of the above categories. The objective of this overall
                  process will be to align, to the extent possible, the mutual
                  interests of the parties with respect to manufacturing
                  operations and to create shared value. This process also will
                  serve to try to identify possible process improvements and
                  other beneficial opportunities that the parties could, if
                  mutually agreed upon, try to execute for the benefit of both
                  parties. On or before March 1st, June 1st, September 1st, and
                  December 1st of each Contract Year, commencing with September
                  1, 2003, BP and Sterling will engage in a business review that
                  will include a review of the above information and the actual
                  performance compared to all agreed upon parameters, as well as
                  such other matters as BP and Sterling believe are pertinent to
                  the optimization of the parties' relationship under the AN
                  Agreements.

6.5      Effective as of April 1, 2003, Section 13.2 of the Production Agreement
         is hereby amended by replacing the phrase "On or before October 1 of
         each Contract Year" with the phrase "At each Annual Meeting".

6.6      Effective as of April 1, 2003, Section 15.2 of the Production Agreement
         is hereby amended to read in its entirety as follows:

         15.2     During the term of this Agreement, insurance on the Facility
                  and those parts of the Plant which serve the Facility shall be
                  maintained by Sterling in types and amounts and against such
                  risks as are typically insured against in the same general
                  area, by persons of comparable size engaged in the same or
                  similar business as Sterling but BP and Sterling may each
                  carry additional insurance, at its sole discretion and cost.
                  Sterling shall make BP an additional insured under the
                  policies evidencing such insurance coverages for liability
                  purposes only. In the event of a fire, explosion, flood,
                  hurricane or windstorm or other casualty resulting in the loss
                  of the Facility or a substantial part thereof, and Sterling
                  and BP cannot

                                       24

<PAGE>

                  agree whether or not the Facility should be repaired, Sterling
                  shall have the right to require that the Facility be repaired
                  and that the insurance proceeds first be applied to the
                  payment of all repair costs. In such event, the parties'
                  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.

6.7      Effective as of April 1, 2003, the Production Agreement is hereby
         amended by deleting Schedule 15.2 thereto in its entirety.

7.       AMENDMENTS TO THE ANEXCO LLC AGREEMENT RELATED TO DISTRIBUTIONS AND
         GOVERNANCE

7.1      The last sentence only of Section 6.05 of the ANEXCO LLC Agreement is
         hereby amended to read in its entirety as follows:

                  All distributions of Assets of the Company in kind (other than
                  in connection with the winding up and liquidation of the
                  Company) shall be made in proportion to the respective
                  Percentage Interests of the Members on the date of any such
                  distribution and may be (as the Members specifically provide)
                  subject to existing Liabilities, except that * * * * * * .

7.2      The first sentence only of Section 7.02 of the ANEXCO LLC Agreement is
         hereby amended to read in its entirety as follows:

                  The Company may not take any of the following actions unless
                  such action is required by this Agreement or has been approved
                  by the affirmative vote of at least * * Managers on the Board:

7.3      Section 7.02 (d) of the ANEXCO LLC Agreement is hereby amended to read
         in its entirety as follows:

                           (d) approval of each Annual Business Plan, or any
                  material revision to any Annual Business Plan, if such Annual
                  Business Plan or revised Annual Business Plan does not
                  contemplate the Company selling the entire Sterling ANEXCO
                  Volume (as defined in the ER Agreement); provided, however,
                  that if such Annual Business Plan or revised Annual Business
                  Plan does contemplate the Company's sale of the entire
                  Sterling ANEXCO Volume, the approval of such Annual Business
                  Plan or revision will only require the affirmative vote of a
                  simple majority of the Whole Board;

                                       25

<PAGE>

7.4      Section 7.02 (g) of the ANEXCO LLC Agreement is hereby amended to read
         in its entirety as follows:

                           (g) the sale, transfer, lease or other disposition of
                  any Asset of the Company if the aggregate fair market value of
                  the Assets disposed of in a single transaction, or a series of
                  related transactions, exceeds * * , except that if such sale,
                  transfer, lease, or other disposition of Assets (i) is
                  pursuant to a Contract entered into pursuant to an Annual
                  Business Plan, (ii) relates to a Member or the Company
                  entering into a third party contract under which such Member
                  or the Company is obligated to purchase Acrylonitrile that is
                  intended to be resold within the Joint Venture Territory, in
                  accordance with Section 5.2 of the Joint Venture Agreement, or
                  (iii) is for the purchase of Additional Volume (as that term
                  is defined in Section 9.4 of the ER Agreement), which in the
                  case of (i), (ii), or (iii), the approval of such will only
                  require the affirmative vote of a simple majority of the Whole
                  Board.

7.5      Section 7.02 (l) of the ANEXCO LLC Agreement is hereby amended by
         replacing the figure * * appearing therein with the figure * *

7.6      Section 7.02 (m) of the ANEXCO LLC Agreement is hereby amended to read
         in its entirety as follows:

                           (m) any matter that could reasonably be expected to
                  result in a Member being required to spend any amount in
                  excess of * * in order to comply with such matter (e.g., any
                  change in the specifications for acrylonitrile sold by the
                  Company that would require a Member to make over * * in
                  capital expenditures at its production facilities in order to
                  comply with such revised specifications) or any matter not in
                  the ordinary course of business that could reasonably be
                  expected to have an adverse effect, in an amount that will
                  exceed * * during any 12 consecutive month period, on the
                  business financial position, results of operations, or cash
                  flows of Sterling or BP's Nitriles Business Unit, provided
                  that, if a Member believes, in good faith, that any matter
                  that is proposed to be approved, or is apparently approved, by
                  less than * * Managers on the Board is subject to the
                  provisions of this clause (m), such Member must notify the
                  other Members of such belief by the earliest of the following
                  to occur: (i) as soon as is reasonably possible after such
                  Member forms such belief; (ii) if any Manager appointed by
                  that Member was at such Board meeting, within seven (7)
                  calendar days after the Board Meeting; or (iii) if no Manager
                  appointed by such Member were at such Board meeting, within
                  seven (7) calendar days after any Manager that attended the
                  Board Meeting provides written notice to the Member whose

                                       26

<PAGE>
                  Managers failed to attend the Board Meeting of the actions
                  taken by the Board at such Board Meeting; and provided
                  further, that if a Member does not so notify the other Members
                  as provided above with respect to a matter, that matter will
                  be deemed not to fall within the provisions of this paragraph
                  (m); and

7.7      The last sentence of Section 7.02 of the ANEXCO LLC Agreement is hereby
         amended by replacing the phrase "a majority of the Board fails"
         appearing therein with the phrase "at least * * Managers on the Board
         fail."

7.8      The first sentence only of Section 7.03(a) of the ANEXCO LLC Agreement
         is hereby amended to read in its entirety as follows:

                  (a) The number of Managers constituting the whole Board (the
                  "Whole Board") will be * * , * * of whom will be appointed by
                  BP (the "BP Representatives"), and * * of whom will be
                  appointed by Sterling (the "Sterling Representatives" and,
                  together with the BP Representatives, the "Representatives").
                  One of the BP Representatives will be the President.

7.9      The last sentence of Section 7.07 of the ANEXCO LLC Agreement is hereby
         amended by replacing the phrase "a majority of the Managers" appearing
         therein with the phrase "the consent of * * or more Managers."

7.10     The first sentence of Section 7.11 of the ANEXCO LLC Agreement is
         hereby amended by replacing the phrase "a majority of the Whole Board"
         appearing therein with the phrase "a majority of the Whole Board, at
         least one of whom must be a Sterling Representative."

7.11     Section 7.15 of the ANEXCO LLC Agreement is hereby amended by replacing
         the phrase "a majority of the Whole Board" appearing therein with the
         phrase " * * or more Managers on the Board."

7.12     The first sentence of Section 7.16(c) of the ANEXCO LLC Agreement is
         hereby amended by replacing the phrase "a majority of the Whole Board"
         appearing therein with the phrase " * * or more Managers on the Board."

7.13     Section 8.01(a) of the ANEXCO LLC Agreement is hereby amended to read
         in its entirety as follows:

                  (a) The officers of the Company shall be a Chairman of the
                  Board, a President, one or more Vice Presidents, a Secretary,
                  a Treasurer and such other officers as may be determined by
                  the Board from time to time. At each annual meeting of the
                  Board at which a quorum shall be present, at least * *
                  Managers on the Board shall

                                       27

<PAGE>
                  elect officers of the Company to succeed any officers whose
                  terms of office are scheduled to expire; provided however,
                  that BP has the sole right to appoint, remove, and replace the
                  Chairman of the Board and the President. Any two or more
                  offices may be held by the same person, except that the
                  offices of President and Secretary may not be held by the same
                  person. No officer (other than the Chairman of the Board and
                  the President) needs to be a Manager. No officer needs to be a
                  Member or a resident of the State of Delaware.

7.14     Section 8.01 of the ANEXCO LLC Agreement is hereby amended by adding a
         new paragraph (c) thereto to read in its entirety as follows:

                           (c) BP has the sole right to designate the Chairman
                  of the Board and the President of the Company, and BP may
                  exercise such right at any time and from time to time. Upon
                  the death, resignation, or removal of the Chairman of the
                  Board or the President, BP has the sole right to designate a
                  new individual as Chairman of the Board or President, as the
                  case may be. Neither the Board nor any Member other than BP
                  will have any authority to appoint the Chairman of the Board
                  or the President.

7.15     The first three sentences of Section 8.03 of the ANEXCO LLC Agreement
         are hereby amended to read in their entirety:

                  BP may, in its sole discretion, by written notice to the
                  Company, remove the Chairman of the Board or the President, or
                  both, at any time, with or without cause. Neither the Board
                  nor any Member other than BP will have any authority to remove
                  the Chairman of the Board or the President. Each of the other
                  officers of the Company may be removed at any time by the
                  affirmative vote of at least * * Managers on the Board, with
                  or without cause.

7.16     The second sentence only of Section 8.04 of the ANEXCO LLC Agreement is
         hereby amended to read in its entirety as follows:

                  Whenever a vacancy shall occur (a) in the office of President,
                  such vacancy may only be filled by BP, and (b) in any office
                  of the Company (other than Chairman of the Board or
                  President), such vacancy may only be filled by the affirmative
                  vote of at least * * Managers on the Board.

7.17     Section 8.07 of the ANEXCO LLC Agreement is hereby amended by replacing
         the phrase "the Chief Executive Officer" appearing therein with the
         phrase "a Manager on the Board with full voting rights and the Chief
         Executive Officer."

                                       28

<PAGE>

7.18     The third sentence only of Section 11.01 of the ANEXCO LLC Agreement is
         hereby amended by replacing the phrase "majority of the Whole Board"
         appearing therein with the phrase "at least * * Managers on the Board."

7.19     The fourth sentence of Section 11.01 of the ANEXCO LLC Agreement is
         hereby amended by relettering clauses (c) and (d) thereto as clauses
         (d) and (e) and adding a new clause (c) thereto to read in its entirety
         as follows:

                           (c)      * * * * * * ;

8.       AMENDMENTS TO THE ANEXCO JV AGREEMENT RELATED TO CHANGES IN SALES
         VOLUMES

8.1      Effective as of the Effective Date of this ER Agreement, Sections 1.3,
         1.4, 1.5, 1.12, 1.23 and 1.33 of the ANEXCO JV Agreement are hereby
         amended to respectively read in their entirety as follows:

                  1.3      [Intentionally Omitted].

                  1.4      [Intentionally Omitted].

                  1.5      [Intentionally Omitted].

                  1.12     [Intentionally Omitted].

                  1.23     [Intentionally Omitted].

                  1.33     [Intentionally Omitted].

8.2      Effective as of the Effective Date of this ER Agreement, Subpart (ii)
         (a) only of the first sentence of Section 3.2 of the ANEXCO JV
         Agreement is hereby amended to read in its entirety as follows:

                  * * * * * * * * *

8.3      The second sentence of Section 3.4 of the ANEXCO JV Agreement is hereby
         amended by replacing the phrase "used in determining each Party's BRV"
         appearing therein with the phrase "treated in the same manner as such
         Party's own production of Acrylonitrile."

8.4      Effective as of the Effective Date of this ER Agreement, the fourth
         sentence only of Article 4 of the ANEXCO JV Agreement is hereby amended
         to read in its entirety as follows:

                                       29

<PAGE>
                  At the beginning of each year, the President of the Company
                  will, in good faith, and consistent with Section 9 of the ER
                  Agreement, estimate the actual volume of Acrylonitrile that
                  each Party will sell to the Company during that year, and the
                  President's estimated volume for a Party, divided by the
                  President's good faith estimation of the actual volume of
                  Acrylonitrile that both Parties will sell to the Company
                  during that same year, will be that Party's "Sales Ratio." If,
                  at any time during the year, the actual volumes sold to the
                  Company appear to be materially different from the estimates
                  the President used to calculate the Sales Ratios, the
                  President may, in good faith, and consistent with Section 9 of
                  the ER Agreement, modify the Sales Ratios to reflect his then
                  current best estimate of the volumes to be sold. * * * * *

8.5      Effective as of the Effective Date of this ER Agreement, Article 5 of
         the ANEXCO JV Agreement is hereby amended to read in its entirety as
         follows:

                               Article 5 - Volumes

                           5.1 Volumes. Each calendar year, (a) Sterling will
                  sell, and the Company will purchase, the Sterling ANEXCO
                  Volume (as defined in, and determined in accordance with,
                  Section 9.3 of the ER Agreement) for such year and (b) BP will
                  sell, and the Company will purchase, the BP ANEXCO Volume (as
                  defined in, and determined in accordance with, Section 9.3 of
                  the ER Agreement) for such year.

                           5.2 New Purchase Contracts. After the Effective Date
                  (as defined in the ER Agreement) except as may be otherwise
                  provided in Section 3.7.8 or Section 5 of the ER Agreement,
                  neither ANEXCO nor a Party will enter into any new third party
                  contracts under which the Company or either Party is obligated
                  to purchase Acrylonitrile for resale within the Joint Venture
                  Territory without the consent of a simple majority of the
                  Whole Board (as defined in the LLC Agreement); provided,
                  however, that in the event that the Company or BP enter into
                  any such contracts, the volume to be resold in the Joint
                  Venture Territory will be considered a part of the BP ANEXCO
                  Volume (as that term is defined in Section 9.3 of the ER
                  Agreement) and subject to any and all provisions of the ER
                  Agreement applicable to the BP ANEXCO Volume.

8.6      Section 7.2 of the ANEXCO JV Agreement is hereby amended by deleting
         the last three sentences thereof.

                                       30

<PAGE>

8.7      Effective as of the Effective Date of this ER Agreement, the last
         sentence only of Section 11.1 of the ANEXCO JV Agreement is hereby
         amended to read in its entirety as follows:

                  The total quantity hereunder so omitted will be deducted from
                  such Party's obligation to sell, and ANEXCO's obligation to
                  purchase, such quantity pursuant to this Agreement, without
                  liability.

8.8      Effective as of the Effective Date of this ER Agreement, Exhibit A to
         the ANEXCO JV Agreement is hereby amended to include the country of * *

8.9      Effective as of the Effective Date of this ER Agreement, Exhibit D to
         the ANEXCO JV Agreement is hereby amended to read in its entirety as
         set forth in Exhibit D (2003) attached hereto and incorporated herein
         for all purposes.

9.       AN PLANT PRODUCTION MARKETING

9.1      The parties acknowledge that (i) Sterling is currently in the process
         of restarting the AN Plant, (ii) the inability of Sterling to market
         all of its AN production contributed to the prolonged shutdown of the
         AN Plant, (iii) the viability of the AN Plant is an important factor in
         the business plan and financial projections included in the
         Reorganization Plan, (iv) the AN Plant does not operate as efficiently
         at a rate below * * * , and (v) a secure outlet for the sale of the * *
         output quantity of the AN Plant is crucial for the long term viability
         of the AN Plant. The parties have accordingly entered into this ER
         Agreement to provide such a secure outlet, among other reasons.

9.2      During each calendar year the AN Agreements are in effect, Sterling
         will produce and sell to BP and ANEXCO, and BP and ANEXCO will purchase
         from Sterling, a volume of AN determined in accordance with this
         Section 9. During each calendar year during the period commencing on
         the day of the AN Plant Start Up and ending on the date the AN
         Agreements terminate (with such obligations pro rated for any partial
         year):

         9.2.1    BP has the right but not the obligation under the Production
                  Agreement to purchase up to * * of the Rated Capacity (as such
                  term is defined in the Production Agreement) of the AN Plant.
                  The volume BP elects to purchase under the Production
                  Agreement during any given year is referred to herein as the
                  "Production Agreement Volume" for such year.

         9.2.2    Sterling is obligated to sell, and BP is obligated to
                  purchase, * * * of AN under * * * , unless the parties
                  mutually agree on a different volume. * * * * *

                                       31

<PAGE>

         9.2.3

                  9.2.3.1  Except as set forth in Section 9.3 below and
                           excluding the Wind up Period and further excluding
                           any period during which Section 3.7.8 hereof applies,
                           Sterling has the right to require ANEXCO to purchase
                           up to an aggregate volume of * * * of AN that is
                           produced at the AN Plant each year, minus the
                           Production Agreement Volume for such year, and minus
                           * * * for such year.

                  9.2.3.2  This Section 9.2.3.2 will apply during any period
                           during which Section 3.7.8 hereof applies and during
                           the Wind up Period. For purposes of this Section
                           9.2.3.2, the "Applicable Period" is defined to be,
                           for any calendar year, the number of days in such
                           calendar year during which Section 3.7.8 hereof
                           applies or the number of days in such calendar year
                           comprising the Wind up Period, as the case may be,
                           and the "Period Ratio" is defined to be, for any
                           calendar year, a fraction, the numerator of which is
                           the number of days in the Applicable Period during
                           such calendar year and the denominator of which is
                           the number of days in such calendar year. Except as
                           set forth in Section 9.3 below, during any Applicable
                           Period, Sterling has the right to require ANEXCO to
                           purchase up to an aggregate volume equal to (i) the
                           Period Ratio for such calendar year multiplied by * *
                           * of AN that is produced at the AN Plant, minus (ii)
                           the portion of the Production Agreement Volume for
                           such year nominated by BP for delivery during such
                           Applicable Period, minus (iii) the Period Ratio
                           multiplied by the * * * for such year, minus (iv) the
                           aggregate volume of AN that Sterling sells in the
                           Joint Venture Territory during such Applicable
                           Period, including * * * plus the aggregate volume of
                           AN that Sterling sells in the Joint Venture Territory
                           to all other former ANEXCO customers, or to any other
                           customer in the Joint Venture Territory, during such
                           Applicable Period. Promptly after the beginning of
                           each Applicable Period, Sterling will notify ANEXCO,
                           in writing, of Sterling's good faith estimate of the
                           volume of AN that is described in clause (iv) above
                           for such Applicable Period. Promptly after the end of
                           each calendar quarter ending during any Applicable
                           Period , Sterling will notify ANEXCO, in

                                       32

<PAGE>

                           writing, as to the actual volume of AN that Sterling
                           sold into the Joint Venture Territory under clause
                           (iv) above during the portion of that calendar
                           quarter falling within such Applicable Period.
                           Sterling also will notify ANEXCO, in writing, if
                           Sterling becomes aware that the actual volume
                           described in clause (iv) above may be significantly
                           different than the estimate Sterling provided to BP
                           at the beginning of the relevant Applicable Period.

                  9.2.3.3  The amount Sterling has the right to require ANEXCO
                           to purchase in any given year pursuant to this
                           Section 9.2.3 is referred to herein as the "Sterling
                           Maximum AN Volume" for such year.

                  9.2.3.4  Notwithstanding anything to the contrary contained
                           herein, Sterling acknowledges and agrees that, unless
                           BP or ANEXCO, as the case may be, consents otherwise
                           in writing, which consent may be withheld by BP or
                           ANEXCO, as the case may be, in its sole discretion,
                           Sterling will not supply or deliver, and neither BP
                           nor ANEXCO will be obligated to purchase or receive,
                           any AN other than AN that Sterling produces at the AN
                           Plant

9.3      Unless Sterling nominates, in writing, a lesser volume at least six (6)
         months prior to the start of a calendar year, Sterling will be deemed
         to have nominated to sell to ANEXCO during such upcoming calendar year
         an aggregate volume of AN equal to the applicable Sterling Maximum AN
         Volume for such upcoming calendar year (in either case, the "Sterling
         ANEXCO Volume"). The Sterling ANEXCO Volume will not exceed the
         Sterling Maximum AN Volume for such year. During each year, ANEXCO will
         purchase, and Sterling will sell, under the ANEXCO JV Agreement, a
         volume equal to the Sterling ANEXCO Volume for such year. In any given
         year, BP may sell to ANEXCO such volumes of AN as BP may from time to
         time elect (the "BP ANEXCO Volume") * * * . * * * * * * * * * * * * *
         If ANEXCO fails to purchase at least * * of the Sterling ANEXCO Volume
         for three consecutive months, Sterling may shut down the AN Plant and
         be relieved of its obligation to sell AN to BP and ANEXCO, and ANEXCO
         and BP will be relieved of their obligation to purchase AN from
         Sterling, under the AN Agreements, during the period the AN Plant is
         shut down, provided that, if Sterling elects to shut down the AN Plant,
         it must (x) provide ANEXCO notice of such shut down as soon as
         reasonably possible after Sterling makes the decision to shut down the
         AN Plant, and (y) give ANEXCO a minimum of two (2) months prior written
         notice of the date Sterling intends to restart the AN Plant and resume
         production (the "Anticipated Restart Date"). In the event Sterling
         restarts the AN Plant and resumes production no later than ten (10)
         days after the Anticipated Restart Date, Sterling will again be
         obligated to supply AN to BP and ANEXCO, and ANEXCO and BP will again
         be obligated to purchase AN from Sterling, under the AN Agreements, on
         the Anticipated Restart Date

                                       33

<PAGE>

         or on the date the AN Plant resumed production, whichever occurred
         last. In the event the AN Plant resumed production more than ten (10)
         days after the Anticipated Restart Date, Sterling will again be
         obligated to supply AN to BP and ANEXCO, and ANEXCO and BP will again
         be obligated to purchase AN from Sterling, under the AN Agreements, on
         the tenth (10th) day after the Anticipated Restart Date. The volume of
         AN that BP and ANEXCO are obligated to buy from Sterling, and that
         Sterling is obligated to sell to BP and ANEXCO, pursuant to the AN
         Agreements, will be reduced by the amount of AN Sterling would have
         otherwise been entitled to supply to BP and ANEXCO during the period
         the AN Plant was shut down. To the extent that ANEXCO has any liability
         to Sterling pursuant to this Section 9.3, such liability will be paid
         by ANEXCO and BP and the amount paid will either be adjusted or
         otherwise paid in a manner that will result in Sterling being
         compensated for one hundred percent (100%) of such liability without
         direct or indirect reduction resulting from Sterling's ownership
         interest in ANEXCO. To the extent that ANEXCO has any liability to BP
         pursuant to this Section 9.3, and such liability results from the
         actions or inactions of Sterling, such liability will be paid by ANEXCO
         and Sterling and the amount paid will either be adjusted or otherwise
         paid in a manner that will result in BP being compensated for one
         hundred percent (100%) of such liability without direct or indirect
         reduction resulting from BP's ownership interest in ANEXCO.

9.4      If Sterling wishes to sell an amount of AN greater than the Sterling
         ANEXCO Volume to ANEXCO ("Additional Volume"), it will so advise ANEXCO
         and BP, and if ANEXCO or BP is interested in purchasing such volume,
         the parties will, in good faith, negotiate the terms and conditions
         associated with the sale and purchase of such Additional Volumes of AN.
         Nothing in this Section 9.4 obligates Sterling to sell, or obligates
         either ANEXCO or BP to buy, any Additional Volume.

9.5      Unless ANEXCO is excused from its obligation to purchase such volume
         under the terms of this ER Agreement or any of the AN Agreements,
         during any given calendar quarter, BP and Sterling must sell, and
         ANEXCO must purchase, one fourth (1/4) of the volume of AN that BP or
         Sterling, as applicable, is obligated to sell under this Section 9 (the
         BP ANEXCO Volume and the Sterling ANEXCO Volume, respectively) during
         that calendar year, plus or minus ten percent (10%) of the BP ANEXCO
         Volume or the Sterling ANEXCO Volume, as the case may be (with such
         amount minus ten percent (10%) being the "BP Minimum Ratable Volume"
         and the "Sterling Minimum Ratable Volume" respectively); provided
         however, that, at the option of the relevant party (with such option
         being exercised in writing and made as soon as is reasonably possible
         after the occurrence of the event giving rise to the proration), the
         foregoing quarterly sales requirements will be prorated for any quarter
         during which such party experiences a force majeure event or has shut
         down an AN

                                       34

<PAGE>

         production facility for forty five (45) days or less for scheduled
         maintenance (a "Temporary Shutdown") provided that, in the case of a
         Temporary Shutdown, such party, no later than September 30th of the
         preceding year, gave ANEXCO written notice of the expected dates and
         durations of its anticipated Temporary Shutdowns for the year in
         question and thereafter provided ANEXCO with prompt written notice of
         any change in the anticipated dates or expected duration of any such
         Temporary Shutdown at least ninety (90) days prior to the new proposed
         date of commencement of such Temporary Shutdown. At the option of
         Sterling (with such option being exercised in writing and made as soon
         as is reasonably possible after the occurrence of the event giving rise
         to the proration), the quantities of AN that Sterling is required to
         sell to BP pursuant to the Production Agreement will be prorated for
         any calendar year during which Sterling experiences a force majeure
         event or has a Temporary Shutdown provided that, in the case of a
         Temporary Shutdown, Sterling, no later than September 30th of the
         preceding year, gave BP written notice of the expected dates and
         durations of its anticipated Temporary Shutdowns for the year in
         question and thereafter provided BP with prompt written notice of any
         change in the anticipated dates or expected duration of any such
         Temporary Shutdown at least ninety (90) days prior to the new proposed
         date of commencement of such Temporary Shutdown. If any quantities are
         to be prorated pursuant to this Section 9.5, the proration will occur
         based on the number of days in the relevant period during which the
         relevant force majeure event or Temporary Shutdown continues. Unless
         ANEXCO or BP is excused from its obligation to purchase such volume
         under the terms of any of the AN Agreements, (i) if BP fails to deliver
         the BP Minimum Ratable Volume, for any particular calendar quarter, the
         difference between the BP Minimum Ratable Volume and the amount of AN
         that BP actually delivered during that calendar quarter will be
         deducted from the BP ANEXCO Volume for the calendar year in question,
         and (ii) if Sterling fails to deliver the Sterling Minimum Ratable
         Volume, for any particular calendar quarter, the difference between the
         Sterling Minimum Ratable Volume and the amount of AN that Sterling
         actually delivered during that calendar quarter will be deducted from
         the Sterling ANEXCO Volume for the calendar year in question. The
         preceding sentence does not affect any rights or remedies of either
         party hereto.

9.6      Upon the mutual agreement of the parties, such agreement not to be
         unreasonably withheld, delayed, or conditioned, the parties will cause
         ANEXCO to ask the issuers of any letters of credit associated with
         ANEXCO's accounts receivables to discount such letters of credit, and
         the proceeds from such discounted letters of credit will be disbursed
         to Sterling as an advance payment of amounts otherwise due or to become
         due to Sterling for AN sales made by Sterling to or through ANEXCO. If
         such occurs, the amount ANEXCO is obligated to pay to Sterling for

                                       35

<PAGE>

         ANEXCO's purchases of AN from Sterling will be reduced by the amount of
         the discounting and any bank fees or charges or other costs ANEXCO
         incurs as a result of the discounting of such letters of credit.

10.      REFUND OF CURE COSTS

         Within thirty (30) days after the Effective Date of this ER Agreement,
         BP will pay Sterling seven hundred seventy thousand dollars ($770,000)
         as required by the Assumption Order.

11.      DISPUTE RESOLUTION

11.1     The procedures for resolving disputes set forth in this Section 11.1
         (the "Dispute Resolution Process") will apply to any dispute or
         controversy arising out of or related to any of the AN Agreements,
         including this ER Agreement.

11.2     If, at any time, a dispute or controversy exists arising out of or
         related to this ER Agreement or any other AN Agreement, a party may
         send the other party written notice ("Dispute Notice") that it is
         exercising its rights to begin this Dispute Resolution Process. The
         Dispute Notice also will contain a description of the dispute or
         controversy. Within ten (10) days of the date of the Dispute Notice,
         the parties will submit the dispute or controversy to their respective
         Chief Executive Officers ("CEOs") or Business Unit Leaders ("BULs") for
         resolution. In the event the CEOs or BULs fail to amicably resolve the
         dispute within thirty (30) days of such referral, the dispute will be
         settled by binding arbitration pursuant to Section 11.3 below.

11.3     Resolution of any dispute or controversy arising out of or related to
         this ER Agreement or any other AN Agreement that cannot be resolved by
         the CEOS and BULs within thirty (30) days after such matter is referred
         to them pursuant to Section 11.2 above will be determined by
         arbitration by three (3) arbitrators, one (1) of whom will be appointed
         by BP, one (1) of whom will be appointed by Sterling, and one (1) of
         whom will be appointed by the other two (2) arbitrators. If the first
         two (2) arbitrators cannot agree on the appointment of a third
         arbitrator, then such third arbitrator will be appointed by the
         Regional Director of the American Arbitration Association whose
         jurisdiction includes New York, New York. The arbitration will be
         conducted in New York, New York pursuant to the Commercial Arbitration
         Rules of the American Arbitration Association. The parties hereto agree
         that the determination of the arbitrators will be final and binding.
         Judgment upon the arbitrators' award may be entered in any court having
         jurisdiction thereof. BP and Sterling will each bear the costs of their
         respective arbitrators and their related expenses, and the costs of the
         third arbitrator and his or her related expenses, as well as all other
         costs of the

<PAGE>

         arbitration, will be paid equally by BP and Sterling or as otherwise
         determined by such arbitrators. During arbitration, the parties will
         continue to perform their obligations under this ER Agreement and the
         other AN Agreements with the exception of those under arbitration.

11.4     Article 21 of the Production Agreement is hereby amended to read in its
         entirety as follows:

                 Article 21 - Dispute Resolution and Arbitration

                  All disputes and controversies arising out of or relating to
                  this Agreement or the License Agreement will be determined in
                  accordance with Section 11 of the ER Agreement.

11.5     Exhibit A of the Production Agreement is hereby amended by deleting the
         definitions of "Arbitration Notice," "CEOs" and "Dispute Resolution
         Committee" therefrom.

11.6     Section 13.10 of the ANEXCO JV Agreement is hereby amended to read in
         its entirety as follows:

                           13.10 Disputes. All disputes and controversies
                  arising out of or relating to this Agreement will be
                  determined in accordance with Section 11 of the ER Agreement.

11.7     Section 12.11 of the ANEXCO LLC Agreement is hereby amended to read in
         its entirety as follows:

                           Section 12.11 Dispute Resolution. All disputes and
                  controversies arising out of or relating to this Agreement
                  will be determined in accordance with Section 11 of the ER
                  Agreement.

11.8     Paragraph (f) of Part Three of the Catalyst Agreement is hereby amended
         to read in its entirety as follows:

                  (f) Disputes. All disputes and controversies arising out of or
                  relating to this Contract will be determined in accordance
                  with Section 11 of the ER Agreement.

12.      GENERAL

12.1     Each of Sterling and BP is and will be an independent contractor with
         respect to its rights and obligations under this ER Agreement, the
         Production Agreement, the Catalyst Agreement and the Letter Agreement,
         and this ER Agreement, the Production Agreement, the Catalyst Agreement
         and the Letter Agreement will not be construed to create a

                                       37

<PAGE>

         partnership, joint venture, association or other entity or business
         organization between Sterling and BP.

12.2     This ER Agreement will inure to the benefit of, and will be binding
         upon, BP and Sterling and their respective successors and permitted
         assigns.

12.3     This ER Agreement may be executed in two or more counterparts, each of
         which will be deemed an original but all of which taken together will
         constitute one and the same agreement.

12.4     Should any clause, sentence, paragraph, subsection or Section of this
         ER 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 ER Agreement, and the parties hereto agree that
         the part or parts of this ER 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.

12.5     This ER Agreement together with the other AN Agreements, as amended
         herein, and * * * and the License Agreement, set forth all of the
         promises, agreements, conditions, understandings, warranties, and
         representations between the parties with respect to the matters covered
         hereby and thereby, and supersede all prior agreements, arrangements,
         and understandings between the parties, whether written, oral or
         otherwise, with respect to the subject matter hereof and thereof. There
         are no promises, agreements, conditions, understandings, warranties, or
         representations, oral or written, express or implied, between the
         parties concerning the subject matter hereof or thereof except as set
         forth herein or therein. In the event of any conflict, the provisions
         of this ER Agreement will govern over the terms of any other AN
         Agreement. Except as expressly amended herein, the terms of the other
         AN Agreements will continue in full force and effect. No modification
         of or amendment to this ER Agreement will be valid for any purpose
         unless made in a written document that specifically states that it is a
         modification of or an amendment to this ER Agreement, and the document
         is signed by both parties. No waiver of any provision of this ER
         Agreement will be valid unless made in a written document that
         specifically states it is a waiver under this ER Agreement and is
         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 under this ER Agreement, and no course of
         dealing between the parties, will operate as a waiver of any right,
         power, or privilege hereunder. No single or partial exercise of any
         right, power, or privilege under this ER Agreement will 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
         under this ER Agreement will entitle such party to any other or further
         notice or

                                       38

<PAGE>

         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.

12.6     Notwithstanding anything to the contrary contained in this ER Agreement
         or any other AN Agreement, the parties' respective obligations to sell
         and purchase AN pursuant to this ER Agreement and the other AN
         Agreements, and ANEXCO's obligations to purchase AN pursuant to the
         ANEXCO JV Agreement and the ANEXCO LLC Agreement, will not commence
         until the date of the AN Plant Start Up.

12.7     Notwithstanding anything to the contrary, the parties to this ER
         Agreement (and each employee, representative, or other agent of such
         party for so long as they remain an employee, representative, or agent)
         may disclose to any and all persons, without limitation of any kind,
         the tax treatment and tax structure of the transaction contemplated by
         this Agreement (the "Transaction") and all materials of any kind
         (including opinions or other analyses) that are provided to such party
         relating to such tax treatment or tax structure. Nothing in this
         Agreement, or any other agreement between the parties hereto express or
         implied, will be construed as limiting in any way the ability of either
         party to consult with any tax adviser (including a tax adviser
         independent from all other entities involved in the Transaction)
         regarding the tax treatment or tax structure of the Transaction,
         provided, however, that any such disclosure may not be made (a) until
         the earlier of (i) the date of the public announcement of discussions
         relating to the Transaction, (ii) the date of the public announcement
         of the Transaction, or (iii) the date of the execution of the agreement
         to enter into the Transaction (with or without conditions) and (b) to
         the extent required to be kept confidential to comply with any
         applicable securities laws.

12.8     Each of BP and Sterling, by its execution of this ER Agreement,
         acknowledges and agrees that ANEXCO will be bound by and perform all
         covenants and actions contemplated to be performed by ANEXCO under this
         ER Agreement.

                                       39

<PAGE>

12.9     This ER Agreement will be governed by and interpreted in accordance
         with the laws of the State of Texas, without regard to its principles
         on choice of law, except to the extent that the laws of the State of
         Delaware mandatorily govern any amendments to the ANEXCO LLC Agreement
         made herein.

INTENDING TO BE LEGALLY BOUND, the parties have executed this ER Agreement
through their duly authorized officers.

BP CHEMICALS INC.                           STERLING CHEMICALS, INC.

By:       /s/ George E. Tacquard            By:  /s/ Richard K. Crump
        -------------------------------          ------------------------------

Title:  Business Unit Leader Nitriles       Title: President & CEO
        -------------------------------           -----------------------------

Date:  June 20, 2003                        Date:  6/19/03
       --------------------------------           -----------------------------

                                       40

<PAGE>

                                    EXHIBIT A
                               LIQUIDATED DAMAGES

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

                                       41

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                               Exhibit D: * * * *

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00054-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00054-of-00352.parquet"}]]