Year ended December 31

2011 Bonus Plan

March 2011

Sterling Chemicals, Inc.

2011 Bonus Plan

Introduction:

     Our 2011 Bonus Plan (our “Bonus Plan”) will be made up of the following two programs (collectively, our “Bonus Programs”) that will provide eligible salaried employees with opportunities to receive cash compensation in addition to their salaries:

	•		Corporate Performance Bonus Program — pays bonuses based on our attainment of environmental and safety goals, our achievement of specified levels of Operating Cash Flow and on individual performance; and
	•		Individual Performance Bonus Program — pays bonuses based on individual performance, irrespective of our environmental or safety performance or the amount of Operating Cash Flow we earn during the year.

All of our salaried personnel (each an “Eligible Employee”), whether exempt or non-exempt and including our President and Chief Executive Officer, our Senior Vice Presidents and our Vice Presidents that report directly to one of our Senior Vice Presidents (our “Executives”), are eligible to receive cash bonuses under our Bonus Plan. To be paid a bonus, an Eligible Employee must be employed by us at the time bonuses are paid, unless the employee has retired, died or become disabled, in which event a pro rata bonus payment will be made based on full months of service for the relevant year. For purposes of our Bonus Plan, “retired” means the voluntary cessation of employment with us after attaining age 55 with at least five years of services or the voluntary cessation of employment with us after attaining age 65 (with no service restriction), and “disabled” has the meaning set forth in our disability plan.

Corporate Performance Bonus Program:

General.

     Under our Corporate Performance Bonus Program, the amount of bonus that each of our Eligible Employees is eligible to earn for any year is determined by the Eligible Employee’s Bonus Target and performance during that year relative to our corporate performance goals and his or her individual performance goals. An Eligible Employee’s “Bonus Target” is a stated percentage of the Eligible Employee’s annual base salary (set by our Compensation Committee or our Board of Directors in the case of our Executives and by our Human Resources & Administration Department in the case of all of our other Eligible Employees). The maximum amount of bonus that can be earned by an Eligible Employee for any year is 130% of his or her Bonus Target for performance relative to corporate performance goals and 70% of his or her Bonus Target for performance relative to individual performance goals. Attaining threshold level of Operating Cash Flow will be required for any bonus to be paid relative to corporate performance goals.

Corporate Performance Goals

     Our corporate performance goals under our Corporate Performance Bonus Program are based on:

	•		the number of Employee OSHA recordable injuries experienced during the year;
	•		the number of Contractor OSHA recordable injuries experienced during the year;
	•		the number of environmental and process safety management incidents experienced during the year (subject to meeting all process safety management regulations); and
	•		the amount of “Operating Cash Flow” earned during the year.

Our Board of Directors has set threshold, target and maximum goals for each of these categories for performance in 2011 as follows:

Goal		Threshold				Target				Maximum
Employee OSHA Recordable Injuries(1)			2				1				0				10	%
Contractor OSHA Recordable Injuries(1)			2				1				0				10	%
Environmental and Process Safety Incidents(1)(2)			3				2				1				10	%
Operating Cash Flow(3)			$(1.0)M			$	10.0M			$	25.0M				70	%

     At the end of each calendar year, the amount of bonus potentially payable to each Eligible Employee for performance relative to our corporate performance goals is determined by

multiplying that Eligible Employee’s Bonus Target times the aggregate percentage earned during that year for performance relative to our corporate performance goals times 65%. The aggregate percentage is determined using the table above with the relevant percentage from the table being multiplied by 0.5 if Threshold level is achieved, 1.0 if Target level is achieved and 2.0 if Maximum level is achieved. Performance relative to our Operating Cash Flow goals that is in between the established levels is prorated on a straight line basis. As an example, if an Eligible Employee has a base salary of $50,000 and Bonus Target of 10% and we achieved Target level for Operating Cash Flow and Maximum level for Employee OSHA Recordable Injuries, Contractor OSHA Reportable Injuries and Environmental and Process Safety Incidents, the Eligible Employee’s potential bonus for performance relative to our corporate performance goals would be:

•

$50,000 times 10% (or $5,000) times aggregate percentage earned during the year times 0.65, with the aggregate percentage being:

Employee OSHA Recordable Injuries			20	%		(10% @ 2X = 20%)
Contractor OSHA Recordable Injuries			20	%		(10% @ 2X = 20%)
Environmental and Process Safety Incidents			20	%		(10% @ 2X = 20%)
Operating Cash Flow			70	%		(70% @ 1X = 70%)
Aggregate Percentage			130	%

As a result, the Eligible Employee in the example would be eligible for a bonus for performance relative to our corporate performance goals of up to $5,000 times 130% times 0.65, or $4,225. On the other hand, if the Threshold level of Operating Cash Flow was not achieved, the Eligible Employee is not eligible for any bonus relative to our corporate performance goals regardless of the safety and environmental metric results.

Individual Performance Goals.

     At the end of each calendar year, the amount of bonus potentially payable to each Eligible Employee for performance relative to their individual performance goals is determined by multiplying that Eligible Employee’s Bonus Target times the aggregate percentage earned during that year for performance relative to his or her individual performance goals times 35%. As is the case for our corporate performance goals, the relevant percentage for each individual performance goal will be multiplied by 0.5 if Threshold level is achieved, 1.0 if Target level is achieved and 2.0 if Maximum level is achieved and those percentages will then be added together (with the multiplier for the relevant percentage pro-rated for performance between any two levels on a straight-line basis for performance goals based on arithmetic calculations).

     Continuing with the example given above, if the same Eligible Employee had four individual performance goals, with each weighted at 25%, and Target level was achieved for two individual performance goals and Maximum level was achieved for two individual performance goals, his or her potential bonus based on his or her performance relative to his or her individual performance goals would be:

$50,000 times 10% (or $5,000) times aggregate percentage earned during the year times 0.35, with aggregate percentage being calculated as follows:

Goal #1			25	%		(25% @ 1.0 = 25%)
Goal #2			25	%		(25% @ 1.0 = 25%)
Goal #3			50	%		(25% @ 2.0 = 50%)
Goal #4			50	%		(25% @ 2.0 = 50%)
Aggregate Percentage			150	%

As a result, the Eligible Employee in the example would be eligible to receive a bonus for his or her performance relative to his or her individual performance goals of up to $5,000 times 150% times 0.35 (or $2,625) and a total potential bonus of up to $6,850 ($4,225 based on performance relative to our corporate performance goals and $2,625 based on performance relative to his or her individual performance goals). However, if threshold Operating Cash Flow was not met, the Eligible Employee is eligible to receive a bonus of only $2625.

General Terms:

Total Bonus Calculation and Payment.

     At the end of each year, our performance under each of our corporate performance goals will be determined. Our financial results will determine the amount of Operating Cash Flow earned during that year and, consequently, whether a bonus will be paid under our Corporate Performance Bonus Program or under our Individual Performance Bonus Program. At the same time, each Eligible Employee’s performance relative to his or her individual performance goals will be assessed and the amount of bonus paid to that employee under our Corporate Performance Bonus Program or Individual Performance Bonus Program, as applicable, will be determined. If the amount of bonus (prior to any payment reductions) to be paid to any Eligible Employee (other than employee whose rating is DM) is less than the amount paid to each hourly employee under our Gainsharing Program, then the amount of that Eligible Employee’s bonus will be increased to match the amount paid under our Gainsharing Program. All bonuses will be paid to all Eligible Employees on or before March 14 in a single lump sum after all taxes have been withheld. The payment of a bonus does not affect any employee’s base pay in any manner and has no impact on the amount or level of benefits under any of our other benefit plans.

Payment Adjustments.

     The amount of bonus paid to an Eligible Employee under our Bonus Plan assumes continued employment with us in active status throughout the year. For purposes of our Bonus Plan, active status is made up of regular hours worked, vacation time, jury duty, service as a witness under court subpoena, funeral leave and military leave. Non-active status includes all other absences from work for any reason, including illness, injury, personal business, doctor’s appointment, excused absence, family illness, leave of absences and personal leave, etc. Once the amount of bonus to be paid to an Eligible Employee is determined under our Bonus Plan, that amount may be reduced if the Eligible Employee has accumulated absences totaling at least 44 working days (352 hours for shift workers) during the relevant year. The amount of reduction

will be 16.67% for the first 44 working days (352 hours for shift workers) of non-active status plus an additional 8.33% reduction for each additional 22 working days (176 hours for shift workers) of non-active status during the year for which the bonus is being paid. The amounts of bonuses paid to Eligible Employees may also be reduced by the Executives or our Board of Directors or Compensation Committee for various business considerations or adjusted, up or down, based on additional individual performance factors.

     The bonus paid to any Eligible Employee under our Bonus Plan who was hired after July 1 of the year during which performance is being assessed will be pro rated based on the number of full months of service during that year. The amount of bonus paid to any Eligible Employee who became eligible under our Bonus Plan in the first half of a year due to a promotion or change in job classification or being hired will not be pro rated due to such promotion, job reclassification or hiring (i.e., all months of service with us during the relevant year will be treated as if they were performed in the Eligible Employee’s most recent position). The amount of bonus paid to any Eligible Employee who has a change is status under our Bonus Plan on or after July 1 due to a promotion or change in job classification will be pro rated based on the number of months of service in the year in each status. For example, if an Eligible Employee’s salary and bonus percentage were increased October 1 due to a promotion, 3/4s of such Eligible Employee’s bonus would be calculated using his or her salary and bonus percentage prior to such promotion and 1/4 of such Eligible Employee’s bonus would be calculated using his or her salary and bonus percentage after such promotion.