Document:

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                                                                    EXHIBIT 10.6

                        STERLING CHEMICALS HOLDINGS, INC.
                            STERLING CHEMICALS, INC.

                 SECOND AMENDED AND RESTATED SEVERANCE PAY PLAN

                             PRELIMINARY STATEMENTS

       A.     Sterling Chemicals Holdings, Inc. and Sterling Chemicals, Inc. are
              Delaware corporations.

       B.     On March 8, 2001, the Holdings Board and the Chemicals Board (as
              such terms are defined below) approved a severance pay plan (as
              amended and restated as of July 13, 2001, the "Existing Plan").

       C.     On October 31, 2001, the United States Bankruptcy Court for the
              Southern District of Texas entered an order (the "Court Order")
              approving the Existing Plan, subject to certain modifications
              negotiated and agreed to by the Company (as defined below), the
              Official Committee of Unsecured Creditors, The Bank of New York,
              as Indenture Trustee, and the Ad Hoc Committee of holders of
              Chemicals' 12-3/8% Senior Secured Notes due 2006.

       D.     The Holdings Board and the Chemicals Board desire to formally
              amend the Existing Plan to incorporate the modifications required
              by the Court Order and to restate the Existing Plan as so amended
              in its entirety.

              NOW, THEREFORE, the Existing Plan is hereby amended and restated,
effective as of the Effective Date (as defined below), to read in its entirety
as follows:

                                    ARTICLE I

                         Definitions and Interpretations

              Section 1.01.Definitions. Capitalized terms used in this Plan
shall have the following respective meanings, except as otherwise provided or as
the context shall otherwise require:

              "Applicable Multiplier" has the meaning specified in Section
       2.02(a).

              "Base Salary" has the meaning specified in Section 2.02(a).

              "Benefit Plan" means any employee benefit plan (including any
       employee benefit plan within the meaning of Section 3(3) of the Employee
       Retirement Income Security Act of 1974), program, arrangement or practice
       maintained, sponsored or provided by Holdings or

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       any Subsidiary, including those relating to bonuses, incentive
       compensation, retirement benefits, stock options, stock ownership or
       stock awards, healthcare and medical benefits, disability benefits, death
       benefits, disability, life, accident and travel insurance, sick leave,
       vacation pay or termination pay, as amended, or any successor to any of
       such plans.

              "Change of Control" means the occurrence of any of the following
       events: (i) Holdings shall not be the surviving entity in any merger,
       consolidation or other reorganization (or survives only as a subsidiary
       of an entity other than a previously wholly-owned Subsidiary); (ii)
       Holdings or Chemicals is dissolved and liquidated; (iii) Chemicals sells,
       leases or exchanges all of its assets or a Substantial Part of its Assets
       (other than in the ordinary course of business) to any other person or
       entity (other than Holdings or another wholly-owned Subsidiary); (iv)
       Chemicals ceases to be a wholly-owned Subsidiary of Holdings for any
       reason other than a merger, consolidation or other reorganization in
       which Holdings or a wholly-owned Subsidiary is the surviving entity; (v)
       any "person" (as that term is used in Sections 13(d) and 14(d) of the
       Securities Exchange Act of 1934, as amended) other than one or more of
       the Excluded Holders, is or becomes the beneficial owner (as defined in
       Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as
       amended, except that a person will be deemed to have "beneficial
       ownership" of all shares that such person has the right to acquire,
       whether such right is exercisable immediately or only after the passage
       of time), directly or indirectly, of more than 50% of the then
       outstanding shares of Holdings' that are normally entitled to vote in the
       election of directors (based upon voting power); (vi) individuals who as
       of March 8, 2001 constituted the Holdings Board (together with any new
       directors whose election by the Holdings Board or whose nomination for
       election by the stockholders of Holdings was approved by a majority of
       the directors of Holdings then still in office who were either directors
       at the beginning of such period or whose election or nomination for
       election was previously so approved) cease for any reason to constitute a
       majority of the Holdings Board then in office; or (vii) the Company
       sells, leases or exchanges all or substantially all of the assets or
       capital securities of any of its SBUs to any other person or entity
       (other than Holdings or another wholly-owned Subsidiary); provided,
       however, that any such sale, lease or exchange shall not constitute a
       "Change of Control" for purposes of this clause (vii) with respect to any
       Participant who was not assigned to work on a full-time basis in the
       relevant SBU at the time of such sale, lease or exchange and, provided
       further, that the sale, lease or exchange of all or substantially all of
       the assets or capital securities of Sterling Fibers, Inc. or Sterling
       Chemicals Acquisitions, Inc. (or any of its direct or indirect
       subsidiaries) shall not constitute a "Change of Control" with respect to
       any Participant.

              "Chemicals" means Sterling Chemicals, Inc. and any Successor.

              "Chemicals Board" means the Board of Directors of Chemicals.

              "COBRA" means the Consolidated Omnibus Budget Reconciliation Act
       of 1985, as amended. Reference in this Plan to COBRA shall be deemed to
       include any amendments or successor provisions to COBRA and any
       regulations thereunder.

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              "Code" means the Internal Revenue Code of 1986, as amended.
       Reference in this Plan to any section of the Code shall be deemed to
       include any amendments or successor provisions to such section and any
       regulations under such section.

              "Company" means Holdings and the Subsidiaries, including
       Chemicals.

              "Compensation Committee" means the Compensation Committee of
       Holdings.

              "Disability" means, with respect to any Participant, a physical or
       mental condition of such Participant that results in such Participant
       becoming eligible for long term disability benefits under the Company's
       long term disability Benefit Plan.

              "Effective Date" means October 31, 2001.

              "Excluded Holders" means the parties, as of March 8, 2001, to that
       certain Sterling Chemicals Holdings, Inc. Stockholders Agreement dated
       effective as of August 21, 1996, as amended.

              "Existing Plan" has the meaning specified in the Preliminary
       Statements of this Plan.

              "Good Reason" means, with respect to any Participant, any of the
       following actions or failures to act, but in each case only if it occurs
       (a) on or after the date that is 180 days prior to the date on which a
       Change of Control occurs and (b) while such Participant is employed by
       Holdings or any Subsidiary, and then only if it is not consented to by
       such Participant in writing:

              (i)   a material reduction by the Company in such Participant's
                    total compensation in effect immediately prior to the
                    effective date of such reduction;

             (ii)   the failure of the Company to continue such Participant's
                    eligibility for participation in employee benefit plans,
                    programs, arrangements and practices providing benefits
                    that, in the aggregate, are at least as favorable to such
                    Participant as those provided under the Benefit Plans in
                    which he or she was a participant immediately prior to the
                    effective date of such failure;

            (iii)   the failure of the Company to maintain employee benefit
                    plans, programs, arrangements and practices entitling such
                    Participant to benefits that, in the aggregate, are at least
                    as favorable to such Participant as those available to such
                    Participant under the Benefit Plans in which he or she was a
                    participant immediately prior to the effective date of such
                    failure; or

             (iv)   any change of more than 75 miles (or, in the case of any
                    Participant for whom the Compensation Committee has approved
                    a shorter distance, such shorter distance) in the location
                    of the principal place of employment of such Participant
                    immediately prior to the effective date of such change.

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       For purposes of this definition, any action or failure to act described
       in clauses (i) through (iv) above shall cease to be a Good Reason with
       respect to any Participant on the date which is 30 days after such
       Participant acquires actual knowledge of such action or failure to act
       unless, prior to such date, such Participant gives a Termination Notice
       pursuant to Section 2.05. In the event of any dispute between the
       Company, on the one hand, and any Participant, on the other hand, with
       respect to the amount of total compensation of such Participant for
       purposes of clause (i) above or the aggregate value or level of any of
       such Participant's benefits for purposes of clause (ii) or (iii) above,
       the Company and such Participant shall use their best efforts to resolve
       such dispute themselves. If they are unable to resolve the dispute within
       15 business days, Deloitte & Touche L.L.P., or such other nationally
       recognized accounting firm or employee benefits firm acceptable to the
       Company and such Participant, shall be engaged by the Company to make its
       own determination with respect to the dispute and the determination by
       such firm shall be final and binding on the Company (including the
       Compensation Committee) and such Participant. In case of any dispute
       regarding the amount of total compensation of a Participant or the value
       or level of a Participant's benefits, the burden of proof shall rest with
       the Participant. If any firm is engaged with respect to any dispute as
       aforesaid, (A) such firm shall be instructed to make its determination as
       soon as practicable and to use such materiality standard as such firm may
       determine to be reasonable under the circumstances and (B) the disputants
       shall provide such firm with all books, records and other information
       relevant to such dispute as such firm may reasonably request. No firm
       engaged as aforesaid shall be liable or responsible to the Company
       (including the Compensation Committee) or any Participant for any
       determination made by such firm in good faith. In case of any claim that
       such firm did not act in good faith, the burden of proof shall rest with
       the person or entity claiming the absence of good faith.

              "Holdings" means Sterling Chemicals Holdings, Inc. and any
       Successor.

              "Holdings Board" means the Board of Directors of Holdings.

              "Misconduct" means, with respect to any Participant:

              (i)   the commission by such Participant of acts that are both
                    dishonest and demonstrably injurious to the Company
                    (monetarily or otherwise) in any material respect;

             (ii)   the failure of such Participant to observe and comply with
                    the Company's published policies relating to alcohol and
                    drugs, harassment or compliance with applicable laws;

            (iii)   the failure of such Participant to observe and comply with
                    any other lawful published policy of the Company, but, in
                    the case of any such failure that is capable of being
                    remedied, only if such failure shall have continued
                    unremedied

                                      -4-
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                    for more than 30 days after written notice thereof is given
                    to such Participant by Holdings or Chemicals;

             (iv)   the willful failure of such Participant to observe and
                    comply with all lawful and ethical directions and
                    instructions of the Holdings Board, any person to whom such
                    Participant reports or any person who has greater authority
                    than such Participant with respect to the relevant
                    directions or instructions;

              (v)   the failure of such Participant to perform, in any material
                    respect, his or her duties with the Company, but only if
                    such failure was not caused by disability or incapacity and
                    shall have continued unremedied for more than 30 days;

             (vi)   the conviction of such Participant for a felony offense; or

            (vii)   any willful conduct on the part of such Participant that
                    prejudices, in any material respect, the reputation of the
                    Company in the fields of business in which it is engaged or
                    with the investment community or the public at large, but
                    only if such Participant knew, or should have known, that
                    such conduct could have such result.

       If any Participant is a party to a written employment agreement with the
       Company, then clause (iv) above shall not apply to any directions or
       instructions that are contrary to or inconsistent with any of the
       positions, functions, duties or reporting responsibilities of such
       Participant as set forth in such written employment agreement or that
       violate any of such Participant's rights, privileges or immunities under
       such employment agreement. In case of any dispute regarding whether or
       not any conduct by a Participant meets any of the standards set forth in
       clauses (i) through (vii) above, the burden of proof shall rest with the
       Company.

              "Participants" means all non-union employees of the Company
       (salaried and hourly) who are based in the United States; provided,
       however, that no employee of the Company that was given notice of his or
       her termination or layoff, or proposed termination or layoff, prior to
       April 1, 2001 shall be a Participant hereunder and, provided further,
       that, except as the Compensation Committee may otherwise provide in
       writing, any individual who is not paid through the Company's payroll
       system, or who is classified by the Company for purposes of this Plan as
       an independent contractor (or some other non-common law employee
       category), shall not be a "Participant" under this Plan, notwithstanding
       such individual's subsequent or retroactive (i) payment through the
       Company's payroll system or (ii) classification or reclassification for
       tax or other purposes.

              "Pension Plans" means the Sterling Chemicals, Inc. Amended and
       Restated Salaried Employees' Pension Plan (effective as of May 1, 1996),
       as amended, and the Sterling Chemicals, Inc. Hourly Paid Employees'
       Pension Plan (effective as of May 1, 1996), as amended, or any successor
       to either of such plans.

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              "Plan" means this Second Amended and Restated Severance Pay Plan,
       as amended, supplemented or modified from time to time in accordance with
       its terms.

              "SBU" means a strategic business unit of the Company.

              "Severance Amount" has the meaning specified in Section
       2.02(a)(i).

              "Subsidiary" means any corporation, limited partnership, general
       partnership, limited liability company or other form of entity a majority
       of any class of voting stock or other voting rights of which is owned,
       directly or indirectly, by Holdings.

              "Substantial Part of its Assets" means (i) all or substantially
       all of the assets of the Company comprising its Texas City, Texas
       facility or (ii) all or substantially all of the assets of the Company
       comprising its pulp chemicals business.

              "Successor" means (i) with respect to all Participants, a
       successor to all or substantially all of the business, operations or
       assets of the Company or any Substantial Part of its Assets (whether
       direct or indirect, by purchase, merger, consolidation or otherwise), and
       (ii) with respect to any Participant as to whom a Change of Control is
       deemed to have occurred pursuant to clause (vii) of the definition of
       Change of Control, the person or entity to or with whom the Company sold,
       leased or exchanged all or substantially all of the assets or capital
       securities of the relevant SBU.

              "Termination Date" means, with respect to any Participant, the
       termination date specified in the Termination Notice delivered by such
       Participant to the Company in accordance with Section 2.05 or the actual
       date of termination of such Participant's employment by the Company for
       any reason other than Misconduct or Disability.

              "Termination Notice" means, with respect to any Participant, a
       notice from such Participant to Holdings purporting to terminate such
       Participant's employment for Good Reason in accordance with Section 2.05.

              "Years of Service" means, with respect to any Participant, the
       number of years of service as of such Participant's Termination Date
       which is recognized by the Company for such Participant for vesting
       purposes under the Pension Plan in which such Participant participates as
       of such Participant's Termination Date; provided, however, that any
       fractional Year of Service shall be rounded up to the next full Year of
       Service.

              Section 1.02.Interpretation. In this Plan, unless a clear contrary
intention appears, (a) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Plan as a whole and not to any particular
Article, Section or other subdivision, (b) reference to any Article or Section,
means such Article or Section hereof and (c) the words "including" (and with
correlative meaning "include") means including, without limiting the generality
of any description preceding such term. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.

                                      -6-
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                                   ARTICLE II

                            Eligibility and Benefits

              Section 2.01.Eligible Employees. This Plan is only for the benefit
of Participants, and no other employees or personnel shall be eligible to
participate in this Plan or to receive any rights or benefits hereunder.

              Section 2.02.Description of Benefits. (a) Subject to Section 2.03,
each Participant shall be entitled to receive the benefits described below if
(i) a Change of Control occurs after April 1, 2001 and (ii) during the period
commencing 180 days prior to the date on which such Change of Control occurs and
ending 180 days after the date on which such Change of Control occurs, either
such Participant terminates or has terminated his or her employment for Good
Reason in accordance with Section 2.05 or the Company terminates or has
terminated such Participant's employment for any reason other than a termination
for Misconduct or Disability:

              (i) the Company shall pay to such Participant, within 30 days
       after such Participant's Termination Date or, in the event that such
       Participant's Termination Date occurred within the 180-day period
       immediately preceding the occurrence of a Change of Control, within 30
       days after such Change of Control, a lump sum cash payment equal to such
       Participant's Base Salary times such Participant's Applicable Multiplier
       (the "Severance Amount"); and

             (ii) for a period of six months following such Participant's
       Termination Date, the COBRA premium required to be paid by such
       Participant for coverage under the Company's medical and dental insurance
       plans shall not exceed the regular premiums required to be paid by active
       employees for similar coverage under such plans; provided, however, that
       the benefits provided under this clause (ii) shall only be available to
       such Participant if such Participant (or his or her qualified
       beneficiaries) makes a timely COBRA election on or after such
       Participant's Termination Date to continue coverage under such medical
       and dental insurance plans and pays the regular employee premium required
       by such plans and, provided further, that during such six-month period,
       the Company shall not amend any such medical or dental insurance plan to
       decrease or restrict eligibility for the benefits available thereunder or
       terminate any such medical or dental insurance plan without establishing
       a successor plan providing benefits that are at least equal to the
       benefits provided under the terminated plan.

For purposes of this Plan, "Base Salary" means, with respect to any Participant,
such Participant's annual base salary immediately prior to the earlier of (A)
the date on which an event occurs that results in such Participant terminating
his or her employment for Good Reason and (B) the actual date of such
Participant's termination by the Company for any reason other than Misconduct or
Disability, and "Applicable Multiplier" means, with respect to any Participant,
the greater of (x) 0.5 and (y) such Participant's Years of Service as of the
earlier of (1) the date on which an event occurs that results in such
Participant terminating his or her employment for

                                      -7-
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Good Reason and (2) the actual date of such Participant's termination by the
Company for any reason other than Misconduct or Disability times a fraction
having a numerator of two and a denominator of 52; provided, however, that no
Participant's Applicable Multiplier shall exceed 1.0.

              (b) No Participant shall be entitled to receive any of the
benefits described in this Section 2.02 on account of any Change of Control
unless such Change of Control occurred (i) while such Participant was employed
by the Company or (ii) within 180 days after such Participant's Termination Date
unless the Company terminates such Participant's employment prior to such Change
of Control and such termination was directly or indirectly related to, connected
with, in anticipation of, in furtherance of, pursuant to the terms of or during
the pendency of such Change of Control or is for the purpose of directly or
indirectly encouraging or facilitating such Change of Control.

              (c) Notwithstanding anything to the contrary contained in this
Plan, the benefits made available under this Plan to Participants expressly
exclude outplacement services and financial counseling.

              (d) Participation in this Plan is voluntary. The Company may
require that each eligible employee execute a participation agreement as a
condition to becoming a Participant hereunder. By agreeing to participate in
this Plan, or by accepting any benefits under this Plan, a Participant
unconditionally agrees for all purposes under this Plan to be bound by all of
the terms and conditions of this Plan, including the provisions of Article III
hereof.

              Section 2.03.Additional Provisions Relating to Benefits under
Sections 2.02. (a) Notwithstanding anything to the contrary contained in this
Plan, the Company's obligation to continue the benefits described in Section
2.02(a)(ii) for any Participant shall cease if and when such Participant ceases
to be eligible to continue group health plan coverage under COBRA.

              (b) Notwithstanding anything to the contrary contained in this
Plan, no Participant shall be entitled to receive any benefits under this Plan
in connection with any Change of Control and termination of the employment of
such Participant by the Company or a Successor if (i) the Company emerges from
bankruptcy as a reorganized entity and, in connection with such emergence,
either the Company or its Successor assumes this Plan as it pertains to such
Participant, as applicable, and (ii) prior to or immediately following such
termination, the Company or such Successor, as the case may be, offers such
Participant employment at the same job position with substantially equivalent
compensation and benefits; provided, however, that the failure or refusal of the
Company or such Successor, as applicable, to assume this Plan shall not impair
the right of any Participant to receive any benefits, or otherwise reduce or
diminish the benefits received by such Participant, pursuant to this Plan.

              (c) Notwithstanding anything to the contrary contained in this
Plan, the amount of the Severance Amount payable to any Participant under this
Plan shall be reduced, dollar for dollar, by the aggregate amount of all
separation, severance or termination payments paid or payable to such
Participant under (i) any Benefit Plan (other than this Plan and the Pension

                                      -8-
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Plans), including the Company's Amended and Restated Key Employee Protection
Plan, (ii) any agreement between such Participant and the Company or (iii) any
applicable law, statute, rule, regulation, order or decree (or other
pronouncement having the effect of law) of any nation or governmental authority,
including the Worker Adjustment and Retraining Notification Act.

              (d) Notwithstanding anything to the contrary contained in this
Plan, no Participant whose employment is terminated by the Company or a
Successor shall be entitled to receive his or her Severance Amount unless and
until such Participant agrees in writing that such Participant will repay to the
Company or its Successor, as the case may be, a Pro Rata Portion of any
Severance Amount received by such Participant if such Participant is offered and
accepts reemployment by the Company or its Successor within 90 days after such
Participant's Termination Date. For purposes of this Plan, "Pro Rata Portion"
means, with respect to any Participant, (i) the Severance Amount received by
such Participant times a fraction, (A) the numerator of which is the number of
days from such Participant's reemployment date to the date which is 90 days
after such Participant's Termination Date, and (B) the denominator of which is
90, minus (ii) such amount as may be required to ensure that the net after tax
amount retained by such Participant after any repayment to the Company pursuant
to this paragraph (d) is equivalent to the net after tax amount that would have
been retained by such Participant had such Participant originally received and
paid taxes on an amount equal to the Severance Amount received by such
Participant minus the amount determined under clause (i) of this definition.

              Section 2.04.Cost of Plan; Plan Unfunded; Participant's Rights
Unsecured. The entire cost of this Plan shall be borne by the Company, and no
contributions shall be required of the Participants. The Company shall not be
required to establish any special or separate fund or make any other segregation
of funds or assets to assure the payment of any benefit hereunder. The right of
any Participant to receive the benefits provided for herein shall be an
unsecured claim against the general assets of the Company.

              Section 2.05.Termination Notices from Participants. For purposes
of this Plan, in order for any Participant to terminate his or her employment
for Good Reason, such Participant must give a written notice of termination to
Holdings or Chemicals, which notice shall be in writing and signed by such
Participant, shall be dated the date it is given to Holdings or Chemicals, shall
specify the termination date, shall state that the termination is for a Good
Reason and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for such Good Reason.

                                   ARTICLE III

                     Claims Procedure and Dispute Resolution

              Section 3.01.Claims for Benefits. Any claim relating to benefits
under this Plan shall be submitted in writing to the Compensation Committee in
such manner as it may direct. If the Compensation Committee determines that any
claimant is not entitled to receive all or part of the benefits claimed, it will
mail or deliver written notice to such claimant of (a) its determination and the
reasons therefor, with appropriate references to pertinent Plan provisions,

                                      -9-
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and (b) the procedure for review of its determination. Such notice shall, if
appropriate, also explain how a claimant may perfect the claim and why
submission of additional information is necessary to do so. Such notice shall be
provided within 90 days after submission of the claim. If the claimant does not
receive notice of a decision within such 90-day period, the claimant's claim
shall be deemed denied.

              Section 3.02.Administrative Appeal. An applicant for benefits
whose claim has been denied in whole or in part, or the duly authorized
representative of such claimant, may, within 60 days after receipt of written
notice of such denial (or after the claim is deemed denied), request a review
thereof and submit to the Compensation Committee in writing such additional
information as the claimant desires. A claimant who submits a claim for review
shall have a reasonable opportunity to submit issues and comments in writing and
to review pertinent documents. The Compensation Committee will then render its
final decision with the specific reasons therefore (including references to
pertinent Plan provisions) and notify the claimant in writing of such decision
within 60 days after the submission of such request for review. If the claimant
does not receive notice of such decision within such 60-day period, the claim
for review shall be deemed denied.

              Section 3.03.Negotiation. Subject to Section 3.05, in case a
dispute or controversy shall arise between any Participant (or any person
claiming by, through or under any Participant) and the Company (including the
Compensation Committee) relating to or arising out of this Plan or a benefit
claim for which a final administrative appeal has been denied (or deemed denied)
pursuant to Section 3.02, either disputant may give written notice to the other
disputant ("Dispute Notice") that it wishes to resolve such dispute or
controversy by negotiations, in which event the disputants shall attempt in good
faith to negotiate a resolution of such dispute or controversy. If the dispute
or controversy is not so resolved within 30 days after the effective date of the
Dispute Notice, subject to Section 3.05, either disputant may initiate
arbitration of the matter as provided in Section 3.04. All negotiations pursuant
to this Section 3.03 shall be held at the Company's principal offices in
Houston, Texas (or such other place as the disputants shall mutually agree) and
shall be treated as compromise and settlement negotiations for the purposes of
the federal and state rules of evidence and procedure.

              Section 3.04.Arbitration. Subject to Section 3.05, any dispute or
controversy (a) which arises out of or relates to this Plan or a benefit claim
for which a final administrative appeal has been denied (or deemed denied)
pursuant to Section 3.02 and (b) which has not been resolved by negotiations in
accordance with Section 3.03 within 30 days of the effective date of the Dispute
Notice shall, upon the request of either disputant, be finally settled by
arbitration conducted expeditiously in accordance with the labor arbitration
rules of the American Arbitration Association. The arbitrator shall be not
empowered to award damages in excess of compensatory damages and each disputant
shall be deemed to have irrevocably waived any damages in excess of compensatory
damages. The arbitrator's decision shall be final and legally binding on the
disputants and their successors and assigns. The fees and expenses of the
arbitrator shall be borne solely by the prevailing disputant or, in the event
there is no clear prevailing disputant, as the arbitrator deems appropriate. All
arbitration conferences and hearings shall be held in Houston, Texas.

                                      -10-
<PAGE>

              Section 3.05.Exclusivity, etc. The dispute resolution procedures
set forth in Sections 3.03 and 3.04 shall not apply to any matter which, by the
express provisions of this Plan, is to be finally determined by the Compensation
Committee or by an accounting firm or employee benefits firm unless and until
the Compensation Committee, accounting firm or employee benefits firm issues its
decision (in the case of the Compensation Committee, in accordance with Sections
3.01 and 3.02). Any such determination by the Compensation Committee or an
accounting firm or employee benefits firm shall be final and may not be
overturned unless such determination is found to be arbitrary and capricious or
an abuse of discretion. No legal action may be brought with respect to this Plan
except for the purpose of specifically enforcing the provisions of this Article
III or for the purpose of enforcing any arbitration award made pursuant to
Section 3.04.

                                   ARTICLE IV

                            Miscellaneous Provisions

              Section 4.01.Cumulative Benefits. Except as provided in Section
2.03(b), the rights and benefits provided to any Participant under this Plan are
cumulative of, and are in addition to, all of the other rights and benefits
provided to such Participant under any Benefit Plan or any agreement between
such Participant and the Company.

              Section 4.02.No Mitigation or Offset. No Participant shall be
required to mitigate the amount of any payment provided for in this Plan by
seeking or accepting other employment following a termination of his or her
employment with the Company or otherwise. Except as otherwise provided in
Section 2.03(a), the amount of any payment provided for in this Plan shall not
be reduced by any compensation or benefit earned by a Participant as the result
of employment by another employer or by retirement benefits.

              Section 4.03.Amendment and Termination. (a) The Holdings Board and
the Chemicals Board shall be entitled to amend or terminate this Plan at any
time and for any reason; provided, however, that no amendment or termination of
this Plan shall affect the rights or benefits of any Participant or the
obligations of the Company accrued under this Plan as of the effective date of
such termination or amendment or any of the rights or benefits of such
Participant or the obligations of the Company accruing under this Plan after the
effective date of such termination or amendment on account of any Change of
Control that occurred prior to such effective date.

              (b) Notwithstanding the foregoing, no termination of this Plan,
and no amendment to this Plan that decreases or restricts benefits or
eligibility hereunder, shall be effective with respect to, binding upon or
reduce any benefits payable hereunder to, any person who at the time is a
Participant if such termination or amendment is (i) directly or indirectly
related to, connected with, in anticipation of, in furtherance of, pursuant to
the terms of or during the pendency of any Change of Control or is for the
purpose of directly or indirectly encouraging or facilitating a Change of
Control, or (ii) made during the period commencing 180 days prior the date on
which

                                      -11-
<PAGE>
any Change of Control occurs and ending 180 days after the date on which such
Change of Control occurs.

              Section 4.04.Administration. (a) The Compensation Committee is, as
respects the rights and obligations of all parties with an interest in this
Plan, given the powers, rights and duties specifically stated elsewhere in this
Plan and, in addition, is given full power and final discretionary authority to:

              (i) make determinations with respect to the administration of this
       Plan, construe and interpret its provisions, take all other actions
       deemed necessary or advisable for the proper administration of this Plan
       and determine all questions arising under this Plan, including the power
       to determine the rights or eligibility of Participants and any other
       persons, and the amounts of their benefits under this Plan, and to remedy
       ambiguities, inconsistencies or omissions;

              (ii) adopt such rules of procedure and regulations as in its
       opinion may be necessary for the proper and efficient administration of
       this Plan;

            (iii) enforce this Plan in accordance with its terms and in
       accordance with any rules of procedure and regulations adopted by the
       Compensation Committee pursuant to clause (ii) above; and

             (iv) employ agents, attorneys, accountants or other persons (who
       also may be employed by the Company), and allocate, delegate or
       reallocate to them such powers, rights and duties as the Compensation
       Committee may consider necessary or advisable to properly carry out the
       administration of this Plan; provided, however, that such allocation or
       delegation and the acceptance thereof by such agents, attorneys,
       accountants or other persons are in writing.

              (b) Subject to applicable law, any determination, construction or
interpretation of the provisions of this Plan, and any decision on any matter
within the discretion of the Compensation Committee, that is made by the
Compensation Committee in good faith shall be binding on all persons. In case of
any claim that the Compensation Committee (or any member thereof) did not act in
good faith, the burden of proof shall rest with the person or entity claiming
the absence of good faith.

              (c) The members of the Compensation Committee shall receive no
additional compensation for their services relating to this Plan. Any expenses
properly incurred by the Compensation Committee incident to this Plan, including
the cost of any bond required by applicable law, shall be paid by the Company.

              (d) The Company shall indemnify and hold harmless each member of
the Compensation Committee against and all expenses and liabilities arising out
of his or her administrative functions or fiduciary responsibilities, including
any expenses and liabilities that are caused by or result from an act or
omission constituting the negligence of such member in the

                                     -12-
<PAGE>
performance of such functions or responsibilities, but excluding expenses and
liabilities that are caused by or result from such member's own gross negligence
or willful misconduct. Expenses against which such member shall be indemnified
hereunder shall include, without limitation, the amounts of any settlement or
judgment, costs, counsel fees and related charges reasonably incurred in
connection with a claim asserted or a proceeding brought or settlement thereof.

              Section 4.05.Release of Claims. As a condition to receipt of the
benefits under this Plan, a Participant will be required to sign an agreement,
to be prepared by Holdings, in which he or she unconditionally and irrevocably
releases the Company and its successors, assigns, divisions, subsidiaries,
representatives, agents, officers, directors, stockholders and employees from
any claims, demands and causes of action relating to or arising out of the
termination of his or her employment with the Company, including any statutory
claims under the Age Discrimination in Employment Act of 1967, the Americans
with Disabilities Act of 1990, the Civil Rights Acts of 1964 and 1991 and the
Texas Commission on Human Rights Act, but excluding, however, any claims,
demands and causes of action pertaining to (a) any benefits that are to be
provided after the date of such agreement pursuant to the terms of this Plan,
(b) such Participant's rights, if any, under the Company's Amended and Restated
Key Employee Protection Plan (as the same may hereafter be amended or modified
in accordance with its terms) or (c) such Participant's rights, if any, under
any employment agreement between such Participant and the Company.

              Section 4.06.Assignability. The Company shall have the right to
assign this Plan and to delegate its duties and obligations hereunder, but not
otherwise; provided, however, that no such assignment shall relieve or discharge
the Company of or from any of its obligations under this Plan. Unless otherwise
approved by the Compensation Committee, no Participant shall transfer or assign
any of his or her rights under this Plan except by will or the laws of descent
and distribution. Except as otherwise provided by law, no benefit, right or
interest of any Participant under this Plan shall be subject to pledge,
encumbrance or charge, seizure, attachment or legal, equitable or other process,
or be liable for, or subject to, debts, liabilities or other obligations.

              Section 4.07.Consolidations, Mergers, Etc. Each of Holdings and
Chemicals will require any person, firm or entity which becomes its Successor to
expressly assume and agree to perform this Plan in writing, in the same manner
and to the same extent that Holdings or Chemicals, as the case may be, would be
required to perform hereunder if no such succession had taken place.

              Section 4.08.Benefit and Burden. This Plan shall be binding upon
and inure to the benefit of the Company and its successors and assigns. This
Plan and all rights of each Participant shall inure to the benefit of and be
enforceable by such Participant and his or her personal or legal
representatives, executors, administrators, heirs and permitted assigns. If any
Participant should die while any amounts are due and payable to such Participant
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Plan to such Participant's devisees, legatees
or other designees or, if there be no such devisees, legatees or other
designees, to such Participant's estate.

                                      -13-
<PAGE>

              Section 4.09.Notices. All notices and other communications
provided for in this Plan shall be in writing and shall be sent, delivered or
mailed, addressed (a) if to Holdings, Chemicals or any other Subsidiary, at
Holdings' principal office address or such other address as Holdings may have
designated by written notice to all Participants for purposes hereof, directed
to the attention of the Treasurer, and (b) if to any Participant, at his or her
residence address on the records of Holdings or to such other address as he or
she may have designated to Holdings in writing for purposes hereof. Each such
notice or other communication shall be deemed to have been duly given or mailed
by United States registered mail, return receipt requested, postage prepaid,
except that any change of notice address shall be effective only upon receipt.

              Section 4.10.Withholdings. The Company shall have the right to
deduct from any payment hereunder all taxes (federal, state or other) and other
payments which it is required to withhold therefrom.

              Section 4.11.No Employment Rights Conferred. Nothing contained in
this Plan shall (i) confer upon any Participant any right with respect to
continuation of employment with the Company or (ii) subject to the rights and
benefits of any Participant hereunder, interfere in any way with the right of
the Company to terminate such Participant's employment at any time.

              Section 4.12.Governing Law. This Plan shall be governed in
accordance with the laws of the State of Texas (without giving effect to
conflicts of laws principles thereof) and applicable federal law.

              IN WITNESS WHEREOF, and as conclusive evidence of the adoption of
this Plan by the Holdings Board and the Chemicals Board, Holdings and Chemicals
have each caused this Plan to be duly executed in its name and behalf by its
proper officer thereunto duly authorized as of March 8, 2001.

                                        STERLING CHEMICALS HOLDINGS, INC.

                                        By:
                                           ------------------------------------
                                        Printed Name:
                                                     --------------------------
                                        Title:
                                              ---------------------------------

                                        STERLING CHEMICALS, INC.

                                        By:
                                           ------------------------------------
                                        Printed Name:
                                                     --------------------------
                                        Title:
                                              ---------------------------------

                                      -14-<PAGE>
                                                                   EXHIBIT 10.15

                                AGREEMENT BETWEEN

                          STERLING PULP CHEMICALS, LTD.

                                 NORTH VANCOUVER

                                BRITISH COLUMBIA

                                       AND

                           PULP, PAPER AND WOODWORKERS
                                    OF CANADA

                                     LOCAL 5

                                BRITISH COLUMBIA

                                    EFFECTIVE
                      DECEMBER 1, 2000 to NOVEMBER 30, 2003

<PAGE>

                                TABLE OF CONTENTS

ARTICLE

<Table>
<S>                                                                         <C>
1         PURPOSE                                                           1
2         RECOGNITION                                                       1
3         MANAGEMENT FUNCTIONS                                              1
4         UNION SECURITY                                                    2
5         TERMS OF AGREEMENT AND CHANGES IN AGREEMENT                       2
6         STRIKES AND LOCKOUTS                                              3
7         HOLIDAYS                                                          3
8         CALL TIME                                                         5
9         HOURS OF WORK                                                     5
10        DEFINITIONS                                                       7
11        ALLOWANCE FOR FAILURE TO PROVIDE WORK                             8
12        UNION NOTICES                                                     8
13        SAFETY                                                            8
14        SENIORITY                                                         9
15        GRIEVANCE PROCEDURE                                               15
16        ARBITRATION                                                       16
17        DAYS OFF AND SCHEDULE OF SHIFTS                                   17
18        VACATIONS                                                         17
19        TEMPORARY EMPLOYEES                                               20
20        JOB CLASSIFICATIONS AND JOB RATES                                 21
21        WAGE RATE ADJUSTMENTS                                             21
</Table>

<PAGE>

                           TABLE OF CONTENTS (CONT'D)

<Table>
<S>                                                                        <C>
22              OVERTIME AND PREMIUM TIME                                   22
23              JURY DUTY PAY                                               23
24              BEREAVEMENT LEAVE                                           24
25              MAINTENANCE DEPARTMENT APPRENTICES                          24
26              SUSPENSION AND/OR DISCHARGE                                 24
27              LEAVE OF ABSENCE                                            24
28              COMMITTEES                                                  25
29              TRAINING                                                    26
30              TECHNOLOGICAL CHANGE AND TERMINATION PAY                    26
31              CONTINUOUS 12-HOUR SHIFTS                                   27
32              HEALTH AND WELFARE                                          27
33              PENSION PLAN                                                28
                EARLY RETIREMENT PROVISION                                  29
34              BANKING OF OVERTIME                                         30
                APPENDIX "A" - JOB CLASSIFICATIONS & RATES                  31
                             - MULTI SKILL/DUAL TRADES                      31
                APPENDIX "B" - MAINTENANCE APPRENTICESHIP                   32
                APPENDIX "C" - BENEFITS OF HOURLY-PAID EMPLOYEES            34
                               NORTH VANCOUVER PLANT
                APPENDIX "D" - PRODUCTION SCHEDULE                          35
                LETTERS OF UNDERSTANDING
                             - TEMPORARY MAINTENANCE CO-ORDINATOR           36
                             - RAIL CAR INSPECTION                          37
</Table>

Changes from previous contract (expired November 30th, 2000) are indicated by
shading & bolding.

                                                                              ii
<PAGE>

                                AGREEMENT BETWEEN
                          STERLING PULP CHEMICALS, LTD.
                              NORTH VANCOUVER, B.C.
                   (HEREINAFTER REFERRED TO AS "THE COMPANY")

                                       AND

                                     LOCAL 5
                           PULP, PAPER AND WOODWORKERS
                                    OF CANADA
                    (HEREINAFTER REFERRED TO AS THE "UNION")

                                    ARTICLE 1
                                     PURPOSE

1.01     The purpose of the Agreement is to provide for orderly collective
         bargaining, prompt disposition of grievances, wages, hours of work and
         other terms and working conditions to the extent and in the manner
         provided herein.

                                    ARTICLE 2
                                   RECOGNITION

2.01     The Company recognizes the Union as the sole and exclusive bargaining
         agent for its employees employed in production and maintenance except
         those excluded by the Labour Relations Code of British Columbia (1993),
         foreman, those above the rank of foreman, sales staff, office and
         clerical staff test and quality control staff, laboratory technicians,
         draftsmen, security guards and those engaged in office janitor work.

2.02     The terms "employee" and "employees" when used in this agreement shall
         mean persons in the employ of the Company within the bargaining unit
         described herein above and covered by this Agreement. Gender: The use
         of "he", "his" and "him" refer to both the masculine and feminine
         genders.

2.03     The Company recognizes the Union's right to communicate with its
         members on the Company's property so that the Union, through its
         elected officials, may fairly represent the employees.

                                    ARTICLE 3
                              MANAGEMENT FUNCTIONS

3.01     All functions, powers, or authority which the Company has not
         specifically abridged, delegated or modified by this Agreement will be
         recognized by the Union as being retained by the Company.

                                                                               1
<PAGE>

                                    ARTICLE 4
                                 UNION SECURITY

4.01     Any employee who is now a member in good standing or who becomes or is
         reinstated as a member of the Union shall, as a condition of
         employment, maintain such membership in good standing throughout the
         term of this Agreement. Any new employee hired shall become a member of
         the Union thirty (30) days after his or her employment. In the event of
         a Local Union intending to suspend a member for non-maintenance of
         membership, the Company shall be notified by the local, in writing at
         least seven (7) days before suspension.

4.02     No employee shall be subject to any penalties against his application
         for membership or reinstatement, except as may be provided for in the
         Constitution of the Pulp, Paper and Woodworkers of Canada.

4.03     There shall be no discrimination against any employee or employees in
         any manner whatsoever because of race, colour, creed, nationality,
         Union membership, and non-Union membership.

4.04     In case a dispute arises as to whether or not an employee has failed to
         maintain his Union membership in good standing, the Union agrees to
         save harmless from and indemnify the Company for any liability that may
         arise from any acts of the Company taken under provisions of ARTICLE 4,
         as a result of its reliance on a representation of facts by the Union.

4.05     The Company will deduct a Union initiation fee and monthly Union dues
         in amounts authorized by individual employees and presented in writing
         to the Company. Any Union dues passed in compliance with Local 5 of the
         Pulp, Paper and Woodworkers of Canada by-laws shall be applied and
         deducted upon notification from the Secretary of Local 5 sent to the
         Company. Such deductions shall be remitted to the Local Secretary -
         Treasurer as soon as possible after the first pay period of each month
         and any adjustments will be made the following month. The Union shall
         advise the Company of the address of the Local Treasurer and of any
         changes in this address. Deductions of Union dues from an employee's
         pay shall be discontinued when written authorization furnished the
         Company by the employee is revoked, in writing by the employee.

4.06     There shall be no solicitation for membership, meetings, etc., during
         working hours and/or on Company premises except with the permission of
         the Company.

4.07     For the purpose of this Agreement, a member of the Union in good
         standing shall mean an employee who has paid or tendered an amount
         equivalent to the regular monthly Union dues and assessments.

                                    ARTICLE 5
                               TERMS OF AGREEMENT
                            AND CHANGES IN AGREEMENT

5.01     This Agreement shall be in effect until the 30th of November, 2003 and
         shall continue thereafter from year to year unless during the four
         months immediately preceding the expiry date either party has given
         written notice to the other party that desires revision of this
         Agreement and its expiry date.

5.02     If notice of desire for changes has been given the parties shall, as
         soon as agreeable, meet for collective bargaining. If such negotiations
         cannot be completed prior to December 1st following the October 1st on
         which such notice was given, any changes in compensation to employees
         shall be retroactive to December 1st.

                                                                              2
<PAGE>
                                    ARTICLE 6
                              STRIKES AND LOCKOUTS

6.01     The Union and its members agree that it will not cause, authorize or
         sanction any strike or stoppage of any of the Company's operations or
         any Curtailment of work or restriction of or interference with
         production during the terms of this Agreement.

6.02     The Company agrees that it will not cause or sanction a lockout during
         the terms of this Agreement.

                                    ARTICLE 7
                                    HOLIDAYS

7.01              Recognized Holidays

         (a)      New Year's Day     Canada Day              Remembrance Day
                  Good Friday        1st Monday In August    Christmas Day
                  Easter Monday      Labour Day              Boxing Day
                  Victoria Day       Thanksgiving Day

         (b)      In the event that Heritage Day is declared as a Statutory
                  Holiday by the Federal Government it will be included in the
                  above list of holidays.

7.02     The period of time recognized as a holiday is the twenty- four (24)
         hour period from 0001 hrs to 2400 hrs on the date recognized as the
         holiday. However for those employees working the 12 hour shift
         schedule, the holiday will commence at 1830 hours immediately preceding
         such 12:01am and will end twenty-four (24) hours later. (i.e. 1830
         hours on the day of the holiday) .

7.03     The hours of commencing and ending specified above may be varied by
         mutual agreement of the Management and the Union Standing committee.
         The specified hours of commencing or ending will be adjusted to
         coincide with regular hours for changing shifts.

7.04     a)       It is understood that day workers will not be required to work
                  on a holiday except to meet the needs of the continued
                  uninterrupted operation of the plant.

         b)       Further, and with special reference to the Christmas holiday
                  the parties recognized that shift workers will be held to
                  absolute reasonable minimum and that only those activities
                  required to maintain the necessary efficient operation of the
                  plant shall be performed.

7.05     a)       When any of the holidays listed in the Agreement falls on a
                  Saturday or Sunday, shift workers should observe the holiday
                  on the day which it falls. Day workers, scheduled Monday to
                  Friday, will observe the holiday on such a day as will provide
                  them with a long weekend. The determination of such day or
                  days shall be determined by the Company consistent with
                  operational requirements.

         b)      In the event a holiday falls on a day when a day worker would
                 otherwise be scheduled off, then said employee will take the
                 holiday on the Thursday before or the Tuesday following the
                 holiday whichever is applicable and is mutually agreed.

         c)       In the event the holiday falls on the day when a shift worker
                  would otherwise be scheduled off, he has the option of banking
                  the time and/or the money.

                                                                              3
<PAGE>

         d)       For shift workers, holiday pay is calculated as 9 1/3 hours
                  pay at straight time, and in the case of banking, 9 1/3 hours
                  will be banked for each holiday that falls on a scheduled day
                  off, and 12 hours for each holiday worked.

7.06     Overtime shall be paid for all work performed during holidays at the
         rates hereinafter specified.

7.07     In addition to any other compensation earned, all employees who are on
         the payroll of the Company on any of the forgoing recognized holidays
         will be granted nine and one-third (9 1/3) hours pay on the straight
         time rate of the employee's regular job, provided however, that:

         (a)     Any new employee must have been on the payroll for not less
                 than thirty (30) days just preceding the holiday and must have
                 worked a minimum of eighty five (85) hours during that thirty
                 (30) day qualifying period.

         b)       The employees must have worked his scheduled work day before
                  and his scheduled work day after the holiday unless failure to
                  work was due to any of the following events.

                  (1) When the employee is on his regular authorized vacation.

                  (2) When the employee's absence is due to bonafide sickness or
                      occupational or non- occupational accident provided
                      however, that payment for such holiday is not being
                      covered by W.C.B. or sick benefit insurance. Payment for
                      such holiday will not be extended beyond the time limit of
                      W.C.B. or sick benefit insurance.

                  (3) When a trade in shifts agreed upon between employees, and
                      approved in advance by Management, results in temporary
                      change of the scheduled work day after the holiday,
                      provided the employee works the shift agreed upon.

                  (4) When the employee's absence is due to an approved leave of
                      absence granted by the Company; provided however that such
                      leave of absence does not exceed ten (10) days prior to or
                      ten (10) days following such holiday.

                  (5) When the employee's absence is due to Jury Duty,
                      subpoenaed witness or bereavement leave as provided by
                      this Agreement.

                  (6) When the operation in which the employee is engaged is
                      curtailed or discontinued by the decision of management
                      and which curtailment of discontinuance changes or
                      eliminates the employee's scheduled work day before, or
                      his scheduled work day after, such holiday.

7.08     An employee whose work schedule conflicts with the normal observance of
         a specified holiday may elect to bank the holiday, and take the time
         off and pay thereof, provided the following conditions are met:

         (a)      The holiday(s) and holiday(s) pay shall be taken at a time
                  convenient to the employee and management consistent with the
                  continued, economic and efficient operation of the plant. It
                  is understood that requests for time off received and granted
                  thirty (30) days in advance will be honoured.

         (b)      Employees must notify their supervisor in writing at least one
                  week in advance of the holiday of his intent to bank that
                  holiday.

                                                                              4
<PAGE>

         (c)      It is also agreed and understood that the employee will take
                  such banked holidays within one year of banking. If the
                  employee does not arrange to take the holiday within the given
                  delay, the Company will schedule time off at its own
                  discretion in lieu thereof or alternatively, if mutually
                  agreed, reimburse any banked holiday pay and forfeit the
                  banked time.

7.09     Employees working temporarily at a higher job rate will be paid at the
         higher job rate for a statutory holiday providing they work at that
         higher job rate on either side of said statutory holiday, otherwise
         they will be paid for the statutory holiday based on their regular job
         rate. If the employee is scheduled off on either side of the statutory
         holiday, then his last scheduled day on before, or his first scheduled
         day on after the statutory holiday, will satisfy this section.

7.10     In the event that an employee is called in, or is scheduled to work, on
         a recognized statutory holiday on a job paying a higher rate than his
         regular job, he will be paid for the statutory holiday at the higher
         rate of pay.

                                    ARTICLE 8
                                    CALL TIME

8.01     Call time is an occasion when an employee, after leaving the premises,
         is called in to work before his next regularly scheduled reporting
         time. In such cases, the Company will pay an additional amount over and
         above pay for hours worked, equal to three (3) hours pay at the
         employee's straight time hourly rate, which shall be known as call
         time. Such call time shall not be payable when the employee, before
         leaving the premises, is notified to report for work before his next
         regularly scheduled reporting time.

8.02     When the hours worked on call time are extended to the employee's
         regularly scheduled starting time, overtime rates as called for by this
         section, shall cease at the employee's regularly scheduled starting
         time unless such call-in was of such duration as to give the employee a
         full shift prior to his regular starting time consistent with article
         22.10.

                                    ARTICLE 9
                                  HOURS OF WORK

9.01     Hours of work shall be scheduled by the Company in accordance with the
         requirements of the plant.

9.02     Employees shall be at their work place and ready to assume their duties
         at the commencement of their work day.

9.03     Shift workers will not leave their work place until 0630 HRS (or 1830
         HRS) unless relieved by the employee assigned to the same position on
         the following shift.

9.04     Employees are expected to co-operate in the execution of necessary
         overtime work. The Company will make every effort to keep overtime to a
         minimum consistent with the continued efficient operation of the plant.

9.05     The normal hours of work shall be:

         a)       For Day Workers - from 0700 Hrs. to 1200 Hrs. and from 1230
                  Hrs. to 1650 Hrs. A ten minute wash up period will be provided
                  prior to lunch and at the completion of the work day.

                  Labourers and Relief Brine Operators assigned to the
                  Maintenance Department (for a period of a week or more), will
                  be classified as Day Workers.

                                                                               5
<PAGE>

         b)       For Shift Workers - from 0630 Hrs. to 1830 Hrs., and 1830 Hrs.
                  to 0630 Hrs. - as per Article 31.

         c)       For Labourers and Relief Brine Operators assigned to the
                  Production Department - Two different workday formats are
                  available:

                      i)   From 0630 Hrs. (or 0730 Hrs.) to 1600 Hrs. (or 1700
                           Hrs.), and 1600 Hrs. (or 1700 Hrs.) to 0130 Hrs. (or
                           0230 Hrs.).

                           A one-half hour lunch break is included, with a ten
                           minute wash up period prior to lunch and at the
                           completion of the work day.

                      ii)  From 0630 Hrs. to 1830 Hrs., and 1830 Hrs. to 0630
                           Hrs. - similar to a shift worker.

9.06     The regular schedule of hours of work shall be:

              a)  For Day Workers - 9 1/3 hours per day and 37 1/3 hours per
                  week. The normal work week will be either Monday to Thursday,
                  or Tuesday to Friday.

              b)  For Shift Workers - 12 hours per day and 36 or 48 hours per
                  week with compensating scheduled time off to average 37 1/3
                  hours/week - as per Article 31. Compensating time off for
                  Shift Workers shall be covered by the Senior Relief Operators
                  and taken in blocks of three (3) day shifts as outlined in the
                  shift schedule in Appendix D. When ever the Senior Relief
                  Operator is scheduled as a spare operator, he may be
                  rescheduled to provide relief on dayshift or nightshift as
                  required.

              c)  For Labourers & Relief Brine Operators assigned to the
                  Production Department - either:

                      i)   Four workdays of 9 hours per day, with compensation
                           to allow averaging of 37 1/3 hours/week over a 9 week
                           period, or

                      ii)  Three workdays of 12 hours per day, with compensation
                           to allow averaging of 37 1/3 hours/week over a 9 week
                           period.

              d)  This article is for the purpose of providing a basis for
                  calculating overtime and shall not be construed as a guarantee
                  of hours of work.

9.07     a)       Labourers and Relief Brine Operators assigned to the
                  Production Department will receive shift premiums (when
                  working the evening shift(s) outlined in Article 9.05(c) as
                  per Article 22.09, & statutory holiday compensation as per
                  Article 7.05(c) & (d).

         b)       Every effort shall be made to schedule consecutive days off in
                  each work week when ever possible.

         c)       For Labourers & Relief Brine Operators, Management will
                  provide access to documentation on: scheduling of hours, &
                  mutual agreements between workers & Management regarding
                  shifts.

                  It is the intention of the company to assign shifts for
                  Labourers and Relief Brine Operators equitably & fairly.

                                                                               6
<PAGE>

                                   ARTICLE 10
                                   DEFINITIONS

10.01    The words "shift workers" means employees assigned to a job on a
         regularly rotating shift schedule. All other employees are considered
         day workers.

10.02    The word "day" shall mean a calendar day and shall be a period of
         twenty-four (24) hours beginning at 0001 hours. However, in the case of
         the work schedule a shift worker working the 12 hour schedule, and only
         in such cases, the day shall deem to have commenced at 0630 HRS.

10.03    The word "week" means a period of seven (7) days beginning at 0001
         hours Monday. However, in the case of the work schedule of a shift
         worker working the 12 hour schedule, and only in such cases, the week
         shall deem to have commenced at 0630 HRS Monday.

10.04    Further to Article 18:

         (a)      The word "week", when used to define a length of vacation, and
                  for the purposes of calculating vacation pay, shall mean
                  37 1/3 average working hours.

         (b)      The word "day", when used to define a length of a vacation,
                  shall mean 9 1/3 working hours.

10.05    Bargaining Unit Work

         (a)      It is the policy of the Company not to use non-bargaining unit
                  personnel to do work normally performed by hourly paid
                  employees.

         It is recognized by the parties that there may be exceptions to the
         above, such as:

         (i)      In emergency situations

         (ii)     When no qualified hourly employee is available

         It is recognized by both parties, however, that for the practical and
         efficient operation of the plant, there are occasions when a supervisor
         must help. These occasions will be temporary in nature and will not
         result in the displacement or exclusion of hourly rated employees.

         (b)      It is the intention of the company not to contract out work
                  normally performed by bargaining unit personnel.

                  It is recognized that there are occasions when contractors may
                  be required:

                  (i)      In emergency situations

                  (ii)     When no qualified bargaining unit employee is
                           available

                  (iii)    When the bargaining unit crew size is not capable of
                           handling such work in a timely fashion.

                  On the occasion when the bargaining unit crew size is not
                  capable of handling such work in a timely fashion, the company
                  shall consult the union standing committee before the work is
                  undertaken by non-Sterling personnel.

                  Sterling Pulp Chemicals, Ltd. will review at quarterly Union
                  Standing Committee meetings the utilization of contractors
                  performing normal bargaining unit work to the exclusion of
                  projects.

                                                                               7
<PAGE>

                                   ARTICLE 11
                      ALLOWANCE FOR FAILURE TO PROVIDE WORK

11.01    An employee who reports for work at his regularly scheduled time and
         who has not been notified by the Company not to report, shall receive
         not less than one half his regular shifts work at his regular straight
         time hourly rate, or pay in lieu thereof at the discretion of the
         Company.

11.02    A telephone call to the number on record in the employee's name in the
         plant personnel files will be considered as proof of notification. An
         employee who leaves no telephone number by which he can be contacted
         forfeits the right to the one half shift or pay in lieu there of as
         mentioned in 11.01 above.

                                   ARTICLE 12
                                  UNION NOTICES

12.01    The Company will provide the Union with a secured bulletin board in the
         plant for the purpose of posting official Union notices and papers.
         Notices will be posted and initialed by a member of the Union Standing
         Committee, or the authorized representative of the Bargaining Agent.

                                   ARTICLE 13
                                     SAFETY

13.01    Employees and the Company are to comply with established Safety Rules
         as amended by the Joint Occupational Health and Safety Committee from
         time to time. Employees will not be expected to operate with unsafe
         equipment or under unsafe working conditions. Employees are expected to
         report immediately any unsafe equipment or condition to the Production
         or Maintenance Manager using where appropriate the Safety Work Order
         System.

13.02    The Union will elect three of its members to serve on the Joint
         Occupational Health and Safety Committee preferably with representation
         from each Department. The Plant Manager will appoint three Company
         representatives.

         The Occupational Health and Safety Committee will meet monthly to
         develop and promote the safety program. It is agreed that the Committee
         will appoint a Chairman with the responsibility alternating between the
         Company and the Union. Where the Chairman is a Union employee, the
         Secretary shall be a Company representative and vice versa.

13.03    The Union undertakes to encourage its members to cooperate in the
         execution of the Plant Safety Program and Safety Education.

13.04    First Aid Attendants

         As of September 1st, 1994, the Occupational First Aid Regulations
         require that the First Aid Attendants only require a Level II
         certificate.

         First Aid Attendants currently holding a Level III equivalent
         certificate, (i.e.: an Industrial First Aid 'A' or 'B' certificate) and
         who desires to renew at that level may do so.

         All new candidates will only be given necessary training to acquire a
         Level II certificate.

                                                                               8
<PAGE>

         If a person lapses in renewing his First Aid certificate and then wants
         to renew, he will be treated as a new candidate.

         Wages during training and exams will be paid as for scheduled hours of
         work:

                 - During the training period.

                 - On the day before the exam.

                 - On the exam or re-exam day.

         The company will pay for associated costs of certification with prior
         authorization of the supervisor. An employee holding a Level II or III
         W.C.B. Occupational First Aid certificate will be paid $1.00 per hour
         over and above the employee's regular rate.

                                   ARTICLE 14
                                    SENIORITY

14.01    General Principles

         (a)      The company recognizes the principles of seniority in the
                  administration of promotions, demotions, transfers, layoffs
                  and recalls. In the application of seniority, provided an
                  employee has the necessary qualifications and ability to
                  perform the work in accordance with job requirements,
                  seniority shall prevail.

         Definitions

         (b)      Plant seniority shall mean the length of continuous service in
                  the employ of the signatory Company in the North Vancouver
                  Bargaining Unit.

         (c)      Departmental seniority shall mean the length of continuous
                  service in a permanent position within the recognized
                  departments.

14.02    Establishing Seniority

         (a)      Plant seniority shall be established from the original date of
                  hire, after completion of a probationary period. A
                  probationary period consists of 40 working days and may be
                  extended by mutual agreement between the company and the
                  union.

         (b)      During the probationary period defined in 14.02(a), a new
                  employee will not have any seniority rights and shall be
                  subject to transfer, demotion, promotion, layoff or discharge
                  at the sole discretion of the Company without recourse to the
                  grievance procedure of this Agreement.

         (c)      The Company will appraise each probationary employee at the
                  end of his first thirty (30) working days in his presence. A
                  Shop Steward or Union Standing Committee Member shall be
                  present if requested by the employee. Copy of the appraisal to
                  be sent to the employee and the Union Standing Committee.

         (d)      An employee who exercises his seniority to promote or bump
                  into another job within the Bargaining Unit, shall be
                  probationary in the new job for a period of two (2) weeks
                  after training is completed. In such instance, the employee
                  shall be formally appraised in his presence and within the
                  stipulated probationary period. A Shop Steward or Union
                  Standing Committee Member shall be present if requested by the
                  employee.

                                                                               9
<PAGE>

14.03    Loss of Seniority

         (a)      Plant or Departmental

                  An employee shall cease to have Plant seniority or
                  Departmental seniority if the employee:

                  1)       quits or resigns, or

                  2)       is discharged

                  3)       Is laid off for a period exceeding recall provisions.

                  4)       Is absent from work for three (3) consecutive days on
                           which he is scheduled to work without notifying his
                           immediate supervisor, giving satisfactory reasons.

                  5)       When recalled to work, once notice by registered mail
                           to the address on record with the company has been
                           made, fails to indicate his intent to return to
                           company service within three (3) days or fails to
                           report to work within seven (7) days.

                  6)       Is absent without cause, to the satisfaction of
                           Management, beyond the time limit of a sick leave or
                           an authorized leave of absence granted by the
                           Company.

         However, Plant and Departmental seniority shall continue to accrue:

                  i)       If absent due to illness or injury provided the
                           absence does not exceed the period provided for in
                           the L.T.D. program, unless seniority would have
                           otherwise been lost.

                  ii)      If absent due to industrial illness or accident at
                           work (recognized by the Worker's Compensation Board)
                           which occurs while working for the Company, unless
                           seniority would have otherwise been lost.

         (b)      Departmental Seniority

                  An employee shall cease to have Departmental seniority in the
                  Department from which he was displaced, if the employee is:

                    1)     Laid off or demoted out of the Department, because of
                           cutbacks, for a period exceeding the recall rights as
                           set out in 14.05(a).

                    2)     Permanently transferred to another Department for a
                           period exceeding six (6) months.

                    3)     Is demoted outside the recognized Departments either
                           voluntarily or for inability to perform the work. If
                           the cause for the demotion has been corrected the
                           employees' previous Departmental seniority will be
                           reinstated.

14.04    Layoffs

         In the event of departmental layoff resulting from cutbacks, employees
         affected will be re-classified to Relief Brine Operator or Labourer
         positions. Layoff from these positions will be on the basis of Plant
         seniority. (Refer to diagram in 14.06)

                                                                              10
<PAGE>

14.05    Recall Provisions

         (a)      In the event of a layoff, recall rights shall be established
                  according to:

                  1)       An employee who is laid off with more than the
                           probationary period, but less than one (1) year of
                           continuous service, shall be entitled to recall
                           rights according to his accumulated Plant seniority
                           for six (6) months from the date of layoff.

                  2)       An employee with one or more years of continuous
                           service shall be entitled to recall rights according
                           to his accumulated Plant seniority for twelve (12)
                           months from the date of layoff, plus one (1)
                           additional month for each year's service up to an
                           additional six (6) months.

         (b)      Departmental Recall Rights

                  An employee shall have recall rights to the Department from
                  which he was displaced as follows:

                  1)       Less than one (1) year of Departmental seniority:
                           - six (6) months recall rights from date of
                           displacement.

                  2)       One (1) or more years of Departmental seniority:
                           - twelve (12) months recall rights plus one (1) month
                           for each year of service up to a maximum of six (6)
                           additional months.

                  However, departmental recall rights shall decrease from the
                  time of displacement and ultimately expire, unless the
                  affected employee is permanently recalled to or promoted to
                  his former position. In such instance the employee affected
                  will be reinstated with his previous accumulated Departmental
                  seniority.

         (c)      Employees shall be recalled to the plant on the basis of
                  Departmental or Plant seniority, subject to Article 14.01(a)
                  depending on where the vacancy occurs.

         (d)      Benefits

                  All benefit plans shall immediately be reinstated upon the
                  recall of an employee.

         (e)      It shall be the duty of all employees to notify the Company
                  promptly of any change in their address or phone number. If an
                  employee fails to do this, the Company will not be responsible
                  for failure to contact the employee.

                                                                              11
<PAGE>

14.06             Departmental Organization

                  The parties recognize the following two departments for
                  seniority purposes in matters of permanent promotions,
                  demotions, layoffs, recalls and transfers:

                                    1)      Production Department
                                    2)      Maintenance Department

The lines of progression shall be as follows:

<Table>
<Caption>
             PRODUCTION DEPARTMENT                    MAINTENANCE DEPARTMENT
             ---------------------                    ----------------------
<S>                                                   <C>

             Senior Relief Operator                        Tradesperson

                Crystal Operator                           Storesperson

                 Cell Operator                          Maintenance Helper

                 Brine Operator

                              Relief Brine Operator

                                    Labourer

</Table>

14.07    Promotions

         (a)      Permanent promotions in established lines of progression will
                  take place with Departmental seniority governing subject to
                  Article 14.01(a). The positions outlined in Article 14.06 that
                  are excluded from lines of progression shall be subject to
                  posting provisions. (See Article 14.08)

         (b)      It is understood that promotion to the position of Tradesman
                  can only be done through the apprenticeship program as
                  outlined in Article 25, or through the promotion of a
                  qualified person.

         (c)      In the event that an employee declines to exercise his
                  Departmental seniority to step up to the next position in his
                  Department, whether permanently or temporarily, to which he
                  would otherwise have been entitled by virtue of Departmental
                  seniority, ability and qualifications, he will no longer be
                  able to exercise his Departmental seniority to obtain a job
                  senior to the employee who bypassed him. A refusal to step up
                  to the next position in the line of progression shall be
                  recorded and a copy sent to the Union.

                                                                              12
<PAGE>

         (d)      4th Class Stationary Engineer's Certificate (Permanent 4th
                  Class Certificate)

                  1)       Upon permanent shutdown of the current boiler and
                           temporary low pressure boiler, a permanent
                           certificate is not a requirement for the purpose of
                           promotion in the production department. It is
                           understood and agreed that production department
                           seniority as of the boiler(s) shutdown date prevails,
                           in accordance with Article 14.07(c).

                  2)       Present Brine Operators and Relief Brine Operators
                           have the option to obtain their permanent 4th Class
                           certificate as per Article 14.07(d)3 iv). Upon
                           successful completion of a permanent 4th Class
                           certificate the Brine Operator / Relief Brine
                           Operator will receive the steam ticket rate when
                           working as a Brine Operator.

                  3)       Should the need arise in the future for a permanent
                           4th Class certificate because of physical plant
                           changes, the following will apply:

                           i)       A permanent 4th Class certificate is
                                    required for the permanent positions of Cell
                                    Operator & Crystal Operator. The Relief &
                                    Temporary Crystal Operators will also
                                    require a permanent 4th Class certificate.

                           ii)      In order to assist an employee who is
                                    promoted to the position of temporary or
                                    permanent Cell Operator, he will be
                                    supported in his application for a temporary
                                    4th Class certificate. He will be required
                                    to obtain a permanent 4th Class certificate
                                    within 12 months. This may be extended to 15
                                    months if he has attempted and failed his
                                    exam in the first 12 months. This also
                                    applies to Relief, Temporary, or Permanent
                                    Crystal Operators.

                           iii)     If after the 15 months, or after 12 months
                                    if no attempt is made to write the exam, he
                                    shall be demoted to a position not requiring
                                    a permanent 4th Class certificate.

                           iv)      In order to assist a production employee to
                                    obtain a permanent 4th Class certificate (to
                                    study and write the necessary material and
                                    exam) he will be allowed paid time off to a
                                    maximum of 84 hours. This will also include
                                    employees who, prior to 1994, have
                                    previously been given the opportunity to
                                    write the exam for a permanent 4th Class
                                    certificate.

14.08    Postings

         Permanent vacancies in the following job classifications will be posted
         and shall be filled on the basis of Plant seniority subject to 14.01(a)
         and Article 14.07.

                  (1)      Brine Operator

                  (2)      Maintenance Helper

                  (3)      Storesperson

                  (4)      Tradesperson

         Notice of permanent vacancies within the scope of the agreement will be
         posted for twelve (12) days, on the bulletin boards. During this time,
         applications may be made to the Administration Manager.

                                                                              13
<PAGE>

14.09    Temporary Openings

         Temporary openings in the Production Department will be divided into
         two (2) categories, namely:

         Type "A" having a duration in excess of three (3) months, and will be
         applicable only in cases of extended leave of absence and long term
         sickness or disability.

         Type "B" having a duration of up to three (3) months to cover vacation
         relief, short term illness and short term absence.

         Type "A" openings will be filled in the same manner as that outlined in
         Article 14.06 for permanent openings. However, in the event that the
         circumstances which caused the opening, return to normal, then the
         temporary position will cease to exist. The accrual of Departmental
         seniority in such cases will be governed by Article 14.01.

         Type "B" openings may be filled by employees in the lowest
         classification within the respective Department, out of line of
         Departmental seniority and subject to Article 14.01(a), to meet the
         continued and efficient operation of the Plant.

         The Company, in administering Type "A" openings, will estimate the
         expected duration of an opening without prejudice, from the information
         available.

14.10    Transfers

         (a)      In the case of permanent transfer from one Department to
                  another, Plant seniority shall govern subject to the provision
                  of Article 14.01(a).

14.11    Demotions

         (a)      Demotions resulting in bumping in the recognized Departments
                  for whatever reason inclusive of layoffs, shall take place in
                  reverse progression to that outlined in Article 14.06 with
                  accumulated Departmental seniority governing subject to
                  Article 14.01(a). It is understood that Maintenance employees
                  in such instance shall exercise Departmental seniority to
                  displace only those employees in the Maintenance Helper and
                  Storesperson positions.

         (b)      An employee who is demoted, within his Department, either
                  voluntarily or for inability to perform the work shall not be
                  entitled to exercise Departmental seniority to move up to a
                  higher job classification. If the cause for the demotion has
                  been corrected the employees' previous Departmental seniority
                  will be reinstated.

14.12    Seniority Lists

         The company shall, within thirty (30) days of the date on which this
         Agreement is signed, furnish the Union with two (2) copies of a list
         showing the Plant and Departmental seniority of each employee then on
         the payroll and will thereafter revise such list each six (6) months.

14.13    Any employee promoted to a supervisory or staff position which removes
         him from the Bargaining Unit shall retain and accumulate his Plant and
         Departmental seniority within the Bargaining Unit for a period of up to
         twelve (12) months following this promotion. The employee will continue
         to pay the prescribed union dues while he maintains his seniority
         within the Bargaining Unit. If during this twelve (12) month period
         such employee is transferred back to the Bargaining Unit, he shall
         exercise his accumulated Plant and Departmental seniority in returning
         his to his former job. Any extension of the above shall be by mutual
         agreement and limited to two (2) month intervals.

                                                                              14
<PAGE>

                                   ARTICLE 15
                               GRIEVANCE PROCEDURE

15.01    A grievance is any difference of opinion or dispute with respect to the
         interpretation, application or alleged violation of this Agreement. A
         grievance must be presented in the following manner.

15.02    Step No. One (1)

         If an employee has a complaint, that employee alone or accompanied by a
         shop steward shall submit the complaint to his Department Manager. The
         Department Manager shall render his decision to the employee within the
         following ten (10) calendar days. If the decision is not satisfactory
         the complaint shall be reduced to writing as a grievance.

15.03    Step No. Two (2)

         If a settlement is not reached as outlined above, the grievance,
         reduced to writing, shall be submitted to the employee's Department
         Manager within fourteen (14) calendar days following receipt of the
         Department Manager's step one (1) decision. A meeting between the Union
         Standing Committee, the grievor and the Department Manager shall take
         place within fourteen (14) calendar days following the submission of
         the written grievance. The Department Manager shall render his written
         decision within fourteen (14) calendar days following the step two (2)
         meeting.

15.04    Step No. Three (3)

         If the written decision of the Department Manager is not accepted, the
         Union Standing Committee may within fourteen (14) calendar days submit
         the grievance to the Plant Manager. A further meeting shall be held
         between the Union Counsellor and/ or an officer of the National Union,
         the Union Standing Committee and the Plant Manager or his designate.
         The Plant Manager shall render his written decision within fourteen
         (14) days following the step three (3) meeting.

15.05    If the decision of the Plant Manager is not accepted the Union may
         refer the grievance to arbitration.

15.06    Notice of reference to arbitration specifying the matter or matters to
         be arbitrated shall be given in writing to the other party within
         forty-five (45) calendar days after the rendering of the decision by
         the Plant Manager.

15.07    The Company or Union may submit a Policy Grievance which directly
         affects the interests of the party to the Collective Agreement and
         shall not be administered as an employee grievance.

         The Policy Grievance may be submitted within thirty (30) working days
         from the date of occurrence of the incident giving rise to the
         grievance. The recipient of the grievance shall render a decision in
         writing within thirty (30) working days of receipt of the grievance.

         The Policy Grievance shall be submitted at Step No. Three (3) of the
         Grievance Procedure.

15.08    In the event that either of the parties does not take a grievance to
         the next higher step within the time limits set out above the grievance
         shall be deemed to have been withdrawn. If the recipient of the
         grievance fails to respond within the time limits set out above, the
         grievance shall be deemed resolved in favor of the grieving party.

                                                                              15
<PAGE>

15.09    A grievance shall be presented as soon as practicable after the
         occurrence causing the grievance. However, the time limit for filing a
         grievance is 21 working days after the occurrence causing the
         grievance.

15.10    When an agreement has been reached between the Company and the Union at
         any stage of the grievance procedure it shall be put in writing and it
         shall be final and binding on both parties.

15.11    Nothing in this agreement shall be construed to prevent any employee
         from presenting any complaints on his own behalf directly to the
         Company or to prevent the Company from making adjustments in respect of
         such individual complaints not inconsistent with the terms and
         provisions of this agreement.

15.12    The time limit between steps may be extended by mutual consent. All
         time extensions must be confirmed in writing.

                                   ARTICLE 16
                                   ARBITRATION

16.01    A grievance which has not been settled after being carried through the
         steps of the Grievance Procedure may be referred to Arbitration in
         accordance with the following procedure.

16.02    When notice is given in accordance with Article 15.06 the party giving
         the notice shall, at the same time, in writing, nominate an arbitrator.

16.03    Within seven (7) days thereafter the other party shall nominate an
         arbitrator and so advise the other party in writing within the said
         delay.

16.04    The two nominees shall endeavour to select a third person who shall act
         as chairman.

16.05    In all matters of procedure not covered by the provisions of this
         section, including alternating procedures for the selection of a third
         arbitrator the provisions of the Labour Relations Code of British
         Columbia (1993) shall apply.

16.06    The Arbitration Board shall have jurisdiction to interpret the
         provision of this Agreement in so far as shall be necessary to the
         determination of the grievance, but shall not have jurisdiction or
         authority to alter in any way, add to, subtract from or modify any of
         the terms hereof, nor make any decision inconsistent with the
         provisions of this agreement.

16.07    The decision of the Arbitration Board shall be final and binding upon
         the parties hereto and the employee or employees concerned.

16.08    Each of the parties shall bear equally the expense of the Chairman of
         the Arbitration Board.

16.09    The parties hereby request the Arbitration Board to render its decision
         as expeditiously as possible.

16.10    The award of the Arbitration Board shall not be made retroactive to a
         date prior to the date on which the grievance was submitted in writing
         as provided for in the Grievance Procedure.

16.11    The Company and the Union may by mutual agreement, elect a single
         arbitrator instead of a three-man arbitration board, and the powers of
         the single arbitrator shall be the same as those of the board of
         arbitration pursuant to this article.

                                                                              16
<PAGE>

                                   ARTICLE 17
                         DAYS OFF AND SCHEDULE OF SHIFTS

17.01    The employer will normally designate consecutive regular days off for
         each regular employee.

17.02    When extensive changes to the schedule are necessary the Company will
         so notify the Union in advance whenever practical, and will welcome
         discussion with the Union Standing Committee.

17.03    (a)      Employees may change their day or days off by mutual agreement
                  with their Department Manager, provided such change shall not
                  involve additional cost to the company.

         (b)      Department Managers may change an employee's day(s) off by
                  mutual agreement with the employee concerned.

17.04    Employees will normally not be scheduled to work six (6) consecutive
         days in a two-week period. The exception being that if the shift
         schedule is altered significantly as a result of layoff, plant
         shutdown, etc., this may not always be possible.

         (a)      Relief Brine Operators/ Labourers (assigned to the Production
                  Department) shifts may be changed at anytime provided the
                  employee is given 24 hour notice prior to shift change. Every
                  effort will be made to give the employee as much notice as
                  possible.

                                   ARTICLE 18
                                    VACATIONS

18.01    It is hereby understood and agreed that in the application of the
         following provisions governing vacations and vacation pay, no employee
         shall be treated less favourably than is provided for under the "Annual
         Holidays Act". (R.S.B.C. 1980) SBC Chap.10 - #36.

18.02    The Vacation year shall be the twelve (12) months commencing on May 1st
         and ending the following April 30th. However, for the purposes of
         calculating vacation pay only May 1st shall be interpreted as being the
         end of the last pay period in April.

18.3     Management will co-operate in arranging vacation time to suit each
         employee. However, the scheduling of vacation time is to be decided by
         Management. Management will give consideration to requests for vacation
         dates on the basis of plant seniority, provided such requests are made
         before March 1st for the current year. However, it is understood that
         no employee can exercise seniority rights over less senior employees in
         the scheduling of more than two (2) weeks vacation during the period
         June 15th to September 15th.

18.04    Vacations are not cumulative and must be taken annually within the
         vacation year as defined in 18.02. However, the Company may extend the
         vacation year due to extenuating circumstances and as mutually agreed
         at the request of an employee.

18.05    No employee may continue to work and draw vacation pay in lieu of
         taking his vacation.

18.06    Vacation pay will be paid by direct deposit to an employee's account on
         a bi-weekly basis as vacation is taken. The company may grant vacation
         pay in advance due to extenuating circumstances and as mutually agreed
         at the request of the employee.

                                                                              17
<PAGE>

18.07    Employees of the Company shall receive their vacation with pay
         entitlement exclusive of recognized holidays to which they are entitled
         under Article 7 of this Agreement.

18.08    When services of an employee are terminated for any reason, he shall
         receive vacation pay for the vacation earned but not taken, computed as
         4% of his total earnings for the period during which vacation was
         earned. An employee who qualifies for vacation under 18.12 will be paid
         6% of his total earnings on termination, those who qualify for
         vacations under 18.13 will be paid 8% of their total earnings on
         termination, and those who qualify for vacation under 18.14 will be
         paid 10% of their total earnings on termination, those who qualify for
         vacation under 18.15 will be paid 12% of total earnings on termination,
         and those who qualify under 18.16 will be paid 14% of total earnings on
         termination.

18.09    The following shall be considered as time worked (maximum 9 1/3 hours
         per day and 37 1/3 hours per week) for the purpose of qualifying for a
         vacation.

         (a)      Time lost as a result of an accident as recognized by the
                  Worker's Compensation Board.

         (b)      Time, not exceeding one year, lost as a result of a
                  non-occupational accident or illness, provided that the
                  employee has completed the probationary period as outlined in
                  Article 14.02, and that he returns to his employment.

         (c)      Time spent on earned vacations.

         (d)      Time spend on holidays as defined in Article 7 of this
                  Agreement.

         (e)      Time absent from work because of Jury Duty or as a subpoenaed
                  witness.

         (f)      Time absent from work because of a death in family.

         (g)      Time absent from work on approved leaves of absence.

18.10    Employees employed by the Company on May 1st of any year and who have:

         (a)      Less than twelve (12) months continuous service and do not
                  qualify under 18.11 below will be granted one quarter (1/4)
                  of a day's vacation with pay for each full week of work
                  performed in the immediately preceding vacation period. No
                  vacation of less than one (1) day, nor more than eight (8)
                  days will be granted under this provision. Fractional
                  entitlements will be rounded off to the nearest full day; eg:
                  an employee with three and one-quarter (3 1/4) days vacation
                  credit will be granted three (3) days vacation; whereas, an
                  employee with three and one-half (3 1/2) or three and three
                  quarters (3 3/4) days vacation credit will be granted four (4)
                  days vacation. Pay for such vacations will be computed at four
                  per cent (4%) of the employee's actual earnings during the
                  vacation period in which the vacation was earned.

                                                                              18
<PAGE>

18.11    Employees on the payroll of the Company on May 1st who have 1400 hours
         continuous service have qualified for a first vacation and shall be
         granted two (2) weeks vacation with pay. Pay for such two-week vacation
         shall be four per cent (4%) of the employee's actual earnings during
         the vacation period in which the vacation was earned, or two weeks base
         pay computed on the basis of the employee's regular job rate at the
         time he goes on vacation, whichever is greater.

18.12    Employees on the payroll of the Company on May 1st who qualify for a
         second vacation shall be granted three (3) weeks vacation with pay. Pay
         for such three-week vacation shall be six per cent (6%) of the
         employee's actual earnings during the immediately preceding vacation
         period, or three weeks base pay computed on the basis of the employee's
         regular job rate at the time he goes on vacation, whichever is greater.

18.13    Employees on the payroll of the Company on May 1st who qualify for a
         7th vacation shall be granted four (4) weeks vacation with pay. Pay for
         such four-week vacation shall be eight per cent (8%) of the employee's
         actual earnings during the immediately preceding vacation period, or
         four weeks base pay computed on the basis of the employee's regular job
         rate at the time he goes on vacation, whichever is greater.

18.14    Employees on the payroll of the Company on May 1st who qualify for a
         15th vacation shall be granted five (5) weeks vacation with pay. Pay
         for such five-week vacation shall be ten per cent (10%) of the
         employee's actual earnings during the immediately preceding vacation
         period, or five weeks base pay computed on the basis of the employee's
         regular job rate at the time he goes on vacation, whichever is greater.

18.15    Employees on the payroll of the Company on May 1st who qualify for a
         24th vacation shall be granted six (6) weeks vacation with pay. Pay for
         such six week vacation shall be twelve per cent (12%) of the employee's
         actual earnings during the immediately preceding vacation period, or
         six weeks base pay computed on the basis of the employee's regular job
         rate at the time he goes on vacation, whichever is greater.

18.16    Employees on the payroll of the Company on May 1st who qualify for a
         30th vacation shall be granted seven (7) weeks vacation with pay. Pay
         for such seven week vacation shall be fourteen per cent (14%) of the
         employee's actual earnings during the immediately preceding vacation
         period, or seven weeks base pay computed on the basis of the employee's
         regular job rate at the time he goes on vacation, whichever is greater.

18.17    For the purpose of calculating vacation pay, actual earnings shall not
         include profit sharing earnings.

18.18    After completing the necessary period of continuous service with the
         Company, an employee shall, in addition to the regular vacation to
         which he is entitled, become eligible to receive a Supplementary
         Vacation with pay as set forth below:

<Table>
<Caption>

                  Year of Completed Continuous Service             Supplementary Vacation
                  ------------------------------------             ----------------------
<S>                                                                <C>
                           After 5 years                                   1 week
                           After 10 years                                  2 weeks
                           After 15 years                                  2 weeks
                           After 20 years                                  2 weeks
                           After 25 years                                  2 weeks
                           After 30 years                                  2 weeks
</Table>

                  (a)      The Supplementary Vacation must be taken within five
                           (5) years of the employee's becoming eligible or
                           before his becoming eligible for his next earning
                           period of Supplementary Vacation as above, whichever
                           comes first.

                                                                              19
<PAGE>

                  (b)      For the purpose of determining eligibility for
                           Supplementary Vacation, an employee's service shall
                           be calculated from the date of his joining the
                           Company.

                  (c)      The Supplementary Vacation may be taken in
                           conjunction with the regular vacation to which the
                           employee is entitled, subject to Article 18.03.

                  (d)      One week's Supplementary Vacation pay shall be equal
                           to 37 1/3 hours at the straight time hourly rate of
                           the employee's regular job.

                  (e)      At retirement or termination from the Company an
                           employee who has qualified for Supplementary Vacation
                           shall be entitled to that portion of Supplementary
                           Vacation Pay proportionate to the number of years of
                           service completed subsequent to his last five-year
                           entitlement period.

18.19    In the event an employee is called in to work, during his/her vacation,
         the employee shall be granted another day off with pay to be taken
         during the current vacation period. The employee being called in must
         receive prior approval from his/her supervisor.

                                   ARTICLE 19
                               TEMPORARY EMPLOYEES

19.01    A temporary FULL-TIME employee shall be an employee who is hired to
         fill a temporary labour need for 37 1/3 hours per week, be it skilled
         or unskilled.

19.02    A temporary PART-TIME employee shall be an employee who is hired for
         less than 37 1/3 hours per week to fill a temporary need as Labourer.

         There will be no displacement of permanent or temporary full-time
         workers by part-time employees.

         Temporary part-time employees may be only utilized after the company
         has consulted with the Union regarding the need for hiring.

19.03    He/she shall be considered a temporary employee for up to one year.

19.04    The company will notify the Union when a temporary employee is being
         hired.

19.05    All articles, with the exception of Article 14 will apply to temporary
         full-time employees. However, the eligibility period for WI, LTD, Life,
         AD&D, and Dental Plans shall be 4 months.

19.06    All articles, with the exception of Articles 14, 32, and 33 will apply
         to temporary part-time employees.

                                                                              20
<PAGE>

                                   ARTICLE 20
                        JOB CLASSIFICATIONS AND JOB RATES

20.01    Job classification during the term of this Agreement shall be in
         accordance with Appendix "A" appended hereto.

20.02    Job rates as detailed in Appendix "A" will be made effective December
         1, 2000 and will remain in effect until November 30, 2003.

                                   ARTICLE 21
                              WAGE RATE ADJUSTMENTS

21.01    Job rate shall be defined as the wage rate for any job classification
         as listed in Appendix "A", "Job Classifications and Job Rates" and
         excludes all premium pay, bonuses, shift differentials and allowances
         of any type or kind.

21.02    Should the Company introduce a change(s) that will affect job content
         during the term of the Agreement, the following procedure shall apply:

         (a)      The Company shall notify the Union as far in advance of the
                  change(s) as is practicable.

         (b)      The Company shall describe the change(s) and provide an
                  estimate of the effect on Union members' jobs.

         (c)      After an appropriate period from commissioning the change(s),
                  up to SIXTY (60) DAYS, a new rate will be settled by
                  discussion between the Company and Union Standing Committee.

         (d)      The Company agrees that failure to resolve any differences
                  there may be after discussions, may result in the Union filing
                  a grievance, as herein provided, alleging that the new rate is
                  incompatible with relevant internal and external comparisons.

         The company agrees that any change in the new rate that may result from
         grievance procedure, discussions, or from an arbitration decision will
         be made retroactive to the date on which the new rate was first applied
         or the date on which the job changed, whichever first occurs.

21.03    If an employee is temporarily transferred to a job paying a higher rate
         he shall be paid the higher rate.

21.04    It is understood that when an employee is being trained for a higher
         paying job he shall receive this regular job rate.

                                                                              21
<PAGE>

                                   ARTICLE 22
                            OVERTIME AND PREMIUM TIME

22.01    Overtime

         Overtime shall be either all authorized time worked in excess of nine
         and one third (9-1/3) hours in a twenty-four (24) consecutive hour
         period, starting when an employee reports for work; or, all hours
         worked in excess of thirty seven and one third (37-1/3) hours in any
         one week except in the case of those employees assigned to the 12-hour
         shifts when overtime shall be all hours worked in excess of 12 hours in
         a 24 consecutive hour period, starting when an employee reports for
         work, or all hours worked in excess of 36 or 48 hours per week
         depending on whether such 36 or 48 hours per week fall into the regular
         schedule of 3 days on and 3 days off.

         (a)      In the event that an employee is required to work overtime
                  hours that run continuously from the end of his shift, he must
                  be given a minimum of eight (8) hours off, before starting his
                  next shift. Any straight time earnings lost as a result will
                  be paid to the employee affected.

         (b)      In the event an employee is called in to work overtime hours
                  that occur in, or extend into, the period between 2330 Hrs.
                  and 0330 Hrs. when such an employee is scheduled to report for
                  work at 0700 Hrs. (or 0630 Hrs), if the time worked in this
                  period is one or more hours the employee will not be required
                  to report for work for a minimum of eight (8) consecutive
                  hours from the end of the time worked. Straight time earnings
                  lost as a result will be paid the employee affected.

         (c)      In the event an employee is called in to work overtime hours
                  that occur in the period between 0330 Hrs. and 0700 Hrs. (or
                  0630 Hrs.), if the time worked in this period is one or more
                  hours the employee will not be required to report for work for
                  a period past 0700 Hrs. (or 0630 Hrs.) equivalent to the hours
                  worked during the 0330 to 0700 Hrs. (or 0630 Hrs.) period, or
                  take the equivalent time off at the end of his/ her shift.
                  Straight time earnings lost as a result will be paid to the
                  employee affected.

22.02    In those weeks when a day worker works a scheduled 37 1/3 hour week,
         hours in excess of 37 1/3 hours shall be paid at overtime rates.

22.03    All authorized overtime shall be paid at double time.

22.04    For the purpose of avoiding pyramiding of overtime, hours compensated
         for at overtime or premium time rates shall not be counted further for
         any purpose in determining overtime liability under the same or any
         other provision.

22.05    Shift Premiums shall not be included when computing pay for overtime.
         Sunday Premiums shall not be included when computing pay for overtime.

22.06    Time exchanged between employees, hours worked as a result of shift
         change, shall be paid for at the regular straight time hourly rate of
         the employee scheduled to work at that time plus shift differential
         applicable to the time worked. Such changes must have the approval of
         the supervisor concerned.

22.07    Where an employee's shift schedule is changed with less than 48 hours
         notice then the employee will be paid overtime for the first shift
         worked (except as noted in 17.04(a)).

                                                                              22
<PAGE>

22.08    Sunday Premium

         A premium of $1.75 per hour shall be paid to all workers for work
         performed on Sunday which shall be known as "Sunday Premium".

22.09    Shift Differentials

         (a)      A differential of $1.60 per hour for all hours worked on
                  scheduled evening night shifts between the hours of 1830 hrs.
                  and 0630 hrs..

         (b)      An employee working on a regularly scheduled night shift shall
                  continue to receive the shift differential for overtime worked
                  beyond 0630 hrs.

22.10    In the event that an employee is called in and reports to work at least
         one full shift before his regular starting time he shall continue to
         receive overtime rates if he is asked to continue on into this regular
         shift.

22.11    A hot meal, value of $12.50 shall be provided for any employee called
         in to work four (4) hours or more on a scheduled day off or if less
         than 24 hours notice is given, or for two (2) hours or more if these
         overtime hours are continuous with his regular scheduled hours, and
         every four hours thereafter.

         In the latter case, depending on the urgency of the work involved, the
         meal may be taken prior to or during the overtime period provided the
         actual time worked is two (2) hours or more.

         When a maintenance employee is called in to work, he will receive the
         hot meal allowance after four (4) hours of work and every (4) hour
         hours thereafter, until the completion of the work.

         Meal vouchers will be included on the pay cheque and be a taxable
         benefit.

                                   ARTICLE 23
                                  JURY DUTY PAY

23.01    a)       The Company will pay an employee called for Jury Duty or as a
                  subpoenaed witness, the difference between the jury duty or
                  witness pay and his straight time pay, provided he works his
                  regular shift when not performing such jury or witness
                  service. The employee will be required to furnish proof of
                  performing such service and such duty pay received.

         b)       Shift workers will not be required to work a scheduled evening
                  shift if :

                  -        jury duty starts the following day, or

                  -        jury duty is completed on the day of the scheduled
                           evening shift.

                                                                              23
<PAGE>

                                   ARTICLE 24
                                BEREAVEMENT LEAVE

24.01    In the event of a death of a member of an employee's immediate family,
         the employee will be allowed a reasonable time off. The Company will
         pay such employee his straight time pay for any of his scheduled
         working days lost immediately following the death, up to a maximum of
         three (3) days to attend the funeral. If the employee is unable to
         attend such funeral, he will be allowed one (1) day off for personal
         reasons for which he will be reimbursed, at this straight time rate for
         any wages lost during such absence.

         "Immediate Family" means Father, Mother, Child, Spouse, Brother,
         Sister, Spouse's Father, Spouse's Mother, Step-Father, Step-Mother,
         Step-Children, Grand Parents and Grand Children, Son's Spouse and
         Daughter's Spouse.

                                   ARTICLE 25
                       MAINTENANCE DEPARTMENT APPRENTICES

25.01    Appendix "B" attached hereto and entitled "Maintenance Apprenticeship"
         shall be part of this agreement.

                                   ARTICLE 26
                           SUSPENSION AND/OR DISCHARGE

26.01    When in the opinion of the Company disciplinary action involving
         suspension or discharge become necessary the Union shall be notified of
         that intent and the reasons therefore, prior to the action, if such
         prior notification is practicable. Further the Company welcomes
         pertinent discussion with the Union about the suspension or the
         discharge prior to that action when practicable.

26.02    In the event that an employee has been discharged and it is alleged
         that he has been unjustly dealt with the grievance procedure may be
         used. The grievance must be submitted to the Company in writing within
         seven (7) days of the discharge and in such cases steps one and two of
         the grievance procedure shall be omitted.

                                   ARTICLE 27
                                LEAVE OF ABSENCE

27.01    The Company will consider granting a leave of absence to employees for
         personal reasons consistent with the continued and efficient operation
         of the plant, and provided there is a minimum of disruption to fellow
         employees.

27.02    The length of such leave of absence in any one year shall be:

         (a)      Those employees with more than one year's service but less
                  than five year's service - up to one week.

         (b)      Those employee with more than five year's service - up to one
                  month.

         However under extenuating circumstances, the Plant Manager may alter
         the above conditions at his sole discretion.

                                                                              24
<PAGE>

27.03    Such leave of absence shall be without remuneration.

27.04    A leave of absence must be applied for in writing.

27.05    It will be the responsibility of the employee to arrange with the
         Company for the payment, suspension, or other disposition, of the
         Company sponsored welfare plans at the time of applying for such leave
         of absence.

27.06    No employee will be granted a leave of absence to accept other
         employment. It is understood, however, that other employment does not
         include duties as elected union officers, elected political
         representative, (i.e.: MLA, MP, Councillor, Mayor, etc.), or other such
         assignments, for which remuneration may be paid.

27.07    The following specific exceptions will be made to the above were a
         leave of absence is granted by the Company to an employee in order that
         he may accept an elected Union or political office (as in 27.06 above).

         (a)      It is agreed that an employee who is elected or appointed to
                  Union office shall be granted sufficient leave in order to
                  perform the duties of the position. The length of such leave
                  of absence may be up to one year or for the elected term.

         (b)      The employee will continue to accumulate seniority.

27.08    Parental leave as outlined in the Employment Standards Act.

                                   ARTICLE 28
                                   COMMITTEES

28.01    The Company shall appoint a Company Standing Committee of three (3)
         individuals which shall represent the Company.

28.02    The Union shall elect from its membership of employees at Sterling Pulp
         Chemical's North Vancouver plant a Union Standing Committee of three
         (3) which shall represent the Union for the purpose stated in this
         Agreement.

28.03    (a)      The Company and Union Standing Committee shall meet quarterly
                  to discuss items of mutual interest. The agenda for each
                  meeting shall consist of the following items.

               i)     Safety

               ii)    Changes to the plant that will affect Union members. Where
                      the change(s) is significant. Workers for the affected
                      areas will be included to provide their input in
                      subsequent discussions.

               iii)   Other items.

         (b)      Minutes of these meetings shall be distributed for signatures
                  within one (1) week after the meeting.

                                                                              25
<PAGE>

                                   ARTICLE 29
                                    TRAINING

29.01    The Company recognizes its responsibility to ensure that its employees
         are adequately trained to perform their jobs in a satisfactory manner.
         The Company will institute a training program for all Production
         employees under the direction of the Production Manager or his
         appointee so that the opportunity will be given to each employee to
         perform his job satisfactorily and to satisfactorily perform the duties
         of the next higher job classification. The Union recognizes that it is
         to the mutual benefit of both parties to have an adequately trained
         workforce.

                                   ARTICLE 30
                    TECHNOLOGICAL CHANGE AND TERMINATION PAY

30.01    The Company will endeavour to give as much prior notice of
         technological change however, not less than 90 days before the date on
         which the technological change is to be effected.

         The notice of technological change shall be in writing and shall state:

         (a)      Nature of the technological change.

         (b)      Date of which technological change will be effected.

         (c)      Approximate number and type of employees likely to be affected
                  by the technological change.

         If the Company and Union are unable to resolve their differences
         regarding technological change, final and conclusive settlement,
         without work stoppage, shall be by arbitration or another method agreed
         to by the parties.

30.02    The Company agrees to pay termination pay to employees permanently laid
         off because of plant closure, automation, technological change,
         modernization or for economic reasons at the rate of pay of two (2)
         weeks pay per year of service. In the event of plant closure the
         Company agrees to negotiate with the Union the termination payout. The
         Company also agrees to cooperate with the Government to minimize the
         impact of plant closure.

         The terms of payout shall be defined as:

         (a)      Initial payment conforming to provisions of the Employment
                  Standards Act.

         (b)      Remainder, if applicable, on expiry of recall rights.

         (c)      A laid off employee may request in writing payment of his
                  termination pay after three (3) months on layoff providing the
                  employee agrees in writing to waive his remaining recall
                  rights.

30.03    When an employee is terminated as a direct result of plant closure,
         automation, and/or technological change, Management will assist the
         Union in communicating with Canada Manpower to advise them of the
         suitability of the employee for re-training and re-location in another
         job, and request that they use their facilities for this purpose.

         In the event of plant closure, the company will endeavor to give as
         much prior notice as possible, however, not less than 90 days.

30.04    The Company agrees to retrain those employees whose jobs cease to exist
         due to Modernization or Expansion, for other jobs within the plant.

         This excludes employees who are laid off or terminated and does not
         obligate the Company under the Maintenance Apprenticeship program.

                                                                              26
<PAGE>

                                   ARTICLE 31
                            CONTINUOUS 12-HOUR SHIFTS

         The parties hereto agree to the following terms and conditions relating
         to the continuous rotating shift schedule, as hereafter defined.

31.01    The work schedule considered herein will be applicable to The Job
         Classifications, currently on the existing continuous rotating shift
         schedule, in the Production Department.

31.02    The shift schedule is as per Appendix D.

31.03    Upon converting to a revised schedule and during the first week under
         it, no premiums will be paid to an employee for the sole reason of
         transferring from one standard work week to another standard work week.

31.04    Each employee's pay will be calculated on a weekly basis. However, if
         an employee wishes, the Company will hold back a fixed amount each week
         the employee works in excess of 36 hours, to be paid to the employee at
         the time he gets his "9 days off". It is clearly understood that this
         holdback of pay will not be flexible, and will only be paid to the
         employee when he takes his scheduled 9 days off.

31.05    Vacations will be allotted on a weekly basis and will be paid on a
         37 1/3 hr. basis.

                                   ARTICLE 32
                               HEALTH AND WELFARE

32.01    Benefits of hourly-paid employees during the term of this Agreement
         shall be in accordance with appendix "C" appended hereto. For full
         details refer to the current Sterling Pulp Chemicals Plan Texts and
         associated policies. For ease of reference, see the current Employees
         Benefits Program booklet.

32.02    E.I. Premium reduction will be applied to funding the benefits package.

32.03    For the purposes of Weekly Indemnity claims the waiting period will be
         "0" days for both illness and accidents and subsequently the claim will
         be paid on the first calendar day.

32.04    The Company will pay all Health and Welfare premiums for the first two
         years during an employee's recovery while on L.T.D.

32.05    Supplementary Benefit Fund

         The company (Sterling Pulp Chemicals) agrees to allocate the following
         amounts of money to a trust fund to be set up by PPWC #5 for use as a
         supplementary benefit fund for current and past members of the local.

         Effective December 1, 1997 the Company will contribute *$0.40/hour for
         regular hours worked to the Fund; effective December 1, 1999 the
         Company will contribute $0.42/hour for regular hours worked to the
         Fund.

         Utilization/application of this supplementary benefit shall be at the
         discretion of members of the local. The company will be kept informed
         as to application of the fund.

         This fund will not prejudice the Company reviewing the ad hoc increases
         to retirees.

         *        Based on 37 1/3 Hrs/week. (For all employees.)

                                                                              27
<PAGE>

32.06    Agreed to eliminate for the term of the agreement requirement for
         physician's statement for absences due to non-occupational sickness or
         accident up to one week. Physician's statement may be required at the
         discretion of the supervisor.

                                   ARTICLE 33
                                  PENSION PLAN

33.01    a)       There shall be a Pension Plan for all employees with
                  contributions made by the Company, to provide for the needs of
                  the employees upon retirement.

         b)       Pension benefits are increased from $45.00/month/year
                  (December 1, 1999) to $51.00/month/year on November 30, 2003.

         c)       Spousal Pension - Effective December 1st, 1994 the spousal
                  benefit is 60% for all years of service.

         d)       Credited service for future retirees is calculated from day
                  one, provided the employee has satisfied the probation period
                  (40 working days). All other terms as per Plan Text.

                                                                              28
<PAGE>

                           EARLY RETIREMENT PROVISION

I        Effective September 8, 1992, retirement at 60 years of age with 20
         years of service with no reduction.

         Effective December 1st, 1994 the following reduction from age 60 to 55
         with 20 years service apply (.41667%/month reduction to age 55)

<Table>
<Caption>

                           Age        Years of Service           Reduction
                           ---        ----------------           ---------
<S>                                   <C>                        <C>
                           65                  20                  0 %
                           64                  20                  0 %
                           63                  20                  0 %
                           62                  20                  0 %
                           61                  20                  0 %
                           60                  20                  0 %
                           59                  20                  5 %
                           58                  20                  10%
                           57                  20                  15%
                           56                  20                  20%
                           55                  20                  25%
</Table>

II       Age 55-64 minimum of 10 years service - 1/4 of 1% per month for each
         month of early retirement -/from 60 to 64 plus 1/2 of 1% per month
         prior to age of 60 (55-60)

                      Current age of 60 (55 to 60) Schedule
<Table>
<S>                                          <C>
                           65                0%
                           64                3%
                           63                6%
                           62                9%
                           61                12%
                           60                15%
                           59                21%
                           58                27%
                           57                33%
                           56                39%
                           55                45%
</Table>

III      Age 55 to 64 - less than 10 years service - 1/2 of 1% per month for
         each month of early retirement prior to age 65.

                                    Schedule
<Table>
<S>                                         <C>
                                65          0%
                                64          6%
                                63          12%
                                62          18%
                                61          24%
                                60          30%
                                59          36%
                                58          42%
                                57          48%
                                56          54%
                                55          60%
</Table>

         Bridging:    Effective December 1, 1988 a bridging formula of $15.00
                      per month per year service will be available to those
                      retiring between age 63 and 65. A minimum of 10 years
                      service is required for bridging.

                                                                              29
<PAGE>

                                   ARTICLE 34
                               BANKING OF OVERTIME

34.01    It is understood and agreed that the voluntary banking of overtime
         hours will involve no extra time or cost to the company, nor will it
         affect the smooth and efficient operation of the plant.

34.02    Time off in lieu of overtime will receive low priority and requires
         mutual agreement between supervisor and employee.

34.03    Overtime pay and/or hours may be banked.

34.04    Overtime hours may be banked to a maximum of thirty-six (36) hours at
         any one time.

34.05    Overtime pay may be banked with no maximum. Pay may be drawn out on any
         regular pay period. Balances in excess of 36 hours not withdrawn by
         September 30th of each year will be paid out in the following pay
         period.

34.06    Overtime pay may be taken when earned and hours banked.

                                                                              30
<PAGE>

                  APPENDIX "A" - JOB CLASSIFICATIONS AND RATES

<Table>
<Caption>

CLASSIFICATION                              DEC. 1/99         DEC. 1/00         DEC. 1/01        DEC. 1/02
--------------                              ---------         ---------         ---------        ---------

<S>                                         <C>               <C>               <C>              <C>
Temporary Maintenance Coordinator (TMC)      $31.03            $31.74            $32.69           $33.67
Tradesperson                                  29.02             29.69             30.58            31.50
Storesperson                                  25.33             25.91             26.69            27.49
Maintenance Helper                            23.93             24.48             25.21            25.97
Senior Relief Operator                        29.02             29.69             30.58            31.50
Crystal Operator                              29.02             29.69             30.58            31.50
Cell Operator                                 28.90             29.56             30.45            31.36
Brine Operator (4th Class Steam Ticket)       27.26             27.89             28.73            29.59
Brine Operator                                26.79             27.41             28.23            29.08
Relief Brine Operator                         23.93             24.48             25.21            25.97
Labourer                                      22.77             23.29             23.99            24.71
</Table>

<Table>
<S>                                 <C>                       <C>
         Hourly Wage increases:     December 1/00:            2.3%
                                    December 1/01:            3.0%
                                    December 1/02:            3.0%
</Table>

                           MULTI SKILLS / DUAL TRADES

1.       Multi Skills is defined as a plant recognized provincial TQ Ticket (as
         defined below) plus in house training for instrumentation, Level "C"
         Provincial Welding certificate or a BCIT Pipefitting Certificate
         Program (or equivalent) or other skills recognized by the Union and the
         Company and supported by TQ ticket, or certificate of training, or
         in-house training.

2.       Dual Trades is defined as two plant recognized TQ qualifications (as
         defined below), a single plant recognized TQ ticket plus a Level "B"
         welding certificate or successful completion of a SAIT (or equivalent)
         correspondence course for instrumentation.

3.       Based on the needs of the plant, multi skills training will be provided
         to personnel meeting the necessary qualifications.

4.       Minimum qualifications is a provincial TQ ticket in at least one of the
         required trades:

                                    Electrician
                                    Instrument Mechanic
                                    Millwright
                                    Pipefitter
                                    Welder

5.       Employee must be presently active in one of the above trades.

6.       A selection board similar to Appendix "B" with a plant committee member
         representing the bargaining unit will determine who will receive the
         multi skills training.

7.       Such training does not preclude the possibility of hiring from outside
         the present bargaining unit for a dual trades person if such a
         tradesperson were required or needed at the plant.

8.       An $0.80/hr premium will be paid after successful completion of the
         training for the multi skilled position.

9.       An additional $0.80/hr premium will be paid for the dual trades
         position as defined in Section 2.

                                                                              31
<PAGE>

                                  APPENDIX "B"
                           MAINTENANCE APPRENTICESHIP

1.       PURPOSE

         To train Tradespersons of the highest calibre consistent with plant
         requirements.

2.       SCOPE

         The program will embrace the Electrical, Instrument Mechanic,
         Millwright, Pipefitter and Welder trades and will be run in conjunction
         with the B.C. Department of Labour Apprenticeship Training Branch.
         Other trades may be added in the future as required. It is intended
         that there will be no more than one apprentice in each trade at any one
         time.

3.       STERLING PULP CHEMICALS APPRENTICESHIP BOARD
         (Otherwise known as "The Board")

         The Board will be established consisting of the Plant Manager,
         (Chairman), the Maintenance Manager, a member of the personnel
         function, and a Tradesperson employee of the designated trade involved
         to made the final selection of apprentices. Said Board will also review
         the progress of the apprentice from time to time and will be empowered
         to take appropriate action. The tradesperson employee member of the
         board will be appointed by the Plant Manager after due consultation
         with the Union.

4.       SELECTION OF CANDIDATES

         Candidates will be selected from interested employees, recent high
         school/technical school graduates, and graduates from accredited
         pre-apprenticeship training course. Psychological, I.Q. aptitude tests
         and other such aids may be used in assessing prospective candidates.
         Apprentices will be selected on the basis of ability, personality, and
         attitude.

5.       JOB SECURITY

         Apprenticeship training under this program does not constitute
         guaranteed employment to a graduate. He retains and accumulates
         seniority while employed as an apprentice, as spelled out in the Union
         Contract, and as such is treated as any other employee on graduation.

         Over and above any provisions in the B.C. Department of Labour
         Apprenticeship program for the termination of unsuitable candidates,
         and apprentice will be on probation for the first year and the Company
         retains the right to terminate the apprentice if, in the opinion of the
         "Board", the candidate is in any way unsuitable.

                                                                              32
<PAGE>

6.       PAY SCHEDULE

         The pay schedule for apprentices will be as follows:

         1st 6 months      -        Labourer  rate
         2nd 6 months      -        Mech. "A" Rate less 7/8 spread
                                    (Labourer rate to Tradesperson rate)
         3rd 6 months      -        Tradesperson Rate less 6/8 spread
         4th 6 months      -        Tradesperson Rate less 5/8 spread
         5th 6 months      -        Tradesperson Rate less 4/8 spread
         6th 6 months      -        Tradesperson Rate less 3/8 spread
         7th 6 months      -        Tradesperson Rate less 2/8 spread
         8th 6 months      -        Tradesperson Rate less 1/8 spread
         On graduation     -        Tradesperson Rate

         While an apprentice is in school the Company will make up his pay to
         his regular weekly pay less all government sponsored allowances
         available. Additional traveling and living expenses will not be paid.

         For the purpose of calculating the regular weekly pay for classroom
         training, the average weekly hours will be used, i.e.: 37 1/3 hours.

7.       PROGRAM

         On the job training will be done under the direction of the Maintenance
         Manager through skilled Tradesperson. The apprentice will be expected
         to perform useful tasks relating to maintenance in general and to a
         large degree his selected trade in particulate. In no circumstances is
         an apprentice to be considered a helper.

8.       TOOLS

         Apprentices will be expected to provide their own hand tools within a
         reasonable period of time.

9.       Apprentices will be considered as part of the bargaining unit and will
         become Union members as provided for in the Sterling Pulp Chemicals
         Union Contract. They shall be subject to the rights, privileges and
         responsibilities of full Union membership except as herein specified.

                                                                              33
<PAGE>

                                  APPENDIX "C"
                        BENEFITS OF HOURLY-PAID EMPLOYEES
                              NORTH VANCOUVER PLANT

<Table>
<Caption>

                         Weekly          Long Term                                           Medical
                        Indemnity        Disability            Life           A D & D      Service Plan
--------------------- -------------- ------------------- ---------------- --------------- ----------------
<S>                   <C>            <C>                 <C>              <C>             <C>
Eligibility *
Full Time               3 Months          3 Months          3 Months         3 Months         1 Month
Temp Full Time          4 Months          4 Months          4 Months         4 Months         1 Month
--------------------- -------------- ------------------- ---------------- --------------- ----------------
Benefits                   75%              60%              $85,000         $ 85,000      All medical,
                       Hours lost    Basic monthly wage                                    Surgical and
                                       Dec. 1/97 max.                                       obstetrical
                                           $5000

--------------------- -------------- ------------------- ---------------- --------------- ----------------
Deductible                  --               --                 --              --               --

--------------------- -------------- ------------------- ---------------- --------------- ----------------
Elimination Period     0-days acc.        26 weeks              --              --               --
                        0 day ill
--------------------- -------------- ------------------- ---------------- --------------- ----------------
Duration Period         26 weeks             to                 --              --               --
                                           Age 65
--------------------- -------------- ------------------- ---------------- --------------- ----------------
Amount of Retirement       --                --           50% of benefit        --               --
                                                          $85000 Decr.
                                                         5%/Yr. min 25%
--------------------- -------------- ------------------- ---------------- --------------- ----------------
Retirement                 --                --                 --              --               --
--------------------- -------------- ------------------- ---------------- --------------- ----------------
Carrier                    SPC            Clarica            Clarica         Clarica          M.S.P.

--------------------- -------------- ------------------- ---------------- --------------- ----------------
SPC Pays                   90%              90%                96%             96%             100%
--------------------- -------------- ------------------- ---------------- --------------- ----------------
Employee Pays              10%              10%          First $1000 of    First $1000           --
                                                            coverage       of coverage
--------------------- -------------- ------------------- ---------------- --------------- ----------------
Termination            Date active     As W.I. other      Death or date   Death or date     Last day of
                       employment    than sick, injury     employment       employment      month which
                         ceases       or vacation pay      terminates       terminates      employment
                                                                                            terminates
--------------------- -------------- ------------------- ---------------- --------------- ----------------
Vesting                    --                --                 --              --               --

===================== ============== =================== ================ =============== ================

<Caption>
                             Extended
                             Health
                             Benefits                 Dental                  Pension
---------------------  ---------------------- -------------------------  ----------------------
<S>                    <C>                    <C>                        <C>
Eligibility *
Full Time                                                                     Probation
Temp Full Time               1 Month                 3 Months            Period/40 Days then
                             1 Month                 4 Months                  day one.
---------------------  ---------------------- -------------------------  ----------------------
Benefits               80% of 1st $1000/yr.       100% Diagnostic            Dec. 1 /1999
                       100% above $1000/yr.    Preventive/Restorative      $45.00/ Mo./yr.
                        Max. $100,000/ yr.        75% Prosthetics
                        Renewable each year     50% Crowns, Bridges         Nov. 30/ 2003
                           Dec. 1/ 2000           50% Orthodontics        $51.00 / Mo./ yr.
                         Direct Payment to          - $2,500.00
                             Pharmacy              Lifetime limit
                            Dec 1/ 2001
                        Birth Control Pills
---------------------  ---------------------- ------------------------- -----------------------
Deductible                 $25/person or        Amounts in excess of               --
                          family per year          B.C. fee guide
---------------------  ---------------------- ------------------------- -----------------------
Elimination Period               --                       --                       --

---------------------  ---------------------- ------------------------- -----------------------
Duration Period                  --                       --                       --

---------------------  ---------------------- ------------------------- -----------------------
Amount of Retirement             --                       --            Benefit in effect at
                                                                        retirement x years of
                                                                               service
---------------------  ---------------------- ------------------------- -----------------------
Retirement                       --                       --             Age 65; 60/20 years
---------------------  ---------------------- ------------------------- -----------------------
Carrier                 Pacific Blue Cross        Great West Life          Standard Life /
                                                                            Montreal Trust
---------------------  ---------------------- ------------------------- -----------------------
SPC Pays                       100%                     90%                        --
---------------------  ---------------------- ------------------------- -----------------------
Employee Pays                    --                     10%                        --

---------------------  ---------------------- ------------------------- -----------------------
Termination              Last day of month     Last day of the month     Death or termination
                         which employment         which employment          of employment
                            terminates               terminates

---------------------  ---------------------- ------------------------- -----------------------
Vesting                          --                      --                 After  2 years
                                                                           service in plan
=====================  ====================== ========================= =======================
</Table>

* See Article 19.05 for the benefits of temporary full-time employees.

                                                                              34
<PAGE>

                                  APPENDIX "D"
                              PRODUCTION SCHEDULE

                                  [ILLEGIBLE]

                                                                              35
<PAGE>
                      [STERLING PULP CHEMICALS LETTERHEAD]

                          LETTER OF UNDERSTANDING FOR
                       TEMPORARY MAINTENANCE CO-ORDINATOR

The Company may as required need an employee to act as a Temporary Maintenance
Co-Ordinator (TMC). (The Maintenance Manager may or may not choose to utilize
the TMC.) The selection of the TMC will be offered to the maintenance employee
meeting qualifications of departmental seniority, plant recognized Provincial
TQ Ticket and ability to perform the work.

Ability to perform the work will be determined by having the employee perform
duties and evaluating his performance. Evaluation will be by the Maintenance
Manager, Production Manager and the Plant Manager with input from the Shop
Floor.

This position is not a full time position and may be implemented when the
Maintenance Manager is away from the site or as short term work load dictates.
The TMC will work on the tools only in an emergency situation.

The number of days will vary from one to five days per week with overtime paid
as per the collective agreement.

The role of the TMC is to perform work load co-ordinations and
administration of the department, so that all work is performed safely.

At no time can the TMC discipline or recommend disciplinary measures.

The regular rate of pay for the TMC will be $27.18/ hr. effective December 1st,
1994. See Appendix "A".

/s/ BOB MACLEOD                              /s/ DENNIS KIBSEY
----------------------                       -------------------------
Bob MacLeod                                  Dennis Kibsey
Plant Manager                                Plant Chairman

                                                                December 9, 1997

                                                                              36
<PAGE>
                      [STERLING PULP CHEMICALS LETTERHEAD]

                            LETTER OF UNDERSTANDING

                              RAIL CAR INSPECTION

The company, Sterling Pulp Chemicals Ltd., North Vancouver Plant and PPWC (Pulp,
Paper and Woodworkers of Canada) Local #5 have agreed to transfer the
responsibilities of railcar inspections from the Maintenance Department to the
Production Department, effective January 18, 1999.

The responsibility for the repair of railcars will remain with the Maintenance
Department.

/s/ ROBERT W. MACLEOD                             /s/ GREG HALL
--------------------------------                  -----------------------------
Robert W. MacLeod, P. Eng.                        Greg Hall

Plant Manager                                     Plant Chairman

                                                                January 12, 1999

                                                                              37
<PAGE>

IN WITNESS WHEREOF we, the undersigned, have as the accredited representatives
of the respective parties to this Agreement hereunto set our signatures this 1
day of December 2000.

For: STERLING PULP CHEMICALS, LTD.           For: PULP, PAPER & WOODWORKERS OF
                                                  CANADA, LOCAL 5

/s/  R.K THOMEY                             /s/  G.A. HALL
---------------------------------            ----------------------------------
     R.K Thomey                                  G.A. Hall

/s/  J.D KIRICHENKO                          /s/  H.W. WEIR
---------------------------------            ----------------------------------
     J.D Kirichenko                               H.W. Weir

/s/  T.N. MILLER                             /s/  J.J. THOMPSON
---------------------------------            ----------------------------------
     T.N. Miller                                  J.J. Thompson

                                             /s/  D.R. KIBSEY
                                             ----------------------------------
                                                  D.R. Kibsey

                                                                              38

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