3RD Amended Key Employee Protection Plan

STERLING CHEMICALS HOLDINGS, INC.
STERLING CHEMICALS, INC.


THIRD AMENDED AND RESTATED KEY EMPLOYEE PROTECTION PLAN


PRELIMINARY STATEMENTS


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


B. The Holdings Board and the Chemicals Board (as such terms are
defined below) have previously duly adopted that certain Second
Amended and Restated Key Employee Protection Plan (the "Existing
Plan").


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


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


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


ARTICLE I


Definitions and Interpretations


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


"Annual Compensation" shall mean, when used as of any date with
reference to any Participant, the sum of (i) the highest annual base
salary of such Participant in effect at any time during the three-year
period ending immediately prior to the date on which the applicable
Change of Control occurs or is deemed to have occurred plus (ii) the
Targeted Bonus, if any, of such Participant in effect immediately prior
to the earlier of (A) the date on which an event occurs that results in
such Participant terminating his or her employment


for Good Reason and (B) the actual date of such Participant's termination
by the Company for any reason other than Misconduct or Disability.


"Applicable Multiplier" shall mean (i) when used with reference to
any Existing Participant, the number set forth opposite such Existing
Participant's name on Exhibit B attached hereto under the heading
"Applicable Multiplier" and (ii) when used with reference to any other
Participant, the multiplier specified in the Instrument of Designation
executed and delivered by Holdings and such Participant in accordance
with Section 2.01(b); provided, however, that in no event shall the
Applicable Multiplier of any Participant be less than 0.50 (except as
provided in Section 2.03) or greater than 2.75.


"Benefit Plan" shall mean any employee benefit plan (including any
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974), program, arrangement or practice
maintained, sponsored or provided by Holdings or any Subsidiary,
including those relating to bonuses, incentive compensation, retirement
benefits, stock options, stock ownership or stock awards, healthcare and
medical benefits, disability benefits, death benefits, disability, life,
accident and travel insurance, sick leave, vacation pay or termination
pay.


"CEO" shall mean the Chief Executive Officer of Holdings.


"Chairman" shall mean the Chairman of the Board of Holdings.


"Change of Control" shall mean the occurrence of any of the
following events: (i) Holdings shall not be the surviving entity in any
merger, consolidation or other reorganization (or survives only as a
subsidiary of an entity other than a previously wholly-owned Subsidiary),
(ii) Holdings sells, leases or exchanges all or a substantial part of its
assets (other than in the ordinary course of business) to any other
person or entity (other than a wholly-owned Subsidiary), (iii) Holdings
is to be dissolved and liquidated, (iv) Chemicals sells, leases or
exchanges all or a substantial part of its assets (other than in the
ordinary course of business) to any other person or entity (other than
Holdings or another wholly-owned Subsidiary), (v) Chemicals ceases to be
a wholly-owned Subsidiary for any reason other than a merger,
consolidation or other reorganization in which Holdings or a wholly-owned
Subsidiary is the surviving entity, (vi) Chemicals sells, leases or
exchanges all or substantially all of its assets to any other person or
entity (other than Holdings or another wholly-owned Subsidiary), (vii)
any person or entity, including a "group" as contemplated by section
13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or
gains ownership or control (including the power to vote) of more than 50%
of the outstanding shares of Holdings' voting stock (based upon voting
power), (viii) as a result of or in connection with any tender or
exchange offer, merger or other business combination, sale of assets or
contested election of directors (by proxy or otherwise), the persons who
were directors of Holdings immediately prior to such offer, merger or
other business combination, sale of assets or election shall cease to
constitute a majority of the Holdings Board (or a majority of the board
of directors of any successor to Holdings) or a majority of the elected
officers of Holdings immediately prior to such offer, merger or other


-2-


business combination, sale of assets or election shall cease to serve as
elected officers of Holdings (or any successor to Holdings), or (ix) the
Company sells, leases or exchanges all or substantially all of the assets
or capital securities of any of its SBUs to any other person or entity
(other than Holdings or another wholly-owned Subsidiary); provided,
however, that any such sale, lease or exchange shall not constitute a
"Change of Control" for purposes of this clause (ix) with respect to any
Participant who was not assigned to work on a full-time basis in the
relevant SBU at the time of such sale, lease or exchange and, provided
further, that the sale, lease or exchange of all or substantially all of
the assets or capital securities of Sterling Fibers, Inc. or Sterling
Chemicals Acquisitions, Inc. (or any of its direct or indirect
subsidiaries) shall not constitute a "Change of Control" with respect to
any Participant.


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


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


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


"Company" shall mean Holdings and the Subsidiaries, including Chemicals.


"Compensation Committee" shall mean the Compensation Committee of
the Holdings Board.


"Confirmation Date" means the date on which the United States
Bankruptcy Court for the Southern District of Texas issues an order
confirming a plan of reorganization for the Company.


"Disability" shall mean, when used with reference to any
Participant, a physical or mental condition of such Participant that, in
the opinion of a licensed physician reasonably acceptable to Holdings and
such Participant or his or her legal representative, (a) prevents such
Participant from being able to perform the services required of him or
her as an employee of the Company, (b) has continued for at least 180
days during any period of twelve consecutive months and (c) is reasonably
expected to continue.


"Effective Date" shall mean October 31, 2001.


"Existing Participants" shall mean the Participants in this Plan
as of the Effective Date, each of whom is listed on Exhibit B attached
hereto.


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


"Good Reason" shall mean, when used with reference to any
Participant, any of the following actions or failures to act, but in each
case only if it occurs (a) on or after the date


-3-


that is 180 days prior to the date on which a Change of Control occurs
and (b) while such Participant is employed by Holdings or any Subsidiary
and then only if it is not consented to by such Participant in writing:


(i) if (but only if) such Participant is Grade S23 or higher, a
material change in such Participant's reporting
responsibilities, titles or elected or appointed offices as
in effect immediately prior to the effective date of such
change, including any change caused by the removal of such
Participant from, or the failure to re-elect such
Participant to, any material corporate office of the Company
held by such Participant immediately prior to such effective
date but excluding any such change that occurs in connection
with such Participant's death, disability or retirement;


(ii) if (but only if) such Participant is Grade S23 or higher,
the assignment to such Participant of duties and/or
responsibilities that are materially inconsistent with such
Participant's status, positions, duties, responsibilities
and functions with the Company immediately prior to the
effective date of such assignment;


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


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


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


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


(vii) any purported termination of such Participant's employment
for Misconduct or Disability not in accordance with the
provisions of Section 3.02; or


(viii) any purported termination of such Participant's
participation in this Plan not in accordance with the
provisions of Section 2.01(c).


-4-


For purposes of this definition, none of the actions described in clauses
(i) through (iii) above shall constitute a Good Reason with respect to
any Participant if it was an isolated and inadvertent action not taken in
bad faith by the Company and if it is remedied by the Company promptly
after receipt of notice thereof given by such Participant. For purposes
of this definition, any action or failure to act described in clauses (i)
through (viii) above shall cease to be a Good Reason with respect to any
Participant on the date which is 60 days after such Participant acquires
actual knowledge of such action or failure to act unless, prior to such
date, such Participant gives a Termination Notice pursuant to Section
3.01. In the event of any dispute between the Company, on the one hand,
and any Participant, on the other hand, with respect to the amount of
total compensation of such Participant for purposes of clause (c) above
or the aggregate value or level of any of such Participant's benefits for
purposes of clause (d) or (e) above, the Company and such Participant
shall use their best efforts to resolve such dispute themselves. If they
are unable to resolve the dispute within 15 business days, Deloitte &
Touche L.L.P., or such other nationally recognized accounting firm or
employee benefits firm acceptable to the Company and such Participant,
shall be engaged by the Company to make its own determination with
respect to the dispute and the determination by such firm shall be final
and binding on the Company (including the Compensation Committee) and
such Participant. If any firm is engaged with respect to any dispute as
aforesaid, (i) such firm shall be instructed to make its determination as
soon as practicable and to use such materiality standard as such firm may
determine to be reasonable under the circumstances and (ii) the
disputants shall provide such firm with all books, records and other
information relevant to such dispute as such firm may reasonably request.
No firm engaged as aforesaid shall be liable or responsible to the
Company (including the Compensation Committee) or any Participant for any
determination made by such firm in good faith.


"Grade" shall mean when used with reference to any Participant for
purposes of any action described in clauses (i) and (ii) of the
definition of Good Reason, his or her salary classification by the
Company immediately prior to such action.


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


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


"Misconduct" shall mean, when used with reference to any
Participant:


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


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


(c) the failure of such Participant to observe and comply with
any other lawful published policy of the Company, but, in
the case of any such failure that is


-5-


capable of being remedied, only if such failure shall have
continued unremedied for more than 30 days after written
notice thereof is given to such Participant by Holdings
and/or Chemicals;


(d) the willful failure of such Participant to observe and
comply with all lawful and ethical directions and
instructions of the Holdings Board, the Chairman and/or the
CEO;


(e) the failure of such Participant to perform, in any material
respect, his or her duties with the Company, but only if
such failure was not caused by disability or incapacity and
shall have continued unremedied for more than 30 days after
written notice thereof is given to such Participant by
Holdings and/or Chemicals;


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


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


For purposes of clauses (d) and (g) above, no act or failure to act on
the part of any Participant shall be considered "willful" if such act or
failure to act was done or omitted to be done by such Participant in good
faith and with the reasonable belief that such Participant's action or
omission was in the best interest of the Company. If any Participant is a
party to a written employment agreement with the Company, then clause (d)
above shall not apply to any directions or instructions that are contrary
to or inconsistent with any of the positions, functions, duties or
reporting responsibilities of such Participant as set forth in such
written employment agreement or that violate any of such Participant's
rights, privileges or immunities under such employment agreement. In case
of any dispute regarding whether or not any conduct by a Participant
meets any ...