Document:

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                                                                     EXHIBIT 4.5

                                                               EXECUTION VERSION

                               SECURITY AGREEMENT

         THIS SECURITY AGREEMENT (as amended, supplemented, amended and restated
or otherwise modified from time to time, this "Agreement"), dated as of December
19, 2002, is made by STERLING CHEMICALS, INC., a Delaware corporation, and
STERLING CHEMICALS ENERGY, INC., a Delaware corporation (each, individually, a
"Borrower" and, collectively, the "Borrowers"), and each other Person (such
capitalized term and all other capitalized terms not otherwise defined herein
shall have the meanings provided for or incorporated by reference in Article I
below) that may from time to time become, pursuant to the terms of the Credit
Agreement, a party to this Agreement (each such Person and each Borrower
individually a "Grantor" and, together with all such other Persons and all
Borrowers, collectively, the "Grantors"), in favor of THE CIT GROUP/BUSINESS
CREDIT, INC., as Administrative Agent for the Secured Parties (together with its
successors and assigns in such capacity, the "Administrative Agent").

                                    RECITALS:

         A.       Pursuant to a Revolving Credit Agreement, dated as of the date
hereof (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Credit Agreement"), among the Borrowers, the various
financial institutions as are, or may from time to time become, parties thereto
(the "Lenders"), and the Administrative Agent, the Lenders and the Issuer have
extended Commitments to make Credit Extensions to the Borrowers.

         B.       As a condition precedent to the making of each Credit
Extension (including the initial Credit Extension) under the Credit Agreement,
each Grantor is required to execute and deliver this Agreement.

         C.       Each Grantor has duly authorized the execution, delivery and
performance of this Agreement.

         D.       It is in the best interests of each Grantor to execute this
Agreement inasmuch as such Grantor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrowers by
the Lenders and the Issuer pursuant to the Credit Agreement and the execution
and delivery of Rate Protection Agreements between the Borrowers and certain
Lenders.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce (i) the
Lenders, the Swing Line Lender and the Issuer to make Revolving Credit Loans and
Swing Line Loans and issue Letters of Credit pursuant to the Credit Agreement
and (ii) the Secured Parties to enter into Rate Protection Agreement(s), each
Grantor jointly and severally agrees, for the benefit of each Secured Party, as
follows:

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                                    ARTICLE I
                                   DEFINITIONS

         SECTION 1.1.   Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):

         "Administrative Agent" is defined in the preamble.

         "Agreement" is defined in the preamble.

         "Borrower" and "Borrowers" are defined in the preamble.

         "Collateral" is defined in Section 2.1.

         "Computer Hardware and Software Collateral" means:

                  (a)      all computer and other electronic data processing
         hardware, integrated computer systems, central processing units, memory
         units, display terminals, printers, features, computer elements, card
         readers, tape drives, hard and soft disk drives, cables, electrical
         supply hardware, generators, power equalizers, accessories and all
         peripheral devices and other related computer hardware;

                  (b)      all software programs (including both source code,
         object code and all related applications and data files), whether now
         owned, licensed or leased or hereafter acquired by any Grantor,
         designed for use on the computers and electronic data processing
         hardware described in clause (a) above;

                  (c)      all firmware associated therewith;

                  (d)      all documentation (including flow charts, logic
         diagrams, manuals, guides and specifications) with respect to such
         hardware, software and firmware described in the preceding clauses (a)
         through (c); and

                  (e)      all rights with respect to all of the foregoing,
         including any and all copyrights, licenses, options, warranties,
         service contracts, program services, test rights, maintenance rights,
         support rights, improvement rights, renewal rights and indemnifications
         and any substitutions, replacements, additions or model conversions of
         any of the foregoing.

         "Copyright Collateral" means all copyrights of each Grantor, whether
statutory or common law, registered or unregistered, now or hereafter in force
in the United States including all of such Grantor's right, title and interest
in and to all copyrights registered in the United States Copyright Office, and
all applications for registration thereof, whether pending or in preparation,
all copyright licenses in the United States, the right to sue for past, present
and future

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infringements of any thereof, all rights corresponding thereto, all extensions
and renewals of any thereof and all Proceeds of the foregoing, including
licenses, royalties, income, payments, claims, damages and proceeds of suit.

         "Credit Agreement" is defined in recital A.

         "Disposition" means, with respect to any property, any sale, long-term
ground lease, Sale/Leaseback Transaction or similar transfer (whether by
foreclosure, deed-in-lieu of foreclosure, assignment or otherwise) of such
property, in each case to any Person (other than a Borrower or any Subsidiary of
any Borrower).

         "Excluded Contracts" means, with respect to any Grantor, all contracts
for the receipt by such Grantor of services or supplies but excluding any
contracts that give rise to the payment of money to such Grantor.

         "Excluded Equipment" means, to the extent any of the following items
constitute fixtures and/or Equipment under applicable laws, all fixtures,
fittings, appliances, apparatus, Equipment, machinery, building and construction
materials and other articles of every kind and nature whatsoever (other than
Inventory) and all replacements thereof and additions, enhancements or upgrades
thereto, now or hereafter affixed, or attached to, placed upon or located on or
in the Real Property or any buildings, structures and other improvements
thereon.

         "Excluded Intellectual Property" means, collectively, (a) all
patentable inventions, letters patent and applications for letters patent that
are necessary or appropriate for the continued operation of the plants located
at the Real Property, and (b) all Trade Secrets that are necessary or
appropriate for the continued operation of the plants located at the Real
Property.

         "Grantor" and "Grantors" are defined in the preamble.

         "Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral, but
excluding (x) the Excluded Intellectual Property, and (y) to the extent the same
constitute Intellectual Property Collateral, the Excluded Contracts.

         "Lenders" is defined in recital A.

         "Patent Collateral" means:

                  (a)      all letters patent and applications for letters
         patent in the United States, including all patent applications in
         preparation for filing in the United States;

                  (b)      all reissues, divisions, continuations,
         continuations-in-part, extensions, renewals and reexaminations of any
         of the items described in clause (a);

                  (c)      all patent licenses in the United States; and

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                  (d)      all Proceeds of, and rights associated with, the
         foregoing (including license royalties and Proceeds of infringement
         suits), the right to sue third parties for past, present or future
         infringements of any patent or patent application, referred to in
         clauses (a) or (b) above, and for breach or enforcement of any patent
         license referred to in clause (c) above.

         "Real Property" means all real property now owned or hereafter acquired
by any Grantor, including, without limitation, that certain real property
located in Galveston County, Texas, more particularly described on Exhibit A of
the Indenture Deed of Trust.

         "Receivable" means any right to payment for Goods sold, leased or
licensed or for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).

         "Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby a Borrower or a Subsidiary of a Borrower
transfers such property to a Person (other than a Borrower or a Subsidiary of a
Borrower) and a Borrower or a Subsidiary of a Borrower leases such transferred
property from such transferee.

         "Termination Date" means the date on which all Obligations have been
paid in full in cash, all Letters of Credit have been terminated, expired or
Cash Collateralized, all Rate Protection Agreements have been terminated and all
Commitments have been permanently terminated.

         "Trademark Collateral" means:

                  (a)      all trademarks, trade names, corporate names, company
         names, business names, fictitious business names, trade styles, service
         marks, certification marks, collective marks, logos, other source of
         business identifiers, designs and General Intangibles of a like nature
         (all of the foregoing items in this clause (a) being collectively
         called a "Trademark"), now existing anywhere in the United States or
         hereafter adopted or acquired in the United States, whether currently
         in use or not, all registrations and recordings thereof and all
         applications in connection therewith, whether pending or in preparation
         for filing, including registrations, recordings and applications in the
         United States Patent and Trademark Office or in any office or agency of
         the United States of America or any State;

                  (b)      all Trademark licenses in the United States;

                  (c)      all reissues, extensions or renewals of any of the
         items described in clauses (a) and (b);

                  (d)      all of the goodwill of the business connected with
         the use of, and symbolized by the items described in, clauses (a)
         through (c); and

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                  (e)      all Proceeds of, and rights associated with, the
         foregoing, including any claim by any Grantor against third parties for
         past, present or future infringement or dilution of any Trademark,
         Trademark registration or Trademark license, including any Trademark,
         Trademark registration or Trademark license referred to in clauses (a)
         through (c) above, or for any injury to the goodwill associated with
         the use of any such Trademark or for breach or enforcement of any such
         Trademark license.

         "Trade Secrets Collateral" means all common law and statutory trade
secrets and all other confidential or proprietary information and know-how used
or obtained at any time for use in the business of any Grantor (all of the
foregoing being collectively called a "Trade Secret"), whether or not such Trade
Secret has been reduced to a writing or other tangible form, including all
documents and things embodying, incorporating or referring in any way to such
Trade Secret, all Trade Secret licenses, and including the right to sue for and
to enjoin and to collect damages for the actual or threatened misappropriation
of any Trade Secret and for the breach or enforcement of any such Trade Secret
license.

         "U.C.C." means the Uniform Commercial Code in effect in the State of
New York, as the same may be amended from time to time.

         SECTION 1.2.   Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.

         SECTION 1.3.   U.C.C. Definitions. Unless otherwise defined herein, the
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used in this Agreement as so
defined: Account, Chattel Paper, Commercial Tort Claim, Deposit Account,
Document, Electronic Chattel Paper, Equipment, General Intangible, Good,
Instrument, Inventory, Investment Property, Letter-of-Credit Right, Proceeds,
Record, Supporting Obligation and Tangible Chattel Paper.

                                   ARTICLE II
                                SECURITY INTEREST

         SECTION 2.1.   Grant of Security. Each Grantor hereby assigns, pledges,
hypothecates, charges, delivers and transfers to the Administrative Agent, for
its benefit and the benefit of each of the Secured Parties, and hereby grants to
the Administrative Agent, for its benefit and the benefit of each of the Secured
Parties, a continuing security interest in all of such Grantor's right, title
and interest in and to the following, whether now owned or hereafter existing or
acquired by such Grantor (the "Collateral"):

                  (a)      all Accounts and all books, other Records and
         Proceeds with respect thereto;

                  (b)      all Chattel Paper (including without limitation all
         Tangible Chattel Paper and Electronic Chattel Paper) and all books,
         other Records and Proceeds with respect thereto;

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                  (c)      all Deposit Accounts, including without limitation
         each Lockbox Account (including all deposits and investments therein
         and all earnings thereon), and all books, other Records and Proceeds
         with respect thereto, but excluding (x) the Indenture Collateral
         Account, and (y) any Proceeds with respect to the Indenture Collateral
         Account;

                  (d)      all Documents and all books, other Records and
         Proceeds with respect thereto;

                  (e)      all General Intangibles (other than Excluded
         Contracts) and all books, other Records and Proceeds with respect
         thereto;

                  (f)      all Inventory and all books, other Records and
         Proceeds with respect thereto;

                  (g)      all other Goods (including without limitation all
         Equipment but excluding the Excluded Equipment) and all books, other
         Records and Proceeds with respect thereto;

                  (h)      all Instruments and all books, other Records and
         Proceeds with respect thereto;

                  (i)      all Intellectual Property Collateral and all books,
         other Records and Proceeds with respect thereto;

                  (j)      all Investment Property and all books, other Records
         and Proceeds with respect thereto;

                  (k)      all Letter-of-Credit Rights and all books, other
         Records and Proceeds with respect thereto;

                  (l)      all Receivables not otherwise described above
         and all books, other Records and Proceeds with respect thereto; and

                  (m)      all Supporting Obligations and all books, other
         Records and Proceeds with respect thereto.

Notwithstanding the foregoing, the "Collateral" shall not include (i) any
Proceeds (other than Capital Securities of a Borrower or a Subsidiary of a
Borrower) arising from a Disposition, casualty or condemnation of Excluded
Equipment or Excluded Contracts, or (ii) any General Intangibles or other rights
arising under any contract, instrument, license or other document as to which
the grant of a security interest would constitute a violation of a valid and
enforceable restriction on such grant in favor of the Person(s) (other than such
Grantor) obligated on such contract, instrument, license or other document,
unless and until any required consents shall have been obtained. Each Grantor
agrees to use commercially reasonable efforts to obtain any such

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required consent with respect to any material item described in clause (ii) of
the immediately preceding sentence.

         SECTION 2.2.   Security for Obligations. This Agreement secures the
payment in cash in full of all Obligations.

         SECTION 2.3.   Continuing Security Interest. This Agreement shall
create a continuing security interest in the Collateral and shall:

                  (a)      remain in full force and effect until the Termination
         Date;

                  (b)      be binding upon each Grantor, its successors,
         transferees and assigns; and

                  (c)      inure, together with the rights and remedies of the
         Administrative Agent hereunder, to the benefit of the Administrative
         Agent and each other Secured Party.

Without limiting the generality of the foregoing clause (c), any Secured Party
may assign or otherwise transfer (in whole or in part) any Revolving Credit
Commitment or Swing Line Loan Commitment or Loan held by it to any other Person,
and such other Person shall thereupon become vested with all the rights and
benefits in respect thereof granted to such Secured Party under any Loan
Document or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 10.11 of the Credit
Agreement. Upon the sale, transfer or other disposition of Collateral in
accordance with the Credit Agreement, the security interests granted herein
shall automatically terminate with respect to such Collateral, but not the
Proceeds thereof. Upon the Termination Date, the security interests granted in
the Collateral by each Grantor hereunder shall automatically terminate and all
rights to such Collateral shall revert and be reassigned to such Grantor. Upon
any sale, transfer, disposition or termination described in either of the two
immediately preceding sentences, the Administrative Agent will, at the
applicable Grantor's sole expense, execute and deliver to such Grantor, without
any representations, warranties or recourse, such documents as such Grantor may
reasonably request to evidence such termination, release or reassignment.

         SECTION 2.4.   Grantor Remains Liable. Anything herein to the contrary
notwithstanding:

                  (a)      each Grantor will remain liable under the contracts
         and agreements included in the Collateral to the extent set forth
         therein, and will perform all of its duties and obligations under such
         contracts and agreements to the same extent as if this Agreement had
         not been executed;

                  (b)      the exercise by the Administrative Agent of any of
         its rights hereunder will not release any Grantor from any of its
         duties or obligations under any such contracts or agreements included
         in the Collateral; and

                  (c)      neither the Administrative Agent nor any other
         Secured Party will have any obligation or liability under any such
         contracts or agreements included in the

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         Collateral by reason of this Agreement, nor will the Administrative
         Agent or any other Secured Party be obligated to perform any of the
         obligations or duties of any Grantor thereunder or to take any action
         to collect or enforce any claim for payment assigned hereunder.

         SECTION 2.5.   Security Interest Absolute. All rights of the
Administrative Agent and the security interests granted to the Administrative
Agent hereunder, and all obligations of each Grantor hereunder, shall be
absolute and unconditional, irrespective of:

                  (a)      any lack of validity or enforceability of any Loan
         Document;

                  (b)      the failure of any Secured Party

                           (i)      to assert any claim or demand or to enforce
                  any right or remedy against the Borrowers or any other Person
                  under the provisions of any Loan Document or otherwise or

                           (ii)     to exercise any right or remedy against any
                  guarantor of, or collateral securing, any Obligations;

                  (c)      any change in the time, manner or place of payment
         of, or in any other term of, all or any of the Obligations or any other
         extension, compromise or renewal of any Obligations;

                  (d)      any reduction, limitation, impairment or termination
         of any Obligations for any reason (other than the repayment in full and
         in cash of all Obligations), including any claim of waiver, release,
         surrender, alteration or compromise, and shall not be subject to (and
         each Grantor hereby waives any right to or claim of) any defense or
         set-off, counterclaim, recoupment or termination whatsoever by reason
         of the invalidity, illegality, nongenuineness, irregularity, compromise
         or unenforceability of, or any other event or occurrence affecting, any
         Obligations or otherwise;

                  (e)      any amendment to, rescission, waiver or other
         modification of, or any consent to departure from, any of the terms of
         any Loan Document;

                  (f)      any addition, exchange, release, surrender or
         non-perfection of any collateral (including the Collateral) or any
         amendment to or waiver or release of or addition to or consent to
         departure from any guaranty for any of the Obligations; or

                  (g)      any other circumstances which might otherwise
         constitute a defense available to, or a legal or equitable discharge
         of, any Borrower, any surety or any guarantor.

         SECTION 2.6.   Postponement of Subrogation, etc. Each Grantor hereby
agrees that it will not exercise any rights which it may acquire by reason of
any payment made hereunder, whether by way of subrogation, reimbursement or
otherwise, until the Termination Date. Any

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amount paid to any Grantor on account of any payment made hereunder prior to the
Termination Date shall be held in trust for the benefit of the Secured Parties
and shall immediately be paid to the Administrative Agent for the benefit of the
Secured Parties and credited and applied against the Obligations, whether
matured or unmatured, in accordance with the terms of the Credit Agreement;
provided, however, that if:

                  (a)      such Grantor has made payment to the Administrative
         Agent for the benefit of the Secured Parties of all or any part of the
         Obligations; and

                  (b)      the Termination Date has occurred,

each Secured Party agrees that, at the requesting Grantor's request, the
Administrative Agent, on behalf of the Secured Parties, will execute and deliver
to such Grantor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
such Grantor of an interest in the Obligations resulting from such payment by
such Grantor. In furtherance of the foregoing, prior to the Termination Date,
each Grantor shall refrain from taking any action or commencing any proceeding
against any Borrower (or its successors or assigns, whether in connection with a
bankruptcy proceeding or otherwise) to recover any amounts in respect of
payments made under this Agreement to the Administrative Agent or any other
Secured Party.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         SECTION 3.1.   Representations and Warranties. Each Grantor represents
and warrants to each Secured Party as set forth in this Article III.

         SECTION 3.2.   Location of Collateral, etc. All of the Equipment,
Inventory and Deposit Accounts of such Grantor are respectively located at the
places specified in Item 3 of the Perfection Certificate. None of the Equipment
or Inventory has, within the four months preceding the date of this Agreement if
then owned by such Grantor, been located at any place other than the places
specified in Item 3 of the Perfection Certificate. The principal place of
business and chief executive office of such Grantor and the office where such
Grantor keeps its Records concerning the Receivables, and all originals of all
Chattel Paper which evidence Receivables, are located at the address set forth
in Item 3 of the Perfection Certificate. Such Grantor has no trade names other
than those specified in Item 1(d) of the Perfection Certificate. During the four
months preceding the date hereof, such Grantor has not been known by any legal
name different from the one set forth on Item 1(a) of the Perfection
Certificate, nor has such Grantor been the subject of any merger or other
corporate reorganization, except as set forth in Item 1(c) of the Perfection
Certificate. All Receivables evidenced by a promissory note or other Instrument,
negotiable document or Chattel Paper have been duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and substance
reasonably satisfactory to the Administrative Agent and delivered and pledged to
the Administrative Agent pursuant to Section 4.6. Such Grantor is not a party to
any Federal, State or local government contract except as set forth in Item 13
of the Perfection Certificate.

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         SECTION 3.3.   Ownership, No Liens, etc. Such Grantor owns its
Collateral free and clear of any Lien, except for the security interest created
by this Agreement and Permitted Liens. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording office, except such as may have been filed in favor of the
Administrative Agent relating to this Agreement or as have been filed in
connection with Permitted Liens.

         SECTION 3.4.   Possession and Control. Such Grantor has exclusive
possession and control of its Equipment and Inventory except where the absence
of possession and control results from actions of such Grantor in the ordinary
course of business.

         SECTION 3.5.   Negotiable Documents, Instruments and Chattel Paper.
Such Grantor has, prior to or contemporaneously herewith, delivered to the
Administrative Agent possession of all originals of all negotiable documents,
Instruments and Chattel Paper currently owned or held by such Grantor (duly
endorsed in blank, if requested by the Administrative Agent).

         SECTION 3.6.   Intellectual Property Collateral. With respect to any
Intellectual Property Collateral owned by such Grantor the loss, impairment or
infringement of which could reasonably be expected to have a Material Adverse
Effect:

                  (a)      such Intellectual Property Collateral is subsisting
         and has not been adjudged invalid or unenforceable, in whole or in
         part;

                  (b)      such Intellectual Property Collateral is valid and
         enforceable;

                  (c)      such Grantor has made all necessary filings to record
         its ownership of the registrations and applications included in such
         Intellectual Property Collateral in the United States Patent and
         Trademark Office and the United States Copyright Office, as applicable;

                  (d)      such Grantor is the owner of the unencumbered right,
         title and interest in and to such Intellectual Property Collateral
         (except for (i) Liens created under the Loan Documents, (ii) Permitted
         Liens, and (iii) rights of licensees under licenses of such
         Intellectual Property Collateral in the ordinary course of business)
         and no claim has been made that the use of such Intellectual Property
         Collateral does or may violate the asserted rights of any third party
         except for claims that could not reasonably be expected to have a
         Material Adverse Effect; and

                  (e)      such Grantor has performed all acts and has paid all
         required fees and Taxes required to maintain the registrations and
         applications filed with respect to any such Intellectual Property
         Collateral that is used in and material for, or necessary to, any
         Borrower's business.

Each Grantor owns directly or is entitled to use by license or otherwise, all
Patents, Trademarks, Trade Secrets, Copyrights, licenses, technology, know-how,
processes and rights with respect to

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any of the foregoing that are used in and material for, or necessary to, the
conduct of such Grantor's business as currently conducted.

         SECTION 3.7.   Validity, etc. This Agreement creates a valid security
interest in and Lien on all Collateral, and, upon the taking of the actions
described in Section 3.8(b), such Lien senior to all Liens (other than Liens
permitted by clauses (b), (d), (e), (f), (h), (k) and (l) of Section 7.2.3 of
the Credit Agreement).

         SECTION 3.8.   Authorization, Approval, etc. Except as have been
obtained or made and are in full force and effect, no material authorization,
material approval or other action by, and no material notice to or material
filing with, any Governmental Authority or regulatory body is required either
(a) for the grant by such Grantor of the security interest granted hereby, the
pledge by such Grantor of any Collateral pursuant hereto or for the execution,
delivery and performance of this Agreement by such Grantor or (b) except for the
filing of appropriate financing statements with the proper filing office in the
appropriate jurisdictions under applicable law to perfect the security interest
of the Administrative Agent in the Collateral and such recordings and
registrations as may be required under the trademark, copyright, and patent laws
of the United States and any other jurisdictions where the Borrowers own
Intellectual Property Collateral, for the perfection of or the exercise by the
Administrative Agent of its rights and remedies hereunder.

         SECTION 3.9.   Compliance with Laws. Such Grantor is in compliance with
the requirements of all applicable laws (including the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every Governmental
Authority, the non-compliance with which could reasonably be expected to have a
Material Adverse Effect or which could reasonably be expected to materially
adversely affect the value of the Collateral.

                                   ARTICLE IV
                                    COVENANTS

         SECTION 4.1.   Certain Covenants. Each Grantor covenants and agrees
that, at all times prior to the Termination Date, such Grantor will, unless the
Required Lenders shall otherwise consent in writing, perform, comply with and be
bound by the obligations set forth in this Article IV.

         SECTION 4.2.   As to Equipment and Inventory. Such Grantor hereby
agrees that it will:

                  (a)      keep all the Equipment and Inventory (other than
         Inventory sold in the ordinary course of business) at the places
         therefor specified in Section 3.2 or, upon 30 days' prior written
         notice to the Administrative Agent, at such other places in a
         jurisdiction where all representations and warranties set forth in
         Article III shall be true and correct in all material respects, and all
         action required pursuant to the first sentence of Section 4.6 shall
         have been taken with respect to the Equipment and Inventory;

                  (b)      cause the Equipment to be maintained and preserved in
         its existing condition, ordinary wear and tear excepted, or in the case
         of any loss or damage to any of the

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         Equipment that is material to the operations of any Grantor, as soon as
         practicable after the occurrence thereof, make or cause to be made all
         repairs, replacements and other improvements in connection therewith
         which are necessary or desirable to such end; and promptly furnish to
         the Administrative Agent a statement respecting any loss or damage to
         any of the Equipment in excess of $1,000,000 per occurrence; and

                  (c)      pay when due all Taxes, assessments and governmental
         charges imposed upon, and all claims (including claims for labor,
         materials and supplies) against the Equipment and Inventory, except to
         the extent the validity thereof is being contested in good faith by
         appropriate proceedings and for which adequate reserves in accordance
         with GAAP have been set aside.

         SECTION 4.3.   As to Receivables. (a) Such Grantor will: (i) keep its
chief executive office and the office(s) where it keeps its Records concerning
the Receivables, and all originals of all Chattel Paper which evidences
Receivables (other than Chattel Paper delivered to the Administrative Agent
pursuant to Section 3.5 or Section 4.6(a)), located at the address(es) set forth
in Section 3.2 and shall keep its other places of business at the addresses set
forth in Section 3.2, or, upon 30 days' prior written notice to the
Administrative Agent, at such other locations in a jurisdiction where all
actions required by the first sentence of Section 4.6 shall have been taken with
respect to the Receivables and such other Collateral; (ii) not change its name,
corporate identity, jurisdiction of organization or federal taxpayer
identification number except upon 30 days' prior written notice to the
Administrative Agent; (iii) hold and preserve such Records concerning the
Receivables; and (iv) permit representatives of the Administrative Agent, at
reasonable times and intervals and upon reasonable notice during normal business
hours to inspect (and photocopy extracts from) such Records.

         (b)      Such Grantor shall have the right to collect, demand, receive,
receipt for, sue for, compound and give acquittances for any and all amounts due
or to become due on Receivables and settle and adjust disputes and claims with
its customers and account debtors, handle returns and recoveries and grant
discounts, credits and allowances with respect to Receivables in the ordinary
course of business so long as no Event of Default shall have occurred and be
continuing.

         (c)      Except as otherwise provided in Section 7.2.19 of the Credit
Agreement, all cash kept by a Grantor in a Deposit Account shall be kept in a
Deposit Account subject to an applicable Lockbox Agreement. All Proceeds of
Collateral received by such Grantor shall be delivered in kind for deposit to
the applicable Lockbox Account. Such Proceeds of Collateral received by such
Grantor shall, prior to deposit in the Lockbox Account, be held (i) separate and
apart from, and not commingled with, any other property and (ii) in express
trust for the benefit of the Administrative Agent until delivery thereof is made
to the applicable Lockbox Account.

         (d)      The Administrative Agent shall have the right to apply any
amount in any Lockbox Account and/or the Concentration Account as set forth in
the Credit Agreement.

         (e)      With respect to each Lockbox Account and the Concentration
Account, it is hereby confirmed and agreed that (i) deposits in each such
account are subject to a security

                                      12

<PAGE>

interest as contemplated hereby, (ii) each such account shall be under the sole
dominion and control of the Administrative Agent and (iii) the Administrative
Agent shall have the sole right of withdrawal over such Collateral, in each case
subject to the provisions of the applicable Lockbox Agreement.

         (f)      Such Grantor will not create any Chattel Paper without placing
a legend on such Chattel Paper acceptable to the Administrative Agent indicating
that the Administrative Agent has a security interest in such Chattel Paper.

         SECTION 4.4.   As to Collateral. (a) Until the occurrence and
continuance of an Event of Default, and such time as the Administrative Agent
shall notify such Grantor of the revocation of such power and authority, such
Grantor (i) may in the ordinary course of its business (except to the extent
prohibited under any Loan Document) at its own expense, refine, process, store,
transport, sell, lease or furnish under the contracts of service any of the
Inventory normally held by such Grantor for such purpose, and use and consume,
in the ordinary course of its business (except to the extent prohibited under
the Credit Agreement or any other Loan Document), any raw materials, including
work in process or materials normally held by such Grantor for such purpose,
(ii) will, at its own expense, endeavor to collect, as and when due, all amounts
due with respect to any Collateral, including the taking of such action with
respect to such collection as the Administrative Agent may reasonably request
upon the occurrence and during the continuance of an Event of Default or, in the
absence of such request, as such Grantor may deem advisable, (iii) may grant, in
the ordinary course of business (except to the extent prohibited under any Loan
Document), to any party obligated on any of the Collateral, any rebate, refund
or allowance to which such party may be lawfully entitled, and may accept, in
connection therewith, the return of Goods, the sale or lease of which shall have
given rise to such Collateral, and (iv) may issue licenses to third-parties with
respect to Trademarks, Patents, Copyrights, and Trade Secrets in the ordinary
course of business. The Administrative Agent, however, may, at any time upon the
occurrence and during the continuance of an Event of Default, notify any parties
obligated on any of the Collateral to make payment to the Administrative Agent
of any amounts due or to become due thereunder and enforce collection of any of
the Collateral by suit or otherwise and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any indebtedness thereunder or evidenced
thereby. Upon request of the Administrative Agent, upon the occurrence and
during the continuance of an Event of Default, such Grantor will, at its own
expense, notify any parties obligated on any of the Collateral to make payment
to the Administrative Agent of any amounts due or to become due thereunder.

         (b)      The Administrative Agent is authorized to endorse, in the name
of such Grantor, any item, howsoever received by the Administrative Agent,
representing any payment on or other Proceeds of any of the Collateral.

         SECTION 4.5.   As to Intellectual Property Collateral. Each Grantor
covenants and agrees to comply with the following provisions as such provisions
relate to any Intellectual Property Collateral of such Grantor:

                                      13

<PAGE>

                  (a)      such Grantor will not (i) do any act, or omit to do
         any act, whereby any of the Patent Collateral may lapse or become
         abandoned or dedicated to the public or unenforceable, (ii) permit any
         of its licensees to, (A) fail to continue to use any of the Trademark
         Collateral in order to maintain all of the Trademark Collateral in full
         force free from any claim of abandonment for non-use, (B) fail to
         maintain as in the past the quality of products and services offered
         under all of the Trademark Collateral, (C) fail to employ, consistent
         with past practice, all of the Trademark Collateral registered with any
         Federal or State authority with an appropriate notice of such
         registration, (D) adopt or use any other Trademark which is confusingly
         similar or a colorable imitation of any of the Trademark Collateral
         unless such other Trademark is subject to the Administrative Agent's
         Lien hereunder, or (E) do or permit any act or knowingly omit to do any
         act whereby any of the Trademark Collateral may lapse or become invalid
         or unenforceable, or (iii) do or permit any act or knowingly omit to do
         any act whereby any of the Copyright Collateral or any of the Trade
         Secrets Collateral may lapse or become invalid or unenforceable or
         placed in the public domain except upon expiration of the end of an
         unrenewable term of a registration thereof, unless, in any such case,
         such Grantor shall either (x) reasonably and in good faith determine
         (and notice of such determination shall have been delivered to the
         Administrative Agent) that any of the relevant Intellectual Property
         Collateral is not of material economic value to such Grantor, or (y) in
         the exercise of its reasonable business judgment determines to do
         otherwise;

                  (b)      such Grantor shall notify the Administrative Agent as
         soon as practicable if it knows, or has reason to know, that any
         application or registration relating to any material item of the
         Intellectual Property Collateral may become abandoned or dedicated to
         the public or placed in the public domain or invalid or unenforceable
         other than upon the natural expiration of protective periods under
         applicable law, or of any adverse determination or development
         (including the institution of, or any such determination or development
         in, any proceeding in the United States Patent and Trademark Office,
         the United States Copyright Office or any U.S. court) regarding such
         Grantor's ownership of any material item of the Intellectual Property
         Collateral, its right to register the same or to keep and maintain and
         enforce the same;

                  (c)      unless such Grantor shall otherwise determine in the
         exercise of its reasonable business judgment, such Grantor will take
         all necessary steps, including in any proceeding before the United
         States Patent and Trademark Office or the United States Copyright
         Office, to maintain and pursue any application (and to obtain the
         relevant registration) filed with respect to, and to maintain any
         registration of, any material item of the Intellectual Property
         Collateral, including the filing of applications for renewal,
         affidavits of use, affidavits of incontestability and opposition,
         interference and cancellation proceedings and the payment of fees and
         Taxes (except to the extent that dedication, abandonment or
         invalidation is permitted under the foregoing clauses (a) and (b)); and

                  (e)      such Grantor will, (i) as soon as practicable (and in
         any event within thirty (30) days) after such Grantor obtains any
         material item of Intellectual Property Collateral that is the subject
         of a registration or application in the United States Patent and

                                      14

<PAGE>

         Trademark Office or in the United States Copyright Office, notify the
         Administrative Agent of the acquisition of such Intellectual Property
         and, (ii) as soon as reasonably practicable after any request by the
         Administrative Agent therefor (and in any event within ten (10)
         Business Days of such request) execute and deliver to the
         Administrative Agent notice(s) to be filed with the United States
         Patent and Trademark Office or United States Copyright Office, as
         applicable, with respect to the security interest granted by this
         Agreement in such Intellectual Property Collateral, together with any
         other documents as may be requested by the Administrative Agent and
         required to acknowledge or register or perfect the Administrative
         Agent's interest in any such item of Intellectual Property Collateral,
         each of which notices and other documents shall be in form and
         substance reasonably satisfactory to the Administrative Agent.

         SECTION 4.6.   Further Assurances, etc. Such Grantor agrees that, from
time to time at its own expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or that the Administrative Agent may reasonably request, in order to
perfect, preserve and protect any security interest granted or purported to be
granted hereby or to enable the Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, such Grantor will:

                  (a)      if any Receivable (excluding any Receivable not
         included in calculating the Borrowing Base Amount and with respect to
         which the payment owed to such Grantor does not exceed $500,000) shall
         be evidenced by a promissory note or other Instrument, negotiable
         document or Chattel Paper, deliver and pledge to the Administrative
         Agent hereunder such promissory note, Instrument, negotiable document
         or Chattel Paper duly endorsed and accompanied by duly executed
         instruments of transfer or assignment, all in form and substance
         reasonably satisfactory to the Administrative Agent;

                  (b)      take such actions as are reasonably requested by the
         Administrative Agent in order to allow the Administrative Agent to
         obtain control with respect to all Collateral consisting of (i) Deposit
         Accounts, (ii) Investment Property, (iii) Letter-of-Credit Rights and
         (iv) Electronic Chattel Paper;

                  (c)      authorize, execute (if necessary) and deliver to the
         Administrative Agent such financing or continuation statements, or
         amendments thereto, and such other instruments or notices (including
         any assignment of claim form under or pursuant to the federal
         assignment of claims statute, 31 U.S.C. Section. 3726, any successor or
         amended version thereof or any regulation promulgated under or pursuant
         to any version thereof), as may be necessary or desirable, or as the
         Administrative Agent may reasonably request; and

                  (d)      furnish to the Administrative Agent, from time to
         time at the Administrative Agent's reasonable request, statements and
         schedules further identifying and describing the Collateral and such
         other reports in connection with the Collateral as the Administrative
         Agent may reasonably request, all in reasonable detail.

                                      15

<PAGE>

With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Grantor where permitted
by law. A carbon, photographic or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.

         SECTION 4.7.   Insurance.   Each Grantor will:

                  (a)      maintain insurance on its property with financially
         sound and reputable insurance companies against loss and damage in at
         least the amounts (and with only those deductibles) customarily
         maintained, (and if insurance companies cease to offer such insurance
         generally or with deductibles in the amounts customarily obtained by
         the Company, such insurance with such deductibles as is acceptable to
         the Administrative Agent) and against such risks as are typically
         insured against in the same general area, by Persons of comparable size
         engaged in the same or similar business as the Grantor; and

                  (b)      maintain all worker's compensation, employer's
         liability insurance or similar insurance as may be required under the
         laws of any state or jurisdiction in which it may be engaged in
         business.

                                    ARTICLE V
                            THE ADMINISTRATIVE AGENT

         SECTION 5.1.   Administrative Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Administrative Agent as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the
Administrative Agent's discretion, upon the occurrence and during the
continuance of an Event of Default, to take any action and to execute any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:

                  (a)      to ask, demand, collect, sue for, recover, compromise
         and receive and give acquittance and receipts for moneys due and to
         become due under or in respect of any of the Collateral;

                  (b)      to receive, endorse and collect any drafts or other
         Instruments, Documents and Chattel Paper, in connection with clause (a)
         above;

                  (c)      to file any claims or take any action or institute
         any proceedings which the Administrative Agent may deem necessary or
         desirable for the collection of any of the Collateral or otherwise to
         enforce the rights of the Administrative Agent with respect to any of
         the Collateral; and

                  (d)      to perform the affirmative obligations of such
         Grantor hereunder (including all obligations of such Grantor pursuant
         to Section 4.6).

                                      16

<PAGE>

Such Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.

         SECTION 5.2.   Administrative Agent May Perform. If any Grantor fails
to perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and any expense of the
Administrative Agent incurred in connection therewith shall be payable by such
Grantor pursuant to Section 6.3.

         SECTION 5.3.   Administrative Agent Has No Duty. The powers conferred
on the Administrative Agent hereunder are solely to protect its interest (on
behalf of the Secured Parties) in the Collateral and shall not impose any duty
on it to exercise any such powers. Except for reasonable care of any Collateral
in its possession and the accounting for moneys actually received by it
hereunder, the Administrative Agent shall have no duty as to any Collateral or
responsibility for:

                  (a)      ascertaining or taking action with respect to calls,
         conversions, exchanges, maturities, tenders or other matters relative
         to any Investment Property, whether or not the Administrative Agent has
         or is deemed to have knowledge of such matters; or

                  (b)      taking any necessary steps to preserve rights against
         prior parties or any other rights pertaining to any Collateral.

         SECTION 5.4.   Reasonable Care. The Administrative Agent agrees to use
reasonable care in the custody and preservation of any of the Collateral in its
possession in accordance with Section 9-207 of the U.C.C.; provided, that (a)
the Administrative Agent shall be deemed to have exercised reasonable care in
the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially similar to that which the
Administrative Agent accords its own property, and (b) it is understood that the
Administrative Agent shall have no responsibility for taking any necessary steps
to preserve rights against prior parties with respect to the Collateral.

                                   ARTICLE VI
                                    REMEDIES

         SECTION 6.1.   Certain Remedies. If any Event of Default shall have
occurred and be continuing:

                  (a)      The Administrative Agent may exercise in respect of
         the Collateral, in addition to other rights and remedies provided for
         herein or otherwise available to it, all the rights and remedies of a
         secured party on default under the U.C.C. (whether or not the U.C.C.
         applies to the affected Collateral) and also may

                           (i)      require each Grantor to, and such Grantor
                  hereby agrees that it will, at its expense and upon request of
                  the Administrative Agent forthwith, assemble all

                                      17

<PAGE>

                  or part of the Collateral as directed by the Administrative
                  Agent and make it available to the Administrative Agent at a
                  place to be designated by the Administrative Agent which is
                  reasonably convenient to both parties, and

                           (ii)     without notice except as specified below,
                  sell the Collateral or any part thereof in one or more parcels
                  at public or private sale, at any of the Administrative
                  Agent's offices or elsewhere, for cash, on credit or for
                  future delivery, and upon such other terms as the
                  Administrative Agent may deem commercially reasonable. Each
                  Grantor agrees that, to the extent notice of sale shall be
                  required by law, at least ten days prior notice to such
                  Grantor of the time and place of any public sale or the time
                  after which any private sale is to be made shall constitute
                  reasonable notification. The Administrative Agent shall not be
                  obligated to make any sale of such Collateral regardless of
                  notice of sale having been given. The Administrative Agent may
                  adjourn any public or private sale from time to time by
                  announcement at the time and place fixed therefor, and such
                  sale may, without further notice, be made at the time and
                  place to which it was so adjourned.

                  (b)      All cash Proceeds received by the Administrative
         Agent in respect of any sale of, collection from or other realization
         upon all or any part of the Collateral shall be applied by the
         Administrative Agent as follows:

                           (i)      first, to the payment of any and all fees
                  and expenses then due and owing to the Administrative Agent
                  (including, without limitation, any amounts payable to the
                  Administrative Agent pursuant to Section 10.3 of the Credit
                  Agreement and Section 6.3 of this Agreement);

                           (ii)     second, to the payment of any and all fees
                  and expenses then due and owing to the other Lenders in
                  accordance with their respective Percentages;

                           (iii)    third, to the payment of all accrued and
                  unpaid interest on Swing Line Loans;

                           (iv)     fourth, to the payment of all accrued and
                  unpaid interest on Revolving Credit Loans, to each Lender in
                  accordance with each Lender's respective Percentage;

                           (v)      fifth, to reduce the outstanding principal
                  amount of all Swing Line Loans until all outstanding Swing
                  Loans have been paid in full;

                           (vi)     sixth, to the payment to the Lenders, in
                  accordance with their respective Percentages, of all
                  outstanding Revolving Credit Loans until all outstanding
                  Revolving Credit Loans have been paid in full;

                           (vii)    seventh, to reduce all unpaid and
                  outstanding Reimbursement Obligations;

                                      18

<PAGE>

                           (viii)   eighth, to Cash Collateralize all Letters of
                  Credit;

                           (ix)     ninth, to the ratable payment of all other
                  unpaid and outstanding Obligations, to each Secured Party in
                  accordance with the proportion that the unpaid and outstanding
                  Obligations to such Secured Party bears to the unpaid and
                  outstanding Obligations to all Secured Parties; and

                           (x)      tenth, any remaining funds shall continue to
                  be held by the Administrative Agent to be held as additional
                  collateral security and applied to any outstanding Obligations
                  in accordance with clauses (i)-(ix) above until the
                  Termination Date, after which such remaining cash Proceeds
                  shall be paid over to the applicable Grantor or to whomsoever
                  may be lawfully entitled to receive such surplus.

                  (c)      The Administrative Agent may

                           (i)      transfer all or any part of the Collateral
                  into the name of the Administrative Agent or its nominee, with
                  or without disclosing that such Collateral is subject to the
                  lien and security interest hereunder,

                           (ii)     notify the parties obligated on any of the
                  Collateral to make payment to the Administrative Agent of any
                  amount due or to become due thereunder,

                           (iii)    enforce collection of any of the Collateral
                  by suit or otherwise, and surrender, release or exchange all
                  or any part thereof, or compromise or extend or renew for any
                  period (whether or not longer than the original period) any
                  obligations of any nature of any party with respect thereto,

                           (iv)     endorse any checks, drafts or other writings
                  in such Grantor's name to allow collection of the Collateral,

                           (v)      take control of any Proceeds of the
                  Collateral and

                           (vi)     execute (in the name, place and stead of
                  such Grantor) endorsements, assignments, stock powers and
                  other instruments of conveyance or transfer with respect to
                  all or any of the Collateral.

         The Administrative Agent shall notify the applicable Grantor promptly
         after it exercises any right or rights pursuant to this Section 6.1(c)
         with respect to Collateral of such Grantor; provided, that any failure
         to provide such notice shall not in any way prejudice any such exercise
         of any right or rights.

         SECTION 6.2.   Compliance with Restrictions. Each Grantor agrees that
in any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in

                                      19

<PAGE>

connection with such sale as it may be advised by counsel is necessary in order
to avoid any violation of applicable law (including compliance with such
procedures as may restrict the number of prospective bidders and purchasers,
require that such prospective bidders and purchasers have certain qualifications
and restrict such prospective bidders and purchasers to Persons who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such Collateral)
or in order to obtain any required approval of the sale or of the purchaser by
any Governmental Authority or official, and such Grantor further agrees that
such compliance shall not result in such sale being considered or deemed not to
have been made in a commercially reasonable manner, nor shall the Administrative
Agent be liable nor accountable to such Grantor for any discount allowed by the
reason of the fact that such Collateral is sold in compliance with any such
limitation or restriction.

         SECTION 6.3.   Indemnity and Expenses. Each Grantor hereby jointly and
severally indemnifies and holds harmless the Administrative Agent from and
against any and all claims, losses and liabilities arising out of or resulting
from this Agreement (including enforcement of this Agreement), except claims,
losses or liabilities resulting from the Administrative Agent's gross negligence
or willful misconduct and, each Grantor will, upon demand pay (without
duplication) to the Administrative Agent the amount of any and all reasonable
expenses, including the reasonable fees and disbursements of its counsel and of
any experts and agents, which the Administrative Agent may incur, in each case,
in connection with:

                  (a)      the administration of this Agreement;

                  (b)      the custody, preservation, use or operation of, or
         the sale of, collection from or other realization upon, any of the
         Collateral;

                  (c)      the exercise or enforcement of any of the rights of
         the Administrative Agent hereunder; or

                  (d)      the failure by any Grantor to perform or observe any
         of the provisions hereof.

                                   ARTICLE VII
                            MISCELLANEOUS PROVISIONS

         SECTION 7.1.   Loan Document. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.

         SECTION 7.2.   Amendments; etc. No amendment to or waiver of any
provision of this Agreement nor consent to any departure by any Grantor herefrom
shall in any event be effective unless the same shall be in writing and signed
by the Administrative Agent (on behalf of the Lenders or the Required Lenders,
as the case may be) and each Grantor and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

                                      20

<PAGE>

         SECTION 7.3.   Protection of Collateral. The Administrative Agent may
from time to time, at its option, perform any act which each Grantor agrees
hereunder to perform and which such Grantor shall fail to perform after being
requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of an Event of
Default) and the Administrative Agent may from time to time take any other
action which the Administrative Agent reasonably deems necessary for the
maintenance, preservation or protection of any of the Collateral or of its
security interest therein.

         SECTION 7.4.   Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and addressed,
delivered or transmitted, if to any Grantor, at the address or facsimile number
of the Company provided for in the Credit Agreement, and, if to the
Administrative Agent, at the address or facsimile number provided for in the
Credit Agreement, or to any such party at such other address or facsimile number
as shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. Any notice, (a) if
mailed and properly addressed with postage prepaid or if properly addressed and
sent by pre-paid courier service, shall be deemed given when received, or (b) if
transmitted by facsimile, shall be deemed given when transmitted (and telephonic
confirmation of receipt thereof has been received).

         SECTION 7.5.    Headings. The various headings of this Agreement are
inserted for convenience only, and shall not affect the meaning or
interpretation of this Agreement or any provisions thereof.

         SECTION 7.6.   Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

         SECTION 7.7.   Counterparts; Effectiveness. This Agreement may be
executed by the parties hereto in several counterparts and by facsimile, each of
which counterparts shall be deemed to be an original (whether such counterpart
is originally executed or a facsimile copy of a counterpart that is originally
executed) and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective as of the date first above
written.

         SECTION 7.8.   Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

         SECTION 7.9.   Additional Grantors. Upon the execution and delivery by
any other Person of an instrument in the form of Annex I hereto, together with
each Schedule thereto, such Person shall become a "Grantor" hereunder with the
same force and effect as if originally named as a Grantor herein. The execution
and delivery of any such instrument shall not require the consent of any other
Grantor hereunder. The rights and obligations of each Grantor hereunder

                                      21

<PAGE>

shall remain in full force and effect notwithstanding the addition of any new
Grantor as a party to this Agreement.

                 [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      22

<PAGE>

         IN WITNESS WHEREOF, each party hereto has caused this Security
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.

                                         GRANTORS:

                                         STERLING CHEMICALS, INC.
                                         STERLING CHEMICALS ENERGY, INC.

                                         By____________________________________
                                            Name:
                                            Title:

                                         ADMINISTRATIVE AGENT:

                                         THE CIT GROUP/BUSINESS CREDIT, INC., as
                                           Administrative Agent, on behalf of
                                           the Secured Parties

                                         By____________________________________
                                         Name:  R. Grant Weiss
                                         Title: Vice President

                     Signature Page to Security Agreement

<PAGE>

                                                                         ANNEX I
                                                           to Security Agreement

                    SUPPLEMENT NO._____ TO SECURITY AGREEMENT

         THIS SUPPLEMENT NO.___, dated as of________________, _______ (this
"Supplement"), to the Security Agreement, dated as of December 19, 2002 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Security Agreement"), among the initial signatories thereto and each
other Person (such capitalized term and all other capitalized terms being used
herein with the meanings provided, or incorporated by reference, in the Security
Agreement) which from time to time thereafter became a party thereto pursuant to
Section 7.9 thereof (each such Person and each Borrower is individually referred
to herein as a "Grantor", and collectively as the "Grantors"), and THE CIT
GROUP/BUSINESS CREDIT, INC., as Administrative Agent for each of the Secured
Parties, is made by _______________, a ____________ (the "Additional Grantor").

                                    RECITALS:

         A.       Pursuant to a Revolving Credit Agreement, dated as of December
19, 2002 (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation, and Sterling Chemicals Energy, Inc., a Delaware
corporation (each individually a "Borrower" and collectively the "Borrowers"),
the various financial institutions as are, or may from time to time become,
parties thereto (the "Lenders") and the Administrative Agent, the Lenders and
the Issuer have extended Commitments to make Credit Extensions to the Borrowers.

         B.       As a condition precedent to the making and maintenance of the
Credit Extensions under the Credit Agreement, the Additional Grantor is required
to execute and deliver this Supplement.

         C.       The Additional Grantor has duly authorized the execution,
delivery and performance of this Supplement and the Security Agreement.

         D.       The Security Agreement provides that additional parties may
become Grantors under the Security Agreement by execution and delivery of an
instrument in the form of this Supplement.

         E.       Pursuant to the provisions of Section 7.9 of the Security
Agreement, the Additional Grantor is becoming a Grantor under the Security
Agreement.

         F.       The Additional Grantor desires to become a Grantor under the
Security Agreement in order to induce the Secured Parties to continue to make
and maintain Revolving Credit Loans and Swing Line Loans and issue and maintain
Letters of Credit under the Credit Agreement as consideration therefor.

                     Annex I to Security Agreement- Page 1

<PAGE>

         NOW, THEREFORE, the Additional Grantor agrees, for the benefit of each
Secured Party, as follows:

         SECTION 1.     In accordance with Section 7.9 of the Security
Agreement, the Additional Grantor by its signature below becomes a Grantor under
the Security Agreement with the same force and effect as if it were an original
signatory thereto as a Grantor, and hereby grants to the Administrative Agent,
for the benefit of the Secured Parties, a security interest in, all of the
following property now owned or at any time hereafter acquired by the Additional
Grantor or in which the Additional Grantor now has or at any time in the future
may acquire any right, title or interest (the "Additional Collateral") as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations:

                  (a)      all Accounts and all books, other Records and
         Proceeds with respect thereto;

                  (b)      all Chattel Paper (including without limitation all
         Tangible Chattel Paper and Electronic Chattel Paper) and all books,
         other Records and Proceeds with respect thereto;

                  (c)      [ALL COMMERCIAL TORT CLAIMS DESCRIBED ON SCHEDULE I
         ATTACHED HERETO](1);

                  (d)      all Deposit Accounts, including without limitation
         each Lockbox Account (including all deposits and investments therein
         and all earnings thereon), and all books, other Records and Proceeds
         with respect thereto, but excluding (x) the Indenture Collateral
         Account, and (y) any Proceeds with respect to the Indenture Collateral
         Account;

                  (e)      all Documents and all books, other Records and
         Proceeds with respect thereto;

                  (f)      all General Intangibles (other than Excluded
         Contracts) and all books, other Records and Proceeds with respect
         thereto;

                  (g)      all Inventory and all books, other Records and
         Proceeds with respect thereto;

                  (h)      all other Goods (including without limitation all
         Equipment but excluding the Excluded Equipment) and all books, other
         Records and Proceeds with respect thereto;

                  (i)      all Instruments and all books, other Records and
         Proceeds with respect thereto;

---------------------
(1) Item to be deleted if the Additional Grantor does not have any Commercial
Tort Claims

                      Annex I to Security Agreement- Page 2

<PAGE>

                  (j)      all Intellectual Property Collateral and all books,
         other Records and Proceeds with respect thereto;

                  (k)      all Investment Property and all books, other Records
         and Proceeds with respect thereto;

                  (l)      all Letter-of-Credit Rights and all books, other
         Records and Proceeds with respect thereto;

                  (m)      all Receivables not otherwise described above and all
         books, other Records and Proceeds with respect thereto; and

                  (n)      all Supporting Obligations and all books, other
         Records and Proceeds with respect thereto.

                  Notwithstanding the foregoing, the "Additional Collateral"
         shall not include (i) any Proceeds (other than Capital Securities of a
         Borrower or a Subsidiary of a Borrower) arising from a Disposition,
         casualty or condemnation of Excluded Equipment or Excluded Contracts,
         or (ii) any General Intangibles or other rights arising under any
         contract, instrument, license or other document as to which the grant
         of a security interest would constitute a violation of a valid and
         enforceable restriction on such grant in favor of the Person(s) (other
         than the Additional Grantor) obligated on such contract, instrument,
         license or other document, unless and until any required consents shall
         have been obtained. The Additional Grantor agrees to use commercially
         reasonable efforts to obtain any such required consent with respect to
         any material item described in clause (ii) of the immediately preceding
         sentence.

In furtherance of the foregoing, each reference to a "Grantor" in the Security
Agreement shall be deemed to include the Additional Grantor, each reference to
"Collateral" in the Security Agreement shall be deemed to include the Additional
Collateral, and each Schedule hereto shall be deemed to be included in the
Schedules thereto.

         SECTION 2.     The Additional Grantor hereby represents and warrants
that (i) this Supplement has been duly authorized, executed and delivered by the
Additional Grantor and constitutes a legal, valid and binding obligation of the
Additional Grantor, enforceable against it in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and general equitable principles, (ii) each Schedule attached hereto contains
true, correct and complete information with respect to the matters set forth
therein, and (iii) all representations and warranties set forth in Article III
of the Security Agreement, as supplemented hereby to incorporate each Schedule
hereto, are true and correct in all respects as to the Additional Grantor.

         SECTION 3.     Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect in accordance with its terms.

                      Annex I to Security Agreement- Page 3

<PAGE>

         SECTION 4.     Any provision of this Supplement which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Supplement or affecting the validity or enforceability of such provision in any
other jurisdiction.

         SECTION 5.     Without limiting the provisions of the Credit Agreement
(or any other Loan Document, including the Security Agreement), the Additional
Grantor agrees to reimburse the Administrative Agent for its reasonable
out-of-pocket expenses in connection with this Supplement, including reasonable
attorneys' fees and expenses of the Administrative Agent.

         SECTION 6.     THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

         SECTION 7.     This Supplement hereby incorporates by reference the
provisions of the Security Agreement, which provisions are deemed to be a part
hereof, and this Supplement shall be deemed to be a part of the Security
Agreement.

         SECTION 8.     This Supplement may be executed in several counterparts,
each of which shall be deemed to be an original (whether such counterpart is
originally executed or a facsimile copy of a counterpart that is originally
executed) and all of which shall constitute together but one and the same
agreement. This Supplement shall become effective and binding as of the date
first above written when a counterpart hereof executed on behalf of the
Additional Grantor shall have been received by the Administrative Agent.

         IN WITNESS WHEREOF, the Additional Grantor has caused this Supplement
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

                                                    [NAME OF ADDITIONAL GRANTOR]

                                                     By________________________
                                                     Name:
                                                     Title:

ACKNOWLEDGED AND ACCEPTED BY:

THE CIT GROUP/BUSINESS CREDIT, INC.
as Administrative Agent, on behalf of the
Secured Parties

By___________________________
  Name:
  Title:

                      Annex I to Security Agreement- Page 4

<PAGE>

                                                                      SCHEDULE I
                                                            to Supplement No.___
                                                           to Security Agreement
                                                  ([NAME OF ADDITIONAL GRANTOR])

                            Commercial Tort Claims(2)

---------------------
(2) Schedule I to be deleted if the Additional Grantor does not have any
Commercial Tort Claims

<PAGE>

                                                               SCHEDULE [I] [II]
                                                            to Supplement No.___
                                                           to Security Agreement
                                                  ([NAME OF ADDITIONAL GRANTOR])

            Perfection Certificate Information for Additional Grantor

                  1.       Names and Business Qualifications. (a) The exact name
(as such name appears in the certificate of incorporation or similar
organizational document of the Additional Grantor), jurisdiction of
organization, and organizational identification number of the Additional
Grantor, and each jurisdiction in which the Additional Grantor is qualified to
conduct business as a foreign entity, are as follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                         Organizational         Jurisdictions Where Qualified to
                                         --------------         --------------------------------
                Jurisdiction of           Identification          Transact Business as a Foreign
                ---------------          --------------          -------------------------------
Name             Incorporation               Number                       Corporation
----             -------------               ------                       -----------
---------------------------------------------------------------------------------------------------
<S>             <C>                      <C>                    <C>
---------------------------------------------------------------------------------------------------
</TABLE>

                           (b)      Set forth below is each other name that the
Additional Grantor has had since its organization, together with the date of the
relevant change:

                           (c)      Except as set forth below, the Additional
Grantor has not changed its identity or organizational structure in any way
within the past five years.

                           (d)      The following is a list of all other names
(including trade names or similar appellations) used by the Additional Grantor
or any of its divisions or other business units at any time during the past five
years:

                  2.       Taxpayer Identification Numbers. The exact taxpayer
identification number of the Additional Grantor is as follows:

                  3.       Current Locations. (a) The chief executive office of
the Additional Grantor is located at the following address:

                           (b)      The following are all locations where the
additional Grantor maintains any chattel paper or any books or records relating
to any accounts receivable:

                           (c)      The following are all locations where the
Additional Grantor maintains any Lockbox Account, deposit account, securities
account or other bank account:

                           (d)      The following is a list of all real property
owned or leased by the Additional Grantor (identify: the complete address and
county of all such real property; whether such property is owned or leased; if
such property is leased, the name and complete address of the lessor of such
property; the use and approximate value of such property):

<PAGE>

                           (e)      The following are all the locations
(including the addresses) where the Additional Grantor maintains any equipment
or inventory not identified above (identify the approximate value of any such
equipment or inventory and the nature of such location):

                           (f)      The following are the names and addresses
of all Persons other than the Additional Grantor which have possession of any
of the Additional Grantor's equipment:

                           (g)      The following are the names and addresses
of all Persons other than the Additional Grantor which have possession of the
Additional Grantor's inventory (explain relationship of such Persons to a
Borrower, e.g., consignee, etc.):

                  4.       Mobile Goods.

                  (a)      Does the Additional Grantor own railroad cars or
                           other rolling stock? Yes_____ No____ .

         If Yes, attached as Schedule 4(a) is a list and description of such
railroad cars or other rolling stock.

                  (b)      Does the Additional Grantor own any aircraft? Yes ___
                           No____ .

         If Yes, attached as Schedule 4(b) is a list and description of such
aircraft.

                  (c)      Does the Additional Grantor own any automotive
equipment or other vehicles (including certificated trailers)? Yes___ No__.

         If Yes, attached as Schedule 4(c) is a list and description of such
automotive equipment and other vehicles.

                  (d)      Does the Additional Grantor own any barges, ships or
                           other vessels? Yes______ No____.

         If Yes, attached as Schedule 4(d) is a list and description of such
barges, ships or other vessels (identify whether certificates of documentation
are issued for such vessels).

                  5.       Consigned Inventory. Approximate dollar amount of the
Additional Grantor's inventory consigned to third parties at any
time:$____________.

                  6.       Inventory Located Outside of U.S. Approximate dollar
amount of the Additional Grantor's inventory located outside of the United
States at any time: $_________.

                  7.       Method of Shipment of Inventory. List the methods by
which the Additional Grantor's inventory is shipped to customers (e.g., common
carrier, by company owned vehicles, company owned railroad cars, etc.).

                  8.       Unusual Transactions. The Additional Grantor's
receivables have been originated by the Additional Grantor and the Additional
Grantor's inventory has been acquired by the Additional Grantor in the ordinary
course of its business.

                  9.       Government Contracts. The Additional Grantor is a
party to the following Federal, State or local government contracts:

                  10.      Patents. Below is a list of each patent and patent
application in which the Additional Grantor has any interest (whether as owner,
licensee or otherwise):

<PAGE>

                  (a)      Nature of interest (e.g., owner, licensee, other);

                  (b)      Description;

                  (c)      Registration number;

                  (d)      Issue date (patent) or date of application (patent
                           application); and

                  (e)      Country of issuance (patent) or country of
                           application (patent application).

                  11.      Trademarks. Below is a list of each registered
trademark and trademark application in which the Additional Grantor has any
interest (whether as owner, licensee or otherwise):

         Registered Trademarks:

                  (a)      Nature of interest (e.g., owner, licensee, other);

                  (b)      Registered trademark;

                  (c)      Registered number;

                  (d)      Property covered;

                  (e)      Date of registration;

                  (f)      Country of registration;

         Trademark Applications:

                  (a)      Nature of interest (e.g., owner, licensee, other);

                  (b)      Trademark to which application applies;

                  (c)      Property covered;

                  (d)      Date of application; and

                  (e)      Country of application.

                  12.      Copyrights. Below is a list of each copyright and
copyright application in which the Additional Grantor has any interest (whether
as owner, license or otherwise):

         Copyrights:

                  (a)      Nature of interest (e.g., owner, licensee, other);

                  (b)      Copyright;

                  (c)      Copyright number;

                  (d)      Property covered;

                  (e)      Date of copyright;

                  (f)      Docket number; and

<PAGE>

                  (g)      Country of registration.

         Copyright Applications:

                  (a)      Nature of interest (e.g., owner, licensee, other);

                  (b)      Copyright to which application applies;

                  (c)      Property covered;

                  (d)      Date of application; and

                  (e)      Country of application.

                  13.      Investment Property. Below is a list of all
securities (whether or not evidenced by a certificate), instruments and other
investment property which are in the name of or beneficially owned by the
Additional Guarantor (identify the issuer and nature of investment property).

                  14.      Material Contract Rights. Below is a list of all
other contract rights, franchises and licenses (other than the real property
leases listed above) the cancellation or termination of which could be
reasonably expected to have a material adverse effect on (a) the business,
condition (financial or otherwise), operations, performance, properties, or
prospects of the Additional Guarantor, (b) the rights and remedies of any
Secured Party under any Loan Document to which the Additional Guarantor is a
party, or (c) the ability of the Additional Guarantor to perform its obligations
under the Loan Documents.<PAGE>

                                                                     EXHIBIT 4.6

                                                               EXECUTION VERSION

                                PLEDGE AGREEMENT

         THIS PLEDGE AGREEMENT (as amended, supplemented, amended and restated
or otherwise modified from time to time, this "Agreement"), dated as of December
19, 2002, is made by STERLING CHEMICALS, INC., a Delaware corporation and
STERLING CHEMICALS ENERGY, INC., a Delaware corporation (each, individually, a
"Borrower" and, together, collectively, the "Borrowers"), and each other Person
(such capitalized term and all other capitalized terms not otherwise defined
herein shall have the meanings provided for or incorporated by reference in
Article I below) that may from time to time become a party to this Agreement
(each such Person and each Borrower, individually, a "Pledgor" and, together
with all such other Persons and all Borrowers, collectively, the "Pledgors"), in
favor of THE CIT GROUP/BUSINESS CREDIT, INC., as Administrative Agent for each
of the Secured Parties (together with its successors and assigns in such
capacity, the "Administrative Agent").

                                    RECITALS:

         A.       Pursuant to a Revolving Credit Agreement, dated as of the date
hereof (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Credit Agreement"), among the Borrowers, the various
financial institutions as are, or may from time to time become, parties thereto
(the "Lenders") and the Administrative Agent, the Lenders and the Issuer have
extended Commitments to make Credit Extensions to the Borrowers.

         B.       As a condition precedent to the making of any Credit Extension
under the Credit Agreement, each Pledgor is required to execute and deliver this
Agreement.

         C.       Each Pledgor has duly authorized the execution, delivery and
performance of this Agreement.

         D.       It is in the best interest of each Pledgor to execute this
Agreement inasmuch as such Pledgor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrowers by
the Lenders and the Issuer pursuant to the Credit Agreement and the execution
and delivery of Rate Protection Agreements between the Borrowers and certain
Lenders.

         NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce (i) the Lenders, the Swing Line
Lender and the Issuer to make Revolving Credit Loans and issue Letters of Credit
pursuant to the Credit Agreement, and (ii) the Secured Parties to enter into
Rate Protection Agreement(s), each Pledgor jointly and severally agrees, for the
benefit of each Secured Party, as follows:

<PAGE>

                                    ARTICLE I
                                   DEFINITIONS

         SECTION 1.1    Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):

         "Administrative Agent" is defined in the preamble.

         "Agreement" is defined in the preamble.

         "Borrowers" is defined in the preamble.

         "Capital Securities" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's equity (including any instruments
convertible into equity), whether now outstanding or issued after the Effective
Date.

         "Collateral" is defined in Section 2.1.

         "Credit Agreement" is defined in recital A.

         "Disposition" is defined in the Intercreditor Agreement.

         "Distributions" means all stock dividends, liquidating dividends,
Capital Securities resulting from (or in connection with the exercise of) stock
splits, reclassifications, warrants, options, non-cash dividends, mergers or
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other Capital
Securities constituting Collateral, but shall not include Dividends.

         "Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business, but shall not include liquidating dividends.

         "Lenders" is defined in recital A.

         "Pledged Notes" means all promissory notes, bonds or debt instruments
at any time issued to any Pledgor (excluding any promissory notes, bonds or debt
instruments not included in calculating the Borrowing Base Amount and with
respect to which the principal amount owed to such Pledgor thereunder does not
exceed $500,000, and excluding any promissory notes, bonds or debt instruments
arising from a Disposition of Indenture Collateral).

         "Pledged Property" means all Pledged Shares, all other pledged Capital
Securities, all other equity securities, all Pledged Notes, all assignments of
any amounts due or to become due with respect thereto and all other instruments
which are now being delivered by any Pledgor to the Administrative Agent or may
from time to time hereafter be delivered by any Pledgor to the

                                       2

<PAGE>

Administrative Agent for the purpose of pledge under this Agreement, and all
proceeds of any of the foregoing.

         "Pledged Securities" means all Pledged Notes and all Capital Securities
which are now being or may hereafter be delivered or pledged by any Pledgor to
the Administrative Agent hereunder.

         "Pledged Share Issuer" means each Person identified in Attachment 1
hereto as the issuer of the Pledged Shares identified opposite the name of such
Person and each other Person whose Capital Securities are required to be pledged
hereunder and under the Credit Agreement from time to time.

         "Pledged Shares" means the Capital Securities of any Pledged Share
Issuer in the amounts and percentages listed in Attachment 1 hereto.

         "Pledgor" and "Pledgors" are defined in the preamble.

         "Securities Act" is defined in clause (a) of Section 6.2.

         "Termination Date" means the date on which all Obligations have been
paid in full in cash, all Letters of Credit have been terminated, expired or
Cash Collateralized, all Rate Protection Agreements have been terminated and all
Commitments have been permanently terminated.

         SECTION 1.2.   Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.

         SECTION 1.3.   U.C.C. Definitions. Unless otherwise defined herein or
in the Credit Agreement or the context otherwise requires, terms for which
meanings are provided in the U.C.C. are used in this Agreement, including its
preamble and recitals, with such meanings.

                                   ARTICLE II
                                     PLEDGE

         SECTION 2.1.   Grant of Security Interest. Each Pledgor hereby pledges,
hypothecates, assigns, charges, delivers and transfers to the Administrative
Agent, for the benefit of each of the Secured Parties, and hereby grants to the
Administrative Agent, for the benefit of the Secured Parties, a continuing
security interest in, all of such Pledgor's right, title and interest in and to
the following, whether now owned or hereafter acquired by such Pledgor
(collectively, the "Collateral"):

                  (a) all issued and outstanding Pledged Shares of each
         Pledged Share Issuer identified in Attachment 1 hereto;

                  (b) all other Capital Securities of any Pledged Share
         Issuer issued from time to time to such Pledgor;

                                       3

<PAGE>

                  (c) all Pledged Notes identified in Attachment 1 hereto and
         all other Pledged Notes, whether now or hereafter delivered to the
         Administrative Agent in connection with this Agreement;

                  (d) all other Pledged Property, whether now or hereafter
         delivered to the Administrative Agent in connection with this
         Agreement;

                  (e) all Dividends, Distributions and other payments and rights
         with respect to any Pledged Property; and

                  (f) all proceeds of any of the foregoing.

         SECTION 2.2.   Security for Obligations. This Agreement secures the
payment in full and in cash of all Obligations.

         SECTION 2.3.   Delivery of Pledged Property. All certificates or
instruments representing or evidencing any Collateral, including all
certificates or instruments representing or evidencing Pledged Securities, shall
be promptly delivered to and held by the Administrative Agent pursuant hereto
(or to a party who will hold such Pledged Securities pursuant to arrangements
satisfactory to the Administrative Agent in its sole discretion), shall be in
suitable form for transfer by delivery and shall be accompanied by all necessary
endorsements, instruments of transfer or assignment, duly executed in blank.

         SECTION 2.4.   Dividends, Distributions and Payments on Pledged
Securities. In the event that any Dividend or other cash payment is to be paid
on any Pledged Security at a time when no Event of Default has occurred and is
continuing, such Dividend or cash payment may be paid directly to the applicable
Pledgor; provided, however, that all amounts so received shall be promptly
deposited by such Pledgor into a Lockbox Account. If any Event of Default has
occurred and is continuing, then any such Dividend or cash payment shall be paid
directly to the Administrative Agent. In the event that any Distribution
consisting of Capital Securities (other than Distributions with respect to the
general partnership interest in S&L Cogeneration Company and limited liability
company interest in ANEXCO described on Attachment 1 hereto) is to be made on
any Pledged Security, such Distribution shall be delivered to and held by or on
behalf of the Administrative Agent as Collateral in accordance with Section 2.3.

         SECTION 2.5.   Continuing Security Interest. This Agreement shall
create a continuing security interest in the Collateral and shall:

                  (a)remain in full force and effect until the Termination Date;

                  (b)be binding upon each Pledgor and its successors,
         transferees and assigns; and

                  (c) inure, together with the rights and remedies of the
         Administrative Agent hereunder, to the benefit of the Secured Parties.

Without limiting the foregoing clause (c), any Secured Party may assign or
otherwise transfer (in whole or in part) any Revolving Credit Commitment or
Swing Line Loan Commitment or Loan held by it to any other Person, and such
other Person shall thereupon become vested with all the

                                       4

<PAGE>

rights and benefits in respect thereof granted to such Secured Party under any
Loan Document or otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 10.11 of the Credit
Agreement. The security interest granted herein shall terminate and all rights
to the Collateral shall revert to each Pledgor on the Termination Date. Upon any
such termination or release of Collateral, the Administrative Agent will, at
each Pledgor's sole expense, deliver to such Pledgor, without any
representations, warranties or recourse of any kind whatsoever, all certificates
and instruments representing or evidencing all Pledged Shares, together with all
other Collateral held by the Administrative Agent hereunder, and execute and
deliver to such Pledgor such documents as such Pledgor shall reasonably request
to evidence such termination or release.

         SECTION 2.6.   Security Interest Absolute. All rights of the
Administrative Agent and the Liens granted to the Administrative Agent
hereunder, and all obligations of each Pledgor hereunder, shall be absolute
and unconditional, irrespective of

                  (a)any lack of validity or enforceability of any Loan
                  Document,

                  (b)the failure of any Secured Party

                           (i) to assert any claim or demand or to enforce any
                  right or remedy against any Pledgor or any other Person under
                  the provisions of the Loan Documents or otherwise, or

                           (ii) to exercise any right or remedy against any
                  guarantor of, or collateral securing, any Obligations of any
                  Pledgor,

                  (c) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the Obligations or any other
         extension, compromise or renewal of any Obligation of any Pledgor,

                  (d) any reduction, limitation, impairment or termination of
         any Obligation of any Pledgor for any reason (other than the repayment
         in full and in cash of all Obligations), including any claim of waiver,
         release, surrender, alteration or compromise, and shall not be subject
         to (and each Pledgor hereby waives any right to or claim of) any
         defense or set-off, counterclaim, recoupment or termination whatsoever
         by reason of the invalidity, illegality, nongenuineness, irregularity,
         compromise or unenforceability of, or any other event or occurrence
         affecting, any Obligation of any Pledgor,

                  (e) any amendment to, rescission, waiver or other
         modification of, or any consent to departure from, any of the terms of
         the Loan Documents,

                  (f) any addition, exchange, release, surrender or
         non-perfection of any collateral (including the Collateral), or any
         amendment to or waiver or release of or addition to or consent to
         departure from any guaranty, for any of the Obligations, or

                  (g) any other circumstances which might otherwise constitute a
         defense available to, or a legal or equitable discharge of, any
         Borrower, any surety or any guarantor.

                                       5

<PAGE>

         SECTION 2.7.   Postponement of Subrogation, etc. Each Pledgor hereby
agrees that it will not exercise any rights which it may acquire by reason of
any payment made hereunder, whether by way of subrogation, reimbursement or
otherwise, until the Termination Date. Any amount paid to any Pledgor on account
of any payment made hereunder prior to the Termination Date shall be held in
trust for the benefit of the Secured Parties and shall promptly be paid to the
Administrative Agent, for the benefit of the Secured Parties, and credited and
applied against the Obligations, whether matured or unmatured, in accordance
with the terms of the Credit Agreement; provided, however, that if

                  (a) any Pledgor has made payment to the Administrative Agent
         for the benefit of the Secured Parties of all or any part of the
         Obligations, and

                  (b) the Termination Date has occurred,

each Secured Party agrees that, at such Pledgor's request, the Administrative
Agent, on behalf of the Secured Parties, will execute and deliver to such
Pledgor appropriate documents (without recourse and without representation or
warranty) necessary to evidence the transfer by subrogation to such Pledgor of
an interest in the Obligations resulting from such payment by such Pledgor. In
furtherance of the foregoing, prior to the Termination Date, each Pledgor shall
refrain from taking any action or commencing any proceeding against any Borrower
(or its successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in respect of payments made
under this Agreement to the Administrative Agent or any other Secured Party.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         Each Pledgor represents and warrants unto each Secured Party, as at the
date of each pledge and delivery hereunder (including each pledge and delivery
of Pledged Securities) by such Pledgor to the Administrative Agent of any
Collateral, as set forth in this Article III below.

         SECTION 3.1.   Ownership, No Liens, etc. Such Pledgor is the legal and
beneficial owner of, and has good and valid title to (and has full right and
authority to pledge and assign) the Collateral pledged by it hereunder, free and
clear of any Liens other than the Lien created by this Agreement.

         SECTION 3.2.   Valid Security Interest. This Agreement creates a valid
security interest in the Collateral in favor of the Administrative Agent, which
security interest shall be perfected and senior to all other Liens with respect
to the Collateral upon either (x) with respect to Collateral consisting of
certificated securities or Pledged Notes, the delivery to the Administrative
Agent of the certificates and instruments representing or evidencing such
Collateral, together with duly executed instruments of transfer, or (y) with
respect to all Collateral, the filing of appropriate financing statements with
the proper filing office in the appropriate jurisdictions.

         SECTION 3.3.   As to Pledged Shares. As of the date hereof, Attachment
1 hereto accurately identifies (i) the name and jurisdiction of organization of
each Pledged Share Issuer, (ii) the number, class(es) and certificate number(s),
if applicable, of the Pledged Shares, and (iii)

                                       6

<PAGE>

the percentage of each class of Capital Securities of each Pledged Share Issuer
represented by such Pledged Shares. In the case of the Pledged Shares of any
Subsidiary of such Pledgor that constitute Collateral, all such Pledged Shares
have been duly authorized and validly issued and are fully paid and
nonassessable. No Pledgor has any Subsidiaries (other than, in the case of the
Company, Sterling Chemicals Marketing, Inc., a Barbados corporation, and the
Excluded Subsidiaries) of which it directly owns any Capital Securities that are
not pledged hereunder. All Pledged Shares (other than the general partnership
interest in S&L Cogeneration Company and limited liability company interest in
ANEXCO described on Attachment 1 hereto) are certificated, have been delivered
to the Administrative Agent accompanied by undated instruments of transfer duly
executed in blank, and such delivery and instruments of transfer are effective
to give the Administrative Agent "control" (as defined in Section 8-106 the
U.C.C.) of such Pledged Shares.

         SECTION 3.4. Authorization, Approval, etc. Except as have been obtained
or made and are in full force and effect, no authorization, approval or other
action by, and no notice to or filing with, any Governmental Authority,
regulatory body or other Person is required either

                  (a) for the pledge by such Pledgor of any Collateral pursuant
         to this Agreement or for the execution, delivery and performance of
         this Agreement by such Pledgor, or

                  (b) for the exercise by the Administrative Agent of the voting
         or other rights provided for in this Agreement, or, except with respect
         to any Pledged Shares as may be required in connection with a
         disposition of such Pledged Shares by laws affecting the offering and
         sale of securities generally, the remedies in respect of the Collateral
         pursuant to this Agreement,

provided, however, that (i) in order to exercise the voting and certain other
rights provided for in this Agreement with respect to a Pledged Share Issuer,
the Pledged Shares of such Pledged Share Issuer must be transferred into the
name of the Administrative Agent on the books and records of such Pledged Share
Issuer prior to the exercise of such voting or other rights, and (ii) the Liens
granted hereunder will not be perfected until either (x) with respect to
Collateral consisting of certificated securities or Pledged Notes, the delivery
to the Administrative Agent of the certificates and instruments representing or
evidencing such Collateral, together with duly executed instruments of transfer,
or (y) with respect to all Collateral, the filing of appropriate financing
statements with the proper filing office in the appropriate jurisdictions.

         SECTION 3.5.   Compliance with Laws. Such Pledgor is in compliance with
the requirements of all applicable laws (including, the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every Governmental
Authority, the non-compliance with which could reasonably be expected to have a
Material Adverse Effect or which could reasonably be expected to materially
adversely affect the value of the Collateral.

                                   ARTICLE IV
                                   COVENANTS

         SECTION 4.1.   Protect Collateral; Further Assurances, etc. Except for
the Lien created by this Agreement, no Pledgor will sell, assign, transfer,
pledge, or encumber the Collateral in

                                       7

<PAGE>

any other manner (except as permitted under Section 7.2.9 and Section 7.2.10 of
the Credit Agreement). Each Pledgor will warrant and defend the right and title
herein granted unto the Administrative Agent in and to the Collateral (and all
right, title and interest represented by the Collateral) against the claims and
demands of all Persons whomsoever. Each Pledgor agrees that at any time, and
from time to time, at the expense of such Pledgor, such Pledgor will promptly
execute and deliver all further instruments, and take all further action, that
may be necessary or that the Administrative Agent may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Each Pledgor
hereby authorizes the Administrative Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of such Pledgor where permitted by law. A
carbon, photographic or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law. No Pledgor will permit any Pledged
Share Issuer that is a Subsidiary of such Pledgor to issue any Capital
Securities unless the same are pledged hereunder and all certificates or
instruments representing or evidencing such Capital Securities are promptly
delivered to and held by or on behalf of the Administrative Agent as Collateral
in accordance with Section 2.3.

         SECTION 4.2.   Stock Powers, etc. Each Pledgor agrees that all Pledged
Securities delivered by such Pledgor pursuant to this Agreement will be
accompanied by duly executed, undated endorsements, stock powers or other
equivalent instruments of transfer reasonably acceptable to the Administrative
Agent. Each Pledgor will, from time to time upon the reasonable request of the
Administrative Agent, promptly deliver to the Administrative Agent such
endorsements, stock powers, instruments and similar documents, reasonably
satisfactory in form and substance to the Administrative Agent, with respect to
the Collateral as the Administrative Agent may reasonably request and will, from
time to time upon the request of the Administrative Agent after the occurrence
of any Event of Default, promptly cause each Pledged Share Issuer and each maker
of each Pledge Note, as applicable, to transfer any Pledged Securities
constituting Collateral into the name of any nominee designated in writing by
the Administrative Agent.

         SECTION 4.3.   Continuous Pledge. Subject to Section 2.4, each Pledgor
will, at all times, keep pledged to the Administrative Agent pursuant hereto all
Pledged Shares and all other Capital Securities constituting Collateral, all
Dividends and Distributions with respect thereto, and all other Collateral and
other Capital Securities, instruments, proceeds and rights from time to time
received by or distributable to such Pledgor in respect of any Collateral. Any
Distributions on Pledged Shares consisting of Capital Securities will be
certificated (other than Distributions with respect to the general partnership
interest in S&L Cogeneration Company and limited liability company interest in
ANEXCO described on Attachment 1 hereto).

         SECTION 4.4.   Voting Rights; Dividends, etc. Each Pledgor agrees:

                  (a) if any Event of Default shall have occurred and be
         continuing, promptly upon receipt thereof by such Pledgor and without
         any request therefor by the Administrative Agent, to deliver (properly
         endorsed where required hereby or requested by the Administrative
         Agent) to the Administrative Agent, all Dividends, Distributions and
         all

                                       8

<PAGE>

         proceeds of the Collateral, all of which shall be held by the
         Administrative Agent as additional Collateral for use in accordance
         with Section 6.4; and

                  (b) if any Event of Default shall have occurred and be
         continuing and the Administrative Agent shall have notified such
         Pledgor in writing of the Administrative Agent's intention to exercise
         its voting power under this Section:

                           (i) the Administrative Agent may exercise (to the
                  exclusion of such Pledgor) the voting power and all other
                  incidental rights of ownership with respect to any Pledged
                  Securities constituting Collateral and such Pledgor hereby
                  grants the Administrative Agent an irrevocable proxy,
                  exercisable under such circumstances, to vote the Pledged
                  Securities; and

                           (ii) promptly to deliver to the Administrative Agent
                  such additional proxies and other documents as may be
                  necessary to allow the Administrative Agent to exercise such
                  voting power.

All Dividends, Distributions and proceeds which may at any time and from time to
time be held by a Pledgor but which such Pledgor is then obligated to deliver to
the Administrative Agent, shall, until delivery to the Administrative Agent, be
held by such Pledgor separate and apart from its other property in trust for the
Administrative Agent. The Administrative Agent agrees that unless an Event of
Default shall have occurred and be continuing and the Administrative Agent shall
have given the written notice referred to in this Section, each Pledgor has the
exclusive power to exercise all voting and other consensual rights with respect
to any Pledged Securities and the Administrative Agent shall, upon the written
request of such Pledgor, promptly deliver such proxies and other documents, if
any, as shall be reasonably requested by such Pledgor which are necessary to
allow such Pledgor to exercise such powers with respect to any such Pledged
Securities; provided, however, that no vote shall be cast, or consent, waiver or
ratification given, or action taken by any Pledgor that would materially impair
the value of any Collateral or be inconsistent with or violate any provision of
the Loan Documents (including, without limitation, any action to foreclose any
Lien securing any Pledged Note or to otherwise enforce any Pledged Note).

                                    ARTICLE V
                            THE ADMINISTRATIVE AGENT

         SECTION 5.1.   Administrative Agent Appointed Attorney-in-Fact. Each
Pledgor hereby irrevocably appoints the Administrative Agent as such Pledgor's
attorney-in-fact, with full authority and in the name, place and stead of the
Pledgor or in its own name, from time to time in the Administrative Agent's
discretion, upon the occurrence and during the continuance of any Event of
Default, to take any action and to execute any instrument which the
Administrative Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:

                  (a) to ask, demand, collect, sue for, recover, compromise and
         receive and give acquittance and receipts for moneys due and to become
         due under or in respect of any of the Collateral;

                                       9

<PAGE>

                  (b) to receive, endorse and collect any drafts or other
         instruments, documents and chattel paper, in connection with clause (a)
         above; and

                  (c) to file any claims or take any action or institute any
         proceedings which the Administrative Agent may deem necessary for the
         collection of any of the Collateral or otherwise to enforce the rights
         of the Administrative Agent with respect to any of the Collateral.

Each Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.

         SECTION 5.2.   Administrative Agent May Perform. If any Pledgor fails
to perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by such
Pledgor pursuant to Section 6.5.

         SECTION 5.3.   Administrative Agent Has No Duty. The powers conferred
on the Administrative Agent hereunder are solely to protect its interest (on
behalf of the Secured Parties) in the Collateral and shall not impose any duty
on it to exercise any such powers. Except for reasonable care of any Collateral
in its possession and the accounting for moneys actually received by it
hereunder, the Administrative Agent shall have no duty as to any Collateral or
responsibility for

                  (a) ascertaining or taking action with respect to calls,
         conversions, exchanges, maturities, tenders or other matters relative
         to any Pledged Property, whether or not the Administrative Agent has or
         is deemed to have knowledge of such matters, or

                  (b) taking any necessary steps to preserve rights against
         prior parties or any other rights pertaining to any Collateral.

         SECTION 5.4.   Reasonable Care. The Administrative Agent agrees to use
reasonable care in the custody and preservation of any of the Collateral in its
possession in accordance with Section 9-207 of the U.C.C.; provided, that (a)
the Administrative Agent shall be deemed to have exercised reasonable care in
the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially similar to that which the
Administrative Agent accords its own property, and (b) it is understood that the
Administrative Agent shall have no responsibility for taking any necessary steps
to preserve rights against prior parties with respect to the Collateral.

                                   ARTICLE VI
                                    REMEDIES

         SECTION 6.1.   Certain Remedies.

                  (a) If any Event of Default shall have occurred and be
         continuing, the Administrative Agent may exercise in respect of the
         Collateral, in addition to other rights and remedies provided for
         herein or otherwise available to it, all the rights and remedies of a
         secured party on default under the U.C.C. (whether or not the U.C.C.
         applies to the

                                       10

<PAGE>

         affected Collateral) and also may, without notice except
         as specified below (or such other notices that are required by the
         U.C.C. (or other applicable law) and cannot be waived by the Pledgor
         hereunder), sell the Collateral or any part thereof in one or more
         parcels at public or private sale, at any of the Administrative Agent's
         offices or elsewhere, for cash, on credit or for future delivery, and
         upon such other terms as the Administrative Agent may deem commercially
         reasonable. Each Pledgor agrees that, to the extent notice of sale
         shall be required by law, at least ten days' prior notice to such
         Pledgor of the time and place of any public sale or the time after
         which any private sale is to be made shall constitute reasonable
         notification. The Administrative Agent shall not be obligated to make
         any sale of Collateral regardless of notice of sale having been given.
         The Administrative Agent may adjourn any public or private sale from
         time to time by announcement at the time and place fixed therefore, and
         such sale may, without further notice, be made at the time and place to
         which it was so adjourned.

                  (b) If any Event of Default shall have occurred and be
         continuing, the Administrative Agent may, in addition to other rights
         and remedies provided for herein or otherwise available to it,

                           (i) transfer all or any part of the Collateral into
                  the name of the Administrative Agent or its nominee, with or
                  without disclosing that such Collateral is subject to the Lien
                  and security interest hereunder,

                           (ii) notify the parties obligated on any of the
                  Collateral to make payment to the Administrative Agent of any
                  amount due or to become due thereunder,

                           (iii) enforce collection of any of the Collateral by
                  suit or otherwise, and surrender, release or exchange all or
                  any part thereof, or compromise or extend or renew for any
                  period (whether or not longer than the original period) any
                  obligations of any nature of any party with respect thereto,

                           (iv) endorse any checks, drafts or other writings in
                  each Pledgor's name to allow collection of the Collateral,

                           (v) take control of any proceeds of the Collateral
                  and

                           (vi) execute (in the name, place and stead of any
                  Pledgor) endorsements, assignments, stock powers and other
                  instruments of conveyance or transfer with respect to all or
                  any of the Collateral.

         SECTION 6.2.   Securities Laws. If the Administrative Agent shall
determine to exercise its right to sell all or any of the Collateral pursuant to
Section 6.1, each Pledgor agrees that, upon written request of the
Administrative Agent, such Pledgor will use commercially reasonable efforts to,
at its own expense:

                  (a) execute and deliver, and cause each issuer of the
         Collateral contemplated to be sold and the directors and officers
         thereof to execute and deliver, all such instruments and documents, and
         do or cause to be done all such other acts and things, as may be
         necessary or, in the opinion of the Administrative Agent, advisable to
         register such Collateral under

                                       11

<PAGE>

         the provisions of the Securities Act of 1933, as from time to time
         amended (the "Securities Act"), and to cause the registration statement
         relating thereto to become effective and to remain effective for such
         period as prospectuses are required by law to be furnished, and to make
         all amendments and supplements thereto and to the related prospectus
         which, in the opinion of the Administrative Agent, are necessary or
         advisable, all in conformity with the requirements of the Securities
         Act and the rules and regulations of the Securities and Exchange
         Commission applicable thereto;

                  (b) use its best efforts to qualify the Collateral under the
         state securities or "Blue Sky" laws and to obtain all necessary
         governmental approvals for the sale of the Collateral, as requested by
         the Administrative Agent;

                  (c) cause each such issuer to make available to its security
         holders, as soon as practicable, an earnings statement that will
         satisfy the provisions of Section 11(a) of the Securities Act; and

                  (d) do or cause to be done all such other acts and things as
         may be necessary to make such sale of the Collateral or any part
         thereof valid and binding and in compliance with applicable law.

Each Pledgor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Administrative Agent or the Secured
Parties by reason of the failure by such Pledgor to perform any of the covenants
contained in this Section and, consequently, agrees that, if such Pledgor shall
fail to perform any of such covenants, it shall pay, as liquidated damages and
not as a penalty, an amount equal to the value (as determined by the
Administrative Agent) of the Collateral on the date the Administrative Agent
shall demand compliance with this Section.

         SECTION 6.3.   Compliance with Restrictions. Each Pledgor agrees that
in any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may
be advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any Governmental Authority, and the Pledgor further
agrees that such compliance shall not result in such sale being considered or
deemed not to have been made in a commercially reasonable manner, nor shall the
Administrative Agent be liable nor accountable to any Pledgor for any discount
allowed by reason of the fact that such Collateral is sold in compliance with
any such limitation or restriction.

         SECTION 6.4.   Application of Proceeds. All cash proceeds received by
the Administrative Agent in respect of any sale of, collection from or other
realization upon all or any part of the Collateral shall be applied by the
Administrative Agent as follows:

                                       12

<PAGE>

                  (a) first, to the payment of any and all fees and expenses
         then due and owing to the Administrative Agent (including, without
         limitation, any amounts payable to the Administrative Agent pursuant to
         Section 10.3 of the Credit Agreement and Section 6.5 of this
         Agreement);

                  (b) second, to the payment of any and all fees and expenses
         then due and owing to the other Lenders in accordance with their
         respective Percentages;

                  (c) third, to the payment of all accrued and unpaid interest
         on Swing Line Loans;

                  (d) fourth, to the payment of all accrued and unpaid interest
         on Revolving Credit Loans, to each Lender in accordance with each
         Lender's respective Percentage;

                  (e) fifth, to reduce the outstanding principal amount of all
         Swing Line Loans until all outstanding Swing Loans have been paid in
         full;

                  (f) sixth, to the payment to the Lenders, in accordance with
         their respective Percentages, of all outstanding Revolving Credit Loans
         until all outstanding Revolving Credit Loans have been paid in full;

                  (g) seventh, to reduce all unpaid and outstanding
         Reimbursement Obligations;

                  (h) eighth, to Cash Collateralize all Letters of Credit;

                  (i) ninth, to the ratable payment of all other unpaid and
         outstanding Obligations, to each Secured Party in accordance with the
         proportion that the unpaid and outstanding Obligations to such Secured
         Party bears to the unpaid and outstanding Obligations to all Secured
         Parties; and

                  (j) tenth, any remaining funds shall continue to be held by
         the Administrative Agent to be held as additional collateral security
         and applied to any outstanding Obligations in accordance with clauses
         (a)-(i) above until the Termination Date, after which such remaining
         cash proceeds shall be paid over to the applicable Pledgor or to
         whomsoever may be lawfully entitled to receive such surplus.

The Pledgors shall remain liable on a joint and several basis for any
deficiency.

         SECTION 6.5.   Indemnity and Expenses. Each Pledgor hereby jointly and
severally indemnifies and holds harmless the Administrative Agent from and
against any and all claims, losses and liabilities arising out of or resulting
from this Agreement (including enforcement of this Agreement), except claims,
losses or liabilities resulting from the Administrative Agent's gross negligence
or willful misconduct, and each Pledgor will pay (without duplication) to the
Administrative Agent the amount of any and all reasonable expenses, including
the reasonable fees and disbursements of its counsel and of any experts and
agents, which the Administrative Agent may incur, in each case, in connection
with:

                                       13

<PAGE>

                  (a) the administration of this Agreement;

                  (b) the custody, preservation, use or operation of, or the
         sale of, collection from or other realization upon, any of the
         Collateral;

                  (c) the exercise or enforcement of any of the rights of the
         Administrative Agent hereunder; or

                  (d) the failure by any Pledgor to perform or observe any of
         the provisions hereof.

                                   ARTICLE VII
                            MISCELLANEOUS PROVISIONS

         SECTION 7.1.   Loan Document. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.

         SECTION 7.2.   Amendments, etc. No amendment to or waiver of any
provision of this Agreement or consent to any departure by any Pledgor herefrom
shall be effective unless the same shall be in writing and signed by the
Administrative Agent (at the direction of such of the Lenders as may be required
by the Credit Agreement) and such Pledgor, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which it is given.

         SECTION 7.3.   Protection of Collateral. The Administrative Agent may
from time to time, at its option, and at the expense of the Pledgors, perform
any act which any Pledgor agrees hereunder to perform and which such Pledgor
shall fail to perform after being requested in writing so to perform (it being
understood that no such request need be given after the occurrence and during
the continuance of an Event of Default) and the Administrative Agent may from
time to time take any other action which the Administrative Agent reasonably
deems necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.

         SECTION 7.4.   Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and addressed,
delivered or transmitted, if to any Pledgor, at the address or facsimile number
of the Company provided for in the Credit Agreement, and, if to the
Administrative Agent, at the address or facsimile number provided for in the
Credit Agreement, or to any such party at such other address or facsimile number
as shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. Any notice, (a)(i) if
mailed and properly addressed with postage prepaid or (ii) if properly addressed
and sent by pre-paid courier service, shall be deemed given when such notice has
been received or (b) if transmitted by facsimile, shall be deemed given when
transmitted (and telephonic confirmation of receipt thereof has been received).

         SECTION 7.5.   Headings. The various headings of this Agreement are
inserted for convenience only, and shall not affect the meaning or
interpretation of this Agreement or any provisions hereof.

                                       14

<PAGE>

         SECTION 7.6 . Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.

         SECTION 7.7.   Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

         SECTION 7.8.   Counterparts. This Agreement may be executed in several
counterparts and by facsimile, each of which counterparts shall be deemed to be
an original (whether such counterpart is originally executed or a facsimile copy
of a counterpart that is originally executed) and all of which shall constitute
together but one and the same agreement. This Agreement shall become effective
as of the date first written above.

         SECTION 7.9.   Additional Pledgors. Upon the execution and delivery by
any other Person of an instrument in the form of Annex I hereto, together with
the Schedule thereto, such Person shall become a "Pledgor" hereunder with the
same force and effect as if originally named as a Pledgor herein. The execution
and delivery of any such instrument shall not require the consent of any other
Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall
remain in full force and effect notwithstanding the addition of any new Pledgor
as a party to this Agreement.

    [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

                                       15

<PAGE>

         IN WITNESS WHEREOF, each party hereto has caused this Pledge Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.

                                     PLEDGORS:

                                     STERLING CHEMICALS, INC.
                                     STERLING CHEMICALS ENERGY, INC.

                                     By:________________________________________
                                     Name:
                                     Title:

                                     ADMINISTRATIVE AGENT:

                                     THE CIT GROUP/BUSINESS CREDIT,
                                     INC., as Administrative Agent, on behalf of
                                     the Secured Parties

                                     By:________________________________________
                                     Name:
                                     Title:

                      [SIGNATURE PAGE TO PLEDGE AGREEMENT]

<PAGE>

                                                                    ATTACHMENT 1
                                                             to Pledge Agreement

                                [TO BE ATTACHED]

                     Attachment 1 to Pledge Agreement- Page-1

<PAGE>

                                                                         ANNEX 1
                                                             to Pledge Agreement

                     SUPPLEMENT NO. ___ TO PLEDGE AGREEMENT

         This SUPPLEMENT NO. ___, dated as of __________, ____ (this
"Supplement"), to the Pledge Agreement, dated as of December 19, 2002 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Pledge Agreement"), among the initial signatories thereto and each
other Person which from time to time thereafter became a party thereto pursuant
to Section 7.9 thereof (each, individually, a "Pledgor", and, collectively, the
"Pledgors"), in favor of THE CIT GROUP/BUSINESS CREDIT INC., as Administrative
Agent for each of the Secured Parties (such term and all other capitalized terms
being used herein with the meanings provided, or incorporated by reference, in
the Pledge Agreement), is made by the undersigned.

                                    RECITALS:

         A.       Pursuant to a Revolving Credit Agreement, dated as of December
19, 2002 (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Credit Agreement"), among Sterling Chemicals, Inc., a
Delaware corporation, and Sterling Chemicals Energy, Inc., a Delaware
corporation (collectively, the "Borrowers"), the various financial institutions
as are, or may from time to time become, parties thereto (the "Lenders") and the
Administrative Agent, the Lenders and the Issuer have extended Commitments to
make Credit Extensions to the Borrowers.

         B.       As a condition precedent to the making and maintenance of
Credit Extensions under the Credit Agreement, the undersigned is required to
execute and deliver this Supplement.

         C.       The undersigned has duly authorized the execution, delivery
and performance of this Supplement and the Pledge Agreement.

         D.       The Pledge Agreement provides that additional parties may
become Pledgors under the Pledge Agreement by execution and delivery of an
instrument in the form of this Supplement.

         E.       Pursuant to the provisions of Section 7.9 of the Pledge
Agreement, the undersigned is becoming a Pledgor under the Pledge Agreement.

         F.       The undersigned desires to become a Pledgor under the Pledge
Agreement in order to induce the Secured Parties to continue to make and
maintain Revolving Credit Loans and Swing Line Loans and issue and maintain
Letters of Credit under the Credit Agreement as consideration therefor.

                       Annex 1 to Pledge Agreement- Page-1

<PAGE>

         NOW, THEREFORE, the undersigned agrees, for the benefit of each Secured
Party, as follows:

         SECTION 1.     In accordance with Section 7.9 of the Pledge Agreement,
the undersigned by its signature below becomes a Pledgor under the Pledge
Agreement with the same force and effect as if it were an original signatory
thereto as a Pledgor and hereby pledges, hypothecates, assigns, charges,
delivers and transfers to the Administrative Agent, for the benefit of the
Secured Parties, and grants to the Administrative Agent, for the benefit of the
Secured Parties, as security for the Obligations, a continuing security interest
in all of the undersigned's right, title and interest in and to the following,
whether now owned or hereafter acquired by the undersigned (collectively, the
"Additional Collateral"):

                  (a) all issued and outstanding Pledged Shares of each Pledged
         Share Issuer identified in Attachment 1 hereto;

                  (b) all other Capital Securities of any Pledged Share Issuer
         issued from time to time to such Pledgor;

                  (c) all Pledged Notes identified in Attachment 1 hereto and
         all other Pledged Notes, whether now or hereafter delivered to the
         Administrative Agent in connection with this Agreement;

                  (d) all other Pledged Property, whether now or hereafter
         delivered to the Administrative Agent in connection with this
         Agreement;

                  (e) all Dividends, Distributions and other payments and rights
         with respect to any Pledged Property; and

                  (f) all proceeds of any of the foregoing.

In furtherance of the foregoing, each reference to a "Pledgor" in the Pledge
Agreement shall be deemed to include the undersigned, each reference to
"Collateral" in the Pledge Agreement shall be deemed to include the Additional
Collateral, and Attachment 1 hereto shall be deemed to be part of Attachment 1
to the Pledge Agreement.

         SECTION 2.     The undersigned hereby represents and warrants that (i)
this Supplement has been duly authorized, executed and delivered by the
undersigned and constitutes a legal, valid and binding obligation of the
undersigned, enforceable against it in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and general
equitable principles, and (ii) all representations and warranties set forth in
Article III of the Pledge Agreement are true and correct in all respects as to
the undersigned and the Additional Collateral.

         SECTION 3.     Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect in accordance with its terms.

                       Annex 1 to Pledge Agreement- Page-2

<PAGE>

         SECTION 4.     In the event any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and in the Pledge Agreement shall not in any way be affected or
impaired.

         SECTION 5.     Without limiting the provisions of the Credit Agreement
(or any other Loan Document, including the Pledge Agreement), the undersigned
agrees to reimburse the Administrative Agent for its reasonable out-of-pocket
expenses in connection with this Supplement, including reasonable attorneys'
fees and expenses of the Administrative Agent.

         SECTION 6.     THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

         SECTION 7.     This Supplement hereby incorporates by reference the
provisions of the Pledge Agreement, which provisions are deemed to be a part
hereof, and this Supplement shall be deemed to be a part of the Pledge
Agreement.

         SECTION 8.     This Supplement may be executed in several counterparts
and by facsimile, each of which counterparts shall be deemed to be an original
(whether such counterpart is originally executed or a facsimile copy of a
counterpart that is originally executed) and all of which shall constitute
together but one and the same agreement. This Supplement shall become effective
and binding upon the Pledgor when a counterpart hereof executed on behalf of the
Pledgor shall have been received by the Administrative Agent.

         IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.

                                     [NAME OF ADDITIONAL PLEDGOR]

                                     By:________________________________________
                                        Name:
                                        Title:

ACKNOWLEDGED AND ACCEPTED BY:

THE CIT GROUP/BUSINESS CREDIT INC.,
as Administrative Agent

By:________________________________________
Name:
Title:

                 Annex 1 to Pledge Agreement- Page-3

<PAGE>

                                                                    ATTACHMENT 1
                                                             to Supplement No.__
                                                                Pledge Agreement

[NAME OF PLEDGOR]

Pledged Shares
--------------

<TABLE>
<CAPTION>
                                             Capital Securities
                         -----------------------------------------------------------

Pledged Share Issuer     Authorized Shares   Outstanding Shares  % of Shares Pledged
--------------------     -----------------   ------------------  -------------------
<S>                      <C>                 <C>                 <C>
</TABLE>

Pledged Notes
-------------

<TABLE>
<CAPTION>
                           Aggregate Principal Amount
                           --------------------------
Maker     Description            Outstanding
-----     -----------            -----------
<S>       <C>              <C>
</TABLE>

                       Annex 1 to Pledge Agreement- Page-4

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