-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F6wWSLenrfldg44JD2FmNQaft5/kxhXSVbP1tw0+3+qrMKVmoJlThQaZml31h5dM gQiKF25bRVDps83HchRxlg== 0000950129-03-004727.txt : 20030922 0000950129-03-004727.hdr.sgml : 20030922 20030922115007 ACCESSION NUMBER: 0000950129-03-004727 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 81 FILED AS OF DATE: 20030922 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE CHEMICAL PRODUCTS INC CENTRAL INDEX KEY: 0001262838 IRS NUMBER: 510405164 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-13 FILM NUMBER: 03903710 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE DEVELOPMENT CORP CENTRAL INDEX KEY: 0001262840 IRS NUMBER: 760666307 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-12 FILM NUMBER: 03903709 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE MANAGEMENT SERVICES INC CENTRAL INDEX KEY: 0001262841 IRS NUMBER: 760321065 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-11 FILM NUMBER: 03903708 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE OLEFINS CORP CENTRAL INDEX KEY: 0001262842 IRS NUMBER: 521629821 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-10 FILM NUMBER: 03903707 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH AMERICAN PROFILES INC CENTRAL INDEX KEY: 0001262828 IRS NUMBER: 760636880 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-19 FILM NUMBER: 03903716 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN BUREN PIPE CORP CENTRAL INDEX KEY: 0001262830 IRS NUMBER: 760441452 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-18 FILM NUMBER: 03903715 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTECH BUILDING PRODUCTS INC CENTRAL INDEX KEY: 0001262831 IRS NUMBER: 760498816 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-17 FILM NUMBER: 03903714 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE CHEMICAL HOLDINGS INC CENTRAL INDEX KEY: 0001262833 IRS NUMBER: 760664308 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-16 FILM NUMBER: 03903713 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE CHEMICAL INVESTMENTS INC CENTRAL INDEX KEY: 0001262834 IRS NUMBER: 760664309 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-15 FILM NUMBER: 03903712 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE CHEMICAL MANUFACTURING INC CENTRAL INDEX KEY: 0001262836 IRS NUMBER: 760664309 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-14 FILM NUMBER: 03903711 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE OVERSEAS CORP CENTRAL INDEX KEY: 0001262843 IRS NUMBER: 660443812 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-09 FILM NUMBER: 03903706 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE PETROCHEMICALS LP CENTRAL INDEX KEY: 0001262844 IRS NUMBER: 760553330 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-08 FILM NUMBER: 03903705 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE POLYMERS LP CENTRAL INDEX KEY: 0001262845 IRS NUMBER: 760144230 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-07 FILM NUMBER: 03903704 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE PVC CORP CENTRAL INDEX KEY: 0001262846 IRS NUMBER: 760346192 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-06 FILM NUMBER: 03903703 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE RESOURCES CORP CENTRAL INDEX KEY: 0001262847 IRS NUMBER: 760321064 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-05 FILM NUMBER: 03903702 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE STYRENE LP CENTRAL INDEX KEY: 0001262849 IRS NUMBER: 760294926 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-04 FILM NUMBER: 03903701 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE VINYL CORP CENTRAL INDEX KEY: 0001262850 IRS NUMBER: 760414632 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-03 FILM NUMBER: 03903700 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WPT LP CENTRAL INDEX KEY: 0001262852 IRS NUMBER: 760469048 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-02 FILM NUMBER: 03903699 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEISMAR VINYLS CO LP CENTRAL INDEX KEY: 0001263828 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-01 FILM NUMBER: 03903698 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD. STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE VINYLS INC CENTRAL INDEX KEY: 0001264129 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-20 FILM NUMBER: 03903717 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD, STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAKE CHEMICAL CORP CENTRAL INDEX KEY: 0001262823 IRS NUMBER: 760346924 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982 FILM NUMBER: 03903697 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEISMAR HOLDINGS INC CENTRAL INDEX KEY: 0001262824 IRS NUMBER: 331036002 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-24 FILM NUMBER: 03903721 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRAMERCY CHLOR-ALKALI CORP CENTRAL INDEX KEY: 0001262825 IRS NUMBER: 760669252 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-23 FILM NUMBER: 03903720 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GVGP INC CENTRAL INDEX KEY: 0001262826 IRS NUMBER: 710921650 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-22 FILM NUMBER: 03903719 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH AMERICAN PIPE CORP CENTRAL INDEX KEY: 0001262827 IRS NUMBER: 760370735 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108982-21 FILM NUMBER: 03903718 MAIL ADDRESS: STREET 1: 2801 POST OAK BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77056 FORMER COMPANY: FORMER CONFORMED NAME: NORTH AMERICAN PIPE CO DATE OF NAME CHANGE: 20030908 S-4 1 h08423sv4.txt WESTLAKE CHEMICAL CORPORATION AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 2003 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- WESTLAKE CHEMICAL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 2869 (State or other jurisdiction of (Primary Standard Industrial incorporation or organization) Classification Code Number) DELAWARE 76-0346924 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
2801 POST OAK BOULEVARD, SUITE 600 LOUIS B. TRENCHARD III HOUSTON, TEXAS 77056 VICE PRESIDENT, LEGAL (713) 960-9111 WESTLAKE CHEMICAL CORPORATION (Address, including ZIP code, and telephone number, 2801 POST OAK BOULEVARD, SUITE 600 including area code, of each registrant's principal HOUSTON, TEXAS 77056 executive offices) (713) 960-9111 (Name, address, including ZIP code, and telephone number, including area code, of agent for service)
--------------------- COPY TO: J. DAVID KIRKLAND, JR. BAKER BOTTS L.L.P. ONE SHELL PLAZA HOUSTON, TEXAS 77002 (713) 229-1234 ---------------------
JURISDICTION OF PRIMARY STANDARD INDUSTRIAL I.R.S. EMPLOYER EXACT NAME OF ADDITIONAL REGISTRANTS INCORPORATION/ORGANIZATION CLASSIFICATION CODE NUMBER IDENTIFICATION NUMBER - ------------------------------------ -------------------------- --------------------------- --------------------- Geismar Holdings, Inc.......................... Delaware 2821 33-1036002 Geismar Vinyls Company LP...................... Delaware 2821 06-1641487 Gramercy Chlor-Alkali Corporation.............. Delaware 2821 76-0669252 GVGP, Inc...................................... Delaware 2821 71-0921650 North American Pipe Corporation................ Delaware 3084 76-0370735 North American Profiles, Inc................... Delaware 3089 76-0636880 Van Buren Pipe Corporation..................... Delaware 3084 76-0441452 Westech Building Products, Inc................. Delaware 3089 76-0498816 Westlake Chemical Holdings, Inc................ Delaware 2869 76-0664308 Westlake Chemical Investments, Inc............. Delaware 2821 76-0664309 Westlake Chemical Manufacturing, Inc........... Delaware 2869 51-0405162 Westlake Chemical Products, Inc................ Delaware 2821 51-0405164 Westlake Development Corporation............... Delaware 2869 76-0666307 Westlake Management Services, Inc.............. Delaware 2869 76-0321065 Westlake Olefins Corporation................... Delaware 2821 52-1629821 Westlake Overseas Corporation.................. U.S. Virgin Islands 2821 66-0443812 Westlake Petrochemicals LP..................... Delaware 2869 76-0553330 Westlake Polymers LP........................... Delaware 2821 76-0144230 Westlake PVC Corporation....................... Delaware 2821 76-0346192 Westlake Resources Corporation................. Delaware 2821 76-0321064 Westlake Styrene LP............................ Delaware 2865 76-0294926 Westlake Vinyl Corporation Delaware 2821 76-0414632 Westlake Vinyls, Inc........................... Delaware 2821 76-0542667 WPT LP......................................... Delaware 2869 76-0469048
--------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE PUBLIC: As soon as practicable following the effectiveness of this Registration Statement. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Securities Act"), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] --------------------- CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED PER NOTE(1) OFFERING PRICE(1) REGISTRATION FEE - --------------------------------------------------------------------------------------------------------------------------------- 8 3/4% Senior Notes due 2011....................... $380,000,000 100% $380,000,000 $30,742 - --------------------------------------------------------------------------------------------------------------------------------- Guarantees................... -- -- -- (2) - --------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act. (2) Pursuant to Rule 457(n) under the Securities Act, no separate fee is payable with respect to the guarantees of the new notes being registered. THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING ANY OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED SEPTEMBER 22, 2003 PROSPECTUS $380,000,000 (WESTLAKE CHEMICAL CORP) WESTLAKE CHEMICAL CORPORATION OFFER TO EXCHANGE 8 3/4% SENIOR NOTES DUE 2011 FOR ALL OUTSTANDING 8 3/4% SENIOR NOTES DUE 2011 FULLY AND UNCONDITIONALLY GUARANTEED BY ALL DOMESTIC RESTRICTED SUBSIDIARIES OF WESTLAKE CHEMICAL CORPORATION THE NEW NOTES: - - will be freely tradable and otherwise substantially identical to the old notes; - - will accrue interest at 8 3/4% per annum, payable semiannually on each January 15 and July 15; - - will not be listed on any securities exchange or on any automated dealer quotation system, but may be sold in the over-the-counter market, in negotiated transactions or through a combination of those methods. THE EXCHANGE OFFER: - - expires at 5:00 p.m., New York City time, on [ ], 200[ ], unless extended; and - - is not conditioned upon any minimum principal amount of old notes being tendered. YOU SHOULD NOTE THAT: - - we will exchange all old notes that are validly tendered and not validly withdrawn for an equal principal amount of new notes that we have registered under the Securities Act of 1933; - - you may withdraw tenders of old notes at any time prior to the expiration of the exchange offer; - - the exchange of old notes for new notes in the exchange offer should not be a taxable event for U.S. federal income tax purposes; and - - the exchange offer is subject to customary conditions, which we may waive in our sole discretion. PLEASE CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 13 OF THIS PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER. ------------------------ NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ The date of this prospectus is . TABLE OF CONTENTS
PAGE ---- WHERE YOU CAN FIND MORE INFORMATION.... i INDUSTRY AND MARKET DATA............... ii PRODUCTION CAPACITY.................... ii NON-GAAP FINANCIAL MEASURES............ ii PROSPECTUS SUMMARY..................... 1 RISK FACTORS........................... 13 FORWARD-LOOKING INFORMATION............ 23 PRIVATE PLACEMENT...................... 24 USE OF PROCEEDS........................ 24 CAPITALIZATION......................... 25 SELECTED CONSOLIDATED FINANCIAL, OPERATING AND INDUSTRY DATA.......... 26 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................... 29 INDUSTRY OVERVIEW...................... 44 BUSINESS............................... 50
PAGE ---- MANAGEMENT............................. 62 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....................... 68 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................... 69 DESCRIPTION OF CERTAIN INDEBTEDNESS.... 71 THE EXCHANGE OFFER..................... 73 DESCRIPTION OF NOTES................... 83 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS................... 127 PLAN OF DISTRIBUTION................... 128 TRANSFER RESTRICTIONS ON OLD NOTES..... 130 LEGAL MATTERS.......................... 130 EXPERTS................................ 130 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS........................... F-1
------------------ THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. YOU SHOULD RELY ONLY ON THE INFORMATION WE HAVE PROVIDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH ADDITIONAL OR DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE ON THE FRONT OF THIS DOCUMENT. WHERE YOU CAN FIND MORE INFORMATION This prospectus incorporates important business and financial information about us that is not included in or delivered with this document. You may request a copy of any or all of the documents summarized in this prospectus or incorporated by reference in this prospectus, without charge, by written or oral request directed to us at the following address and telephone number: Westlake Chemical Corporation 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 Telephone: (713) 960-9111 Attention: Investor Relations The exhibits to the documents will generally not be made available unless they are specifically incorporated by reference in the documents. TO OBTAIN TIMELY DELIVERY OF ANY OF OUR DOCUMENTS, YOU MUST MAKE YOUR REQUEST TO US BY NO LATER THAN [ ], 200[ ]. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [ ], 200[ ]. THE EXCHANGE OFFER CAN BE EXTENDED BY US IN OUR SOLE DISCRETION, BUT WE CURRENTLY DO NOT INTEND TO EXTEND THE EXPIRATION DATE. SEE "THE EXCHANGE OFFER" FOR MORE DETAILED INFORMATION. This prospectus is part of a registration statement we have filed with the SEC relating to the notes and the related guarantees. As permitted by SEC rules, this prospectus does not contain all of the i information we have included in the registration statement and the accompanying exhibits and schedules we file with the SEC. You may refer to the registration statement, exhibits and schedules for more information about us and these securities. You may read and copy, at prescribed rates, the registration statement, exhibits and schedules and any reports that we file at the SEC's public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains an Internet site that contains information we file electronically with the SEC, which you can access over the Internet at http://www.sec.gov. Under the terms of the indenture governing the notes, following consummation of the exchange offer described in this prospectus, we will file with the SEC (unless the SEC will not accept such a filing): (1) all quarterly and annual reports on Forms 10-Q and 10-K required to be filed with the SEC; and (2) all current reports on Form 8-K required to be filed with the SEC, for public availability within the time periods specified in the rules and regulations applicable to those reports. If, at any time after consummation of the exchange offer, we are no longer subject to the periodic reporting requirements of the Securities Exchange Act of 1934 for any reason, we will nevertheless continue filing the reports specified in this paragraph with the SEC within the time periods specified above unless the SEC will not accept such a filing. We have agreed that we will not take any action for the purpose of causing the SEC not to accept any such filings. If the SEC will not accept our filings for any reason, we will post the reports referred to in this paragraph on our website within the time periods that would apply if we were required to file those reports with the SEC. INDUSTRY AND MARKET DATA Industry and market data used throughout this prospectus were obtained through internal company research, surveys and studies conducted by third parties and industry and general publications, including information from the Chemical Market Associates, Inc., or CMAI. We have not independently verified market and industry data from third-party sources. While we believe internal company estimates are reliable and market definitions are appropriate, neither such estimates nor these definitions have been verified by any independent sources, and we do not make any representations as to the accuracy of such estimates. PRODUCTION CAPACITY Unless we state otherwise, annual production capacity used throughout this prospectus represents rated capacity at June 30, 2003. We calculated rated capacity by estimating the number of days in a typical year that a production unit of a plant is expected to operate, after allowing for downtime for regular maintenance, and multiplying that number by an amount equal to the unit's optimal daily output based on the design feedstock mix. Because the rated capacity of a production unit is an estimated amount, actual production volumes may be more or less than the rated capacity. NON-GAAP FINANCIAL MEASURES The body of accounting principles generally accepted in the United States is commonly referred to as "GAAP." For this purpose, a non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. In this prospectus, we disclose so-called non-GAAP financial measures, primarily Adjusted EBITDA. Our Adjusted EBITDA is calculated as net income before interest expense, income taxes, depreciation and amortization, other income, impairment of long-lived assets (a non-cash charge), cumulative effect of ii change in accounting principle and minority interest. The non-GAAP financial measures described in this prospectus are not substitutes for the GAAP measures of earnings and cash flow. EBITDA is a key measure used by the banking and high-yield investing communities in their evaluation of economic performance. Adjusted EBITDA is included in this prospectus because management believes that it is a useful tool for measuring our ability to meet our future debt service, capital expenditure and working capital requirements and for comparing our operating performance with the performance of other companies that have different financing and capital structures or tax rates. Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, Adjusted EBITDA as presented for us may not be comparable to EBITDA or Adjusted EBITDA reported by other companies. iii PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all the information that is important to you or that you should consider before deciding whether to participate in this exchange offer. You should carefully read this entire prospectus, including the financial statements and related notes, before making an investment decision. In this prospectus, we refer to Westlake Chemical Corporation and its consolidated subsidiaries as "we," "us" or "Westlake," unless we state otherwise or the context clearly indicates otherwise. ABOUT WESTLAKE We are a vertically integrated manufacturer and marketer of basic chemicals, polymers, vinyls and fabricated products. Our products include some of the most widely used chemicals in the world, which are fundamental to many diverse consumer and industrial markets, including flexible and rigid packaging, automotive products, coatings, residential and commercial construction as well as other durable and non-durable goods. We believe that our business is characterized by highly integrated, world-class chemical production facilities, state-of-the-art technology, leading regional market positions for particular products, a strong and stable customer base and experienced management. We operate in two principal business segments, Olefins and Vinyls, and we are one of the few fully integrated producers of vinyls and fabricated products in North America. For the six months ended June 30, 2003, we had net sales of $698.6 million, net income of $11.7 million and Adjusted EBITDA of $76.9 million. During the same period, our Olefins segment contributed 62% and our Vinyls segment contributed 38% of our net sales, after intercompany eliminations. For the six months ended June 30, 2003, our Olefins segment contributed 67% and our Vinyls segment contributed 34% of our Adjusted EBITDA, including corporate and other. We benefit from highly integrated production facilities that allow us to process raw materials into higher value-added chemicals and fabricated products. We have 8.1 billion pounds of active aggregate production capacity at 11 strategically located manufacturing plants in North America. We believe that with our highly integrated capabilities, we are less affected by volatility in product demand, have less exposure to the effects of cyclical raw material prices and operate at higher capacity utilization rates than non-integrated chemical producers. In addition, the strategic location of our facilities lowers our transportation costs due to our high level of internally consumed production. In 2002, we used 71% of our basic chemical production internally to produce higher value-added chemicals and fabricated products for sale to external customers. OLEFINS In our Olefins segment, we manufacture ethylene, polyethylene, styrene and associated co-products at our facilities in Lake Charles, Louisiana. For the six months ended June 30, 2003, our Olefins segment had net sales of $432.1 million, operating income of $25.0 million and Adjusted EBITDA of $51.8 million. Ethylene. Ethylene is the world's most widely consumed petrochemical in terms of volume. It is the key building block used to produce a large number of higher value-added chemicals including polyethylene, ethylene dichloride, ethylbenzene and ethylene oxide. We have the capacity to produce 2.3 billion pounds of ethylene per year at our Lake Charles facilities. In 2002, we consumed 84% of that production internally to produce higher value-added chemical products. We also have the capacity to produce 450 million pounds of ethylene per year in our Vinyls segment at our Calvert City, Kentucky facilities, all of which is consumed internally in the production of vinyl chloride monomer, or VCM. Polyethylene. Polyethylene, the world's most widely consumed polymer, is used in the manufacture of a wide variety of packaging, film, coating and molded product applications including trash can liners, shopping and dry cleaning bags and housewares. We produce the three principal types of polyethylene: low-density polyethylene, or LDPE, linear low-density polyethylene, or LLDPE, and high-density polyethylene, or HDPE. We are the fourth largest producer of LDPE in North America. We have the capacity to produce 850 million pounds of LDPE and 500 million pounds of LLDPE or HDPE per year. 1 Styrene. Styrene is used to produce polystyrene and synthetic rubber, which are used in a number of applications including injection molding, disposables, food packaging, housewares, paints and coatings, resins, building materials and toys. We have the capacity to produce 450 million pounds of styrene per year. VINYLS In our Vinyls segment, we manufacture polyvinyl chloride, or PVC, VCM, chlorine, caustic soda, ethylene and fabricated products. Chlorine and ethylene are the basic raw materials used to manufacture VCM, which we then convert into PVC. We use most of our PVC to manufacture fabricated products such as pipe, fence, deck and door and window components. We manage our integrated vinyls production chain, from the basic chemicals to finished fabricated products, to maximize product margins, pricing and capacity utilization. Our primary manufacturing facilities are in Calvert City, Kentucky. We also own eight strategically located PVC fabricated product facilities, each situated in close proximity to our markets and customers. In addition, in 2003, we acquired a vinyls facility in Geismar, Louisiana. Although the facility is currently idle, we plan to start up the ethylene dichloride portion of the Geismar facility in the fourth quarter of 2003. We intend to operate part or all of the remainder of the facility when market conditions support utilization of the additional capacity. We also own a 43% interest in a PVC joint venture in China with total capacity of 264 million pounds of PVC per year. For the six months ended June 30, 2003, our Vinyls segment had net sales of $266.5 million, operating income of $9.6 million and Adjusted EBITDA of $26.3 million. PVC. PVC, the world's third most widely used plastic, is an attractive alternative to traditional materials such as glass, metal, wood, concrete and other plastic materials because of its versatility, durability and cost competitiveness. We have the capacity to produce 800 million pounds of PVC per year, excluding capacity of our China joint venture and our Geismar facility. In 2002, we used 61% of our PVC internally in the production of our fabricated products. PVC is used for construction materials including pipe, siding and window and door components; rigid and flexible film for packaging; and medical applications such as blood bags and tubing. VCM. VCM is used to produce PVC, solvents and PVC-related products. We have the capacity to produce 1.3 billion pounds of VCM per year, excluding capacity at our Geismar facility. In 2002, we used 63% of our VCM production in our PVC operations. Chlorine and Caustic Soda. We produce chlorine and caustic soda, co-products commonly referred to as chlor-alkali, at our Calvert City facilities. We use chlorine to produce VCM and sell caustic soda to external customers who use it in a variety of end markets including the production of pulp and paper, organic and inorganic chemicals, and alumina. In 2002, we converted our chlorine facility to a more efficient, state-of-the-art membrane technology, resulting in an approximate 25% reduction in energy consumption per unit of production that should result in significant savings, as energy is a major cost of chlor-alkali production. This conversion increased our annual production capacity by 64% from 250 to 410 million pounds of chlorine and from 275 to 450 million pounds of caustic soda. Ethylene. Our Calvert City ethylene plant has annual production capacity of 450 million pounds and, in 2002, produced approximately 70% of the ethylene required for our VCM production. We obtain the remainder of the ethylene we need for our Vinyls business from our Lake Charles ethylene production. Fabricated Products. Products made from PVC are used in construction materials ranging from water and sewer systems to home and commercial applications for fence, deck, window and patio door systems. PVC windows and patio doors are more energy efficient, less costly and easier to maintain than alternative products. PVC fence and deck products feature low maintenance materials and long product life. PVC pipe offers greater strength, lower installed cost, increased corrosion resistance, lighter weight and longer service life when compared to iron, steel and concrete alternatives. We are a leading manufacturer of PVC fabricated products in the geographic regions where we operate. We market pipe products under the "North American Pipe" brand, PVC window and patio door components under the "NAPG" brand and PVC fence and deck products under the "Westech" brand, all of which are 2 recognized brands in their respective markets. We sell substantially all of our products to distributors who, in turn, sell the products to municipalities and contractors. Since entering the market in 1992, we have increased our annual capacity of fabricated products from 194 million pounds to 600 million pounds. COMPETITIVE STRENGTHS Vertically Integrated Operations. We operate in two vertically integrated business segments and use the majority of our internally produced basic chemicals to manufacture higher value-added chemicals and fabricated products. We are one of the few fully integrated producers of vinyls and fabricated products in North America. By operating integrated olefins and vinyls production processes, we believe we are less susceptible to volatility in product demand, have less exposure to the effects of cyclical raw material prices and are able to operate at higher capacity utilization rates than non-integrated chemical producers. We have also been able to lower our transportation costs due to our high level of internally consumed production. In 2002, we used almost 85% of our ethylene production to manufacture polyethylene, styrene monomer and VCM. We also used 63% of our VCM production to manufacture PVC and 61% of our PVC production to manufacture our fabricated products. Efficient Modern Asset Base and Low Cost Operations. We operate some of the industry's newest manufacturing facilities in North America and focus on continually improving our asset portfolio and cost position. We have invested $1.2 billion since 1990 to construct new, state-of-the-art facilities and to acquire and to upgrade acquired facilities and equipment in both our Olefins and Vinyls segments. We built two ethylene crackers in Lake Charles in 1991 and 1997, and constructed a gas-phase LLDPE/HDPE plant in 1998. In addition, we recently completed the technology conversion and upgrade of our chlor-alkali facility at Calvert City, reducing per unit energy consumption by approximately 25% and increasing capacity by 64%. These newer plants increase operating efficiency and reduce our maintenance and environmental compliance costs. Our ethylene plants allow us to choose between ethane, propane and butane feedstocks. This flexibility enables us to react to changing market conditions and reduce raw material costs. We continually focus on reducing costs throughout our organization and believe that our selling, general and administrative costs, as a percentage of net sales, of 5.5% for 2002 is one of the lowest in the chemical industry. We eliminate research and development expenses by selectively acquiring and licensing third-party proprietary technology as a cost-effective approach to product development and production efficiency improvement. Stable and Sustained Customer Relationships. We believe that our focus on customer service strengthens customer loyalty during periods of lower demand, leading to stability in down-cycles. We estimate that 87% of our net sales in 2002 were made to the same customers we had in 2000. Almost all of our 2002 net sales were to customers in the North American market, limiting our exposure to the lower-margin export market. Strong Regional Market Presence. We are a leading seller of PVC fabricated products in the geographic regions where we operate. Fabricated products are sold on a regional basis. The location of our vinyls facilities at Calvert City, Kentucky on the Tennessee River provides a freight cost advantage to our customers in the high-volume Midwest and Northeast markets when compared to most of our competitors located on the Gulf Coast. Our eight fabricated products facilities in North America allow us to focus our sales effort on local markets where we have a strong market presence. Experienced Management and Strong Equity Support. Our senior management team has an average of over 25 years of experience in the petrochemical industry. We were founded by our chairman, T.T. Chao, and his family in 1985. The Chao family has more than 50 years of experience in the plastics and fabrications industries, both in Asia and the United States. Our management has demonstrated expertise in reducing costs and growing our business through acquisitions and capacity expansions. In addition, since 1997, Westlake Polymer & Petrochemical, Inc., our parent company, has contributed $134 million to our equity consisting of $50 million in cash, equity interests in Westlake Styrene with a book value of $79 million and a vinyls facility in Geismar, Louisiana with a book value of $5 million. In 3 addition, in August 2003, we received a capital contribution from our parent company consisting of the 20% of common stock of Westlake Olefins Corporation we did not own, with a book value of $82 million. CURRENT INDUSTRY CONDITIONS The profitability of our key olefins and vinyls products is cyclical. In general, the cycles are characterized by periods of tight supply, leading to high operating rates and margins, followed by periods of oversupply primarily resulting from significant capacity additions, leading to reduced operating rates and lower margins. Our Olefins and Vinyls businesses recently have been operating in a down cycle as a result of significant new capacity additions, weak demand reflecting the current global economic conditions and high raw material costs. Our primary raw materials are natural gas based feedstocks, which have recently increased in price dramatically, primarily as a result of unseasonably cold weather, record low inventory levels, poor underlying natural gas supply trends and recent geopolitical events. According to CMAI, industry fundamentals currently suggest a cyclical recovery in the petrochemicals business beginning in 2005, with the next peak expected to commence in 2006. Industry recovery is supported by limited new capacity additions for these products in North America over the next several years, combined with announced capacity shutdowns. CMAI forecasts operating rates and margins to improve as demand recovers as a result of improved global economic conditions. In the first six months of 2003, we experienced some recovery in margins for our key products. While prices for many of our feedstocks increased dramatically in the period, we were able to increase the prices for most of our products to offset much of the higher raw materials costs. These higher feedstock costs were primarily a result of unfavorable supply and demand fundamentals in the North American market for natural gas discussed above. During the second quarter of 2003, we experienced softer demand for our products, which we believe was primarily a result of depletion of inventory built up by customers during the first quarter of 2003 in anticipation of higher prices later in 2003. In addition, we generally experienced lower margins during the second quarter. We have not seen definitive signs of a sustained economic recovery in our industry in the third quarter of 2003. While there was some improvement in volume, this improvement may not be sustained. An uncertain pricing environment has resulted in pricing pressure on most of our products. An unscheduled outage at our Calvert City complex in July is expected to reduce third quarter income from operations by approximately $1.5 million. RISK FACTORS PLEASE READ AND CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 13 BEFORE PARTICIPATING IN THE EXCHANGE OFFER. THE FINANCING TRANSACTIONS On July 31, 2003, we sold $380.0 million in aggregate principal amount of 8 3/4% Senior Notes due 2011 in transactions exempt from or not subject to the registration requirements of the Securities Act of 1933. You may exchange these notes in the exchange offer described in this prospectus. On the same date, we entered into a $120.0 million senior secured term loan and borrowed $21.0 million under a new $200.0 million senior secured revolving credit facility. We used the aggregate net proceeds from these transactions of approximately $507.4 million to repay in full our then-existing revolving credit facility, term loan and 9.5% Series A and Series B notes, including all accrued and unpaid interest, fees and a make-whole premium on the notes, and to provide cash collateral for outstanding letters of credit. As a result of the refinancing, we will recognize $11.3 million in non-operating expense in the third quarter of 2003, consisting of the $4.0 million make-whole premium and $7.3 in previously capitalized debt issuance costs. In conjunction with the transactions described above, we also terminated our then-existing accounts receivable securitization facility and repurchased all accounts receivable previously sold to our 4 unconsolidated accounts receivable securitization subsidiary. Please read "Description of Certain Indebtedness" for a description of the new credit facility and term loan. PRINCIPAL EXECUTIVE OFFICES Our principal executive offices are located at 2801 Post Oak Boulevard, Houston, Texas 77056 and our telephone number is (713) 960-9111. Our corporate website address is www.westlakegroup.com. The information contained in our corporate website is not part of this prospectus. 5 THE EXCHANGE OFFER On July 31, 2003, we issued $380 million principal amount of the outstanding 8 3/4% Senior Notes due 2011. We sold the old notes in transactions exempt from or not subject to the registration requirements under the Securities Act. Accordingly, the old notes are subject to transfer restrictions. In general, you may not offer or sell the old notes unless either they are registered under the Securities Act or the offer or sale is exempt from or not subject to registration under the Securities Act and applicable state securities laws. In connection with the sale of the old notes, we entered into a registration rights agreement with the initial purchasers of the old notes. We agreed to use all commercially reasonable efforts to have the registration statement of which this prospectus is a part declared effective by the SEC within 180 days after the issue date of the old notes and to complete the exchange offer within 30 business days after the registration statement becomes effective. In the exchange offer, you are entitled to exchange your old notes for new notes with substantially identical terms, except that the existing transfer restrictions will be removed. You should read the discussion under the headings "-- Terms of the New Notes" and "Description of Notes" for further information about the new notes. We have summarized the terms of the exchange offer below. You should read the discussion under the heading "The Exchange Offer" for further information about the exchange offer and resale of the new notes. IF YOU FAIL TO EXCHANGE YOUR OLD NOTES FOR NEW NOTES IN THE EXCHANGE OFFER, THE EXISTING TRANSFER RESTRICTIONS WILL REMAIN IN EFFECT AND THE MARKET VALUE OF YOUR OLD NOTES LIKELY WILL BE ADVERSELY AFFECTED BECAUSE OF A SMALLER FLOAT AND REDUCED LIQUIDITY. Expiration Date............... The exchange offer will expire at 5:00 p.m., New York City time, on [ ], 200[ ]or such later date and time to which we extend it. Withdrawal of Tenders......... You may withdraw your tender of old notes at any time prior to the expiration date. We will return to you, without charge, any old notes that you tendered but that were not accepted for exchange promptly after the expiration or termination of the exchange offer. Conditions to the Exchange Offer......................... We will not be required to accept old notes for exchange if, in our reasonable judgment, the exchange offer, or the making of any exchange by a holder of old notes, would: - violate applicable law or any applicable interpretation of the staff of the SEC; or - be impaired by any action or proceeding that has been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer. The exchange offer is not conditioned upon any minimum aggregate principal amount of old notes being tendered. Please read "The Exchange Offer -- Conditions to the Exchange Offer" for more information about the conditions to the exchange offer. Procedures for Tendering Old Notes......................... If you wish to participate in the exchange offer, you must complete, sign and date the letter of transmittal that we are providing with this prospectus and mail or deliver the letter of transmittal, together with the old notes, to the exchange agent. If your old notes are held through The Depository Trust Company, you may effect delivery of the old notes by book-entry transfer. 6 In the alternative, if your old notes are held through DTC, you may participate in the exchange offer through DTC's automated tender offer program. If you tender under this program, you will agree to be bound by the letter of transmittal as though you had signed it. By signing or agreeing to be bound by the letter of transmittal, you will represent to us that, among other things: - any new notes that you receive will be acquired in the ordinary course of your business; - you have no arrangement or understanding with any person to participate in the distribution of the old notes or the new notes; - you are not our "affiliate," as defined in Rule 405 of the Securities Act, or, if you are our affiliate, you will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; - if you are not a broker-dealer, you are not engaged in, and do not intend to engage in, the distribution of the new notes; - if you are a broker-dealer, you will receive new notes for your own account in exchange for old notes that you acquired as a result of market-making activities or other trading activities, and you will deliver a prospectus in connection with any resale of such new notes; - if you are a broker-dealer, you did not purchase the old notes to be exchanged for the new notes from us; and - you are not acting on behalf of any person who could not truthfully and completely make the foregoing representations. Special Procedures for Beneficial Owners............. If you own a beneficial interest in old notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender the old notes in the exchange offer, please contact the registered holder as soon as possible and instruct it to tender on your behalf and to comply with our instructions described in this prospectus. Guaranteed Delivery Procedures.................... You must tender your old notes according to the guaranteed delivery procedures described in "The Exchange Offer -- Guaranteed Delivery Procedures" if any of the following apply: - you wish to tender your old notes but they are not immediately available; - you cannot deliver your old notes, the letter of transmittal or any other required documents to the exchange agent prior to the expiration date; or - you cannot comply with the applicable procedures under DTC's automated tender offer program prior to the expiration date. 7 United States Federal Income Tax Consequences.............. The exchange of old notes for new notes in the exchange offer should not be a taxable event for U.S. federal income tax purposes. Please read "Certain United States Federal Income Tax Considerations." Use of Proceeds............... We will not receive any cash proceeds from the issuance of new notes in the exchange offer. THE EXCHANGE AGENT We have appointed JPMorgan Chase Bank as exchange agent for the exchange offer. Please direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for the notice of guaranteed delivery to the exchange agent. If you are not tendering under DTC's automated tender offer program, you should send the letter of transmittal and any other required documents to the exchange agent as follows: JPMORGAN CHASE BANK [telephone number] BY OVERNIGHT DELIVERY, COURIER OR MAIL (REGISTERED OR CERTIFIED MAIL RECOMMENDED): JPMorgan Chase Bank [Address] [Attention: ] BY FACSIMILE TRANSMISSION (ELIGIBLE INSTITUTIONS ONLY): [telephone number] Attention: [ ] Confirm by Telephone: [telephone number] 8 TERMS OF THE NEW NOTES The new notes will be freely tradable and otherwise substantially identical to the old notes. The new notes will not have registration rights or provisions for additional interest. The new notes will evidence the same debt as the old notes, and the old notes and the new notes will be governed by the same indenture. The old notes and the new notes will vote together as a single class under the indenture. Issuer........................ Westlake Chemical Corporation Notes Offered................. $380,000,000 aggregate principal amount of 8 3/4% Senior Notes due 2011. Maturity Date................. July 15, 2011. Interest...................... 8 3/4% per annum, payable semi-annually in arrears on January 15 and July 15, commencing on January 15, 2004. Subsidiary Guarantees......... The new notes will be jointly and severally guaranteed on a senior unsecured basis by all of our existing and future domestic restricted subsidiaries. Ranking....................... The new notes and the subsidiary guarantees will rank: - effectively junior in right of payment to all of our and the guarantors' secured indebtedness and to the indebtedness and other liabilities of our non-guarantor subsidiaries; - equal in right of payment to all of our and the guarantors' unsecured senior indebtedness; and - senior in right of payment to all of our and the guarantors' subordinated indebtedness. As of June 30, 2003, after giving effect to the offering of the old notes and the application of the net proceeds from that offering, from borrowings of $21.0 million under our new credit facility and from our new $120.0 million term loan as described under "-- The Financing Transactions" and "Private Placement," the new notes and the subsidiary guarantees would have ranked effectively junior in right of payment to: - approximately $141.0 million of secured indebtedness; and - $4.7 million of current liabilities and $0.3 million of long-term indebtedness of our non-guarantor subsidiaries. Optional Redemption........... We may redeem any of the notes at any time on or after July 15, 2007, in whole or in part, in cash at the redemption prices described in this prospectus, plus accrued and unpaid interest to the date of redemption. In addition, on or before July 15, 2007, we may redeem up to 35% of the aggregate principal amount of notes with the net proceeds of certain equity offerings. We may make that redemption only if, after the redemption, at least 65% of the aggregate principal amount of notes remains outstanding. We may redeem any of the notes at any time before July 15, 2007 in cash at 100% of the principal amount plus accrued and unpaid interest to the date of redemption and a make-whole premium. See "Description of Notes -- Optional Redemption." 9 Change of Control............. Upon a change of control, we may be required to make an offer to purchase each holder's notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. See "Description of Notes -- Repurchase at the Option of Holders -- Change of Control." Certain Covenants............. The indenture contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: - pay dividends on, redeem or repurchase our capital stock; - make investments and other restricted payments; - incur additional indebtedness or issue preferred stock; - create liens; - permit dividend or other payment restrictions on our restricted subsidiaries; - sell all or substantially all of our assets or consolidate or merge with or into other companies; - engage in transactions with affiliates; and - engage in sale-leaseback transactions. These limitations are subject to a number of important qualifications and exceptions. See "Description of Notes -- Certain Covenants." Registration Rights........... If we fail to complete the exchange offer as required by the registration rights agreement, we may be obligated to pay additional interest to holders of the old notes. Please read "Description of Notes -- Registration Rights; Additional Interest" for more information regarding your rights as a holder of old notes. No Prior Market............... There is no existing trading market for the new notes, and there can be no assurance regarding: - any future development or liquidity of a trading market for the new notes; - your ability to sell your new notes at all; or - the price at which you may be able to sell your new notes. Future trading prices of the new notes will depend on many factors, including: - prevailing interest rates; - our operating results and financial condition; and - the market for similar securities. We do not currently intend to apply for the listing of the new notes on any securities exchange or for quotation of the new notes in any dealer quotation system. 10 SUMMARY CONSOLIDATED FINANCIAL, OPERATING AND INDUSTRY DATA We have provided in the table below summary consolidated financial, operating and industry data. You should read this data in conjunction with "Selected Consolidated Financial, Operating and Industry Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes appearing elsewhere in this prospectus.
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, -------------------------------------------------------------- ------------------------- 1998 1999 2000 2001 2002 2002 2003 ---------- ---------- ---------- ---------- ---------- ----------- ----------- (UNAUDITED) (UNAUDITED) (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Net sales............................ $ 826,694 $1,057,631 $1,391,363 $1,087,033 $1,072,627 $ 485,624 $ 698,557 Gross profit......................... 21,107 169,675 192,663 (34,726) 70,535 3,943 63,509 Selling, general and administrative expenses........................... 47,256 52,087 61,855 53,203 58,783 26,613 31,663 Impairment of long-lived assets(1)... 14,622 2,748 10,777 7,677 2,239 -- 932 Income (loss) from operations........ (40,771) 114,840 120,031 (95,606) 9,513 (22,670) 30,914 Interest expense..................... (35,899) (41,991) (31,957) (31,892) (32,907) (16,221) (16,544) Other income, net(2)................. 7,889 11,421 1,685 8,895 6,784 6,530 6,310 Net income (loss).................... (45,141) 37,800 53,695 (64,875) (1,339) (14,897) 11,674 BALANCE SHEET DATA (END OF PERIOD): Cash and cash equivalents............ 30,501 8,617 8,256 78,991 10,074 10,308 9,587 Working capital(3)................... 154,270 155,814 134,091 169,089 186,138 157,684 228,760 Total assets......................... 1,377,798 1,344,857 1,393,485 1,329,152 1,322,053 1,297,546 1,355,270 Total debt........................... 590,406 460,889 392,889 511,639 506,350 506,596 495,467 Stockholders' equity................. 394,470 433,023 512,275 445,935 443,425 431,566 461,749 OTHER OPERATING DATA: Adjusted EBITDA(4)................... 52,675 204,050 211,971 (4,622) 101,354 21,015 76,850 Cash flow from: Operating activities............... 74,512 132,884 172,332 28,485 (29,676) (43,884) 25,196 Investing activities............... (152,973) (25,251) (87,693) (76,500) (33,686) (19,756) (15,720) Financing activities............... 103,006 (129,517) (85,000) 118,750 (5,555) (5,043) (9,963) Depreciation and amortization........ 78,824 86,462 81,163 83,307 89,602 43,685 45,004 Capital expenditures................. 216,299 29,170 78,893 76,500 38,587 21,436 18,977 EXTERNAL SALES VOLUME: (MILLIONS OF POUNDS) Ethylene............................. 658 586 607 560 340 110 232 Polyethylene......................... 768 1,117 1,213 1,076 1,199 607 615 Styrene.............................. 416 445 455 494 428 204 182 PVC.................................. 424 310 300 309 301 156 129 VCM.................................. 135 387 394 459 473 232 230 Fabricated products.................. 495 506 440 501 545 303 243 AVERAGE INDUSTRY PRICING:(5) (CENTS PER POUND, EXCEPT AS NOTED) Ethylene(6).......................... 13.4 21.5 27.2 21.4 16.9 16.2 22.2 Polyethylene(7)...................... 35.0 41.0 46.4 42.8 41.9 38.3 51.5 Styrene(8)........................... 17.5 22.9 34.8 21.8 27.3 25.9 32.1 PVC(9)............................... 26.5 32.8 36.7 31.4 34.4 30.8 42.2 VCM(10).............................. 15.3 18.3 25.3 18.9 19.9 17.3 25.8 Natural gas ($/mmbtu)(11)............ 2.16 2.32 4.32 4.04 3.37 2.97 5.83
11 (1) Impairments in 1998 and 1999 related primarily to a fabricated products business that was subsequently sold and an idled PVC plant. Impairments in 2000 and 2001 related primarily to assets that were acquired but never placed in service. The 2002 impairment related to a ceased product business. The 2003 impairment related to idled styrene assets. (2) Other income, net is composed of interest income, insurance proceeds, income and expenses related to our accounts receivable securitization facility, equity income, management fee income and other gains and losses. (3) Working capital equals current assets less current liabilities. (4) Adjusted EBITDA is calculated as net income before interest expense, income taxes, depreciation and amortization, other income, impairment of long-lived assets (a non-cash charge), cumulative effect of change in accounting principle and minority interest. See "Non-GAAP Financial Measures." The following table reconciles Adjusted EBITDA with our net income (loss): RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ---------------------------------------------------- ------------------------- 1998 1999 2000 2001 2002 2002 2003 -------- -------- -------- -------- -------- ----------- ----------- (UNAUDITED) (UNAUDITED) (IN THOUSANDS) Net income (loss)..................... $(45,141) $ 37,800 $ 53,695 $(64,875) $ (1,339) $(14,897) $11,674 Plus: Cumulative effect of change in accounting principle, net of tax............................... -- 9,335 -- -- -- -- -- Minority interest................... 2,795 6,797 5,357 (8,473) (8,065) (5,173) 1,329 Provision for (benefit from) income taxes............................. (26,435) 30,338 30,707 (45,255) (7,206) (12,291) 7,677 Interest expense.................... 35,899 41,991 31,957 31,892 32,907 16,221 16,544 Less: Other income, net................... 7,889 11,421 1,685 8,895 6,784 6,530 6,310 -------- -------- -------- -------- -------- -------- ------- Income (loss) from operations......... (40,771) 114,840 120,031 (95,606) 9,513 (22,670) 30,914 -------- -------- -------- -------- -------- -------- ------- Plus: Depreciation and amortization....... 78,824 86,462 81,163 83,307 89,602 43,685 45,004 Impairment of long-lived assets..... 14,622 2,748 10,777 7,677 2,239 -- 932 -------- -------- -------- -------- -------- -------- ------- Adjusted EBITDA....................... $ 52,675 $204,050 $211,971 $ (4,622) $101,354 $ 21,015 $76,850 ======== ======== ======== ======== ======== ======== =======
(5) These are average industry prices for the indicated products as reported by CMAI and are not the prices we realized. (6) Represents average North American spot prices of ethylene over the period as reported by CMAI. (7) Represents average North American prices of LDPE general purpose film over the period as reported by CMAI. (8) Represents average North American spot prices of styrene over the period as reported by CMAI. (9) Represents average North American contract prices of PVC over the period as reported by CMAI. (10) Represents average North American contract prices of VCM over the period as reported by CMAI. (11) Represents average prices of Henry Hub natural gas over the period as reported by the New York Mercantile Exchange (NYMEX). 12 RISK FACTORS You should carefully consider the risks described below before deciding whether to participate in the exchange offer. The risks described below are not the only ones facing our company. Additional risks not currently known to us or that we currently deem immaterial may also impair our business operations. Our business, financial condition, results of operations or cash flows could be materially adversely affected by any of these risks. The trading price of the notes could decline due to any of these risks, and you may lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this prospectus. See "Forward-Looking Information." RISKS RELATING TO THE EXCHANGE OFFER IF YOU FAIL TO EXCHANGE YOUR OLD NOTES, THE EXISTING TRANSFER RESTRICTIONS WILL REMAIN IN EFFECT AND THE MARKET VALUE OF YOUR OLD NOTES MAY BE ADVERSELY AFFECTED BECAUSE THEY MAY BE MORE DIFFICULT TO SELL. If you fail to exchange your old notes for new notes under the exchange offer, then you will continue to be subject to the existing transfer restrictions on the old notes. In general, the old notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except in connection with this exchange offer or as required by the registration rights agreement, we do not intend to register resales of the old notes. The tender of old notes under the exchange offer will reduce the principal amount of the old notes outstanding. Due to the corresponding reduction in liquidity, this may have an adverse effect upon, and increase the volatility of, the market price of any old notes that you continue to hold following completion of the exchange offer. RISKS RELATING TO OUR INDEBTEDNESS AND THE NEW NOTES The risks described in this "Risks Relating to Our Indebtedness and the New Notes" that apply to the new notes also apply to any old notes not tendered for new notes in the exchange offer. WE ARE HIGHLY LEVERAGED, WHICH COULD ADVERSELY AFFECT OUR ABILITY TO OPERATE OUR BUSINESS. As of June 30, 2003, after giving effect to the offering of the old notes and application of the net proceeds from that offering, from borrowings of $21.0 million under our new credit facility and from our new $120.0 million term loan as described under "Private Placement," we would have had total outstanding debt of approximately $532.2 million. This debt would have represented approximately 54% of our total capitalization. We would have up to $179.0 million of available capacity under our new credit facility, subject to borrowing base limitations, and we may continue to borrow thereunder to fund working capital or other needs in the near term. For the year ended December 31, 2002, our earnings would have been inadequate to cover fixed charges by $15.4 million. In addition, our earnings have been inadequate to cover our fixed charges in three of the past five years. Our level of debt and the limitations imposed on us by our existing or future debt agreements could have significant consequences on our business and future prospects, including the following: - a significant portion of our cash flow from operations will be dedicated to the payment of interest and principal on our debt and will not be available for other purposes; - we may not be able to obtain necessary financing in the future for working capital, capital expenditures, acquisitions, debt service requirements or other purposes; - our less leveraged competitors could have a competitive advantage because they have greater flexibility to utilize their cash flow to improve their operations; 13 - we may be exposed to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which would result in higher interest expense in the event of increases in interest rates; and - we could be more vulnerable in the event of a downturn in our business that would leave us less able to take advantage of significant business opportunities and to react to changes in our business and in market or industry conditions. TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL. Our ability to make payments on and to refinance our indebtedness, including the notes, and to fund planned capital expenditures will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or that future borrowings will be available to us under our new credit facility in an amount sufficient to enable us to pay our indebtedness, including the notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the notes, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including our new credit facility, our new term loan and the notes, on commercially reasonable terms or at all. OUR NEW CREDIT FACILITY, OUR NEW TERM LOAN AND THE INDENTURE GOVERNING THE NOTES IMPOSE SIGNIFICANT OPERATING AND FINANCIAL RESTRICTIONS, WHICH MAY PREVENT US FROM CAPITALIZING ON BUSINESS OPPORTUNITIES AND TAKING SOME ACTIONS. Our new credit facility, our new term loan and the indenture governing the notes impose significant operating and financial restrictions on us. These restrictions limit our ability to: - pay dividends on, redeem or repurchase our capital stock; - make investments and other restricted payments; - incur additional indebtedness or issue preferred stock; - create liens; - permit dividend or other payment restrictions on our restricted subsidiaries; - sell all or substantially all of our assets or consolidate or merge with or into other companies; - engage in transactions with affiliates; and - engage in sale-leaseback transactions. These limitations are subject to a number of important qualifications and exceptions. Our new credit facility also requires us to maintain a minimum fixed charge coverage ratio if availability falls below a specified level. These covenants may adversely affect our ability to finance our future operations and capital needs and to pursue available business opportunities. A breach of any of these covenants could result in a default in respect of the related debt. If a default occurred, the relevant lenders could elect to declare the debt, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that debt. In addition, any acceleration of debt under our new credit facility or our new term loan will constitute a default under some of our other debt, including the indenture governing the notes. 14 YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES IS EFFECTIVELY SUBORDINATED TO THE RIGHTS OF OUR EXISTING AND FUTURE SECURED CREDITORS. FURTHER, THE GUARANTEES OF THE NOTES ARE EFFECTIVELY SUBORDINATED TO ALL OUR GUARANTORS' EXISTING AND FUTURE SECURED INDEBTEDNESS. Holders of our secured indebtedness and the secured indebtedness of the guarantors will have claims that are prior to your claims as holders of the notes to the extent of the value of the assets securing that other indebtedness. Notably, we and certain of our subsidiaries, including the guarantors, are parties to the new credit facility and term loan, which together are secured by liens on, among other things, our accounts receivable, inventory and some fixed assets. The notes are effectively subordinated to all that secured indebtedness. In the event of any distribution or payment of our assets in any foreclosure, dissolution, winding-up, liquidation, reorganization or other bankruptcy proceeding, holders of secured indebtedness will have prior claim to our assets that constitute their collateral. Holders of the notes will participate ratably with all holders of our unsecured indebtedness that is deemed to be of the same class as the notes, and potentially with all of our other general creditors, based upon the respective amounts owed to each holder or creditor, in our remaining assets. In any of the foregoing events, we cannot assure you that there will be sufficient assets to pay amounts due on the notes. As a result, holders of notes may receive less, ratably, than holders of secured indebtedness. As of June 30, 2003, after giving effect to the offering of the old notes and the application of the net proceeds from that offering, from borrowings of $21.0 million under our new credit facility and from our new $120.0 million term loan as described under "Private Placement," the notes would have been effectively junior to $141.0 million of secured indebtedness, and we would have up to $179.0 million of available capacity under our new credit facility, subject to borrowing base limitations. YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES COULD BE ADVERSELY AFFECTED IF ANY OF OUR NON-GUARANTOR SUBSIDIARIES DECLARES BANKRUPTCY, LIQUIDATES OR REORGANIZES. Some but not all of our subsidiaries will guarantee the notes. In the event of a bankruptcy, liquidation or reorganization of any of our non-guarantor subsidiaries, holders of that subsidiary's indebtedness and its trade creditors will generally be entitled to payment of their claims from the assets of the subsidiary before any assets are made available for distribution to us. As of June 30, 2003, after giving effect to the offering of the old notes and the application of the net proceeds from that offering, from borrowings of $21.0 million under our new credit facility and from our new $120.0 million term loan as described under "Private Placement," the notes would have been effectively junior to $5.0 million of indebtedness and other liabilities (including trade payables) of our non-guarantor subsidiaries. Our non-guarantor subsidiaries generated 2.0% of our consolidated net sales in 2002 and held 3.3% of our consolidated assets as of June 30, 2003. FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID GUARANTEES AND REQUIRE NOTE HOLDERS TO RETURN PAYMENTS RECEIVED FROM GUARANTORS. Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee could be voided or claims in respect of a guarantee could be subordinated to all other debts of the applicable guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee: - received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and - was insolvent or rendered insolvent by reason of such incurrence; or - was engaged or about to engage in a business or transaction for which the guarantor's remaining assets constituted unreasonably small capital; or - intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature. 15 In addition, any payment by that guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor or to a fund for the benefit of the creditors of the guarantor. The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if: - the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; - the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or - it could not pay its debts as they become due. On the basis of historical financial information, recent operating history and other factors, we believe that each guarantor, after giving effect to its guarantee of the notes, will not be insolvent, will not have unreasonably small capital for the business in which it is engaged and will not have incurred debts beyond its ability to pay such debts as they mature. We cannot assure you, however, as to what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard. WE MAY INCUR ADDITIONAL DEBT RANKING EQUAL TO THE NOTES. If we incur any additional debt that ranks equally with the notes, the holders of that debt will be entitled to share ratably with you in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding-up of our company. This may have the effect of reducing the amount of proceeds paid to you. WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE INDENTURE. Upon the occurrence of specified change of control events, we will be required to offer to repurchase all outstanding notes at 101% of the principal amount thereof plus accrued and unpaid interest and additional interest, if any, to the date of repurchase. It is possible, however, that we will not have sufficient funds at the time of the change of control to make the required repurchase of notes or that restrictions in our new credit facility or new term loan will not allow such repurchases. In addition, certain important corporate events, such as leveraged recapitalizations that would increase the level of our indebtedness, would not constitute a "change of control" under the indenture. See "Description of Notes -- Repurchase at the Option of Holders." Our new credit facility and term loan provide that certain change of control events will be a default that will permit the lenders to accelerate the maturity of all borrowings under the credit facility and term loan and terminate commitments to lend under the credit facility. Any of our future debt agreements may contain similar provisions. THERE IS NO TRADING MARKET FOR THE NEW NOTES AND THERE MAY NEVER BE ONE. The new notes will be new securities for which currently there is no trading market. We do not currently intend to apply for the listing of the new notes on any securities exchange or for quotation of the new notes in any dealer quotation system. The liquidity of any market for the notes will depend on the number of holders of those notes, the interest of securities dealers in making a market in those securities and other factors. Accordingly, we cannot assure you as to the development or liquidity of any trading market for the notes or as to your ability to sell your notes at all. Historically, the market for non- investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the notes. We cannot assure you that the market, if any, for the notes will be free from similar disruptions. Any such disruptions may adversely affect the note holders. 16 Even if a market for the new notes develops, trading prices could be higher or lower than the initial offering price or historical trading prices of the outstanding notes. The prices of the new notes will depend on many factors, including: - prevailing interest rates; - our operating results and financial condition; and - the market for similar securities. WE ARE CONTROLLED BY WESTLAKE POLYMER & PETROCHEMICAL, INC. ALL OF OUR DIRECTORS HAVE BEEN DESIGNATED BY WPPI AND ARE AFFILIATED WITH WPPI. ACCORDINGLY, NONE OF THEM IS DISINTERESTED. Westlake Polymer & Petrochemical, Inc., or WPPI, owns all of our equity and is able to control all matters requiring a stockholder vote. Our entire board of directors has been designated by WPPI and is affiliated with WPPI. Accordingly, none of our directors is disinterested. In addition, WPPI controls the appointment of our management, any mergers involving our company, sales of all or substantially all of our assets and similar extraordinary transactions. We can give you no assurance that your interests will not differ from those of WPPI, our board of directors or our management. RISKS RELATING TO OUR BUSINESS CYCLICALITY IN THE PETROCHEMICAL INDUSTRY HAS IN THE PAST, AND MAY IN THE FUTURE, RESULT IN REDUCED OPERATING MARGINS OR OPERATING LOSSES. Our historical operating results reflect the cyclical and volatile nature of the petrochemical industry. The industry is mature and capital intensive. Margins in this industry are sensitive to supply and demand balances both domestically and internationally, which historically have been cyclical. The cycles are characterized by periods of tight supply, leading to high operating rates and margins, followed by periods of oversupply primarily resulting from significant capacity additions, leading to reduced operating rates and lower margins. Moreover, profitability in the petrochemical industry is affected by the worldwide level of demand along with vigorous price competition which may intensify due to, among other things, new domestic and foreign industry capacity. In general, weak economic conditions either in the United States or in the world tend to reduce demand and put pressure on margins. It is not possible to predict accurately the supply and demand balances, market conditions and other factors that will affect industry operating margins in the future. WE SELL COMMODITY PRODUCTS IN HIGHLY COMPETITIVE MARKETS AND FACE SIGNIFICANT COMPETITION AND PRICE PRESSURE. We sell our products in highly competitive markets. Due to the commodity nature of many of our products, competition in these markets is based primarily on price and to a lesser extent on performance, product quality, product deliverability and customer service. As a result, we generally are not able to protect our market position for these products by product differentiation and may not be able to pass on cost increases to our customers. Accordingly, increases in raw material and other costs may not necessarily correlate with changes in prices for these products, either in the direction of the price change or in magnitude. Specifically, timing differences in pricing between raw material prices, which may change daily, and contract product prices, which in many cases are negotiated only monthly or less often, sometimes with an additional lag in effective dates for increases, have had and may continue to have a negative effect on profitability. Significant volatility in raw material costs tends to put pressure on product margins, as sales price increases generally tend to lag behind raw material cost increases. Conversely, when raw material costs decrease, customers seek relief in the form of lower sales prices. 17 HIGH COSTS OF RAW MATERIALS AND ENERGY MAY RESULT IN INCREASED OPERATING EXPENSES AND ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND CASH FLOW. Significant variations in the costs and availability of raw materials and energy may negatively affect our results of operations. We purchase significant amounts of ethane and propane feedstock, natural gas, chlorine and salt to produce several basic chemicals. We also purchase significant amounts of electricity to supply the energy required in our production processes. The cost of these raw materials and energy, in the aggregate, represents a substantial portion of our operating expenses. The prices of raw materials and energy generally follow price trends of, and vary with market conditions for, crude oil and natural gas, which are highly volatile and cyclical. Our results of operations have been and could in the future be significantly affected by increases in these costs. Price increases increase our working capital needs and, accordingly, can adversely affect our liquidity and cash flow. We typically do not enter into significant hedging arrangements with respect to prices of raw materials. However, we have occasionally entered into short-term contracts in order to hedge our costs for ethane and natural gas. We cannot assure you that in the future we will hedge any of our raw material costs or that any such hedges will have successful results. In addition, higher natural gas prices adversely affect the ability of many domestic chemical producers to compete internationally since U.S. producers are disproportionately reliant on natural gas and natural gas liquids as an energy source and as a raw material. In addition to the impact that this had on our exports, reduced competitiveness of U.S. producers also has in the past increased the availability of chemicals in North America, as U.S. production that would otherwise have been sold overseas was instead offered for sale domestically, resulting in excess supply and lower prices in North America. We could also face the threat of imported products from countries that have a cost advantage. THERE IS OVERCAPACITY IN CERTAIN SEGMENTS OF THE PETROCHEMICAL INDUSTRY THAT MAY RESULT IN LOWER OPERATING RATES AND MARGINS. Currently, there is overcapacity in the ethylene and polymers industries as a number of our competitors have added capacity. There can be no assurance that future growth in product demand will be sufficient to utilize this excess capacity. Excess industry capacity has depressed, and may continue to depress, our operating rates and margins. The global economic and political environment continues to be uncertain, contributing to reduced industry operating rates, adding to the volatility of raw materials and energy costs, and forestalling the industry's recovery from trough conditions, which may place pressure on our results of operations. EXTERNAL FACTORS BEYOND OUR CONTROL CAN CAUSE FLUCTUATIONS IN DEMAND FOR OUR PRODUCTS AND IN OUR PRICES AND MARGINS, WHICH MAY NEGATIVELY AFFECT OUR RESULTS OF OPERATIONS AND CASH FLOW. External factors beyond our control can cause volatility in raw material prices, demand for our products, product prices and volumes and deterioration in operating margins. These factors can also magnify the impact of economic cycles on our business and results of operations. Examples of external factors include: - general economic conditions; - the level of business activity in the industries that use our products; - competitor action; - technological innovations; - currency fluctuations; - international events and circumstances; and - governmental regulation in the United States and abroad. We believe that events in the Middle East and Venezuela have had a particular influence in recent months and may continue to do so until the situations normalize. In addition, a number of our products 18 are highly dependent on durable goods markets, such as housing and construction, which are themselves particularly cyclical. If the global economy does not improve, demand for our products and our income and cash flow would continue to be adversely affected. We may reduce production at or idle a facility for an extended period of time or exit a business because of high raw material prices, an oversupply of a particular product and/or a lack of demand for that particular product, which makes production uneconomical. Temporary outages sometimes last for several quarters or, in certain cases, longer and cause us to incur costs, including the expenses of maintaining and restarting these facilities. Factors such as increases in raw material costs or lower demand in the future may cause us to further reduce operating rates or idle facilities or exit uncompetitive businesses. Continued hostilities in the Middle East and/or the occurrence or threat of occurrence of future terrorist attacks such as those against the United States on September 11, 2001 could adversely affect the economies of the United States and other developed countries. A lower level of economic activity could result in a decline in demand for our products, which could adversely affect our net sales and margins and limit our future growth prospects. In addition, these risks have and may continue to increase volatility in prices for crude oil and natural gas and could result in increased feedstock costs. In addition, these risks could cause increased instability in the financial and insurance markets and adversely affect our ability to access capital and to obtain insurance coverages that we consider adequate or are otherwise required by our contracts with third parties. OUR INABILITY TO COMPETE SUCCESSFULLY MAY REDUCE OUR OPERATING PROFITS. The petrochemical industry is highly competitive. In the last several years, there have been a number of mergers, acquisitions, spin-offs and joint ventures in the industry. This restructuring activity has resulted in fewer but more competitive producers, many of which are larger than we are and have greater financial resources than we do. Among our competitors are some of the world's largest chemical companies and chemical industry joint ventures. Competition within the petrochemical industry and in the manufacturing of fabricated products is affected by a variety of factors, including: - product price; - technical support and customer service; - quality; - reliability of supply; - availability of potential substitute materials; and - product performance. Changes in the competitive environment could have a material adverse effect on our business and our operations. These changes could include: - the emergence of new domestic and international competitors; - the rate of capacity additions by competitors; - change in customer base due to mergers; - the intensification of price competition in our markets; - the introduction of new or substitute products by competitors; - the technological innovations of competitors; and - the adoption of new environmental laws and regulatory requirements. OUR PRODUCTION FACILITIES PROCESS SOME VOLATILE AND HAZARDOUS MATERIALS THAT SUBJECT US TO OPERATING RISKS THAT COULD ADVERSELY AFFECT OUR OPERATING RESULTS. We have three major manufacturing facilities: our olefins complex in Lake Charles, Louisiana, our vinyls complex in Calvert City, Kentucky and our recently acquired vinyls facility in Geismar, Louisiana, which is currently idle. Our operations are subject to the usual hazards associated with commodity 19 chemical and plastics manufacturing and the related use, storage, transportation and disposal of feedstocks, products and wastes, including: - pipeline leaks and ruptures; - explosions; - fires; - severe weather and natural disasters; - mechanical failure; - unscheduled downtime; - labor difficulties; - transportation interruptions; - chemical spills; - discharges or releases of toxic or hazardous substances or gases; - storage tank leaks; - other environmental risks; and - terrorist attacks. These hazards can cause personal injury and loss of life, catastrophic damage to or destruction of property and equipment and environmental damage, and may result in a suspension of operations and the imposition of civil or criminal penalties. We could become subject to environmental claims brought by governmental entities or third parties. The loss or shutdown over an extended period of operations at either of our major operating facilities would have a material adverse effect on us. We maintain property, business interruption and casualty insurance which we believe is in accordance with customary industry practices, but we cannot be fully insured against all potential hazards incident to our business, including losses resulting from war risks or terrorist acts. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage. If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our financial position. NEW REGULATIONS CONCERNING THE TRANSPORTATION OF HAZARDOUS CHEMICALS AND THE SECURITY OF CHEMICAL MANUFACTURING FACILITIES COULD RESULT IN HIGHER OPERATING COSTS. Targets such as chemical manufacturing facilities may be at greater risk of future terrorist attacks than other targets in the United States. As a result, the chemical industry has responded to the issues surrounding the terrorist attacks of September 11, 2001 by starting new initiatives relating to the security of chemicals industry facilities and the transportation of hazardous chemicals in the United States. Simultaneously, local, state and federal governments have begun a regulatory process that could lead to new regulations impacting the security of chemical plant locations and the transportation of hazardous chemicals. Our business or our customers' businesses could be adversely affected because of the cost of complying with new regulations. OUR OPERATIONS AND ASSETS ARE SUBJECT TO EXTENSIVE ENVIRONMENTAL, HEALTH AND SAFETY LAWS AND REGULATIONS. We use large quantities of hazardous substances and generate large quantities of hazardous wastes in our manufacturing operations. Due to the large quantities of hazardous substances and wastes, our industry is highly regulated and monitored by various environmental regulatory authorities. As such, we are subject to extensive federal, state and local laws and regulations pertaining to pollution and protection of the environment, health and safety and governing, among other things, emissions to the air, discharges onto land or waters, the maintenance of safe conditions in the workplace, the remediation of contaminated sites, and the generation, handling, storage, transportation, treatment and disposal of waste materials. Some of these laws and regulations are subject to varying and conflicting interpretations. Many of these laws and regulations provide for substantial fines and potential criminal sanctions for violations and require the installation of costly pollution control equipment or operational changes to limit pollution emissions and/or reduce the likelihood or impact of hazardous substance releases, whether permitted or not. For example, at our Lake Charles and Calvert City plants, we are currently planning equipment and operational changes necessary to comply with anticipated requirements of the U.S. Environmental Protection Agency's recently promulgated regulations related to the ethylene maximum achievable control technology, or MACT, 20 standards that require compliance by July 2005, as well as anticipated wastewater regulations of the synthetic organic chemical manufacturing industries. In addition, we cannot accurately predict future developments, such as increasingly strict environmental laws or regulations, and inspection and enforcement policies, as well as resulting higher compliance costs, which might affect the handling, manufacture, use, emission, disposal or remediation of products, other materials or hazardous and non-hazardous waste, and we cannot predict with certainty the extent of our future liabilities and costs under environmental, health and safety laws and regulations. These liabilities and costs may be material. We also may face liability for alleged personal injury or property damage due to exposure to chemicals or other hazardous substances at our facilities or to chemicals that we otherwise manufacture, handle or own. Although these types of claims have not historically had a material impact on our operations, a significant increase in the success of these types of claims could materially adversely affect our business, financial condition, operating results or cash flow. Environmental laws may have a significant effect on the nature and scope of, and responsibility for, cleanup of contamination at our current and former operating facilities, the costs of transportation and storage of raw materials and finished products, the costs of reducing emissions and the costs of the storage and disposal of wastewater. In addition, the federal Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, and similar state laws impose joint and several liability for the costs of remedial investigations and actions on the entities that generated waste, arranged for disposal of the wastes, transported to or selected the disposal sites and the past and present owners and operators of such sites. All such potentially responsible parties (or any one of them, including us) may be required to bear all of such costs regardless of fault, legality of the original disposal or ownership of the disposal site. Our operations are inherently subject to accidental spills, discharges or other releases of hazardous substances that may make us liable to governmental entities or private parties. This may involve contamination associated with our current and former facilities, facilities to which we sent wastes or by- products for treatment or disposal and other contamination. Accidental discharges may occur in the future, future action may be taken in connection with past discharges, governmental agencies may assess damages or penalties against us in connection with any past or future contamination, or third parties may assert claims against us for damages allegedly arising out of any past or future contamination. In addition, we may be liable for existing contamination related to certain of our facilities for which we believe third parties are liable in the event such third parties fail to perform with their obligations. For further discussion of such existing contamination, see "Business -- Environmental and Other Regulation." In some cases, compliance with environmental, health and safety laws and regulations can only be achieved by capital expenditures, such as the installation of pollution control equipment. For environmentally related capital expenditures at our Lake Charles and Calvert City facilities, we spent approximately $1.6 million in the year ended December 31, 2002, $14.1 million in the year ended December 31, 2001 and $1.9 million in the year ended December 31, 2000. We currently estimate that environmentally related capital expenditures at these facilities will be approximately $5.8 million for 2003. In addition, we currently estimate that environmentally related capital expenditures at our recently acquired Geismar facility will be approximately $0.6 million for 2003. OUR PROPERTY INSURANCE DOES NOT COVER ACTS OF TERRORISM AND, IN THE EVENT OF A TERRORIST ATTACK, WE COULD LOSE NET SALES AND OUR FACILITIES. As a result of the terrorist attacks of September 11, 2001 and other events, our insurance carriers have created exclusions for losses from terrorism from our "all risk" property insurance policies. While separate terrorism insurance coverage is available, premiums for such coverage are very expensive, especially for chemical facilities, and the policies are subject to very high deductibles. Available terrorism coverage typically excludes coverage for losses from acts of foreign governments as well as nuclear, biological and chemical attacks. We have determined that it is not economically prudent to obtain terrorism insurance, especially given the significant risks that are not covered by such insurance, and we do 21 not carry terrorism insurance on our property at this time. In the event of a terrorist attack impacting one or more of our facilities, we could lose the net sales from the facilities and the facilities themselves, and could become liable for any contamination or for personal or property damage due to exposure to hazardous materials caused by any catastrophic release that may result from a terrorist attack. 22 FORWARD-LOOKING INFORMATION Certain of the statements contained in this prospectus are forward-looking statements. All statements, other than statements of historical facts, included in this prospectus that address activities, events or developments that we expect, project, believe or anticipate will or may occur in the future are forward-looking statements. These include such matters as: - future operating rates, margins, cash flow and demand for our products; - production capacities; - expected cyclical recovery in the olefins and vinyls industries; - our ability to borrow additional funds under our new credit facility; - future capacity additions and expansions in the industry; - compliance with present and future environmental regulations and costs associated with environmentally related penalties, capital expenditures, remedial actions and proceedings; and - effects of pending legal proceedings. We have based these statements on assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe were appropriate in the circumstances when the statements were made. These statements are subject to a number of assumptions, risks and uncertainties, including those described above under "Risk Factors" and the following: - general economic and business conditions; - the cyclical nature of the chemical industry; - the availability, cost and volatility of raw materials and energy; - uncertainties associated with the United States and worldwide economies, including those due to political tensions in the Middle East and elsewhere; - current and potential governmental regulatory actions in the United States and regulatory actions and political unrest in other countries; - industry production capacity and operating rates; - the supply/demand balance for our products; - competitive products and pricing pressures; - access to capital markets; - terrorist acts; - operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks); - changes in laws or regulations; - technological developments; - our ability to implement our business strategies; and - creditworthiness of our customers. Many of such factors are beyond our ability to control or predict. Any of the factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future perform- 23 ance, and our actual results and future developments may differ materially from those projected in the forward-looking statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels. PRIVATE PLACEMENT On July 31, 2003, we issued $380 million principal amount of the outstanding 8 3/4% Senior Notes due 2011 to the initial purchasers of those notes. We issued the old notes to the initial purchasers in transactions exempt from or not subject to registration under the Securities Act. The initial purchasers then offered and resold the notes to qualified institutional buyers and non-U.S. persons initially at 100.0% of the principal amount. On the same date, we entered into a $120.0 million senior secured term loan and borrowed $21.0 million under a $200.0 million senior secured revolving credit facility. We used the aggregate net proceeds from these transactions of approximately $507.4 million to repay in full our then-existing revolving credit facility, term loan and 9.5% Series A and Series B notes, including all accrued and unpaid interest, fees and a make-whole premium on the notes, and to provide cash collateral for outstanding letters of credit. In conjunction with the transactions described above, we also terminated our then-existing accounts receivable securitization facility and repurchased all accounts receivable previously sold to our unconsolidated accounts receivable securitization subsidiary. Please read "Description of Certain Indebtedness" for a description of the new credit facility and term loan. USE OF PROCEEDS We will not receive any cash proceeds from the issuance of the new notes. In consideration for issuing the new notes, we will receive in exchange a like principal amount of old notes. The old notes surrendered in exchange for the new notes will be retired and canceled and cannot be reissued. Accordingly, issuance of the new notes will not result in any change in our capitalization. 24 CAPITALIZATION We have provided in the table below our consolidated cash and cash equivalents and capitalization as of June 30, 2003 and as adjusted to reflect the issuance of the notes, completion of our new credit facility and term loan and the application of the net proceeds from the note issuance, from borrowings of $21.0 million under the new credit facility and from the new term loan as described under "Private Placement." You should read this table in conjunction with our consolidated financial statements and the related notes appearing elsewhere in this prospectus.
JUNE 30, 2003 ----------------------- ACTUAL(1) AS ADJUSTED --------- ----------- (IN MILLIONS) Cash and cash equivalents................................... $ 9.6 $ 18.7(2) ====== ======= Long-term debt, including current portion: New senior secured revolving credit facility(3)........... $ -- $ 21.0 New senior secured term loan.............................. -- 120.0 Existing revolving credit facility........................ 161.5 -- Existing term loan........................................ 114.0 -- 9.50% Series A Senior Secured Notes Due March 31, 2005(4)................................................ 58.8 -- 9.50% Series B Senior Secured Notes Due March 31, 2005(4)................................................ 150.0 -- 8 3/4% Senior Notes due 2011.............................. -- 380.0 Loan related to tax-exempt revenue bonds.................. 10.9 10.9 Other..................................................... 0.3 0.3 ------ ------- Total long-term debt, including current portion... 495.5 532.2 ------ ------- Total stockholders' equity.................................. 461.7 454.6(5) ------ ------- Total capitalization.............................. $957.2 $ 986.8 ====== =======
- --------------------- (1) Excludes $9.0 million of accounts receivable as of June 30, 2003 sold to our accounts receivable securitization subsidiary. We repurchased $45.6 million of accounts receivable sold to our accounts receivable securitization subsidiary in connection with the refinancing described in "Private Placement." (2) Reflects $9.1 million of cash proceeds from the refinancing. In addition, we used $2.4 million of proceeds to provide cash collateral to secure letters of credit under the existing revolving credit facility. (3) The new credit facility provides for availability of up to $200 million, subject to borrowing base limitations. See "Description of Certain Indebtedness -- New Credit Facility." (4) In connection with the prepayment of the notes, we paid an aggregate make-whole premium of $4.0 million. (5) Reflects pre-tax charges for the $4.0 million make-whole premium in connection with the prepayment of the notes and a $7.3 million write off of the unamortized balance of previously capitalized debt issuance costs as of June 30, 2003. The after-tax impact on stockholders' equity of the make-whole premium and the write off is $7.1 million. 25 SELECTED CONSOLIDATED FINANCIAL, OPERATING AND INDUSTRY DATA We have provided in the table below selected consolidated financial, operating and industry data. We have derived the statement of operations data for each of the years in the three-year period ended December 31, 2002, and the balance sheet data as of December 31, 2001 and 2002, from audited consolidated financial statements appearing elsewhere in this prospectus. We have derived the statement of operations data for each of the years in the two-year period ended December 31, 1999, and the balance sheet data as of December 31, 1998, 1999 and 2000, from audited consolidated financial statements not included in this prospectus. We have derived the statement of operations data for the six-month periods ended June 30, 2002 and 2003, and the balance sheet data as of June 30, 2003, from unaudited consolidated financial statements included elsewhere in this prospectus, which, in our management's opinion, include all adjustments necessary for the fair presentation of our financial position at June 30, 2003 and our results of operations for the six-month periods ended June 30, 2002 and 2003. We have derived the balance sheet data as of June 30, 2002 from our unaudited consolidated financial statements not included in this prospectus. Results of operations for the six-month period ended June 30, 2003 are not necessarily indicative of the results of operations that may be achieved for the entire year. You should read this data in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes appearing elsewhere in this prospectus.
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, -------------------------------------------------------------- ------------------------- 1998 1999 2000 2001 2002 2002 2003 ---------- ---------- ---------- ---------- ---------- ----------- ----------- (UNAUDITED) (UNAUDITED) (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Net sales............................ $ 826,694 $1,057,631 $1,391,363 $1,087,033 $1,072,627 $ 485,624 $ 698,557 Gross profit......................... 21,107 169,675 192,663 (34,726) 70,535 3,943 63,509 Selling, general and administrative expenses........................... 47,256 52,087 61,855 53,203 58,783 26,613 31,663 Impairment of long-lived assets(1)... 14,622 2,748 10,777 7,677 2,239 -- 932 Income (loss) from operations........ (40,771) 114,840 120,031 (95,606) 9,513 (22,670) 30,914 Interest expense..................... (35,899) (41,991) (31,957) (31,892) (32,907) (16,221) (16,544) Other income, net(2)................. 7,889 11,421 1,685 8,895 6,784 6,530 6,310 Net income (loss).................... (45,141) 37,800 53,695 (64,875) (1,339) (14,897) 11,674 BALANCE SHEET DATA (END OF PERIOD): Cash and cash equivalents............ 30,501 8,617 8,256 78,991 10,074 10,308 9,587 Working capital(3)................... 154,270 155,814 134,091 169,089 186,138 157,684 228,760 Total assets......................... 1,377,798 1,344,857 1,393,485 1,329,152 1,322,053 1,297,546 1,355,270 Total debt........................... 590,406 460,889 392,889 511,639 506,350 506,596 495,467 Stockholders' equity................. 394,470 433,023 512,275 445,935 443,425 431,566 461,749 OTHER OPERATING DATA: Adjusted EBITDA(4)................... 52,675 204,050 211,971 (4,622) 101,354 21,015 76,850 Cash flow from: Operating activities............... 74,512 132,884 172,332 28,485 (29,676) (43,884) 25,196 Investing activities............... (152,973) (25,251) (87,693) (76,500) (33,686) (19,759) (15,720) Financing activities............... 103,006 (129,517) (85,000) 118,750 (5,555) (5,043) (9,963) Depreciation and amortization........ 78,824 86,462 81,163 83,307 89,602 43,685 45,004 Capital expenditures................. 216,299 29,170 78,893 76,500 38,587 21,436 18,977 Ratio of earnings to fixed charges(5)......................... -- 2.8x 3.3x -- -- -- 2.0x
26
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------ ------------ 1998 1999 2000 2001 2002 2002 2003 ---- ----- ----- ----- ----- ---- ---- EXTERNAL SALES VOLUME: (MILLIONS OF POUNDS) Ethylene............................................ 658 586 607 560 340 110 232 Polyethylene........................................ 768 1,117 1,213 1,076 1,199 607 615 Styrene............................................. 416 445 455 494 428 204 182 PVC................................................. 424 310 300 309 301 156 129 VCM................................................. 135 387 394 459 473 232 230 Fabricated products................................. 495 506 440 501 545 303 243 AVERAGE INDUSTRY PRICING:(6) (CENTS PER POUND, EXCEPT AS NOTED) Ethylene(7)......................................... 13.4 21.5 27.2 21.4 16.9 16.2 22.2 Polyethylene(8)..................................... 35.0 41.0 46.4 42.8 41.9 38.3 51.5 Styrene(9).......................................... 17.5 22.9 34.8 21.8 27.3 25.9 32.1 PVC(10)............................................. 26.5 32.8 36.7 31.4 34.4 30.8 42.2 VCM(11)............................................. 15.3 18.3 25.3 18.9 19.9 17.3 25.8 Natural gas ($/mmbtu)(12)........................... 2.16 2.32 4.32 4.04 3.37 2.97 5.83
- --------------------- (1) Impairments in 1998 and 1999 related primarily to a fabricated products business that was subsequently sold and an idled PVC plant. Impairments in 2000 and 2001 related primarily to assets that were acquired but never placed in service. The 2002 impairment related to a ceased product business. The 2003 impairment related to idled styrene assets. (2) Other income, net is composed of interest income, insurance proceeds, income and expenses related to our accounts receivable securitization facility, equity income, management fee income and other gains and losses. (3) Working capital equals current assets less current liabilities. (4) Adjusted EBITDA is calculated as net income before interest expense, income taxes, depreciation and amortization, other income, impairment of long-lived assets (a non-cash charge), cumulative effect of change in accounting principle and minority interest. See "Non-GAAP Financial Measures." The following table reconciles Adjusted EBITDA with our net income (loss): RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ---------------------------------------------------- ------------------------- 1998 1999 2000 2001 2002 2002 2003 -------- -------- -------- -------- -------- ----------- ----------- (UNAUDITED) (UNAUDITED) (IN THOUSANDS) Net income (loss).................. $(45,141) $ 37,800 $ 53,695 $(64,875) $ (1,339) $(14,897) $11,674 Plus: Cumulative effect of change in accounting principle, net of tax............................ -- 9,335 -- -- -- -- -- Minority interest................ 2,795 6,797 5,357 (8,473) (8,065) (5,173) 1,329 Provision for (benefit from) income taxes................... (26,435) 30,338 30,707 (45,255) (7,206) (12,291) 7,677 Interest expense................. 35,899 41,991 31,957 31,892 32,907 16,221 16,544 Less: Other income, net................ 7,889 11,421 1,685 8,895 6,784 6,530 6,310 -------- -------- -------- -------- -------- -------- ------- Income (loss) from operations...... (40,771) 114,840 120,031 (95,606) 9,513 (22,670) 30,914 -------- -------- -------- -------- -------- -------- ------- Plus: Depreciation and amortization.... 78,824 86,462 81,163 83,307 89,602 43,685 45,004 Impairment of long-lived assets......................... 14,622 2,748 10,777 7,677 2,239 -- 932 -------- -------- -------- -------- -------- -------- ------- Adjusted EBITDA.................... $ 52,675 $204,050 $211,971 $ (4,622) $101,354 $ 21,015 $76,850 ======== ======== ======== ======== ======== ======== =======
(5) We have computed the ratios of earnings to fixed charges by dividing earnings by fixed charges. For this purpose, "earnings" consist of earnings before income taxes plus fixed charges less capitalized interest. "Fixed charges" consist of interest expense, capitalized interest and that portion of operating lease rental expense (one-third) we have deemed to represent the interest factor of such expense. 27 For the years ended December 31, 1998, 2001 and 2002, earnings were inadequate to cover fixed charges by $74.3 million, $119.7 million and $15.4 million, respectively. For the six months ended June 30, 2002, earnings were inadequate to cover fixed charges by $32.7 million. (6) These are average industry prices for the indicated products as reported by CMAI and are not the prices we realized. (7) Represents average North American spot prices of ethylene over the period as reported by CMAI. (8) Represents average North American prices of LDPE general purpose film over the period as reported by CMAI. (9) Represents average North American spot prices of styrene over the period as reported by CMAI. (10) Represents average North American contract prices of PVC over the period as reported by CMAI. (11) Represents average North American contract prices of VCM over the period as reported by CMAI. (12) Represents average prices of Henry Hub natural gas over the period as reported by the New York Mercantile Exchange (NYMEX). 28 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Selected Consolidated Financial, Operating and Industry Data" and our consolidated financial statements and notes thereto appearing elsewhere in this prospectus. This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors" and elsewhere in this prospectus. See "Forward-Looking Information." OVERVIEW We are a vertically integrated manufacturer and marketer of petrochemicals, polymers and fabricated products. Our two principal business segments are Olefins and Vinyls. We use the majority of our internally-produced basic chemicals to produce higher value-added chemicals and fabricated products. Consumption of the basic chemicals that we manufacture in the commodity portions of our ethylene and vinyls processes has increased significantly over the past 30 years. Our Olefins and Vinyls products are some of the most widely used chemicals in the world and are upgraded into a wide variety of higher value-added chemical products used in many end markets. Petrochemicals are typically manufactured in large volume by a number of different producers using widely available technologies. The petrochemical industry exhibits cyclical, commodity characteristics, and margins are influenced by changes in the balance between supply and demand and the resulting operating rates, the level of general economic activity and the price of raw materials. The cycle is characterized by periods of tight supply, leading to high operating rates and margins, followed by a decline in operating rates and margins primarily as a result of significant capacity additions. Due to the significant size of new plants, capacity additions are built in large increments and typically require several years of demand growth to be absorbed. The industry is currently in a down cycle as a result of significant new capacity additions in the past several years, combined with soft demand resulting from the global economic recession. Currently, no significant new olefins or vinyls capacity additions have been announced in North America. While operating rates and margins are currently depressed, rates are expected to increase as economic growth improves and excess capacity is absorbed, which is expected to result in increasing margins. We purchase significant amounts of ethane and propane feedstock, natural gas, chlorine and salt from third parties for use in production of basic chemicals in the olefins and vinyls chains. We also purchase significant amounts of electricity to supply the energy required in our production processes. While we have agreements providing for the supply of ethane and propane feedstocks, natural gas, chlorine, salt and electricity, the contractual prices for these raw materials and energy vary with market conditions and may be highly volatile. Factors which have caused volatility in our raw material prices in the past and which may do so in the future, include: - shortages of raw materials due to increasing demand; - capacity constraints due to construction delays, strike action or involuntary shutdowns; - the general level of business and economic activity; and - the direct or indirect effect of governmental regulation. Significant volatility in raw material costs tends to put pressure on product margins, as sales price increases generally tend to lag behind raw material cost increases. Conversely, when raw material costs decrease, customers seek relief in the form of lower sales prices. These dynamics are particularly pronounced during periods of excess industry capacity and contributed to the trough conditions experienced by the chemical industry in 2001 and 2002. We typically do not enter into hedging arrangements with respect to prices of raw materials. 29 In 2001 and 2002, we experienced two periods of dramatically increased raw material costs. In 2001, natural gas prices spiked to a high of $9.82 per million BTUs, or mmbtu, as compared to a three year average of $3.57 per mmbtu between 1999 and 2001. Prices for natural gas declined, but spiked again in 2002 to a high of $5.34 per mmbtu for natural gas. As a result of weak industry conditions, in most cases we were unable to fully pass these raw material price increases through to customers and our margins declined. In the first six months of 2003, we experienced another natural gas price spike with prices averaging $5.83 per mmbtu. In this period, we were able to pass some of the higher feedstock prices through to our customers. As a result, margins improved compared to margins in 2001 and 2002. Our historical results have been significantly affected by our plant production capacity, our efficient use of the capacity and our ability to increase our capacity. Since inception, we have followed a disciplined growth strategy that focuses on plant acquisitions, new plant construction and internal expansion. We evaluate each expansion project on the basis of its ability to produce sustained returns in excess of its cost of capital and its ability to improve efficiency or reduce operating costs. In addition, we continually evaluate the cost efficiency of our assets and have implemented an asset rationalization program to eliminate under-performing assets. We have invested approximately $1.2 billion since 1990 to construct new, state-of-the-art facilities and to acquire and to upgrade acquired facilities and equipment in both our Olefins and Vinyls segments. Our Olefins business began in 1985 with the acquisition of our low-density polyethylene plant. We began operations in this facility in 1986. Since that time, we have significantly increased our olefins capacity, increasing our LDPE capacity from 225 million pounds to 850 million pounds and adding 2.3 billion pounds of ethylene capacity, 450 million pounds of styrene monomer capacity and 500 million pounds of LLDPE capacity. During the same period, we commenced our Vinyls operations and added substantial capacity to those operations, including two PVC plants (one of which is in China through our joint venture), five PVC pipe plants and three PVC components plants. In 1997, we also acquired a chlor-alkali plant and an ethylene plant in Calvert City, Kentucky. RESULTS OF OPERATIONS SEGMENT DATA
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------ ------------------- 2000 2001 2002 2002 2003 ---------- ---------- ---------- -------- -------- (DOLLARS IN THOUSANDS) NET SALES: Olefins........................... $ 906,276 $ 665,703 $ 627,494 $273,345 $450,636 Vinyls............................ 527,652 455,339 474,095 227,408 266,784 Intersegment eliminations......... (42,565) (34,009) (28,962) (15,129) (18,863) ---------- ---------- ---------- -------- -------- Total.......................... $1,391,363 $1,087,033 $1,072,627 $485,624 $698,557 ========== ========== ========== ======== ======== INCOME (LOSS) FROM OPERATIONS: Olefins........................... $ 94,292 $ (44,734) $ 7,875 $(12,613) $ 24,992 Vinyls............................ 43,999 (32,857) 10,482 (7,858) 9,632 Corporate and other............... (18,260) (18,015) (8,844) (2,199) (3,710) ---------- ---------- ---------- -------- -------- Total.......................... $ 120,031 $ (95,606) $ 9,513 $(22,670) $ 30,914 ========== ========== ========== ======== ======== ADJUSTED EBITDA(1): Olefins........................... $ 144,439 $ 3,602 $ 61,370 $ 13,737 $ 51,779 Vinyls............................ 69,531 (904) 45,068 8,212 26,314 Corporate and other............... (1,999) (7,320) (5,084) (934) (1,243) ---------- ---------- ---------- -------- -------- Total.......................... $ 211,971 $ (4,622) $ 101,354 $ 21,015 $ 76,850 ========== ========== ========== ======== ========
30 - --------------------- (1) The following tables reconcile Adjusted EBITDA with our income (loss) from operations for each segment: RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO ADJUSTED EBITDA -- OLEFINS
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ----------------------------- ------------------ 2000 2001 2002 2002 2003 -------- -------- ------- -------- ------- (DOLLARS IN THOUSANDS) Income (loss) from operations............. $ 94,292 $(44,734) $ 7,875 $(12,613) $24,992 Depreciation and amortization............. 50,147 48,336 53,495 26,350 25,855 Impairment of long-lived assets........... -- -- -- -- 932 -------- -------- ------- -------- ------- Adjusted EBITDA........................... $144,439 $ 3,602 $61,370 $ 13,737 $51,779 ======== ======== ======= ======== =======
RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO ADJUSTED EBITDA -- VINYLS
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ---------------------------- ------------------ 2000 2001 2002 2002 2003 ------- -------- ------- -------- ------- (DOLLARS IN THOUSANDS) Income (loss) from operations.............. $43,999 $(32,857) $10,482 $ (7,858) $ 9,632 Depreciation and amortization.............. 25,532 31,153 32,347 16,070 16,682 Impairment of long-lived assets............ -- 800 2,239 -- -- ------- -------- ------- -------- ------- Adjusted EBITDA............................ $69,531 $ (904) $45,068 $ 8,212 $26,314 ======= ======== ======= ======== =======
RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO ADJUSTED EBITDA -- CORPORATE AND OTHER
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ----------------------------- ----------------- 2000 2001 2002 2002 2003 -------- -------- ------- ------- ------- (DOLLARS IN THOUSANDS) Income (loss) from operations.............. $(18,260) $(18,015) $(8,844) $(2,199) $(3,710) Depreciation and amortization.............. 5,484 3,818 3,760 1,265 2,467 Impairment of long-lived assets............ 10,777 6,877 -- -- -- -------- -------- ------- ------- ------- Adjusted EBITDA............................ $ (1,999) $ (7,320) $(5,084) $ (934) $(1,243) ======== ======== ======= ======= =======
SIX MONTHS ENDED JUNE 30, 2003 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2002 Net Sales. Net sales increased by $213.0 million, or 43.9%, to $698.6 million in the first six months of 2003 from $485.6 million in the first six months of 2002. This increase was due to price increases throughout our Olefins and Vinyls segments and higher ethylene sales volumes. Higher selling prices were primarily the result of higher energy and raw material cost that were passed through to customers. These improvements were partially offset by lower sales volumes for PVC pipe and resin resulting from lower demand. Gross Margin. Gross margins increased to 9.1% in the first six months of 2003 from 0.8% in the first six months of 2002. This improvement was primarily a result of higher prices, reduced by higher feedstock and energy costs and lower sales volumes for PVC pipe and resin. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $5.1 million in the first six months of 2003 as compared to the first six months of 2002. The increase was primarily the result of increases in consulting and legal fees, allowance for doubtful accounts and insurance costs. 31 Impairment of Long-Lived Assets. Impairment of long-lived assets was $0.9 million in the first six months of 2003 and related to idled styrene assets. Interest Expense. Interest expense increased $0.3 million in the first six months of 2003 as compared to the first six months of 2002. The average interest rate increased to 7.0% in the first six months of 2003 from 6.1% in the first six months of 2002. The impact of higher interest rates was partially offset by a decrease in the average debt balance. Other Income, Net. Other income, net decreased by $0.2 million in the first six months of 2003 as compared to the first six months of 2002, primarily as a result of reduced management service fees and lower interest income, which were partially offset by higher derivative gains. Income Taxes. Our effective tax rate for the six months ended June 30, 2003 and 2002 was 37.1% and 38.0%, respectively. The effective tax rates for six months ended June 30, 2003 and 2002 are different from the federal statutory tax rate due to state taxes. Olefins Segment Net Sales. Net sales increased by $173.6 million, or 67.2%, to $432.1 million in the first six months of 2003 from $258.5 million in the first six months of 2002. This increase was due to price increases in ethylene, polyethylene and styrene and higher sales volumes in ethylene, partially offset by lower styrene sales volumes. These increased prices were due to higher demand and higher energy and raw material costs that were passed through to customers. Ethylene sales volumes increased due to an increase in contract sales volumes for merchant ethylene. Styrene sales volumes decreased due to lower demand and a planned 30-day shut-down our Lake Charles styrene facility for maintenance. Income (Loss) from Operations. Income (loss) from operations in our Olefins segment increased by $37.6 million to income of $25.0 million in the first six months of 2003 from a loss of $12.6 million in the first six months of 2002. This increase was due to price increases for ethylene, polyethylene and styrene, reduced by higher feedstock and energy costs. The increase was also due to higher sales volumes for ethylene and polyethylene and higher production volume for ethylene. In the first quarter of 2002, one ethylene unit was down for 44 days due to a fire while the other unit ran at a reduced rate throughout the quarter due to furnace metallurgical failures, which were subsequently resolved. Vinyls Segment Net Sales. Net sales increased by $39.3 million to $266.5 million in the first six months of 2003 from $227.2 million in the first six months of 2002. This increase was due to price increases in PVC pipe and fence, PVC resin, VCM and caustic, partially offset by lower PVC pipe and resin sales volumes. The price increases resulted from higher energy costs that were passed through to customers. The sales volume decreases were primarily the result of heavy rainfall in the first six months in the Midwest and Southeast regions. Income (Loss) from Operations. Income (loss) from operations in our Vinyls segment increased by $17.5 million to income of $9.6 million in the first six months of 2003 from a loss of $7.9 million in the first six months of 2002. This increase was due to higher prices for PVC pipe and fence products, PVC resin and caustic and was partially offset by higher raw material costs. The increase was also due to higher production volumes for chlor-alkali resulting from an expansion and conversion of the chlor-alkali plant to membrane technology in the first quarter of 2002. This expansion lowered per unit energy costs by approximately 25% and reduced external chlorine purchases while increasing caustic production. These improvements were partially offset by lower PVC pipe and resin sales volume. 2002 COMPARED WITH 2001 Net Sales. Net sales decreased by $14.4 million, or 1.3%, to $1,072.6 million in 2002 from $1,087.0 million in 2001. This decrease was primarily due to lower prices for ethylene, polyethylene and caustic and lower styrene sales volumes and was partially offset by higher sales volumes in both our 32 Olefins and Vinyls segments and higher styrene prices. Ethylene and polyethylene prices fell primarily due to energy and raw material cost reductions in natural gas, ethane and propane. Sales volumes were higher for our Olefins and Vinyls products due to increases in 2002 demand as compared with 2001, when we experienced a slowdown in the general economy. Gross Margin. Gross margin increased to positive 6.6% in 2002 from negative 3.2% in 2001. This improvement was primarily due to price increases, higher sales volumes and higher utilization rates, partially offset by higher energy and raw material costs. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by approximately $5.6 million in 2002 compared with 2001 primarily due to increases in the provision for doubtful accounts of $5.2 million, depreciation of software and hardware of $2.0 million due to the startup of several information technology projects and an increase in insurance expense of $1.8 million due to rate increases, partially offset by reductions in payroll and benefits of $2.5 million due to reductions in head count and bonuses. Impairment of Long-Lived Assets. Impairment of long-lived assets decreased to $2.2 million in 2002 from $7.7 million in 2001. The 2002 impairment was for assets related to a discontinued product in our Vinyls business. The 2001 impairment included a $3.2 million write-down to fair market value of idled assets held for sale and $4.4 million relating to computer software and fixed assets. Interest Expense. Interest expense increased by $1.0 million in 2002 from 2001, primarily due to an increase in interest rates. The weighted average interest rate on borrowings as of December 31, 2002 and 2001 was 7.1% and 6.3%, respectively. Other Income, Net. Other income, net decreased by $2.1 million in 2002 from 2001, primarily as a result of reduced insurance claims proceeds and a reduction in management fees received from an affiliated company. Income Taxes. The effective income tax rate increased to 43.4% in 2002 from 38.2% in 2001 due to an adjustment of prior period state net operating loss carryforwards. Olefins Segment Net Sales. Net sales before intersegment eliminations decreased by $38.2 million, or 5.7%, to $627.5 million in 2002 from $665.7 million in 2001. This decrease resulted from lower prices for ethylene and LDPE and lower merchant sales volumes for ethylene, styrene and ethylene co-product and was partially offset by higher styrene prices and higher LDPE and LLDPE sales volumes. As reported by CMAI, selling prices for spot ethylene decreased by 21.1% to 16.9 cents per pound in 2002. Ethylene co-product sales decreased in 2002, primarily due to lower pricing. Sales volumes for LDPE and LLDPE, which are higher value-added products, increased substantially in 2002 due to stronger market demand. Our polyethylene sales volumes increased by 11.4% to 1.2 billion pounds in 2002 as compared to 2001. Our styrene sales volumes decreased by 13.5% to 427.6 million pounds in 2002 due to a reduction from 2001 levels in outside purchases of styrene for subsequent resale. Income (Loss) from Operations. Income (loss) from operations increased by $52.6 million to $7.9 million in 2002 from a loss of $44.7 million in 2001. This increase was primarily due to higher polyethylene margins, higher styrene margins, higher polyethylene sales volumes and higher utilization rates in polyethylene and styrene. Polyethylene margins were higher in 2002 due to decreased raw material costs as compared to 2001 levels. Styrene margins were higher in 2002 due to price increases and lower raw material costs. Increased utilization rates resulted from increased demand for ethylene, polyethylene and styrene. Operating costs were lower due to cost cutting measures, primarily a reduction in force initiated in 2002. These improvements were partially offset by an outage at one of our ethylene units due to a fire resulting in 44 days of downtime in the first quarter of 2002. Our second ethylene unit was operating at reduced rates for the first half of 2002 due to furnace metallurgical failures, which were subsequently resolved. 33 Vinyls Segment Net Sales. Net sales increased by $18.8 million, or 4.1%, to $474.1 million in 2002 from $455.3 million in 2001. This increase was due to higher prices for PVC pipe, PVC resin, VCM and ethylene co-products and higher sales volumes for PVC pipe, VCM, caustic and ethylene co-products. These increases were partially offset by lower PVC fence prices, lower caustic prices, lower PVC resin volumes and lower caustic trading volumes. Caustic sales volumes increased by 80.0 million pounds, or 23.4%, to 422.0 million pounds, primarily due to our expansion of our chlor-alkali facility that started up in the second quarter of 2002. Income (Loss) from Operations. Income (loss) from operations increased by $43.4 million to $10.5 million in 2002 from a loss of $32.9 million in 2001. This increase was due to higher prices for fabricated products and PVC resin prices combined with lower raw material costs for propane and chlorine and higher utilization rates for the PVC pipe, PVC fence, PVC, VCM and chlor-alkali plants. The higher profit margins and utilization rates were primarily due to the impact of increased demand for our Vinyls products as a result of a more favorable environment for construction spending as interest rates fell throughout 2002. As a result of the improved demand, the industry was able to institute several price increases during 2002. The chlor-alkali plant was converted to membrane technology beginning in 2001. This project was completed and brought on line in the second quarter of 2002. This conversion positively affected income (loss) from operations due to an approximate 25% reduction in per unit energy cost and higher chlorine and caustic soda production. Our VCM and ethylene plants underwent de-bottlenecking during 2001, which reduced overall operating costs. The benefit of these lower operating costs were not fully realized until 2002. 2001 COMPARED WITH 2000 Net Sales. Net sales decreased by $304.4 million, or 21.9%, to $1,087.0 million in 2001 from $1,391.4 million in 2000. Lower 2001 net sales were primarily due to price decreases throughout our Olefins and Vinyls segments and lower ethylene and polyethylene sales volumes, partially offset by higher sales volumes of PVC pipe and fence, PVC resin and VCM. Ethylene and polyethylene prices and sales volumes decreased in 2001 due to reduced demand as a result of a general economic slowdown and large capacity additions in the industry in 2000 and 2001. Lower prices in Vinyls were primarily the result of the general economic slowdown. Gross Margin. Gross margin decreased to a negative 3.2% in 2001 from a positive 13.8% in 2000. This decrease was primarily due to price decreases, partially offset by lower raw material costs of ethane and propane. A general slowdown in the economy, energy price spikes and large capacity additions in ethylene and polyethylene all contributed to lower utilization rates and profit margins. Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by $8.7 million, or 14.0%, in 2001 compared with 2000. The decrease was a result of decreases in consulting and legal expenses of $1.9 million, in depreciation and amortization of $1.2 million, in contract labor costs of $1.0 million, in provision for doubtful accounts of $1.0 million and in other selling, general and administrative expenses of $3.6 million. Impairment of Long-Lived Assets. Impairment of long-lived assets decreased to $7.7 million in 2001 from $10.8 million in 2000. The 2001 impairment included a $3.2 million write-down to fair market value of idled assets held for sale and $4.4 million related to computer software and fixed assets. The 2000 impairment included a $10.8 million write-down to fair market value of idled assets. Interest Expense. Interest expense did not materially change from 2000 to 2001. Income Taxes. The effective income tax rate increased to 38.2% in 2001 from 34.2% in 2000. Our 2000 income tax provision was based on alternative minimum tax. Alternative minimum tax did not apply in 2001 and the higher regular federal rate was used. 34 Olefins Segment Net Sales. Net sales before intersegment eliminations decreased by $240.6 million, or 26.5%, to $665.7 million in 2001 from $906.3 million in 2000. This decrease resulted from price decreases in polyethylene, styrene and ethylene and lower sales volumes in polyethylene, ethylene and ethylene co-products. As reported by CMAI, in 2001, ethylene spot prices decreased by 21.1% to 21.4 cents per pound, LDPE prices decreased by 7.9% to 42.8 cents per pound, LLDPE prices decreased by 9.6% to 34.8 cents per pound and styrene spot prices decreased by 37.2% to 21.9 cents per pound. Polyethylene sales volumes in 2001 decreased 136 million pounds, or 11.3%, and ethylene sales volumes in 2001 fell by 14.8%, in each case from 2000 levels, due to a weaker U.S. economy, lower market demand and significant capacity additions in the industry. These lower sales prices and sales volumes were partially offset by higher styrene sales volumes resulting from increased trading volumes in 2001. Income (Loss) from Operations. Income (loss) from operations decreased by $138.9 million to a loss of $44.7 million in 2001 from income of $94.3 million in 2000. The decrease was due to lower product prices and margins in ethylene, polyethylene and styrene and lower utilization rates and sales volumes in ethylene and polyethylene. Utilization rates were also lower in styrene, while sales volumes were higher due to higher trading volumes. Ethylene and polyethylene demand and utilization rates fell in 2001 due to a global economic downturn and energy price spikes early in 2001. Ethylene and polyethylene utilization rates were also impacted by large capacity additions in 2000 and 2001. Styrene profit margins fell in 2001 due to the weak economy and lower production at our styrene facility. The lower production was replaced with styrene purchased for resale. Vinyls Segment Net Sales. Net sales decreased by $72.4 million, or 13.7%, to $455.3 million from $527.7 million in 2000. This decrease was primarily due to lower prices for PVC pipe and fence, PVC resin, VCM and ethylene co-products and was partially offset by higher sales volumes of PVC pipe and fence, PVC resin and VCM. As reported by CMAI, in 2001, PVC resin prices decreased by 14.3% to 31.4 cents per pound. Our PVC pipe prices fell by an average of 32.3% in 2001 compared with 2000. These price decreases were the result of a general slowdown in the global economy and declining demand for these products. Income (Loss) from Operations. Income (loss) from operations decreased by $76.9 million to a loss of $32.9 million in 2001 from income of $44.0 million in 2000. This decrease was due to lower prices for PVC pipe and fence, PVC resin, VCM and ethylene co-products, primarily propylene and aromatics, and was only partially offset by lower raw material cost for propane, ethylene and chlorine. Product demand fell in 2001 due to the global economic downturn, resulting in lower prices and margin pressure. Income (loss) from operations was also negatively impacted in 2001 due to de-bottlenecking projects at the propane ethylene cracking facility and the VCM plant. CASH FLOW DISCUSSION OPERATING ACTIVITIES First Six Months of 2003 and 2002. Operating activities generated cash of $25.2 million in the first six months of 2003 compared to net cash used of $43.9 million in the same period in 2002. The $69.1 million improvement in operating cash flow was primarily due to improvements in income (loss) from operations, as described above, and favorable changes in working capital. Income from operations increased by $53.6 million in the first six months of 2003 as compared to the first six months of 2002. Changes in components of working capital, which we define for purposes of this cash flow discussion as accounts receivable, inventories, prepaid expenses, and other current assets less accounts payable and accrued liabilities, used cash of $32.6 million in the first six months of 2003, compared to $51.4 million net cash used in the first six months of 2002, an improvement of $18.8 million. In the first six months of 2003, receivables increased by $21.2 million, primarily due to higher average selling prices and inventory increased by $37.4 million due to production increases and higher feedstock and energy prices. The resulting effect on operating cash flow was offset by a $17.6 million increase in accounts payable and 35 accrued liabilities, primarily due to higher energy and feedstock costs. An $8.3 million reduction in prepaid expenses in the first six months of 2003 was related to feedstock purchases in the fourth quarter of 2002. The primary reason for the $43.9 million use of cash in the first six months of 2002 was a $53.8 million increase in receivables, partially offset by slightly lower inventories and higher accrued liabilities. The increase in receivables was due to higher average selling prices and sale volumes throughout our Olefins and Vinyls segments. 2002, 2001 and 2000. Operating activities used cash of $29.7 million in 2002, compared to cash provided of $28.5 million in 2001 and $172.3 million in 2000. The $58.2 million decrease in operating cash flow in 2002 as compared to 2001 was primarily due to changes in working capital components. Changes in working capital components used $93.2 million of cash in 2002 and provided $62.2 million of cash in 2001. In 2002, accounts receivable increased by $52.2 million due to higher product sales, decreased utilization of our receivables securitization facility and higher product prices in the fourth quarter of 2002. Inventory increased by $42.6 million in 2002 due to both higher raw material prices and purchases made at year-end in anticipation of rising prices. Prepaid expenses increased in 2002 by $11.8 million as a result of prepaid feedstock purchases. In 2002, accounts payable increased by $14.5 million, primarily due to increased inventory levels. Operating cash flow decreased by $143.8 million in 2001 as compared to 2000, primarily due to a $215.6 million decrease in income (loss) from operations. The cash flow impact from the decrease in income (loss) from operations was partially offset by a $62.2 million decrease in working capital components. Changes in working capital components provided $62.2 million of cash in 2001 compared to cash used of $3.7 million in 2000. Lower prices and sales volume in 2001 resulted in lowered working capital requirements. Accounts receivable were $29.7 million lower than 2000 and inventories decreased by $77.0 million. Partially offsetting the positive impact of the lower receivables and inventory was a $29.9 million increase in accounts payable and a $15.0 million increase in accrued liabilities. INVESTING ACTIVITIES First Six Months of 2003 and 2002. Net cash used in investing activities was $15.7 million in the first six months of 2003 as compared to $19.8 million in the first six months of 2002. Capital spending in the first six months of 2003 of $19.0 million related to normal maintenance, safety and environmental projects. These expenditures were offset by $3.3 million of insurance proceeds. Capital spending in the first six months of 2002 of $21.4 million was related to maintenance, safety and environmental projects and the completion of the conversion of the Calvert City chlorine plant from mercury cell to membrane technology. These expenditures were offset by $1.7 million of insurance proceeds. 2002, 2001 and 2000. Net cash used in investing activities was $33.7 million in 2002 as compared to $76.5 million in 2001 and $87.7 million in 2000. As a result of the chemical industry downturn in 2001 and the first half of 2002, we limited our 2002 capital expenditures to primarily maintenance, environmental and safety related projects. Total 2002 capital spending was $38.6 million, before a $4.9 million insurance reimbursement for replacement of equipment destroyed by a fire at the Lake Charles plant. In 2001 and 2000, capital expenditures included normal maintenance, environmental and safety expenditures of $29.0 million and $39.0 million, respectively. In 2000, we acquired a window fabrication business for $8.8 million. The remainder of the capital expenditures of $47.5 million in 2001 and $39.9 million in 2000 primarily related to the conversion of the Calvert City chlorine plant to membrane technology, the debottlenecking of the Calvert City ethylene and VCM plants and the expansion of one of our fabricated products pipe plants. FINANCING ACTIVITIES First Six Months of 2003 and 2002. Net cash used by financing activities during the first six months of 2003 was $10.0 million as we were able to use part of the cash generated from operating activities to repay debt. The equity contribution from the parent relates to cash contributed with the stock of GVGP, Inc. and Geismar Holdings, Inc. in April 2003. Net cash used by financing activities during the first six 36 months of 2002 was $5.0 million. In the first six months of 2002, we used available cash to fund operating needs and repay $5.0 million of debt. 2002, 2001 and 2000. Financing activities used cash of $5.6 million in 2002, compared to net cash provided by financing activities of $118.8 million in 2001 and net cash used by financing activities of $85.0 million in 2000. During 2002, our debt decreased $5.6 million despite cash requirements for operating activities of $29.7 million and investing activities of $33.7 million as we used available cash of $68.9 million for those purposes. In 2001, debt increased by $118.8 million which, together with net cash from operating activities of $28.5 million, provided the cash to fund investing activities of $76.5 million and to increase cash balances by $70.7 million. In 2000, debt decreased $68.0 million as cash generated from operating activities was sufficient to cover the debt reduction, investing requirements of $87.7 million, as well as paying a dividend of $17.0 million to our parent company. In June 2002, we concluded negotiations with our existing lenders to change the maturity date to March 2005 for our then-existing revolving credit facility, term loan, series A and Series B notes and letter of credit support. As part of the agreement, we repaid a total of $20.0 million of principal, retroactive interest of $5.1 million and fees of $9.6 million, of which $9.4 million was capitalized and amortized over the term of the amended agreements. In 2001, we repaid $21.3 million of our outstanding notes and $20.0 million of our term loan. In 2000, we repaid $10.0 million of our term loan. LIQUIDITY AND CAPITAL RESOURCES LIQUIDITY AND FINANCING ARRANGEMENTS Our principal sources of liquidity are from cash and cash equivalents, cash from operations and short-term borrowings under our revolving credit facility. In addition, we have received equity contributions from our parent company from time to time. CASH Cash balances were $9.6 million at June 30, 2003 compared to $10.3 million at June 30, 2002. Cash balances were $8.3 million, $79.0 million and $10.1 million at December 31, 2000, 2001 and 2002, respectively. We believe the June 30, 2003, December 31, 2002 and June 30, 2002 cash levels are representative of balances required to fund our short-term requirements at quarter end and year end. However, the $79.0 million balance at December 31, 2001 was higher in order to provide us with additional liquidity because we agreed with our lenders to suspend borrowings under our revolver in connection with the debt restructuring that we completed in June 2002. DEBT Our current debt structure is used to fund our business operations, and our revolving credit facility is a source of liquidity. As of June 30, 2003, we had outstanding long-term debt of $495.5 million, including current maturities of $1.2 million, consisting of $208.8 million principal amount of our Series A and Series B notes, $161.5 million of borrowings under our $291.6 million revolving credit agreement, $114.0 million of borrowings under our term loan, $10.9 million loan from the proceeds of tax-exempt revenue bonds (supported by an $11.3 million letter of credit) and $0.3 million of other debt. The Series A and Series B notes bore interest at 9.5% per year. Debt outstanding under the credit agreement and the term loan bore interest at variable rates. On July 31, 2003, we completed a refinancing of substantially all of our outstanding long-term debt. We used net proceeds from the refinancing of approximately $507.4 million to: - repay in full all outstanding amounts under our existing revolving credit facility, term loan and 9.5% Series A and Series B notes, including accrued and unpaid interest, fees and a $4.0 million make-whole premium to the noteholders; and - provide $2.4 million in cash collateral for outstanding letter of credit obligations of $2.2 million. 37 In conjunction with the refinancing, we terminated our accounts receivable securitization facility by repurchasing all accounts receivable previously sold to our unconsolidated accounts receivables securitization subsidiary. No gain or loss was recognized as a result of the accounts receivable repurchase. We also obtained a $12.4 million letter of credit to secure our obligations under a letter of credit reimbursement agreement related to outstanding tax-exempt bonds. As a result of the refinancing, we will recognize $11.3 million in non-operating expense in the third quarter of 2003 consisting of the $4.0 million make-whole premium and a write-off of $7.3 million in previously capitalized debt issuance expenses. The refinancing consisted of: - $380.0 million in aggregate principal amount of privately placed 8 3/4% senior notes due 2011; - $120.0 million senior secured term loan due in 2010; and - $21.0 million in borrowings under a $200.0 million senior secured working capital revolving credit facility due in 2007. We incurred approximately $13.6 million in costs associated with the refinancing that will be capitalized and amortized over the term of the new debt. Please read "Description of Certain Indebtedness" and "Description of Notes." CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS In addition to long-term debt, we are required to make payments relating to various types of obligations. The following table summarizes our minimum payments as of December 31, 2002 relating to long-term debt, unconditional purchase obligations and operating leases for the next five years and thereafter, after giving effect to the refinancing transaction described above.
TOTAL 2003 2004-2005 2006-2007 THEREAFTER ------ ----- --------- --------- ---------- (IN MILLIONS) CONTRACTUAL OBLIGATIONS Long-Term Debt....................... $506.4 $ 0.6 $ 2.7 $ 2.4 $500.7 Operating Leases..................... 116.7 18.1 28.2 20.5 49.9 Unconditional Purchase Obligations... 71.1 9.6 16.4 14.7 30.4 ------ ----- ----- ----- ------ $694.2 $28.3 $47.3 $37.6 $581.0 ====== ===== ===== ===== ====== OTHER COMMERCIAL COMMITMENTS Standby Letters of Credit............ $ 13.5 -- $13.5 -- -- ====== ===== ===== ===== ======
Long-Term Debt. Long-term debt amortization is based on the terms of the refinanced debt. Please read the discussion above under "-- Debt" and the description of the new credit facility and term loan under "Description of Certain Indebtedness." Operating Leases. We lease various facilities and equipment under noncancelable operating leases for various periods. Unconditional Purchase Obligations. We are party to various unconditional obligations to purchase products and services primarily including commitments to purchase nitrogen, waste water treatment services and pipeline usage. Standby Letters of Credit. This includes (1) our obligation under a $11.3 million letter of credit issued in connection with the $10.9 million tax-exempt revenue bonds and (2) other letters of credit totaling $2.2 million issued to support obligations under our insurance programs, including for workers' compensation claims. Our ability to make payments on and to refinance our indebtedness, including the notes offered by this prospectus, and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, 38 regulatory and other factors that are beyond our control. Based on our current level of operations, we believe our cash flow from operations, available cash and available borrowings under our new credit facility will be adequate to meet our future liquidity needs. We cannot assure you, however, that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or that future borrowings will be available to us under our new credit facility in an amount sufficient to enable us to pay our indebtedness, including the notes offered by this prospectus, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the notes, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including our new credit facility and the notes, on commercially reasonable terms or at all. RECEIVABLES SECURITIZATION Prior to the July 2003 refinancing transactions described above, we sold trade receivables to Westlake AR Corporation ("WARC"), a wholly owned, non-consolidated subsidiary. WARC, in turn, had an agreement with an independent issuer of receivables-backed commercial paper under which it sold receivables and received cash proceeds of up to $49.5 million. The proceeds received from this accounts receivables securitization facility effectively reduced our debt. The amount of proceeds we received varied depending on a number of factors, including the availability of receivables, the credit and aging of the receivables, concentration of credit risk and our utilization of the facility. As of June 30, 2003 and 2002, the balance of our accounts receivable sold and the facility was $9.0 million and $31.9 million, respectively. The balance as of December 31, 2002, 2001 and 2000 was $15.1 million, $38.0 million, and $49.1 million, respectively. Immediately prior to the July 2003 refinancing, we repurchased all accounts receivable sold to WARC and terminated the securitization facility. CRITICAL ACCOUNTING POLICIES Critical accounting policies are those that are important to our financial condition and require management's most difficult, subjective, or complex judgments. Different amounts would be reported under different operating conditions or under alternative assumptions. We have evaluated the accounting policies used in the preparation of the accompanying consolidated financial statements and related notes and believe those policies are reasonable and appropriate. We apply those accounting policies that we believe best reflect the underlying business and economic events, consistent with accounting principles generally accepted in the United States. Our more critical accounting policies include those related to long-lived assets, accruals for long-term employee benefits, transfer of financial assets, inventories and environmental and legal obligations. Inherent in such policies are certain key assumptions and estimates. We periodically update the estimates used in the preparation of the financial statements based on its latest assessment of the current and projected business and general economic environment. Our significant accounting policies are summarized in note 1 to the accompanying audited consolidated financial statements. We believe the following to be our most critical accounting policies applied in the preparation of our financial statements. Long-Lived Assets. Key estimates related to long-lived assets include useful lives, recoverability of carrying values and existence of any retirement obligations and such estimates could be significantly modified. The carrying values of long-lived assets could be impaired by new technological developments, new chemical industry entrants with significant raw material or other cost advantages, uncertainties associated with the U.S. and world economies, the cyclical nature of the chemical and refining industries and uncertainties associated with governmental actions. We defer the costs of turnaround maintenance and repair activities and amortize the costs over the period until the next expected major turnaround of the affected unit. During 2002, 2001 and 2000, cash expenditures of $16.3 million, $12.9 million and $8.0 million, respectively, were deferred and are being amortized, generally over three to five year periods. Amortization in 2002, 2001 and 2000 of previously deferred turnaround costs was $5.0 million, $3.2 million and $2.6 million, respectively. 39 The estimated useful lives of long-lived assets range from three to 25 years. Depreciation and amortization of these assets, including amortization of deferred turnaround costs, under the straight-line method over their estimated useful lives totaled $86 million, $82 million and $79 million in 2002, 2001 and 2000, respectively. If the useful lives of the assets were found to be shorter than originally estimated, depreciation charges would be accelerated. We periodically evaluate long-lived assets for potential impairment indicators. Our judgments regarding the existence of impairment indicators are based on legal factors, market conditions and the operational performance of our businesses. Actual impairment losses incurred could vary significantly from amounts estimated. Additionally, future events could cause us to conclude that impairment indicators exist and that associated long-lived assets of our businesses are impaired. Any resulting impairment loss could have a material adverse impact on our financial condition and results of operations. Additional information concerning long-lived assets and related depreciation and amortization appears in note 5 to the accompanying audited consolidated financial statements. Long-Term Employee Benefit Costs. Our costs for long-term employee benefits, particularly pension and postretirement medical and life benefits, are incurred over long periods of time and involve many uncertainties over those periods. The net periodic benefit cost attributable to current periods is based on several assumptions about such future uncertainties, and is sensitive to changes in those assumptions. It is our responsibility, often with the assistance of independent experts, to select assumptions that represent the best estimates of those uncertainties. It is also our responsibility to review those assumptions periodically and, if necessary, adjust the assumptions to reflect changes in economic or other factors. Accounting for employee retirement plans involves estimating the cost of benefits that are to be provided in the future and attempting to match, for each employee, that estimated cost to the period worked. To accomplish this, we rely extensively on advice from actuaries and assumptions are made about inflation, investment returns, mortality, employee turnover and discount rates that ultimately impact amounts recorded. While we believes that the amounts recorded in the accompanying consolidated financial statements related to these retirement plans are based on the best estimates and judgments available, the actual outcomes could differ from these estimates. Additional information on the key assumptions underlying these benefit costs appears in note 11 to the accompanying audited consolidated financial statements. Transfers of Financial Assets. We account for the transfers of financial assets, including transfers to a Qualified Special Purpose Entity, or QSPE, in accordance with Statement of Financial Accounting Standards ("SFAS") 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. In accordance with SFAS 140, we recognize transfers of financial assets as sales provided that control has been relinquished. Control is deemed to be relinquished only when all of the following conditions have been met: (1) the assets have been isolated from the transferor, even in bankruptcy or other receivership (true sale opinions are required); (2) the transferee has the right to pledge or exchange the assets received and (3) the transferor has not maintained effective control over the transferred assets (e.g., a unilateral ability to repurchase a unique or specific asset). We are also required to follow the accounting guidance under SFAS 140 and Emerging Issues Task Force ("EITF") Topic D-14, Transactions Involving Special-Purpose Entities, to determine whether or not an special purpose entity is required to be consolidated. Our transfers of financial assets relate to securitization transactions with a special purpose entity, or SPE, meeting the SFAS 140 definition of a QSPE. A QSPE can generally be described as an entity with significantly limited powers that are intended to limit it to passively holding financial assets and distributing cash flows based upon established terms. Based upon the guidance in SFAS 140, we are not required to and do not consolidate our QSPE. Rather, we account for involvement with our QSPE under a financial components approach in which we recognize only our retained interest in assets transferred to the QSPE. We account for such retained interests at fair value with changes in fair value reported in earnings. 40 As discussed under "-- Liquidity and Capital Resources -- Receivables Securitization," we terminated our securitization facility in conjunction with our refinancing transaction. Inventories. Inventories primarily include product, materials and supplies. Inventories are stated at lower of cost or market. Cost is determined using the first-in, first-out, or FIFO, method. Environmental and Legal Obligations. We consult with various professionals to assist us in making estimates relating to environmental costs and legal proceedings. We accrue an expense when we determine that it is probable that a liability has been incurred and the amount is reasonably estimable. While we believe that the amounts recorded in the accompanying consolidated financial statements related to these contingencies are based on the best estimates and judgments available, the actual outcomes could differ from our estimates. See note 16 to the accompanying audited consolidated financial statements. ACCOUNTING CHANGES Effective January 1, 2002, we implemented SFAS 141, Business Combinations, SFAS 142, Goodwill and Other Intangible Assets, and SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. On January 1, 2003, we implemented SFAS 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets and SFAS 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections. Implementation of SFAS 141, SFAS 142, SFAS 143, SFAS 144 and SFAS 145 did not have a material effect on our consolidated financial statements. RECENT ACCOUNTING PRONOUNCEMENTS In August 2002, the FASB issued SFAS 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets. This statement requires: (a) an existing legal obligation association with the retirement of a tangible long-lived asset must be recognized as a liability when incurred and the amount of the liability be initially measured at fair value, (b) an entity must recognize subsequent changes in the liability that result from the passage of time and revisions in either the timing or amount of estimated cash flows and (c) upon initially recognizing a liability for an asset retirement obligation, an entity must capitalize the cost by recognizing an increase in the carrying amount of the related long-lived asset. SFAS 143 will be effective for financial statements issued for fiscal years beginning after June 15, 2002. As of December 31, 2002, we did not have legal or contractual obligations to close any of our facilities. Our adoption of SFAS 143 on January 1, 2003 did not have a material impact on our consolidated results of operations, cash flows or financial position. In October 2002, the FASB issued SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement supersedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of. SFAS 144 provides that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. The provisions of SFAS 144 are effective for fiscal years beginning after December 15, 2001. Our adoption of SFAS 144 on January 1, 2002 did not have a material impact on our consolidated results of operations, cash flows or financial position. In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections. SFAS 145 rescinds SFAS 4, Reporting Gains and Losses from Extinguishment of Debt. By rescinding SFAS 4, gains or losses from extinguishment of debt that do not meet the criteria of APB No. 30 should not be reported as an extraordinary item and should be reclassified to income from continuing operations in all periods presented. APB No. 30 states that extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. SFAS 145 is effective for fiscal years beginning after May 15, 2002. Our adoption of SFAS 145 on January 1, 2003 did not have a material impact on our consolidated results of operations, cash flow or financial position. As discussed under "-- Liquidity and Capital Resources -- Debt," we completed a refinancing of substantially all of our outstanding long-term debt on July 31, 2003. As a result of the refinancing, we will recognize $11.3 million in non-operating 41 expense in the third quarter of 2003, consisting of the $4.0 million make-whole premium and $7.3 in previously capitalized debt issuance costs. In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF Issue 94-3, a liability for an exit cost as defined in EITF Issue 94-3 was recognized at the date of an entity's commitment to an exit plan. The provisions of SFAS 146 are effective for exit or disposal activities initiated after December 31, 2002, with early application encouraged. Previously issued financial statements shall not be restated upon adoption of SFAS 146. Our management believes that this statement will not have a material impact on our consolidated results of operations, cash flow or financial position. In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34. FIN 45 clarifies the requirements of SFAS 5, Accounting for Contingencies, relating to the guarantor's accounting for, and disclosure of, the issuance of certain types of guarantees. FIN 45 requires that upon issuance of a guarantee, the entity (i.e., the guarantor) must recognize a liability for the fair value of the obligation it assumes under that guarantee, including the cases in which the entity does not receive separately identifiable consideration (i.e., a premium) for issuing the guarantee. FIN 45 is intended to improve the comparability of financial reporting by requiring identical accounting for guarantees issued with a separately identified premium and guarantees issued without a separately identified premium. The disclosure provisions of FIN 45 are effective for financial statements of interim or annual periods that end after December 15, 2002. However, the provisions for initial recognition and measurement are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002, irrespective of a guarantor's year-end. In accordance with the provisions of FIN 45, we will recognize the fair value of the guarantees issued as modified after December 31, 2002. In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, Consolidation of Variable Interest Entities. This interpretation provides new consolidation accounting guidance for entities involved with SPEs and will replace the guidance provided by EITF Topic D-14. Interpretation 46 does not impact accounting for securitizations transacted through QSPEs. Interpretation 46 will require a primary beneficiary, defined as an entity, that participates in either a majority of the risks or rewards of a SPE, to consolidate the SPE. A SPE would not be subject to this interpretation if the entity has sufficient voting equity capital (presumed to require a minimum of 10%) so that the entity is able to finance its activities without additional subordinated financial support from other parties. While we have not yet completed our analysis of the impact of the new interpretation, we do not anticipate that the adoption of this interpretation will have a material impact on our consolidated results of operations, cash flows or financial position. In March 2003, the FASB issued SFAS 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 149 will be effective for contracts entered into, modified or designated as hedges after June 30, 2003. We have adopted this standard as of July 1, 2003 and do not expect it to have a significant effect on our consolidated results of operations, cash flows or financial position. In May 2003, the FASB issued SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." This statement improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity and requires that those instruments be classified as liabilities in statements of financial position. This statement will be 42 effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. We will adopt SFAS 150 as of July 1, 2003 and do not expect it to have a significant effect on our consolidated results of operations, cash flows or financial position. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK COMMODITY PRICE RISK A substantial portion of our products and raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to fluctuate with changes in the business cycle. We try to protect against such instability through various business strategies. Generally, our strategy is to limit our exposure to price variances by locking in prices for future purchases and sales. Our strategies also include ethylene product feedstock flexibility and moving downstream into the olefins and vinyls products where pricing is more stable. We use derivative instruments in certain instances to reduce price volatility risk on feedstocks and products. Based on our open derivative positions at August 31, 2003, a hypothetical $1.00 increase in the price of an mmbtu of natural gas would have decreased our income before taxes by $0.6 million and a hypothetical $0.10 increase in the price of a gallon of propane would have increased our income before taxes by $0.6 million. Additional information concerning derivative commodity instruments appears in note 6 to the accompanying unaudited consolidated financial statements. INTEREST RATE RISK We are exposed to interest rate risk with respect to variable rate debt. At December 31, 2002, we had variable rate debt of $297.6 million outstanding, and at June 30, 2003, we had variable rate debt of $286.7 million outstanding. All except for $0.3 million of this debt was repaid with proceeds from the refinancing transactions described above under "-- Liquidity and Capital Resources -- Debt." All of the debt under the new credit facility and term loan is at variable rates. We do not currently hedge our variable interest rate debt, but we may do so in the future. The average variable interest rate for our variable rate debt of $130.9 million as of August 31, 2003 was 4.6%. A hypothetical 100 basis point increase in interest rates would increase our annual interest expense by $1.3 million. 43 INDUSTRY OVERVIEW SUMMARY Olefins and vinyl products are some of the key building blocks of the petrochemical industry and primarily include ethylene, chlorine and their derivative products. Olefins, including ethylene, polyethylene and styrene, are used in the manufacture of a wide range of consumer non-durable plastics and films including flexible and rigid packaging, as well as consumer durables and industrial products including automotive products and coatings. Vinyls, including chlorine, polyvinyl chloride (commonly referred to as PVC) and fabricated products, are also used in a wide variety of applications, with particular focus in the plastic pipe and construction industries. Demand for these products has historically been driven by economic growth, with other key factors being rising living standards in developing nations and the continued substitution of plastics and synthetics for other materials. As a result, global olefins and vinyl products demand has historically risen in excess of U.S. gross domestic product. Petrochemicals are typically manufactured in large volumes by a number of different producers using widely available technologies. Changes in the balance between supply and demand and the resulting operating rates, the level of general economic activity and the price of raw materials all influence the petrochemical industry cycle and margins. The cycle is characterized by periods of tight supply, leading to high operating rates and peak margins, followed by a decline in operating rates and margins primarily as a result of significant capacity additions. Due to the significant size of new plants, capacity additions are built in large increments and typically require several years of demand growth to be absorbed. The industry is currently in a down cycle as a result of significant new capacity additions in the past several years, combined with soft demand resulting from the global economic slowdown. Currently, no significant new olefins or vinyls capacity additions have been announced in North America. According to CMAI, industry fundamentals currently suggest a cyclical recovery in the petrochemicals business beginning in 2005, with the next peak expected to commence in 2006. Industry recovery is supported by limited new capacity additions expected for these products in North America over the next several years, and a number of producers have announced capacity shutdowns. CMAI expects operating rates and margins to improve as demand recovers as a result of improved global economic conditions. OLEFINS Ethylene. Ethylene is the most widely consumed petrochemical in the world, with over 200 billion pounds used in 2002. It is a basic raw material for a broad array of chemical products including: (1) polyethylene (in the form of high density polyethylene, or HDPE, low density polyethylene, or LDPE, and linear low density polyethylene, or LLDPE), which is used in numerous consumer and industrial products, including trash bags, packaging film, toys, housewares and plastic bottles; (2) ethylene dichloride, which is further processed into PVC; (3) ethylbenzene, an intermediate chemical used in the production of polystyrene, which is then used in packaging and containers; and (4) ethylene oxide, which is used in the production of ethylene glycol, and further processed into antifreeze, polyester fibers and resins. North America is the largest consumer of ethylene, with an estimated 65 billion pounds consumed per annum, or 32% of world demand. The following chart below shows North American ethylene consumption by end use. 44 2002 NORTH AMERICAN ETHYLENE CONSUMPTION BY END USE (PIE CHART)
PERCENTAGE ---------- Ethylbenzene................................................ 6% Ethylene dichloride......................................... 13% Ethylene oxide/ethylene glycol.............................. 13% Polyethylene................................................ 56% Other....................................................... 12%
- --------------------- Source: CMAI. Between 1990 and 2002, the global and North American compound annual growth rates for ethylene demand were 4.2% and 2.4%, respectively. The world's 2002 ethylene capacity totaled approximately 240 billion pounds, with North American capacity accounting for approximately 32% of the total. While significant new ethylene capacity was built over the past several years, no major capacity additions are expected in North America in the next three years, and it typically takes three to four years to construct a new ethylene facility. The North American ethylene industry has been altered by consolidation and alliances among producers with the aggregate capacity share of the five largest North American producers increasing. Cash margins in the U.S. ethylene market reached a peak in 1995, with operating rates increasing in response to both strong demand and limited capacity additions. The 1996 to 1998 period was characterized by significant capacity additions and lower demand due to the Asian crisis, resulting in lower margins. As the world economy recovered in 1999 and 2000, demand for ethylene improved, resulting in increased operating rates and margins. Operating rates and margins declined dramatically by late 2000 and continued into 2002 due to the impact of increased capacity from new plants, the sharp slowdown in the economy and increased raw material costs. Through the first half of 2003, significantly higher feedstock costs prompted dramatic price increases. Demand was also higher than the prior year period, in part as a result of customer orders that built inventory ahead of the anticipated price increases. According to CMAI, ethylene industry fundamentals suggest a cyclical recovery in ethylene prices and margins beginning in 2005, with the next peak expected to commence in 2006. This recovery in the ethylene market is supported by minimal new capacity additions expected in North America and significant capacity shutdowns announced by a number of large producers. CMAI expects operating rates and margins to improve as demand recovers due to improved global economic conditions. Polyethylene. Polyethylene is produced through the polymerization of ethylene. There are three primary types of polyethylene: LDPE, HDPE and LLDPE. LDPE is typically used in applications requiring flexibility and film clarity, such as household bags and wraps. HDPE is a rigid plastic most commonly used for blow molding in the manufacture of milk bottles, liquid detergent bottles, industrial drums, bottles and gas tanks. LLDPE is a tough yet flexible plastic with its major end use in cost-sensitive film applications such as stretch wrap, trash can liners and injection molding applications, including housewares and lids. Historically, polyethylene demand has grown at or above economic growth rates, driven by the replacement of other materials with plastics. Between 1993 and 2002, North American LLDPE demand has grown at a compound annual growth rate of 5.8%, followed by HDPE at 3.6%, while LDPE demand remained flat. The following chart shows North American polyethylene consumption by end use. 45 2002 NORTH AMERICAN POLYETHYLENE CONSUMPTION BY END USE (PIE CHART)
PERCENTAGE ---------- Wire and cable.............................................. 2% Rotomolding................................................. 3% Extrusion coating........................................... 3% Pipe and profile............................................ 7% Injection molding........................................... 12% Film and sheet.............................................. 40% Blow molding................................................ 16% Other....................................................... 17%
- --------------------- Source: CMAI. The world's 2002 polyethylene capacity totaled approximately 150 billion pounds, with North America capacity accounting for 30% of the total. Over the next three years, limited polyethylene capacity additions have been announced in North America, with the lead-time to build a new plant typically around two years. As with ethylene, the industry has been concentrated into fewer, larger competitors in recent years. U.S. operating rates held relatively steady from 1995 to 2000, benefiting from strong economic activity balanced by modest capacity additions. Margins moved from a cyclical peak in 1995 to trough conditions over the 1998 to 2000 period, as escalating feedstock costs were not fully recovered through price increases. In early 2001, natural gas prices reached historic highs, while demand declined through the year as a result of the weakened North American and global economy. A modest improvement in demand, a reduction in feedstock costs and the closure of some excess polyethylene capacity occurred in 2002, resulting in marginally improved industry profitability. The first quarter of 2003 has seen a dramatic increase in feedstock costs. Polyethylene producers have generally been able to maintain margins through price increases despite the higher feedstock costs. Styrene. Styrene is used primarily in the production of polystyrene and is also used to make styrene butadiene rubber, acrylonitrile-butadiene-styrene, or ABS, styrene-acrylonitrile, or SAN, resins, styrene co-polymers, unsaturated polyester resins, and other downstream chemical products. The following chart shows 2002 North American styrene consumption by end use. 2002 NORTH AMERICAN STYRENE CONSUMPTION BY END USE (PIE CHART)
PERCENTAGE ---------- ABS/SAN..................................................... 7% Expandable polystyrene...................................... 10% Styrene butadiene rubber.................................... 12% Polystyrene................................................. 56% Other....................................................... 15%
- --------------------- Source: CMAI. Historically, styrene demand has grown in line with economic growth rates, driven by the increased replacement of other materials with polystyrene. Between 1990 and 2002, North American styrene demand has grown at a compound annual growth rate of 2.4%. The world's 2002 styrene demand totaled approximately 48 billion pounds, with North American demand accounting for 23% of the total. The styrene industry is characterized by backward-integrated producers that produce ethylene and benzene, as well as forward-integrated producers that produce polystyrene and ABS. Following peak cash margins in 1995, margins declined from 1996 to 1998 as a result of modest demand growth combined with significant new capacity additions. During 1999 and 2000, the styrene industry experienced an increase in demand growth from developing regions and high utilization rates, 46 which, when combined with reducing feedstock costs, resulted in a strong improvement in margins. During 2001, the North American manufacturing recession significantly reduced demand while higher U.S. feedstock costs made North American styrene less attractive to Asian buyers. Utilization rates in North America dropped in 2001 and the industry's profitability level declined significantly. During 2002, utilization rates rose due to the decrease of capacity and a modest increase in demand, leading to higher profitability as compared to 2001. VINYLS Chlorine and Caustic Soda. Chlorine and caustic soda are co-products manufactured by breaking salt into its components through the application of electric power. Chlorine and caustic soda are produced in a fixed ratio forming what is commonly referred to as an electrochemical unit, or ECU. Electric power is the most significant cost component in the production of chlorine and caustic soda. Chlorine is used in a wide variety of chemical processes and products, including those used to make plastics and PVC resins. Other applications include the manufacture of propylene oxide and titanium dioxide, water purification and pulp and paper bleaching. Caustic soda is used in the production of pulp and paper, alumina, oil, textiles, soaps, detergents and a variety of other chemical processes. The following charts show 2002 consumption of chlorine and caustic soda by end use. 2002 NORTH AMERICAN CHLOR-ALKALI CONSUMPTION BY END USE Chlorine (PIE CHART)
PERCENTAGE ---------- Epichlorohydrin........... 6% Propylene oxide........... 10% Ethylene dichloride....... 39% Chlorinated intermediates........... 10% Other..................... 35%
Caustic Soda (PIE CHART)
PERCENTAGE ---------- Alumina................... 3% Water treatment........... 3% Soaps, detergents and textiles................ 12% Inorganic chemicals....... 22% Organic chemicals......... 23% Pulp and paper............ 24% Other..................... 13%
- --------------------- Source: CMAI. Between 1990 and 2002, global and North American chlorine demand has increased at compound annual growth rates of 1.5% and 0.2%, respectively. In North America, growth resulting from the increased demand for PVC resins and propylene oxide has been offset by declining usage as a bleaching agent in pulp and paper. Caustic soda supply has been driven by chlorine production, as the two co-products are produced in a fixed ratio of 1.1 to 1, and historically, there has been a large market for caustic soda at a given price due to its wide variety of applications as a pH modifying agent. There are generally three main processes for manufacturing chlorine: (1) the mercury cell process, the oldest and highest cost technology, (2) the diaphragm process and (3) the membrane process, the newest, lowest cost process. North American chlorine capacity is approximately 34 billion pounds, and is made up almost entirely of diaphragm and membrane technology. No new major chlorine capacity expansions have been announced, and it typically takes two to three years to build a new facility. As a result, when combined with increasing demand of PVC and stable demand of pulp and paper, operating rates and margins are expected to improve over the near to medium term. While long-term growth has typically been driven by chlorine demand, short-term demand fluctuations will cause chlorine and caustic soda prices typically to move in opposite directions, with the "higher demand" product dictating the premium price. As a result, manufacturers generally track pricing on an ECU basis, which is essentially the combination of chlorine and caustic soda prices. ECU prices reached a peak in 1995 at over $400 per ton, trending down to a trough in 1999 to just over $200 per ton from weak but balanced demand for both chlorine and caustic soda. The industry experienced a recovery in ECU pricing in 2000 and early 2001, driven particularly by strong caustic soda demand. Beginning in 47 late 2001 and into 2002, a significant decline in demand caused by the global economic recession resulted in lower operating rates and ECU prices. Beginning in late 2002 and into the first half of 2003, rising energy prices resulted in dramatic increases in ECU prices, as producers have pushed to maintain margins. PVC and VCM. PVC is a plastic resin manufactured from vinyl chloride monomer (commonly referred to as VCM), which in turn is manufactured from ethylene and chlorine. PVC resins are one of the most widely used plastics in the world today, with estimated demand of 60.8 billion pounds globally, with North America accounting for 26% of the total. Applications are diverse and include pipe and fittings, window frames, siding, flooring, shower curtains, packaging, bottles, film, medical tubing, business machine housings and credit cards. The following chart shows 2002 consumption of PVC by end use. 2002 NORTH AMERICAN PVC CONSUMPTION BY END USE (PIE CHART)
PERCENTAGE ---------- Bottles..................................................... 1% Wire and cable.............................................. 4% Film and sheet.............................................. 14% Profiles and tubes.......................................... 28% Pipe and fittings........................................... 48% Other....................................................... 5%
- --------------------- Source: CMAI. Between 1990 and 2002, North American PVC demand has increased at a compound annual growth rate of 3.9%, driven by increased economic and new/remodeling housing activity and the cost-effective replacement of metal and other materials. Minimal announced capacity expansions are expected over the next three years. The capacity additions are not, however, expected to keep up with anticipated increases in demand. It typically takes one to two years to build new capacity. According to CMAI, PVC industry fundamentals suggest a cyclical recovery in PVC prices and margins in 2004. This recovery in the PVC market is supported by minimal new capacity additions expected in North America. CMAI expects operating rates and margins to improve as demand recovers due to improved global economic conditions. After reaching peak margins in 1994 and 1995, margins declined in the 1996 to 1999 period due to the absorption of significant new capacity additions. The industry experienced a significant decline in North American demand and operating rates in 2000 and 2001. The industry experienced a return to growth driven by the housing sector in 2002, and, when combined with modest new capacity, producers were able to maintain operating rates and margins. The first six months of 2003 has been characterized by increasing product prices driven by feedstock cost increases, with PVC producers able to modestly improve margins. Fabricated Products. Fabricated products manufactured from PVC resin include pipe, siding, fence, deck, garden accessories and window and door components. The construction building materials market is the largest consumer of PVC-based fabricated products in North America due to PVC's durability, ease of installation and low maintenance requirements. Pipe fabricated from PVC resin is the largest market for PVC resin in North America. PVC pipe is especially advantageous in more demanding applications, proving itself as one of the more durable and reliable materials on the market today. PVC pipe offers greater strength, lower installed cost, increased corrosion resistance, lighter weight and longer service life when compared to iron, steel and concrete alternatives. According to Chemical Data, Inc., the PVC "Rigid Pipe and Tubing" market grew at a compound annual growth rate of 3.8% from 1994 through 2002. 48 Windows and patio doors manufactured from PVC resin are more energy efficient, less costly and easier to maintain than alternative products. According to Chemical Data, Inc., the PVC "Windows and Doors" market grew at a compound annual growth rate of 10.5% between 1994 and 2002. Fence products manufactured from PVC resin feature low maintenance materials and long product life. According to Pure Strategy, from 1996 through 2000, PVC fence demand more than doubled, growing from 3% of the total fence market in 1996 to 7% of an estimated $4.9 billion market in 2000. 49 BUSINESS OVERVIEW We are a vertically integrated manufacturer and marketer of basic chemicals, polymers, vinyls and fabricated products. Our products include some of the most widely used chemicals in the world, which are fundamental to many diverse consumer and industrial markets, including flexible and rigid packaging, automotive products, coatings, residential and commercial construction as well as other durable and non-durable goods. We believe that our business is characterized by highly integrated, world-class chemical production facilities, state-of-the-art technology, leading regional market positions for particular products, a strong and stable customer base and experienced management. We operate in two principal business segments, Olefins and Vinyls, and we are one of the few fully integrated producers of vinyls and fabricated products in North America. We benefit from highly integrated production facilities that allow us to process raw materials into higher value-added chemicals and fabricated products. We have 8.1 billion pounds of active aggregate production capacity at 11 strategically located manufacturing plants in North America. We believe that with our highly integrated capabilities, we are less affected by volatility in product demand, have less exposure to the effects of cyclical raw material prices and operate at higher capacity utilization rates than non-integrated producers. In addition, the strategic location of our facilities lowers our transportation costs due to our high level of internally consumed production. In 2002, we used 71% of our basic chemical production internally to produce higher value-added chemicals and fabricated products for sale to external customers. COMPETITIVE STRENGTHS Vertically Integrated Operations. We operate in two vertically integrated business segments and use the majority of our internally produced basic chemicals to manufacture higher value-added chemicals and fabricated products. We are one of the few fully integrated producers of vinyls and fabricated products in North America. By operating integrated olefins and vinyls production processes, we believe we are less susceptible to volatility in product demand, have less exposure to the effects of cyclical raw material prices and are able to operate at higher capacity utilization rates than non-integrated producers. We have also been able to lower our transportation costs due to our high level of internally consumed production. In 2002, we used almost 85% of our ethylene production to manufacture polyethylene, styrene monomer and VCM. We also used 63% of our VCM production to manufacture PVC and 61% of our PVC production to manufacture our fabricated products. Efficient Modern Asset Base and Low Cost Operations. We operate some of the industry's newest manufacturing facilities in North America and focus on continually improving our asset portfolio and cost position. We have invested approximately $1.2 billion since 1990 to construct new, state-of-the-art facilities and to acquire and to upgrade acquired facilities and equipment in both our Olefins and Vinyls segments. We built two ethylene crackers in Lake Charles in 1991 and 1997, and constructed a gas-phase LLDPE/ HDPE plant in 1998. In addition, we recently completed the technology conversion and upgrade of our chlor-alkali facility at Calvert City, reducing per unit energy consumption by approximately 25% and increasing capacity by 64%. These newer plants increase operating efficiency and reduce our maintenance and environmental compliance costs. Our ethylene plants allow us to choose between ethane, propane and butane feedstocks. This flexibility enables us to react to changing market conditions and reduce raw material costs. We continually focus on reducing costs throughout our organization and believe that our selling, general and administrative costs, as a percentage of net sales, of 5.5% for 2002 is one of the lowest in the chemical industry. We eliminate research and development expenses by selectively acquiring and licensing third-party proprietary technology as a cost-effective approach to product development and production efficiency improvement. Stable and Sustained Customer Relationships. We believe that our focus on customer service strengthens customer loyalty during periods of lower demand, leading to stability in down-cycles. We 50 estimate that 87% of our net sales in 2002 were made to the same customers we had in 2000. Almost all of our 2002 net sales were to customers in the North American market, limiting our exposure to the lower-margin export market. Strong Regional Market Presence. We are a leading seller of PVC fabricated products in the geographic regions where we operate. Fabricated products are sold on a regional basis. The location of our vinyls facilities at Calvert City, Kentucky on the Tennessee River provides a freight cost advantage to our customers in the high-volume Midwest and Northeast markets when compared to most of our competitors located on the Gulf Coast. Our eight fabricated products facilities in North America allow us to focus our sales effort on local markets where we have a strong market presence. Experienced Management and Strong Equity Support. Our senior management team has an average of over 25 years of experience in the petrochemical industry. We were founded by our chairman, T.T. Chao, and his family in 1985. The Chao family has more than 50 years of experience in the plastics and fabrications industries, both in Asia and the United States. Our management has demonstrated expertise in reducing costs and growing our business through acquisitions and capacity expansions. In addition, since 1997, Westlake Polymer & Petrochemical, Inc., our parent company, has contributed $134 million to our equity consisting of $50 million in cash, equity interests in Westlake Styrene with a book value of $79 million and a vinyls facility in Geismar, Louisiana with a book value of $5 million. In addition, in August 2003, we received a capital contribution from our parent company consisting of the 20% of common stock of Westlake Olefins Corporation we did not own, with a book value of $82 million. OUR HISTORY In the 1950s, the Chao family built the first PVC plant in Taiwan. During the 1960s, they established what is now the China General Plastics Group of companies. These companies include some of the leading publicly held petrochemicals and plastic manufacturing companies in Asia. In 1990, the Chao family founded the Titan Group, a joint venture with an investment holding company owned by the Malaysian government. The Titan Group built and operates Malaysia's first, and currently the largest, integrated polyolefins complex. We began operations in 1986 after the Chao family acquired our first polyethylene plant near Lake Charles, Louisiana from Occidental Petroleum Corporation. We began our vinyls operations in 1990 with the acquisition of a VCM plant in Calvert City, Kentucky from the Goodrich Corporation. In 1992, we commenced our fabricated products operations after acquiring three PVC pipe plants. Since 1986, we have grown rapidly into a leading integrated producer of petrochemicals, polymers and fabricated products. We achieved this by acquiring 15 plants, constructing six new plants (including our PVC joint venture in China) and completing numerous capacity or production line expansions. 51 OLEFINS BUSINESS PRODUCTS Olefins are the basic building blocks used to create a wide variety of petrochemical products. We manufacture ethylene, polyethylene, styrene, and associated co-products at our manufacturing facilities in Lake Charles, Louisiana. We have two ethylene plants, two polyethylene plants and one styrene monomer plant at our Lake Charles complex. The following table illustrates our production capacities by principal product and the primary end uses of these materials:
PRODUCT ANNUAL CAPACITY END USES - ------- -------------------- -------- (MILLIONS OF POUNDS) Ethylene.......................... 2,300 Polyethylene, ethylene dichloride, ethylbenzene, ethylene oxide/ethylene glycol Low-Density Polyethylene.......... 850 High clarity packaging, shrink films, laundry and dry cleaning bags, ice bags, frozen foods packaging, bakery bags, coated paper board, cup stock, paper, folding cartons, lids, housewares, closures and general purpose molding Linear Low-Density and High- Density Polyethylene............ 500 Heavy-duty films and bags, general purpose liner (LLDPE); thin-walled food tubs, housewares, pails, totes and crates (HDPE) Styrene........................... 450 Disposables, packaging material, appliances, paints and coatings, resins and building materials
Ethylene. Ethylene is the world's most widely consumed petrochemical in terms of volume. It is the key building block used to produce a large number of higher value-added chemicals including polyethylene, ethylene dichloride, ethylbenzene and ethylene oxide. In 2002, we produced 1.9 billion pounds of ethylene at our Lake Charles complex and consumed 84% of that production internally to produce polyethylene and styrene monomer in our Olefins business and to produce vinyl chloride monomer, or VCM, in our Vinyls business. We also produce ethylene in our Vinyls segment at our Calvert City, Kentucky facilities, all of which is consumed internally in the production of VCM. In addition, we produce ethylene co-products including chemical grade propylene, crude butadiene, pyrolisis gasoline and hydrogen. Together, these co-products accounted for approximately 367 million pounds of our total 2002 production. We sell our entire output of these co-products to third parties. We plan to start up the ethylene dichloride portion of the Geismar facility in the fourth quarter of 2003 and to use a portion of our Lake Charles ethylene production to produce that ethylene dichloride. Polyethylene. Polyethylene, the world's most widely consumed polymer, is used in the manufacture of a wide variety of packaging, film, coatings and molded product applications. Polyethylene is generally classified as either low-density polyethylene, or LDPE, linear low-density polyethylene, or LLDPE, or high-density polyethylene, or HDPE. The density correlates to the relative stiffness of the products. The difference between LDPE and LLDPE is molecular, and products produced from LLDPE are stronger than products produced from LDPE. LDPE is used in end products such as bread bags, dry cleaning bags, food wraps and milk carton and snack package coatings. LLDPE is used for higher film strength applications such as stretch film and heavy duty sacks. LDPE and LLDPE are also used in injection molded products such as tubs, containers and toys. HDPE is used to manufacture products such as grocery, merchandise and trash bags, plastic containers and plastic caps and closures. We are the fourth largest producer of LDPE in North America and, in 2002, we produced 765 million pounds of LDPE in 94 different formulations to meet the needs of our diverse customer base. We also produced 323 million pounds of LLDPE in 27 formulations and 167 million pounds of HDPE in 12 different formulations. We produce the three primary types of polyethylene and sell them to third parties as a final product in pellet form. We produce LDPE at one of our polyethylene plants and have the 52 flexibility to produce both LLDPE and HDPE at the other polyethylene plant. This flexibility allows us to maximize production of either HDPE or LLDPE depending on prevailing market conditions. Styrene. Styrene is used to produce polystyrene and synthetic rubber, which are used in a number of applications including injection molding, disposables, food packaging, housewares, paints and coatings, resins, building materials and toys. We produce styrene at our Lake Charles plant and, in 2002, we produced 416 million pounds of styrene, which we sold to external customers. FEEDSTOCKS We are highly integrated along our olefins product chain. We produce all of the ethylene required to produce our polyethylene, styrene and VCM. Ethylene can be produced from either petroleum liquid feedstocks, such as naphtha, condensates and gas oils, or from natural gas liquid feedstocks, such as ethane, propane and butane. One of our ethylene plants uses ethane as its feedstock and the other can use ethane, ethane/propane mix, propane and, most recently, butane, a heavier, naphtha-based feedstock. We continue to seek ways to minimize our feedstock cost by increasing our ability to use alternative feedstocks. We receive ethane, propane and butane at our Lake Charles facilities through several pipelines from a variety of suppliers in Texas and Louisiana. In addition to our internally supplied ethylene, we also require butene or hexene to manufacture polyethylene and benzene to manufacture styrene. We receive butene and hexene at the Lake Charles complex via rail car from five primary suppliers. We receive benzene via pipeline pursuant to a supply contract with a nearby supplier. The butene and the hexene contracts are renewable annually. The benzene contract is also an annual agreement. Butene and hexene are priced on either a formula basis or on a toll basis using our ethylene. Under a typical tolling arrangement, we provide our ethylene to a third party that processes it into the desired end product for a fee. MARKETING, SALES AND DISTRIBUTION We use the majority of our Lake Charles ethylene production in our polyethylene, styrene and VCM operations. We sell the remainder to third parties. In addition, we sell our ethylene co-products to third parties. Our primary ethylene co-products are chemical grade propylene, crude butadiene, pyrolisis gasoline and hydrogen. The majority of sales in our Olefins business are made under agreements for one year or more. Contract volumes are established within a range. The terms of these contracts are fixed for a period (typically more than one year), although earlier termination may occur if the parties fail to agree on price and deliveries are suspended for a period of several months. In most cases, these contracts also contemplate extension of the term unless terminated by one of the parties. We typically ship our ethylene, propylene and hydrogen via a pipeline system that connects our plants to numerous customers. We also have storage agreements and exchange agreements that allow us access to customers who are not directly connected to the pipeline system. We transport our polyethylene by rail or truck and we move our styrene, crude butadiene and pyrolisis gasoline by barge, rail or truck. We have an internal sales force that sells directly to our customers. Our polyethylene customers are some of the nation's leading film and flexible packaging manufacturers. In 2002, our ten largest polyethylene customers accounted for 22% of Olefins segment net sales. In 2002, our top three styrene customers accounted for 13% of Olefins segment net sales. No single Olefins customer accounted for more than 10% of our segment net sales. COMPETITION The markets in which our Olefins business operates are highly competitive. We compete on the basis of price, customer service, product deliverability, product quality and product performance. Our competitors in the ethylene, polyethylene and styrene markets are typically some of the world's largest chemical companies, including Equistar Chemicals, LP, The Dow Chemical Company, ExxonMobil 53 Chemical Company, Lyondell Chemical Company, Chevron Phillips Chemical Company LP and NOVA Chemicals Corporation. VINYLS BUSINESS PRODUCTS Principal products in our integrated Vinyls segment include PVC, VCM, chlorine, caustic soda and ethylene. We also manufacture and sell products fabricated from the PVC we produce, including pipe, fence and deck, and window and patio door components. We manage our integrated Vinyls production chain, from the basic chemicals to finished fabricated products, to maximize product margins, pricing and capacity utilization. Our primary manufacturing facilities are in Calvert City, Kentucky and include an ethylene plant, a chlor-alkali plant, a VCM plant and a PVC plant. We also own eight strategically located PVC fabricated product facilities. In addition, in 2003 we acquired a vinyls facility in Geismar, Louisiana. Although the facility is currently idle, we plan to start up the ethylene dichloride portion of the Geismar facility in the fourth quarter of 2003. We intend to operate part or all of the remainder of the facility when market conditions support utilization of the additional capacity. We also own a 43% interest in a PVC joint venture in China with total capacity of 264 million pounds of PVC per year. The following table illustrates our production capacities by principal product and the end uses of these products:
PRODUCT ANNUAL CAPACITY(1) END USES - ------- -------------------- -------- (MILLIONS OF POUNDS) PVC......................... 800 Construction materials including pipe, siding, profiles for windows and doors; rigid and flexible film for packaging; medical applications such as blood bags and tubing VCM......................... 1,300 PVC Chlorine.................... 410 VCM, organic/inorganic chemicals, bleach Caustic Soda................ 450 Pulp and paper, organic/inorganic chemicals, neutralization, alumina Ethylene.................... 450 VCM Fabricated Products......... 600 Pipe: water and sewer, plumbing, irrigation, conduit; components: windows and doors; fence and deck
- --------------------- (1) Annual capacity excludes total capacity of 79 million pounds of fabricated products and 264 million pounds of PVC from our China joint venture (in which we have a 43% interest) and 600 million pounds of PVC and VCM from our idled facilities at Geismar, Louisiana. PVC. PVC, the world's third most widely used plastic, is an attractive alternative to traditional materials such as glass, metal, wood, concrete and other plastic materials because of its versatility, durability and cost competitiveness. PVC is produced from VCM, which is, in turn, made from chlorine and ethylene. We will use the ethylene dichloride that we produce in our Geismar facility internally to produce PVC. PVC compounds are made by combining PVC resin with various additives in order to make either rigid and impact-resistant or soft and flexible compounds. The various compounds are then fabricated into end-products through extrusion, calendering, injection-molding or blow-molding. Flexible PVC compounds are used for wire and cable insulation, automotive interior and exterior trims, packaging and medical devices. Rigid extrusion PVC compounds are commonly used in window frames, vertical blinds and construction products, including pipes. Injection-molding PVC compounds are used in specialty products such as computer housings and keyboards, appliance parts and bottles. In 2002, we produced 761 million pounds of PVC at our Calvert City facilities. We used 61% of our PVC internally in the production of our fabricated products. The remainder of our PVC was sold to downstream fabricators. VCM. VCM is used to produce PVC, solvents and PVC-related products. We use ethylene and chlorine to produce VCM. In 2002, we produced 1.2 billion pounds of VCM at our Calvert City facilities and used 63% percent of our VCM production in our PVC operations. The remainder of our VCM production was sold under a long-term contract with an external customer. 54 Chlorine and Caustic Soda. We combine salt and electricity to produce chlorine and caustic soda, co-products commonly referred to as chlor-alkali, at our Calvert City facilities. We use our chlorine production in our VCM plant. Our caustic soda is sold to external customers who use it for, among other things, the production of pulp and paper, organic and inorganic chemicals and alumina. In 2002, we modernized and expanded our chlorine plant by replacing our mercury cell technology with a more efficient, state-of-the-art membrane technology, resulting in a 64% increase in capacity and an approximate 25% reduction in energy consumption per unit of production that should result in significant cost savings as energy is a major cost of chlor-alkali production. In 2002, we produced 296 million pounds of chlorine and 340 million pounds of caustic soda. In 2003, we have the capacity to supply approximately 50% of our internal chlorine requirements. We purchased the portion of our chlorine requirements that we do not fulfill internally under an ethylene dichloride supply agreement that expires in December 2003. We are working with suppliers to satisfy our continuing chlorine requirements and we do not expect any disruption in our chlorine supply. Ethylene. We use all of the ethylene produced at Calvert City internally to produce VCM and, in 2002, we produced approximately 70% of the ethylene required for our VCM production. We obtain the remainder of the ethylene we need for our Vinyls business from our Lake Charles ethylene production in the form of ethylene dichloride. We plan to start up the ethylene chloride portion of our Geismar facility in the fourth quarter of 2003 and to use the ethylene dichloride internally in our production of PVC beginning in 2004. Fabricated Products. Products made from PVC are used in construction materials ranging from water and sewer systems to home and commercial applications for fence, deck, window and patio door systems. We manufacture and market water, sewer, irrigation and conduit pipe products under the "North American Pipe" brand. PVC pipe offers greater strength, lower installed cost, increased corrosion resistance, lighter weight and longer service life when compared to iron, steel and concrete alternatives. We also manufacture and market PVC window and patio door profiles under the "NAPG" brand and PVC fence and deck products under the "Westech" brand. PVC windows and patio doors are more energy efficient, less costly and easier to maintain than alternative products. PVC fence and deck products feature low maintenance materials and long product life. In 2002, we produced 514 million pounds of PVC fabricated products, including 444 million pounds of PVC pipe, 46 million pounds of fence and 24 million pounds of window and patio door profiles, all of which were sold to third parties. China Joint Venture. We own a 43% interest in Suzhou Huasu Plastics Co. Ltd., a joint venture based near Shanghai, China. Our joint venture partners include Norway's Norsk Hydro ASA, two Chinese government-owned chemical companies and International Finance Corporation, a unit of the World Bank. In 1995, this joint venture constructed and began operating a PVC film and fabricated products plant that has a current annual capacity of 79 million pounds of PVC film. In 1999, the joint venture constructed and began operating a PVC resin plant that has an annual capacity of 264 million pounds of PVC resin. In 2002, 12% of the PVC resin was used internally for the production of the PVC film and fabricated products. FEEDSTOCKS We are highly integrated along our vinyls production chain. We produce all the ethylene, VCM and PVC used in our Vinyls business. In 2002, we produced 42% of the chlorine required for our VCM plant. We purchased the remaining amount at market prices. We purchased the salt required for our chlor-alkali plant pursuant to a long-term contract that expires in 2005. The chlorine and salt purchase prices are based on market prices. We purchase electricity for our chlor-alkali production from the Tennessee Valley Authority under a favorable contract that runs through 2005. We are one of the few fully integrated producers of vinyls and fabricated products in North America. Our Calvert City PVC plant supplies all the PVC required for our fabricated products plants. We believe that this provides us with a significant advantage over other fabricated products manufacturers that are 55 reliant on external suppliers of PVC. The remaining feedstocks for fabricated products include pigments, fillers and stabilizers, which we purchase under short-term contracts based on prevailing market prices. MARKETING, SALES AND DISTRIBUTION We are a leading manufacturer of PVC fabricated products in the geographic regions where we operate. We sell our PVC pipe through a combination of distributors, manufacturer representatives and our internal salaried sales force. We use a regional sales approach. This allows us to provide focused customer service and to meet the specified needs of individual customers. In 2002, we had approximately 700 customers, with the top five customers accounting for a total of 42% of net sales in our Vinyls segment. We use an internal salaried sales force to market and sell our fence and window and patio door profiles. We sell primarily to fabricators who then convert the product into kits for installation by contractors. In 2002, we used 63% of our VCM production in our PVC operations and sold over 90% of the remaining production under a long-term contract. We sell all of our caustic soda production to external customers, concentrating on customers who can receive the product by barge over the Mississippi, Tennessee and Ohio Rivers to minimize distribution costs. In 2002, we had approximately 50 caustic soda customers. COMPETITION Competition in the vinyls market is based on price, product availability, product performance and customer service. We compete in the vinyls market with other large and medium-sized producers including Oxy Vinyls, LP, The Dow Chemical Company, Shintech, Inc., Georgia Gulf Corporation and Formosa Plastics Corporation. Competition in the fabricated products market is based on price, on-time delivery, product quality, customer service and product consistency. We compete in the fabricated products market with other medium and large-sized producers and fabricators including J-M Manufacturing Company, Inc., Diamond Plastics Corporation, National Pipe & Plastics, Inc. and PW Eagle, Inc. We are a leading manufacturer of PVC pipe in the geographic areas served by our North American Pipe Corporation subsidiary. We believe that we are the number two manufacturer of PVC fence and deck in the United States. FACILITIES AND CAPABILITIES Our manufacturing facilities and principal products are set forth below. Except as noted, we own each of these facilities. Our Lake Charles and Calvert City facilities have been pledged to secure our new term loan.
LOCATION PRINCIPAL PRODUCTS - -------- ------------------ Lake Charles, Louisiana.................. Ethylene, polyethylene, styrene Calvert City, Kentucky(1)................ PVC, VCM, chlorine, caustic soda, ethylene Geismar, Louisiana(2).................... PVC, VCM and ethylene dichloride Booneville, Mississippi.................. PVC pipe Springfield, Kentucky.................... PVC pipe Litchfield, Illinois..................... PVC pipe Wichita Falls, Texas..................... PVC pipe Van Buren, Arkansas...................... PVC pipe Evansville, Indiana...................... Fence and deck Calgary, Alberta, Canada(3).............. Window and patio doors Pauling, New York........................ Window and patio doors
56 - --------------- (1) We lease a portion of our Calvert City facilities. (2) Although our Geismar facility is currently idle, we plan to start up the ethylene dichloride portion of the Geismar facility in the fourth quarter of 2003. We intend to operate part or all of the remainder of the facility when market conditions support utilization of the additional capacity. (3) We lease our Calgary facility. OLEFINS Our Lake Charles complex consists of three sites on over 1,300 acres in Lake Charles, Louisiana, each within two miles of one another. The complex includes two ethylene plants, two polyethylene plants and a styrene monomer plant. The combined capacity of our two ethylene plants is approximately 2.3 billion pounds per year. The capacity of our two polyethylene plants is approximately 1.4 billion pounds per year and the capacity of our styrene plant is approximately 450 million pounds per year. We operate some of the newest manufacturing sites in North America and focus on continually improving our asset portfolio and cost position. Our newest polyethylene plant has two production units that use gas phase technology to manufacture both LLDPE and HDPE. Our styrene monomer plant is being modernized with state-of-the-art technology and underwent debottlenecking in the second quarter of 2003 for additional capacity. Our Lake Charles complex includes a marine terminal that provides for worldwide shipping capabilities. The complex also is located near rail transportation facilities, which allows for efficient delivery of raw materials and prompt shipment of our products to customers. In addition, the complex is connected by pipeline systems to our ethylene feedstock sources in both Texas and Louisiana. Within the complex, our ethylene plants are connected by pipeline systems to our polyethylene and styrene plants. Our location, combined with our integration in ethylene and our new and modernized plant facilities, allows for low-cost production and distribution of products in our Olefins business. We intend to continue to explore ways to optimize our plant capabilities and to maximize our production as market conditions warrant additional capacity. In 2002, we made capital expenditures for the upgrade, maintenance and modernization of production, manufacturing and administrative facilities for our Lake Charles complex of $21.1 million. In 2001, these expenditures amounted to $20.5 million. VINYLS Our Calvert City complex is situated on 550 acres on the Tennessee River in Kentucky and includes an ethylene plant, a chlor-alkali plant, a VCM plant and a PVC plant. The capacity of our Calvert City ethylene plant is 450 million pounds per year and of our chlor-alkali plant is 410 million pounds of chlorine and 450 million pounds of caustic soda per year. In 2002, we modernized and expanded our chlorine plant by replacing our mercury cell technology with a more efficient, state-of-the-art membrane technology, resulting in a 64% increase in capacity and approximately a 25% reduction in energy consumption per unit of production that should result in significant cost savings as energy is a major cost of the chlor-alkali production. Our VCM plant has a capacity of 1.3 billion pounds per year and our Calvert City PVC plant has a capacity of 800 million pounds per year. We currently operate eight fabricated products plants, consisting of five PVC pipe plants, a fence and deck plant and two window and patio door profiles plants. The majority of our plants are strategically located near our Calvert City complex and service customers throughout the middle United States. One of our profiles plants is located in Calgary, Alberta and the other is in Pauling, New York. The combined capacity of our fabricated products plants is 600 million pounds per year. We intend to continue to explore ways to optimize our plant capabilities and to maximize our production of both vinyls and fabricated products as market conditions warrant additional capacity. In 2002, we made capital expenditures for the expansion and modernization of manufacturing facilities for our Vinyls business of $17.0 million. In 2001, these expenditures amounted to $53.3 million, of which a majority was used to upgrade and expand our chlor-alkali facility. 57 In 2003, we acquired a vinyls facility in Geismar, Louisiana. The facility was purchased for $5 million in cash plus a percentage of future earnings not to exceed $4 million. The site includes a PVC plant with a capacity of 600 million pounds per year and a VCM plant with a capacity of 600 million pounds per year with related ethylene dichloride capacity. Although the facility is currently idle, we intend to operate it when market conditions support utilization of the additional capacity and we may use a portion of the facility to produce ethylene dichloride before starting up the entire facility. We believe that our current facilities are adequate to meet the requirements of our present and foreseeable future operations. HEADQUARTERS Our principal executive offices are located in Houston, Texas. Our office space is leased, at market rates, from an affiliate under a lease expiring December 31, 2004. See "Certain Relationships and Related Transactions." TECHNOLOGY AND INTELLECTUAL PROPERTY Our technology strategy is to selectively acquire and license third-party proprietary technology. Our selection process incorporates many factors, including the cost of the technology, our customer's requirements, raw material and energy consumption rates, product quality, capital costs, maintenance requirements and reliability. We believe that the most cost-effective way to acquire technology applicable to our businesses is to purchase or license it from third-party market providers. As a result, we have eliminated the need for research expenditures and believe we are able to select the best available technology at the time our need arises. After acquiring a technology, we devote considerable efforts to further develop and effectively apply the technology with a view to continuously improving our competitive position. We license technology from a number of third-party providers. In 1988, we selected the MW Kellogg technology for our first ethylene plant at our Lake Charles complex. In 1995, we selected the ABB Lummus Crest technology, as a state-of-the-art, low-cost and efficient method of producing ethylene, for the second ethylene plant at Lake Charles. In 1990, we selected Mobil/Badger technology for our styrene monomer plant at Lake Charles and in 1996 selected BP technology for our second Lake Charles polyethylene plant. In 1997, we entered into a corporate-wide technology agreement with Aspen Technology. The Aspen Technology Plantelligence(TM) includes an advanced process control software system which improves process control and economic optimization. In 1998, we licensed Asahi Chemical membrane technology for our chlor-alkali plant. ENVIRONMENTAL AND OTHER REGULATION As is common in our industry, obtaining, producing and distributing many of our products involves the use, storage, transportation and disposal of large quantities of toxic and hazardous materials, and our manufacturing operations require the generation and disposal of large quantities of hazardous wastes. We are subject to extensive, evolving and increasingly stringent federal and local environmental laws and regulations, which address, among other things, the following: - emissions to the air; - discharges to land or to surface and subsurface waters; - other releases into the environment; - remediation of contaminated sites; - generation, handling, storage, transportation, treatment and disposal of waste materials; and - maintenance of safe conditions in the workplace. 58 We are subject to environmental laws and regulations that may require us to remove or mitigate the effects of the disposal or release of chemical substances at various sites. Under some of these laws and regulations, a current or previous owner or operator of property may be held liable for the costs of removal or remediation of hazardous substances on, under, or in its property, without regard to whether the owner or operator knew of, or caused the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time they occurred. As several of our production sites have a history of industrial use, it is impossible to predict precisely what effect these laws and regulations will have on us in the future. As is typical for chemical businesses, soil and groundwater contamination has occurred in the past at some of our sites, and might occur or be discovered at other sites in the future. We have typically conducted extensive soil and groundwater assessments throughout our operations either prior to acquisitions or associated with subsequent permitting requirements. Our investigations have not revealed any contamination caused by our operations that would likely require us to incur material long-term remediation efforts and associated liabilities. Lake Charles. In the fall of 2000, we determined that we were not in compliance with certain Clean Air Act regulations governing emissions of benzene from our two ethylene plants in Lake Charles. We voluntarily reported this discovery to the Louisiana Department of Environmental Quality, or LDEQ, and began negotiations to resolve the matter. We subsequently expanded the scope of our settlement discussions to include other environmental non-compliance matters at all of our plants in Lake Charles. We have reached a tentative settlement with the LDEQ requiring us to pay $815,000 in penalties and to perform specified beneficial environmental projects that we expect to cost approximately $4.4 million. A majority of these expenditures has already been made. The LDEQ has requested public comments on the terms of the proposed settlement agreement, and we believe that it will be finalized later this year. Calvert City. In connection with our acquisition of the manufacturing complex in Calvert City from Goodrich Corporation, or Goodrich, in 1990 and 1997, Goodrich agreed to indemnify us for any liabilities related to pre-existing contamination at the site. The soil and groundwater had been extensively contaminated by Goodrich's operations. In 1993, the Geon Corporation was spun off from Goodrich, and Geon assumed the responsibility to operate the site-wide remediation system and the indemnification obligations for any liabilities arising from pre-existing contamination at the site. Subsequently, Geon's name was changed to PolyOne. Part of the former Goodrich facility, which we did not acquire and on which we do not operate and that we believe is still owned by either Goodrich or PolyOne, is listed on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA. Contamination at our Calvert City facilities is currently being investigated and remediated by PolyOne. Given the scope and extent of the underlying contamination, the remediation will likely take a number of years and, while it is difficult to estimate, the amount of remaining remediation costs has been estimated to be $20 million. For the past three years, PolyOne has suggested that our actions after our acquisition of the complex have contributed to or otherwise exacerbated the contamination at the site. We have denied those allegations and have retained technical experts to evaluate our position. Goodrich has also asserted similar claims. In addition, Goodrich has asserted that we are responsible for a portion of the ongoing costs of treating contaminated groundwater being pumped from beneath the site and has withheld payment for a portion of the costs that we incur to operate Goodrich's pollution control equipment located on our property. We met with Goodrich representatives in July and August of 2003 to discuss Goodrich's assertions and have requested further information from Goodrich. In March and June 2002, the EPA's National Enforcement Investigation Center, or NEIC, conducted an environmental investigation of our manufacturing complex in Calvert City. In May 2003, we received a report prepared by NEIC summarizing the results of that investigation. Among other things, the NEIC concluded that the requirements of several regulatory provisions had not been met. We have begun to analyze the NEIC report and have identified areas where we believe that erroneous factual or legal conclusions, or both, may have been drawn by NEIC. We have met with the EPA and plan additional meetings with the EPA to review its conclusions. Nevertheless, it is likely that penalties will be imposed or that expenditures for installation of environmental controls will be required, or both, by either the EPA or 59 the Kentucky Department of Environmental Protection as a result of this investigation. At this time, we are unable to estimate the amount of penalties or expenditures that may be required. Geismar. In 2003, we acquired portions of an idled chemical complex in Geismar, Louisiana that were previously owned and operated by Borden Chemicals, Inc. and Borden Chemicals and Plastics Operating Limited Partnership, or BCP. Since these facilities have remained idle for some time, we expect to incur some costs to reopen the production processes, including costs related to obtaining or updating the necessary permits and to installing or modifying the necessary pollution control equipment. In 1998, BCP entered into a consent decree with the U.S. Environmental Protection Agency and the LDEQ to investigate and remediate contaminated soil and groundwater at the site. As a part of BCP's bankruptcy reorganization, Borden Chemicals assumed BCP's obligations under the 1998 consent decree in a separate settlement agreement with the EPA and the LDEQ. The EPA has estimated that the cleanup obligations of BCP and Borden Chemicals may total approximately $33 million. We believe that approximately $20 million of these costs relate to property that we did not acquire and on which we do not operate. Early in 2002, CERCLA was amended to create a new defense against liability for purchasers of contaminated property. We believe we meet the criteria set forth in the statute to take advantage of the "bona fide purchaser" defense with respect to pre-existing contamination as long as, among other things, we do not release hazardous substances at the site that create a material effect and we cooperate with Borden Chemicals as it performs its remediation obligations at the site. In August 2003, the LDEQ notified us that it will first look to Borden Chemicals to address cleanup responsibilities for existing contamination on the property we acquired. Although we may not be required by the statute to do so, we plan to conduct an extensive environmental baseline analysis to further demonstrate the condition of the site at the time of our acquisition. It is our policy to comply with all environmental, health and safety requirements and to provide safe and environmentally sound workplaces for our employees. In some cases, compliance can be achieved only by incurring capital expenditures, and we are faced with instances of non-compliance from time to time. In 2002, our combined expenditures, including those with respect to third party and divested sites, for compliance with environmental control regulations and internal company initiatives totaled $8.4 million, of which $1.6 million was for capital projects. Our 2003 budget calls for expenditures, including capital projects, of $11.2 million for environmental compliance. We anticipate that stringent environmental regulations will continue to be imposed on us and the industry in general. Although we cannot predict with certainty future expenditures, management believes that our current spending trends will continue. It is difficult to estimate the future costs of environmental protection and remediation because of many uncertainties, including uncertainties about the status of laws, regulations and information related to individual locations and sites and our ability to rely on third parties to carry out such remediation. Subject to the foregoing, but taking into consideration our experience regarding environmental matters of a similar nature and facts currently known, we believe that capital expenditures and remedial actions to comply with existing laws governing environmental protection will not have a material adverse effect on our business and financial results. EMPLOYEES As of June 30, 2003, we had 1,623 employees, 288 contractors and 13 consultants in the following areas:
CATEGORY NUMBER - -------- ------ Olefins segment............................................. 622 Vinyls segment.............................................. 1,216 Headquarters................................................ 86
Approximately 18% of our employees are represented by labor unions. There have been no strikes or lockouts and we have not experienced any work stoppages throughout our history. We believe that our relationship with the local union officials and bargaining committees is open and positive. 60 LEGAL PROCEEDINGS In connection with the purchase of our Calvert City facilities in 1997, we acquired 10 barges that we use to transport chemicals on the Mississippi, Ohio and Illinois Rivers. In April 1999, the U.S. Coast Guard issued a forfeiture order permanently barring the use of our barges in coastwise trade due to an alleged violation of a federal statute regarding the citizenship of the purchaser. We appealed the forfeiture order with the Coast Guard and, in June 1999, we filed suit in the U.S. Court of Appeals for the D.C. Circuit seeking a stay of the order pending resolution of the Coast Guard appeal. The D.C. Circuit granted the stay and we are able to use the barges pending resolution of our appeal with the Coast Guard. In September 1999, the Customs Service issued $17.5 million in penalties for alleged unauthorized usage of the barges between January 1998 and January 1999. The Customs Service subsequently acknowledged that the imposition of the penalties violated the stay and informed us the penalties had been cancelled in January 2000. The Coast Guard has indicated that it will issue an order resolving our administrative appeal on or about October 2003. We are exploring the option of seeking legislative relief through a private bill from the U.S. Congress, and the Coast Guard has stated that it will not oppose such efforts. We do not believe that the ultimate outcome of this matter will have a material adverse effect on our business, although there can be no assurance in this regard. In addition to the matters described above and under "-- Environmental and Other Regulation," we are involved in various routine legal proceedings incidental to the conduct of our business. We do not believe that any of these legal proceedings will have material adverse effect on our financial condition, results of operations or cash flows. 61 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth information concerning our directors, executive officers and other key managers, including their ages as of June 30, 2003:
NAME AGE POSITION(S) - ---- --- ----------- T.T. Chao................................. 81 Chairman of the Board James Chao................................ 55 Vice Chairman of the Board Albert Chao............................... 53 President and Director Dorothy C. Jenkins........................ 57 Director Ruth I. Dreessen.......................... 47 Senior Vice President and Chief Financial Officer David R. Hansen........................... 53 Senior Vice President, Administration Wayne D. Morse............................ 60 Senior Vice President, Manufacturing and Vinyls Jerry D. Farmer........................... 55 Vice President, Manufacturing -- Lake Charles Fred M. Jones............................. 54 Vice President, Marketing and Materials Management -- Vinyls Tai-li Keng............................... 55 Vice President and Treasurer John A. Labuda............................ 53 Vice President and General Auditor David C. Lu............................... 59 Vice President, International George J. Mangieri........................ 52 Vice President and Controller Michael C. Tann........................... 55 Vice President, North American Profiles Jeffrey L. Taylor......................... 49 Vice President, Polyethylene Louis B. Trenchard III.................... 57 Vice President, Legal Warren W. Wilder.......................... 46 Vice President, Olefins and Styrene John Minelli.............................. 52 General Manager, North American Pipe
T.T. Chao. Mr. Chao has been our Chairman of the Board since 1985 and has over 50 years of international experience in the chemical industry. He is the founder of China General Plastics Group (Taiwan) and was Chairman of Titan Group (Malaysia) until June 2003, when he became Chairman Emeritus and Founder. Mr. Chao is the father of James Chao, our Vice Chairman of the Board, Albert Chao, our President, and Dorothy C. Jenkins, a director. James Chao. Mr. Chao has been our Vice Chairman of the Board since May 1996 and became a director in June 2003. Mr. Chao has over 30 years of international experience in the chemical industry. In June 2003, he was named Chairman of Titan Group and previously served as the Managing Director. He has served as a Special Assistant to the Chairman of China General Plastics Group and worked in various financial, managerial and technical positions at Mattel Incorporated, Developmental Bank of Singapore, Singapore Gulf Plastics Pte. Ltd. and Gulf Oil Corporation. Mr. Chao, along with his brother Albert Chao, assisted T.T. Chao in founding Westlake Group and served as Westlake's first president from 1985 to 1996. Mr. Chao received his Bachelor of Science degree from the Massachusetts Institute of Technology and an MBA from Columbia University. Albert Chao. Mr. Chao has been our President since May 1996 and a director since June 2003. Mr. Chao has over 30 years of international experience in the chemical industry. In 1985, Mr. Chao assisted T.T. Chao and James Chao in founding Westlake, where he served as Executive Vice President until he succeeded brother James as President. He has held positions in the Controller's Group of Mobil Oil Corporation, in the Technical Department of Hercules Incorporated and in the Plastics Group of Gulf Oil Corporation. He subsequently served as Assistant to the Chairman of China General Plastics Group 62 and Deputy Managing Director of a plastics fabrication business in Singapore. Mr. Chao received a Bachelor's degree from Brandeis University and an MBA from Columbia University. Dorothy C. Jenkins. Ms. Jenkins has been a director since June 2003. Ms. Jenkins is a director of A-Group Holdings, an affiliate of ours. She is also a member of the boards of various civic and charitable organizations including Florida Southern College, Polk Museum of Art and Ringling Museum Foundation. Ms. Jenkins is the sister of James Chao and Albert Chao, and the daughter of T.T. Chao. She is a graduate of Wellesley College and holds a B.S. in Mathematics with additional graduate studies in mathematics at the University of South Florida. Ruth I. Dreessen. Ms. Dreessen has been our Senior Vice President and Chief Financial Officer since June 2003. She was employed by JPMorgan Chase & Company for 21 years where she last served as Managing Director of the Global Chemicals Group. She was formerly a member of the board of Georgia Gulf Corporation and is currently a member of the board of Better Minerals & Aggregates Corporation. She received her undergraduate degree from New College of Florida and a Masters in International Affairs from Columbia University. David R. Hansen. Mr. Hansen has been our Senior Vice President, Administration, since September 1999. Prior to joining Westlake in 1990, Mr. Hansen served as Director of Human Resources & Administration for Agrico Chemical Company and held various human resources and administrative management positions within the Williams Companies. He has over 28 years of administrative management experience in the oil, gas, energy, chemicals, pipeline, plastics and computer industries. He received his Bachelor of Science degree in Social Science from the University of Utah and has completed extensive graduate work toward an M.S. in Human Resources Management. Wayne D. Morse. Mr. Morse has been a Senior Vice President since 1994 and was most recently named Senior Vice President, Vinyls and Manufacturing in January 2003. Mr. Morse joined Westlake in 1990 after 23 years of service with Goodrich Corporation. He held the position of Vice President and General Manager of BFG Intermediates Division, which had ethylene, chlor-alkali and EDC/VCM operations. Since joining Westlake, Mr. Morse has had broad executive responsibility for all chemical operations and is the senior manufacturing executive of our company. Mr. Morse earned a B.S. degree in Chemical Engineering from the University of Louisville. Jerry D. Farmer. Mr. Farmer has been our Vice President, Manufacturing -- Lake Charles, since May 2002. He joined Westlake in 1990 after 21 years with Goodrich Corporation, where he held positions in engineering, operations and manufacturing management. He has served as the senior manufacturing executive of our Kentucky operations beginning March 1990 and currently holds a similar position in Louisiana. Mr. Farmer received a Bachelor of Science degree in Chemical Engineering from the University of Missouri at Rolla. Fred M. Jones. Mr. Jones has been our Vice President, Marketing and Materials Management -- Vinyls, since February 1999. Prior to joining Westlake in 1990, he was Purchasing Manager with BFG Intermediates Division of Goodrich Corporation for eight years, where he had responsibility for feedstock, energy and raw material management. He worked for Diamond Shamrock Corporation for seven years prior to his employment with Goodrich Corporation. Mr. Jones received both his Bachelor's degree in Business and his MBA from Sam Houston State University. Tai-li Keng. Ms. Keng has been our Vice President and Treasurer since December 2002. From May 1996 to December 2002, she served as Manager, Banking and Investments. Ms. Keng joined Westlake in 1992 after nine years in commercial banking, where she last served as a Vice President of NationsBank. She previously served as Manager, Finance and Manager, Banking & Investments of NationsBank and its predecessors. Ms. Keng is a graduate of the National Taiwan University and the State University of New York. She holds a Masters of International Management from the American Graduate School of International Management. John A. Labuda. Mr. Labuda has been our Vice President and General Auditor since July 1998. He served as our Vice President and Controller from 1993 to 1998. Prior to joining Westlake in 1991, 63 Mr. Labuda served as Controller of Wellstream Corporation. He previously was employed as Controller of a subsidiary of Schlumberger Limited, where he also served in several other staff positions. He received his Bachelor of Arts degree and MBA from State University of New York at Buffalo. David C. Lu. Mr. Lu has been our Vice President, International, since July 1993. Mr. Lu joined Westlake in 1991. Prior to that time, he served as Assistant to the Chairman of China General Plastics Corporation and held other positions during his 23-year tenure with the firm. Mr. Lu graduated in 1967 with a law degree from Fu Jen Catholic University in Taiwan. George J. Mangieri. Mr. Mangieri has been our Vice President and Controller since joining us in April 2000. Prior to joining Westlake, Mr. Mangieri served as Vice President and Controller of Zurn Industries, Inc. from 1998 to 2000. He previously was employed as Vice President and Controller for Imo Industries, Inc. in New Jersey, and spent over 10 years in public accounting with Ernst & Young LLP, where he served as Senior Manager. He received his Bachelor of Science degree from Monmouth College and is a Certified Public Accountant. Michael C. Tann. Mr. Tann has been our Vice President, North American Profiles, since December 2002. Mr. Tann began his employment with Westlake in 1992 and has previously served as Vice President, North American Pipe, and Vice President, Vinyls. Previously, Mr. Tann was Vice President of the Fabricating Division and Executive Officer of the PVC Film/Sheet Division at China General Plastics Corporation in Taiwan. He has over 25 years of experience in PVC production and operations. Mr. Tann received his Masters of Science degree in Industrial Engineering from the Illinois Institute of Technology. Jeffrey L. Taylor. Mr. Taylor has been our Vice President, Polyethylene, since January 2003. Mr. Taylor joined Westlake in March 2002 as Manager, PE Marketing. Mr. Taylor joined Westlake after a 25-year career with Chevron Phillips Chemical Company. In his last assignment he served as the Vice President, Polyethylene, Americas. During his career, he has held a variety of sales, marketing, operations and general management assignments. He is a graduate of the University of Delaware with a B.S. in Business Administration and a B.A. in Mathematics. Louis B. Trenchard III. Mr. Trenchard has been our Vice President, Legal, since September 1998. Mr. Trenchard joined our Legal Department as Assistant General Counsel in 1992. His 26 years of legal experience include private practice in Texas and Louisiana. He also served as Secretary and Senior Corporation Counsel of Cooper Industries, and General Counsel of a subsidiary of Schlumberger Limited. He received a Bachelor of Science degree in Business Administration from Louisiana State University and his JD from Tulane University. He is a graduate of the Executive Program of the Stanford Business School, and Columbia Law School's Parker School of Foreign and Comparative Law. Warren W. Wilder. Mr. Wilder has been our Vice President, Olefins and Styrene, since January 2003. Mr. Wilder joined Westlake in January 2000 as Vice President, Planning and Business Development, and in February 2001, he was appointed Vice President, Polyethylene. Prior to joining Westlake, he was an executive with Koch Industries, Inc. for over 10 years where he held positions in planning and business development, finance, operations and general management. Mr. Wilder holds a B.S. in Chemical Engineering from the University of Washington and an MBA from the University of Chicago. John Minelli. Mr. Minelli joined our company in December 2002 as our General Manager, North American Pipe, after a 26-year career with Bristolpipe. He was President of Bristolpipe for the last nine years. Mr. Minelli has been active in the plastic pipe industry over his career and has served on the boards of it various industry associations. He is a graduate of Indiana University with a B.A. in History. 64 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table provides information regarding the compensation awarded to or earned during 2002 by our principal executive officer, the next four most highly compensated individuals who were serving as executive officers at the end of 2002 and one former executive officer for whom disclosure would have been required but for the fact that he was not serving as an executive officer at the end of 2002 (collectively, the "named executive officers").
LONG-TERM COMPENSATION ------------ ANNUAL COMPENSATION LONG-TERM -------------------- INCENTIVE ALL OTHER NAME AND PRINCIPAL POSITION SALARY($) BONUS($) PAYOUTS COMPENSATION(1) - --------------------------- --------- -------- ------------ --------------- Albert Chao President.................................. $242,112 $ 1,320 $36,667 $ 8,564 Henry Kahn(2) Former Senior Vice President and Chief Financial Officer....................... 236,900 1,347 -- 11,744 Wayne D. Morse Senior Vice President, Vinyls and Manufacturing........................... 235,584 1,682 52,800 5,564 David R. Hansen Senior Vice President, Administration...... 190,800 1,040 32,267 14,061 Warren W. Wilder Vice President, Olefins and Styrene........ 171,396 30,319(3) -- 6,626 George J. Mangieri Vice President and Controller.............. 169,944 926 -- 6,617
- --------------------- (1) Consists of company contributions to a defined contribution plan, matching contributions deposited into our 401(k) plan and premiums paid on behalf of the executive for term life insurance as follows:
DEFINED TERM LIFE NAME CONTRIBUTION PLAN 401(K) CONTRIBUTION INSURANCE PREMIUMS - ---- ----------------- ------------------- ------------------ Albert Chao........................ $8,500 -- $64 Henry Kahn......................... 6,180 $5,500 64 Wayne D. Morse..................... -- 5,500 64 David R. Hansen.................... 8,500 5,500 61 Warren W. Wilder................... 4,285 2,286 55 George J. Mangieri................. 4,249 2,314 54
(2) Mr. Kahn became a consultant to Westlake effective December 16, 2002 and is being paid one year's salary and associated benefits. (3) Includes a $30,000 signing bonus. 65 LONG-TERM INCENTIVE PLAN - AWARDS IN 2002 The following table provides information regarding units awarded to the named executive officers on January 1, 2003 for services provided in 2002 under our Performance Unit Plan.
PERFORMANCE OR OTHER PERIOD UNTIL NAME NUMBER OF UNITS MATURATION OR PAYOUT - ---- --------------- -------------------- Albert Chao......................................... 60,072 2/7/10 years Henry Kahn.......................................... -- -- Wayne D. Morse...................................... 50,102 2/7/10 years David R. Hansen..................................... 40,576 2/7/10 years Warren W. Wilder.................................... 48,599 2/7/10 years George J. Mangieri.................................. 24,095 2/7/10 years
The Performance Unit Plan is a discretionary, non-qualified, non-equity based long-term incentive plan that covers essentially all of our executives and other key employees, including the named executive officers. The employees who participate in the plan and all awards under the plan are determined on a discretionary basis by the Chairman's Office. Units are granted on the first day of each year and 50% of the units vest two years after the grant date and the remaining 50% vest seven years after the grant date. All units will convert to cash as described below if not exercised before the end of ten years from the date of grant. The cash value of each unit is based on the percentage increase or decrease in our consolidated book value over the life of the grant as measured on December 31 of each year. Book value at the date of each grant is established by the Chairman's Office. Increases in the book value exclude any capital contributions or increases in capital due to mergers, and book value is adjusted to reflect the payment of any dividends. There are no minimum or maximum payouts with respect to the units issued under the plan. The theoretical cash value of each unit granted on January 1, 2002 would be zero as of December 31, 2002 because our book value decreased during 2002. PENSION PLAN TABLE The following table provides estimated annual pension benefits payable to some of our employees, including Wayne D. Morse, upon retirement at age 65 based on credited service as of January 1, 2003 under the provisions of the Westlake Group Salaried Employees' Defined Benefit Plan. None of the other named executive officers participate in this plan.
AVERAGE FINAL EARNINGS (BASE SALARY PLUS ANNUAL BONUS) APPROXIMATE ANNUAL BENEFIT FOR YEARS OF SERVICE INDICATED(1) HIGHEST FOUR CONSECUTIVE YEARS -------------------------------------------------------------- OUT OF THE LAST 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS - ------------------------------- ---------- ---------- ---------- ---------- ---------- $125,000........... $27,032 $36,043 $45,054 $54,064 $ 63,075 150,000........... 33,032 44,043 55,054 66,064 77,075 175,000........... 39,032 52,043 65,054 78,064 91,075 200,000........... 45,032 60,043 75,054 90,064 105,075 225,000........... 45,032 60,043 75,054 90,064 105,075 250,000........... 45,032 60,043 75,054 90,064 105,075 300,000........... 45,032 60,043 75,054 90,064 105,075 400,000........... 45,032 60,043 75,054 90,064 105,075 450,000........... 45,032 60,043 75,054 90,064 105,075 500,000........... 45,032 60,043 75,054 90,064 105,075
- --------------------- (1) Mr. Morse had 35 estimated credited years of service as of January 1, 2003. The amounts shown in the above table are necessarily based upon certain assumptions, including retirement of the employee at age 65 based on credited services as of January 1, 2003 and payment of the 66 benefit under the basic form of allowance provided under the Westlake Group Salaried Employees' Defined Benefit Plan (payment for the life of the employee five years certain). The amounts will change if the payment is made under any other form of allowance permitted by the retirement plan or if an employee's actual retirement occurs after January 1, 2003 since the "annual covered compensation level" of such employee (one of the factors used in computing the annual retirement benefits) may change during the employee's subsequent years of membership service. The covered compensation for which retirement benefits are computed under the Westlake Group Salaried Employees' Defined Benefit Plan is the average of the participant's highest four consecutive years out of the last ten years of base salary plus annual bonus. Base salary and annual bonus amounts for 2002 are set forth under the "Salary" and "Bonus" headings in the Summary Compensation Table for Mr. Morse. The benefits shown are not subject to deduction for Social Security benefits or other offset amounts, including any offset for payments made from the Goodrich Corporation plan for certain former employees of Goodrich Corporation, including Mr. Morse. SEVERANCE AGREEMENTS We have entered into a severance agreement with Mr. Wilder under which we have agreed to pay him for twelve months at his then current salary and a bonus in the event of his involuntary termination, except in the case of cause, death, disability or retirement. COMPENSATION OF DIRECTORS Our directors receive no compensation for their services as directors. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 2002, Albert Chao and James Chao participated in deliberations of our board of directors concerning executive officer compensation. 67 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the beneficial ownership of our common stock as of the date of this prospectus by each beneficial owner of 5% or more of the outstanding shares of common stock, by each of our directors, by each named executive officer and by all directors and executive officers as a group. To our knowledge, except as indicated in the footnotes to this table or as provided by applicable community property laws, the persons named in the table have sole investment and voting power with respect to the shares of common stock indicated.
COMMON STOCK ---------------------- NUMBER OF PERCENT OF NAME AND ADDRESS OF BENEFICIAL OWNER(1) SHARES CLASS - --------------------------------------- --------- ---------- Westlake Polymer & Petrochemical, Inc....................... 10,000 100.0% Gulf Polymer & Petrochemical, Inc.(2)....................... 10,000 100.0 T.T. Chao................................................... -- -- James Chao(3)............................................... -- -- Albert Chao(3).............................................. -- -- Dorothy C. Jenkins(3)....................................... -- -- Henry Kahn.................................................. -- -- Wayne D. Morse.............................................. -- -- David R. Hansen............................................. -- -- Warren W. Wilder............................................ -- -- George J. Mangieri.......................................... -- -- All directors and executive officers as a group(3).......... -- --
- --------------------- (1) The address of each beneficial owner is 2801 Post Oak Boulevard, Houston, Texas 77056. (2) Gulf Polymer & Petrochemical, Inc. owns all of the shares of common stock of Westlake Polymer & Petrochemical, Inc. and, therefore, may be deemed to have beneficial ownership of the shares of our common stock owned by Westlake Polymer & Petrochemical, Inc. (3) James Chao, Albert Chao and Dorothy C. Jenkins are each a trustee with voting and investment power for three trusts that each own one third of the voting common stock of Gulf Polymer & Petrochemical, Inc. Accordingly, James Chao, Albert Chao and Dorothy C. Jenkins together, or each of them individually, may be deemed to have investment or voting power with respect to the shares of our common stock beneficially owned by Gulf Polymer & Petrochemical, Inc. 68 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The following summary descriptions of the material terms of agreements to which we are a party are qualified in their entirety by reference to the agreement to which each summary description relates. We currently lease, at market rates, our principal executive offices in Houston, Texas, under a lease with Westlake Post Oak Center Ltd., one of our affiliates. Total annual payments under the lease in 2002, 2001 and 2000 were approximately $1.5 million, $1.7 million and $1.6 million, respectively. We expect to make payments of approximately $1.6 million under the lease in 2003. See "Business -- Facilities and Capabilities." We are party to a federal tax allocation agreement with our ultimate parent, Gulf Polymer & Petrochemical, Inc., or GPPI. Under this agreement, GPPI is responsible for the payment of all federal income taxes for the consolidated group and is entitled to receive any refunds. We must make quarterly deposits with GPPI equal to the amount of federal tax we would owe if we filed a separate federal tax return. After each return is filed, we must make an additional payment to reflect the amount of tax actually paid by the group. GPPI will generally pay us if we have a tax attribute that reduces the consolidated tax liability of the group. In 2000, we made estimated tax payments totaling $11.8 million to the Internal Revenue Service on behalf of GPPI for the consolidated group. In 2001, GPPI sought refunds for the consolidated group totaling $11.3 million of the amount paid in 2000. In 2001, we received $11.3 million from the IRS on behalf of GPPI. In 2002, GPPI sought a $0.5 million refund for the consolidated group. We received $0.5 million from the IRS in the first six months of 2003 on behalf of GPPI. In June 1998, one of our subsidiaries, Westlake Management Services, Inc., entered into a management advice and technical assistance agreement with Titan Petrochemicals (M) SDN. BDH., Titan Polyethylene (Malaysia) SDN. BHD. and Titan PP Polymers (M) SDN. BHD., three Malaysian affiliates. Under the agreement, Westlake Management Services agrees to provide various management, administrative and expatriate services at cost. The agreement expires on December 31, 2008. Westlake Management Services received $2.2 million, $2.6 million and $3.1 million for these services in 2002, 2001 and 2000, respectively, and is expected to receive $1.0 million in 2003. In 1996, in connection with the construction of the polyethylene plant, we signed a technology license agreement with BP Chemicals Limited. During 1997, we assigned the license to Westlake Technology Corporation, a subsidiary of GPPI. We sublicense the technology and pay a royalty based on production. We paid royalties of $3.1 million, $3.2 million and $2.9 million in 2002, 2001 and 2000, respectively, and expect to pay $3.1 million in 2003. In 1998, we entered into a software sublicense with Westlake Technology Corporation. Under this agreement, we made software license payments to Westlake Technology Corporation of $1.3 million and $1.3 million in 2001 and 2000, respectively. We also made payments for software maintenance support of $0.5 million and $0.7 million in 2001 and 2000, respectively. We made no payments under the agreement in 2002. In March 2001, the board of directors of Westlake Olefins Corporation, an 80%-owned subsidiary at that time, declared and paid cash dividends as a return of capital amounting to $87 million to Westlake Polymer & Petrochemical, Inc., our parent company. Immediately following the payment, we received a capital contribution from Westlake Polymer & Petrochemical, Inc. of $87 million. In August 2003, we received a capital contribution from Westlake Polymer & Petrochemical, Inc. consisting of the 20% of common stock of Westlake Olefins Corporation that we did not own. As a result of this contribution, we now own 100% of Westlake Olefins Corporation. In 2000, Westlake International Investments Corporation, one of our subsidiaries, issued a $2.0 million promissory note to Gulf United Investments Corporation, one of our affiliates. In 2002, accrued interest was added to the principal and a new $2.3 million promissory note was issued with a maturity date of August 2004. Interest on this note accrues at prime rate and is due at maturity. As of December 31, 2002, the principal balance of the note was $253,459 due to principal payments during 2002. 69 In 2002, a predecessor of Geismar Vinyls Company LP issued a $117,000 promissory note to Gulf United Investments Corporation. Geismar Vinyls Company LP became one of our subsidiaries in April 2003 when Westlake Polymer & Petrochemical, Inc. contributed the stock of Geismar Holdings, Inc. and GVGP, Inc., the partners of Geismar Vinyls Company LP, to us. The loan accrued interest at prime rate and was repaid in full in July 2003. 70 DESCRIPTION OF CERTAIN INDEBTEDNESS NEW CREDIT FACILITY On July 31, 2003, we entered into a $200 million senior secured revolving credit facility that matures in July 2007. Amounts drawn under the new facility are limited to (1) 85% of the net amount of eligible accounts receivable, plus (2) the lesser of (a) 70% of the value of lower of cost or market of eligible inventory, or (b) 85% of the appraised net orderly liquidation value of the eligible inventory, minus (3) such reserves as Bank of America, the agent, may establish. Advances on inventory are limited to $120 million. The facility includes a $50 million sub-limit for letters of credit, and any outstanding letters of credit will be deducted from availability under the facility. Amounts drawn under the facility initially bear interest at either LIBOR plus 2.25% or Bank of America's prime rate plus 0.25%. The interest rate margins are subject to grid pricing adjustments based on a fixed charge coverage ratio after the first year. We pay a fee on the unused portion of the facility of 0.5% per year. We may terminate the new facility at any time, with payment of a termination fee in the first two years. The new facility is secured by first priority liens on existing and future acquired accounts receivable and contract rights, inventory, chattel paper, instruments, documents, deposit accounts and related general intangibles of our domestic subsidiaries. Each of our domestic restricted subsidiaries guarantees the new facility. The new facility contains a number of negative covenants restricting, among other things, prepayment or redemption of the notes offered by this prospectus, distributions, dividends and repurchases of capital stock and other equity interests, acquisitions and investments, indebtedness, liens and affiliate transactions. We are required to maintain a fixed charge coverage ratio if the excess availability under the new senior secured credit facility falls below $50 million for any three consecutive business days, or is less than $35 million at any time. The facility contains customary events of default. NEW TERM LOAN On July 31, 2003, we entered into a $120 million senior secured term loan that matures in July 2010. The term loan provides for increases in the amount of the loan up to $170 million, but these increases are not pre-committed by the lenders. Principal payments of 0.25% of the term loan are due quarterly during the first six years, with the balance due in three quarterly installments of 23.5% of the term loan in seventh year of the loan and the balance due on the maturity date. Amounts outstanding under the loan bear interest at either LIBOR plus 3.75% or Bank of America's prime rate plus 2.75%. We may prepay the new term loan at any time after the first year without penalty. During the first year, we may prepay up to 35% of the new term loan with the proceeds of equity offerings at 101%. We must prepay the new term loan with the proceeds from assets sales or casualty events if the assets sold or subject to a casualty event are term loan collateral. In addition, we must prepay the term loan with the proceeds from assets or casualty events if the proceeds are not reinvested within one year. We must also prepay the new term loan with 50% of excess cash flow under an annual cash sweep arrangement if excess cash flow for the fiscal year is at least $2 million. The new term loan is secured by first priority liens on our Lake Charles and our Calvert City facilities and some related general intangibles. Our obligations under this loan are guaranteed by each of our domestic restricted subsidiaries. The new term loan contains a number of negative covenants restricting, among other things, prepayment or redemption of the notes offered by this prospectus, distributions, dividends and repurchases of capital stock and other equity interests, acquisitions and investments, indebtedness, liens and affiliate transactions. The new term loan contains customary events of default. LOAN RELATED TO TAX-EXEMPT BONDS AND LETTER OF CREDIT In December 1997, one of our subsidiaries entered into a loan agreement with Calcasieu Parish Public Trust Authority. The loan was made with proceeds from the sale of tax-exempt revenue bonds by the trust authority. Our subsidiary is obligated to make payments to the bond trustee equal to the principal and interest payments due to the bondholders, for any premium resulting from redemption of the bonds and for other fees and expenses. Our subsidiary's payment obligations under the loan agreement are backed by a 71 letter of credit in favor of the trustee for the benefit of the bondholders. As of June 30, 2003, the total principal outstanding under the loan was $10.9 million. We have agreed to reimburse the letter of credit issuer for any disbursements it makes under the letter of credit. On July 31, 2003, we obtained a $12.4 million letter of credit under our new credit facility to assure our performance under the new letter of credit reimbursement and credit support agreement that we entered into on the same date with the issuer of the original letter of credit. 72 THE EXCHANGE OFFER Participation in the exchange offer is voluntary, and we urge you to carefully consider whether to accept. Please consult your financial and tax advisors in making your own decision on what action to take. We are offering to issue new registered 8 3/4% Senior Notes due 2011 in exchange for a like principal amount of our outstanding 8 3/4% Senior Notes due 2011. We may extend, delay or terminate the exchange offer. Holders of old notes who wish to exchange their notes will need to complete the exchange offer documentation related to the exchange. PURPOSE OF THE EXCHANGE OFFER We sold the old notes in transactions that were exempt from or not subject to the registration requirements under the Securities Act. Accordingly, the old notes are subject to transfer restrictions. In general, you may not offer or sell the old notes unless either they are registered under the Securities Act or the offer or sale is exempt from or not subject to registration under the Securities Act and applicable state securities laws. In connection with the sale of the old notes, we entered into a registration rights agreement with the initial purchasers of the old notes. In that agreement, we agreed to use all commercially reasonable efforts to file a registration statement relating to an offer to exchange the old notes for new notes and to have that registration statement declared effective by the SEC within 180 days after the issue date of the old notes. We also agreed to use all commercially reasonable efforts to complete the exchange offer within 30 business days after the registration statement becomes effective. We are offering the new notes under this prospectus in an exchange offer for the old notes to satisfy our obligations under the registration rights agreement. Each broker-dealer that receives new notes for its own account in exchange for old notes acquired as a result of market-making activities or other trading activities may be deemed to be an "underwriter" within the meaning of the Securities Act and must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. Please read "Plan of Distribution." RESALE OF NEW NOTES Based on interpretations of the SEC staff in "no action letters" issued to third parties, we believe that each new note issued in the exchange offer may be offered for resale, resold and otherwise transferred by you without compliance with the registration and prospectus delivery provisions of the Securities Act if: - you are not our "affiliate" within the meaning of Rule 405 under the Securities Act; - you acquire such new notes in the ordinary course of your business; and - you are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of new notes. The SEC has not, however, considered the legality of our exchange offer in the context of a "no action letter," and there can be no assurance that the staff of the SEC would make a similar determination with respect to our exchange offer as it has in other interpretations to other parties. If you tender your old notes in the exchange offer with the intention of participating in any manner in a distribution of the new notes, you: - cannot rely on such interpretations by the SEC staff; and - must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the new notes. Unless an exemption from registration is otherwise available, the resale by any holder intending to distribute new notes should be covered by an effective registration statement under the Securities Act containing the selling holder's information required by Item 507 or Item 508, as applicable, of 73 Regulation S-K under the Securities Act. This prospectus may be used for an offer to resell, resale or other retransfer of new notes only as specifically described in this prospectus. Failure to comply with the registration and prospectus delivery requirements by a holder subject to these requirements could result in that holder incurring liability for which it is not indemnified by us. With respect to broker-dealers, only those that acquired the old notes for their own account as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives new notes for its own account in exchange for old notes acquired as a result of market-making activities or other trading activities may be deemed to be an "underwriter" within the meaning of the Securities Act and must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. Please read "Plan of Distribution" for more details regarding the transfer of new notes. TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions described in this prospectus and in the letter of transmittal, we will accept for exchange any old notes properly tendered and not withdrawn prior to the expiration date of the exchange offer. We will issue $1,000 principal amount of new notes in exchange for each $1,000 principal amount of old notes surrendered under the exchange offer. Old notes may be tendered only in integral multiples of $1,000. The exchange offer is not conditioned upon any minimum aggregate principal amount of old notes being tendered for exchange. As of the date of this prospectus, $380 million principal amount of old notes is outstanding. This prospectus and the letter of transmittal are being sent to all registered holders of old notes. There will be no fixed record date for determining registered holders of old notes entitled to participate in the exchange offer. We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Securities Exchange Act of 1934 and the rules and regulations of the SEC. Old notes that are not tendered for exchange in the exchange offer will: - remain outstanding; - continue to accrue interest; and - be entitled to the rights and benefits that holders have under the indenture relating to the notes and, if applicable, the registration rights agreement. However, these old notes will not be freely tradable. See "-- Consequences of Failure to Exchange" below. By signing or agreeing to be bound by the letter of transmittal, you acknowledge that, upon request, you will execute and deliver any additional documents deemed by the exchange agent or us to be necessary or desirable to complete the exchange, assignment and transfer of the old notes tendered by you, including the transfer of such old notes on the account books maintained by DTC. We will be deemed to have accepted for exchange properly tendered old notes when we have given oral or written notice of the acceptance to the exchange agent and complied with the applicable provisions of the registration rights agreement. The exchange agent will act as agent for the tendering holders for the purposes of receiving the new notes from us. If you tender old notes in the exchange offer, you will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of old notes. We will pay all charges and expenses, other than certain applicable taxes described below, in connection with the exchange offer. It is important that you read the section "-- Fees and Expenses" for more details about fees and expenses incurred in the exchange offer. We will return any old notes that we do not accept for exchange for any reason without expense to the tendering holder as promptly as practicable after the expiration or termination of the applicable exchange offer. 74 EXPIRATION DATE The exchange offer will expire at 5:00 p.m., New York City time, on[ ], 200[ ], unless, in our sole discretion, we extend it. EXTENSIONS; DELAY IN ACCEPTANCE; TERMINATION OR AMENDMENT We expressly reserve the right, at any time or at various times, to extend the period of time during which the exchange offer is open. We may delay acceptance for exchange of any old notes by giving oral or written notice of the extension to their holders. During any such extensions, all old notes you have previously tendered and not withdrawn will remain subject to the exchange offer, and we may accept them for exchange. We do not currently intend to extend the expiration date. To extend an exchange offer, we will notify the exchange agent orally or in writing of any extension. We also will make a public announcement of the extension no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. If any of the conditions described below under "-- Conditions to the Exchange Offer" have not been satisfied, we reserve the right, in our sole discretion to: - delay accepting for exchange any old notes; - extend the exchange offer; or - terminate the exchange offer. We will give oral or written notice of such delay, extension or termination to the exchange agent. Subject to the terms of the registration rights agreement, we also reserve the right to amend the terms of the exchange offer in any manner. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the registered holders of the old notes. If we amend the exchange offer in a manner that we determine to constitute a material change, we will promptly disclose that amendment by means of a prospectus supplement. We will distribute the supplement to the registered holders of the old notes. Depending upon the significance of the amendment and the manner of disclosure to the registered holders, we will extend the exchange offer if the exchange offer would otherwise expire during such period. Without limiting the manner in which we may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the exchange offer, we have no obligation to publish, advertise or otherwise communicate any such public announcement, other than by making a timely release to an appropriate news agency. CONDITIONS TO THE EXCHANGE OFFER Despite any other term of the exchange offer, if in our reasonable judgment the exchange offer, or the making of any exchange by a holder of old notes, would violate applicable law or any applicable interpretation of the staff of the SEC (due to a change in its current interpretations) or would be impaired by any action or proceeding that has been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer: - we will not be required to accept for exchange, or exchange any new notes for, any old notes; and - we may terminate the exchange offer before accepting any old notes for exchange. In addition, we will not be obligated to accept for exchange the old notes of any holder that has not made to us: - the representations described below under "-- Procedures for Tendering" and in the letter of transmittal; and 75 - such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to make available to us an appropriate form for registering the new notes under the Securities Act. We expressly reserve the right to amend or terminate the exchange offer, and to reject for exchange any old notes not previously accepted for exchange in the exchange offer, upon the occurrence of any of the conditions to that exchange offer specified above. These conditions are for our sole benefit, and we may assert them or waive them in whole or in part at any time or at various times in our sole discretion. Our failure at any time to exercise any of these rights will not mean that we have waived our rights. Each right will be deemed an ongoing right that we may assert at any time or at various times. In addition, we will not accept for exchange any old notes tendered, and will not issue new notes in exchange for any such old notes, if at that time any stop order has been threatened or is in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture relating to the notes under the Trust Indenture Act of 1939. PROCEDURES FOR TENDERING HOW TO TENDER GENERALLY Only a registered holder of old notes may tender its old notes in the exchange offer. If you are a beneficial owner of old notes and wish to have the registered owner tender on your behalf, please see "-- How to Tender if You Are a Beneficial Owner" below. To tender in the exchange offer, a holder must either comply with the procedures for manual tender or comply with the automated tender offer program procedures of DTC described below under "-- Tendering Through DTC's Automated Tender Offer Program." To complete a manual tender, a holder must: - complete, sign and date the letter of transmittal or a facsimile of the letter of transmittal; - have the signature on the letter of transmittal guaranteed if the letter of transmittal so requires; and - mail or deliver the letter of transmittal or facsimile and deliver the old notes to the exchange agent prior to the expiration date. If you wish to tender your old notes and cannot comply with the requirement to deliver the letter of transmittal and your old notes (including by book-entry transfer) or use the automated tender offer program of DTC described below before the expiration date, you must tender your outstanding notes according to the guaranteed delivery procedures described below. To be tendered effectively, the exchange agent must receive any physical delivery of the letter of transmittal and other required documents at its address provided above under "Prospectus Summary -- The Exchange Agent" prior to the expiration date. To complete a tender through DTC's automated tender offer program, the exchange agent must receive, prior to the expiration date, a timely confirmation of book-entry transfer of such old notes into the exchange agent's account at DTC according to the procedure for book-entry transfer described below and a properly transmitted agent's message. The tender by a holder that is not withdrawn prior to the expiration date and our acceptance of that tender will constitute an agreement between the holder and us in accordance with the terms and subject to the conditions described in this prospectus and in the letter of transmittal. THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK. RATHER THAN MAIL THESE ITEMS, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR COURIER SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. YOU SHOULD NOT SEND THE LETTER OF TRANSMITTAL OR OLD NOTES TO 76 US. YOU MAY REQUEST YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE ABOVE TRANSACTIONS FOR YOU. BOOK-ENTRY TRANSFER The exchange agent will make a request to establish an account with respect to the old notes at DTC for purposes of the exchange offer promptly after the date of this prospectus. Any financial institution participating in DTC's system may make book-entry delivery of old notes by causing DTC to transfer such old notes into the exchange agent's account at DTC in accordance with DTC's procedures for transfer. If you are unable to deliver confirmation of the book-entry tender of your old notes into the exchange agent's account at DTC or all other documents required by the letter of transmittal to the exchange agent on or prior to the expiration date, you must tender your old notes according to the guaranteed delivery procedures described below. TENDERING THROUGH DTC'S AUTOMATED TENDER OFFER PROGRAM The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC's system may use DTC's automated tender offer program to tender its old notes. Accordingly, participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, transmit their acceptance of the exchange offer electronically. They may do so by causing DTC to transfer the old notes to the exchange agent in accordance with its procedures for transfer. DTC will then send an agent's message to the exchange agent. An "agent's message" is a message transmitted by DTC to and received by the exchange agent and forming part of the book-entry confirmation, stating that: - DTC has received an express acknowledgment from a participant in DTC's automated tender offer program that is tendering old notes that are the subject of such book-entry confirmation; - the participant has received and agrees to be bound by the terms of the letter of transmittal or, in the case of an agent's message relating to guaranteed delivery, the participant has received and agrees to be bound by the applicable notice of guaranteed delivery; and - we may enforce the agreement against the participant. HOW TO TENDER IF YOU ARE A BENEFICIAL OWNER If you beneficially own old notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender those notes, you should contact the registered holder as soon as possible and instruct the registered holder to tender on your behalf. If you are a beneficial owner and wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your old notes, either: - make appropriate arrangements to register ownership of the old notes in your name; or - obtain a properly completed bond power from the registered holder of your old notes. The transfer of registered ownership may take considerable time and may not be completed prior to the expiration date. SIGNATURES AND SIGNATURE GUARANTEES You must have signatures on a letter of transmittal or a notice of withdrawal described below guaranteed by an "eligible institution" unless the old notes are tendered: - by a registered holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the letter of transmittal and the new notes are being issued 77 directly to the registered holder of the old notes tendered in the exchange offer for those new notes; or - for the account of an eligible institution. An "eligible institution" is a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act, in each case that is a member of one of the recognized signature guarantee programs identified in the letter of transmittal. WHEN ENDORSEMENTS OR BOND POWERS ARE NEEDED If a person other than the registered holder of any old notes signs the letter of transmittal, the old notes must be endorsed or accompanied by a properly completed bond power. The registered holder must sign the bond power as the registered holder's name appears on the old notes. An eligible institution must guarantee that signature. If the letter of transmittal or any old notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing. Unless we waive this requirement, they also must submit evidence satisfactory to us of their authority to deliver the letter of transmittal. DETERMINATIONS UNDER THE EXCHANGE OFFER We will determine, in our sole discretion, all questions as to the validity, form, eligibility, time of receipt, acceptance of tendered old notes and withdrawal of tendered old notes. Our determination will be final and binding. We reserve the absolute right to reject any old notes not properly tendered or any old notes our acceptance of which, in the opinion of our counsel, might be unlawful. We also reserve the right to waive any defects, irregularities or conditions of the exchange offer as to particular old notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of old notes must be cured within the time we determine. Neither we, the exchange agent nor any other person will be under any duty to give notification of defects or irregularities with respect to tenders of old notes, nor will we or those persons incur any liability for failure to give such notification. Tenders of old notes will not be deemed made until such defects or irregularities have been cured or waived. Any old notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned to the tendering holder, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date. WHEN WE WILL ISSUE NEW NOTES In all cases, we will issue new notes for old notes that we have accepted for exchange in the exchange offer only after the exchange agent timely receives: - old notes or a timely book-entry confirmation of such old notes into the exchange agent's account at DTC; and - a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent's message. RETURN OF OLD NOTES NOT ACCEPTED OR EXCHANGED If we do not accept any tendered old notes for exchange for any reason described in the terms and conditions of the exchange offer or if old notes are submitted for a greater principal amount than the holder desires to exchange, we will return the unaccepted or non-exchanged old notes without expense to 78 their tendering holder. In the case of old notes tendered by book-entry transfer into the exchange agent's account at DTC according to the procedures described above, such non-exchanged old notes will be credited to an account maintained with DTC. These actions will occur as promptly as practicable after the rejection of tender or the expiration or termination of the exchange offer. YOUR REPRESENTATIONS TO US By signing or agreeing to be bound by the letter of transmittal, you will represent to us that, among other things: - any new notes that you receive will be acquired in the ordinary course of your business; - you have no arrangement or understanding with any person to participate in the distribution of the old notes or the new notes; - you are not our "affiliate," as defined in Rule 405 of the Securities Act, or, if you are our affiliate, you will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; - if you are not a broker-dealer, you are not engaged in, and do not intend to engage in, the distribution of the new notes; - if you are a broker-dealer, you will receive new notes for your own account in exchange for old notes that you acquired as a result of market-making activities or other trading activities, and you will deliver a prospectus in connection with any resale of such new notes; - if you are a broker-dealer, you did not purchase the old notes to be exchanged for the new notes from us; and - you are not acting on behalf of any person who could not truthfully and completely make the foregoing representations. GUARANTEED DELIVERY PROCEDURES If you wish to tender your old notes but they are not immediately available or if you cannot deliver your old notes, the letter of transmittal or any other required documents to the exchange agent or comply with the applicable procedures under DTC's automated tender offer program prior to the expiration date, you may tender if: - the tender is made through a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an eligible guarantor institution; - prior to the expiration date, the exchange agent receives from that firm, bank, trust company or institution either a properly completed and duly executed notice of guaranteed delivery by facsimile transmission, mail or courier or a properly transmitted agent's message relating to a notice of guaranteed delivery: - stating your name and address, the registration number or numbers of your old notes and the principal amount of old notes tendered; - stating that the tender is being made thereby; and - guaranteeing that, within three New York Stock Exchange trading days after the expiration date of the exchange offer, the letter of transmittal or facsimile thereof or agent's message in lieu thereof, together with the old notes or a book-entry confirmation, and any other documents required by the letter of transmittal, will be deposited by the eligible guarantor institution with the exchange agent; and 79 - the exchange agent receives such properly completed and executed letter of transmittal or facsimile or agent's message, as well as all tendered old notes in proper form for transfer or a book-entry confirmation, and all other documents required by the letter of transmittal, within three New York Stock Exchange trading days after the expiration date. Upon request to the exchange agent, the exchange agent will send a notice of guaranteed delivery to you if you wish to tender your old notes according to the guaranteed delivery procedures described above. WITHDRAWAL OF TENDERS Except as otherwise provided in this prospectus, you may withdraw your tender at any time prior to 5:00 p.m., New York City time, on the expiration date. For a withdrawal to be effective: - the exchange agent must receive a written notice of withdrawal at the address listed above under "Prospectus Summary -- The Exchange Agent"; or - the withdrawing holder must comply with the appropriate procedures of DTC's automated tender offer program. Any notice of withdrawal must: - specify the name of the person who tendered the old notes to be withdrawn; - identify the old notes to be withdrawn, including the registration number or numbers and the principal amount of such old notes; - be signed by the person who tendered the old notes in the same manner as the original signature on the letter of transmittal used to deposit those old notes, or be accompanied by documents of transfer sufficient to permit the trustee to register the transfer into the name of the person withdrawing the tender; and - specify the name in which such old notes are to be registered, if different from that of the person who tendered the old notes. If old notes have been tendered under the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn old notes and otherwise comply with the procedures of DTC. We will determine, in our sole discretion, all questions as to the validity, form, eligibility and time of receipt of notice of withdrawal, and our determination will be final and binding on all parties. We will deem any old notes so withdrawn not to have been validly tendered for exchange for purposes of the exchange offer. Any old notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder without cost to the holder or, in the case of old notes tendered by book-entry transfer into the exchange agent's account at DTC according to the procedures described above, such old notes will be credited to an account maintained with DTC for the old notes. This return or crediting will take place as soon as practicable after withdrawal. You may retender properly withdrawn old notes by following one of the procedures described under "-- Procedures for Tendering" above at any time on or prior to the expiration date. FEES AND EXPENSES We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail; however, we may make additional solicitation by facsimile, email, telephone or in person by our officers and regular employees and those of our affiliates. We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related 80 reasonable out-of-pocket expenses. We may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this prospectus, letters of transmittal and related documents to the beneficial owners of the old notes and in handling or forwarding tenders for exchange. We will pay the cash expenses to be incurred in connection with the exchange offer including: - SEC registration fees; - fees and expenses of the exchange agent and trustee; - accounting and legal fees and printing costs; and - related fees and expenses. TRANSFER TAXES We will pay all transfer taxes, if any, applicable to the exchange of old notes in the exchange offer. The tendering holder will, however, be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if: - certificates representing new notes or old notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of old notes tendered; - tendered old notes are registered in the name of any person other than the person signing the letter of transmittal; or - a transfer tax is imposed for any reason other than the exchange of old notes in the exchange offer. If satisfactory evidence of payment of any transfer taxes payable by a tendering holder is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to that tendering holder. The exchange agent will retain possession of new notes with a face amount equal to the amount of the transfer taxes due until it receives payment of the taxes. CONSEQUENCES OF FAILURE TO EXCHANGE If you do not tender your old notes for new notes in the exchange offer, or if you tender your old notes but subsequently withdraw them, your old notes will remain outstanding and continue to accrue interest, but will not retain any rights under the registration rights agreement (except in limited circumstances involving the initial purchasers and specified broker-dealers) or accrue additional interest under that agreement. IN ADDITION, YOU WILL REMAIN SUBJECT TO THE EXISTING RESTRICTIONS ON TRANSFER OF THE OLD NOTES. IN GENERAL, YOU MAY NOT OFFER OR SELL THE OLD NOTES UNLESS EITHER THEY ARE REGISTERED UNDER THE SECURITIES ACT OR THE OFFER OR SALE IS EXEMPT FROM OR NOT SUBJECT TO REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. Except as required by the registration rights agreement, we do not intend to register resales of the old notes under the Securities Act. THE TENDER OF OLD NOTES IN THE EXCHANGE OFFER WILL REDUCE THE PRINCIPAL AMOUNT OF THE OLD NOTES. DUE TO THE CORRESPONDING REDUCTION IN LIQUIDITY, THIS MAY HAVE AN ADVERSE EFFECT UPON, AND INCREASE THE VOLATILITY OF, THE MARKET PRICE OF ANY OLD NOTES THAT YOU CONTINUE TO HOLD FOLLOWING COMPLETION OF THE EXCHANGE OFFER. ACCOUNTING TREATMENT We will not recognize a gain or loss for accounting purposes upon the consummation of the exchange offer. We will amortize our expenses of the exchange offer over the term of new notes in accordance with U.S. generally accepted accounting principles. 81 OTHER Participation in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your decision on what action to take. In the future, we may seek to acquire untendered old notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plan to acquire any old notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered old notes, except as required by the registration rights agreement. 82 DESCRIPTION OF NOTES You can find the definitions of certain terms used in this description under the subheading "Certain Definitions." In this description, the words "Westlake," "we," "us" and "our" refer only to Westlake Chemical Corporation and not to any of its subsidiaries. The old notes were, and the new notes will be, issued under an indenture dated as of July 31, 2003 among Westlake, the Guarantors and JPMorgan Chase Bank, as trustee. The terms of the notes include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended. As described below under "--Registration Rights; Additional Interest," we are filing a registration statement to enable holders of old notes to exchange their notes for publicly registered notes having substantially identical terms, except for provisions relating to transfer restrictions and additional interest. The old notes, and the new notes issued in the exchange offer and any debt securities issued in the private exchange described below will constitute a single series of securities under the indenture and therefore will vote together as a single class for purposes of determining whether holders of the requisite percentage in aggregate principal amount thereof have taken actions or exercised rights they are entitled to take or exercise under the indenture. We are required under specified circumstances to file a shelf registration statement to cover resales of the old notes. If we fail to satisfy specified obligations under the registration rights agreement, we may be required to pay additional interest to holders of the old notes. The following description is a summary of the material provisions of the indenture and the registration rights agreement. It does not restate these agreements in their entirety. We urge you to read the indenture and the registration rights agreement because they, and not this description, define your rights as holders of the notes. We have filed the indenture and the registration rights agreement as exhibits to the registration statement of which this prospectus is a part. Certain defined terms used in this description but not defined below under "-- Certain Definitions" have the meanings assigned to them in the indenture and the registration rights agreement. The registered holder of a note will be treated as the owner of it for all purposes. Only registered holders will have rights under the indenture. BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTEES THE NOTES The notes will be: - general unsecured obligations of Westlake; - pari passu in right of payment with all existing and future unsecured senior Indebtedness of Westlake; - senior in right of payment to any future subordinated Indebtedness of Westlake; and - unconditionally guaranteed by the Guarantors. THE GUARANTEES Westlake's payment obligations under the notes will be guaranteed by all of Westlake's Domestic Subsidiaries. Each guarantee will be: - a general unsecured obligation of the Guarantor; - pari passu in right of payment with any existing and future unsecured senior Indebtedness of that Guarantor; and - senior in right of payment to any future subordinated Indebtedness of that Guarantor. 83 Not all of our subsidiaries will guarantee the notes. In the event of a bankruptcy, liquidation or reorganization of any of these non-guarantor subsidiaries, that non-guarantor subsidiary will pay the holders of its debt and its trade creditors before it will be able to distribute any of its assets to us. The non-guarantor subsidiaries generated 2.0% of our consolidated net sales for the year ended December 31, 2002 and held 3.3% of our consolidated assets as of June 30, 2003. As of the date of the indenture, all of our Subsidiaries will be "Restricted Subsidiaries," other than the Subsidiary whose sole asset is our interest in our China joint venture and our existing special purpose subsidiary related to our accounts receivable securitization facility that was terminated on July 31, 2003 in connection with our refinancing. However, under the circumstances described below under the caption "-- Certain Covenants -- Designation of Restricted and Unrestricted Subsidiaries," we will be permitted to designate certain of our subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will not be subject to many of the restrictive covenants in the indenture. Our Unrestricted Subsidiaries will not guarantee the notes. PRINCIPAL, MATURITY AND INTEREST Westlake issued $380.0 million in aggregate principal amount of notes in the original offering. Westlake may issue additional notes from time to time without the consent of the holders. Any issuance of additional notes is subject to all of the covenants in the indenture, including the covenant described below under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock." The notes and any additional notes subsequently issued under the indenture will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Westlake will issue notes in denominations of $1,000 and integral multiples of $1,000. The notes will mature on July 15, 2011. Interest on the notes will accrue at the rate of 8 3/4% per annum and will be payable semi-annually in arrears on January 15 and July 15, commencing on January 15, 2004. Interest on overdue principal and interest will accrue at a rate that is 1% higher than the then applicable interest rate on the notes. Westlake will make each interest payment to the holders of record on the immediately preceding January 1 and July 1. Interest on the notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year of twelve 30-day months. METHODS OF RECEIVING PAYMENTS ON THE NOTES If a holder of notes with an aggregate principal amount in excess of $1.0 million has given wire transfer instructions to Westlake, Westlake will pay all principal, interest and premium, if any, on that holder's notes in accordance with those instructions. All other payments on notes will be made at the office or agency of the paying agent and registrar within the City and State of New York unless Westlake elects to make interest payments by check mailed to the noteholders at their addresses set forth in the register of holders. PAYING AGENT AND REGISTRAR FOR THE NOTES The trustee is acting as paying agent and registrar. Westlake may change the paying agent or registrar without prior notice to the holders of the notes, and Westlake or any of its Domestic Subsidiaries may act as paying agent or registrar. TRANSFER AND EXCHANGE A holder may transfer or exchange notes in accordance with the provisions of the indenture. The registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents in connection with a transfer of notes. Holders will be required to pay all taxes and 84 other governmental charges due on transfer. Westlake is not required to transfer or exchange any note selected for redemption. Also, Westlake is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed. GUARANTEES Westlake's payment obligations under the notes are guaranteed by each of Westlake's current and future Domestic Subsidiaries. These Guarantees are joint and several obligations of the Guarantors. The obligations of each Guarantor under its Guarantee will be limited as necessary to prevent that Guarantee from constituting a fraudulent transfer or conveyance under applicable law. See "Risk Factors -- Risks Relating to the Offering -- Federal and state statutes allow courts, under specific circumstances, to void guarantees and require note holders to return payments received from guarantors." A Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than Westlake or another Guarantor, unless: (1) immediately after giving effect to that transaction, no Default or Event of Default exists; and (2) either: (a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (in each case if other than the Guarantor) assumes all the obligations of that Guarantor under the indenture and its Guarantee pursuant to a supplemental indenture satisfactory to the trustee and under the registration rights agreement; or (b) if applicable, the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the indenture. The Guarantee of a Guarantor will be released: (1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) Westlake or a Restricted Subsidiary of Westlake, if the sale or other disposition does not violate the "Asset Sale" provisions of the indenture; (2) in connection with any sale or other disposition of all of the Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) Westlake or a Subsidiary of Westlake, if the sale or other disposition does not violate the "Asset Sale" provisions of the indenture; (3) if Westlake designates any Restricted Subsidiary that is a Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of the indenture; or (4) upon legal defeasance or satisfaction and discharge of the notes as provided below under the captions "-- Legal Defeasance and Covenant Defeasance" and "-- Satisfaction and Discharge." See "-- Repurchase at the Option of Holders -- Asset Sales." OPTIONAL REDEMPTION At any time on or prior to July 15, 2007, Westlake may on any one or more occasions redeem up to 35% of the aggregate principal amount of notes issued under the indenture at a redemption price of 85 108.75% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the redemption date, with the net cash proceeds of one or more Public Equity Offerings; provided that: (1) at least 65% of the aggregate principal amount of notes issued under the indenture remains outstanding immediately after the occurrence of such redemption (excluding notes held by Westlake and its Subsidiaries); and (2) the redemption occurs within 60 days of the date of the closing of such Public Equity Offering. At any time prior to July 15, 2007, Westlake may also redeem all or a part of the notes at a redemption price equal to 100% of the principal amount of notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest, to the redemption date, subject to the rights of noteholders on the relevant record date to receive interest due on the relevant interest payment date. Except pursuant to the preceding paragraphs, the notes will not be redeemable at Westlake's option prior to July 15, 2007. On or after July 15, 2007, Westlake may redeem all or a part of the notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and additional interest, if any, on the notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on July 15 of the years indicated below, subject to the rights of noteholders on the relevant record date to receive interest on the relevant interest payment date:
YEAR PERCENTAGE - ---- ---------- 2007........................................................ 104.375% 2008........................................................ 102.917% 2009........................................................ 101.458% 2010 and thereafter......................................... 100.000%
SELECTION AND NOTICE If less than all of the notes are to be redeemed at any time, the trustee will select notes for redemption as follows: (1) if the notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the notes are listed; or (2) if the notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the trustee deems fair and appropriate. Westlake will redeem notes only in principal amounts of $1,000 and integral multiples of $1,000. Notices of redemption will be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the notes or a satisfaction and discharge of the indenture. Notices of redemption may not be conditional. If any note is to be redeemed in part only, the notice of redemption that relates to that note will state the portion of the principal amount of that note that is to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the holder of notes upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption. Unless Westlake defaults in the payment of the redemption amount, on and after the redemption date, interest ceases to accrue on notes or portions of them called for redemption. 86 MANDATORY REDEMPTION Westlake is not required to make mandatory redemption or sinking fund payments with respect to the notes. REPURCHASE AT THE OPTION OF HOLDERS CHANGE OF CONTROL If a Change of Control occurs, each holder of notes will have the right to require Westlake to repurchase all or any part (equal to $1,000 or an integral multiple of $1,000) of that holder's notes pursuant to a Change of Control Offer on the terms set forth in the indenture. In the Change of Control Offer, Westlake will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest and additional interest, if any, on the notes repurchased, to the date of purchase, subject to the rights of noteholders on the relevant record date to receive interest due on the relevant interest payment date. Within 30 days following any Change of Control, Westlake will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on the Change of Control Payment Date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the indenture and described in such notice. On the Change of Control Payment Date, Westlake will, to the extent lawful: (1) accept for payment all notes or portions of notes properly tendered pursuant to the Change of Control Offer; (2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all notes or portions of notes properly tendered; and (3) deliver or cause to be delivered to the trustee the notes properly accepted together with an officers' certificate stating the aggregate principal amount of notes or portions of notes being purchased by Westlake. The paying agent will promptly pay to each holder of notes properly tendered the Change of Control Payment for such notes, and the trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any; provided that each new note will be in a principal amount of $1,000 or an integral multiple of $1,000. The provisions described above requiring Westlake to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of the indenture, including those described below under "-- Certain Covenants -- Merger, Consolidation or Sale of Assets," are applicable to the transaction. Except as described above with respect to a Change of Control, the indenture does not contain provisions that permit the holders of the notes to require that Westlake repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction. Westlake will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control Offer made by Westlake and purchases all notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to the indenture as described above under the caption "-- Selection and Notice," unless and until there is a default in payment of the applicable redemption price. The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of "all or substantially all" of the properties or assets of Westlake and its Restricted Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase "substantially all," there is no established quantitative definition of the phrase under applicable 87 law. Accordingly, the ability of a holder of notes to require Westlake to repurchase its notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of Westlake and its Restricted Subsidiaries taken as a whole to another Person or group may be uncertain. ASSET SALES Westlake will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (1) Westlake or the Restricted Subsidiary, as the case may be, receives consideration at the time of the Asset Sale at least equal to the Fair Market Value (as determined by Westlake's Board of Directors and evidenced by a resolution of the Board of Directors set forth in an officers' certificate delivered to the trustee) of the assets or Equity Interests issued or sold or otherwise disposed of; and (2) at least 75% of the consideration received in the Asset Sale by Westlake or such Restricted Subsidiary is in the form of cash or Cash Equivalents or a controlling interest in a business engaged in a Permitted Business. For purposes of this provision, each of the following will also be deemed to be cash: (a) any liabilities, as shown on its most recent balance sheet, of Westlake or such Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the notes or any related Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases Westlake or such Restricted Subsidiary from further liability; (b) any securities, notes or other obligations received by Westlake or any such Restricted Subsidiary from such transferee that are promptly, subject to ordinary settlement periods, converted or monetized by Westlake or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion or monetization; and (c) any stock or assets of the kind referred to in clauses (2) or (4) of the next paragraph of this covenant. Within 360 days after the receipt of any Net Proceeds from an Asset Sale, Westlake (or the applicable Restricted Subsidiary, as the case may be) may apply those Net Proceeds, at its option: (1) to repay Indebtedness and other Obligations under a Credit Facility and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; (2) to acquire all or substantially all of the assets of, or any Capital Stock of, any Person or division thereof conducting a Permitted Business, if, in the case of any such acquisition of Capital Stock and after giving effect thereto, such Person will be a Restricted Subsidiary of Westlake (or enter into a binding commitment for any such acquisition); provided that such binding commitment shall be treated as a permitted application of Net Proceeds from the date of such commitment until and only until the earlier of (x) the date on which such acquisition is consummated and (y) the 180th day following the expiration of the aforementioned 360-day period. If the acquisition or expenditure contemplated by such binding commitment is not consummated on or before such 180th day and Westlake or such Restricted Subsidiary shall not have applied such Net Proceeds pursuant to clause (1), (3) or (4) of this paragraph on or before such 180th day, such commitment shall be deemed not to have been a permitted application of Net Proceeds; (3) to make a capital expenditure; or (4) to acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business. Pending the final application of any Net Proceeds, Westlake may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by the indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding 88 paragraph will constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, Westlake will make an Asset Sale Offer to all holders of notes and all holders of other Pari Passu Indebtedness containing provisions similar to those set forth in the indenture with respect to offers to purchase or redeem with the proceeds of asset sales to purchase the maximum principal amount of notes and such other Pari Passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of principal amount plus accrued and unpaid interest and additional interest, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, Westlake may use those Excess Proceeds for any purpose not otherwise prohibited by the indenture. If the aggregate principal amount of notes and other Pari Passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the trustee will select the notes and such other Pari Passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. Westlake will comply with the provisions of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those provisions are applicable in connection with each repurchase of notes pursuant to a Change of Control Offer or an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control or Asset Sale provisions of the indenture, Westlake will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control or Asset Sale provisions of the indenture by virtue of such conflict. The agreements governing Westlake's other Indebtedness contain, and future agreements may contain, prohibitions of certain events, including events that would constitute a Change of Control or an Asset Sale and including repurchases of or other prepayments in respect of the notes. The exercise by the holders of notes of their right to require Westlake to repurchase the notes upon a Change of Control or an Asset Sale could cause a default under these other agreements, even if the Change of Control or Asset Sale itself does not, due to the financial effect of such repurchases on Westlake. In the event a Change of Control or Asset Sale occurs at a time when Westlake is prohibited from purchasing notes, Westlake could seek the consent of its senior lenders to the purchase of notes or could attempt to refinance the borrowings that contain such prohibition. If Westlake does not obtain such consent or repay those borrowings, Westlake will remain prohibited from purchasing notes. In that case, Westlake's failure to purchase tendered notes would constitute an Event of Default under the indenture which may, in turn, constitute a default under the other indebtedness. Finally, Westlake's ability to pay cash to the holders of notes upon a repurchase may be limited by Westlake's then existing financial resources. See "Risk Factors -- Risks Relating to the Offering -- We may not have the ability to raise the funds necessary to finance the change of control offer required by the indenture." CERTAIN COVENANTS RESTRICTED PAYMENTS Westlake will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (1) declare or pay any dividend or make any other distribution on account of Westlake's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving Westlake or any of its Restricted Subsidiaries) or to the direct or indirect holders of Westlake's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of Westlake or to Westlake or a Restricted Subsidiary of Westlake); (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving Westlake) any Equity Interests of Westlake or any direct or indirect parent of Westlake; 89 (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness of Westlake or any Guarantor that is contractually subordinated to the notes or any Guarantee (excluding any intercompany Indebtedness between or among Westlake and any of its Restricted Subsidiaries), except a payment of interest or principal at or after the Stated Maturity of such interest or principal; or (4) make any Restricted Investment (all such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; and (2) Westlake would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock;" and (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by Westlake and its Restricted Subsidiaries since the date of the indenture (excluding Restricted Payments permitted by clauses (2), (3), (4), (6), (7), (8), (9), (10) and (11) of the next succeeding paragraph), is less than the sum, without duplication, of: (a) 50% of the Consolidated Net Income of Westlake for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the indenture to the end of Westlake's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); provided, however, that if at any time after the date of the indenture the notes are rated Investment Grade, the percentage will be 100% of Consolidated Net Income for such period; provided, further, however, that if such Restricted Payment is to be made in reliance upon an additional amount permitted pursuant to the immediately preceding proviso, the notes must be rated Investment Grade at the time such Restricted Payment is declared or, if not declared, made, plus (b) 100% of the aggregate net cash proceeds received by Westlake since the date of the indenture as a contribution to its common equity capital or by Westlake or any of its Restricted Subsidiaries from the issue or sale of Equity Interests of Westlake (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of Westlake or any of its Restricted Subsidiaries that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of Westlake), plus (c) to the extent that any Restricted Investment that was made after the date of the indenture is sold for cash or otherwise liquidated, repaid for cash or otherwise reduced, the lesser of (i) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (ii) the initial amount of such Restricted Investment, plus (d) to the extent that any Unrestricted Subsidiary of Westlake is redesignated as a Restricted Subsidiary after the date of the indenture, the Fair Market Value of Westlake's Investment in such Subsidiary as of the date of such redesignation, plus (e) 50% of any dividends received by Westlake or a Restricted Subsidiary of Westlake that is a Guarantor after the date of the indenture from an Unrestricted Subsidiary or a Joint Venture, to the extent that such dividends were not otherwise included in Consolidated Net Income of Westlake for such period; provided, however, that if at any time after the date of the 90 indenture the notes are rated Investment Grade, the percentage will be 100% of any such dividends; provided, further, however, that if such Restricted Payment is to be made in reliance upon an additional amount permitted pursuant to the immediately preceding proviso, the notes must be rated Investment Grade at the time such Restricted Payment is declared or, if not declared, made. So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of the dividend, if at the date of declaration the dividend payment would have complied with the provisions of the indenture; (2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent issuance or sale (other than to a Subsidiary of Westlake) of, Equity Interests of Westlake (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to Westlake; provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from clause (3) (b) of the preceding paragraph; (3) the defeasance, redemption, repurchase or other acquisition of Indebtedness of Westlake or any Guarantor that is contractually subordinated to the notes or to any Guarantee of the notes with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness; (4) the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary of Westlake to Westlake or another Restricted Subsidiary, or the purchase, redemption, or other acquisition or retirement of any Equity Interests in a Restricted Subsidiary held by Westlake or another Restricted Subsidiary; (5) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Westlake or any Restricted Subsidiary of Westlake held by any current or former officer, director or employee of Westlake or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stock option agreement, shareholders' agreement or similar plan or agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $1.0 million in any twelve-month period; (6) the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options; (7) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of Westlake or any Restricted Subsidiary of Westlake issued on or after the date of the indenture in accordance with the Fixed Charge Coverage Ratio test described below under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock"; (8) distributions or payments of Receivables Fees; (9) the repurchase of any Indebtedness of Westlake or any Guarantor that is contractually subordinated to the notes or to any Guarantee of the notes at a purchase price not greater than 101% of the principal amount thereof in the event of (x) a change of control pursuant to a provision no more favorable to the holders thereof than the provision described under "-- Repurchase at the Option of the Holders -- Change of Control" or (y) an Asset Sale (pursuant to a provision no more favorable to the holders thereof than the provision described under "-- Repurchase at the Option of the Holders -- Asset Sales"); provided that in each case, prior to such repurchase Westlake has made a Change of Control Offer or Asset Sale Offer, as applicable, and repurchased all notes that were validly tendered for payment in connection with such Change of Control Offer or Asset Sale Offer; (10) Permitted Payments to Parent; and 91 (11) other Restricted Payments in an aggregate amount not to exceed $25.0 million since the date of the indenture. The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by Westlake or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this covenant will be determined by the Board of Directors whose resolution with respect thereto will be delivered to the trustee. The Board of Directors' determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the Fair Market Value exceeds $15.0 million. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK Westlake will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt), and Westlake will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that Westlake may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and the Guarantors may incur Indebtedness or issue preferred stock, if the Fixed Charge Coverage Ratio for Westlake's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom and, in the case of Acquired Debt, giving pro forma effect to the applicable transaction related thereto), as if the additional Indebtedness had been incurred (and such transaction had occurred) or the preferred stock or Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (1) the incurrence by Westlake or any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of Westlake and its Subsidiaries thereunder) not to exceed the greater of (x) $320.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by Westlake or any of its Restricted Subsidiaries since the date of the indenture to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to the covenant described above under the caption "-- Repurchase at the Option of Holders -- Asset Sales" or (y) the amount of the Borrowing Base as of the date of such incurrence; (2) the incurrence by Westlake and its Restricted Subsidiaries of the Existing Indebtedness; (3) the incurrence by Westlake and the Guarantors of Indebtedness represented by the notes and the related Guarantees to be issued on the date of the indenture and the exchange notes and the related Guarantees to be issued in accordance with the registration rights agreement; (4) the incurrence by Westlake or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used or usable in a Permitted Business, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed $10.0 million at any time outstanding; 92 (5) the incurrence by Westlake or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, refund, refinance, renew, defease or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the indenture to be incurred under the first paragraph of this covenant or clauses (2), (3), (4), (5) or (16) of this paragraph; (6) the incurrence by Westlake or any of its Restricted Subsidiaries of intercompany Indebtedness between or among Westlake and any of its Restricted Subsidiaries; provided, however, that: (a) if Westlake or any Guarantor is the obligor on such Indebtedness and the payee is not Westlake or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the notes, in the case of Westlake, or the Guarantee, in the case of a Guarantor; and (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Westlake or a Restricted Subsidiary of Westlake and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either Westlake or a Restricted Subsidiary of Westlake will be deemed, in each case, to constitute an incurrence of such Indebtedness by Westlake or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6); (7) the issuance by any of Westlake's Restricted Subsidiaries to Westlake or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that: (a) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than Westlake or a Restricted Subsidiary of Westlake; and (b) any sale or other transfer of any such preferred stock to a Person that is not either Westlake or a Restricted Subsidiary of Westlake; will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7); (8) the incurrence by Westlake or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business and not for speculative purposes; (9) the guarantee by Westlake or any of the Guarantors of Indebtedness of Westlake or a Restricted Subsidiary of Westlake that was permitted to be incurred by another provision of this covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the notes, then the guarantee shall be subordinated to the same extent as the Indebtedness guaranteed; (10) the incurrence by Westlake or any of its Restricted Subsidiaries of Indebtedness in respect of workers' compensation claims; self-insurance obligations; bankers' acceptances; performance, appeal, completion, guarantee and surety bonds; or similar requirements in the ordinary course of business; (11) the incurrence by Westlake or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; (12) the incurrence by Foreign Subsidiaries of Indebtedness in an aggregate principal amount at any time outstanding pursuant to this clause (12), including all Permitted Refinancing Indebtedness incurred to refund, refinance, defease, renew, extend or replace Indebtedness incurred pursuant to this clause (12), not to exceed $10.0 million; (13) the incurrence by Westlake or a Restricted Subsidiary of Indebtedness arising from agreements of Westlake or such Restricted Subsidiary providing for indemnification, adjustment of 93 purchase price or similar obligations, in each case, incurred in connection with the disposition of any business, assets or subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by Westlake or such Restricted Subsidiary in connection with such disposition; (14) the incurrence by Westlake or a Restricted Subsidiary of Indebtedness consisting of take-or-pay obligations contained in supply agreements entered into in the ordinary course of business; (15) the incurrence by Westlake of Indebtedness to any of its Subsidiaries incurred in connection with the purchase of accounts receivable and related assets by Westlake from any such Subsidiary which assets are subsequently conveyed by Westlake in connection with a Receivable Facility; and (16) the incurrence by Westlake or any of the Guarantors of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to extend, refund, refinance, renew, defease or replace any Indebtedness incurred pursuant to this clause (16), and the issuance by Westlake of any Disqualified Stock and by any Restricted Subsidiary of any additional preferred stock, not to exceed $50.0 million. Westlake will not incur, and will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Pari Passu Indebtedness of Westlake or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the notes and the applicable Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of Westlake solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this "Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, Westlake will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant. Indebtedness under Credit Facilities outstanding on the date on which notes are first issued and authenticated under the indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of Westlake as accrued. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that Westlake or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. LIENS Westlake will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien, except Permitted Liens, to secure Indebtedness of any kind on any asset now owned or hereafter acquired, unless all payments due under the indenture and the notes are secured on an equal and ratable basis with the obligations so secured (or, if such obligations are subordinated by their terms to the notes or the related Guarantees, prior to the obligations so secured) until such time as such obligations are no longer secured by a Lien. 94 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES Westlake will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock to Westlake or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to Westlake or any of its Restricted Subsidiaries; (2) make loans or advances to Westlake or any of its Restricted Subsidiaries; or (3) transfer any of its properties or assets to Westlake or any of its Restricted Subsidiaries. However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of: (1) agreements governing Existing Indebtedness and Credit Facilities as in effect on the date of the indenture and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the date of the indenture; (2) the indenture, the notes and the Guarantees; (3) applicable law, rule, regulation or order; (4) any instrument governing Indebtedness or Capital Stock of a Person as in effect at the time of the acquisition by Westlake or any of its Restricted Subsidiaries of such Person or the properties or assets of such Person (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the indenture to be incurred; (5) customary non-assignment provisions in contracts and leases entered into in the ordinary course of business; (6) construction loans and purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property constructed, purchased or leased of the nature described in clause (3) of the preceding paragraph; (7) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition; (8) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (9) Liens securing Indebtedness otherwise permitted to be incurred under the provisions of the covenant described above under the caption "-- Liens" that limit the right of the debtor to dispose of the assets subject to such Liens; (10) any restriction under an agreement governing Indebtedness of a Foreign Subsidiary permitted under "-- Incurrence of Indebtedness and Issuance of Preferred Stock"; (11) provisions limiting or prohibiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other 95 similar agreements entered into with the approval of Westlake's Board of Directors, which limitation or prohibition is applicable only to the assets that are the subject of such agreements; and (12) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. For purposes of determining compliance with this "Dividend and Other Payment Restrictions Affecting Subsidiaries" covenant, in the event that a restriction meets the criteria of more than one of the categories of permitted restrictions described in clauses (1) through (12) above, Westlake will be permitted to classify such restriction on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant. MERGER, CONSOLIDATION OR SALE OF ASSETS Westlake may not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not Westlake is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of Westlake and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless: (1) either: (a) Westlake is the surviving or continuing Person; or (b) the Person formed by or surviving any such consolidation or merger (if other than Westlake) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a Person organized or existing under the laws of the United States, any state of the United States or the District of Columbia; (2) the Person formed by or surviving any such consolidation or merger (if other than Westlake) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of Westlake under the notes, the indenture and the registration rights agreement pursuant to agreements reasonably satisfactory to the trustee; (3) immediately after giving effect to such transaction, no Default or Event of Default exists; and (4) Westlake or the Person formed by or surviving any such consolidation or merger (if other than Westlake), or to which such sale, assignment, transfer, conveyance or other disposition has been made will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock." In addition, Westlake may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. This "Merger, Consolidation or Sale of Assets" covenant will not apply to: (A) a merger or consolidation of Westlake with an Affiliate for the purpose of reincorporating or reorganizing Westlake in another jurisdiction; (B) a merger or consolidation of Westlake with a Wholly Owned Restricted Subsidiary; provided that, in connection with any such merger or consolidation, no consideration, other than Equity Interests (other than Disqualified Stock) in the surviving or continuing Person or Westlake, shall be issued or distributed to the holders of Equity Interests of Westlake; and (C) any sale, transfer, assignment, conveyance or other disposition of assets between or among Westlake and its Restricted Subsidiaries. 96 TRANSACTIONS WITH AFFILIATES Westlake will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of Westlake (each, an "Affiliate Transaction"), unless: (1) the Affiliate Transaction is on terms that are no less favorable to Westlake or the relevant Restricted Subsidiary than those that might reasonably have been obtained in a comparable transaction by Westlake or such Restricted Subsidiary with an unrelated Person; and (2) Westlake delivers to the trustee: (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Board of Directors set forth in an officers' certificate certifying that such Affiliate Transaction complies with this covenant and such Affiliate Transaction been approved by a majority of the members of the Board of Directors; and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15.0 million, an opinion as to the fairness to Westlake or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph: (1) any fees, compensation and other payments paid to any officer or employee pursuant to any employment agreement, employee or director benefit plan, officer and director indemnification agreement or any similar arrangement entered into by Westlake or any of its Restricted Subsidiaries in the ordinary course of business; (2) transactions between or among Westlake and/or its Restricted Subsidiaries; (3) transactions with a Person (other than an Unrestricted Subsidiary of Westlake) that is an Affiliate of Westlake solely because Westlake owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person; (4) payment of reasonable directors' fees to Persons who are not otherwise Affiliates of Westlake; (5) any issuance of Equity Interests (other than Disqualified Stock) of Westlake to Affiliates of Westlake; (6) Restricted Payments that do not violate the provisions of the indenture described above under the caption "-- Restricted Payments"; (7) loans or advances to employees in the ordinary course of business not to exceed $2.0 million in the aggregate at any one time outstanding; (8) sales (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable, related assets and the provision of billing, collection and other services in connection therewith, in each case, to an Accounts Receivable Subsidiary in connection with any Receivables Facility; (9) transactions pursuant to any contract or agreement in effect on the issue date, as the same may be amended, modified, extended or replaced from time to time, so long as any such contract or agreement as so amended, modified, extended or replaced is, taken as a whole, not materially less favorable to Westlake and its Restricted Subsidiaries than under those agreements as described in the 97 section "Certain Relationships and Related Transactions" in Westlake's offering memorandum dated July 21, 2003; (10) any transaction or series of transactions between Westlake or any Restricted Subsidiary and any of their Joint Ventures, provided that (a) such transaction or series of transactions is in the ordinary course of business between Westlake or such Restricted Subsidiary and such Joint Venture, and (b) with respect to any such Affiliate Transaction involving aggregate consideration in excess of $5.0 million, such Affiliate Transaction complies with clause (1) of the initial paragraph above and such Affiliate Transaction has been approved by the Board of Directors; and (11) Permitted Investments and Permitted Payments to Parent. ADDITIONAL GUARANTEES If Westlake or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary after the date of the indenture, then that newly acquired or created Domestic Subsidiary will, unless it has been designated as an Unrestricted Subsidiary under the indenture, become a Guarantor and execute a supplemental indenture and deliver an opinion of counsel satisfactory to the trustee within 10 business days of the date on which it was acquired or created. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by Westlake and its Restricted Subsidiaries in the Subsidiary designated as Unrestricted will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the covenant described above under the caption "-- Restricted Payments" or under one or more clauses of the definition of Permitted Investments, as determined by Westlake. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default. If a Restricted Subsidiary that is a Guarantor is designated an Unrestricted Subsidiary in accordance with the terms of this covenant, such Guarantee will be released. SALE AND LEASEBACK TRANSACTIONS Westlake will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that Westlake or any Restricted Subsidiary may enter into a sale and leaseback transaction if: (1) Westlake or that Restricted Subsidiary, as applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the Fixed Charge Coverage Ratio test in the first paragraph of the covenant described above under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock" and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption "-- Liens;" (2) the gross cash proceeds of that sale and leaseback transaction are at least equal to the Fair Market Value, as determined in good faith by the Board of Directors and set forth in an officers' certificate delivered to the trustee, of the property that is the subject of that sale and leaseback transaction; and (3) the transfer of assets in that sale and leaseback transaction is permitted by, and Westlake applies the proceeds of such transaction in compliance with, the covenant described above under the caption "-- Repurchase at the Option of Holders -- Asset Sales." 98 ACCOUNTS RECEIVABLE FACILITIES Westlake or any of its Restricted Subsidiaries may sell (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) at any time and from time to time, accounts receivable and related assets to any Accounts Receivable Subsidiary; provided that the aggregate consideration received in each such sale is at least equal to the aggregate fair market value of the receivables sold. PAYMENTS FOR CONSENT Westlake will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the notes unless such consideration is offered to be paid or agreed to be paid to all holders of the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. REPORTS As long as Westlake is not subject to the periodic reporting requirements of the Exchange Act, Westlake will furnish to all holders of the notes and prospective purchasers of the notes designated by the holders, promptly upon their request, the information required to be delivered under Rule 144A(d)(4) of the Securities Act. In addition, prior to consummation of the exchange offer contemplated by this prospectus and the registration rights agreement, Westlake will furnish to the trustee, within 15 days after it would have been required to file the same with the SEC if Westlake had been subject to the periodic reporting requirements of the Exchange Act and excluding any time periods applicable to "accelerated filers" under the Exchange Act, quarterly and annual financial statements, including any notes thereto (and with respect to annual financial statements only, an auditors' report thereon by a firm of established national reputation), and a "Management's Discussion and Analysis of Financial Condition and Results of Operations," both comparable to that which Westlake would have been required to include in a quarterly report on Form 10-Q or an annual report on Form 10-K if Westlake had been subject to those periodic reporting requirements. Following consummation of the exchange offer, Westlake will file with the SEC (unless the SEC will not accept such a filing): (1) all quarterly and annual reports on Forms 10-Q and 10-K required to be filed with the SEC; and (2) all current reports on Form 8-K required to be filed with the SEC, for public availability within the time periods specified in the rules and regulations applicable to such reports. If, at any time after consummation of the exchange offer, Westlake is no longer subject to the periodic reporting requirements of the Exchange Act for any reason, Westlake will nevertheless continue filing the reports specified in the preceding paragraph with the SEC within the time periods specified above unless the SEC will not accept such a filing. Westlake has agreed that it will not take any action for the purpose of causing the SEC not to accept any such filings. If the SEC will not accept Westlake's filings for any reason, Westlake will post the reports referred to in the preceding paragraph on its website within the time periods that would apply if Westlake were required to file those reports with the SEC. 99 EVENTS OF DEFAULT AND REMEDIES Each of the following is an Event of Default: (1) default for 30 days in the payment when due of interest or additional interest on the notes; (2) default in payment when due of the principal of, or premium, if any, on the notes; (3) failure by Westlake or any of its Restricted Subsidiaries to comply with the provisions described under the captions "-- Repurchase at the Option of Holders -- Change of Control," "-- Repurchase at the Option of Holders -- Asset Sales," or "-- Certain Covenants -- Merger, Consolidation or Sale of Assets;" (4) failure by Westlake or any Guarantor for 60 days after notice to comply with any of the other agreements in the indenture; (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by Westlake or any of its Restricted Subsidiaries (or the payment of which is guaranteed by Westlake or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the indenture, if that default: (a) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or (b) results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $20.0 million or more and has not been discharged in full or such acceleration has not been rescinded or annulled within 30 days of such maturity or acceleration; (6) failure by Westlake or any of its Restricted Subsidiaries to pay or otherwise discharge or stay final judgments aggregating in excess of $20.0 million, which are not covered by indemnities or third party insurance as to which the Person giving such indemnity or such insurer has not disclaimed coverage, for a period of 60 days after such judgments become final and non-appealable; (7) except as permitted by the indenture, any Guarantee of the notes shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Guarantee of the notes; and (8) certain events of bankruptcy or insolvency described in the indenture with respect to Westlake or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary. In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to Westlake, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then outstanding notes may declare all the notes to be due and payable immediately. Subject to certain limitations, holders of a majority in principal amount of the then outstanding notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from holders of the notes notice of any continuing Default or Event of Default if it determines that withholding notes is in their interest, except a Default or Event of Default relating to the payment of principal or interest. 100 Subject to the provisions of the indenture relating to the duties of the trustee, in case an Event of Default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any holders of notes unless such holders have offered to the trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any), interest or additional interest (if any), when due, no holder of a note may pursue any remedy with respect to the indenture or the notes unless: (1) such holder has previously given the trustee notice that an Event of Default is continuing; (2) holders of at least 25% in aggregate principal amount of the outstanding notes have requested the trustee to pursue the remedy; (3) such holders have offered the trustee reasonable security or indemnity against any loss, liability or expense; (4) the trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and (5) holders of a majority in aggregate principal amount of the outstanding notes have not given the trustee a direction inconsistent with such request within such 60-day period. The holders of a majority in aggregate principal amount of the notes then outstanding by notice to the trustee may, on behalf of the holders of all of the notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the indenture except a continuing Default or Event of Default in the payment of interest or additional interest, if any, on, or the principal of, the notes. In the case of any Event of Default occurring by reason of any willful action or inaction taken or not taken by or on behalf of Westlake with the intention of avoiding payment of the premium that Westlake would have had to pay if Westlake then had elected to redeem the notes pursuant to the optional redemption provisions of the indenture, an equivalent premium will also become and be immediately due and payable to the extent permitted by law upon the acceleration of the notes. The preceding paragraph refers only to those times when Westlake, while solvent, voluntarily, knowingly, deliberately or intentionally avoids payment of the premium referred to above and is not intended to encompass those situations in which such a payment of premium would render Westlake insolvent or force a bankruptcy, liquidation or reorganization of Westlake, or where non-payment is a result of financial distress or adverse financial condition. Westlake is required to deliver to the trustee annually a statement regarding compliance with the indenture. Upon becoming aware of any Default or Event of Default, Westlake is required to deliver to the trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of Westlake or any Guarantor, as such, will have any liability for any obligations of Westlake or the Guarantors under the notes, the indenture or the Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws. 101 LEGAL DEFEASANCE AND COVENANT DEFEASANCE Westlake may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding notes and all obligations of the Guarantors discharged with respect to their Guarantees ("Legal Defeasance") except for: (1) the rights of holders of outstanding notes to receive payments in respect of the principal of, or premium, if any, interest or additional interest, if any, on such notes when such payments are due from the trust referred to below; (2) Westlake's obligations with respect to the notes concerning issuing temporary notes, registration of transfer or exchange of notes, mutilated, destroyed, lost or stolen notes, the furnishing to the trustee of lists of holders and the maintenance of an office or agency for registration of transfer or exchange or for payment and money for security payments held in trust; (3) the rights, powers, trusts, duties and immunities of the trustee, and Westlake's obligations in connection therewith; and (4) the Legal Defeasance provisions of the indenture. In addition, Westlake may, at its option and at any time, elect to have the obligations of Westlake and the Guarantors released with respect to certain covenants (including its obligation to make Change of Control Offers and Asset Sale Offers) that are described in the indenture ("Covenant Defeasance") and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "-- Events of Default and Remedies" will no longer constitute an Event of Default with respect to the notes. In order to exercise either Legal Defeasance or Covenant Defeasance: (1) Westlake must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the notes, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, premium, if any, interest and additional interest, if any, on the outstanding notes on the Stated Maturity or on the applicable redemption date, as the case may be, and Westlake must specify whether the notes are being defeased to maturity or to a particular redemption date; (2) in the case of Legal Defeasance, Westlake has delivered to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that (a) Westlake has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the date of the indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon, such opinion of counsel will confirm that, the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (3) in the case of Covenant Defeasance, Westlake has delivered to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (4) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); (5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the indenture) to which 102 Westlake or any of its Subsidiaries is a party or by which Westlake or any of its Subsidiaries is bound; (6) Westlake must deliver to the trustee an officers' certificate stating that the deposit was not made by Westlake with the intent of preferring the holders of notes over any other creditors of Westlake with the intent of defeating, hindering, delaying or defrauding any other creditors of Westlake or others; and (7) Westlake must deliver to the trustee an officers' certificate and an opinion of counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the indenture or the notes may be amended or supplemented with the consent of the holders of at least a majority in principal amount of the notes then outstanding as a single class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes), and any existing default or compliance with any provision of the indenture or the notes may be waived with the consent of the holders of a majority in principal amount of the then outstanding notes as a single class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes). Without the consent of each noteholder affected, an amendment or waiver may not (with respect to any notes held by a non-consenting holder): (1) reduce the percentage of principal amount of notes whose holders must consent to an amendment, supplement or waiver; (2) reduce, or change the Stated Maturity of, the principal of any note, change the date on which any of the notes may be subject to redemption or repurchase or reduce the redemption or repurchase price of the notes; (3) reduce the rate of or change the time for payment of interest on any note; (4) waive a Default or Event of Default in the payment of principal of, premium, if any, interest or additional interest, if any, on, the notes (except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration); (5) make any note payable in money other than that stated in the notes; (6) make any change in the provisions of the indenture relating to waivers of past Defaults or Events of Default or the rights of holders of notes to receive payments of principal of, premium, if any, interest or additional interest, if any, on, the notes; (7) waive a redemption payment with respect to any note (other than a payment required by one of the covenants described above under the caption "-- Repurchase at the Option of Holders"); (8) release any Guarantor from any of its obligations under its Guarantee or the indenture, except in accordance with the terms of the indenture; or (9) make any change in the preceding amendment and waiver provisions. Notwithstanding the preceding, without the consent of any holder of notes, Westlake, the Guarantors and the trustee may amend or supplement the indenture or the notes: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for uncertificated notes in addition to or in place of certificated notes; 103 (3) to provide for the assumption of Westlake's or a Guarantor's obligations to holders of notes in the case of a merger or consolidation or sale of all or substantially all of its assets pursuant to the indenture; (4) to make any change that would provide any additional rights or benefits to the holders of notes or that does not adversely affect in any material respect the legal rights under the indenture of any such holder; (5) to provide any security for, any guarantees of or any additional obligors on the notes or the Guarantees, or to confirm and evidence the release, termination or discharge of any such security or guarantee when such release, termination or discharge is permitted by the indenture; (6) to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act; or (7) to conform the text of the indenture or the notes to any provision of this Description of Notes to the extent that such provision in this Description of Notes was intended to be a substantially verbatim recitation of a provision of the indenture, the Guarantees or the notes. SATISFACTION AND DISCHARGE The indenture will be discharged and will cease to be of further effect as to all notes and Guarantees issued thereunder, when: (1) either: (a) all notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust and thereafter repaid to Westlake or discharged from that trust, have been delivered to the trustee for cancellation; or (b) all notes that have not been delivered to the trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and Westlake or any Guarantor has irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, with consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the notes not delivered to the trustee for cancellation for principal, any premium and accrued interest and additional interest, if any, to the date of maturity or redemption; (2) no Default or Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which Westlake or any Guarantor is a party or by which Westlake or any Guarantor is bound; (3) Westlake or any Guarantor has paid or caused to be paid all sums payable by it under the indenture; and (4) Westlake has delivered irrevocable instructions to the trustee under the indenture to apply the deposited money toward the payment of the notes at maturity or the redemption date, as the case may be. In addition, Westlake must deliver an officers' certificate and an opinion of counsel to the trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. 104 CONCERNING THE TRUSTEE If the trustee becomes a creditor of Westlake or any Guarantor, the indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign. The holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that in case an Event of Default occurs and is continuing, the trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of notes, unless such holder has offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense. BOOK-ENTRY, DELIVERY AND FORM The notes will be issued only in fully registered form, without exception. We will issue the new notes in the form of one or more permanent global notes (the "Global Notes") in definitive, fully registered, book-entry form. The Global Notes will be deposited with or on behalf of The Depository Trust Company and registered in the name of Cede & Co., as nominee of DTC, or will remain in the custody of the trustee in accordance with the FAST Balance Certificate Agreement between DTC and the trustee. Westlake has appointed the trustee at its corporate trust office as paying agent, transfer agent and registrar for the notes. In such capacities, the trustee is responsible for, among other things, (i) maintaining a record of the aggregate holdings of notes represented by the Global Notes, and accepting notes for exchange and registration of transfer, (ii) ensuring that payments of principal, premium, if any, and interest in respect of the notes received by the trustee from Westlake are duly paid to DTC or its nominees and (iii) transmitting to Westlake any notices from Holders. Westlake will cause the transfer agent to act as registrar and will cause to be kept at the office of the transfer agent a register in which, subject to such reasonable regulations as it may prescribe, Westlake will provide for the registration of the notes and registration of transfers of the notes. Westlake may vary or terminate the appointment of the paying agent or the transfer agent, or appoint additional or other such agents or approve any change in the office through which any such agent acts, provided that there shall at all times be a paying agent and a transfer agent in the Borough of Manhattan, The City of New York, New York. Westlake will cause notice of any resignation, termination or appointment of the trustee or any paying agent or transfer agent, and of any change in the office through which any such agent will act, to be provided to holders of the notes. EXCHANGES OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES A beneficial interest in a Global Note may not be exchanged for a note in certificated form unless: - DTC (x) notifies Westlake that it is unwilling or unable to continue as Depository for such Global Note or (y) has ceased to be a clearing agency registered under the Exchange Act and, in each case, a successor Depository has not been appointed within 90 days of that notice; - there shall have occurred and be continuing an Event of Default with respect to the notes, and DTC requests the issuance of certificated notes; or - Westlake determines not to have the notes represented by a Global Note. In all cases, certificated notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in approved denominations, requested by or on behalf of DTC (in accordance with its customary procedures). Any such exchange will be effected only through the 105 DWAC System and an appropriate adjustment will be made in the records of the security register to reflect a decrease in the principal amount of the relevant Global Note. GLOBAL NOTES The following description of the operations and procedures of DTC is provided solely as a matter of convenience. These operations and procedures are solely within the control of DTC and are subject to change from time to time. Westlake and the Guarantors take no responsibility for these operations and procedures and urge investors to contact DTC or its participants directly to discuss these matters. Upon the issuance of the Global Notes, DTC will credit, on its internal system, the respective principal amount of the individual beneficial interests represented by such Global Notes to the accounts with DTC ("participants") or persons who hold interests through participants. Ownership of beneficial interests in the Global Notes will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants), and the records of participants (with respect to interest of persons other than participants). As long as DTC, or its nominee, is the registered holder of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner and holder of the notes represented by such Global Note for all purposes under the indenture and the notes. Except in the limited circumstances described above under "-- Exchanges of Book-Entry Notes for Certificated Notes," owners of beneficial interests in a Global Note will not be entitled to have any portions of such Global Note registered in their names, will not receive or be entitled to receive physical delivery of notes in certificated form and will not be considered the owners or holders of the Global Note (or any notes presented thereby), under the indenture or the notes. In addition, no beneficial owner of an interest in a Global Note will be able to transfer that interest except in accordance with DTC's applicable procedures (in addition to those under the indenture referred to herein). In the event that owners of beneficial interests in a Global Note become entitled to receive notes in certificated form, such notes will be issued only in registered form in denominations of $1,000 and integral multiples thereof. The laws of some states require that certain persons take physical delivery in certificated form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such persons may be limited to that extent. Because DTC can act only on behalf of participants, which in turn act on behalf of indirect participants and certain banks, the ability of a person having beneficial interests in a Global Note to pledge such interests to persons or entities that do not participate in the DTC system, or otherwise take action in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests. Payments of the principal of and any premium and interest on Global Notes will be made to DTC or its nominee as the registered owner thereof. Neither Westlake, the trustee nor any of their respective agents will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Beneficial interests in the Global Notes will trade in DTC's Same-Day Funds Settlement System, and secondary market trading activity in such interests will therefore settle in immediately available funds. Westlake expects that DTC or its nominee, upon receipt of any payment of principal or interest in respect of a Global Note representing any notes held by it or its nominee, will immediately credit participants' accounts with payment in amounts proportionate to their respective beneficial interests in the principal amount of such Global Notes for such notes as shown on the records of DTC or its nominee. Westlake also expects that payments by participants to owners of beneficial interests in such Global Notes held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in "street name." Such payments will be the responsibility of such participants. Transfers between participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds. 106 DTC has advised Westlake that it will take any action permitted to be taken by a holder of notes (including the presentation of notes for exchange as described below), only at the direction of one or more participants to whose account with DTC interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of the notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default (as defined below), under the notes, DTC reserves the right to exchange the Global Notes for notes in certificated form, and to distribute such notes to its participants. DTC has advised Westlake as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code, as amended, and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical transfer and delivery of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations. Indirect access to the DTC system is available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). Although DTC has agreed to the foregoing procedures in order to facilitate transfers of beneficial ownership interests in the Global Notes among participants of DTC, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither Westlake, the trustee nor any of their respective agents will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations, including maintaining, supervising or reviewing the records relating to, or payments made on account of, beneficial ownership interests in Global Notes. SAME-DAY SETTLEMENT AND PAYMENT Westlake will make payments in respect of the notes represented by the Global Notes (including principal, premium, if any, interest and additional interest, if any), by wire transfer of immediately available funds to the accounts specified by the holder of the Global Note. The notes represented by the Global Notes are expected to trade in DTC's Same-Day Funds Settlement System, and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately available funds. REGISTRATION RIGHTS; ADDITIONAL INTEREST The following description is a summary of the material provisions of the registration rights agreement. It does not restate that agreement in its entirety. We urge you to read the registration rights agreement in its entirety because it, and not this description, defines your registration rights as holders of the notes. The registration rights agreement has been filed as an exhibit to the registration statement of which this prospectus is a part. In connection with the issuance of the old notes, Westlake, the Guarantors and the initial purchasers entered into the registration rights agreement. Pursuant to the registration rights agreement, Westlake and the Guarantors agreed to file with the SEC a registration statement on the appropriate form relating to a registered exchange offer for the notes. Unless the exchange offer would not be permitted by applicable law or SEC policy, Westlake and the Guarantors will: (1) file an exchange offer registration statement with the SEC and use all commercially reasonable efforts to have the exchange offer registration statement declared effective by the SEC as soon as practicable on or prior to 180 days after the issue date of the old notes; and 107 (2) following the effectiveness of the exchange offer registration statement: - commence the exchange offer; and - use all commercially reasonable efforts to consummate the exchange offer on or prior to 30 business days, or longer if required by the federal securities laws, after the date on which the exchange offer registration statement was declared effective by the SEC and issue new notes in exchange for all old notes tendered prior thereto in the exchange offer. Westlake will keep the exchange offer open for at least 20 business days (or longer, if required by applicable law) after the date notice of the exchange offer is mailed to the holders of the old notes. During the exchange offer, Westlake will offer to all holders of old notes who are legally eligible to participate in the exchange offer the opportunity to exchange their old notes for new notes. If any initial purchaser holds any old notes acquired by it that have the status of an unsold allotment in the initial distribution of the old notes, Westlake will issue and deliver to that initial purchaser in a private exchange, upon request and in exchange for the old notes held by that initial purchaser, a like aggregate principal amount of Westlake's debt securities that are identical in all material respects to the new notes. These private exchange notes will, however, be subject to transfer restrictions. The registration rights agreement also provides that Westlake and the Guarantors will: - use commercially reasonable efforts to make available, for up to 180 days after the consummation of the exchange offer, a prospectus for use in connection with any resale of the new notes received by broker-dealers in exchange for old notes acquired as a result of market-making activities or other trading activities, as described below under "Plan of Distribution"; and - pay certain expenses incident to the exchange offer and indemnify specified holders of the new notes (including broker-dealers) against certain liabilities, including liabilities under the Securities Act. A broker-dealer that delivers this prospectus to purchasers in connection with resales of new notes will be subject to civil liability provisions under the Securities Act in connection with those sales and will be bound by the applicable provisions of the registration rights agreement, including the indemnification obligations. If you desire to tender your old notes, you will be required to make to us the representations described above under "The Exchange Offer -- Procedures for Tendering -- Your Representations to Us" to participate in the exchange offer. If: (1) Westlake and the Guarantors are not permitted to consummate the exchange offer as contemplated by the registration rights agreement because the exchange offer is not permitted by applicable law or SEC policy; or (2) any initial purchaser so requests with respect to old notes (or private exchange notes) not eligible to be exchanged for new notes in the exchange offer and held by it following consummation of the exchange offer; (3) any holder of Transfer Restricted Notes (as defined below) notifies Westlake prior to the 20th day following consummation of the exchange offer that: - it is prohibited by law or SEC policy from participating in the exchange offer; - it may not resell the new notes acquired by it in the exchange offer to the public without delivering a prospectus and the prospectus contained in the exchange offer registration statement is not appropriate or available for such resales by it; or - it is a broker-dealer and owns old notes acquired directly from Westlake or an affiliate of Westlake, 108 Westlake and the Guarantors will file with the SEC a shelf registration statement to cover resales of the Transfer Restricted Notes by any such holder. If obligated to file a shelf registration statement, Westlake and the Guarantors will use all commercially reasonable efforts to: - file the shelf registration statement with the SEC on or prior to the later of (a) 90 days after the issue date of the old notes and (b) 60 days after such filing obligation arises; and - cause the shelf registration statement to be declared effective by the SEC as soon as practicable on or prior to 90 days after the date on which Westlake and the Guarantors are required to file the shelf registration statement. A holder who sells notes pursuant to the shelf registration statement generally will be required to be named as a selling securityholder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the registration rights agreement applicable to such a holder, including certain indemnification obligations. In addition, each holder of the notes will be required to deliver information to be used in connection with the shelf registration statement in order to have its notes included in the shelf registration statement, and Westlake will not be required to pay additional interest, as described below, to a holder who has not furnished certain information specified in the registration rights agreement. For purposes of the preceding, "Transfer Restricted Notes" means each old note until: - the date on which such note has been exchanged by a person other than a broker-dealer for a new note in the exchange offer; - following the exchange by a broker-dealer in the exchange offer of an old note for a new note, the date on which such new note is sold to a purchaser in whose hands those new notes are freely tradable under the Securities Act; - the date on which such note has been effectively registered under the Securities Act and disposed of in accordance with the shelf registration statement; - the date on which such note is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act; or - the date on which such note ceases to be outstanding. Westlake may suspend the availability of a registration statement and the use of the related prospectus for resales of Transfer Restricted Notes if: - such action is required by applicable law; - such action is taken by Westlake in good faith and for valid business reasons, including the possible acquisition or divestiture of assets or a material corporate transaction or event; or - the happening of any event or the discovery of any fact makes any statement made in the registration statement or the related prospectus untrue in any material respect or constitutes an omission to state a material fact in the registration statement or the related prospectus. The period for which Westlake is obligated to keep the registration statement effective will be extended by the period of such suspension. Each holder of Transfer Restricted Notes will be required to discontinue disposition of Transfer Restricted Notes pursuant to that registration statement upon receipt from Westlake of notice of any events described in the preceding paragraph or certain other events specified in the registration rights agreement. If: (1) Westlake and the Guarantors fail to file any of the registration statements required by the registration rights agreement on or before the date specified for such filing; or 109 (2) any of such registration statements is not declared effective by the SEC on or prior to the date specified for such effectiveness; or (3) Westlake and the Guarantors fail to consummate the exchange offer on or prior to the date specified for such consummation; or (4) the shelf registration statement or the exchange offer registration statement is declared effective but thereafter ceases to be effective or usable in connection with resales of Transfer Restricted Notes covered thereby during the periods specified in the registration rights agreement, except during limited periods as a result of the exercise by Westlake of its right to suspend use of a registration statement and the related prospectus as described above, (each such event referred to in clauses (1) through (4) above, a "Registration Default"), then Westlake and the Guarantors will pay additional interest to each holder of Transfer Restricted Notes affected thereby, with respect to the first 90-day period immediately following the occurrence of the first Registration Default, in an amount equal to $0.05 per week per $1,000 principal amount of notes held by such holder. The weekly amount of the additional interest per $1,000 principal amount of notes will increase by an additional $0.05 for each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of additional interest for all Registration Defaults of $0.40 per week per $1,000 principal amount of notes. Westlake will not be required to pay additional interest for more than one Registration Default at any given time, and additional interest will accrue only for those days that a Registration Default occurs and is continuing. Following the cure of all Registration Defaults, the accrual of additional interest will cease. Additional interest will not be payable on any notes other than Transfer Restricted Notes. A holder will not be entitled to receive any additional interest on any Transfer Restricted Notes if that holder was, at the time the exchange offer was pending and consummated, eligible to exchange, and did not validly tender or withdrew, Transfer Restricted Notes for new notes in the exchange offer. All accrued additional interest will be paid by Westlake on each interest payment date to the holders entitled to the payment in the same manner and at the same time as regular interest on the notes is paid. GOVERNING LAW New York law governs the indenture, the registration rights agreement and the notes. OTHER Westlake will make all payments on the notes without withholding or deducting any taxes or other governmental charges imposed by a United States jurisdiction, unless it is required to do so by applicable law. If Westlake is required to withhold taxes, it will not pay any additional, or gross up, amounts with respect to the withholding or deduction. Westlake may at any time purchase notes on the open market or otherwise at any price. Westlake will surrender all notes that it redeems or purchase to the trustee for cancellation, and may not reissue or resell any of these notes. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the indenture. Reference is made to the indenture for a full definition of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Accounts Receivable Subsidiary" means any Wholly Owned Subsidiary of Westlake (i) which is formed solely for the purpose of, and which engages in no substantial activities other than activities in connection with, financing accounts receivable of Westlake and/or its Restricted Subsidiaries, (ii) which is designated by Westlake as an Accounts Receivables Subsidiary pursuant to an officers' certificate delivered to the trustee, (iii) no portion of Indebtedness or any other obligation (contingent or otherwise) of which 110 is at any time recourse to or obligates Westlake or any Restricted Subsidiary in any way, or subjects any property or asset of Westlake or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to (1) representations, warranties and covenants (or, any indemnity with respect to such representations, warranties and covenants) entered into in the ordinary course of business in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to such Accounts Receivable Subsidiary or (2) any guarantee of any such accounts receivable financing by Westlake or any Restricted Subsidiary that is permitted to be incurred pursuant to the covenants described under the caption entitled "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" and "-- Restricted Payments," (iv) with which neither Westlake nor any Restricted Subsidiary has any contract, agreement, arrangement or understanding other than contracts, agreements, arrangements and understandings entered into in the ordinary course of business in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable in accordance with the covenant described under the caption "-- Certain Covenants -- Accounts Receivable Facilities" and fees payable in the ordinary course of business in connection with servicing accounts receivable and (v) with respect to which neither Westlake nor any Restricted Subsidiary has any obligation (a) to subscribe for additional Equity Interests therein or make any additional capital contribution or similar payment or transfer thereto other than in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to such Accounts Receivable Subsidiary in accordance with the covenant described under "-- Certain Covenants -- Accounts Receivable Facilities" or (b) to maintain or preserve the solvency, any balance sheet term, financial condition, level of income or results of operations thereof. "Acquired Debt" means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien that, at the time of acquisition of an asset by such specified Person, encumbers such asset. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Applicable Premium" means, with respect to any note on any redemption date, the greater of: (1) 1.0% of the principal amount of the note; or (2) the excess, if any, of: (a) the present value on such redemption date of (i) the redemption price of the note at July 15, 2007 (such redemption price being set forth in the table appearing above under the caption "-- Optional Redemption") plus (ii) all required interest payments due on the note through July 15, 2007 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the principal amount of the note. 111 "Asset Sale" means: (1) the sale, lease, conveyance or other disposition (other than the creation of a Lien) of any assets or rights; provided that the sale, conveyance or other disposition of all or substantially all of the assets of Westlake and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described above under the caption "-- Repurchase at the Option of Holders -- Change of Control" and/or the provisions described above under the caption "-- Certain Covenants -- Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset Sale covenant; and (2) the issuance of Equity Interests in any of Westlake's Restricted Subsidiaries or the sale by Westlake or any Restricted Subsidiary of Equity Interests in any of its Subsidiaries or Joint Ventures. Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale: (1) any single transaction or series of related transactions for which Westlake or its Restricted Subsidiaries receive aggregate consideration of less than $15.0 million; (2) a transfer of assets between or among Westlake and/or its Restricted Subsidiaries; (3) an issuance of Equity Interests by a Restricted Subsidiary to Westlake or to a Restricted Subsidiary of Westlake; (4) the sale or lease of products, services, accounts receivable, rolling stock, barges, pipeline capacity or chemical products in the ordinary course of business and any sale or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business; (5) a sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable and/or related assets to an Accounts Receivable Subsidiary in connection with any Receivables Facility; (6) the sale or other disposition of cash or Cash Equivalents; or (7) a Restricted Payment that does not violate the covenant described above under the caption "-- Certain Covenants -- Restricted Payments" or a Permitted Investment. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided, however, that if such sale and leaseback transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of "Capital Lease Obligation." "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. "Board of Directors" means: (1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board; (2) with respect to a partnership, the Board of Directors of the general partner of the partnership; 112 (3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and (4) with respect to any other Person, the board or committee of such Person serving a similar function. "Borrowing Base" means, as of any date, an amount equal to: (1) 75% of the face amount of all accounts receivable owned by Westlake and its Subsidiaries as of the end of the most recent fiscal quarter preceding such date that were not more than 90 days past due; plus (2) 55% of the book value of all inventory owned by Westlake and its Subsidiaries as of the end of the most recent fiscal quarter preceding such date. "Capital Lease Obligation" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. "Capital Stock" means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. "Cash Equivalents" means: (1) United States dollars; (2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one-year from the date of acquisition; (3) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of "B" or better; (4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; (5) commercial paper having one of the two highest ratings obtainable from Moody's or S&P and in each case maturing within nine months after the date of acquisition; and (6) investments in any U.S. dollar denominated money market fund as defined by Rule 2a-7 under the Investment Company Act of 1940. 113 "Change of Control" means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Westlake and its Restricted Subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d) of the Exchange Act) other than a Principal or a Related Party of a Principal; (2) the adoption of a plan relating to the liquidation or dissolution of Westlake; (3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties or a Permitted Group, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of Westlake, measured by voting power rather than number of shares, other than in any transaction that complies with clause (4) below; (4) Westlake consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, Westlake, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of Westlake or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of Westlake outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance); or (5) after an initial public offering of common stock of Westlake or any direct or indirect parent of Westlake, the first day on which a majority of the members of the Board of Directors of Westlake are not Continuing Directors. "Consolidated Cash Flow" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication: (1) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus (2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period (including any provision for taxes on the Net Income of any Joint Venture that is a pass-through entity for federal income tax purposes, to the extent such taxes are paid or payable by such Person or any of its Restricted Subsidiaries, provided, however, that such provision for taxes shall only be equal to such Person's proportional share in the Joint Venture), to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus (3) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus (4) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus (5) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business; in each case, on a consolidated basis and determined in accordance with GAAP. 114 Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary of Westlake will be added to Consolidated Net Income to compute Consolidated Cash Flow of Westlake only to the extent that a corresponding amount would be permitted at the date of determination to be distributed as a dividend to Westlake by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person; (2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; (3) the cumulative effect of a change in accounting principles will be excluded; and (4) notwithstanding clause (1) above, the Net Income (but not loss) of any Unrestricted Subsidiary will be excluded, whether or not distributed to the specified Person or one of its Subsidiaries. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of Westlake who: (1) was a member of such Board of Directors on the date of the indenture; or (2) was nominated for election or elected or appointed to such Board of Directors with the approval of, or whose nomination for election by the stockholders was approved by, a majority of the Continuing Directors who were members of such Board at the time of such nomination, appointment or election. "Credit Agreement" means, collectively, (i) the credit agreement dated as of July 31, 2003 among Westlake, the guarantors and other Subsidiaries of Westlake named therein, Bank of America, N.A., Banc of America Securities LLC and the financial institutions named therein providing for a revolving credit facility as described under "Description of Certain Indebtedness -- New Credit Facility" and (ii) the credit agreement dated as of July 31, 2003 among Westlake, the Subsidiaries of Westlake named therein, Bank of America, N.A. and the other lenders named therein providing for a term loan as described under "Description of Certain Indebtedness -- New Term Loan," in each case including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith and in each case as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Credit Facilities" means, one or more debt facilities (including, without limitation, the Credit Agreement and any Receivable Facility) or commercial paper facilities, in each case with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to Accounts Receivable Subsidiaries) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (including by 115 means of sales of debt securities to institutional investors) in whole or in part from time to time, whether or not with the same lenders or agents. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require Westlake to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that Westlake may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." The amount of Disqualified Stock deemed to be outstanding at any time for purposes of the indenture will be the maximum amount that Westlake and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends. "Domestic Subsidiary" means any Restricted Subsidiary of Westlake that was formed under the laws of the United States or any state of the United States or the District of Columbia or that guarantees or otherwise provides direct credit support for any Indebtedness of Westlake. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Existing Indebtedness" means the Indebtedness of Westlake and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the date of the indenture, including all reimbursement obligations with respect to letters of credit outstanding as of that date, in each case until such amounts are repaid. "Fair Market Value" means the price that could be negotiated in an arm's-length transaction between a willing buyer and a willing seller not involving distress or necessity of either party, determined in good faith by the Board of Directors of Westlake (unless otherwise provided in the indenture). "Fixed Charge Coverage Ratio" means, with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during 116 the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect (in accordance with Regulation S-X under the Securities Act) as if they had occurred on the first day of the four-quarter reference period; (2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded; (3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date; (4) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period; (5) any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period; and (6) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months). "Fixed Charges" means, with respect to any specified Person for any period, the sum, without duplication, of: (1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations; plus (2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (3) any interest accruing on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus (4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of Westlake (other than Disqualified Stock) or to Westlake or a Restricted Subsidiary of Westlake, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. However, interest payments on Indebtedness of a Joint Venture shall, in each case, not be deemed Fixed Charges of Westlake or any Restricted Subsidiary as of any date of determination when such Indebtedness is not considered Indebtedness of Westlake or any Restricted Subsidiary. "Foreign Subsidiary" means any subsidiary that is not a Domestic Subsidiary. 117 "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. "General Partner" means a Restricted Subsidiary of Westlake or any of its Restricted Subsidiaries that has no assets and conducts no operations other than its ownership of a general partnership interest in a Joint Venture. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection or deposit in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements (other than with respect to the obligations of a Joint Venture, solely by virtue of a Restricted Subsidiary being the General Partner of such Joint Venture if, as of the date of determination, no payment on such Indebtedness has been made by such General Partner of such Joint Venture and such arrangement would not be classified and accounted for, in accordance with GAAP, as a liability on a consolidated balance sheet of Westlake), or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise). "Guarantors" means each of: (1) each of the Subsidiaries of Westlake listed on schedule A to the indenture; and (2) any other subsidiary that executes a Guarantee of the notes in accordance with the provisions of the indenture; in each case until a successor to such Person becomes such under the applicable provisions of the indenture, and thereafter "Guarantor" means the successor Person. "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under: (1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; (2) other agreements or arrangements designed to manage interest rate risk; and (3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates, currency values or commodity prices. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) in respect of banker's acceptances; (4) representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions; (5) representing the balance deferred and unpaid of the purchase price of any property due more than six months after such property is acquired; or (6) representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit, Attributable Debt and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in 118 accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date will be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and (3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of: (A) the Fair Market Value of such assets at the date of determination, and (B) the amount of the Indebtedness of the other Person. "Investment Grade" means a rating of Baa3 or better by Moody's and BBB- or better by S&P (or, if either such entity ceases to rate the notes for reasons outside of the control of Westlake, the equivalent investment grade credit rating from any other "nationally recognized statistical rating organization" within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by Westlake as a replacement agency). "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commissions, loans, fees, compensation and advances to officers, directors and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Investment" excludes trade credit and accounts receivable in the ordinary course of business and reimbursement obligations in respect of letters of credit and tender, bid, performance, government contract, surety and appeal bonds, in each case solely with respect to obligations of Westlake or any of its Restricted Subsidiaries. If Westlake or any Restricted Subsidiary of Westlake sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of Westlake such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of Westlake, Westlake will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of Westlake's Investments in such Restricted Subsidiary that were not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." The acquisition by Westlake or any Restricted Subsidiary of Westlake of a Person that holds an Investment in a third Person will be deemed to be an Investment by Westlake or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the final paragraph of the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." Except as otherwise provided in the indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value. "Joint Venture" means any joint venture between Westlake and/or any Restricted Subsidiary and any other Person, if such joint venture is: (1) owned 50% or less by Westlake and/or any of its Restricted Subsidiaries; and (2) not directly or indirectly controlled by or under direct or indirect common control of Westlake and/or any of its Restricted Subsidiaries. For purposes of this definition, "control," as used with respect to any entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such 119 entity, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Limited Recourse Stock Pledge" means the pledge of Equity Interests in any Joint Venture or any Unrestricted Subsidiary to secure Non-Recourse Debt of such Joint Venture or Unrestricted Subsidiary, which pledge is made by a Restricted Subsidiary of Westlake, the activities of which are limited to making and managing Investments, and owning Equity Interests, in such Joint Venture or Unrestricted Subsidiary, but only for so long as its activities are so limited. "Moody's" means Moody's Investors Service, Inc. "Net Income" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: (1) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with: (a) any Asset Sale or any disposition pursuant to a sale and leaseback transaction; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by Westlake or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (1) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, (2) taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, (3) amounts required to be paid to holders of minority interests in Restricted Subsidiaries or Joint Ventures as a result of such Asset Sale, (4) amounts required to be applied to the repayment of Indebtedness, other than Indebtedness under a Credit Facility, secured by a Lien on the asset or assets that were the subject of such Asset Sale, or which must by the terms of such Lien or by applicable law be repaid out of the proceeds of such Asset Sale, (5) all payments made with respect to liabilities directly associated with the assets which are the subject of the Asset Sale, including, without limitation, trade payables and other accrued liabilities, and (6) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "Non-Recourse Debt" means Indebtedness: (1) as to which neither Westlake nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; (2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of Westlake or any of its Restricted 120 Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and (3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of Westlake or any of its Restricted Subsidiaries, other than the Equity Interests of a Joint Venture that is not a Restricted Subsidiary or of an Unrestricted Subsidiary pledged by Westlake or any of its Restricted Subsidiaries as a Limited Recourse Stock Pledge. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Pari Passu Indebtedness" means, in the case of the notes, any senior Indebtedness of Westlake and, in the case of the Guarantees of the notes, any senior Indebtedness of the guarantor thereof, including, in each case, Indebtedness and other Obligations outstanding under a Credit Facility. "Permitted Business" means the petrochemical, chemicals, and vinyls or plastic fabrications business and any other businesses related, incidental, complementary or ancillary thereto. "Permitted Group" means any group of investors that is deemed to be a "person" (as that term is used in Section 13(d)(3) of the Exchange Act) at any time prior to Westlake's initial public offering of common stock, provided that no single Person (other than the Principals and their Related Parties) Beneficially Owns (together with its Affiliates) more of the Voting Stock of Westlake that is Beneficially Owned by such group of investors than is then collectively Beneficially Owned by the Principals and their Related Parties in the aggregate. "Permitted Investments" means: (1) any Investment in Westlake or in a Restricted Subsidiary of Westlake that is a Guarantor; (2) any Investment in Cash Equivalents; (3) any Investment by Westlake or any Restricted Subsidiary of Westlake in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary of Westlake and a Guarantor; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, Westlake or a Restricted Subsidiary of Westlake that is a Guarantor; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption "-- Repurchase at the Option of Holders -- Asset Sales"; (5) any acquisition of assets or Capital Stock solely in exchange for the, or out of the net cash proceeds of a substantially concurrent, issuance of Equity Interests (other than Disqualified Stock) of Westlake; (6) any Investments received in settlement, compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of Westlake or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons who are not Affiliates; (7) Investments represented by Hedging Obligations; (8) loans or advances to employees made in the ordinary course of business of Westlake or the Restricted Subsidiary of Westlake in an aggregate principal amount not to exceed $2.0 million at any one time outstanding; 121 (9) Investments in an Accounts Receivable Subsidiary that, as conclusively determined by the Board of Directors of Westlake, are necessary or advisable to effect a Receivables Facility; (10) Limited Recourse Stock Pledges; (11) additional Investments in a Subsidiary of Westlake holding an interest in Suzhou Huasu Plastics Co. Ltd. in an aggregate amount not to exceed $8.5 million; (12) Investments in Joint Ventures in an aggregate amount not to exceed $25.0 million; (13) repurchases of the notes; and (14) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (14) that are at the time outstanding not to exceed $10.0 million. "Permitted Liens" means: (1) Liens on assets of Westlake or any Guarantor securing Pari Passu Indebtedness that is permitted by the terms of the indenture to be incurred and/or securing Hedging Obligations related thereto; (2) Liens in favor of Westlake or any Guarantor; (3) Liens on property of a Person existing at the time such Person becomes a Subsidiary or is merged with or into or consolidated with Westlake or any Subsidiary of Westlake; provided that such Liens were in existence prior to the contemplation of such acquisition, merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with Westlake or the Subsidiary or that becomes a Subsidiary; (4) Liens on property (including Capital Stock) existing at the time of acquisition of the property by Westlake or any Subsidiary of Westlake, provided that such Liens were in existence prior to, and not incurred in contemplation of, such acquisition; (5) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of the second paragraph of the covenant entitled "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" covering only the assets acquired with or financed by such Indebtedness; (6) Liens existing on the date of the indenture; (7) Liens imposed by law, such as carriers', warehousemen's, landlord's and mechanics' Liens, in each case, incurred in the ordinary course of business; (8) Liens created for the benefit of (or to secure) the notes (or Guarantees of the notes); (9) Liens securing reimbursement obligations with respect to commercial letters of credit obtained in the ordinary course of business, consistent with past practices, which encumber documents and other property or assets relating to such letters of credit and products and proceeds thereof; (10) Liens incurred or assumed in connection with the issuance of revenue bonds the interest on which is exempt from federal income taxation pursuant to Section 103(b) of the Internal Revenue Code, including, without limitation, liens as a cash collateral account securing existing reimbursement obligations with respect to a letter of credit issued pursuant thereto; (11) customary Liens for the fees, costs and expenses of trustees and escrow agents pursuant to any indenture, escrow agreement or similar agreement establishing a trust or escrow arrangement; (12) Liens on assets of Westlake or any Restricted Subsidiary arising as a result of a sale and leaseback transaction with respect to such assets; provided that the proceeds from such sale and leaseback transaction are applied to the repayment of Indebtedness or acquisition of assets or the 122 making of capital expenditures pursuant to the covenant described above under the caption "-- Repurchase at Option of Holders -- Asset Sales;" (13) Liens on accounts receivable and related property deemed to arise in connection with any Receivables Facility; (14) the interest of a lessor or licensor under an operating lease or license under which Westlake or any of its Restricted Subsidiaries are lessee, sublessee, or licensee, including protective financing statement filings; (15) Limited Recourse Stock Pledges; (16) Liens encumbering customary initial deposits and margin deposits, netting provisions and setoff rights, in each case securing Indebtedness under Hedging Obligations; (17) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the indenture; provided, however, that: (A) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and (B) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount, of the Permitted Referencing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such refinancings, refunding, extension, renewal or replacement; and (18) Liens incurred in the ordinary course of business of Westlake or any Restricted Subsidiary of Westlake with respect to obligations that do not exceed $10.0 million at any one time outstanding. "Permitted Payments to Parent" means, without duplication as to amounts: (1) payments to the Parent to permit the Parent to pay when due, or the incurrence by Westlake or any Restricted Subsidiary of expenses on behalf of Parent with respect to, reasonable accounting, legal and administrative expenses of the Parent, in an aggregate amount not to exceed $1.0 million per annum; and (2) for so long as Westlake is a member of a group filing a consolidated or combined tax return with the Parent, payments to the Parent in the amount of the relevant tax (including any penalties and interest) that Westlake would owe if Westlake were filing a separate tax return (or a separate consolidated or combined return with its Subsidiaries that are members of the consolidated or combined group), taking into account any carryovers and carrybacks of tax attributes (such as net operating losses) of Westlake and such Subsidiaries from other taxable years. "Permitted Refinancing Indebtedness" means any Indebtedness of Westlake or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of Westlake or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (1) the principal amount (or initial accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount outstanding, or in the case of a revolving line of credit, available (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted 123 Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes or the related Guarantees, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the notes or the related Guarantees, as applicable, on subordination terms at least as favorable to the holders of notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness is incurred either by Westlake or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "Principals" means T.T. Chao, his descendants, including by adoption, and the spouses of any such individuals. "Public Equity Offering" means any underwritten public equity offering of common stock of Westlake yielding gross proceeds to the issuer of at least $25.0 million. "Receivables Facilities" means one or more receivables financing facilities or arrangements, as amended from time to time, pursuant to which Westlake or any of its Restricted Subsidiaries sells (including a sale in exchange for a promissory note of or Equity Interest in an Accounts Receivable Subsidiary) its accounts receivable, related assets and the provision of billing, collection and other services in connection therewith, in each case to an Accounts Receivable Subsidiary. "Receivables Fees" means distributions or payments made directly or by means of discounts with respect to any participation interests issued or sold in connection with, and other fees paid to a Person that is not Westlake or a Restricted Subsidiary in connection with, any Receivables Facility. "Related Party" means: (1) any controlling stockholder, 80% (or more) owned Subsidiary, or immediate family member (in the case of an individual) of any Principal; or (2) any Person, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a 50% or more controlling interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately preceding clause (1). "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. Unless the context otherwise requires, each reference to a "Restricted Subsidiary" shall refer to a Subsidiary of Westlake. "S&P" means Standard & Poor's Ratings Services. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of the indenture. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. 124 "Subsidiary" means, with respect to any specified Person: (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). "Treasury Rate" means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to July 15, 2007; provided, however, that if the period from the redemption date to July 15, 2007, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used. "Unrestricted Subsidiary" means (i) any Accounts Receivable Subsidiary, (ii) a Subsidiary holding an interest in Suzhou Huasu Plastics Co. Ltd., (iii) any Subsidiary of an Unrestricted Subsidiary and (iv) any other Subsidiary of Westlake that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt; (2) is not party to any agreement, contract, arrangement or understanding with Westlake or any Restricted Subsidiary of Westlake unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to Westlake or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of Westlake; (3) is a Person with respect to which neither Westlake nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of Westlake or any of its Restricted Subsidiaries. Any designation of a Subsidiary of Westlake as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a certified copy of the Board Resolution giving effect to such designation and an officers' certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption "-- Certain Covenants -- Restricted Payments." If, at any time, any Unrestricted Subsidiary (other than an Accounts Receivable Subsidiary) designated after the date of the indenture would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of Westlake as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," Westlake will be in default of such covenant. The Board of Directors of Westlake may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of Westlake of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant 125 described under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. "Wholly-Owned" Subsidiary of any specified Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) will at the time be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person and one or more Wholly-Owned Subsidiaries of such Person. 126 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS We have based the following discussion on the current provisions of the Internal Revenue Code of 1986, applicable Treasury regulations, judicial authority and administrative rulings. We have not obtained an opinion of counsel and have not sought a ruling from the Internal Revenue Service, and we can give you no assurance that the IRS will agree with the following discussion. Changes in the applicable law may occur that may be retroactive and could affect the tax consequences to you of the receipt of new notes in exchange for old notes in the exchange offer. We do not discuss the effect of special rules such as those that apply to insurance companies, tax-exempt organizations, financial institutions, broker-dealers, foreign corporations, and a person who is not a citizen or resident of the United States. WE RECOMMEND THAT YOU CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF RECEIVING NEW NOTES IN EXCHANGE FOR OLD NOTES IN THE EXCHANGE OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAW. We believe that the receipt of new notes in exchange for old notes in the exchange offer should not be treated as an exchange for United States federal income tax purposes because the new notes and the old notes are not materially different in kind or in extent, and as a result on the receipt of new notes in exchange for old notes in the exchange offer you should not recognize gain or loss, your initial tax basis in the new notes should be the same as your adjusted tax basis in the old notes immediately before such exchange, and your holding period for the new notes should include your holding period for the old notes. 127 PLAN OF DISTRIBUTION Based on interpretations by the staff of the SEC in no-action letters issued to third parties, we believe that you may transfer new notes issued in the exchange offer in exchange for the old notes if: - you acquire the new notes in the ordinary course of your business; and - you are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of new notes. We believe that you may not transfer new notes issued in the exchange offer in exchange for the old notes if you are: - our "affiliate" within the meaning of Rule 405 under the Securities Act; - a broker-dealer that acquired old notes directly from us; or - a broker-dealer that acquired old notes as a result of market-making activities or other trading activities, unless you comply with the registration and prospectus delivery provisions of the Securities Act. If you wish to exchange your old notes for new notes in the exchange offer, you will be required to make representations to us as described above under "The Exchange Offer -- Procedures for Tendering -- Your Representations to Us" of this prospectus and in the letter of transmittal. In addition, each broker- dealer that receives new notes for its own account in the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of those new notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for old notes where such old notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the expiration date of the exchange offer, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until [ ], 2004, all dealers effecting transactions in the new notes may be required to deliver a prospectus. We are entitled under the registration rights agreement to suspend the use of this prospectus by broker-dealers under specified circumstances. For example, we may suspend the use of this prospectus if: - the SEC requests an amendment or supplement to this prospectus or the related registration statement or additional information; - the SEC issues any stop order suspending the effectiveness of the registration statement or initiates proceedings for that purpose; - we receive notification of the suspension of the qualification of the new notes for sale in any jurisdiction or the initiation or threatening of any proceeding for that purpose; - the suspension is required by law; - the suspension is taken by us in good faith and for valid business reason, including the possible acquisition or divestiture of assets or a material corporate transaction or event; or - the happening of any event or the discovery of any fact makes any statement made in this prospectus untrue in any material respect or constitutes an omission to state a material fact in this prospectus. If we suspend the use of this prospectus, the 180-day period referred to above will be extended by a number of days equal to the period of the suspension. 128 We will not receive any proceeds from any sale of new notes by broker-dealers. New notes received by broker-dealers for their own account in the exchange offer may be sold from time to time in one or more transactions: - in the over-the-counter market; - in negotiated transactions; - through the writing of options on the new notes; or - a combination of those methods of resale. The prices at which these sales occur may be at: - market prices prevailing at the time of resale; - prices related to prevailing market prices; or - negotiated prices. Any resales may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from the selling broker-dealer or the purchasers of the new notes. Any broker-dealer that resells new notes that were received by it for its own account under the exchange offer and any broker or dealer that participates in a distribution of the new notes may be deemed to be an "underwriter" within the meaning of the Securities Act, and any profit on any resale of new notes and any commissions or concessions received by these persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the expiration date of the exchange offer, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incidental to the exchange offer, including the expenses of one counsel for the holders of old notes, other than commissions and concessions of any brokers or dealers. We also have agreed that we will indemnify specified holders of the new notes, including broker-dealers, against certain liabilities, including liabilities under the Securities Act. 129 TRANSFER RESTRICTIONS ON OLD NOTES The old notes were not registered under the Securities Act. Accordingly, we offered and sold the old notes only in private sales exempt from or not subject to the registration requirements of the Securities Act: - to "qualified institutional buyers" under Rule 144A under the Securities Act; and - outside the United States in compliance with Regulation S under the Securities Act. You may not offer or sell those old notes in the United States or to, or for the account or benefit of, U.S. persons except in transactions exempt from or not subject to the Securities Act registration requirements. LEGAL MATTERS Certain legal matters in connection with the offering of the new notes will be passed upon for us by Baker Botts L.L.P., Houston, Texas. EXPERTS The consolidated financial statements as of December 31, 2002 and 2001 and for each of the three years in the period ended December 31, 2002 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 130 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE(S) ------- UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002.................................................. F-2 Consolidated Statements of Operations and Comprehensive Income (Loss) for Six Months Ended June 30, 2003 and 2002...................................................... F-3 Consolidated Statements of Cash Flows for Six Months Ended June 30, 2003 and 2002.................................... F-4 Notes to Consolidated Financial Statements.................. F-5 AUDITED CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Auditors.............................. F-18 Consolidated Balance Sheets as of December 31, 2002 and 2001...................................................... F-19 Consolidated Statements of Operations and Comprehensive Income (Loss) for Years Ended December 31, 2002, 2001 and 2000...................................................... F-20 Consolidated Statements of Changes in Stockholders' Equity for Years Ended December 31, 2002, 2001 and 2000.......... F-21 Consolidated Statements of Cash Flows for Years Ended December 31, 2002, 2001 and 2000.......................... F-22 Notes to Consolidated Financial Statements.................. F-23 Schedule II -- Valuation and Qualifying Accounts............ F-62
F-1 WESTLAKE CHEMICAL CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 30, DECEMBER 31, 2003 2002 ---------- ------------ (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS) ASSETS Current assets Cash and cash equivalents................................. $ 9,587 $ 10,074 Accounts receivable, net.................................. 141,483 123,234 Inventories, net.......................................... 208,229 170,866 Prepaid expenses and other current assets................. 5,900 14,246 Deferred income taxes..................................... 17,052 17,052 ---------- ---------- Total current assets................................. 382,251 335,472 Property, plant and equipment, net.......................... 919,460 935,463 Equity investment........................................... 15,806 14,990 Other assets, net........................................... 37,753 36,128 ---------- ---------- Total assets......................................... $1,355,270 $1,322,053 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable.......................................... $ 77,013 $ 68,207 Accrued liabilities....................................... 75,278 66,454 Current portion of long-term debt......................... 1,200 14,673 ---------- ---------- Total current liabilities............................ 153,491 149,334 Long-term debt.............................................. 494,267 491,677 Deferred income taxes....................................... 139,997 132,782 Other liabilities........................................... 23,144 23,541 ---------- ---------- Total liabilities.................................... 810,899 797,334 ---------- ---------- Minority interest........................................... 82,622 81,294 ---------- ---------- Stockholders' equity Preferred stock, nonvoting, noncumulative, no par value, 1,000 shares authorized; 890 shares issued and outstanding............................................ 89,000 89,000 Common stock, $1 par value, 10,000 shares authorized; 1,115 shares issued and outstanding.................... 1 1 Additional paid-in capital................................ 309,601 304,364 Retained earnings......................................... 65,310 53,636 Minimum pension liability................................. (2,006) (2,006) Cumulative foreign currency translation................... (157) (1,570) ---------- ---------- Total stockholders' equity........................... 461,749 443,425 ---------- ---------- Total liabilities and stockholders' equity........... $1,355,270 $1,322,053 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. F-2 WESTLAKE CHEMICAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ------------------------- 2003 2002 ----------- ----------- (IN THOUSANDS OF DOLLARS) Net sales................................................... $698,557 $485,624 Cost of sales............................................... 635,048 481,681 -------- -------- 63,509 3,943 Selling, general and administrative expenses................ 31,663 26,613 Impairment of long-lived assets............................. 932 -- -------- -------- Income (loss) from operations............................... 30,914 (22,670) OTHER INCOME (EXPENSE) Interest expense............................................ (16,544) (16,221) Other income, net........................................... 6,310 6,530 -------- -------- Income (loss) before income taxes and minority interest..... 20,680 (32,361) -------- -------- PROVISION FOR (BENEFIT FROM) INCOME TAXES Current..................................................... 462 396 Deferred.................................................... 7,215 (12,687) -------- -------- 7,677 (12,291) -------- -------- Income (loss) before minority interest...................... 13,003 (20,070) Minority interest in the net income (loss) of consolidated subsidiary................................................ 1,329 (5,173) -------- -------- Net income (loss)........................................... 11,674 (14,897) OTHER COMPREHENSIVE INCOME (LOSS) Change in foreign currency translation...................... 1,413 526 -------- -------- Comprehensive income (loss)................................. $ 13,087 $(14,371) ======== ========
The accompanying notes are an integral part of these consolidated financial statements. F-3 WESTLAKE CHEMICAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ------------------------- 2003 2002 ----------- ----------- (IN THOUSANDS OF DOLLARS) CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss)........................................... $ 11,674 $(14,897) -------- -------- Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization............................. 42,801 42,768 Provision for bad debts................................... 2,930 5,722 Amortization of debt issue costs.......................... 2,203 917 (Gain) loss from disposition of fixed assets.............. (2,824) 46 Impairment of long-lived assets........................... 932 -- Deferred income taxes..................................... 7,215 (12,687) Minority interest in income (loss)........................ 1,329 (5,173) Changes in operating assets and liabilities Accounts receivable.................................... (21,179) (53,846) Inventories............................................ (37,363) 4,683 Prepaid expenses and other current assets.............. 8,346 (288) Accounts payable....................................... 8,806 (4,854) Accrued liabilities.................................... 8,824 2,954 Other, net............................................. (8,498) (9,229) -------- -------- Total adjustments.................................... 13,522 (28,987) -------- -------- Net cash provided by (used for) operating activities.......................................... 25,196 (43,884) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment.................. (18,977) (21,436) Proceeds from insurance claims.............................. 3,257 1,680 -------- -------- Net cash used for investing activities............... (15,720) (19,756) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Equity contribution from parent............................. 1,037 -- Proceeds from borrowings.................................... 125,500 14,390 Repayments of borrowings.................................... (136,500) (19,433) -------- -------- Net cash used for financing activities............... (9,963) (5,043) -------- -------- Net increase (decrease) in cash and cash equivalents........ (487) (68,683) Cash and cash equivalents at beginning of period............ 10,074 78,991 -------- -------- Cash and cash equivalents at end of period.................. $ 9,587 $ 10,308 ======== ======== Supplemental schedule of noncash investing activities: Contribution of common stock of GVGP, Inc. and Geismar Holdings, Inc.......................................... $ 4,200 ========
The accompanying notes are an integral part of these consolidated financial statements. F-4 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (DOLLARS IN THOUSANDS) 1. BASIS OF FINANCIAL STATEMENTS The accompanying unaudited consolidated financial statements do not include all information and footnotes required for complete financial statements under generally accepted accounting principles in the United States. The financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the financial statements for the years ended December 31, 2002, 2001 and 2000 for Westlake Chemical Corporation (the "Company") presented elsewhere in this prospectus. In the opinion of the Company, the accompanying unaudited interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of the Company's financial position as of June 30, 2003, the results of operations for the six months ended June 30, 2003 and 2002 and the changes in its cash position for the six months ended June 30, 2003 and 2002. Results of operations for the interim periods presented are not necessarily indicative of the results that will be realized for the year ending December 31, 2003 or any other interim period. The financial statements should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2002 and the notes thereto presented elsewhere in this prospectus. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. 2. ACCOUNTS RECEIVABLE Accounts receivable consist of the following:
JUNE 30, DECEMBER 31, 2003 2002 -------- ------------ Accounts receivable -- trade................................ $ 52,000 $ 51,924 Accounts receivable -- affiliates........................... 100,958 80,623 Allowance for doubtful accounts............................. (17,933) (13,382) -------- -------- 135,025 119,165 Taxes receivable............................................ 216 1,235 Accounts receivable -- other................................ 6,242 2,834 -------- -------- $141,483 $123,234 ======== ========
3. INVENTORIES Inventories consist of the following:
JUNE 30, DECEMBER 31, 2003 2002 --------- ------------ Finished product............................................ $138,168 $103,646 Feedstock, additives and chemicals.......................... 52,787 49,534 Materials and supplies...................................... 25,504 26,428 -------- -------- 216,459 179,608 Allowance for inventory obsolescence........................ (8,230) (8,742) -------- -------- Net inventory............................................... $208,229 $170,866 ======== ========
F-5 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) In December 2002, the Company entered into an agreement with an unaffiliated third party to sell 15 million pounds of finished product inventory during 2003 at a fixed price. In accordance with the agreement, the Company will be required to repurchase this inventory throughout 2003 at market prices at the time of the repurchase after certain agreed upon adjustments. Due to the terms of the agreement, cash received from the sale of the inventory is recorded as a liability, which is adjusted to the market value of the inventory to reflect the repurchase obligations. The Company recognized losses of $1,155 for the six months ended June 30, 2003 related to this agreement. No gains or losses were recognized in 2002. As of June 30, 2003 and December 31, 2002, the Company had $2,437 and $4,279, respectively, of inventory separately identified and restricted for use in accordance with this agreement. 4. PROPERTY, PLANT AND EQUIPMENT Depreciation expense on property, plant and equipment of $39,289 and $38,526 is included in cost of sales in the consolidated statement of operations for the six months ended June 30, 2003 and 2002, respectively. The Company recognized a gain from disposition of fixed assets of $2,824 due to $3,257 of insurance proceeds received during the six months ended June 30, 2003. The Company also recognized a $932 impairment charge related to idled Styrene assets during the same period. 5. OTHER ASSETS Amortization expense on other assets of $5,715 and $5,159 is included in selling, general, and administrative expenses in the consolidated statement of operations for the six months ended June 30, 2003 and 2002, respectively. 6. DERIVATIVE COMMODITY INSTRUMENTS The Company had gains of $1,047 in connection with commodity derivatives and inventory repurchase obligations for the six months ended June 30, 2003 compared to gains of $545 for the six months ended June 30, 2002. Derivative gains and losses recorded in the second quarter totaled $2,675 and $545, respectively, for 2003 and 2002. No derivatives gain or loss was recorded in the first quarter of 2002. Risk management asset balances of $3,317 and $185 were included in "Prepaid expenses and other current assets" and risk management liability balances of $524 and $326 were included in "Accrued liabilities" in the Company's balance sheets as of June 30, 2003 and December 31, 2002, respectively. At June 30, 2003, the fair value of the natural gas futures contracts for 880,000 mmbtu and propane forward contracts for 385,000 barrels were obtained from a third party. 7. INCOME TAXES The Company's effective tax rate for the six months ended June 30, 2003 and 2002 was 37% and 38%, respectively. The Company recognized income tax expense of $7,677 for the six months ended June 30, 2003 as compared to a benefit of $12,291 for the six months ended June 30, 2002 as a result of positive earnings for the U.S. operations in the first six months of 2003 as compared to a loss in the first six months of 2002. The effective tax rates for the six months ended June 30, 2003 and 2002 are different from the federal statutory tax rate due to state taxes. 8. COMMITMENTS AND CONTINGENCIES The Company is involved in various legal proceedings in the ordinary course of business. In management's opinion, none of these proceedings will have a material adverse effect on the Company's financial condition, results of operations and cash flows. F-6 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) The Company is subject to environmental laws and regulations that may require it to remove or mitigate the effects of the disposal or release of chemical substances at various sites. Under some of these laws and regulations, a current or previous owner or operator of property may be held liable for the costs of removal or remediation of hazardous substances on, under, or in its property, without regard to whether the owner or operator knew of, or caused the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time they occurred. As several of the Company's production sites have a history of industrial use, it is impossible to predict precisely what effect these laws and regulations will have on the Company in the future. As is typical for chemical businesses, soil and groundwater contamination has occurred in the past at some of the Company's sites, and might occur or be discovered at other sites in the future. The Company has typically conducted extensive soil and groundwater assessments throughout its operations either prior to acquisitions or associated with subsequent permitting requirements. The Company's investigations have not revealed any contamination caused by its operations that would likely require it to incur material long term remediation efforts and associated liabilities. Lake Charles. In the fall of 2000, the Company determined that it was not in compliance with certain Clean Air Act regulations governing emissions of benzene from its two ethylene plants in Lake Charles. The Company voluntarily reported this discovery to the Louisiana Department of Environmental Quality, or LDEQ, and began negotiations to resolve the matter. The Company subsequently expanded the scope of its settlement discussions to include other environmental non-compliance matters at all of its plants in Lake Charles. The Company has reached a tentative settlement with the LDEQ requiring it to pay $815 in penalties and to perform specified beneficial environmental projects that will cost approximately $4,400. A majority of these expenditures has already been made. The LDEQ has requested public comments on the terms of the proposed settlement agreement, and the Company believes that it will be finalized later this year. Calvert City. In connection with the Company's acquisition of the manufacturing complex in Calvert City from Goodrich Corporation ("Goodrich") in 1990 and 1997, Goodrich agreed to indemnify the Company for any liabilities related to pre-existing contamination at the site. Contamination at the Calvert City facilities is currently being investigated and remediated by PolyOne, an entity spun off from Goodrich in 1993 that assumed remediation and indemnification obligations for the site. For the past three years, PolyOne has suggested that the Company's actions after its acquisition of the complex have contributed to or otherwise exacerbated the contamination at the site. The Company has denied those allegations and has retained technical experts to evaluate its position. Goodrich has also asserted similar claims. In addition, Goodrich has asserted that the Company is responsible for a portion of the ongoing costs of treating contaminated groundwater being pumped from beneath the site and has withheld payment for a portion of the costs that the Company incurs to operate Goodrich's pollution control equipment located on the Company's property. The Company met with Goodrich representatives in July and August of 2003 to discuss Goodrich's assertions and has requested further information from Goodrich. In March and June 2002, the EPA's National Enforcement Investigation Center, or NEIC, conducted an environmental investigation of the Company's manufacturing complex in Calvert City. In May 2003, the Company received a report prepared by NEIC summarizing the results of that investigation. Among other things, the NEIC concluded that the requirements of several regulatory provisions had not been met. The Company has begun to analyze the NEIC report and has identified areas where the Company believes that erroneous factual or legal conclusions, or both, may have been drawn by NEIC. The Company has met with the EPA and plans additional meetings with the EPA to review its conclusions. Nevertheless, it is likely that penalties will be imposed or that expenditures for installation of environmental controls will be required, or both, by either the EPA or the Kentucky Department of Environmental Protection as a F-7 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) result of this investigation. At this time, the Company is unable to estimate the amount of penalties or expenditures that may be required. Geismar. In 2003, the Company acquired portions of an idled chemical complex in Geismar, Louisiana that were previously owned and operated by Borden Chemicals, Inc. and Borden Chemicals and Plastics Operating Limited Partnership, or BCP. In 1998, BCP entered into a consent decree with the U.S. Environmental Protection Agency and the LDEQ to investigate and remediate contaminated soil and groundwater at the site. As a part of BCP's bankruptcy reorganization, Borden Chemicals assumed BCP's obligations under the 1998 consent decree in a separate settlement agreement with the EPA and the LDEQ. Early in 2002, the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, was amended to create a new defense against liability for purchasers of contaminated property. The Company believes that it meets the criteria set forth in the statute to take advantage of the "bona fide purchaser" defense with respect to pre-existing contamination as long as, among other things, the Company does not release hazardous substances at the site that create a material effect and the Company cooperates with Borden Chemicals as it performs its remediation obligations at the site. In August 2003, the LDEQ notified the Company that it will first look to Borden Chemicals to address cleanup responsibilities for existing contamination on the property the Company acquired. It is the Company's policy to comply with all environmental, health and safety requirements and to provide safe and environmentally sound workplaces for its employees. In some cases, compliance can be achieved only by incurring capital expenditures, and the Company is faced with instances of non-compliance from time to time. It is difficult to estimate the future costs of environmental protection and remediation because of many uncertainties, including uncertainties about the status of laws, regulations and information related to individual locations and sites and the Company's ability to rely on third parties to carry out such remediation. Subject to the foregoing, but taking into consideration the Company's experience regarding environmental matters of a similar nature and facts currently known, the Company believes that capital expenditures and remedial actions to comply with existing laws governing environmental protection will not have a material adverse effect on the Company's business and financial results. In connection with the purchase of the Calvert City facilities in 1997, the Company acquired 10 barges that it uses to transport chemicals on the Mississippi, Ohio and Illinois Rivers. In April 1999, the U.S. Coast Guard issued a forfeiture order permanently barring the use of the barges in coastwise trade due to an alleged violation of a federal statute regarding the citizenship of the purchaser. The Company appealed the forfeiture order with the Coast Guard and, in June 1999, the Company filed suit in the U.S. Court of Appeals for the D.C. Circuit seeking a stay of the order pending resolution of the Coast Guard appeal. The D.C. Circuit granted the stay and the Company is able to use the barges pending resolution of its appeal with the Coast Guard. The Coast Guard has indicated that it will issue an order resolving the Company's administrative appeal on or about October 2003. The Company is exploring the option of seeking legislative relief through a private bill from the U.S. Congress, and the Coast Guard has stated that it will not oppose such efforts. The Company does not believe that the ultimate outcome of this matter will have a material adverse effect on its business, although there can be no assurance in this regard. In March 2002, the Company was awarded $16,300, plus legal fees and costs, by the U.S. District Court of the Western District of Louisiana, resulting from the Company's counterclaim in the Taita Chemical Company, LTD ("Taita") vs. Westlake Styrene Corporation ("WSC") lawsuit. The suit was brought by Taita in 1997 to recoup alleged overpayments relative to a styrene purchase agreement between Taita and WSC. The case is currently on appeal and scheduled for a hearing on September 3, 2003. No gain or loss was recognized as of June 30, 2003 or December 31, 2002. F-8 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) The Company has various purchase commitments for materials, supplies and services incident to the ordinary conduct of business. Such commitments are at prices not in excess of market prices. Certain feedstock purchase commitments require taking delivery of minimum volumes at market-determined prices. 9. SEGMENT INFORMATION The Company operates in two principal business segments: Olefins and Vinyls. These segments are strategic business units that offer a variety of different products. The Company manages each segment separately as each business requires different technology and marketing strategies.
SIX MONTHS ENDED JUNE 30, ------------------- 2003 2002 -------- -------- SALES TO EXTERNAL CUSTOMERS Olefins..................................................... $432,088 $258,473 Vinyls...................................................... 266,469 227,151 -------- -------- $698,557 $485,624 ======== ======== INTERSEGMENT SALES Olefins..................................................... $ 18,548 $ 14,872 Vinyls...................................................... 315 257 -------- -------- $ 18,863 $ 15,129 ======== ======== INCOME (LOSS) FROM OPERATIONS Olefins..................................................... $ 24,992 $(12,613) Vinyls...................................................... 9,632 (7,858) Corporate and other......................................... (3,710) (2,199) -------- -------- $ 30,914 $(22,670) ======== ======== CAPITAL EXPENDITURES Olefins..................................................... $ 11,196 $ 13,753 Vinyls...................................................... 7,675 7,587 Corporate and other......................................... 106 96 -------- -------- $ 18,977 $ 21,436 ======== ========
JUNE 30, DECEMBER 31, 2003 2002 ---------- ------------ ASSETS Olefins..................................................... $ 910,291 $ 903,569 Vinyls...................................................... 375,127 350,684 Corporate and other......................................... 69,852 67,800 ---------- ---------- $1,355,270 $1,322,053 ========== ==========
F-9 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) A reconciliation of total segment income (loss) from operations to consolidated income (loss) before taxes is as follows:
SIX MONTHS ENDED JUNE 30, ------------------- 2003 2002 -------- -------- Income (loss) from operations for reportable segments....... $ 30,914 $(22,670) Interest expense............................................ (16,544) (16,221) Other income, net........................................... 6,310 6,530 -------- -------- Income (loss) before taxes.................................. $ 20,680 $(32,361) ======== ========
10. STOCKHOLDERS' EQUITY In April 2003, the Company's parent contributed the stock of Geismar Holdings, Inc. and GVGP, Inc. to the Company. These entities are the partners of Geismar Vinyls Company LP (GVC). GVC's assets, which consist of a vinyls facility in Geismar, Louisiana, were purchased by the parent company in December 2002 for $5.0 million in cash. In addition, a percentage of earnings during the first two years of operations, not to exceed $4.0 million, is to be paid by the Company. The contribution was recognized on the Company's balance sheet as an increase to additional paid in capital. As of June 30, 2003, the financial statements of GVC are consolidated in the accompanying financial statements. Although the Geismar facility was idle as of the date of its acquisition by the parent company and remains idle, the Company intends to operate the facility when market conditions support utilization of the additional capacity. 11. SUBSEQUENT EVENTS On July 31, 2003, the Company completed a refinancing of substantially all of its outstanding long-term debt. The Company used net proceeds from the refinancing of approximately $507.4 million to: - repay in full all outstanding amounts under its existing revolving credit facility, term loan and 9.5% Series A and Series B notes, including accrued and unpaid interest, fees and a $4.0 million make- whole premium to the noteholders; and - provide $2.4 million in cash collateral for outstanding letter of credit obligations of $2.2 million. In conjunction with the refinancing, the Company terminated its accounts receivable securitization facility by repurchasing all accounts receivable previously sold to its unconsolidated accounts receivables securitization subsidiary. No gain or loss was recognized as a result of the accounts receivable repurchase. The Company also obtained a $12.4 million letter of credit to secure its obligations under a letter of credit reimbursement agreement related to outstanding tax-exempt bonds. As a result of the refinancing, the Company will recognize $11.3 million in non-operating expense in the third quarter of 2003 consisting of the $4.0 million make-whole premium and a write-off of $7.3 million in previously capitalized debt issuance expenses. The refinancing consisted of: - $380.0 million in aggregate principal amount of privately placed 8 3/4% senior notes due 2011; - $120.0 million senior secured term loan due in 2010; and - $21.0 million in borrowings under a new $200.0 million senior secured working capital revolving credit facility due in 2007. F-10 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) The Company incurred approximately $13.6 million in costs associated with the refinancing that will be capitalized and amortized over the term of the new debt. The 8 3/4% senior notes are unsecured. There is no sinking fund and no scheduled amortization of the notes prior to maturity. The notes are subject to redemption, and holders may require the Company to repurchase the notes upon a change of control. All domestic restricted subsidiaries are guarantors of the senior notes. See Note 12. The term loan bears interest at either LIBOR plus 3.75% or prime rate plus 2.75%. Quarterly principal payments of $0.3 million are due on the term loan beginning on September 30, 2003, with the balance due in four equal quarterly installments in the seventh year of the loan. Mandatory prepayments are due on the term loan with the proceeds of asset sales and casualty events subject, in some instances, to reinvestment provisions. The term loan also requires prepayment with 50% of excess cash flow as determined under the term loan agreement. The term loan is secured by the Company's Lake Charles and Calvert City facilities and some related general intangibles. The revolving credit facility bears interest at either LIBOR plus 2.25% or prime rate plus 0.25%, subject to a grid pricing adjustment based on a fixed charge coverage ratio after the first year and subject to a 0.5% unused line fee. The revolving credit facility is also subject to a termination fee if terminated during the first two years. The revolving credit facility is secured by accounts receivable and contract rights, inventory, chattel paper, instruments, documents, deposit accounts and related general intangibles. The revolving credit facility matures in 2007. The agreements governing the 8 3/4% senior notes, the new term loan and the revolving credit facility each contain customary representations, conditions and events of default. Accordingly, these agreements impose significant operating and financial restrictions on the Company. These restrictions, among other things, provide limitations on incurrence of additional indebtedness, the payment of dividends, significant investments and sale of assets. These limitations are subject to a number of important qualifications and exceptions. None of the agreements require the Company to maintain specified financial ratios, except that the Company's new revolving credit facility requires the Company to maintain a minimum fixed charge coverage ratio when availability falls below a specified minimum level. On August 1, 2003, the Company received a capital contribution from its parent company consisting of 20% of common stock of Westlake Olefins Corporation (WOC). As a result of this contribution, the Company now owns 100% of WOC. This contribution eliminated the minority interest balance of $82.4 million as of August 1, 2003 (the effective date of the contribution). This transaction is recognized as an increase in additional paid in capital of the Company. 12. GUARANTOR DISCLOSURES The Company's payment obligations under its 8 3/4% senior notes are fully and unconditionally guaranteed by each of its current and future domestic restricted subsidiaries (the "Guarantor Subsidiaries"). These guarantees are the joint and several obligations of the Guarantor Subsidiaries. The following unaudited condensed consolidating financial information presents the financial condition, results of operations and cash flows of Westlake Chemical Corporation, the Guarantor Subsidiaries and the remaining subsidiaries that do not guarantee the notes (the "Non-Guarantor Subsidiaries"), together with consolidating adjustments necessary to present the Company's results on a consolidated basis. WOC is the Company's 80%-owned subsidiary and is included with the Guarantor Subsidiaries. The 20% minority interest in WOC was contributed to Westlake Chemical Corporation by its parent as of August 1, 2003. F-11 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION AS OF JUNE 30, 2003
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR BALANCE SHEET CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ------------- ----------- ------------ ------------- ------------ ------------ Current assets Cash and cash equivalents... $ 7,094 $ 622 $ 1,871 $ -- $ 9,587 Accounts receivable, net.... 445,056 144,117 8,651 (456,341) 141,483 Inventories, net............ -- 202,827 5,402 -- 208,229 Prepaid expenses and other current assets........... 224 5,588 88 -- 5,900 Deferred income taxes....... 17,052 -- -- -- 17,052 ---------- ---------- ------- ----------- ---------- Total current assets..... 469,426 353,154 16,012 (456,341) 382,251 Property, plant and equipment, net......................... -- 913,993 5,467 -- 919,460 Equity investment............. 732,923 -- 15,806 (732,923) 15,806 Other assets, net............. 158,981 19,991 7,881 (149,100) 37,753 ---------- ---------- ------- ----------- ---------- Total assets............. $1,361,330 $1,287,138 $45,166 $(1,338,364) $1,355,270 ========== ========== ======= =========== ========== Current liabilities Accounts payable............ $ 8,596 $ 68,233 $ 184 $ -- $ 77,013 Accrued liabilities......... 10,044 60,708 4,526 -- 75,278 Current portion of long-term debt..................... 1,200 -- -- -- 1,200 ---------- ---------- ------- ----------- ---------- Total current liabilities............ 19,840 128,941 4,710 -- 153,491 Long-term debt................ 483,008 616,459 245 (605,445) 494,267 Deferred income taxes......... 139,997 -- -- -- 139,997 Other liabilities............. 1,905 21,239 -- -- 23,144 Minority interest............. -- 82,622 -- -- 82,622 Stockholders' equity.......... 716,580 437,877 40,211 (732,919) 461,749 ---------- ---------- ------- ----------- ---------- Total liabilities and stockholders' equity... $1,361,330 $1,287,138 $45,166 $(1,338,364) $1,355,270 ========== ========== ======= =========== ==========
F-12 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION AS OF DECEMBER 31, 2002
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR BALANCE SHEET CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ------------- ----------- ------------ ------------- ------------ ------------ Current assets Cash and cash equivalents... $ 6,900 $ 424 $ 2,750 $ -- $ 10,074 Accounts receivable, net.... 470,267 136,945 6,582 (490,560) 123,234 Inventories, net............ -- 167,310 3,556 -- 170,866 Prepaid expenses and other current assets........... 412 13,707 127 -- 14,246 Deferred income taxes....... 17,052 -- -- -- 17,052 ---------- ---------- ------- ----------- ---------- Total current assets..... 494,631 318,386 13,015 (490,560) 335,472 Property, plant and equipment, net......................... -- 930,140 5,323 -- 935,463 Equity investment............. 728,047 -- 14,990 (728,047) 14,990 Other assets, net............. 154,067 16,005 8,103 (142,047) 36,128 ---------- ---------- ------- ----------- ---------- Total assets............. $1,376,745 $1,264,531 $41,431 $(1,360,654) $1,322,053 ========== ========== ======= =========== ========== Current liabilities Accounts payable............ $ -- $ 67,894 $ 313 $ -- $ 68,207 Accrued liabilities......... 19,398 43,805 3,251 -- 66,454 Current portion of long-term debt..................... 14,673 -- -- -- 14,673 ---------- ---------- ------- ----------- ---------- Total current liabilities............ 34,071 111,699 3,564 -- 149,334 Long-term debt................ 480,535 643,506 245 (632,609) 491,677 Deferred income taxes......... 132,782 -- -- -- 132,782 Other liabilities............. 2,049 21,492 -- -- 23,541 Minority interest............. -- 81,294 -- -- 81,294 Stockholders' equity.......... 727,308 406,540 37,622 (728,045) 443,425 ---------- ---------- ------- ----------- ---------- Total liabilities and stockholders' equity... $1,376,745 $1,264,531 $41,431 $(1,360,654) $1,322,053 ========== ========== ======= =========== ==========
F-13 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2003
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR STATEMENT OF OPERATIONS CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ----------------------- ----------- ------------ ------------- ------------ ------------ Net sales........................ $ -- $689,319 $12,563 $ (3,325) $698,557 Cost of sales.................... -- 627,602 10,771 (3,325) 635,048 -------- -------- ------- -------- -------- -- 61,717 1,792 -- 63,509 Selling, general and administrative expenses........ 3,261 27,369 1,033 -- 31,663 Impairment of long-lived assets......................... -- 932 -- -- 932 -------- -------- ------- -------- -------- Income (loss) from operations.... (3,261) 33,416 759 -- 30,914 OTHER INCOME (EXPENSE) Interest expense................. (16,470) (11,447) (5) 11,378 (16,544) Other income (expense), net...... 11,322 5,717 649 (11,378) 6,310 -------- -------- ------- -------- -------- Income (loss) before income taxes and minority interest.......... (8,409) 27,686 1,403 -- 20,680 Provision for (benefit from) income taxes................... (3,122) 10,576 223 -- 7,677 -------- -------- ------- -------- -------- Income (loss) before minority interest....................... (5,287) 17,110 1,180 -- 13,003 Minority interest in the net income (loss) of consolidated subsidiary..................... -- 1,329 -- -- 1,329 -------- -------- ------- -------- -------- Net income (loss)................ $ (5,287) $ 15,781 $ 1,180 $ -- $ 11,674 ======== ======== ======= ======== ========
F-14 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2002
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR STATEMENT OF OPERATIONS CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ----------------------- ----------- ------------ ------------- ------------ ------------ Net sales........................ $ -- $476,725 $11,062 $(2,163) $485,624 Cost of sales.................... -- 474,869 8,975 (2,163) 481,681 -------- -------- ------- ------- -------- -- 1,856 2,087 -- 3,943 Selling, general and administrative expenses........ 3,142 22,464 1,007 -- 26,613 -------- -------- ------- ------- -------- Income (loss) from operations.... (3,142) (20,608) 1,080 -- (22,670) OTHER INCOME (EXPENSE) Interest expense................. (16,101) (5,711) (47) 5,638 (16,221) Other income (expense), net...... 5,144 6,178 846 (5,638) 6,530 -------- -------- ------- ------- -------- Income (loss) before income taxes and minority interest.......... (14,099) (20,141) 1,879 -- (32,361) Provision for (benefit from) income taxes................... (5,355) (7,442) 506 -- (12,291) -------- -------- ------- ------- -------- Income (loss) before minority interest....................... (8,744) (12,699) 1,373 -- (20,070) Minority interest in the net income (loss) of consolidated subsidiary..................... -- (5,173) -- -- (5,173) -------- -------- ------- ------- -------- Net income (loss)................ $ (8,744) $ (7,526) $ 1,373 $ -- $(14,897) ======== ======== ======= ======= ========
F-15 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2003
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR STATEMENT OF CASH FLOWS CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ----------------------- ----------- ------------ ------------- ------------ ------------ Net income (loss)................ $ (5,287) $15,781 $1,180 $ -- $ 11,674 Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization................ 2,203 41,670 1,131 -- 45,004 Provision for bad debts........ -- 2,930 -- -- 2,930 (Gain) loss from disposition of fixed assets................ -- (2,761) (63) -- (2,824) Impairment of long-lived assets...................... -- 932 -- -- 932 Deferred income taxes.......... (3,122) 10,337 -- -- 7,215 Minority interest in income (loss)...................... -- 1,329 -- -- 1,329 Net changes in working capital and other...................... 17,400 (55,840) (2,624) -- (41,064) -------- ------- ------ ---- --------- Net cash provided by (used for) operating activities........ 11,194 14,378 (376) -- 25,196 -------- ------- ------ ---- --------- Additions to property, plant and equipment...................... -- (18,474) (503) -- (18,977) Proceeds from insurance claims... -- 3,257 -- -- 3,257 -------- ------- ------ ---- --------- Net cash used for investing activities.................. -- (15,217) (503) -- (15,720) -------- ------- ------ ---- --------- Equity contribution from parent......................... -- 1,037 -- -- 1,037 Proceeds from borrowings......... 125,500 -- -- -- 125,500 Repayments of borrowings......... (136,500) -- -- -- (136,500) -------- ------- ------ ---- --------- Net cash provided by (used for) financing activities........ (11,000) 1,037 -- -- (9,963) -------- ------- ------ ---- --------- Net increase (decrease) in cash and cash equivalents........... 194 198 (879) -- (487) Cash and cash equivalents at beginning of period............ 6,900 424 2,750 -- 10,074 -------- ------- ------ ---- --------- Cash and cash equivalents at end of period...................... $ 7,094 $ 622 $1,871 $ -- $ 9,587 ======== ======= ====== ==== =========
F-16 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 2002
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR STATEMENT OF CASH FLOWS CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ----------------------- ----------- ------------ ------------- ------------ ------------ Net income (loss)................ $ (8,744) $ (7,526) $ 1,373 $ -- $(14,897) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization................ 917 42,670 98 -- 43,685 Provision for bad debts........ -- 5,722 -- -- 5,722 (Gain) loss from disposition of fixed assets................ -- 46 -- -- 46 Impairment of long-lived assets...................... -- -- -- -- -- Deferred income taxes.......... (5,355) (7,332) -- -- (12,687) Minority interest in income (loss)...................... -- (5,173) -- -- (5,173) Net changes in working capital and other...................... (49,850) (8,302) (2,428) -- (60,580) -------- -------- ------- ----- -------- Net cash provided by (used for) operating activities................ (63,032) 20,105 (957) -- (43,884) -------- -------- ------- ----- -------- Additions to property, plant and equipment...................... -- (20,757) (679) -- (21,436) Proceeds from insurance claims... -- 1,680 -- -- 1,680 -------- -------- ------- ----- -------- Net cash used for investing activities................ -- (19,077) (679) -- (19,756) -------- -------- ------- ----- -------- Proceeds from borrowings......... 14,390 -- -- -- 14,390 Repayments of borrowings......... (19,433) -- -- -- (19,433) -------- -------- ------- ----- -------- Net cash used for financing activities................ (5,043) -- -- -- (5,043) -------- -------- ------- ----- -------- Net increase (decrease) in cash and cash equivalents........... (68,075) 1,028 (1,636) -- (68,683) Cash and cash equivalents at beginning of period............ 75,820 202 2,969 -- 78,991 -------- -------- ------- ----- -------- Cash and cash equivalents at end of period...................... $ 7,745 $ 1,230 $ 1,333 $ -- $ 10,308 ======== ======== ======= ===== ========
F-17 REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Shareholders of Westlake Chemical Corporation In our opinion, the consolidated financial statements listed in the index appearing on page F-1 present fairly, in all material respects, the financial position of Westlake Chemical Corporation and its subsidiaries (the "Company") at December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing on page F-1 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP Houston, Texas March 24, 2003, except for Notes 17 and 18, which are as of June 23, 2003, and Note 19, which is as of September 19, 2003 F-18 WESTLAKE CHEMICAL CORPORATION CONSOLIDATED BALANCE SHEETS
DECEMBER 31, ------------------------- 2002 2001 ----------- ----------- (IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS) ASSETS Current assets Cash and cash equivalents................................. $ 10,074 $ 78,991 Accounts receivable, net.................................. 123,234 81,419 Inventories, net.......................................... 170,866 128,227 Prepaid expenses and other current assets................. 14,246 2,413 Deferred income taxes..................................... 17,052 12,296 ---------- ---------- Total current assets................................. 335,472 303,346 Property, plant and equipment, net.......................... 935,463 978,525 Equity investment........................................... 14,990 14,883 Other assets, net........................................... 36,128 32,398 ---------- ---------- Total assets......................................... $1,322,053 $1,329,152 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable.......................................... $ 68,207 $ 53,731 Accrued liabilities....................................... 66,454 67,483 Current portion of long-term debt......................... 14,673 13,043 ---------- ---------- Total current liabilities............................ 149,334 134,257 Long-term debt.............................................. 491,677 498,596 Deferred income taxes....................................... 132,782 135,965 Other liabilities........................................... 23,541 25,040 ---------- ---------- Total liabilities.................................... 797,334 793,858 ---------- ---------- Minority interest........................................... 81,294 89,359 ---------- ---------- Stockholders' equity Preferred stock, nonvoting, noncumulative, no par value, 1,000 shares authorized; 890 shares issued and outstanding............................................ 89,000 89,000 Common stock, $1 par value, 10,000 shares authorized; 1,115 shares issued and outstanding.................... 1 1 Additional paid-in capital................................ 304,364 304,364 Retained earnings......................................... 53,636 54,975 Minimum pension liability................................. (2,006) (671) Cumulative foreign currency translation................... (1,570) (1,734) ---------- ---------- Total stockholders' equity........................... 443,425 445,935 ---------- ---------- Total liabilities and stockholders' equity........... $1,322,053 $1,329,152 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. F-19 WESTLAKE CHEMICAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
YEAR ENDED DECEMBER 31, ------------------------------------ 2002 2001 2000 ---------- ---------- ---------- (IN THOUSANDS OF DOLLARS) Net sales................................................ $1,072,627 $1,087,033 $1,391,363 Cost of sales............................................ 1,002,092 1,121,759 1,198,700 ---------- ---------- ---------- 70,535 (34,726) 192,663 Selling, general and administrative expenses............. 58,783 53,203 61,855 Impairment of long-lived assets.......................... 2,239 7,677 10,777 ---------- ---------- ---------- Income (loss) from operations............................ 9,513 (95,606) 120,031 OTHER INCOME (EXPENSE) Interest expense......................................... (32,907) (31,892) (31,957) Other income, net........................................ 6,784 8,895 1,685 ---------- ---------- ---------- Income (loss) before income taxes........................ (16,610) (118,603) 89,759 ---------- ---------- ---------- PROVISION FOR (BENEFIT FROM) INCOME TAXES Current.................................................. 733 426 3,316 Deferred................................................. (7,939) (45,681) 27,391 ---------- ---------- ---------- (7,206) (45,255) 30,707 ---------- ---------- ---------- Income (loss) before minority interest................... (9,404) (73,348) 59,052 Minority interest in the net income (loss) of consolidated subsidiary................................ (8,065) (8,473) 5,357 ---------- ---------- ---------- Net income (loss)........................................ (1,339) (64,875) 53,695 OTHER COMPREHENSIVE INCOME (LOSS) Change in foreign currency translation................... 164 (794) (630) Change in minimum pension liability...................... (1,335) (671) -- ---------- ---------- ---------- Comprehensive income (loss).............................. $ (2,510) $ (66,340) $ 53,065 ========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. F-20 WESTLAKE CHEMICAL CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
ACCUMULATED OTHER COMPREHENSIVE LOSS ----------------------- COMMON STOCK CUMULATIVE ------------------ ADDITIONAL MINIMUM FOREIGN PREFERRED NUMBER OF PAID-IN RETAINED PENSION CURRENCY STOCK SHARES AMOUNT CAPITAL EARNINGS LIABILITY TRANSLATION TOTAL --------- --------- ------ ---------- -------- --------- ----------- -------- (IN THOUSANDS OF DOLLARS, EXCEPT SHARES) BALANCES AT DECEMBER 31, 1999........................ $89,000 1,115 $ 1 $261,177 $ 83,155 $ -- $ (310) $433,023 Net income.................... -- -- -- -- 53,695 -- -- 53,695 Dividends paid to Parent...... -- -- -- -- (17,000) -- -- (17,000) Contribution of Westlake Styrene Corporation shares...................... -- -- -- 43,187 -- -- -- 43,187 Other comprehensive income Change in cumulative foreign currency translation...... -- -- -- -- -- -- (630) (630) ------- ----- --- -------- -------- ------- ------- -------- BALANCES AT DECEMBER 31, 2000........................ 89,000 1,115 1 304,364 119,850 -- (940) 512,275 Net loss...................... -- -- -- -- (64,875) -- -- (64,875) Dividends paid to Parent...... -- -- -- (87,000) -- -- -- (87,000) Capital contribution from Parent...................... -- -- -- 87,000 -- -- -- 87,000 Other comprehensive income Minimum pension liability... -- -- -- -- -- (671) -- (671) Change in cumulative foreign currency translation...... -- -- -- -- -- -- (794) (794) ------- ----- --- -------- -------- ------- ------- -------- BALANCES AT DECEMBER 31, 2001........................ 89,000 1,115 1 304,364 54,975 (671) (1,734) 445,935 Net loss...................... -- -- -- -- (1,339) -- -- (1,339) Other comprehensive income Minimum pension liability... -- -- -- -- -- (1,335) -- (1,335) Change in cumulative foreign currency translation...... -- -- -- -- -- -- 164 164 ------- ----- --- -------- -------- ------- ------- -------- BALANCES AT DECEMBER 31, 2002........................ $89,000 1,115 $ 1 $304,364 $ 53,636 $(2,006) $(1,570) $443,425 ======= ===== === ======== ======== ======= ======= ========
The accompanying notes are an integral part of these consolidated financial statements. F-21 WESTLAKE CHEMICAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, --------------------------------- 2002 2001 2000 --------- --------- --------- (IN THOUSANDS OF DOLLARS) CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss)......................................... $ (1,339) $ (64,875) $ 53,695 --------- --------- --------- Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization........................... 86,467 81,853 79,164 Provision for bad debts................................. 10,379 3,817 1,300 Amortization of debt issue costs........................ 3,135 1,454 1,999 Gain from disposition of fixed assets................... (2,259) -- -- Impairment of long-lived assets......................... 2,239 7,677 10,777 Deferred income taxes................................... (7,939) (45,681) 27,391 Minority interest in income (loss)...................... (8,065) (8,473) 5,357 Changes in operating assets and liabilities Accounts receivable.................................. (52,194) 29,651 (12,342) Inventories.......................................... (42,639) 77,007 (21,610) Prepaid expenses and other current assets............ (11,833) 490 -- Accounts payable..................................... 14,476 (29,916) 5,115 Accrued liabilities.................................. (1,029) (15,011) 25,164 Other, net........................................... (19,075) (9,508) (3,678) --------- --------- --------- Total adjustments.................................. (28,337) 93,360 118,637 --------- --------- --------- Net cash provided by (used for) operating activities...................................... (29,676) 28,485 172,332 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment................ (38,587) (76,500) (78,893) Proceeds from insurance claims............................ 4,901 -- -- Acquisition of business operations........................ -- -- (8,800) --------- --------- --------- Net cash used for investing activities............. (33,686) (76,500) (87,693) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings.................................. 113,890 226,000 52,000 Repayments of borrowings.................................. (119,445) (107,250) (120,000) Capital contribution from parent.......................... -- 87,000 -- Dividends paid to parent.................................. -- (87,000) (17,000) --------- --------- --------- Net cash provided by (used for) financing activities...................................... (5,555) 118,750 (85,000) --------- --------- --------- Net increase (decrease) in cash and cash equivalents...... (68,917) 70,735 (361) Cash and cash equivalents at beginning of year............ 78,991 8,256 8,617 --------- --------- --------- Cash and cash equivalents at end of year.................. $ 10,074 $ 78,991 $ 8,256 ========= ========= ========= SUPPLEMENTAL CASH FLOW INFORMATION Interest paid............................................. $ 31,344 $ 38,529 $ 30,339 Income taxes paid......................................... 95 2,723 17,766 NONCASH TRANSACTIONS Interest added to the principal........................... 266 -- -- Contribution of Westlake Styrene Corporation shares....... -- -- 43,187
The accompanying notes are an integral part of these consolidated financial statements. F-22 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Westlake Chemical Corporation ("WCC") was incorporated in 1991 in the state of Delaware to own certain chemical operations and to facilitate financing transactions for the related companies. WCC is a wholly owned subsidiary of Westlake Polymer and Petrochemical, Inc. ("WPPI"), which in turn is a wholly owned subsidiary of Gulf Polymer and Petrochemical, Inc. ("GPPI"). WCC and its subsidiaries are collectively referred to as the "Company." The Company operates as an integrated petrochemical manufacturer and plastics fabricator. The Company's customers range from large chemical processors and plastic fabricators to small construction contractors, municipalities and supply warehouses primarily throughout North America. The petrochemical industry is subject to price fluctuations and volatile feedstock pricing typical of a commodity-based industry, which may not be rapidly passed to all customers. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and subsidiaries in which the Company directly or indirectly owns more than a 50% voting interest. Investments in entities in which the Company has a significant ownership interest, generally 20% to 50%, and in entities in which the Company has greater than 50% ownership, but due to contractual agreement or otherwise does not exercise control, are accounted for using the equity method. Intercompany balances and transactions are eliminated. Minority interest represents 20% ownership by an affiliate of one of the Company's subsidiaries. CASH AND CASH EQUIVALENTS Cash equivalents consist of highly liquid investments that are readily convertible into cash and have a maturity of three months or less at the date of acquisition. INVENTORIES Inventories primarily include product, material and supplies. Inventories are stated at lower of cost or market. Cost is determined using the first-in, first-out ("FIFO") method. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment is carried at cost, net of accumulated depreciation. Cost includes expenditures for improvements and betterments which extend the useful lives of the assets and interest capitalized on significant capital projects. Capitalized interest was $398 and $1,607 in 2002 and 2001, respectively. No interest was capitalized in 2000. Repair and maintenance costs are charged to operations as incurred. Depreciation is provided by utilizing the straight-line method over the estimated useful lives of the assets as follows:
CLASSIFICATION YEARS - -------------- ----- Buildings and improvements.................................. 25 Plant and equipment......................................... 25 Other....................................................... 3-7
IMPAIRMENT OF LONG-LIVED ASSETS The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash F-23 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) flows expected to be generated by the asset. Assets are considered to be impaired if the carrying amount of an asset exceeds the future undiscounted cash flows. The impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or estimated fair value less costs to sell. Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which superseded SFAS 121. Adoption of SFAS 144 did not have material effect on the consolidated results of operations, cash flows or financial position of the Company. IMPAIRMENT OF INTANGIBLE ASSETS Effective January 1, 2002, the Company adopted SFAS 142, Goodwill and Other Intangible Assets. In accordance with this statement, goodwill and indefinite-lived intangible assets are no longer amortized, but are tested for impairment at least annually. Other intangible assets with finite lives are amortized, over their estimated useful life and reviewed for impairment in accordance with the provisions of SFAS 144. The Company has no reported goodwill at December 31, 2002 and 2001. Adoption of SFAS 142 did not have material effect on consolidated results of operations, cash flows or financial position of the Company. TURNAROUND COSTS Turnaround costs are deferred at the time of the turnaround and amortized (within depreciation and amortization) on a straight-line basis until the next planned turnaround. Deferred turnaround costs are presented as a component of other assets. EXCHANGES The Company enters into inventory exchange transactions with third parties, which involve fungible commodities. These exchanges are settled in like-kind quantities and are valued at lower of cost or market. Cost is determined using the FIFO method. As of December 31, 2002 and 2001, the net exchange balance payable of $2,197 and $14,547, respectively, are included in accrued liabilities. INCOME TAXES The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred tax assets or liabilities are recorded based upon temporary differences between the tax basis of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax expense or benefit is the result of changes in the deferred tax assets and liabilities during the period. Valuation allowances are recorded against deferred tax assets when it is considered more likely than not that the deferred tax assets will not be realized. The Company, except for a foreign subsidiary, is included in the consolidated tax return of GPPI. The provision for income taxes has been computed on a separate company basis. FOREIGN CURRENCY TRANSLATION Assets and liabilities of foreign subsidiaries are translated to U.S. dollars at the exchange rate as of the end of the year. Statement of operations items are translated at the average exchange rate for the year. The resulting translation adjustment is recorded as a separate component of stockholders' equity. F-24 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONCENTRATION OF CREDIT RISK Financial instruments which potentially subject the Company to concentration of risk consist principally of trade receivables from customers engaged in manufacturing polyethylene products, polyvinyl chloride products and utilizing polyvinyl chloride pipe. The Company performs periodic credit evaluations of the customers' financial condition and generally does not require collateral. The Company maintains reserves for potential losses. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts reported in the balance sheet for cash and cash equivalents, receivables, and accounts payable approximate their fair value due to the short maturities of these instruments. The fair value of the Company's debt as of December 31, 2002 and 2001 approximates its carrying value because the interest rates on the borrowings as of December 31, 2002 and 2001 approximate the market rates for similar borrowing capacities available at the market and due to recent changes in the terms of the Company borrowings in 2002. The net fair value of derivative instruments as of December 31, 2002 and 2001 was $141 and $0, respectively. The fair value of derivative financial instruments is estimated using current market quotes. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. REVENUE RECOGNITION Revenues associated with sales of chemical products are recorded when title passes to the customer upon delivery under executed customer purchase orders or contracts. Title generally passes to customers when goods are shipped to the customers. For export contracts, the title passes to customers at the time specified by each contract. Provisions for discounts, rebates and returns are provided for in the same period as the related sales are recorded. PRICE RISK MANAGEMENT Commencing January 1, 2001, the Company adopted SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS 138. SFAS 133 requires that the Company recognizes all derivative instruments on the balance sheet at fair value, and changes in the derivative's fair value must be currently recognized in earnings or comprehensive income, depending on the designation of the derivative. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded in comprehensive income and is recognized in the income statement when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings currently. The Company does not enter into derivative instruments for trading purposes; however, the Company utilizes commodity price swaps to reduce price risks by entering into price swaps with counterparties and by purchasing or selling futures on established exchanges. The Company takes both fixed and variable positions, depending upon anticipated future physical purchases and sales of these commodities. Open F-25 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) positions are accounted for as hedges with gains or losses deferred until corresponding physical transactions occur or until corresponding positions expire or close. The fair value of the natural gas futures and propane swap contracts was obtained from a third party.
DECEMBER 31, ----------------------------------- 2002 2001 ---------------- ---------------- CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE -------- ----- -------- ----- Natural gas futures contracts....................... $(326) $(326) $-- $-- Propane swap contracts.............................. 185 185 -- --
During 2002, due to the short-term nature of the commitments and associated derivative instruments, the Company did not designate any of its derivative instruments as hedges under the provisions of SFAS 133. As such, gains and losses from changes in the fair value of all the derivative instruments used in 2002 were included in earnings. ENVIRONMENTAL COSTS Environmental costs relating to current operations are expensed or capitalized, as appropriate, depending on whether such costs provide future economic benefits. Remediation liabilities are recognized when the costs are considered probable and can be reasonably estimated. Measurement of liabilities is based on currently enacted laws and regulations, existing technology and undiscounted site-specific costs. Environmental liabilities in connection with properties that are sold or closed are realized upon such sale or closure, to the extent they are probable and estimable and not previously reserved. In assessing environmental liabilities, no set-off is made for potential insurance recoveries. Recognition of any joint and several liabilities is based upon the Company's best estimate of its final pro rata share of the liability. TRANSFERS OF FINANCIAL ASSETS The Company accounts for the transfers of financial assets, including transfers to a qualified special purpose entity ("QSPE"), in accordance with SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement No. 125. In accordance with SFAS 140, the Company recognizes transfers of financial assets as sales provided that control has been relinquished. Control is deemed to be relinquished only when all of the following conditions have been met: (i) the assets have been isolated from the transferor, even in bankruptcy or other receivership (true sale opinions are required); (ii) the transferee has the right to pledge or exchange the assets received and (iii) the transferor has not maintained effective control over the transferred assets (e.g., a unilateral ability to repurchase a unique or specific asset). The Company is also required to follow the accounting guidance under SFAS 140 and Emerging Issues Task Force ("EITF") Topic No. D-14, Transactions Involving Special-Purpose Entities, to determine whether or not a special purpose entity ("SPE") is required to be consolidated. The Company's transfer of financial assets relate to securitization transactions with a special purpose entity meeting the SFAS 140 definition of a QSPE. A QSPE can generally be described as an entity with significantly limited powers which are intended to limit it to passively holding financial assets and distributing cash flows based upon pre-set terms. Based upon the guidance in SFAS 140, the Company is not required to and does not consolidate such QSPE. Rather, the Company accounts for its involvement with QSPEs under a financial components approach in which the Company recognizes only its retained interest in assets transferred to the QSPE. The Company accounts for such retained interests at fair value with changes in fair value reported in earnings. F-26 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) In January 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 ("FIN 46"). FIN 46 provides new consolidation accounting guidance for entities involved with special purpose entities and will replace guidance provided by EITF Topic No. D-14. This guidance does not impact the accounting for securitizations transacted through QSPEs. FIN 46 will require a primary beneficiary, defined as an entity, which participates in either a majority of the risks or rewards of such special purpose entity, to consolidate the SPE. An SPE would not be subject to this interpretation if such entity has sufficient voting equity capital (presumed to require a minimum of 10 percent), such that the entity is able to finance its activities without additional subordinated financial support from other parties. While the Company has not yet completed its analysis of the impact of the new interpretation, the Company does not anticipate that the adoption of this interpretation will have a material impact to the Company's consolidated results of operations, cash flows or financial position. OTHER Amortization of debt issue costs is computed on a basis which approximates the interest method over the term of the related debt. Certain other assets (Note 6) are amortized over periods ranging from 3 to 15 years using the straight-line method. RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to current year presentation. RECENT ACCOUNTING PRONOUNCEMENTS In August 2002, the FASB issued SFAS 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets. This statement requires the following: (a) an existing legal obligation association with the retirement of a tangible long-lived asset must be recognized as a liability when incurred and the amount of the liability be initially measured at fair value, (b) an entity must recognize subsequent changes in the liability that result from the passage of time and revisions in either the timing or amount of estimated cash flows and (c) upon initially recognizing a liability for an asset retirement obligation, an entity must capitalize the cost by recognizing an increase in the carrying amount of the related long-lived asset. SFAS 143 will be effective for financial statements issued for fiscal years beginning after June 15, 2002. As of December 31, 2002, the Company does not have legal or contractual obligations to close any of its facilities. The Company's adoption of SFAS 143 on January 1, 2003 did not have a material impact on consolidated results of operations, cash flows or financial position of the Company. In October 2002, the FASB issued SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement supersedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. SFAS 144 provides that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. The provisions of SFAS 144 are effective for fiscal years beginning after December 15, 2001. The Company's adoption of SFAS 144 on January 1, 2002 did not have a material impact on consolidated results of operations, cash flows or financial position of the Company. In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections. SFAS 145 rescinds SFAS 4, Reporting Gains and Losses from Extinguishment of Debt. By rescinding SFAS 4, gains or losses from extinguishment of debt that do not meet the criteria of APB No. 30 should not be reported as an extraordinary item and should be reclassified to income from continuing operations in all periods presented. F-27 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) APB No. 30 states that extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. SFAS 145 is effective for fiscal years beginning after May 15, 2002. The Company's adoption of SFAS 145 on January 1, 2003 did not have a material impact on consolidated results of operations, cash flow or financial position of the Company. In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF Issue 94-3, a liability for an exit cost as defined in EITF Issue 94-3 was recognized at the date of an entity's commitment to an exit plan. The provisions of SFAS 146 are effective for exit or disposal activities initiated after December 31, 2002, with early application encouraged. Previously issued financial statements shall not be restated upon adoption of SFAS 146. Management believes that this statement will not have a material impact on the Company's consolidated results of operations, cash flow or financial position. In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34. FIN 45 clarifies the requirements of SFAS 5, Accounting for Contingencies, relating to the guarantor's accounting for, and disclosure of, the issuance of certain types of guarantees. FIN 45 requires that upon issuance of a guarantee, the entity (i.e., the guarantor) must recognize a liability for the fair value of the obligation it assumes under that guarantee, including the cases in which the entity does not receive separately identifiable consideration (i.e., a premium) for issuing the guarantee. FIN 45 is intended to improve the comparability of financial reporting by requiring identical accounting for guarantees issued with a separately identified premium and guarantees issued without a separately identified premium. The disclosure provisions of FIN 45 are effective for financial statements of interim or annual periods that end after December 15, 2002. However, the provisions for initial recognition and measurement are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002, irrespective of a guarantor's year end. In accordance with the provisions of FIN 45, the Company will recognize the fair value of the guarantees issued as modified after December 31, 2002. 2. ACCOUNTS RECEIVABLE Accounts receivable consist of the following at December 31, 2002 and 2001:
2002 2001 -------- ------- Accounts receivable -- trade................................ $ 51,924 $39,428 Accounts receivable -- affiliates........................... 80,623 37,324 Allowance for doubtful accounts............................. (13,382) (4,913) -------- ------- 119,165 71,839 Taxes receivable............................................ 1,235 3,295 Accounts receivable -- other................................ 2,834 6,285 -------- ------- $123,234 $81,419 ======== =======
F-28 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) 3. WESTLAKE AR CORPORATION In August 1997, the Company established Westlake AR Corporation ("WARC"), an unconsolidated subsidiary and QSPE. WARC's activities are legally limited to purchasing WCC's accounts receivable, selling undivided ownership interests in the accounts receivable and collecting and distributing proceeds related to the receivables. In October 1997, the Company entered into a Receivable Transfer Agreement to sell accounts receivable to WARC, which, under a separate agreement, agreed to sell up to $49,500 of revolving undivided ownership interests in those accounts receivable to an unrelated financial institution (the "receivable securitization"). As a result of certain WCC's subsidiaries merging into Delaware limited liability partnerships, an amended and restated Receivable Transfer Agreement was executed on February 12, 2001. As of December 31, 2002 and 2001, the undivided ownership interest in the receivables was $15,100 and $38,000, respectively. As a result of the reduction of the undivided ownership interest in its receivable, in 2001, WCC contributed $11,900 of cash to WARC. At December 31, 2002 and 2001, accounts receivables amounting to $91,059 and $67,406, respectively, had been sold under this agreement. These sales were reflected as reduction of trade accounts receivable. The Company retains beneficial interest to those receivables. The fair value of the beneficial interests approximates the carrying value of the receivables. The amount of receivables sold fluctuates based upon the availability of the receivable and is directly affected by changing business volume and credit risks. The Company guarantees certain amounts due by WARC under its agreement with the financial institution. The carrying amount of the Company's exposure related to guarantees for WARC loan were $15,100 and $38,000 as of December 31, 2002 and 2001, respectively. WCC sells receivables to WARC at a discount of approximately 2% and receives certain servicing fees from WARC. During the years ended December 31, 2002, 2001 and 2000, WCC recognized discount expense of $5,632, $7,480 and $12,788, respectively, and servicing fees of $6,724, $6,251 and $8,659, respectively, within other income, net in the statement of operations. In addition to purchasing receivables from WCC and utilizing WCC to service and collect its receivables, as well as fund the expenditures, WARC has an agreement with WCC whereby WARC's cash balance in excess of $250 is swept nightly into an account controlled by WCC. At December 31, 2002, the receivable from WARC, net of payable to WARC, was $25,456. At December 31, 2001, the payable to WARC, net of receivable from WARC, was $29,259. These amounts were included in receivables from affiliates on the balance sheet. 4. INVENTORIES Inventories consist of the following at December 31, 2002 and 2001:
2002 2001 -------- -------- Finished product............................................ $103,646 $ 76,281 Feedstock, additives and chemicals.......................... 49,534 34,427 Materials and supplies...................................... 26,428 26,841 -------- -------- 179,608 137,549 Allowance for inventory obsolescence........................ (8,742) (9,322) -------- -------- Net inventory............................................... $170,866 $128,227 ======== ========
In December 2002, the Company entered into an agreement to sell 15 million pounds of finished product inventory during 2003 at a fixed price. In accordance with the agreement, the Company will be F-29 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) required to repurchase this inventory during 2003 at market prices at the time of repurchase after certain agreed upon adjustments. Due to the terms of the agreement, cash received from the sale of the inventory will be recorded as a liability, which will be adjusted to market value of the inventory to reflect repurchase obligations. As of December 31, 2002, the Company had $4,279 inventory separately identified and restricted for use in accordance with this agreement. 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following at December 31, 2002 and 2001:
2002 2001 ---------- ---------- Land........................................................ $ 11,050 $ 10,918 Buildings and improvements.................................. 71,568 71,443 Plant and equipment......................................... 1,337,675 1,262,898 Other....................................................... 76,223 71,270 ---------- ---------- 1,496,516 1,416,529 Less: Accumulated depreciation.............................. (579,978) (514,229) ---------- ---------- 916,538 902,300 Construction in progress.................................... 18,925 76,225 ---------- ---------- $ 935,463 $ 978,525 ========== ==========
Depreciation expense on plant and equipment of $78,249 and $77,186 is included in cost of sales in the consolidated statement of operations in 2002 and 2001, respectively. During the fourth quarter of 2002, the Company announced plans to address the changing market conditions impacting the polyethylene pipe business and recognized an asset impairment charge of $1,783 to reflect the property and equipment associated with this business at its estimated fair value. The carrying amount of such assets was reduced to $497 as of December 31, 2002. On December 31, 2002 and 2001, the Company recognized a write-down of plant and equipment amounting to $2,239 and $7,677, respectively. Additionally, the Company recognized a write-down of plant and equipment of $10,777 the year ended December 31, 2000. The write-downs have been reflected in the consolidated statement of operations. The write-downs represent the amount necessary to adjust the carrying value of certain plant and equipment to its net realizable value. Property, plant and equipment includes nonoperating assets of $4,061 and $4,080 at December 31, 2002 and 2001, respectively. F-30 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) 6. OTHER ASSETS Other assets consist of the following at December 31, 2002 and 2001:
2002 2001 -------- -------- Technology licenses......................................... $ 10,541 $ 10,541 Debt issuance costs......................................... 21,141 9,817 Note receivable from affiliate.............................. 9,253 9,253 Turnaround cost............................................. 16,229 13,048 Other....................................................... 10,493 11,015 -------- -------- 67,657 53,674 Less: Accumulated amortization.............................. (31,529) (21,276) -------- -------- $ 36,128 $ 32,398 ======== ========
Amortization expense on other assets of $11,353, $6,121 and $8,926 is included in the consolidated statement of operations in 2002, 2001 and 2000, respectively. 7. LONG-TERM DEBT Indebtedness consists of the following at December 31, 2002 and 2001:
2002 2001 -------- -------- Revolving lines of credit -- maximum aggregate availability of $291,610 and $300,000 in 2002 and 2001................. $172,500 $165,000 Term loan................................................... 113,957 120,000 Series A notes, interest at 9.50% and 8.51% in 2002 and 2001...................................................... 58,750 63,750 Series B notes, interest at 9.50% and 7.51% in 2002 and 2001...................................................... 150,000 150,000 Loan related to tax-exempt revenue bonds.................... 10,889 10,889 Other....................................................... 254 2,000 -------- -------- 506,350 511,639 Less: Current portion of long-term debt..................... (14,673) (13,043) -------- -------- $491,677 $498,596 ======== ========
The Company entered into a $300,000 revolving credit facility in 1996 with a syndicate of banks. As discussed below, the agreement was amended in June 2002. Prior to the amendment, at the Company's option, interest with respect to this revolving credit agreement accrued at a rate equal to the adjusted Eurodollar rate, or the higher of the adjusted federal funds rate or adjusted prime rate, as defined, and was payable at the end of each interest period or quarterly. The weighted-average interest rate as of December 31, 2002 and 2001, was 5.44% and 4.44%, respectively. In March 1998, the Company entered into a $150,000 term loan with a group of banks. As discussed below, the agreement was amended in June 2002. Prior to the amendment, at the Company's option, interest on the debt accrued at the adjusted Eurodollar rate or at a rate equal to the higher of the adjusted federal funds rate or prime rate, as defined, and was payable at the end of each interest period or quarterly. The outstanding term loan as of December 31, 2002 and 2001 was $113,957 and $120,000, respectively. The weighted-average interest rate as of December 31, 2002 and 2001 was 5.62% and 4.73%, respectively. F-31 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) In December 1997, the Company entered into a loan agreement with a public trust established for public purposes for the benefit of Parish of Calcasieu, Louisiana. The public trust issued $10,889 in tax-exempt waste disposal revenue bonds (revenue bonds) in order to finance the Company's construction of waste disposal facilities for its new ethylene plant. The revenue bonds expire in December 2027 and are subject to redemption and mandatory tender for purchase prior to maturity under certain conditions. Interest on the revenue bonds accrues at a rate determined by a remarketing agent and is payable quarterly. The interest rate on the revenue bonds at December 31, 2002 and 2001 was 1.7% and 1.6%, respectively. In conjunction with the loan agreement, the Company entered into a letter of credit reimbursement agreement and obtained a letter of credit from a bank in the amount of $11,268. The letter of credit will expire in March 2005. In 1994, the Company issued $85,000 of senior notes. In accordance with the original terms the senior notes were due in four equal annual installments beginning February 14, 2001, to a group of private investors. Interest accrued at the fixed rate of 8.51%. Interest is payable semi-annually. The Company issued $150,000 of senior notes to a group of private investors in 1995. Interest accrued at the fixed rate of 7.51%. Interest is payable semi-annually. In accordance with the original terms, principal was due in six equal semiannual payments beginning November 30, 2004. Both issuances of WCC senior notes, the revolving credit facility and the term loan are guaranteed by each of the Company's consolidated restricted subsidiaries, as defined (Note 8). The senior notes require the Company to pay the investors the difference between the stated rate and reinvestment rate, as defined, if the notes are prepaid. The indebtedness also contains certain restrictive covenants which, among other things, provide limitations on the incurrence of additional indebtedness, the payment of dividends and the sale of assets, and require the Company to maintain certain financial ratios and minimum net worth. Since June 29, 2001, the Company obtained a series of waivers for noncompliance with certain of the covenants related to its $300,000 revolving credit facility, $150,000 term loan, $11,268 letter of credit reimbursement agreement, 7.51% senior note agreement and the 8.51% senior note agreement. As part of the waiver agreement, the Company agreed with the lenders to pay interest monthly, and postponed the $10,000 principal repayment on the term loan originally due September 30, 2001, the $10,000 term loan principal repayment originally due December 31, 2001, the $20,000 term loan principal repayment originally due March 31, 2002, and the $21,250 8.51% note principal repayment originally due February 14, 2002. On June 26, 2002, the Company and the lenders under these agreements formalized new amended and restated agreements. The new amendments result in the Company providing security in most of its assets to its lenders, with a relaxation of financial covenants and an increase in interest rates and limitations on capital spending. As part of and through the date of the new amendments, the Company obtained waivers of all known covenant noncompliance with the previous agreements. The amended revolver is divided into three tranches: a $7,274 Tranche A1 priced at prime plus 2.25%, a $126,114 Tranche A2 priced at LIBOR plus 3.25% or prime plus 2.25%, and a $158,223 Tranche B priced at LIBOR plus 3.25% plus 0.5% utilization fee or prime plus 2.25% plus 0.5% utilization fee. Amounts drawn are attributed first to Tranche B to the extent of its availability, then to Tranche A2 and then to Tranche A1. The amended term loan of $113,957 is priced at LIBOR plus 3.75% or prime plus 2.75%. Both the 7.51% and 8.51% notes are repriced to 9.50% with interest payable quarterly. All of the loan agreements were amended to mature on March 31, 2005. As of December 31, 2002, the balance outstanding for Tranches A1, A2 and B were $0, $16,485 and $156,015, respectively. On June 26, 2002, at the closing of the amendment, the Company paid retroactive interest to July 1, 2001 of $5,116, fees of $9,574 and accrued interest of $1,775. Costs paid to the creditors at closing and fees paid to third parties in connection with the amendment of $9,377 were capitalized and are amortized F-32 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) over the term of the amended agreements. The Company also paid at closing a total of $20,000 consisting of a permanent pay down of $8,390 on the revolver, principal repayment of $6,043 on its term loan, principal repayment of $5,000 on its 8.51% notes, and deposited $567 into a restrictive cash account as collateral against the letter of credit reimbursement agreement. Other than as discussed in the previous paragraph, there was no other principal amortization in 2002. The amortization in 2003 through 2005 will be used to pay down, on a pro rata basis, the revolving credit facility, the term loan and the new 9.5% notes and to cash collateralize the letter of credit reimbursement agreement. In addition, starting in 2003, excess cash flow as defined in the loan agreements will also be used to pay down the revolving credit facility, the term loan and the 9.5% notes and to cash collateralize the letter of credit reimbursement agreement on a pro rata basis. The quarterly payments to be made in relation to the new 9.5% Series A and B notes, revolving credit facility and term loan are as follows:
September 30, 2003.......................................... $ 4,891 December 31, 2003........................................... 9,782 March 31, 2004.............................................. 29,347 June 30, 2004............................................... 29,347 September 30, 2004.......................................... 34,238 December 31, 2004........................................... 39,129 March 31, 2005.............................................. 348,727
The weighted average interest rate on the borrowings at December 31, 2002 and 2001 was 7.07% and 6.28%, respectively. In March 2000, a subsidiary of the Company entered into a $2,000 term loan with a related party. Interest on the debt accrues at prime rate and is payable at maturity. The loan maturity has been extended to August 2004, and the loan amount paid down to $254. The aggregate maturities of long-term debt are as follows:
2003........................................................ $ 14,673 2004........................................................ 132,061 2005........................................................ 348,727 2006........................................................ -- Thereafter.................................................. 10,889 -------- $506,350 ========
The Company will have aggregate scheduled interest payments for the new 9.5% Series A and Series B notes as follows:
2003........................................................ $19,781 2004........................................................ 17,361 2005........................................................ 3,445 ------- $40,587 =======
F-33 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) 8. SUPPLEMENTAL GUARANTOR INFORMATION Under the terms of the indebtedness described in Note 7, all subsidiaries of the Company that are not unrestricted entities are guarantors, jointly and severally, of the revolving credit facility, term loan agreement and senior notes. Westlake International Investments Corporation is the only unrestricted subsidiary of the Company. See Note 19 for guarantor disclosures related to the refinancing completed on July 31, 2003. The following condensed consolidated financial information presents supplemental information for the restricted entities (which include the parent company) and the unrestricted entity as of December 31, 2002 and 2001. CONDENSED CONSOLIDATING FINANCIAL INFORMATION AS OF DECEMBER 31, 2002
CONSOLIDATED RESTRICTED UNRESTRICTED WESTLAKE ENTITIES ENTITY CHEMICAL ---------- ------------ ------------ BALANCE SHEET Total current assets..................................... $ 335,428 $ 44 $ 335,472 Property, plant and equipment, net....................... 935,463 -- 935,463 Equity investment........................................ -- 14,990 14,990 Other assets............................................. 28,377 7,751 36,128 ---------- ------- ---------- Total assets................................... $1,299,268 $22,785 $1,322,053 ========== ======= ========== Current portion of long term debt........................ $ 14,673 $ -- $ 14,673 Other current liabilities................................ 134,661 -- 134,661 Long term debt........................................... 491,424 253 491,677 Deferred income taxes.................................... 132,782 -- 132,782 Other liabilities........................................ 23,541 -- 23,541 Minority interest........................................ 81,294 -- 81,294 Stockholder's equity..................................... 420,893 22,532 443,425 ---------- ------- ---------- Total liabilities and stockholder's equity..... $1,299,268 $22,785 $1,322,053 ========== ======= ==========
F-34 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2002
CONSOLIDATED RESTRICTED UNRESTRICTED WESTLAKE ENTITIES ENTITY CHEMICAL ---------- ------------ ------------ STATEMENT OF OPERATIONS Net sales................................................ $1,072,627 $ -- $1,072,627 Cost of sales............................................ 1,002,092 -- 1,002,092 Selling, general and administrative expenses............. 58,783 -- 58,783 Impairment of long-lived assets.......................... 2,239 -- 2,239 ---------- ------- ---------- Income from operations................................... 9,513 -- 9,513 OTHER INCOME (EXPENSE) Interest expense......................................... (32,806) (101) (32,907) Other income (expense), net.............................. 4,738 2,046 6,784 ---------- ------- ---------- Income (loss) before income taxes........................ (18,555) 1,945 (16,610) Provision for income taxes............................... (7,206) -- (7,206) ---------- ------- ---------- Income (loss) before minority interest................... (11,349) 1,945 (9,404) Minority interest in the net income of consolidated subsidiary............................................. (8,065) -- (8,065) ---------- ------- ---------- Net income (loss)........................................ (3,284) 1,945 (1,339) Retained earnings, December 31, 2001..................... 54,584 391 54,975 ---------- ------- ---------- Retained earnings, December 31, 2002..................... $ 51,300 $ 2,336 $ 53,636 ========== ======= ==========
F-35 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2002
CONSOLIDATED RESTRICTED UNRESTRICTED WESTLAKE ENTITIES ENTITY CHEMICAL ---------- ------------ ------------ STATEMENT OF CASH FLOWS Net income (loss)........................................ $ (3,284) $ 1,945 $ (1,339) ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Depreciation and amortization............................ 89,488 114 89,602 Net changes in working capital and other................. (117,937) (2) (117,939) ---------- ------- ---------- Net cash provided (used) by operating activities................................... (31,733) 2,057 (29,676) ---------- ------- ---------- (Additions) to property, plant and equipment............. (38,587) -- (38,587) Proceeds from insurance claims........................... 4,901 -- 4,901 ---------- ------- ---------- Net cash used in investing activities.......... (33,686) -- (33,686) ---------- ------- ---------- Proceeds from borrowings................................. 113,890 -- 113,890 Repayments of borrowings................................. (117,432) (2,013) (119,445) ---------- ------- ---------- Net cash used in financing activities.......... (3,542) (2,013) (5,555) ---------- ------- ---------- Net increase (decrease) in cash and cash equivalents..... (68,961) 44 (68,917) Cash and cash equivalents at beginning of year........... 78,991 -- 78,991 ---------- ------- ---------- Cash and cash equivalents at end of year................. $ 10,030 $ 44 $ 10,074 ========== ======= ==========
F-36 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION AS OF DECEMBER 31, 2001
CONSOLIDATED RESTRICTED UNRESTRICTED WESTLAKE ENTITIES ENTITY CHEMICAL ---------- ------------ ------------ BALANCE SHEET Total current assets..................................... $ 303,346 $ -- $ 303,346 Property, plant and equipment, net....................... 978,525 -- 978,525 Equity investment........................................ -- 14,883 14,883 Other assets............................................. 24,533 7,865 32,398 ---------- ------- ---------- Total assets................................... $1,306,404 $22,748 $1,329,152 ========== ======= ========== Current portion of long term debt........................ $ 11,043 $ 2,000 $ 13,043 Other current liabilities................................ 121,214 -- 121,214 Long term debt........................................... 498,596 -- 498,596 Deferred income taxes.................................... 135,965 -- 135,965 Other liabilities........................................ 25,040 -- 25,040 Minority interest........................................ 89,359 -- 89,359 Stockholder's equity..................................... 425,187 20,748 445,935 ---------- ------- ---------- Total liabilities and stockholder's equity..... $1,306,404 $22,748 $1,329,152 ========== ======= ==========
F-37 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2001
CONSOLIDATED RESTRICTED UNRESTRICTED WESTLAKE ENTITIES ENTITY CHEMICAL ---------- ------------ ------------ STATEMENT OF OPERATIONS Net sales................................................ $1,087,033 $ -- $1,087,033 Cost of sales............................................ 1,121,759 -- 1,121,759 Selling, general and administrative expenses............. 53,203 -- 53,203 Write down of impaired assets............................ 7,677 -- 7,677 ---------- ------- ---------- Loss from operations..................................... (95,606) -- (95,606) OTHER INCOME (EXPENSE) Interest expense......................................... (31,892) -- (31,892) Other income (expense), net.............................. 7,949 946 8,895 ---------- ------- ---------- Income (loss) before income taxes........................ (119,549) 946 (118,603) (Benefit from) provision for income taxes................ (45,255) -- (45,255) ---------- ------- ---------- Income before minority interest.......................... (74,294) 946 (73,348) Minority interest in the net income of consolidated subsidiary............................................. (8,473) -- (8,473) ---------- ------- ---------- Net income............................................... (65,821) 946 (64,875) Retained earnings, December 31, 2000..................... 120,405 (555) 119,850 ---------- ------- ---------- Retained earnings, December 31, 2001..................... $ 54,584 $ 391 $ 54,975 ========== ======= ==========
F-38 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2001
CONSOLIDATED RESTRICTED UNRESTRICTED WESTLAKE ENTITIES ENTITY CHEMICAL ---------- ------------ ------------ STATEMENT OF CASH FLOWS Net income............................................... $ (65,821) $ 946 $ (64,875) ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Depreciation and amortization............................ 83,115 192 83,307 Net changes in working capital and other................. 11,191 (1,138) 10,053 ---------- ------- ---------- Net cash provided (used) by operating activities................................... 28,485 -- 28,485 ---------- ------- ---------- (Additions) to property, plant and equipment............. (76,500) -- (76,500) ---------- ------- ---------- Net cash used in investing activities.......... (76,500) -- (76,500) ---------- ------- ---------- Proceeds from borrowings................................. 226,000 -- 226,000 Repayments of borrowings................................. (107,250) -- (107,250) ---------- ------- ---------- Net cash used in financing activities.......... 118,750 -- 118,750 ---------- ------- ---------- Net increase (decrease) in cash and cash equivalents..... 70,735 -- 70,735 Cash and cash equivalents at beginning of year........... 8,256 -- 8,256 ---------- ------- ---------- Cash and cash equivalents at end of year................. $ 78,991 $ -- $ 78,991 ========== ======= ==========
F-39 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2000
CONSOLIDATED RESTRICTED UNRESTRICTED WESTLAKE ENTITIES ENTITY CHEMICAL ---------- ------------ ------------ STATEMENT OF OPERATIONS Net sales................................................ $1,391,363 $ -- $1,391,363 Cost of sales............................................ 1,198,700 -- 1,198,700 Selling, general and administrative expenses............. 61,855 -- 61,855 Write down of impaired assets............................ 10,777 -- 10,777 ---------- ----- ---------- Income from operations................................... 120,031 -- 120,031 OTHER INCOME (EXPENSE) Interest expense......................................... (31,957) -- (31,957) Other income (expense), net.............................. 1,871 (186) 1,685 ---------- ----- ---------- Income before income taxes............................... 89,945 (186) 89,759 Provision for income taxes............................... 30,707 -- 30,707 ---------- ----- ---------- Income before minority interest.......................... 59,238 (186) 59,052 Minority interest in the net income of consolidated subsidiary............................................. 5,357 -- 5,357 ---------- ----- ---------- Net income............................................... 53,881 (186) 53,695 Retained earnings, December 31, 1999..................... 83,524 (369) 83,155 Dividends paid to parents................................ (17,000) -- (17,000) ---------- ----- ---------- Retained earnings, December 31, 2000..................... $ 120,405 $(555) $ 119,850 ========== ===== ==========
F-40 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2000
CONSOLIDATED RESTRICTED UNRESTRICTED WESTLAKE ENTITIES ENTITY CHEMICAL ---------- ------------ ------------ STATEMENT OF CASH FLOWS Net income............................................... $ 53,881 $(186) $ 53,695 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Depreciation and amortization............................ 80,986 177 81,163 Net changes in working capital and other................. 37,465 9 37,474 ---------- ----- ---------- Net cash provided (used) by operating activities................................... 172,332 -- 172,332 ---------- ----- ---------- (Additions) to property, plant and equipment............. (78,893) -- (78,893) Acquisition of business operations....................... (8,800) -- (8,800) ---------- ----- ---------- Net cash used in investing activities.......... (87,693) -- (87,693) ---------- ----- ---------- Proceeds from borrowings................................. 52,000 -- 52,000 Repayments of borrowings................................. (120,000) -- (120,000) Contributions from parent................................ -- -- -- Dividend paid to parent.................................. (17,000) -- (17,000) ---------- ----- ---------- Net cash used in financing activities.......... (85,000) -- (85,000) ---------- ----- ---------- Net increase (decrease) in cash and cash equivalents..... (361) -- (361) Cash and cash equivalents at beginning of year........... 8,617 -- 8,617 ---------- ----- ---------- Cash and cash equivalents at end of year................. $ 8,256 $ -- $ 8,256 ========== ===== ==========
9. DERIVATIVE COMMODITY INSTRUMENTS The Company uses derivative instruments to reduce price volatility risk on commodities, primarily natural gas and ethane. Generally, the Company's strategy is to hedge its exposure to price variance by locking in prices for future purchases and sales. The Company accounts for such commodity derivatives as hedges. Usually, such derivatives are for terms less than one year. During 2002, due to the short-term nature of the commitments and associated derivative instruments, the Company did not designate any of its derivative instruments as hedges under the provisions of SFAS 133. As such, gains and losses from changes in the fair value of all the derivative instruments used in 2002 were included in earnings. The exposure on commodity derivatives used for price risk management includes the risk that the counterparty will not pay if the market declines below the established fixed price. In such case, the Company would lose the benefit of the derivative differential on the volume of the commodities covered. In any case, the Company would continue to receive the market price on the actual volume hedged. The Company also bears the risk that it could lose the benefit of market improvements over the fixed derivative price for the term and volume of the derivative securities (as such improvements would accrue to the benefit of the counterparty). The Company had losses of $737, $800 and $135 in connection with commodity derivatives for the years ending December 2002, 2001 and 2000, respectively. Risk management asset balance of $185 was included in "Prepaid expenses and other current assets," and risk management liability balance of $326 F-41 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) was included in "Accrued liabilities" in the Company's balance sheet as of December 31, 2002. There were no risk management assets or liabilities as of December 31, 2001. 10. INCOME TAXES The Company's income tax provision for the years ended December 31, 2002 and 2001 consists of the following:
2002 2001 2000 ------- -------- ------- CURRENT Federal................................................ $ -- $ -- $ 637 State.................................................. (219) 426 2,655 Foreign................................................ 952 -- 24 ------- -------- ------- 733 426 3,316 ------- -------- ------- DEFERRED Federal................................................ (7,785) (43,223) 25,739 State.................................................. (154) (2,458) 1,238 Foreign................................................ -- -- 414 ------- -------- ------- (7,939) (45,681) 27,391 ------- -------- ------- Total provision (benefit).................... $(7,206) $(45,255) $30,707 ======= ======== =======
An analysis of the Company's effective income tax rate for the years ended December 31, 2002, 2001 and 2000, follows:
2002 2001 2000 ------- -------- ------- Provision for federal income tax at statutory rate..... $(5,656) $(41,304) $31,419 State income tax provision net of federal income tax effect............................................... (210) (1,534) 2,530 Foreign tax............................................ 952 -- -- Other, net............................................. (2,292) (2,417) (3,242) ------- -------- ------- $(7,206) $(45,255) $30,707 ======= ======== =======
F-42 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) The tax effects of the principal temporary differences between financial reporting and income tax reporting at December 31, 2002 and 2001, are as follows:
2002 2001 --------- --------- AMT credit carryforward..................................... $ 28,938 $ 31,895 Net operating loss carryforward............................. 91,292 79,057 Investments................................................. 14,757 14,757 Accruals.................................................... 9,384 9,806 Inventory................................................... 2,222 825 Other....................................................... 3,867 4,076 --------- --------- Deferred tax assets -- total................................ 150,460 140,416 Book/tax depreciation differences........................... (265,543) (264,085) Other....................................................... (647) --------- --------- Deferred tax liabilities -- total........................... (266,190) (264,085) --------- --------- Total net deferred tax liabilities.......................... $(115,730) $(123,669) ========= =========
At December 31, 2002, the Company had federal and state tax net operating loss carryforward of approximately $246,270 and $625,050, respectively, which will expire in varying amounts between 2009 and 2020 and are subject to certain limitations on an annual basis. Management believes the Company will realize the full benefit of the net operating loss carryforwards before they expire. 11. EMPLOYEE BENEFITS The Company has a defined contribution savings plan covering all regular full-time employees whereby employees may elect to contribute up to 15% of their annual compensation. The Company matches the first 6% of such employee contributions at rates which vary by subsidiary. The Company may, at its discretion, make an additional contribution in an amount as the Board of Directors may determine. For the years ended December 31, 2002, 2001 and 2000, the Company charged approximately $1,905, $1,838 and $1,690, respectively, to expense for these contributions. The Company has a defined contribution retirement plan covering substantially all employees of certain subsidiaries who have completed one year of service. The Company contributions to the plan are determined as a percentage of employees' base and overtime pay. For the years ended December 31, 2002, 2001 and 2000, the Company charged approximately $1,908, $2,021 and $2,000, respectively, to expense for these contributions. The Company has noncontributory defined benefit plans which cover substantially all salaried and all wage employees of two subsidiaries. Benefits for salaried employees under these plans are based primarily on years of service and employees' pay near retirement. Benefits for wage employees are based upon years of service and a fixed amount per year as negotiated periodically. The Company recognizes the years of service prior to the Company's acquisition of the facilities for purposes of determining vesting eligibility and benefit levels for a certain subsidiary and for determining vesting and eligibility for employees of a certain subsidiary not covered by collective bargaining agreements. The Company's funding policy is consistent with the funding requirements of federal law and regulations. F-43 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) The Company provides postretirement healthcare benefits to the employees of three subsidiaries in 2001 who meet certain minimum age and service requirements. The Company has the right to modify or terminate some of these benefits.
PENSION BENEFITS OTHER BENEFITS --------------------------- ------------------------------ 2002 2001 2000 2002 2001 2000 ------- ------- ------- -------- -------- -------- CHANGE IN BENEFIT OBLIGATION Benefit obligation, beginning of year...... $20,492 $19,386 $15,785 $ 18,155 $ 18,071 $ 16,800 Service cost............. 807 845 876 403 411 320 Interest cost............ 1,385 1,299 1,224 446 467 539 Actuarial gain (loss).... (424) (618) 1,823 648 (118) 1,016 Benefits paid............ (571) (420) (322) (569) (676) (604) Plan amendment........... -- -- -- 2,313 -- -- ------- ------- ------- -------- -------- -------- Benefit obligation, end of year................ 21,689 20,492 19,386 21,396 18,155 18,071 ------- ------- ------- -------- -------- -------- CHANGE IN PLAN ASSETS Fair value of plan assets, beginning of year................... 12,070 12,461 11,638 -- -- -- Actual return............ (550) (742) (66) -- -- -- Employer contribution.... 2,125 771 1,211 569 676 604 Benefits paid............ (571) (420) (322) (569) (676) (604) ------- ------- ------- -------- -------- -------- Fair value of plan assets, end of year.... 13,074 12,070 12,461 -- -- -- ------- ------- ------- -------- -------- -------- Funded status............ (8,615) (8,422) (6,925) (21,396) (18,155) (18,071) Unrecognized net actuarial loss......... 2,729 1,562 313 6,408 6,221 6,836 Unamortized transition obligation............. -- -- -- 1,025 1,139 1,253 Unamortized prior period service cost........... 549 876 1,203 2,426 379 433 ------- ------- ------- -------- -------- -------- Net amount recognized.... $(5,337) $(5,984) $(5,409) $(11,537) $(10,416) $ (9,549) ======= ======= ======= ======== ======== ======== AMOUNTS RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION CONSIST OF Accrued benefit liability.............. $(7,790) $(7,326) $(5,409) $(11,537) $(10,416) $ (9,549) Intangible asset......... 447 671 -- -- -- -- Accumulated other comprehensive.......... -- -- -- -- -- -- loss................... 2,006 671 -- -- -- -- ------- ------- ------- -------- -------- -------- $(5,337) $(5,984) $(5,409) $(11,537) $(10,416) $ (9,549) ======= ======= ======= ======== ======== ========
F-44 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS)
PENSION BENEFITS OTHER BENEFITS ------------------ ------------------ 2002 2001 2000 2002 2001 2000 ---- ---- ---- ---- ---- ---- WEIGHTED-AVERAGE ASSUMPTIONS AS OF YEAR END Discount rate.................................. 7% 7% 7% 5.5% 5.5% 6.0% Expected return on plan assets................. 9% 9% 9% 0% 0% 0% Rate of compensation increase.................. 4.5% 4.5% 5.0% 0% 0% 0%
PENSION BENEFITS OTHER BENEFITS --------------------------- ------------------------ 2002 2001 2000 2002 2001 2000 ------- ------- ------- ------ ------ ------ COMPONENTS OF NET PERIODIC BENEFIT COST Service cost................... $ 807 $ 845 $ 876 $ 403 $ 411 $ 320 Interest cost.................. 1,385 1,299 1,224 446 467 539 Expected return on plan assets....................... (1,121) (1,126) (1,155) -- -- -- Net amortization............... 406 330 308 840 665 756 ------- ------- ------- ------ ------ ------ Net period benefit cost........ $ 1,477 $ 1,348 $ 1,253 $1,689 $1,543 $1,615 ======= ======= ======= ====== ====== ======
12. RELATED PARTY TRANSACTIONS The Company leases office space for management and administrative services from an affiliated party. For the years ending December 31, 2002, 2001 and 2000, the Company incurred and paid lease payments of approximately $1,512, $1,671 and $1,600, respectively. In March 2000, the Company loaned an affiliated party $2,000. Principal and interest payments will be repaid in twelve semi-annual installments which commence in January 2003. Interest on the debt accrues at LIBOR plus 2%. The affiliate has to comply with certain debt covenants which limit its ability to pay the principal and interest on the loans to affiliates. The Company's ability to recover the interest and principal of the loan with the affiliate as well as time of such recovery is contingent upon the affiliate's compliance with these covenants. Previously, the Company loaned this same affiliate $5,150. No interest or principal payments were received from the original loan from 1997 through 2001. Interest payments of $1,350 were received in 2002 and included in other income (expense) in the income statement. The loan amounts are included in other assets, net in the accompanying consolidated balance sheet. During the years ended December 31, 2002, 2001 and 2000, the Company and subsidiaries charged affiliates $2,204, $2,627 and $3,130, respectively, for management services incurred on their behalf. The amounts are included in other income in the accompanying consolidated statement of operations. Amounts due for such services and other expenses of $1,056 and $3,622 as of December 31, 2002 and 2001, respectively, are included in accounts receivable in the accompanying consolidated balance sheet. During the years ended December 31, 2001 and 2000, the Company purchased product for resale from an affiliate of $2,639 and $269, respectively. In connection with the construction of a polyethylene plant, the Company signed a technology license agreement with a third party. During 1997, the Company assigned the technology license agreement to Westlake Technology Corporation ("WTC"), a subsidiary of GPPI. The Company entered into a sublicense agreement with WTC whereby the Company continues to utilize the technology and pays WTC a fee based on the Company's production. Approximately $3,289, $3,188 and $2,942 of fees are included in cost of sales for the years 2002, 2001 and 2000, respectively. F-45 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) In December 1997, the Company entered into an agreement with WTC for licensing computer software. The agreement provides for quarterly licensing payments until 2002 based on achieved cost savings. Licensing payments of approximately $1,300 were made in 2001 and 2000. Quarterly software support fee payments of $450 and $720 were made in 2001 and 2000, respectively. In March 2001, the Company declared and paid cash dividends as a return of capital amounting to $87,000 to WPPI. Immediately following the payment, the Company received a capital contribution from WPPI amounting to $87,000. 13. ACQUISITIONS In December 2000, the Company received a capital contribution from WPPI consisting of 49 percent of the shares of common stock outstanding at Westlake Styrene Corporation ("WSC"). As a result of this contribution, the Company owns 100 percent of WSC. The contribution of WSC shares was recorded by the Company at $43,187, which represents WPPI's historical cost of the contributed WSC shares. During April 2000, the Company acquired a window fabrication business for approximately $8,800. The acquired business assets were recorded at fair value at the date of purchase. 14. OTHER INCOME Other income, net consists of the following for the years ended December 31, 2002 and 2001:
2002 2001 2000 ------- ------- ------- Management services..................................... $ 2,204 $ 2,627 $ 3,130 Interest income......................................... 1,978 1,755 1,077 Insurance proceeds, net................................. 1,965 2,878 591 WARC servicing fees, net of discount expense............ 1,092 (1,229) (4,129) Equity income........................................... 770 1,138 656 WARC interest........................................... 244 481 735 Derivative loss......................................... (737) (800) (135) Sales leaseback gain.................................... 340 620 339 Other................................................... (1,072) 1,425 (579) ------- ------- ------- $ 6,784 $ 8,895 $ 1,685 ======= ======= =======
15. SEVERANCE COSTS During the year ended December 31, 2002, the Company incurred $1,075 of severance cost relating to the termination of 58 employees. The termination program commenced in July 2002 and was completed by December 31, 2002. As of December 31, 2002, a $240 liability was recorded in accrued liabilities representing payments to be made over time for the employee terminations. Severance expenses of $985 and $90 are included in the cost of sales and selling, general and administrative expenses components, respectively, of the income statement for the year ended December 31, 2002. 16. COMMITMENTS AND CONTINGENCIES The Company is involved in various legal proceedings in the ordinary course of business. In management's opinion, none of these proceedings will have a material adverse effect on the Company's financial condition, results of operations and cash flows. F-46 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) The Company is subject to environmental laws and regulations that may require it to remove or mitigate the effects of the disposal or release of chemical substances at various sites. Under some of these laws and regulations, a current or previous owner or operator of property may be held liable for the costs of removal or remediation of hazardous substances on, under, or in its property, without regard to whether the owner or operator knew of, or caused the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time they occurred. As several of the Company's production sites have a history of industrial use, it is impossible to predict precisely what effect these laws and regulations will have on the Company in the future. As is typical for chemical businesses, soil and groundwater contamination has occurred in the past at some of the Company's sites, and might occur or be discovered at other sites in the future. The Company has typically conducted extensive soil and groundwater assessments throughout its operations either prior to acquisitions or associated with subsequent permitting requirements. The Company's investigations have not revealed any contamination caused by its operations, which would likely require it to incur material long term remediation efforts and associated liabilities. Lake Charles. In the fall of 2000, the Company determined that it was not in compliance with certain Clean Air Act regulations governing emissions of benzene from its two ethylene plants in Lake Charles. The Company voluntarily reported this discovery to the Louisiana Department of Environmental Quality, or LDEQ, and began negotiations to resolve the matter. The Company subsequently expanded the scope of its settlement discussions to include other environmental non-compliance matters at all of its plants in Lake Charles. In 2003, the Company has reached a tentative settlement with the LDEQ requiring it to pay $815 in penalties, which were accrued at December 31, 2002, and to perform specified beneficial environmental projects that will cost approximately $4,400. A portion of these expenditures has already been made. A final settlement may be reached by the fall of 2003. Calvert City. In connection with the Company's acquisition of the manufacturing complex in Calvert City from Goodrich Corporation ("Goodrich") in 1990 and 1997, Goodrich agreed to indemnify the Company for any pre-existing contamination at the site. Contamination at the Calvert City facilities is currently being investigated and remediated by PolyOne, an entity spun off from Goodrich in 1993 that assumed remediation and indemnification obligations for the site. For the past three years, PolyOne has suggested that the Company's actions after its acquisition of the complex have contributed to or otherwise exacerbated the contamination at the site. The Company has denied those allegations and has retained technical experts to evaluate its position. Goodrich has also recently asserted similar claims. While the Company believes that Goodrich and PolyOne will continue to remediate, and remain fully responsible for, this contamination in accordance with state and federal requirements and their contractual obligations to the Company, there can be no assurance that these parties will continue such remediation or that the Company will not be found to be at least partially responsible. In March and June 2002, the EPA's National Enforcement Investigation Center, or NEIC, conducted an environmental investigation of the Company's manufacturing complex in Calvert City in response to a January 2002 chlorine release. In May 2003, the Company received a report prepared by NEIC summarizing the results of that investigation. Among other things, the NEIC concluded that the requirements of several regulatory provisions had not been met. The Company has begun to analyze the NEIC report and has identified areas where the Company believes that erroneous factual or legal conclusions, or both, may have been drawn by NEIC, and the Company plans to meet with the EPA to review those areas. Nevertheless, it is likely that penalties will be imposed by either the EPA or the Kentucky Department of Environmental Protection for other violations. In general, it is the Company's policy to comply with all environmental, health and safety requirements and to provide safe and environmentally sound workplaces for its employees. In some cases, F-47 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) compliance can be achieved only by incurring capital expenditures, and the Company is faced with instances of non-compliance from time to time. It is difficult to estimate the future costs of environmental protection and remediation because of many uncertainties, including uncertainties about the status of laws, regulations and information related to individual locations and sites and the Company's ability to rely on third parties to carry out such remediation. Subject to the foregoing, but taking into consideration the Company's experience regarding environmental matters of a similar nature and facts currently known, the Company believes that capital expenditures and remedial actions to comply with existing laws governing environmental protection will not have a material adverse effect on the Company's business and financial results. In connection with the purchase of our Calvert City facilities in 1997, the Company acquired 10 barges that it uses to transport chemicals on the Mississippi, Ohio and Illinois Rivers. In April 1999, the U.S. Coast Guard issued a forfeiture order permanently barring the use of the barges in coastwise trade due to an alleged violation of a federal statute regarding the citizenship of the purchaser. The Company appealed the forfeiture order with the Coast Guard and, in June 1999, the Company filed suit in the U.S. Court of Appeals for the D.C. Circuit seeking a stay of the order pending resolution of the Coast Guard appeal. The D.C. Circuit granted the stay and the Company is able to use the barges pending resolution of its appeal with the Coast Guard. The Company has approached the Coast Guard to discuss settlement of this matter. The Company does not believe that the ultimate outcome of this matter will have a material adverse effect on its business, although there can be no assurance in this regard. In March 2002, the Company was awarded $16,300, plus legal fees and costs, by the U.S. District Court of the Western District of Louisiana, resulting from the Company's counterclaim in the Taita Chemical Company, LTD ("Taita") vs. Westlake Styrene Corporation ("WSC") lawsuit. The suit was brought by Taita in 1997 to recoup alleged overpayments relative to an off-take agreement between Taita and WSC. The case is currently under appeal. No gain or loss was recognized as of December 31, 2002. The Company is obligated under various long-term and short-term noncancelable operating leases. Several of the leases provide for renewal terms. At December 31, 2002, future minimum lease commitments are as follows:
2003........................................................ $ 18,115 2004........................................................ 15,720 2005........................................................ 12,452 2006........................................................ 10,659 2007........................................................ 9,830 Thereafter.................................................. 49,972 -------- $116,748 ========
Rental expense, net of railcar mileage credits, was approximately $18,079, $19,990 and $18,957 for the years ended December 31, 2002, 2001 and 2000, respectively. The Company has various purchase commitments for materials, supplies and services incident to the ordinary conduct of business. Such commitments are at prices not in excess of market prices. Certain feedstock purchase commitments require taking delivery of minimum volumes at market-determined prices. F-48 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) 17. SEGMENT INFORMATION The Company operates in two principal business segments: Olefins and Vinyls. These segments are strategic business units that offer a variety of different products. The Company manages each segment separately as each business requires different technology and marketing strategies. The Company's Olefins segment manufactures and markets ethylene, polyethylene, styrene monomer and various ethylene co-products. The majority of the Company's ethylene production is used in the Company's polyethylene, styrene and VCM operations. The remainder of ethylene is sold to third parties. In addition, we sell our ethylene co-products to third parties. Our primary ethylene co-products are propylene, crude butadiene and hydrogen. The majority of sales in our olefins business are made under long-term agreements. Contract volumes are established within a range. The terms of these contracts are fixed for a period (typically more than one year), although earlier terminations may occur if the parties fail to agree on price and deliveries are suspended for a period of several months. In most cases, these contracts also contemplate extension of the term unless specifically terminated by one of the parties. No single external Olefins customer accounted for more than 10% of segment net sales during 2002, 2001 or 2000. The Company's Vinyls business manufactures and markets PVC, VCM, chlorine, caustic soda, and ethylene. The Company also manufactures and sells products fabricated from the PVC that the Company produces, including pipe, window and patio door profile and fence. The Company's main manufacturing complex is located in Calvert City, Kentucky. It includes an ethylene plant, a chlor-alkali plant, a VCM plant and a PVC plant. The Company also owns a 43% interest in a PVC joint venture in China. As discussed in Note 1, in 2003, the Company acquired a PVC and VCM manufacturing facility in Geismar, Louisiana. The Company uses a majority of its chlorine, VCM and PVC production to manufacture fabricated products at the Company's eight regional plants. The remainder of the VCM production is sold pursuant to a contract that requires the Company to supply a minimum of 400 million pounds of VCM per year. During 2002, 2001 and 2000 one customer accounted for 19.8%, 17.3%, and 19.7%, respectively, of net sales in the Vinyls segment. The accounting policies of the individual segments are the same as those described in Note 1.
YEAR ENDED DECEMBER 31, ------------------------------------ 2002 2001 2000 ---------- ---------- ---------- SALES TO EXTERNAL CUSTOMERS Olefins.......................................... $ 599,035 $ 631,694 $ 863,711 Vinyls........................................... 473,592 455,339 527,652 ---------- ---------- ---------- $1,072,627 $1,087,033 $1,391,363 ========== ========== ========== INTERSEGMENT SALES Olefins.......................................... $ 28,459 $ 34,009 $ 42,565 Vinyls........................................... 503 -- -- ---------- ---------- ---------- $ 28,962 $ 34,009 $ 42,565 ========== ========== ==========
F-49 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER 31, ------------------------------------ 2002 2001 2000 ---------- ---------- ---------- INCOME (LOSS) FROM OPERATIONS Olefins.......................................... $ 7,875 $ (44,734) $ 94,292 Vinyls........................................... 10,482 (32,857) 43,999 Corporate and other.............................. (8,844) (18,015) (18,260) ---------- ---------- ---------- $ 9,513 $ (95,606) $ 120,031 ========== ========== ========== CAPITAL EXPENDITURES Olefins.......................................... $ 21,098 $ 20,471 $ 19,777 Vinyls........................................... 17,036 53,302 50,223 Corporate and other.............................. 453 2,727 8,893 ---------- ---------- ---------- $ 38,587 $ 76,500 $ 78,893 ========== ========== ==========
DECEMBER 31, ----------------------- 2002 2001 ---------- ---------- TOTAL ASSETS Olefins........................................... $ 903,569 $ 861,976 Vinyls............................................ 350,684 350,303 Corporate and other............................... 67,800 116,873 ---------- ---------- $1,322,053 $1,329,152 ========== ==========
A reconciliation of total segment income (loss) from operations to consolidated income (loss) before taxes is as follows:
YEAR ENDED DECEMBER 31, ------------------------------- 2002 2001 2000 -------- --------- -------- Income (loss) from operations for reportable segments.......................................... $ 9,513 $ (95,606) $120,031 Interest expense.................................... (32,907) (31,892) (31,957) Other income, net................................... 6,784 8,895 1,685 -------- --------- -------- Income (loss) before taxes.......................... $(16,610) $(118,603) $ 89,759 ======== ========= ========
18. SUBSEQUENT EVENTS In April 2003, the Company's parent contributed to the Company the stock of Geismar Holdings, Inc. and GVGP, Inc. These entities are the partners of Geismar Vinyls Company LP (GVC). GVC's assets, which consist of a vinyls facility in Geismar, Louisiana, were purchased by the parent company in December 2002 for $5 million in cash consideration. In addition, a percentage of future earnings not to exceed $4 million is to be paid by the Company. Although the Geismar facility is currently idled, the Company intends to operate the facility when market conditions support utilization of the additional capacity. The contribution will be accounted for by the Company at the parent's book value. F-50 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) 19. GUARANTOR DISCLOSURES On July 31, 2003, the Company completed a refinancing of substantially all of its outstanding long-term debt. The Company used net proceeds from the refinancing of approximately $507.4 million to: - repay in full all outstanding amounts under its existing revolving credit facility, term loan and 9.5% Series A and Series B notes, including accrued and unpaid interest, fees and a $4.0 million make-whole premium to the noteholders; and - provide $2.4 million in cash collateral for outstanding letter of credit obligations of $2.2 million. In conjunction with the refinancing, the Company terminated its accounts receivable securitization facility by repurchasing all accounts receivable previously sold to its unconsolidated accounts receivables securitization subsidiary. No gain or loss was recognized as a result of the accounts receivable repurchase. The Company also obtained a $12.4 million letter of credit to secure its obligations under a letter of credit reimbursement agreement related to outstanding tax-exempt bonds. As a result of the refinancing, the Company will recognize $11.3 million in non-operating expense in the third quarter of 2003 consisting of the $4.0 million make-whole premium and a write-off of $7.3 million in previously capitalized debt issuance expenses. The refinancing consisted of: - $380.0 million in aggregate principal amount of privately placed 8 3/4% senior notes due 2011; - $120.0 million senior secured term loan due in 2010; and - $21.0 million in borrowings under a new $200.0 million senior secured working capital revolving credit facility due in 2007. The Company incurred approximately $13.6 million in costs associated with the refinancing that will be capitalized and amortized over the term of the new debt. The 8 3/4% senior notes are unsecured. There is no sinking fund and no scheduled amortization of the notes prior to maturity. The notes are subject to redemption, and holders may require the Company to repurchase the notes upon a change of control. All domestic restricted subsidiaries are guarantors of the senior notes. The term loan bears interest at either LIBOR plus 3.75% or prime rate plus 2.75%. Quarterly principal payments of $0.3 million are due on the term loan beginning on September 30, 2003, with the balance due in four equal quarterly installments in the seventh year of the loan. Mandatory prepayments are due on the term loan with the proceeds of asset sales and casualty events subject, in some instances, to reinvestment provisions. The term loan also requires prepayment with 50% of excess cash flow as determined under the term loan agreement. The term loan is secured by the Company's Lake Charles and Calvert City facilities and some related general intangibles. The revolving credit facility bears interest at either LIBOR plus 2.25% or prime rate plus 0.25%, subject to a grid pricing adjustment based on a fixed charge coverage ratio after the first year and subject to a 0.5% unused line fee. The revolving credit facility is also subject to a termination fee if terminated during the first two years. The revolving credit facility is secured by accounts receivable and contract rights, inventory, chattel paper, instruments, documents, deposit accounts and related general intangibles. The revolving credit facility matures in 2007. The agreements governing the 8 3/4% senior notes, the new term loan and the revolving credit facility each contain customary representations, conditions and events of default. Accordingly, these agreements impose significant operating and financial restrictions on the Company. These restrictions, among other F-51 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) things, provide limitations on incurrence of additional indebtedness, the payment of dividends, significant investments and sale of assets. These limitations are subject to a number of important qualifications and exceptions. None of the agreements require the Company to maintain specified financial ratios, except that the Company's new revolving credit facility requires the Company to maintain a minimum fixed charge coverage ratio when availability falls below a specified minimum level. The Company's payment obligations under its 8 3/4% senior notes are fully and unconditionally guaranteed by each of its current and future domestic restricted subsidiaries (the "Guarantor Subsidiaries"). These guarantees are the joint and several obligations of the Guarantor Subsidiaries. The following condensed consolidating financial information presents the financial condition, results of operations and cash flows of Westlake Chemical Corporation, the Guarantor Subsidiaries and the remaining subsidiaries that do not guarantee the notes (the "Non-Guarantor Subsidiaries"), together with consolidating adjustments necessary to present the Company's results on a consolidated basis. Westlake Olefins Corporation is the Company's 80%-owned subsidiary and is included with the Guarantor Subsidiaries. The 20% minority interest in Westlake Olefins Corporation was contributed to Westlake Chemical Corporation by its parent as of August 1, 2003. F-52 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION AS OF DECEMBER 31, 2002
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR BALANCE SHEET CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ------------- ----------- ------------ ------------- ------------ ------------ Current assets Cash and cash equivalents... $ 6,900 $ 424 $ 2,750 $ -- $ 10,074 Accounts receivable, net.... 470,267 136,945 6,582 (490,560) 123,234 Inventories, net............ -- 167,310 3,556 -- 170,866 Prepaid expenses and other current assets........... 412 13,707 127 -- 14,246 Deferred income taxes....... 17,052 -- -- -- 17,052 ---------- ---------- ------- ----------- ---------- Total current assets..... 494,631 318,386 13,015 (490,560) 335,472 Property, plant and equipment, net......................... -- 930,140 5,323 -- 935,463 Equity investment............. 728,047 -- 14,990 (728,047) 14,990 Other assets, net............. 154,067 16,005 8,103 (142,047) 36,128 ---------- ---------- ------- ----------- ---------- Total assets............. $1,376,745 $1,264,531 $41,431 $(1,360,654) $1,322,053 ========== ========== ======= =========== ========== Current liabilities Accounts payable............ $ -- $ 67,894 $ 313 $ -- $ 68,207 Accrued liabilities......... 19,398 43,805 3,251 -- 66,454 Current portion of long-term debt..................... 14,673 -- -- -- 14,673 ---------- ---------- ------- ----------- ---------- Total current liabilities............ 34,071 111,699 3,564 -- 149,334 Long-term debt................ 480,535 643,506 245 (632,609) 491,677 Deferred income taxes......... 132,782 -- -- -- 132,782 Other liabilities............. 2,049 21,492 -- -- 23,541 Minority interest............. -- 81,294 -- -- 81,294 Stockholders' equity.......... 727,308 406,540 37,622 (728,045) 443,425 ---------- ---------- ------- ----------- ---------- Total liabilities and stockholders' equity... $1,376,745 $1,264,531 $41,431 $(1,360,654) $1,322,053 ========== ========== ======= =========== ==========
F-53 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION AS OF DECEMBER 31, 2001
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR BALANCE SHEET CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ------------- ----------- ------------ ------------- ------------ ------------ Current assets Cash and cash equivalents... $ 75,820 $ 202 $ 2,969 $ -- $ 78,991 Accounts receivable, net.... 359,679 146,102 2,232 (426,594) 81,419 Inventories, net............ -- 124,989 3,238 -- 128,227 Prepaid expenses and other current assets........... -- 1,835 578 -- 2,413 Deferred income taxes....... 12,296 -- -- -- 12,296 ---------- ---------- ------- ----------- ---------- Total current assets..... 447,795 273,128 9,017 (426,594) 303,346 Property, plant and equipment, net......................... -- 973,215 5,310 -- 978,525 Equity investment............. 727,922 -- 14,883 (727,922) 14,883 Other assets, net............. 237,650 18,710 8,083 (232,045) 32,398 ---------- ---------- ------- ----------- ---------- Total assets............. $1,413,367 $1,265,053 $37,293 $(1,386,561) $1,329,152 ========== ========== ======= =========== ========== Current liabilities Accounts payable............ $ 4,303 $ 49,375 $ 53 $ -- $ 53,731 Accrued liabilities......... 7,225 58,267 1,991 -- 67,483 Current portion of long-term debt..................... 11,043 -- 2,000 -- 13,043 ---------- ---------- ------- ----------- ---------- Total current liabilities............ 22,571 107,642 4,044 -- 134,257 Long-term debt................ 487,707 649,694 (954) (637,851) 498,596 Deferred income taxes......... 135,965 -- -- -- 135,965 Other liabilities............. 2,035 23,005 -- -- 25,040 Minority interest............. -- 89,359 -- -- 89,359 Stockholders' equity.......... 765,089 395,353 34,203 (748,710) 445,935 ---------- ---------- ------- ----------- ---------- Total liabilities and stockholders' equity... $1,413,367 $1,265,053 $37,293 $(1,386,561) $1,329,152 ========== ========== ======= =========== ==========
F-54 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2002
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR STATEMENT OF OPERATIONS CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ----------------------- ----------- ------------ ------------- ------------ ------------ Net sales....................... $ -- $1,055,873 $21,871 $ (5,117) $1,072,627 Cost of sales................... -- 989,886 17,323 (5,117) 1,002,092 -------- ---------- ------- -------- ---------- -- 65,987 4,548 -- 70,535 Selling, general and administrative expenses....... 6,727 50,045 2,011 -- 58,783 Impairment of long-lived assets........................ -- 1,783 456 -- 2,239 -------- ---------- ------- -------- ---------- Income (loss) from operations... (6,727) 14,159 2,081 -- 9,513 Other income (expense) Interest expense................ (32,721) (13,411) (101) 13,326 (32,907) Other income (expense), net..... 13,996 3,930 2,184 (13,326) 6,784 -------- ---------- ------- -------- ---------- Income (loss) before income taxes and minority interest... (25,452) 4,678 4,164 -- (16,610) Provision for (benefit from) income taxes.................. (5,882) (2,851) 1,527 -- (7,206) -------- ---------- ------- -------- ---------- Income (loss) before minority interest...................... (19,570) 7,529 2,637 -- (9,404) Minority interest in the net income (loss) of consolidated subsidiary.................... -- (8,065) -- -- (8,065) -------- ---------- ------- -------- ---------- Net income (loss)............... $(19,570) $ 15,594 $ 2,637 $ -- $ (1,339) ======== ========== ======= ======== ==========
F-55 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2001
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR STATEMENT OF OPERATIONS CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ----------------------- ----------- ------------ ------------- ------------ ------------ Net sales....................... $ -- $1,069,423 $20,755 $ (3,145) $1,087,033 Cost of sales................... -- 1,108,052 16,852 (3,145) 1,121,759 -------- ---------- ------- -------- ---------- -- (38,629) 3,903 -- (34,726) Selling, general and administrative expenses....... 7,362 43,890 1,951 -- 53,203 Impairment of long-lived assets........................ 3,636 4,041 -- -- 7,677 -------- ---------- ------- -------- ---------- Income (loss) from operations... (10,998) (86,560) 1,952 -- (95,606) Other income (expense) Interest expense....................... (32,967) (59,251) (152) 60,478 (31,892) Other income (expense), net..... 63,279 4,643 1,451 (60,478) 8,895 -------- ---------- ------- -------- ---------- Income (loss) before income taxes and minority interest... 19,314 (141,168) 3,251 -- (118,603) Provision for (benefit from) income taxes.................. 4,073 (50,326) 998 -- (45,255) -------- ---------- ------- -------- ---------- Income (loss) before minority interest...................... 15,241 (90,842) 2,253 -- (73,348) Minority interest in the net income (loss) of consolidated subsidiary.................... -- (8,473) -- -- (8,473) -------- ---------- ------- -------- ---------- Net income (loss)............... $ 15,241 $ (82,369) $ 2,253 $ -- $ (64,875) ======== ========== ======= ======== ==========
F-56 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2000
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR STATEMENT OF OPERATIONS CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ----------------------- ----------- ------------ ------------- ------------ ------------ Net sales....................... $ -- $1,377,000 $18,681 $ (4,318) $1,391,363 Cost of sales................... -- 1,186,802 16,216 (4,318) 1,198,700 -------- ---------- ------- -------- ---------- -- 190,198 2,465 -- 192,663 Selling, general and administrative expenses....... 5,225 54,809 1,821 -- 61,855 Impairment of long-lived assets........................ -- 10,777 -- -- 10,777 -------- ---------- ------- -------- ---------- Income (loss) from operations... (5,225) 124,612 644 -- 120,031 Other income (expense) Interest expense................ (31,461) (31,823) (63) 31,390 (31,957) Other income (expense), net..... 32,372 594 109 (31,390) 1,685 -------- ---------- ------- -------- ---------- Income (loss) before income taxes and minority interest... (4,314) 93,383 690 -- 89,759 Provision for (benefit from) income taxes.................. 4,257 26,012 438 -- 30,707 -------- ---------- ------- -------- ---------- Income (loss) before minority interest...................... (8,571) 67,371 252 -- 59,052 Minority interest in the net income (loss) of consolidated subsidiary.................... 5,357 -- -- 5,357 -------- ---------- ------- -------- ---------- Net income (loss)............... $ (8,571) $ 62,014 $ 252 $ -- $ 53,695 ======== ========== ======= ======== ==========
F-57 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2002
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR STATEMENT OF CASH FLOWS CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ----------------------- ----------- ------------ ------------- ------------ ------------ Net income (loss)................ $ (19,570) $ 15,594 $ 2,637 $ -- $ (1,339) ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Depreciation and amortization................ 3,135 84,270 2,197 -- 89,602 Provision for bad debts........ -- 10,379 -- -- 10,379 (Gain) loss from disposition of fixed assets................ -- (2,259) 456 -- (2,259) Impairment of long-lived assets...................... -- 1,783 -- -- 2,239 Deferred income taxes.......... (5,882) (2,057) -- -- (7,939) Minority interest in income (loss)...................... -- (8,065) -- -- (8,065) Net changes in working capital and other................... (43,061) (67,904) (1,329) -- (112,294) --------- -------- ------- ----- --------- Net cash provided by (used for) operating activities................ (65,378) 31,741 3,961 -- (29,676) --------- -------- ------- ----- --------- Additions to property, plant and equipment...................... -- (36,420) (2,167) (38,587) Proceeds from insurance claims... -- 4,901 -- -- 4,901 --------- -------- ------- ----- --------- Net cash used for investing activities................ -- (31,519) (2,167) -- (33,686) --------- -------- ------- ----- --------- Proceeds from borrowings......... 113,890 -- -- -- 113,890 Repayments of borrowings......... (117,432) -- (2,013) -- (119,445) --------- -------- ------- ----- --------- Net cash provided by (used for) financing activities................ (3,542) -- (2,013) -- (5,555) --------- -------- ------- ----- --------- Net increase (decrease) in cash and cash equivalents........... (68,920) 222 (219) -- (68,917) Cash and cash equivalents at beginning of period............ 75,820 202 2,969 -- 78,991 --------- -------- ------- ----- --------- Cash and cash equivalents at end of period...................... $ 6,900 $ 424 $ 2,750 $ -- $ 10,074 ========= ======== ======= ===== =========
F-58 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2001
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR STATEMENT OF CASH FLOWS CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ----------------------- ----------- ------------ ------------- ------------ ------------ Net income (loss)................ $ 15,241 $(82,369) $ 2,253 $ -- $ (64,875) Adjustments to reconcile net income (loss) to net cash provided by operating activities Depreciation and amortization................ 1,454 79,581 2,272 -- 83,307 Provision for bad debts........ -- 3,804 13 -- 3,817 (Gain) loss from disposition of fixed assets................ -- -- -- -- -- Impairment of long-lived assets...................... 3,636 4,041 -- -- 7,677 Deferred income taxes.......... (385) (45,296) -- -- (45,681) Minority interest in income (loss)...................... -- (8,473) -- -- (8,473) Net changes in working capital and other...................... (67,219) 123,674 (3,742) -- 52,713 --------- -------- ------- ----- --------- Net cash provided by (used for) operating activities................ (47,273) 74,962 796 -- 28,485 --------- -------- ------- ----- --------- Additions to property, plant and equipment...................... -- (74,760) (1,740) (76,500) Proceeds from insurance claims... -- -- -- -- -- --------- -------- ------- ----- --------- Net cash used for investing activities................ -- (74,760) (1,740) -- (76,500) --------- -------- ------- ----- --------- Proceeds from borrowings......... 226,000 -- -- -- 226,000 Repayments of borrowings......... (107,250) -- -- -- (107,250) Capital contribution from parent......................... 87,000 -- -- -- 87,000 Repayments of borrowings......... (87,000) -- -- -- (87,000) --------- -------- ------- ----- --------- Net cash used for financing activities................ 118,750 -- -- -- 118,750 --------- -------- ------- ----- --------- Net increase (decrease) in cash and cash equivalents........... 71,477 202 (944) -- 70,735 Cash and cash equivalents at beginning of period............ 4,343 -- 3,913 -- 8,256 --------- -------- ------- ----- --------- Cash and cash equivalents at end of period...................... $ 75,820 $ 202 $ 2,969 $ -- $ 78,991 ========= ======== ======= ===== =========
F-59 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) CONDENSED CONSOLIDATING FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2000
WESTLAKE CHEMICAL GUARANTOR NON-GUARANTOR STATEMENT OF CASH FLOWS CORPORATION SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED - ----------------------- ----------- ------------ ------------- ------------ ------------ Net income (loss)................ $ (8,571) $ 62,014 $ 252 $ -- $ 53,695 ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Depreciation and amortization................ 3,590 75,426 2,147 -- 81,163 Provision for bad debts........ -- 1,300 -- -- 1,300 (Gain) loss from disposition of fixed assets................ -- -- -- -- -- Impairment of long-lived assets...................... 10,777 -- -- 10,777 Deferred income taxes.......... (4,315) 31,292 414 -- 27,391 Minority interest in income (loss)...................... -- 5,357 -- -- 5,357 Net changes in working capital and other...................... 92,515 (100,487) 621 -- (7,351) --------- --------- ------- ----- --------- Net cash provided by (used for) operating activities................ 83,219 85,679 3,434 -- 172,332 --------- --------- ------- ----- --------- Additions to property, plant and equipment...................... -- (76,879) (2,014) (78,893) Proceeds from insurance claims... -- (8,800) -- -- (8,800) --------- --------- ------- ----- --------- Net cash used for investing activities................ -- (85,679) (2,014) -- (87,693) --------- --------- ------- ----- --------- Proceeds from borrowings......... 52,000 -- -- -- 52,000 Repayments of borrowings......... (120,000) -- -- -- (120,000) Dividend paid to parent.......... (17,000) -- -- -- (17,000) --------- --------- ------- ----- --------- Net cash used for financing activities................ (85,000) -- -- -- (85,000) --------- --------- ------- ----- --------- Net increase (decrease) in cash and cash equivalents........... (1,781) -- 1,420 -- (361) Cash and cash equivalents at beginning of period............ 6,124 -- 2,493 -- 8,617 --------- --------- ------- ----- --------- Cash and cash equivalents at end of period...................... $ 4,343 $ -- $ 3,913 $ -- $ 8,256 ========= ========= ======= ===== =========
F-60 WESTLAKE CHEMICAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) 20. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
THREE MONTHS ENDED --------------------------------------------------- MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, 2002 2002 2002 2002 --------- -------- ------------- ------------ Net sales.............................. $203,144 $282,480 $304,987 $282,016 Gross profit........................... (10,913) 14,856 51,008 15,584 Income (loss) from operations.......... (22,600) (70) 33,334 (1,151) Net income (loss)...................... (14,626) (271) 16,927 (3,369)
THREE MONTHS ENDED --------------------------------------------------- MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, 2001 2001 2001 2001 --------- -------- ------------- ------------ Net sales.............................. $306,486 $286,287 $265,114 $229,146 Gross profit........................... (14,771) (2,188) (10,240) (7,527) Income (loss) from operations.......... (28,483) (13,417) (24,388) (29,318) Net income (loss)...................... (16,314) (10,904) (15,990) (21,667)
F-61 WESTLAKE CHEMICAL CORPORATION SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (DOLLARS IN THOUSANDS)
BALANCE AT BALANCE AT ACCOUNTS RECEIVABLE BEGINNING CHARGED TO ADDITIONS/ END OF ALLOWANCE FOR DOUBTFUL ACCOUNTS OF YEAR EXPENSE (DEDUCTIONS)(1) YEAR - ------------------------------- ---------- ---------- --------------- ---------- 2000........................................... $1,595 $ 1,300 $ (864) $ 2,031 2001........................................... 2,031 3,937 (1,055) 4,913 2002........................................... 4,913 10,379 (1,910) 13,382
- --------------- (1) Accounts receivable written off during the period.
BALANCE AT BALANCE AT INVENTORY BEGINNING CHARGED TO ADDITIONS/ END OF ALLOWANCE FOR INVENTORY OBSOLESCENCE OF YEAR EXPENSE (DEDUCTIONS)(1) YEAR - ------------------------------------ ---------- ---------- --------------- ---------- 2000........................................... $1,660 $5,130 $(1,581) $5,209 2001........................................... 5,209 5,122 (1,009) 9,322 2002........................................... 9,322 1,287 (1,867) 8,742
- --------------- (1) Inventory written off during the period. F-62 UNTIL [ ], 2004 (THE 90TH DAY AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. (WESTLAKE CHEMICAL LOGO) PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS Delaware Corporations. Delaware law permits a corporation to adopt a provision in its certificate of incorporation eliminating or limiting the personal liability of a director, but not an officer in his or her capacity as such, to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except that such provision shall not limit the liability of a director for (1) any breach of the director's duty of loyalty to the corporation or its stockholders, (2) acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (3) liability under section 174 of the Delaware General Corporation Law (the "DGCL") for unlawful payment of dividends or stock purchases or redemptions or (4) any transaction from which the director derived an improper personal benefit. The certificate of incorporation of Westlake Chemical Corporation ("Westlake") provides that, to the fullest extent of Delaware law, no Westlake director shall be liable to Westlake or its stockholders for monetary damages for breach of fiduciary duty as a director. The certificate of incorporation of each other Delaware corporation that is a registrant, except for Westlake Vinyl Corporation, contains a similar provision. The certificate of incorporation of Westlake Vinyl Corporation contains no provision limiting the liability of directors. Under Delaware law, a corporation may indemnify any individual made a party or threatened to be made a party to any type of proceeding, other than an action by or in the right of the corporation, because he or she is or was an officer, director, employee or agent of the corporation or was serving at the request of the corporation as an officer, director, employee or agent of another corporation or entity against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such proceeding: (1) if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation; or (2) in the case of a criminal proceeding, he or she had no reasonable cause to believe that his or her conduct was unlawful. A corporation may indemnify any individual made a party or threatened to be made a party to any threatened, pending or completed action or suit brought by or in the right of the corporation because he or she was an officer, director, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other entity, against expenses actually and reasonably incurred in connection with such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, provided that such indemnification will be denied if the individual is found liable to the corporation unless, in such a case, the court determines the person is nonetheless entitled to indemnification for such expenses. A corporation must indemnify a present or former director or officer who successfully defends himself or herself in a proceeding to which he or she was a party because he or she was a director or officer of the corporation against expenses actually and reasonably incurred by him or her. Expenses incurred by an officer or director, or any employees or agents as deemed appropriate by the board of directors, in defending civil or criminal proceedings may be paid by the corporation in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of such director, officer, employee or agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation. The Delaware law regarding indemnification and expense advancement is not exclusive of any other rights which may be granted by the certificate of incorporation or bylaws, a vote of stockholders or directors, agreement or otherwise. Under the Delaware General Corporation Law, termination of any proceeding by conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that such person is prohibited from being indemnified. Westlake's bylaws authorize indemnification of any person entitled to indemnity under law to the full extent permitted by law. The bylaws of Geismar Holdings, Inc., Gramercy Chlor-Alkali Corporation, GVGP, Inc., North American Profiles, Inc., Westlake Chemical Holdings, Inc., Westlake Chemical II-1 Investments, Inc., Westlake Chemical Manufacturing, Inc., Westlake Chemical Products, Inc., Westlake Development Corporation and Westlake Vinyls, Inc. require indemnification of officers, directors, employees and agents to the extent permitted by the DGCL. The bylaws of Van Buren Pipe Corporation and Westech Building Products, Inc. require indemnification of directors and officers to the fullest extent permitted by applicable law and such indemnification must be approved by a two-thirds vote of the board upon a determination by the board that indemnification is proper. The bylaws of North American Pipe Corporation, Westlake Management Services, Inc., Westlake Olefins Corporation, Westlake PVC Corporation, Westlake Resources Corporation and Westlake Vinyl Corporation contain no provisions regarding indemnification of officers or directors. Delaware Limited Partnerships. Subject to such standards and restrictions as are set forth in its limited partnership agreement, the Delaware Revised Uniform Limited Partnership Act empowers a Delaware limited partnership to indemnify and hold harmless any partner or other person from and against any and all claims and demands. The limited partnership agreement for each Delaware limited partnership that is a registrant provides that (1) the general partner's obligation to perform are performable only to the extent that the partnership has funds available and (2) neither the general partner nor its affiliates shall ever be personally liable to involuntarily furnish its or their own funds for any such purposes, to respond in damages or to render specific performance. The limited partners agree to look solely to the general partner's partnership interest for recovery of any judgment against the general partner. So long as the general partner acts in good faith, it has no liability or obligation to the partnership or to any partner for any decision, act or omission, whether or not such decision, act or omission was (1) authorized or reasonably prudent or (2) the result of the exercise of good or bad business judgment. U.S. Virgin Islands Corporation. The general corporation law of the U.S. Virgin Islands permits a corporation to adopt a provision in its articles of incorporation eliminating or limiting the personal liability of a director to the corporation or its stockholders for damages for breach of duty as a director, except that such provision shall not eliminate or limit the liability of a director (1) if a judgment or other final adjudication adverse to the director establishes that the director's acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of the law or (2) that the director gained a financial profit or other advantage to which the director was not legally entitled. The articles of incorporation of Westlake Overseas Corporation contain no provision limiting the liability of directors. Under the general corporation law of the U.S. Virgin Islands, a corporation may indemnify any individual made a party or threatened to be made a party to any type of proceeding, other than an action by or in the right of the corporation, because he or she is or was an officer, director, employee or agent of the corporation or was serving at the request of the corporation as an officer, director, employee or agent of another corporation or entity against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such proceeding: (1) if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation; and (2) in the case of a criminal action or proceeding, he or she had no reasonable cause to believe that his or her conduct was unlawful. A corporation may indemnify any individual made a party or threatened to be made a party to any threatened, pending or completed action or suit brought by or in the right of the corporation because he or she was an officer, director, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other entity, against expenses actually and reasonably incurred in connection with such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, provided that such indemnification will be denied if the individual is found liable to the corporation unless, in such a case, the court determines the person is nonetheless entitled to indemnification for such expenses. A corporation must indemnify a present or former director or officer who successfully defends himself or herself in a proceeding to which he or she was a party because he or she was a director or officer of the corporation against expenses actually and reasonably incurred by him or her. Expenses incurred by an officer or director, or any employees or agents as deemed appropriate by the board of directors, in defending civil or criminal proceedings may be paid by the corporation in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of such II-2 director, officer, employee or agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation. Under the general corporation law of the U.S. Virgin Islands, termination of any proceeding by conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that such person is prohibited from being indemnified. The bylaws of Westlake Overseas Corporation provide that officers and directors shall be defended and indemnified by the corporation and the shareholders for against any and all claims and liabilities arising from serving as an officer or director, except for willful misconduct or gross negligence. As permitted by U.S. Virgin Islands law, the bylaws also authorize Westlake Overseas Corporation to purchase and maintain insurance to cover this liability of the corporation. ITEM 21. EXHIBITS (a) Exhibits
EXHIBIT NO. EXHIBIT - ------- ------- 3.1 Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on September 3, 1991. 3.2 Certificate of Amendment to the Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on June 28, 1993. 3.3 Certificate of Amendment of the Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on November 4, 1993. 3.4 Certificate of Amendment of the Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on August 14, 1997. 3.5 Bylaws of Westlake. 3.6 Certificate of Incorporation of Geismar Holdings, Inc. as filed with the Delaware Secretary of State on December 26, 2002. 3.7 By-Laws of Geismar Holdings, Inc. 3.8 Certificate of Limited Partnership of Geismar Vinyls Company LP as filed with the Delaware Secretary of State on January 2, 2003. 3.9 Certificate of Amendment to the Certificate of Limited Partnership of Geismar Vinyls Company LP as filed with the Delaware Secretary of State on January 8, 2003. 3.10 Agreement of Limited Partnership of Geismar Vinyls Company LP. 3.11 Certificate of Incorporation of Gramercy Chlor-Alkali Corporation as filed with the Delaware Secretary of State on December 13, 2000. 3.12 By-Laws of Gramercy Chlor-Alkali Corporation. 3.13 Certificate of Incorporation of GVGP, Inc. as filed with the Delaware Secretary of State on December 26, 2002. 3.14 By-Laws of GVGP, Inc. 3.15 Certificate of Incorporation of North American Pipe Corporation as filed with the Delaware Secretary of State on May 29, 1992. 3.16 Certificate of Amendment to the Certificate of Incorporation of North American Pipe Corporation as filed with the Delaware Secretary of State on July 7, 1992. 3.17 Bylaws of North American Pipe Corporation. 3.18 Certificate of Incorporation of North American Profiles, Inc. as filed with the Delaware Secretary of State on March 27, 2000. 3.19 Certificate of Amendment to the Certificate of Incorporation of North American Profiles, Inc. as filed with the Delaware Secretary of State on August 1, 2000. 3.20 By-Laws of North American Profiles, Inc. 3.21 Certificate of Incorporation of Van Buren Pipe Corporation as filed with the Delaware Secretary of State on May 25, 1994. 3.22 Certificate of Amendment to the Certificate of Incorporation of Van Buren Pipe Corporation as filed with the Delaware Secretary of State on December 13, 1995.
II-3
EXHIBIT NO. EXHIBIT - ------- ------- 3.23 By-Laws of Van Buren Pipe Corporation. 3.24 Certificate of Incorporation of Westech Building Products, Inc. as filed with the Delaware Secretary of State on May 25, 1994. 3.25 Certificate of Amendment to the Certificate of Incorporation of Westech Building Products, Inc. as filed with the Delaware Secretary of State on May 6, 1996. 3.26 By-Laws of Westech Building Products, Inc. 3.27 Certificate of Incorporation of Westlake Chemical Holdings, Inc. as filed with the Delaware Secretary of State on December 13, 2000. 3.28 By-Laws of Westlake Chemical Holdings, Inc. 3.29 Certificate of Incorporation of Westlake Chemical Investments, Inc. as filed with the Delaware Secretary of State on December 13, 2000. 3.30 By-Laws of Westlake Chemical Investments, Inc. 3.31 Certificate of Incorporation of Westlake Chemical Manufacturing, Inc. as filed with the Delaware Secretary of State on December 13, 2000. 3.32 By-Laws of Westlake Chemical Manufacturing, Inc. 3.33 Certificate of Incorporation of Westlake Chemical Products, Inc. as filed with the Delaware Secretary of State on December 13, 2000. 3.34 By-Laws of Westlake Chemical Products, Inc. 3.35 Certificate of Incorporation of Westlake Development Corporation as filed with the Delaware Secretary of State on December 13, 2000. 3.36 By-Laws of Westlake Development Corporation. 3.37 Certificate of Incorporation of Westlake Management Services, Inc. as filed with the Delaware Secretary of State on November 5, 1990. 3.38 Bylaws of Westlake Management Services, Inc. 3.39 Certificate of Incorporation of Westlake Olefins Corporation as filed with the Delaware Secretary of State on May 15, 1989. 3.40 Certificate of Amendment to the Certificate of Incorporation of Westlake Olefins Corporation as filed with the Delaware Secretary of State on July 20, 1992. 3.41 By-Laws of Westlake Olefins Corporation. 3.42 Articles of Incorporation of Westlake Overseas Corporation as filed with the Office of Lieutenant Governor of the U.S. Virgin Islands on May 10, 1988. 3.43 By-Laws of Westlake Overseas Corporation. 3.44 Certificate of Limited Partnership of Westlake Petrochemicals LP as filed with the Delaware Secretary of State on December 20, 2000. 3.45 Certificate of Amendment to the Certificate of Limited Partnership of Westlake Petrochemicals LP as filed with the Delaware Secretary of State on December 28, 2000. 3.46 Agreement of Limited Partnership of Westlake Petrochemicals LP. 3.47 Certificate of Limited Partnership of Westlake Polymers LP as filed with the Delaware Secretary of State on December 20, 2000. 3.48 Agreement of Limited Partnership of Westlake Polymers LP. 3.49 Certificate of Incorporation of Westlake PVC Corporation as filed with the Delaware Secretary of State on August 19, 1991. 3.50 Certificate of Amendment to the Certificate of Incorporation of Westlake PVC Corporation as filed with the Delaware Secretary of State on August 20, 1991. 3.51 Bylaws of Westlake PVC Corporation. 3.52 Certificate of Incorporation of Westlake Resources Corporation as filed with the Delaware Secretary of State on October 23, 1990. 3.53 Bylaws of Westlake Resources Corporation. 3.54 Certificate of Limited Partnership of Westlake Styrene LP as filed with the Delaware Secretary of State on December 20, 2000. 3.55 Agreement of Limited Partnership of Westlake Styrene LP.
II-4
EXHIBIT NO. EXHIBIT - ------- ------- 3.56 Certificate of Incorporation of Westlake Vinyl Corporation as filed with the Delaware Secretary of State on June 8, 1990. 3.57 Certificate of Amendment to the Certificate of Incorporation of Westlake Vinyl Corporation as filed with the Delaware Secretary of State on October 18, 1993. 3.58 Certificate of Amendment to the Certificate of Incorporation of Westlake Vinyl Corporation as filed with the Delaware Secretary of State on November 4, 1993. 3.59 Bylaws of Westlake Vinyl Corporation. 3.60 Certificate of Incorporation of Westlake Vinyls, Inc. as filed with the Delaware Secretary of State on July 10, 1997. 3.61 Certificate of Amendment to the Certificate of Incorporation of Westlake Vinyls, Inc. as filed with the Delaware Secretary of State on September 28, 2001. 3.62 By-Laws of Westlake Vinyls, Inc. 3.63 Certificate of Limited Partnership of WPT LP as filed with the Delaware Secretary of State on December 20, 2000. 3.64 Agreement of Limited Partnership of WPT LP. 4.1 Indenture dated as of July 31, 2003 by and among Westlake, the guarantors named therein and JPMorgan Chase Bank, as trustee, relating to 8 3/4% Senior Notes due 2011. 4.2 Form of 8 3/4% Senior Notes due 2011 (included in Exhibit 4.1). 4.3 Registration Rights Agreement dated as of July 31, 2003 by and among Westlake, the guarantors named therein, Credit Suisse First Boston LLC, Banc of America Securities LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Citigroup Global Markets Inc., Scotia Capital (USA) Inc., Credit Lyonnais Securities (USA) Inc., and CIBC World Markets Corp. relating to 8 3/4% Senior Notes due 2011. Westlake and the guarantors are party to long-term debt instruments under which the total amount of securities authorized does not exceed 10% of the total assets of Westlake and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of Regulation S-K, Westlake agrees to furnish a copy of such instruments to the SEC upon request. 5.1* Opinion of Baker Botts L.L.P. as to the legality of the securities. 10.1 Credit Agreement dated as of July 31, 2003 by and among the financial institutions party thereto, as lenders, Bank of America, N.A., as agent, Westlake and certain of its domestic subsidiaries, as borrowers relating to a $200 million senior secured revolving credit facility. 10.2 Credit Agreement dated as of July 31, 2003 by and among Westlake, as borrower, certain of its subsidiaries, as guarantors, Bank of America, N.A., as agent and the lenders party thereto relating to a $120 million senior secured term loan. 10.3 Westlake Group Performance Unit Plan effective January 1, 1991. 10.4 Employment agreement with Warren Wilder dated December 10, 1999. 10.5 First Amended and Restated Federal Income Tax Allocation Agreement dated as of May 10, 2002 (the "Tax Allocation Agreement") among Gulf Polymer & Petrochemical, Inc., Westlake and certain subsidiaries of Westlake. 10.6 Amendment to Tax Allocation Agreement dated as of August 1, 2003 among Gulf Polymer & Petrochemical, Inc., Westlake and certain subsidiaries of Westlake. 12.1 Computation of Ratio of Earnings to Fixed Charges. 21 Subsidiaries of the Registrant. 23.1 Consent of PricewaterhouseCoopers LLP. 23.2* Consent of Baker Botts L.L.P. (included in Exhibit 5.1). 24.1 Powers of Attorney (included on the signature pages of the Registration Statement). 25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Trustee for 8 3/4% Senior Notes due 2011, on Form T-1. 99.1 Form of Letter to Depository Trust Company Participants. 99.2 Form of Letter to Clients.
II-5
EXHIBIT NO. EXHIBIT - ------- ------- 99.3 Form of Notice of Guaranteed Delivery. 99.4 Form of Letter of Transmittal.
- --------------- * To be filed by amendment. (b) Financial Statement Schedules Westlake Chemical Corporation -- Schedule II -- Valuation and Qualifying Accounts (included on page F-62 of the prospectus filed pursuant to Part I of this registration statement). ITEM 22. UNDERTAKINGS (a) The undersigned registrants hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to: (i) include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrants pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of any registrant pursuant to the foregoing provisions, or otherwise, such registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by any registrant of expenses incurred or paid by a director, officer or controlling person of such registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, such registrant will, unless, II-6 in the opinion of its counsel, the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (c) The undersigned registrants hereby undertake to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (d) The undersigned registrants hereby undertake to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-7 SIGNATURES Pursuant to the requirements of the Securities Act, each of the registrants has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, the State of Texas, on September 22, 2003. WESTLAKE CHEMICAL CORPORATION GEISMAR VINYLS COMPANY LP, BY GVGP, INC., ITS GENERAL PARTNER GRAMERCY CHLOR-ALKALI CORPORATION GVGP, INC. WESTLAKE CHEMICAL HOLDINGS, INC. WESTLAKE CHEMICAL INVESTMENTS, INC. WESTLAKE MANAGEMENT SERVICES, INC. WESTLAKE OLEFINS CORPORATION WESTLAKE OVERSEAS CORPORATION WESTLAKE PETROCHEMICALS LP, BY WESTLAKE CHEMICAL INVESTMENTS, INC., ITS GENERAL PARTNER WESTLAKE POLYMERS LP, BY WESTLAKE CHEMICAL INVESTMENTS, INC., ITS GENERAL PARTNER WESTLAKE PVC CORPORATION WESTLAKE RESOURCES CORPORATION WESTLAKE STYRENE LP, BY WESTLAKE CHEMICAL HOLDINGS, INC., ITS GENERAL PARTNER WESTLAKE VINYL CORPORATION WESTLAKE VINYLS, INC. WPT LP, BY WESTLAKE CHEMICAL HOLDINGS, INC., ITS GENERAL PARTNER By: /s/ ALBERT CHAO ------------------------------------ Name: Albert Chao Title: President GEISMAR HOLDINGS, INC. WESTLAKE CHEMICAL MANUFACTURING, INC. WESTLAKE CHEMICAL PRODUCTS, INC. WESTLAKE DEVELOPMENT CORPORATION By: /s/ R. MICHAEL LOONEY ------------------------------------ Name: R. Michael Looney Title: President II-8 NORTH AMERICAN PIPE CORPORATION NORTH AMERICAN PROFILES, INC. VAN BUREN PIPE CORPORATION WESTECH BUILDING PRODUCTS, INC. By: /s/ JOHN A. LABUDA ------------------------------------ Name: John A. Labuda Title: President POWER OF ATTORNEY Each person whose signature appears below appoints Albert Chao, Ruth Dreessen, Tai-li Keng and Louis Trenchard III, and each of them, severally, as his or her true and lawful attorney or attorneys-in-fact and agent or agents, each of whom shall be authorized to act with or without the other, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead in his or her capacity as a director or officer or both, as the case may be, of the respective registrant named below, to sign any and all amendments (including post-effective amendments) to this Registration Statement and all documents or instruments necessary or appropriate to enable such registrant to comply with the Securities Act of 1933, as amended, and to file the same with the Securities and Exchange Commission, with full power and authority to each of said attorneys-in-fact and agents to do and perform in the name and on behalf of each such director or officer, or both, as the case may be, each and every act whatsoever that is necessary, appropriate or advisable in connection with any or all of the above-described matters and to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their substitutes, may lawfully do or cause to be done by virtue hereof. WESTLAKE CHEMICAL CORPORATION Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities indicated and on September 22, 2003.
SIGNATURE TITLE --------- ----- /s/ ALBERT CHAO President and Director (Principal Executive - -------------------------------------- Officer) Albert Chao /s/ RUTH I. DREESSEN Senior Vice President and Chief Financial Officer - -------------------------------------- (Principal Financial Officer) Ruth I. Dreessen /s/ GEORGE J. MANGIERI Vice President and Controller (Principal - -------------------------------------- Accounting Officer) George J. Mangieri /s/ T.T. CHAO Chairman of the Board - -------------------------------------- T.T. Chao /s/ JAMES CHAO Vice Chairman of the Board - -------------------------------------- James Chao /s/ DOROTHY C. JENKINS Director - -------------------------------------- Dorothy C. Jenkins
II-9 GEISMAR HOLDINGS, INC. WESTLAKE CHEMICAL MANUFACTURING, INC. WESTLAKE CHEMICAL PRODUCTS, INC. WESTLAKE DEVELOPMENT CORPORATION Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities indicated and on September 22, 2003.
SIGNATURE TITLE --------- ----- /s/ R. MICHAEL LOONEY President and Director - -------------------------------------- R. Michael Looney /s/ HAROLD F. KALBACH, JR. Director - -------------------------------------- Harold F. Kalbach, Jr. /s/ GREG F. STROBL Director - -------------------------------------- Greg F. Strobl
GEISMAR VINYLS COMPANY LP, BY GVGP, INC., ITS GENERAL PARTNER GRAMERCY CHLOR-ALKALI CORPORATION GVGP, INC. WESTLAKE CHEMICAL HOLDINGS, INC. WESTLAKE CHEMICAL INVESTMENTS, INC. WESTLAKE MANAGEMENT SERVICES, INC. WESTLAKE OLEFINS CORPORATION WESTLAKE PETROCHEMICALS LP, BY WESTLAKE CHEMICAL INVESTMENTS, INC., ITS GENERAL PARTNER WESTLAKE POLYMERS LP, BY WESTLAKE CHEMICAL INVESTMENTS, INC., ITS GENERAL PARTNER WESTLAKE PVC CORPORATION WESTLAKE RESOURCES CORPORATION WESTLAKE STYRENE LP, BY WESTLAKE CHEMICAL HOLDINGS, INC., ITS GENERAL PARTNER WESTLAKE VINYL CORPORATION WESTLAKE VINYLS, INC. WPT LP, BY WESTLAKE CHEMICAL HOLDINGS, INC., ITS GENERAL PARTNER Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities indicated and on September 22, 2003.
SIGNATURE TITLE --------- ----- /s/ ALBERT CHAO President and Director - -------------------------------------- Albert Chao
II-10 NORTH AMERICAN PIPE CORPORATION NORTH AMERICAN PROFILES, INC. VAN BUREN PIPE CORPORATION WESTECH BUILDING PRODUCTS, INC. Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities indicated and on September 22, 2003.
SIGNATURE TITLE --------- ----- /s/ JOHN A. LABUDA President and Director - -------------------------------------- John A. Labuda
WESTLAKE OVERSEAS CORPORATION Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities indicated and on September 22, 2003.
SIGNATURE TITLE --------- ----- /s/ ALBERT CHAO President and Director - -------------------------------------- Albert Chao /s/ JOHN A. LABUDA Director - -------------------------------------- John A. Labuda /s/ GABI S. RIVERA Director - -------------------------------------- Gabi S. Rivera /s/ MARIA CONOR-FREEMAN Director - -------------------------------------- Maria Conor-Freeman
II-11 INDEX TO EXHIBITS
EXHIBIT NO. EXHIBIT - ------- ------- 3.1 Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on September 3, 1991. 3.2 Certificate of Amendment to the Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on June 28, 1993. 3.3 Certificate of Amendment of the Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on November 4, 1993. 3.4 Certificate of Amendment of the Certificate of Incorporation of Westlake as filed with the Delaware Secretary of State on August 14, 1997. 3.5 Bylaws of Westlake. 3.6 Certificate of Incorporation of Geismar Holdings, Inc. as filed with the Delaware Secretary of State on December 26, 2002. 3.7 By-Laws of Geismar Holdings, Inc. 3.8 Certificate of Limited Partnership of Geismar Vinyls Company LP as filed with the Delaware Secretary of State on January 2, 2003. 3.9 Certificate of Amendment to the Certificate of Limited Partnership of Geismar Vinyls Company LP as filed with the Delaware Secretary of State on January 8, 2003. 3.10 Agreement of Limited Partnership of Geismar Vinyls Company LP. 3.11 Certificate of Incorporation of Gramercy Chlor-Alkali Corporation as filed with the Delaware Secretary of State on December 13, 2000. 3.12 By-Laws of Gramercy Chlor-Alkali Corporation. 3.13 Certificate of Incorporation of GVGP, Inc. as filed with the Delaware Secretary of State on December 26, 2002. 3.14 By-Laws of GVGP, Inc. 3.15 Certificate of Incorporation of North American Pipe Corporation as filed with the Delaware Secretary of State on May 29, 1992. 3.16 Certificate of Amendment to the Certificate of Incorporation of North American Pipe Corporation as filed with the Delaware Secretary of State on July 7, 1992. 3.17 Bylaws of North American Pipe Corporation. 3.18 Certificate of Incorporation of North American Profiles, Inc. as filed with the Delaware Secretary of State on March 27, 2000. 3.19 Certificate of Amendment to the Certificate of Incorporation of North American Profiles, Inc. as filed with the Delaware Secretary of State on August 1, 2000. 3.20 By-Laws of North American Profiles, Inc. 3.21 Certificate of Incorporation of Van Buren Pipe Corporation as filed with the Delaware Secretary of State on May 25, 1994. 3.22 Certificate of Amendment to the Certificate of Incorporation of Van Buren Pipe Corporation as filed with the Delaware Secretary of State on December 13, 1995. 3.23 By-Laws of Van Buren Pipe Corporation. 3.24 Certificate of Incorporation of Westech Building Products, Inc. as filed with the Delaware Secretary of State on May 25, 1994. 3.25 Certificate of Amendment to the Certificate of Incorporation of Westech Building Products, Inc. as filed with the Delaware Secretary of State on May 6, 1996. 3.26 By-Laws of Westech Building Products, Inc. 3.27 Certificate of Incorporation of Westlake Chemical Holdings, Inc. as filed with the Delaware Secretary of State on December 13, 2000. 3.28 By-Laws of Westlake Chemical Holdings, Inc. 3.29 Certificate of Incorporation of Westlake Chemical Investments, Inc. as filed with the Delaware Secretary of State on December 13, 2000. 3.30 By-Laws of Westlake Chemical Investments, Inc. 3.31 Certificate of Incorporation of Westlake Chemical Manufacturing, Inc. as filed with the Delaware Secretary of State on December 13, 2000. 3.32 By-Laws of Westlake Chemical Manufacturing, Inc.
EXHIBIT NO. EXHIBIT - ------- ------- 3.33 Certificate of Incorporation of Westlake Chemical Products, Inc. as filed with the Delaware Secretary of State on December 13, 2000. 3.34 By-Laws of Westlake Chemical Products, Inc. 3.35 Certificate of Incorporation of Westlake Development Corporation as filed with the Delaware Secretary of State on December 13, 2000. 3.36 By-Laws of Westlake Development Corporation. 3.37 Certificate of Incorporation of Westlake Management Services, Inc. as filed with the Delaware Secretary of State on November 5, 1990. 3.38 Bylaws of Westlake Management Services, Inc. 3.39 Certificate of Incorporation of Westlake Olefins Corporation as filed with the Delaware Secretary of State on May 15, 1989. 3.40 Certificate of Amendment to the Certificate of Incorporation of Westlake Olefins Corporation as filed with the Delaware Secretary of State on July 20, 1992. 3.41 By-Laws of Westlake Olefins Corporation. 3.42 Articles of Incorporation of Westlake Overseas Corporation as filed with the Office of Lieutenant Governor of the U.S. Virgin Islands on May 10, 1988. 3.43 By-Laws of Westlake Overseas Corporation. 3.44 Certificate of Limited Partnership of Westlake Petrochemicals LP as filed with the Delaware Secretary of State on December 20, 2000. 3.45 Certificate of Amendment to the Certificate of Limited Partnership of Westlake Petrochemicals LP as filed with the Delaware Secretary of State on December 28, 2000. 3.46 Agreement of Limited Partnership of Westlake Petrochemicals LP. 3.47 Certificate of Limited Partnership of Westlake Polymers LP as filed with the Delaware Secretary of State on December 20, 2000. 3.48 Agreement of Limited Partnership of Westlake Polymers LP. 3.49 Certificate of Incorporation of Westlake PVC Corporation as filed with the Delaware Secretary of State on August 19, 1991. 3.50 Certificate of Amendment to the Certificate of Incorporation of Westlake PVC Corporation as filed with the Delaware Secretary of State on August 20, 1991. 3.51 Bylaws of Westlake PVC Corporation. 3.52 Certificate of Incorporation of Westlake Resources Corporation as filed with the Delaware Secretary of State on October 23, 1990. 3.53 Bylaws of Westlake Resources Corporation. 3.54 Certificate of Limited Partnership of Westlake Styrene LP as filed with the Delaware Secretary of State on December 20, 2000. 3.55 Agreement of Limited Partnership of Westlake Styrene LP. 3.56 Certificate of Incorporation of Westlake Vinyl Corporation as filed with the Delaware Secretary of State on June 8, 1990. 3.57 Certificate of Amendment to the Certificate of Incorporation of Westlake Vinyl Corporation as filed with the Delaware Secretary of State on October 18, 1993. 3.58 Certificate of Amendment to the Certificate of Incorporation of Westlake Vinyl Corporation as filed with the Delaware Secretary of State on November 4, 1993. 3.59 Bylaws of Westlake Vinyl Corporation. 3.60 Certificate of Incorporation of Westlake Vinyls, Inc. as filed with the Delaware Secretary of State on July 10, 1997. 3.61 Certificate of Amendment to the Certificate of Incorporation of Westlake Vinyls, Inc. as filed with the Delaware Secretary of State on September 28, 2001. 3.62 By-Laws of Westlake Vinyls, Inc. 3.63 Certificate of Limited Partnership of WPT LP as filed with the Delaware Secretary of State on December 20, 2000. 3.64 Agreement of Limited Partnership of WPT LP. 4.1 Indenture dated as of July 31, 2003 by and among Westlake, the guarantors named therein and JPMorgan Chase Bank, as trustee, relating to 8 3/4% Senior Notes due 2011. 4.2 Form of 8 3/4% Senior Notes due 2011 (included in Exhibit 4.1).
EXHIBIT NO. EXHIBIT - ------- ------- 4.3 Registration Rights Agreement dated as of July 31, 2003 by and among Westlake, the guarantors named therein, Credit Suisse First Boston LLC, Banc of America Securities LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Citigroup Global Markets Inc., Scotia Capital (USA) Inc., Credit Lyonnais Securities (USA) Inc., and CIBC World Markets Corp. relating to 8 3/4% Senior Notes due 2011. Westlake and the guarantors are party to long-term debt instruments under which the total amount of securities authorized does not exceed 10% of the total assets of Westlake and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of Regulation S-K, Westlake agrees to furnish a copy of such instruments to the SEC upon request. 5.1* Opinion of Baker Botts L.L.P. as to the legality of the securities. 10.1 Credit Agreement dated as of July 31, 2003 by and among the financial institutions party thereto, as lenders, Bank of America, N.A., as agent, Westlake and certain of its domestic subsidiaries, as borrowers relating to a $200 million senior secured revolving credit facility. 10.2 Credit Agreement dated as of July 31, 2003 by and among Westlake, as borrower, certain of its subsidiaries, as guarantors, Bank of America, N.A., as agent and the lenders party thereto relating to a $120 million senior secured term loan. 10.3 Westlake Group Performance Unit Plan effective January 1, 1991. 10.4 Employment agreement with Warren Wilder dated December 10, 1999. 10.5 First Amended and Restated Federal Income Tax Allocation Agreement dated as of May 10, 2002 (the "Tax Allocation Agreement") among Gulf Polymer & Petrochemical, Inc., Westlake and certain subsidiaries of Westlake. 10.6 Amendment to Tax Allocation Agreement dated as of August 1, 2003 among Gulf Polymer & Petrochemical, Inc., Westlake and certain subsidiaries of Westlake. 12.1 Computation of Ratio of Earnings to Fixed Charges. 21 Subsidiaries of the Registrant. 23.1 Consent of PricewaterhouseCoopers LLP. 23.2* Consent of Baker Botts L.L.P. (included in Exhibit 5.1). 24.1 Powers of Attorney (included on the signature pages of the Registration Statement). 25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Trustee for 8 3/4% Senior Notes due 2011, on Form T-1. 99.1 Form of Letter to Depository Trust Company Participants. 99.2 Form of Letter to Clients. 99.3 Form of Notice of Guaranteed Delivery. 99.4 Form of Letter of Transmittal.
- --------------- * To be filed by amendment. EX-3.1 3 h08423exv3w1.txt CERTIFICATE OF INCORPORATION - WESTLAKE EXHIBIT 3.1 CERTIFICATE OF INCORPORATION OF WESTLAKE VINYL CORPORATION ARTICLE I The name of the corporation is Westlake Vinyl Corporation. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is the Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Bob Casey, Jr. 2900 South Tower Pennzoil Place Houston, Texas 77002-2781 ARTICLE VI The name and mailing address of the person who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: Bob Casey, Jr. 2900 South Tower Pennzoil Place Houston, Texas 77002-2781 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to adopt, amend or repeal the bylaws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the bylaws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the bylaws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the state of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the bylaws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 3rd day of September, 1991. /s/ Bob Casey, Jr. ------------------------------ Bob Casey, Jr. EX-3.2 4 h08423exv3w2.txt CERTIFICATE OF AMEND. TO CERT. OF INCORPORATION EXHIBIT 3.2 CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF WESTLAKE VINYL CORPORATION Pursuant to the provisions of Section 242 of the Delaware General Corporation law, and as duly authorized this date by consent of the sole shareholder and sole director of Westlake Vinyl Corporation ("the Corporation"), the Corporation adopts this Certificate of Amendment to its Certificate of Incorporation, such that Article IV thereof shall read as follows: Article IV. The total number of shares of stock which the Corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 dollars ($1.00) each ("Common Stock"), and 1,000 shares of Preferred Stock, without par value. The Corporation may issue one or more series of Preferred Stock. The Board of Directors is hereby vested with authority from time to time to establish and designate such series, and to fix and determine the relative rights and preferences of the shares of any series, and to increase or decrease the number of shares within each series; provided that the board of Directors may not decrease the number of shares within a series below the number of shares within such series that is then issued and outstanding. The voting powers, designations, preferences, rights and qualifications, limitations or restrictions of any series of Preferred Stock may be set forth in a certificate of designations provided for in a resolution or resolutions adopted by the Board of Directors. The number of shares of the Corporation outstanding at the time of such adoption was 1,000; and the number of shares entitled to vote thereon was 1,000. The number of shares voted for such amendment was 1,000; and there were no shares voted against such amendment. THUS DULY AUTHORIZED AND ADOPTED effective this 27th day of July, 1992. Attest: WESTLAKE VINYL CORPORATION /s/ Michael A. Robison By: /s/ James Chao - ------------------------------------ ------------------------ Michael A. Robison James Chao Secretary President EX-3.3 5 h08423exv3w3.txt CERTIFICATE OF AMEND. TO CERT. OF INCORPORATION EXHIBIT 3.3 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Westlake Vinyl Corporation ("Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That in lieu of a meeting and vote of directors, the Board of Directors of the Corporation, by unanimous written consent filed with the Corporation, in accordance with the provisions of Section 141(f) of the General Corporation Law of the State of Delaware, have adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of the Corporation: RESOLVED, That the Certificate of Incorporation be amended by changing Article I to read as follows: ARTICLE I The name of the corporation is Westlake Chemical Corporation. SECOND: That in lieu of a meeting and vote of stockholders, the stockholders of all outstanding stock entitled to vote thereon have given written consent to the above amendment in accordance with Section 228 of the General Corporation Law of the State of Delaware, and said written consent has been filed with the Corporation. THIRD: That said amendments were duly adopted in accordance with the provisions of Section 141, 216, 228, and 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of the Corporation will not be reduced under or by reason of said amendments. IN WITNESS WHEREOF, Westlake Vinyl Corporation has caused this certificate to be signed by its Executive Vice President and attested by its Secretary, this 31st day of October, 1993. WESTLAKE VINYL CORPORATION By: /s/ A. Chao ------------------------------- Albert Chao Executive Vice President ATTEST: By: /s/ Michael A. Robison -------------------------------- Michael A. Robison Secretary EX-3.4 6 h08423exv3w4.txt CERTIFICATE OF AMEND. TO CERT. OF INCORPORATION EXHIBIT 3.4 CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF WESTLAKE CHEMICAL CORPORATION Pursuant to the provisions of Section 242 of the Delaware General Corporation law, and as duly authorized this date by consent of the shareholders of Westlake Chemical Corporation ("the Corporation"), the Corporation adopts this certificate of Amendment to its Certificate of Incorporation, such that ARTICLE IV thereof shall read as follows: "ARTICLE IV The total number of shares which the Corporation has the authority to issue is ten thousand (10,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each ("Common Stock"), and 1000 shares of Preferred Stock, without par value. The Corporation may issue one or more series of Preferred Stock. The Board of Directors is hereby vested with authority from time to time to establish and designate such series, and to fix and determine the relative rights and preferences of the shares of any series, and to increase or decrease the number of shares within each series; provided that the Board of Directors may not decrease the number of shares within a series below the number of shares within such series that is then issued and outstanding. The voting powers, designations, preferences, rights and qualifications, limitations or restrictions of any series of Preferred Stock may be set forth in a certificate of designations provided for in a resolution or resolutions adopted by the Board of Directors." The number of shares of common stock in the Corporation authorized at the time of such adoption was 1,000 shares $1.00 par value per share ("Common Stock") and 1,000 shares of no par value Preferred Stock, ("Preferred Stock") of which 1,000 shares of Common Stock, and 890 shares of Preferred Stock are issued and outstanding and entitled to vote at the meeting. The number of shares of Common Stock voted for such amendment was 1,000; the number of shares of Preferred Stock voted for such amendment was 890 and there were no shares voted against such amendment. THUS DULY AUTHORIZED AND ADOPTED effective this 12th day of August, 1997. ATTEST: WESTLAKE VINYL CORPORATION /s/ Louis B. Trenchard III By: /s/ A. Chao - --------------------------- ------------------------ Louis B. Trenchard III Albert Chao, President Assistant Secretary EX-3.5 7 h08423exv3w5.txt BYLAWS OF WESTLAKE EXHIBIT 3.5 WESTLAKE CHEMICAL CORPORATION BYLAWS ARTICLE I OFFICES Section 1.1. Registered Office and Agent. The initial registered office shall be The Corporation Trust company, in the City of Wilmington, County of New Castle, State of Delaware 19801, and the name of the initial registered agent of the Corporation at such address shall be A. Dana Atwell. Section 1.2. Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 2.1. Annual Meetings. Annual meetings of stockholders shall be held at such date, time and place, either within or without the State of Delaware, as may be designated from time to time by the Board of Directors and stated in the notice of the meeting, for the purpose of electing a Board of Directors and transacting such other business as may properly be brought before the meeting. Section 2.2. Special Meetings. Unless otherwise provided by statute or by the Certificate of Incorporation of the Corporation (the "Certificate of Incorporation"), special meetings of the stockholders, for any purpose or purposes, may be called by the President and shall be called by the President or Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the Corporation issued, outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 2.3. Notice of Meetings. Whenever stockholders are required or permitted to take action at a meeting, a written notice of the meeting shall be given, which notice shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 2.4. Quorum. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the presence in person or by proxy of the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote thereat shall constitute a quorum at each meeting of the stockholders and all questions shall be decided by a majority of the shares so represented in person or by proxy at the meeting and entitled to vote thereat. The stockholders present at any duly organized meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 2.5. Adjournments. Notwithstanding any other provisions of the Certificate of Incorporation or these Bylaws, the holders of a majority of the shares of stock of the Corporation entitled to vote at any meeting, present in person or represented by proxy, whether or not a quorum is present, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At any such adjourned meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting originally called; provided, however, that if the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting. Section 2.6. Voting; Proxies. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Each proxy shall be revocable unless expressly provided therein to be irrevocable or unless otherwise made irrevocable by law. Section 2.7. Action by Consent of Stockholders. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall (i) be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and (ii) be filed with the minutes of proceedings of the stockholders. Such writing(s) shall be manually executed if practicable, but if circumstances so require, effect shall be given to written consent transmitted by telegraph, telex, telecopy or similar means of visual data transmission. Such writing(s) shall include the date of each stockholder's execution thereof. Section 2.8. List of Stockholders Entitled to Vote. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. -2- Section 2.9. Fixing Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting or other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. ARTICLE III BOARD OF DIRECTORS Section 3.1. Number; Qualifications. The number of directors shall be as fixed in such a manner as may be determined by the vote of not less than a majority of the directors then in office, but shall not be less than one. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3.2 of this Article III, and each director elected shall hold office until his successor is elected and qualified or until his earlier death, resignation or removal. A director need not be a stockholder of the Corporation. A majority of the directors may elect from its members a chairman. The chairman, if any, shall hold this office until his successor shall have been elected and qualified. Section 3.2. Vacancies. Any vacancy in the Board of Directors, including vacancies resulting from any increase in the authorized number of directors, may be filled by a majority of the remaining directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual meeting of stockholders and their successors are duly elected and qualified, or until their earlier death, resignation or removal. Section 3.3. Powers. The business, affairs and property of the Corporation shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not, by statute, the Certificate of Incorporation or these Bylaws, directed or required to be exercised or done by the stockholders. Section 3.4. Resignations. Any director may resign at any time by written notice to the Corporation. Any such resignation shall take effect at the date of receipt of such notice or at any later time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 3.5. Regular Meetings. Regular meetings of the Board of Directors shall be held at such place or places within or without the State of Delaware, at such hour and on such day as may be fixed by resolution of the Board of Directors, without further notice of such meetings. The time or place of holding regular meetings of the Board of Directors may be changed by the President by giving written notice thereof as provided in Section 3.7 of this Article III. -3- Section 3.6. Special Meetings. Special meetings of the Board of Directors may be held whenever called by (i) the Chairman of the Board; (ii) the President; (iii) the President or Secretary on the written request of a majority of the Board of Directors; or (iv) resolution adopted by the Board of Directors. Special meetings may be held within or without the State of Delaware as may be stated in the notice of the meeting. Section 3.7. Notice of Meetings. Written notice of the time, place and general nature of the business to be transacted at all special meetings of the Board of Directors, and written notice of any change in the time or place of holding the regular meetings of the Board of Directors, must be given to each director at least one day prior to the day of the meeting; provided, however, that notice of any meeting need not be given to any director if waived by him in writing, or if he shall be present at such meeting, except when the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 3.8. Quorum; Vote Required for Action. At all meetings of the Board of Directors, a majority of directors then in office shall constitute a quorum for the transaction of business and, except as otherwise provided by law or these Bylaws, the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors; but a lesser number may adjourn the meeting from day to day, without notice other than announcement at the meeting, until a quorum shall be present. Directors may participate in any meeting of the directors, and members of any committee of directors may participate in any meeting of such committee, by means of conference telephone or similar communications equipment by means of which all persons participating in such meeting can hear each other, and such participation shall constitute presence in person at such meeting. Section 3.9. Action by Consent of Directors. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if all members of the board consent thereto in writing, which may be in counterparts, and the writing or writings are filed with the minutes of proceedings of the Board of Directors. Such writing(s) shall be manually executed if practicable, but if circumstances so require, effect shall be given to written consent transmitted by telegraph, telex, telecopy or similar means of visual data transmission. Section 3.10. Telephonic Meetings Permitted. Members of the Board of Directors, or any committee designated by the board, may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Bylaw shall constitute presence in person at such meeting. Section 3.11. Compensation. Directors shall be entitled to such compensation for their services as may be approved by the Board of Directors, including, if so approved by resolution of the Board of Directors, a fixed sum and expenses of attendance at each regular or special meeting or any committee thereof. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. -4- Section 3.12. Removal. Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. The notice calling such meeting shall state the intention to act upon such matter, and, if the notice so provides, the vacancy or vacancies caused by such removal may be filled at such meeting by a vote of the majority of the shares entitled to vote at an election of directors. Section 3.13. Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee. The alternate members of any committee may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in a resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have such power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or revocation of a dissolution, or amending the Bylaws of the Corporation; and, unless the resolution or the Certificate of Incorporation expressly so provide, no committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. Members of special or standing committees shall be entitled to receive such compensation for serving on such committees as the Board of Directors shall determine. ARTICLE IV NOTICES Section 4.1. Notices. Whenever, by statute, the Certificate of Incorporation or these Bylaws, notice is required to be given to any director or stockholder, such notice must be in writing and may be given in person, in writing or by mail, telegram, telecopy or other similar means of visual communication, addressed to such director or stockholder, at his address as it appears on the records of the Corporation, with postage or other transmittal charges thereon prepaid. Such notice shall be deemed to be given (i) if by mail, at the time when the same shall be deposited in the United States mail and (ii) otherwise, when such notice is transmitted. Section 4.2. Waiver of Notice. Whenever any notice is required to be given under the provisions of the Certificate of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. -5- ARTICLE V OFFICERS Section 5.1. Election; Qualifications; Term of Office; Resignation; Removal; Vacancies. The officers of the Corporation shall be elected or appointed by the Board of Directors and may include, at the discretion of the Board, a Chairman of the Board, a President, a Secretary, a Treasurer and such Executive, Senior or other Vice Presidents and other officers as may be determined by the Board of Directors. Any number of offices may be held by the same person. The officers of the Corporation shall hold office until their successors are chosen and qualified, except that any officer may resign at any time by written notice to the Corporation and the Board of Directors may remove any officer at any time at its discretion with or without cause. Any vacancies occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting. Section 5.2. Powers and Duties. The officers of the Corporation shall have such powers and duties as generally pertain to their offices, except as modified herein or by the Board of Directors, as well as such powers and duties as shall be determined from time to time by the Board of Directors. The Chairman of the Board, if one is elected, and otherwise the President, shall preside at all meetings of the Board. The President shall preside at all meetings of the stockholders. ARTICLE VI STOCK Section 6.1. Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate, signed by (i) the Chairman or Vice-Chairman of the Board of Directors, or the President or a Vice President and (ii) the treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in section 202 of the General Corporation Law of the State of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and rights. Section 6.2. Certificates Issued for Partly Paid Shares. Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares the total amount of the consideration to be paid therefor, and the amount paid thereon shall be specified. -6- Section 6.3. Facsimile Signatures. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 6.4. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. Section 6.5. Transfer of Stock. Subject to applicable federal and state securities laws and contractual obligations, upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed, and, if required by counsel to the Corporation, accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction upon its books. ARTICLE VII GENERAL PROVISIONS Section 7.1. Dividends. Subject to the provisions of the Certificate of Incorporation, dividends upon the capital stock of the Corporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interests of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. Section 7.2. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. Section 7.3. Seal. The seal of the Corporation shall be in such form as the Board of Directors shall prescribe. Section 7.4. Amendments. These Bylaws may be altered, amended or repealed or new Bylaws may be adopted by the stockholders or by the Board of Directors, when such -7- power is conferred upon the Board of Directors by the Certificate of Incorporation (i) at any regular meeting of the stockholders or of the Board of Directors (ii) or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new Bylaws shall be contained in the notice of such special meeting. If the power to adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the Certificate of Incorporation, it shall not divest or limit the power of the stockholders to adopt, amend or repeal Bylaws. ARTICLE VIII INDEMNIFICATION The Corporation shall be authorized to indemnify any person entitled to indemnity under law to the full extent permitted by law. -8- EX-3.6 8 h08423exv3w6.txt CERTIFICATE OF INCORPORATION-GEISMAR HOLDINGS EXHIBIT 3.6 CERTIFICATE OF INCORPORATION OF GEISMAR HOLDINGS, INC. ARTICLE I The name of the corporation is GEISMAR HOLDINGS, INC. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VI The name and mailing address of the persons who is to serve as directors of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: R. Michael Looney 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 Harold F. Kalbach Robert W. Grier 103 Foulk Road Wilmington, DE 19803 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or appeal the by-laws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. -2- ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 24th day of December 2002. /s/ Stephen LeSatz, Jr. ----------------------------- Stephen LeSatz, Jr. EX-3.7 9 h08423exv3w7.txt BYLAWS OF GEISMAR HOLDINGS, INC. EXHIBIT 3.7 GEISMAR HOLDINGS, INC. BY-LAWS ARTICLE I OFFICERS Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 2003, shall be held on the first Monday of November of each year, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than 1 nor more than 3. The first board shall consist of 3 directors. Thereafter, within the limits above specified the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the 2 stockholders, except as provided in Section 2 of this Article, and each director elected shall hold of office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on 2 days' notice to each director, either personally or by mail or by facsimile communication; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. 3 Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. COMMITTEES OF DIRECTORS Section 10. The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing any by-law of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 11. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 12. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or by-law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. 4 ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify, Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and 5 except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary or an assistant secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. 6 Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such 7 meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. 8 SEAL Section 6. The corporate seal shall be in a form as prescribed from time to time by the Directors. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 9 EX-3.8 10 h08423exv3w8.txt CERTIFICATE OF LIMITED PARTNERSHIP EXHIBIT 3.8 CERTIFICATE OF LIMITED PARTNERSHIP The undersigned, desiring to form a limited partnership pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Delaware Code, Chapter 17, do hereby certify as follows: I. The name of the limited partnership is GEISMAR VINYLS LP II. The address of the Partnership's registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. The registered agent for service of process in the State of Delaware at such address is The Corporation Trust Company. III. The name and mailing address of each general partner is as follows: NAME MAILING ADDRESS GVGP, INC. 2801 Post Oak Boulevard, Suite 600 Houston, TX 77056 IV. The Certificate of Limited Partnership shall become effective December 31, 2002 for accounting purposes only. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Limited Partnership of GEISMAR VINYLS LP as of December 27, 2002. GVGP, INC. General Partner By: /s/ A. Chao ----------------------------------- Albert Chao, President EX-3.9 11 h08423exv3w9.txt CERTIFICATE OF AMEND. TO CERTIFICATE OF L.P. EXHIBIT 3.9 CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF LIMITED PARTNERSHIP OF GEISMAR VINYLS LP The undersigned, desiring to amend the Certificate of Limited Partnership of Geismar Vinyls LP pursuant to the provisions of Section 17-202 of the Revised Uniform Limited Partnership Act of the State of Delaware, does hereby certify as follows: FIRST: The name of the Limited Partnership is GEISMAR VINYLS LP SECOND: Article I of the Certificate of Limited Partnership shall be amended as follows: "I. The name of the limited partnership is GEISMAR VINYLS COMPANY LP" IN WITNESS WHEREOF, the undersigned executed this Amendment to the Certificate of Limited Partnership on this 8th day of January, 2003. GVGP, INC. General Partner By: /s/ A. Chao --------------------------- Albert Chao, President EX-3.10 12 h08423exv3w10.txt CERTIFICATE OF LIMITED PARTNERSHIP EXHIBIT 3.10 THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON SUBMISSION TO THE GENERAL PARTNER OF THE PARTNERSHIP OF SUCH EVIDENCE AS MAY BE SATISFACTORY TO IT TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER. AGREEMENT OF LIMITED PARTNERSHIP OF GEISMAR VINYLS LP THIS AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") made effective as of December 27, 2002, by and between GVGP, INC., a Delaware corporation ("CORPORATION") and GEISMAR HOLDINGS, INC., a Delaware corporation ("HOLDINGS"); WITNESSETH: WHEREAS, CORPORATION is a Delaware corporation qualified to do business in the State of Delaware; and WHEREAS, HOLDINGS is a Delaware corporation qualified to do business in the State of Delaware; and WHEREAS, CORPORATION and HOLDINGS desire to enter into and form a limited partnership under the Revised Delaware Limited Partnership Act, as amended (the "Act"), to engage in any lawful business, act or activity for which limited partnerships may be organized under the Act; NOW, THEREFORE, in consideration of the mutual agreements set forth herein and of the contributions to capital by CORPORATION and HOLDINGS as set forth in Article II, CORPORATION and HOLDINGS hereby agree as follows: ARTICLE I FORMATION AND ORGANIZATION 1.1. Formation and Name of Partnership. Pursuant to the provisions of the Act, the CORPORATION and HOLDINGS hereby enter into and form a limited partnership (the "Partnership") for the purposes hereinafter set forth. The Partnership shall conduct its business under the name "GEISMAR VINYLS LP" and such name shall be used at all times in connection with the Partnership's business and affairs. CORPORATION shall be the general partner of the Partnership and HOLDINGS shall be the limited partner of the Partnership. 1.2. Certain Definitions. The following terms used herein, unless the context otherwise specifically requires, shall have the following respective meanings: "Affiliate" means, with respect to any designated person, any other person which, directly or indirectly, controls or is controlled by or is under common control with such designated person, and shall include any director, officer, employee or partner of such designated person. "Article"' shall refer to the numbered articles of this Agreement. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Distributable Funds" shall have the meaning set forth in Section 4.1. "Fiscal Year" or "Year" shall mean a calendar year (or portion thereof) ending on December 31 of such year. "General Partner" shall mean GVGP, INC., a Delaware corporation. "Limited Partner" shall mean GEISMAR HOLDINGS, INC. a Delaware corporation. "Operating Revenues" shall have the meaning set forth in Section 4.1. "Ownership Percentage" of a Partner shall have the meaning set forth in Section 2.5. "Partners" shall refer to the General Partner and the Limited Partner. "Partnership Interest" shall have the meaning set forth in Section 2.5. "Partnership Office" shall have the meaning set forth in Section 1.4. "Section" shall refer to the numbered sections of this Agreement. Other capitalized terms used in this Agreement shall have the meanings indicated. 1.3. Term. This Agreement shall be effective and the Partnership shall commence upon compliance by the Partners with Section 2.01 of the Act and shall continue until dissolved pursuant to Article VIII. 1.4. Principal Office; Registered Office and Registered Agent; Filing. 1.4.1. Principal Office. The principal office of the Partnership (the "Partnership office"), where the books and records of the Partnership shall be kept, shall be 2801 Post Oak 2 Boulevard, Suite 600, Houston, TX 77056 Attention: Secretary. Upon compliance with applicable legal requirements and notice to the Limited Partner, the General Partner may change the Partnership office to such other location or locations within or without the State of Texas, as the General Partner may determine to be reasonably convenient for the General Partner and may accordingly designate as the Partnership Office for purposes hereof. 1.4.2. Filing of Certificate. The General Partner shall execute any certificate or certificates required by law to be filed in connection with the formation of the Partnership, including that required by the Act, and shall cause such certificate or certificates to be filed in the appropriate records. 1.4.3. Registered Office and Registered Agent. The registered office of the Partnership in Delaware is located at The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801, and the name of its registered agent at such address is The Corporation Trust Company. The General Partner is hereby given the authority to change the registered office and/or to appoint a new registered agent as the General Partner may determine in compliance with applicable legal requirements. 1.4.4. Other Jurisdictions. The General Partner shall take all steps appropriate under the laws of any jurisdiction in which it may be necessary to qualify the Partnership to transact business and to be treated as a limited partnership doing business in such jurisdiction. 1.5. Purposes of the Partnership. The object and purpose of the Partnership is to engage in any lawful business, act or activity for which limited partnerships may be organized under the Act; and to do all such other acts and things as the General Partner may deem appropriate in connection with the furtherance and accomplishment of the foregoing objects. 1.6. General Partner. GVGP, INC. shall be and is hereby constituted the general partner of the Partnership. The management of the business and affairs of the Partnership shall be conducted as provided in Article V. Except to the extent otherwise specifically provided herein or prohibited by the Act, the General Partner shall have full power and authority to take all action in connection with the Partnership's affairs and to exercise exclusive management, supervision, and control of the Partnership's properties and business and shall have the full power to do all things necessary, convenient or appropriate in connection therewith. 1.7. Limited Partner. GEISMAR HOLDINGS, INC. shall be and is hereby constituted as the limited partner of the Partnership. The Limited Partner, in such capacity, shall have no participation in the management of the Partnership or power to transact any Partnership business or to act for or bind the Partnership in any respect; and the Limited Partner shall not, except to the extent provided in Section 8.2.3 or by law, ever be (i) personally liable for any part of the debts or other obligations of the Partnership or (ii) obligated to make contributions to the Partnership in excess of those made pursuant to this Agreement. 3 ARTICLE II CAPITAL CONTRIBUTIONS 2.1. Contributions. Simultaneously with the execution and delivery hereof, the General Partner has contributed to the capital of the Partnership a one percent (1%) undivided interest in the Assets, and the Limited Partner has contributed to the capital of the Partnership a ninety-nine percent (99%) undivided interest in the Assets. 2.2. Financing. Certain funds to finance the business of the Partnership may be derived from loans to the Partnership from third parties ("Third-Party Financing") and from the revenues of the Partnership. Any Third-Party Financing shall be entered into from time to time on such terms as the General Partner may deem advisable. 2.3. Other Funds. Except as provided in Section 8.2.3, no Partner shall be obligated (i) to contribute additional amounts to the Partnership's capital, or (ii) to furnish such Partner's funds or property for Partnership purposes, or (iii) to otherwise provide funds to or on behalf of the Partnership. 2.4. Withdrawal of Capital. No Partner shall be entitled to withdraw any part of such Partner's contribution to the Partnership capital or to receive any distribution from the Partnership except as provided in this Agreement. No Partner shall be entitled to demand or receive from the Partnership either interest on contributions to Partnership capital or property in kind, as a partition of Partnership property or otherwise. 2.5. Ownership Percentages. Each Partner's beneficial ownership interest in the Partnership ("Partnership Interest") is in the following respective percentage ("Ownership Percentage"): General Partner 1% Limited Partner 99% ARTICLE III ACCOUNTING AND TAX MATTERS 3.1. Books. The books of account of the Partnership, for financial and tax purposes, shall be kept on an accrual basis generally accepted for Internal Revenue Service reporting purposes, as appropriate to the Partnership's business. 3.2. Tax Matters. 3.2.1. Tax Returns. The General Partner shall prepare and file all income tax returns of the Partnership and shall furnish copies thereof to the Limited Partner. 3.2.2. Tax Matters Partner. The General Partner shall be the "tax matters partner" of the Partnership, within the meaning of Section 6231(a)(7) of the Code and any regulations 4 issued thereunder, unless the Code or the regulations issued thereunder requires another person to be the tax matters partner. The expenses, if any, that the General Partner incurs in fulfilling its obligations pursuant to this Section 3.2.2 shall be expenses of the Partnership. ARTICLE IV DISTRIBUTION OF PARTNERSHIP FUNDS; ALLOCATIONS 4.1. Distributable Funds. The term "Distributable Funds" of the Partnership shall mean the excess from time to time of (A) the total of (i) cash held by the Partnership, including without limitation, cash proceeds derived from operations ("Operating Revenues"), plus (ii) net proceeds received from any sale or refinancing of all or a portion of property, proceeds of casualty insurance and condemnation awards not currently required for rebuilding, restoration, repair or operation ("Sale Proceeds"), less (B) the working capital requirements of the Partnership (as determined by the General Partner) and such reserves as may be established by the General Partner from time to time. 4.2. Distributions. The General Partner shall, not later than 60 days following the end of each quarter of each Fiscal Year, determine the availability of Distributable Funds, which shall be distributed to Partners as follows: (i) in the event that (a) the ratio of the Partners' capital account balances is not equal to (b) the ratio of the Partners' Ownership Percentages, Distributable Funds shall be distributed so as to equalize, to the extent possible, (a) the ratio of the Partners' capital account balances and (b) the ratio of the Partners' Ownership Percentages, and (ii) in the event that (a) the ratio of the Partners' capital account balances is equal to (b) the ratio of the Partners' Ownership Percentages, Distributable Funds shall be distributed in the ratio of the Partners' respective Ownership Percentages. Except as otherwise required by law, no Partner shall be required to restore to the Partnership any funds distributed to it pursuant to the provisions of this Agreement. 4.3. Allocations. 4.3.1. In General. All income, gains, losses, deductions and credits (excluding gains or losses from the sale or disposition of Partnership properties) of the Partnership shall be allocated to Partners in accordance with their respective Ownership Percentages. 4.3.2. Gains on Sales. Net gains from the sale or other disposition of any of the Partnership assets or properties, including without limitation such gains on a sale or other disposition resulting in or followed by a winding up of the Partnership's affairs and a final distribution in accordance with Section 8.2, shall be allocated to the Partners in accordance with their respective ownership Percentages provided, however, that net gain from the sale of Assets contributed to the Partnership by a Partner shall be allocated (for tax purposes only) 100% to such contributing Partner to the extent of the excess of the agreed value of the contributed Assets on the date of its contribution, less the contributing Partner's adjusted tax basis in such Assets on the date of its contribution, and any remaining net gain shall be allocated to the Partners in accordance with their Ownership Percentages. 5 4.3.3. Losses on Sales. Net losses from the sale or other disposition of any of the Partnership assets or properties, including without limitation such losses on a sale or other disposition resulting in or followed by a winding up of the Partnership's affairs and a final distribution in accordance with Section 8.2, shall be allocated to the Partners in accordance with their respective Ownership Percentages; provided, however, that net loss from the sale of the Assets contributed to the Partnership by a Partner shall be allocated (for tax purposes only) 100% to such contributing Partner to the extent of the excess of the contributing Partner's adjusted tax basis in such Assets on the date of its contribution, less the value of the contributed Assets on the date of its contribution to the Partnership, and any remaining net loss shall be allocated to the Partners in accordance with their ownership Percentages. 4.3.4. Determination of Profits and Losses. For purposes of this Section 4.3, the income, gains, losses, deductions and credits of the Partnership shall be determined for each Fiscal Year in accordance with the accounting methods followed by the Partnership for federal income tax purposes and the allocations contemplated hereby shall be determined as a percentage (of each item of Partnership income, gain, loss, deduction or credit, as the case may be) obtained by dividing (i) the number of days of such Fiscal Year into (ii) the product obtained by multiplying a Partner's Ownership Percentage by the number of days in such Fiscal Year on which such Partner held such Ownership Percentage. ARTICLE V RIGHTS, POWERS, AND DUTIES OF THE PARTNERS 5.1. Management of Partnership Business. The General Partner shall have the sole right to manage the business and affairs of the Partnership, and shall have and enjoy all of the rights and powers of a general partner of a partnership with limited partners except as otherwise provided by the Act or this Agreement. 5.2. Powers of the General Partner. 5.2.1. General Powers. Without limiting the provisions of Section 5.1, and subject only to the qualifications of Section 5.3, the General Partner is empowered to act for and bind the Partnership with respect to all matters and shall have full power and authority to exercise all powers that may be lawfully exercised by the general partner of a limited partnership formed under the Act, and third persons dealing with the Partnership shall be fully protected in relying on any action taken or instrument executed on behalf of the Partnership by the General Partner. 5.3. Limitations on Powers of the General Partner. Notwithstanding the provisions of Sections 5.1 and 5.2, without the prior consent of the Limited Partner, the General Partner shall not take any action that it may not lawfully take without such consent. 5.4. Limited Partners. The Limited Partner shall not participate in or have any control over the management of the business of the Partnership or transact any business for the Partnership. The Limited Partner shall not have any power to sign for or bind the Partnership. 6 The Limited Partner shall not have any right to withdraw from or cause the dissolution of the Partnership or to cause the partition of its properties. 5.5. Books and Records. The General Partner shall maintain complete and accurate books of the Partnership at the Partnership Office, showing the names, addresses and Partnership Interests and capital accounts of all Partners, and all receipts, expenditures, assets, liabilities, profits and losses of the Partnership and all other records necessary for the recording of the business and affairs of the Partnership, as well as all records required by the Act. Each Partner and his duly authorized representative shall at all reasonable times during regular business hours, have access to and may inspect and examine the Partnership's books or records. 5.6. Reports Within 90 days after the end of each year, the General Partner shall prepare, or cause to be prepared, a report which shall include tax reporting information required by the Partners for preparation of their respective income tax returns. All decisions as to accounting matters, except as specifically provided herein, shall be made by the General Partner and shall be in accordance with accepted accounting practices, as such are applicable to the method of accounting adopted by the Partnership. 5.7. Income Tax Elections. The General Partner, subject only to Article III, shall have the right to make any applicable elections under the Code which, in the judgment of the General Partner, are in the best interests of the Partnership. 5.8. Capital and Income Accounts. 5.8.1. General Rules. The General Partner shall maintain a capital account and an income account for each Partner. Except as otherwise provided herein, each Partner's capital account shall be maintained in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv). There shall be credited to the capital account of each Partner the amount of cash and the agreed value of any Assets contributed to the deductions and credits shall be allocated to the income accounts of the Partners as provided in Section 4.3. At the end of each Year, and following any sale of the Partnership's assets, in connection with the liquidation of the Partnership pursuant to Article XIII, the income accounts of all of the Partners shall be closed out to their respective capital account. The capital account of a Partner shall be charged with the amount of any cash distributed and the fair market value of any Assets distributed to such Partner. Any optional loans or advances made by a Partner to the Partnership shall not be credited to the lending Partner's income or capital account. Distributions (whether constituting principal or interest) to a lending Partner in repayment of any such optional loans or advances shall not be charged to the lending Partner's income or capital account. In connection with each assignment of any interest in the Partnership (other than an assignment intended only to secure payment of indebtedness or other obligation), the capital and income accounts allocable to such interest in the Partnership shall be transferred from the assignor to the assignee. 5.8.2. Hypothetical Sale. Upon liquidation of the Partnership or any Partner's interest in the Partnership, any unsold Partnership assets shall be valued to determine the gain or loss that would result if such assets were sold at their fair market value, as determined in good faith by the General Partner, at the time of such liquidation. The capital accounts of the Partners 7 shall be adjusted to reflect the manner in which any such gain or loss would have been allocated if such assets had been sold at such value. 5.9. Right to Compete. Neither the General Partner nor any of its officers, agents or employees shall be obligated to devote its or their full time and attention to the Partnership and its affairs, but only such time as may reasonably be necessary for the conduct of the Partnership's business. Nothing contained in this Agreement shall preclude the General Partner, its officers, agents or employees from engaging in any business, or making any other investment, even though such business, or other investment may be in competition with the business of the Partnership. Any such activity may be undertaken with or without notice to or participation therein by the other Partner and neither any Partner nor the Partnership shall have any right or claim with respect to any such activity or the income or profits therefrom. 5.10. Limitation on Responsibility of General Partner. The General Partner's obligations to perform the functions enumerated herein and such other obligations as may arise by operation of law or otherwise shall be performable only to the extent that the Partnership from time to time has funds available therefor, and neither the General Partner nor its Affiliates shall ever be personally liable to furnish involuntarily its or their own funds for any such purposes, to respond in damages, or to render specific performance. The Limited Partner hereby further agrees to look solely to the Partnership Interest of the General Partner for recovery of any judgment against the General Partner. In the exercise of any of its responsibilities or authority under this Agreement or otherwise, the General Partner shall be obligated to act in good faith; and so long as it acts in good faith, it shall have no liability or obligation to the Partnership or to any Partner for any decision, act or omission, whether or not such decision, act or omission shall have been authorized or reasonably prudent, and whether or not such decision, act or omission shall have been the result of the exercise of good or bad business judgment. ARTICLE VI ASSIGNMENT OR TRANSFER OF INTEREST BY PARTNERS 6.1. Conditions of Transfer. Partnership Interests are transferable, provided, however, that no Partnership Interest, or any portion thereof, may be transferred without the consent of the other Partner. 6.2. Partner Representations. Each of the Partners, by execution of this Agreement, and each assignee or transferee of a Partner by acceptance of the rights and interests of his assignor or transferor in the Partnership, represents and warrants to and covenants and agrees with the Partnership and the other Partner that such Partner's interest has been acquired under this Agreement for such Partner's own account, for investment, and not with a view to or for sale in connection with any distribution thereof or with any present intention of distributing or selling such interest. The Limited Partner hereby further represents and warrants to the Partnership and the General Partner as follows: (i) The Limited Partner has such knowledge and experience in financial and business matters, including investing in or dealing with real estate ventures similar to that of the Partnership, that it is capable of 8 evaluating the merits and risks of an investment in the Partnership. The Limited Partner is able to bear the economic risk of an investment in the Partnership, including the risk of holding indefinitely any Partnership Interest acquired hereunder. (ii) The Limited Partner has been afforded full access to representatives of the General Partner for purposes of such inquiry as such Limited Partner deems appropriate, and all information requested by the Limited Partner concerning the Partnership has been supplied. (iii) The Limited Partner recognizes that the Partnership is engaged in an enterprise of high and inherent risks. 6.3. Indemnification. Each Partner agrees to indemnify and hold harmless the Partnership and the other Partner, their respective agents and representatives and the Affiliates of each of the foregoing, from and against any and all loss, claims, damage or liability directly or indirectly related to, arising from or incurred in connection with any breach of the covenants, representations and warranties of this Article VI (including any misrepresentation or omission related thereto) by such Partner. 6.4. Substituted Limited Partner. An assignee or transferee (other than an existing Partner) of the interest of the Limited Partner may be admitted as a Substituted Limited Partner only with the consent of the General Partner and shall be admitted as of the date of such consent. The granting or denying of such consent shall be in the absolute discretion of the General Partner. Unless the assignee is the General Partner, any assignee of a Partnership Interest to whose admission such consent is given (a "Substituted Limited Partner") shall become and shall have only the rights and duties of a limited partner of the Partnership, and the assigned Partnership interest shall thereafter be a Limited Partnership Interest. Any transferee of the interest of the Limited Partner shall be entitled only to receive distributions hereunder until such transferee has been admitted as a limited partner of the Partnership. 6.5. Effect of Change in Partners. Subject to all of the provisions of this Agreement, and to the extent permitted under applicable law, the dissolution, liquidation, bankruptcy or substitution of the Limited Partner shall not interrupt the continuity of or cause the termination or dissolution of the Partnership. 6.6. Reconstitution. Upon dissolution of the Partnership, the Partnership may be reconstituted and its business continued without being wound up if there remains at least one general partner. The business of the Partnership may be carried on by any such remaining general partner. ARTICLE VII REIMBURSEMENT OF CERTAIN COSTS 7.1. Reimbursement of Certain Costs. The General Partner shall be reimbursed promptly by the Partnership for all actual, reasonable, and necessary expenditures made from 9 time to time on behalf of the Partnership in connection with the affairs of the Partnership, or the performance of the duties of the General Partner hereunder. ARTICLE VIII DISSOLUTION AND LIQUIDATION 8.1. Events of Dissolution. The Partnership shall be dissolved upon the occurrence of any of the following events: (i) the agreement of all Partners; or (ii) December 31, 2099. 8.2. Winding Up and Distribution of Assets. 8.2.1. Winding Up. Upon dissolution of the Partnership, the General Partner shall proceed to wind up the affairs of the Partnership, liquidate the property and assets of the Partnership that it determines shall be sold and terminate the Partnership. 8.2.2. Application of Proceeds. The proceeds of such liquidation and any unsold assets shall be applied in the following order of priority: (i) first, to the expenses of such liquidation; (ii) second, to the debts and liabilities of the Partnership to third parties, if any, in the order of priority provided by law; (iii) third, to a reasonable reserve to be set up to provide for any contingent or unforeseen liabilities or obligations of the Partnership to third parties (to be held and disbursed, at the reasonable discretion of the General Partner, by an escrow agent selected by it) and at the expiration of such period as the General Partner may reasonably deem advisable, the balance shall be distributed as provided herein; (iv) fourth, to all loans that any Partner may have made and any other debts or liquidated obligations of the Partnership to the Partners; (v) fifth, to the Partners until they shall have received back the amounts shown in, and in the proportions of, their capital accounts; and (vi) sixth, the assets of the Partnership, if any, shall be distributed to the Partners (or their successors and assigns) in accordance with their respective Ownership Interests. 8.2.3. Restoration of Negative Capital Account. If, upon the liquidation of the Partnership or the liquidation of a Partner's interest in the Partnership, a Partner shall have a negative balance in his capital account, after giving effect to all adjustments to the capital 10 account of such Partner pursuant to Article IV and Section 5.8, then notwithstanding anything herein, such Partner shall contribute to the Partnership cash in the amount of such deficit balance. Contributions made under this Section shall be made by the end of the taxable year of the Partnership in which the liquidation of the Partnership or the liquidation of such Partner's interest in the Partnership occurs (or, if later, within ninety days after the date of such liquidation); and shall be used first to satisfy any amounts then owing by the Partnership to its creditors to the extent that such creditors have recourse to the assets of the Partners; any remaining amount shall be distributed to the Partners having positive balances in their capital accounts in proportion to such positive balances. Notwithstanding anything herein, a Partner required to make a contribution pursuant to this Section 8.2.3 shall be personally liable to make such contribution. For purposes of this Section 8.2.3, the term "liquidation" shall have the meaning given it in the first two sentences of Treasury Regulation Section 1.704-1 (b)(2)(ii)(g). ARTICLE IX MISCELLANEOUS 9.1. Certificate Requirements. The General Partner hereby agrees that it shall execute and file promptly the certificate required by the Act for the formation of the Partnership contemplated by this Agreement. The General Partner will execute and file, from time to time, in said office all such documents to amend said certificate as are required by the Act for the carrying out of the terms and provisions of this Agreement; and upon winding up of the Partnership, the General Partner shall execute and file in said office the documents required by the Act to cancel said certificate as theretofore amended. 9.2. Notices. All notices, requests, statements, offers, acceptances, requests for consents or other writings required or permitted to be given or furnished hereunder to any Partner ("Notices") shall be in writing and delivered to such Partner or deposited in the United States mail in a sealed envelope, registered or certified mail, with postage prepaid, or sent by facsimile, telex or telegram (and confirmed by registered or certified mail the same date), addressed to such Partner as follows: (i) If to the General Partner, to: GVGP, INC. 2801 Post Oak Boulevard, Suite 600 Houston, TX 77056 Attention: Corporate Secretary (ii) If to the Limited Partner, to: GEISMAR HOLDINGS, INC. 103 Foulk Road, Suite 200 Wilmington, DE 19803 Attention: Entity Services Group LLC or at such other address as such Partner shall have previously designated by Notice to the Partner giving such Notice. All Notices shall be deemed given when delivered or, if mailed, on the second business day after the day of mailing, and if sent by telex or telegram, the first business 11 day after the day of dispatch. Any Partner may change its address for the receipt of Notices at any time by giving notice thereof to the other Partner. Notwithstanding the requirement as to the use of registered or certified mail, any routine reports required by this Agreement to be submitted to Partners at specified times may be sent by first class mail. 9.3. Entire Agreement. This Agreement supersedes all priory agreements and understandings among the Partners with respect to the subject matter hereof. 9.4. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware. 9.5. Modification, Termination and Waiver. This Agreement may be modified, terminated or waived only by a writing signed by the party to be charged with such modification, termination or waiver. 9.6. Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. However, no assignment of any interest in this Agreement may be made otherwise than in accordance with the provisions of this Agreement. 9.7. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original of this Agreement but all of which, taken together, shall constitute one and the same Agreement. 9.8. Severability. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 9.9. Further Assurances. Each Partner shall execute such deeds, assignments, endorsements, evidences of transfer and other instruments and documents and shall give such further assurances as shall be necessary to perform its obligations hereunder. 9.10. Limitation on Rights of Others. No person other than a Partner shall have any legal or equitable right, remedy or claim under or in respect of this Agreement. 12 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. GENERAL PARTNER: GVGP, INC. By: /s/ A. Chao ----------------------- Albert Chao, President LIMITED PARTNER: GEISMAR HOLDINGS, INC. By: /s/ Harold F. Kalbach Jr. ------------------------------- Harold F. Kalbach Jr. VP & Asst. Secretary 13 EX-3.11 13 h08423exv3w11.txt CERTIFICATE OF INCORPORATION-GRAMERCY CHLOR-ALKALI EXHIBIT 3.11 CERTIFICATE OF INCORPORATION OF GRAMERCY CHLOR-ALKALI CORPORATION ARTICLE I The name of the corporation is GRAMERCY CHLOR-ALKALI CORPORATION. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is the Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Stephen LeSatz, Jr. Westlake Center, Suite 600 2801 Post Oak Boulevard Houston, Texas 77056 ARTICLE VI The name and mailing address of the person who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: Stephen LeSatz, Jr. Westlake Center, Suite 600 2801 Post Oak Boulevard Houston, Texas 77056 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or appeal the by-laws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provisions contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed - 2 - and the facts herein stated are true, and accordingly have hereunto set my hand this 7th day of December 2002. /s/ Stephen LeSatz, Jr. ----------------------------------------- Stephen LeSatz, Jr. - 3 - EX-3.12 14 h08423exv3w12.txt BYLAWS OF GRAMERCY CHLOR-ALKALI CORP. EXHIBIT 3.12 GRAMERCY CHLOR-ALKALI CORPORATION BY-LAWS ARTICLE I OFFICERS Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Houston, State of Texas, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 2001, shall be held on the Second day of January, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth 2 the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than 1 nor more than 3. The first board shall consist of 1 director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold of office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter 3 provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on 2 days' notice to each director, either personally or by mail or by facsimile communication; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. COMMITTEES OF DIRECTORS Section 10. The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing any by-law of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. 4 Section 11. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 12. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or by-law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. 5 Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. 6 Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. 7 LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 8 ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. 9 ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 10 EX-3.13 15 h08423exv3w13.txt CERTIFICATE OF INCORPORATION - GVGP, INC. EXHIBIT 3.13 CERTIFICATE OF INCORPORATION OF GVGP, INC. ARTICLE I The name of the corporation is GVGP, INC. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is the Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VI The name and mailing address of the persons who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is a follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or appeal the by-laws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed - 2 - and the facts herein stated are true, and accordingly have hereunto set my hand this 26th day of December 2002. /s/ Stephen LeSatz, Jr. ---------------------------------- Stephen LeSatz, Jr. - 3 - EX-3.14 16 h08423exv3w14.txt BYLAWS OF GVGP, INC. EXHIBIT 3.14 GVGP, INC. BY-LAWS ARTICLE I OFFICERS Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETING OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election f directors shall be held either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of the stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 2003, shall be held on January 2 of each year, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be presented or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking 2 of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than 1 nor more than 3. The first board shall consist of 1 director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold of office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are not directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. 3 Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on 2 days' notice to each director, either personally or by mail or by facsimile communication; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. COMMITTEES OF DIRECTORS Section 10. The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing any by-law of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 11. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. 4 COMPENSATION OF DIRECTORS Section 12. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or by-law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. 5 Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary or any assistant secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committee when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or any assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such 6 other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by 7 the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 8 ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall be in a form as prescribed from time to time by the Directors. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. 9 ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 10 EX-3.15 17 h08423exv3w15.txt CERTIFICATE OF INCORPORATION - THALIA INTERESTS EXHIBIT 3.15 CERTIFICATE OF INCORPORATION OF THALIA INTERESTS, INC. ARTICLE I The name of the corporation is THALIA INTERESTS, INC. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Bob Casey, Jr. 2900 South Tower Pennzoil Place Houston, Texas 77002-2781 ARTICLE VI The name and mailing address of the person who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: Bob Casey, Jr. 2900 South Tower Pennzoil Place Houston, Texas 77002-2781 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to adopt, amend or repeal the bylaws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the bylaws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the bylaws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the bylaws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed - 2 - and the facts herein stated are true, and accordingly have hereunto set my hand this 29th day of May, 1992. /s/ Bob Casey, Jr. ----------------------------- Bob Casey, Jr. - 3 - EX-3.16 18 h08423exv3w16.txt CERTIFICATE OF AMEND. OF CERT. OF INCORPORATION EXHIBIT 3.16 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION THALIA INTERESTS, INC. ("Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That in lieu of a meeting and vote of directors, the Board of Directors of the Corporation, by unanimous written consent filed with the Corporation, in accordance with the provisions of Section 141(f) of the General Corporation Law of the State of Delaware, have adopted a resolution proposing and declaring advisable the following amendments to the Certificate of Incorporation of the Corporation: RESOLVED, That the Certificate of Incorporation be amended by changing Article I to read as follows: ARTICLE I The name of the corporation is NORTH AMERICAN PIPE CORPORATION. SECOND: That in lieu of a meeting and vote of stockholders, the sole stockholder of all outstanding stock entitled to vote thereon has given written consent to the above amendment in accordance with Section 228 of the General Corporation Law of the State of Delaware, and said written consent has been filed with the Corporation. THIRD: That said amendments were duly adopted in accordance with the provisions of Sections 141, 216, 228 and 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of the Corporation will not be reduced under or by reason of said amendments. IN WITNESS WHEREOF, Thalia Interests, Inc. has caused this certificate to be signed by its President and attested by its Secretary, this 6th day of July, 1992. THALIA INTERESTS, INC. By: /s/ Michael A. Robison ------------------------------------- Michael A. Robison President ATTEST: By: /s/ Michael A. Robison ---------------------- Michael A. Robison Secretary EX-3.17 19 h08423exv3w17.txt BYLAWS OF NORTH AMERICAN PIPE CORPORATION EXHIBIT 3.17 BYLAWS OF NORTH AMERICAN PIPE CORPORATION (hereinafter called the "Company") ARTICLE I MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual Meetings. The annual meetings of stockholders shall be held on such date and at such time as shall be designated from time to time by the Board and stated in the notice of the meeting, at which meetings the stockholders shall elect by a plurality vote the Board, and transact such other business as may properly be brought before the meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 3. Special Meetings. Unless otherwise prescribed by law or by the certificate of incorporation of the Company (the "Certificate"), special meetings of stockholders, for any purpose or purposes, may be called by either (i) the Chairman, (ii) the President, (iii) any vice president, (iv) the Secretary or (v) any assistant secretary, and shall be called by any such officer at the request in writing of a majority of the Board or at the request in writing of stockholders owning a majority of the capital stock of the Company issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Written notice of the special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. Section 4. Quorum. Except as otherwise provided by law or by the Certificate, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat present in person or represented by proxy shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting. Section 5. Voting. Unless otherwise required by law, the Certificate or these bylaws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share standing in his name on the books of the Company. Such votes may be case in person or by proxy, but no proxy shall be voted on or after three years from its date unless such proxy provides for a longer period. The Board, in its discretion, or the officer of the Company presiding at a meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 6. List of Stockholders Entitled to Vote. The officer of the Company who has charge of the stock ledger of the Company shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder of the company who is present. ARTICLE II DIRECTORS Section 1. Number and Election of Directors. The business and affairs of the Company shall be managed by the Board, initially consisting of one (1) director. The number of directors may be increased or decreased from time to time by resolution of the Board or by due election of that number of directors by the stockholders, but no decrease by the Board shall have the effect of shortening the term of any incumbency. Except as provided in Section 2 of this Article, the director or directors, as the case may be, shall be elected by a plurality of the votes cast at annual meetings of stockholders and shall hold office until the next annual meting and until his/their successor(s) is duly elected and qualified or until his/their earlier resignation or removal. Any director may resign at any time upon notice to the Company. Directors need not be stockholders. Section 2. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified or until their earlier resignation or removal. Section 3. Duties and Powers. The business of the Company shall be managed by or under the direction of the Board, which may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the Certificate or by these bylaws directed or required to be exercised or done by the stockholders. Section 4. Meetings. The Board may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board may be held without notice at such time and at such place as may from time to time be determined by the Board. - 2 - Special meetings of the Board may be called by the Chairman, if there be one, the President or any director. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than 48 hours before the date of the meeting, by telephone, facsimile, telegram, telex or similar means of visual data transmission on 24 hours notice or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Section 5. Quorum. Except as may be otherwise specifically provided by law, the Certificate or these bylaws, at all meetings of the Board, a majority of the entire Board shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board. If a quorum shall not be present at any meeting of the Board, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 6. Actions of the Board. Unless otherwise provided by the Certificate or these bylaws, any action required or permitted to be taken at any meeting of the Board may be taken without a meeting, if all the members of the Board consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board. Such writings, which may be in counterparts, shall be manually executed if practicable; provided, however, that if circumstances so require, effect shall be given to written consents transmitted by telegraph, telex, facsimile or similar means of visual data transmission. Section 7. Meetings by Means of Conference Telephone. Unless otherwise provided by the Certificate or these bylaws, members of the Board or any committee designated by the Board may participate in a meeting of the Board or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 7 shall constitute presence in person at such meeting. Section 8. Committees. (a) Designation. The Board may, by resolution adopted by a majority of the entire Board, designate one or more standing or special committees, including, as they shall so determine, an executive committee. The executive committee, if one is designated, shall consist of one or more of the directors of the Company. Any other committee designated by the Board shall consist of one or more of the directors of the Company. (b) Executive Committee. The Executive Committee, during intervals between meetings of the Board, shall have and exercise all the powers and authority of the Board in the management of the business of the Company, except as otherwise limited by statutes, the Certificate or these bylaws. (c) Alternate Committee Members. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of an alternate member to replace - 3 - the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, regardless of whether he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any absent or disqualified member. (d) Powers and Duties. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company; provided, however, that nothing in this Section 8 shall be deemed to authorize a committee of the Board to have broader authority than the Board. Each committee shall keep regular minutes and report to the Board when required. Section 9. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board and may be paid a fixed sum for attendance at each meeting of the Board or a stated salary or other consideration as director. No such payment shall preclude any director from serving the Company in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. ARTICLE III OFFICERS Section 1. General. The officers of the Company shall be chosen by the Board and shall include a President, a Treasurer and a Secretary. The Board, in its discretion, may also choose (i) one of its members as Chairman and (ii) one or more vice presidents, assistant secretaries, assistant treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate or these bylaws. The officers of the Company need not be stockholders of the Company nor, except in the case of the Chairman, need such officers be directors of the Company. Section 2. Election. The Board at its first meeting held after each annual meeting of stockholders shall elect the officers of the Company, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board; and all officers of the Company shall hold office until their successors are chosen and qualified or until their earlier resignation or removal. Any officer elected by the Board may be removed at any time by the affirmative vote of a majority of the Board. Any vacancy occurring in any office of the Company shall be filled by the Board. The salaries of all officers of the company shall be fixed by the Board. Section 3. Powers and Duties. The officers of the Company shall have such powers and duties as generally pertain to their offices, except as diminished or enlarged from time to time by action of the Board. The Chairman of the Board or in his absence the President, shall preside at all meetings of the Board and of the stockholders, and in their absence a presiding officer shall be appointed by action of a majority of the directors or stockholders, as the case may be. Section 4. Other Officers. Such other officers as the Board may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board. - 4 - The Board may delegate to any other officer of the Company the power to choose such other officers and to prescribe their respective duties and powers. ARTICLE IV STOCK Section 1. Signatures. The certificates for shares of stock of the Company shall be signed by the President, Vice President or other officer designated by the Board, counter-signed by the Secretary or Treasurer. Where a certificate is countersigned by (i) a transfer agent other than the Company or its employee or (ii) a registrar other than the Company or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 2. Record Date. In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a record date which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however that the Board may fix a new record date for the adjourned meeting. ARTICLE V NOTICES Whenever written notice is required by law, the Certificate or these bylaws to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at his address as it appears on the records of the Company, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by facsimile, telegram, telex or similar means of visual data transmission. ARTICLE VI AMENDMENTS These bylaws may be altered, amended or repealed, in whole or in part, or new bylaws may be adopted, at any annual or special meeting of the stockholders or of the Board by at least a majority vote of the stockholders or the Board; provided however, that notice of such alteration, amendment, repeal or adoption of new bylaws be contained in the notice of such meeting of - 5 - stockholders or directors. Any alteration, amendment, addition to or repeal of these bylaws made by the Board is subject to the power of the stockholders to change such action. ADOPTED as of this 29th day of May, 1992. /s/ Bob Casey, Jr. ---------------------------------- Bob Casey, Jr. Secretary - 6 - EX-3.18 20 h08423exv3w18.txt CERTIFICATE OF INCORPORATION - WESTECH WINDOWS EXHIBIT 3.18 CERTIFICATE OF INCORPORATION OF WESTECH WINDOWS, INC. ARTICLE I The name of the corporation is WESTECH WINDOWS, INC. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is the Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Stephen LeSatz, Jr. Westlake Center, Suite 600 2801 Post Oak Boulevard Houston, Texas 77056 ARTICLE VI The name and mailing address of the person who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is a follows: Stephen LeSatz, Jr. Westlake Center, Suite 600 2801 Post Oak Boulevard Houston, Texas 77056 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or appeal the by-laws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 27th day of March, 2000. /s/ Stephen LeSatz, Jr. ---------------------------------- Stephen LeSatz, Jr. EX-3.19 21 h08423exv3w19.txt CERTIFICATE OF AMEND. TO CERT. OF INCORPORATION EXHIBIT 3.19 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Westech Windows, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That the sole member of the Board of Directors of said corporation, by written consent filed with the minutes of the Board pursuant to Section 141(f) of the General Corporation Law of the State of Delaware, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED: That the Certificate of Incorporation of Westech Windows, Inc. be amended by changing Article I thereof so that, as amended, said Article shall be and read as follows: ARTICLE I The name of the corporation is NORTH AMERICAN PROFILES, INC. SECOND: That in lieu of a meeting and vote of stockholders, the sole stockholder of said corporation has given written consent to said amendment in accordance with Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, Westech Windows, Inc. has caused this certificate to be signed by its President this 31st day of July, 2000. WESTECH WINDOWS, INC. /s/ John A. Labuda --------------------------------- John A. Labuda President EX-3.20 22 h08423exv3w20.txt BYLAWS OF WESTECH WINDOWS, INC. EXHIBIT 3.20 WESTECH WINDOWS, INC. BY-LAWS ARTICLE I OFFICERS Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Houston, State of Texas, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1998, shall be held on the Second day of January, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the - 2 - minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than 1 nor more than 3. The first board shall consist of I director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold of office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter - 3 - provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on 2 days' notice to each director, either personally or by mail or by facsimile communication; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these bylaws. COMMITTEES OF DIRECTORS Section 11. The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, - 4 - amending or repealing any by-law of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by-law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. - 5 - Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant - 6 - secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such - 7 - certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. - 8 - ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the - 9 - board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. - 10 - EX-3.21 23 h08423exv3w21.txt CERTIFICATE OF INCORPORATION-VAN BUREN PIPE CORP. EXHIBIT 3.21 CERTIFICATE OF INCORPORATION OF NAPCO MANUFACTURING CORPORATION 1. The name of the corporation is NAPCO MANUFACTURING CORPORATION. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is ten thousand (10,000) and the par value of each such shares is One Dollar ($1.00) amounting in the aggregate to Ten Thousand Dollars ($10,000). 5A. The name and mailing address of the incorporator is as follows: NAME MAILING ADDRESS W.T. Erwin CT Corporation System 811 Dallas Avenue Houston, Texas 77002 E.W. Patterson. CT Corporation System 811 Dallas Avenue Houston, Texas 77002 E.A. Wallace CT Corporation System 811 Dallas Avenue Houston, Texas 77002 5B. The name and mailing address of each person who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS S. Clayton Snear 544 Westheimer Suite 1560 Houston, Texas 77056 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 9. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 25th day of May, 1994. /s/ W.T. Erwin, Jr. --------------------------------- W.T. Erwin, Jr. /s/ E.W. Patterson --------------------------------- E.W. Patterson /s/ E.A. Wallace --------------------------------- E.A. Wallace - 2 - EX-3.22 24 h08423exv3w22.txt CERTIFICATE OF AMEND. TO CERT. OF INCORPORATION EXHIBIT 3.22 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION NAPCO Manufacturing Corporation ("Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That the Board of Directors of said corporation, by unanimous written consent of its members, filed with the minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, That the Certificate of Incorporation of NAPCO Manufacturing Corporation be amended by changing Article I thereof so that, as amended, said Article shall be and read as follows: ARTICLE I The name of the corporation is Van Buren Pipe Corporation. SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given written consent to said amendment in accordance with Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, NAPCO Manufacturing Corporation has caused this certificate to be signed by its Secretary this 12th day of December, 1995. NAPCO MANUFACTURING CORPORATION By: /s/ Michael A. Robison ----------------------------- Michael A. Robison Secretary EX-3.23 25 h08423exv3w23.txt BYLAWS OF VAN BUREN PIPE CORPORATION EXHIBIT 3.23 VAN BUREN PIPE CORPORATION BY-LAWS ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section l. All meetings of the stockholders for the election of directors shall be held in the City of Houston, State of Texas, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1995, shall be held on the Second day of January, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of - 2 - the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than three (3). The first board shall consist of one (1) director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. - 3 - Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on two (2) days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the - 4 - power or authority in reference to amending the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by- laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. - 5 - Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the - 6 - powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall - 7 - perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated - 8 - shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. - 9 - CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The company shall indemnify and advance expenses under this Article VII to the fullest extent permitted by applicable law in effect on the date of adoption of these by-laws by the board of directors and to such greater extent as applicable law may thereafter permit. Section 8. The company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the company) by reason of the fact that he is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the company, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 9. The company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the company to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the company or is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise against expenses (including attorney's fees) actually and reasonably incurred by him in connection with such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the company. - 10 - Notwithstanding the foregoing, no indemnification shall be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. Section 10. An indemnification under Sections 8 and 9 of this Article (unless ordered by a court) shall be made by the company only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in said Section 8 and 9. Such determination shall be made by the vote of two-thirds of the members of the board of directors. Section 11. If a director, officer, employee or agent of the company has been successful on the merits or otherwise as a party to any action, suit or proceeding, referred to in Sections 8 and 9 of this Article, or with respect to any claim, issue or matter therein (to the extent that a portion of his expenses can be reasonably allocated thereto), he shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith. Section 12. Expenses incurred in connection with a civil, criminal, administrative or investigative action, suit of proceeding, or threat thereof, may be paid by the company in advance of the final disposition of such action, suit or proceeding as authorized by the board of directors in the specific case, upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the company as authorized in this Article. Section 13. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any other by-law, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 14. The company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the company, or is or was serving at the request of the corporation as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article or of any provision of the General Corporation Law of the State of Delaware. Section 15. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. - 11 - ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. - 12 - EX-3.24 26 h08423exv3w24.txt CERTIFICATE OF INCORPORATION-WESTECH BUILDING PROD EXHIBIT 3.24 CERTIFICATE OF INCORPORATION OF PVC PIPE MANUFACTURING CORPORATION 1. The name of the corporation is PVC PIPE MANUFACTURING CORPORATION. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the corporation shall have authority to issue is ten thousand (10,000) and the par value of each such shares is One Dollar ($1.00) amounting in the aggregate to Ten Thousand Dollars ($10,000). 5A. The name and mailing address of the incorporator are as follows: NAME MAILING ADDRESS W.T. Erwin CT Corporation System 811 Dallas Avenue Houston, Texas 77002 E.W. Patterson. CT Corporation System 811 Dallas Avenue Houston, Texas 77002 E.A. Wallace CT Corporation System 811 Dallas Avenue Houston, Texas 77002 5B. The name and mailing address of each person who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows: NAME MAILING ADDRESS S. Clayton Snear. 544 Westheimer Suite 1560 Houston, Texas 77056 6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation. 8. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 9. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this 25th day of May, 1994. /s/ W.T. Erwin, Jr. --------------------------------- W.T. Erwin, Jr. /s/ E.W. Patterson --------------------------------- E. W. Patterson /s/ E.A. Wallace --------------------------------- E.A. Wallace - 2 - EX-3.25 27 h08423exv3w25.txt CERTIFICATE OF AMEND. TO CERT. OF INCORPORATION EXHIBIT 3.25 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION PVC Pipe Manufacturing Corporation ("Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That the Board of Directors of said corporation, by unanimous written consent of its members, filed with the minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, That the Certificate of Incorporation of PVC Pipe Manufacturing Corporation be amended by changing Article I thereof so that, as amended, said Article shall be and read as follows: ARTICLE I The name of the corporation is Westech Building Products, Inc. SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given written consent to said amendment in accordance with Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, PVC Pipe Manufacturing Corporation has caused this certificate to be signed by its Secretary this 3rd day of May, 1996. PVC PIPE MANUFACTURING CORPORATION By: /s/ S. Clayton Snear ------------------------------ S. Clayton Snear Secretary EX-3.26 28 h08423exv3w26.txt BYLAWS OF WESTECH BUILDING PRODUCTS, INC. EXHIBIT 3.26 WESTECH BUILDING PRODUCTS, INC. BY-LAWS ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Houston, State of Texas, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1995, shall be held on the Second day of January, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the - 2 - minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than one (1) nor more than three (3). The first board shall consist of one (1) director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duty elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter - 3 - provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on two (2) days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. - 4 - Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the - 5 - time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in - 6 - the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, - 7 - then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated - 8 - shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. - 9 - CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The company shall indemnify and advance expenses under this Article VII to the fullest extent permitted by applicable law in effect on the date of adoption of these by-laws by the board of directors and to such greater extent as applicable law may thereafter permit. Section 8. The company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the company) by reason of the fact that he is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the company, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 9. The company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the company to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the company or is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise against expenses (including attorney's fees) actually and reasonably incurred by him in connection with such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the company. Notwithstanding the foregoing, no indemnification shall be made in respect to any claim, issue or - 10 - matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. Section 10. An indemnification under Sections 8 and 9 of this Article (unless ordered by a court) shall be made by the company only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in said Section 8 and 9. Such determination shall be made by the vote of two-thirds of the members of the board of directors. Section 11. If a director, officer, employee or agent of the company has been successful on the merits or otherwise as a party to any action, suit or proceeding, referred to in Sections 8 and 9 of this Article, or with respect to any claim, issue or matter therein (to the extent that a portion of his expenses can be reasonably allocated thereto), he shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith. Section 12. Expenses incurred in connection with a civil, criminal, administrative or investigative action, suit of proceeding, or threat thereof, may be paid by the company in advance of the final disposition of such action, suit or proceeding as authorized by the board of directors in the specific case, upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the company as authorized in this Article. Section 13. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any other by-law, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 14. The company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the company, or is or was serving at the request of the corporation as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article or of any provision of the General Corporation Law of the State of Delaware. Section 15. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. - 11 - ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. - 12 - EX-3.27 29 h08423exv3w27.txt CERTIFICATE OF INCORPORATION-WESTLAKE CHEM. HOLD. EXHIBIT 3.27 CERTIFICATE OF INCORPORATION OF WESTLAKE CHEMICAL HOLDINGS, INC. ARTICLE I The name of the corporation is WESTLAKE CHEMICAL HOLDINGS, INC. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VI The name and mailing address of the person who is to serve as director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the by-laws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 13th day of December 2000. /s/ Stephen LeSatz, Jr. -------------------------------- Stephen LeSatz, Jr. - 2 - EX-3.28 30 h08423exv3w28.txt BYLAWS OF WESTLAKE CHEMICAL HOLDINGS, INC. EXHIBIT 3.28 WESTLAKE CHEMICAL HOLDINGS, INC. BY-LAWS ARTICLE I OFFICERS Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section l. All meetings of the stockholders for the election of directors shall be held in the City of Houston, State of Texas, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 2001, shall be held on the Second day of January, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than 60 days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth - 2 - the action so taken, shall be signed by the holders of outstanding stock having not less than the number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than 1 nor more than 3. The first board shall consist of 1 director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the - 3 - meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on 2 days' notice to each director, either personally or by mail or by facsimile communication; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. COMMITTEES OF DIRECTORS Section 10. The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing any by-law of the corporation. Such committee or committees shall have - 4 - such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 11. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 12. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or by-law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. - 5 - Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose - 6 - supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. - 7 - Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of - 8 - shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. - 9 - INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. - 10 - EX-3.29 31 h08423exv3w29.txt CERTIFICATE OF INCORPORATION-WESTLAKE CHEM. INVEST EXHIBIT 3.29 CERTIFICATE OF INCORPORATION OF WESTLAKE CHEMICAL INVESTMENTS, INC. ARTICLE I The name of the corporation is WESTLAKE CHEMICAL INVESTMENTS, INC. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VI The name and mailing address of the person who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the by-laws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 13th day of December 2000. /s/ Stephen LeSatz, Jr. ---------------------------- Stephen LeSatz, Jr. - 2 - EX-3.30 32 h08423exv3w30.txt BYLAWS OF WESTLAKE CHEMICAL INVESTMENTS, INC. EXHIBIT 3.30 WESTLAKE CHEMICAL INVESTMENTS, INC. BY-LAWS ARTICLE I OFFICERS Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section l. All meetings of the stockholders for the election of directors shall be held in the City of Houston, State of Texas, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 2001, shall be held on the Second day of January, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken - 2 - without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than 1 nor more than 3. The first board shall consist of 1 director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, - 3 - or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on 2 days' notice to each director, either personally or by mail or by facsimile communication; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. COMMITTEES OF DIRECTORS Section 10. The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, - 4 - amending or repealing any by-law of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 11. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 12. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or by-law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. - 5 - Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose - 6 - supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman - 7 - or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. - 8 - REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. - 9 - SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. - 10 - EX-3.31 33 h08423exv3w31.txt CERTIFICATE OF INCORPORATION-WESTLAKE CHEM. MANU. EXHIBIT 3.31 CERTIFICATE OF INCORPORATION OF WESTLAKE CHEMICAL MANUFACTURING, INC. ARTICLE I The name of the corporation is WESTLAKE CHEMICAL MANUFACTURING, INC. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VI The name and mailing address of the person who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the by-laws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts 2 herein stated are true, and accordingly have hereunto set my hand this 13th day of December 2000. /s/ Stephen LeSatz, Jr. ---------------------------- Stephen LeSatz, Jr. 3 EX-3.32 34 h08423exv3w32.txt BYLAWS OF WESTLAKE CHEMICAL MANUFACTURING, INC. EXHIBIT 3.32 WESTLAKE CHEMICAL MANUFACTURING, INC. BY-LAWS ARTICLE I OFFICERS Section 1. The principal and registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. The books and records of the Corporation shall be maintained at the principal office in Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 2001, shall be held on the Second day of January, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from, time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth 2 the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than 1 nor more than 3. The first board shall consist of 1 director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold of office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by- laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware, provided, however, that meetings of Directors of the Corporation shall not be held within the State of Texas. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the 3 meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on 2 days' notice to each director, either personally or by mail or by facsimile communication; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. COMMITTEES OF DIRECTORS Section 10. The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing 4 any by-law of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 11. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 12. Unless otherwise restricted by the certificate of incorporation of these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or by-law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. 5 Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation, and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant 6 secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositaries as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the President and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all of the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before 7 such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of, stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 8 ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization, and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. 9 ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 10 EX-3.33 35 h08423exv3w33.txt CERTIFICATE OF INCORPORATION-WESTLAKE CHEM. PROD. EXHIBIT 3.33 CERTIFICATE OF INCORPORATION OF WESTLAKE CHEMICAL PRODUCTS, INC. ARTICLE I The name of the corporation is WESTLAKE CHEMICAL PRODUCTS, INC. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VI The name and mailing address of the person who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the by-laws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. 2 I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 13th day of December 2000. /s/Stephen LeSatz, Jr. -------------------------------- Stephen LeSatz. Jr. 3 EX-3.34 36 h08423exv3w34.txt BYLAWS OF WESTLAKE CHEMICAL PRODUCTS, INC. EXHIBIT 3.34 WESTLAKE CHEMICAL PRODUCTS, INC. BY-LAWS ARTICLE I OFFICERS Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Houston, State of Texas, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 2001, shall be held on the Second day of January, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than 1 nor more than 3. The first board shall consist of 1 director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the 2 stockholders, except as provided in Section 2 of this Article, and each director elected shall hold of office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on 2 days' notice to each director, either personally or by mail or by facsimile communication; special meetings shall be called by the president or secretary in the manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. 3 Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. COMMITTEES OF DIRECTORS Section 10. The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing any by-law of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 11. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 12. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or by-law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to 4 mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order 5 designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 6 ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. 7 REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. 8 INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 9 EX-3.35 37 h08423exv3w35.txt CERTIFICATE OF INCORPORATION-WESTLAKE DEV. CORP. EXHIBIT 3.35 CERTIFICATE OF INCORPORATION OF WESTLAKE DEVELOPMENT CORPORATION ARTICLE I The name of the corporation is WESTLAKE DEVELOPMENT CORPORATION. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Stephen LeSatz, Jr. 2801 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VI The name and mailing address of the person who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: Stephen LeSatz, Jr. 2001 Post Oak Boulevard, Suite 600 Houston, Texas 77056 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the by-laws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without The State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors, or in the by-laws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 13th day of December 2000. /s/Stephen LeSatz, Jr. -------------------------------- Stephen LeSatz. Jr. 2 EX-3.36 38 h08423exv3w36.txt BYLAWS OF WESTLAKE DEVELOPMENT CORPORATION EXHIBIT 3.36 WESTLAKE DEVELOPMENT CORPORATION BY-LAWS ARTICLE I OFFICERS Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Houston, State of Texas, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 2001, shall be held on the Second day of January, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting 2 at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than 1 nor more than 3. The first board shall consist of 1 director. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter 3 provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on 2 days' notice to each director, either personally or by mail or by facsimile communication; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. COMMITTEES OF DIRECTORS Section 10. The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing 4 any by-law of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 11. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 12. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or by-law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. 5 Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall bold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a sea], under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and 6 when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed 7 upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action, A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of 8 shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate sea] shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. 9 INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 10 EX-3.37 39 h08423exv3w37.txt CERTIFICATE OF INCORPORATION-WESTLAKE MGMT. SERV. EXHIBIT 3.37 CERTIFICATE OF INCORPORATION OF WESTLAKE MANAGEMENT SERVICES, INC. ARTICLE I The name of the corporation is Westlake Management Services, Inc. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Bob Casey, Jr. 2900 South Tower Pennzoil Place Houston, Texas 77002-2781 ARTICLE VI The name and mailing address of the person who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: Bob Casey, Jr. 2900 South Tower Pennzoil Place Houston, Texas 77002-2781 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to adopt, amend or repeal the bylaws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the bylaws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the bylaws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the bylaws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. 2 I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 2nd day of November, 1990. /s/Bob Casey, Jr. -------------------------------- Bob Casey, Jr. 3 EX-3.38 40 h08423exv3w38.txt BYLAWS OF WESTLAKE MANAGEMENT SERVICES, INC. EXHIBIT 3.38 BYLAWS OF WESTLAKE MANAGEMENT SERVICES, INC. (hereinafter called the "Company") ARTICLE I MEETINGS OF STOCKHOLDERS Section 1. Place of meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual Meetings. The annual meetings of stockholders shall be held on such date and at such time as shall be designated from time to time by the Board and stated in the notice of the meeting, at which meetings the stockholders shall elect by a plurality vote the Board, and transact such other business as may properly be brought before the meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 3. Special Meetings. Unless otherwise prescribed by law or by the certificate of incorporation of the Company (the "Certificate"), special meetings of stockholders, for any purpose or purposes, may be called by either (i) the Chairman, (ii) the President, (iii) any vice president, (iv) the Secretary or (v) any assistant secretary, and shall be called by any such officer at the request in writing of a majority of the Board or at the request in writing of stockholders owning a majority of the capital stock of the Company issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Written notice of the special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. Section 4. Quorum. Except as otherwise provided by law or by the Certificate, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for; the transaction of business. If, however, such quorum shall, not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat present in person or represented by proxy shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting. Section 5. Voting. Unless otherwise required by law, the Certificate or these bylaws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share standing in his name on the books of the Company. Such votes may be case in person or by proxy, but no proxy shall be voted on or after three years from its date unless such proxy provides for a longer period. The Board, in its discretion, or the officer of the Company presiding at a meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 6. List of Stockholders Entitled to Vote. The officer of the Company who has charge of the stock ledger of the Company shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder of the company who is present. ARTICLE II DIRECTORS Section 1. Number and Election of Directors. The business and affairs of the Company shall be managed by the Board, initially consisting of one (1) director. The number of directors may be increased or decreased from time to time by resolution of the Board or by due election of that number of directors by the stockholders, but no decrease by the Board shall have the effect of shortening the term of any incumbency. Except as provided in Section 2 of this Article, the director or directors, as the case may be, shall be elected by a plurality of the votes cast at annual meetings of stockholders and shall hold office until the next annual meting and until his/their successor(s) is duly elected and qualified or until his/their earlier resignation or removal. Any director may resign at any time upon notice to the Company. Directors need not be stockholders. Section 2. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified or until their earlier resignation or removal. Section 3. Duties and Powers. The business of the Company shall be managed by or under the direction of the Board, which may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the Certificate or by these bylaws directed or required to be exercised or done by the stockholders. Section 4. Meetings. The Board may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board may be held without notice at such time and at such place as may from time to time be determined by the Board. 2 Special meetings of the Board may be called by the Chairman, if there be one, the President or any director. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than 48 hours before the date of the meeting, by telephone, facsimile, telegram, telex or similar means of visual data transmission on 24 hours notice or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Section 5. Quorum. Except as may be otherwise specifically provided by law, the Certificate or these bylaws, at all meetings of the Board, a majority of the entire Board shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board. If a quorum shall not be present at any meeting of the Board, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 6. Actions of the Board. Unless otherwise provided by the Certificate or these bylaws, any action required or permitted to be taken at any meeting of the Board may be taken without a meeting, if all the members of the Board consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board. Such writings, which may be in counterparts, shall be manually executed if practicable; provided, however, that if circumstances so require, effect shall be given to written consents transmitted by telegraph, telex, facsimile or similar means of visual data transmission. Section 7. Meetings by Means of Conference Telephone. Unless otherwise provided by the Certificate or these bylaws, members of the Board or any committee designated by the Board may participate in a meeting of the Board or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 7 shall constitute presence in person at such meeting. Section 8. Committees. (a) Designation. The Board may, by resolution adopted by a majority of the entire Board, designate one or more standing or special committees, including, as they shall so determine, an executive committee. The executive committee, if one is designated, shall consist of one or more of the directors of the Company. Any other committee designated by the Board shall consist of one or more of the directors of the Company. (b) Executive Committee. The Executive Committee, during, intervals between meetings of the Board, shall have and exercise all the powers and authority of the Board in the management of the business of the Company, except as otherwise limited by statutes, the Certificate or these bylaws. (c) Alternate Committee Members. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of 3 a committee, and in the absence of a designation by the Board of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, regardless of whether he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any absent or disqualified member. (d) Powers and Duties. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company; provided, however, that nothing in this Section 8 shall be deemed to authorize a committee of the Board to have broader authority than the Board. Each committee shall keep regular minutes and report to the Board when required. Section 9. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board and may be paid a fixed sum for attendance at each meeting of the Board or a stated salary or other consideration as director. No such payment shall preclude any director from serving the company in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. ARTICLE III OFFICERS Section 1. General. The officers of the Company shall be chosen by the Board and shall include a President, a Treasurer and a Secretary. The Board, in its discretion, may also choose (i) one of its members as Chairman and (ii) one or more vice presidents, assistant secretaries, assistant treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate or these bylaws. The officers of the Company need not be stockholders of the Company nor, except in the case of the Chairman, need such officers be directors of the Company. Section 2. Election. The Board at its first meeting held after each annual meeting of stockholders shall elect the officers of the company, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board; and all officers of the Company shall hold office until their successors are chosen and qualified or until their earlier resignation or removal. Any officer elected by the Board may be removed at any time by the affirmative vote of a majority of the Board. Any vacancy occurring in any office of the Company shall be filled by the Board. The salaries of all officers of the Company shall be fixed by the Board. Section 3. Powers and Duties. The officers of the Company shall have such powers and duties as generally pertain to their offices, except as diminished or enlarged from time to time by Action of the Board. The Chairman of the Board or in his absence the President, shall preside at all meetings of the Board and of the stockholders, and in their absence a presiding officer shall be appointed by action of a majority of the directors or stockholders, as the case may be. 4 Section 4. Other officers. Such other officers as the Board may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board. The Board may delegate to any other officer of the Company the power to choose such other officers and to prescribe their respective duties and powers. ARTICLE IV STOCK Section 1. Signatures. The certificates for shares of stock of the Company shall be signed by the President, Vice President or other officer designated by the Board, countersigned by the Secretary or Treasurer. Where a certificate is countersigned by (i) a transfer agent other than the Company or its employee or (ii) a registrar other than the Company or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 2. Record Date. In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise of Any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a record date which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however that the Board may fix a new record date for the adjourned meeting. ARTICLE V NOTICES Whenever written notice is required by law, the Certificate or these bylaws to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at his address as it appears on the records of the company, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by facsimile, telegram, telex or similar means of visual data transmission. ARTICLE VI AMENDMENTS These bylaws may be altered, amended or repealed, in whole or in part, or new bylaws may be adopted, at any annual or special meeting of the stockholders or of the Board by at least a majority vote of the stockholders or the Board; provided however, that notice of such alteration, 5 amendment, repeal or adoption of new bylaws be contained in the notice of such meeting of stockholders or directors. Any alteration, amendment, addition to or repeal of these bylaws made by the Board is subject to the power of the stockholders to change such action. ADOPTED as of this 6th day of November, 1990. /s/ Bob Casey, Jr. --------------------------- Bob Casey, Jr. Secretary 6 EX-3.39 41 h08423exv3w39.txt CERTIFICATE OF INCORPORATION-WESTLAKE OLEFINS CORP EXHIBIT 3.39 CERTIFICATE OF INCORPORATION OF WESTLAKE INTERNATIONAL CORPORATION ARTICLE I The name of the corporation is Westlake International Corporation. ARTICLE II The address of the corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, County of New Castle, Wilmington, Delaware, 19801. The name of its registered agent at such address is The Corporation Trust Company. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful business, act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is ten thousand (10,000) shares of common stock of the par value of Ten Thousand Dollars ($10,000.00) each. The exclusive voting power of the corporation shall be vested in the common stock of the corporation. Each share of common stock shall entitle the holder thereof to one vote at all meetings of the stockholders of the corporation. ARTICLE V The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. ARTICLE VI A director of the corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE VII The number of directors which shall constitute the whole board of directors shall be fixed from time to time by the by-laws of the Corporation. ARTICLE VIII The name and mailing address of the persons who are to serve as the initial directors of the corporation until the first annual meeting of stockholders of the corporation, or until their successors are elected and qualified, are set forth below:
Name Address ---- ------- T. T. Chao 2801 Post Oak Boulevard Houston, Texas 77056 Bob Casey 2900 South Tower Pennzoil Place Houston, Texas 77002
ARTICLE IX The name and mailing address of the incorporator are as follows:
Name Address ---- ------- Dawn S. Born 2900 South Tower Pennzoil Place Houston, Texas 77002
ARTICLE X In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to make, alter or repeal the by-laws of the corporation, but the stockholders may make additional by-laws and may alter or repeal any by-law whether adopted by them or otherwise. ARTICLE XI Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. ARTICLE XII The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 12th day of May, 1989. /s/Dawn S. Born ------------------------- Dawn S. Born EX-3.40 42 h08423exv3w40.txt CERTIFICATE OF AMEND. TO CERT. OF INCORPORATION EXHIBIT 3.40 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Westlake International Corporation ("Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That in lieu of a meeting and vote of directors, the Board of Directors of the Corporation, by unanimous written consent filed with the Corporation, in accordance with the provisions of Section 141(f) of the General Corporation Law of the State of Delaware, have adopted a resolution proposing and declaring advisable the following amendments to the Certificate of Incorporation of the Corporation: RESOLVED, That the Certificate of Incorporation be amended by changing Article I to read as follows: ARTICLE I The name of the corporation is Westlake Olefins Corporation. SECOND: That in lieu of a meeting and vote of stockholders, the holders of all outstanding stock entitled to vote thereon have given their written consent to the above amendment in accordance with Section 228 of the General Corporation Law of the State of Delaware, and said written consent has been filed with the Corporation. THIRD: That said amendments were duly adopted in accordance with the provisions of Sections 141, 216, 228 and 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of the Corporation will not be reduced under or by reason of said amendments. IN WITNESS WHEREOF, Westlake International Corporation has caused this certificate to be signed by Michael A. Robison, its Vice President, and attested by Michael A. Robison, its Secretary, this 17th day of July, 1992. Westlake International Corporation By: /s/Michael A. Robison ------------------------------ Michael A. Robison Vice President ATTEST: By: /s/Michael A. Robison ----------------------------------- Michael A. Robison Secretary EX-3.41 43 h08423exv3w41.txt BYLAWS OF WESTLAKE OLEFINS CORPORATION EXHIBIT 3.41 WESTLAKE OLEFINS CORPORATION BY-LAWS ARTICLE I. Meetings of Stockholders Section 1. The annual meeting of stockholders shall be held at such date and time and at such place as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, for the purposes of electing directors and of transacting such other business as may properly come before the meeting. Section 2. Special meetings of the stockholders may be called at any time by the Board of Directors, the Chairman of the Board, or the President. Upon written request of any person or persons who have duly called a special meeting, it shall be the duty of the Secretary of the Corporation to mail written notice of such meeting to the stockholders as provided in Section 4 of this Article I within five business days after receipt of the request and to give due notice thereof. If the Secretary shall neglect or refuse to fix the date of the meeting and give notice thereof, the person or persons calling the meeting may do so. Section 3. Every annual or special meeting of the stockholders shall be held at such place within or without the State of Delaware as the Board of Directors may designate, or, in the absence of such designation, at the registered office of the Corporation in the State of Delaware. Section 4. Written notice of every meeting of the stockholders shall be given by the Secretary of the Corporation to each stockholder of record entitled to vote at the meeting, by placing such notice in the mail at least ten days, but not more than sixty days, prior to the day named for the meeting addressed to each stockholder at his address appearing on the books of the Corporation or supplied by him to the Corporation for the purpose of notice. Section 5. The Board of Directors may fix a date, not less than ten nor more than sixty days preceding the date of any meeting of stockholders, as a record date for the determination of stockholders entitled to notice of, or to vote at, any such meeting. The Board of Directors shall not close the books of the Corporation against transfers of shares during the whole or any part of such period. Section 6. The notice of every meeting of the stockholders may be accompanied by a form of proxy approved by the Board of Directors in favor of such person or persons as the Board of Directors may select. Section 7. Each stockholder shall be entitled, at every meeting of the stockholders, to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted after three years from its date, unless the proxy provides for a longer period. Section 8. Except as otherwise provided by law or by the Certificate of Incorporation of the Corporation, as from time to time amended, the presence in person or by proxy of the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote thereat shall constitute a quorum at each meeting of the stockholders and all questions shall be decided by vote of the majority of the shares so represented in person or by proxy at the meeting and entitled to vote thereat. The stockholders present at any duly called meeting may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 9. The holders of a majority of the shares of stock of the Corporation entitled to vote at any meeting, present in person or represented by proxy, whether a quorum is present or not, shall have the power to adjourn the meeting from time to time, without notice other than 2 announcement at the meeting, until a quorum shall be present or represented. At any such adjourned meeting at which a quorum shall be present, any, action may be taken that could have been taken at the meeting originally called; provided, that if the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting. Section 10. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. ARTICLE II. Board of Directors Section 1. The business, affairs and property of the corporation shall be managed by or under the direction of the Board of Directors. The number of directors shall be not less than one nor more than fifteen and shall be as fixed in such manner as may be determined by the vote of not less than a majority of the directors then in office. Each director shall hold office until the annual meeting of stockholders next succeeding his election, and until his successor is duly 3 elected and shall qualify, or until his earlier death, resignation or removal. A director need not be a resident of the State of Delaware or a stockholder of the Corporation. Section 2. Any vacancy in the Board of Directors, including vacancies resulting from an increase in the number of directors, shall be filled by a majority of the remaining members of the Board though less than a quorum. Any director elected to fill a vacancy shall hold office until the annual meeting of stockholders next succeeding his election, and until his successor has been duly elected and qualified, or until his earlier death, resignation or removal. Section 3. Any director may resign at any time by written notice to the Corporation. Any such resignation shall take effect at the date of receipt of such notice or at any later time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4. Regular meetings of the Board of Directors shall be held at such place or places within or without the State of Delaware, at such hour and on such day as may be fixed by resolution of the Board of Directors, without further notice of such meetings. The tine or place of holding regular meetings of the Board of Directors may be changed by the Chairman of the Board by giving written notice thereof as provided in Section 6 of this Article II. Section 5. Special meetings of the Board of Directors shall be held, whenever called by the Chairman of the Board or the President, by a majority of the directors or by resolution adopted by the Board of Directors, at such place or places within or without the State of Delaware as may be stated in the notice of the meeting. Section 6. Written notice of the time and place of, and general nature of the business to be transacted at, all special meetings of the Board of Directors, and written notice of any change in the time or place of holding the regular meetings of the Board of Directors, shall be 4 given to each director either personally or by mail or telegraph at least one day before the day of the meeting; provided, however, that notice of any meeting need not be given to any director if waived by him in writing before or after such meeting, or if he shall be present at such meeting except when the director attends for the express purpose of objecting [at the beginning of the meeting) to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Section 7. A majority of the directors in office shall constitute a quorum of the Board of Directors for the transaction of business; but a lesser number may adjourn from day to day until a quorum is present. Except as otherwise provided by law or in these By-Laws, all questions shall be decided by the vote of a majority of the directors present. Directors may participate in any meeting of the directors, and members of any committee of directors may participate in any meeting of such committee, by conference telephone or similar communications equipment by means of which all persons participating in such meeting can hear each other, and such participation shall constitute presence in person at any such meeting. Section 8. Any action which may be taken at a meeting of the directors or members of any committee of directors may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the directors or members of any committee of directors as the case may be and shall be filed with the Secretary of the Corporation. Such writing, which may be in counterparts, shall be manually executed if practicable; provided, however, that if circumstances so require, effect shall be given to written consent transmitted by telegraph, telex, telecopy or similar means of visual data transmission. Section 9. Directors shall be entitled to such compensation for their services as may be approved by the Board of Directors, including, if so approved by resolution of the Board of 5 Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board of Directors or any meeting of a committee of directors. No provision of these By-Laws shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE III. Committees of Directors Section 1. The Board of Directors may, by resolution adopted by a majority of the whole Board, designate one or more standing or special committees, including, as they shall so determine, an Executive Committee. The Executive Committee, if one is designated, shall consist of one or more of the directors of the Corporation. Any other committee designated by the Board of Directors shall consist of one or more of the directors of the Corporation. The Executive committee, during intervals between meetings of the Board, shall have and exercise all the powers and authority of the Board of Directors in the management of the business of the corporation, except as otherwise limited by statutes, the Certificate of Incorporation or these By-Laws. Any other committee designated by the Board of Directors shall have and may, except as otherwise limited by statute, the Certificate of Incorporation or these By-Laws, exercise such powers and authority of the Board of Directors in the management of the business of the Corporation as may be provided in the resolution adopted by the Board of Directors designating such committee. The Board of Directors may designate one or more directors as alternate members of any committee. In the absence or on the disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Such committee or committees shall have such name 6 or names and such limitations of authority as may be determined from time to time by resolution adopted by the Board of Directors. Section 2. Each committee of directors shall keep regular minutes of its proceedings and report the same to the Board of Directors when required. Section 3. Members of special or standing committees shall be entitled to receive such compensation for serving on such committees as the Board of Directors shall determine. ARTICLE IV. Officers Section 1. The officers of the Corporation shall consist of a Chairman of the Board, President, Secretary, Treasurer and such Executive, Senior or other Vice Presidents and other officers as may be elected or appointed by the Board of Directors. Any number of offices may be held by the same person. All officers shall hold office until their successors are elected or appointed, except that the Board of Directors may remove any officer at any time at its discretion. Section 2. The officers of the Corporation shall have such powers and duties as generally pertain to their offices, except as diminished or enlarged from time to time by action of the Board of Directors. The Chairman of the Board, or, in his absence, the President shall preside at all meetings of the Board and of the stockholders, and in their absence a presiding officer shall be appointed by action of a majority of the directors or stockholders, as the case may be. ARTICLE V. Seal The seal of the Corporation shall be in such form as the Board of Directors shall prescribe. 7 ARTICLE VI. Certificates of Stock The shares of stock of the Corporation shall be represented by certificates of stock, signed by the Chairman of the Board, the President or such Vice President or other officer designated by the Board of Directors, countersigned by the Treasurer or the Secretary or any Assistant Secretary and if such certificates of stock are signed or countersigned by a transfer agent other than the Corporation, or by a registrar other than the Corporation, such signature of the President, Vice President, or other officer, such countersignature of the Treasurer or Secretary, and the seal, or any of them, may be executed in facsimile, engraved or printed. In case any officer who has signed or whose facsimile signature has been placed upon any share certificate shall have ceased to be such officer before the certificate is issued, it may be issued by the Corporation with the same effect as if the officer had not ceased to be such at the date of its issue. The certificates of stock shall be in such form as the Board of Directors may from time to time prescribe. ARTICLE VII. Amendments These By-Laws may be altered, added to or repealed by the stockholders at any annual or special meeting, by at least a majority of the votes that all stockholders are entitled to cast, and the power to make, alter or repeal these By-Laws is also vested in the Board of Directors, acting by a majority vote of the members of the Board of Directors in office (subject always to the power of the stockholders to change such action). 8 EX-3.42 44 h08423exv3w42.txt ARTICLES OF INCORP. - WESTLAKE OVERSEAS CORP. EXHIBIT 3.42 ARTICLES OF INCORPORATION OF WESTLAKE OVERSEAS CORPORATION We the undersigned natural persons of lawful age, acting as incorporators of a corporation under Title 13, Virgin Islands Code, adopt the following Articles of Incorporation for such corporation. FIRST: The name of the corporation is: WESTLAKE OVERSEAS CORPORATION SECOND: The corporate purposes are: 1. General - To engage in the business of importation and exportation of petrochemicals and in general to do all things necessary and proper in connection therewith. 2. Ancillary - To do everything necessary, proper, advisable or convenient for the accomplishment of the purposes hereinabove set forth, and to do all other things incidental thereto or connected therewith which are not forbidden by statute or by these Articles. 3. Foreign Sales Corporation - To undertake the business of a Foreign Sales Corporation. 4. Business Outside Territory - To conduct and carry out its business in any state or territory of the United States or in any foreign country. 5. Other - To engage in any other business activity or enterprise not prohibited by law. THIRD: The aggregate number of shares which the corporation shall have authority to issue is one thousand (1,000) common shares at no par value. FOURTH: The minimum amount of capital with which the corporation shall commence business shall be One Thousand Dollars ($1,000). FIFTH: The address of the initial registered office of the corporation shall be #1A Gallows Bay, PO Box 4540, Christiansted, St. Croix, U.S. Virgin Islands 00820. SIXTH: The name of the initial registered agent of the corporation is PROFESSIONAL CORPORATE SERVICE GROUP, INC., PO Box 3627, #1A Gallows Bay, Christiansted, St. Croix, USVI 00820. SEVENTH: The corporation shall have perpetual existence. ARTICLES OF INCORPORATION Page 2 EIGHTH: The number of directors shall be provided by the By Laws, and shall not be less than three. NINTH: The names and addresses of the persons forming the corporation are: Maud Pierre-Charles, Lisa L. Perkins, Carmen M. Santiago, of Lot #1A, Gallows Bay, Christiansted, St. Croix, U.S. Virgin Islands 00820. TENTH: The corporation shall have all rights and powers granted to a corporation by law, and all powers necessary or convenient to carry out the purposes set forth in Article Second, and to act as principal, agent, partner or in any other capacity which may be authorized or approved by the Board of Directors of this corporation. IN WITNESS WHEREOF, the Incorporators have signed these Articles of Incorporation at Christiansted, St. Croix, U.S. Virgin Islands, on this 10th day of May, 1988. IN WITNESS: /s/ Maud Pierre-Charles ------------------------------- --------------------------------- Maud Pierre-Charles ------------------------------- /s/ Lisa L. Perkins ------------------------------- --------------------------------- Lisa L. Perkins ------------------------------- /s/ Carmen M. Santiago ------------------------------- --------------------------------- Carmen M. Santiago ------------------------------- ACKNOWLEDGMENT TERRITORY OF THE VIRGIN ISLANDS ) DIVISION OF ST. CROIX ) SS: On this 10th day of May, 1988 before me, the undersigned officer, personally appeared Maud Pierre-Charles, Lisa L. Perkins, Carmen M. Santiago, known to me (or satisfactorily proven) to be the individuals whose names are subscribed to the foregoing ARTICLES OF INCORPORATION; and they acknowledged to me that they executed same freely and voluntarily for the uses and purposes therein contained. 2 ARTICLES OF INCORPORATION Page 3 IN WITNESS WHEREOF, I hereunto set my hand and seal. ---------------------------------- NOTARY PUBLIC 3 EX-3.43 45 h08423exv3w43.txt BY-LAWS OF WESTLAKE OVERSEAS CORPORATION EXHIBIT 3.43 BY-LAWS OF WESTLAKE OVERSEAS CORPORATION ARTICLE I -- OFFICES The principal office of the corporation in the Territory of the U.S. Virgin Islands shall be located in the town of Christiansted, District of St. Croix. The corporation may have such other offices, either within or without the Territory of incorporation as the board of directors may designate or as the business of the corporation may from time to time require. ARTICLE II -- STOCKHOLDERS 1. ANNUAL MEETING. The annual meeting of the stockholders shall be held on the first Monday in February in each year, beginning with the year 1989 at the hour of 09:00 o'clock A.M., for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday such meeting shall be held on the next succeeding business day. 2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the president or by the directors, and shall be called by the president at the request of the holders of not less than 51 percent of all the outstanding shares of the corporation entitled to vote at the meeting. 3. PLACE OF MEETING. The directors may designate any place, either within or without the Territory unless otherwise prescribed by statute, as the place of meeting for any annual meeting or for any special meeting called by the directors. A waiver of notice signed by all stockholders entitled to vote at a meeting may designate any place, either within or without the Territory, unless otherwise prescribed by statute, as the place for holding such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the corporation. 4. NOTICE OF MEETING. Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 30, nor more than 120, days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid. 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose of determining stockholders entitled to notice of, or to vote at, any meeting of stockholders or any adjournment thereof, or stockholders entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose the directors of the corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, 30 days. If the stock transfer books shall be closed for the purpose of determining stockholders entitled to notice of, or to vote at, a meeting of stockholders, such books shall be closed for at least 30 days immediately preceding such meeting. In lieu of closing the stock transfer books, the directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than 30 days and, in case of a meeting of stockholders, not less than 30 days prior to the date on which the particular action requiring such determination of stockholders is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of stockholders entitled to notice of, or to vote at, a meeting of stockholders, or stockholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof. 6. VOTING LISTS. The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at least 10 days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of 10 days prior to such meeting, shall be kept on file at the principal office of the corporation and shall be subject to inspection by any stockholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting. The original stock transfer book shall be prima facie evidence as to who are the stockholders entitled to examine such list or transfer books or to vote at the meeting of stockholders. 7. QUORUM. At any meeting of stockholders 51 percent of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. If less than said number of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any 2 business may be transacted which might have been transacted at the meeting as originally notified. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. 8. PROXIES. At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by his duly authorized attorney in fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. 9. VOTING. Each stockholder entitled to vote in accordance with the terms and provisions of the Certificate of Incorporation and these by-laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder. Upon the demand of any stockholder, the vote for directors and upon any question before the meeting shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the laws of this Territory. 10. ORDER OF BUSINESS. The order of business at all meetings of the stockholders, shall be as follows: 1. Roll Call. 2. Proof of notice of meeting or waiver of notice. 3. Reading of minutes of preceding meeting. 4. Reports of Officers. 5. Reports of Committees. 6. Election of Directors. 7. Unfinished Business. 8. New Business. 11. INFORMAL ACTION BY STOCKHOLDERS. Unless otherwise provided by law, any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. 3 ARTICLE III -- BOARD OF DIRECTORS 1. GENERAL POWERS. The business and affairs of the corporation shall be managed by its board of directors. The directors shall in all cases act as a board, and they may adopt such rules and regulations for the conduct of their meetings and the management of the corporation as they may deem proper, not inconsistent with these by-laws and the laws of this Territory. 2. NUMBER, TENURE AND QUALIFICATIONS. The number of Directors of the corporation shall be 4. Each director shall hold office until the next annual meeting of stockholders and until his successor shall have been elected and qualified. 3. REGULAR MEETINGS. A regular meeting of the directors shall be held without other notice than this by-law immediately after, and at the same place as, the annual meeting of stockholders. The directors may provide by resolution the time and place for the holding of additional regular meetings, without other notice than such resolution. 4. SPECIAL MEETINGS. Special meetings of the directors may be called by or at the request of the president or any two directors. The person or persons authorized to call special meetings of the directors may fix the place for holding any special meeting of the directors called by them. 5. NOTICE. Notice of any special meeting shall be given at least 30 days previously thereto by written notice delivered personally, or by telegram, or mailed to each director at his business address. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. 6. QUORUM. At any meeting of the directors 2 shall constitute a quorum for the transaction of business, but if less than said number is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. 4 7. MANNER OF ACTING. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the directors. 8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the board for any reason except the removal of directors without cause may be filled by a vote of a majority of the directors then in office, although less than a quorum exists. Vacancies occurring by reason of the removal of directors without cause shall be filled by vote of the stockholders. A director elected to fill a vacancy caused by resignation, death or removal shall be elected to bold office for the unexpired term of his predecessor. 9. REMOVAL OF DIRECTORS. Any or all of the directors may be removed for cause by vote of the stockholders or by action of the board. Directors may be removed without cause only by vote of the stockholders. 10. RESIGNATION. A director may resign at any time by giving written notice to the board, the president or the secretary of the corporation. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the board or such officer, and the acceptance of the resignation shall not be necessary to make it effective. 11. COMPENSATION. No compensation shall be paid to directors, as such, for their services, but by resolution of the board a fixed sum and expenses for actual attendance at each regular or special meeting of the board may be authorized. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. 12. PRESUMPTION OF ASSENT. A director of the corporation who is present at a meeting of the directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless he abstained from voting or his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. 13. EXECUTIVE AND OTHER COMMITTEES. The board, by resolution, may designate from among its members an executive committee and other committees, each consisting of two or more directors. Each such committee shall serve at the pleasure of the board. 5 14. SPECIAL MEETINGS - CONFERENCE BY TELEPHONE. Special meetings of the board of directors may be held by means of telephone conferences or equipment of similar communications by means of which all directors participating in the meeting can hear each other. Participating in a meeting by telephone or similar communications equipment shall constitute presence in person at the special meeting, except where a director participated in a meeting for the sole purpose of objecting to the transaction of any business on the ground that the special meeting is not lawfully convened or called. 15. INFORMAL ACTION BY DIRECTORS. Unless otherwise provided by law, any action required to be taken at a meeting of the directors, or any other action which may be taken at a meeting of the directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors. 16. DEATH OF NON-U.S. RESIDENT DIRECTOR. In the event of the death or change in residency of a director who was not a resident of the United States, the Resident Agent of Professional Corporate Service Group, Inc. shall instantaneously and automatically be substituted as a director of the corporation. ARTICLE IV -- OFFICERS 1. NUMBER. The officers of the corporation shall be a president, a vice-president, a secretary and a treasurer, each of whom shall be elected by the directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the directors. 2. ELECTION AND TERM OF OFFICE. The officers of the corporation to be elected by the directors shall be elected annually at the first meeting of the directors held after each annual meeting of the stockholders. Each officer shall hold office until his successor shall have been duly elected and shall have qualified, or until his death, or until he shall resign or shall have been removed in the manner hereinafter provided. 3. REMOVAL. Any officer or agent elected or appointed by the directors may be removed by the directors whenever in their judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. 6 4. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the directors for the unexpired portion of the term. 5. PRESIDENT. The president shall be the principal executive officer of the corporation and, subject to the control of the directors, shall in general supervise and control all of the business and affairs of the corporation. He shall, when present, preside at all meetings of the stockholders and of the directors. He may sign, with the secretary or any other proper officer of the corporation thereunto authorized by the directors, certificates for shares of the corporation, any deeds, mortgages, bonds, contracts, or other instruments which the directors have authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the directors or by these by-laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the directors from time to time. 6. VICE-PRESIDENT. In the absence of the president or in event of his death, inability or refusal to act, the vice-president shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-president shall perform such other duties as from time to time may be assigned to him by the president or by the directors. 7. SECRETARY. The secretary shall keep the minutes of the stockholders' and of the directors' meetings in one or more books provided for that purpose, see that all notices are duly given in accordance with the provisions of these by-laws or as required, be custodian of the corporate records and of the seal of the corporation and keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder, have general charge of the stock transfer books of the corporation and in general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him by the president or by the directors. 8. TREASURER. If required by the directors, the treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the directors shall determine. He shall have charge and custody of, and be responsible for, all funds and securities of the corporation; receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with these by-laws and in general perform all of the duties incident to the office of treasurer and such other duties as from time to time may be assigned to him by the president or by the directors. 7 9. SALARIES. The salaries of the officers shall be fixed from time to time by the directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation. ARTICLE V -- CONTRACTS, LOANS, CHECKS AND DEPOSITS 1. CONTRACTS. The directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. 2. LOANS. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the directors. Such authority may be general or confined to specific instances. 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the directors. 4. DEPOSITS. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the directors may select. ARTICLE VI -- CERTIFICATES FOR SHARES AND THEIR TRANSFER 1. CERTIFICATES FOR SHARES. Certificates representing shares of the corporation shall be in such form as shall be determined by the directors. Such certificates shall be signed by the president and by the secretary or by such other officers authorized by law and by the directors. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the stockholders, the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the corporation as the directors may prescribe. 8 2. TRANSFERS OF SHARES. (a) Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession. assignment or authority to transfer. It shall be the duty of the corporation to issue a new certificate to the person entitled thereto, and cancel the old certificate; every such transfer shall be entered on the transfer book of the corporation which shall be kept at its principal office. (b) The corporation shall be entitled to treat the holder of record of any share as the holder in fact thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person whether or not it shall have express or other notice thereof, except as expressly provided by the laws of this Territory. ARTICLE VII -- FISCAL YEAR The fiscal year of the corporation shall begin on the date of incorporation. ARTICLE VIII -- DIVIDENDS The directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law. ARTICLE IX -- SEAL The directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation, the Territory of incorporation, year of incorporation and the words, "Corporate Seal". ARTICLE X -- WAIVER OF NOTICE Unless otherwise provided by law, whenever any notice is required to be given to any stockholder or director of the corporation under the provisions of these by-laws or under the provisions of the Articles of Incorporation, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. ARTICLE XI -- AMENDMENTS These by-laws may be altered, amended or repealed and new by-laws may be adopted by a vote of the stockholders representing a majority of all the shares issued and outstanding, at any annual stockholders' meeting or at any special stockholders' meeting when the proposed amendment has been set out in the notice of such meeting. ARTICLE XII -- INDEMNIFICATION OF DIRECTORS AND OFFICERS Each director and officer of the corporation now or hereafter serving as such, shall be defended and indemnified by the corporation and the shareholders against any and all claims and liabilities to which he has or shall become subject by reason of serving or having served as such 9 director or officer, or by reason of any action alleged to have been taken, omitted, or neglected by him as such director or officer; and the corporation shall reimburse each such person for all legal expenses and costs reasonably incurred by him in connection with any such claim or liability, provided, however, that no such person shall be indemnified against, or be reimbursed for any expense incurred in connection with any claim or liability arising out of his own willful misconduct or gross negligence. The corporation may purchase and maintain insurance to cover the liability of the corporation set forth herein. ARTICLE XIII -- FSC ELECTION AND COMPLIANCE The corporation will elect to become a Foreign Sales Corporation, pursuant to the Internal Revenue Code Section 921 et seq. Except in the event that "small FSC" status is elected, the meetings of the Board of Directors and Shareholders shall be held outside of the United States, and, at least once annually, a Board of Directors' meeting and a Shareholders' meeting must be held in the U.S. Virgin Islands. Any terms to the contrary contained in Article II, Paras. 3 and 11, and Article III, Paras. 3, 4, 14 and 15 shall be specifically overridden by this Article XIII, except if "small FSC" status is elected. It is the intention of the corporation that these by-laws shall be interpreted and followed in such a manner that the corporation shall qualify as a Foreign Sales Corporation. Without the necessity of a meeting of the Board of Directors, the corporation shall, subsequent to its FSC election, change its fiscal year to that of the principal stockholder of the corporation, to-wit: the fiscal year shall begin on the 1st day of January each year. 10 EX-3.44 46 h08423exv3w44.txt CERTIFICATE OF L.P. OF WESTLAKE PETROCHEMICALS LP EXHIBIT 3.44 CERTIFICATE OF LIMITED PARTNERSHIP The undersigned, desiring to form a limited partnership pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Delaware Code, Chapter 17, do hereby certify as follows: I. The name of the limited partnership is WESTLAKE PETROCHEMICALS LP. II. The address of the Partnership's registered office in the State of Delaware is 103 Foulk Road, Suite 200, Wilmington, DE 19803. The registered agent for service of process in the State of Delaware at such address is Entity Services Group, L.L.C. III. The name and mailing address of each general partner is as follows: NAME MAILING ADDRESS Westlake Chemical Holdings, Inc. 2801 Post Oak Boulevard, Suite 600 Houston, TX 77056 IN WITNESS WHEREOF, the undersigned has executed this Certificate of Limited Partnership of WESTLAKE PETROCHEMICALS LP as of December 21, 2000. WESTLAKE CHEMICAL HOLDINGS, INC., GENERAL PARTNER By: /s/ A. Chao ----------------------------- Albert Chao, President EX-3.45 47 h08423exv3w45.txt CERTIFICATE OF AMEND. TO CERTIFICATE OF L. P. EXHIBIT 3.45 CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF LIMITED PARTNERSHIP OF WESTLAKE PETROCHEMICALS LP The undersigned, desiring to amend the Certificate of Limited Partnership of WESTLAKE PETROCHEMICALS LP pursuant to the provisions of Section 17-202 of the Revised Uniform Limited Partnership Act of the State of Delaware does hereby certify as follows: FIRST: The name of the limited partnership is WESTLAKE PETROCHEMICALS LP. SECOND: Article III of the Certificate of Limited Partnership shall be amended as follows: "The name and mailing address of each general partner is as follows: NAME MAILING ADDRESS ---- --------------- Westlake Chemical Investments, Inc. 2801 Post Oak Boulevard, Suite 600 Houston, TX 77056" IN WITNESS WHEREOF, the undersigned has executed this Amendment to the Certificate of Limited Partnership of WESTLAKE PETROCHEMICALS LP as of December 21, 2000. WESTLAKE CHEMICAL HOLDINGS, INC. GENERAL PARTNER By: /s/ A. Chao ---------------------------------------- Albert Chao, President EX-3.46 48 h08423exv3w46.txt AGREEMENT OF L. P. - WESTLAKE PETROCHEMICALS LP EXHIBIT 3.46 THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON SUBMISSION TO THE GENERAL PARTNER OF THE PARTNERSHIP OF SUCH EVIDENCE AS MAY BE SATISFACTORY TO IT TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER. AGREEMENT OF LIMITED PARTNERSHIP OF WESTLAKE PETROCHEMICALS LP THIS AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") made effective as of December 21, 2000, by and between WESTLAKE CHEMICAL INVESTMENTS, INC., a Delaware corporation ("INVESTMENTS") and WESTLAKE CHEMICAL PRODUCTS, INC., a Delaware corporation ("PRODUCTS"); W I T N E S S E T H: WHEREAS, INVESTMENTS is a Delaware corporation qualified to do business in the State of Delaware; and WHEREAS, PRODUCTS is a Delaware corporation qualified to do business in the State of Delaware; and WHEREAS, INVESTMENTS and PRODUCTS desire to enter into and form a limited partnership under the Revised Delaware Limited Partnership Act, as amended (the "Act"), to engage in any lawful business, act or activity for which limited partnerships may be organized under the Act; NOW, THEREFORE, in consideration of the mutual agreements set forth herein and of the contributions to capital by INVESTMENTS and PRODUCTS as set forth in Article II, INVESTMENTS and PRODUCTS hereby agree as follows: ARTICLE I FORMATION AND ORGANIZATION 1.1. Formation and Name of Partnership. Pursuant to the provisions of the Act, INVESTMENTS and PRODUCTS hereby enter into and form a limited partnership (the "Partnership") for the purposes hereinafter set forth. The Partnership shall conduct its business under the name "WESTLAKE PETROCHEMICALS LP" and such name shall be used at all times in connection with the Partnership's business and affairs. INVESTMENTS shall be the general partner of the Partnership and PRODUCTS shall be the limited partner of the Partnership. 1.2. Certain Definitions. The following terms used herein, unless the context otherwise specifically requires, shall have the following respective meanings: "Affiliate" means, with respect to any designated person, any other person which, directly or indirectly, controls or is controlled by or is under common control with such designated person, and shall include any director, officer, employee or partner of such designated person. "Article" shall refer to the numbered articles of this Agreement. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Distributable Funds" shall have the meaning set forth in Section 4.1. "Fiscal Year" or "Year" shall mean a calendar year (or portion thereof) ending on December 31 of such year. "General Partner" shall mean WESTLAKE CHEMICAL INVESTMENTS, INC., a Delaware corporation. "Limited Partner" shall mean WESTLAKE CHEMICAL PRODUCTS, INC. a Delaware corporation. "Operating Revenues" shall have the meaning set forth in Section 4.1. "Ownership Percentage" of a Partner shall have the meaning set forth in Section 2.5. "Partners" shall refer to the General Partner and the Limited Partner. "Partnership Interest" shall have the meaning set forth in Section 2.5. "Partnership Office" shall have the meaning set forth in Section 1.4. "Section" shall refer to the numbered sections of this Agreement. 2 Other capitalized terms used in this Agreement shall have the meanings indicated. 1.3. Term. This Agreement shall be effective and the Partnership shall commence upon compliance by the Partners with Section 2.01 of the Act and shall continue until dissolved pursuant to Article VIII. 1.4. Principal Office; Registered Office and Registered Agent; Filing. 1.4.1. Principal Office. The principal office of the Partnership (the "Partnership office"), where the books and records of the Partnership shall be kept, shall be 2801 Post Oak Boulevard, Suite 600, Houston, TX 77056 Attention: Secretary. Upon compliance with applicable legal requirements and notice to the Limited Partner, the General Partner may change the Partnership office to such other location or locations within or without the State of Texas as the General Partner may determine to be reasonably convenient for the General Partner and may accordingly designate as the Partnership Office for purposes hereof. 1.4.2. Filing of Certificate. The General Partner shall execute any certificate or certificates required by law to be filed in connection with the formation of the Partnership, including that required by the Act, and shall cause such certificate or certificates to be filed in the appropriate records. 1.4.3. Registered Office and Registered Agent. The registered office of the Partnership in Delaware is located at 103 Foulk Road, Suite 200, Wilmington Delaware 19803, and the name of its registered agent at such address is Entity Services Group, LLC. The General Partner is hereby given the authority to change the registered office and/or to appoint a new registered agent as the General Partner may determine in compliance with applicable legal requirements. 1.4.4. Other Jurisdictions. The General Partner shall take all steps appropriate under the laws of any jurisdiction in which it may be necessary to qualify the Partnership to transact business and to be treated as a limited partnership doing business in such jurisdiction. 1.5. Purposes of the Partnership. The object and purpose of the Partnership is to engage in any lawful business, act or activity for which limited partnerships may be organized under the Act; and to do all such other acts and things as the General Partner may deem appropriate in connection with the furtherance and accomplishment of the foregoing objects. 1.6. General Partner. WESTLAKE CHEMICAL INVESTMENTS, INC., shall be and is hereby constituted the general partner of the Partnership. The management of the business and affairs of the Partnership shall be conducted as provided in Article V. Except to the extent otherwise specifically provided herein or prohibited by the Act, the General Partner shall have full power and authority to take all action in connection with the Partnership's affairs and to exercise exclusive management, supervision, and control of the Partnership's properties and business and shall have the full power to do all things necessary, convenient or appropriate in connection therewith. 3 1.7. Limited Partner. WESTLAKE CHEMICAL PRODUCTS, INC. shall be and is hereby constituted as the limited partner of the Partnership. The Limited Partner, in such capacity, shall have no participation in the management of the Partnership or power to transact any Partnership business or to act for or bind the Partnership in any respect; and the Limited Partner shall not, except to the extent provided in Section 8.2.3 or by law, ever be (i) personally liable for any part of the debts or other obligations of the Partnership or (ii) obligated to make contributions to the Partnership in excess of those made pursuant to this Agreement. ARTICLE II CAPITAL CONTRIBUTIONS 2.1. Contributions. Simultaneously with the execution and delivery hereof, the General Partner has contributed to the capital of the Partnership a one percent (1%) undivided interest in the Assets, and the Limited Partner has contributed to the capital of the Partnership a ninety-nine percent (99%) undivided interest in the Assets. 2.2. Financing. Certain funds to finance the business of the Partnership may be derived from loans to the Partnership from third parties ("Third-Party Financing") and from the revenues of the Partnership. Any Third-Party Financing shall be entered into from time to time on such terms as the General Partner may deem advisable. 2.3. Other Funds. Except as provided in Section 8.2.3, no Partner shall be obligated (i) to contribute additional amounts to the Partnership's capital, or (ii) to furnish such Partner's funds or property for Partnership purposes, or (iii) to otherwise provide funds to or on behalf of the Partnership. 2.4. Withdrawal of Capital. No Partner shall be entitled to withdraw any part of such Partner's contribution to the Partnership capital or to receive any distribution from the Partnership except as provided in this Agreement. No Partner shall be entitled to demand or receive from the Partnership either interest on contributions to Partnership capital or property in kind, as a partition of Partnership properly or otherwise. 2.5. Ownership Percentages. Each Partner's beneficial ownership interest in the Partnership ("Partnership Interest") is in the following respective percentage ("Ownership Percentage"): General Partner 1% Limited Partner 99% 4 ARTICLE III ACCOUNTING AND TAX MATTERS 3.1. Books. The books of account of the Partnership, for financial and tax purposes, shall be kept on an accrual basis generally accepted for Internal Revenue Service reporting purposes, as appropriate to the Partnership's business. 3.2. Tax Matters. 3.2.1. Tax Returns. The General Partner shall prepare and file all income tax returns of the Partnership and shall furnish copies thereof to the Limited Partner. 3.2.2. Tax Matters Partner. The General Partner shall be the "tax matters partner" of the Partnership, within the meaning of Section 6231(a)(7) of the Code and any regulations issued thereunder, unless the Code or the regulations issued thereunder requires another person to be the tax matters partner. The expenses, if any, that the General Partner incurs in fulfilling its obligations pursuant to this Section 3.2.2 shall be expenses of the Partnership. ARTICLE IV DISTRIBUTION OF PARTNERSHIP FUNDS; ALLOCATIONS 4.1. Distributable Funds. The term "Distributable Funds" of the Partnership shall mean the excess from time to time of (A) the total of (i) cash held by the Partnership, including without limitation, cash proceeds derived from operations ("Operating Revenues"), plus (ii) net proceeds received from any sale or refinancing of all or a portion of property, proceeds of casualty insurance and condemnation awards not currently required for rebuilding, restoration, repair or operation ("Sale Proceeds"), less (B) the working capital requirements of the Partnership (as determined by the General Partner) and such reserves as may be established by the General Partner from time to time. 4.2. Distributions. The General Partner shall, not later than 60 days following the end of each quarter of each Fiscal Year, determine the availability of Distributable Funds, which shall be distributed to Partners as follows: (i) in the event that (a) the ratio of the Partners' capital account balances is not equal to (b) the ratio of the Partners' Ownership Percentages, Distributable Funds shall be distributed so as to equalize, to the extent possible, (a) the ratio of the Partners' capital account balances and (b) the ratio of the Partners' Ownership Percentages, and (ii) in the event that (a) the ratio of the Partners' capital account balances is equal to (b) the ratio of the Partners' Ownership Percentages, Distributable Funds shall be distributed in the ratio of the Partners' respective Ownership Percentages. Except as otherwise required by law, no Partner shall be required to restore to the Partnership any funds distributed to it pursuant to the provisions of this Agreement. 4.3. Allocations. 5 4.3.1. In General. All income, gains, losses, deductions and credits (excluding gains or losses from the sale or disposition of Partnership properties) of the Partnership shall be allocated to Partners in accordance with their respective Ownership Percentages. 4.3.2. Gains on Sales. Net gains from the sale or other disposition of any of the Partnership assets or properties, including without limitation such gains on a sale or other disposition resulting in or followed by a winding up of the Partnership's affairs and a final distribution in accordance with Section 8.2, shall be allocated to the Partners in accordance with their respective ownership Percentages provided, however, that net gain from the sale of Assets contributed to the Partnership by a Partner shall be allocated (for tax purposes only) 100% to such contributing Partner to the extent of the excess of the agreed value of the contributed Assets on the date of its contribution, less the contributing Partner's adjusted tax basis in such Assets on the date of its contribution, and any remaining net gain shall be allocated to the Partners in accordance with their Ownership Percentages. 4.3.3. Losses on Sales. Net losses from the sale or other disposition of any of the Partnership assets or properties, including without limitation such losses on a sale or other disposition resulting in or followed by a winding up of the Partnership's affairs and a final distribution in accordance with Section 8.2, shall be allocated to the Partners in accordance with their respective Ownership Percentages; provided, however, that net loss from the sale of the Assets contributed to the Partnership by a Partner shall be allocated (for tax purposes only) 100% to such contributing Partner to the extent of the excess of the contributing Partner's adjusted tax basis in such Assets on the date of its contribution, less the value of the contributed Assets on the date of its contribution to the Partnership, and any remaining net loss shall be allocated to the Partners in accordance with their ownership Percentages. 4.3.4. Determination of Profits and Losses. For purposes of this Section 4.3, the income, gains, losses, deductions and credits of the Partnership shall be determined for each Fiscal Year in accordance with the accounting methods followed by the Partnership for federal income tax purposes and the allocations contemplated hereby shall be determined as a percentage (of each item of Partnership income, gain, loss, deduction or credit, as the case may be) obtained by dividing (i) the number of days of such Fiscal Year into (ii) the product obtained by multiplying a Partner's Ownership Percentage by the number of days in such Fiscal Year on which such Partner held such Ownership Percentage. ARTICLE V RIGHTS, POWERS, AND DUTIES OF THE PARTNERS 5.1. Management of Partnership Business. The General Partner shall have the sole right to manage the business and affairs of the Partnership, and shall have and enjoy all of the rights and powers of a general partner of a partnership with limited partners except as otherwise provided by the Act or this Agreement. 5.2. Powers of the General Partner. 6 5.2.1. General Powers. Without limiting the provisions of Section 5.1, and subject only to the qualifications of Section 5.3, the General Partner is empowered to act for and bind the Partnership with respect to all matters and shall have full power and authority to exercise all powers that may be lawfully exercised by the general partner of a limited partnership formed under the Act, and third persons dealing with the Partnership shall be fully protected in relying on any action taken or instrument executed on behalf of the Partnership by the General Partner. 5.3. Limitations on Powers of the General Partner. Notwithstanding the provisions of Sections 5.1 and 5.2, without the prior consent of the Limited Partner, the General Partner shall not take any action that it may not lawfully take without such consent. 5.4. Limited Partners. The Limited Partner shall not participate in or have any control over the management of the business of the Partnership or transact any business for the Partnership. The Limited Partner shall not have any power to sign for or bind the Partnership. The Limited Partner shall not have any right to withdraw from or cause the dissolution of the Partnership or to cause the partition of its properties. 5.5. Books and Records. The General Partner shall maintain complete and accurate books of the Partnership at the Partnership Office, showing the names, addresses and Partnership Interests and capital accounts of all Partners, and all receipts, expenditures, assets, liabilities, profits and losses of the Partnership and all other records necessary for the recording of the business and affairs of the Partnership, as well as all records required by the Act. Each Partner and his duly authorized representative shall at all reasonable times during regular business hours have access to and may inspect and examine the Partnership's books or records. 5.6. Reports. Within 90 days after the end of each year, the General Partner shall prepare, or cause to be prepared, a report which shall include tax reporting information required by the Partners for preparation of their respective income tax returns. All decisions as to accounting matters, except as specifically provided herein, shall be made by the General Partner and shall be in accordance with accepted accounting practices, as such are applicable to the method of accounting adopted by the Partnership. 5.7. Income Tax Elections. The General Partner, subject only to Article III, shall have the right to make any applicable elections under the Code which, in the judgment of the General Partner, are in the best interests of the Partnership. 5.8. Capital and Income Accounts. 5.8.1. General Rules. The General Partner shall maintain a capital account and an income account for each Partner. Except as otherwise provided herein, each Partner's capital account shall be maintained in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv). There shall be credited to the capital account of each Partner the amount of cash and the agreed value of any Assets contributed to the Partnership by such Partner. Annual income, gains, losses deductions and credits shall be allocated to the income accounts of the Partners as provided in 7 Section 4.3. At the end of each Year, and following any sale of the Partnership's assets in connection with the liquidation of the Partnership pursuant to Article XIII, the income accounts of all of the Partners shall be closed out to their respective capital accounts. The capital account of a Partner shall be charged with the amount of any cash distributed and the fair market value of any Assets distributed to such Partner. Any optional loans or advances made by a Partner to the Partnership shall not be credited to the lending Partner's income or capital account. Distributions (whether constituting principal or interest) to a lending Partner in repayment of any such optional loans or advances shall not be charged to the lending Partner's income or capital account. In connection with each assignment of any interest in the Partnership (other than an assignment intended only to secure payment of indebtedness or other obligation), the capital and income accounts allocable to such interest in the Partnership shall be transferred from the assignor to the assignee. 5.8.2. Hypothetical Sale. Upon liquidation of the Partnership or any Partner's interest in the Partnership, any unsold Partnership assets shall be valued to determine the gain or loss that would result if such assets were sold at their fair market value, as determined in good faith by the General Partner, at the time of such liquidation. The capital accounts of the Partners shall be adjusted to reflect the manner in which any such gain or loss would have been allocated if such assets had been sold at such value. 5.9. Right to Compete. Neither the General Partner nor any of its officers, agents or employees shall be obligated to devote its or their full time and attention to the Partnership and its affairs, but only such time as may reasonably be necessary for the conduct of the Partnership's business. Nothing contained in this Agreement shall preclude the General Partner, its officers, agents or employees from engaging in any business, or making any other investment, even though such business, or other investment may be in competition with the business of the Partnership. Any such activity may be undertaken with or without notice to or participation therein by the other Partner and neither any Partner nor the Partnership shall have any right or claim with respect to any such activity or the income or profits therefrom. 5.10. Limitation on Responsibility of General Partner. The General Partner's obligations to perform the functions enumerated herein and such other obligations as may arise by operation of law or otherwise shall be performable only to the extent that the Partnership from time to time has funds available therefor, and neither the General Partner nor its Affiliates shall ever be personally liable to furnish involuntarily its or their own funds for any such purposes, to respond in damages, or to render specific performance. The Limited Partner hereby further agrees to look solely to the Partnership Interest of the General Partner for recovery of any judgment against the General Partner. In the exercise of any of its responsibilities or authority under this Agreement or otherwise, the General Partner shall be obligated to act in good faith; and so long as it acts in good faith, it shall have no liability or obligation to the Partnership or to any Partner for any decision, act or omission, whether or not such decision, act or omission shall have been authorized or reasonably prudent, and whether or not such decision, act or omission shall have been the result of the exercise of good or bad business judgment. 8 ARTICLE VI ASSIGNMENT OR TRANSFER OF INTEREST BY PARTNERS 6.1. Conditions of Transfer. Partnership Interests are transferable, provided, however, that no Partnership Interest, or any portion thereof, may be transferred without the consent of the other Partner. 6.2. Partner Representations. Each of the Partners, by execution of this Agreement, and each assignee or transferee of a Partner by acceptance of the rights and interests of his assignor or transferor in the Partnership, represents and warrants to and covenants and agrees with the Partnership and the other Partner that such Partner's interest has been acquired under this Agreement for such Partner's own account, for investment, and not with a view to or for sale in connection with any distribution thereof or with any present intention of distributing or selling such interest. The Limited Partner hereby further represents and warrants to the Partnership and the General Partner as follows: (i) The Limited Partner has such knowledge and experience in financial and business matters, including investing in or dealing with ventures similar to that of the Partnership, that it is capable of evaluating the merits and risks of an investment in the Partnership. The Limited Partner is able to bear the economic risk of an investment in the Partnership, including the risk of holding indefinitely any Partnership Interest acquired hereunder. (ii) The Limited Partner has been afforded full access to representatives of the General Partner for purposes of such inquiry as such Limited Partner deems appropriate, and all information requested by the Limited Partner concerning the Partnership has been supplied. (iii) The Limited Partner recognizes that the Partnership is engaged in an enterprise of high and inherent risks. 6.3. Indemnification. Each Partner agrees to indemnify and hold harmless the Partnership and the other Partner, their respective agents and representatives and the Affiliates of each of the foregoing, from and against any and all loss, claims, damage or liability directly or indirectly related to, arising from or incurred in connection with any breach of the covenants, representations and warranties of this Article VI (including any misrepresentation or omission related thereto) by such Partner. 6.4. Substituted Limited Partner. An assignee or transferee (other than an existing Partner) of the interest of the Limited Partner may be admitted as a Substituted Limited Partner only with the consent of the General Partner and shall be admitted as of the date of such consent. The granting or denying of such consent shall be in the absolute discretion of the General Partner. Unless the assignee is the General Partner, any assignee of a Partnership Interest to whose admission such consent is given (a "Substituted Limited Partner") shall become and shall have only the rights and duties of a limited partner of the Partnership, and the assigned Partnership Interest shall thereafter be a Limited Partnership Interest. Any transferee of the 9 interest of the Limited Partner shall be entitled only to receive distributions hereunder until such transferee has been admitted as a limited partner of the Partnership. 6.5. Effect of Change in Partners. Subject to all of the provisions of this Agreement, and to the extent permitted under applicable law, the dissolution, liquidation, bankruptcy or substitution of the Limited Partner shall not interrupt the continuity of or cause the termination or dissolution of the Partnership. 6.6. Reconstitution. Upon dissolution of the Partnership, the Partnership may be reconstituted and its business continued without being wound up if there remains at least one general partner. The business of the Partnership may be carried on by any such remaining general partner. ARTICLE VII REIMBURSEMENT OF CERTAIN COSTS 7.1. Reimbursement of Certain Costs. The General Partner shall be reimbursed promptly by the Partnership for all actual, reasonable, and necessary expenditures made from time to time on behalf of the Partnership in connection with the affairs of the Partnership, or the performance of the duties of the General Partner hereunder. ARTICLE VIII DISSOLUTION AND LIQUIDATION 8.1. Events of Dissolution. The Partnership shall be dissolved upon the occurrence of any of the following events: (i) the agreement of all Partners; or (ii) December 31, 2099. 8.2. Winding Up and Distribution of Assets. 8.2.1. Winding Up. Upon dissolution of the Partnership, the General Partner shall proceed to wind up the affairs of the Partnership, liquidate the property and assets of the Partnership that it determines shall be sold and terminate the Partnership. 8.2.2. Application of Proceeds. The proceeds of such liquidation and any unsold assets shall be applied in the following order of priority: (i) first, to the expenses of such liquidation; (ii) second, to the debts and liabilities of the Partnership to third parties, if any, in the order of priority provided by law; 10 (iii) third, to a reasonable reserve to be set up to provide for any contingent or unforeseen liabilities or obligations of the Partnership to third parties (to be held and disbursed, at the reasonable discretion of the General Partner, by an escrow agent selected by it) and at the expiration of such period as the General Partner may reasonably deem advisable, the balance shall be distributed as provided herein; (iv) fourth, to all loans that any Partner may have made and any other debts or liquidated obligations of the Partnership to the Partners; (v) fifth, to the Partners until they shall have received back the amounts shown in, and in the proportions of, their capital accounts; and (vi) sixth, the remaining assets of the Partnership, if any, shall be distributed to the Partners (or their successors and assigns) in accordance with their respective Ownership Interests. 8.2.3. Restoration of Negative Capital Account. If, upon the liquidation of the Partnership or the liquidation of a Partner's interest in the Partnership, a Partner shall have a negative balance in his capital account, after giving effect to all adjustments to the capital account of such Partner pursuant to Article IV and Section 5.8, then notwithstanding anything herein, such Partner shall contribute to the Partnership cash in the amount of such deficit balance. Contributions made under this Section shall be made by the end of the taxable year of the Partnership in which the liquidation of the Partnership or the liquidation of such Partner's interest in the Partnership occurs (or, if later, within ninety days after the date of such liquidation); and shall be used first to satisfy any amounts then owing by the Partnership to its creditors to the extent that such creditors have recourse to the assets of the Partners; any remaining amount shall be distributed to the Partners having positive balances in their capital accounts in proportion to such positive balances. Notwithstanding anything herein, a Partner required to make a contribution pursuant to this Section 8.2.3 shall be personally liable to make such contribution. For purposes of this Section 8.2.3, the term "liquidation" shall have the meaning given it in the first two sentences of Treasury Regulation Section 1.704-1(b)(2)(ii)(g). ARTICLE IX MISCELLANEOUS 9.1. Certificate Requirements. The General Partner hereby agrees that it shall execute and file promptly the certificate required by the Act for the formation of the Partnership contemplated by this Agreement. The General Partner will execute and file, from time to time, in said office all such documents to amend said certificate as are required by the Act for the carrying out of the terms and provisions of this Agreement; and upon winding up of the Partnership, the General Partner shall execute and file in said office the documents required by the Act to cancel said certificate as theretofore amended. 9.2. Notices. All notices, requests, statements, offers, acceptances, requests for consents or other writings required or permitted to be given or furnished hereunder to any Partner ("Notices") shall be in writing and delivered to such Partner or deposited in the United States 11 mail in a sealed envelope, registered or certified mail, with postage prepaid, or sent by facsimile, telex or telegram (and confirmed by registered or certified mail the same date), addressed to such Partner as follows: (i) If to the General Partner, to: Westlake Chemical Investments, Inc. 2801 Post Oak Boulevard, Suite 600 Houston, TX 77056 Attention: Corporate Secretary (ii) If to the Limited Partner, to: Westlake Chemical Products, Inc. 103 Foulk Road, Suite 200 Wilmington, DE 19803 Attention: Entity Services Group LLC or at such other address as such Partner shall have previously designated by Notice to the Partner giving such Notice. All Notices shall be deemed given when delivered or, if mailed, on the second business day after the day of mailing, and if sent by telex or telegram, the first business day after the day of dispatch. Any Partner may change its address for the receipt of Notices at any time by giving notice thereof to the other Partner. Notwithstanding the requirement as to the use of registered or certified mail, any routine reports required by this Agreement to be submitted to Partners at specified times may be sent by first class mail. 9.3. Entire Agreement. This Agreement supersedes all priory agreements and understandings among the Partners with respect to the subject matter hereof. 9.4. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware. 9.5. Modification, Termination and Waiver. This Agreement may be modified, terminated or waived only by a writing signed by the party to be charged with such modification, termination or waiver. 9.6. Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. However, no assignment of any interest in this Agreement may be made otherwise than in accordance with the provisions of this Agreement. 9.7. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original of this Agreement but all of which, taken together, shall constitute one and the same Agreement. 9.8. Severability. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 12 9.9. Further Assurances. Each Partner shall execute such deeds, assignments, endorsements, evidences of transfer and other instruments and documents and shall give such further assurances as shall be necessary to perform its obligations hereunder. 9.10. Limitation on Rights of Others. No person other than a Partner shall have any legal or equitable right, remedy or claim under or in respect of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. GENERAL PARTNER: WESTLAKE CHEMICAL INVESTMENTS, INC. By: /s/ A. Chao LIMITED PARTNER: WESTLAKE CHEMICAL PRODUCTS, INC. By: /s/ Harold F. Kalbach Jr. 13 EX-3.47 49 h08423exv3w47.txt CERTIFICATE OF L.P. OF WESTLAKE POLYMERS LP EXHIBIT 3.47 CERTIFICATE OF LIMITED PARTNERSHIP The undersigned, desiring to form a limited partnership pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Delaware Code, Chapter 17, do hereby certify as follows: I. The name of the limited partnership is WESTLAKE POLYMERS LP. II. The address of the Partnership's registered office in the State of Delaware is 103 Foulk Road, Suite 200, Wilmington, DE 19803. The registered agent for service of process in the State of Delaware at such address is Entity Services Group, L.L.C. III. The name and mailing address of each general partner is as follows: NAME MAILING ADDRESS Westlake Chemical Investments, Inc. 2801 Post Oak Boulevard, Suite 600 Houston, TX 77056 IN WITNESS WHEREOF, the undersigned has executed this Certificate of Limited Partnership of WESTLAKE POLYMERS LP as of December 20th, 2000. WESTLAKE CHEMICAL INVESTMENTS, INC., GENERAL PARTNER By: /s/ A. Chao ------------------------------------- Albert Chao, President EX-3.48 50 h08423exv3w48.txt AGREEMENT OF L. P. - WESTLAKE POLYMERS LP EXHIBIT 3.48 THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON SUBMISSION TO THE GENERAL PARTNER OF THE PARTNERSHIP OF SUCH EVIDENCE AS MAY BE SATISFACTORY TO IT TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER. AGREEMENT OF LIMITED PARTNERSHIP OF WESTLAKE POLYMERS LP THIS AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") made effective as of December 21, 2000, by and between WESTLAKE CHEMICAL INVESTMENTS, INC., a Delaware corporation ("INVESTMENTS") and WESTLAKE CHEMICAL PRODUCTS, INC., a Delaware corporation ("PRODUCTS"); W I T N E S S E T H: WHEREAS, INVESTMENTS is a Delaware corporation qualified to do business in the State of Delaware; and WHEREAS, PRODUCTS is a Delaware corporation qualified to do business in the State of Delaware; and WHEREAS, INVESTMENTS and PRODUCTS desire to enter into and form a limited partnership under the Revised Delaware Limited Partnership Act, as amended (the "Act"), to engage in any lawful business, act or activity for which limited partnerships may be organized under the Act; NOW, THEREFORE, in consideration of the mutual agreements set forth herein and of the contributions to capital by INVESTMENTS and PRODUCTS as set forth in Article II, INVESTMENTS and PRODUCTS hereby agree as follows: ARTICLE I FORMATION AND ORGANIZATION 1.1. Formation and Name of Partnership. Pursuant to the provisions of the Act, INVESTMENTS and PRODUCTS hereby enter into and form a limited partnership (the "Partnership") for the purposes hereinafter set forth. The Partnership shall conduct its business under the name "WESTLAKE POLYMERS LP" and such name shall be used at all times in connection with the Partnership's business and affairs. INVESTMENTS shall be the general partner of the Partnership and PRODUCTS shall be the limited partner of the Partnership. 1.2. Certain Definitions. The following terms used herein, unless the context otherwise specifically requires, shall have the following respective meanings: "Affiliate" means, with respect to any designated person, any other person which, directly or indirectly, controls or is controlled by or is under common control with such designated person, and shall include any director, officer, employee or partner of such designated person. "Article" shall refer to the numbered articles of this Agreement. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Distributable Funds" shall have the meaning set forth in Section 4.1. "Fiscal Year" or "Year" shall mean a calendar year (or portion thereof) ending on December 31 of such year. "General Partner" shall mean WESTLAKE CHEMICAL INVESTMENTS, INC., a Delaware corporation. "Limited Partner" shall mean WESTLAKE CHEMICAL PRODUCTS, INC. a Delaware corporation. "Operating Revenues" shall have the meaning set forth in Section 4.1. "Ownership Percentage" of a Partner shall have the meaning set forth in Section 2.5. "Partners" shall refer to the General Partner and the Limited Partner. "Partnership Interest" shall have the meaning set forth in Section 2.5. "Partnership Office" shall have the meaning set forth in Section 1.4. "Section" shall refer to the numbered sections of this Agreement. Other capitalized terms used in this Agreement shall have the meanings indicated. 2 1.3. Term. This Agreement shall be effective and the Partnership shall commence upon compliance by the Partners with Section 2.01 of the Act and shall continue until dissolved pursuant to Article VIII. 1.4. Principal Office; Registered Office and Registered Agent; Filing. 1.4.1. Principal Office. The principal office of the Partnership (the "Partnership office"), where the books and records of the Partnership shall be kept, shall be 2801 Post Oak Boulevard, Suite 600, Houston, TX 77056 Attention: Secretary. Upon compliance with applicable legal requirements and notice to the Limited Partner, the General Partner may change the Partnership office to such other location or locations within or without the State of Texas as the General Partner may determine to be reasonably convenient for the General Partner and may accordingly designate as the Partnership Office for purposes hereof. 1.4.2. Filing of Certificate. The General Partner shall execute any certificate or certificates required by law to be filed in connection with the formation of the Partnership, including that required by the Act, and shall cause such certificate or certificates to be filed in the appropriate records. 1.4.3. Registered Office and Registered Agent. The registered office of the Partnership in Delaware is located at 103 Foulk Road, Suite 200, Wilmington Delaware 19803, and the name of its registered agent at such address is Entity Services Group, LLC. The General Partner is hereby given the authority to change the registered office and/or to appoint a new registered agent as the General Partner may determine in compliance with applicable legal requirements. 1.4.4. Other Jurisdictions. The General Partner shall take all steps appropriate under the laws of any jurisdiction in which it may be necessary to qualify the Partnership to transact business and to be treated as a limited partnership doing business in such jurisdiction. 1.5. Purposes of the Partnership. The object and purpose of the Partnership is to engage in any lawful business, act or activity for which limited partnerships may be organized under the Act; and to do all such other acts and things as the General Partner may deem appropriate in connection with the furtherance and accomplishment of the foregoing objects. 1.6. General Partner. WESTLAKE CHEMICAL INVESTMENTS, INC., shall be and is hereby constituted the general partner of the Partnership. The management of the business and affairs of the Partnership shall be conducted as provided in Article V. Except to the extent otherwise specifically provided herein or prohibited by the Act, the General Partner shall have full power and authority to take all action in connection with the Partnership's affairs and to exercise exclusive management, supervision, and control of the Partnership's properties and business and shall have the full power to do all things necessary, convenient or appropriate in connection therewith. 1.7. Limited Partner. WESTLAKE CHEMICAL PRODUCTS, INC. shall be and is hereby constituted as the limited partner of the Partnership. The Limited Partner, in such capacity, shall have no participation in the management of the Partnership or power to transact any Partnership business or to act for or bind the Partnership in any respect; and the Limited 3 Partner shall not, except to the extent provided in Section 8.2.3 or by law, ever be (i) personally liable for any part of the debts or other obligations of the Partnership or (ii) obligated to make contributions to the Partnership in excess of those made pursuant to this Agreement. ARTICLE II CAPITAL CONTRIBUTIONS 2.1. Contributions. Simultaneously with the execution and delivery hereof, the General Partner has contributed to the capital of the Partnership a one percent (1%) undivided interest in the Assets, and the Limited Partner has contributed to the capital of the Partnership a ninety-nine percent (99%) undivided interest in the Assets. 2.2. Financing. Certain funds to finance the business of the Partnership may be derived from loans to the Partnership from third parties ("Third-Party Financing") and from the revenues of the Partnership. Any Third-Party Financing shall be entered into from time to time on such terms as the General Partner may deem advisable. 2.3. Other Funds. Except as provided in Section 8.2.3, no Partner shall be obligated (i) to contribute additional amounts to the Partnership's capital, or (ii) to furnish such Partner's funds or property for Partnership purposes, or (iii) to otherwise provide funds to or on behalf of the Partnership. 2.4. Withdrawal of Capital. No Partner shall be entitled to withdraw any part of such Partner's contribution to the Partnership capital or to receive any distribution from the Partnership except as provided in this Agreement. No Partner shall be entitled to demand or receive from the Partnership either interest on contributions to Partnership capital or property in kind, as a partition of Partnership property or otherwise. 2.5. Ownership Percentage. Each Partner's beneficial ownership interest in the Partnership ("Partnership Interest") is in the following respective percentage ("Ownership Percentage"): General Partner 1% Limited Partner 99% ARTICLE III ACCOUNTING AND TAX MATTERS 3.1. Books. The books of account of the Partnership, for financial and tax purposes, shall be kept on an accrual basis generally accepted for Internal Revenue Service reporting purposes, as appropriate to the Partnership's business. 4 3.2. Tax Matters. 3.2.1. Tax Returns. The General Partner shall prepare and file all income tax returns of the Partnership and shall furnish copies thereof to the Limited Partner. 3.2.2. Tax Matters Partner. The General Partner shall be the "tax matters partner" of the Partnership, within the meaning of Section 6231(a)(7) of the Code and any regulations issued thereunder, unless the Code or the regulations issued thereunder requires another person to be the tax matters partner. The expenses, if any, that the General Partner incurs in fulfilling its obligations pursuant to this Section 3.2.2 shall be expenses of the Partnership. ARTICLE IV DISTRIBUTION OF PARTNERSHIP FUNDS; ALLOCATIONS 4.1. Distributable Funds. The term "Distributable Funds" of the Partnership shall mean the excess from time to time of (A) the total of (i) cash held by the Partnership, including without limitation, cash proceeds derived from operations ("Operating Revenues"), plus (ii) net proceeds received from any sale or refinancing of all or a portion of property, proceeds of casualty insurance and condemnation awards not currently required for rebuilding, restoration, repair or operation ("Sale Proceeds"), less (B) the working capital requirements of the Partnership (as determined by the General Partner) and such reserves as may be established by the General Partner from time to time. 4.2. Distributions. The General Partner shall, not later than 60 days following the end of each quarter of each Fiscal Year, determine the availability of Distributable Funds, which shall be distributed to Partners as follows: (i) in the event that (a) the ratio of the Partners' capital account balances is not equal to (b) the ratio of the Partners' Ownership Percentages, Distributable Funds shall be distributed so as to equalize, to the extent possible, (a) the ratio of the Partners' capital account balances and (b) the ratio of the Partners' Ownership Percentages, and (ii) in the event that (a) the ratio of the Partners' capital account balances is equal to (b) the ratio of the Partners' Ownership Percentages, Distributable Funds shall be distributed in the ratio of the Partners' respective Ownership Percentages. Except as otherwise required by law, no Partner shall be required to restore to the Partnership any funds distributed to it pursuant to the provisions of this Agreement. 4.3. Allocations. 4.3.1. In General. All income, gains, losses, deductions and credits (excluding gains or losses from the sale or disposition of Partnership properties) of the Partnership shall be allocated to Partners in accordance with their respective Ownership Percentages. 4.3.2. Gains on Sales. Net gains from the sale or other disposition of any of the Partnership assets or properties, including without limitation such gains on a sale or other disposition resulting in or followed by a winding up of the Partnership's affairs and a final distribution in accordance with Section 8.2, shall be allocated to the Partners in accordance with their respective ownership Percentages provided, however, that net gain from the sale of Assets contributed to the Partnership by a Partner shall be allocated (for tax purposes only) 100% to 5 such contributing Partner to the extent of the excess of the agreed value of the contributed Assets on the date of its contribution, less the contributing Partner's adjusted tax basis in such Assets on the date of its contribution, and any remaining net gain shall be allocated to the Partners in accordance with their Ownership Percentages. 4.3.3. Losses on Sales. Net losses from the sale or other disposition of any of the Partnership assets or properties, including without limitation such losses on a sale or other disposition resulting in or followed by a winding up of the Partnership's affairs and a final distribution in accordance with Section 8.2, shall be allocated to the Partners in accordance with their respective Ownership Percentages; provided, however, that net loss from the sale of the Assets contributed to the Partnership by a Partner shall be allocated (for tax purposes only) 100% to such contributing Partner to the extent of the excess of the contributing Partner's adjusted tax basis in such Assets on the date of its contribution, less the value of the contributed Assets on the date of its contribution to the Partnership, and any remaining net loss shall be allocated to the Partners in accordance with their ownership Percentages. 4.3.4. Determination of Profits and Losses. For purposes of this Section 4.3, the income, gains, losses, deductions and credits of the Partnership shall be determined for each Fiscal Year in accordance with the accounting methods followed by the Partnership for federal income tax purposes and the allocations contemplated hereby shall be determined as a percentage (of each item of Partnership income, gain, loss, deduction or credit, as the case may be) obtained by dividing (i) the number of days of such Fiscal Year into (ii) the product obtained by multiplying a Partner's Ownership Percentage by the number of days in such Fiscal Year on which such Partner held such Ownership Percentage. ARTICLE V RIGHTS, POWERS, AND DUTIES OF THE PARTNERS 5.1. Management of Partnership Business. The General Partner shall have the sole right to manage the business and affairs of the Partnership, and shall have and enjoy all of the rights and powers of a general partner of a partnership with limited partners except as otherwise provided by the Act or this Agreement. 5.2. Powers of the General Partner. 5.2.1. General Powers. Without limiting the provisions of Section 5.1, and subject only to the qualifications of Section 5.3, the General Partner is empowered to act for and bind the Partnership with respect to all matters and shall have full power and authority to exercise all powers that may be lawfully exercised by the general partner of a limited partnership formed under the Act, and third persons dealing with the Partnership shall be fully protected in relying on any action taken or instrument executed on behalf of the Partnership by the General Partner. 5.3. Limitations on Powers of the General Partner. Notwithstanding the provisions of Sections 5.1 and 5.2, without the prior consent of the Limited Partner, the General Partner shall not take any action that it may not lawfully take without such consent. 6 5.4. Limited Partners. The Limited Partner shall not participate in or have any control over the management of the business of the Partnership or transact any business for the Partnership. The Limited Partner shall not have any power to sign for or bind the Partnership. The Limited Partner shall not have any right to withdraw from or cause the dissolution of the Partnership or to cause the partition of its properties. 5.5. Books and Records. The General Partner shall maintain complete and accurate books of the Partnership at the Partnership Office, showing the names, addresses and Partnership Interests and capital accounts of all Partners, and all receipts, expenditures, assets, liabilities, profits and losses of the Partnership and all other records necessary for the recording of the business and affairs of the Partnership, as well as all records required by the Act. Each Partner and his duly authorized representative shall at all reasonable times during regular business hours have access to and may inspect and examine the Partnership's books or records. 5.6. Reports. Within 90 days after the end of each year, the General Partner shall prepare, or cause to be prepared, a report which shall include tax reporting information required by the Partners for preparation of their respective income tax returns. All decisions as to accounting matters, except as specifically provided herein, shall be made by the General Partner and shall be in accordance with accepted accounting practices, as such are applicable to the method of accounting adopted by the Partnership. 5.7. Income tax Elections. The General Partner, subject only to Article III, shall have the right to make any applicable elections under the Code which, in the judgment of the General Partner, are in the best interests of the Partnership. 5.8. Capital and Income Accounts. 5.8.1. General Rules. The General Partner shall maintain a capital account and an income account for each Partner. Except as otherwise provided herein, each Partner's capital account shall be maintained in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv). There shall be credited to the capital account of each Partner the amount of cash and the agreed value of any Assets contributed to the Partnership by such Partner. Annual income, gains, losses deductions and credits shall be allocated to the income accounts of the Partners as provided in Section 4.3. At the end of each Year, and following any sale of the Partnership's assets in connection with the liquidation of the Partnership pursuant to Article XIII, the income accounts of all of the Partners shall be closed out to their respective capital accounts. The capital account of a Partner shall be charged with the amount of any cash distributed and the fair market value of any Assets distributed to such Partner. Any optional loans or advances made by a Partner to the Partnership shall not be credited to the lending Partner's income or capital account. Distributions (whether constituting principal or interest) to a lending Partner in repayment of any such optional loans or advances shall not be charged to the lending Partner's income or capital account. In connection with each assignment of any interest in the Partnership (other than an assignment intended only to secure payment of indebtedness or other obligation), the capital and income accounts allocable to such interest in the Partnership shall be transferred from the assignor to the assignee. 7 5.8.2. Hypothetical Sale. Upon liquidation of the Partnership or any Partner's interest in the Partnership, any unsold Partnership assets shall be valued to determine the gain or loss that would result if such assets were sold at their fair market value, as determined in good faith by the General Partner, at the time of such liquidation. The capital accounts of the Partners shall be adjusted to reflect the manner in which any such gain or loss would have been allocated if such assets had been sold at such value. 5.9. Right to Compete. Neither the General Partner nor any of its officers, agents or employees shall be obligated to devote its or their full time and attention to the Partnership and its affairs, but only such time as may reasonably be necessary for the conduct of the Partnership's business. Nothing contained in this Agreement shall preclude the General Partner, its officers, agents or employees from engaging in any business, or making any other investment, even though such business, or other investment may be in competition with the business of the Partnership. Any such activity may be undertaken with or without notice to or participation therein by the other Partner and neither any Partner nor the Partnership shall have any right or claim with respect to any such activity or the income or profits therefrom. 5.10. Limitation on Responsibility of General Partner. The General Partner's obligations to perform the functions enumerated herein and such other obligations as may arise by operation of law or otherwise shall be performable only to the extent that the Partnership from time to time has funds available therefor, and neither the General Partner nor its Affiliates shall ever be personally liable to furnish involuntarily its or their own funds for any such purposes, to respond in damages, or to render specific performance. The Limited Partner hereby further agrees to look solely to the Partnership Interest of the General Partner for recovery of any judgment against the General Partner. In the exercise of any of its responsibilities or authority under this Agreement or otherwise, the General Partner shall be obligated to act in good faith; and so long as it acts in good faith, it shall have no liability or obligation to the Partnership or to any Partner for any decision, act or omission, whether or not such decision, act or omission shall have been authorized or reasonably prudent, and whether or not such decision, act or omission shall have been the result of the exercise of good or bad business judgment. ARTICLE VI ASSIGNMENT OR TRANSFER OF INTEREST BY PARTNERS 6.1. Conditions of Transfer. Partnership Interests are transferable, provided, however, that no Partnership Interest, or any portion thereof, may be transferred without the consent of the other Partner. 6.2. Partner Representations. Each of the Partners, by execution of this Agreement, and each assignee or transferee of a Partner by acceptance of the rights and interests of his assignor or transferor in the Partnership, represents and warrants to and covenants and agrees with the Partnership and the other Partner that such Partner's interest has been acquired under this Agreement for such Partner's own account, for investment, and not with a view to or for sale in connection with any distribution thereof or with any present intention of distributing or selling such interest. The Limited Partner hereby further represents and warrants to the Partnership and the General Partner as follows: 8 (i) The Limited Partner has such knowledge and experience in financial and business matters, including investing in or dealing with ventures similar to that of the Partnership, that it is capable of evaluating the merits and risks of an investment in the Partnership. The Limited Partner is able to bear the economic risk of an investment in the Partnership, including the risk of holding indefinitely any Partnership Interest acquired hereunder. (ii) The Limited Partner has been afforded full access to representatives of the General Partner for purposes of such inquiry as such Limited Partner deems appropriate, and all information requested by the Limited Partner concerning the Partnership has been supplied. (iii) The Limited Partner recognizes that the Partnership is engaged in an enterprise of high and inherent risks. 6.3. Indemnification. Each Partner agrees to indemnify and bold harmless the Partnership and the other Partner, their respective agents and representatives and the Affiliates of each of the foregoing, from and against any and all loss, claims, damage or liability directly or indirectly related to, arising from or incurred in connection with any breach of the covenants, representations and warranties of this Article VI (including any misrepresentation or omission related thereto) by such Partner. 6.4. Substituted Limited Partner. An assignee or transferee (other than an existing Partner) of the interest of the Limited Partner may be admitted as a Substituted Limited Partner only with the consent of the General Partner and shall be admitted as of the date of such consent. The granting or denying of such consent shall be in the absolute discretion of the General Partner. Unless the assignee is the General Partner, any assignee of a Partnership Interest to whose admission such consent is given (a "Substituted Limited Partner") shall become and shall have only the rights and duties of a limited partner of the Partnership, and the assigned Partnership Interest shall thereafter be a Limited Partnership Interest. Any transferee of the interest of the Limited Partner shall be entitled only to receive distributions hereunder until such transferee has been admitted as a limited partner of the Partnership. 6.5. Effect of Change in Partners. Subject to all of the provisions of this Agreement, and to the extent permitted under applicable law, the dissolution, liquidation, bankruptcy or substitution of the Limited Partner shall not interrupt the continuity of or cause the termination or dissolution of the Partnership. 6.6. Reconstitution. Upon dissolution of the Partnership, the Partnership may be reconstituted and its business continued without being wound up if there remains at least one general partner. The business of the Partnership may be carried on by any such remaining general partner. 9 ARTICLE VII REIMBURSEMENT OF CERTAIN COSTS 7.1. Reimbursement of Certain Costs. The General Partner shall be reimbursed promptly by the Partnership for all actual, reasonable, and necessary expenditures made from time to time on behalf of the Partnership in connection with the affairs of the Partnership, or the performance of the duties of the General Partner hereunder. ARTICLE VIII DISSOLUTION AND LIQUIDATION 8.1. Events of Dissolution. The Partnership shall be dissolved upon the occurrence of any of the following events: (i) the agreement of all Partners; or (ii) December 31, 2099. 8.2. Winding Up and Distribution of Assets. 8.2.1. Winding Up. Upon dissolution of the Partnership, the General Partner shall proceed to wind up the affairs of the Partnership, liquidate the property and assets of the Partnership that it determines shall be sold and terminate the Partnership. 8.2.2. Application of Proceeds. The proceeds of such liquidation and any unsold assets shall be applied in the following order of priority: (i) first, to the expenses of such liquidation; (ii) second, to the debts and liabilities of the Partnership to third parties, if any, in the order of priority provided by law; (iii) third, to a reasonable reserve to be set up to provide for any contingent or unforeseen liabilities or obligations of the Partnership to third parties (to be held and disbursed, at the reasonable discretion of the General Partner, by an escrow agent selected by it) and at the expiration of such period as the General Partner may reasonably deem advisable, the balance shall be distributed as provided herein; (iv) fourth, to all loans that any Partner may have made and any other debts or liquidated obligations of the Partnership to the Partners; (v) fifth, to the Partners until they shall have received back the amounts shown in, and in the proportions of, their capital accounts; and 10 (vi) sixth, the remaining assets of the Partnership, if any, shall be distributed to the Partners (or their successors and assigns) in accordance with their respective Ownership Interests. 8.2.3. Restoration of Negative Capital Account. If, upon the liquidation of the Partnership or the liquidation of a Partner's interest in the Partnership, a Partner shall have a negative balance in his capital account, after giving effect to all adjustments to the capital account of such Partner pursuant to Article IV and Section 5.8, then notwithstanding anything herein, such Partner shall contribute to the Partnership cash in the amount of such deficit balance. Contributions made under this Section shall be made by the end of the taxable year of the Partnership in which the liquidation of the Partnership or the liquidation of such Partner's interest in the Partnership occurs (or, if later, within ninety days after the date of such liquidation); and shall be used first to satisfy any amounts then owing by the Partnership to its creditors to the extent that such creditors have recourse to the assets of the Partners; any remaining amount shall be distributed to the Partners having positive balances in their capital accounts in proportion to such positive balances. Notwithstanding anything herein, a Partner required to make a contribution pursuant to this Section 8.2.3 shall be personally liable to make such contribution. For purposes of this Section 8.2.3, the term "liquidation" shall have the meaning given it in the first two sentences of Treasury Regulation Section 1.704-1(b)(2)(ii)(g). ARTICLE IX MISCELLANEOUS 9.1. Certificate Requirements. The General Partner hereby agrees that it shall execute and file promptly the certificate required by the Act for the formation of the Partnership contemplated by this Agreement. The General Partner will execute and file, from time to time, in said office all such documents to amend said certificate as are required by the Act for the carrying out of the terms and provisions of this Agreement; and upon winding up of the Partnership, the General Partner shall execute and file in said office the documents required by the Act to cancel said certificate as theretofore amended. 9.2. Notices. All notices, requests, statements, offers, acceptances, requests for consents or other writings required or permitted to be given or furnished hereunder to any Partner ("Notices") shall be in writing and delivered to such Partner or deposited in the United States mail in a sealed envelope, registered or certified mail, with postage prepaid, or sent by facsimile, telex or telegram (and confirmed by registered or certified mail the same date), addressed to such Partner as follows: (i) If to the General Partner, to: Westlake Chemical Investments, Inc. 2801 Post Oak Boulevard, Suite 600 Houston, TX 77056 Attention: Corporate Secretary 11 (ii) If to the Limited Partner, to: Westlake Chemical Products, Inc. 103 Foulk Road, Suite 200 Wilmington, DE 19803 Attention: Entity Services Group LLC or at such other address as such Partner shall have previously designated by Notice to the Partner giving such Notice. All Notices shall be deemed given when delivered or, if mailed, on the second business day after the day of mailing, and if sent by telex or telegram, the first business day after the day of dispatch. Any Partner may change its address for the receipt of Notices at any time by giving notice thereof to the other Partner. Notwithstanding the requirement as to the use of registered or certified mail, any routine reports required by this Agreement to be submitted to Partners at specified times may be sent by first class mail. 9.3. Entire Agreement. This Agreement supersedes all priory agreements and understandings among the Partners with respect to the subject matter hereof. 9.4. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware. 9.5. Modification, Termination and Waiver. This Agreement may be modified, terminated or waived only by a writing signed by the party to be charged with such modification, termination or waiver. 9.6. Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. However, no assignment of any interest in this Agreement may be made otherwise than in accordance with the provisions of this Agreement. 9.7. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original of this Agreement but all of which, taken together, shall constitute one and the same Agreement. 9.8. Severability . If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 9.9. Further Assurances. Each Partner shall execute such deeds, assignments, endorsements, evidences of transfer and other instruments and documents and shall give such further assurances as shall be necessary to perform its obligations hereunder. 9.10. Limitation on Rights of Others. No person other than a Partner shall have any legal or equitable right, remedy or claim under or in respect of this Agreement. 12 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. GENERAL PARTNER: WESTLAKE CHEMICAL INVESTMENTS, INC. By: /s/ A. Chao ----------------------------------- LIMITED PARTNER: WESTLAKE CHEMICAL PRODUCTS, INC. By: /s/ Harold F. Kalbach Jr. ----------------------------------- 13 EX-3.49 51 h08423exv3w49.txt CERTIFICATE OF INCORPORATION-WESTLAKE PVC CORP. EXHIBIT 3.49 CERTIFICATE OF INCORPORATION OF WESTLAKE VINYL CORPORATION ARTICLE I The name of the corporation is Westlake Vinyl Corporation. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Bob Casey, Jr. 2900 South Tower Pennzoil Place Houston, Texas 77002-2781 ARTICLE VI The name and mailing address of the person who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: Bob Casey, Jr. 2900 South Tower Pennzoil Place Houston, Texas 77002-2781 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to adopt, amend or repeal the bylaws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the bylaws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the bylaws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the bylaws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such, laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. 2 I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 19th day of August, 1991. /s/Bob Casey, Jr. ---------------------------------- Bob Casey, Jr. 3 EX-3.50 52 h08423exv3w50.txt CERTIFICATE OF AMEND. TO CERT. OF INCORPORATION EXHIBIT 3.50 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Westlake Vinyl Corporation ("Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That in lieu of a meeting and vote of directors, the Board of Directors of the Corporation, by unanimous written consent filed with the Corporation, in accordance with the Provisions of Section 141(f) of the General Corporation Law of the State of Delaware, have adopted a resolution proposing and declaring advisable the following amendments to the Certificate of Incorporation of the Corporation: RESOLVED, That the Certificate of Incorporation be amended by changing Article I to read as follows: ARTICLE I The name of the corporation is Westlake PVC Corporation. SECOND: That in lieu of a meeting and vote of stockholders, the sole stockholder of all outstanding stock entitled to vote thereon has given written consent to the above amendment in accordance with Section 228 of the General Corporation Law of the State of Delaware, and said written consent has been filed with the Corporation. THIRD: That said amendments were duly adopted in accordance with the provisions of Sections 141, 216, 228 and 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of the Corporation will not be reduced under or by reason of said amendments. IN WITNESS WHEREOF, Westlake Vinyl Corporation has caused this certificate to be signed by Bob Casey, Jr., its President, and attested by Bob Casey, Jr., its Secretary, this 20th day of August, 1991. Westlake Vinyl Corporation By: /s/Bob Casey, Jr. ------------------------------- Bob Casey, Jr. ATTEST: By: /s/Bob Casey, Jr. -------------------------------- Bob Casey, Jr. EX-3.51 53 h08423exv3w51.txt BYLAWS OF WESTLAKE PVC CORPORATION EXHIBIT 3.51 BYLAWS OF WESTLAKE PVC CORPORATION (F/K/A WESTLAKE VINYL CORPORATION) (hereinafter called the "Company") ARTICLE I MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual Meetings. The annual meetings of stockholders shall be held on such date and at such time as shall be designated from time to time by the Board and stated in the notice of the meeting, at which meetings the stockholders shall elect by a plurality vote the Board, and transact such other business as may properly be brought before the meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 3. Special Meetings. Unless otherwise prescribed by law or by the certificate of incorporation of the Company (the "Certificate"), special meetings of stockholders, for any purpose or purposes, may be called by either (i) the Chairman, (ii) the President, (iii) any vice president, (iv) the Secretary or (v) any assistant secretary, and shall be called by any such officer at the request in writing of a majority of the Board or at the request in writing of stockholders owning a majority of the capital stock of the Company issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Written notice of the special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. Section 4. Quorum. Except as otherwise provided by law or by the Certificate, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat present in person or represented by proxy shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting. Section 5. Voting. Unless otherwise required by law, the Certificate or these bylaws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share standing in his name on the books of the Company. Such votes may be case in person or by proxy, but no proxy shall be voted on or after three years from its date unless such proxy provides for a longer period. The Board, in its discretion, or the officer of the Company presiding at a meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 6. List of Stockholders Entitled to Vote. The officer of the Company who has charge of the stock ledger of the Company shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder of the Company who is present. ARTICLE II DIRECTORS Section 1. Number and Election of Directors. The business and affairs of the Company shall be managed by the Board, initially consisting of one (1) director. The number of directors may be increased or decreased from time to time by resolution of the Board or by due election of that number of directors by the stockholders, but no decrease by the Board shall have the effect of shortening the term of any incumbency. Except as provided in Section 2 of this Article, the director or directors, as the case may be, shall be elected by a plurality of the votes cast at annual meetings of stockholders and shall hold office until the next annual meting and until his/their successor(s) is duly elected and qualified or until his/their earlier resignation or removal. Any director may resign at any time upon notice to the Company. Directors need not be stockholders. Section 2. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified or until their earlier resignation or removal. Section 3. Duties and Powers. The business of the Company shall be managed by or under the direction of the Board, which may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the Certificate or by these bylaws directed or required to be exercised or done by the stockholders. Section 4. Meetings. The Board may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board may be held without notice at such time and at such place as may from time to time be determined by the Board. -2- Special meetings of the Board may be called by the Chairman, if there be one, the President or any director. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than 48 hours before the date of the meeting, by telephone, facsimile, telegram, telex or similar means of visual data transmission on 24 hours notice or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Section 5. Quorum. Except as may be otherwise specifically provided by law, the Certificate or these bylaws, at all meetings of the Board, a majority of the entire Board shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board. If a quorum shall not be present at any meeting of the Board, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 6. Actions of the Board. Unless otherwise provided by the Certificate or these bylaws, any action required or permitted to be taken at any meeting of the Board may be taken without a meeting, if all the members of the Board consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board. Such writings, which may be in counterparts, shall be manually executed if practicable; provided, however, that if circumstances so require, effect shall be given to written consents transmitted by telegraph, telex, facsimile or similar means of visual data transmission. Section 7. Meetings by Means of Conference Telephone. Unless otherwise provided by the Certificate or these bylaws, members of the Board or any committee designated by the Board may participate in a meeting of the Board or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 7 shall constitute presence in person at such meeting. Section 8. Committees. (a) Designation. The Board may, by resolution adopted by a majority of the entire Board, designate one or more standing or special committees, including, as they shall so determine, an executive committee. The executive committee, if one is designated, shall consist of one or more of the directors of the Company. Any other committee designated by the Board shall consist of one or more of the directors of the Company. (b) Executive Committee. The Executive Committee, during intervals between meetings of the Board, shall have and exercise all the powers and authority of the Board in the management of the business of the Company, except as otherwise limited by statutes, the Certificate or these bylaws. (c) Alternate Committee Members. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of an alternate member to -3- replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, regardless of whether he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any absent or disqualified member. (d) Powers and Duties. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company; provided, however, that nothing in this Section 8 shall be deemed to authorize a committee of the Board to have broader authority than the Board. Each committee shall keep regular minutes and report to the Board when required. Section 9. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board and may be paid a fixed sum for attendance at each meeting of the Board or a stated salary or other consideration as director. No such payment shall preclude any director from serving the Company in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. ARTICLE III OFFICERS Section 1. General. The officers of the Company shall be chosen by the Board and shall include a President, a Treasurer and a Secretary. The Board, in its discretion, may also choose (i) one of its members as Chairman and (ii) one or more vice presidents, assistant secretaries, assistant treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate or these bylaws. The officers of the Company need not be stockholders of the Company nor, except in the case of the Chairman, need such officers be directors of the Company. Section 2. Election. The Board at its first meeting held after each annual meeting of stockholders shall elect the officers of the Company, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board; and all officers of the Company shall hold office until their successors are chosen and qualified or until their earlier resignation or removal. Any officer elected by the Board may be removed at any time by the affirmative vote of a majority of the Board. Any vacancy occurring in any office of the Company shall be filled by the Board. The salaries of all officers of the Company shall be fixed by the Board. Section 3. Powers and Duties. The officers of the Company shall have such powers and duties as generally pertain to their offices, except as diminished or enlarged from time to time by action of the Board. The Chairman of the Board or in his absence the President, shall preside at all meetings of the Board and of the stockholders, and in their absence a presiding officer shall be appointed by action of a majority of the directors or stockholders, as the case may be. -4- Section 4. Other Officers. Such other officers as the Board may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board. The Board may delegate to any other officer of the Company the power to choose such other officers and to prescribe their respective duties and powers. ARTICLE IV STOCK Section 1. Signatures. The certificates for shares of stock of the Company shall be signed by the President, Vice President or other officer designated by the Board, countersigned by the Secretary or Treasurer. Where a certificate is countersigned by (i) a transfer agent other than the Company or its employee or (ii) a registrar other than the Company or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 2. Record Date. In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a record date which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however that the Board may fix a new record date for the adjourned meeting. ARTICLE V NOTICES Whenever written notice is required by law, the Certificate or these bylaws to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at his address as it appears on the records of the Company, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by facsimile, telegram, telex or similar means of visual data transmission. ARTICLE VI AMENDMENTS These bylaws may be altered, amended or repealed, in whole or in part, or new bylaws may be adopted, at any annual or special meeting of the stockholders or of the Board by at least a majority vote of the stockholders or the Board; provided however, that notice of such alteration, amendment, repeal or adoption of new bylaws be contained in the notice of such meeting of -5- stockholders or directors. Any alteration, amendment, addition to or repeal of these bylaws made by the Board is subject to the power of the stockholders to change such action. ADOPTED as of this 19th day of August, 1991. /s/ Bob Casey, Jr. ------------------------------------ Bob Casey, Jr. President -6- EX-3.52 54 h08423exv3w52.txt CERTIFICATE OF INCORP.-WESTLAKE RESOURCES CORP. EXHIBIT 3.52 CERTIFICATE OF INCORPORATION OF WESTLAKE RESOURCES CORPORATION ARTICLE I The name of the corporation is Westlake Resources Corporation. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Bob Casey, Jr. 2900 South Tower Pennzoil Place Houston, Texas 77002-2781 ARTICLE VI The name and mailing address of the person who is to serve as the director of the corporation until the first annual meeting of the stockholders of the corporation or until a successor is elected and qualified is as follows: Bob Casey, Jr. 2900 South Tower Pennzoil Place Houston, Texas 77002-2781 ARTICLE VII In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized to adopt, amend or repeal the bylaws of the corporation. ARTICLE VIII Elections of directors need not be by written ballot unless the bylaws of the corporation shall so provide. All action required to be taken or which may be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically granted. Meetings of stockholders may be held within or without the State of Delaware, as the bylaws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes of the State of Delaware) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the bylaws of the corporation. ARTICLE IX A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the Delaware General Corporation Law as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. ARTICLE X The corporation reserves the right to amend, alter or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the laws of the State of Delaware, and to add additional provisions authorized by such, laws as are then in force. All rights conferred on the directors or stockholders of the corporation herein or in any amendment hereof are granted subject to this reservation. ARTICLE XI The corporation shall indemnify its directors and officers, and may indemnify its employees and agents, to the extent permitted by the General Corporation Law of the State of Delaware. 2 I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 19th day of October, 1990. /s/ Bob Casey, Jr. ------------------------------ Bob Casey, Jr. EX-3.53 55 h08423exv3w53.txt BYLAWS OF WESTLAKE RESOURCES CORPORATION EXHIBIT 3.53 BYLAWS OF WESTLAKE RESOURCES CORPORATION (hereinafter called the "Company") ARTICLE I MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual Meetings. The annual meetings of stockholders shall be held on such date and at such time as shall be designated from time to time by the Board and stated in the notice of the meeting, at which meetings the stockholders shall elect by a plurality vote the Board, and transact such other business as may properly be brought before the meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 3. Special Meetings. Unless otherwise prescribed by law or by the Certificate of incorporation of the Company (the "Certificate"), special meetings of stockholders, for any purpose or purposes, may be called by either (i) the Chairman, (ii) the President, (iii) any vice president, (iv) the Secretary or (v) any assistant secretary, and shall be called by any such officer at the request in writing of a majority of the Board or at the request in writing of stockholders owning a majority of the capital stock of the Company issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Written notice of the special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. Section 4. Quorum. Except as otherwise provided by law or by the Certificate, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat present in person or represented by proxy shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting. Section 5. Voting. Unless otherwise required by law, the Certificate or these bylaws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share standing in his name on the books of the Company. Such votes may be case in person or by proxy, but no proxy shall be voted on or after three years from its date unless such proxy provides for a longer period. The Board, in its discretion, or the officer of the Company presiding at a meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 6. List of Stockholders Entitled to Vote. The officer of the Company who has charge of the stock ledger of the Company shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder of the Company who is present. ARTICLE II DIRECTORS Section 1. Number and Election of Directors. The business and affairs of the Company shall be managed by the Board, initially consisting of one (1) director. The number of directors may be increased or decreased from time to time by resolution of the Board or by due election of that number of directors by the stockholders, but no decrease by the Board shall have the effect of shortening the term of any incumbency. Except as provided in Section 2 of this Article, the director or directors, as the case may be, shall be elected by a plurality of the votes cast at annual meetings of stockholders and shall hold office until the next annual meeting and until his/their successor(s) is duly elected and qualified or until his/their earlier resignation or removal. Any director may resign at any time upon notice to the Company. Directors need not be stockholders. Section 2. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified or until their earlier resignation or removal. Section 3. Duties and Powers. The business of the Company shall be managed by or under the direction of the Board, which may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the Certificate or by these bylaws directed or required to be exercised or done by the stockholders. Section 4. Meetings. The Board may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board may be held without notice at such time and at such place as may from time to time be determined by the Board. Special meetings of the Board may be called by the Chairman, if there be one, the President or -2- any director. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than 48 hours before the date of the meeting, by telephone, facsimile, telegram, telex or similar means of visual data transmission on 24 hours notice or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Section 5. Quorum. Except as may be otherwise specifically provided by law, the Certificate or these bylaws, at all meetings of the Board, a majority of the entire Board shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board. If a quorum shall not be present at any meeting of the Board, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 6. Actions of the Board. Unless otherwise provided by the Certificate or these bylaws, any action required or permitted to be taken at any meeting of the Board may be taken without a meeting, if all the members of the Board consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board. Such writings, which may be in counterparts, shall be manually executed if practicable; provided, however, that if circumstances so require, effect shall be given to written consents transmitted by telegraph, telex, facsimile or similar means of visual data transmission. Section 7. Meetings by Means of Conference Telephone. Unless otherwise provided by the Certificate or these bylaws, members of the Board or any committee designated by the Board may participate in a meeting of the Board or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 7 shall constitute presence in person at such meeting. Section 8. Committees. (a) Designation. The Board may, by resolution adopted by a majority of the entire Board, designate one or more standing or special committees, including, as they shall so determine, an executive committee. The executive committee, if one is designated, shall consist of one or more of the directors of the Company. Any other committee designated by the Board shall consist of one or more of the directors of the Company. (b) Executive Committee. The Executive Committee, during intervals between meetings of the Board, shall have and exercise all the powers and authority of the Board in the management of the business of the Company, except as otherwise limited by statutes, the Certificate or these bylaws. (c) Alternate Committee Members. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of an alternate member to replace the absent or disqualified member, the member or members thereof present at any -3- meeting and not disqualified from voting, regardless of whether he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any absent or disqualified member. (d) Powers and Duties. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company; provided, however, that nothing in this Section 8 shall be deemed to authorize a committee of the Board to have broader authority than the Board. Each committee shall keep regular minutes and report to the Board when required. Section 9. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board and may be paid a fixed sum for attendance at each meeting of the Board or a stated salary or other consideration as director. No such payment shall preclude any director from serving the Company in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. ARTICLE III OFFICERS Section 1. General. The officers of the Company shall be chosen by the Board and shall include a President, a Treasurer and a Secretary. The Board, in its discretion, may also choose (i) one of its members as Chairman and (ii) one or more vice presidents, assistant secretaries, assistant treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate or these bylaws. The officers of the Company need not be stockholders of the Company nor, except in the case of the Chairman, need such officers be directors of the Company. Section 2. Election. The Board at its first meeting held after each annual meeting of stockholders shall elect the officers of the Company, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board; and all officers of the Company shall hold office until their successors are chosen and qualified or until their earlier resignation or removal. Any officer elected by the Board may be removed at any time by the affirmative vote of a majority of the Board. Any vacancy occurring in any office of the Company shall be filled by the Board. The salaries of all officers of the Company shall be fixed by the Board. Section 3. Powers and Duties. The officers of the Company shall have such powers and duties as generally pertain to their offices, except as diminished or enlarged from time to time by action of the Board. The Chairman of the Board or in his absence the President, shall preside at all meetings of the Board and of the stockholders, and in their absence a presiding officer shall be appointed by action of a majority of the directors or stockholders, as the case may be. Section 4. Other Officers. Such other officers as the Board may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board. -4- The Board may delegate to any other officer of the Company the power to choose such other officers and to prescribe their respective duties and powers. ARTICLE IV STOCK Section 1. Signatures. The certificates for shares of stock of the Company shall be signed by the President, Vice President or other officer designated by the Board, countersigned by the Secretary or Treasurer. Where a certificate is countersigned by (i) a transfer agent other than the Company or its employee or (ii) a registrar other than the Company or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the sane effect as if he were such officer, transfer agent or registrar at the date of issue. Section 2. Record Date. In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a record date which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however that the Board may fix a new record date for the adjourned meeting. ARTICLE V NOTICES Whenever written notice is required by law, the Certificate or these bylaws to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at his address as it appears on the records of the Company, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by facsimile, telegram, telex or similar means of visual data transmission. ARTICLE VI AMENDMENTS These bylaws may be altered, amended or repealed, in whole or in part, or new bylaws may be adopted, at any annual or special meeting of the stockholders or of the Board by at least a majority vote of the stockholders or the Board; provided however, that notice of such alteration, amendment, repeal or adoption of new bylaws be contained in the notice of such meeting of stockholders or directors. Any alteration, amendment, addition to or repeal of these bylaws made by the Board is subject to the power of the stockholders to change such action. -5- ADOPTED as of this 2nd day of November, 1990. /s/ Bob Casey, Jr. -------------------------------- Bob Casey, Jr. Secretary EX-3.54 56 h08423exv3w54.txt CERTIFICATE OF L.P. OF WESTLAKE STYRENE LP EXHIBIT 3.54 CERTIFICATE OF LIMITED PARTNERSHIP The undersigned, desiring to form a limited partnership pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Delaware Code, Chapter 17, do hereby certify as follows: I. The name of the limited partnership is WESTLAKE STYRENE LP. II. The address of the Partnership's registered office in the State of Delaware is 103 Foulk Road, Suite 200, Wilmington, DE 19803. The registered agent for service of process in the State of Delaware at such address is Entity Services Group, L.L.C. III. The name and mailing address of each general partner is as follows:
NAME MAILING ADDRESS ---- --------------- Westlake Chemical Holdings, Inc. 2801 Post Oak Boulevard, Suite 600 Houston, TX 77056
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Limited Partnership of WESTLAKE STYRENE LP as of December 20, 2000. WESTLAKE CHEMICAL HOLDINGS, INC., GENERAL PARTNER By: /s/ A. Chao ------------------------------------- Albert Chao, President EX-3.55 57 h08423exv3w55.txt AGREEMENT OF L. P. - WESTLAKE STYRENE LP EXHIBIT 3.55 THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON SUBMISSION TO THE GENERAL PARTNER OF THE PARTNERSHIP OF SUCH EVIDENCE AS MAY BE SATISFACTORY TO IT TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BF IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER. ---------- AGREEMENT OF LIMITED PARTNERSHIP OF WESTLAKE STYRENE LP THIS AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") made effective as of December 21, 2000, by and between WESTLAKE CHEMICAL HOLDINGS, INC., a Delaware corporation ("HOLDINGS") and WESTLAKE CHEMICAL MANUFACTURING, INC., a Delaware corporation ("MANUFACTURING"); WITNESSETH: WHEREAS, HOLDINGS is a Delaware corporation qualified to do business in the State of Delaware; and WHEREAS, MANUFACTURING is a Delaware corporation qualified to do business in the State of Delaware; and WHEREAS, HOLDINGS and MANUFACTURING desire to enter into and form a limited partnership under the Revised Delaware Limited Partnership Act, as amended (the "Act"), to engage in any lawful business, act or activity for which limited partnerships may be organized under the Act; NOW, THEREFORE, in consideration of the mutual agreements set forth herein and of the contributions to capital by HOLDINGS and MANUFACTURING as set forth in Article II, HOLDINGS and MANUFACTURING hereby agree as follows: ARTICLE I FORMATION AND ORGANIZATION 1.1. Formation and Name of Partnership. Pursuant to the provisions of the Act, the HOLDINGS and MANUFACTURING hereby enter into and form a limited partnership (the "Partnership") for the purposes hereinafter set forth. The Partnership shall conduct its business under the name "WESTLAKE STYRENE LP" and such name shall be used at all times in connection with the Partnership's business and affairs. HOLDINGS shall be the general partner of the Partnership and MANUFACTURING shall be the limited partner of the Partnership. 1.2. Certain Definitions. The following terms used herein, unless the context otherwise specifically requires, shall have the following respective meanings: "Affiliate" means, with respect to any designated person, any other person which, directly or indirectly, controls or is controlled by or is under common control with such designated person, and shall include any director, officer, employee or partner of such designated person. "Article" shall refer to the numbered articles of this Agreement. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Distributable Funds" shall have the meaning set forth in Section 4.1. "Fiscal Year" or "Year" shall mean a calendar year (or portion thereof) ending on December 31 of such year. "General Partner" shall mean WESTLAKE CHEMICAL HOLDINGS, INC., a Delaware corporation. "Limited Partner" shall mean WESTLAKE CHEMICAL MANUFACTURING, INC., a Delaware corporation. "Operating Revenues" shall have the meaning set forth in Section 4.1. "Ownership Percentage" of a Partner shall have the meaning set forth in Section 2.5. "Partners" shall refer to the General Partner and the Limited Partner. "Partnership Interest" shall have the meaning set forth in Section 2.5. "Partnership Office" shall have the meaning set forth in Section 1.4. "Section" shall refer to the numbered sections of this Agreement. Other capitalized terms used in this Agreement shall have the meanings indicated. 1.3. Term. This Agreement shall be effective and the Partnership shall commence upon compliance by the Partners with Section 2.01 of the Act and shall continue until dissolved pursuant to Article VIII. 1.4. Principal Office; Registered Office and Registered Agent; Filing. 1.4.1. Principal Office. The principal office of the Partnership (the "Partnership office"), where the books and records of the Partnership shall be kept, shall be 2801 Post Oak Boulevard, Suite 600, Houston, TX 77056 Attention: Secretary. Upon compliance with applicable legal 2 requirements and notice to the Limited Partner, the General Partner may change the Partnership office to such other location or locations within or without the State of Texas as the General Partner may determine to be reasonably convenient for the General Partner and may accordingly designate as the Partnership Office for purposes hereof. 1.4.2. Filing of Certificate. The General Partner shall execute any certificate or certificates required by law to be filed in connection with the formation of the Partnership, including that required by the Act, and shall cause such certificate or certificates to be filed in the appropriate records. 1.4.3. Registered Office and Registered Agent. The registered office of the Partnership in Delaware is located at 103 Foulk Road, Suite 200, Wilmington Delaware 19803, and the name of its registered agent at such address is Entity Services Group, LLC. The General Partner is hereby given the authority to change the registered office and/or to appoint a new registered agent as the General Partner may determine in compliance with applicable legal requirements. 1.4.4. Other Jurisdictions. The General Partner shall take all steps appropriate under the laws of any jurisdiction in which it may be necessary to qualify the Partnership to transact business and to be treated as a limited partnership doing business in such jurisdiction. 1.5. Purposes of the Partnership. The object and purpose of the Partnership is to engage in any lawful business, act or activity for which limited partnerships may be organized under the Act; and to do all such other acts and things as the General Partner may deem appropriate in connection with the furtherance and accomplishment of the foregoing objects. 1.6. General Partner. WESTLAKE CHEMICAL HOLDINGS, INC. shall be and is hereby constituted the general partner of the Partnership. The management of the business and affairs of the Partnership shall be conducted as provided in Article V. Except to the extent otherwise specifically provided herein or prohibited by the Act, the General Partner shall have full power and authority to take all action in connection with the Partnership's affairs and to exercise exclusive management, supervision, and control of the Partnership's properties and business and shall have the full power to do all things necessary, convenient or appropriate in connection therewith. 1.7. Limited Partner. WESTLAKE CHEMICAL MANUFACTURING, INC. shall be and is hereby constituted as the limited partner of the Partnership. The Limited Partner, in such capacity, shall have no participation in the management of the Partnership or power to transact any Partnership business or to act for or bind the Partnership in any respect; and the Limited Partner shall not, except to the extent provided in Section 8.2.3 or by law, ever be (i) personally liable for any part of the debts or other obligations of the Partnership or (ii) obligated to make contributions to the Partnership in excess of those made pursuant to this Agreement. ARTICLE II CAPITAL CONTRIBUTIONS 2.1. Contributions. Simultaneously with the execution and delivery hereof, the General Partner has contributed to The capital of the Partnership a one percent (1%) undivided interest in the Assets, and the Limited Partner has contributed to the capital of the Partnership a ninety-nine percent (99%) undivided interest in the Assets. 3 2.2. Financing. Certain funds to finance the business of the Partnership may be derived from loans to the Partnership from third parties ("Third-Party Financing") and from the revenues of the Partnership. Any Third-Party Financing shall be entered into from time to time on such terms as the General Partner may deem advisable. 2.3. Other Funds. Except as provided in Section 8.2.3, no Partner shall be obligated (i) to contribute additional amounts to the Partnership's capital, or (ii) to furnish such Partner's funds or property for Partnership purposes, or (iii) to otherwise provide funds to or on behalf of the Partnership. 2.4. Withdrawal of Capital. No Partner shall be entitled to withdraw any part of such Partner's contribution to the Partnership capital or to receive any distribution from the Partnership except as provided in this Agreement. No Partner shall be entitled to demand or receive from the Partnership either interest on contributions to Partnership capital or property in kind, as a partition of Partnership property or otherwise. 2.5. Ownership Percentages. Each Partner's beneficial ownership interest in the Partnership ("Partnership Interest") is in the following respective percentage ("Ownership Percentage"): General Partner 1% Limited Partner 99% ARTICLE III ACCOUNTING AND TAX MATTERS 3.1. Books. The books of account of the Partnership, for financial and tax purposes, shall be kept on an accrual basis generally accepted for Internal Revenue Service reporting purposes, as appropriate to the Partnership's business. 3.2. Tax Matters. 3.2.1. Tax Returns. The General Partner shall prepare and file all income tax returns of the Partnership and shall furnish copies thereof to the Limited Partner. 3.2.2. Tax Matters Partner. The General Partner shall be the "tax matters partner" of the Partnership, within the meaning of Section 6231(a)(7) of the Code and any regulations issued thereunder, unless the Code or the regulations issued thereunder requires another person to be the tax matters partner. The expenses, if any, that the General Partner incurs in fulfilling its obligations pursuant to this Section 3.2.2 shall be expenses of the Partnership. ARTICLE IV DISTRIBUTION OF PARTNERSHIP FUNDS; ALLOCATIONS 4.1. Distributable Funds. The term "Distributable Funds" of the Partnership shall mean the excess from time to time of (A) the total of (i) cash held by the Partnership, including without limitation, cash proceeds derived from operations ("Operating Revenues"), plus (ii) net proceeds received from any sale or refinancing of all or a portion of property, proceeds of casualty insurance and condemnation awards not currently required for rebuilding, restoration, repair or operation ("Sale Proceeds"), less (B) 4 the working capital requirements of the Partnership (as determined by the General Partner) and such reserves as may be established by the General Partner from time to time. 4.2. Distributions. The General Partner shall, not later than 60 days following the end of each quarter of each Fiscal Year, determine the availability of Distributable Funds, which shall be distributed to Partners as follows: (i) in the event that (a) the ratio of the Partners' capital account balances is not equal to (b) the ratio of the Partners' Ownership Percentages, Distributable Funds shall be distributed so as to equalize, to the extent possible, (a) the ratio of the Partners' capital account balances and (b) the ratio of the Partners' Ownership Percentages, and (ii) in the event that (a) the ratio of the Partners' capital account balances is equal to (b) the ratio of the Partners' Ownership Percentages, Distributable Funds shall be distributed in the ratio of the Partners' respective Ownership Percentages. Except as otherwise required by law, no Partner shall be required to restore to the Partnership any funds distributed to it pursuant to the provisions of this Agreement. 4.3. Allocations. 4.3.1. In General. All income, gains, losses, deductions and credits (excluding gains or losses from the sale or disposition of Partnership properties) of the Partnership shall be allocated to Partners in accordance with their respective Ownership Percentages. 4.3.2. Gains on Sales. Net gains from the sale or other disposition of any of the Partnership assets or properties, including without limitation such gains on a sale or other disposition resulting in or followed by a winding up of the Partnership's affairs and a final distribution in accordance with Section 8.2, shall be allocated to the Partners in accordance with their respective ownership Percentages provided, however, that net gain from the sale of Assets contributed to the Partnership by a Partner shall be allocated (for tax purposes only) 100% to such contributing Partner to the extent of the excess of the agreed value of the contributed Assets on the date of its contribution, less the contributing Partner's adjusted tax basis in such Assets on the date of its contribution, and any remaining net gain shall be allocated to the Partners in accordance with their Ownership Percentages. 4.3.3. Losses on Sales. Net losses from the sale or other disposition of any of the Partnership assets or properties, including without limitation such losses on a sale or other disposition resulting in or followed by a winding up of the Partnership's affairs and a final distribution in accordance with Section 8.2, shall be allocated to the Partners in accordance with their respective Ownership Percentages; provided, however, that net loss from the sale of the Assets contributed to the Partnership by a Partner shall be allocated (for tax purposes only) 100% to such contributing Partner to the extent of the excess of the contributing Partner's adjusted tax basis in such Assets on the date of its contribution, less the value of the contributed Assets on the date of its contribution to the Partnership, and any remaining net loss shall be allocated to the Partners in accordance with their ownership Percentages. 4.3.4. Determination of Profits and Losses. For purposes of this Section 4.3, the income, gains, losses, deductions and credits of the Partnership shall be determined for each Fiscal Year in accordance with the accounting methods followed by the Partnership for federal income tax purposes and the allocations contemplated hereby shall be determined as a percentage (of each item of Partnership income, gain, loss, deduction or credit, as the case may be) obtained by dividing (i) the number of days of such Fiscal Year into (ii) the product obtained by multiplying a Partner's Ownership Percentage by the number of days in such Fiscal Year on which such Partner held such Ownership Percentage. 5 ARTICLE V RIGHTS, POWERS, AND DUTIES OF THE PARTNERS 5.1. Management of Partnership Business. The General Partner shall have the sole right to manage the business and affairs of the Partnership, and shall have and enjoy all of the rights and powers of a general partner of a partnership with limited partners except as otherwise provided by the Act or this Agreement. 5.2. Powers of the General Partner. 5.2.1. General Powers. Without limiting the provisions of Section 5.1, and subject only to the qualifications of Section 5.3, the General Partner is empowered to act for and bind the Partnership with respect to all matters and shall have full power and authority to exercise all powers that may be lawfully exercised by the general partner of a limited partnership formed under the Act, and third persons dealing with the Partnership shall be fully protected in relying on any action taken or instrument executed on behalf of the Partnership by the General Partner. 5.3. Limitations on Powers of the General Partner. Notwithstanding the provisions of Sections 5.1 and 5.2, without the prior consent of the Limited Partner, the General Partner shall not take any action that it may not lawfully take without such consent. 5.4. Limited Partners. The Limited Partner shall not participate in or have any control over the management of the business of the Partnership or transact any business for the Partnership. The Limited Partner shall not have any power to sign for or bind the Partnership. The Limited Partner shall not have any right to withdraw from or cause the dissolution of the Partnership or to cause the partition of its properties. 5.5. Books and Records. The General Partner shall maintain complete and accurate books of the Partnership at the Partnership Office, showing the names, addresses and Partnership Interests and capital accounts of all Partners, and all receipts, expenditures, assets, liabilities, profits and losses of the Partnership and all other records necessary for the recording of the business and affairs of the Partnership, as well as all records required by the Act. Each Partner and his duly authorized representative shall at all reasonable times during regular business hours have access to and may inspect and examine the Partnership's books or records. 5.6. Reports. Within 90 days after the end of each year, the General Partner shall prepare, or cause to be prepared, a report which shall include tax reporting information required by the Partners for preparation of their respective income tax returns. All decisions as to accounting matters, except as specifically provided herein, shall be made by the General Partner and shall be in accordance with accepted accounting practices, as such are applicable to the method of accounting adopted by the Partnership. 5.7. Income Tax Elections. The General Partner, subject only to Article III, shall have the right to make any applicable elections under the Code which, in the judgment of the General Partner, are in the best interests of the Partnership. 6 5.8. Capital and Income Accounts. 5.8.1. General Rules. The General Partner shall maintain a capital account and an income account for each Partner. Except as otherwise provided herein, each Partner's capital account shall be maintained in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv). There shall be credited to the capital account of each Partner the amount of cash and the agreed value of any Assets contributed to the deductions and credits shall be allocated to the income accounts of the Partners as provided in Section 4.3. At the end of each Year, and following any sale of the Partnership's assets in connection with the liquidation of the Partnership pursuant to Article XIII, the income accounts of all of the Partners shall be closed out to their respective capital accounts. The capital account of a Partner shall be charged with the amount of any cash distributed and the fair market value of any Assets distributed to such Partner. Any optional loans or advances made by a Partner to the Partnership shall not be credited to the lending Partner's income or capital account. Distributions (whether constituting principal or interest) to a lending Partner in repayment of any such optional loans or advances shall not be charged to the lending Partner's income or capital account. In connection with each assignment of any interest in the Partnership (other than an assignment intended only to secure payment of indebtedness or other obligation), the capital and income accounts allocable to such interest in the Partnership shall be transferred from the assignor to the assignee. 5.8.2. Hypothetical Sale. Upon liquidation of the Partnership or any Partner's interest in the Partnership, any unsold Partnership assets shall be valued to determine the gain or loss that would result if such assets were sold at their fair market value, as determined in good faith by the General Partner, at the time of such liquidation. The capital accounts of the Partners shall be adjusted to reflect the manner in which any such gain or loss would have been allocated if such assets had been sold at such value. 5.9. Right to Compete. Neither the General Partner nor any of its officers, agents or employees shall be obligated to devote its or their full time and attention to the Partnership and its affairs, but only such time as may reasonably be necessary for the conduct of the Partnership's business. Nothing contained in this Agreement shall preclude the General Partner, its officers, agents or employees from engaging in any business, or making any other investment, even though such business, or other investment may be in competition with the business of the Partnership. Any such activity may be undertaken with or without notice to or participation therein by the other Partner and neither any Partner nor the Partnership shall have any right or claim with respect to any such activity or the income or profits therefrom. 5.10. Limitation on Responsibility of General Partner. The General Partner's obligations to perform the functions enumerated herein and such other obligations as may arise by operation of law or otherwise shall be performable only to the extent that the Partnership from time to time has funds available therefor, and neither the General Partner nor its Affiliates shall ever be personally liable to furnish involuntarily its or their own funds for any such purposes, to respond in damages, or to render specific performance. The Limited Partner hereby further agrees to look solely to the Partnership Interest of the General Partner for recovery of any judgment against the General Partner. In the exercise of any of its responsibilities or authority under this Agreement or otherwise, the General Partner shall be obligated to act in good faith; and so long as it acts in good faith, it shall have no liability or obligation to the Partnership or to any Partner for any decision, act or omission, whether or not such decision, act or omission shall have been authorized or reasonably prudent, and whether or not such decision, act or omission shall have been the result of the exercise of good or bad business judgment. 7 ARTICLE VI ASSIGNMENT OR TRANSFER OF INTEREST BY PARTNERS 6.1. Conditions of Transfer. Partnership Interests are transferable, provided, however, that no Partnership Interest, or any portion thereof may be transferred without the consent of the other Partner. 6.2. Partner Representations. Each of the Partners, by execution of this Agreement, and each assignee or transferee of a Partner by acceptance of the rights and interests of his assignor or transferor in the Partnership, represents and warrants to and covenants and agrees with the Partnership and the other Partner that such Partner's interest has been acquired under this Agreement for such Partner's own account, for investment, and not with a view to or for sale in connection with any distribution thereof or with any present intention of distributing or selling such interest. The Limited Partner hereby further represents and warrants to the Partnership and the General Partner as follows: (i) The Limited Partner has such knowledge and experience in financial and business matters, including investing in or dealing with real estate ventures similar to that of the Partnership, that it is capable of evaluating the merits and risks of an investment in the Partnership. The Limited Partner is able to bear the economic risk of an investment in the Partnership, including the risk of holding indefinitely any Partnership Interest acquired hereunder. (ii) The Limited Partner has been afforded full access to representatives of the General Partner for purposes of such inquiry as such Limited Partner deems appropriate, and all information requested by the Limited Partner concerning the Partnership has been supplied. (iii) The Limited Partner recognizes that the Partnership is engaged in an enterprise of high and inherent risks. 6.3. Indemnification. Each Partner agrees to indemnify and bold harmless the Partnership and the other Partner, their respective agents and representatives and the Affiliates of each of the foregoing, from and against any and all loss, claims, damage or liability directly or indirectly related to, arising from or incurred in connection with any breach of the covenants, representations and warranties of this Article VI (including any misrepresentation or omission related thereto) by such Partner. 6.4. Substituted Limited Partner. An assignee or transferee (other than an existing Partner) of the interest of the Limited Partner may be admitted as a Substituted Limited Partner only with the consent of the General Partner and shall be admitted as of the date of such consent. The granting or denying of such consent shall be in the absolute discretion of the General Partner. Unless the assignee is the General Partner, any assignee of a Partnership Interest to whose admission such consent is given (a "Substituted Limited Partner") shall become and shall have only the rights and duties of a limited partner of the Partnership, and the assigned Partnership Interest shall thereafter be a Limited Partnership Interest. Any transferee of the interest of the Limited Partner shall be entitled only to receive distributions hereunder until such transferee has been admitted as a limited partner of the Partnership. 6.5. Effect of Change in Partners. Subject to all of the provisions of this Agreement, and to the extent permitted under applicable law, the dissolution, liquidation, bankruptcy or substitution of the Limited Partner shall not interrupt the continuity of or cause the termination or dissolution of the Partnership. 8 6.6. Reconstitution. Upon dissolution of the Partnership, the Partnership may be reconstituted and its business continued without being wound up if there remains at least one general partner. The business of the Partnership may be carried on by any such remaining general partner. ARTICLE VII REIMBURSEMENT OF CERTAIN COSTS 7.1. Reimbursement of Certain Costs. The General Partner shall be reimbursed promptly by the Partnership for all actual, reasonable, and necessary expenditures made from time to time on behalf of the Partnership in connection with the affairs of the Partnership, or the performance of the duties of the General Partner hereunder. ARTICLE VIII DISSOLUTION AND LIQUIDATION 8.1. Events of Dissolution. The Partnership shall be dissolved upon the occurrence of any of the following events: (i) the agreement of all Partners; or (ii) December 31, 2099. 8.2. Winding Up and Distribution of Assets. 8.2.1. Winding Up. Upon dissolution of the Partnership, the General Partner shall proceed to wind up the affairs of the Partnership, liquidate the property and assets of the Partnership that it determines shall be sold and terminate the Partnership. 8.2.2. Application of Proceeds. The proceeds of such liquidation and any unsold assets shall be applied in the following order of priority: (i) first, to the expenses of such liquidation; (ii) second, to the debts and liabilities of the Partnership to third parties, if any, in the order of priority provided by law; (iii) third, to a reasonable reserve to be set up to provide for any contingent or unforeseen liabilities or obligations of the Partnership to third parties (to be held and disbursed, at the reasonable discretion of the General Partner, by an escrow agent selected by it) and at the expiration of such period as the General Partner may reasonably deem advisable, the balance shall be distributed as provided herein; (iv) fourth, to all loans that any Partner may have made and any other debts or liquidated obligations of the Partnership to the Partners; (v) fifth, to the Partners until they shall have received back the amounts shown in, and in the proportions of, their capital accounts; and 9 (vi) sixth, the remaining assets of the Partnership, if any, shall be distributed to the Partners (or their successors and assigns) in accordance with their respective Ownership Interests. 8.2.3. Restoration of Negative Capital Account. If, upon the liquidation of the Partnership or the liquidation of a Partner's interest in the Partnership, a Partner shall have a negative balance in his capital account, after giving effect to all adjustments to the capital account of such Partner pursuant to Article IV and Section 5.8, then notwithstanding anything herein, such Partner shall contribute to the Partnership cash in the amount of such deficit balance. Contributions made under this Section shall be made by the end of the taxable year of the Partnership in which the liquidation of the Partnership or the liquidation of such Partner's interest in the Partnership occurs (or, if later, within ninety days after the date of such liquidation); and shall be used first to satisfy any amounts then owing by the Partnership to its creditors to the extent that such creditors have recourse to the assets of the Partners; any remaining amount shall be distributed to the Partners having positive balances in their capital accounts in proportion to such positive balances. Notwithstanding anything herein, a Partner required to make a contribution pursuant to this Section 8.2.3 shall be personally liable to make such contribution. For purposes of this Section 8.2.3, the term "liquidation" shall have the meaning given it in the first two sentences of Treasury Regulation Section 1.704-1(b)(2)(i)(g). ARTICLE IX MISCELLANEOUS 9.1. Certificate Requirements. The General Partner hereby agrees that it shall execute and file promptly the certificate required by the Act for the formation of the Partnership contemplated by this Agreement. The General Partner will execute and file, from time to time, in said office all such documents to amend said certificate as are required by the Act for the carrying out of the terms and provisions of this Agreement; and upon winding up of the Partnership, the General Partner shall execute and file in said office the documents required by the Act to cancel said certificate as theretofore amended. 9.2. Notices. All notices, requests, statements, offers, acceptances, requests for consents or other writings required or permitted to be given or furnished hereunder to any Partner ("Notices") shall be in writing and delivered to such Partner or deposited in the United States mail in a sealed envelope, registered or certified mail, with postage prepaid, or sent by facsimile, telex or telegram (and confirmed by registered or certified mail the same date), addressed to such Partner as follows: (i) If to the General Partner, to: Westlake Chemical Holdings, Inc. 2801 Post Oak Boulevard, Suite 600 Houston, TX 77056 Attention: Corporate Secretary (ii) If to the Limited Partner, to: Westlake Chemical Manufacturing, Inc. 103 Foulk Road, Suite 200 Wilmington, DE 19803 Attention: Entity Services Group LLC 10 or at such other address as such Partner shall have previously designated by Notice to the Partner giving such Notice. All Notices shall be deemed given when delivered or, if mailed, on the second business day after the day of mailing, and if sent by telex or telegram, the first business day after the day of dispatch. Any Partner may change its address for the receipt of Notices at any time by giving notice thereof to the other Partner. Notwithstanding the requirement as to the use of registered or certified mail, any routine reports required by this Agreement to be submitted to Partners at specified times may be sent by first class mail. 9.3. Entire Agreement. This Agreement supersedes all prior agreements and understandings among the Partners with respect to the subject matter hereof. 9.4. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware. 9.5. Modification, Termination and Waiver. This Agreement may be modified, terminated or waived only by a writing signed by the party to be charged with such modification, termination or waiver. 9.6. Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. However, no assignment of any interest in this Agreement may be made otherwise than in accordance with the provisions of this Agreement. 9.7. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original of this Agreement but all of which, taken together, shall constitute one and the same Agreement. 9.8. Severability. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 9.9. Further Assurances. Each Partner shall execute such deeds, assignments, endorsements, evidences of transfer and other instruments and documents and shall give such further assurances as shall be necessary to perform its obligations hereunder. 9.10. Limitation on Rights of Others. No person other than a Partner shall have any legal or equitable right, remedy or claim under or in respect of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. GENERAL PARTNER: WESTLAKE CHEMICAL HOLDINGS, INC. By: /s/ A. Chao ------------------ 11 LIMITED PARTNER: WESTLAKE CHEMICAL MANUFACTURING, INC. By: /s/ Harold F. Kalbach Jr. ------------------------- 12 EX-3.56 58 h08423exv3w56.txt CERTIFICATE OF INCORP.-WESTLAKE VINYL CORPORATION EXHIBIT 3.56 CERTIFICATE OF INCORPORATION OF WESTLAKE HOLDINGS CORPORATION ARTICLE I The name of the corporation is Westlake Holdings Corporation. ARTICLE II The registered agent of the corporation is The Corporation Trust Company. The address of such registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. ARTICLE III The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock at a par value of One and No/100 Dollars ($1.00) each. ARTICLE V The name and mailing address of the incorporator are as follows: Bob Casey, Jr. 2900 South Tower Pennzoil Place Houston, Texas 77002-2781 I, THE UNDERSIGNED, being the incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 7th day of June, 1990. /s/ Bob Casey, Jr. ----------------------------- Bob Casey, Jr. EX-3.57 59 h08423exv3w57.txt CERTIFICATE OF AMEND. TO CERT. OF INCORPORATION EXHIBIT 3.57 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Westlake Holdings Corporation ("Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That in lieu of a meeting and vote of directors, the Board of Directors of the Corporation, by unanimous written consent filed with the Corporation, in accordance with the Provisions of Section 141(f) of the General Corporation Law of the State of Delaware, have adopted a resolution proposing and declaring advisable the following amendments to the Certificate of Incorporation of the Corporation: RESOLVED, That the Certificate of Incorporation be amended by changing Article I to read as follows: ARTICLE I The name of the corporation is Westlake Chemical Corporation. SECOND: That in lieu of a meeting and vote of stockholders, the sole stockholder of all outstanding stock entitled to vote thereon has given written consent to the above amendment in accordance with Section 228 of the General Corporation Law of the State of Delaware, and said written consent has been filed with the Corporation. THIRD: That said amendments were duly adopted in accordance with the provisions of Sections 141, 216, 228 and 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of the Corporation will not be reduced under or by reason of said amendments. IN WITNESS WHEREOF, Westlake Holdings Corporation has caused this certificate to be signed by its President and attested by its Secretary, this 15th day of October, 1993. WESTLAKE HOLDINGS CORPORATION By: /s/ A. Chao ------------------------- Albert Chao President ATTEST: By: /s/ Michael A. Robison ---------------------- Michael A. Robison Secretary EX-3.58 60 h08423exv3w58.txt CERTIFICATE OF AMEND. TO CERT. OF INCORPORATION EXHIBIT 3.58 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Westlake Chemical Corporation ("Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That in lieu of a meeting and vote of directors, the Board of Directors of the Corporation, by unanimous written consent filed with the Corporation, in accordance with the Provisions of Section 141(f) of the General Corporation Law of the State of Delaware, have adopted a resolution proposing and declaring advisable the following amendments to the Certificate of Incorporation of the Corporation: RESOLVED, That the Certificate of Incorporation be amended by changing Article I to read as follows: ARTICLE I The name of the corporation is Westlake Vinyl Corporation. SECOND: That in lieu of a meeting and vote of stockholders, the sole stockholder of all outstanding stock entitled to vote thereon has given written consent to the above amendment in accordance with Section 228 of the General Corporation Law of the State of Delaware, and said written consent has been filed with the Corporation. THIRD: That said amendments were duly adopted in accordance with the provisions of Sections 141, 216, 228 and 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of the Corporation will not be reduced under or by reason of said amendments. IN WITNESS WHEREOF, Westlake Chemical Corporation has caused this certificate to be signed by its Executive Vice President and attested by its Secretary, this 31st day of October, 1993. WESTLAKE CHEMICAL CORPORATION By: /s/ A. Chao ---------------------------- Albert Chao Executive Vice President ATTEST: By: /s/ Michael A. Robison ---------------------- Michael A. Robison Secretary EX-3.59 61 h08423exv3w59.txt BYLAWS OF WESTLAKE VINYL CORPORATION EXHIBIT 3.59 BYLAWS OF WESTLAKE VINYL CORPORATION (hereinafter called the "Company") ARTICLE I MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual Meetings. The annual meetings of stockholders shall be held on such date and at such time as shall be designated from time to time by the Board and stated in the notice of the meeting, at which meetings the stockholders shall elect by a plurality vote the Board, and transact such other business as may properly be brought before the meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 3. Special Meetings. Unless otherwise prescribed by law or by the certificate of incorporation of the Company (the "Certificate"), special meetings of stockholders, for any purpose or purposes, may be called by either (i) the Chairman, (ii) the President, (iii) any vice president, (iv) the Secretary or (v) any assistant secretary, and shall be called by any such officer at the request in writing of a majority of the Board or at the request in writing of stockholders owning a majority of the capital stock of the Company issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Written notice of the special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. Section 4. Quorum. Except as otherwise provided by law or by the Certificate, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat present in person or represented by proxy shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting. Section 5. Voting. Unless otherwise required by law, the Certificate or these bylaws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share standing in his name on the books of the Company. Such votes may be cast in person or by proxy, but no proxy shall be voted on or after three years from its date unless such proxy provides for a longer period. The Board, in its discretion, or the officer of the Company presiding at a meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 6. List of Stockholders Entitled to Vote. The officer of the Company who has charge of the stock ledger of the Company shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder of the Company who is present. ARTICLE II DIRECTORS Section 1. Number and Election of Directors. The business and affairs of the Company shall be managed by the Board, initially consisting of one (1) director. The number of directors may be increased or decreased from time to time by resolution of the Board or by due election of that number of directors by the stockholders, but no decrease by the Board shall have the effect of shortening the term of any incumbency. Except as provided in Section 2 of this Article, the director or directors, as the case may be, shall be elected by a plurality of the votes cast at annual meetings of stockholders and shall hold office until the next annual meting and until his/their successor(s) is duly elected and qualified or until his/their earlier resignation or removal. Any director may resign at any time upon notice to the Company. Directors need not be stockholders. Section 2. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified or until their earlier resignation or removal. Section 3. Duties and Powers. The business of the Company shall be managed by or under the direction of the Board, which may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the Certificate or by these bylaws directed or required to be exercised or done by the stockholders. Section 4. Meetings. The Board may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board may be held without notice at such time and at such place as may from time to time be determined by the Board. Special meetings of the Board may be called by the Chairman, if there be one, the President or -2- any director. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than 48 hours before the date of the meeting, by telephone, facsimile, telegram, telex or similar means of visual data transmission on 24 hours notice or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Section 5. Quorum. Except as may be otherwise specifically provided by law, the Certificate or these bylaws, at all meetings of the Board, a majority of the entire Board shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board. If a quorum shall not be present at any meeting of the Board, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 6. Actions of the Board. Unless otherwise provided by the Certificate or these bylaws, any action required or permitted to be taken at any meeting of the Board may be taken without a meeting, if all the members of the Board consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board. Such writings, which may be in counterparts, shall be manually executed if practicable; provided, however, that if circumstances so require, effect shall be given to written consents transmitted by telegraph, telex, facsimile or similar means of visual data transmission. Section 7. Meetings by Means of Conference Telephone. Unless otherwise provided by the Certificate or these bylaws, members of the Board or any committee designated by the Board may participate in a meeting of the Board or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 7 shall constitute presence in person at such meeting. Section 8. Committees. (a) Designation. The Board may, by resolution adopted by a majority of the entire Board, designate one or more standing or special committees, including, as they shall so determine, an executive committee. The executive committee, if one is designated, shall consist of one or more of the directors of the Company. Any other committee designated by the Board shall consist of one or more of the directors of the Company. (b) Executive Committee. The Executive Committee, during intervals between meetings of the Board, shall have and exercise all the powers and authority of the Board in the management of the business of the Company, except as otherwise limited by statutes, the Certificate or these bylaws. (c) Alternate Committee Members. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of an alternate member to replace the absent or disqualified member, the member or members thereof present at any -3- meeting and not disqualified from voting, regardless of whether he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any absent or disqualified member. (d) Powers and Duties. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company; provided, however, that nothing in this Section 8 shall be deemed to authorize a committee of the Board to have broader authority than the Board. Each committee shall keep regular minutes and report to the Board when required. Section 9. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board and may be paid a fixed sum for attendance at each meeting of the Board or a stated salary or other consideration as director. No such payment shall preclude any director from serving the Company in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. ARTICLE III OFFICERS Section 1. General. The officers of the Company shall be chosen by the Board and shall include a President, a Treasurer and a Secretary. The Board, in its discretion, may also choose (i) one of its members as Chairman and (ii) one or more vice presidents, assistant secretaries, assistant treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate or these bylaws. The officers of the Company need not be stockholders of the Company nor, except in the case of the Chairman, need such officers be directors of the Company. Section 2. Election. The Board at its first meeting held after each annual meeting of stockholders shall elect the officers of the Company, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board; and all officers of the Company shall hold office until their successors are chosen and qualified or until their earlier resignation or removal. Any officer elected by the Board may be removed at any time by the affirmative vote of a majority of the Board. Any vacancy occurring in any office of the Company shall be filled by the Board. The salaries of all officers of the Company shall be fixed by the Board. Section 3. Powers and Duties. The officers of the Company shall have such powers and duties as generally pertain to their offices, except as diminished or enlarged from time to time by action of the Board. The Chairman of the Board or in his absence the President, shall preside at all meetings of the Board and of the stockholders, and in their absence a presiding officer shall be appointed by action of a majority of the directors or stockholders, as the case may be. Section 4. Other Officers. Such other officers as the Board may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board. -4- The Board may delegate to any other officer of the Company the power to choose such other officers and to prescribe their respective duties and powers. ARTICLE IV STOCK Section 1. Signatures. The certificates for shares of stock of the Company shall be signed by the President, Vice President or other officer designated by the Board, countersigned by the Secretary or Treasurer. Where a certificate is countersigned by (i) a transfer agent other than the Company or its employee or (ii) a registrar other than the Company or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 2. Record Date. In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix, in advance, a record date which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however that the Board may fix a new record date for the adjourned meeting. ARTICLE V NOTICES Whenever written notice is required by law, the Certificate or these bylaws to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at his address as it appears on the records of the Company, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by facsimile, telegram, telex or similar means of visual data transmission. ARTICLE VI AMENDMENTS These bylaws may be altered, amended or repealed, in whole or in part, or new bylaws may be adopted, at any annual or special meeting of the stockholders or of the Board by at least a majority vote of the stockholders or the Board; provided however, that notice of such alteration, amendment, repeal or adoption of new bylaws be contained in the notice of such meeting of stockholders or directors. Any alteration, amendment, addition to or repeal of these bylaws made by the Board is subject to the power of the stockholders to change such action. -5- ADOPTED as of this 3rd day of September, 1991. /s/ Bob Casey, Jr. ------------------------------ Bob Casey, Jr. President -6- EX-3.60 62 h08423exv3w60.txt CERTIFICATE OF INCORP.-WESTLAKE VINYLS, INC. EXHIBIT 3.60 CERTIFICATE OF INCORPORATION OF WESTLAKE CA&O CORPORATION 1. The name of the corporation is Westlake CA&O Corporation. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted is: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. To manufacture, purchase or otherwise acquire, invest in, own, mortgage pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description. To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of this corporation. To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, choses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof. To borrow or raise money for any of the purposes of the corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the Corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes. To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of the corporation's property and assets, or any interest therein, wherever situated. In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of Delaware or by any other law of Delaware or by this Certificate of Incorporation together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the corporation. The business and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this Certificate of Incorporation, but the business and purposes specified in each of the foregoing clauses of this article shall be regarded as independent business and purposes. 4. The total number of shares of stock which the corporation shall have authority to issue is: One Thousand (1,000); all of such shares shall be without par value. 5. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS ---- --------------- J. McBurnett 811 Dallas Ave., Houston, TX 77002 B. Cleveland 811 Dallas Ave., Houston, TX 77002 D. Singleton 811 Dallas Ave., Houston, TX 77002
The name and mailing address of each person who is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified, is as follows:
NAME MAILING ADDRESS ---- --------------- T.T. Chao 2801 Post Oak Blvd., Suite 600 Houston, TX 77056
6. The corporation is to have perpetual existence. 7. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: 2 To make, alter or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. To designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the Delaware General Corporation Law to be submitted to stockholders for approval or (ii) adopting, amending or repealing any by-law of the corporation. When and as authorized by the stockholders in accordance with law, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. 8. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or 3 receivers appointed for this corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. 9. The corporation reserves the right to amend, after, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. 10. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this Certificate, hereby declaring and certifying that this is our act and deed and the facts herein stated are true, and accordingly have hereunto set our hands this Tenth day of July, 1997. /s/ J. McBurnett ---------------------------- J. McBurnett /s/ B. Cleveland ---------------------------- B. Cleveland /s/ D. Singleton ---------------------------- D. Singleton 4 EX-3.61 63 h08423exv3w61.txt CERTIFICATE OF AMEND. TO CERT. OF INCORPORATION EXHIBIT 3.61 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Westlake CA&O Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That the sole member of the Board. of Directors of said corporation, by written consent filed with the minutes of the Board pursuant to Section 141(f) of the General Corporation Law of the State of Delaware, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED: That the Certificate of Incorporation of Westlake CA&O Corporation be amended by changing paragraph 1 thereof so that, as amended, said paragraph shall be and read as follows: 1. The name of the corporation is WESTLAKE VINYLS, INC. SECOND: That in lieu of a meeting and vote of stockholders, the sole stockholder of said corporation has given written consent to said amendment in accordance with Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, Westlake CA&O Corporation has caused this certificate to be signed by its President this 28th day of September, 2001. WESTLAKE CA&O CORPORATION /s/ A. Chao -------------------------- Albert Chao President EX-3.62 64 h08423exv3w62.txt BYLAWS OF WESTLAKE VINYLS, INC. EXHIBIT 3.62 WESTLAKE CA&O CORPORATION * * * * * BY-LAWS * * * * * ARTICLE I OFFICES Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Houston, State of Texas, at such place as may be fixed from time to time by the board of directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual meetings of stockholders, commencing with the year 1998, shall be held on the Second day of January, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 6. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 8. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum 2 shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Section 10. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be not less than I nor more than 3. The first board shall consist of I directors, Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. 3 Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. Section 3. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special meetings of the board may be called by the president on 2 days' notice to each director, either personally or by mail or by facsimile communication, special meetings shall be called by 4 the president or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director; in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 8. At all meetings of the board, a majority of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 11. The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. 5 Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power Or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing any by-law of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 14. Unless otherwise restricted by the certificate of incorporation or by law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, 6 and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by facsimile telecommunication. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, one or more vice-presidents, a secretary and a treasurer. Section 3. The board of directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings of the stockholders and the board of directors, shall have general and active management of 7 the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a sea], under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. In the absence of the president or in the event of his inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 8 THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by a certificate or shall be uncertificated. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation. Section 2. Any of or all the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be 9 issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate or certificates or uncertificated shares to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting: provided, however, that the board of directors may fix a new record date for the adjourned meeting. 10 REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or Interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. 11 FISCAL YEAR Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION Section 7. The corporation shall indemnify its officers, directors, employees and agents to the extent permitted by the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These by-laws may be altered, amended or repeated or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal by-laws is conferred upon the board of directors by the certificate of incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal by-laws. 12 EX-3.63 65 h08423exv3w63.txt CERTIFICATE OF L.P. OF WPT LP EXHIBIT 3.63 CERTIFICATE OF LIMITED PARTNERSHIP The undersigned, desiring to form a limited partnership pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Delaware Code, Chapter 17, do hereby certify as follows: I. The name of the limited partnership is WPT LP. II. The address of the Partnership's registered office in the State of Delaware is 103 Foulk Road, Suite 200, Wilmington, DE 19803. The registered agent for service of process in the State of Delaware at such address is Entity Services Group, L.L.C. III. The name and mailing address of each general partner is as follows:
NAME MAILING ADDRESS ---- --------------- Westlake Chemical Holdings, Inc. 2801 Post Oak Boulevard, Suite 600 Houston, TX 77056
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Limited Partnership of WPT LP as of December 20, 2000. WESTLAKE CHEMICAL HOLDINGS, INC., GENERAL PARTNER By: /s/ A. Chao --------------------------------- Albert Chao, President EX-3.64 66 h08423exv3w64.txt AGREEMENT OF L. P. - WPT LP EXHIBIT 3.64 THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON SUBMISSION TO THE GENERAL PARTNER OF THE PARTNERSHIP OF SUCH EVIDENCE AS MAY BE SATISFACTORY TO IT TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER. ---------- AGREEMENT OF LIMITED PARTNERSHIP OF WPT LP THIS AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") made effective as of December 21, 2000, by and between WESTLAKE CHEMICAL HOLDINGS, INC., a Delaware corporation ("HOLDINGS") and WESTLAKE CHEMICAL MANUFACTURING, INC., a Delaware corporation ("MANUFACTURING"); WITNESSETH: WHEREAS, HOLDINGS is a Delaware corporation qualified to do business in the State of Delaware; and WHEREAS, MANUFACTURING is a Delaware corporation qualified to do business in the State of Delaware; and WHEREAS, HOLDINGS and MANUFACTURING desire to enter into and form a limited partnership under the Revised Delaware Limited Partnership Act, as amended (the "Act"), to engage in any lawful business, act or activity for which limited partnerships may be organized under the Act; NOW, THEREFORE, in consideration of the mutual agreements set forth herein and of the contributions to capital by HOLDINGS and MANUFACTURING as set forth in Article II, HOLDINGS and MANUFACTURING hereby agree as follows: ARTICLE I FORMATION AND ORGANIZATION 1.1. Formation and Name of Partnership. Pursuant to the provisions of the Act, the HOLDINGS and MANUFACTURING hereby enter into and form a limited partnership (the "Partnership") for the purposes hereinafter set forth. The Partnership shall conduct its business under the name "WPT LP" and such name shall be used at all times in connection with the Partnership's business and affairs. HOLDINGS shall be the general partner of the Partnership and MANUFACTURING shall be the limited partner of the Partnership. 1.2. Certain Definitions. The following terms used herein, unless the context otherwise specifically requires, shall have the following respective meanings: "Affiliate" means, with respect to any designated person, any other person which, directly or indirectly, controls or is controlled by or is under common control with such designated person, and shall include any director, officer, employee or partner of such designated person. "Article" shall refer to the numbered articles of this Agreement. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Distributable Funds" shall have the meaning set forth in Section 4.1. "Fiscal Year" or "Year" shall mean a calendar year (or portion thereof) ending on December 31 of such year. "General Partner" shall mean WESTLAKE CHEMICAL HOLDINGS, INC., a Delaware corporation. "Limited Partner" shall mean WESTLAKE CHEMICAL MANUFACTURING, INC. a Delaware corporation. "Operating Revenues" shall have the meaning set forth in Section 4.1. "Ownership Percentage" of a Partner shall have the meaning set forth in Section 2.5. "Partners" shall refer to the General Partner and the Limited Partner. "Partnership Interest" shall have the meaning set forth in Section 2.5. "Partnership Office" shall have the meaning set forth in Section 1.4. "Section" shall refer to the numbered sections of this Agreement. Other capitalized terms used in this Agreement shall have the meanings indicated. 1.3. Term. This Agreement shall be effective and the Partnership shall commence upon compliance by the Partners with Section 2.01 of the Act and shall continue until dissolved pursuant to Article VIII. 2 1.4. Principal Office; Registered Office and Registered Agent; Filing. 1.4.1 Principal Office. The principal office of the Partnership (the "Partnership office"), where the books and records of the Partnership shall be kept, shall be 2801 Post Oak Boulevard, Suite 600, Houston, TX 77056 Attention: Secretary. Upon compliance with applicable legal requirements and notice to the Limited Partner, the General Partner may change the Partnership office to such other location or locations within or without the State of Texas as the General Partner may determine to be reasonably convenient for the General Partner and may accordingly designate as the Partnership Office for purposes hereof. 1.4.2 Filing of Certificate. The General Partner shall execute any certificate or certificates required by law to be filed in connection with the formation of the Partnership, including that required by the Act, and shall cause such certificate or certificates to be filed in the appropriate records. 1.4.3 Registered Office and Registered Agent. The registered office of the Partnership in Delaware is located at 103 Foulk Road, Suite 200, Wilmington Delaware 19803, and the name of its registered agent at such address is Entity Services Group, LLC. The General Partner is hereby given the authority to change the registered office and/or to appoint a new registered agent as the General Partner may determine in compliance with applicable legal requirements. 1.4.4 Other Jurisdictions. The General Partner shall take all steps appropriate under the laws of any jurisdiction in which it may be necessary to qualify the Partnership to transact business and to be treated as a limited partnership doing business in such jurisdiction. 1.5. Purposes of the Partnership. The object and purpose of the Partnership is to engage in any lawful business, act or activity for which limited partnerships may be organized under the Act; and to do all such other acts and things as the General Partner may deem appropriate in connection with the furtherance and accomplishment of the foregoing objects. 1.6. General Partner. WESTLAKE CHEMICAL HOLDINGS, INC., Inc. shall be and is hereby constituted the general partner of the Partnership. The management of the business and affairs of the Partnership shall be conducted as provided in Article V. Except to the extent otherwise specifically provided herein or prohibited by the Act, the General Partner shall have full power and authority to take all action in connection with the Partnership's affairs and to exercise exclusive management, supervision, and control of the Partnership's properties and business and shall have the full power to do all things necessary, convenient or appropriate in connection therewith. 1.7. Limited Partner. WESTLAKE CHEMICAL MANUFACTURING, INC. shall be and is hereby constituted as the limited partner of the Partnership. The Limited Partner, in such capacity, shall have no participation in the management of the Partnership or power to transact any Partnership business or to act for or bind the Partnership in any respect; and the Limited Partner shall not, except to the extent provided in Section 8.2.3 or by law, ever be (i) personally liable for any part of the debts or other obligations of the Partnership or (ii) obligated to make contributions to the Partnership in excess of those made pursuant to this Agreement. 3 ARTICLE II CAPITAL CONTRIBUTIONS 2.1. Contributions. Simultaneously with the execution and delivery hereof, the General Partner has contributed to the capital of the Partnership a one percent (1%) undivided interest in the Assets, and the Limited Partner has contributed to the capital of the Partnership a ninety-nine percent (99%) undivided interest in the Assets. 2.2. Financing. Certain funds to finance the business of the Partnership may be derived from loans to the Partnership from third parties ("Third-Party Financing") and from the revenues of the Partnership. Any Third-Party Financing shall be entered into from time to time on such terms as the General Partner may deem advisable. 2.3. Other Funds. Except as provided in Section 8.2.3, no Partner shall be obligated (i) to contribute additional amounts to the Partnership's capital, or (ii) to furnish such Partner's funds or property for Partnership purposes, or (iii) to otherwise provide funds to or on behalf of the Partnership. 2.4. Withdrawal of Capital. No Partner shall be entitled to withdraw any part of such Partner's contribution to the Partnership capital or to receive any distribution from the Partnership except as provided in this Agreement. No Partner shall be entitled to demand or receive from the Partnership either interest on contributions to Partnership capital or property in kind, as a partition of Partnership property or otherwise. 2.5. Ownership Percentages. Each Partner's beneficial ownership interest in the Partnership ("Partnership Interest") is in the following respective percentage ("Ownership Percentage"): General Partner 1% Limited Partner 99% ARTICLE III ACCOUNTING AND TAX MATTERS 3.1. Books. The books of account of the Partnership, for financial and tax purposes, shall be kept on an accrual basis generally accepted for Internal Revenue Service reporting purposes, as appropriate to the Partnership's business. 3.2. Tax Matters. 3.2.1 Tax Returns. The General Partner shall prepare and file all income tax returns of the Partnership and shall furnish copies thereof to the Limited Partner. 3.2.2 Tax Matters Partner. The General Partner shall be the "tax matters partner" of the Partnership, within the meaning of Section 6231(a)(7) of the Code and any regulations 4 issued thereunder, unless the Code or the regulations issued thereunder requires another person to be the tax matters partner. The expenses, if any, that the General Partner incurs in fulfilling its obligations pursuant to this Section 3.2.2 shall be expenses of the Partnership. ARTICLE IV DISTRIBUTION OF PARTNERSHIP FUNDS; ALLOCATIONS 4.1. Distributable Funds. The term "Distributable Funds" of the Partnership shall mean the excess from time to time of (A) the total of (i) cash held by the Partnership, including without limitation, cash proceeds derived from operations ("Operating Revenues"), plus (ii) net proceeds received from any sale or refinancing of all or a portion of property, proceeds of casualty insurance and condemnation awards not currently required for rebuilding, restoration, repair or operation ("Sale Proceeds"), less (B) the working capital requirements of the Partnership (as determined by the General Partner) and such reserves as may be established by the General Partner from time to time. 4.2. Distributions. The General Partner shall, not later than 60 days following the end of each quarter of each Fiscal Year, determine the availability of Distributable Funds, which shall be distributed to Partners as follows: (i) in the event that (a) the ratio of the Partners' capital account balances is not equal to (b) the ratio of the Partners' Ownership Percentages, Distributable Funds shall be distributed so as to equalize, to the extent possible, (a) the ratio of the Partners' capital account balances and (b) the ratio of the Partners' Ownership Percentages, and (ii) in the event that (a) the ratio of the Partners' capital account balances is equal to (b) the ratio of the Partners' Ownership Percentages, Distributable Funds shall be distributed in the ratio of the Partners' respective Ownership Percentages. Except as otherwise required by law, no Partner shall be required to restore to the Partnership any funds distributed to it pursuant to the provisions of this Agreement. 4.3. Allocations. 4.3.1 In General. All income, gains, losses, deductions and credits (excluding gains or losses from the sale or disposition of Partnership properties) of the Partnership shall be allocated to Partners in accordance with their respective Ownership Percentages. 4.3.2 Gains on Sales. Net gains from the sale or other disposition of any of the Partnership assets or properties, including without limitation such gains on a sale or other disposition resulting in or followed by a winding up of the Partnership's affairs and a final distribution in accordance with Section 8.2, shall be allocated to the Partners in accordance with their respective ownership Percentages provided, however, that net gain from the sale of Assets contributed to the Partnership by a Partner shall be allocated (for tax purposes only) 100% to such contributing Partner to the extent of the excess of the agreed value of the contributed Assets on the date of its contribution, less the contributing Partner's adjusted tax basis in such Assets on the date of its contribution, and any remaining net gain shall be allocated to the Partners in accordance with their Ownership Percentages. 5 4.3.3 Losses on Sales. Net losses from the sale or other disposition of any of the Partnership assets or properties, including without limitation such losses on a sale or other disposition resulting in or followed by a winding up of the Partnership's affairs and a final distribution in accordance with Section 8.2, shall be allocated to the Partners in accordance with their respective Ownership Percentages; provided, however, that net loss from the sale of the Assets contributed to the Partnership by a Partner shall be allocated (for tax purposes only) 100% to such contributing Partner to the extent of the excess of the contributing Partner's adjusted tax basis in such Assets on the date of its contribution, less the value of the contributed Assets on the date of its contribution to the Partnership, and any remaining net loss shall be allocated to the Partners in accordance with their ownership Percentages. 4.3.4 Determination of Profits and Losses. For purposes of this Section 4.3, the income, gains, losses, deductions and credits of the Partnership shall be determined for each Fiscal Year in accordance with the accounting methods followed by the Partnership for federal income tax purposes and the allocations contemplated hereby shall be determined as a percentage (of each item of Partnership income, gain, loss, deduction or credit, as the case may be) obtained by dividing (i) the number of days of such Fiscal Year into (ii) the product obtained by multiplying a Partner's Ownership Percentage by the number of days in such Fiscal Year on which such Partner held such Ownership Percentage. ARTICLE V RIGHTS, POWERS, AND DUTIES OF THE PARTNERS 5.1. Management of Partnership Business. The General Partner shall have the sole right to manage the business and affairs of the Partnership, and shall have and enjoy all of the rights and powers of a general partner of a partnership with limited partners except as otherwise provided by the Act or this Agreement. 5.2. Powers of the General Partner. 5.2.1 General Powers. Without limiting the provisions of Section 5.1, and subject only to the qualifications of Section 5.3, the General Partner is empowered to act for and bind the Partnership with respect to all matters and shall have full power and authority to exercise all powers that may be lawfully exercised by the general partner of a limited partnership formed under the Act, and third persons dealing with the Partnership shall be fully protected in relying on any action taken or instrument executed on behalf of the Partnership by the General Partner. 5.3. Limitations on Powers of the General Partner. Notwithstanding the provisions of Sections 5.1 and 5.2, without the prior consent of the Limited Partner, the General Partner shall not take any action that it may not lawfully take without such consent. 5.4. Limited Partners. The Limited Partner shall not participate in or have any control over the management of the business of the Partnership or transact any business for the Partnership. The Limited Partner shall not have any power to sign for or bind the Partnership. 6 The Limited Partner shall not have any right to withdraw from or cause the dissolution of the Partnership or to cause the partition of its properties. 5.5. Books and Records. The General Partner shall maintain complete and accurate books of the Partnership at the Partnership Office, showing the names, addresses and Partnership Interests and capital accounts of all Partners, and all receipts, expenditures, assets, liabilities, profits and losses of the Partnership and all other records necessary for the recording of the business and affairs of the Partnership, as well as all records required by the Act. Each Partner and his duty authorized representative shall at all reasonable times during regular business hours have access to and may inspect and examine the Partnership's books or records. 5.6. Reports. Within 90 days after the end of each year, the General Partner shall prepare, or cause to be prepared, a report which shall include tax reporting information required by the Partners for preparation of their respective income tax returns. All decisions as to accounting matters, except as specifically provided herein, shall be made by the General Partner and shall be in accordance with accepted accounting practices, as such are applicable to the method of accounting adopted by the Partnership. 5.7. Income Tax Elections. The General Partner, subject only to Article III, shall have the right to make any applicable elections under the Code which, in the judgment of the General Partner, are in the best interests of the Partnership. 5.8. Capital and Income Accounts. 5.8.1 General Rules. The General Partner shall maintain a capital account and an income account for each Partner. Except as otherwise provided herein, each Partner's capital account shall be maintained in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv). There shall be credited to the capital account of each Partner the amount of cash and the agreed value of any Assets contributed to the deductions and credits shall be allocated to the income accounts of the Partners as provided in Section 4.3. At the end of each Year, and following any sale of the Partnership's assets in connection with the liquidation of the Partnership pursuant to Article XIII, the income accounts of all of the Partners shall be closed out to their respective capital accounts. The capital account of a Partner shall be charged with the amount of any cash distributed and the fair market value of any Assets distributed to such Partner. Any optional loans or advances made by a Partner to the Partnership shall not be credited to the lending Partner's income or capital account. Distributions (whether constituting principal or interest) to a lending Partner in repayment of any such optional loans or advances shall not be charged to the lending Partner's income or capital account. In connection with each assignment of any interest in the Partnership (other than an assignment intended only to secure payment of indebtedness or other obligation), the capital and income accounts allocable to such interest in the Partnership shall be transferred from the assignor to the assignee. 5.8.2 Hypothetical Sale. Upon liquidation of the Partnership or any Partner's interest in the Partnership, any unsold Partnership assets shall be valued to determine the gain or loss that would result if such assets were sold at their fair market value, as determined in good faith by the General Partner, at the time of such liquidation. The capital accounts of the Partners 7 shall be adjusted to reflect the manner in which any such gain or loss would have been allocated if such assets had been sold at such value. 5.9. Right to Compete. Neither the General Partner nor any of its officers, agents or employees shall be obligated to devote its or their full time and attention to the Partnership and its affairs, but only such time as may reasonably be necessary for the conduct of the Partnership's business. Nothing contained in this Agreement shall preclude the General Partner, its officers, agents or employees from engaging in any business, or making any other investment, even though such business, or other investment may be in competition with the business of the Partnership. Any such activity may be undertaken with or without notice to or participation therein by the other Partner and neither any Partner nor the Partnership shall have any right or claim with respect to any such activity or the income or profits therefrom. 5.10. Limitation on Responsibility of General Partner. The General Partner's obligations to perform the functions enumerated herein and such other obligations as may arise by operation of law or otherwise shall be performable only to the extent that the Partnership from time to time has funds available therefor, and neither the General Partner nor its Affiliates shall ever be personally liable to furnish involuntarily its or their own funds for any such purposes, to respond in damages, or to render specific performance. The Limited Partner hereby further agrees to look solely to the Partnership Interest of the General Partner for recovery of any judgment against the General Partner. In the exercise of any of its responsibilities or authority under this Agreement or otherwise, the General Partner shall be obligated to act in good faith; and so long as it acts in good faith, it shall have no liability or obligation to the Partnership or to any Partner for any decision, act or omission, whether or not such decision, act or omission shall have been authorized or reasonably prudent, and whether or not such decision, act or omission shall have been the result of the exercise of good or bad business judgment, ARTICLE VI ASSIGNMENT OR TRANSFER OF INTEREST BY PARTNERS 6.1. Conditions of Transfer. Partnership Interests are transferable, provided, however, that no Partnership Interest, or any portion thereof, may be transferred without the consent of the other Partner. 6.2. Partner Representations. Each of the Partners, by execution of this Agreement, and each assignee or transferee of a Partner by acceptance of the rights and interests of his assignor or transferor in the Partnership, represents and warrants to and covenants and agrees with the Partnership and the other Partner that such Partner's interest has been acquired under this Agreement for such Partner's own account, for investment, and not with a view to or for sale in connection with any distribution thereof or with any present intention of distributing or selling such interest. The Limited Partner hereby further represents and warrants to the Partnership and the General Partner as follows: (i) The Limited Partner has such knowledge and experience in financial and business matters, including investing in or dealing with real estate ventures similar to that of the Partnership, that it is capable of evaluating the 8 merits and risks of an investment In the Partnership. The Limited Partner is able to bear the economic risk of an investment in the Partnership, including the risk of holding indefinitely any Partnership Interest acquired hereunder. (ii) The Limited Partner has been afforded full access to representatives of the General Partner for purposes of such inquiry as such Limited Partner deems appropriate, and all information requested by the Limited Partner concerning the Partnership has been supplied. (iii) The Limited Partner recognizes that the Partnership is engaged in an enterprise of high and inherent risks. 6.3. Indemnification. Each Partner agrees to indemnify and hold harmless the Partnership and the other Partner, their respective agents and representatives and the Affiliates of each of the foregoing, from and against any and all loss, claims, damage or liability directly or indirectly related to, arising from or incurred in connection with any breach of the covenants, representations and warranties of this Article VI (including any misrepresentation or omission related thereto) by such Partner. 6.4. Substituted Limited Partner. An assignee or transferee (other than an existing Partner) of the interest of the Limited Partner may be admitted as a Substituted Limited Partner only with the consent of the General Partner and shall be admitted as of the date of such consent. The granting or denying of such consent shall be in the absolute discretion of the General Partner. Unless the assignee is the General Partner, any assignee of a Partnership Interest to whose admission such consent is given (a "Substituted Limited Partner") shall become and shall have only the rights and duties of a limited partner of the Partnership, and the assigned Partnership Interest shall thereafter be a Limited Partnership Interest. Any transferee of the interest of the Limited Partner shall be entitled only to receive distributions hereunder until such transferee has been admitted as a limited partner of the Partnership. 6.5. Effect of Change in Partners. Subject to all of the provisions of this Agreement, and to the extent permitted under applicable law, the dissolution, liquidation, bankruptcy or substitution of the Limited Partner shall not interrupt the continuity of or cause the termination or dissolution of the Partnership. 6.6. Reconstitution. Upon dissolution of the Partnership, the Partnership may be reconstituted and its business continued without being wound up if there remains at least one general partner. The business of the Partnership may be carried on by any such remaining general partner. ARTICLE VII REIMBURSEMENT OF CERTAIN COSTS 7.1. Reimbursement of Certain Costs. The General Partner shall be reimbursed promptly by the Partnership for all actual, reasonable, and necessary expenditures made from time to time on behalf of the Partnership in connection with the affairs of the Partnership, or the performance of the duties of the General Partner hereunder. 9 ARTICLE VIII DISSOLUTION AND LIQUIDATION 8.1. Events of Dissolution. The Partnership shall be dissolved upon the occurrence of any of the following events: (i) the agreement of all Partners; or (ii) December 31, 2099. 8.2. Winding Up and Distribution of Assets. 8.2.1 Winding Up. Upon dissolution of the Partnership, the General Partner shall proceed to wind up the affairs of the Partnership, liquidate the property and assets of the Partnership that it determines shall be sold and terminate the Partnership. 8.2.2 Application of Proceeds. The proceeds of such liquidation and any unsold assets shall be applied in the following order of priority: (i) first, to the expenses of such liquidation; (ii) second, to the debts and liabilities of the Partnership to third parties, if any, in the order of priority provided by law; (iii) third, to a reasonable reserve to be set up to provide for any contingent or unforeseen liabilities or obligations of the Partnership to third parties (to be held and disbursed, at the reasonable discretion of the General Partner, by an escrow agent selected by it) and at the expiration of such period as the General Partner may reasonably deem advisable, the balance shall be distributed as provided herein; (iv) fourth, to all loans that any Partner may have made and any other debts or liquidated obligations of the Partnership to the Partners; (v) fifth, to the Partners until they shall have received back the amounts shown in, and in the proportions of, their capital accounts; and (vi) sixth, the remaining assets of the Partnership, if any, shall be distributed to the Partners (or their successors and assigns) in accordance with their respective Ownership Interests. 8.2.3 Restoration of Negative Capital Account. If, upon the liquidation of the Partnership or the liquidation of a Partner's interest in the Partnership, a Partner shall have a negative balance in his capital account, after giving effect to all adjustments to the capital account of such Partner pursuant to Article IV and Section 5.8, then notwithstanding anything herein, such Partner shall contribute to the Partnership cash in the amount of such deficit balance. Contributions made under this Section shall be made by the end of the taxable year of 10 the Partnership in which the liquidation of the Partnership or the liquidation of such Partner's interest in the Partnership occurs (or, if later, within ninety days after the date of such liquidation); and shall be used first to satisfy any amounts then owing by the Partnership to its creditors to the extent that such creditors have recourse to the assets of the Partners; any remaining amount shall be distributed to the Partners having positive balances in their capital accounts in proportion to such positive balances. Notwithstanding anything herein, a Partner required to make a contribution pursuant to this Section 8.2.3 shall be personally liable to make such contribution. For purposes of this Section 8.2.3, the term "liquidation" shall have the meaning given it in the first two sentences of Treasury Regulation Section 1.704-1(b)(2)(ii)(g). ARTICLE IX MISCELLANEOUS 9.1. Certificate Requirements. The General Partner hereby agrees that it shall execute and file promptly the certificate required by the Act for the formation of the Partnership contemplated by this Agreement. The General Partner will execute and file, from time to time, in said office all such documents to amend said certificate as are required by the Act for the carrying out of the terms and provisions of this Agreement; and upon winding up of the Partnership, the General Partner shall execute and file in said office the documents required by the Act to cancel said certificate as theretofore amended. 9.2. Notices. All notices, requests, statements, offers, acceptances, requests for consents or other writings required or permitted to be given or furnished hereunder to any Partner ("Notices") shall be in writing and delivered to such Partner or deposited in the United States mail in a sealed envelope, registered or certified mail, with postage prepaid, or sent by facsimile, telex or telegram (and confirmed by registered or certified mail the same date), addressed to such Partner as follows: (i) If to the General Partner, to: Westlake Chemical Holdings, Inc. 2801 Post Oak Boulevard, Suite 600 Houston, TX 77056 Attention: Corporate Secretary (ii) If to the Limited Partner, to: Westlake Chemical Manufacturing, Inc. 103 Foulk Road, Suite 200 Wilmington, DE 19803 Attention: Entity Services Group LLC or at such other address as such Partner shall have previously designated by Notice to the Partner giving such Notice. All Notices shall be deemed given when delivered or, if mailed, on the second business day after the day of mailing, and if sent by telex or telegram, the first business day after the day of dispatch. Any Partner may change its address for the receipt of Notices at any time by giving notice thereof to the other Partner. Notwithstanding the requirement as to the 11 use of registered or certified mail, any routine reports required by this Agreement to be submitted to Partners at specified times may be sent by first class mail. 9.3. Entire Agreement. This Agreement supersedes all priory agreements and understandings among the Partners with respect to the subject matter hereof. 9.4. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware. 9.5. Modification, Termination and Waiver. This Agreement may be modified, terminated or waived only by a writing signed by the party to be charged with such modification, termination or waiver. 9.6. Successors and Assigns. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. However, no assignment of any interest in this Agreement may be made otherwise than in accordance with the provisions of this Agreement. 9.7. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original of this Agreement but all of which, taken together, shall constitute one and the same Agreement. 9.8. Severability. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 9.9. Further Assurances. Each Partner shall execute such deeds, assignments, endorsements, evidences of transfer and other instruments and documents and shall give such further assurances as shall be necessary to perform its obligations hereunder. 9.10. Limitation on Rights of Others. No person other than a Partner shall have any legal or equitable right, remedy or claim under or in respect of this Agreement. 12 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. GENERAL PARTNER: WESTLAKE CHEMICAL HOLDINGS, INC. By: /s/ A. Chao --------------------------------------- LIMITED PARTNER: WESTLAKE CHEMICAL MANUFACTURING, INC. By: /s/ Harold F. Kalbach Jr. --------------------------------------- 13 EX-4.1 67 h08423exv4w1.txt INDENTURE DATED JULY 31, 2003 EXHIBIT 4.1 CONFORMED COPY - -------------------------------------------------------------------------------- ----------------------------------------------------- WESTLAKE CHEMICAL CORPORATION and each of the Guarantors named herein 8 3/4% SENIOR NOTES DUE 2011 ---------------------------- INDENTURE Dated as of July 31, 2003 ---------------------------- JPMorgan Chase Bank Trustee ---------------------------- - -------------------------------------------------------------------------------- CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section 310(a)(1)................................................................... 7.10 (a)(2)................................................................. 7.10 (a)(3)................................................................. N.A. (a)(4)................................................................. N.A. (a)(5)................................................................. 7.10 (b).................................................................... 7.10 (c).................................................................... N.A. 311(a)...................................................................... 7.11 (b).................................................................... 7.11 (c).................................................................... N.A. 312(a)...................................................................... 2.05 (b).................................................................... 12.03 (c).................................................................... 12.03 313(a)...................................................................... 7.06 (b)(2)................................................................. 7.06; 7.07 (c).................................................................... 7.06; 12.02 (d).................................................................... 7.06 314(a)...................................................................... 4.03; 4.04; 12.05 (c)(1)................................................................. 12.04 (c)(2)................................................................. 12.04 (c)(3)................................................................. N.A. (e).................................................................... 12.05 (f).................................................................... N.A. 315(a)...................................................................... 7.01 (b).................................................................... 7.05,12.02 (c).................................................................... 7.01 (d).................................................................... 7.01 (e).................................................................... 6.11 316(a) (last sentence)...................................................... 2.09 (a)(1)(A).............................................................. 6.05 (a)(1)(B).............................................................. 6.04 (a)(2)................................................................. N.A. (b).................................................................... 6.07 (c).................................................................... 9.04 317(a)(1)................................................................... 6.08 (a)(2)................................................................. 6.09 (b).................................................................... 2.04 318(a)...................................................................... 12.01 (b).................................................................... N.A. (c).................................................................... 12.01
N.A. means not applicable. * This Cross Reference Table is not part of the Indenture. TABLE OF CONTENTS
Page ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions................................................................ 1 Section 1.02 Other Definitions.......................................................... 23 Section 1.03 Incorporation by Reference of Trust Indenture Act.......................... 24 Section 1.04 Rules of Construction...................................................... 24 ARTICLE 2. THE NOTES Section 2.01 Amount, Form and Dating.................................................... 25 Section 2.02 Execution and Authentication............................................... 26 Section 2.03 Registrar, Paying Agent, Depositary and Custodian.......................... 26 Section 2.04 Paying Agent to Hold Money in Trust........................................ 27 Section 2.05 Holder Lists............................................................... 27 Section 2.06 Transfer and Exchange...................................................... 27 Section 2.07 Replacement Notes.......................................................... 40 Section 2.08 Outstanding Notes.......................................................... 40 Section 2.09 Treasury Notes............................................................. 40 Section 2.10 Temporary Notes............................................................ 41 Section 2.11 Cancellation............................................................... 41 Section 2.12 Defaulted Interest......................................................... 41 ARTICLE 3. REDEMPTION AND PREPAYMENT Section 3.01 Notices to Trustee......................................................... 41 Section 3.02 Selection of Notes to Be Redeemed or Purchased............................. 42 Section 3.03 Notice of Redemption....................................................... 42 Section 3.04 Effect of Notice of Redemption............................................. 43 Section 3.05 Deposit of Redemption or Purchase Price.................................... 43 Section 3.06 Notes Redeemed or Purchased in Part........................................ 44 Section 3.07 Optional Redemption........................................................ 44 Section 3.08 Mandatory Redemption....................................................... 44 Section 3.09 Offer to Purchase by Application of Excess Proceeds........................ 45 ARTICLE 4. COVENANTS Section 4.01 Payment of Notes........................................................... 47 Section 4.02 Maintenance of Office or Agency............................................ 47 Section 4.03 Reports.................................................................... 48 Section 4.04 Compliance Certificate..................................................... 49 Section 4.05 Taxes...................................................................... 49 Section 4.06 Stay, Extension and Usury Laws............................................. 49 Section 4.07 Restricted Payments........................................................ 50 Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries............. 53 Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock................. 54
Section 4.10 Asset Sales................................................................ 57 Section 4.11 Transactions with Affiliates............................................... 59 Section 4.12 Liens...................................................................... 60 Section 4.13 Corporate Existence........................................................ 60 Section 4.14 Offer to Repurchase Upon Change of Control................................. 61 Section 4.15 Limitation on Sale and Leaseback Transactions.............................. 62 Section 4.16 Payments for Consent....................................................... 63 Section 4.17 Additional Note Guarantees................................................. 63 Section 4.18 Designation of Restricted and Unrestricted Subsidiaries.................... 63 Section 4.19 Accounts Receivable Facilities............................................. 63 ARTICLE 5. SUCCESSORS Section 5.01 Merger, Consolidation, or Sale of Assets................................... 64 Section 5.02 Successor Corporation Substituted.......................................... 65 ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01 Events of Default.......................................................... 65 Section 6.02 Acceleration............................................................... 67 Section 6.03 Other Remedies............................................................. 67 Section 6.04 Waiver of Past Defaults.................................................... 67 Section 6.05 Control by Majority........................................................ 68 Section 6.06 Limitation on Suits........................................................ 68 Section 6.07 Rights of Holders of Notes to Receive Payment.............................. 68 Section 6.08 Collection Suit by Trustee................................................. 68 Section 6.09 Trustee May File Proofs of Claim........................................... 69 Section 6.10 Priorities................................................................. 69 Section 6.11 Undertaking for Costs...................................................... 69 ARTICLE 7. TRUSTEE Section 7.01 Duties of Trustee.......................................................... 70 Section 7.02 Rights of Trustee.......................................................... 71 Section 7.03 Individual Rights of Trustee............................................... 72 Section 7.04 Trustee's Disclaimer....................................................... 72 Section 7.05 Notice of Defaults......................................................... 72 Section 7.06 Reports by Trustee to Holders of the Notes................................. 72 Section 7.07 Compensation and Indemnity................................................. 73 Section 7.08 Replacement of Trustee..................................................... 73 Section 7.09 Successor Trustee by Merger, Etc........................................... 74 Section 7.10 Eligibility; Disqualification.............................................. 74 Section 7.11 Preferential Collection of Claims Against Company.......................... 75 ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance................... 75 Section 8.02 Legal Defeasance and Discharge............................................. 75 Section 8.03 Covenant Defeasance........................................................ 75 Section 8.04 Conditions to Legal or Covenant Defeasance................................. 76
ii Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions...................................... 77 Section 8.06 Repayment to Company....................................................... 77 Section 8.07 Reinstatement.............................................................. 78 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01 Without Consent of Holders of Notes........................................ 78 Section 9.02 With Consent of Holders of Notes........................................... 79 Section 9.03 Compliance with Trust Indenture Act........................................ 80 Section 9.04 Revocation and Effect of Consents.......................................... 80 Section 9.05 Notation on or Exchange of Notes........................................... 81 Section 9.06 Trustee to Sign Amendments, etc............................................ 81 ARTICLE 10. NOTE GUARANTEES Section 10.01 Guarantee.................................................................. 81 Section 10.02 Limitation on Guarantor Liability.......................................... 83 Section 10.03 Execution and Delivery of Note Guarantee................................... 83 Section 10.04 Guarantors May Consolidate, etc., on Certain Terms......................... 83 Section 10.05 Releases Following Sale of Assets.......................................... 84 ARTICLE 11. SATISFACTION AND DISCHARGE Section 11.01 Satisfaction and Discharge................................................. 85 Section 11.02 Application of Trust Money................................................. 86 ARTICLE 12. MISCELLANEOUS Section 12.01 Trust Indenture Act Controls............................................... 86 Section 12.02 Notices.................................................................... 86 Section 12.03 Communication by Holders of Notes with Other Holders of Notes.............. 87 Section 12.04 Certificate and Opinion as to Conditions Precedent......................... 88 Section 12.05 Statements Required in Certificate or Opinion.............................. 88 Section 12.06 Rules by Trustee and Agents................................................ 88 Section 12.07 No Personal Liability of Directors, Officers, Employees and Stockholders... 88 Section 12.08 Governing Law.............................................................. 88 Section 12.09 No Adverse Interpretation of Other Agreements.............................. 89 Section 12.10 Successors................................................................. 89 Section 12.11 Severability............................................................... 89 Section 12.12 Counterpart Originals...................................................... 89 Section 12.13 Table of Contents, Headings, etc........................................... 89
iii EXHIBITS Schedule I GUARANTORS Exhibit A1 FORM OF NOTE Exhibit A2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE Exhibit B FORM OF CERTIFICATE OF TRANSFER Exhibit C FORM OF CERTIFICATE OF EXCHANGE Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Exhibit E FORM OF NOTATION OF NOTE GUARANTEE Exhibit F FORM OF SUPPLEMENTAL INDENTURE iv INDENTURE dated as of July 31, 2003 among Westlake Chemical Corporation, a Delaware corporation (the "Company"), the Guarantors (as defined) and JPMorgan Chase Bank, as trustee (the "Trustee"). The Company, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined) of the Company's 8-3/4% Senior Notes due 2011 (the "Notes"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions. "144A Global Note" means a Global Note substantially in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A. "Accounts Receivable Subsidiary" means any Wholly Owned Subsidiary of the Company (i) which is formed solely for the purpose of, and which engages in no substantial activities other than activities in connection with, financing accounts receivable of the Company and/or its Restricted Subsidiaries, (ii) which is designated by the Company as an Accounts Receivables Subsidiary pursuant to an Officers' Certificate delivered to the Trustee, (iii) no portion of Indebtedness or any other obligation (contingent or otherwise) of which is at any time recourse to or obligates the Company or any Restricted Subsidiary in any way, or subjects any property or asset of the Company or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to (1) representations, warranties and covenants (or, any indemnity with respect to such representations, warranties and covenants) entered into in the ordinary course of business in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to such Accounts Receivable Subsidiary or (2) any guarantee of any such accounts receivable financing by the Company or any Restricted Subsidiary that is permitted to be incurred pursuant to Section 4.07 and Section 4.09 hereof, (iv) with which neither the Company nor any Restricted Subsidiary has any contract, agreement, arrangement or understanding other than contracts, agreements, arrangements and understandings entered into in the ordinary course of business in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable in accordance with Section 4.19 hereof and fees payable in the ordinary course of business in connection with servicing accounts receivable and (v) with respect to which neither the Company nor any Restricted Subsidiary has any obligation (a) to subscribe for additional Equity Interests therein or make any additional capital contribution or similar payment or transfer thereto other than in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to such Accounts Receivable Subsidiary in accordance with Section 4.19 hereof or (b) to maintain or preserve the solvency, any balance sheet term, financial condition, level of income or results of operations thereof. "Acquired Debt" means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien that, at the time of acquisition of an asset by such specified Person, encumbers such asset. "Additional Interest" shall have the meaning set forth in Section 6 of the Registration Rights Agreement. "Additional Notes" means any Notes (other than the Initial Notes) issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the Initial Notes. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Agent" means any Registrar or Paying Agent. "Applicable Premium" means, with respect to any Note on any redemption date, the greater of: (1) 1.0% of the principal amount of the Note; or (2) the excess, if any, of: (a) the present value on such redemption date of (i) the redemption price of the note at July 15, 2007 (such redemption price being set forth in Section 3.07(c) hereof) plus (ii) all required interest payments due on the Note through July 15, 2007 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the principal amount of the Note. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange. "Asset Sale" means: (1) the sale, lease, conveyance or other disposition (other than the creation of a Lien) of any assets or rights; provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole shall be governed by Section 4.14 and/or Section 5.01 and not by Section 4.10 hereof; and (2) the issuance of Equity Interests in any of the Company's Restricted Subsidiaries or the sale by the Company or any Restricted Subsidiary of Equity Interests in any of its Subsidiaries or Joint Ventures. Notwithstanding the preceding, none of the following items shall be deemed to be an Asset Sale: (1) any single transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $15.0 million; 2 (2) a transfer of assets between or among the Company and/or its Restricted Subsidiaries; (3) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to a Restricted Subsidiary of the Company; (4) the sale or lease of products, services, accounts receivable, rolling stock, barges, pipeline capacity or chemical products in the ordinary course of business and any sale or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business; (5) a sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable and/or related assets to an Accounts Receivable Subsidiary in connection with any Receivables Facility; (6) the sale or other disposition of cash or Cash Equivalents; or (7) a Restricted Payment that does not violate the covenant contained in Section 4.07 hereof or a Permitted Investment. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided, however, that if such sale and leaseback transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby shall be determined in accordance with the definition of "Capital Lease Obligation." "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. "Board of Directors" means: (1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board; (2) with respect to a partnership, the Board of Directors of the general partner of the partnership; (3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and (4) with respect to any other Person, the board or committee of such Person serving a similar function. 3 "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors of the Company and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Borrowing Base" means, as of any date, an amount equal to: (1) 75% of the face amount of all accounts receivable owned by the Company and its Subsidiaries as of the end of the most recent fiscal quarter preceding such date that were not more than 90 days past due; plus (2) 55% of the book value of all inventory owned by the Company and its Subsidiaries as of the end of the most recent fiscal quarter preceding such date. "Broker-Dealer" means Participating Broker-Dealer or Exchanging Dealer as defined in the Registration Rights Agreement. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. "Capital Stock" means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. "Cash Equivalents" means: (1) United States dollars; (2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one-year from the date of acquisition; (3) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and 4 overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of "B" or better; (4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; (5) commercial paper having one of the two highest ratings obtainable from Moody's or S&P and in each case maturing within nine months after the date of acquisition; and (6) investments in any U.S. dollar denominated money market fund as defined by Rule 2a-7 under the Investment Company Act of 1940, as amended. "Change of Control" means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d) of the Exchange Act) other than a Principal or a Related Party of a Principal; (2) the adoption of a plan relating to the liquidation or dissolution of the Company; (3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties or a Permitted Group, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Company, measured by voting power rather than number of shares, other than in any transaction that complies with clause (4) below; (4) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance); or (5) after an initial public offering of common stock of the Company or any direct or indirect parent of the Company, the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. "Clearstream" means Clearstream Banking, S.A. and its successors and assigns. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person; provided, however, that for purposes of any provision contained herein which is required by the TIA, "Company" shall also mean each other obligor (if any), other than a Guarantor, on the Notes. 5 "Consolidated Cash Flow" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication: (1) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus (2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period (including any provision for taxes on the Net Income of any Joint Venture that is a pass-through entity for federal income tax purposes, to the extent such taxes are paid or payable by such Person or any of its Restricted Subsidiaries, provided, however, that such provision for taxes shall only be equal to such Person's proportional share in the Joint Venture), to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus (3) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus (4) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus (5) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business; in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary of the Company shall be added to Consolidated Net Income to compute Consolidated Cash Flow of the Company only to the extent that a corresponding amount would be permitted at the date of determination to be distributed as a dividend to the Company by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person; 6 (2) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; (3) the cumulative effect of a change in accounting principles shall be excluded; and (4) notwithstanding clause (1) above, the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the specified Person or one of its Subsidiaries. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who: (1) was a member of such Board of Directors on the date hereof; or (2) was nominated for election or elected or appointed to such Board of Directors with the approval of, or whose nomination for election by the stockholders was approved by, a majority of the Continuing Directors who were members of such Board at the time of such nomination, appointment or election. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Company and the Guarantors. "Credit Agreement" means, collectively, (i) that certain credit agreement, dated as of the date hereof, among the financial institutions from time to time party thereto, Bank of America, N.A., Banc of America Securities LLC, the Company and certain Subsidiaries of the Company providing for a revolving credit facility and (ii) that certain credit agreement, dated as of the date hereof, among the Company, certain Subsidiaries of the Company, lenders party thereto and Bank of America, N.A. providing for a term loan, in each case, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith and in each case as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Credit Facilities" means, one or more debt facilities (including, without limitation, the Credit Agreement and any Receivable Facility) or commercial paper facilities, in each case, with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to Accounts Receivable Subsidiaries) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time, whether or not with the same lenders or agents. "Custodian" means the Trustee, as custodian with respect to the Notes issued in global form, or any successor entity thereto. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. 7 "Definitive Note" means a certificated Note (other than a Global Note) registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A1 hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 hereof. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Indenture shall be the maximum amount that the Company and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends. "Domestic Subsidiary" means any Restricted Subsidiary of the Company that was formed under the laws of the United States or any state of the United States or the District of Columbia or that guarantees or otherwise provides direct credit support for any Indebtedness of the Company. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Euroclear" means Euroclear Bank S.A./N.V., and its successors or assigns, as operator of the Euroclear system. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and any successor statute. "Exchange Notes" means the Notes issued in the Exchange Offer pursuant to Section 2.06(f) hereof. "Exchange Offer" means a Registered Exchange Offer as defined in the Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Existing Indebtedness" means the Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the date hereof, including all reimbursement obligations with respect to letters of credit outstanding as of the date hereof, in each case, until such amounts are repaid. 8 "Fair Market Value" means the price that could be negotiated in an arm's-length transaction between a willing buyer and a willing seller not involving distress or necessity of either party, determined in good faith by the Board of Directors of the Company (unless otherwise herein provided). "Fixed Charge Coverage Ratio" means, with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be given pro forma effect (in accordance with Regulation S-X under the Securities Act) as if they had occurred on the first day of the four-quarter reference period; (2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, shall be excluded; (3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges shall not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date; (4) any Person that is a Restricted Subsidiary on the Calculation Date shall be deemed to have been a Restricted Subsidiary at all times during such four-quarter period; (5) any Person that is not a Restricted Subsidiary on the Calculation Date shall be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period; and (6) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months). 9 "Fixed Charges" means, with respect to any specified Person for any period, the sum, without duplication, of: (1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations; plus (2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (3) any interest accruing on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus (4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. However, interest payments on Indebtedness of a Joint Venture shall, in each case, not be deemed Fixed Charges of the Company or any Restricted Subsidiary as of any date of determination when such Indebtedness is not considered Indebtedness of the Company or any Restricted Subsidiary. "Foreign Subsidiary" means any subsidiary that is not a Domestic Subsidiary. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. "General Partner" means a Restricted Subsidiary of the Company or any of its Restricted Subsidiaries that has no assets and conducts no operations other than its ownership of a general partnership interest in a Joint Venture. "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibits A1 and A2 hereto issued in accordance with Section 2.01, 2.06(b)(4), 2.06(d)(2), 2.06(d)(3) or 2.06(f) hereof. "Global Note Legend" means the legend set forth in Section 2.06(g)(2), which is required to be placed on all Global Notes issued under this Indenture. 10 "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection or deposit in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements (other than with respect to the obligations of a Joint Venture, solely by virtue of a Restricted Subsidiary being the General Partner of such Joint Venture if, as of the date of determination, no payment on such Indebtedness has been made by such General Partner of such Joint Venture and such arrangement would not be classified and accounted for, in accordance with GAAP, as a liability on a consolidated balance sheet of the Company), or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise). "Guarantors" means each of: (1) the guarantors listed on Schedule I hereto; and (2) any other Subsidiary that executes a Note Guarantee in accordance with the provisions of this Indenture, in each case until a successor to such Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Guarantor" shall mean such successor Person. "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under: (1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; (2) other agreements or arrangements designed to manage interest rate risk; and (3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates, currency values or commodity prices. "Holder" means a Person in whose name a Note is registered in the Registrar's books. "IAI Global Note" means a Global Note substantially in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that shall be issued in a denomination equal to the outstanding principal amount of the Notes sold to Institutional Accredited Investors. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) in respect of banker's acceptances; 11 (4) representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions; (5) representing the balance deferred and unpaid of the purchase price of any property due more than six months after such property is acquired; or (6) representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit, Attributable Debt and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and (3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of: (a) the Fair Market Value of such assets at the date of determination, and (b) the amount of the Indebtedness of the other Person. "Indenture" means this Indenture, as amended or supplemented from time to time. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Initial Notes" means the first $380,000,000 aggregate principal amount of Notes issued under this Indenture on the date hereof (and any Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, Initial Notes or such other Notes pursuant to Section 2.01, 2.06, 2.07, 2.10 or 3.06). "Initial Purchasers" means each of Credit Suisse First Boston LLC, Banc of America Securities LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Citigroup Global Markets Inc., Scotia Capital (USA) Inc., Credit Lyonnais Securities (USA) Inc. and CIBC World Markets Corp. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who is not also a QIB. "Investment Grade" means a rating of Baa3 or better by Moody's and BBB- or better by S&P (or, if either such entity ceases to rate the Notes for reasons outside of the control of the Company, the equivalent investment grade credit rating from any other "nationally recognized statistical rating 12 organization" within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Company as a replacement agency). "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commissions, loans, fees, compensation and advances to officers, directors and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Investment" excludes trade credit and accounts receivable in the ordinary course of business and reimbursement obligations in respect of letters of credit and tender, bid, performance, government contract, surety and appeal bonds, in each case solely with respect to obligations of the Company or any of its Restricted Subsidiaries. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Company's Investments in such Restricted Subsidiary that were not sold or disposed of in an amount determined as provided in the last paragraph of Section 4.07(b) hereof. The acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an Investment in a third Person shall be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the last paragraph of Section 4.07(b) hereof. Except as otherwise provided in this Indenture, the amount of an Investment shall be determined at the time the Investment is made and without giving effect to subsequent changes in value. "Joint Venture" means any joint venture between the Company and/or any Restricted Subsidiary and any other Person, if such joint venture is: (1) owned 50% or less by the Company and/or any of its Restricted Subsidiaries; and (2) not directly or indirectly controlled by or under direct or indirect common control of the Company and/or any of its Restricted Subsidiaries. For purposes of this definition, "control," as used with respect to any entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders for use by such Holders in connection with the Exchange Offer. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected 13 under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Limited Recourse Stock Pledge" means the pledge of Equity Interests in any Joint Venture or any Unrestricted Subsidiary to secure Non-Recourse Debt of such Joint Venture or Unrestricted Subsidiary, which pledge is made by a Restricted Subsidiary of the Company, the activities of which are limited to making and managing Investments, and owning Equity Interests, in such Joint Venture or Unrestricted Subsidiary, but only for so long as its activities are so limited. "Moody's" means Moody's Investors Service, Inc. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: (1) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with: (a) any Asset Sale or any disposition pursuant to a sale and leaseback transaction; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (1) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, (2) taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, (3) amounts required to be paid to holders of minority interests in Restricted Subsidiaries or Joint Ventures as a result of such Asset Sale, (4) amounts required to be applied to the repayment of Indebtedness, other than Indebtedness under a Credit Facility, secured by a Lien on the asset or assets that were the subject of such Asset Sale, or which must by the terms of such Lien or by applicable law be repaid out of the proceeds of such Asset Sale, (5) all payments made with respect to liabilities directly associated with the assets which are the subject of the Asset Sale, including, without limitation, trade payables and other accrued liabilities, and (6) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "Non-Recourse Debt" means Indebtedness: (1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; 14 (2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and (3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries, other than the Equity Interests of a Joint Venture that is not a Restricted Subsidiary or of an Unrestricted Subsidiary pledged by the Company or any of its Restricted Subsidiaries as a Limited Recourse Stock Pledge. "Non-U.S. Person" means a Person who is not a U.S. Person. "Note Guarantee" means the Guarantee by each Guarantor of the Company's payment obligations under this Indenture and on the Notes as provided in Article 10 hereof. "Notes" has the meaning assigned to it in the preamble to this Indenture. The Initial Notes and the Additional Notes shall be treated as a single class for all purposes under this Indenture, and unless the context otherwise requires, all references to the Notes shall include the Initial Notes and any Additional Notes. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 12.05 hereof. "Offering Circular" means the offering circular of the Company dated July 21, 2003 prepared in connection with the initial offering of the Initial Notes. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 12.05 hereof. The counsel may be an employee of or counsel to the Company, any Guarantor, any other Subsidiary of the Company or the Trustee. "Pari Passu Indebtedness" means, in the case of the Notes, any senior Indebtedness of the Company and, in the case of the Note Guarantees, any senior Indebtedness of the Guarantor thereof, including, in each case, Indebtedness and other Obligations outstanding under a Credit Facility. "Participant" means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream). 15 "Permitted Business" means the petrochemical, chemicals, and vinyls or plastic fabrications business and any other businesses related, incidental, complementary or ancillary thereto. "Permitted Group" means any group of investors that is deemed to be a "person" (as that term is used in Section 13(d)(3) of the Exchange Act) at any time prior to the Company's initial public offering of common stock, provided that no single Person (other than the Principals and their Related Parties) Beneficially Owns (together with its Affiliates) more of the Voting Stock of the Company that is Beneficially Owned by such group of investors than is then collectively Beneficially Owned by the Principals and their Related Parties in the aggregate. "Permitted Investments" means: (1) any Investment in the Company or in a Restricted Subsidiary of the Company that is a Guarantor; (2) any Investment in Cash Equivalents; (3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary of the Company and a Guarantor; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company that is a Guarantor; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof; (5) any acquisition of assets or Capital Stock solely in exchange for the, or out of the net cash proceeds of a substantially concurrent, issuance of Equity Interests (other than Disqualified Stock) of the Company; (6) any Investments received in settlement, compromise or resolution of: (a) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Company or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (b) litigation, arbitration or other disputes with Persons who are not Affiliates; (7) Investments represented by Hedging Obligations; (8) loans or advances to employees made in the ordinary course of business of the Company or the Restricted Subsidiary of the Company in an aggregate principal amount not to exceed $2.0 million at any one time outstanding; 16 (9) Investments in an Accounts Receivable Subsidiary that, as conclusively determined by the Board of Directors of the Company, are necessary or advisable to effect a Receivables Facility; (10) Limited Recourse Stock Pledges; (11) additional Investments in a Subsidiary of the Company holding an interest in Suzhou Huasu Plastics Co. Ltd. in an aggregate amount not to exceed $8.5 million; (12) Investments in Joint Ventures in an aggregate amount not to exceed $25.0 million; (13) repurchases of the Notes; and (14) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (14) that are at the time outstanding not to exceed $10.0 million. "Permitted Liens" means: (1) Liens on assets of the Company or any Guarantor securing Pari Passu Indebtedness that is permitted by the terms of this Indenture to be incurred and/or securing Hedging Obligations related thereto; (2) Liens in favor of the Company or any Guarantor; (3) Liens on property of a Person existing at the time such Person becomes a Subsidiary or is merged with or into or consolidated with the Company or any Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such acquisition, merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Subsidiary or that becomes a Subsidiary; (4) Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Company or any Subsidiary of the Company, provided that such Liens were in existence prior to, and not incurred in contemplation of, such acquisition; (5) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of Section 4.09(b) covering only the assets acquired with or financed by such Indebtedness; (6) Liens existing on the date of this Indenture; (7) Liens imposed by law, such as carriers', warehousemen's, landlord's and mechanics' Liens, in each case, incurred in the ordinary course of business; (8) Liens created for the benefit of (or to secure) the Notes (or the Note Guarantees); (9) Liens securing reimbursement obligations with respect to commercial letters of credit obtained in the ordinary course of business, consistent with past practices, which encumber 17 documents and other property or assets relating to such letters of credit and products and proceeds thereof; (10) Liens incurred or assumed in connection with the issuance of revenue bonds the interest on which is exempt from federal income taxation pursuant to Section 103(b) of the Internal Revenue Code of 1986, as amended (or any successor provision), including, without limitation, liens as a cash collateral account securing existing reimbursement obligations with respect to a letter of credit issued pursuant thereto; (11) customary Liens for the fees, costs and expenses of trustees and escrow agents pursuant to any indenture, escrow agreement or similar agreement establishing a trust or escrow arrangement; (12) Liens on assets of the Company or any Restricted Subsidiary arising as a result of a sale and leaseback transaction with respect to such assets; provided that the proceeds from such sale and leaseback transaction are applied to the repayment of Indebtedness or acquisition of assets or the making of capital expenditures pursuant to Section 4.10 hereof; (13) Liens on accounts receivable and related property deemed to arise in connection with any Receivables Facility; (14) the interest of a lessor or licensor under an operating lease or license under which the Company or any of its Restricted Subsidiaries are lessee, sublessee, or licensee, including protective financing statement filings; (15) Limited Recourse Stock Pledges; (16) Liens encumbering customary initial deposits and margin deposits, netting provisions and setoff rights, in each case securing Indebtedness under Hedging Obligations; (17) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under this Indenture; provided, however, that: (a) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and (b) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount, of the Permitted Referencing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such refinancings, refunding, extension, renewal or replacement; and (18) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $10.0 million at any one time outstanding. "Permitted Payments to Parent" means, without duplication as to amounts: 18 (1) payments to the Parent to permit the Parent to pay when due, or the incurrence by the Company or any Restricted Subsidiary of expenses on behalf of Parent with respect to, reasonable accounting, legal and administrative expenses of the Parent, in an aggregate amount not to exceed $1.0 million per annum; and (2) for so long as the Company is a member of a group filing a consolidated or combined tax return with the Parent, payments to the Parent in the amount of the relevant tax (including any penalties and interest) that the Company would owe if the Company were filing a separate tax return (or a separate consolidated or combined return with its Subsidiaries that are members of the consolidated or combined group), taking into account any carryovers and carrybacks of tax attributes (such as net operating losses) of the Company and such Subsidiaries from other taxable years. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (1) the principal amount (or initial accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount outstanding, or in the case of a revolving line of credit, available (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes or the Note Guarantees, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes or the Note Guarantees, as applicable, on subordination terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (4) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "Principals" means T.T. Chao, his descendants, including by adoption, and the spouses of any such individuals. "Private Placement Legend" means the legend set forth in Section 2.06(g)(1) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. 19 "Public Equity Offering" means any underwritten public equity offering of common stock of the Company yielding gross proceeds to the issuer of at least $25.0 million. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Receivables Facilities" means one or more receivables financing facilities or arrangements, as amended from time to time, pursuant to which the Company or any of its Restricted Subsidiaries sells (including a sale in exchange for a promissory note of or Equity Interest in an Accounts Receivable Subsidiary) its accounts receivable, related assets and the provision of billing, collection and other services in connection therewith, in each case to an Accounts Receivable Subsidiary. "Receivables Fees" means distributions or payments made directly or by means of discounts with respect to any participation interests issued or sold in connection with, and other fees paid to a Person that is not the Company or a Restricted Subsidiary in connection with, any Receivables Facility. "Registration Rights Agreement" means the Registration Rights Agreement dated as of July 31, 2003 among the Company, the Guarantors and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate. "Regulation S Permanent Global Note" means a permanent Global Note in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon termination of the Restricted Period in accordance with Section 2.01(c). "Regulation S Temporary Global Note" means a temporary Global Note in the form of Exhibit A2 hereto deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S. "Related Party" means: (1) any controlling stockholder, 80% (or more) owned Subsidiary, or immediate family member (in the case of an individual) of any Principal; or (2) any Person, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a 50% or more controlling interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately preceding clause (1). "Responsible Officer," when used with respect to the Trustee, means any officer within the Institutional Trust Services department of the Trustee having direct responsibility for administration of this Indenture. "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. "Restricted Global Note" means a Global Note bearing the Private Placement Legend. 20 "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Period" means the 40-day distribution compliance period as defined in Regulation S or such longer period as determined in accordance with Section 2.01(c). "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. Unless the context otherwise requires, each reference to a "Restricted Subsidiary" herein shall refer to a Restricted Subsidiary of the Company. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated the Securities Act. "S&P" means Standard & Poor's Ratings Services. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, or any successor statute. "Shelf Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1 - 02 of Regulation S - X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Subsidiary" means, with respect to any specified Person: (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). Unless the context otherwise requires, each reference to a "Subsidiary" herein shall refer to a Subsidiary of the Company. 21 "TIA" means the Trust Indenture Act of 1939 as in effect on the date on which this Indenture is qualified under the TIA. "Treasury Rate" means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to July 15, 2007; provided, however, that if the period from the redemption date to July 15, 2007, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "Trustee" means the party named as such in the preamble to this Indenture until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Global Note" means a permanent Global Note substantially in the form of Exhibit A1 attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that do not bear the Private Placement Legend. "Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Subsidiary" means (i) any Accounts Receivable Subsidiary, (ii) a Subsidiary holding an interest in Suzhou Huasu Plastics Co. Ltd., (iii) any Subsidiary of an Unrestricted Subsidiary and (iv) any other Subsidiary of the Company that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt; (2) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries. Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an officers' certificate certifying that such designation complied with the preceding conditions and was permitted by the Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary (other than an Accounts Receivable Subsidiary) designated after the date hereof would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted 22 Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the Company shall be in default of Section 4.09. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (1) such Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default or Event of Default would be in existence following such designation. "U.S. Person" means a U.S. person as defined in Rule 902(k) under the Securities Act. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. "Wholly Owned" Subsidiary of any specified Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) will at the time be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person and one or more Wholly-Owned Subsidiaries of such Person. Section 1.02 Other Definitions.
Defined in Term Section ---- ------- "Affiliate Transaction"............................. 4.11 "Asset Sale Offer".................................. 3.09 "Authentication Order".............................. 2.02 "Calculation Date".................................. 1.01 "Change of Control Offer"........................... 4.14 "Change of Control Payment"......................... 4.14 "Change of Control Payment Date".................... 4.14 "Covenant Defeasance"............................... 8.03 "DTC"............................................... 2.03 "Event of Default".................................. 6.01 "Excess Proceeds"................................... 4.10 "incur"............................................. 4.09 "Legal Defeasance".................................. 8.02 "Offer Amount"...................................... 3.09 "Offer Period"...................................... 3.09
23
Defined in Term Section ---- ------- "Paying Agent"...................................... 2.03 "Payment Default"................................... 6.01 "Permitted Debt".................................... 4.09 "Purchase Date"..................................... 3.09 "Registrar"......................................... 2.03 "Restricted Payments"............................... 4.07
Section 1.03. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC; "indenture securities" means the Notes and the Note Guarantees; "indenture security holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes and the Note Guarantees means the Company and the Guarantors, respectively, and any other obligor upon the Notes and the Note Guarantees, respectively. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.04 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) "will" shall be interpreted to express a command; (6) provisions apply to successive events and transactions; and 24 (7) references to sections of or rules under the Securities Act will be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2. THE NOTES Section 2.01 Amount, Form and Dating. (a) General. Subject to Section 4.09, the aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited. The Notes and the Trustee's certificate of authentication will be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) Global Notes. Notes issued in global form will be substantially in the form of Exhibits A1 or A2 attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form will be substantially in the form of Exhibit A1 attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note will represent such of the outstanding Notes as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, transfers and redemptions. Any endorsement of a Global Note to reflect the amount, or any increase or decrease in the amount, of outstanding Notes represented thereby will be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. (c) Temporary Global Notes. Notes offered and sold to Non-U.S. Persons in reliance on Regulation S will be issued initially in the form of the Regulation S Temporary Global Note, which will be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, at its Dallas, Texas office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream Bank, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Restricted Period will be terminated upon the receipt by the Trustee of: (1) a written certificate from the Depositary, together with copies of certificates from Euroclear and Clearstream Bank certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note or an IAI Global Note bearing a Private Placement Legend, all as contemplated by Section 2.06(b) hereof); and 25 (2) an Officers' Certificate from the Company, as required pursuant to Section 12.04 hereof; Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note will be exchanged for beneficial interests in Regulation S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee will cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. (d) Euroclear and Clearstream Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream Banking" and "Customer Handbook" of Clearstream will be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes that are held by Participants through Euroclear or Clearstream. Section 2.02 Execution and Authentication. Two Officers must sign the Notes for or on behalf of the Company by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note will nevertheless be valid. A Note will not be entitled to any benefit under this Indenture or be valid until authenticated by the manual signature of the Trustee. Such signature will be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee will, upon receipt of a written order of the Company signed by two Officers (an "Authentication Order"), authenticate Notes for original issue up to an aggregate principal amount set forth in such Authentication Order. The aggregate principal amount of Notes outstanding at any time may not exceed the aggregate amount of Notes authenticated for original issue pursuant to all the Authentication Orders issued by the Company except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders, the Company, any Guarantor or any Affiliate of the Company or any Guarantor. Section 2.03 Registrar, Paying Agent, Depositary and Custodian. The Company will maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar will keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If 26 the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Domestic Subsidiaries may act as Paying Agent or Registrar. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes. Section 2.04 Paying Agent to Hold Money in Trust. The Company will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of, or premium, if any, interest or Additional Interest, if any, on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or any of its Domestic Subsidiaries) will have no further liability for the money. If the Company or any such Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee will serve as Paying Agent for the Notes. Each Paying Agent shall otherwise comply with TIA Section 317(b). Section 2.05 Holder Lists. The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company will furnish to the Trustee at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA Section 312(a). Section 2.06 Transfer and Exchange. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. A Global Note will be exchanged by the Company for Definitive Notes only if: (1) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 90 days after the date of such notice from the Depositary; (2) an Event of Default has occurred with respect to the Notes and is continuing and the Registrar has received a request from the Depositary to issue Definitive Notes in lieu of all or a portion of the Global Notes (in which case the Company shall deliver Definitive Notes within 30 days of such request); 27 (3) in the case of a Regulation S Global Note, Euroclear or Clearstream, as the case may be, (A) is closed for business for a continuous period of 14 days (other than by reason of statutory or other holidays), or (B) announces an intention permanently to cease business or does in fact do so; provided, however, that Definitive Notes shall only be issued in exchange for or in lieu of such Regulation S Global Note; or (4) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Company for Definitive Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act. Upon the occurrence of any of the preceding events in (1), (2), (3) or (4) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee in exchange for the beneficial interests in the Global Notes so exchanged. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note, except as provided in the second sentence of this Section 2.06(a). A Global Note may not be transferred or exchanged for another Note, and beneficial interests in a Global Note shall not be exchanged in whole or in part for Definitive Notes, other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (1) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(1). (2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar either: (A) both: (i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing 28 the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged; and (ii) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or (B) in the case of a transfer of a beneficial interest in a Global Note to a Person that must take delivery thereof in the form of a Definitive Note because (1) the transferee is a QIB and the Rule 144A Global Note has been exchanged for Definitive Notes pursuant to Section 2.06(a), (2) the transferee is a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 and the Regulation S Permanent Global Note has been exchanged for Definitive Notes pursuant to Section 2.06(a), (3) the transferee is an Institutional Accredited Investor and the IAI Global Note has been exchanged for Definitive Notes pursuant to Section 2.06(a) or (4) the transferee would have taken delivery thereof in the form of an Unrestricted Global Note but for the fact that such Global Note has been exchanged for Definitive Notes pursuant to Section 2.06(a); or in the case of an exchange of a beneficial interest in a Restricted Global Note pursuant to the Exchange Offer by a Person that would have taken delivery thereof in the form of an Unrestricted Global Note but for the fact that such Global Note has not been issued or has been exchanged for Definitive Notes pursuant to Section 2.06(a), both: (i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged; and (ii) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon consummation of an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(2) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. (3) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar receives the following: 29 (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transferee is the Company or will take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications and certificates required by item (3) thereof, if applicable. (4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(2) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that (i) such holder is not a Broker-Dealer; (ii) any Exchange Notes to be received by such holder will be acquired in the ordinary course of its business; (iii) such holder has no arrangement or understanding with any Person to participate in the distribution of the Notes or the Exchange Notes; (iv) such holder is not an "affiliate" (as defined in Rule 405 under the Securities Act) of the Company or any Guarantor, or, if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; and (v) such holder is not engaged in, and does not intend to engage in, the distribution of the Exchange Notes; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global 30 Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar and the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (c) Transfer of Beneficial Interests for Definitive Notes. (1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note in accordance with Section 2.06(b)(2)(B), then, upon receipt by the Registrar of the following documentation: (A) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (B) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (C) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (A) and (B) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; or (D) if such beneficial interest is being transferred to the Company, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar 31 through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. (2) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.06(c)(1)(B) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (3) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note in accordance with Section 2.06(b)(2)(B) only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that (i) such holder is not a Broker-Dealer; (ii) any Exchange Notes to be received by such holder will be acquired in the ordinary course of its business; (iii) such holder has no arrangement or understanding with any Person to participate in the distribution of the Notes or the Exchange Notes; (iv) such holder is not an "affiliate" (as defined in Rule 405 under the Securities Act) of the Company or any Guarantor, or, if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; and (v) such holder is not engaged in, and does not intend to engage in, the distribution of the Exchange Notes; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, the Registrar receives a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof, and, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered. 32 Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will not bear the Private Placement Legend. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests in a Global Note. (1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2) thereof; (B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; or (D) if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (C) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinions of Counsel required by item (3) thereof, if applicable; the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, and in the cases of clause (D), the IAI Global Note. (2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that (i) such holder is not a Broker-Dealer; (ii) any Exchange Notes to be received by such holder will be acquired in the ordinary course of its business; (iii) such holder has no arrangement or understanding with any Person to participate in the distribution of the Notes or the Exchange Notes; (iv) such holder is not an "affiliate" (as defined in Rule 405 under the Securities Act) of the Company or any Guarantor, or, if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; and (v) such holder is not engaged in, and does not intend to engage in, the distribution of the Exchange Notes; 33 (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (i) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (ii) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Company or the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar and the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(2), the Trustee will cancel the Restricted Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. (3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Unrestricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (2)(B), (2)(D) or (3) above at a time when an Unrestricted Global Note has not yet been issued, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar will register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder 34 must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). (1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. (2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that (i) such holder is not a Broker-Dealer; (ii) any Exchange Notes to be received by such holder will be acquired in the ordinary course of its business; (iii) such holder has no arrangement or understanding with any Person to participate in the distribution of the Notes or the Exchange Notes; (iv) such holder is not an "affiliate" (as defined in Rule 405 under the Securities Act) of the Company or any Guarantor, or, if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; and (v) such holder is not engaged in, and does not intend to engage in, the distribution of the Exchange Notes; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (i) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or 35 (ii) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar and the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. (f) Exchange Offer. Upon the consummation of the Exchange Offer in accordance with the Registration Rights Agreement, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate: (1) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes accepted for exchange in the Exchange Offer by Persons that certify in the applicable Letters of Transmittal that (i) any Exchange Notes received by such Person will be acquired in the ordinary course of its business, (ii) such Person has no arrangements or understanding with any other Person to participate in the distribution of the Initial Notes or the Exchange Notes within the meaning of the Securities Act, (iii) such Person is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or any Guarantor or if it is an affiliate, such Person will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Person is not a Broker-Dealer, it is not engaged in, and does not intend to engage in, the distribution of the Exchange Notes, (v) if such Person is a Broker-Dealer, it will receive Exchange Notes for its own account in exchange for Initial Notes that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes, (vi) if such Person is a Broker-Dealer, it did not purchase the Initial Notes to be exchanged for the Exchange Notes from the Company or a Guarantor, and (vii) such Person is not acting on behalf of any other Person who could not truthfully and completely make the foregoing representations; and (2) Unrestricted Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes under clause (1), the Trustee will cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly. (g) Legends. The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. 36 (1) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or in lieu thereof) shall bear the legend in substantially the following form: "THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF WESTLAKE CHEMICAL CORPORATION (THE "COMPANY") THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (V) IN THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT), IN A MINIMUM PRINCIPAL AMOUNT OF NOT LESS THAN $100,000, THAT IS ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF IN VIOLATION OF THE SECURITIES ACT AND THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER IN THE FORM SET FORTH ON THE REVERSE HEREOF CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO RESTRICTIONS ON TRANSFER OF THIS NOTE OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. IF CERTIFICATED: IN ADDITION, WITH RESPECT TO ANY TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (A)(VI) ABOVE), THE HOLDER WILL DELIVER TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AND, IN THE CASE OF A TRANSFER PURSUANT TO CLAUSE (A)(IV) ABOVE, A LEGAL OPINION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER BY IT COMPLIES WITH THE FOREGOING RESTRICTIONS." (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4), (c)(3), (d)(2), (d)(3), (e)(2), (e)(3) or (f) of this Section 2.06 (and all Notes issued in exchange therefor or in lieu thereof) will not bear the Private Placement Legend. 37 (2) Global Note Legend. Each Global Note will bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN." (3) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note will bear a legend in substantially the following form: "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON." (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes in accordance with the second sentence of Section 2.06(a) or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note will be 38 increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (1) To permit registrations of transfers and exchanges, the Company will execute and the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 or at the Registrar's request. (2) No service charge will be made to a Holder of a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.14 and 9.05 hereof). (3) When Definitive Notes are presented to the Registrar with the request to register the transfer of such Definitive Notes or to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements and the requirements of this Indenture for such transactions are met; provided, however, that the Definitive Notes presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instruction of transfer in form reasonably satisfactory to the Registrar duly executed by the Holder thereof or by his attorney, duly authorized in writing, on which instruction the Registrar can rely. (4) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes will be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (5) Neither the Company nor the Registrar will be required: (A) to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection; or (B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (6) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent, the Company and any Guarantor may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent, the Company or any Guarantor shall be affected by notice to the contrary. (7) The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. 39 (8) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. Section 2.07 Replacement Notes. If any mutilated Note is surrendered to the Trustee or the Company, or if the Holder of a Note claims that the Note has been destroyed, lost or stolen and the Trustee and the Company receive evidence to their satisfaction of the destruction, loss or theft of such Note, the Company will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, any Guarantors, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company and the Trustee may charge a Holder for their expenses in replacing a Note. If, after delivery of such replacement Note, a protected purchaser of the original Note in lieu of which such replacement Note was issued presents for payment or registration such original Note, the Trustee shall be entitled to recover such replacement Note from the party to whom it was delivered or any party taking therefrom, except a protected purchaser, and shall be entitled to recover upon the security and indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Company or the Trustee in connection therewith. Every replacement Note is an additional obligation of the Company and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 2.08 Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note; provided, however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be outstanding for purposes of Section 3.07(a) hereof. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest. Section 2.09 Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in or consented to any direction, amendment, supplement, waiver or consent, Notes owned by the Company, a Guarantor or any other obligor upon the Notes or any Affiliate of the Company, of a Guarantor or of such other obligor shall be disregarded and shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, 40 amendment, supplement, waiver or consent, only Notes that the Trustee knows are so owned will be so disregarded. Section 2.10 Temporary Notes. Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes. Temporary Notes will be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as may be reasonably acceptable to the Trustee. Without unreasonable delay, the Company will prepare and the Trustee will authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes will be entitled to all of the benefits of this Indenture. Section 2.11 Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent will forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else will cancel all Notes surrendered for registration of transfer, exchange, payment, redemption, replacement or cancellation and, unless the Company shall direct in writing that canceled Notes be returned to it, the Trustee shall thereafter treat and dispose of such canceled Note in accordance with its document destruction policies. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. Section 2.12 Defaulted Interest. If the Company defaults in a payment of interest on the Notes, it will pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company will fix or cause to be fixed each such special record date and payment date, provided that no such special record date may be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) will mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. ARTICLE 3. REDEMPTION AND PREPAYMENT Section 3.01 Notices to Trustee. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it must furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth: (1) the clause of this Indenture pursuant to which the redemption shall occur; (2) the redemption date; 41 (3) the principal amount of Notes to be redeemed; and (4) the redemption price. Section 3.02 Selection of Notes to Be Redeemed. If less than all of the Notes are to be redeemed at any time, the Trustee will select Notes for redemption as follows: (1) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or (2) if the Notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate. In the event of partial redemption or purchase by lot, the particular Notes to be redeemed or purchased will be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption or purchase date by the Trustee from the outstanding Notes not previously called for redemption or purchase. The Trustee will promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected will be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption or purchase. Section 3.03 Notice of Redemption. Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company will mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Article 8 or 11 of this Indenture. The notice will identify the Notes to be redeemed and will state: (1) the redemption date; (2) the redemption price; (3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, on or after the redemption date upon surrender of such Note to the Paying Agent, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note; (4) the name and address of the Paying Agent; 42 (5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (6) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date, and the only remaining right of the Holder of such Notes is to receive payment of the redemption price upon surrender to the Paying Agent of the Notes redeemed; (7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee will give the notice of redemption in the Company's name and at its expense; provided, however, that the Company has delivered to the Trustee, at least 45 days prior to the redemption date (unless a shorter time shall be satisfactory to the Trustee), an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Section 3.04 Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. Failure to give notice to a Holder or any defect in any notice shall not affect the validity of any notice to any other Holder. Section 3.05 Deposit of Redemption or Purchase Price. Prior to 10:00 a.m., New York City time, on the redemption or purchase date, the Company will deposit with the Trustee or with the Paying Agent (or, if the Company or any Domestic Subsidiary is acting as the Paying Agent, segregate and hold in trust as provided in Section 2.04) money sufficient to pay the redemption or purchase price, accrued interest and Additional Interest, if any, on all Notes or portions thereof to be redeemed or purchased on that date. The Trustee or the Paying Agent will promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption or purchase price, accrued interest and Additional Interest, if any, on all Notes or portions thereof to be redeemed or purchased. If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes called for redemption or purchase, whether or not such Notes are presented for payment, and the Holders of such Notes shall have no further rights with respect to such Notes except for the right to receive the redemption price, accrued interest and Additional Interest, if any, upon surrender of such Notes. If a Note is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. 43 Section 3.06 Notes Redeemed or Purchased in Part. Upon surrender to the Paying Agent of a Note that is redeemed or purchased in part, the Company will issue and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the expense of the Company, a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered. Section 3.07 Optional Redemption. (a) At any time on or prior to July 15, 2007, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under this Indenture at a redemption price of 108.75% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest, if any, to the redemption date, with the net cash proceeds of one or more Public Equity Offerings; provided that: (1) at least 65% of the aggregate principal amount of Notes issued under this Indenture remains outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and (2) the redemption occurs within 60 days of the date of the closing of such Public Equity Offering. (b) At any time prior to July 15, 2007, the Company may also redeem all or a part of the Notes at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Additional Interest, if any, to the redemption date, subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment date. Except pursuant to Sections 3.07(a) and 3.07(b), the Notes are not redeemable at the Company's option prior to July 15, 2007. (c) On or after July 15, 2007, the Company may redeem all or a part of the Notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Additional Interest, if any, on the Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on July 15 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant interest payment date:
Year Percentage ---- ---------- 2007................................................ 104.375% 2008................................................ 102.917% 2009................................................ 101.458% 2010 and thereafter................................. 100.000%
(d) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. (e) In the event that the Company is required to commence a Change of Control Offer to all Holders to purchase Notes, the procedures set forth in Section 4.14 shall apply. Section 3.08 Mandatory Redemption. The Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. 44 Section 3.09 Offer to Purchase by Application of Excess Proceeds. In the event that, pursuant to Section 4.10 hereof, the Company is required to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"), it will follow the procedures specified below. The Asset Sale Offer shall be made to all Holders and all holders of other Pari Passu Indebtedness containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets. The Asset Sale Offer will remain open for a period of at least 20 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company will apply all Excess Proceeds (the "Offer Amount") to the purchase of Notes and such other Pari Passu Indebtedness (on a pro rata basis, if applicable) or, if less than the Offer Amount has been tendered, all Notes and other Indebtedness tendered in response to the Asset Sale Offer. Payment for any Notes so purchased will be made in the same manner as redemption payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest and Additional Interest, if any, will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company will send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice will contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The notice, which will govern the terms of the Asset Sale Offer, will state: (1) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer will remain open; (2) the Offer Amount, the purchase price and the Purchase Date; (3) that any Note not tendered or accepted for payment will continue to accrue interest; (4) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer will cease to accrue interest after the Purchase Date, and the only remaining right of the Holder of such Note is to receive payment of the purchase price upon surrender of the Note so purchased to the Company or the Paying Agent; (5) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in integral multiples of $1,000 only; (6) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company or a Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Purchase Date; (7) that Holders will be entitled to withdraw their election if the Company or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the 45 Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (8) that, if the aggregate principal amount of Notes and other Pari Passu Indebtedness surrendered by Holders exceeds the Offer Amount, the Company will select the Notes and other Pari Passu Indebtedness to be purchased on a pro rata basis based on the principal amount of Notes and such other Pari Passu Indebtedness tendered (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, will be purchased); and (9) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer), which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. On or before the Purchase Date, the Company will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof and other Pari Passu Indebtedness tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes and other Pari Passu Indebtedness tendered, and will deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof and such other Pari Passu Indebtedness were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company or the Paying Agent, as the case may be, will promptly (but in any case not later than five Business Days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company will promptly issue a new Note, and the Trustee, upon written request from the Company will authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered; provided that each new Note will be in a principal amount of $1,000 or an integral multiple thereof. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company will comply with the provisions of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such provisions are applicable in connection with each purchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 3.09 or Section 4.10 hereof, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 3.09 or Section 4.10 hereof by virtue of such conflict. Other than as specifically provided in this Section 3.09 or 4.10, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.05 and 3.06 hereof. Section 3.10 Purchase of Securities. The Company, any Guarantor and any Affiliate of the Company or any Guarantor may, subject to applicable law, at any time purchase or otherwise acquire Notes in the open market or by private agreement. Any such acquisition shall not operate as or be deemed for any purpose to be a redemption of the Indebtedness represented by such Notes. Any Notes purchased or acquired by the Company or a Guarantor shall be delivered to the Trustee and, upon such delivery, the Indebtedness represented thereby shall be deemed to be satisfied. Section 2.11 shall apply to all Notes so delivered. 46 ARTICLE 4. COVENANTS Section 4.01 Payment of Notes. The Company will pay or cause to be paid the principal of, and premium, if any, interest and Additional Interest, if any, on the Notes on the dates and in the manner provided in the Notes and this Indenture. Principal of, and premium, if any, interest and Additional Interest, if any, will be considered paid on the date due if the Paying Agent, if other than the Company or a Domestic Subsidiary thereof, holds as of 11:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal of, and premium, if any, interest and Additional Interest, if any, then due. The Company will pay all Additional Interest, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Additional Interest, if any (without regard to any applicable grace period) at the same rate to the extent lawful. Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law and without the payment of any additional or gross up amounts with respect thereto, deduct or withhold income or other similar taxes imposed by the laws of the United States, any state of the United States or the District of Columbia from any payments of principal, or premium, if any, interest or Additional Interest, if any, hereunder. Section 4.02 Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or the Paying Agent) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company or any Guarantor in respect of the Notes, the Note Guarantees and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission will in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03 hereof. 47 Section 4.03 Reports. (a) Prior to consummation of the Exchange Offer, whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company will furnish to the Trustee, within 15 days after it would have been required to file the same with the SEC if the Company had been subject to the periodic reporting requirements of Section 13 or 15(d) of the Exchange Act and excluding any time periods applicable to "accelerated filers" under the Exchange Act, quarterly and annual financial statements, including any notes thereto (and with respect to annual financial statements only, an auditors' report thereon by a firm of established national reputation), and a "Management's Discussion and Analysis of Financial Condition and Results of Operations," both comparable to that which the Company would have been required to include in a quarterly report on Form 10-Q or an annual report on Form 10-K if the Company had been subject to those periodic reporting requirements. (b) Following the consummation of the Exchange Offer, whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company will file with the SEC (unless the SEC will not accept such a filing): (1) all quarterly and annual reports on Forms 10-Q and 10-K required to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange Act; and (2) all current reports on Form 8-K required to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange Act; in each case, for public availability within the time periods specified in the rules and regulations applicable to such reports. The Company will not take any action for the purpose of causing the SEC not to accept any such filings. If the SEC will not accept the Company's filings for any reason, the Company will post the reports referred to in clauses (1) and (2) of this Section 4.03(b) on its website within the time periods that would apply if the Company were required to file those reports with the SEC. If this Indenture is qualified under the TIA, but not otherwise, the Company and the Guarantors shall also comply with the provisions of TIA Section 314(a). (c) As long as the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will furnish to the Holders and to prospective purchasers of the Notes designated by the Holders, promptly upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. (d) The Company intends to file the reports referred to in clauses (1) and (2) of Section 4.03(b) hereof with the SEC in electronic form pursuant to Regulation S-T of the SEC using the SEC's Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system. The Company shall notify the Trustee in the manner prescribed herein of each such filing. The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the reports so filed. Compliance with the foregoing shall constitute delivery by the Company of such reports to the Trustee in compliance with the provisions of TIA Section 314(a). The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the SEC, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of the reports, information and documents to the Trustee pursuant to this Section 4.03 shall be solely for the purposes of compliance with this Section 4.03 and with TIA Section 314(a). The Trustee's receipt of such reports, information and documents shall not constitute notice to it of the content thereof or of any matter determinable from the content thereof, including the Company's compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers' Certificates. 48 Section 4.04 Compliance Certificate. (a) The Company and each Guarantor (to the extent that such Guarantor is so required under the TIA) shall deliver to the Trustee, within 120 days after the end of each fiscal year, a statement signed by an Officer of the Company or such Guarantor, as the case may be, which need not constitute an Officers' Certificate, complying with TIA Section 314(a)(4) and stating that a review of the activities of the Company or such Guarantor, as the case may be, during the preceding fiscal year has been made under the supervision of the signing Officer with a view to determining whether the Company or such Guarantor, as the case may be, has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company or such Guarantor, as the case may be, has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company or such Guarantor, as the case may be, is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company or such Guarantor, as the case may be, is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof insofar as they relate to accounting matters or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) So long as any of the Notes are outstanding, the Company will deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. Section 4.05 Taxes. The Company will pay, and will cause each of its Restricted Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies imposed upon the Company or any of its Restricted Subsidiaries or any of their respective properties, except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. Section 4.06 Stay, Extension and Usury Laws. The Company and each of the Guarantors covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the 49 execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted. Section 4.07 Restricted Payments. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (1) declare or pay any dividend or make any other distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary of the Company); (2) purchase, redeem or otherwise acquire or retire for value (including without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company; (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness of the Company or any Guarantor that is contractually subordinated to the Notes or any Note Guarantee (excluding any intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries), except a payment of interest or principal at or after the Stated Maturity of such interest or principal; or (4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (i) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; and (ii) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof; and (iii) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries since the date hereof (excluding Restricted Payments permitted by clauses (2), (3), (4), (6), (7), (8), (9), (10) and (11) of Section 4.07(b) below), is less than the sum, without duplication, of: (A) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date hereof to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for 50 such period is a deficit, less 100% of such deficit); provided, however, that if at any time after the date hereof the Notes are rated Investment Grade, the percentage will be 100% of Consolidated Net Income for such period; provided, further, however, that if such Restricted Payment is to be made in reliance upon an additional amount permitted pursuant to the immediately preceding proviso, the Notes must be rated Investment Grade at the time such Restricted Payment is declared or, if not declared, made, plus (B) 100% of the aggregate net cash proceeds received by the Company since the date hereof as a contribution to its common equity capital or by the Company or any of its Restricted Subsidiaries from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company or any of its Restricted Subsidiaries that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company), plus (C) to the extent that any Restricted Investment that was made after the date hereof is sold for cash or otherwise liquidated, repaid for cash or otherwise reduced, the lesser of (i) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (ii) the initial amount of such Restricted Investment, plus (D) to the extent that any Unrestricted Subsidiary of the Company is redesignated as a Restricted Subsidiary after the date hereof, the Fair Market Value of the Company's Investment in such Subsidiary as of the date of such redesignation, plus (E) 50% of any dividends received by the Company or a Restricted Subsidiary of the Company that is a Guarantor after the date hereof from an Unrestricted Subsidiary or a Joint Venture, to the extent that such dividends were not otherwise included in Consolidated Net Income of the Company for such period; provided, however, that if at any time after the date hereof the Notes are rated Investment Grade, the percentage will be 100% of any such dividends; provided, further, however, that if such Restricted Payment is to be made in reliance upon an additional amount permitted pursuant to the immediately preceding proviso, the Notes must be rated Investment Grade at the time such Restricted Payment is declared or, if not declared, made. (b) So long as no Default has occurred and is continuing or would be caused thereby, the provisions of Section 4.07(a) will not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of the dividend, if at the date of declaration the dividend payment would have complied with the provisions of this Indenture; (2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent issuance or sale (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to the Company; provided that the 51 amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from Section 4.07(a)(iii)(B) hereof; (3) the defeasance, redemption, repurchase or other acquisition of Indebtedness of the Company or any Guarantor that is contractually subordinated to the Notes or to any Note Guarantee with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness; (4) the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary to the Company or another Restricted Subsidiary, or the purchase, redemption or other acquisition or retirement of any Equity Interests in a Restricted Subsidiary held by the Company or another Restricted Subsidiary; (5) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any current or former officer, director or employee of the Company or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stock option agreement, shareholders' agreement or similar plan or agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $1.0 million in any twelve-month period; (6) the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options; (7) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company or any Restricted Subsidiary of the Company issued on or after the date hereof in accordance with the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof. (8) distributions or payments of Receivables Fees; (9) the repurchase of any Indebtedness of the Company or any Guarantor that is contractually subordinated to the Notes or to any Note Guarantee at a purchase price not greater than 101% of the principal amount thereof in the event of (x) a change of control pursuant to a provision no more favorable to the holders thereof than the provision set forth in Section 4.14 hereof or (y) an Asset Sale (pursuant to a provision no more favorable to the holders thereof than the provision set forth in Section 4.10 hereof); provided that in each case, prior to such repurchase the Company has made a Change of Control Offer or Asset Sale Offer, as applicable, and repurchased all Notes that were validly tendered for payment in connection with such Change of Control Offer or Asset Sale Offer; (10) Permitted Payments to Parent; and (11) other Restricted Payments in an aggregate amount not to exceed $25.0 million since the date hereof. The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this Section 4.07 will be 52 determined by the Board of Directors and set forth in a Board Resolution which shall be delivered to the Trustee. The Board of Directors' determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the Fair Market Value exceeds $15.0 million. Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Company or any of its Restricted Subsidiaries; (2) make loans or advances to the Company or any of its Restricted Subsidiaries; or (3) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. (b) The restrictions in Section 4.08(a) will not apply to encumbrances or restrictions existing under or by reason of: (1) agreements governing Existing Indebtedness and Credit Facilities as in effect on the date hereof and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements, as in effect on the date hereof; (2) this Indenture, the Notes and the Note Guarantees; (3) applicable law, rule, regulation or order; (4) any instrument governing Indebtedness or Capital Stock of a Person as in effect at the time of the acquisition by the Company or any of its Restricted Subsidiaries of such Person or the properties or assets of such Person (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred; (5) customary non-assignment provisions in contracts and leases entered into in the ordinary course of business; (6) construction loans and purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property constructed, purchased or leased of the nature described in Section 4.08(a)(3); 53 (7) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition; (8) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (9) Liens securing Indebtedness otherwise permitted to be incurred under the provisions of Section 4.12 hereof that limit the right of the debtor to dispose of the assets subject to such Liens; (10) any restriction under an agreement governing Indebtedness of a Foreign Subsidiary permitted under Section 4.09 hereof; (11) provisions limiting or prohibiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into with the approval of the Company's Board of Directors, which limitation or prohibition is applicable only to the assets that are the subject of such agreements; and (12) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. For purposes of determining compliance with this Section 4.08, in the event that a restriction meets the criteria of more than one of the categories of permitted restrictions described in clauses (1) through (12) of this Section 4.08(b), the Company will be permitted to classify such restriction on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.08. Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt), and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and the Guarantors may incur Indebtedness or issue preferred stock, if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom and, in the case of Acquired Debt, giving pro forma effect to the applicable transaction related thereto), as if the additional Indebtedness had been incurred (and such transaction had occurred) or the preferred stock or Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. (b) The provisions of Section 4.09(a) will not prohibit the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): 54 (1) the incurrence by the Company or any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Subsidiaries thereunder) not to exceed the greater of (x) $320.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any of its Restricted Subsidiaries since the date hereof to repay any term Indebtedness under a Credit Facility or to repay any revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment reduction thereunder pursuant to Section 4.10 hereof or (y) the amount of the Borrowing Base as of the date of such incurrence; (2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date hereof and the Exchange Notes and the related Note Guarantees to be issued in accordance with the Registration Rights Agreement; (4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used or usable in a Permitted Business, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed $10.0 million at any time outstanding; (5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, refund, refinance, renew, defease or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) or clauses (2), (3), (4), (5) or (16) of this Section 4.09(b); (6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that: (A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and (B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6); 55 (7) the issuance by any of the Company's Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that: (A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and (B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company; will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7); (8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business and not for speculative purposes; (9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the guarantee shall be subordinated to the same extent as the Indebtedness guaranteed; (10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of workers' compensation claims; self-insurance obligations; bankers' acceptances; performance, appeal, completion, guarantee and surety bonds; or similar requirements in the ordinary course of business; (11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; (12) the incurrence by Foreign Subsidiaries of Indebtedness in an aggregate principal amount at any time outstanding pursuant to this clause (12), including all Permitted Refinancing Indebtedness incurred to refund, refinance, defease, renew, extend or replace Indebtedness incurred pursuant to this clause (12), not to exceed $10.0 million; (13) the incurrence by the Company or a Restricted Subsidiary of Indebtedness arising from agreements of the Company or such Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred in connection with the disposition of any business, assets or subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company or such Restricted Subsidiary in connection with such disposition; (14) the incurrence by the Company or a Restricted Subsidiary of Indebtedness consisting of take-or-pay obligations contained in supply agreements entered into in the ordinary course of business; 56 (15) the incurrence by the Company of Indebtedness to any of its Subsidiaries incurred in connection with the purchase of accounts receivable and related assets by the Company from any such Subsidiary which assets are subsequently conveyed by the Company in connection with a Receivable Facility; and (16) the incurrence by the Company or any of the Guarantors of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to extend, refund, refinance, renew, defease or replace any Indebtedness incurred pursuant to this clause (16), and the issuance by the Company of any Disqualified Stock and by any Restricted Subsidiary of any additional preferred stock, not to exceed $50.0 million. The Company will not incur, and will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Pari Passu Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the related Note Guarantee on substantially identical terms; provided, however, that no Indebtedness shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) of Section 4.09(b) or is entitled to be incurred pursuant to Section 4.09(a), the Company will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under this Indenture will be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of Section 4.09(b). The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; provided, in each such case, that the amount thereof is included in the Fixed Charges of the Company as accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. Section 4.10 Asset Sales. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (1) the Company or the Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (as determined by the Company's Board of Directors and evidenced by a Board Resolution set forth in an Officers' Certificate delivered to the Trustee) of the assets or Equity Interests issued or sold or otherwise disposed of; and (2) at least 75% of the consideration received in the Asset Sale by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents or a controlling interest in a 57 business engaged in a Permitted Business. For purposes of this Section 4.10(a)(2), each of the following shall also be deemed to be cash: (A) any liabilities, as shown on its most recent balance sheet, of the Company or such Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Note Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Company or such Restricted Subsidiary from further liability; (B) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are promptly, subject to ordinary settlement periods, converted or monetized by the Company or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion or monetization; and (C) any stock or assets of the kind referred to in clauses (2) or (4) of Section 4.10(b). (b) Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds at its option: (1) to repay Indebtedness and other Obligations under a Credit Facility and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; (2) to acquire all or substantially all of the assets of, or any Capital Stock of, any Person or division thereof conducting a Permitted Business, if, in the case of any such acquisition of Capital Stock and after giving effect thereto, such Person will be a Restricted Subsidiary of the Company (or enter into a binding commitment for any such acquisition); provided that such binding commitment shall be treated as a permitted application of Net Proceeds from the date of such commitment until and only until the earlier of (x) the date on which such acquisition is consummated and (y) the 180th day following the expiration of the aforementioned 360-day period. If the acquisition or expenditure contemplated by such binding commitment is not consummated on or before such 180th day and the Company or such Restricted Subsidiary shall not have applied such Net Proceeds pursuant to clause (1), (3) or (4) of this Section 4.10(b) on or before such 180th day, such commitment shall be deemed not to have been a permitted application of Net Proceeds; (3) to make a capital expenditure; or (4) to acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business. (c) Pending the final application of any such Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0 million, within ten days thereof, the Company shall make an Asset Sale Offer to all Holders and all holders of other Pari Passu Indebtedness containing provisions similar to those set forth in this Indenture with respect to offers to purchase or redeem with the proceeds of asset sales to purchase the maximum principal amount of Notes and such other Pari Passu Indebtedness that 58 may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of principal amount plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and other Pari Passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other Pari Passu Indebtedness to be purchased on a pro rata basis based on the principal amount of Notes and such other Pari Passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. Section 4.11 Transactions with Affiliates. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each an "Affiliate Transaction"), unless: (1) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that might reasonably have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person; and (2) the Company delivers to the Trustee: (A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a Board Resolution set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this Section 4.11 and that such Affiliate Transaction has been approved by a majority of the members of the Board of Directors; and (B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. (b) The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.11(a): (1) any fees, compensation and other payments paid to any officer or employee pursuant to any employment agreement, employee or director benefit plan, officer and director indemnification agreement or any similar arrangement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business; (2) transactions between or among the Company and/or its Restricted Subsidiaries; (3) transactions with a Person (other than an Unrestricted Subsidiary of the Company) that is an Affiliate of the Company solely because the Company owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person; 59 (4) payment of reasonable directors' fees to Persons who are not otherwise Affiliates of the Company; (5) any issuance of Equity Interests (other than Disqualified Stock) of the Company to Affiliates of the Company; (6) Restricted Payments that do not violate Section 4.07 hereof. (7) loans or advances to employees in the ordinary course of business not to exceed $2.0 million in the aggregate at any one time outstanding; (8) sales (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable, related assets and the provision of billing, collection and other services in connection therewith, in each case, to an Accounts Receivable Subsidiary in connection with any Receivables Facility; (9) transactions pursuant to any contract or agreement in effect on the date hereof, as the same may be amended, modified, extended or replaced from time to time, so long as any such contract or agreement as so amended, modified, extended or replaced is, taken as a whole, not materially less favorable to the Company and its Restricted Subsidiaries than under those agreements as described in the Offering Circular in the section "Certain Relationships and Related Transactions"; (10) any transaction or series of transactions between the Company or any Restricted Subsidiary and any of their Joint Ventures, provided that (a) such transaction or series of transactions is in the ordinary course of business between the Company or such Restricted Subsidiary and such Joint Venture, and (b) with respect to any such Affiliate Transaction involving aggregate consideration in excess of $5.0 million, such Affiliate Transaction complies with Section 4.11(a)(1) hereof and such Affiliate Transaction has been approved by the Board of Directors; and (11) Permitted Investments and Permitted Payments to Parent. Section 4.12 Liens. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien, except Permitted Liens, to secure Indebtedness of any kind on any asset now owned or hereafter acquired, unless all payments due under this Indenture and the Notes are secured on an equal and ratable basis with the obligations so secured (or, if such obligations are subordinated by their terms to the Notes or the Note Guarantees, prior to the obligations so secured) until such time as such obligations are no longer secured by a Lien. Section 4.13 Corporate Existence. Subject to Articles 5 and 10 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (1) its corporate existence, and the corporate, partnership or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Restricted Subsidiary; and (2) the rights (charter and statutory), licenses and franchises of the Company and its Restricted Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted 60 Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders. Section 4.14 Offer to Repurchase Upon Change of Control. (a) Upon the occurrence of a Change of Control, the Company will make an offer (a "Change of Control Offer") to each Holder to repurchase all or any part (equal to $1,000 or an integral multiple of $1,000) of such Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest, if any, on the Notes repurchased, if any, to the Change of Control Payment Date, subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment date (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and stating: (1) that the Change of Control Offer is being made pursuant to this Section 4.14 and that all Notes properly tendered will be accepted for payment; (2) the purchase price and the purchase date, which shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Payment Date, and the only remaining right of the Holder of such Note is to receive payment of the Change of Control Payment upon surrender of the Note so purchased to the Company or the Paying Agent; (5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, or transfer by book-entry transfer, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer), which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company will comply with the provisions of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such provisions are applicable in connection with each repurchase of the Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.14, the Company will comply 61 with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.14 hereof by virtue of such conflict. (b) On the Change of Control Payment Date, the Company will, to the extent lawful: (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer; (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and (3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company. The Paying Agent will promptly mail or deliver to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note will be in a principal amount of $1,000 or an integral multiple thereof. (c) Notwithstanding anything to the contrary in this Section 4.14, the Company will not be required to make a Change of Control Offer upon a Change of Control if: (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.14 hereof and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer; or (2) notice of redemption has been given pursuant to Section 3.03 hereof, unless or until there is a default in payment of the applicable redemption price. (d) Other than as specifically provided in this Section 4.14, any redemption pursuant to this Section 4.14 shall be made pursuant to the provisions of Sections 3.05 and 3.06 hereof. Section 4.15 Limitation on Sale and Leaseback Transactions. The Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that the Company or any Restricted Subsidiary may enter into a sale and leaseback transaction if: (1) the Company or that Restricted Subsidiary, as applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the Fixed Charge Coverage Ratio test in Section 4.09(a) hereof and (b) incurred a Lien to secure such Indebtedness pursuant to Section 4.12 hereof; (2) the gross cash proceeds of that sale and leaseback transaction are at least equal to the Fair Market Value, as determined in good faith by the Board of Directors and set forth in an Officers' Certificate delivered to the Trustee, of the property that is the subject of that sale and leaseback transaction; and 62 (3) the transfer of assets in such sale and leaseback transaction is permitted by, and the Company applies the proceeds of such sale and leaseback transaction in compliance with, Sections 3.09 and 4.10 hereof. Section 4.16 Payments for Consent. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or agreed to be paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Section 4.17 Additional Note Guarantees. If the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary after the date hereof, then the Company will cause that newly acquired or created Domestic Subsidiary, unless such newly acquired or created Domestic Subsidiary has been designated as an Unrestricted Subsidiary under this Indenture, to become a Guarantor and execute a Note Guarantee pursuant to a supplemental indenture in form and substance satisfactory to the Trustee and deliver an Opinion of Counsel satisfactory to the Trustee, to the Trustee within ten Business Days of the date on which it was acquired or created to the effect that such supplemental indenture has been duly authorized, executed and delivered by such Domestic Subsidiary and constitutes a valid and binding agreement of such Domestic Subsidiary, enforceable against such Domestic Subsidiary in accordance with its terms (subject to customary exceptions). The form of such supplemental indenture is attached as Exhibit F hereto. Section 4.18 Designation of Restricted and Unrestricted Subsidiaries The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary designated as Unrestricted shall be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 4.07 hereof or under one or more clauses of the definition of Permitted Investments, as determined by the Company. That designation shall only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default. If a Restricted Subsidiary that is a Guarantor is designated an Unrestricted Subsidiary in accordance with the terms of this covenant, such Note Guarantee will be released. Section 4.19 Accounts Receivable Facilities The Company or any of its Restricted Subsidiaries may sell (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) at any time and from time to time, accounts receivable and related assets to any Accounts Receivable Subsidiary; provided that the aggregate consideration received in each such sale is at least equal to the aggregate fair market value of the receivables sold. 63 ARTICLE 5. SUCCESSORS Section 5.01 Merger, Consolidation, or Sale of Assets. (a) The Company shall not, directly or indirectly, (1) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation), or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries, taken as a whole, in one or more related transactions, to another Person; unless: (1) either: (A) the Company is the surviving or continuing Person; or (B) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a Person organized or existing under the laws of the United States, any state of the United States or the District of Columbia; (2) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Company under the Notes, this Indenture and the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee; (3) immediately after giving effect to such transaction, no Default or Event of Default exists; and (4) the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition has been made will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof. In addition, the Company shall not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. (b) Section 5.01(a) shall not apply to: (1) a merger or consolidation of the Company with an Affiliate for the purpose of reincorporating or reorganizing the Company in another jurisdiction; (2) a merger or consolidation of the Company with a Wholly Owned Restricted Subsidiary; provided that, in connection with any such merger or consolidation, no consideration, other than Equity Interests (other than Disqualified Stock) in the surviving or continuing Person or the Company, shall be issued or distributed to the holders of Equity Interests of the Company; and (3) any sale, transfer, assignment, conveyance or other disposition of assets between or among the Company and its Restricted Subsidiaries. 64 Section 5.02 Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets, of the Company in a transaction that is subject to, and that complies with the provisions of, Section 5.01 hereof, the successor Person formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor Person and not to the Company), and may exercise every right and power of the Company under this Indenture and the Notes with the same effect as if such successor Person had been named as the Company herein and (except in the case of a lease) the predecessor Company shall be released from all obligations under this Indenture and the Notes; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes in the case of a sale, assignment, transfer, conveyance or other disposition of less than all of the Company's assets. ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01 Events of Default. An "Event of Default" occurs if: (1) there is a default for 30 days in the payment when due of interest or Additional Interest on the Notes; (2) there is a default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on the Notes; (3) the Company or any of its Restricted Subsidiaries fails to comply with the provisions of Section 3.09, 4.10, 4.14 or 5.01 hereof; (4) the Company or any Guarantor fails to comply with any other covenant or agreement in this Indenture or the Notes which shall not have been remedied within the specified period after written notice, as specified in the last paragraph of this Section 6.01; (5) there is a default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists or is created after the date hereof, if such default: (A) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or (B) results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the 65 maturity of which has been so accelerated, aggregates $20.0 million or more and has not been discharged in full or such acceleration has not been rescinded or annulled within 30 days of such maturity or acceleration; (6) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its Restricted Subsidiaries, which judgment or judgments are not paid, stayed or otherwise discharged for a period of 60 days after such judgment or judgments become final and non-appealable; provided that the aggregate of all such unpaid, unstayed or undischarged judgments that are not covered by indemnities or third party insurance as to which the Person giving such indemnity or such insurer has not disclaimed coverage exceeds $20.0 million; and (7) the Company or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law: (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a custodian of it or for all or substantially all of its property, (D) makes a general assignment for the benefit of its creditors; or (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that remains unstayed and in effect for 60 consecutive days and that: (A) is for relief against the Company or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary as debtor in an involuntary case; (B) appoints a custodian of the Company or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or (C) orders the liquidation of the Company or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; (9) except as permitted by this Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Note Guarantee. When a Default is cured, it ceases. 66 A Default under clause (4) of this Section 6.01 is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in principal amount of the then outstanding Notes notify the Company, and the Trustee, of the Default, and the Company or the applicable Guarantor, as the case may be, fails to cure the Default within 60 days after receipt of the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a "Notice of Default." Section 6.02 Acceleration. (a) In the case of an Event of Default specified in clause (7) or (8) of Section 6.01 hereof, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee by notice to the Company or the Holders of at least 25% in principal amount of the then outstanding Notes by notice to the Company and the Trustee, may declare all the Notes to be due and payable. Upon any such declaration, the Notes shall become due and payable immediately. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal or premium, if any, interest or Additional Interest, if any, that has become due solely because of the acceleration) have been cured or waived. (b) If an Event of Default occurs by reason of any willful action or inaction taken or not taken by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to Section 3.07(b) (if such Event of Default occurs prior to July 15, 2007) or Section 3.07(c) (if such Event of Default occurs on or after July 15, 2007), then, upon acceleration of the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law. (c) Section 6.02(b) refers only to those times when the Company, while solvent, voluntarily, knowingly, deliberately or intentionally avoids payment of the premium referred to in Section 6.02(b) and is not intended to encompass those situations in which such a payment of premium would render the Company insolvent or force a bankruptcy, liquidation or reorganization of the Company, or where non-payment is a result of financial distress or adverse financial condition. Section 6.03 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal and premium, if any, interest and Additional Interest, if any, on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 6.04 Waiver of Past Defaults. Subject to Sections 6.07 and 9.02, Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder (including, without limitation, waivers obtained in connection with a tender offer or exchange offer for, or purchases of, Notes or a solicitation of consents in respect of Notes), except (1) a continuing Default or Event of 67 Default in the payment of the principal of, or premium, if any, interest or Additional Interest, if any, on any Note or (2) a continued Default in respect of a provision that under Section 9.02 cannot be amended or supplemented without the consent of each Holder affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 6.05 Control by Majority. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. Section 6.06 Limitation on Suits. Subject to Section 6.07, a Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer and, if requested, provide to the Trustee indemnity or security reasonably satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with such request within 60 days after receipt of the request and the offer and, if requested, the provision of reasonable security or indemnity; and (5) during such 60-day period, the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. Section 6.07 Rights of Holders of Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal of, and premium, if any, interest and Additional Interest, if any, on such Note, on or after the respective due dates expressed in such Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Section 6.08 Collection Suit by Trustee. If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company or a Guarantor for the whole amount of principal of, and premium, if any, interest and Additional Interest, if any, remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest 68 and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 6.09 Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents and to take such actions, including participating as a member, voting or otherwise, of any committee of creditors, as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10 Priorities. If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal of, and premium, if any, interest and Additional Interest, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal of, and premium, if any, interest and Additional Interest, if any, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. Section 6.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the 69 filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7. TRUSTEE Section 7.01 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (1) the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee will examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this paragraph does not limit the effect of paragraph (b) of this Section 7.01; (2) the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01. (e) No provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder has offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. 70 (f) The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02 Rights of Trustee. (a) The Trustee may conclusively rely upon any document reasonably believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company or a Guarantor will be sufficient if signed by an Officer of the Company or such Guarantor. (f) The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. (g) The Trustee is not required to take notice or deemed to have notice of any Event of Default hereunder, except Events of Default under Section 6.01(1) or 6.01(2), unless a Responsible Officer of the Trustee has actual knowledge thereof or has received notice in writing of such Event of Default from the Company, any Guarantor or the Holders of at least 25% in aggregate principal amount of the outstanding Notes, and in the absence of any such notice, the Trustee may conclusively assume that no such Event of Default exists. (h) The Trustee is not required to give any bond or surety with respect to the performance of its duties or the exercise of its powers under this Indenture. (i) In the event the Trustee receives inconsistent or conflicting requests and indemnity from two or more groups of Holders of Notes, each representing less than a majority in aggregate principal amount of the outstanding Notes, pursuant to the provisions of this Indenture, the Trustee, in its sole discretion, may determine what action, if any, shall be taken. (j) The Trustee's immunities and protections from liability and its right to indemnification in connection with the performance of its duties under this Indenture shall extend to the Trustee's officers, directors, agents, attorneys and employees to the same extent as is applicable to the Trustee. Such immunities and protections and right to indemnification, together with the Trustee's right to 71 compensation, shall survive the Trustee's resignation or removal, the defeasance or discharge of this Indenture and final payment of the Notes. (k) The permissive right of the Trustee to take the actions permitted by this Indenture shall not be construed as an obligation or duty to do so. Section 7.03 Individual Rights of Trustee. The Trustee in its commercial banking or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any Guarantor or any Affiliate of the Company or any Guarantor with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as Trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. Section 7.04 Trustee's Disclaimer. The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or any Guarantor or upon the Company's or any Guarantor's direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, it will not be responsible for any statement or recital herein or any statement or other information in the Notes, any offering circular or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. Section 7.05 Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee will mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, or premium, if any, interest or Additional Interest, if any, on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. Section 7.06 Reports by Trustee to Holders of the Notes. (a) Within 60 days after each June 15 beginning with the June 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee will mail to the Holders a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also will comply with TIA Section 313(b)(2). The Trustee will also transmit by mail all reports as required by TIA Section 313(c). (b) A copy of each report at the time of its mailing to the Holders will be mailed by the Trustee to the Company and filed by the Trustee with the SEC and each stock exchange on which the Notes are listed in accordance with TIA Section 313(d). The Company will promptly notify the Trustee when the Notes are listed on any stock exchange. 72 Section 7.07 Compensation and Indemnity. (a) The Company will pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation will not be limited by any law on compensation of a trustee of an express trust. The Company will reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses will include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. (b) The Company and the Guarantors will indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company and the Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Company, the Guarantors or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee will notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company will not relieve the Company or any of the Guarantors of their obligations hereunder. The Company or such Guarantor will defend the claim and the Trustee will cooperate in the defense. The Trustee may have separate counsel and the Company will pay the reasonable fees and expenses of such counsel. Neither the Company nor any Guarantor need pay for any settlement made without its consent, which consent will not be unreasonably withheld. (c) The obligations of the Company and the Guarantors under this Section 7.07 will survive the satisfaction and discharge of this Indenture. (d) To secure the Company's payment obligations in this Section 7.07, the Trustee will have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien will survive the satisfaction and discharge of this Indenture. (e) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(7) or (8) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. (f) The Trustee will comply with the provisions of TIA Section 313(b)(2) to the extent applicable. Section 7.08 Replacement of Trustee. (a) A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. (b) The Trustee may resign at any time and be discharged from the trust hereby created by so notifying the Company in writing. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10 hereof; 73 (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (3) a custodian or public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. (c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company will promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. (d) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. (e) If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (f) A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee will mail a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof will continue for the benefit of the retiring Trustee. Section 7.09 Successor Trustee by Merger, Etc. Subject to Section 7.10, if the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Trustee. Section 7.10 Eligibility; Disqualification. There will at all times be a Trustee hereunder that is a corporation, bank or banking association organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. This Indenture will always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section 310(b). 74 Section 7.11 Preferential Collection of Claims Against Company. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of its Board of Directors evidenced by a Board Resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8. Section 8.02 Legal Defeasance and Discharge. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes (including the Note Guarantees) on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company and the Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Note Guarantees), which will thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all their other obligations under such Notes, the Note Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, and premium, if any, interest and Additional Interest, if any, on such Notes when such payments are due from the trust referred to in Section 8.04 hereof; (2) the Company's obligations with respect to such Notes under Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10 and 4.02 hereof; (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith; and (4) this Article 8. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. Section 8.03 Covenant Defeasance. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company and the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from each of their obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof and clause (4) of 75 Section 5.01 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, "Covenant Defeasance"), and the Notes will thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and Note Guarantees, the Company and the Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes and Note Guarantees will be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(3) through 6.01(5) hereof will not constitute Events of Default. Section 8.04 Conditions to Legal or Covenant Defeasance. In order to exercise either Legal Defeasance or Covenant Defeasance under either Sections 8.02 or 8.03 hereof: (1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, (x) cash in United States dollars, (y) non-callable Government Securities, or (z) a combination of the two, in such amounts as will be sufficient, in the opinion (in the case of clauses (y) and (z)) of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, and premium, if any, interest and Additional Interest, if any, on the outstanding Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (2) in the case of an election under Section 8.02 hereof, the Company has delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that: (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or (B) since the date hereof, there has been a change in the applicable federal income tax law, in either case, to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (3) in the case of an election under Section 8.03 hereof, the Company must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; 76 (4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); (5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (6) the Company must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others; and (7) the Company must deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company or any of its Domestic Subsidiaries acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal of, and premium, if any, interest and Additional Interest, if any, but such money need not be segregated from other funds except to the extent required by law. The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. Section 8.06 Repayment to Company. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, or premium, if any, interest or Additional Interest, if any, on any Note and remaining unclaimed for two years after such principal and premium, if any, interest and Additional Interest, if any, has become due and payable shall be paid to the Company on its request or (if then held by the Company) will be discharged from such trust; and the Holder of such Note will thereafter 77 be permitted to look only to the Company for payment thereof as general creditors unless an applicable abandoned property law designates another Person, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 8.07 Reinstatement. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's and any Guarantor's obligations under this Indenture and the Notes and the Note Guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company or any Guarantor makes any payment of principal of, or premium, if any, interest or Additional Interest, if any, on any Note following the reinstatement of its obligations, the Company or such Guarantor will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01 Without Consent of Holders of Notes. Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder of a Note: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for uncertificated Notes in addition to or in place of certificated Notes; (3) to provide for the assumption of the Company's or a Guarantor's obligations to the Holders by a successor to the Company or such Guarantor pursuant to Article 5 or Article 10 hereof; respectively; (4) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect in any material respect the legal rights hereunder of any Holder; (5) to provide any security for, any guarantees of or any additional obligors on the Notes or the Note Guarantees, or to confirm and evidence the release, termination or discharge of any such security or guarantee when such release, termination or discharge is permitted by this Indenture; (6) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; or 78 (7) to conform the text of this Indenture or the Notes to any provision in the Offering Circular in the section "Description of Notes" to the extent that such provision in the "Description of Notes" was intended to be a substantially verbatim recitation of a provision of this Indenture, the Note Guarantees or the Notes. Upon the request of the Company accompanied by a Board Resolution authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 9.06 hereof, the Trustee will join with the Company and the Guarantors in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental Indenture. Section 9.02 With Consent of Holders of Notes. Except as provided below in this Section 9.02, the Company, the Guarantors and the Trustee may amend or supplement this Indenture (including, without limitation, Section 3.09, 4.10 and 4.14 hereof), the Note Guarantees and the Notes with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding as a single class (including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Upon the request of the Company accompanied by a Board Resolution authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 9.06 hereof, the Trustee will join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental Indenture. It is not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company will mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. The Holders of a majority in aggregate principal amount of the Notes then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes (including, without limitation, waivers obtained in connection with a tender offer or exchange offer for, or purchases of, Notes or a solicitation of consents in respect of Notes). However, without the consent of each Holder affected, an amendment, supplement or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder): (1) reduce the percentage of principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; 79 (2) reduce, or change the Stated Maturity of, the principal of any Note, change the date on which any of the Notes may be subject to redemption or repurchase or reduce the redemption or repurchase price of the Notes; (3) reduce the rate of or change the time for payment of interest on any Note; (4) waive a Default or Event of Default in the payment of principal of, or premium, if any, interest or Additional Interest, if any, on, the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration); (5) make any Note payable in money other than that stated in the Notes; (6) make any change in the provisions of this Indenture relating to waivers of past Defaults or Events of Default or the rights of Holders to receive payments of principal of, or premium, if any, interest or Additional Interest, if any, on the Notes; (7) waive a redemption payment with respect to any Note (other than a payment required by Sections 3.09, 4.10 or 4.14 hereof); (8) release any Guarantor from any of its obligations under its Note Guarantee or this Indenture, except in accordance with the terms of this Indenture; or (9) make any change in Section 6.04 or 6.07 hereof or in this sentence of Section 9.02. Section 9.03 Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes will be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. Section 9.04 Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by such Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to its Note if the Trustee receives written notice of revocation before a date and time therefor identified by the Company in a notice furnished to such Holder in accordance with the terms of this Indenture or, if no such date and time shall be identified, the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. The Company may, but shall not be obligated to, fix a record date (which need not comply with TIA Section 316(c)) for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver or to take any other action under this Indenture. If a record date is fixed, then notwithstanding the provisions of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No consent shall be valid or effective for more than 90 days after such record date unless consents from Holders of the principal amount of Notes 80 required hereunder for such amendment, supplement or waiver to be effective shall have also been given and not revoked within such 90-day period. After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it is of the type described in any of clauses (1) through (9) of Section 9.02 hereof. In such case, the amendment, supplement or waiver shall bind each Holder who has consented to it and every subsequent Holder that evidences the same debt as the consenting Holder's Note. Section 9.05 Notation on or Exchange of Notes. If an amendment or supplement changes the terms of a Note, the Company may require the Holder of such Note to deliver such Note to the Trustee. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company, in exchange for all Notes, may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note will not affect the validity and effect of such amendment, supplement or waiver. Section 9.06 Trustee to Sign Amendments, etc. The Trustee will sign any amended or supplemental Indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not sign it. In executing any amended or supplemental Indenture, the Trustee will be entitled to receive and (subject to Section 7.01 hereof) will be fully protected in relying upon, in addition to any documents required by Section 12.04 hereof, an Officers' Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental Indenture is authorized or permitted by this Indenture. ARTICLE 10. NOTE GUARANTEES Section 10.01 Guarantee. (a) Subject to this Article 10, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (1) the principal of, and premium, if any, interest and Additional Interest, if any, on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other payment obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (2) in case of any extension of time of payment or renewal of any Notes or any of such other payment obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. 81 Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection. (b) The Guarantors hereby agree that their obligations hereunder will be, to the extent permitted by law, unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. To the extent permitted by law, each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and, subject to Article 8, covenant that this Note Guarantee will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. (c) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either the Company or any Guarantor to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect. (d) Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantee. (e) In the event of a default in the payment of principal of, or premium, if any, interest or Additional Interest, if any, on any Note when and as the same shall become due, whether at maturity, by acceleration, redemption or otherwise, or in the event of a default in the payment of any interest on the overdue principal of or interest on such Note, if any, if lawful, or any other payment obligation of the Company to the Holder of such Note or the Trustee hereunder or thereunder, each of the Trustee and such Holder shall have the right to proceed first and directly against a Guarantor under this Indenture without first proceeding against the Company or exhausting any other remedies which the Trustee or such Holder may have and without resorting to any other security held by it. (f) The Trustee shall have the right, power and authority to do all things it deems necessary or advisable to enforce the provisions of this Indenture relating to the Note Guarantee and to protect the interests of the Holders of the Notes and, in the event of a default in the payment of principal of, or premium, if any, interest or Additional Interest, if any, on any Note when and as the same shall become due, whether at maturity, by acceleration, redemption or otherwise, or in the event of a default in the payment of any interest on the overdue principal of or interest on such Note, if any, if lawful, or any other payment obligation of the Company to the Holder of such Note or the Trustee hereunder or thereunder, the Trustee may institute or appear in such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of its rights and the rights of the Holders, whether for the 82 specific enforcement of any covenant or agreement in this Indenture relating to the Note Guarantee or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Without limiting the generality of the foregoing, in the event of a default in the payment of principal of, or premium, if any, interest or Additional Interest, if any, on any Note when due, the Trustee may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against a Guarantor and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of such Guarantor, wherever situated. Section 10.02 Limitation on Guarantor Liability. Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and each Guarantor hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 10, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. Section 10.03 Execution and Delivery of Note Guarantee. To evidence its Note Guarantee set forth in Section 10.01, each Guarantor hereby agrees that a notation of such Note Guarantee substantially in the form attached as Exhibit E hereto will be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture will be executed on behalf of such Guarantor by one of its Officers. Each Guarantor hereby agrees that its Note Guarantee set forth in Section 10.01 will remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed, the Note Guarantee will be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, will constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the Guarantors. In the event that the Company creates or acquires any Domestic Subsidiary after the date of this Indenture, if required by Section 4.17 hereof, the Company will cause such Domestic Subsidiary to comply with the provisions of Section 4.17 hereof and this Article 10, to the extent applicable. Section 10.04 Guarantors May Consolidate, etc., on Certain Terms. (a) Except as otherwise provided in Section 10.05, no Guarantor may sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than the Company or another Guarantor, unless: 83 (1) immediately after giving effect to such transaction, no Default or Event of Default exists; and (2) either: (i) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (in each case if other than the Guarantor) assumes all the obligations of that Guarantor under this Indenture and its Note Guarantee pursuant to a supplemental indenture satisfactory to the Trustee and under the Registration Rights Agreement; or (ii) if applicable, the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including, without limitation, Section 4.10 hereof. (b) Upon any consolidation or merger, or any sale or other disposition of all or substantially all of the assets of, a Guarantor in a transaction that is subject to, and that complies with the provisions of, Section 10.04(a) hereof, the successor Person formed by such consolidation or into or with which such Guarantor is merged or to which such sale or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the applicable "Guarantor" shall refer instead to the successor Person and not to such Guarantor), and may exercise every right and power of such Guarantor under this Indenture and its Note Guarantee with the same effect as if such successor Person had been named as a Guarantor herein and the predecessor Guarantor shall be released from all obligations under this Indenture and its Note Guarantee. Such successor Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Note Guarantees so issued will in all respects have the same legal rank and benefit under this Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. Except as set forth in Articles 4 and 5 hereof, and notwithstanding Section 10.04(a)(2) and (b) hereof, nothing contained in this Indenture or in any of the Notes will prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or will prevent any sale or other disposition of all or substantially all of the assets of a Guarantor to the Company or another Guarantor. Section 10.05 Releases Following Sale of Assets. In the event of any sale or other disposition of all or substantially all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the Capital Stock of any Guarantor, in each case, to a Person that is not (either before or after giving effect to such transactions) the Company or a Restricted Subsidiary of the Company, then such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the Capital Stock of such Guarantor) or the Person acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation Section 4.10 hereof. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of this Indenture, including without limitation Section 4.10 hereof, the Trustee will execute 84 any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Note Guarantee. Any Guarantor not released from its obligations under its Note Guarantee will remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under this Indenture to the extent provided in this Article 10. ARTICLE 11. SATISFACTION AND DISCHARGE Section 11.01 Satisfaction and Discharge. This Indenture will be discharged and will cease to be of further effect as to all Notes and Note Guarantees issued hereunder, when: (1) either: (a) all Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Company or discharged from that trust) have been delivered to the Trustee for cancellation; or (b) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination of both, in such amounts as will be sufficient with consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for the principal of, and premium, if any, interest and Additional Interest, if any, to the date of maturity or redemption; (2) no Default or Event of Default has occurred and is continuing on the date of such deposit or will occur as a result of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; (3) the Company or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture; and (4) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be. In addition, the Company must deliver an Officers' Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section 11.01, the provisions of Section 11.02 and Section 8.06 will survive. In addition, nothing in this Section 11.01 will be deemed to 85 discharge those provisions of Section 7.07 hereof, that, by their terms, survive the satisfaction and discharge of this Indenture. Section 11.02 Application of Trust Money. Subject to the provisions of Section 8.06, all money and non-callable Government Securities (including the proceeds therefrom) deposited with the Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company or any of its Domestic Subsidiaries acting as Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law. If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's and any Guarantor's obligations under this Indenture and the Notes and the Note Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 11.01; provided that if the Company or any Guarantor has made any payment of principal of, or premium, if any, interest or Additional Interest, if any, on any Notes following the reinstatement of its obligations, the Company or such Guarantor shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent. ARTICLE 12. MISCELLANEOUS Section 12.01 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), the imposed duties will control. Section 12.02 Notices. Any notice or communication by the Company, any Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier, electronic message or overnight air courier guaranteeing next day delivery, to the others' address: If to the Company or any Guarantor: Westlake Chemical Corporation 2801 Post Oak Boulevard Houston, Texas 77056 Telecopier No.: (713) 629-6239 Attention: Vice President, Legal Email: Ltrenchard@westlakegroup.com 86 With a copy to: Baker Botts L.L.P. One Shell Plaza 910 Louisiana Street Houston, Texas 77002 Telecopier No.: (713) 229-1522 Attention: J. David Kirkland, Jr. Email: David.Kirkland@bakerbotts.com If to the Trustee: JPMorgan Chase Bank 600 Travis Street, Suite 1150 Houston, Texas 77002 Telecopier No.: (713) 577-5200 Attention: Frank W. McCreary Email: Frank.W.McCreary@jpmorgan.com The Company, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; at the time sent, if sent during normal business hours, or the following business day, if sent outside of normal business hours, if telecopied or sent by electronic message; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication will also be so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it will mail a copy to the Trustee and each Agent at the same time. All notices or communications, including without limitation notices to the Trustee, the Company or a Guarantor by Holders, shall be in writing, except as otherwise set forth herein. In case by reason of the suspension of regular mail service, or by reason of any other cause, it shall be impossible to mail any notice required by this Indenture, then such method of notification as shall be made with the approval of the Trustee shall constitute a sufficient mailing of such notice. Section 12.03 Communication by Holders of Notes with Other Holders of Notes. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). 87 Section 12.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with. Section 12.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) must comply with the provisions of TIA Section 314(e) and must include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with. Section 12.06 Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. Section 12.07 No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, this Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws. Section 12.08 Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT 88 GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Section 12.09 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 12.10 Successors. All agreements of the Company in this Indenture and the Notes will bind its successors. All agreements of the Trustee in this Indenture will bind its successors. All agreements of each Guarantor in this Indenture will bind its successors, except as otherwise provided in Section 10.05. Section 12.11 Severability. In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby. Section 12.12 Counterpart Originals. The parties may sign any number of copies of this Indenture. Each signed copy will be an original, but all of them together represent the same agreement. Section 12.13 Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] 89 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written. WESTLAKE CHEMICAL CORPORATION By: /s/ Albert Chao --------------------------------------------- Name: Albert Chao Title: President GUARANTORS: GEISMAR HOLDINGS, INC. GEISMAR VINYLS COMPANY LP, BY GVGP, INC., ITS GENERAL PARTNER GRAMERCY CHLOR-ALKALI CORPORATION GVGP, INC. NORTH AMERICAN PIPE CORPORATION NORTH AMERICAN PROFILES, INC. VAN BUREN PIPE CORPORATION WESTECH BUILDING PRODUCTS, INC. WESTLAKE CHEMICAL HOLDINGS, INC. WESTLAKE CHEMICAL INVESTMENTS, INC. WESTLAKE CHEMICAL MANUFACTURING, INC. WESTLAKE CHEMICAL PRODUCTS, INC. WESTLAKE DEVELOPMENT CORPORATION WESTLAKE MANAGEMENT SERVICES, INC. WESTLAKE OLEFINS CORPORATION WESTLAKE OVERSEAS CORPORATION WESTLAKE PETROCHEMICALS LP, BY WESTLAKE CHEMICAL INVESTMENTS, INC., ITS GENERAL PARTNER WESTLAKE POLYMERS LP, BY WESTLAKE CHEMICAL INVESTMENTS, INC., ITS GENERAL PARTNER WESTLAKE PVC CORPORATION WESTLAKE RESOURCES CORPORATION WESTLAKE STYRENE LP, BY WESTLAKE CHEMICAL HOLDINGS, INC., ITS GENERAL PARTNER WESTLAKE VINYL CORPORATION WESTLAKE VINYLS, INC. WPT LP, BY WESTLAKE CHEMICAL HOLDINGS, INC., ITS GENERAL PARTNER By: /s/ Tai-Li Keng --------------------------------------------- Name: Tai-Li Keng Title: Vice President 90 JPMORGAN CHASE BANK, as Trustee By: /s/ Frank W. McCreary --------------------------------------------- Authorized Signatory 91 SCHEDULE I GUARANTORS The following schedule lists each Guarantor under the Indenture as of the date of the Indenture: GEISMAR HOLDINGS, INC. GEISMAR VINYLS COMPANY LP GRAMERCY CHLOR-ALKALI CORPORATION GVGP, INC. NORTH AMERICAN PIPE CORPORATION NORTH AMERICAN PROFILES, INC. VAN BUREN PIPE CORPORATION WESTECH BUILDING PRODUCTS, INC. WESTLAKE CHEMICAL HOLDINGS, INC. WESTLAKE CHEMICAL INVESTMENTS, INC. WESTLAKE CHEMICAL MANUFACTURING, INC. WESTLAKE CHEMICAL PRODUCTS, INC. WESTLAKE DEVELOPMENT CORPORATION WESTLAKE MANAGEMENT SERVICES, INC. WESTLAKE OLEFINS CORPORATION WESTLAKE OVERSEAS CORPORATION WESTLAKE PETROCHEMICALS LP WESTLAKE POLYMERS LP WESTLAKE PVC CORPORATION WESTLAKE RESOURCES CORPORATION WESTLAKE STYRENE LP WESTLAKE VINYL CORPORATION WESTLAKE VINYLS, INC. WPT LP I-1 EXHIBIT A1 [Face of Note] - -------------------------------------------------------------------------------- [144A GLOBAL NOTE] [IAI GLOBAL NOTE] [REGULATION S PERMANENT GLOBAL NOTE] CUSIP ____________ 8 3/4% Senior Notes due 2011 No. ___ $____________ WESTLAKE CHEMICAL CORPORATION promises to pay to______________________________________________________________ or registered assigns, the principal sum of____________________________________________________Dollars, [or such greater or lesser amount as indicated on the Schedule of Exchanges of Interests in the Global Note,]* on July 15, 2011. Interest Payment Dates: January 15 and July 15 Record Dates: January 1 and July 1 Dated: July 31, 2003 WESTLAKE CHEMICAL CORPORATION By:_____________________________________ Name: Title: By:_____________________________________ Name: Title: This is one of the Notes referred to in the within-mentioned Indenture: JPMORGAN CHASE BANK, as Trustee By:____________________________________ Authorized Signatory - -------------------------------------------------------------------------------- * This notation shall be included only if the Note is issued in global form. A1-1 [Back of Note] 8 3/4% Senior Notes due 2011 [Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture] [Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture] This Note is one of a duly authorized issue of 8-3/4% Senior Notes due 2011 of Westlake Chemical Corporation, a Delaware corporation (the "Company"). Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. (1) INTEREST. The Company promises to pay interest on the principal amount of this Note at 8-3/4% per annum from July 31, 2003 until maturity and shall pay the Additional Interest, if any, payable pursuant to Section 6 of the Registration Rights Agreement referred to below. The Company will pay interest and Additional Interest, if any, semi-annually in arrears on January 15 and July 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from July 31, 2003; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be January 15, 2004. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time at a rate that is 1% per annum in excess of the interest rate then in effect to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Additional Interest, if any (without regard to any applicable grace periods) from time to time at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. (2) METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) and Additional Interest, if any, to the Persons who are registered Holders of Notes at the close of business on the January 1 or July 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal and premium, if any, interest and Additional Interest, if any, at the office or agency of the Company maintained for such purpose within the City and State of New York, or, at the option of the Company, payment of interest and Additional Interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders maintained by the Registrar; provided that payment by wire transfer of immediately available funds will be required with respect to principal of, and premium, if any, interest and Additional Interest, if any, on all Global Notes and any other Notes with any aggregate principal amount in excess of $1,000,000 the Holder of which has provided wire transfer instructions to the Company or the Paying Agent. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. (3) PAYING AGENT AND REGISTRAR. Initially, JPMorgan Chase Bank, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any A1-2 Paying Agent or Registrar without notice to any Holder. The Company or any of its Domestic Subsidiaries may act in any such capacity. (4) INDENTURE. The Company issued the Notes under an Indenture dated as of July 31, 2003 (the "Indenture") among the Company, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "TIA"). The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are general unsecured obligations of the Company and are initially issued in an aggregate principal amount of $380,000,000. The Company may, subject to the covenants set forth in the Indenture, issue Additional Notes from time to time without the consent of the Holders. The Notes initially issued and any Additional Notes subsequently issued under the Indenture will be treated as a single class for all purposes of the Indenture, including, without limitation, with respect to waivers, amendments, supplements, redemptions and offers to purchase. (5) OPTIONAL REDEMPTION. (a) Except as set forth in subparagraphs (b) and (c) of this Paragraph 5, the Company will not have the option to redeem the Notes prior to July 15, 2007. On or after July 15, 2007, the Company will have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Additional Interest, if any, on the Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on July 15 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant Interest Payment Date:
Year Percentage ---- ---------- 2007............................................ 104.375% 2008............................................ 102.971% 2009............................................ 101.458% 2010 and thereafter............................. 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time on or prior to July 15, 2007, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture with the net cash proceeds of one or more Public Equity Offerings at a redemption price equal to 108.75% of the aggregate principal amount plus accrued and unpaid interest and Additional Interest, if any, to the redemption date thereof; provided that at least 65% in aggregate principal amount of the Notes issued under the Indenture remains outstanding immediately after the occurrence of such redemption and that such redemption occurs within 60 days of the date of the closing of such Public Equity Offering. (c) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior to July 15, 2007, the Company may also redeem all or a part of the Notes at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Additional Interest, if any, to the redemption date, subject to the rights of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date. "Applicable Premium" means, with respect to any Note on any redemption date, the greater of (1) 1.0% of the principal amount of the Note or (2) the excess, if any, of (a) the present value on such redemption date of A1-3 (i) the redemption price of the note at July 15, 2007 (such redemption price being set forth in paragraph 5(a)) plus (ii) all required interest payments due on the Note through July 15, 2007 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points, over (b) the principal amount of the Note. "Treasury Rate" means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to July 15, 2007; provided, however, that if the period from the redemption date to July 15, 2007, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. (6) MANDATORY REDEMPTION. The Company will not be required to make mandatory redemption or sinking fund payments with respect to the Notes. (7) REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Company will be required to make an offer (a "Change of Control Offer") to each Holder to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest, if any on the Notes repurchased, if any, to the Change of Control Payment Date, subject to the rights of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company will mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Company or a Restricted Subsidiary consummates any Asset Sales, within ten days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company will commence an offer to all Holders of Notes and all holders of other Pari Passu Indebtedness containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Notes and such other Pari Passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase, in accordance with the procedures set forth in the Indenture. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other Pari Passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other Pari Passu Indebtedness to be purchased on a pro rata basis based on the principal amount of Notes and such other Pari Passu Indebtedness tendered. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of this Note and otherwise complying with the procedures set forth in the Indenture. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. A1-4 (8) NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. (9) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and other governmental charges required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Note for a period of 15 days before a selection of Notes to be redeemed. (10) PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. (11) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions and limitations, the Indenture, the Note Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, voting as a single class, and any existing default or compliance with any provision of the Indenture, the Note Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes, voting as a single class. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's or a Guarantor's obligations to Holders of the Notes in case of a merger or consolidation or a transfer of all or substantially all of its assets, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect in any material respect the legal rights under the Indenture of any such Holder, to provide any security for, any guarantees of or any additional obligors on the Notes or the Note Guarantees, or to confirm and evidence the release, termination or discharge of any such security or guarantee when such release, termination or discharge is permitted by this Indenture, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA, and to conform the text of the Indenture or the Notes to any provision in the Offering Circular relating to the initial issuance of the Notes in the section "Description of Notes" to the extent that such provision in the "Description of Notes" was intended to be a substantially verbatim recitation of a provision of the Indenture, the Note Guarantees or the Notes. Without the consent of each Holder affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting Holder) (1) reduce the percentage of principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (2) reduce, or change the Stated Maturity of, the principal of any Note, change the date on which any of the Notes may be subject to redemption or repurchase or reduce the redemption or repurchase price of the Notes; (3) reduce the rate of or change the time for payment of interest on any Note; (4) waive a Default or Event of Default in the payment of principal of, or premium, if any, interest or Additional Interest, if any, on the Notes (except a A1-5 rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration); (5) make any Note payable in money other than that stated in the Notes; (6) make any change in the provisions of the Indenture relating to waivers of past Defaults or Events of Default or the rights of Holders to receive payments of principal of, or premium, if any, interest or Additional Interest, if any, on the Notes; (7) waive a redemption payment with respect to any Note (other than a payment required in connection with an Asset Sale or a Change of Control); (8) release any Guarantor from any of its obligations under its Note Guarantee or the Indenture, except in accordance with the terms of the Indenture; or (9) make any change in certain provisions of the Indenture related to amendments, supplements and waivers. (12) DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Additional Interest on the Notes; (ii) default in payment of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption or otherwise, (iii) failure by the Company or any of its Restricted Subsidiaries to comply with Sections 3.09, 4.10, 4.14 or 5.01 of the Indenture; (iv) failure by the Company or any Guarantor for 60 days after notice to comply with any other covenant or agreement in the Indenture, or the Notes; (v) default under certain other agreements relating to Indebtedness of the Company for money borrowed in excess of $20.0 million which default (a) results in the acceleration of such Indebtedness prior to its express maturity, or (b) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default; (vi) certain final judgments for the payment of money in excess of $20.0 million that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Company or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary and (viii) except as permitted by the Indenture, any Note Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor or any Person acting on its behalf shall deny or disaffirm its obligations under such Guarantor's Note Guarantee. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal, premium, interest or Additional Interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of principal of, or premium, if any, interest or Additional Interest, if any, on the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. (13) DISCHARGE PRIOR TO MATURITY. The Indenture with respect to the Notes shall be discharged and canceled upon the payment of all of the Notes and, subject to Article 8 of the Indenture, shall be discharged except for certain obligations upon the irrevocable deposit with the A1-6 Trustee of any combination of funds and non-callable Government Obligations sufficient for such payment. (14) TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company, any Guarantor or any of their respective Affiliates, and may otherwise deal with the Company, any Guarantor or any such Affiliate, as if it were not the Trustee. (15) NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator or stockholder of the Company or any of the Guarantors, as such, will have any liability for any obligations of the Company or such Guarantor under the Notes, the Note Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. (16) AUTHENTICATION. This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. (17) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). (18) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. (19) ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes will have all the rights set forth in the Registration Rights Agreement dated as of July 31, 2003, between the Company, the Guarantors and the other parties named on the signature pages thereof or, in the case of Additional Notes, Holders of Restricted Global Notes and Restricted Definitive Notes will have the rights set forth in one or more registration rights agreements, if any, among the Company, the Guarantors and the other parties thereto, relating to rights given by the Company to the purchasers of any Additional Notes to register such Additional Notes under the Securities Act (collectively, the "Registration Rights Agreement"). (20) TRANSFER RESTRICTIONS. By its acceptance of any Note bearing a legend restricting transfer, each Holder of such Note acknowledges the restrictions on transfer of such Note set forth in the Indenture and in such legend and agrees that it will transfer such Note only as provided in the Indenture. A1-7 The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Westlake Chemical Corporation 2801 Post Oak Boulevard Houston, Texas 77056 Attention: Vice President, Legal A1-8 EXHIBIT A1 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:___________________________________ (Insert assignee's legal name) ________________________________________________________________________________ (Insert assignee's social security or tax I.D. number) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint_________________________________________________________ as agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: _______________ Your Signature:__________________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: _________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A1-9 EXHIBIT A1 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box below: [ ] Section 4.10 [ ] Section 4.14 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the principal amount you elect to have purchased: $___________________ Date: _______________ Your Signature:__________________________________ (Sign exactly as your name appears on the face of this Note) Tax Identification No.:__________________________ Signature Guarantee*: _________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A1-10 EXHIBIT A1 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE* The following exchanges of a part of this Global Note for an interest in another Global Note or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount Amount of Decrease of this Global Note Signature of in Principal Amount Amount of Increase in Following Such Authorized Officer of Principal Amount of Decrease of Trustee or Date of Exchange this Global Note this Global Note (or Increase) Custodian ---------------- ---------------- ---------------- ------------- ---------
* This schedule should be included only if the Note is issued in global form. A1-11 EXHIBIT A2 [Face of Regulation S Temporary Global Note] - -------------------------------------------------------------------------------- CUSIP __________ 8 3/4% Senior Notes due 2011 No. ___ $__________ WESTLAKE CHEMICAL CORPORATION promises to pay to______________________________________________________________ or registered assigns, the principal sum of____________________________________________________Dollars, [or such greater or lesser amount as indicated on the Schedule of Exchanges of Interests in the Global Note,]* on July 15, 2011. Interest Payment Dates: January 15 and July 15 Record Dates: January 1 and July 1 Dated: July 31, 2003 WESTLAKE CHEMICAL CORPORATION By:_________________________________ Name: Title: By:_________________________________ Name: Title: This is one of the Notes referred to in the within-mentioned Indenture: JPMORGAN CHASE BANK, as Trustee By:__________________________________ Authorized Signatory - -------------------------------------------------------------------------------- * This notation shall be included only if the Note is issued in global form. A2-1 [Back of Regulation S Temporary Global Note] 8 3/4% Senior Notes due 2011 THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF WESTLAKE CHEMICAL CORPORATION (THE "COMPANY") THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A A2-2 TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (V) IN THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT), IN A MINIMUM PRINCIPAL AMOUNT OF NOT LESS THAN $100,000, THAT IS ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF IN VIOLATION OF THE SECURITIES ACT AND THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER IN THE FORM SET FORTH ON THE REVERSE HEREOF CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO RESTRICTIONS ON TRANSFER OF THIS NOTE OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. IF CERTIFICATED: IN ADDITION, WITH RESPECT TO ANY TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (A)(VI) ABOVE), THE HOLDER WILL DELIVER TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AND, IN THE CASE OF A TRANSFER PURSUANT TO CLAUSE (A)(IV) ABOVE, A LEGAL OPINION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER BY IT COMPLIES WITH THE FOREGOING RESTRICTIONS. This Note is one of a duly authorized issue of 8-3/4% Senior Notes due 2011 of Westlake Chemical Corporation, a Delaware corporation (the "Company"). Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. (1) INTEREST. The Company promises to pay interest on the principal amount of this Note at 8-3/4% per annum from July 31, 2003 until maturity and shall pay the Additional Interest, if any, payable pursuant to Section 6 of the Registration Rights Agreement referred to below. The Company will pay interest and Additional Interest, if any, semi-annually in arrears on January 15 and July 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from July 31, 2003; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be January 15, 2004. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time at a rate that is 1% per annum in excess of the interest rate then in effect to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Additional Interest, if any (without regard to any applicable grace periods) from time to time at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. A2-3 Until this Regulation S Temporary Global Note is exchanged for one or more Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to receive payments of interest hereon; until so exchanged in full, this Regulation S Temporary Global Note shall in all other respects be entitled to the same benefits as other Notes under the Indenture. (2) METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) and Additional Interest, if any, to the Persons who are registered Holders of Notes at the close of business on the January 1 or July 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal and premium, if any, interest and Additional Interest, if any, at the office or agency of the Company maintained for such purpose within the City and State of New York, or, at the option of the Company, payment of interest and Additional Interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders maintained by the Registrar; provided that payment by wire transfer of immediately available funds will be required with respect to principal of, and premium, if any, interest and Additional Interest, if any, on all Global Notes and any other Notes with any aggregate principal amount in excess of $1,000,000 the Holder of which has provided wire transfer instructions to the Company or the Paying Agent. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. (3) PAYING AGENT AND REGISTRAR. Initially, JPMorgan Chase Bank, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Domestic Subsidiaries may act in any such capacity. (4) INDENTURE. The Company issued the Notes under an Indenture dated as of July 31, 2003 (the "Indenture") among the Company, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "TIA"). The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are general unsecured obligations of the Company and are initially issued in an aggregate principal amount of $380,000,000. The Company may, subject to the covenants set forth in the Indenture, issue Additional Notes from time to time without the consent of the Holders. The Notes initially issued and any Additional Notes subsequently issued under the Indenture will be treated as a single class for all purposes of the Indenture, including, without limitation, with respect to waivers, amendments, supplements, redemptions and offers to purchase. (5) OPTIONAL REDEMPTION. (a) Except as set forth in subparagraphs (b) and (c) of this Paragraph 5, the Company will not have the option to redeem the Notes prior to July 15, 2007. On or after July 15, 2007, the Company will have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Additional Interest, if any, on the Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on July 15 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant Interest Payment Date: A2-4
Year Percentage ---- ---------- 2007................................................ 104.375% 2008................................................ 102.971% 2009................................................ 101.458% 2010 and thereafter................................. 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time on or prior to July 15, 2007, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture with the net cash proceeds of one or more Public Equity Offerings at a redemption price equal to 108.75% of the aggregate principal amount plus accrued and unpaid interest and Additional Interest, if any, to the redemption date thereof; provided that at least 65% in aggregate principal amount of the Notes issued under the Indenture remains outstanding immediately after the occurrence of such redemption and that such redemption occurs within 60 days of the date of the closing of such Public Equity Offering. (c) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior to July 15, 2007, the Company may also redeem all or a part of the Notes at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Additional Interest, if any, to the redemption date, subject to the rights of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date. "Applicable Premium" means, with respect to any Note on any redemption date, the greater of (1) 1.0% of the principal amount of the Note or (2) the excess, if any, of (a) the present value on such redemption date of (i) the redemption price of the note at July 15, 2007 (such redemption price being set forth in paragraph 5(a)) plus (ii) all required interest payments due on the Note through July 15, 2007 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points, over (b) the principal amount of the Note. "Treasury Rate" means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to July 15, 2007; provided, however, that if the period from the redemption date to July 15, 2007, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. (6) MANDATORY REDEMPTION. The Company will not be required to make mandatory redemption or sinking fund payments with respect to the Notes. (7) REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change of Control, the Company will be required to make an offer (a "Change of Control Offer") to each Holder to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Interest, if any on the Notes repurchased, if any, to the Change of Control Payment Date, subject to the rights of Holders on the relevant record date to receive interest due on the relevant Interest A2-5 Payment Date (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company will mail a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. (b) If the Company or a Restricted Subsidiary consummates any Asset Sales, within ten days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company will commence an offer to all Holders of Notes and all holders of other Pari Passu Indebtedness containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount of Notes and such other Pari Passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase, in accordance with the procedures set forth in the Indenture. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other Pari Passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other Pari Passu Indebtedness to be purchased on a pro rata basis based on the principal amount of Notes and such other Pari Passu Indebtedness tendered. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of this Note and otherwise complying with the procedures set forth in the Indenture. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. (8) NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. (9) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and other governmental charges required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Note for a period of 15 days before a selection of Notes to be redeemed. This Regulation S Temporary Global Note is exchangeable in whole or in part for one or more Global Notes only (i) on or after the termination of the 40-day restricted period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global Note for one or more Global Notes, the Trustee shall cancel this Regulation S Temporary Global Note. A2-6 (10) PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. (11) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions and limitations, the Indenture, the Note Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, voting as a single class, and any existing default or compliance with any provision of the Indenture, the Note Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes, voting as a single class. Without the consent of any Holder of a Note, the Indenture or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's or a Guarantor's obligations to Holders of the Notes in case of a merger or consolidation or a transfer of all or substantially all of its assets, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect in any material respect the legal rights under the Indenture of any such Holder, to provide any security for, any guarantees of or any additional obligors on the Notes or the Note Guarantees, or to confirm and evidence the release, termination or discharge of any such security or guarantee when such release, termination or discharge is permitted by this Indenture, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA, and to conform the text of the Indenture or the Notes to any provision in the Offering Circular relating to the initial issuance of the Notes in the section "Description of Notes" to the extent that such provision in the "Description of Notes" was intended to be a substantially verbatim recitation of a provision of the Indenture, the Note Guarantees or the Notes. Without the consent of each Holder affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting Holder) (1) reduce the percentage of principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (2) reduce, or change the Stated Maturity of, the principal of any Note, change the date on which any of the Notes may be subject to redemption or repurchase or reduce the redemption or repurchase price of the Notes; (3) reduce the rate of or change the time for payment of interest on any Note; (4) waive a Default or Event of Default in the payment of principal of, or premium, if any, interest or Additional Interest, if any, on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration); (5) make any Note payable in money other than that stated in the Notes; (6) make any change in the provisions of the Indenture relating to waivers of past Defaults or Events of Default or the rights of Holders to receive payments of principal of, or premium, if any, interest or Additional Interest, if any, on the Notes; (7) waive a redemption payment with respect to any Note (other than a payment required in connection with an Asset Sale or a Change of Control); (8) release any Guarantor from any of its obligations under its Note Guarantee or the Indenture, except in accordance with the terms of the Indenture; or (9) make any change in certain provisions of the Indenture related to amendments, supplements and waivers. (12) DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest or Additional Interest on the Notes; (ii) default in payment of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption or otherwise, (iii) failure by the Company or any of its Restricted Subsidiaries to comply with Sections 3.09, 4.10, 4.14 or 5.01 of the Indenture; (iv) failure by the Company or any Guarantor for 60 days after notice to comply with any other covenant or agreement in the Indenture, or the Notes; (v) default under certain other agreements relating to A2-7 Indebtedness of the Company for money borrowed in excess of $20.0 million which default (a) results in the acceleration of such Indebtedness prior to its express maturity, or (b) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default; (vi) certain final judgments for the payment of money in excess of $20.0 million that remain undischarged for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Company or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary and (viii) except as permitted by the Indenture, any Note Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor or any Person acting on its behalf shall deny or disaffirm its obligations under such Guarantor's Note Guarantee. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal, premium, interest or Additional Interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of principal of, or premium, if any, interest or Additional Interest, if any, on the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. (13) DISCHARGE PRIOR TO MATURITY. The Indenture with respect to the Notes shall be discharged and canceled upon the payment of all of the Notes and, subject to Article 8 of the Indenture, shall be discharged except for certain obligations upon the irrevocable deposit with the Trustee of any combination of funds and non-callable Government Obligations sufficient for such payment. (14) TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company, any Guarantor or any of their respective Affiliates, and may otherwise deal with the Company, any Guarantor or any such Affiliate, as if it were not the Trustee. (15) NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator or stockholder of the Company or any of the Guarantors, as such, will have any liability for any obligations of the Company or such Guarantor under the Notes, the Note Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. (16) AUTHENTICATION. This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. A2-8 (17) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). (18) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. (19) ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes will have all the rights set forth in the Registration Rights Agreement dated as of July 31, 2003, between the Company, the Guarantors and the other parties named on the signature pages thereof or, in the case of Additional Notes, Holders of Restricted Global Notes and Restricted Definitive Notes will have the rights set forth in one or more registration rights agreements, if any, among the Company, the Guarantors and the other parties thereto, relating to rights given by the Company to the purchasers of any Additional Notes to register such Additional Notes under the Securities Act (collectively, the "Registration Rights Agreement"). (20) TRANSFER RESTRICTIONS. By its acceptance of any Note bearing a legend restricting transfer, each Holder of such Note acknowledges the restrictions on transfer of such Note set forth in the Indenture and in such legend and agrees that it will transfer such Note only as provided in the Indenture. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Westlake Chemical Corporation 2801 Post Oak Boulevard Houston, Texas 77056 Attention: Vice President, Legal A2-9 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:___________________________________ (Insert assignee's legal name) ________________________________________________________________________________ (Insert assignee's social security or tax I.D. number) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint_________________________________________________________ as agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: _______________ Your Signature:__________________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: _________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A2-10 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box below: [ ] Section 4.10 [ ] Section 4.14 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the principal amount you elect to have purchased: $_____________ Date: _______________ Your Signature:__________________________________ (Sign exactly as your name appears on the face of this Note) Tax Identification No.:__________________________ Signature Guarantee*: _________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A2-11 SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Global Note, or of other Restricted Global Notes for an interest in this Regulation S Temporary Global Note, have been made:
Principal Amount Amount of Decrease of this Global Note Signature of in Principal Amount Amount of Increase in Following Such Authorized Officer of Principal Amount of Decrease of Trustee or Date of Exchange this Global Note this Global Note (or Increase) Custodian ---------------- ---------------- ---------------- ------------- ---------
A2-12 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Westlake Chemical Corporation 2801 Post Oak Boulevard Houston, Texas 77056 JPMorgan Chase Bank 600 Travis Street, Suite 1150 Houston, Texas 77002 Re: 8 3/4% Senior Notes due 2011 Reference is hereby made to the Indenture, dated as of July 31, 2003 (the "Indenture") among Westlake Chemical Corporation, as issuer (the "Company"), the Guarantors named on the signature pages thereto and JPMorgan Chase Bank, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ___________________ (the "Transferor") owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the "Transfer"), to ___________________________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [ ] Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Restricted DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, such person and each such account has been given notice that the Transfer is being made in reliance on Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. [ ] Check if Transferee will take delivery of a beneficial interest in the Temporary Regulation S Global NOTE, THE REGULATION S GLOBAL NOTE OR A RESTRICTED DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a B-1 plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed Transfer is being made prior to the expiration of the Restricted Period, (a) the Transferee will take delivery of a beneficial interest in the Temporary Regulation S Global Note held immediately after such Transfer through Euroclear or Clearstream, and (b) the Transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note, the Temporary Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A RESTRICTED DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) [ ] such Transfer is being effected to the Company; or (b) [ ] such Transfer is being effected to an Institutional Accredited Investor in a minimum principal amount of Notes or beneficial interests therein of not less than $100,000, that is acquiring the Notes or such beneficial interests for its own account or for the account of another Institutional Accredited Investor for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act, in each case, pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation or general advertising within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2), in the case of Definitive Notes, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Restricted Definitive Notes and in the Indenture and the Securities Act. 4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE. (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act (and based on an Opinion of Counsel if the Company or the Registrar so requests). Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no B-2 longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act (and based on an Opinion of Counsel if the Company or the Registrar so requests). Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act (and based on an Opinion of Counsel if the Company or the Registrar so requests). Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. _______________________________________ [Insert Name of Transferor] By:____________________________________ Name: Title: Dated: _______________________ B-3 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) [ ] a beneficial interest in the: (i) [ ] 144A Global Note (CUSIP 960413 AB8), or (ii) [ ] Regulation S Global Note (CUSIP U96060 AA3), or (iii) [ ] IAI Global Note (CUSIP 960413 AD4); or (b) [ ] a Restricted Definitive Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) [ ] a beneficial interest in the: (i) [ ] 144A Global Note (CUSIP 960413 AB8), or (ii) [ ] Regulation S Global Note (CUSIP U96060 AA3), or (iii) [ ] IAI Global Note (CUSIP 960413 AD4); or (iv) [ ] Unrestricted Global Note (CUSIP _________); or (b) [ ] a Restricted Definitive Note; or (c) [ ] an Unrestricted Definitive Note, in accordance with the terms of the Indenture. B-4 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Westlake Chemical Corporation 2801 Post Oak Boulevard Houston, Texas 77056 JPMorgan Chase Bank 600 Travis Street, Suite 1150 Houston, Texas 77002 Re: 8 3/4% Senior Notes due 2011 (CUSIP ____________) Reference is hereby made to the Indenture, dated as of July 31, 2003 (the "Indenture"), among Westlake Chemical Corporation as issuer (the "Company"), the Guarantors named on the signature pages thereto and JPMorgan Chase Bank, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. __________________________, (the "Owner") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $____________ in such Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States (and, in the case of clause (ii) and (iii), based on an Opinion of Counsel if the Company or the Registrar so requests). (b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States (and, in the case of clauses (ii) and (iii), based on an Opinion of Counsel if the Company and the Registrar so request). C-1 (c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States (and, in the case of clauses (ii) and (iii), based on an Opinion of Counsel if the Company and the Registrar so request). (2). CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL Note. In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [ ] 144A Global Note, [ ] Regulation S Global Note, or [ ] IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. C-2 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ______________________________________ [Insert Name of Transferor] By:___________________________________ Name: Title: Dated: ______________________ C-3 FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Westlake Chemical Corporation 2801 Post Oak Boulevard Houston, Texas 77056 JPMorgan Chase Bank 600 Travis Street, Suite 1150 Houston, Texas 77002 Re: 8 3/4% Senior Notes due 2011 Reference is hereby made to the Indenture, dated as of July 31, 2003 (the "Indenture"), among Westlake Chemical Corporation, as issuer (the "Company"), the Guarantors named on the signature pages thereto and JPMorgan Chase Bank, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with our proposed purchase of $____________ aggregate principal amount of: (a) [ ] a beneficial interest in a Global Note, or (b) [ ] a Definitive Note, we confirm that: 1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should offer, resell, pledge or otherwise transfer the Notes or any interest therein, we will do so only (i) to the Company, (ii) in the United States to a person whom we reasonably believes is a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in a transaction meeting the requirements of Rule 144A, (iii) outside the United States in a transaction complying with the provisions of Rule 904 under the Securities Act, (iv) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if available), (v) in the United States to an institutional "accredited investor" (as defined below), in a minimum principal amount of Notes or interests therein of not less than $100,000, that is acquiring the Notes or such interests for its own account or for the account of another institutional accredited investor for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act and that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the trustee a signed letter substantially in the form of this letter or (vi) pursuant to an effective registration statement under the Securities Act, in each of cases (i) through (vi) in accordance with any applicable securities laws of any State of the United States. We further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements D-4 of clauses (i) through (v) of this paragraph a notice advising such purchaser that offers, resales, pledges and transfers thereof are restricted as stated herein. 3. We understand that, on any proposed offer, sale, pledge or transfer of the Notes or beneficial interest therein, we will be required to furnish to you such certifications, legal opinions and other information as you may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment and can afford the complete loss of such investment. 5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion , in each case in a minimum principal amount of Notes or interests therein of not less than $100,000 for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act. You are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ____________________________________ [Insert Name of Accredited Investor] By:_________________________________ Name: Title: Dated: _______________________ D-5 EXHIBIT E FORM OF NOTATION OF NOTE GUARANTEE For value received, each Guarantor (which term includes any successor Person under the Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in, and subject to the provisions of, the Indenture dated as of July 31, 2003 (the "Indenture") among Westlake Chemical Corporation ("Company"), the Guarantors listed on Schedule I thereto and JPMorgan Chase Bank, as trustee (the "Trustee"), (a) the due and punctual payment of the principal of, premium, if any, interest and Additional Interest, if any, on the Notes (as defined in the Indenture), whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal of and interest on the Notes, if any, if lawful, and the due and punctual performance of all other payment obligations of the Company to the Holders or the Trustee all in accordance with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any of such other payment obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantors to the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee. [Name of Guarantors] By:______________________________________ Name: Title: E-1 EXHIBIT F FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT GUARANTORS Supplemental Indenture (this "Supplemental Indenture"), dated as of ________________, 20[__], among __________________ (the "Guaranteeing Subsidiary"), a subsidiary of Westlake Chemical Corporation (or its permitted successor), a __________________ (the "Company"), the Company, the other Guarantors (as defined in the Indenture referred to herein) and JPMorgan Chase Bank (or its permitted successor), as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company and the Guarantors have heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of July 31, 2003, [add appropriate references to any further supplements] providing for the issuance of 8-3/4% Senior Notes due 2011 (the "Notes"); WHEREAS, Section 4.17 of the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's payment obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Note Guarantee"); and WHEREAS, Section 9.01(5) of the Indenture provides that, without the consent of any Holder (as defined therein), the Company, the Guarantors and the Trustee may amend or supplement the Indenture to add guarantees of or additional obligors on the Notes or the Note Guarantees; WHEREAS, the Company and the Guarantors, pursuant to the foregoing authority, propose to amend and supplement the Indenture in certain respects to provide for the Note Guarantee of the Guaranteeing Subsidiary; NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the Guaranteeing Subsidiary, the other Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally unconditionally guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Company thereunder, that: (i) the principal of, and premium, if any, interest and Additional Interest, if any, on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other payment obligations of the Company to the F-1 Holders or the Trustee thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other payment obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors and the Guaranteeing Subsidiary shall be jointly and severally obligated to pay the same immediately. The Guaranteeing Subsidiary agrees that this is a guarantee of payment and not of collection. (b) The Guaranteeing Subsidiary hereby agrees that its obligations hereunder shall be, to the extent permitted by law, unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. To the extent permitted by law, the Guaranteeing Subsidiary hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and, subject to Article 8 of the Indenture, covenants that this Note Guarantee will not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. The Guaranteeing Subsidiary accepts all obligations of a Guarantor under the Indenture. (c) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either the Company or any Guarantor to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (d) The Guaranteeing Subsidiary agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. The Guaranteeing Subsidiary further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantee. (e) In the event of a default in the payment of principal of, or premium, if any, interest or Additional Interest, if any, on any Note when and as the same shall become due, whether at maturity, by acceleration, redemption or otherwise, or in the F-2 event of a default in the payment of any interest on the overdue principal of or interest on such Note, if any, if lawful, or any other payment obligation of the Company to the Holder of such Note or the Trustee thereunder, each of the Trustee and such Holder shall have the right to proceed first and directly against the Guaranteeing Subsidiary under the Indenture without first proceeding against the Company or exhausting any other remedies which the Trustee or such Holder may have and without resorting to any other security held by it. (f) The Trustee shall have the right, power and authority to do all things it deems necessary or advisable to enforce the provisions of the Indenture relating to the Note Guarantee and to protect the interests of the Holders of the Notes and, in the event of a default in the payment of principal of, or premium, if any, interest or Additional Interest, if any, on any Note when and as the same shall become due, whether at maturity, by acceleration, redemption or otherwise, or in the event of a default in the payment of any interest on the overdue principal of or interest on such Note, if any, if lawful, or any other payment obligation of the Company to the Holder of such Note or the Trustee thereunder, the Trustee may institute or appear in such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of its rights and the rights of the Holders, whether for the specific enforcement of any covenant or agreement in the Indenture relating to the Note Guarantee or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Without limiting the generality of the foregoing, in the event of a default in the payment of principal of, or premium, if any, interest or Additional Interest, if any, on any Note when due, the Trustee may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Guaranteeing Subsidiary and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Guaranteeing Subsidiary, wherever situated. (i) Pursuant to Section 10.02 of the Indenture, the Obligations of the Guaranteeing Subsidiary will be limited to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of the Guaranteeing Subsidiary, that are relevant under any applicable Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law relating to fraudulent transfers or conveyance, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 10 of the Indenture, result in the obligations of such Guarantor under this Note Guarantee not constituting a fraudulent transfer or conveyance. 3. EXECUTION AND DELIVERY. The Guaranteeing Subsidiary agrees that the Note Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. (a) Except as otherwise provided in Section 5 hereof, the Guaranteeing Subsidiary may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than the Company or another Guarantor, unless: F-3 (i) immediately after giving effect to such transaction, no Default or Event of Default exists; and (ii) either (A) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (in each case if other than the Guaranteeing Subsidiary) assumes all the obligations of that Guarantor under the Indenture, this Supplemental Indenture and its Note Guarantee pursuant to a supplemental indenture satisfactory to the Trustee, and under the Registration Rights Agreement, or (B) if applicable, the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation, Section 4.10 thereof. (b) Upon any consolidation or merger, or any sale or other disposition of all or substantially all of the assets of, the Guaranteeing Subsidiary in a transaction that is subject to, and that complies with the provisions of, Section 4(a) hereof, the successor Person formed by such consolidation or into or with which such Guarantor is merged or to which such sale or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of the Indenture referring to the applicable "Guarantor" shall refer instead to the successor Person and not to such Guarantor), and may exercise every right and power of such Guarantor under the Indenture, this Supplemental Indenture and its Note Guarantee with the same effect as if such successor Person had been named as a Guarantor herein and therein and the predecessor Guarantor shall be released from all obligations under the Indenture, this Supplemental Indenture and its Note Guarantee. Such successor Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable under the Indenture which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Note Guarantees so issued will in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution of the Indenture (c) Except as set forth in Articles 4 and 5 and Section 10.04 of the Indenture, and notwithstanding clauses (a)(ii) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of the Guaranteeing Subsidiary with or into the Company or another Guarantor, or shall prevent any sale or other disposition of all or substantially all of the assets of the Guaranteeing Subsidiary to the Company or another Guarantor. 5. RELEASES. (a) In the event of any sale or other disposition of all or substantially all of the assets of the Guaranteeing Subsidiary, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the Capital Stock of the Guaranteeing Subsidiary, in each case to a Person that is not (either before or after giving effect to such transactions) the Company or a Restricted Subsidiary of the Company, then such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the Capital Stock of such Guarantor) or the Person acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the F-4 applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of the Indenture, including without limitation Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of the Guaranteeing Subsidiary from its obligations under its Note Guarantee. (b) If the Guaranteeing Subsidiary is not released from its obligations under its Note Guarantee, it shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture to the extent provided in Article 10 of the Indenture. 6. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, or stockholder of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or the Guaranteeing Subsidiary under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary, the other Guarantors and the Company. 11. Trust Indenture Act Controls. If any provision of this Supplemental Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), the imposed duties will control. 12. Supplemental Indenture Incorporated into Indenture. The terms and conditions of this Supplemental Indenture shall be deemed to be part of the Indenture for all purposes with respect to the Notes and the Note Guarantees. The Indenture is hereby incorporated by reference herein and, as supplemented by this Supplemental Indenture, is in all respects adopted, ratified and confirmed. 13. Notes Deemed Conformed. As of the date hereof, the provisions of the Notes shall be deemed to be conformed, without the necessity for any reissuance or exchange of such Note or any other action on the part of the Holders, the Company, any Guarantor or the Trustee, so as to reflect this Supplemental Indenture. F-5 14. Successors. All agreements of the Guaranteeing Subsidiary in this Indenture will bind its successors, except as otherwise provided in Section 5. 15. Severability. In case any provision in this Supplemental Indenture is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby. F-6 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: _______________, 20___ [GUARANTEEING SUBSIDIARY] By: _______________________________ Name: Title: WESTLAKE CHEMICAL CORPORATION By: _______________________________ Name: Title: [EXISTING GUARANTORS] By: _______________________________ Name: Title: [TRUSTEE], as Trustee By: _______________________________ Authorized Signatory F-7 EX-4.3 68 h08423exv4w3.txt REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.3 CONFORMED COPY $380,000,000 WESTLAKE CHEMICAL CORPORATION 8-3/4% SENIOR NOTES DUE 2011 REGISTRATION RIGHTS AGREEMENT July 31, 2003 Credit Suisse First Boston LLC Banc of America Securities LLC Deutsche Bank Securities Inc. J.P. Morgan Securities Inc. Citigroup Global Markets Inc. Scotia Capital (USA) Inc. Credit Lyonnais Securities (USA) Inc. CIBC World Markets Corp. c/o Credit Suisse First Boston LLC Eleven Madison Avenue New York, New York 10010-3629 Ladies and Gentlemen: Westlake Chemical Corporation, a Delaware corporation (the "ISSUER"), proposes to issue and sell to Credit Suisse First Boston LLC, Banc of America Securities LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Citigroup Global Markets Inc., Scotia Capital (USA) Inc., Credit Lyonnais Securities (USA) Inc. and CIBC World Markets Corp. (collectively, the "INITIAL PURCHASERS"), upon the terms set forth in a purchase agreement dated as of July 21, 2003 (the "PURCHASE AGREEMENT"), $380,000,000 aggregate principal amount of its 8-3/4% Senior Notes due 2011 (the "INITIAL NOTES") to be unconditionally guaranteed as to payment of principal, premium, if any, interest and Additional Interest (as defined below), if any (the "GUARANTEES" and, together with the Initial Notes on which such Guarantees are endorsed, the "INITIAL SECURITIES"), by the subsidiaries of the Company named in Schedule B to the Purchase Agreement (the "GUARANTORS" and, together with the Issuer, the "COMPANY"). The Initial Securities will be issued pursuant to an Indenture, dated as of July 31, 2003, (the "INDENTURE") among the Issuer, the Guarantors and JP Morgan Chase Bank (the "TRUSTEE"). As an inducement to the Initial Purchasers, the Company agrees with the Initial Purchasers, for the benefit of the holders of the Initial Securities (including, without limitation, the Initial Purchasers), the Exchange Securities (as defined below) and the Private Exchange Securities (as defined below) (collectively the "HOLDERS"), as follows: 1. Registered Exchange Offer. To the extent not prohibited by applicable law or by applicable interpretations of the staff of the Securities and Exchange Commission (the "COMMISSION"), the Issuer and the Guarantors shall, at their own cost, prepare and, not later than 90 days after (or if the 90th day is not a business day, the first business day thereafter (such 90th day or business day thereafter being a "FILING DEADLINE")) the date of original issue of the Initial Securities (the "ISSUE DATE"), file with the Commission a registration statement (the "EXCHANGE OFFER REGISTRATION STATEMENT") on an appropriate form under the Securities Act of 1933, as amended (the "SECURITIES ACT"), with respect to a proposed offer that would be registered under the Securities Act (the "REGISTERED EXCHANGE OFFER") to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities and related Guarantees (collectively, the "EXCHANGE SECURITIES") of the Issuer and the Guarantors, respectively, issued under the Indenture and identical in all material respects to the Initial Securities (except for the transfer restrictions relating to the Initial Securities and the provisions relating to the matters described in Section 6 hereof) that would be registered under the Securities Act. To the extent not prohibited by applicable law or by applicable interpretations of the staff of the Commission, the Issuer and the Guarantors shall use all commercially reasonable efforts to cause such Exchange Offer Registration Statement to become effective under the Securities Act within 180 days (or if the 180th day is not a business day, the first business day thereafter (such 180th day or business day thereafter being an "EFFECTIVENESS DEADLINE")) after the Issue Date of the Initial Securities and to consummate the Registered Exchange Offer on or prior to 30 business days, or longer if required by the federal securities laws, after the date on which the Exchange Offer Registration Statement was declared effective by the Commission (such period being the "EXCHANGE OFFER REGISTRATION PERIOD" and such 30th business day (or such later date as required by the federal securities laws) being the "CONSUMMATION DEADLINE"). Following the declaration of the effectiveness of the Exchange Offer Registration Statement by the Commission, the Issuer and the Guarantors shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities (as defined in Section 6 hereof) electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder's business and has no arrangements or understandings with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States. The Company acknowledges that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder which is a broker-dealer electing to exchange Initial Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an "EXCHANGING DEALER"), is required to deliver a prospectus containing substantially the information set forth in (a) Annex A hereto in the "The Exchange Offer - Resales of the Notes" section and the "Purpose of the Exchange Offer" section, and (b) Annex B hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Exchange Securities acquired in exchange for Securities constituting any portion of an unsold allotment is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale. Subject to the Issuer's right to suspend the availability of the Exchange Offer Registration Statement or the use of the prospectus contained therein pursuant to Section 3(b), the Issuer and the Guarantors shall use all commercially reasonable efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, however, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Issuer and the Guarantors shall use all commercially reasonable efforts to make such prospectus and any amendment or supplement thereto, available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 90 days after the consummation of the Registered Exchange Offer. If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, the Issuer and the Guarantors, simultaneously with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the "PRIVATE EXCHANGE") for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities and the related Guarantees of the Issuer and the Guarantors, respectively, issued under the Indenture and identical in all material respects (including the existence 2 of restrictions on transfer under the Securities Act and the securities laws of the several states of the United States, but excluding provisions relating to the matters described in Section 6 hereof) to the Initial Securities (the "PRIVATE EXCHANGE SECURITIES"). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the "SECURITIES". In connection with the Registered Exchange Offer, the Issuer and the Guarantors shall: (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (b) keep the Registered Exchange Offer open for not less than 20 business days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders; (c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee; (d) permit Holders to withdraw tendered Initial Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and (e) otherwise comply in all material respects with all applicable laws relating to the Exchange Offer. As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Issuer and the Guarantors shall: (x) accept for exchange all the Initial Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange; (y) deliver or cause to be delivered to the Trustee for cancellation all the Initial Securities so accepted for exchange; and (z) cause the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to the Initial Securities of such Holder so accepted for exchange. The Indenture will provide that the Exchange Securities will not bear the Private Placement Legend (as defined in the Indenture) or be subject to the transfer restrictions set forth therein and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter. Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the date of original issue of the Initial Securities. Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of its business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Initial Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Issuer or any Guarantor or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities, (v) if such Holder is a broker-dealer, it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to 3 acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities, (vi) if such Holder is a broker-dealer, it did not purchase the Initial Securities to be exchanged for the Exchange Securities from the Issuer or a Guarantor and (vii) such Holder is not acting on behalf of any person who could not truthfully and completely make the foregoing representations. Notwithstanding any other provisions hereof, but subject to the Issuer's right to suspend the availability of the Exchange Offer Registration Statement or the use of the prospectus contained therein pursuant to Section 3(b), the Issuer and the Guarantors will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If following the date hereof there has been announced a change in Commission policy with respect to exchange offers that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Registered Exchange Offer is permitted by applicable federal law, the Issuer and the Guarantors will use all commercially reasonable efforts to obtain a no-action letter or other favorable decision from the Commission allowing the Issuer and the Guarantors to consummate the Registered Exchange Offer, unless the Company makes a good faith determination based on the advice of counsel that such a request would be denied in light of publicly available no-action letters, in which case the Company shall proceed to file a Shelf Registration Statement pursuant to the provisions of Section 2 hereof. 2. Shelf Registration. If, (i) because of any change in law or in applicable interpretations thereof by the staff of the Commission, the Issuer and the Guarantors are not required to file the Exchange Offer Registration Statement or permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) any Initial Purchaser so requests with respect to the Initial Securities (or the Private Exchange Securities) not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer, or (iii) any Holder of Transfer Restricted Securities (as defined in Section 6 hereof) notifies the Issuer prior to the 20th day following consummation of the Registered Exchange Offer that (x) such Holder is prohibited by law or Commission policy from participating in the Registered Exchange Offer, (y) such Holder may not resell the Exchange Securities acquired by it in the Registered Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by it or (z) such Holder is a broker-dealer and owns Initial Securities acquired directly from the Issuer or an affiliate of the Issuer, the Issuer and the Guarantors shall take the following actions: (a) The Issuer and the Guarantors shall, at their cost, use all commercially reasonable efforts to file with the Commission on or prior to the later of (1) 90 days after the Issue Date (or if the 90th day is not a business day, the first business day thereafter) and (2) 60 days after so required or requested pursuant to this Section 2 (or if the 60th day is not a business day, the first business day thereafter (the latest of such business days set forth in clauses (1) or (2) being a "FILING DEADLINE"), and thereafter to cause to be declared effective by the Commission as soon as practicable on or prior to 90 days (or if the 90th day is not a business day, the first business day thereafter) after Filing Deadline (such 90th day or business day thereafter being the "EFFECTIVENESS DEADLINE"), a registration statement (the "Shelf Registration Statement" and, together with the Exchange Offer Registration Statement, a "REGISTRATION STATEMENT") on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the "SHELF REGISTRATION"); provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder. 4 (b) The Issuer and the Guarantors shall use all commercially reasonable efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, for a period of two years (or for such longer period if extended pursuant to Section 3(j) below) from the date of its effectiveness or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto, (ii) become eligible for resale pursuant to rule 144(k) under the Securities Act (or any successor rule thereof) or (iii) otherwise are no longer Transfer Restricted Securities. Subject to the Issuer's right to suspend the availability of the Shelf Registration Statement or the use of the prospectus contained therein pursuant to Section 3(b), the Issuer and the Guarantors shall be deemed not to have used all commercially reasonable efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Transfer Restricted Securities covered thereby not being able to offer and sell such Securities during that period, unless such action is required by applicable law. (c) Notwithstanding any other provisions of this Agreement to the contrary, but subject to the Issuer's right to suspend the availability of the Shelf Registration Statement or the use of the prospectus contained therein pursuant to Section 3(b), the Issuer and the Guarantors shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 3. Registration Procedures. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply: (a) The Issuer shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company shall use commercially reasonable efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may propose, (ii) include the information set forth in Annex A hereto in the "The Exchange Offer - Resales of New Notes" section and the "Purpose of the Exchange Offer" section and in Annex B hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex C hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer, (iii) if requested by an Initial Purchaser, include the information with respect to such Initial Purchaser required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement, (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," reasonably acceptable to the Initial Purchasers, which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a "PARTICIPATING BROKER-DEALER"), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission, and (v) in the case of a Shelf Registration Statement, include the names of any Holders, whose Securities are covered by the Shelf Registration Statement in accordance with Section 2, as selling securityholders, subject to Section 3(n). (b) The Issuer shall give written notice to the Initial Purchasers, the Holders of the Securities proposed to be sold under a Shelf Registration Statement and any Participating Broker-Dealer from whom 5 the Issuer has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made): (i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information, in each case after the Registration Statement has become effective; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (v) of the happening of any event or the discovery of any fact that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus does not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading; and (vi) of the determination by the Issuer to suspend the availability of the Registration Statement or the use of the prospectus for resales of Transfer Restricted Notes because such action (1) is required by applicable law or (2) is taken by the Issuer in good faith and for valid business reasons, including the possible acquisition or divestiture of assets or a material corporate transaction or event. (c) The Issuer and the Guarantors shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration Statement. (d) The Company shall furnish to each Holder of Transfer Restricted Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference), unless such exhibits have been filed with the Commission in electronic format pursuant to Regulation S-T promulgated by the Commission. (e) The Company shall deliver to each known Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or any such Holder requests, all exhibits thereto (including those incorporated by reference), unless such exhibits have been filed with the Commission in electronic format pursuant to Regulation S-T promulgated by the Commission. (f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Transfer Restricted Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Issuer and the Guarantors consent, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Transfer Restricted Securities in 6 connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement. (g) The Company shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Issuer and the Guarantors consent, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement. (h) Prior to any public offering of the Securities pursuant to any Registration Statement, the Company shall register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or "blue sky" laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that neither the Issuer nor any Guarantor shall be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject. (i) If the Securities are no longer in global form, the Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement. (j) Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Issuer and the Guarantors are required to maintain an effective Registration Statement, the Issuer and the Guarantors shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer in accordance with paragraphs (ii) through (vi) of Section 3(b) above (a "SUSPENSION NOTICE") to suspend the availability of the Registration Statement or the use of the prospectus until the requisite changes to the prospectus have been made or until the Issuer has delivered written notice to the Initial Purchasers, such Holders and such Participating Broker-Dealers that such Registration Statement is once again effective or available or that no supplement or amendment is required (the "SECOND NOTICE"), then the Initial Purchasers, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days from and including the date of the giving of the Suspension Notice to and including the date when the Initial Purchasers, such Holders and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus or such Second Notice pursuant to this Section 3(j). (k) Not later than the consummation of the Registered Exchange Offer or Private Exchange or effective date of the Shelf Registration Statement, as applicable, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Initial Securities, the Exchange 7 Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company. (l) The Issuer and the Guarantors will comply in all material respects with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period. (m) The Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture. (n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. (o) The Issuer and the Guarantors shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as the Holders of not less than a majority of the aggregate principal amount of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration. (p) In the case of any Shelf Registration, the Company shall (i) make reasonably available for inspection by the Holders of the Securities, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by the Holders of the Securities or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) cause the Company's officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the Holders of the Securities or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchasers by Credit Suisse First Boston LLC and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 4 hereof and shall be subject to any confidentiality procedures reasonably instituted by the Issuer and consented to by the Holders, which consent shall not be unreasonably withheld. (q) In the case of any Shelf Registration, the Company, if requested by the Holders of not less than majority of the aggregate principal amount of the Securities covered thereby, shall cause (i) its counsel to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement (it being agreed that the matters to be covered by such opinion shall include, without limitation but subject to customary qualifications and exceptions, the due incorporation and good standing of the Issuer and its subsidiaries; the qualification of the Issuer and its subsidiaries to transact business as foreign corporations; the due authorization, execution and delivery of the relevant agreement of the type referred to in Section 3(o) hereof; the due authorization, execution, authentication and issuance, and the validity and enforceability, of the applicable Securities; the absence of material legal or governmental proceedings involving the Issuer and its subsidiaries; the absence of governmental approvals required to be obtained in connection with the Shelf Registration Statement, the 8 offering and sale of the applicable Securities, or any agreement of the type referred to in Section 3(o) hereof; the compliance as to form in all material respects of such Shelf Registration Statement and any documents incorporated by reference therein and of the Indenture with the requirements of the Securities Act and the Trust Indenture Act, respectively; and, as of the date of the opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from such Shelf Registration Statement and the prospectus included therein, as then amended or supplemented, and from any documents incorporated by reference therein of an untrue statement of a material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any such documents, in the light of the circumstances existing at the time that such documents were filed with the Commission under the Exchange Act), (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities, and (iii) its independent public accountants to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72. (r) In the case of the Registered Exchange Offer, if requested prior to the effectiveness of the Exchange Offer Registration Statement by any Initial Purchaser holding Securities representing an unsold allotment in the initial distribution or any known Participating Broker-Dealer, the Company shall cause (i) its counsel and its general counsel to deliver to such Initial Purchaser or such Participating Broker-Dealer signed opinions in substantially the forms set forth in Sections 6(c) and (d) of the Purchase Agreement with such changes as are customary in connection with the preparation of a Registration Statement and excluding any matters related to the Refinancing Transactions or the authorization, execution, delivery, binding obligation or enforceability of the Senior Credit Facilities (each as defined in the Purchase Agreement) and (ii) its independent public accountants to deliver to such Initial Purchaser or such Participating Broker-Dealer a comfort letter, in customary form, meeting the requirements as to the substance thereof as set forth in Section 6(a) of the Purchase Agreement, with appropriate date changes. (s) If a Registered Exchange Offer or a Private Exchange is to be consummated and the Securities are no longer in global form, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or caused to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied. (t) The Company shall use all commercially reasonable efforts to (a) if the Initial Securities have been rated prior to the initial sale of such Initial Securities, confirm such ratings will apply to the Securities covered by a Registration Statement, or (b) if the Initial Securities were not previously rated, cause the Securities covered by a Registration Statement to be rated with the appropriate rating agencies, but in each case only if so requested by Holders of a majority in aggregate principal amount of Securities covered by such Registration Statement, or by the managing underwriters, if any. (u) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Conduct Rules (the "RULES") of the National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will assist such broker-dealer in complying with the requirements of such Rules, including, without limitation, by (i) if such Rules, including Rule 2720, shall so require, engaging a "qualified independent underwriter" (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and 9 (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules. (v) The Issuer and the Guarantors shall use all commercially reasonable efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby. 4. Registration Expenses. The Issuer and the Guarantors shall bear all fees and expenses incurred in connection with the performance of its obligations under Sections 1 through 3 hereof (including the reasonable fees and expenses, if any, of Latham & Watkins LLP, counsel for the Initial Purchasers, incurred in connection with the Registered Exchange Offer), whether or not the Exchange Offer Registration Statement or a Shelf Registration Statement is filed or becomes effective, and, in the event of a Shelf Registration, shall bear or reimburse the Holders of the Securities covered thereby for the reasonable fees and disbursements of one firm of counsel designated by the Holders of a majority in principal amount of the Initial Securities covered thereby to act as counsel for the Holders of the Initial Securities in connection therewith. 5. Indemnification. (a) The Issuer and the Guarantors agree to indemnify and hold harmless each Holder of the Securities, any Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any Participating Broker-Dealer and such controlling persons are referred to collectively as the "INDEMNIFIED PARTIES") from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that (i) the Issuer and Guarantors shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Issuer or the Guarantors by or on behalf of such Holder specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus relating to such Securities was required to be delivered by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or Participating Broker-Dealer results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Securities to such person, a copy of the final prospectus if the Issuer had previously furnished copies thereof to such Holder or Participating Broker-Dealer; provided further, however, that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party. The Company and the Guarantors shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders. (b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Issuer and the Guarantors, each of the directors of the Issuer or any Guarantor, each officer of the Issuer or any Guarantor that signs a Registration Statement, and each person, if any, who controls the Issuer or the Guarantors within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Issuer or the Guarantors or any such director, officer or controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a 10 material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Issuer, any Guarantor, and any such director, officer or controlling person for any legal or other expenses reasonably incurred by the Issuer, Guarantor or any such director, officer or controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Issuer or the Guarantors or any of their respective officers, directors or controlling persons. (c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the exchange of the Securities pursuant to the Registered Exchange Offer, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer and Guarantors, on the one hand or such Holder or such other indemnified party, as the case may be, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to a Registration Statement exceeds the amount of damages which such Holders have 11 otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Issuer or the Guarantors within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Issuer and the Guarantors. (e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. 6. Additional Interest Under Certain Circumstances. (a) Additional interest (the "ADDITIONAL INTEREST") with respect to the Initial Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (iv) below, a "REGISTRATION DEFAULT"): (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline; (ii) any Registration Statement required by this Agreement is not declared effective by the Commission on or prior to the applicable Effectiveness Deadline; (iii) the Registered Exchange Offer has not been consummated on or prior to the Consummation Deadline; or (iv) If after either the Exchange Offer Registration Statement or the Shelf Registration Statement is declared effective (A) such Registration Statement thereafter ceases to be effective; or (B) such Registration Statement or the related prospectus ceases to be usable (except as permitted in Section 3(b)(vi) or in paragraph (b) of this Section 6) in connection with resales of Transfer Restricted Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or (2) it shall be necessary to amend such Registration Statement or supplement the related prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder. Each of the foregoing will constitute a Registration Default whatever the reason for any such event and whether it is voluntary or involuntary or is beyond the control of the Issuer or the Guarantors or pursuant to operation of law or as a result of any action or inaction by the Commission. Additional Interest shall accrue on the Transfer Restricted Securities affected by such Registration Default over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have been cured, in an amount equal to $.05 per week per $1,000 principal amount of Transfer Restricted Securities for the first 90-day period immediately following the occurrence of such Registration Default. The weekly amount of Additional Interest per $1,000 principal amount of Transfer Restricted Securities shall increase by an additional $.05 with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Additional Interest for all Registration Defaults of $.40 per week per $1,000 principal amount of Transfer Restricted Securities. Additional Interest will not accrue for more than one Registration Default at any given time, and will accrue only for those days that a Registration Default occurs and is continuing. Anything herein to the contrary notwithstanding, any Holder who was, at the time the Exchange Offer was pending and consummated, eligible to exchange, and did not validly tender or withdrew, its Initial Securities for Exchange Securities in the Exchange Offer will not be entitled to receive any Additional Interest. 12 (b) A Registration Default referred to in Section 6(a)(iv) hereof shall be deemed not to have occurred and be continuing in relation to a Registration Statement or the related prospectus covering resales of Transfer Restricted Securities if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Registration Statement to incorporate quarterly financial information or annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or (y) other material events with respect to the Company that would need to be described in such Registration Statement or the related prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Registration Statement and related prospectus to describe such events; provided, however, that in any case if such Registration Default occurs for a continuous period in excess of 60 days, Additional Interest shall be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured. (c) Any amounts of Additional Interest due pursuant to clause (i), (ii), (iii) or (iv) of Section 6(a) above will be payable in cash on the regular interest payment dates with respect to the Initial Securities. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Transfer Restricted Securities on which such Additional Interest is accruing, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360. (d) "TRANSFER RESTRICTED SECURITIES" means each Initial Security until (i) the date on which such Transfer Restricted Security has been exchanged by a person other than a broker-dealer for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of a Initial Security for an Exchange Note, the date on which such Exchange Note is sold to a purchaser in whose hands such Exchange Note is freely tradable under the Securities Act, (iii) the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement, (iv) the date on which such Initial Securities is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act or (v) the date on which such Initial Security ceases to be outstanding. 7. Rules 144 and 144A. The Issuer and the Guarantors shall use all commercially reasonable efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Initial Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Issuer and the Guarantors covenant that they will take such further action as any Holder of Initial Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Initial Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). The Company will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company by the Initial Purchasers upon request. Upon the request of any Holder of Initial Securities, the Issuers and the Guarantors shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act. 8. Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering ("MANAGING UNDERWRITERS") will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering. No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. Except as provided in Section 4 and unless the Company otherwise agrees to be so responsible, the Holders participating in any underwritten offering shall be responsible for 13 any expenses customarily borne by selling securityholders, including underwriting discounts and commissions and fees and expenses of counsel to selling securityholders. 9. Miscellaneous. (a) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Holders of a majority in principal amount of the Securities affected by such amendment, modification, supplement, waiver or consents. (b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery: (1) if to a Holder of the Securities, at the most current address given by such Holder to the Company. (2) if to the Initial Purchasers; Credit Suisse First Boston LLC Eleven Madison Avenue New York, NY 10010-3629 Fax No.: (212) 325-8278 Attention: Transactions Advisory Group with a copy to: Latham & Watkins LLP 885 Third Avenue, Suite 1000 New York, NY 10022 Fax No.: (212) 751-4864 Attention: Peter M. Labonski, Esq. (3) if to the Company, at its address as follows: Westlake Chemical Corporation 2801 Post Oak Boulevard Houston, TX 77056 Fax No.: (713) 629-6239 Attention: Louis B. Trenchard, III with a copy to: Baker Botts L.L.P. One Shell Plaza 910 Louisiana Street Houston, TX 77002 Fax No.: (713) 229-7701 Attention: J. David Kirkland, Jr., Esq. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient's facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery. 14 (c) No Inconsistent Agreements. The Issuer and the Guarantors have not, as of the date hereof, entered into, nor shall they, on or after the date hereof, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. (d) Successors and Assigns. This Agreement shall be binding upon the Issuer, the Guarantors and their respective successors and assigns. (e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. (h) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (i) Securities Held by the Company. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 15 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers, the Issuer and the Guarantors in accordance with its terms. Very truly yours, Westlake Chemical Corporation By: /s/ A. Chao ------------------------------------ Name: Albert Chao Title: President Geismar Holdings, Inc. Geismar Vinyls Company LP, by GVGP, Inc., its general partner Gramercy Chlor-Alkali Corporation GVGP, Inc. North American Pipe Corporation North American Profiles, Inc. Van Buren Pipe Corporation Westech Building Products, Inc. Westlake Chemical Holdings, Inc. Westlake Chemical Investments, Inc. Westlake Chemical Manufacturing, Inc. Westlake Chemical Products, Inc. Westlake Development Corporation Westlake Management Services, Inc. Westlake Olefins Corporation Westlake Overseas Corporation Westlake Petrochemicals LP, by Westlake Chemical Investments, Inc., its general partner Westlake Polymers LP, by Westlake Chemical Investments, Inc., its general partner Westlake PVC Corporation Westlake Resources Corporation Westlake Styrene LP, by Westlake Chemical Holdings, Inc., its general partner Westlake Vinyl Corporation Westlake Vinyls, Inc. WPT LP, by Westlake Chemical Holdings, Inc., its general partner By: /s/ Tai-Li Keng ------------------------------------ Name: Tai-Li Keng Title: Vice President 16 The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written. Credit Suisse First Boston LLC Banc of America Securities LLC Deutsche Bank Securities Inc. J.P. Morgan Securities Inc. Citigroup Global Markets Inc. Scotia Capital (USA) Inc. Credit Lyonnais Securities (USA) Inc. CIBC World Markets Corp. BY: Credit Suisse First Boston LLC By: /s/ David Faris ------------------------------------ Name: David Faris Title: Director 17 ANNEX A Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution." ANNEX B PLAN OF DISTRIBUTION Each broker-dealer that receives exchange notes for its own account in the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of those exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for old notes where such old notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the expiration date of the exchange offer, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 200[ ], all dealers effecting transactions in the exchange notes may be required to deliver a prospectus.(1) We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account in the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale. The prices at which these sales may occur may be at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any resales may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from the selling broker-dealer or the purchasers of any the exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of exchange notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the expiration date of the exchange offer, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the old notes) other than commissions or concessions of any brokers or dealers. We also have agreed that we will indemnify the specified holder of the new notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. - -------- (1) In addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page or on the inside front cover of the Exchange Offer prospectus. ANNEX C [ ] CHECK HERE AND COMPLETE THE FOLLOWING IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name:____________________________________________ Address:_________________________________________ _________________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer, the undersigned represents that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. If the undersigned is a broker-dealer, the undersigned represents it did not purchase the Initial Securities to be exchanged for the Exchange Securities from the Issuer or a Guarantor. EX-10.1 69 h08423exv10w1.txt CREDIT AGREEMENT - SENIOR SECURED REVOLVING CREDIT EXHIBIT 10.1 CONFORMED COPY CREDIT AGREEMENT DATED AS OF JULY 31, 2003 among THE FINANCIAL INSTITUTIONS NAMED HEREIN as the Lenders and BANK OF AMERICA, N.A. as the Agent BANC OF AMERICA SECURITIES LLC, as the Sole Lead Arranger and Book Manager and WESTLAKE CHEMICAL CORPORATION and each other Person listed on SCHEDULE 1 hereto, as the Borrowers $200,000,000 TABLE OF CONTENTS
Section Page - ------- ---- ARTICLE 1 LOANS AND LETTERS OF CREDIT....................................... 1 1.1 Total Facility.................................................. 1 1.2 Revolving Loans................................................. 1 1.3 Letters of Credit............................................... 4 1.4 Bank Products................................................... 7 ARTICLE 2 INTEREST AND FEES................................................. 7 2.1 Interest........................................................ 7 2.2 Continuation and Conversion Elections........................... 8 2.3 Maximum Interest Rate........................................... 9 2.4 Closing Fee..................................................... 9 2.5 Unused Line Fee................................................. 9 2.6 Letter of Credit Fee............................................ 10 ARTICLE 3 PAYMENTS AND PREPAYMENTS.......................................... 10 3.1 Revolving Loans................................................. 10 3.2 Full or Partial Termination of Facility......................... 10 3.3 Prepayments of the Loans....................................... 11 3.4 LIBOR Rate Loan Prepayments..................................... 12 3.5 Payments by the Borrowers....................................... 12 3.6 Payments as Revolving Loans..................................... 12 3.7 Apportionment, Application and Reversal of Payments............. 12 3.8 Indemnity for Returned Payments................................. 13 3.9 Agent's and Lenders' Books and Records; Monthly Statements...... 13 ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY............................ 14 4.1 Taxes........................................................... 14 4.2 Illegality...................................................... 14 4.3 Increased Costs and Reduction of Return......................... 15 4.4 Funding Losses.................................................. 15 4.5 Inability to Determine Rates.................................... 16 4.6 Certificates of the Agent....................................... 16 4.7 Survival........................................................ 16 ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES................. 16 5.1 Books and Records............................................... 16 5.2 Financial Information........................................... 16 5.3 Notices to the Lenders.......................................... 19 ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS............................ 21 6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents................................ 21
i 6.2 Validity and Priority of Security Interest...................... 21 6.3 Organization and Qualification.................................. 22 6.4 Corporate Name; Prior Transactions.............................. 22 6.5 Subsidiaries and Affiliates..................................... 22 6.6 Financial Statements and Projections............................ 22 6.7 Capitalization.................................................. 22 6.8 Solvency........................................................ 23 6.9 Debt............................................................ 23 6.10 Distributions................................................... 23 6.11 Real Estate; Leases............................................. 23 6.12 Proprietary Rights.............................................. 23 6.13 Trade Names..................................................... 23 6.14 Litigation...................................................... 23 6.15 Labor Disputes.................................................. 23 6.16 Environmental Laws.............................................. 24 6.17 No Violation of Law............................................. 25 6.18 No Default...................................................... 25 6.19 ERISA Compliance................................................ 25 6.20 Taxes........................................................... 26 6.21 Regulated Entities.............................................. 26 6.22 Use of Proceeds; Margin Regulations............................. 26 6.23 Copyrights, Patents, Trademarks and Licenses, etc............... 26 6.24 No Material Adverse Change...................................... 26 6.25 Full Disclosure................................................. 26 6.26 Material Agreements............................................. 27 6.27 Bank Accounts................................................... 27 6.28 Governmental Authorization...................................... 27 6.29 No Restrictions................................................. 27 ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS................................ 27 7.1 Taxes and Other Obligations..................................... 27 7.2 Legal Existence and Good Standing............................... 27 7.3 Compliance with Law and Agreements; Maintenance of Licenses; Amendments to Bond Debt and Fixed Asset Loan.......... 28 7.4 Maintenance of Property; Inspection of Property................. 28 7.5 Insurance....................................................... 28 7.6 Insurance and Condemnation Proceeds............................. 29 7.7 Environmental Laws.............................................. 29 7.8 Compliance with ERISA........................................... 30 7.9 Mergers, Consolidations, or Sales............................... 30 7.10 Distributions; Capital Change; Restricted Investments........... 30 7.11 Transactions Affecting Collateral or Obligations................ 31 7.12 Guaranties...................................................... 31 7.13 Debt............................................................ 31 7.14 Prepayment/Prepayment of Debt................................... 32 7.15 Transactions with Affiliates.................................... 32 7.16 Business Conducted.............................................. 33 7.17 Liens........................................................... 33 7.18 Sale and Leaseback Transactions................................. 33 7.19 New Subsidiaries................................................ 33
ii 7.20 Fiscal Year..................................................... 33 7.21 Fixed Charge Coverage Ratio..................................... 33 7.22 Use of Proceeds................................................. 33 7.23 Collateral...................................................... 33 7.24 Tax Shelter Regulations......................................... 34 7.25 Permitted Debt under Bond Debt and Fixed Asset Loan............. 34 7.26 Permitted Acquisitions.......................................... 34 7.27 Excluded Deposit Accounts....................................... 35 7.28 Fixed Asset Loan Collateral Account............................. 35 7.29 Further Assurances.............................................. 35 ARTICLE 8 CONDITIONS OF LENDING............................................. 35 8.1 Conditions Precedent to Making of Loans on the Closing Date..... 35 8.2 Conditions Precedent to Each Loan............................... 38 ARTICLE 9 DEFAULT; REMEDIES................................................. 38 9.1 Events of Default............................................... 38 9.2 Remedies........................................................ 41 ARTICLE 10 TERM AND TERMINATION............................................. 42 10.1 Term and Termination............................................ 42 ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS..... 42 11.1 Amendments and Waivers.......................................... 42 11.2 Assignments; Participations..................................... 44 ARTICLE 12 THE AGENT........................................................ 45 12.1 Appointment and Authorization................................... 45 12.2 Delegation of Duties............................................ 46 12.3 Liability of Agent.............................................. 46 12.4 Reliance by Agent............................................... 46 12.5 Notice of Default............................................... 47 12.6 Credit Decision................................................. 47 12.7 Indemnification................................................. 47 12.8 Agent in Individual Capacity.................................... 47 12.9 Successor Agent................................................. 48 12.10 Withholding Tax................................................. 48 12.11 Collateral Matters.............................................. 49 12.12 Restrictions on Actions by Lenders; Sharing of Payments......... 50 12.13 Agency for Perfection........................................... 51 12.14 Payments by Agent to Lenders.................................... 51 12.15 Settlement...................................................... 51 12.16 Letters of Credit; Intra-Lender Issues.......................... 54 12.17 Concerning the Collateral and the Related Loan Documents........ 55 12.18 Field Audit and Examination Reports; Disclaimer by Lenders...... 56
iii 12.19 Relation Among Lenders.......................................... 56 12.20 Co-Agents....................................................... 56 ARTICLE 13 MISCELLANEOUS.................................................... 56 13.1 No Waivers; Cumulative Remedies................................. 56 13.2 Severability.................................................... 57 13.3 Governing Law; Choice of Forum; Service of Process.............. 57 13.4 WAIVER OF JURY TRIAL............................................ 58 13.5 Survival of Representations and Warranties...................... 58 13.6 Other Security and Guaranties................................... 58 13.7 Fees and Expenses............................................... 59 13.8 Notices......................................................... 59 13.9 Waiver of Notices............................................... 60 13.10 Binding Effect.................................................. 60 13.11 Indemnity of the Agent, the Arranger, and the Lenders by the Borrower.................................................... 60 13.12 Limitation of Liability......................................... 61 13.13 Final Agreement................................................. 61 13.14 Counterparts.................................................... 61 13.15 Captions........................................................ 62 13.16 Right of Setoff................................................. 62 13.17 Confidentiality................................................. 62 13.18 Conflicts with Other Loan Documents............................. 63 13.19 Westlake as Agent............................................... 63
iv ANNEXES, EXHIBITS AND SCHEDULES ANNEX A - DEFINED TERMS EXHIBIT A - FORM OF NOTE EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE EXHIBIT C - FORM OF OBLIGATION GUARANTY EXHIBIT D - FORM OF NOTICE OF BORROWING EXHIBIT E - FORM OF NOTICE OF CONTINUATION/CONVERSION EXHIBIT F - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT EXHIBIT G - FORM OF COMPLIANCE CERTIFICATE SCHEDULE 1 - BORROWERS SCHEDULE 1.2 - LENDERS' COMMITMENTS SCHEDULE 6.3 - ORGANIZATION AND QUALIFICATIONS SCHEDULE 6.4 - PRIOR CORPORATE NAMES SCHEDULE 6.5 - SUBSIDIARIES AND AFFILIATES SCHEDULE 6.9 - DEBT AND LIENS SCHEDULE 6.11 - REAL ESTATE; LEASES SCHEDULE 6.12 - PROPRIETARY RIGHTS SCHEDULE 6.13 - TRADE NAMES SCHEDULE 6.14 - LITIGATION SCHEDULE 6.15 - LABOR DISPUTES SCHEDULE 6.16 - ENVIRONMENTAL LAW SCHEDULE 6.19 - ERISA COMPLIANCE SCHEDULE 6.26 - MATERIAL AGREEMENTS SCHEDULE 6.27 - BANK ACCOUNTS SCHEDULE 7.10 - EXISTING INVESTMENTS SCHEDULE 7.17 - EXISTING LIENS v CREDIT AGREEMENT This Credit Agreement, dated as of July 31, 2003, (this "Agreement") among the financial institutions from time to time parties hereto (such financial institutions, together with their respective successors and assigns, are referred to hereinafter each individually as a "LENDER" and collectively as the "LENDERS"), BANK OF AMERICA, N.A. with an office at 55 S. Lake Avenue, Suite 900, Pasadena, CA 91101, as agent for the Lenders (in its capacity as agent, the "AGENT"), and WESTLAKE CHEMICAL CORPORATION, a Delaware corporation ("WESTLAKE") and certain of its domestic subsidiaries listed on SCHEDULE 1 hereto, each with offices at 2801 Post Oak Boulevard, Houston, Texas 77056 (each a "BORROWER" and collectively, all Borrowers, including Westlake, the "BORROWERS"). W I T N E S S E T H: WHEREAS, the Borrowers have requested the Lenders to make available to the Borrowers a revolving line of credit for loans and letters of credit in an amount not to exceed $200,000,000, and which extensions of credit the Borrowers will use for the purposes permitted hereunder; WHEREAS, capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in ANNEX A which is attached hereto and incorporated herein; the rules of construction contained therein shall govern the interpretation of this Agreement, and all Annexes, Exhibits, and Schedules attached hereto are incorporated herein by reference; WHEREAS, the Lenders have agreed to make available to the Borrowers a revolving credit facility upon the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, the Lenders, the Agent, and the Borrowers hereby agree as follows. ARTICLE 1 LOANS AND LETTERS OF CREDIT 1.1 Total Facility. Subject to all of the terms and conditions of this Agreement, the Lenders agree to make available a total credit facility of up to $200,000,000 (the "TOTAL FACILITY") to the Borrowers from time to time during the term of this Agreement. The Total Facility shall be composed of a revolving line of credit consisting of Revolving Loans and Letters of Credit described herein. 1.2 Revolving Loans. (a) (i) Amounts. Subject to the satisfaction of the conditions precedent set forth in ARTICLE 8, each Lender severally, but not jointly, agrees, upon any Borrower's request from time to time on any Business Day during the period from the Closing Date to the Termination Date, to make revolving loans (the "REVOLVING LOANS") to the Borrowers in amounts not to exceed such Lender's Pro Rata Share of Availability, except for Non-Ratable Loans and Agent Advances. The Lenders, however, in their unanimous discretion, may elect to make Revolving Loans or issue or arrange to have issued Letters of Credit in excess of the Borrowing Base but not in excess of the Maximum Revolver Amount on one or more occasions, but if they do so, neither the Agent nor the Lenders shall be deemed thereby to have changed the limits of the Borrowing Base or to be obligated to exceed such limits on any other occasion. If any Borrowing would exceed Availability, the Lenders may refuse to make or may otherwise restrict the making of Revolving Loans as the Lenders determine until such excess has been eliminated, subject to the Agent's authority, in its sole discretion, to make Agent Advances pursuant to the terms of SECTION 1.2(I). (ii) The Borrowers shall execute and deliver to each Lender requesting a note, a note to evidence the Revolving Loan of that Lender. Each note shall be in the principal amount of the requesting Lender's Pro Rata Share of the Maximum Revolver Amount, dated the date hereof and substantially in the form of EXHIBIT A (each a "NOTE" and, collectively, the "NOTES"). Each Note shall represent the obligation of the Borrowers to pay the amount of the requesting Lender's Pro Rata Share of the Maximum Revolver Amount, or, if less, such Lender's Pro Rata Share of the aggregate unpaid principal amount of all Revolving Loans to the Borrowers together with interest thereon as prescribed in SECTION 2.1. The entire unpaid balance of the Revolving Loan and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the Termination Date. (b) Procedure for Borrowing. (i) Each Borrowing shall be made upon any Borrower's irrevocable written notice delivered to the Agent in the form of a notice of borrowing in substantially the form of EXHIBIT E ("NOTICE OF BORROWING") and signed by Westlake, on its behalf and as agent for the other Borrowers, which Notice of Borrowing shall be received by the Agent prior to (i) 12:00 noon (Houston, Texas time) three (3) Business Days prior to the requested Funding Date, in the case of LIBOR Rate Loans and (ii) 11:00 a.m. (Houston, Texas time) on the requested Funding Date, in the case of Base Rate Loans, specifying: (A) the amount of the Borrowing, which in the case of a LIBOR Rate Loan must equal or exceed $5,000,000 (and integral increments of $1,000,000 in excess of such amount); (B) the requested Funding Date, which must be a Business Day; (C) whether the Revolving Loans requested are to be Base Rate Loans or LIBOR Rate Loans (and if not specified, it shall be deemed a request for a Base Rate Loan); (D) the duration of the Interest Period for LIBOR Rate Loans (and if not specified, it shall be deemed a request for an Interest Period of one month); and (E) the Borrower or Borrowers which are to receive all or any portion of such Borrowing and the amount of such Borrowing to be advanced to such Borrower or Borrowers. provided, however, that with respect to the Borrowing to be made on the Closing Date, such Borrowings will consist of Base Rate Loans only. (ii) In lieu of delivering a Notice of Borrowing, the Borrowers may give the Agent telephonic notice of such request for advances to the Designated Account on or before the deadline set forth above. The Agent at all times shall be entitled to rely on such telephonic notice in making such Revolving Loans, regardless of whether any written confirmation is received. (iii) The Borrowers shall have no right to request a LIBOR Rate Loan while a Default or Event of Default has occurred and is continuing. -2- (c) Reliance upon Authority. Prior to the Closing Date, the Borrowers shall deliver to the Agent, a notice setting forth the account of the Borrowers ("DESIGNATED ACCOUNT") to which the Agent is authorized to transfer the proceeds of the Revolving Loans requested hereunder. The Borrowers may designate a replacement account from time to time by written notice. All such Designated Accounts must be reasonably satisfactory to the Agent. The Agent is entitled to rely conclusively on any person's request for Revolving Loans on behalf of the Borrowers, so long as the proceeds thereof are to be transferred to the Designated Account. The Agent has no duty to verify the identity of any individual representing himself or herself as a person authorized by the Borrowers to make such requests on its behalf. (d) No Liability. The Agent shall not incur any liability to the Borrowers as a result of acting upon any notice referred to in SECTIONS 1.2(B) and (C), which the Agent believes in good faith to have been given by an officer or other person duly authorized by any Borrowers to request Revolving Loans on its behalf. The crediting of Revolving Loans to the Designated Account conclusively establishes the obligation of the Borrowers to repay such Revolving Loans as provided herein. (e) Notice Irrevocable. Any Notice of Borrowing (or telephonic notice in lieu thereof) made pursuant to SECTION 1.2(B) shall be irrevocable. The Borrowers shall be bound to borrow the funds requested therein in accordance therewith. (f) Agent's Election. Promptly after receipt of a Notice of Borrowing (or telephonic notice in lieu thereof), the Agent shall elect to have the terms of SECTION 1.2(G) or the terms of SECTION 1.2(H) apply to such requested Borrowing. If the Bank declines in its sole discretion to make a Non-Ratable Loan pursuant to SECTION 1.2(H), the terms of SECTION 1.2(G) shall apply to the requested Borrowing. (g) Making of Revolving Loans. If Agent elects to have the terms of this SECTION 1.2(G) apply to a requested Borrowing, then promptly after receipt of a Notice of Borrowing or telephonic notice in lieu thereof, the Agent shall notify the Lenders by telecopy, telephone or e-mail of the requested Borrowing. Each Lender shall transfer its Pro Rata Share of the requested Borrowing available to the Agent in immediately available funds, to the account from time to time designated by Agent, not later than 12:00 noon (Houston, Texas time) on the applicable Funding Date. After the Agent's receipt of all proceeds of such Revolving Loans, the Agent shall make the proceeds of such Revolving Loans available to the Borrowers on the applicable Funding Date by transferring same day funds to the Designated Account; provided, however, that the amount of Revolving Loans so made on any date shall not exceed the Availability on such date. (h) Making of Non-Ratable Loans. (i) If any Borrower requests a Base Rate Loan and Agent elects, with the consent of the Bank, to have the terms of this SECTION 1.2(H) apply to a requested Borrowing, the Bank shall make a Revolving Loan in the amount of that Borrowing available to the Borrowers on the applicable Funding Date by transferring same day funds to the Designated Account. Each Revolving Loan made solely by the Bank pursuant to this SECTION 1.2(H) is herein referred to as a "NON-RATABLE LOAN", and such Revolving Loans are collectively referred to as the "NON-RATABLE LOANS." Each Non-Ratable Loan shall be subject to all the terms and conditions applicable to other Revolving Loans except that all payments thereon shall be payable to the Bank solely for its own account. The aggregate amount of Non-Ratable Loans outstanding at any time shall not exceed $20,000,000. The Agent shall not request the Bank to make any Non-Ratable Loan if (1) the Agent has received written notice from any Lender that one or more of the applicable conditions precedent set forth in ARTICLE 8 will not be satisfied on the -3- requested Funding Date for the applicable Borrowing, or (2) the requested Borrowing would exceed Availability on that Funding Date. (ii) The Non-Ratable Loans shall be secured by the Agent's Liens in and to the Collateral and shall constitute Base Rate Loans and Obligations hereunder. (i) Agent Advances. (i) Subject to the limitations set forth below, the Agent is authorized by the Borrowers and the Lenders, from time to time in the Agent's sole discretion, (A) after the occurrence of a Default or an Event of Default, or (B) at any time that any of the other conditions precedent set forth in ARTICLE 8 have not been satisfied, to make Base Rate Loans to the Borrowers on behalf of the Lenders in an aggregate amount outstanding at any time not to exceed 5% of the Borrowing Base but not in excess of the Maximum Revolver Amount which the Agent, in its reasonable business judgment, deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, (2) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (3) to pay any other amount chargeable to the Borrowers pursuant to the terms of this Agreement, including costs, fees, and expenses as described in SECTION 13.7 (any of such advances are herein referred to as "AGENT ADVANCES"); provided, that the Majority Lenders may at any time revoke the Agent's authorization to make Agent Advances. Any such revocation must be in writing and shall become effective prospectively upon the Agent's receipt thereof. (ii) The Agent Advances shall be secured by the Agent's Liens in and to the Collateral and shall constitute Base Rate Loans and Obligations hereunder. 1.3 Letters of Credit. (a) Agreement to Issue or Cause To Issue. Subject to the terms and conditions of this Agreement, the Agent agrees (i) to cause the Letter of Credit Issuer to issue, and to amend or renew Letters of Credit previously issued by it in accordance with this SECTION 1.3, for the account of any Borrower one or more commercial/documentary and standby letters of credit (each a "LETTER OF CREDIT" and collectively, the "LETTERS OF CREDIT") and/or (ii) to provide credit support or other enhancement to a Letter of Credit Issuer acceptable to the Agent, which issues a Letter of Credit for the account of any Borrower (any such credit support or enhancement being herein referred to as a "CREDIT SUPPORT") from time to time during the term of this Agreement. (b) Amounts; Outside Expiration Date. The Agent shall not have any obligation to issue or cause to be issued any Letter of Credit or to provide Credit Support for any Letter of Credit at any time if: (i) the maximum face amount of the requested Letter of Credit is greater than the Unused Letter of Credit Subfacility at such time; (ii) the maximum undrawn amount of the requested Letter of Credit and all commissions, fees, and charges due from the Borrowers in connection with the opening thereof would exceed Availability at such time; or (iii) such Letter of Credit has an expiration date less than 30 days prior to the Stated Termination Date or more than twelve (12) months from the date of issuance for standby letters of credit and 180 days from the date of issuance for documentary letters of credit; provided that any Letter of Credit issued in connection with the IRB may have an expiration date of not later than the Termination Date. With respect to any Letter of Credit which contains any "evergreen" or automatic renewal provision, each Lender shall be deemed to have consented to any such extension or renewal unless any such Lender shall have provided to the Agent, written notice that it declines to consent to any such extension or renewal at least thirty (30) days prior to the date on which the Letter of Credit Issuer is entitled to decline to extend or renew the Letter of Credit. If all of the -4- requirements of this SECTION 1.3 are met and no Default or Event of Default has occurred and is continuing, no Lender shall decline to consent to any such extension or renewal. (c) Other Conditions. In addition to conditions precedent contained in ARTICLE 8, the obligation of the Agent to issue or to cause to be issued any Letter of Credit or to provide Credit Support for any Letter of Credit is subject to the following conditions precedent having been satisfied in a manner reasonably satisfactory to the Agent: (i) The Borrowers shall have delivered to the Letter of Credit Issuer, at such times and in such manner as such Letter of Credit Issuer may prescribe, an application in form and substance satisfactory to such Letter of Credit Issuer and reasonably satisfactory to the Agent for the issuance of the Letter of Credit and such other documents as may be required pursuant to the terms thereof, and the form, terms and purpose of the proposed Letter of Credit shall be reasonably satisfactory to the Agent and the Letter of Credit Issuer; and (ii) As of the date of issuance, no order of any court, arbitrator or Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that the proposed Letter of Credit Issuer refrain from, the issuance of letters of credit generally or the issuance of such Letters of Credit. (d) Issuance of Letters of Credit. (i) Request for Issuance. The Borrowers must notify the Agent of a requested Letter of Credit at least three (3) Business Days prior to the proposed issuance date. Such notice shall be irrevocable and must specify the original face amount of the Letter of Credit requested, the Business Day of issuance of such requested Letter of Credit, whether such Letter of Credit is standby, commercial, or documentary, whether such Letter of Credit may be drawn in a single or in partial draws, the Business Day on which the requested Letter of Credit is to expire, the purpose for which such Letter of Credit is to be issued, and the beneficiary of the requested Letter of Credit. The Borrowers shall attach to such notice the proposed form of the Letter of Credit. (ii) Responsibilities of the Agent; Issuance. As of the Business Day immediately preceding the requested issuance date of the Letter of Credit, the Agent shall determine the amount of the applicable Unused Letter of Credit Subfacility and Availability. If (A) the face amount of the requested Letter of Credit is less than the Unused Letter of Credit Subfacility and (B) the amount of such requested Letter of Credit and all commissions, fees, and charges due from the Borrowers in connection with the opening thereof would not exceed Availability, the Agent shall cause the Letter of Credit Issuer to issue the requested Letter of Credit on the requested issuance date so long as the other conditions hereof are met. (iii)No Extensions or Amendment. The Agent shall not be obligated to cause the Letter of Credit Issuer to extend or amend any Letter of Credit issued pursuant hereto unless the requirements of this SECTION 1.3 are met as though a new Letter of Credit were being requested and issued. (e) Payments Pursuant to Letters of Credit. The Borrowers joint and severally agree to reimburse immediately the Letter of Credit Issuer for any draw under any Letter of Credit and the Agent for the account of the Lenders upon any payment pursuant to any Credit Support, and to pay the -5- Letter of Credit Issuer the amount of all other charges and fees payable to the Letter of Credit Issuer in connection with any Letter of Credit immediately when due, irrespective of any claim, setoff, defense or other right which any Borrower may have at any time against the Letter of Credit Issuer or any other Person. Each drawing under any Letter of Credit shall constitute a request by the Borrowers to the Agent for a Borrowing of a Base Rate Loan in the amount of such drawing. The Funding Date with respect to such Borrowing shall be the date of such drawing. (f) Indemnification; Exoneration; Power of Attorney. (i) Indemnification. In addition to amounts payable as elsewhere provided in this SECTION 1.3, the Borrowers joint and severally agree to protect, indemnify, pay, and save the Lenders and the Agent harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees) which any Lender or the Agent (other than a Lender in its capacity as a Letter of Credit Issuer) may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit or the provision of any Credit Support or enhancement in connection therewith. The Borrowers' obligations under this Section shall survive payment of all other Obligations. (ii) Assumption of Risk by the Borrower. As among the Borrowers, the Lenders, and the Agent, the Borrowers joint and severally assume all risks of the acts and omissions of, or misuse of any of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Lenders and the Agent shall not be responsible for and the Borrowers shall not be relieved of any of their obligations hereunder on account of: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any Person in connection with the application for and issuance of and presentation of drafts with respect to any of the Letters of Credit, even if it should prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (C) the failure of the beneficiary of any Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (D) errors, omissions, interruptions, or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof; (G) the misapplication by the beneficiary of any Letter of Credit of the proceeds of any drawing under such Letter of Credit; (H) any consequences arising from causes beyond the control of the Lenders or the Agent, including any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority or (I) the Letter of Credit Issuer's honor of a draw for which the draw or any certificate fails to comply in any respect with the terms of the Letter of Credit. None of the foregoing shall affect, impair or prevent the vesting of any rights or powers of the Agent or any Lender under this SECTION 1.3(F). Nothing set forth herein shall prevent Borrowers, following reimbursement in respect of any Letter of Credit, from asserting claims against the Letter of Credit Issuer for any honor of any Letter of Credit constituting gross negligence or willful misconduct. (iii)Exoneration. Without limiting the foregoing, no action or omission whatsoever by the Agent or any Lender (excluding any Lender in its capacity as a Letter of Credit Issuer) shall result in any liability of the Agent or any Lender to any Borrower, or relieve any Borrower of any of its obligations hereunder to any such Person. (iv) Rights Against Letter of Credit Issuer. Nothing contained in this Agreement is intended to limit the Borrowers' rights, if any, with respect to the Letter of Credit Issuer, -6- which arise as a result of the letter of credit application and related documents executed by and between the Borrowers and the Letter of Credit Issuer. (v) Account Party. The Borrowers hereby authorize and direct any Letter of Credit Issuer to name any Borrower as the "ACCOUNT PARTY" therein and to deliver to the Agent all instruments, documents, and other writings and property received by the Letter of Credit Issuer pursuant to the Letter of Credit, and to accept and rely upon the Agent's instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the application therefor. (g) Supporting Letter of Credit; Cash Collateral. If, notwithstanding the provisions of SECTION 1.3(B) and SECTION 10.1, any Letter of Credit or Credit Support is outstanding upon the termination of this Agreement, then upon such termination the Borrowers shall deposit with the Agent, for the ratable benefit of the Agent and the Lenders, with respect to each Letter of Credit or Credit Support then outstanding, a standby letter of credit (a "SUPPORTING LETTER OF CREDIT") in form and substance satisfactory to the Agent, issued by an issuer satisfactory to the Agent in an amount equal to the greatest amount for which such Letter of Credit or such Credit Support may be drawn plus any fees and expenses associated with such Letter of Credit or such Credit Support, under which Supporting Letter of Credit the Agent is entitled to draw amounts necessary to reimburse the Agent and the Lenders for payments to be made by the Agent and the Lenders under such Letter of Credit or Credit Support and any fees and expenses associated with such Letter of Credit or Credit Support. Such Supporting Letter of Credit shall be held by the Agent, for the ratable benefit of the Agent and the Lenders, as security for, and to provide for the payment of, the aggregate undrawn amount of such Letters of Credit or such Credit Support remaining outstanding. 1.4 Bank Products. The Borrowers may request and the Agent may, in its sole and absolute discretion, arrange for the Borrowers to obtain from the Bank or the Bank's Affiliates, Bank Products, although the Borrowers are not required to do so. If Bank Products are provided by an Affiliate of the Bank, the Borrowers agree to indemnify and hold the Agent, the Bank, and the Lenders harmless from any and all costs and obligations now or hereafter incurred by the Agent, the Bank, or any of the Lenders which arise from any indemnity given by the Agent to its Affiliates related to such Bank Products; provided, however, nothing contained herein is intended to limit any Borrower's rights, with respect to the Bank or its Affiliates, if any, which arise as a result of the execution of documents by and between any Borrower and the Bank or its Affiliates, as the case may be, which relate to Bank Products or the provision of the Bank Products pursuant thereto. The agreement contained in this Section shall survive termination of this Agreement. Each Borrower acknowledges and agrees that the obtaining of Bank Products from the Bank or the Bank's Affiliates (a) is in the sole and absolute discretion of the Bank or the Bank's Affiliates, and (b) is subject to all rules and regulations of the Bank or the Bank's Affiliates. ARTICLE 2 INTEREST AND FEES 2.1 Interest. (a) Interest Rates. All outstanding Obligations shall bear interest on the unpaid principal amount thereof (including, to the extent permitted by law, on interest thereon not paid when due) from the date made until paid in full in cash at a rate determined by reference to the Base Rate or the LIBOR Rate plus the Applicable Margin as set forth below, but not to exceed the Maximum Rate. If at any time Loans are outstanding with respect to which the Borrowers have not delivered to the Agent a notice specifying the basis for determining the interest rate applicable thereto in accordance herewith, those Loans shall bear interest at a rate determined by reference to the Base Rate (unless the Default Rate -7- has been effected by the Agent and the Required Lenders pursuant to SECTION 2.1(B)) until notice to the contrary has been given to the Agent in accordance with this Agreement and such notice has become effective. Except as otherwise provided herein, the outstanding Obligations shall bear interest as follows: (i) For all Base Rate Loans and other Obligations (other than LIBOR Rate Loans) at a fluctuating per annum rate equal to the Base Rate plus the Applicable Margin; and (ii) For all LIBOR Rate Loans at a per annum rate equal to the LIBOR Rate plus the Applicable Margin. Each change in the Base Rate shall be reflected in the interest rate applicable to Base Rate Loans as of the effective date of such change. All interest charges shall be computed on the basis of a year of 360 days and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). The Borrowers shall pay to the Agent, for the ratable benefit of Lenders, interest accrued on all Base Rate Loans in arrears on the first day of each month hereafter and on the Termination Date. The Borrowers shall pay to the Agent, for the ratable benefit of Lenders, interest on all LIBOR Rate Loans in arrears on each LIBOR Interest Payment Date. (b) Default Rate. If any Event of Default occurs and is continuing and the Agent or the Required Lenders in their discretion so elect, then, while any such Event of Default is continuing, all of the Obligations shall bear interest at the Default Rate applicable thereto. 2.2 Continuation and Conversion Elections. (a) The Borrowers may: (i) elect, as of any Business Day, in the case of Base Rate Loans, to convert any Base Rate Loans (or any part thereof in an amount not less than $5,000,000, or that is in an integral multiple of $1,000,000 in excess thereof) into LIBOR Rate Loans; or (ii) elect, as of the last day of the applicable Interest Period, to continue any LIBOR Rate Loans having Interest Periods expiring on such day (or any part thereof in an amount not less than $1,000,000, or that is in an integral multiple of $1,000,000 in excess thereof); provided, that if at any time the aggregate amount of LIBOR Rate Loans in respect of any Borrowing is reduced, by payment, prepayment, or conversion of part thereof to be less than $1,000,000, such LIBOR Rate Loans shall automatically convert into Base Rate Loans; provided further that if the notice shall fail to specify the duration of the Interest Period, such Interest Period shall be one month. (b) Westlake, on its behalf and as agent for the other Borrowers, shall deliver a notice of continuation/conversion ("NOTICE OF CONTINUATION/CONVERSION") to the Agent not later than 12:00 noon (Houston, Texas time) at least three (3) Business Days in advance of the Continuation/Conversion Date, if the Loans are to be converted into or continued as LIBOR Rate Loans and specifying: (i) the proposed Continuation/Conversion Date; (ii) the aggregate amount of Loans to be converted or renewed; -8- (iii) the type of Loans resulting from the proposed conversion or continuation; and (iv) the duration of the requested Interest Period, provided, however, the Borrowers may not select an Interest Period that ends after the Stated Termination Date. (c) If upon the expiration of any Interest Period applicable to LIBOR Rate Loans, the Borrowers has failed to select timely a new Interest Period to be applicable to LIBOR Rate Loans or if any Default or Event of Default then exists, the Borrowers shall be deemed to have elected to convert such LIBOR Rate Loans into Base Rate Loans effective as of the expiration date of such Interest Period. (d) The Agent will promptly notify each Lender of its receipt of a Notice of Continuation/Conversion. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of the Loans with respect to which the notice was given held by each Lender. (e) There may not be more than twelve (12) different LIBOR Rate Loans in effect hereunder at any time. 2.3 Maximum Interest Rate. In no event shall any interest rate provided for hereunder (including any fees or other fees or other compensation which are deemed or determined to be interest) exceed the maximum rate legally chargeable by any Lender under applicable law for such Lender with respect to loans of the type provided for hereunder (the "MAXIMUM RATE"). If, for any period, any interest, absent such limitation, would have exceeded the Maximum Rate, then the interest rate for that period shall be the Maximum Rate, and, if in future periods, that interest rate would otherwise be less than the Maximum Rate, then that interest rate shall remain at the Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the same had not been limited by the Maximum Rate. In the event that, upon payment in full of the Obligations, the total amount of interest paid or accrued under the terms of this Agreement is less than the total amount of interest which would, but for this SECTION 2.3, have been paid or accrued if the interest rate otherwise set forth in this Agreement had at all times been in effect, then the Borrowers shall, to the extent permitted by applicable law, pay the Agent, for the account of the Lenders, an amount equal to the excess of (a) the lesser of (i) the amount of interest which would have been charged if the Maximum Rate had, at all times, been in effect or (ii) the amount of interest which would have accrued had the interest rate otherwise set forth in this Agreement, at all times, been in effect over (b) the amount of interest actually paid or accrued under this Agreement. If a court of competent jurisdiction determines that the Agent and/or any Lender has received interest and other charges hereunder in excess of the Maximum Rate, such excess shall be deemed received on account of, and shall automatically be applied to reduce, the Obligations other than interest, in the inverse order of maturity, and if there are no Obligations outstanding, the Agent and/or such Lender shall refund to the Borrowers such excess. 2.4 Closing Fee. Borrowers shall pay the Agent for its account the fees described in the Fee Letter (the "CLOSING FEE"). 2.5 Unused Line Fee. On the first day of each month hereafter and on the Termination Date, the Borrowers agree to pay to the Agent, for the account of the Lenders, in accordance with their respective Pro Rata Shares, an unused line fee (the "UNUSED LINE FEE") equal to the Applicable Margin for the Unused Line Fee times the amount by which the Maximum Revolver Amount exceeded the sum of the average daily outstanding principal amount of Revolving Loans and the average daily undrawn face amount of outstanding Letters of Credit, during the immediately preceding month or shorter period if -9- calculated for the first month hereafter or on the Termination Date. The Unused Line Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed. All principal payments received by the Agent shall be deemed to be credited to the Borrowers' Loan Account immediately upon receipt for purposes of calculating the Unused Line Fee pursuant to this SECTION 2.5. 2.6 Letter of Credit Fee. The Borrowers agree to pay (a) to the Agent, for the account of the Lenders, in accordance with their respective Pro Rata Shares, for each Letter of Credit, a per annum fee (the "LETTER OF CREDIT Fee") equal to the Applicable Margin for LIBOR Rate Loans multiplied by the stated amount of each Letter of Credit, (b) on the date of issuance of any Letter of Credit, to the Agent for the benefit of the Letter of Credit Issuer, a fronting fee of one-quarter of one percent (0.25%) per annum of the undrawn face amount of each Letter of Credit, and (c) on the date of issuance of any Letter of Credit, to the Letter of Credit Issuer, all out-of-pocket costs, fees and expenses incurred by the Letter of Credit Issuer in connection with the application for, processing of, issuance of, or amendment to any Letter of Credit. The Letter of Credit Fee shall be payable monthly in arrears on the first day of each month following any month in which a Letter of Credit is outstanding and on the Termination Date. The Letter of Credit Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed. ARTICLE 3 PAYMENTS AND PREPAYMENTS 3.1 Revolving Loans. The Borrowers shall repay the outstanding principal balance of the Revolving Loans, plus all accrued but unpaid interest thereon, on the Termination Date. The Borrowers may prepay Revolving Loans at any time, and reborrow subject to the terms of this Agreement. In addition, and without limiting the generality of the foregoing, upon demand, the Borrowers shall pay to the Agent, for account of the Lenders, the amount, without duplication, by which the Aggregate Revolver Outstandings exceeds the lesser of the Borrowing Base or the Maximum Revolver Amount. 3.2 Full or Partial Termination of Facility. (a) Termination of Facility. The Borrowers may terminate this Agreement upon at least thirty (30) days' notice to the Agent and the Lenders, upon (a) the payment in full of all outstanding Revolving Loans, together with accrued interest thereon, and all fees payable under SECTION 2.5, and the cancellation and return of all outstanding Letters of Credit (or, in the alternative, with respect to Letters of Credit, providing (i) cash collateral for all remaining Letters of Credit in an amount equal to 110% of the aggregate face amounts of such Letters of Credit or (ii) a back-up letter of credit for each such Letter of Credit in form and substance and from an issuer acceptable to the Agent in its sole discretion), (b) the payment of the early termination fee set forth below, (c) the payment in full in cash of all reimbursable expenses and other Obligations, and (d) with respect to any LIBOR Rate Loans prepaid, payment of the amounts due under SECTION 4.4, if any. (b) Partial Reduction of Facility. On and after August 1, 2004, the Borrowers may permanently reduce the Maximum Revolver Amount in increments of $25,000,000 but in no event shall the Maximum Revolver Amount be less than $100,000,000 (the amount of such reduction, the "PARTIAL TERMINATION AMOUNT") upon at least thirty (30) days' notice to the Agent and the Lenders, upon (a) the payment in full of any Revolving Loans, together with accrued interest thereon, to the extent such Revolving Loans exceed the Maximum Revolver Amount (after giving effect to such reduction) and (b) the payment of the early termination fee set forth below in respect of the Partial Termination Amount, regardless of whether the Partial Termination Amount is outstanding on the date of the partial reduction. Once -10- reduced in accordance with this SECTION 3.2(B), the Maximum Revolver Amount may not be increased. (c) Early Termination Fee. If this Agreement is terminated or the Maximum Revolver Amount is permanently reduced at any time prior to the Stated Termination Date, whether pursuant to this Section or pursuant to SECTION 9.2, the Borrowers shall pay to the Agent, in addition to other amounts payable hereunder, for the account of the Lenders, an early termination fee determined in accordance with the following table:
PERIOD DURING WHICH EARLY TERMINATION EARLY TERMINATION OCCURS FEE ------------------------ --------------------------------- On or prior to the first 1.0% of the Maximum Revolver Anniversary Date Amount or the Partial Termination Amount, as applicable After the first Anniversary 0.5% of the Maximum Revolver Date but on or prior to the Amount or the Partial Termination second Anniversary Date Amount, as applicable After the second Anniversary 0% of the Maximum Revolver Amount Date or the Partial Termination Amount, as applicable
Notwithstanding the foregoing, payment of the early termination fee shall not be required in the event the Borrowers refinance the Total Facility with a credit facility arranged by the Bank. 3.3 Prepayments of the Loans. (a) Immediately upon receipt by any Loan Party of proceeds of any Equity Issuance, the Borrowers shall prepay the Loans (without a reduction of the Maximum Revolver Amount) in an amount equal to 100% of all such proceeds to the extent any such proceeds are not paid to redeem the Bond Debt or prepay the Fixed Asset Loan, net of (i) commissions and other reasonable and customary transaction costs, fees, and expenses properly attributable to such transaction and payable by such Loan Party in connection therewith (in each case, paid to non-Affiliates), (ii) transfer taxes, and (iii) an appropriate reserve for taxes in accordance with GAAP in connection therewith. (b) To the extent set forth in this SECTION 3.3(B), immediately upon receipt by any Loan Party of proceeds from the sale of any Collateral (other than sales of Inventory in the ordinary course of business and any Term Priority Collateral to the extent such proceeds are applied to repay the Fixed Asset Loan or are used to acquire replacement assets as permitted by the Fixed Asset Loan) the Borrowers shall prepay the Loans in an amount equal to 100% of all such proceeds, net of (i) commissions and other reasonable and customary transaction costs, fees, and expenses properly attributable to such transaction and payable by such Loan Party in connection therewith (in each case, paid to non-Affiliates), (ii) transfer taxes, and (iii) appropriate amounts required to be reserved (in accordance with GAAP) for post-closing adjustments by any Loan Party in connection with such transaction, against any liabilities retained by any Loan Party after such transaction, which liabilities are associated with the asset or assets sold ("NET SALE PROCEEDS"). No payment from the Net Sale Proceeds shall be required hereunder to the extent Availability exceeds the amount of Revolving Loans outstanding on such date of determination. In addition, 100% of the Net Sale Proceeds shall be deducted from the -11- calculation of the Borrowing Base, but such reduction shall not be deemed to be a permanent reduction of the Maximum Revolver Amount. (c) Prepayments from the proceeds of all Equity Issuances and dispositions of Collateral in accordance with SECTIONS 3.3(A) and 3.3(B), respectively, shall be applied as follows: first, to accrued interest with respect to the Revolving Loans, second, to pay the principal of the Revolving Loans, and third to cash collateralize outstanding Letters of Credit. 3.4 LIBOR Rate Loan Prepayments. In connection with any prepayment, if any LIBOR Rate Loans are prepaid prior to the expiration date of the Interest Period applicable thereto, the Borrowers shall pay to the Lenders the amounts described in SECTION 4.4. 3.5 Payments by the Borrowers. (a) All payments to be made by the Borrowers shall be made without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein, all payments by the Borrowers shall be made to the Agent for the account of the Lenders, at the account designated by the Agent and shall be made in Dollars and in immediately available funds, no later than 12:00 noon (Houston, Texas time) on the date specified herein. Any payment received by the Agent after such time shall be deemed (for purposes of calculating interest only) to have been received on the following Business Day and any applicable interest shall continue to accrue. (b) Subject to the provisions set forth in the definition of "Interest Period", whenever any payment is due on a day other than a Business Day, such payment shall be due on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. 3.6 Payments as Revolving Loans. At the election of Agent, all payments of principal, interest, reimbursement obligations in connection with Letters of Credit and Credit Support for Letters of Credit, fees, premiums, reimbursable expenses and other sums payable hereunder, may be paid from the proceeds of Revolving Loans made hereunder. The Borrowers hereby irrevocably authorize the Agent to charge the Loan Account for the purpose of paying all amounts from time to time due hereunder (without regard to any grace periods hereunder, including, without limitation, Loans that constitute Agent Advances) and agrees that all such amounts charged shall constitute Revolving Loans (including Non-Ratable Loans and Agent Advances). 3.7 Apportionment, Application and Reversal of Payments. Principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Loans to which such payments relate held by each Lender) and payments of the fees shall, as applicable, be apportioned ratably among the Lenders, except for fees payable solely to Agent and the Letter of Credit Issuer and except as provided in SECTION 11.1(B). All payments shall be remitted to the Agent and all such payments not relating to principal or interest of specific Loans, or not constituting payment of specific fees, and all proceeds of Accounts or other Collateral received by the Agent, shall be applied, ratably, subject to the provisions of this Agreement, first, to pay any fees, indemnities, or expense reimbursements then due to the Agent from the Borrower; second, to pay any fees or expense reimbursements then due to the Lenders from the Borrower; third, to pay interest due in respect of all Loans, including Non-Ratable Loans and Agent Advances; fourth, to pay or prepay principal of the Non-Ratable Loans and Agent Advances; fifth, to pay or prepay principal of the Revolving Loans (other than Non-Ratable Loans and Agent Advances) and unpaid reimbursement obligations in respect of Letters of Credit; sixth, to pay an amount to Agent equal to all outstanding Letter of Credit Obligations to be held as cash collateral for such Obligations; and seventh, to the payment of any other Obligations including any -12- amounts relating to Bank Products due to the Agent or any Lender by the Borrower. Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Borrowers, or unless an Event of Default has occurred and is continuing, neither the Agent nor any Lender shall apply any payments which it receives to any LIBOR Rate Loan, except (a) on the expiration date of the Interest Period applicable to any such LIBOR Rate Loan, or (b) in the event, and only to the extent, that there are no outstanding Base Rate Loans and, in any event, the Borrowers shall pay LIBOR breakage losses in accordance with SECTION 4.4. To the extent not inconsistent with the express terms of this Agreement, the Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Obligations. 3.8 Indemnity for Returned Payments. If after receipt of any payment which is applied to the payment of all or any part of the Obligations, the Agent, any Lender, the Bank or any Affiliate of the Bank is for any reason compelled to surrender such payment or proceeds to any Person because such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other reason, then the Obligations or part thereof intended to be satisfied shall be revived and continued and this Agreement shall continue in full force as if such payment or proceeds had not been received by the Agent or such Lender and the Borrowers shall be liable to pay to the Agent and the Lenders, and hereby does indemnify the Agent and the Lenders and hold the Agent and the Lenders harmless for the amount of such payment or proceeds surrendered. The provisions of this SECTION 3.8 shall be and remain effective notwithstanding any contrary action which may have been taken by the Agent or any Lender in reliance upon such payment or application of proceeds, and any such contrary action so taken shall be without prejudice to the Agent's and the Lenders' rights under this Agreement and shall be deemed to have been conditioned upon such payment or application of proceeds having become final and irrevocable. The provisions of this SECTION 3.8 shall survive the termination of this Agreement. 3.9 Agent's and Lenders' Books and Records; Monthly Statements. The Agent shall record the principal amount of the Loans owing to each Lender, the undrawn face amount of all outstanding Letters of Credit and the aggregate amount of unpaid reimbursement obligations outstanding with respect to the Letters of Credit from time to time on its books. In addition, each Lender may note the date and amount of each payment or prepayment of principal of such Lender's Loans in its books and records. Failure by the Agent or any Lender to make such notation shall not affect the obligations of the Borrowers with respect to the Loans or the Letters of Credit. Each Borrower agrees that the Agent's and each Lender's books and records showing the Obligations and the transactions pursuant to this Agreement and the other Loan Documents shall be admissible in any action or proceeding arising therefrom, and shall constitute rebuttably presumptive proof thereof, absent manifest error, irrespective of whether any Obligation is also evidenced by a promissory note or other instrument. The Agent will provide to the Borrowers a monthly statement of Loans, payments, and other transactions pursuant to this Agreement. Such statement shall be deemed correct, accurate, and binding on the Borrowers and an account stated (except for reversals and reapplications of payments made as provided in SECTION 3.7 and corrections of errors discovered by the Agent), unless the Borrowers notify the Agent in writing to the contrary within thirty (30) days after such statement is received. In the event a timely written notice of objections is given by the Borrowers, only the items to which exception is expressly made will be considered to be disputed by the Borrowers. -13- ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY 4.1 Taxes. (a) Any and all payments by any Borrower to each Lender or the Agent under this Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding, for any Taxes. In addition, the Borrowers shall pay all Other Taxes. (b) Subject to SECTION 12.10, each Borrower agrees to indemnify and hold harmless each Lender and the Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this SECTION 4.1) paid by any Lender or the Agent and any liability (including penalties, interest, additions to tax, and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days after the date such Lender or the Agent makes written demand therefor. (c) If any Borrower shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum payable hereunder to any Lender or the Agent, then: (i) the sum payable shall be increased as necessary so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section) such Lender or the Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions or withholdings been made; (ii) such Borrower shall make such deductions and withholdings; (iii) such Borrower shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law; and (iv) such Borrower shall also pay to each Lender or the Agent for the account of such Lender, at the time interest is paid, all additional amounts which the respective Lender specifies as necessary to preserve the after-tax yield such Lender would have received if such Taxes or Other Taxes had not been imposed. (d) At the Agent's request, within 30 days after the date of any payment by any Borrower of Taxes or Other Taxes, such Borrower shall furnish the Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Agent. (e) If any Borrower is required to pay additional amounts to any Lender or the Agent pursuant to SUBSECTION (C) of this SECTION 4.1, then such Lender shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its lending office so as to eliminate any such additional payment by such Borrower which may thereafter accrue, if such change in the judgment of such Lender is not otherwise disadvantageous to such Lender. 4.2 Illegality. (a) If any Lender determines that the introduction of any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Lender or its applicable lending office to make LIBOR Rate Loans, then, on notice thereof by that Lender to the Borrowers through the Agent together with an explanation of the -14- circumstances, any obligation of that Lender to make LIBOR Rate Loans shall be suspended until that Lender notifies the Agent and the Borrowers that the circumstances giving rise to such determination no longer exist. (b) If a Lender determines that it is unlawful to maintain any LIBOR Rate Loan, the Borrowers shall, upon its receipt of notice of such fact and demand from such Lender (with a copy to the Agent), prepay in full such LIBOR Rate Loans of that Lender then outstanding, together with interest accrued thereon and amounts required under SECTION 4.4, either on the last day of the Interest Period thereof, if that Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or immediately, if that Lender may not lawfully continue to maintain such LIBOR Rate Loans and if applicable convert to Base Rate Loans. If the Borrowers are required to so prepay any LIBOR Rate Loans, then concurrently with such prepayment, the Borrowers shall borrow from the affected Lender, in the amount of such prepayment, a Base Rate Loan. 4.3 Increased Costs and Reduction of Return. (a) If any Lender determines that due to either (i) the introduction of or any change in the interpretation of any law or regulation after the date hereof or (ii) the compliance by that Lender with any guideline or request from any central bank or other Governmental Authority after the date hereof (whether or not having the force of law), there shall be any increase in the cost to such Lender as a consequence of such Lender's obligations hereunder of agreeing to make or making, funding, or maintaining any LIBOR Rate Loans, then the Borrowers shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be sent to the Agent), pay to the Agent for the account of such Lender, additional amounts as are sufficient to compensate such Lender for such increased costs. (b) If any Lender shall have determined that the introduction after the date hereof of (i) any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by such Lender or any corporation or other entity controlling such Lender with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation or other entity controlling such Lender and (taking into consideration such Lender's or such corporation's or other entity's policies with respect to capital adequacy and such Lender's desired return on capital) determines that the amount of such capital is increased as a consequence of its Commitment, loans, credits, or obligations under this Agreement, then, upon demand of such Lender to the Borrowers through the Agent, the Borrowers shall pay to such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender for such increase. 4.4 Funding Losses. The Borrowers shall reimburse each Lender and hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of: (a) the failure of the Borrowers to make on a timely basis any payment of principal of any LIBOR Rate Loan; (b) the failure of the Borrowers to borrow, continue, or convert a Loan after the Borrowers have given (or is deemed to have given) a Notice of Borrowing or a Notice of Continuation/Conversion; or (c) the prepayment or other payment (including after acceleration thereof) of any LIBOR Rate Loans on a day that is not the last day of the relevant Interest Period; -15- (excluding any such loss of anticipated profit) including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its LIBOR Rate Loans or from fees payable to terminate the deposits from which such funds were obtained. The Borrowers shall also pay any customary administrative fees charged by any Lender in connection with the foregoing. For purposes of calculating amounts payable by the Borrower to the Lenders under this SECTION 4.4, each Lender shall be deemed to have funded each LIBOR Rate Loan made by it at the LIBOR Rate for such Loan by a matching deposit or other borrowing in the applicable London interbank Eurodollar market for a comparable amount and for a comparable period, whether or not such LIBOR Rate Loan was in fact so funded. 4.5 Inability to Determine Rates. If the Agent determines that for any reason adequate and reasonable means do not exist for determining the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Loan on the basis provided for in the definition of LIBOR Rate, or that the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders of funding such Loan, the Agent will promptly so notify the Borrowers and each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate Loans hereunder shall be suspended until the Agent revokes such notice in writing. Upon receipt of such notice, the Borrowers may revoke any Notice of Borrowing or Notice of Continuation/Conversion then submitted by them. If the Borrowers do not revoke such Notice, the Lenders shall make, convert or continue the Loans, as proposed by the Borrowers, in the amount specified in the applicable notice submitted by the Borrowers, but such Loans shall be made, converted, or continued as Base Rate Loans instead of LIBOR Rate Loans. 4.6 Certificates of the Agent. If any Lender claims reimbursement or compensation under this ARTICLE 4, Agent shall determine the amount thereof and shall deliver to the Borrowers (with a copy to the affected Lender) a certificate setting forth in reasonable detail the amount payable to the affected Lender, and such certificate shall be conclusive and binding on the Borrowers in the absence of manifest error. 4.7 Survival. The agreements and obligations of the Borrowers in this ARTICLE 4 shall survive the payment of all other Obligations. ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES 5.1 Books and Records. The Borrowers shall maintain, at all times, correct and complete books, records and accounts in which complete, correct and timely entries are made of their respective transactions in accordance with GAAP applied consistently with the audited Financial Statements required to be delivered pursuant to SECTION 5.2(A). The Borrowers shall, by means of appropriate entries, reflect in such accounts and in all Financial Statements proper liabilities and reserves for all taxes and proper provision for depreciation and amortization of property and bad debts, all in accordance with GAAP. The Borrowers shall maintain at all times books and records pertaining to the Collateral in such detail, form and scope as the Agent or any Lender shall reasonably require, including, but not limited to, records of (a) all payments received and all credits and extensions granted with respect to the Accounts; (b) the return, rejection, repossession, stoppage in transit, loss, damage, or destruction of any Inventory; and (c) all other dealings affecting the Collateral. 5.2 Financial Information. The Borrowers shall promptly furnish to the Agent, all such financial information regarding the Loan Parties as the Agent shall reasonably request. Without limiting the foregoing, the Borrowers will furnish to the Agent, in such detail as the Agent or the Lenders shall request in their reasonable discretion, the following: -16- (a) As soon as available, but in any event not later than the earlier of (i) the filing thereof with the Securities and Exchange Commission ("SEC"), and (ii) ninety (90) days after the close of each Fiscal Year, consolidated audited and consolidating unaudited balance sheets, and income statements, cash flow statements and changes in stockholders' equity for Westlake and its Subsidiaries for such Fiscal Year, and the accompanying notes thereto, setting forth in each case in comparative form figures for the previous Fiscal Year, all in reasonable detail, fairly presenting the financial position and the results of operations of Westlake and its Subsidiaries as at the date thereof and for the Fiscal Year then ended, and prepared in accordance with GAAP. Such statements shall be examined in accordance with generally accepted auditing standards by and, in the case of such statements performed on a consolidated basis, accompanied by a report of independent certified public accountants selected by the Borrowers and reasonably satisfactory to the Agent, which is not qualified with respect to scope limitations imposed by any Loan Party, with respect to accounting principles followed by any Loan Party not in accordance with GAAP, or with respect to a "going concern" or similar nature. Westlake, simultaneously with retaining such independent public accountants to conduct such annual audit, shall send a letter to such accountants, with a copy to the Agent and the Lenders, notifying such accountants that one of the primary purposes for retaining such accountants' services and having audited financial statements prepared by them is for use by the Agent and the Lenders. The Borrowers hereby authorize the Agent to communicate directly with its certified public accountants and, by this provision, authorizes those accountants to disclose to the Agent any and all financial statements and other supporting financial documents and schedules relating to the Borrowers and to discuss directly with the Agent the finances and affairs of the Loan Parties. (b) As soon as available, but in any event not later than the earlier of: (i) the filing thereof with the SEC, and (ii) forty-five (45) days after the last day of the first three fiscal quarters of each Fiscal Year, consolidated and consolidating unaudited balance sheets and income statements, and consolidated cash flow statements and changes in stockholders' equity, for Westlake and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then-current fiscal year to, such last day. The Borrowers shall certify by a certificate signed by a Responsible Officer of Westlake that all such statements have been prepared in accordance with GAAP and present fairly the financial position for the Loan Parties as at the dates thereof and its results of operations for the periods then ended, subject to normal year-end adjustments and the absence of applicable footnotes. (c) As soon as available, but in any event not later than thirty (30) days after the end of each month other than March, June, September, or December (and, as soon as available, but in any event not later than forty-five (45) days after the end of each March, June, September, and December, and without duplication of the Financial Statements required by SECTION 5.2(B)), consolidated unaudited balance sheets of Westlake and its Subsidiaries as at the end of such month, and consolidated unaudited income statements and cash flow statements for Westlake and its Subsidiaries for such month and for the period from the beginning of the Fiscal Year to the end of such month, all in reasonable detail, fairly presenting the financial position and results of operations of Westlake and its Subsidiaries as at the date thereof and for such periods, and prepared in accordance with GAAP (except for the inclusion of necessary footnotes) applied consistently with the audited Financial Statements required to be delivered pursuant to SECTION 5.2(A), together with a schedule setting forth in reasonable detail the calculation of the Fixed Charge Coverage Ratio for the immediately preceding twelve (12) month period. The Borrowers shall certify by a certificate signed by a Responsible Officer of Westlake that all such statements have been prepared in accordance with GAAP and present fairly the financial position for the Loan Parties as at the dates thereof and its results of operations for the periods then ended, subject to normal year-end adjustments and the absence of applicable footnotes. (d) With each of the audited Financial Statements delivered pursuant to SECTION 5.2(A), a certificate of the independent certified public accountants that examined such statement -17- to the effect that they have reviewed and are familiar with this Agreement and that, in examining such Financial Statements, they did not become aware of any fact or condition which then constituted a Default or Event of Default with respect to a financial covenant, except for those, if any, described in reasonable detail in such certificate. (e) Within thirty (30) days after the end of each month, other than March, June, September, or December, in each case on the date the reports described in SECTION 5.2(C) above, a Compliance Certificate in the form of EXHIBIT G from a Responsible Officer on behalf of the Loan Parties stating that, among other things, except as explained in reasonable detail in such certificate, (i) all of the representations and warranties of the Loan Parties contained in this Agreement and the other Loan Documents are correct and complete in all material respects as at the date of such certificate as if made at such time, except for those that speak as of a particular date, (ii) the Loan Parties are, at the date of such certificate, in compliance in all material respects with all of its respective covenants and agreements in this Agreement and the other Loan Documents, and (iii) no Default or Event of Default then exists or existed during the period covered by the Financial Statements and at the end of such period and if the Loan Parties are required to comply with the covenant in SECTION 7.21 during such period, including calculations (in reasonable detail) required to establish that the Loan Parties were in compliance with such covenant during such period. If such certificate discloses that a representation or warranty is not correct or complete, or that a covenant has not been complied with, or that a Default or Event of Default existed or exists, such certificate shall set forth what action the Borrowers have taken or propose to take with respect thereto. (f) Within thirty (30) days after the beginning of each Fiscal Year, annual forecasts (to include forecasted consolidated, as well as consolidating by business segment in accordance with Westlake's customary practices, balance sheets, income statements and cash flow statements) for Westlake and its Subsidiaries as at the end of and for each fiscal month of such Fiscal Year. (g) Intentionally omitted. (h) Promptly upon the filing thereof, copies of all reports, if any, to or other documents filed by any Loan Party with the Securities and Exchange Commission under the Exchange Act, and all reports, notices, or statements sent or received by any Loan Party to or from the holders of any of the Bond Debt or other Debt of any Loan Party registered under the Securities Act of 1933 or to or from the trustee under any indenture under which the same is issued, other than non-material disclosures. (i) As soon as available, but in any event not later than fifteen (15) days after any Borrower's receipt thereof, a copy of any management letters prepared for any Borrower by any independent certified public accountants of the Borrowers in connection with the audited Financial Statements of the Borrowers for any Fiscal Year. (j) Promptly after their preparation, copies of any and all proxy statements, financial statements, and reports which any Borrower makes available to its public shareholders, if any. (k) If requested by the Agent, promptly after filing with the IRS, a copy of each tax return filed by any Loan Party. (l) As soon as available, but in any event by the second Business Day of each week for the prior week ending on the last Business Day of such prior week; provided that not more than four (4) times in any fiscal year, the following may be delivered by the third Business Day of such week, in form and substance reasonably satisfactory to the Agent: (i) a schedule of each Loan Party's Accounts created, credit memoranda, and collections for the applicable week, together with a reconciliation of each -18- Loan Party's Accounts created, credit memos, collections and other adjustments to Accounts since the last such weekly reconciliation and a Borrowing Base Certificate; (ii) a summary of each credit memorandum in excess of $250,000; (iii) after the occurrence of the Account Triggering Date, an Inventory report; and (iv) with the delivery of each of the foregoing, a certificate executed by a Responsible Officer on behalf of all of the Loan Parties certifying as to the accuracy and completeness of the foregoing. (m) As soon as available, but in any event within fifteen (15) days after the end of each month or more frequently if requested by the Agent to determine Availability or otherwise, each in form and substance reasonably satisfactory to the Agent: (i) a reconciliation of each Loan Party's Accounts created, credit memoranda, collections and other adjustments to Accounts since the last such monthly reconciliation and a Borrowing Base Certificate; (ii) an aging of each Loan Party's Accounts together with a reconciliation to the previous calendar month end's accounts receivable balance of such Loan Party's Accounts and to its general ledger; (iii) an aging of each Loan Party's accounts payable; (iv) a detailed calculation of Eligible Accounts and Eligible Inventory; (v) upon the Agent's reasonable request, copies of invoices in connection with each Loan Party's Accounts, customer statements, credit memos, remittance advices and reports, deposit slips, and shipping and delivery documents in connection with each Loan Party's Accounts and for Inventory acquired by each Loan Party; (vi) an Inventory report; (vii) such other reports as to the Collateral as the Agent shall reasonably request from time to time; and (viii) with the delivery of each of the foregoing, a certificate executed by a Responsible Officer on behalf of all of the Loan Parties certifying as to the accuracy and completeness of the foregoing. If any of the Loan Parties' records or reports of the Collateral are prepared by an accounting service or other agent, each Loan Party hereby authorizes, and shall cause each Loan Party to authorize, such service or agent to deliver such records, reports, and related documents to the Agent for distribution to the Lenders. (n) Such additional information as the Agent and/or any Lender may from time to time reasonably request regarding the financial and business affairs of Westlake or any of its Subsidiaries. 5.3 Notices to the Lenders. The Borrowers shall notify the Agent and the Lenders in writing of the following matters at the following times: (a) Immediately after any Responsible Officer of any Loan Party becoming aware of any Default or Event of Default; (b) Immediately after any Responsible Officer of any Loan Party becoming aware of the assertion by the holder of any capital stock of any Loan Party or the holder of any Debt of any Loan Party in a face amount in excess of $5,000,000 that a default exists with respect thereto or that such Loan Party is not in compliance with the terms thereof, or the threat or commencement by such holder of any enforcement action because of such asserted default or non-compliance; (c) Immediately after any Responsible Officer of any Loan Party becoming aware of any event or circumstance which could reasonably be expected to have a Material Adverse Effect; (d) Immediately after any Responsible Officer of any Loan Party becoming aware of any pending or threatened action, suit, or proceeding, by any Person, or any pending or threatened investigation by a Governmental Authority, which could reasonably be expected to have a Material Adverse Effect; (e) Immediately after any Responsible Officer of any Loan Party becoming aware of any pending or threatened strike, work stoppage, unfair labor practice claim, or other labor -19- dispute affecting the any Loan Party in a manner which could reasonably be expected to have a Material Adverse Effect; (f) Immediately after any Responsible Officer of any Loan Party becoming aware of any violation of any law, statute, regulation, or ordinance of a Governmental Authority affecting any Loan Party which could reasonably be expected to have a Material Adverse Effect; (g) Immediately after receipt by a Responsible Officer of any Loan Party of any notice of any violation by any Loan Party of any Environmental Law which could reasonably be expected to have a Material Adverse Effect or that any Governmental Authority has asserted in writing that any Loan Party is not in compliance with any Environmental Law or is investigating any Loan Party's compliance therewith; (h) Immediately after receipt by any Responsible Officer of any Loan Party of any written notice that the any Loan Party is or may be liable to any Person as a result of the Release or threatened Release of any Contaminant or that any Loan Party is subject to investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to the Release or threatened Release of any Contaminant which, in either case, is reasonably likely to give rise to liability in excess of $7,500,000; (i) Immediately after receipt by a Responsible Officer of any Loan Party of any written notice of the imposition of any Environmental Lien against any property of any Loan Party securing an amount which could reasonably be expected to exceed $5,000,000; (j) Any change in any Loan Party's name as it appears in the state of its incorporation or other organization, state of incorporation or organization, type of entity, organizational identification number, locations of Collateral, or form of organization, trade names under which any Loan Party will sell Inventory or create Accounts, or to which instruments in payment of Accounts may be made payable, in each case at least thirty (30) days prior thereto; (k) Within ten (10) Business Days after any Loan Party or any ERISA Affiliate knows or has reason to know, that an ERISA Event, or a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code), which could reasonably be expected to result in liability to any Loan Party in excess of $5,000,000, has occurred, and, when known, any action taken or threatened by the IRS, the DOL, or the PBGC with respect thereto; (l) Upon request, or, in the event that such filing reflects a potentially adverse significant financial change with respect to the matters covered thereby, within ten (10) Business Days after the filing thereof with the PBGC, the DOL, or the IRS, as applicable, copies of the following: (i) each annual report (form 5500 series), including Schedule B thereto, filed with the PBGC, the DOL, or the IRS with respect to each Plan, (ii) a copy of each funding waiver request filed with the PBGC, the DOL, or the IRS with respect to any Plan and all communications received by any Loan Party or any ERISA Affiliate from the PBGC, the DOL, or the IRS with respect to such request, and (iii) a copy of each other filing or notice filed with the PBGC, the DOL, or the IRS, with respect to each Plan by either any Loan Party or any ERISA Affiliate; (m) Upon request, copies of each actuarial report for any Plan or Multi-employer Plan and annual report for any Multi-employer Plan; and within ten (10) Business Days after receipt thereof by any Loan Party or any ERISA Affiliate, copies of the following: (i) any notices of the PBGC's intention to terminate a Plan or to have a trustee appointed to administer such Plan; (ii) any unfavorable determination letter from the IRS regarding the qualification of a Plan under Section 401(a) of the Code; -20- or (iii) any notice from a Multi-employer Plan regarding the imposition of withdrawal liability to any Loan Party in excess of $5,000,000; (n) Within ten (10) Business Days after the occurrence of any failure by any Loan Party or any ERISA Affiliate to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; (o) Within ten (10) Business Days after any Responsible Officer of any Loan Party or any ERISA Affiliate knows or has reason to know that any of the following events has or will occur which could reasonably be expected to result in liability to any Loan Party in excess of $5,000,000: (i) a Multi-employer Plan has been or will be terminated; (ii) the administrator or plan sponsor of a Multi-employer Plan intends to terminate a Multi-employer Plan; or (iii) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan; or (p) Promptly after the Borrowers have notified the Agent of any intention by the Borrowers to treat the Loans and/or Letters of Credit and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form. Each notice given under this SECTION 5.3 shall describe the subject matter thereof in reasonable detail, and shall set forth the action that the Loan Party, its Subsidiary, or any ERISA Affiliate, as applicable, has taken or proposes to take with respect thereto. ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS Each Borrower (and each other Loan Party by executing an Obligation Guaranty, with respect to such Loan Party) warrants and represents to the Agent and the Lenders that except as hereafter disclosed to and accepted by the Agent and the Required Lenders in writing: 6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents. Each Loan Party has the power and authority to execute, deliver, and perform this Agreement and the other Loan Documents to which it is a party, to incur the Obligations, and to grant to the Agent's Liens upon and security interests in the Collateral. Each Loan Party has taken all necessary action (including obtaining approval of its stockholders if necessary) to authorize its execution, delivery, and performance of this Agreement and the other Loan Documents to which it is a party. This Agreement and the other Loan Documents to which it is a party have been duly executed and delivered by each Loan Party, and constitute the legal, valid, and binding obligations of each Loan Party, enforceable against each such Loan Party in accordance with their respective terms except as enforceability may be limited by the Federal Bankruptcy Code or by any other state or federal bankruptcy or insolvency act or law and general principles of equity. Each Loan Party's execution, delivery, and performance of this Agreement and the other Loan Documents to which it is a party do not and will not conflict with, or constitute a violation or breach of, or result in the imposition of any Lien (other than in favor of the Agent) upon the property of such Loan Party or any of its Subsidiaries, by reason of the terms of (a) any contract, mortgage, lease, material agreement, indenture, or instrument to which such Loan Party is a party or which is binding upon it, (b) any Requirement of Law applicable to such Loan Party or any of its Subsidiaries, or (c) the certificate or articles of incorporation or by-laws or the limited liability company or limited partnership agreement of such Loan Party or any of its Subsidiaries. 6.2 Validity and Priority of Security Interest. The provisions of this Agreement, the Collateral Documents, and the other Loan Documents create legal and valid Liens on all the Collateral in -21- favor of the Agent, for the ratable benefit of the Agent and the Lenders, and, upon the filing of all applicable financing statements against the Borrowers, such Liens shall constitute perfected and continuing Liens on all the Collateral, having priority over all other Liens on the Collateral, except for those Liens identified in CLAUSES (C), (D), and (E) of the definition of Permitted Liens securing all the Obligations, and enforceable against each Loan Party and all third parties and except as provided under the Intercreditor Agreement. 6.3 Organization and Qualification. Each Loan Party (a) is duly organized or incorporated and validly existing in good standing under the laws of the state of its organization or incorporation, (b) is qualified to do business and is in good standing in the jurisdictions set forth on SCHEDULE 6.3 which are the only jurisdictions in which qualification is necessary in order for it to own or lease its property and conduct its business and (c) has all requisite power and authority to conduct its business and to own its property. 6.4 Corporate Name; Prior Transactions. Except as set forth on SCHEDULE 6.4, no Loan Party has, during the past five (5) years, been known by or used any other corporate or fictitious name, or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property outside of the ordinary course of business. 6.5 Subsidiaries and Affiliates. SCHEDULE 6.5 is a correct and complete list of the name and relationship to each Loan Party of each and all its Subsidiaries and other Affiliates owned, directly or indirectly, by Parent. No Loan Party has any ownership interest in any Subsidiary of any Unrestricted Subsidiary of Westlake. 6.6 Financial Statements and Projections. (a) The Borrowers have delivered to the Agent and the Lenders the audited balance sheet and related statements of income, retained earnings, cash flows, and changes in stockholders equity for the Loan Parties as of December 31, 2002, and for the Fiscal Year then ended, accompanied by the report thereon of the Borrowers' independent certified public accountants, PricewaterhouseCoopers LLP. The Borrowers have also delivered to the Agent and the Lenders the unaudited balance sheet and related statements of income and cash flows for the Loan Parties as of May 31, 2003. All such Financial Statements have been prepared in accordance with GAAP and fairly present in all material respects the financial position of the Loan Parties as at the dates thereof and their results of operations for the periods then ended, subject to normal year-end adjustments as to the May 31, 2003 statements, and the absence of applicable footnotes. (b) The Latest Projections when submitted to the Lenders as required herein represent the Borrowers' good faith estimate of the future financial performance of the Loan Parties for the periods set forth therein. The Latest Projections have been prepared on the basis of the assumptions set forth therein, which the Borrowers believes are fair and reasonable in light of current and reasonably foreseeable business conditions at the time submitted to the Lenders. (c) The pro forma balance sheet of the Loan Parties as at June 30, 2003, delivered to the Agent and the Lenders, fairly presents the Loan Parties' financial condition as at such date after giving effect to all of the transactions contemplated to occur on the Closing Date, and has been prepared in accordance with GAAP. 6.7 Capitalization. Westlake's authorized capital stock consists of _________ shares of common stock, par value $_____ per share, of which _______ shares are validly issued and outstanding, fully paid and non-assessable and are owned beneficially and of record by Parent. -22- 6.8 Solvency. On the Closing Date, at the time of each Borrowing hereunder, and on the dates of the issuance of any Letters of Credit to be issued hereunder, each Loan Party is (and after giving effect to the transactions contemplated by the Loan Documents, and any incurrence of additional Debt will be) Solvent. 6.9 Debt. After giving effect to (a) the making of the Revolving Loans to be made on the Closing Date and (b) the issuance of any Letters of Credit to be issued on the Closing Date, the Loan Parties have no Debt, except (i) the Obligations, (ii) Debt described on SCHEDULE 6.9, and (iii) other Debt permitted by SECTION 7.13. 6.10 Distributions. Since December 31, 2002, no Distribution has been declared, paid, or made upon or in respect of any capital stock or other securities of Westlake or any of its Subsidiaries except as permitted by SECTION 7.10. 6.11 Real Estate; Leases. SCHEDULE 6.11 sets forth, as of the Closing Date, a correct and complete list of all Real Estate owned by any Loan Party and all Real Estate owned by any of their Subsidiaries that is a Loan Party, all leases and subleases of real or personal property held by any Loan Party as lessee or sublessee (other than leases of personal property as to which any Loan Party is lessee or sublessee for which the value of such personal property in the aggregate is less than $1,000,000), and all leases and subleases of real or personal property held by any Loan Party as lessor, or sublessor. Each of such leases and subleases is valid and enforceable in accordance with its terms against the Loan Party or Subsidiary thereof which is a party thereto and is in full force and effect, and to the best of each Loan Party's knowledge, no default by any party to any such lease or sublease exists. Each Loan Party has good and indefeasible title in fee simple to the Real Estate identified on SCHEDULE 6.11 as owned by such Loan Party, or valid leasehold interests in all Real Estate designated therein as "leased" by such Loan Party and each Loan Party has good and indefeasible title to all of its other property reflected on the May 31, 2003 Financial Statements delivered to the Agent and the Lenders, except as disposed of in the ordinary course of business since the date thereof, free of all Liens except Permitted Liens. 6.12 Proprietary Rights. SCHEDULE 6.12 sets forth a correct and complete list of all of the Proprietary Rights of each Loan Party. None of the Proprietary Rights is subject to any licensing agreement or similar arrangement except as set forth on SCHEDULE 6.12. To the best of each Loan Party's knowledge, none of the Proprietary Rights of such Loan Party infringes on or conflicts in any material respect with any other Person's property, and no other Person's property infringes on or conflicts with the Proprietary Rights of such Loan Party. The Proprietary Rights described on SCHEDULE 6.12 constitute all of the property of such type necessary to the current conduct of the business of each such Loan Party. No Proprietary Rights are necessary for the Agent to be able to enforce the Agent's Liens granted in any Collateral Document in any Inventory or Accounts. 6.13 Trade Names. All trade names or styles under which any Loan Party or any of their Subsidiaries will sell Inventory or create Accounts, or to which instruments in payment of Accounts may be made payable, are listed on SCHEDULE 6.13. 6.14 Litigation. Except as set forth on SCHEDULE 6.14, there is no pending, or to the best of any Loan Party's knowledge threatened, action, suit, proceeding, or counterclaim by any Person against any Loan Party, or to the best of any Loan Party's knowledge, investigation by any Governmental Authority, or any basis for any of the foregoing, which could reasonably be expected to have a Material Adverse Effect. 6.15 Labor Disputes. Except as set forth on SCHEDULE 6.15, as of the Closing Date (a) there is no collective bargaining agreement or other labor contract covering employees of any Loan -23- Party or any of their Subsidiaries, (b) no such collective bargaining agreement or other labor contract is scheduled to expire during the term of this Agreement, (c) to the best of each Loan Party's knowledge, no union or other labor organization is seeking to organize, or to be recognized as, a collective bargaining unit of employees of any Loan Party or any of their Subsidiaries or for any similar purpose, and (d) there is no pending or (to the best of any Loan Party's knowledge) threatened, strike, work stoppage, material unfair labor practice claim, or other material labor dispute against or affecting any Loan Party or their Subsidiaries or their employees. 6.16 Environmental Laws. Except as otherwise disclosed on SCHEDULE 6.16 or except as would not have a Material Adverse Effect: (a) The Loan Parties and their Subsidiaries are and have been in compliance with all Environmental Laws. (b) Each of the Loan Parties and their Subsidiaries have obtained, and have timely filed any renewal applications for, all permits necessary for its current operations under Environmental Laws, and each Loan Party and its Subsidiaries are in compliance with all terms and conditions of such permits, or, when applicable, such applications. (c) There has been no Release, nor to the best of any Loan Party's knowledge, any threatened Release, that has resulted in or that could result in: (i) a violation of or obligation under any Environmental Law, including without limitation, notification, deed recordation, or remediation, or (ii) a diminution in value of the Real Estate. The Real Estate has not contained and currently does not contain any underground storage tanks, any polychlorinated biphenyls (PCBs), or any asbestos. (d) The Loan Parties and their Subsidiaries have not given, nor were they required to give, and have not received, any notice that: (i) the Loan Parties and their Subsidiaries have violated, or are about to violate, any Environmental Law; (ii) there has been a Release, or there is a threat of Release, from the Real Estate; (iii) the Loan Parties and their Subsidiaries may be or are liable, in whole or in part, for the costs of cleaning up, remediating, removing or responding to a Release; or (iv) the Real Estate is subject to a lien in favor of any governmental entity for any liability, costs or damages, under any Environmental Laws arising from, or costs incurred by, such governmental entity in response to a Release. No conditions have existed, currently exist, or are reasonably foreseeable, that would give rise to such a notice. (e) Neither Loan Parties nor any Subsidiary nor any Real Estate or presently conducted operations, nor any previously owned real property or prior operations, is subject to any enforcement order from or liability agreement with any Governmental Authority or private Person respecting (i) compliance with any Environmental Law or (ii) any potential liabilities and costs or remedial action arising from the Release or threatened Release. (f) To the best of any Loan Party's knowledge, none of the present or past operations of the Loan Parties or their Subsidiaries is the subject of any investigation by any Governmental Authority evaluating whether any compliance action is warranted or any remedial action is needed to respond to a Release or threatened Release. (g) Neither the Loan Parties nor any of their Subsidiaries has entered into any negotiations or settlement agreements with any Person (including the prior owner of its property) imposing material obligations or liabilities on the Borrower or any of its Subsidiaries with respect to any remedial action in response to the Release of a Contaminant or environmentally related claim. -24- (h) Neither the Loan Parties nor any of their Subsidiaries have ever disposed of, sent or arranged for the transportation of Hazardous Materials on or from Real Estate or formerly owned real property which, pursuant to CERCLA or any similar or analogous state law, has been placed or is proposed to be paced (by the United States Environmental Protection Agency ("EPA") or similar state authority) on the "National Priorities List" or similar state list. (i) Neither the Loan Parties nor any of their Subsidiaries have been identified by EPA, any similar state authority, or any third party, as a potentially responsible party under CERCLA, or any similar or analogous state law, with respect to the Real Estate or any other site currently or formerly owned, operated or used by Loan Parties or their Subsidiaries. (j) None of the products manufactured, distributed or sold by the Loan Parties or any of their Subsidiaries contain asbestos containing material. (k) No Environmental Lien has attached to the Real Estate. 6.17 No Violation of Law. Neither any Loan Party nor any of their Subsidiaries is in violation of any Requirement of Law applicable to it which violation could reasonably be expected to have a Material Adverse Effect. 6.18 No Default. Neither any Loan Party nor any of their Subsidiaries is in default with respect to any note, indenture, loan agreement, mortgage, lease, deed, or other agreement to which such Person is a party or by which it is bound, which default could reasonably be expected to have a Material Adverse Effect. 6.19 ERISA Compliance. Except as specifically disclosed in SCHEDULE 6.19: (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code, and other federal or state law. Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and to the best knowledge of any Loan Party, nothing has occurred which would prevent or cause the loss, of such qualification. Each Borrower and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. (b) There are no pending or, to the best knowledge of any Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. (c) (i) No ERISA Event has occurred within the past five (5) years or is reasonably expected to occur which has or could reasonably be expected to result in liability to any Loan Party in excess of $7,500,000; (ii) the Unfunded Pension Liability, in the aggregate, for all Pension Plans does not exceed $7,500,000; (iii) neither any Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA to the PBGC with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); and (iv) neither any Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. -25- 6.20 Taxes. The Loan Parties and their Subsidiaries have filed all federal and other tax returns and reports required to be filed (or appropriate extensions have been timely filed), and have paid all federal and other taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable unless such unpaid taxes and assessments would constitute a Permitted Lien. 6.21 Regulated Entities. None of any Loan Party, any Person controlling any Loan Party, or any Subsidiary of any Loan Party, is an "Investment Company" within the meaning of the Investment Company Act of 1940. No Loan Party is a regulated entity under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code or law, or any other federal or state statute or regulation limiting its ability to incur Debt. 6.22 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be used solely (a) to refinance existing Debt, (b) to pay the costs and expenses related to this Agreement, (c) for working capital purposes of the Loan Parties, and (d) for general corporate purposes. None of such proceeds will be used for the purpose of purchasing or carrying any "margin stock" as defined in Regulations T, U, or X of the Board of Governors of the Federal Reserve System or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of such Regulations. No part of the proceeds of the Loan will be used for any purpose which violates, or is inconsistent with, the provisions of Regulation X. No Loan Party nor any Subsidiary of any Loan Party is engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. Following the application of the proceeds of each Loan or drawing under each Letter of Credit, not more than 25% of the value of the assets (either of any individual Borrower or of the Loan Parties on a consolidated basis) subject to the provisions of SECTION 7.9 or SECTION 7.18 or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Debt and within the scope of SECTION 9.1(D) will be Margin Stock. 6.23 Copyrights, Patents, Trademarks and Licenses, etc. Each Loan Party owns or is licensed or otherwise has the right to use all of the Proprietary Rights, contractual franchises, licenses, permits, rights of way, authorizations, and other rights that are reasonably necessary for the operation of its businesses, without conflict with the rights of any other Person. To the best knowledge of any Borrower, no slogan or other advertising device, product, process, method, substance, part, or other material now employed, or now contemplated to be employed, by any Loan Party or any Subsidiary of any Loan Party infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending, or, to the best knowledge of any Loan Party, threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of any Borrower, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect. 6.24 No Material Adverse Change. No Material Adverse Effect has occurred since the latest date of the Financial Statements delivered to the Lenders. 6.25 Full Disclosure. None of the representations or warranties (other than as to estimates, projections, and pro forma Financial Statements) made by any Loan Party in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement or certificate furnished by or on behalf of any Loan Party in connection with the Loan Documents (including the offering and disclosure materials delivered by or on behalf of the Loan Parties to the Lenders prior to the Closing Date), contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered. Any estimates, projections, and pro forma Financial Statements -26- delivered to the Agent or the Lenders were prepared in good faith based on assumptions believed to be reasonable at the time. 6.26 Material Agreements. SCHEDULE 6.26 hereto sets forth as of the Closing Date all Material Agreements to which any Borrower is a party or is bound as of the date hereof. 6.27 Bank Accounts. SCHEDULE 6.27 contains as of the Closing Date a complete and accurate list of all bank accounts maintained by the Loan Parties with any bank or other financial institution. 6.28 Governmental Authorization. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document other than (a) those already obtained, (b) the filing of UCC financing statements and mortgages, and (c) the filing of the Copyright Security Agreements and the Patent and Trademark Agreements. 6.29 No Restrictions. There exists no document, contract, or agreement to which any Loan Party or any direct or indirect parent of any Loan Party is a party that could reasonably be expected to materially and adversely affect this Agreement, any other Loan Document, or the transactions contemplated hereby or thereby or that otherwise restricts or prohibits the transactions contemplated hereby or thereby. ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS Each Borrower (and each other Loan Party by execution of an Obligation Guaranty, with respect to covenants applicable to such Loan Party) covenants to the Agent and each Lender that so long as any of the Obligations remain outstanding or this Agreement is in effect: 7.1 Taxes and Other Obligations. Each Loan Party shall, and shall cause each of its Subsidiaries to, (a) file prior to delinquency all tax returns and other reports which it is required to file; (b) pay, or provide for the payment, when due, of all taxes, fees, assessments and other governmental charges against it or upon its property, income and franchises, make all required withholding and other tax deposits, and establish adequate reserves or other provision required by GAAP for the payment of all such items, and provide to the Agent and the Lenders, upon request, satisfactory evidence of its timely compliance with the foregoing; and (c) pay when due all Debt owed by it and all claims of materialmen, mechanics, carriers, warehousemen, landlords, processors and other like Persons, and all other indebtedness owed by it and perform and discharge in a timely manner all other obligations undertaken by it; provided, however, so long as Westlake has notified the Agent in writing, no Loan Party or any of their Subsidiaries need to pay any tax, fee, assessment, or governmental charge (i) which such Loan Party is contesting in good faith by appropriate proceedings diligently pursued, (ii) for which such Loan Party or its Subsidiary, as the case may be, has established proper reserves as required under GAAP, and (iii) the nonpayment of which does not result in the imposition of a Lien (other than a Permitted Lien). 7.2 Legal Existence and Good Standing. Except as permitted by SECTION 7.9, each Loan Party shall maintain its legal existence and its qualification and good standing in all jurisdictions in which the failure to maintain such existence and qualification or good standing could reasonably be expected to have a Material Adverse Effect. -27- 7.3 Compliance with Law and Agreements; Maintenance of Licenses; Amendments to Bond Debt and Fixed Asset Loan. Each Loan Party shall comply, and shall cause each of its Subsidiaries to comply, in all material respects, with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act and all Environmental Laws), except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect. No Loan Party shall violate the provisions of any Material Agreement, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect. Each Loan Party shall, and shall cause each of its Subsidiaries to, obtain and maintain all licenses, permits, franchises, and governmental authorizations necessary to own its property and to conduct its business as conducted on the Closing Date, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect. No Loan Party shall modify, amend, or alter its certificate or articles of incorporation, or its limited liability company operating agreement or limited partnership agreement, as applicable, other than in a manner which does not adversely affect the rights of the Lenders or the Agent. No Loan Party shall amend or modify any provision of, or waive any condition under, any document or instrument evidencing or relating to the Bond Debt or the Fixed Asset Loan, without first (a) providing to the Agent a copy of such proposed amendment, modification, or waiver and (b) obtaining Required Lenders' prior written consent thereto, if the Agent determines, in its reasonable discretion, that any such change or changes could reasonably be expected to adversely affect the rights of Lenders. 7.4 Maintenance of Property; Inspection of Property. (a) Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain all of its property necessary and useful in the conduct of its business, in good operating condition and repair, ordinary wear and tear excepted. (b) Each Loan Party shall permit representatives and independent contractors of the Agent (at the expense of the Borrowers not to exceed four (4) times per year unless a Default or an Event of Default has occurred and is continuing) to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom and to discuss its affairs, finances and accounts with its directors, officers and independent public accountants, at such reasonable times during normal business hours and as soon as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, when a Default or an Event of Default exists, the Agent or any Lender may do any of the foregoing at the expense of the Borrowers at any time during normal business hours without advance notice. (c) Each Loan Party shall own or have valid licenses for all Proprietary Rights necessary for the anticipated future conduct of the business of each such Loan Party. 7.5 Insurance. (a) Each Loan Party shall maintain, and shall cause each of its Subsidiaries with financially sound and reputable insurers having a rating of at least A- or better by Best Rating Guide, or by other companies acceptable to the Agent in its sole discretion (it being understood that the companies acceptable to the Agent on the Closing Date shall be acceptable thereafter absent a change in rating or other circumstances), insurance against loss or damage by fire with extended coverage; theft, burglary, pilferage and loss in transit; public liability and third party property damage; larceny, embezzlement, or other criminal liability; business interruption (other than with respect to North American Pipe Corporation for which no business interruption insurance is required absent a change in circumstances); public liability and third party property damage; and such other hazards or of such other types as is customary for Persons engaged in the same or similar business, as the Agent, in its discretion, or acting at the direction of the Required Lenders, shall specify, in amounts, and under policies and coverages acceptable to the -28- Agent and the Required Lenders (it being understood that policies acceptable in form and substance to the Agent in connection with the initial closing shall be generally acceptable thereafter absent a change in law, facts, or circumstances). (b) Each Loan Party shall cause the Agent, for the ratable benefit of the Agent and the Lenders, to be named as loss payee or additional insured, as its interest may appear, with respect to the Inventory, in a manner acceptable to the Agent. Each policy of insurance (other than policies issued by Oil Insurance Limited) shall contain a clause or endorsement requiring the insurer to give not less than thirty (30) days' prior written notice to the Agent in the event of cancellation of the policy for any reason whatsoever (other than cancellation of the policy for non-payment of premiums, which shall require not less than ten (10) days' prior written notice to the Agent) and a clause or endorsement stating that the status of the Agent as loss payee or additional insured shall not be impaired or invalidated by any act or neglect of any Loan Party or any of their Subsidiaries or the owner of any Real Estate not covered by the applicable policy. All premiums for such insurance shall be paid by or on behalf of the Loan Parties when due, and certificates of insurance and, if requested by the Agent or any Lender, photocopies of the policies, shall be delivered to the Agent. If any Loan Party fails to procure such insurance or to pay the premiums therefor when due, the Agent may, and at the direction of the Required Lenders shall, do so from the proceeds of Revolving Loans. 7.6 Insurance and Condemnation Proceeds. The Borrowers shall promptly notify the Agent and the Lenders of any loss, damage, or destruction to the Collateral, whether or not covered by insurance, other than any loss, damage, or destruction involving an amount or fair market value of less than $250,000 in the aggregate for each occurrence or series of occurrences ("MINOR INSURANCE EVENTS"). Other than with respect to Minor Insurance Events, and subject to the Intercreditor Agreement, the Agent is hereby authorized to collect all insurance and condemnation proceeds in respect of Collateral directly and, after deducting from such proceeds the reasonable expenses, if any, incurred by the Agent in the collection or handling thereof, the Agent shall apply such proceeds, ratably, to the reduction of the Obligations (but not a reduction of the Maximum Revolver Amount) in the order provided for in SECTION 3.7. In the case of any loss, damage, or destruction to any assets of the Loan Parties that includes Collateral and other assets of the Loan Parties, the Loan Parties shall deliver to the Agent satisfactory evidence of the amount of the insurance and condemnation proceeds that are attributable to the Collateral; if the Agent is not satisfied with such evidence, the Agent may, at the expense of the Loan Parties, retain an independent third party to perform such valuation. 7.7 Environmental Laws. (a) Each Loan Party shall, and shall cause each of their Subsidiaries to, conduct its business in compliance in all material respects with all Environmental Laws applicable to it, including those relating to the generation, handling, use, storage, and disposal of any Hazardous Material. Each Loan Party shall, and shall cause each of its Subsidiaries to, take prompt and appropriate action to respond to any material non-compliance with Environmental Laws and shall report to the Agent any such material non-compliance and any such response. (b) Without limiting the generality of the foregoing, the Borrowers shall submit to the Agent and the Lenders annually, commencing on the first Anniversary Date, and on each Anniversary Date thereafter, an update of the status of each environmental compliance or material liability issue of a Loan Party with respect to its property. The Agent or any Lender may request copies of technical reports prepared by any Loan Party and their communications with any Governmental Authority to determine whether any Loan Party or any of their Subsidiaries is proceeding reasonably to correct, cure, or contest in good faith any alleged non-compliance or environmental liability. The Borrowers shall, at the Agent's or the Required Lenders' request and at the Borrowers' expense, (i) retain -29- an independent environmental engineer acceptable to the Agent to evaluate the site, including tests if appropriate, where the non-compliance or alleged non-compliance with Environmental Laws has occurred and prepare and deliver to the Agent a report setting forth the results of such evaluation, a proposed plan for responding to any environmental problems described therein, and an estimate of the costs thereof, and (ii) provide to the Agent and the Lenders a supplemental report of such engineer whenever the scope of the environmental problems, or the response thereto or the estimated costs thereof, shall increase in any material respect. 7.8 Compliance with ERISA. Each Loan Party shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code, and other federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; (c) make all required contributions to any Plan subject to Section 412 of the Code; (d) not engage in a prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which could reasonably be expected to result in liability to any Loan Party in excess of $7,500,000; and (e) not engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. 7.9 Mergers, Consolidations, or Sales. No Loan Party nor any of their Subsidiaries shall enter into any transaction of merger, reorganization, or consolidation, or agree to do any of the foregoing other than (a) as permitted by SECTION 7.26, or (b) mergers among Loan Parties; provided that, in any merger involving a Borrower, a Borrower must be the surviving entity. No Loan Party nor any of their Subsidiaries shall transfer, sell, assign, lease, or otherwise dispose of all or any part of its property (including, without limitation, the stock or equity of any Subsidiary of such Loan Party except as expressly permitted by the immediately preceding sentence), or wind up, liquidate, or dissolve, or agree to do any of the foregoing, except (a) for sales of Inventory in the ordinary course of its business, (b) for sales or other dispositions of Equipment in the ordinary course of business that are obsolete or no longer useable by any Loan Party in its respective business with a book value or contemplated sales proceeds not to exceed $2,000,000 in the aggregate in any Fiscal Year, (c) for sales, leases, or other transfers or dispositions among Loan Parties, (d) for the sale, discount, or transfer of delinquent Accounts in the ordinary course of business for purposes of collection, and (e) so long as no Default or Event of Default then exists or arises as a result thereof, sales of assets, other than those in CLAUSES (A) through (D), for fair value for cash, so long as any mandatory prepayments required by SECTION 3.3(B), if any are required, are made. All assets purchased with such proceeds shall be free and clear of all Liens, except the Agent's Liens or other Permitted Liens. 7.10 Distributions; Capital Change; Restricted Investments. No Loan Party nor any of their Subsidiaries shall (a) directly or indirectly declare or make, or incur any liability to make, any Distribution, except (i) Distributions to any Loan Party from its direct Subsidiaries, and (ii) other Distributions by Loan Parties, if, after giving effect to such Distribution, (x) Availability equals or exceeds $100,000,000, and (y) the Fixed Charge Coverage Ratio is at least 1.00 to 1.0, (b) make any change in its capital structure which could have a Material Adverse Effect, or (c) make any Restricted Investment, provided that if any payment, prepayment, redemption, purchase, or deposit in respect of any Debt of the Loan Parties is permitted to be made under SECTION 7.14(C), and such payment, prepayment, redemption, purchase, or deposit otherwise constitutes a Restricted Investment, such payment, prepayment, redemption, purchase, or deposit shall not be prohibited by the terms of this SECTION 7.10(C). Notwithstanding the foregoing, Distributions are permitted hereunder only to the extent that any such Distribution is made in accordance with applicable Requirement of Law and constitutes a valid, non-voidable transaction. -30- 7.11 Transactions Affecting Collateral or Obligations. No Loan Party nor any of their Subsidiaries shall enter into any transaction which would be reasonably expected to have a Material Adverse Effect. 7.12 Guaranties. No Loan Party nor any of their Subsidiaries shall make, issue, or become liable on any Guaranty, except (a) Obligation Guaranties in favor of the Agent, (b) Guaranties of Debt permitted by SECTION 7.13, and (c) a Guaranty by Westlake Olefins Corporation for the account of Suzhou Huasu Plastics Co. Ltd. in an aggregate amount not to exceed $8,500,000. 7.13 Debt. No Loan Party shall incur or maintain any Debt, other than: (a) the Obligations; (b) Debt existing on the Closing Date and described on SCHEDULE 6.9; (c) Capital Leases of Equipment and purchase money secured Debt incurred to purchase Equipment; provided that (i) Liens securing the same attach only to the Equipment acquired by the incurrence of such Debt, and (ii) the aggregate amount of such Debt (including Capital Leases) outstanding does not exceed $10,000,000 at any time; (d) the Existing Letters of Credit, so long as Borrowers use their best efforts to cause such Existing Letters of Credit to be replaced with Letters of Credit hereunder within ninety (90) days of the Closing Date; (e) the Bond Debt; (f) Debt arising under the Fixed Asset Loan in a principal amount not to exceed $170,000,000 at any time outstanding; (g) other unsecured Debt not to exceed $100,000,000 so long as the Fixed Charge Coverage Ratio on the date of incurrence of such Debt and after giving effect to the incurrence of such Debt is at least 1.00 to 1.0; (h) Debt evidencing a refunding, renewal, extension, or replacement of the Debt existing on the Closing Date and described on SCHEDULE 6.9 and other Debt permitted hereunder; provided that (i) the principal amount thereof is not increased, (ii) the Liens, if any, securing such refunded, renewed, extended, or replaced Debt do not attach to any assets in addition to those assets, if any, securing the Debt to be refunded, renewed, extended, or replaced, (iii) no Person that is not an obligor or guarantor of such Debt as of such date shall become an obligor or guarantor thereof, and (iv) the terms of such refunding, renewal, or extension are no less favorable to the Borrowers, the Agent, or the Lenders than the original Debt, including, without limitation, the maturity date thereof and any principal amortization thereof; (i) Debt of any Loan Party owed to any of its Restricted Subsidiaries, or Debt of any Restricted Subsidiary owed to the owner of its equity interests which is a Loan Party; (j) Debt to finance insurance premiums in an amount not to exceed $10,000,000 at any time outstanding; (k) Debt owed by Westlake and/or North American Pipe Corporation to North American Profiles Limited in an amount not to exceed $5,000,000 in the aggregate; provided that any payments or -31- prepayments of such Debt shall permanently reduce the amount of Debt permitted pursuant to this CLAUSE (K); (l) Debt arising under Hedge Agreements; (m) Debt among Loan Parties on terms of the kind customarily employed to allocate charges among members of a consolidated group of entities, in each such case, that are fair and reasonable to the Loan Parties and consistent with past practices of the Loan Parties. 7.14 Prepayment/Prepayment of Debt. The Borrowers shall pay the Obligations in accordance with the terms and provisions of the Loan Documents. Each Loan Party (a) shall promptly pay (or renew and extend) all of its material obligations as the same become due (unless such obligations -- other than the Obligations -- are being contested in good faith by appropriate proceedings); (b) shall not, except as expressly permitted by CLAUSE (C) hereof, voluntarily prepay any principal of, or interest on, any other Debt, including the Bond Debt or the Fixed Asset Loan (except (i) the Obligations in accordance with the terms of this Agreement, (ii) the Debt in connection with the IRBs, (iii) prepayments and payments of the Debt permitted by SECTION 7.13(K), (iv) refinancings of Debt to be refinanced on the Closing Date as a result of the transactions occurring in such date, or (v) refinancings of the Fixed Asset Loan or other Debt to the extent such refinancing is permitted by SECTION 7.13(H)), whether subordinate to the Obligations or not; and (c) shall not, directly or indirectly, pay, prepay, redeem, or purchase, or deposit funds or property for the payment (including, without limitation, a payment in respect of any sinking fund or defeasance of any Bond Debt or the Fixed Asset Loan), prepayment, redemption, or purchase of, any Bond Debt or the Fixed Asset Loan other than (i) regularly scheduled interest and principal payments on the Bond Debt and Fixed Asset Loan made in compliance with the provisions thereof; (ii) redemptions or prepayments (whether voluntary or mandatory) of the Bond Debt or the Fixed Asset Loan (other than Excess Cash Flow Prepayments and Equity Proceeds Prepayments), if, after giving effect to such redemption or prepayment, (x) the Availability is at least $80,000,000, and (y) the Fixed Charge Coverage Ratio is at least 1.00 to 1.0; (iii) Excess Cash Flow Prepayments and Equity Proceeds Prepayments, if, after giving effect to such prepayments, (x) the Availability is at least $50,000,000, and (y) the Fixed Charge Coverage Ratio is at least 1.00 to 1.0; and (iv) mandatory prepayments of the Fixed Asset Loan with the proceeds from sales of or condemnation or casualty events involving collateral securing the Term Priority Collateral. 7.15 Transactions with Affiliates. Except as permitted by SECTION 7.9(A) or 7.12, or as set forth below, no Loan Party shall sell, transfer, distribute, or pay any money or property, including, but not limited to, any fees or expenses of any nature (including, but not limited to, any fees or expenses for management services), to any Affiliate, or lend or advance money or property to any Affiliate, or invest in (by capital contribution or otherwise) or purchase or repurchase any stock or indebtedness (other than the Obligation Guaranties), or any property, of any Affiliate, or become liable on any Guaranty of the indebtedness, dividends, or other obligations of any Affiliate other than (a) transactions between the -32- Loan Parties on terms of the kind customarily employed to allocate charges among members of a consolidated group of entities, in each such case, that are fair and reasonable to the Loan Parties and consistent with past practices of the Loan Parties, and (b) transactions with respect to tax sharing agreements so long as the Loan Parties do not pay more taxes in the aggregate pursuant to such tax sharing agreement than the Loan Parties in the aggregate would be required to pay if each Loan Party filed a separate tax return. Notwithstanding the foregoing, while no Event of Default has occurred and is continuing and so long as done in compliance with SECTION 7.10, the Loan Parties and their Subsidiaries may engage in transactions with Affiliates in the ordinary course of business consistent with past practices, in amounts and on terms no less favorable to the Loan Parties and their Subsidiaries than would be obtained in a comparable arm's-length transaction with a third party who is not an Affiliate. 7.16 Business Conducted. No Loan Party will, directly or indirectly, permit or suffer to exist any material change in the type of businesses in which it is engaged from the businesses of the Loan Parties as conducted on the Closing Date and in similar or related businesses that are reasonable extensions or additions to the Loan Parties' business on the Closing Date. 7.17 Liens. No Loan Party shall create, incur, assume, or permit to exist any Lien on any property now owned or hereafter acquired by any of them, except Permitted Liens, and Liens securing Capital Leases and purchase money Debt permitted in SECTION 7.13. 7.18 Sale and Leaseback Transactions. No Loan Party nor any of their Subsidiaries shall, directly or indirectly, enter into any arrangement with any Person providing for such Loan Party or such Subsidiary to lease or rent property that such Loan Party or such Subsidiary has sold or will sell or otherwise transfer to such Person. 7.19 New Subsidiaries. No Loan Party shall, directly or indirectly, organize, create, acquire, or permit to exist any Subsidiary without giving the Agent at least ten (10) days prior written notice of such organization, creation, or acquisition. Borrowers shall cause each Person that becomes a Restricted Subsidiary of any Loan Party after the Closing Date (whether as a result of acquisition, merger, creation, or otherwise), (a) to execute an Obligation Guaranty on the date such entity becomes a Restricted Subsidiary of a Loan Party and promptly deliver (but in no event later than five (5) days following consummation of such creation, acquisition, or merger) such Obligation Guaranty to the Agent and (b) to execute and deliver to the Agent all required Collateral Documents (in form and substance acceptable to the Agent) creating Agent's Liens in favor of the Agent in the Collateral owned by such Restricted Subsidiary. 7.20 Fiscal Year. No Loan Party shall change its Fiscal Year. 7.21 Fixed Charge Coverage Ratio. Following the Triggering Date and based on the most recently delivered Financial Statements received pursuant to SECTION 5.2, the Borrowers will maintain a Fixed Charge Coverage Ratio for each period of immediately preceding twelve (12) months of not less than 1.00 to 1.0. 7.22 Use of Proceeds. No Loan Party shall nor shall a Loan Party suffer or permit any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Borrowers or others incurred to purchase or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act. 7.23 Collateral. To secure the full and complete payment and performance of the Obligations, Borrowers shall (and shall cause each Restricted Subsidiary to) enter into Collateral -33- Documents (in form and substance acceptable to the Agent) pursuant to which, among other things, each such entity shall, to the extent permitted by applicable law, grant, pledge, assign, and create first priority Agent's Liens (except to the extent Permitted Liens affect such priority or except as provided under the Intercreditor Agreement) in and to all Collateral owned by such entity. 7.24 Tax Shelter Regulations. (a) The Borrowers do not intend to treat the Loans and/or Letters of Credit and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event the Borrowers determine to take any action inconsistent with such intention, it will promptly notify the Agent thereof. If the Borrowers so notify the Agent, the Borrowers acknowledge that one or more of the Lenders may treat its Loans and/or its interest in Non-Ratable Loans and/or Agent Advances and/or Letters of Credit as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will maintain the lists and other records required by such Treasury Regulation. (b) Neither the Agent nor any Lender intends to treat the Loans and/or Letters of Credit and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event the Agent or any Lender determines to take any action inconsistent with this intention, such person will so notify Westlake. If the Agent or any Lender so notifies Westlake, the Agent and such Lender acknowledge that one or more of the Borrowers may treat any Loans and/or Letter of Credit as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and such Borrower or Borrowers, as applicable, will maintain the lists and other records required by such Treasury Regulation. 7.25 Permitted Debt under Bond Debt and Fixed Asset Loan. The Borrowers shall at all times reserve the full amount of the Maximum Revolver Amount under (a) Section 4.09(b)(1) (the basket permitting the credit facilities) of the indenture for the Bond Debt and (b) Section 8.03(c)(i) of the Fixed Asset Loan. 7.26 Permitted Acquisitions. The Loan Parties may consummate Acquisitions, so long as: (a) the Acquisition by a Loan Party is of a Person or assets which are in substantially the same lines of business as the business conducted by such Loan Party on the date hereof, or any other business reasonably related thereto; (b) as of the closing thereof, each Acquisition has been approved and recommended by the board of directors (or equivalent body) of the Person to be acquired or from which such business or asset is to be acquired; (c) prior to the closing of such Acquisition (other than an Acquisition of assets), the Person to be acquired is Solvent; (d) as of the closing of the Acquisition, after giving effect thereto, the Loan Party that is the acquiring party must be Solvent and the Loan Parties, on a consolidated basis, must be Solvent; (e) as of the closing of any such Acquisition, (i) such Acquisition is structured as a merger, a Borrower must be the surviving entity after giving effect to such merger; and (ii) if such Acquisition is structured as a stock/equity acquisition, the acquiring Loan Party shall own not less than a 100% interest in the entity being acquired and such acquired entity will be a domestic company that is or becomes a Loan Party hereunder; -34- (f) as of the closing of any Acquisition, no Default or Potential Default shall exist or occur as a result thereof, and after giving effect thereto; (g) if the Acquisition target is to be a Restricted Subsidiary, then Borrowers shall have complied with the terms and conditions of SECTION 7.19; (h) the absence of action, suit, investigation, or proceeding pending or threatened in a any court or before any arbitrator or Governmental Authority that affects the target or the proposed Acquisition, which could reasonably be expected to have a Material Adverse Effect on the target or the Loan Parties; (i) no Acquisition results in the formation or Acquisition of a Foreign Subsidiary of any Loan Party; the Purchase Price for such Acquisition (A) must be less than or equal to $20,000,000, and (B) when aggregated with the Purchase Price of all other Acquisitions consummated during such Fiscal Year, does not exceed $50,000,000 in the aggregate; and (ii) immediately prior to such Acquisition and after giving effect to any Revolving Loans to be made in connection therewith, (A) there is at least $100,000,000 of Availability, and (B) the Pro Forma Fixed Charge Coverage Ratio shall be at least 1.00 to 1.0; and (j) for the purposes of calculating Availability under this SECTION 7.26, no assets of the Person to be acquired or the assets to be acquired shall be included in the Borrowing Base unless such assets are acceptable to the Agent. 7.27 Excluded Deposit Accounts. In the event the amount of funds on deposit in the Local Accounts ever exceeds $300,000 at any time in the aggregate on any date of determination, the Borrowers shall immediately deliver to the Agent Blocked Account Agreements with respect to each such Local Account. 7.28 Fixed Asset Loan Collateral Account. The Loan Parties shall not deposit any funds into the Fixed Asset Loan Collateral Account other than net proceeds from the sale of Term Priority Collateral and insurance or condemnation proceeds received by any Loan Party in respect of any Term Priority Collateral. 7.29 Further Assurances. The Loan Parties shall execute and deliver, or cause to be executed and delivered, to the Agent and/or the Lenders such documents and agreements, and shall take or cause to be taken such actions, as the Agent or any Lender may, from time to time, request to carry out the terms and conditions of this Agreement and the other Loan Documents. ARTICLE 8 CONDITIONS OF LENDING 8.1 Conditions Precedent to Making of Loans on the Closing Date. The obligation of the Lenders to make the initial Revolving Loans on the Closing Date, and the obligation of the Agent to cause the Letter of Credit Issuer to issue any Letter of Credit on the Closing Date, are subject to the following conditions precedent having been satisfied in a manner satisfactory to the Agent and each Lender: (a) This Agreement and the other Loan Documents shall have been executed by each party thereto and each Loan Party, as applicable, shall have performed and complied with all covenants, agreements, and conditions contained herein and the other Loan Documents which are required to be performed or complied with by the Loan Parties before or on such Closing Date. -35- (b) Upon making the Revolving Loans on the Closing Date (including such Revolving Loans made to finance the Closing Fee or otherwise as reimbursement for fees, costs, and expenses then payable under this Agreement), and with all its obligations current, the Borrowers shall have Availability of at least $100,000,000. (c) All representations and warranties made hereunder and in the other Loan Documents shall be true and correct as if made on such date. (d) No Default or Event of Default shall have occurred and be continuing after giving effect to the Loans to be made and the Letters of Credit to be issued on the Closing Date. (e) The Agent and the Lenders shall have received such opinions of counsel for the Loan Parties (other than Westlake Overseas Corporation) as the Agent or any Lender shall request, each such opinion to be in a form, scope, and substance satisfactory to the Agent, the Lenders, and their respective counsel. (f) The Agent shall have received: (i) financing statements in proper form for filing, under the UCC in all jurisdictions that the Agent may deem necessary or desirable in order to perfect the Agent's Liens; and (ii) duly authorized UCC-3 Termination Statements and such other instruments, in form and substance satisfactory to the Agent, as shall be necessary to terminate and satisfy all Liens on the Property of the Loan Parties except Permitted Liens. (g) The Borrowers shall have paid all fees, including the amounts owing as of the Closing Date under the Fee Letter, and expenses of the Agent and the Attorney Costs incurred in connection with any of the Loan Documents and the transactions contemplated thereby to the extent invoiced. (h) The Agent shall have received evidence, in form, scope, and substance, reasonably satisfactory to the Agent, of all insurance coverage as required by this Agreement. (i) The Agent and the Lenders shall have had an opportunity, if they so choose, to examine the books of account and other records and files of the Loan Parties and to make copies thereof, and to conduct a pre-closing audit which shall include, without limitation, verification of Inventory, Accounts, and the Borrowing Base, and the results of such examination and audit shall have been satisfactory to the Agent and the Lenders in all respects. (j) All proceedings taken in connection with the execution of this Agreement, the Notes, all other Loan Documents, and all documents and papers relating thereto shall be satisfactory in form, scope, and substance to the Agent and the Lenders. (k) Each Loan Party shall have established all of its Deposit Accounts at the Bank or shall have entered into Blocked Account Agreements (on terms acceptable to the Agent) with respect to all Deposit Accounts not established at the Bank other than (i) the account number 910-2-710192 at JPMorgan Chase Bank and (ii) immaterial local accounts of the Loan Partners (the "LOCAL ACCOUNTS") so long as the amount of funds on deposit in such accounts does not exceed $300,000 in the aggregate at any time. -36- (l) No event has occurred and is continuing, or would result from such extension of credit, which has had or would (after giving effect thereto) reasonably be expected to have a Material Adverse Effect. (m) After giving effect to the incurrence of the Bond Debt and the incurrence of Debt under the Agreement and the Fixed Asset Loan, the Agent shall be reasonably satisfied with the corporate and capital structure and management of Westlake and its Subsidiaries. (n) Evidence satisfactory to Agent that there shall exist no action, suit, investigation, litigation, or proceeding pending or threatened in any court or before any arbitrator or Governmental Authority that in Agent's judgment (a) could reasonably be expected to have a Material Adverse Effect, or (b) could reasonably be expected to materially and adversely affect this Agreement, any other Loan Document, or the transactions contemplated hereby or thereby. (o) Agent shall have received, each in form and substance satisfactory to Agent, (a) a pro forma balance sheet of the Loan Parties as at June 30, 2003, which balance sheet shall reflect no material changes from the most recent pro forma balance sheet of the Loan Parties previously delivered to Agent, (b) financial projections in form satisfactory to Agent of the Loan Parties scheduling the amount of Availability and evidencing the Loan Parties' ability to comply with the financial covenants set forth in SECTION 7.21, if applicable, and (c) interim financial statements for the Loan Parties as of May 31, 2003. (p) Receipt by Agent and satisfactory review by Agent of all material contracts of the Loan Parties with material customers. (q) Evidence satisfactory to Agent of closing of each of the Bond Debt and the Fixed Asset Loan, each on terms and conditions satisfactory to Agent. (r) Execution and delivery of the Intercreditor Agreement by all parties thereto. (s) Without limiting the generality of the items described above, each Loan Party shall have delivered or caused to be delivered to the Agent (in form and substance reasonably satisfactory to the Agent), the financial statements, instruments, resolutions, documents, agreements, certificates, opinions, and other items set forth on the "Closing Checklist" delivered by the Agent to Westlake prior to the Closing Date. The acceptance by the Borrowers of any Loans made or Letters of Credit issued on the Closing Date shall be deemed to be a representation and warranty made by the Borrowers to the effect that all of the conditions precedent to the making of such Loans or the issuance of such Letters of Credit have been satisfied or waived, with the same effect as delivery to the Agent and the Lenders of a certificate signed by a Responsible Officer on behalf of the Borrowers, dated the Closing Date, to such effect. Execution and delivery to the Agent by a Lender of a counterpart of this Agreement shall be deemed confirmation by such Lender that (i) all conditions precedent in this SECTION 8.1 have been fulfilled to the satisfaction of such Lender, (ii) the decision of such Lender to execute and deliver to the Agent an executed counterpart of this Agreement was made by such Lender independently and without reliance on the Agent or any other Lender as to the satisfaction of any condition precedent set forth in this SECTION 8.1, and (iii) all documents sent to such Lender for approval consent, or satisfaction were acceptable to such Lender. -37- 8.2 Conditions Precedent to Each Loan. The obligation of the Lenders to make each Loan, including the initial Revolving Loans on the Closing Date, and the obligation of the Agent to cause the Letter of Credit Issuer to issue any Letter of Credit shall be subject to the further conditions precedent that on and as of the date of any such extension of credit: (a) The following statements shall be true, and the acceptance by the Borrowers of any extension of credit shall be deemed to be a statement to the effect set forth in CLAUSES (I), (II), and (III) with the same effect as the delivery to the Agent and the Lenders of a certificate signed by a Responsible Officer on behalf of the Loan Parties, dated the date of such extension of credit, stating that: (i) The representations and warranties contained in this Agreement and the other Loan Documents are correct in all material respects on and as of the date of such extension of credit as though made on and as of such date, other than any such representation or warranty which relates to a specified prior date and except to the extent the Agent and the Lenders have been notified in writing by the Borrowers that any representation or warranty is not correct and the Required Lenders have explicitly waived in writing compliance with such representation or warranty; and (ii) No event has occurred and is continuing, or would result from such extension of credit, which constitutes a Default or an Event of Default; and (iii) No event has occurred and is continuing, or would result from such extension of credit, which has had or would have a Material Adverse Effect. (b) No such Borrowing shall exceed Availability, provided, however, that the foregoing conditions precedent set forth in this SECTION 8.2 are not conditions to each Lender participating in or reimbursing the Bank or the Agent for such Lenders' Pro Rata Share of any Non-Ratable Loan or Agent Advance made in accordance with the provisions of SECTIONS 1.2(H) and (I). ARTICLE 9 DEFAULT; REMEDIES 9.1 Events of Default. It shall constitute an event of default ("EVENT OF DEFAULT") if any one or more of the following shall occur for any reason: (a) any failure or refusal by any Loan Party to pay (i) any principal of the Obligations when the same becomes due (whether by its terms, by acceleration, or as otherwise provided in the Loan Documents); or (ii) interest, fees, premium, or any other part of the Obligations within one day after the same becomes due and payable in accordance with the Loan Documents, whether upon demand or otherwise; (b) any representation or warranty made or deemed made by any Loan Party in this Agreement or in any of the other Loan Documents, any Financial Statement, or any certificate furnished by any Loan Party at any time to the Agent or any Lender shall prove to be untrue in any material respect as of the date on which made, deemed made, or furnished; (c) (i) any default shall occur in the observance or performance of any of the covenants and agreements contained in SECTIONS 5.2(L), 5.2(M), 7.2, 7.5, 7.9 through 7.29, or SECTION 11 of the Security Agreement, provided that Agent, in its sole discretion may grant the Loan Parties one additional day to deliver the reports described in SECTIONS 5.2(L) and 5.2(M), (ii) any default shall occur in the observance or performance of any of the covenants and agreements contained in SECTIONS 5.2 (other than SECTIONS 5.2(L) or 5.2(m)) or 5.3 and such default shall continue for three (3) days or more; or -38- (iii) any default shall occur in the observance or performance of any of the other covenants or agreements contained in any other Section of this Agreement or any other Loan Document, any other Loan Documents, or any other agreement entered into at any time to which any Loan Party and the Agent or any Lender are party (including in respect of any Bank Products with respect to which the aggregate liability to the Loan Parties exceeds $250,000) and such default shall continue for thirty (30) days or more; (d) any "default" or "event of default" shall occur with respect to any Debt (other than the Obligations) of any Loan Party in an outstanding principal amount which exceeds $5,000,000 (in the aggregate), or under any agreement or instrument under or pursuant to which any such Debt may have been issued, created, assumed, or guaranteed by any Loan Party, and such default shall continue for more than the period of grace, if any, therein specified, if the effect thereof (with or without the giving of notice or further lapse of time or both) is to accelerate, or to permit the holders of any such Debt to accelerate, the maturity of any such Debt; or any such Debt shall be declared due and payable or be required to be prepaid prior to the stated maturity or redemption date thereof; (e) Westlake or any of its Subsidiaries shall (i) file a voluntary petition in bankruptcy or file a voluntary petition or an answer or otherwise commence any action or proceeding seeking reorganization, arrangement, or readjustment of its debts or for any other relief under the federal Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or law, state or federal, now or hereafter existing, or consent to, approve of, or acquiesce in, any such petition, action, or proceeding; (ii) apply for or acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee or similar officer for it or for all or any part of its property; (iii) make an assignment for the benefit of creditors; (iv) be unable generally to pay its debts as they become due; or (v) not be Solvent; (f) an involuntary petition shall be filed or an action or proceeding otherwise commenced seeking reorganization, arrangement, consolidation or readjustment of the debts of Westlake or any of its Subsidiaries or for any other relief under the federal Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or law, state or federal, now or hereafter existing and such petition or proceeding shall not be dismissed within sixty (60) days after the filing or commencement thereof or an order of relief shall be entered with respect thereto; (g) a receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee or similar officer for Westlake or any of its Subsidiaries or for all or any part of their respective property shall be appointed or a warrant of attachment, execution, or similar process shall be issued against any part of the property of Westlake or any of its Subsidiaries; (h) any Loan Party shall file a certificate of dissolution under applicable state law or shall be liquidated, dissolved or wound-up or shall commence or have commenced against it any action or proceeding for dissolution, winding-up or liquidation, or shall take any corporate action in furtherance thereof except as permitted under SECTIONS 7.2 or 7.9; (i) all or any material part of the property of any Loan Party shall be nationalized, expropriated, or condemned, seized, or otherwise appropriated, or custody or control of such property or of such Loan Party shall be assumed by any Governmental Authority or any court of competent jurisdiction at the instance of any Governmental Authority, except where contested in good faith by proper proceedings diligently pursued where a stay of enforcement is in effect; (j) any Loan Document shall be terminated, revoked, or declared void, invalid, or unenforceable or challenged by any Loan Party or any other obligor; -39- (k) one or more judgments, orders, decrees, or arbitration awards is entered against the Loan Parties involving in the aggregate liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) as to any single or related or unrelated series of transactions, incidents or conditions, of $10,000,000 or more, and either (i) enforcement proceedings are commenced upon such judgment, order, decree, or award, or (ii) there is a period of 30 consecutive days during which a stay of enforcement of such judgment, order, decree, or award, by reason of pending appeal or otherwise, is not in effect; (l) any loss, theft, damage, or destruction of any item or items of Collateral or other property of any Loan Party occurs which could reasonably be expected to cause a Material Adverse Effect and is not adequately covered by insurance; (m) there is filed against any Loan Party any action, suit, or proceeding under any federal or state racketeering statute (including the Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit, or proceeding (i) is not dismissed within one hundred twenty (120) days, and (ii) could reasonably be expected to result in the confiscation or forfeiture of any material portion of the Collateral; (n) for any reason other than the failure of the Agent to take any action available to it to maintain perfection of the Agent's Liens, pursuant to the Loan Documents, any Loan Document ceases to be in full force and effect or any Lien with respect to any material portion of the Collateral intended to be secured thereby ceases to be, or is not, valid, perfected, and prior to all other Liens (other than Permitted Liens or as required under the Intercreditor Agreement) or is terminated, revoked, or declared void; (o) (i) an ERISA Event shall occur with respect to a Pension Plan or Multi-employer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multi-employer Plan, or the PBGC in an aggregate amount in excess of $7,500,000; (ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans at any time exceeds $7,500,000; or (iii) any Loan Party or any ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multi-employer Plan in an aggregate amount in excess of $7,500,000; (p) there occurs a Change of Control; (q) there occurs an event having a Material Adverse Effect; (r) other than those existing on the Closing Date and disclosed on SCHEDULE 6.16, any Environmental Liabilities in excess of $10,000,000 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), but excluding: (i) Environmental Liabilities in an aggregate amount at any time up to $20,000,000 for which a Reserve is established for 100% of such aggregate amount; and (ii) amounts in excess of $20,000,000 secured by a perfected first lien on cash collateral equal to 100% of that portion of such amount in excess of the Reserves described in clause (i) for a period not to exceed 30 days; or (s) an event shall occur, including, without limitation, a "change in control" or "change of control" as defined in any documents or agreements evidencing or creating the Bond Debt or the Fixed Asset Loan and (i) the trustee or the required holders of any such Debt shall initiate notice under provisions governing such Debt to require (or any Loan Party shall automatically be so required) to -40- redeem or repurchase such Debt, or (ii) any Loan Party shall initiate notice to holders of the Bond Debt or the Fixed Asset Loan in connection with a redemption of such Debt. 9.2 Remedies. (a) If a Default or an Event of Default exists, the Agent may, in its discretion, and shall, at the direction of the Required Lenders, do one or more of the following at any time or times and in any order, without notice to or demand on the Borrower: (i) restrict the amount of or refuse to make Revolving Loans; and (ii) restrict or refuse to provide Letters of Credit or Credit Support. If an Event of Default exists, the Agent, may, in its discretion, and shall, at the direction of the Required Lenders, reduce the Maximum Revolver Amount, or the advance rates against Eligible Accounts and/or Eligible Inventory used in computing the Borrowing Base, or reduce one or more of the other elements used in computing the Borrowing Base. In addition, if an Event of Default exists, the Agent shall, at the direction of the Required Lenders, do one or more of the following, in addition to the actions described in the preceding sentence, at any time or times and in any order, without notice to or demand on the Borrower: (A) terminate the Commitments and this Agreement; (B) declare any or all Obligations to be immediately due and payable; provided, however, that upon the occurrence of any Event of Default described in SECTIONS 9.1(E), 9.1(F), 9.1(G), or 9.1(H), the Commitments shall automatically and immediately expire and all Obligations shall automatically become immediately due and payable without notice or demand of any kind; (C) require the Borrowers to cash collateralize all outstanding Letter of Credit Obligations; and (D) pursue its other rights and remedies under the Loan Documents and applicable law. (b) If an Event of Default has occurred and is continuing: (i) the Agent shall have for the benefit of the Lenders, in addition to all other rights of the Agent and the Lenders, the rights and remedies of a secured party under the Loan Documents and the UCC; (ii) the Agent may, at any time, take possession of the Collateral and keep it on any Loan Party's premises, at no cost to the Agent or any Lender, or remove any part of it to such other place or places as the Agent may desire, or the Loan Parties shall, upon the Agent's demand, at the Borrowers' cost, assemble the Collateral and make it available to the Agent at a place reasonably convenient to the Agent; and (iii) the Agent may sell and deliver any Collateral at public or private sales, for cash, upon credit or otherwise, at such prices and upon such terms as the Agent deems advisable, in its sole discretion, and may, if the Agent deems it reasonable, postpone or adjourn any sale of the Collateral by an announcement at the time and place of sale or of such postponed or adjourned sale without giving a new notice of sale. Without in any way requiring notice to be given in the following manner, the Loan Parties agree that any notice by the Agent of sale, disposition, or other intended action hereunder or in connection herewith, whether required by the UCC or otherwise, shall constitute reasonable notice to such Loan Party if such notice is mailed by registered or certified mail, return receipt requested, postage prepaid, or is delivered personally against receipt, at least five (5) Business Days prior to such action to Westlake's address specified in or pursuant to SECTION 13.8. If any Collateral is sold on terms other than payment in full at the time of sale, no credit shall be given against the Obligations until the Agent or the Lenders receive payment, and if the buyer defaults in payment, the Agent may resell the Collateral without further notice to any Loan Party. In the event the Agent seeks to take possession of all or any portion of the Collateral by judicial process, the Loan Parties irrevocably waive to the extent permitted under applicable Law: (A) the posting of any bond, surety, or security with respect thereto which might otherwise be required; (B) any demand for possession prior to the commencement of any suit or action to recover the Collateral; and (C) any requirement that the Agent retain possession and not dispose of any Collateral until after trial or final judgment. The Loan Parties agree that the Agent has no obligation to preserve rights to the Collateral or marshal any Collateral for the benefit of any Person. The Agent is hereby granted a license or other right to use, without charge, the Loan Parties' labels, patents, copyrights, name, trade secrets, trade names, trademarks, and advertising matter, or any similar property, in advertising or selling any Collateral, and unless the terms and -41- provisions of such rights provide otherwise, in completing production of any Collateral, and the Loan Parties' rights under all licenses and all franchise agreements shall inure to the Agent's benefit for such purpose. The proceeds of sale shall be applied first to all expenses of sale, including attorneys' fees, and then to the Obligations. The Agent will return any excess to the Borrowers and the Borrowers shall remain liable for any deficiency. (c) If an Event of Default occurs and is continuing, the Loan Parties hereby waive, to the extent permitted by applicable law, all rights to notice and hearing prior to the exercise by the Agent of the Agent's rights to repossess the Collateral without judicial process or to reply, attach or levy upon the Collateral without notice or hearing. ARTICLE 10 TERM AND TERMINATION 10.1 Term and Termination. The term of this Agreement shall end on the Stated Termination Date unless sooner terminated in accordance with the terms hereof. The Agent upon direction from the Required Lenders may terminate this Agreement without notice upon the occurrence of an Event of Default. Upon the effective date of termination of this Agreement for any reason whatsoever, all Obligations (including all unpaid principal, accrued and unpaid interest, and any early termination or prepayment fees or penalties) shall become immediately due and payable, and the Borrowers shall immediately arrange for the cancellation and return of Letters of Credit then outstanding (or, in the alternative, shall provide (a) cash collateral for all remaining Letters of Credit in an amount equal to 110% of the aggregate face amounts of such Letters of Credit or (b) a back-up letter of credit for each remaining Letter of Credit in form and substance and from an issuer acceptable to the Agent in its sole discretion). Notwithstanding the termination of this Agreement, until all Obligations are indefeasibly paid and performed in full in cash or acceptable back-up letters of credit are provided as set forth in the immediately preceding sentence, the Borrowers shall remain bound by the terms of this Agreement and shall not be relieved of any of its Obligations hereunder or under any other Loan Document, and the Agent and the Lenders shall retain all their rights and remedies hereunder (including the Agent's Liens in and all rights and remedies with respect to all then existing and after-arising Collateral). ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS 11.1 Amendments and Waivers. (a) No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by the Loan Parties therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by the Agent at the written request of the Required Lenders) and the Borrowers and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by each Lender affected thereby and the Borrowers and acknowledged by the Agent, do any of the following: (i) extend the Commitment of any Lender; (ii) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees (other than fees payable solely to the Agent), or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document; -42- (iii) reduce the principal of, or the rate of interest specified herein on any Loan, or any fees or other amounts payable hereunder or under any other Loan Document; (iv) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans which is required for the Lenders or any of them to take any action hereunder; (v) increase any of the percentages set forth in the definition of the Borrowing Base; (vi) amend this Section or any provision of this Agreement providing for consent or other action by all Lenders; (vii) release all or substantially all of the Obligation Guaranties or release Collateral other than as permitted by SECTION 12.11 or amend any provisions of the Intercreditor Agreement that would affect the priority of Agent's Liens in the Collateral; (viii) change the definitions of "Majority Lenders" or "Required Lenders"; or (ix) increase the Maximum Revolver Amount, the Maximum Inventory Loan Amount, or Letter of Credit Subfacility; provided, however, the Agent may, in its sole discretion and notwithstanding the limitations contained in CLAUSES (V) and (IX) above and any other terms of this Agreement, make Agent Advances in accordance with SECTION 1.2(G) and, provided further, that (A) no amendment, waiver, or consent shall, unless in writing and signed by the Agent, affect the rights or duties of the Agent under this Agreement or any other Loan Document; (B) no amendment shall increase the Commitment of any Lender unless consented to by such Lender; and (C) SCHEDULE 1.2 hereto (Commitments) may be amended from time to time by Agent alone to reflect assignments of Commitments in accordance herewith. (b) If any fees are paid to the Lenders as consideration for amendments, waivers, or consents with respect to this Agreement, at Agent's election, such fees may be paid only to those Lenders that agree to such amendments, waivers or consents within the time specified for submission thereof. (c) If, in connection with any proposed amendment, waiver or consent (a "PROPOSED CHANGE"): (i) requiring the consent of all Lenders, the consent of Required Lenders is obtained, but the consent of other Lenders is not obtained (any such Lender whose consent is not obtained as described in this clause (i) and in clause (ii) below being referred to as a "NON-CONSENTING LENDER"), or (ii) requiring the consent of Required Lenders, the consent of Majority Lenders is obtained, then, so long as the Agent is not a Non-Consenting Lender, at the Borrowers' request, the Agent or an Eligible Assignee shall have the right (but not the obligation) with the Agent's approval, to purchase from the Non-Consenting Lenders, and the Non-Consenting Lenders agree that they shall sell, all the Non-Consenting Lenders' Commitments for an amount equal to the principal balances thereof and all accrued -43- interest and fees with respect thereto through the date of sale pursuant to Assignment and Acceptance Agreement(s), without premium or discount. 11.2 Assignments; Participations. (a) Any Lender may, with the written consent of the Agent (which consent shall not be unreasonably withheld), assign and delegate to one or more Eligible Assignees (provided that no consent of the Agent shall be required in connection with any assignment and delegation by a Lender to an Affiliate of such Lender) (each an "ASSIGNEE") all, or any ratable part of all, of the Loans, the Commitment, and the other rights and obligations of such Lender hereunder, in a minimum amount of $10,000,000 (provided that, unless an assignor Lender has assigned and delegated all of its Loans and Commitment, no such assignment and/or delegation shall be permitted unless, after giving effect thereto, such assignor Lender retains a Commitment in a minimum amount of $10,000,000; provided, however, that the Borrowers and the Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Borrowers and the Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall have delivered to the Borrowers and the Agent an Assignment and Acceptance in the form of EXHIBIT F ("ASSIGNMENT AND ACCEPTANCE") together with any note or notes, if any, subject to such assignment and (iii) the assignor Lender or Assignee has paid to the Agent a processing fee in the amount of $3,500. The Borrowers agree to promptly execute and deliver new promissory notes and replacement promissory notes if requested by an Assignee or assignor Lender to evidence assignments of the Loans and Commitments in accordance herewith. (b) From and after the date that the Agent notifies the assignor Lender that it has received an executed Assignment and Acceptance (and consent of the Agent thereto, if required) and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations, including, but not limited to, the obligation to participate in Letters of Credit and Credit Support have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties, or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of this Agreement or any other Loan Document furnished pursuant hereto or the attachment, perfection, or priority of any Lien granted by any Loan Party Borrower to the Agent or any Lender in the Collateral; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto; (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such Assignee will, independently (without reliance upon the Agent, such assigning Lender, or any other Lender, and based on such documents and information as it shall deem appropriate at the time), continue to make its own -44- credit decisions in taking or not taking action under this Agreement; (v) such Assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers, including the discretionary rights and incidental power, as are reasonably incidental thereto; and (vi) such Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (d) Immediately upon satisfaction of the requirements of SECTION 11.2(A), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto. (e) Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons not Affiliates of any Borrower (a "PARTICIPANT") participating interests in any Loans, the Commitment of that Lender and the other interests of that Lender (the "ORIGINATING LENDER") hereunder and under the other Loan Documents; provided, however, that (i) the Originating Lender's obligations under this Agreement shall remain unchanged; (ii) the Originating Lender shall remain solely responsible for the performance of such obligations; (iii) the Borrowers and the Agent shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender's rights and obligations under this Agreement and the other Loan Documents; and (iv) no Lender shall transfer or grant any participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except the matters set forth in SECTION 11.1(A) (I), (II), and (III), and all amounts payable by the Borrowers hereunder shall be determined as if such Lender had not sold such participation; except that, if amounts outstanding under this Agreement are due and unpaid, or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent and subject to the same limitation as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. (f) Notwithstanding any other provision in this Agreement, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. ARTICLE 12 THE AGENT 12.1 Appointment and Authorization. Each Lender hereby designates and appoints the Bank as its Agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. In addition, each Lender hereby authorizes the Agent to enter into the Intercreditor Agreement. The Agent agrees to act as such on the express conditions contained in this ARTICLE 12. The provisions of this ARTICLE 12 are solely for the benefit of the Agent and the Lenders and no Borrower shall have any rights as a third party beneficiary of any of the provisions contained herein. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duties or responsibilities, except those expressly set forth -45- herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. Except as expressly otherwise provided in this Agreement, the Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions which the Agent is expressly entitled to take or assert under this Agreement and the other Loan Documents, including (a) the determination of the applicability of ineligibility criteria with respect to the calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to SECTION 1.2(I), and (c) the exercise of remedies pursuant to SECTION 9.2, and any action so taken or not taken shall be deemed consented to by the Lenders. 12.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees, or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects as long as such selection was made without gross negligence or willful misconduct. 12.3 Liability of Agent. None of the Agent-Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Lenders for any recital, statement, representation, or warranty made by any Borrower, any Affiliate of any Borrower, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability, or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books, or records of any Borrower or any Affiliates of any Borrower. 12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document, or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Borrower), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders (or all Lenders if so required by SECTION 11.1) and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. -46- 12.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, unless the Agent shall have received written notice from a Lender or the Borrowers referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default." The Agent will notify the Lenders of its receipt of any such notice. The Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with SECTION 9; provided, however, that unless and until the Agent has received any such request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable. 12.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by the Agent hereinafter taken, including any review of the affairs of the Borrowers and their Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to the Agent that it has, independently (without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate), made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition, and creditworthiness of the Borrowers and their Affiliates, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower. Each Lender also represents that it will, independently (without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time), continue to make its own credit analysis, appraisals, and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition, and creditworthiness of the Borrowers. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by the Agent, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition, or creditworthiness of the Borrowers which may come into the possession of any of the Agent-Related Persons. 12.7 Indemnification. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Borrowers and without limiting the obligation of the Borrowers to do so), in accordance with their Pro Rata Shares, from and against any and all Indemnified Liabilities as such term is defined in SECTION 13.11; provided, however, that no Lender shall be liable for the payment to the Agent-Related Persons of any portion of such Indemnified Liabilities resulting solely from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender shall reimburse the Agent upon demand for its Pro Rata Share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings, or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Borrower. The undertaking in this SECTION 12.7 shall survive the payment of all Obligations hereunder and the resignation or replacement of the Agent. 12.8 Agent in Individual Capacity. The Bank and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with the Borrowers and their Affiliates as though the Bank were not the Agent hereunder and without notice to or consent of the Lenders. The Bank or its Affiliates may receive information regarding the Borrowers, their Affiliates and Account Debtors (including information that may be subject to confidentiality obligations -47- in favor of the Borrowers, Affiliates, or Account Debtors) and acknowledge that the Agent and the Bank shall be under no obligation to provide such information to them. With respect to its Loans, the Bank shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent, and the terms "Lender" and "Lenders" include the Bank in its individual capacity. 12.9 Successor Agent. The Agent may resign as Agent upon at least thirty (30) days prior notice to the Lenders and the Borrowers, such resignation to be effective upon the acceptance of a successor agent to its appointment as Agent. In the event the Bank sells all of its Commitment and Revolving Loans as part of a sale, transfer or other disposition by the Bank of substantially all of its loan portfolio, the Bank shall resign as Agent and such purchaser or transferee shall become the successor Agent hereunder. Subject to the foregoing, if the Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Lenders and Westlake, a successor agent from among the Lenders. Upon the acceptance of its appointment as successor agent hereunder, (a) such successor agent shall succeed to all the rights, powers, and duties of the retiring Agent, (b) the term "Agent" shall mean such successor agent, (c) the retiring Agent's appointment, powers, and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this ARTICLE 12 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. 12.10 Withholding Tax. (a) If any Lender is a "foreign corporation, partnership, or trust" within the meaning of the Code and such Lender claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver to the Agent: (i) if such Lender claims an exemption from, or a reduction of, withholding tax under a United States of America tax treaty, properly completed IRS Forms W-8BEN and W-8ECI before the payment of any interest in the first calendar year and before the payment of any interest in each third succeeding calendar year during which interest may be paid under this Agreement; (ii) if such Lender claims that interest paid under this Agreement is exempt from United States of America withholding tax because it is effectively connected with a United States of America trade or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI before the payment of any interest is due in the first taxable year of such Lender and in each succeeding taxable year of such Lender during which interest may be paid under this Agreement, and IRS Form W-9; and (iii) such other form or forms as may be required under the Code or other laws of the United States of America as a condition to exemption from, or reduction of, United States of America withholding tax. Such Lender agrees to promptly notify the Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction. (b) If any Lender claims exemption from, or reduction of, withholding tax under a United States of America tax treaty by providing IRS Form W-8BEN, and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations owing to such Lender, such Lender agrees to notify the Agent of the percentage amount in which it is no longer the beneficial owner -48- of Obligations of the Borrowers to such Lender. To the extent of such percentage amount, the Agent will treat such Lender's IRS Form W-8BEN as no longer valid. (c) If any Lender claiming exemption from United States of America withholding tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations owing to such Lender, such Lender agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code. (d) If any Lender is entitled to a reduction in the applicable withholding tax, the Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by SUBSECTION (A) of this Section are not delivered to the Agent, then the Agent may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax. (e) If the IRS or any other Governmental Authority of the United States of America or other jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason), such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of the Agent. 12.11 Collateral Matters. (a) The Lenders hereby irrevocably authorize the Agent, at its option and in its sole discretion, to release any Agent's Liens upon any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by the Borrowers of all Aggregate Revolver Outstandings, and the termination of all outstanding Letters of Credit (or, in the alternative, with respect to Letters of Credit, providing (x) cash collateral for all remaining Letters of Credit in an amount equal to 110% of the aggregate face amounts of such Letters of Credit or (y) a back-up letter of credit for each such Letter of Credit in form and substance and from an issuer acceptable to the Agent in its sole discretion) (whether or not any of such obligations are due) and all other Obligations; (ii) constituting property being sold or disposed of if the Borrowers certify to the Agent that the sale or disposition is made in compliance with SECTION 7.9 (and the Agent may rely conclusively on any such certificate, without further inquiry); (iii) constituting property in which the Loan Parties owned no interest at the time the Lien was granted or at any time thereafter; or (iv) constituting property leased to the Loan Parties under a lease which has expired or been terminated in a transaction permitted under this Agreement. Except as provided above, the Agent will not release any of the Agent's Liens without the prior written authorization of the Lenders; provided that the Agent may, in its discretion, release the Agent's Liens on Collateral valued in the aggregate not in excess of $500,000 during each Fiscal Year without the prior written authorization of the Lenders and the Agent may release the Agent's Liens on Collateral valued in the aggregate not in excess of $1,000,000 during each Fiscal Year with the prior written authorization of Required Lenders. Upon request by the Agent or the Borrowers at any time, the Lenders will confirm in writing the Agent's authority to release any Agent's Liens upon particular types or items of Collateral pursuant to this SECTION 12.11. -49- (b) Upon receipt by the Agent of any authorization required pursuant to SECTION 12.11(A) from the Lenders of the Agent's authority to release Agent's Liens upon particular types or items of Collateral, and upon at least five (5) Business Days prior written request by the Borrowers, the Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Agent's Liens upon such Collateral; provided, however, that (i) the Agent shall not be required to execute any such document on terms which, in the Agent's opinion, would expose the Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of any Loan Party in respect of) all interests retained by any Loan Party, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral. (c) The Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by any Loan Party or is cared for, protected, or insured or has been encumbered, or that the Agent's Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure, or fidelity, or to continue exercising, any of the rights, authorities, and powers granted or available to the Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, the Agent may act in any manner it may deem appropriate, in its sole discretion given the Agent's own interest in the Collateral in its capacity as one of the Lenders and that the Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing. 12.12 Restrictions on Actions by Lenders; Sharing of Payments. (a) Each of the Lenders agrees that it shall not, without the express consent of all Lenders, and that it shall, to the extent it is lawfully entitled to do so, upon the request of all Lenders, set off against the Obligations, any amounts owing by such Lender to any Borrower or any accounts of any Borrower now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so by the Agent, take or cause to be taken any action to enforce its rights under this Agreement or against any Borrower, including the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral. (b) If at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations of any Borrower to such Lender arising under, or relating to, this Agreement or the other Loan Documents, except for any such proceeds or payments received by such Lender from the Agent pursuant to the terms of this Agreement, or (ii) payments from the Agent in excess of such Lender's ratable portion of all such distributions by the Agent, such Lender shall promptly (1) turn the same over to the Agent, in kind, and with such endorsements as may be required to negotiate the same to the Agent, or in same day funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, however, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment. -50- 12.13 Agency for Perfection. Each Lender hereby appoints each other Lender as agent for the purpose of perfecting the Lenders' security interest in assets which, in accordance with Article 9 of the UCC can be perfected only by possession or control. Should any Lender (other than the Agent) obtain possession or control of any such Collateral, such Lender shall notify the Agent thereof, and, promptly upon the Agent's request therefor shall deliver such Collateral or control thereof to the Agent or in accordance with the Agent's instructions. 12.14 Payments by Agent to Lenders. All payments to be made by the Agent to the Lenders shall be made by bank wire transfer or internal transfer of immediately available funds to each Lender pursuant to wire transfer instructions delivered in writing to the Agent on or prior to the Closing Date (or if such Lender is an Assignee, on the applicable Assignment and Acceptance), or pursuant to such other wire transfer instructions as each party may designate for itself by written notice to the Agent. Concurrently with each such payment, the Agent shall identify whether such payment (or any portion thereof) represents principal, premium, or interest on the Revolving Loans or otherwise. Unless the Agent receives notice from the Borrowers prior to the date on which any payment is due to the Lenders that the Borrowers will not make such payment in full as and when required, the Agent may assume that the Borrowers have made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrowers have not made such payment in full to the Agent, each Lender shall repay to the Agent on demand such amount distributed to such Lender, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Lender until the date repaid. 12.15 Settlement. (a) (i) Each Lender's funded portion of the Revolving Loans is intended by the Lenders to be equal at all times to such Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding such agreement, the Agent, the Bank, and the other Lenders agree (which agreement shall not be for the benefit of or enforceable by any Borrower) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among them as to the Revolving Loans, the Non-Ratable Loans and the Agent Advances shall take place on a periodic basis in accordance with the following provisions: (ii) The Agent shall request settlement ("Settlement") with the Lenders on at least a weekly basis, or on a more frequent basis at Agent's election, (A) on behalf of the Bank, with respect to each outstanding Non-Ratable Loan, (B) for itself, with respect to each Agent Advance, and (C) with respect to collections received, in each case, by notifying the Lenders of such requested Settlement by telecopy, telephone or other similar form of transmission, of such requested Settlement, no later than 12:00 noon (Houston, Texas time) on the date of such requested Settlement (the "SETTLEMENT DATE"). Each Lender (other than the Bank, in the case of Non-Ratable Loans and the Agent in the case of Agent Advances) shall transfer the amount of such Lender's Pro Rata Share of the outstanding principal amount of the Non-Ratable Loans and Agent Advances with respect to each Settlement to the Agent, to Agent's account, not later than 2:00 p.m. (Houston, Texas time), on the Settlement Date applicable thereto. Settlements may occur during the continuation of a Default or an Event of Default and whether or not the applicable conditions precedent set forth in ARTICLE 8 have then been satisfied. Such amounts made available to the Agent shall be applied against the amounts of the applicable Non-Ratable Loan or Agent Advance and, together with the portion of such Non-Ratable Loan or Agent Advance representing the Bank's Pro Rata Share thereof, shall constitute Revolving Loans of such Lenders. If any such amount is not transferred to the Agent by any Lender on the Settlement Date applicable thereto, the Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate for the first three (3) days from and after the -51- Settlement Date and thereafter at the Interest Rate then applicable to the Revolving Loans (A) on behalf of the Bank, with respect to each outstanding Non-Ratable Loan, and (B) for itself, with respect to each Agent Advance. (iii) Notwithstanding the foregoing, not more than one (1) Business Day after demand is made by the Agent (whether before or after the occurrence of a Default or an Event of Default and regardless of whether the Agent has requested a Settlement with respect to a Non-Ratable Loan or Agent Advance), each other Lender (A) shall irrevocably and unconditionally purchase and receive from the Bank or the Agent, as applicable, without recourse or warranty, an undivided interest and participation in such Non-Ratable Loan or Agent Advance equal to such Lender's Pro Rata Share of such Non-Ratable Loan or Agent Advance and (B) if Settlement has not previously occurred with respect to such Non-Ratable Loans or Agent Advances, upon demand by Bank or Agent, as applicable, shall pay to Bank or Agent, as applicable, as the purchase price of such participation an amount equal to one-hundred percent (100%) of such Lender's Pro Rata Share of such Non-Ratable Loans or Agent Advances. If such amount is not in fact made available to the Agent by any Lender, the Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate for the first three (3) days from and after such demand and thereafter at the Interest Rate then applicable to Base Rate Loans. (iv) From and after the date, if any, on which any Lender purchases an undivided interest and participation in any Non-Ratable Loan or Agent Advance pursuant to CLAUSE (III) above, the Agent shall promptly distribute to such Lender, such Lender's Pro Rata Share of all payments of principal and interest and all proceeds of Collateral received by the Agent in respect of such Non-Ratable Loan or Agent Advance. (v) Between Settlement Dates, the Agent, to the extent no Agent Advances are outstanding, may pay over to the Bank any payments received by the Agent, which in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to the Bank's Revolving Loans including Non-Ratable Loans. If, as of any Settlement Date, collections received since the then immediately preceding Settlement Date have been applied to the Bank's Revolving Loans (other than to Non-Ratable Loans or Agent Advances in which such Lender has not yet funded its purchase of a participation pursuant to CLAUSE (III) above), as provided for in the previous sentence, the Bank shall pay to the Agent for the accounts of the Lenders, to be applied to the outstanding Revolving Loans of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Revolving Loans. During the period between Settlement Dates, the Bank with respect to Non-Ratable Loans, the Agent with respect to Agent Advances, and each Lender with respect to the Revolving Loans other than Non-Ratable Loans and Agent Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the actual average daily amount of funds employed by the Bank, the Agent, and the other Lenders, respectively. (vi) Unless the Agent has received written notice from a Lender to the contrary, the Agent may assume that the applicable conditions precedent set forth in ARTICLE 8 have been satisfied and the requested Borrowing will not exceed Availability on any Funding Date for a Revolving Loan or Non-Ratable Loan. (b) Lenders' Failure to Perform. All Revolving Loans (other than Non-Ratable Loans and Agent Advances) shall be made by the Lenders simultaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Revolving Loans hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its -52- obligation to make any Revolving Loans hereunder, (ii) no failure by any Lender to perform its obligation to make any Revolving Loans hereunder shall excuse any other Lender from its obligation to make any Revolving Loans hereunder, and (iii) the obligations of each Lender hereunder shall be several, not joint and several. (c) Defaulting Lenders. Unless the Agent receives notice from a Lender on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, at least one (1) Business Day prior to the date of such Borrowing, that such Lender will not make available as and when required hereunder to the Agent that Lender's Pro Rata Share of a Borrowing, the Agent may assume that each Lender has made such amount available to the Agent in immediately available funds on the Funding Date. Furthermore, the Agent may, in reliance upon such assumption, make available to the Borrowers on such date a corresponding amount. If any Lender has not transferred its full Pro Rata Share to the Agent in immediately available funds and the Agent has transferred corresponding amount to the Borrowers on the Business Day following such Funding Date, that the Lender shall make such amount available to the Agent, together with interest at the Federal Funds Rate for that day. A notice by the Agent submitted to any Lender with respect to amounts owing shall be conclusive, absent manifest error. If each Lender's full Pro Rata Share is transferred to the Agent as required, the amount transferred to the Agent shall constitute that Lender's Revolving Loan for all purposes of this Agreement. If that amount is not transferred to the Agent on the Business Day following the Funding Date, the Agent will notify the Borrowers of such failure to fund and, upon demand by the Agent, the Borrowers shall pay such amount to the Agent for the Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the Interest Rate applicable at the time to the Revolving Loans comprising that particular Borrowing. The failure of any Lender to make any Revolving Loan on any Funding Date (any such Lender, prior to the cure of such failure, being hereinafter referred to as a "DEFAULTING LENDER") shall not relieve any other Lender of its obligation hereunder to make a Revolving Loan on that Funding Date. No Lender shall be responsible for any other Lender's failure to advance such other Lenders' Pro Rata Share of any Borrowing. (d) Retention of Defaulting Lender's Payments. The Agent shall not be obligated to transfer to a Defaulting Lender any payments made by any Borrower to the Agent for the Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid to or retained by the Agent. In its discretion, the Agent may loan the Borrowers the amount of all such payments received or retained by it for the account of such Defaulting Lender. Any amounts so loaned to the Borrowers shall bear interest at the rate applicable to Base Rate Loans and for all other purposes of this Agreement shall be treated as if they were Revolving Loans, provided, however, that for purposes of voting or consenting to matters with respect to the Loan Documents and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender". Until a Defaulting Lender cures its failure to fund its Pro Rata Share of any Borrowing (i) such Defaulting Lender shall not be entitled to any portion of the Unused Line Fee and (ii) the Unused Line Fee shall accrue in favor of the Lenders which have funded their respective Pro Rata Shares of such requested Borrowing and shall be allocated among such performing Lenders ratably based upon their relative Commitments. This Section shall remain effective with respect to such Lender until such time as the Defaulting Lender shall no longer be in default of any of its obligations under this Agreement. The terms of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, or relieve or excuse the performance by the Borrowers of their duties and obligations hereunder. (e) Removal of Defaulting Lender. At the Borrowers' request, the Agent or an Eligible Assignee reasonably acceptable to the Agent and the Borrowers shall have the right (but not the obligation) to purchase from any Defaulting Lender, and each Defaulting Lender shall, upon such request, sell and assign to the Agent or such Eligible Assignee, all of the Defaulting Lender's outstanding -53- Commitment hereunder. Such sale shall be consummated promptly after Agent has arranged for a purchase by Agent or an Eligible Assignee pursuant to an Assignment and Acceptance, and at a price equal to the outstanding principal balance of the Defaulting Lender's Loans, plus accrued interest and fees, without premium or discount. 12.16 Letters of Credit; Intra-Lender Issues. (a) Notice of Letter of Credit Balance. On each Settlement Date the Agent shall notify each Lender of the issuance of all Letters of Credit since the prior Settlement Date. (b) Participations in Letters of Credit. (i) Purchase of Participations. Immediately upon issuance of any Letter of Credit in accordance with SECTION 1.3(D), each Lender shall be deemed to have irrevocably and unconditionally purchased and received without recourse or warranty, an undivided interest and participation equal to such Lender's Pro Rata Share of the face amount of such Letter of Credit or the Credit Support provided through the Agent to the Letter of Credit Issuer, if not the Bank, in connection with the issuance of such Letter of Credit (including all obligations of the Borrowers with respect thereto, and any security therefor or guaranty pertaining thereto). (ii) Sharing of Reimbursement Obligation Payments. Whenever the Agent receives a payment from any Borrower on account of reimbursement obligations in respect of a Letter of Credit or Credit Support as to which the Agent has previously received for the account of the Letter of Credit Issuer thereof payment from a Lender, the Agent shall promptly pay to such Lender such Lender's Pro Rata Share of such payment from such Borrower. Each such payment shall be made by the Agent on the next Settlement Date. (iii) Documentation. Upon the request of any Lender, the Agent shall furnish to such Lender copies of any Letter of Credit, Credit Support for any Letter of Credit, reimbursement agreements executed in connection therewith, applications for any Letter of Credit, and such other documentation as may reasonably be requested by such Lender. (iv) Obligations Irrevocable. The obligations of each Lender to make payments to the Agent with respect to any Letter of Credit or with respect to their participation therein or with respect to any Credit Support for any Letter of Credit or with respect to the Revolving Loans made as a result of a drawing under a Letter of Credit and the obligations of the Borrower for whose account the Letter of Credit or Credit Support was issued to make payments to the Agent, for the account of the Lenders, shall be irrevocable and shall not be subject to any qualification or exception whatsoever, including any of the following circumstances: (1) any lack of validity or enforceability of this Agreement or any of the other Loan Documents; (2) the existence of any claim, setoff, defense, or other right which any Borrower may have at any time against a beneficiary named in a Letter of Credit or any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), any Lender, the Agent, the issuer of such Letter of Credit, or any other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein, or any unrelated transactions (including any underlying transactions between any Borrower or any other Person and the beneficiary named in any Letter of Credit); -54- (3) any draft, certificate or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid, or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (4) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents; (5) the occurrence of any Default or Event of Default; or (6) the failure of the Borrowers to satisfy the applicable conditions precedent set forth in ARTICLE 8. (c) Recovery or Avoidance of Payments; Refund of Payments In Error. In the event any payment by or on behalf of any Borrower received by the Agent with respect to any Letter of Credit or Credit Support provided for any Letter of Credit and distributed by the Agent to the Lenders on account of their respective participations therein is thereafter set aside, avoided, or recovered from the Agent in connection with any receivership, liquidation, or bankruptcy proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent their respective Pro Rata Shares of such amount set aside, avoided, or recovered, together with interest at the rate required to be paid by the Agent upon the amount required to be repaid by it. Unless the Agent receives notice from the Borrowers prior to the date on which any payment is due to the Lenders that the Borrowers will not make such payment in full as and when required, the Agent may assume that the Borrowers have made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrowers have not made such payment in full to the Agent, each Lender shall repay to the Agent on demand such amount distributed to such Lender, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Lender until the date repaid. (d) Indemnification by Lenders. To the extent not reimbursed by the Borrowers and without limiting the obligations of the Borrowers hereunder, the Lenders agree to indemnify the Letter of Credit Issuer ratably in accordance with their respective Pro Rata Shares, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys' fees), or disbursements of any kind and nature whatsoever that may be imposed on, incurred by, or asserted against the Letter of Credit Issuer in any way relating to or arising out of any Letter of Credit or the transactions contemplated thereby or any action taken or omitted by the Letter of Credit Issuer under any Letter of Credit or any Loan Document in connection therewith; provided that no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful misconduct of the Person to be indemnified. Without limitation of the foregoing, each Lender agrees to reimburse the Letter of Credit Issuer promptly upon demand for its Pro Rata Share of any costs or expenses payable by the Borrowers to the Letter of Credit Issuer, to the extent that the Letter of Credit Issuer is not promptly reimbursed for such costs and expenses by a Borrower. The agreement contained in this Section shall survive payment in full of all other Obligations. 12.17 Concerning the Collateral and the Related Loan Documents. Each Lender authorizes and directs the Agent to enter into the other Loan Documents, for the ratable benefit and obligation of the Agent and the Lenders. Each Lender agrees that any action taken by the Agent, Majority Lenders, or Required Lenders, as applicable, in accordance with the terms of this Agreement or the other Loan Documents, and the exercise by the Agent, the Majority Lenders, or the Required Lenders, as applicable, of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. The Lenders acknowledge that the -55- Revolving Loans, Agent Advances, Non-Ratable Loans, Bank Products, and all interest, fees and expenses hereunder constitute one Debt, secured pari passu by all of the Collateral. 12.18 Field Audit and Examination Reports; Disclaimer by Lenders. By signing this Agreement, each Lender: (a) is deemed to have requested that the Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a "Report" and collectively, "Reports") prepared by or on behalf of the Agent; (b) expressly agrees and acknowledges that neither the Bank nor the Agent (i) makes any representation or warranty as to the accuracy of any Report, or (ii) shall be liable for any information contained in any Report; (c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that the Agent or the Bank or other party performing any audit or examination will inspect only specific information regarding the Borrowers and will rely significantly upon the Borrowers' books and records, as well as on representations of the Borrowers' personnel; (d) agrees to keep all Reports confidential and strictly for its internal use, and not to distribute except to its participants, or use any Report in any other manner; and (e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold the Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to the Borrowers, or the indemnifying Lender's participation in, or the indemnifying Lender's purchase of, a loan or loans of the Borrower; and (ii) to pay and protect, and indemnify, defend and hold the Agent and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including Attorney Costs) incurred by the Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender. 12.19 Relation Among Lenders. The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Agent) authorized to act for, any other Lender. 12.20 Co-Agents. None of the Lenders identified on the facing page or signature pages of this Agreement as a "co-agent" (if any) shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders so identified as a "co-agent" (if any) shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE 13 MISCELLANEOUS 13.1 No Waivers; Cumulative Remedies. No failure by the Agent or any Lender to exercise any right, remedy, or option under this Agreement or any present or future supplement thereto, or -56- in any other agreement between or among any Borrower and the Agent and/or any Lender, or delay by the Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by the Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by the Agent or the Lenders on any occasion shall affect or diminish the Agent's and each Lender's rights thereafter to require strict performance by the Borrowers of any provision of this Agreement. The Agent and the Lenders may proceed directly to collect the Obligations without any prior recourse to the Collateral. The Agent's and each Lender's rights under this Agreement will be cumulative and not exclusive of any other right or remedy which the Agent or any Lender may have. 13.2 Severability. The illegality or unenforceability of any provision of this Agreement or any Loan Document or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder. 13.3 Governing Law; Choice of Forum; Service of Process. (a) The Loan Documents have been entered into pursuant to Section 5-1401 of the New York General Obligations Law and the substantive laws of the State of New York (except to the extent the laws of another jurisdiction govern the creation, perfection, validity, or enforcement of Liens under the Collateral Documents), and the applicable federal laws of the United States of America shall govern the validity, construction, enforcement and interpretation of the Loan Documents. (b) EACH PARTY HERETO (INCLUDING EACH GUARANTOR BY EXECUTION OF AN OBLIGATION GUARANTY), IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, HEREBY (A) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE (PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN IN THE STATE OF NEW YORK, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY NEW YORK LAW, (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE OBLIGATION BROUGHT IN ANY SUCH COURT, (C) IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (D) AGREES TO DESIGNATE AND MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN NEW YORK IN CONNECTION WITH ANY SUCH LITIGATION AND TO DELIVER TO THE AGENT EVIDENCE THEREOF, IF REQUESTED, AND (E) IRREVOCABLY AGREES TO THE FULLEST EXTENT PERMITTED BY LAW THAT ANY LEGAL PROCEEDING AGAINST ANY PARTY HERETO ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE OBLIGATION SHALL BE BROUGHT IN ONE OF THE AFOREMENTIONED COURTS. THE SCOPE OF EACH OF THE FOREGOING WAIVERS IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE LOAN PARTIES AND EACH OTHER PARTY TO THE LOAN DOCUMENTS ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE AGREEMENT OF EACH PARTY HERETO TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THE LOAN DOCUMENTS, AND EACH WILL CONTINUE TO RELY ON EACH OF SUCH WAIVERS IN RELATED FUTURE DEALINGS. THE LOAN PARTIES AND EACH OTHER PARTY TO THE LOAN DOCUMENTS WARRANT AND REPRESENT THAT THEY HAVE REVIEWED THESE WAIVERS WITH THEIR LEGAL COUNSEL, AND THAT THEY KNOWINGLY AND VOLUNTARILY AGREE TO EACH SUCH WAIVER FOLLOWING CONSULTATION WITH LEGAL -57- COUNSEL. THE WAIVERS IN THIS SECTION 13.3 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS, AND REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN DOCUMENT. In the event of litigation, this agreement may be filed as a written consent to a trial by the court. Notwithstanding the foregoing: (1) the agent and the lenders shall have the right to bring any action or proceeding against any loan party or their property in the courts of any other jurisdiction the agent or the lenders deem necessary or appropriate in order to realize on the collateral or other security for the obligations and (2) each of the parties hereto acknowledges that any appeals from the courts described in the immediately preceding sentence may have to be heard by a court located outside those jurisdictions. (c) EACH BORROWER AND EACH OTHER LOAN PARTY (BY EXECUTION OF AN OBLIGATION GUARANTY) HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO WESTLAKE AT ITS ADDRESS SET FORTH IN SECTION 13.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF (I) TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED WITH A NATIONALLY-RECOGNIZED OVERNIGHT COURIER OR (II) WHEN ACTUALLY DELIVERED TO SUCH PERSON. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW. 13.4 WAIVER OF JURY TRIAL. EACH BORROWER AND EACH OTHER LOAN PARTY (BY EXECUTION OF AN OBLIGATION GUARANTY), THE LENDERS, AND THE AGENT EACH IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY SUCH PARTIES AGAINST ANY OTHER SUCH PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT, OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH BORROWER, THE LENDERS, AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 13.5 Survival of Representations and Warranties. All of the Borrowers' representations and warranties contained in this Agreement shall survive the execution, delivery, and acceptance thereof by the parties, notwithstanding any investigation by the Agent or the Lenders or their respective agents. 13.6 Other Security and Guaranties. The Agent, may, without notice or demand and without affecting any Borrower's obligations hereunder, from time to time: (a) take from any Person and hold collateral (other than the Collateral) for the payment of all or any part of the Obligations and exchange, enforce, or release such collateral or any part thereof; and (b) accept and hold any endorsement or guaranty of payment of all or any part of the Obligations and release or substitute any such endorser or -58- guarantor, or any Person who has given any Lien in any other collateral as security for the payment of all or any part of the Obligations, or any other Person in any way obligated to pay all or any part of the Obligations. 13.7 Fees and Expenses. The Borrowers agree to pay to the Agent and the Arranger (as applicable), for their respective benefits, on demand, all reasonable costs and expenses that the Agent and the Arranger pays or incurs in connection with the negotiation, preparation, syndication, consummation, administration, enforcement, and termination of this Agreement or any of the other Loan Documents, including: (a) Attorney Costs; (b) costs and expenses (including, without duplication, attorneys' and paralegals' fees and disbursements) for any amendment, supplement, waiver, consent, or subsequent closing in connection with the Loan Documents and the transactions contemplated thereby; (c) costs and expenses of lien searches; (d) taxes, fees, and other charges for recording any mortgages, filing financing statements and continuations, and other actions to perfect, protect, and continue the Agent's Liens (including costs and expenses paid or incurred by the Agent in connection with the consummation of the Agreement); (e) sums paid or incurred to pay any amount or take any action reasonably required of any Borrower under the Loan Documents that Borrowers fail to pay or take; (f) costs of appraisals, inspections, and verifications of the Collateral, including travel, lodging, and meals for inspections of the Collateral and the Loan Parties' operations by the Agent plus the Agent's then customary charge for field examinations and audits and the preparation of reports thereof (such charge is currently $850 per day (or portion thereof) for each Person retained or employed by the Agent with respect to each field examination or audit); and (g) costs and expenses of forwarding loan proceeds, collecting checks, and other items of payment, and establishing and maintaining Payment Accounts and lock boxes, and costs and expenses of preserving and protecting the Collateral. In addition, the Borrowers agree to pay costs and expenses incurred by the Agent and the Arranger (including Attorneys' Costs) to the Agent and the Arranger, as applicable, for their respective benefit, on demand, and to the other Lenders for their benefit, on demand, and all reasonable fees, expenses and disbursements incurred by such other Lenders for one law firm retained by such other Lenders, in each case, paid or incurred to obtain payment of the Obligations, enforce the Agent's Liens, sell or otherwise realize upon the Collateral, and otherwise enforce the provisions of the Loan Documents, or to defend any claims made or threatened against the Agent, the Arranger, or any Lender arising out of the transactions contemplated hereby (including preparations for and consultations concerning any such matters). The foregoing shall not be construed to limit any other provisions of the Loan Documents regarding costs and expenses to be paid by the Borrower. All of the foregoing costs and expenses may be (in the sole discretion of the Agent) charged to the Borrowers' Loan Account as Revolving Loans as described in SECTION 3.7 up to the Maximum Revolver Amount. 13.8 Notices. Except as otherwise provided herein, all notices, demands and requests that any party is required or elects to give to any other shall be in writing, or by a telecommunications device capable of creating a written record, and any such notice shall become effective (a) on the earlier of (i) two (2) days after the same shall have been so deposited with a nationally-recognized overnight courier or (ii) when actually delivered to such person, (b) four (4) days after it shall have been mailed by United States mail, first class, certified or registered, with postage prepaid, or (c) in the case of notice by such a telecommunications device, when properly transmitted, in each case addressed to the party to be notified as follows: -59- If to the Agent or to the Bank: Bank of America, N.A. 55 S. Lake Avenue, Suite 900 Pasadena, CA 91101 Attention: Robert Mostert Facsimile No.: 626.397.1275 with copies to: Haynes and Boone, LLP 901 Main Street, Suite 3100 Dallas, TX 75202 Attention: Sue P. Murphy Facsimile No.: 214.200.0565 If to the Borrower: Westlake Chemical Corporation 2801 Post Oak Boulevard Houston, TX 77056 Attention: Treasurer Facsimile No.: 713.960.9420 or to such other address as each party may designate for itself by like notice. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to the persons designated above to receive copies shall not adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. 13.9 Waiver of Notices. Unless otherwise expressly provided herein, each Borrower waives presentment, and notice of demand or dishonor and protest as to any instrument, notice of intent to accelerate the Obligations, and notice of acceleration of the Obligations, as well as any and all other notices to which it might otherwise be entitled. No notice to or demand on any Borrower which the Agent or any Lender may elect to give shall entitle any Borrower to any or further notice or demand in the same, similar, or other circumstances. 13.10 Binding Effect. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective representatives, successors, and assigns of the parties hereto; provided, however, that no interest herein may be assigned by any Borrower without prior written consent of the Agent and each Lender. The rights and benefits of the Agent and the Lenders hereunder shall, if such Persons so agree, inure to any party acquiring any interest in the Obligations or any part thereof. 13.11 Indemnity of the Agent, the Arranger, and the Lenders by the Borrower. (a) Each Borrower and each other Loan Party (by execution of an Obligation Guaranty) agrees to defend, indemnify, and hold the Agent-Related Persons, the Arranger, and each Lender and each of their respective officers, directors, employees, counsel, representatives, agents, and attorneys-in-fact (each, an "INDEMNIFIED PERSON") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses, and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time -60- (including at any time following repayment of the Loans and the termination, resignation, or replacement of the Agent or replacement of any Lender) be imposed on, incurred by, or asserted against any such Person in any way relating to or arising out of this Agreement or any document contemplated by or referred to herein, or the transactions contemplated hereby, or any action taken or omitted by any such Person under or in connection with any of the foregoing, including with respect to any investigation, litigation, or proceeding (including any insolvency proceeding or appellate proceeding) related to or arising out of this Agreement, any other Loan Document, or the Loans or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "INDEMNIFIED LIABILITIES"); provided, that the Borrower shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities to the extent resulting from the gross negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall survive payment of all other Obligations. (b) Each Borrower and each other Loan Party (by execution of an Obligation Guaranty) agrees to indemnify, defend, and hold harmless the Agent and the Lenders from any Environmental Liability, arising directly or indirectly, in whole or in part, out of any breach of this Agreement, including without limitation, any breach of SECTION 6.16 or SECTION 7.7 by any Loan Party. This indemnity will apply whether the Hazardous Material is on, under, or about any Real Estate or operations or property leased to, or formerly owned or operated by, any Loan Party or any of their Subsidiaries. The indemnity includes, but is not limited to, Attorneys Costs. The indemnity extends to the Agent and the Lenders, their parents, affiliates, subsidiaries, and all of their directors, officers, employees, agents, successors, attorneys, and assigns. This indemnity will survive repayment of all other Obligations. This indemnity is intended to allocate responsibility between the Loan Parties and the Agent and the Lenders as contemplated by Section 107(e)(1) of CERCLA and any successor federal statute, rule, or regulations or comparable state statute, rule, or regulations. 13.12 Limitation of Liability. NO CLAIM MAY BE MADE BY ANY LOAN PARTY, ANY LENDER, OR OTHER PERSON AGAINST THE AGENT, THE ARRANGER, ANY LENDER, OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS, OR ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH BORROWER AND EACH OTHER LOAN PARTY (BY EXECUTION OF AN OBLIGATION GUARANTY) AND EACH LENDER HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR. 13.13 Final Agreement. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. No modification, rescission, waiver, release, or amendment of any provision of this Agreement or any other Loan Document shall be made, except by a written agreement signed by the Borrowers and a duly authorized officer of each of the Agent and the requisite Lenders. 13.14 Counterparts. This Agreement may be executed in any number of counterparts, and by the Agent, each Lender, and each Borrower in separate counterparts, each of which shall be an -61- original, but all of which shall together constitute one and the same agreement; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. 13.15 Captions. The captions contained in this Agreement are for convenience of reference only, are without substantive meaning and should not be construed to modify, enlarge, or restrict any provision. 13.16 Right of Setoff. In addition to any rights and remedies of the Lenders provided by law, if an Event of Default exists or the Loans have been accelerated, each Lender is authorized at any time and from time to time, without prior notice to any Borrower, any such notice being waived by each Borrower to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender or any Affiliate of such Lender to or for the credit or the account of any Borrower against any and all Obligations (for the benefit of all Lenders as provided herein), now or hereafter existing, irrespective of whether or not the Agent or such Lender shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Lender agrees promptly to notify the Borrowers and the Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS. If any Lender shall obtain any payment or prepayment with respect to the Obligation as a result of exercising its Right under this SECTION 13.16 which is in excess of its share of any such payment in accordance with the relevant rights of the Lenders under the Loan Documents, then such Lender shall purchase from the other Lenders such participations as shall be necessary to cause such purchasing Lender to share the excess payment with each other Lender in accordance with the relevant rights under the Loan Documents. If all or any portion of such excess payment is subsequently recovered from such purchasing Lender, then the purchase shall be rescinded and the purchase price restored to the extent of such recovery. Each Loan Party agrees that any Lender purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all of its rights of payment (including the right of offset) with respect to such participation as fully as if such Lender were the direct creditor of such Loan Party in the amount of such participation. 13.17 Confidentiality. (a) Each Borrower hereby consents that the Agent and each Lender may issue and disseminate to the public general non-confidential information describing the credit accommodation entered into pursuant to this Agreement, including the names and addresses of the Borrowers and a general description of the business of the Borrowers and may use the Borrowers' name in advertising and other promotional material. (b) The Agent and each Lender severally agrees to take customary and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as "confidential" or "secret" by the Borrowers and provided to the Agent or such Lender by or on behalf of the Borrowers, under this Agreement, or any other Loan Document, except to the extent that such information (i) was or becomes generally available to the public other than as a result of disclosure by the Agent or such Lender, or (ii) was or becomes available on a nonconfidential basis from a source other than the Borrowers, provided that such source is not bound by a confidentiality agreement with the Borrowers known to the Agent or such Lender; provided, however, that the Agent and any Lender may -62- disclose such information (1) at the request or pursuant to any requirement of any Governmental Authority to which the Agent or such Lender is subject or in connection with an examination of the Agent or such Lender by any such Governmental Authority; (2) pursuant to subpoena or other court process; (3) when required to do so in accordance with the provisions of any applicable Requirement of Law; (4) to the extent reasonably required in connection with any litigation or proceeding (including, but not limited to, any bankruptcy proceeding) to which the Agent, any Lender or their respective Affiliates may be party; (5) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document; (6) to the Agent's or such Lender's independent auditors, accountants, attorneys, and other professional advisors; provided that such Persons have been informed that such information is required to be kept confidential to the extent required by this SECTION 13.17; (7) to any prospective Participant or Assignee under any Assignment and Acceptance, actual or potential, provided that such prospective Participant or Assignee agrees to keep such information confidential to the same extent required of the Agent and the Lenders hereunder; (8) as expressly permitted under the terms of any other document or agreement regarding confidentiality to which any Borrower is party with the Agent or such Lender, and (9) to its Affiliates; provided that such Persons have been informed that such information is required to be kept confidential to the extent required by this SECTION 13.17. Notwithstanding anything herein to the contrary, the information subject to this SECTION 13.17(B) shall not include, and the Agent, each Lender, and each employee, representative, or other agent of the Agent or any Lender may disclose to any and all persons without limitation of any kind, the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Agent or such Lender relating to such tax treatment and tax structure. 13.18 Conflicts with Other Loan Documents. Unless otherwise expressly provided in this Agreement (or in another Loan Document by specific reference to the applicable provision contained in this Agreement), if any provision contained in this Agreement conflicts with any provision of any other Loan Document, the provision contained in this Agreement shall govern and control. 13.19 Westlake as Agent. By executing this Agreement, each of the Borrowers confirms to the other parties to this Agreement that Westlake shall (and has been duly appointed by each of the Borrowers to) act as agent for the Borrowers for all purposes of the Loan Documents, including, without limitation, taking any action or receiving any communication on behalf of such Borrower in connection with the Loan Documents. Each of the Lenders and Agent shall be entitled to deal with any Borrower through Westlake and to rely on any instructions or other communications from Westlake on behalf of any Borrower. None of the Lenders or Agent shall have any responsibility to any Borrower for dealing with the Borrowers as provided in this SECTION 13.19, and the Obligation of each of the Borrowers to the Lenders shall not be affected by any matter relating to acts or omissions of Westlake relating to the Borrowing or otherwise as agent for the Borrowers hereunder. Notwithstanding the appointment of Westlake as agent for the Borrowers hereunder, Agent and the Lenders shall in their sole discretion be entitled to deal directly with any Borrower for all purposes of the Loan Documents. [REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURE PAGE FOLLOWS.] -63- SIGNATURE PAGE TO CREDIT AGREEMENT IN WITNESS WHEREOF, the parties have entered into this Agreement on the date first above written. BANK OF AMERICA, N.A., as Agent By: /s/ Robert Mostert ----------------------------------------- Robert Mostert, Vice President SIGNATURE PAGE TO CREDIT AGREEMENT SIGNATURE PAGE TO THAT CERTAIN CREDIT AMENDMENT DATED AS OF JULY 31, 2003, AMONG WESTLAKE CHEMICAL CORPORATION AND CERTAIN OF ITS DIRECT AND INDIRECT SUBSIDIARIES, AS BORROWERS, BANK OF AMERICA, N.A., AS THE AGENT, AND THE LENDERS DEFINED HEREIN. BANK OF AMERICA, N.A., as a Lender By: /s/ Robert Mostert ----------------------------------------- Robert Mostert, Vice President SIGNATURE PAGE TO CREDIT AGREEMENT SIGNATURE PAGE TO THAT CERTAIN CREDIT AMENDMENT DATED AS OF JULY 31, 2003, AMONG WESTLAKE CHEMICAL CORPORATION AND CERTAIN OF ITS DIRECT AND INDIRECT SUBSIDIARIES, AS BORROWERS, BANK OF AMERICA, N.A., AS THE AGENT, AND THE LENDERS DEFINED HEREIN. WESTLAKE CHEMICAL CORPORATION, a Delaware corporation By: /s/ A. Chao ------------------------------------------ Albert Chao President SIGNATURE PAGE TO CREDIT AGREEMENT SIGNATURE PAGE TO THAT CERTAIN CREDIT AMENDMENT DATED AS OF JULY 31, 2003, AMONG WESTLAKE CHEMICAL CORPORATION AND CERTAIN OF ITS DIRECT AND INDIRECT SUBSIDIARIES, AS BORROWERS, BANK OF AMERICA, N.A., AS THE AGENT, AND THE LENDERS DEFINED HEREIN. NORTH AMERICAN PIPE CORPORATION, a Delaware corporation VAN BUREN PIPE CORPORATION, a Delaware corporation WESTECH BUILDING PRODUCTS, INC., a Delaware corporation WESTLAKE PVC CORPORATION, a Delaware corporation WESTLAKE VINYLS, INC., a Delaware corporation By: /s/ Tai-Li Keng ------------------------------------------ Tai-Li Keng Vice-President of the above Borrowers SIGNATURE PAGE TO CREDIT AGREEMENT SIGNATURE PAGE TO THAT CERTAIN CREDIT AMENDMENT DATED AS OF JULY 31, 2003, AMONG WESTLAKE CHEMICAL CORPORATION AND CERTAIN OF ITS DIRECT AND INDIRECT SUBSIDIARIES, AS BORROWERS, BANK OF AMERICA, N.A., AS THE AGENT, AND THE LENDERS DEFINED HEREIN. GEISMAR VINYLS COMPANY LP, a Delaware limited partnership By: GVGP, Inc., its general partner WESTLAKE PETROCHEMICALS LP, a Delaware limited partnership By: Westlake Chemical Investments, Inc., its general partner WESTLAKE POLYMERS LP, a Delaware limited partnership By: Westlake Chemical Investments, Inc., its general partner WESTLAKE STYRENE LP, a Delaware limited partnership By: Westlake Chemical Holdings, Inc., its general partner WPT LP, a Delaware limited partnership By: Westlake Chemical Holdings, Inc., its general partner By: /s/ Tai-Li Keng ------------------------------------ Tai-Li Keng Vice President of the general partners of the above Borrowers SIGNATURE PAGE TO CREDIT AGREEMENT ANNEX A TO CREDIT AGREEMENT DEFINITIONS Capitalized terms used in the Loan Documents shall have the following respective meanings (unless otherwise defined therein), and all section references in the following definitions shall refer to sections of the Agreement: "ACCOUNTS" means all of the Loan Party's now owned or hereafter acquired or arising accounts, as defined in the UCC, including any rights to payment for the sale or lease of goods or rendition of services, whether or not they have been earned by performance. "ACCOUNT DEBTOR" means each Person obligated in any way on or in connection with an Account, Chattel Paper, or General Intangibles (including a payment intangible). "ACCOUNT TRIGGERING DATE" means the date upon which the Availability is less than $60,000,000 at any time. "ACH TRANSACTIONS" means any cash management or related services including the automatic clearing house transfer of funds by the Bank for the account of any Borrower pursuant to agreement or overdrafts. "ACQUISITION" means any transaction or series of related transactions for the purpose of, or resulting in, directly or indirectly, (a) the acquisition by any Loan Party of all or substantially all of the assets of a Person or of any business or division of a Person; (b) the acquisition by any Loan Party of more than 50% of any class of Voting Stock (or similar ownership interests) of any Person; or (c) a merger, consolidation, amalgamation, or other combination by any Loan Party with another Person if a Loan Party is the surviving entity, provided that, (i) in any merger involving any Borrower, a Borrower must be the surviving entity; and (ii) for purpose of this Agreement, any Acquisition among Loan Parties is not an "Acquisition." "ADJUSTED NET EARNINGS FROM OPERATIONS" means, with respect to any fiscal period of Westlake, the Loan Parties' consolidated net income after provision for income taxes for such fiscal period, as determined in accordance with GAAP and reported on the Financial Statements for such period, excluding any and all of the following included in such net income: (a) gain or loss arising from the sale of any capital assets; (b) gain arising from any write-up in the book value of any asset; (c) earnings of any Person, substantially all the assets of which have been acquired by any Loan Party in any manner, to the extent realized by such other Person prior to the date of acquisition; (d) earnings of any Person in which any Loan Party has an ownership interest unless (and only to the extent) such earnings shall actually have been received by such Loan Party in the form of cash distributions; (e) earnings of any Person to which assets of any Loan Party shall have been sold, transferred, or disposed of, or into which any Loan Party shall have been merged, or which has been a party with any Loan Party to any consolidation or other form of reorganization, prior to the date of such transaction; (f) gain arising from the acquisition of Debt or equity security of any Loan Party or from cancellation or forgiveness of Debt; and (g) gain arising from extraordinary items, as determined in accordance with GAAP, or from any other non-recurring transaction. "AFFILIATE" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person or which owns, directly or ANNEX A TO CREDIT AGREEMENT indirectly, five percent (5%) or more of the outstanding equity interest of such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise. "AGENT" means the Bank, solely in its capacity as agent for the Lenders, and any successor agent. "AGENT ADVANCES" has the meaning specified in SECTION 1.2(I). "AGENT'S LIENS" means the Liens in the Collateral granted to the Agent, for the benefit of the Lenders, Bank, and Agent pursuant to this Agreement and the other Loan Documents. "AGENT-RELATED PERSONS" means the Agent, together with its Affiliates, and the officers, directors, employees, counsel, representatives, agents and attorneys-in-fact of the Agent and such Affiliates. "AGGREGATE REVOLVER OUTSTANDINGS" means, at any date of determination: the sum of (a) the unpaid balance of Revolving Loans, (b) the aggregate amount of Pending Revolving Loans, (c) one hundred percent (100%) of the aggregate undrawn face amount of all outstanding Letters of Credit, and (d) the aggregate amount of any unpaid reimbursement obligations in respect of Letters of Credit. "AGREEMENT" means the Credit Agreement dated as of July 31, 2003, by and among the Borrowers, the Agent, and the other Lenders, as from time to time amended, modified or restated. "ANNIVERSARY DATE" means each anniversary of the Closing Date. "APPLICABLE MARGIN" means (i) with respect to Base Rate Loans and all other Obligations (other than LIBOR Rate Loans and the Unused Line Fee), 0.25%; (ii) with respect to LIBOR Rate Loans, 2.25%; and (iii) with respect to the Unused Line Fee, .50%. The Applicable Margins with respect to Base Rate Loans and LIBOR Rate Loans shall be adjusted (up or down) prospectively on a quarterly basis, as determined by the Loan Parties' consolidated financial performance, commencing with the first day of the first calendar quarter that occurs more than five (5) days after delivery of the Borrowers' quarterly Financial Statements to Lenders for the fiscal quarter ending June 30, 2004. Adjustments in Applicable Margins shall be determined by reference to the following grids: A-2 ANNEX A TO CREDIT AGREEMENT
IF FIXED CHARGE COVERAGE RATIO IS: LEVEL OF APPLICABLE MARGINS: - -------------------------------------------------------------------------------- Less than 1.20:1.0 Level I Less than 1.40:1.0, but greater than or equal to Level II 1.20:1.0 Less than 1.60:1.0, but greater than or equal to Level III 1.40:1.0 Less than 1.80:1.0, but greater than or equal to Level IV 1.60:1.0 Greater than or equal to 1.80:1.0 Level V
LOW TO HIGH
APPLICABLE MARGINS LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V - --------------------------------------------------------------------------------------------- Base Rate Loans 1.00% 0.75% 0.50% 0.25% 0.00% LIBOR Rate Loans 3.00% 2.75% 2.50% 2.25% 2.00%
All adjustments in the Applicable Margins after June 30, 2004 shall be implemented quarterly on a prospective basis, for each calendar quarter commencing at least five (5) days after the date of delivery to the Lenders of monthly Financial Statements evidencing the need for an adjustment. Concurrently with the delivery of those Financial Statements, the Borrowers shall deliver to the Agent and the Lenders a certificate, signed by a Responsible Officer on behalf of the Borrowers, setting forth in reasonable detail the basis for the continuance of, or any change in, the Applicable Margins. Failure to timely deliver such Financial Statements shall, in addition to any other remedy provided for in this Agreement, result in an increase in the Applicable Margins to the highest level set forth in the foregoing grid, until the first day of the first calendar month following the delivery of those Financial Statements demonstrating that such an increase is not required. If a Default or Event of Default has occurred and is continuing at the time any reduction in the Applicable Margins is to be implemented, no reduction may occur until the first day of the first calendar month following the date on which such Default or Event of Default is waived or cured. "ARRANGER" means Banc of America Securities LLC and its successors and assigns, in its capacity as sole lead arrangers and sole book manager under the Loan Documents. "ASSIGNEE" has the meaning specified in SECTION 11.2(A). "ASSIGNMENT AND ACCEPTANCE" has the meaning specified in SECTION 11.2(A). "ATTORNEY COSTS" means and includes all reasonable fees, expenses, and disbursements of any law firm or other counsel engaged by the Agent or the Arranger, and the reasonably allocated costs and expenses of internal legal services of the Agent and the Arranger. "AVAILABILITY" means, at any time (a) the lesser of (i) the Maximum Revolver Amount or (ii) the Borrowing Base, minus (b) Reserves from time to time established by the Agent in its reasonable credit judgment without duplication to the Reserves deducted in the calculation of the Borrowing Base, minus (c) in each case, the Aggregate Revolver Outstandings. "BANK" means Bank of America, N.A., a national banking association, or any successor entity thereto. A-3 ANNEX A TO CREDIT AGREEMENT "BANK PRODUCTS" means any one or more of the following types of services or facilities extended to any Loan Party by the Bank or any Affiliate of the Bank in reliance on the Bank's agreement to indemnify such Affiliate: (i) credit cards; (ii) ACH Transactions; (iii) cash management, including controlled disbursement services; and (iv) Hedge Agreements. "BANK PRODUCT RESERVES" means all reserves which the Agent from time to time establishes in its reasonable discretion for the Bank Products then provided or outstanding. "BANKRUPTCY CODE" means Title 11 of the United States Code (11 U.S.C.Section 101 et seq.). "BASE RATE" means, for any day, the rate of interest in effect for such day as publicly announced from time to time by the Bank in Charlotte, North Carolina as its "prime rate" (the "prime rate" being a rate set by the Bank based upon various factors including the Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate). Any change in the prime rate announced by the Bank shall take effect at the opening of business on the day specified in the public announcement of such change. Each Interest Rate based upon the Base Rate shall be adjusted simultaneously with any change in the Base Rate. "BASE RATE LOAN" means, a Revolving Loan during any period in which it bears interest based on the Base Rate. "BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms "BENEFICIALLY OWNS" and "BENEFICIALLY OWNED" have corresponding meanings. "BLOCKED ACCOUNT AGREEMENT" means an agreement among any Borrower, the Agent, and a Clearing Bank, in form and substance reasonably satisfactory to the Agent, concerning the collection of payments which represent the proceeds of Accounts or of any other Collateral of such Borrower. "BOND DEBT" means the 8-3/4% Senior Notes due 2011 issued by Westlake pursuant to that certain Indenture dated as of the Closing Date, between Westlake and JPMorgan Chase Bank in an aggregate original principal amount of $380,000,000, and the documents and agreements evidencing and establishing such Debt, as the same may be amended from time to time in accordance with the terms thereof and hereof. "BORROWER" and "BORROWERS" have the meaning specified in the preamble to this Agreement. "BORROWING" means a borrowing hereunder consisting of Revolving Loans made on the same day by the Lenders to the Borrowers or by Bank in the case of a Borrowing funded by Non-Ratable Loans or by the Agent in the case of a Borrowing consisting of an Agent Advance, or the issuance of Letters of Credit hereunder. "BORROWING BASE" means, at any time, an amount equal to (a) the sum of (i) eighty-five percent (85%) of the Net Amount of Eligible Accounts; plus (ii) the lesser of (y) seventy percent (70%) of the value of the lower of cost or market of Eligible Inventory or (z) eighty-five percent (85%) of the Net A-4 ANNEX A TO CREDIT AGREEMENT Orderly Liquidation Value of all Eligible Inventory; minus (b) Reserves from time to time established by the Agent in its reasonable credit judgment; provided that the aggregate Revolving Loans advanced against Eligible Inventory shall not exceed the Maximum Inventory Loan Amount. "BORROWING BASE CERTIFICATE" means a certificate by a Responsible Officer for the benefit of the Borrowers, substantially in the form of EXHIBIT B (or another form acceptable to the Agent) setting forth the calculation of the Borrowing Base, including a calculation of each component thereof, all in such detail as shall be reasonably satisfactory to the Agent. All calculations of the Borrowing Base in connection with the preparation of any Borrowing Base Certificate shall originally be made by the Borrowers and certified to the Agent; provided, that the Agent shall have the right to review and adjust, in the exercise of its reasonable credit judgment, any such calculation (1) to reflect its reasonable estimate of declines in value of any of the Collateral described therein, and (2) to the extent that such calculation is not in accordance with this Agreement. "BUSINESS DAY" means (a) any day that is not a Saturday, Sunday, or a day on which banks in Pasadena, California, Houston, Texas, New York, New York, or Charlotte, North Carolina are required or permitted to be closed, and (b) with respect to all notices, determinations, fundings and payments in connection with the LIBOR Rate or LIBOR Rate Loans, any day that is a Business Day pursuant to CLAUSE (A) above and that is also a day on which trading in Dollars is carried on by and between banks in the London interbank market. "CAPITAL ADEQUACY REGULATION" means any guideline, request, or directive of any central bank or other Governmental Authority, or any other law, rule, or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. "CAPITAL STOCK" means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights, or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests, and (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "CAPITAL EXPENDITURES" means all payments due (whether or not paid during any fiscal period) in respect of the cost of any fixed asset or improvement, or replacement, substitution, or addition thereto, which has a useful life of more than one year, including, without limitation, those costs arising in connection with the direct or indirect acquisition of such asset by way of increased product or service charges or in connection with a Capital Lease. "CAPITAL LEASE" means any lease of property by a Person which, in accordance with GAAP, should be reflected as a capital lease on the balance sheet of such Person. "CHANGE OF CONTROL" means the occurrence of any of the following: (a) the direct or indirect sale, transfer, conveyance, or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Westlake and its Subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d) of the Exchange Act) other than a Principal or a Related Party of a Principal; (b) the adoption of a plan relating to the liquidation or dissolution of Westlake; (c) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties or a Permitted Group, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of Westlake, measured by voting power A-5 ANNEX A TO CREDIT AGREEMENT rather than number of shares, other than in any transaction that complies with CLAUSE (d) herein; (d) Westlake consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, Westlake, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of Westlake or such other Person is converted into or exchanged for cash, securities, or other property, other than any such transaction where the Voting Stock of Westlake outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance); or (e) after an initial public offering of Westlake or any direct or indirect parent of Westlake, the first day on which a majority of the members of the board of directors of Westlake are not Continuing Directors. "CHATTEL PAPER" means all of any Loan Party's now owned or hereafter acquired chattel paper, as defined in the UCC, including electronic chattel paper. "CLEARING BANK" means the Bank or any other banking institution with whom a Payment Account has been established pursuant to a Blocked Account Agreement. "CLOSING DATE" means the date of this Agreement. "CLOSING FEE" has the meaning specified in SECTION 2.4. "CODE" means the Internal Revenue Code of 1986. "COLLATERAL" means (a) all of each Loan Party's Inventory, Accounts, Instruments, Chattel Paper, Deposit Accounts (other than the Fixed Asset Loan Collateral Account), Documents, and Related General Intangibles; and (b) all other assets of any Person from time to time subject to Agent's Liens securing payment or performance of the Obligations. "COLLATERAL DOCUMENTS" means all Security Agreements, pledge agreements, Copyright Security Agreements, Patent and Trademark Agreements, financing statements, assignments of partnership interests, Obligation Guaranties, and mortgages at any time delivered to the Agent to create or evidence Liens securing the Obligations, together with all reaffirmations, amendments, and modifications thereof or supplements thereto. "COMMITMENT" means, at any time with respect to a Lender, the principal amount set forth beside such Lender's name under the heading "COMMITMENT" on SCHEDULE 1.2 attached to the Agreement or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of SECTION 11.2, as such Commitment may be adjusted from time to time in accordance with the provisions of SECTION 11.2, and "COMMITMENTS" means, collectively, the aggregate amount of the commitments of all of the Lenders. "CONTAMINANT" means any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, asbestos in any form or condition, PCBs, or any constituent of any such substance or waste. "CONTINUATION/CONVERSION DATE" means the date on which a Loan is converted into or continued as a LIBOR Rate Loan. "CONTINUING DIRECTORS" means, as of any date of determination, any member of the board of directors of Westlake who (a) was a member of such board of directors on the Closing Date or (b) was A-6 ANNEX A TO CREDIT AGREEMENT nominated for election or elected or appointed to such board of directors with the approval of, or whose nomination for election by the stockholders was approved by, a majority of the Continuing Directors who were members of such board of directors at the time of such nomination, appointment, or election. "COPYRIGHT SECURITY AGREEMENT" means any Copyright Security Agreement, executed and delivered by any Loan Party to the Agent, for the benefit of the Agent and the Lenders, to evidence and perfect the Agent's security interest in the Loan Parties' present and future copyrights and related licenses and rights. "CREDIT SUPPORT" has the meaning specified in SECTION 1.3(A). "DEBT" means, without duplication, all liabilities, obligations, and indebtedness of any Loan Party to any Person, of any kind or nature, now or hereafter owing, arising, due or payable, howsoever evidenced, created, incurred, acquired or owing, whether primary, secondary, direct, contingent, fixed or otherwise, consisting of indebtedness for borrowed money, the deferred purchase price of property, or preferred stock or other equity interests that have characteristics of Debt such as, dividend requirements (whether cash or paid in kind) or mandatory redemption requirements, excluding trade payables, but including (a) all Obligations; (b) all obligations and liabilities of any Person secured by any Lien on any Loan Party's property, even though such Loan Party shall not have assumed or become liable for the payment thereof; provided, however, that all such obligations and liabilities which are limited in recourse to such property shall be included in Debt only to the extent of the book value of such property as would be shown on a balance sheet of such Loan Party prepared in accordance with GAAP; (c) all obligations or liabilities created or arising under any Capital Lease or conditional sale or other title retention agreement with respect to property used or acquired by any Borrower, even if the rights and remedies of the lessor, seller or lender thereunder are limited to repossession of such property; provided, however, that all such obligations and liabilities which are limited in recourse to such property shall be included in Debt only to the extent of the book value of such property as would be shown on a balance sheet of any Loan Party prepared in accordance with GAAP; (d) all obligations and liabilities under Guaranties of another Person of borrowed money; and (e) the present value (discounted at the Base Rate) of lease payments due under synthetic leases. "DEFAULT" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured, waived, or otherwise remedied during such time) constitute an Event of Default. "DEFAULT RATE" means a fluctuating per annum interest rate at all times equal to the sum of (a) the otherwise applicable Interest Rate plus (b) two percent (2%) per annum. Each Default Rate shall be adjusted simultaneously with any change in the applicable Interest Rate. In addition, the Default Rate shall result in an increase in the Letter of Credit Fee by two (2) percentage points per annum. "DEFAULTING LENDER" has the meaning specified in SECTION 12.15(C). "DEPOSIT ACCOUNTS" means all "deposit accounts" as such term is defined in the UCC, now or hereafter held in the name of any Borrower, including, without limitation, the Payment Accounts. "DESIGNATED ACCOUNT" has the meaning specified in Section 1.2(c). "DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital A-7 ANNEX A TO CREDIT AGREEMENT Stock, in whole or in part, on or prior to the date that is 91 days after the Stated Termination Date. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require Westlake to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that Westlake may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with SECTION 7.10. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Agreement will be the maximum amount that Westlake and its Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends. "DISTRIBUTION" means, in respect of any corporation: (a) the payment or making of any dividend or other distribution of property in respect of capital stock (or any options or warrants for, or other rights with respect to, such stock) of such corporation, other than distributions in capital stock (or any options or warrants for such stock) of the same class; or (b) the redemption or other acquisition by such corporation of any capital stock (or any options or warrants for such stock) of such corporation. "DOCUMENTS" means all documents as such term is defined in the UCC, including bills of lading, warehouse receipts or other documents of title, now owned or hereafter acquired by any Borrower. "DOL" means the United States Department of Labor or any successor department or agency. "DOLLAR" and "$" means dollars in the lawful currency of the United States. Unless otherwise specified, all payments under this Agreement shall be made in Dollars. "DOMESTIC SUBSIDIARY" of any Person means a direct or indirect Subsidiary of such Person that is organized or incorporated under the laws of a jurisdiction of the United States, other than a direct or indirect Subsidiary of a Foreign Subsidiary of such Person. "EBITDA" means, with respect to any fiscal period of the Borrowers, Adjusted Net Earnings from Operations, plus, to the extent deducted in the determination of Adjusted Net Earnings from Operations for that fiscal period, interest expenses, interest on financed insurance premiums permitted pursuant to SECTION 7.13(J), Federal, state, local and foreign income taxes, depreciation and amortization. "ELIGIBLE ACCOUNTS" means the Accounts which the Agent in the exercise of its reasonable commercial discretion determines to be Eligible Accounts. Without limiting the discretion of the Agent to establish other criteria of ineligibility, Eligible Accounts shall not, unless the Agent in its sole discretion elects, include any Account: (a) with respect to which more than ninety (90) days have elapsed since the date of the original invoice therefor or which is more than sixty (60) days past due (without duplication); (b) with respect to which any of the representations, warranties, covenants, and agreements contained in the Security Agreement are incorrect or have been breached; (c) with respect to which Account (or any other Account due from such Account Debtor), in whole or in part, a check, promissory note, draft, trade acceptance or other instrument for the payment of money has been received, presented for payment, and returned uncollected for any reason; A-8 ANNEX A TO CREDIT AGREEMENT (d) which represents a progress billing (as hereinafter defined) or as to which any Loan Party has extended the time for payment without the consent of the Agent; for the purposes hereof, "progress billing" means any invoice for goods sold or leased or services rendered under a contract or agreement pursuant to which the Account Debtor's obligation to pay such invoice is conditioned upon any Loan Party's completion of any further performance under the contract or agreement; (e) with respect to which any one or more of the following events has occurred to the Account Debtor on such Account: death or judicial declaration of incompetency of an Account Debtor who is an individual; the filing by or against the Account Debtor of a request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or similar laws of the United States, any state or territory thereof, or any foreign jurisdiction, now or hereafter in effect; the making of any general assignment by the Account Debtor for the benefit of creditors; the appointment of a receiver or trustee for the Account Debtor or for any of the assets of the Account Debtor, including, without limitation, the appointment of or taking possession by a "custodian," as defined in the Federal Bankruptcy Code; the institution by or against the Account Debtor of any other type of insolvency proceeding (under the bankruptcy laws of the United States or otherwise) or of any formal or informal proceeding for the dissolution or liquidation of, settlement of claims against, or winding up of affairs of, the Account Debtor; the sale, assignment, or transfer of all or any material part of the assets of the Account Debtor; the nonpayment generally by the Account Debtor of its debts as they become due; or the cessation of the business of the Account Debtor as a going concern; (f) if fifty percent (50%) or more of the aggregate Dollar amount of outstanding Accounts owed at such time by the Account Debtor thereon is classified as ineligible under CLAUSE (A) above; (g) owed by an Account Debtor which: (i) does not maintain its chief executive office in the United States of America or Canada (other than the Province of Newfoundland); or (ii) is not organized under the laws of the United States of America or any state thereof; or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof; except to the extent that such Account is secured or payable by a letter of credit in form and substance and from a domestic issuer acceptable to the Agent in its sole discretion; (h) owed by an Account Debtor which is another Loan Party or an Affiliate or employee of any Loan Party; (i) except as provided in CLAUSE (K) below, with respect to which either the perfection, enforceability, or validity of the Agent's Liens in such Account, or the Agent's right or ability to obtain direct payment to the Agent of the proceeds of such Account, is governed by any federal, state, or local statutory requirements other than those of the UCC; (j) owed by an Account Debtor to which any Loan Party is indebted in any way, or which is subject to any right of setoff or recoupment by the Account Debtor, unless the Account Debtor has entered into an agreement acceptable to the Agent to waive setoff rights; or if the Account Debtor thereon has disputed liability or made any claim with respect to any other Account due from such Account Debtor; but in each such case only to the extent of such indebtedness, setoff, recoupment, dispute, or claim, and other Accounts owing pursuant to performance contracts which the Agent determines in its reasonable credit judgment could be set off in the event of any Loan Party's default thereunder; A-9 ANNEX A TO CREDIT AGREEMENT (k) owed by the government of the United States of America, or any department, agency, public corporation, or other instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C.Section 3727 et seq.), and any other steps necessary to perfect the Agent's Liens therein, have been complied with to the Agent's satisfaction with respect to such Account; (l) owed by any state, municipality, or other political subdivision of the United States of America, or any department, agency, public corporation, or other instrumentality thereof and as to which the Agent determines that its Lien therein is not or cannot be perfected; (m) which represents a sale on a bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment, or other repurchase or return basis, a sale on cash on delivery terms, or the remaining balances on Accounts that were short paid by an Account Debtor and are evidenced by debit memoranda; (n) which is evidenced by a promissory note or other instrument or by chattel paper; (o) if the Agent believes, in the exercise of its reasonable judgment, that the prospect of collection of such Account is impaired or that the Account may not be paid by reason of the Account Debtor's financial inability to pay; (p) with respect to which the Account Debtor is located in any state requiring the filing of a Notice of Business Activities Report or similar report in order to permit a Loan Party to seek judicial enforcement in such State of payment of such Account, unless such Loan Party has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then-current year; (q) which arises out of a sale not made in the ordinary course of any Loan Party's business; (r) with respect to which the goods giving rise to such Account have not been shipped and delivered to and accepted by the Account Debtor or the services giving rise to such Account have not been performed by a Loan Party, and, if applicable, accepted by the Account Debtor, or the Account Debtor revokes its acceptance of such goods or services; (s) owed by an Account Debtor or a group of affiliated Account Debtors which is obligated to one or more Loan Parties respecting Accounts the aggregate unpaid balance of which exceeds fifteen percent (15%) of the aggregate unpaid balance of all Accounts owed to the Loan Parties at such time by all of the Loan Parties' Account Debtors, but only to the extent of such excess; (t) which is not subject to a first priority and perfected security interest in favor of the Agent for the benefit of the Lenders; (u) owed by an Account Debtor pursuant to a performance contract (including, without limitation, any exchange contracts), which Agent determines in its reasonable credit judgment could be set off in the event of any Loan Party's default thereunder; or (w) on and after a Default, Event of Default, or the Account Triggering Date, with respect to which the Agent does not have control of the Payment Accounts. A-10 ANNEX A TO CREDIT AGREEMENT If any Account at any time ceases to be an Eligible Account, then such Account shall promptly be excluded from the calculation of Eligible Accounts. "ELIGIBLE ASSIGNEE" means (a) a commercial bank, commercial finance company, or other asset based lender, having total assets in excess of $1,000,000,000; (b) any Lender listed on the signature page of this Agreement; (c) any Affiliate of any Lender; and (d) if an Event of Default has occurred and is continuing, any Person reasonably acceptable to the Agent. "ELIGIBLE INVENTORY" means Inventory, valued at the lower of cost (on a first-in, first-out basis) or market, which the Agent, in its reasonable discretion, determines to be Eligible Inventory. Without limiting the discretion of the Agent to establish other criteria of ineligibility, Eligible Inventory shall not, unless the Agent in its sole discretion elects, include any Inventory: (a) that is not owned by a Loan Party; (b) that is not subject to the Agent's Liens, which are perfected as to such Inventory, or that are subject to any other Lien whatsoever (other than the Liens described in CLAUSE (D) of the definition of Permitted Liens; provided that such Permitted Liens (i) are junior in priority to the Agent's Liens or subject to Reserves and (ii) do not impair directly or indirectly the ability of the Agent to realize on or obtain the full benefit of the Collateral); (c) that does not consist of finished goods or raw materials; (d) that consists of work-in-process, spare parts, scrap Inventory, additive, compounds, regrinds, samples, prototypes, supplies, or packing and shipping materials; (e) that is not in good condition, is unmerchantable, is defective, or does not meet all standards imposed by any Governmental Authority, having regulatory authority over such goods, their use or sale; (f) that is not currently either usable or salable, at prices approximating at least cost, in the normal course of any Loan Party's business, or that is slow moving or stale; (g) that is obsolete or returned or repossessed or used goods taken in trade; (h) that is located outside the United States of America or that is in-transit from vendors or suppliers or to customers; (i) that is located in a public warehouse or in possession of a bailee or in a facility leased by any Person for which appropriate bailee letters and lien releases and waivers have not been obtained or for which Reserves acceptable to Agent have not been established; notwithstanding the foregoing, any Inventory that is located in a facility leased by any Loan Party will be Eligible Inventory to the extent the value of Inventory in such location equals or exceeds $250,000 if a Reserve for rents or storage charges has been established for Inventory at such location; (j) that contains or bears any Proprietary Rights licensed to a Loan Party by any Person, if the Agent is not satisfied that it may sell or otherwise dispose of such Inventory in accordance with the terms of the Security Agreement and SECTION 9.2 without infringing the rights of the licensor of such Proprietary Rights or violating any contract with such licensor (and without payment of any royalties other than any royalties due with respect to the sale or disposition of such Inventory pursuant to the A-11 ANNEX A TO CREDIT AGREEMENT existing license agreement), and, as to which such Loan Party has not delivered to the Agent a consent or sublicense agreement from such licensor in form and substance acceptable to the Agent if requested; (k) that is not reflected in the details of a current perpetual inventory report; (l) that is placed on consignment; (m) that is located in pipelines; (n) that is located with vendors to whom any Loan Party has any accounts payable to the extent of such accounts payable balance; or (o) that has been capitalized on the Financial Statements of any Loan Party. If any Inventory at any time ceases to be Eligible Inventory, such Inventory shall promptly be excluded from the calculation of Eligible Inventory. "ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for a Release or injury to the environment. "ENVIRONMENTAL COMPLIANCE RESERVE" means any reserve which the Agent establishes in its reasonable discretion after prior written notice to the Borrowers from time to time for amounts that are reasonably likely to be expended by the Loan Parties in order for the Loan Parties and their operations and property (a) to comply with any notice from a Governmental Authority asserting material non-compliance with Environmental Laws, or (b) to correct any such material non-compliance identified in a report delivered to the Agent and the Lenders pursuant to SECTION 7.7. "ENVIRONMENTAL LAWS" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case relating to environmental, health, safety and land use matters. "ENVIRONMENTAL LIABILITY" means any obligation, liability (including, without limitation, any strict liability), loss, fine, penalty, charge, Lien, damage, cost, reasonable attorneys' and expert fees, or any other expense arising under, or resulting from a violation of any Environmental Law, the presence, Release, or threatened Release of any Hazardous Materials, or actual or threatened damages to natural resources. "ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental Authority for (a) any liability under Environmental Laws, or (b) damages arising from, or costs incurred by such Governmental Authority in response to, a Release or threatened Release. "ENVIRONMENTAL PERMIT" means any permit, license, or other authorization from any Governmental Authority that is required under any Environmental Law for the lawful conduct of any business, process, or other activity. "EQUIPMENT" means all of any Loan Party's now owned and hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and other tangible personal property (except Inventory), including embedded software, motor vehicles with respect to which a certificate of title has been issued, aircraft, dies, tools, jigs, molds, and office equipment, as well as all of such types of property A-12 ANNEX A TO CREDIT AGREEMENT leased by any Loan Party and all of any Loan Party's rights and interests with respect thereto under such leases (including, without limitation, options to purchase); together with all present and future additions and accessions thereto, replacements therefor, component and auxiliary parts and supplies used or to be used in connection therewith, and all substitutes for any of the foregoing, and all manuals, drawings, instructions, warranties and rights with respect thereto; wherever any of the foregoing is located. "EQUITY ISSUANCE" means the issuance on and after the Closing Date by any Loan Party of any shares of any class of stock, warrants, or other equity interests, other than present and future shares of stock, options, or warrants issued to employees, or directors of any Loan Party under any Loan Party's stock option or other benefit or compensation plans or arrangements, or stock issued upon their exercise. "EQUITY PROCEEDS PREPAYMENT" means any prepayment of the Fixed Asset Loan from the issuance of Capital Stock, as currently set forth in Sections 2.04(a)(ii) or 2.04(b)(iii)of the Fixed Asset in effect on the Closing Date. "ERISA" means the Employee Retirement Income Security Act of 1974, and regulations promulgated thereunder. "ERISA AFFILIATE" means any trade or business (whether or not incorporated) under common control with any Loan Party within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA EVENT" means (a) a Reportable Event with respect to a Pension Plan, (b) a withdrawal by any Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA, (c) a complete or partial withdrawal by any Loan Party or any ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan is in reorganization, (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multi-employer Plan, (e) the occurrence of an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multi-employer Plan, or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Loan Party or any ERISA Affiliate. "EVENT OF DEFAULT" has the meaning specified in SECTION 9.1. "EXCESS CASH FLOW PREPAYMENT" means any prepayment of the Fixed Asset Loan from "Excess Cash Flow", as defined in and as currently set forth in Section 2.04(b)(i)of the Fixed Asset in effect on the Closing Date. "EXISTING LETTERS OF CREDIT" means (a) that certain letter of credit in the amount of $11,268,475.00 issued by JPMorgan Chase Bank to JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as trustee on behalf of Westlake to secure the payment of IRBs, (b) that certain letter of credit in the amount of $100,000.00 issued by JPMorgan Chase Bank to Reliance National Insurance Co., (c) that certain letter of credit in the amount of $362,635.00 issued by JPMorgan Chase Bank to Indemnity Insurance Co., (d) that certain letter of credit in the amount of $500,000.00 issued by JPMorgan Chase Bank to National Union Fire Insurance Co., (e) that certain letter of credit in the amount of $650,000.00 issued by JPMorgan Chase Bank to Zurich Insurance Company, and (e) that certain letter of credit in the amount of $595,000.00 issued by JPMorgan Chase Bank to Oil Insurance Limited. A-13 ANNEX A TO CREDIT AGREEMENT "EXCHANGE ACT" means the Securities Exchange Act of 1934, and regulations promulgated thereunder. "FDIC" means the Federal Deposit Insurance Corporation, and any Governmental Authority succeeding to any of its principal functions. "FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Bank on such day on such transactions as determined by the Agent. "FEDERAL RESERVE BOARD" means the Board of Governors of the Federal Reserve System or any successor thereto. "FEE LETTER" means that certain letter agreement relating to certain fees dated as of July 3, 2003, between Westlake, the Bank, and the Arranger. "FINANCIAL STATEMENTS" means, according to the context in which it is used, the financial statements referred to in SECTIONS 5.2 and 6.6 or any other financial statements required to be given to the Lenders pursuant to this Agreement. "FISCAL YEAR" means the Loan Parties' fiscal year for financial accounting purposes. The current Fiscal Year of the Loan Parties will end on December 31, 2003. "FIXED ASSET AGENT" means the "Administrative Agent" under and as defined in the Fixed Asset Loan. "FIXED ASSET LOAN" means the loans under the Credit Agreement dated as of July __, 2003, among Westlake, as borrower, certain Subsidiaries of Westlake, as guarantors, Bank of America, N.A., as administrative agent, and the lenders party thereto. "FIXED ASSET LOAN COLLATERAL ACCOUNT" means the Deposit Account maintained by Westlake with the Fixed Asset Agent into which (a) net proceeds from the disposition of and (b) insurance proceeds with respect to the Term Priority Collateral securing the Fixed Asset Loan shall be deposited pursuant to the requirements of the Fixed Asset Loan; provided that no other amounts are deposited into such Deposit Accounts. "FIXED CHARGE COVERAGE RATIO" means, with respect to any fiscal period of the Loan Parties, the ratio of EBITDA during the preceding twelve (12) months to Fixed Charges during such twelve (12) month period. "FIXED CHARGES" means, with respect to any fiscal period of the Loan Parties on a consolidated basis, without duplication, interest expense, Capital Expenditures (excluding Capital Expenditures funded with Debt other than Revolving Loans, but including, without duplication, principal payments with respect to such Debt), scheduled principal payments of Debt, prepayments and A-14 ANNEX A TO CREDIT AGREEMENT unscheduled payments of Debt (other than the Fixed Asset Loan), payments on any deferred payment plan for insurance premiums permitted pursuant to SECTION 7.13(J), cash Distributions paid by any Loan Party, and Federal, state, local and foreign income taxes, excluding deferred taxes. "FOREIGN SUBSIDIARY" of any Person means a Subsidiary of such Person that is organized or incorporated under the laws of a jurisdiction other than a jurisdiction of the United States. "FUNDING DATE" means the date on which a Borrowing occurs. "GAAP" means generally accepted accounting principles and practices set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the Closing Date. "GENERAL INTANGIBLES" means all of the Loan Parties' now owned or hereafter acquired general intangibles, choses in action, and causes of action and all other intangible personal property of the Loan Parties of every kind and nature (other than Accounts), including, without limitation, all contract rights, payment intangibles, Proprietary Rights, corporate or other business records, inventions, designs, blueprints, plans, specifications, patents, patent applications, trademarks, service marks, trade names, trade secrets, goodwill, copyrights, computer software, customer lists, registrations, licenses, franchises, tax refund claims, any funds which may become due to any Loan Party in connection with the termination of any Plan or other employee benefit plan or any rights thereto and any other amounts payable to any Loan Party from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, property, casualty, or any similar type of insurance and any proceeds thereof, proceeds of insurance covering the lives of key employees on which any Loan Party is beneficiary, rights to receive dividends, distributions, cash, Instruments, and other property in respect of or in exchange for any letter of credit, guarantee, claim, security interest, or other security held by or granted to any Loan Party. "GOVERNMENTAL AUTHORITY" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "GUARANTOR" means any Person, including, but not limited to, each Restricted Subsidiary of Westlake, which undertakes to be liable for all or any part of the Obligations by execution of an Obligations Guaranty or otherwise. "GUARANTY" means, with respect to any Person, all obligations of such Person which in any manner directly or indirectly guarantee or assure, or in effect guarantee or assure, the payment or performance of any indebtedness, dividend or other obligations of any other Person (the "guaranteed obligations"), or assure or in effect assure the holder of the guaranteed obligations against loss in respect thereof, including any such obligations incurred through an agreement, contingent or otherwise: (a) to purchase the guaranteed obligations or any property constituting security therefor; (b) to advance or supply funds for the purchase or payment of the guaranteed obligations or to maintain a working capital or other balance sheet condition; or (c) to lease property or to purchase any debt or equity securities or other property or services. A-15 ANNEX A TO CREDIT AGREEMENT "HAZARDOUS MATERIALS" means any material that poses a threat to, or is regulated to protect, human health, safety, public welfare or the environment, including without limitation, "hazardous substance," "pollutant or contaminant," "petroleum" and "natural gas liquids," as those terms are defined or used in Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, polychlorinated biphenyls, lead, asbestos, urea formaldehyde, radioactive materials, putrescible materials, infectious materials, and toxic microorganisms (including mold). "HEDGE AGREEMENT" means any and all transactions, agreements, or documents now existing or hereafter entered into, which provides for an interest rate, credit, commodity, or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging any Loan Party's exposure to fluctuations in interest or exchange rates, loan, credit exchange, security or currency valuations or commodity prices; provided that such Hedge Agreement shall be incurred in the ordinary course of business and consistent with prior business practices of the Loan Parties and not for speculative purposes. "INSTRUMENTS" means all instruments as such term is defined in the UCC, now owned or hereafter acquired by any Borrower. "INTANGIBLE ASSETS" means assets that are considered to be intangible assets under GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trade marks, patents, unamortized deferred charges, unamortized debt discount, and capitalized research and development costs. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement dated as of the Closing Date, by and among, Borrowers, Agent, and Fixed Asset Agent. "INTEREST PERIOD" means, as to any LIBOR Rate Loan, the period commencing on the Funding Date of such Loan or on the Continuation/Conversion Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and ending on the date one, two, or three months thereafter as selected by the Borrowers in any Notice of Borrowing, in the form attached hereto as EXHIBIT D, or Notice of Continuation/Conversion, in the form attached hereto as EXHIBIT E, provided that: (a) if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day; (b) any Interest Period pertaining to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (c) no Interest Period shall extend beyond the Stated Termination Date. "INTEREST RATE" means each or any of the interest rates, including the Default Rate, set forth in SECTION 2.1. "INVENTORY" means all of any Loan Party's now owned and hereafter acquired inventory, goods and merchandise, wherever located, to be furnished under any contract of service or held for sale or lease, all returned goods, raw materials, work-in-process, finished goods (including embedded software), A-16 ANNEX A TO CREDIT AGREEMENT other materials and supplies of any kind, nature, or description which are used or consumed in any Loan Party's business or used in connection with the packing, shipping, advertising, selling or finishing of such goods, merchandise, and all documents of title or other Documents representing them. "IRBS" means the $10,889,000 original principal amount Calcasieu Parish Public Trust Authority Waste Disposal Revenue Bonds issued pursuant to the Indenture of Trust dated December 1, 1997, between Calcasieu Parish Public Trust Authority, as issuer, and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as trustee. "IRS" means the Internal Revenue Service and any Governmental Authority succeeding to any of its principal functions under the Code. "LATEST PROJECTIONS" means: (a) on the Closing Date and thereafter until the Agent receives new projections pursuant to SECTION 5.2(F), the projections of the Loan Parties' financial condition, results of operations, and cash flows, for the period commencing on April 1, 2003, and ending on December 31, 2007, and delivered to the Agent prior to the Closing Date; and (b) thereafter, the projections most recently received by the Agent pursuant to SECTION 5.2(F). "LENDER" and "LENDERS" have the meanings specified in the introductory paragraph hereof and shall include the Agent to the extent of any Agent Advance outstanding and the Bank to the extent of any Non-Ratable Loan outstanding; provided that no such Agent Advance or Non-Ratable Loan shall be taken into account in determining any Lender's Pro Rata Share. "LETTER OF CREDIT" has the meaning specified in SECTION 1.3(A). "LETTER OF CREDIT FEE" has the meaning specified in SECTION 2.6. "LETTER OF CREDIT ISSUER" means the Bank, any affiliate of the Bank, or any other financial institution that issues any Letter of Credit pursuant to this Agreement. "LETTER-OF-CREDIT RIGHTS" means "letter-of-credit rights" as such term is defined in the UCC, now owned or hereafter acquired by any Loan Party, including rights to payment or performance under a letter of credit, whether or not any Loan Party, as beneficiary, has demanded or is entitled to demand payment or performance. "LETTER OF CREDIT SUBFACILITY" means $50,000,000. "LIBOR INTEREST PAYMENT DATE" means, with respect to a LIBOR Rate Loan, the Termination Date and the last day of each Interest Period applicable to such Loan or, with respect to each Interest Period of greater than three months in duration, the last day of the third month of such Interest Period and the last day of such Interest Period. "LIBOR RATE" means, for any Interest Period, with respect to LIBOR Rate Loans, the rate of interest per annum determined pursuant to the following formula: LIBOR Rate = Offshore Base Rate -------------------------------------- 1.00 - Eurodollar Reserve Percentage Where, "OFFSHORE BASE RATE" means the rate per annum appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at A-17 ANNEX A TO CREDIT AGREEMENT approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the Offshore Base Rate shall be, for any Interest Period, the rate per annum appearing on Reuters Screen LIBOR Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates. If for any reason none of the foregoing rates is available, the Offshore Base Rate shall be, for any Interest Period, the rate per annum determined by Agent as the rate of interest at which dollar deposits in the approximate amount of the LIBOR Rate Loan comprising part of such Borrowing would be offered by the Bank's London Branch to major banks in the offshore dollar market at their request at or about 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. "EURODOLLAR RESERVE PERCENTAGE" means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day applicable to member banks under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental, or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"). The Offshore Rate for each outstanding LIBOR Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage. "LIBOR RATE LOAN" means a Revolving Loan during any period in which it bears interest based on the LIBOR Rate. "LIEN" means: (a) any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute, or contract, and including a security interest, charge, claim, or lien arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement, security agreement, conditional sale or trust receipt, or a lease, consignment, or bailment for security purposes; (b) to the extent not included under CLAUSE (A), any reservation, exception, encroachment, easement, right-of-way, covenant, condition, restriction, lease, or other title exception or encumbrance affecting property; and (c) any contingent or other agreement to provide any of the foregoing. "LOAN ACCOUNT" means the loan account of the Borrowers, which account shall be maintained by the Agent. "LOAN DOCUMENTS" means this Agreement, the Notes, the Collateral Documents, the Letters of Credit, any applications for Letters of Credit, the Intercreditor Agreement, and any other agreements, instruments, and documents heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise relating to the Obligations, the Collateral, or any other aspect of the transactions contemplated by this Agreement. "LOAN PARTIES" means, on any date of determination, each Borrower and all Guarantors, and "LOAN PARTY" means any Borrower or any Guarantor. "LOANS" means, collectively, all loans and advances provided for in ARTICLE 1. "LOCAL ACCOUNTS" has the meaning specified in SECTION 8.1(K). A-18 ANNEX A TO CREDIT AGREEMENT "MAJORITY LENDERS" means at any date of determination Lenders whose Pro Rata Shares aggregate more than 50%. "MARGIN STOCK" means "margin stock" as such term is defined in Regulation T, U, or X of the Federal Reserve Board. "MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a material adverse effect upon, the assets, liabilities, business, operations, properties, or condition (financial or otherwise) of Westlake, the Loan Parties taken as a whole or the Collateral; (b) a material impairment of the ability of any Loan Party to perform under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect, or enforceability against any Loan Party of any Loan Document to which it is a party. "MATERIAL AGREEMENT" means any material written or oral agreement, contract, commitment, or understanding to which any Loan Party is a party, by which such Loan Party is directly or indirectly bound, or to which any assets of such Loan Party may be subject, which involves amounts payable to any Loan Party in excess of $10,000,000 in the aggregate during any 12-month period, or financial obligations of any Loan Party in excess of $5,000,000 in the aggregate during any 12-month period, and which is not cancellable by such Loan Party upon 30 days or less notice without liability for further payment (other than nominal penalties). "MAXIMUM INVENTORY LOAN AMOUNT" means $120,000,000. "MAXIMUM RATE" has the same meaning specified in SECTION 2.3. "MAXIMUM REVOLVER AMOUNT" means $200,000,000, as such amount may be reduced from time to time pursuant to the terms of this Agreement. "MULTI-EMPLOYER PLAN" means a "multi-employer plan" as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years contributed to by any Loan Party or any ERISA Affiliate. "NET AMOUNT OF ELIGIBLE ACCOUNTS" means, at any time, the gross amount of Eligible Accounts less sales, excise, or similar taxes, and less returns, discounts, claims, credits, allowances, accrued rebates, offsets, deductions, counterclaims, disputes, and other defenses of any nature at any time issued, owing, granted, outstanding, available, or claimed. "NET ORDERLY LIQUIDATION VALUE" shall mean (a) the "net orderly liquidation value" determined by a valuation company acceptable to the Agent after performance of an Inventory valuation to be done at the Agent's request and the Borrowers' expense, less the amount estimated by such valuation company for marshalling, reconditioning, carrying, and sales expenses designed to maximize the resale value of such Inventory and assuming that the time required to dispose of such Inventory is three (3) months; or (b) if no such Inventory valuation has been requested by the Agent, the value customarily attributed to Inventory in the appraisal industry for Inventory of similar quality and quantity, and similarly dispersed (under similar and relevant circumstances under standard asset-based lending procedures), at the time of the valuation, less the amount customarily estimated in the appraisal industry at the time of any determination for marshalling, recondition, carrying, and sales expenses designed to maximize the resale value of such Inventory and assuming that the time required to dispose of such Inventory is three (3) months. A-19 ANNEX A TO CREDIT AGREEMENT "NON-RATABLE LOAN" and "NON-RATABLE LOANS" have the meanings specified in SECTION 1.2(h). "NOTE and NOTES" have the same meaning specified in SECTION 1.2(a)(ii). "NOTICE OF BORROWING" has the meaning specified in SECTION 1.2(b). "NOTICE OF CONTINUATION/CONVERSION" has the meaning specified in SECTION 2.2(b). "OBLIGATION GUARANTY" means the (a) a Guaranty of the Obligations in substantially the form and upon the terms of EXHIBIT C, executed and delivered by any Person pursuant to the requirements of the Loan Documents; and (b) any amendments, modifications, supplements, restatements, ratifications, or reaffirmations of any Guaranty made in accordance with the Loan Documents. "OBLIGATIONS" means all present and future loans, advances, liabilities, obligations, covenants, duties, and debts owing by any Loan Party to the Agent and/or any Lender, arising under or pursuant to this Agreement or any of the other Loan Documents, whether or not evidenced by any note, or other instrument or document, whether arising from an extension of credit, opening of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including all principal, interest, charges, expenses, fees, attorneys' fees, filing fees, and any other sums chargeable to any Loan Party hereunder or under any of the other Loan Documents. "Obligations" includes, without limitation, (a) all debts, liabilities, and obligations now or hereafter arising from or in connection with the Letters of Credit and (b) all debts, liabilities and obligations now or hereafter arising from or in connection with Bank Products. "OTHER TAXES" means any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Documents. "PARENT" means Westlake Polymer & Petrochemical, Inc., a Delaware corporation. "PARTICIPANT" means any Person who shall have been granted the right by any Lender to participate in the financing provided by such Lender under this Agreement, and who shall have entered into a participation agreement in form and substance satisfactory to such Lender. "PATENT AND TRADEMARK AGREEMENTS" means any Patent Security Agreement and any Trademark Security Agreement, executed and delivered by any Loan Party to the Agent to evidence and perfect the Agent's security interest in each such Loan Party's present and future patents, trademarks, and related licenses and rights, for the benefit of the Agent and the Lenders. "PAYMENT ACCOUNT" means each bank account established pursuant to the Security Agreement, to which the proceeds of Accounts and other Collateral are deposited or credited, and which is maintained in the name of the Agent or the Borrowers, as the Agent may determine, on terms acceptable to the Agent. "PCBS" means polychlorinated biphenyls. "PBGC" means the Pension Benefit Guaranty Corporation or any Governmental Authority succeeding to the functions thereof. A-20 ANNEX A TO CREDIT AGREEMENT "PENDING REVOLVING LOANS" means, at any time, the aggregate principal amount of all Revolving Loans requested in any Notice of Borrowing received by the Agent which have not yet been advanced. "PENSION PLAN" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which any Loan Party or any ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multi-employer Plan has made contributions at any time during the immediately preceding five (5) plan years. "PERMITTED GROUP" means any group of investors that is deemed to be a "person" (as that term is used in Section 13(d)(3) of the Exchange Act) at any time prior to Westlake's initial public offering of common stock, provided that no single Person (other than the Principals and their Related Parties) Beneficially Owns (together with its Affiliates) more of the Voting Stock of the Borrower that is Beneficially Owned by such group of investors than is then collectively Beneficially Owned by the Principals and their Related Parties in the aggregate. "PERMITTED LIENS" means: (a) Liens for taxes not delinquent or statutory Liens for taxes and other governmental charges in an amount not to exceed $100,000 provided that the payment of such taxes or governmental charges which are due and payable is being contested in good faith and by appropriate proceedings diligently pursued and as to which adequate financial reserves have been established on the applicable Loan Party's books and records and a stay of enforcement of any such Lien is in effect; (b) the Agent's Liens; (c) Liens consisting of deposits made in the ordinary course of business in connection with, or to secure payment of, obligations under workers' compensation, unemployment insurance, social security, and other similar laws, or to secure the performance of bids, tenders, or contracts (other than for the repayment of Debt), or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of Debt), or to secure statutory obligations (other than liens arising under ERISA or Environmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; (d) Liens securing the claims or demands of materialmen, mechanics, carriers, rail carriers, warehousemen, landlords, and other like Persons, provided that if any such Lien arises from the nonpayment of such claims or demand when due, such claims or demands do not exceed $1,000,000 in the aggregate unless any such claims or demands is being contested in good faith and by appropriate proceedings diligently pursued and as to which adequate financial reserves have been established on the applicable Loan Party's books and records and a stay of enforcement of any such Lien is in effect; (e) Liens constituting encumbrances in the nature of reservations, exceptions, encroachments, easements, rights of way, covenants running with the land, and other similar title exceptions or encumbrances affecting any Real Estate; provided that they do not in the aggregate materially detract from the value of the Real Estate or materially interfere with its use in the ordinary conduct of the applicable Loan Party's business; (f) Liens arising from judgments and attachments in connection with court proceedings provided that the attachment or enforcement of such Liens would not result in an Event of Default hereunder and such Liens are being contested in good faith by appropriate proceedings, adequate reserves have been set aside and no material Property is subject to a material risk of loss or forfeiture and A-21 ANNEX A TO CREDIT AGREEMENT the claims in respect of such Liens are fully covered by insurance (subject to ordinary and customary deductibles) and a stay of execution pending appeal or proceeding for review is in effect; (g) Financing statements filed by the owner of Equipment leased to a Loan Party and filed solely for the purpose of putting third parties on notice of such owner's interest (as a lessor under an operating lease) in such Equipment, so long as such operating lease remains a true operating lease under GAAP and under applicable law; (h) Liens securing the Existing Letters of Credit existing on the Closing Date, so long as such Existing Letters of Credit are replaced with Letters of Credit hereunder within ninety (90) days of the Closing Date; (i) Liens securing the Fixed Asset Loan (including, without limitation, Liens in the Fixed Asset Loan Collateral Account), which to the extent such Liens attach to Collateral, are subject to the Intercreditor Agreement, but in no event shall such Liens attach to any Accounts or Inventory; (j) Liens securing Debt existing on the Closing Date to the extent such Liens are described on SCHEDULE 7.17; (k) Liens evidencing consignments of Inventory; (l) Liens securing Debt permitted pursuant to SECTION 7.13(j) so long as such Liens attached only to unearned premiums for such financed insurance; and (m) Liens securing Hedge Agreements; provided that if such Hedge Agreements do not constitute Bank Products, the amount secured by such Liens does not exceed $1,000,000 and the assets subject to such Liens attach solely to margin accounts related thereto. "PERSON" means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, Governmental Authority, or any other entity. "PLAN" means an employee benefit plan (as defined in Section 3(3) of ERISA) which any Loan Party or any ERISA Affiliate makes, is making, or is obligated to make contributions and includes any Pension Plan. "PRINCIPALS" means T.T. Chao, his descendents, including by adoption, and the spouses of any such individuals. "PROPRIETARY RIGHTS" means all of any Loan Party's now owned and hereafter arising or acquired: licenses, franchises, permits, patents, patent rights, copyrights, works which are the subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent, trademark, and service mark applications, and all licenses and rights related to any of the foregoing, including those federally registered or otherwise material patents, trademarks, service marks, trade names, and copyrights set forth on SCHEDULE 6.12 hereto, and all other rights under any of the foregoing, all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing, and all rights to sue for past, present and future infringement of any of the foregoing. "PRO FORMA FIXED CHARGE COVERAGE RATIO" means, with respect to any proposed Acquisition, calculation of the Fixed Charge Coverage Ratio with respect to the immediately preceding twelve (12) months, calculated as though the proposed Acquisition had occurred at the beginning of such A-22 ANNEX A TO CREDIT AGREEMENT period, and calculation of the Fixed Charge Coverage Ratio on a pro forma basis, based on the Loan Parties' best estimates as of the date of calculation, of the ratio of EBITDA during the succeeding twelve (12) months to the projected Fixed Charges during such succeeding twelve (12) month period, after giving effect to the proposed Acquisition. "PRO RATA SHARE" means, with respect to a Lender, a fraction (expressed as a percentage), the numerator of which is the amount of such Lender's Commitment and the denominator of which is the sum of the amounts of all of the Lenders' Commitments, or if no Commitments are outstanding, a fraction (expressed as a percentage), the numerator of which is the amount of Obligations owed to such Lender and the denominator of which is the aggregate amount of the Obligations owed to the Lenders, in each case giving effect to a Lender's participation in Non-Ratable Loans and Agent Advances. "PURCHASE PRICE" means, with respect to any Acquisition, all direct, indirect, and deferred cash and non-cash payments made to or for the benefit of the Person being acquired (or whose assets are being acquired), its shareholders, officers, directors, employees, or Affiliates in connection with such Acquisition, including, without limitation, the amount of any Debt being assumed in connection with such Acquisition (and subject to the limitations on Debt in this Agreement), seller financing, payments under non-competition or consulting agreements entered into in connection with such Acquisition and similar agreements, all non-cash consideration and the value of any stock, options, or warrants or other rights to acquire stock issued as part of the consideration in such transaction; provided that, for the purposes hereof, non-competition agreements and consulting agreements shall be valued at their present value discounted over the term of such agreement at the Base Rate in effect at the time of the Acquisition. "REAL ESTATE" means all of any Loan Party's now or hereafter owned or leased estates in real property, including, without limitation, all fees, leaseholds and future interests, together with all of any Loan Party's now or hereafter owned or leased interests in the improvements thereon, the fixtures attached thereto, and the easements appurtenant thereto. "RELATED GENERAL INTANGIBLES" means all of each Loan Parties' intangible personal property used or useful for, in connection with, or in any respect related to, any Accounts, Inventory, Instruments, Chattel Paper, Documents, or Deposit Accounts, which Related General Intangibles shall include all money, General Intangibles (including payment intangibles and software), and Proprietary Rights, together with all additions, amendments, and modifications thereto, extensions, renewals, enlargements, and proceeds thereof, substitutions therefor, and income and profits therefrom. To the extent obtained in connection with or otherwise related to Accounts, Inventory, Instruments, Chattel Paper, Documents, or Deposit Accounts, the following are included, without limitation, in the definition of "RELATED GENERAL INTANGIBLES": loan commitments, financing arrangements, bonds, leases, permits, sales contracts, insurance policies, and the proceeds therefrom, books and records, funds, bank deposits; all Proprietary Rights used in connection therewith; any award, remuneration, settlement, or compensation heretofore made or hereafter to be made by any Governmental Authority to any Loan Party, all deposits, funds, accounts, contract rights, or documents, arising from or by virtue of any transactions; all permits, licenses, franchises, certificates, and other rights and privileges; all proceeds arising from or by virtue of the sale, lease, or other disposal of all or any part of the foregoing; and all proceeds (including premium refunds) payable or to be payable under each policy of insurance relating to the foregoing. "RELATED PARTY" means (a) any controlling stockholder, 80% (or more) owned Subsidiary, or immediate family member (in the case of an individual) of any Principal or (b) any Person, A-23 ANNEX A TO CREDIT AGREEMENT the beneficiaries, stockholders, partners, owners, or Persons beneficially holding a 50% or more controlling interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately preceding CLAUSE (A). "RELEASE" means a release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching, or migration of any Hazardous Materials into the environment, including the movement of Hazardous Materials through or in the air, soil, surface water, groundwater or Real Estate or other property. "REPORTABLE EVENT" means, any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. "REQUIRED LENDERS" means at any time Lenders whose Pro Rata Shares aggregate more than 66-2/3%. "REQUIREMENT OF LAW" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. "RESERVES" means reserves that limit the availability of credit hereunder, consisting of reserves against Availability, Eligible Accounts, or Eligible Inventory, established by Agent from time to time in Agent's reasonable credit judgment. Without limiting the generality of the foregoing, the following reserves shall be deemed to be a reasonable exercise of Agent's credit judgment: (a) Bank Product Reserves, (b) a reserve for accrued, unpaid interest on the Obligations, (c) reserves for rent at leased locations subject to statutory or contractual landlord liens, (d) Inventory shrinkage, (e) Environmental Compliance Reserves, (f) customs charges, (g) dilution, and (h) warehousemen's or bailees' charges. "RESPONSIBLE OFFICER" means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer, or controller of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership, and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. "RESTRICTED INVESTMENT" means, as to any Loan Party, any acquisition of property by such Loan Party in exchange for cash or other property, whether in the form of an acquisition of stock, debt, or other indebtedness or obligation, or the purchase or acquisition of any other property, or an investment, loan, advance, extension of credit, capital contribution, or subscription, except the following: (a) acquisitions of Equipment to be used in the business of such Loan Party so long as the acquisition costs thereof constitute Capital Expenditures permitted hereunder; (b) acquisitions of Inventory in the ordinary course of business of such Loan Party; (c) acquisitions of current assets acquired in the ordinary course of business of such Loan Party; (d) direct obligations of the United States of America, or any agency thereof, or obligations guaranteed by the United States of America, provided that such obligations mature within one year from the date of acquisition thereof; (e) acquisitions of certificates of deposit maturing within one year from the date of acquisition, bankers' acceptances, Eurodollar bank deposits, or overnight bank deposits, in each case issued by, created by, or with a bank or trust company organized under the laws of the United States of America or any state thereof having capital and surplus aggregating at least $100,000,000; (f) acquisitions of commercial paper given a rating of "A2" or better by Standard & Poor's Corporation or "P2" or better by Moody's Investors Service, Inc. and maturing not more than 90 A-24 ANNEX A TO CREDIT AGREEMENT days from the date of creation thereof; (g) loans, advances, extensions of credit, capital contributions, and other investments (i) by any Loan Party to its Subsidiaries or (ii) to any Loan Party by its Subsidiaries, or the direct or indirect owners of the equity interests in such Loan Party; (h) investments existing on the Closing Date and identified on SCHEDULE 7.10, including, without limitation, loans, advances, extensions of credit to, and renewals or extensions thereof in accordance with SECTION 7.13, or capital contributions and other investments in any Unrestricted Subsidiary of Westlake; (i) Hedge Agreements; (j) Acquisitions made in accordance with SECTION 7.26; (k) sales of Inventory by one Loan Party to another Loan Party so long as the payment terms with respect to such Inventory are in accordance with the customary business terms of such Loan Parties and payment for such Inventory is made within thirty (30) days of delivery of such Inventory; (l) payments on any Debt permitted by SECTION 7.13(k), and (m) transactions among Loan Parties so long as such transactions are otherwise permitted by the terms of SECTION 7.15. "RESTRICTED SUBSIDIARY" means, at any time of determination, all Subsidiaries of Westlake, other than Unrestricted Subsidiaries of Westlake. "REVOLVING LOANS" has the meaning specified in SECTION 1.2 and includes each Agent Advance and Non-Ratable Loan. "SEC" has the meaning specified in SECTION 5.2(a). "SECURITY AGREEMENT" means, collectively, the Security Agreements of even date herewith executed by the Loan Parties in favor of the Agent for the benefit of the Agent and the other Lenders. "SETTLEMENT" AND "SETTLEMENT DATE" have the meanings specified in SECTION 12.15(a)(ii). "SOLVENT" means, when used with respect to any Person, that at the time of determination: (a) the assets of such Person, at a fair valuation, are in excess of the total amount of its debts (including contingent liabilities); and (b) the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become absolute and matured; and (c) it is then able and expects to be able to pay its debts (including contingent debts and other commitments) as they mature; and (d) it has capital sufficient to carry on its business as conducted and as proposed to be conducted. For purposes of determining whether a Person is Solvent, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability of such Person. "STATED TERMINATION DATE" means July 14, 2007. "SUBSIDIARY" of a Person means (a) any entity of which more than fifty percent (50%) of the voting stock or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof or (b) any partnership (limited or general) of which such Person shall at any time be A-25 ANNEX A TO CREDIT AGREEMENT the general partner or of which more than fifty percent (50%) of the issued and outstanding partnership interests, is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a "Subsidiary" refer to a Subsidiary of Westlake. "SUPPORTING LETTER OF CREDIT" has the meaning specified in SECTION 1.3(g). "TAXES" means any and all present or future taxes, levies, imposts, deductions, charges, or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Agent, such taxes (including income taxes or franchise taxes) as are imposed on or measured by the Agent's or each Lender's net income in any the jurisdiction (whether federal, state or local and including any political subdivision thereof) under the laws of which such Lender or the Agent, as the case may be, is organized or maintains a lending office. "TERMINATION DATE" means the earliest to occur of (a) the Stated Termination Date, (b) the date the Total Facility is terminated either by the Borrowers pursuant to SECTION 3.2 or by the Required Lenders pursuant to SECTION 9.2, and (c) the date this Agreement is otherwise terminated for any reason whatsoever pursuant to the terms of this Agreement. "TERM PRIORITY COLLATERAL" has the meaning given such term in the Intercreditor Agreement. "TOTAL FACILITY" has the meaning specified in SECTION 1.1. "TRIGGERING DATE" means the date upon which either (a) the Availability has been less than $50,000,000 for the immediately preceding three (3) consecutive Business Days or (b) the Availability is less than $35,000,000 at any time; provided that in the event (i) the Availability has been greater than $50,000,000 at all times for ninety (90) consecutive days and (ii) the Fixed Charge Coverage Ratio on such date of determination is 1.00 to 1.0, commencing on the first day of any month after the criteria set forth above is satisfied, then the Triggering Date shall be deemed to not be continuing for purposes of this Agreement, and the requirements of SECTIONS 5.2(l)(iii) and 7.21 shall not be required unless a subsequent Triggering Date occurs. "UCC" means the Uniform Commercial Code, as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result thereof to be applied in connection with the issue of perfection of security interests; provided, that to the extent that the UCC is used to define any term herein or in any other documents and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern. "UNFUNDED PENSION LIABILITY" means the excess of a Pension Plan's benefit liabilities under Section 4001(a)(16) of ERISA for the most recent plan year for which an Actuarial Valuation has been prepared, over the current value of that Plan's assets, determined in accordance with any assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "UNRESTRICTED SUBSIDIARY" means, at any time of determination thereof, (a) Westlake AR Corporation, (b) any Foreign Subsidiary of Westlake or any other Loan Party (other than Westlake Overseas Corporation which shall be a Restricted Subsidiary under this Agreement), and (c) any Subsidiary of an Unrestricted Subsidiary of Westlake. A-26 ANNEX A TO CREDIT AGREEMENT "UNUSED LETTER OF CREDIT SUBFACILITY" means an amount equal to $50,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit plus, without duplication, (b) the aggregate unpaid reimbursement obligations with respect to all Letters of Credit. "UNUSED LINE FEE" has the meaning specified in SECTION 2.5. "VOTING STOCK" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors of such Person. Accounting Terms. Any accounting term used in the Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations in the Agreement shall be computed, unless otherwise specifically provided therein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of the Financial Statements. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrowers or the Required Lenders shall so request, the Agent, the Lenders, and the Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrowers shall provide to the Agent and the Lenders Financial Statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof," "herein," "hereunder" and similar words refer to the Agreement as a whole and not to any particular provision of the Agreement; and Subsection, Section, Schedule and Exhibit references are to the Agreement unless otherwise specified. (c) (i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. (ii) The term "including" is not limiting and means "including without limitation." (iii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including," the words "to" and "until" each mean "to but excluding" and the word "through" means "to and including." (iv) The word "or" is not exclusive. (d) Unless otherwise expressly provided herein, (i) references to agreements (including the Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. A-27 ANNEX A TO CREDIT AGREEMENT (e) The captions and headings of the Agreement and other Loan Documents are for convenience of reference only and shall not affect the interpretation of the Agreement. (f) The Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms. (g) For purposes of SECTION 9.1, a breach of the financial covenant contained in SECTION 7.21 shall be deemed to have occurred as of any date of determination thereof by the Agent or as of the last day of any specified measuring period, regardless of when the Financial Statements reflecting such breach are delivered to the Agent. (h) The Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Borrowers and the other parties, and are the products of all parties. Accordingly, they shall not be construed against the Lenders or the Agent merely because of the Agent's or Lenders' involvement in their preparation. A-28 ANNEX A TO CREDIT AGREEMENT EXHIBIT A FORM OF NOTE $____________________ __________ __, 2003 For Value Received, the undersigned (referred to herein as the "BORROWERS") hereby jointly and severally promise to pay to the order of ____________________(the "LENDER") in care of Bank of America, N.A. (the "AGENT"), at the Agent's office located at 55 S. Lake Avenue, Suite 900, Pasadena, CA 91101, for the account of the Lender, the lesser of the principal amount of _____________________ ($_______________) or the aggregate amount of all outstanding Revolving Loans made to Borrowers by the Lender from time to time. The undersigned also promise to pay interest on the unpaid principal amount of each Borrowing from the date of such Borrowing until such principal amount is paid. This Note shall be subject to the terms of that certain Credit Agreement described below (the "CREDIT AGREEMENT"), and all principal and interest payable hereunder shall be due and payable in accordance with the terms of the Credit Agreement. This Note is the Note referred to in the Credit Agreement, dated as of July 31, 2003, among the Borrowers, the Lender, certain other Lenders party thereto, and Bank of America, N.A., as Agent for the Lenders. Terms defined in the Credit Agreement are used herein with the same meanings. The Credit Agreement, among other things, contains provisions for acceleration of the maturity of this Note, upon the happening of certain stated events and also for prepayments on account of the principal of this Note prior to the maturity of this Note upon the terms and conditions specified in the Credit Agreement. Without limiting the immediately preceding sentence, reference is made to SECTION 2.3 of the Credit Agreement for usury savings provisions. Principal and interest payments shall be in money of the United States of America, lawful at such times for the satisfaction of public and private debts, and shall be in immediately available funds. The Borrowers jointly and severally promise to pay the costs of collection, including reasonable attorney's fees, if default is made in the payment of this Note. THIS NOTE AND THE OTHER LOAN DOCUMENTS HAVE BEEN ENTERED INTO PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK, AND THE APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION HEREOF. IN WITNESS WHEREOF, the undersigned have caused this Note to be executed by officers thereunto duly authorized and directed by appropriate corporate authority. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES FOLLOW] EXHIBIT A BORROWERS: WESTLAKE CHEMICAL CORPORATION, A DELAWARE CORPORATION By: --------------------------------------- Name: ------------------------------- Title: ------------------------------ NORTH AMERICAN PIPE CORPORATION, A DELAWARE CORPORATION By: --------------------------------------- Name: ------------------------------- Title: WESTLAKE STYRENE LP, A DELAWARE LIMITED PARTNERSHIP By: Westlake Chemical Holdings, Inc., its general partner By: --------------------------------- Name: ------------------------- Title: ------------------------ WPT LP, A DELAWARE LIMITED PARTNERSHIP By: Westlake Chemical Holdings, Inc., its general partner By: --------------------------------- Name: ------------------------- Title: ------------------------ WESTLAKE VINYLS, INC., A DELAWARE CORPORATION By: --------------------------------------- Name: ------------------------------- Title: ------------------------------ SIGNATURE PAGE TO NOTE WESTLAKE PVC CORPORATION, A DELAWARE CORPORATION By: --------------------------------------- Name: ------------------------------- Title: ------------------------------ GEISMER VINYLS COMPANY LP, A DELAWARE LIMITED PARTNERSHIP By: GVGP, Inc., its general partner By: --------------------------------- Name: ------------------------- Title: ------------------------ WESTECH BUILDING PRODUCTS, INC., A DELAWARE CORPORATION By: --------------------------------------- Name: ------------------------------- Title: ------------------------------ WESTLAKE PETROCHEMICALS LP, A DELAWARE LIMITED PARTNERSHIP By: Westlake Chemical Investments, Inc., its general partner By: --------------------------------- Name: ------------------------- Title: ------------------------ WESTLAKE POLYMERS LP, A DELAWARE LIMITED PARTNERSHIP By: Westlake Chemical Investments, Inc., its general partner By: --------------------------------- Name: ------------------------- Title: ------------------------ SIGNATURE PAGE TO NOTE VAN BUREN PIPE CORPORATION, A DELAWARE CORPORATION By: --------------------------------------- Name: ------------------------------- Title: ------------------------------ SIGNATURE PAGE TO NOTE EXHIBIT B FORM OF BORROWING BASE CERTIFICATE REPORTING DATE: To: BANK OF AMERICA, N.A., individually as a Lender and as agent for itself and the other Lenders (the "AGENT") under that certain Credit Agreement dated as of July 31, 2003 (such agreement, as it may be amended, restated, or otherwise modified from time to time, the "CREDIT AGREEMENT"), by and among the Agent, Westlake Chemical Corporation and certain of its domestic subsidiaries listed as Borrowers thereto (collectively, the "BORROWERS"), and the Lenders party thereto. Reference is hereby made to the Credit Agreement, the terms defined therein being used herein as therein defined. This Borrowing Base Certificate is delivered pursuant to the terms of the Credit Agreement. The undersigned hereby certifies and warrants to the Agent and the Lenders on behalf of the Borrowers as follows: I. I am a duly qualified and acting Responsible Officer of Westlake, and I am familiar with the financial statements and financial affairs of the Loan Parties. I am authorized to execute this Borrowing Base Certificate on behalf of the Loan Parties. II. Attached hereto as SCHEDULE 1 are true and correct computations of the Borrowing Base under the Credit Agreement as of the date set forth below. The Borrowers further represent and warrant to the Agent and the Lenders that the representations and warranties contained in ARTICLE VI of the Credit Agreement are true and correct in all material respects on and as of the date of this Borrowing Base Certificate as if made on and as of the date hereof (except to the extent that such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date and except to the extent that (a) the Agent and the Lenders have been notified in writing by the Borrowers that any representation or warranty is not correct and the Required Lenders have explicitly waived in writing compliance with such representation or warranty or (b) any representation or warranty has been qualified by the updated information reflected in, and as permitted under, the Compliance Certificate submitted by Westlake to the Agent periodically), and that no Event of Default or Default has occurred and is continuing, except as disclosed in an attachment to this Certificate. IN WITNESS WHEREOF, Westlake has caused this Borrowing Base Certificate to be executed and delivered on this ___ day of __________, 200_. WESTLAKE CHEMICAL CORPORATION, ON ITS BEHALF AND AS AGENT FOR THE OTHER BORROWERS By: --------------------------------- Name: ---------------------------- Title: --------------------------- EXHIBIT B SCHEDULE 1 (See attached computations of the Borrowing Base) SCHEDULE I TO EXHIBIT B EXHIBIT C FORM OF OBLIGATION GUARANTY THIS OBLIGATION GUARANTY (this "GUARANTY") is executed as of ____________, 2003, jointly and severally by the undersigned (each a "GUARANTOR" and collectively the "GUARANTORS"), for the benefit of BANK OF AMERICA, N.A., a national banking association (in its capacity as Agent for the benefit of Lenders (defined below)). RECITALS A. WHEREAS, Westlake Chemical Corporation and certain of its domestic subsidiaries listed as Borrowers thereto (each a "BORROWER" and collectively the "BORROWERS"), Bank of America, N.A., as Agent (including its permitted successors and assigns in such capacity, "AGENT"), and Lenders now or hereafter party to the Credit Agreement have entered into a Credit Agreement, dated as of July 31, 2003 (as amended, modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"); B. WHEREAS, provisions of the Credit Agreement permit Guarantors to directly or indirectly receive proceeds of Borrowings made pursuant thereto; and C. WHEREAS, this Guaranty is integral to the transactions contemplated by the Loan Documents and is a condition precedent to Lenders' obligations to extend credit under the Loan Documents. ACCORDINGLY, for adequate and sufficient consideration, the receipt and adequacy of which are hereby acknowledged, each Guarantor, jointly and severally (together with any other Person that executes an Obligation Guaranty), guarantees to Agent and Lenders the prompt payment of the Guaranteed Debt (defined below) as follows: 1. DEFINITIONS. Terms defined in the Credit Agreement or in ANNEX A thereto have the same meanings when used, unless otherwise defined, in this Guaranty. As used in this Guaranty: AGENT is defined in the recitals to this Guaranty. BORROWERS means Borrowers, any Borrower as debtors-in-possession, and any receiver, trustee, liquidator, conservator, custodian, or similar party appointed for any Borrower or for all or substantially all of any Borrower's assets under any Debtor Relief Law. CREDIT AGREEMENT is defined in the recitals to this Guaranty. DEBTOR RELIEF LAW means the Bankruptcy Code of the United States of America and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, fraudulent transfer or conveyance, suspension of payments, or similar laws from time to time in effect affecting the rights of creditors generally. GUARANTEED DEBT means, collectively, (a) the Obligations and (b) all present and future costs, 1 EXHIBIT C Attorney Costs, and expenses reasonably incurred by Agent or any Lender to enforce any Borrower's, any Guarantor's, or any other obligor's payment of any of the Guaranteed Debt, including, without limitation (to the extent lawful), all present and future amounts that would become due but for the operation of Sections 502 or 506 or any other provision of Title 11 of the United States Code and all present and future accrued and unpaid interest (including, without limitation, all post-maturity interest and any post-petition interest in any proceeding under Debtor Relief Laws to which any Borrower or any Guarantor becomes subject). GUARANTOR and GUARANTORS is defined in the preamble to this Guaranty. LENDER means, individually, or LENDERS means, collectively, on any date of determination, Agent and the Lenders and their permitted successors and assigns. SUBORDINATED DEBT means, for each Guarantor, all present and future obligations of any Company to such Guarantor, whether those obligations are (a) direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, (b) due or to become due to such Guarantor, (c) held by or are to be held by such Guarantor, (d) created directly or acquired by assignment or otherwise, or (e) evidenced in writing. 2. GUARANTY. This is an absolute, irrevocable, and continuing guaranty of payment, not collection, and the circumstance that at any time or from time to time the Guaranteed Debt may be paid in full does not affect the obligation of any Guarantor with respect to the Guaranteed Debt incurred after that. This Guaranty remains in effect until the Guaranteed Debt is fully paid and performed, all commitments to extend any credit under the Loan Documents have terminated, all Letters of Credit which have not been fully cash collateralized have expired or been terminated, and all Hedge Agreements with any Lender have expired. No Guarantor may rescind or revoke its obligations with respect to the Guaranteed Debt. Notwithstanding any contrary provision, it is the intention of Guarantors, Lenders, and Agent that the amount of the Guaranteed Debt guaranteed by Guarantors by this Guaranty shall be, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer, or similar laws applicable to Guarantors. Accordingly, notwithstanding anything to the contrary contained in this Guaranty or any other agreement or instrument executed in connection with the payment of any of the Guaranteed Debt, the amount of the Guaranteed Debt guaranteed by any Guarantor by this Guaranty shall be limited to an aggregate amount equal to the largest amount that would not render such Guarantor's obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any applicable state law. 3. CONSIDERATION. Each Guarantor represents and warrants that its liability under this Guaranty may reasonably be expected to directly or indirectly benefit it. 4. CUMULATIVE RIGHTS. If any Guarantor becomes liable for any indebtedness owing by any Borrower to Agent or any Lender, other than under this Guaranty, that liability shall not be in any manner impaired or affected by this Guaranty. The rights of Agent or Lenders under this Guaranty are cumulative of any and all other rights that Agent or Lenders may ever have against any Guarantor. The exercise by Agent or Lenders of any right under this Guaranty or otherwise does not preclude the concurrent or subsequent exercise of any other right. 5. PAYMENT UPON DEMAND. If an Event of Default exists, each Guarantor shall, on demand and without further notice of dishonor and without any notice having been given to any 2 EXHIBIT C Guarantor previous to that demand of either the acceptance by Agent or Lenders of this Guaranty or the creation or incurrence of any Guaranteed Debt, pay the amount of the Guaranteed Debt then due and payable to Agent and Lenders; provided that, if an Event of Default exists and Agent or Lenders cannot, for any reason, accelerate the Obligations, then the Guaranteed Debt shall be, as among Guarantors, Agent, and Lenders, a fully matured, due, and payable obligation of Guarantors to Agent and Lenders. It is not necessary for Agent or Lenders, in order to enforce that payment by any Guarantor, first or contemporaneously to institute suit or exhaust remedies against any Borrower or others liable on any Guaranteed Debt or to enforce rights against any Collateral securing any Guaranteed Debt. 6. SUBORDINATION. The Subordinated Debt is expressly subordinated to the full and final payment of the Guaranteed Debt. Each Guarantor agrees not to accept any payment of any Subordinated Debt from any Company if an Event of Default exists. If any Guarantor receives any payment of any Subordinated Debt in violation of the foregoing, such Guarantor shall hold that payment in trust for Agent and Lenders and promptly turn it over to Agent, in the form received (with any necessary endorsements), to be applied to the Guaranteed Debt. 7. SUBROGATION AND CONTRIBUTION. Until payment in full of the Guaranteed Debt, the termination of the obligation of Lenders to extend credit under the Loan Documents, and expiration of all Hedge Agreements between any Loan Party and any Lender, (a) no Guarantor may assert, enforce, or otherwise exercise any right of subrogation to any of the rights or Liens of Agent or Lenders or any other beneficiary against any Borrower or any other obligor on the Guaranteed Debt or any Collateral or other security or any right of recourse, reimbursement, subrogation, contribution, indemnification, or similar right against any Borrower or any other obligor on any Guaranteed Debt or any guarantor of it, (b) each Guarantor defers all of the foregoing rights (whether they arise in equity, under contract, by statute, under common law, or otherwise), and (c) each Guarantor defers the benefit of, and subordinates any right to participate in, any Collateral or other security given to Agent or Lenders or any other beneficiary to secure payment of any Guaranteed Debt. 8. NO RELEASE. Guarantors' obligations under this Guaranty shall not be released, diminished, or affected by the occurrence of any one or more of the following events: (a) any taking or accepting of any other security or assurance for any Guaranteed Debt; (b) any release, surrender, exchange, subordination, impairment, or loss of any Collateral securing any Guaranteed Debt; (c) any full or partial release of the liability of any other obligor on any Guaranteed Debt, except for any final release resulting from payment in full of such Guaranteed Debt; (d) the modification of, or waiver of compliance with, any terms of any other Loan Document; (e) the insolvency, bankruptcy, or lack of corporate or partnership power of any other obligor at any time liable for any Guaranteed Debt, whether now existing or occurring in the future; (f) any renewal, extension, or rearrangement of any Guaranteed Debt or any adjustment, indulgence, forbearance, or compromise that may be granted or given by Agent or any Lender to any other obligor on any Guaranteed Debt; (g) any neglect, delay, omission, failure, or refusal of Agent or any Lender to take or prosecute any action in connection with the Guaranteed Debt or to foreclose, take, or prosecute any action in connection with any Loan Document; (h) any failure of Agent or any Lender to notify any Guarantor of any renewal, extension, or assignment of any Guaranteed Debt, or the release of any security or of any other action taken or refrained from being taken by Agent or any Lender against any Borrower or any new agreement between Agent, any Lender, and any Borrower; it being understood that neither Agent nor any Lender is required to give any Guarantor any notice of any kind under any circumstances whatsoever with respect to or in connection with any Guaranteed Debt, other than any notice required to be given to any Guarantor by law or elsewhere in this Guaranty; (i) the unenforceability of any Guaranteed Debt against any other obligor or any security securing same because 3 EXHIBIT C it exceeds the amount permitted by law, the act of creating it is ultra vires, the officers creating it exceeded their authority or violated their fiduciary duties in connection with it, or otherwise; or (j) any payment of any Guaranteed Debt to Agent or any Lender is held to constitute a preference under any Debtor Relief Law or for any other reason Agent or any Lender is required to refund that payment or make payment to someone else (and in each such instance this Guaranty will be reinstated in an amount equal to that payment). 9. WAIVERS. By execution hereof, each Guarantor acknowledges and agrees to the waivers set forth in SECTION 13.9 of the Credit Agreement. To the maximum extent lawful, each Guarantor waives all rights by which it might be entitled to require suit on an accrued right of action in respect of any Guaranteed Debt or require suit against any Borrower or others. 10. LOAN DOCUMENTS. By execution hereof, each Guarantor covenants and agrees that certain representations, warranties, terms, covenants, and conditions set forth in the Loan Documents are applicable to Guarantors and shall be imposed upon Guarantors, and each Guarantor reaffirms that each such representation and warranty is true and correct and covenants and agrees to promptly and properly perform, observe, and comply with each such term, covenant, or condition. Moreover, each Guarantor acknowledges and agrees that this Guaranty is subject to the offset provisions of the Loan Documents in favor of Agent and Lenders. In the event the Credit Agreement or any other Loan Document shall cease to remain in effect for any reason whatsoever during any period when any part of the Guaranteed Debt remains unpaid, the terms, covenants, and agreements of the Credit Agreement or such other Loan Document incorporated herein by reference shall nevertheless continue in full force and effect as obligations of Guarantors under this Guaranty. 11. RELIANCE AND DUTY TO REMAIN INFORMED. Each Guarantor confirms that it has executed and delivered this Guaranty after reviewing the terms and conditions of the Loan Documents and such other information as it has deemed appropriate in order to make its own credit analysis and decision to execute and deliver this Guaranty. Each Guarantor confirms that it has made its own independent investigation with respect to Borrowers' creditworthiness and is not executing and delivering this Guaranty in reliance on any representation or warranty by Agent or any Lender as to that creditworthiness. Each Guarantor expressly assumes all responsibilities to remain informed of the financial condition of Borrowers and any circumstances affecting Borrowers' ability to perform under the Loan Documents to which it is a party or any Collateral securing any Guaranteed Debt. 12. NO REDUCTION. The Guaranteed Debt shall not be reduced, discharged, or released because or by reason of any existing or future offset, claim, or defense (except for the defense of complete and final payment of the Guaranteed Debt) of any Borrower or any other obligor against Agent or any Lender or against payment of the Guaranteed Debt, whether that offset, claim, or defense arises in connection with the Guaranteed Debt or otherwise. Those claims and defenses include, without limitation, failure of consideration, breach of warranty, fraud, bankruptcy, incapacity/infancy, statute of limitations, lender liability, accord and satisfaction, usury, forged signatures, mistake, impossibility, frustration of purpose, and unconscionability. 13. INSOLVENCY OF GUARANTOR. Should any Guarantor become insolvent, or fail to pay such Guarantor's debts generally as they become due, or voluntarily seek, consent to, or acquiesce in, the benefit or benefits of any Debtor Relief Law (other than as a creditor or claimant), or become a party to (or be made the subject of) any proceeding provided for by any Debtor Relief Law (other than as a creditor or claimant) that could suspend or otherwise adversely affect the rights of Agent or any Lender 4 EXHIBIT C granted hereunder, then, in any such event, the Guaranteed Debt shall be, as among such Guarantor, Agent and Lenders, a fully matured, due, and payable obligation of such Guarantor to Agent and Lenders (without regard to whether any Borrower is then in default under the Loan Documents or whether the Obligations, or any part thereof, is then due and owing by any Borrower to any Lender), payable in full by such Guarantor to Lenders upon demand, and the amount thereof so payable shall be the estimated amount owing in respect of the contingent claim created hereunder. 14. LOAN DOCUMENT. This Guaranty is a Loan Document and is subject to the applicable provisions of SECTION 13 of the Credit Agreement, including, without limitation, the provisions relating to GOVERNING LAW, CHOICE OF FORUM, SERVICE OF PROCESS AND JURISDICTION, AND WAIVER OF JURY TRIAL, all of which are incorporated into this Guaranty by reference the same as if set forth in this Guaranty verbatim. 15. NOTICES. To be effective, notices required or permitted to be given under this Guaranty must be in writing, shall be delivered as provided in SECTION 13.8 of the Credit Agreement to the address or facsimile number set forth on the signature pages to this Guaranty, and shall be effective as provided in SECTION 13.8 of the Credit Agreement. 16. AMENDMENTS, ETC. No amendment, waiver, or discharge to or under this Guaranty is valid unless it is in writing and is signed by the party against whom it is sought to be enforced. 17. AGENT AND LENDERS. Agent is Agent for each Lender under the Credit Agreement. All rights granted to Agent under or in connection with this Guaranty are for each Lender's ratable benefit. Agent may, without the joinder of any Lender, exercise any rights in Agent's or Lenders' favor under or in connection with this Guaranty. Agent's and each Lender's rights and obligations vis-a-vis each other may be subject to one or more separate agreements between those parties. However, no Guarantor is required to inquire about any such agreement or is subject to any terms of such agreement unless such Guarantor specifically joins such agreement. Therefore, neither Guarantor nor its successors or assigns is entitled to any benefits or provisions of any such separate agreement or is entitled to rely upon or raise as a defense any party's failure or refusal to comply with the provisions of such agreement. 18. PARTIES. This Guaranty benefits Agent, Lenders, and their respective successors and assigns and binds Guarantors and their respective successors and assigns. Upon appointment of any successor Agent under the Credit Agreement, all of the rights of Agent under this Guaranty automatically vest in that new Agent as successor Agent on behalf of Lenders without any further act, deed, conveyance, or other formality other than that appointment. The rights of Agent and Lenders under this Guaranty may be transferred with any assignment of the Guaranteed Debt. The Credit Agreement contains provisions governing assignments of the Guaranteed Debt and of rights and obligations under this Guaranty. REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURE PAGE(S) TO FOLLOW. 5 EXHIBIT C EXECUTED as of the date first stated in this Guaranty. GUARANTORS: NOTICE INFORMATION FOR ALL GUARANTORS: - --------------------------------- -------------------------------------- -------------------------------------- -------------------------------------- By: --------------------------------- Name: ------------------------- Title: ------------------------ SIGNATURE PAGE TO OBLIGATION GUARANTY EXHIBIT D NOTICE OF BORROWING Date: __________________, 200_ To: BANK OF AMERICA, N.A., individually as a Lender and as agent for itself and the other Lenders (the "AGENT") under that certain Credit Agreement dated as of July 31, 2003 (such agreement, as it may be amended, restated, or otherwise modified from time to time, the "CREDIT AGREEMENT"), by and among the Agent, Westlake Chemical Corporation and certain of its domestic subsidiaries listed as Borrowers thereto (collectively, the "BORROWERS"), and the Lenders party thereto. Ladies and Gentlemen: The undersigned, Westlake Chemical Corporation ("WESTLAKE"), on its behalf and as agent for the other Borrowers refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably of the Borrowing specified below: 1. The Business Day of the proposed Borrowing is ____________, 200___. 2. The aggregate amount of the proposed Borrowing is $_____________. 3. The Borrowing is to be comprised of $_______ of Base Rate and $_______ of LIBOR Rate Loans. 4. The duration of the Interest Period for the LIBOR Rate Loans, if any, included in the Borrowing shall be _____ month[s]. 5. Name of Borrower or Borrowers to receive all or any portion of the requested Borrowing and the amount to be advanced to such Borrower or Borrowers: _________________________ The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom: (a) The representations and warranties of the Loan Parties contained in the Credit Agreement are true and correct as though made on and as of such date and except to the extent that (a) the Agent and the Lenders have been notified in writing by any Borrower that any representation or warranty is not correct and the Required Lenders have explicitly waived in writing compliance with such representation or warranty or (b) any representation or warranty has been qualified by the updated information reflected in, and as permitted under, the Compliance Certificate submitted by Westlake to the Agent periodically; (b) No Default or Event of Default has occurred and is continuing, or would result from such proposed Borrowing; (c) The full amount of the Maximum Revolver Amount has been reserved under (a) Section [4.09(b)(1)] (the basket permitting the credit facilities) of the indenture for the Bond Debt and (b) Section 8.03(c)(i) of the Fixed Asset Loan; and 1 EXHIBIT D (d) The proposed Borrowing will not cause the aggregate principal amount of all outstanding Revolving Loans plus the aggregate amount available for drawing under all outstanding Letters of Credit, to exceed the Borrowing Base, the Maximum Revolver Amount, or the Maximum Inventory Amount. IN WITNESS WHEREOF, Westlake has caused this Notice of Borrowing to be executed and delivered on this ___ day of __________, 200_. 2 EXHIBIT D WESTLAKE CHEMICAL CORPORATION, ON ITS BEHALF AND AS AGENT FOR THE OTHER BORROWERS By: --------------------------------- Name: ---------------------------- Title: --------------------------- Signature Page to Notice of Borrowing EXHIBIT E NOTICE OF CONTINUATION/CONVERSION Date: __________________, 200_ To: BANK OF AMERICA, N.A., individually as a Lender and as agent for itself and the other Lenders (the "AGENT") under that certain Credit Agreement dated as of July 31, 2003 (such agreement, as it may be amended, restated, or otherwise modified from time to time, the "CREDIT AGREEMENT"), by and among the Agent, Westlake Chemical Corporation and certain of its domestic subsidiaries listed as Borrowers thereto (collectively, the "BORROWERS"), and the Lenders party thereto. Ladies and Gentlemen: The undersigned, Westlake Chemical Corporation ("WESTLAKE"), on its behalf and as agent for the other Borrowers refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably of the [conversion] [continuation] of the Loans specified herein, that: 1. The Continuation/Conversion Date is _______, 200_. 2. The aggregate amount of the Loans to be [converted] [continued] is $________. 3. The Loans are to be [converted into] [continued as] [LIBOR Rate] [Base Rate] Loans. 4. The duration of the Interest Period for the LIBOR Rate Loans included in the [conversion] [continuation] shall be ____ month[s]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the proposed Continuation/Conversion Date, before and after giving effect thereto and to the application of the proceeds therefrom: (a) The representations and warranties of the Loan Parties contained in the Credit Agreement are true and correct as though made on and as of such date and except to the extent that (a) the Agent and the Lenders have been notified in writing by any Borrower that any representation or warranty is not correct and the Required Lenders have explicitly waived in writing compliance with such representation or warranty or (b) any representation or warranty has been qualified by the updated information reflected in, and as permitted under, the Compliance Certificate submitted by Westlake to the Agent periodically; (b) No Default or Event of Default has occurred and is continuing, or would result from such proposed [conversion] [continuation]; and (c) The proposed conversion-continuation will not cause the aggregate principal amount of all outstanding Revolving Loans plus the aggregate amount available for drawing under all outstanding Letters of Credit to exceed the Borrowing Base, the Maximum Revolver Amount, or the Maximum Inventory Amount. IN WITNESS WHEREOF, Westlake has caused this Notice of Continuation/Conversion to be executed and delivered on this ___ day of __________, 200_. 1 EXHIBIT E WESTLAKE CHEMICAL CORPORATION, ON ITS BEHALF AND AS AGENT FOR THE OTHER BORROWERS By: ______________________________________ Name: ________________________________ Title: _______________________________ 2 EXHIBIT F ASSIGNMENT AND ACCEPTANCE AGREEMENT This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "ASSIGNMENT AND ACCEPTANCE") dated as of ____________________, 200_ is made between ______________________________ (the "ASSIGNOR") and __________________________ (the "ASSIGNEE"). RECITALS WHEREAS, the Assignor is party to that certain Credit Agreement dated as of July 31, 2003 (as amended, amended and restated, modified, supplemented, or renewed, the "CREDIT AGREEMENT") by and among Westlake Chemical Corporation and certain of its domestic subsidiaries listed as Borrowers thereto (collectively, the "BORROWERS"), the several financial institutions from time to time party thereto (including the Assignor, the "LENDERS"), and Bank of America, N.A., as agent for the Lenders (the "Agent"). Any terms defined in the Credit Agreement and not defined in this Assignment and Acceptance are used herein as defined in the Credit Agreement; WHEREAS, as provided under the Credit Agreement, the Assignor has committed to make Revolving Loans (the "REVOLVING COMMITTED LOANS") to the Borrowers in an aggregate amount not to exceed $__________ (the "REVOLVING COMMITMENT"); WHEREAS, the Assignor has made Revolving Committed Loans in the aggregate principal amount of $__________ to the Borrowers; WHEREAS, [the Assignor has acquired a participation in its pro rata share of the Letter of Credit Issuer's liabilities under Letters of Credit in an aggregate principal amount of $____________ (the "L/C OBLIGATIONS")] [no Letters of Credit are outstanding under the Credit Agreement]; and WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all] rights and obligations of the Assignor under the Credit Agreement in respect of its Revolving Commitment, together with a corresponding portion of each of its outstanding Revolving Committed Loans and L/C Obligations, in an aggregate amount equal to $__________ (the "ASSIGNED AMOUNT") on the terms and subject to the conditions set forth herein and the Assignee wishes to accept assignment of such rights and to assume such obligations from the Assignor on such terms and subject to such conditions; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: 1. Assignment and Acceptance. (a) Subject to the terms and conditions of this Assignment and Acceptance, (i) the Assignor hereby sells, transfers, and assigns to the Assignee, and (ii) the Assignee hereby purchases, assumes, and undertakes from the Assignor, without recourse and without representation or warranty (except as provided in this Assignment and Acceptance) __% (the "ASSIGNEE'S PERCENTAGE SHARE") of (A) the Revolving Commitment, the Revolving Committed Loans, and the L/C Obligations of the Assignor and (B) all related rights, benefits, obligations, liabilities, and indemnities of the Assignor under and in connection with the Credit Agreement and the Loan Documents. (b) With effect on and after the Effective Date (as defined in SECTION 5 1 EXHIBIT F hereof), the Assignee shall be a party to the Credit Agreement and succeed to all of the rights and be obligated to perform all of the obligations of a Lender under the Credit Agreement, including the requirements concerning confidentiality and the payment of indemnification, with a Revolving Commitment in an amount equal to the Assigned Amount. The Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender. It is the intent of the parties hereto that the Revolving Commitment of the Assignor shall, as of the Effective Date, be reduced by an amount equal to the Assigned Amount, and the Assignor shall relinquish its rights and be released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee; provided, however, the Assignor shall not relinquish its rights under SECTIONS 3.8, 4, and 13.11 of the Credit Agreement to the extent such rights relate to the time prior to the Effective Date. (c) After giving effect to the assignment and assumption set forth herein, on the Effective Date the Assignee's Revolving Commitment will be $__________ and Revolving Committed Loans will be $__________. (d) After giving effect to the assignment and assumption set forth herein, on the Effective Date the Assignor's Revolving Commitment will be $__________ and Revolving Committed Loans will be $__________. 2. Payments. (a) As consideration for the sale, assignment, and transfer contemplated in SECTION 1 hereof, the Assignee shall pay to the Assignor on the Effective Date in immediately available funds an amount equal to the purchase price agreed between the Assignor and the Assignee for the Assigned Amount. (b) The [Assignor] [Assignee] further agrees to pay to the Agent a processing fee in the amount specified in SECTION 11.2(A) of the Credit Agreement. 3. Reallocation of Payments. Any interest, fees, and other payments accrued to the Effective Date with respect to the Revolving Commitment, Revolving Committed Loans, and L/C Obligations shall be for the account of the Assignor. Any interest, fees, and other payments accrued on and after the Effective Date with respect to the Assigned Amount shall be for the account of the Assignee. Each of the Assignor and the Assignee agrees that it will hold in trust for the other party any interest, fees, and other amounts which it may receive to which the other party is entitled pursuant to the preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt. 4. Independent Credit Decision. The Assignee (a) acknowledges that it has received a copy of the Credit Agreement and the Schedules and Exhibits thereto, together with copies of the most recent Financial Statements of the Loan Parties, and such other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into this Assignment and Acceptance; and (b) agrees that it will, independently and without reliance upon the Assignor, the Agent, or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Credit Agreement. 5. Effective Date; Notices. 2 EXHIBIT F (a) As between the Assignor and the Assignee, the effective date for this Assignment and Acceptance shall be __________, 200_ (the "EFFECTIVE DATE"); provided that the following conditions precedent have been satisfied on or before the Effective Date: (i) this Assignment and Acceptance shall be executed and delivered by the Assignor and the Assignee; (ii) the consent of the Agent (if necessary) required for an effective assignment of the Assigned Amount by the Assignor to the Assignee shall have been duly obtained and shall be in full force and effect as of the Effective Date; (iii) the Assignee shall pay to the Assignor all amounts due to the Assignor under this Assignment and Acceptance; (iv) the Assignee shall have complied with SECTION 11.2 of the Credit Agreement (if applicable); (v) the processing fee referred to in SECTION 2(B) hereof and in SECTION 11.2(A) of the Credit Agreement shall have been paid to the Agent; and (b) Promptly following the execution of this Assignment and Acceptance, the Assignor shall deliver to the Borrowers and the Agent for acknowledgment by the Agent, a Notice of Assignment in the form attached hereto as SCHEDULE 1. 6. Agent. (a) The Assignee hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the Lenders pursuant to the terms of the Credit Agreement. [INCLUDE (b) ONLY IF ASSIGNOR IS AGENT] (b) The Assignee shall assume no duties or obligations held by the Assignor in its capacity as Agent under the Credit Agreement.] 7. Withholding Tax. The Assignee (a) represents and warrants to the Agent and the Borrowers that under applicable law and treaties no tax will be required to be withheld by the Agent or the Borrowers with respect to any payments to be made to the Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of any jurisdiction other than the United States or any State thereof) to the Agent and the Borrowers prior to the time that the Agent or the Borrowers is required to make any payment of principal, interest, or fees in respect of the interest assigned hereunder, duplicate executed originals of either U.S. Internal Revenue Service Form W-8ECI or U.S. Internal Revenue Service Form W-8BEN (wherein the Assignee claims entitlement to the benefits of a tax treaty that provides for a complete exemption from U.S. federal income withholding tax on all payments hereunder) and agrees to provide new Forms W-8ECI or W-8BEN upon the expiration of any previously delivered form or comparable statements in accordance with applicable U.S. law and regulations and amendments thereto, duly executed and completed by the Assignee, and (c) agrees to comply with all applicable U.S. laws and regulations with regard to such withholding tax exemption. 3 EXHIBIT F 8. Representations and Warranties. (a) The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any Lien or other adverse claim; (ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to fulfill its obligations hereunder; (iii) no notices to, or consents, authorizations, or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery, and performance of this Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery, or performance; and (iv) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid, and binding obligation of the Assignor, enforceable against the Assignor in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization, and other laws of general application relating to or affecting creditors' rights and to general equitable principles. (b) The Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties, or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of the Credit Agreement or any other instrument or document furnished pursuant thereto. The Assignor makes no representation or warranty in connection with, and assumes no responsibility with respect to, the solvency, financial condition, or statements of the Companies, or the performance or observance by any Loan Party of any of its respective obligations under the Credit Agreement or any other instrument or document furnished in connection therewith. (c) The Assignee represents and warrants that (i) it is duly organized and existing and it has full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder; (ii) no notices to, or consents, authorizations, or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery, and performance of this Assignment and Acceptance; and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery, or performance; (iii) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid, and binding obligation of the Assignee, enforceable against the Assignee in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization, and other laws of general application relating to or affecting creditors' rights and to general equitable principles; and (iv) it is an Eligible Assignee. 9. Further Assurances. The Assignor and the Assignee each hereby agree to execute and deliver such other instruments, and take such other action, as either party may reasonably request in connection with the transactions contemplated by this Assignment and Acceptance, including the delivery of any notices or other documents or instruments to the Borrowers or the Agent, which may be required in connection with the assignment and assumption contemplated hereby. 10. Miscellaneous. (a) Any amendment or waiver of any provision of this Assignment and 4 EXHIBIT F Acceptance shall be in writing and signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power, or privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this Assignment and Acceptance shall be without prejudice to any rights with respect to any other or further breach thereof. (b) All payments made hereunder shall be made without any set-off or counterclaim. (c) The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection with the negotiation, preparation, execution, and performance of this Assignment and Acceptance. (d) This Assignment and Acceptance may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. (e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF [TEXAS]. The Assignor and the Assignee each irrevocably submits to the non-exclusive jurisdiction of any State or Federal court sitting in Texas over any suit, action, or proceeding arising out of or relating to this Assignment and Acceptance and irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such Texas State or Federal court. Each party to this Assignment and Acceptance hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. (f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN). IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance to be executed and delivered by their duly authorized officers as of the date first above written. 5 EXHIBIT F [ASSIGNOR] By:______________________________________ Title:___________________________________ Address:_________________________________ [ASSIGNEE] By:______________________________________ Title:___________________________________ Address:_________________________________ 6 EXHIBIT F SCHEDULE 1 TO ASSIGNMENT AND ACCEPTANCE NOTICE OF ASSIGNMENT AND ACCEPTANCE _________________, 200_ Bank of America, N.A, as Agent (as hereinafter defined) 55 S. Lake Avenue, Suite 900 Pasadena, CA 91101 Attn: Robert Mostert Re: Westlake Chemical Corporation et al. Ladies and Gentlemen: We refer to the Credit Agreement dated as of July 31, 2003 (such agreement, as it may be amended, restated, or otherwise modified from time to time, the "CREDIT AGREEMENT") by and among Westlake Chemical Corporation and certain of its domestic subsidiaries listed as Borrowers thereto (collectively, the "BORROWERS"), the Lenders referred to therein, and Bank of America, N.A., as agent for the Lenders (the "AGENT"). Terms defined in the Credit Agreement are used herein as therein defined. 1. We hereby give the Agent notice of, and request the Agent's consent to, the assignment by __________________ (the "ASSIGNOR") to _______________ (the "ASSIGNEE") of _____% of the right, title, and interest of the Assignor in and to the Credit Agreement (including the right, title, and interest of the Assignor in and to the Revolving Commitment of the Assignor to make Revolving Loans, all outstanding Revolving Loans made by the Assignor, and the Assignor's participation in the Letters of Credit pursuant to the Assignment and Acceptance Agreement attached hereto (the "ASSIGNMENT AND ACCEPTANCE"). We understand and agree that the Assignor's Revolving Commitment to make Revolving Loans, as of , 200 , is $ ___________, the aggregate amount of its outstanding Revolving Loans is $_____________, and its participation in Letters of Credit is $_____________. 2. The Assignee agrees that, upon receiving the consent of the Agent to such assignment, the Assignee will be bound by the terms of the Credit Agreement as fully and to the same extent as if the Assignee were the Lender originally holding such interest in the Credit Agreement. 3. The following administrative details apply to the Assignee: (A) Notice Address: ____________________ Assignee name: _____________________ Address: ___________________________ Attention: _________________________ Telephone: (___) __________________ Telecopier: (___) _________________ SCHEDULE I TO ASSIGNMENT AND ACCEPTANCE Telex (Answerback): ___ (B) Payment Instructions: Account No.: ______________________ At: ______________________ ______________________ ______________________ Reference: ______________________ Attention: ______________________ 4. The Agent is entitled to rely upon the representations, warranties, and covenants of each of the Assignor and Assignee contained in the Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of Assignment and Acceptance to be executed by their respective duly authorized officials, officers, or agents as of the date first above mentioned. Very truly yours, [NAME OF ASSIGNOR] By: __________________________ Title: __________________________ [NAME OF ASSIGNEE] By: __________________________ Title: __________________________ ACKNOWLEDGED AND ASSIGNMENT CONSENTED TO: Bank of America, N.A., as Agent By: _________________________ Title: _________________________ 2 EXHIBIT G FORM OF COMPLIANCE CERTIFICATE (Westlake Chemical Corporation et al.) FOR ________ENDED ________________, ______ DATE: _________________, _____ AGENT: Bank of America, N.A. BORROWER: Westlake Chemical Corporation and certain of its domestic subsidiaries This certificate is delivered under the Credit Agreement, dated as of July 31, 2003 (as amended, modified, supplemented, or restated from time to time, the "CREDIT AGREEMENT"), among Agent, Westlake Chemical Corporation and certain of its domestic subsidiaries listed as Borrowers thereto (collectively, the "BORROWERS"), and the Lenders party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meaning given to such terms in the Credit Agreement. I certify to Agent and Lenders on behalf of the Loan Parties that: (a) I am a Responsible Officer of the Loan Parties in the position(s) set forth under my signature below; (b) the Financial Statements of the Loan Parties attached to this certificate were prepared in accordance with GAAP, and present fairly in all material respects the consolidated, and, with respect to annual or quarterly Financial Statements, consolidating, financial condition and results of operations of Westlake and its Subsidiaries as of, and for the (______ months, or fiscal year) ended on, ____________, _____(the "SUBJECT PERIOD") [(subject only to normal year-end audit adjustments)]; (c) a review of the activities of the Loan Parties during the Subject Period has been made under my supervision with a view to determining whether, during the Subject Period, the Loan Parties have kept, observed, performed, and fulfilled all of their respective obligations under the Loan Documents, and during the Subject Period, (i) all of the representations and warranties of the Loan Parties contained in the Credit Agreement and the other Loan Documents are correct and complete in all material respects as at the date pf this certificate, except for those that speak as of a particular date, (ii) each of the Loan Parties is, as of the date of this certificate, in compliance in all material respects with all of its respective covenants and agreements in the Credit Agreement and the other Loan Documents (except for the deviations, if any, set forth on ANNEX A to this certificate), and (iii) no Event of Default (nor any Default) exists as of the date of this certificate or existed during the Subject Period and at the end of such period, which has not been cured or waived (except the Defaults or Events of Defaults, if any, described on ANNEX A to this Certificate); (d) ANNEX B to this certificate sets forth in reasonable detail the calculation of the Fixed Charge Coverage Ratio at the end of the Subject Period (for the immediately preceding twelve (12) month period); (e) to the extent any Equity Issuance or Collateral disposition occurred during the Subject EXHIBIT G Period, all mandatory prepayments reductions required pursuant to SECTION 3.3 have been made; (f) attached hereto as ANNEX C, is a true and correct copy of a schedule indicating the outstanding principal amount of the Debt permitted by SECTION 7.13(K) of the Credit Agreement at the end of the Subject Period; and (g) during the Subject Period, any revisions to SCHEDULES 6.3, 6.5, 6.12, and 6.13 to the Credit Agreement or any Schedule or Annex to each Collateral Document that was required to be revised and supplied to Agent in accordance with the terms of the Loan Documents has been so revised and supplied. WESTLAKE CHEMICAL CORPORATION, ON ITS BEHALF AND AS AGENT FOR THE OTHER LOAN PARTIES By: _______________________________________ Name: ________________________________ Title: ________________________________ EXHIBIT G 2 ANNEX A TO COMPLIANCE CERTIFICATE DEVIATIONS FROM LOAN DOCUMENTS/ EVENTS OF DEFAULTS OR DEFAULTS (If none, so state.) ANNEX A TO COMPLIANCE CERTIFICATE ANNEX B TO COMPLIANCE CERTIFICATE FIXED CHARGE COVERAGE RATIO CALCULATION [Form to be Agreed to by Agent and Borrowers] ANNEX B TO COMPLIANCE CERTIFICATE EX-10.2 70 h08423exv10w2.txt CREDIT AGREEMENT - SENIOR SECURED TERM LOAN EXHIBIT 10.2 CONFORMED COPY ================================================================================ EXECUTION COPY CREDIT AGREEMENT Dated as of July 31, 2003 among WESTLAKE CHEMICAL CORPORATION, as the Borrower, CERTAIN SUBSIDIARIES OF THE BORROWER FROM TIME TO TIME PARTY HERETO, as Guarantors, BANK OF AMERICA, N.A., as Administrative Agent, and THE LENDERS PARTY HERETO BANC OF AMERICA SECURITIES LLC, as Joint Lead Arranger and Co-Book Manager CREDIT SUISSE FIRST BOSTON, as Joint Lead Arranger and Co-Book Manager TABLE OF CONTENTS
Section Page - ------- ---- THE LENDERS PARTY HERETO..........................................................................................i ARTICLE I DEFINITIONS AND ACCOUNTING TERMS........................................................................1 1.01 Defined Terms...................................................................................1 1.02 Other Interpretive Provisions..................................................................24 1.03 Accounting Terms...............................................................................24 1.04 Rounding.......................................................................................25 1.05 References to Agreements and Laws..............................................................25 1.06 Times of Day...................................................................................25 ARTICLE II THE COMMITMENTS AND BORROWINGS........................................................................25 2.01 Loans..........................................................................................25 2.02 Borrowings, Conversions and Continuations of Loans.............................................27 2.03 [Intentionally Omitted]........................................................................28 2.04 Prepayments....................................................................................28 2.05 [Intentionally Omitted]........................................................................30 2.06 Repayment of Loans.............................................................................30 2.07 Interest.......................................................................................31 2.08 Fees...........................................................................................32 2.09 Computation of Interest and Fees...............................................................32 2.10 Evidence of Debt...............................................................................32 2.11 Payments Generally.............................................................................32 2.12 Sharing of Payments............................................................................34 ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY...............................................................34 3.01 Taxes..........................................................................................34 3.02 Illegality.....................................................................................35 3.03 Inability to Determine Rates...................................................................36 3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans.........36 3.05 Funding Losses.................................................................................37 3.06 Matters Applicable to all Requests for Compensation............................................37 3.07 Survival.......................................................................................37 ARTICLE IV GUARANTY..............................................................................................38 4.01 The Guaranty...................................................................................38 4.02 Obligations Unconditional......................................................................38 4.03 Reinstatement..................................................................................39 4.04 Certain Additional Waivers.....................................................................39 4.05 Remedies.......................................................................................39 4.06 Rights of Contribution.........................................................................39 4.07 Guarantee of Payment; Continuing Guarantee.....................................................40 ARTICLE V CONDITIONS PRECEDENT TO BORROWINGS.....................................................................40 5.01 Conditions of Closing Date and Initial Borrowing...............................................40 5.02 Conditions to all Borrowings...................................................................44 ARTICLE VI REPRESENTATIONS AND WARRANTIES........................................................................45 6.01 Existence, Qualification and Power; Compliance with Laws.......................................45 6.02 Authorization; No Contravention................................................................45 6.03 Governmental Authorization; Other Consents.....................................................45 6.04 Binding Effect.................................................................................46 6.05 Financial Statements; No Material Adverse Effect...............................................46 6.06 Litigation.....................................................................................46
i 6.07 No Default.....................................................................................47 6.08 Ownership of Property; Liens...................................................................47 6.09 Environmental Compliance.......................................................................47 6.10 Insurance......................................................................................48 6.11 Taxes..........................................................................................48 6.12 ERISA Compliance...............................................................................48 6.13 Subsidiaries...................................................................................49 6.14 Margin Regulations; Investment Company Act; Public Utility Holding Company Act.................49 6.15 Disclosure.....................................................................................49 6.16 Compliance with Laws...........................................................................49 6.17 Intellectual Property..........................................................................50 6.18 Solvency.......................................................................................50 6.19 Tax Shelter Regulations........................................................................50 6.20 Business Locations.............................................................................50 6.21 Labor Matters..................................................................................50 6.22 Nature of Business.............................................................................50 6.23 Representations and Warranties from Other Loan Documents.......................................51 6.24 Collateral Documents...........................................................................51 ARTICLE VII AFFIRMATIVE COVENANTS................................................................................51 7.01 Financial Statements...........................................................................51 7.02 Certificates; Other Information................................................................52 7.03 Notices and Information........................................................................53 7.04 Payment of Obligations.........................................................................54 7.05 Preservation of Existence, Etc.................................................................54 7.06 Maintenance of Properties......................................................................54 7.07 Maintenance of Insurance.......................................................................54 7.08 Compliance with Laws...........................................................................55 7.09 Books and Records..............................................................................55 7.10 Inspection Rights..............................................................................55 7.11 Use of Proceeds................................................................................55 7.12 Additional Guarantors..........................................................................56 7.13 Pledged Assets.................................................................................56 7.14 Further Assurances.............................................................................56 ARTICLE VIII NEGATIVE COVENANTS..................................................................................57 8.01 Asset Sales....................................................................................57 8.02 Restricted Payments............................................................................58 8.03 Incurrence of Indebtedness and Issuance of Preferred Stock.....................................60 8.04 Liens..........................................................................................62 8.05 Dividend and Other Payment Restrictions Affecting Subsidiaries.................................62 8.06 Merger, Consolidation or Sale of Assets........................................................63 8.07 Transactions with Affiliates...................................................................63 8.08 Sale and Leaseback Transactions................................................................65 8.09 Anti-Layering..................................................................................65 8.10 Organization Documents; Fiscal Year............................................................65 8.11 Specified Facilities...........................................................................65 8.12 Accounts Receivable Facilities.................................................................65 8.13 Designation of Restricted and Unrestricted Subsidiaries........................................66 8.14 Collateral Account.............................................................................66 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES........................................................................66 9.01 Events of Default..............................................................................66 9.02 Remedies Upon Event of Default.................................................................68
ii 9.03 Application of Funds...........................................................................68 ARTICLE X ADMINISTRATIVE AGENT...................................................................................69 10.01 Appointment and Authorization of Administrative Agent..........................................69 10.02 Delegation of Duties...........................................................................69 10.03 Liability of Administrative Agent..............................................................69 10.04 Reliance by Administrative Agent...............................................................70 10.05 Notice of Default..............................................................................70 10.06 Credit Decision; Disclosure of Information by Administrative Agent.............................70 10.07 Indemnification of Administrative Agent........................................................71 10.08 Administrative Agent in its Individual Capacity................................................71 10.09 Successor Administrative Agent.................................................................72 10.10 Administrative Agent May File Proofs of Claim..................................................72 10.11 Collateral and Guaranty Matters................................................................73 10.12 Other Agents; Arrangers and Managers...........................................................73 10.13 Intercreditor Agreement........................................................................73 ARTICLE XI MISCELLANEOUS.........................................................................................74 11.01 Amendments, Etc................................................................................74 11.02 Notices and Other Communications; Facsimile Copies.............................................75 11.03 No Waiver; Cumulative Remedies.................................................................76 11.04 Attorney Costs, Expenses and Taxes.............................................................76 11.05 Indemnification by the Borrower................................................................76 11.06 Payments Set Aside.............................................................................77 11.07 Successors and Assigns.........................................................................77 11.08 Confidentiality................................................................................80 11.09 Set-off........................................................................................80 11.10 Interest Rate Limitation.......................................................................81 11.11 Counterparts...................................................................................81 11.12 Integration....................................................................................81 11.13 Survival of Representations and Warranties.....................................................81 11.14 Severability...................................................................................82 11.15 Tax Forms......................................................................................82 11.16 Replacement of Lenders.........................................................................83 11.17 Governing Law..................................................................................83 11.18 Waiver of Right to Trial by Jury...............................................................84 11.19 Entire Agreement...............................................................................84
iii SCHEDULES 1.01(a) Existing Indebtedness 1.01(b) Existing Liens 2.01 Commitments and Pro Rata Shares 6.03 Required Consents, Authorizations, Notices and Filings 6.10 Insurance 6.13 Subsidiaries 6.17 Intellectual Property Matters 6.20(a) Real Properties 6.20(b) Collateral Locations 6.20(c) Chief Executive Office, Jurisdiction of Incorporation, Principal Place of Business 6.21 Labor Agreements 11.02 Administrative Agent's Office, Certain Addresses for Notices EXHIBITS 1.01 Form of Security Agreement 2.01 Form of New Commitment Agreement 2.02 Form of Loan Notice 7.01 Form of Excess Cash Flow Calculation Certificate 7.12 Form of Joinder Agreement 11.07 Form of Assignment and Assumption iv CREDIT AGREEMENT This CREDIT AGREEMENT (as amended, modified, restated or supplemented from time to time, the "Agreement") is entered into as of July 31, 2003 by and among WESTLAKE CHEMICAL CORPORATION, a Delaware corporation (together with any permitted successors and assigns, the "Borrower"), the Guarantors (as defined herein), the Lenders (as defined herein), and BANK OF AMERICA, N.A., as Administrative Agent (as defined herein). The Borrower has requested that the Lenders provide a term loan in an aggregate amount of $120,000,000 for the purposes hereinafter set forth, and the Lenders are willing to do so on the terms and conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.01 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth below: "Accounts Receivable Subsidiary" means any Wholly-Owned Subsidiary of the Borrower (i) which is formed solely for the purpose of, and which engages in no substantial activities other than activities in connection with, financing accounts receivable of the Borrower and/or its Restricted Subsidiaries, (ii) which is designated by the Borrower as an Accounts Receivables Subsidiary pursuant to an officers' certificate delivered to the Administrative Agent, (iii) no portion of Indebtedness or any other obligation (contingent or otherwise) of which is at any time recourse to or obligates the Borrower or any Restricted Subsidiary in any way, or subjects any property or asset of the Borrower or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to (1) representations, warranties and covenants (or, any indemnity with respect to such representations, warranties and covenants) entered into in the ordinary course of business in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to such Accounts Receivable Subsidiary or (2) any guarantee of any such accounts receivable financing by the Borrower or any Restricted Subsidiary that is permitted to be incurred pursuant to Sections 8.02 and 8.03, (iv) with which neither the Borrower nor any Restricted Subsidiary has any contract, agreement, arrangement or understanding other than contracts, agreements, arrangements and understandings entered into in the ordinary course of business in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable in accordance with Section 8.12 and fees payable in the ordinary course of business in connection with servicing accounts receivable and (v) with respect to which neither the Borrower nor any Restricted Subsidiary has any obligation (a) to subscribe for additional Equity Interests therein or make any additional capital contribution or similar payment or transfer thereto other than in connection with the sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable to such Accounts Receivable Subsidiary in accordance with Section 8.12 or (b) to maintain or preserve the solvency, any balance sheet term, financial condition, level of income or results of operations thereof. "Acquired Debt" means, with respect to any specified Person, (a) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person and (b) Indebtedness secured by a Lien that, at the time of acquisition of an asset by such specified Person, encumbers such asset. "Additional Commitment" means, with respect to any Lender which executes a New Commitment Agreement in accordance with Section 2.01(b), the commitment of such Lender in an aggregate principal amount up to the amount specified in such New Commitment Agreement to make Tranche B Term Loans in accordance with the provisions of Section 2.01. "Administrative Agent" means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent. "Administrative Agent's Office" means the Administrative Agent's address and, as appropriate, account as set forth on Schedule 11.02, or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders. "Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Administrative Agent. "Affiliate" means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. "Agent-Related Persons" means the Administrative Agent, together with its Affiliates (including, in the case of Bank of America in its capacity as the Administrative Agent, BAS), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Agreement" has the meaning assigned to such term in the heading hereof. "Applicable Rate" means, (a) with respect to Base Rate Loans, 2.75% and (b) with respect to Eurodollar Loans, 3.75%. "Asset-Based Facility" means the senior secured revolving credit agreement dated as of the Closing Date among the Borrower, the guarantors named therein, Bank of America, N.A., Banc of America LLC and the lenders named therein providing for a revolving credit facility with availability of up to $200,000,000, subject to borrowing base limitations, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Asset Sale" means (a) the sale, lease, conveyance or other disposition (other than the creation of a Lien) of any assets or rights; provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Borrower and its Restricted Subsidiaries taken as a whole will also be subject to Section 8.06 and Section 9.01(m) and not by the provisions of Section 8.01; and (b) the issuance of Equity Interests in any Restricted Subsidiary or the sale by any Consolidated Party of Equity Interests in any of its Subsidiaries or Joint Ventures. Notwithstanding the preceding sentence, none of the following items will be deemed to be an Asset Sale: (i) any single transaction or series of related transactions (to the extent not involving Collateral) for which the Borrower or its Restricted Subsidiaries receive aggregate consideration of less than $15,000,000; (ii) a transfer of assets between or among the Loan Parties; (iii) a transfer of assets between or among Consolidated Parties that are not Loan Parties; 2 (iv) an issuance of Equity Interests by a Restricted Subsidiary to another Consolidated Party; (v) the sale or lease of products, services, accounts receivable, rolling stock, barges, pipeline capacity or chemical products in the ordinary course of business; (vi) except to the extent such transaction (or series or related transactions) involves Collateral having a net book value of more than $5,000,000, any sale or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business; (vii) a sale (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable and/or related assets to an Accounts Receivable Subsidiary in connection with any Receivables Facility; (viii) the sale or other disposition of cash or Cash Equivalents; or (ix) a Restricted Payment that does not involve the sale, lease, conveyance or other disposition of Collateral and does not violate Section 8.02. "Assignment and Assumption" means an Assignment and Assumption substantially in the form of Exhibit 11.07, and shall include, in the case of the initial assignments of portions of Tranche B Term Loan B by the sole initial Lender, one or more master assignments and assumption agreements to effect assignments to multiple assignees substantially on the terms of the form of Assignment and Assumption set forth in Exhibit 11.07. "Attorney Costs" means and includes all fees, expenses and disbursements of any law firm or other external counsel and, without duplication, the allocated cost of internal legal services and all expenses and disbursements of internal counsel. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended on may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implied in such transaction, determined in accordance with GAAP; provided, however, that if such sale and leaseback transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of "Capital Lease Obligation". "Audited Financial Statements" means the audited consolidated and consolidating balance sheet of the Borrower and its Restricted Subsidiaries for the fiscal year ended December 31, 2002, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal year of the Borrower and its Restricted Subsidiaries, including the notes thereto. "Bank of America" means Bank of America, N.A. and its successors. "Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time. "BAS" means Banc of America Securities LLC. "Base Rate" means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate." The "prime rate" is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change. "Base Rate Loan" means a Loan that bears interest based on the Base Rate. 3 "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. "Borrower" has the meaning specified in the heading hereof. "Borrowing" means a borrowing consisting of simultaneous Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent's Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market. "Businesses" means, at any time, a collective reference to the businesses operated by the Consolidated Parties at such time. "Capital Lease Obligations" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. "Capital Stock" means (i) in the case of a corporation, capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership, partnership interests (whether general or limited), (iv) in the case of a limited liability company, membership interests and (v) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Cash Equivalents" means (a) Dollars; (b) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one-year from the date of acquisition; (c) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500,000,000 and a Thomson Bank Watch Rating of "B" or better; (d) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above; (e) commercial paper having one of the two highest ratings obtainable from Moody's or S&P and in each case maturing within nine months after the date of acquisition; and (f) investments in any Dollar denominated money market fund as defined by Rule 2a-7 under the Investment Company Act of 1940. "Casualty Proceeds" shall have the meaning assigned to such term in Section 7.07(b). 4 "Change of Control" means the occurrence of any of the following: (a) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Borrower and its Restricted Subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d) of the Exchange Act) other than a Principal or a Related Party of a Principal; (b) the adoption of a plan relating to the liquidation or dissolution of the Borrower; (c) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties or a Permitted Group, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Borrower, measured by voting power rather than number of shares, other than in any transaction that complies with clause (d) herein; (d) the Borrower consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Borrower, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Borrower or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of the Borrower outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance); or (e) after an initial public offering of the Borrower or any direct or indirect parent of the Borrower, the first day on which a majority of the members of the board of directors of the Borrower are not Continuing Directors. "Closing Date" means the first date all the conditions precedent in Section 5.01 are satisfied or waived in accordance with Section 5.01. "Code" means the Internal Revenue Code of 1986. "Collateral" means a collective reference to all real and personal Property with respect to which Liens in favor of the Administrative Agent are purported to be granted pursuant to and in accordance with the terms of the Collateral Documents. "Collateral Account" means the deposit account maintained by the Borrower with the Administrative Agent (and subject to the security interest of the Administrative Agent) into which Net Proceeds from Asset Sales of Collateral and Casualty Proceeds from Involuntary Dispositions affecting Collateral shall be deposited pending final application of such proceeds in accordance with the terms of this Agreement. "Collateral Documents" means a collective reference to the Security Agreement, the Mortgage Instruments and such other security documents as may be executed and delivered by the Loan Parties pursuant to the terms of Section 7.13. "Commitment" means, as to each Lender, the Tranche B Term Loan Commitment of such Lender. "Consolidated Cash Flow" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication: (a) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus (b) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period (including any provision for taxes on the Net Income of any Joint Venture that is a pass-through entity for federal income tax purposes, to the extent such taxes are paid or payable 5 by such Person or any of its Restricted Subsidiaries, provided, however, that such provision for taxes shall only be equal to such Person's proportional share in the Joint Venture), to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus (c) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus (d) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus (e) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary of the Borrower will be added to Consolidated Net Income to compute Consolidated Cash Flow of the Borrower only to the extent that a corresponding amount would be permitted at the date of determination to be distributed as a dividend to the Borrower by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (a) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person; (b) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders; (c) the cumulative effect of a change in accounting principles will be excluded; and (d) notwithstanding clause (a) above, the Net Income (but not loss) of any Unrestricted Subsidiary will be excluded, whether or not distributed to the specified Person or one of its Subsidiaries. "Consolidated Parties" means a collective reference to the Borrower and its Restricted Subsidiaries, and "Consolidated Party" means any one of them. "Continuing Directors" means, as of any date of determination, any member of the board of directors of the Borrower who (a) was a member of such board of directors on the Closing Date or (b) was nominated for election or elected or appointed to such board of directors with the approval of, or whose nomination for election by the stockholders was approved by, a majority of the Continuing Directors who were members of such board of directors at the time of such nomination, appointment or election. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Control" has the meaning specified in the definition of "Affiliate" set forth in this Section 1.01. 6 "Debtor Relief Laws" means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally. "Default" means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default. "Default Rate" means an interest rate equal to (a) the Base Rate plus (b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in each case to the fullest extent permitted by applicable Laws. "Defaulting Lender" means any Lender that (a) has failed to fund any portion of the Loans required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the Maturity Date. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Borrower to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Borrower may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 8.02. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Agreement will be the maximum amount that the Borrower and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends. "Dollar" and "$" mean lawful money of the United States. "Domestic Subsidiary" means any Restricted Subsidiary that is organized under the laws of any political subdivision of the United States. "Eligible Assignee" has the meaning specified in Section 11.07(g). "Environmental Laws" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. 7 "Environmental Liability" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Restricted Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "ERISA" means the Employee Retirement Income Security Act of 1974. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate a Pension Plan under Section 4041(c) of ERISA, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA if such termination could reasonably be expected to have a Material Adverse Effect, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate. "Eurodollar Rate" means for any Interest Period with respect to any Eurodollar Rate Loan: (a) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or (b) if the rate referenced in the preceding clause (a) does not appear on such page or service or such page or service shall not be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or (c) if the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum determined by the Administrative Agent as the rate of interest at which deposits in 8 Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted and with a term equivalent to such Interest Period would be offered by Bank of America's London Branch to major banks in the London interbank eurodollar market at their request at approximately 4:00 p.m. (London time) two Business Days prior to the first day of such Interest Period. "Eurodollar Rate Loan" means a Loan that bears interest at a rate based on the Eurodollar Rate. "Event of Default" has the meaning specified in Section 9.01. "Excess Cash Flow" means, for any fiscal year, with respect to the Borrower and its Restricted Subsidiaries on a consolidated basis, as reported in the financial statements delivered pursuant to Section 7.01(a) and as determined in accordance with GAAP, an amount (rounded to the nearest $1,000,000) equal to the sum (without duplication) of (a) net cash provided by operating activities, after excluding the impact of changes in any Receivables Facility, minus (b) capital expenditures (except to the extent attributable to the incurrence of Capital Lease Obligations or otherwise financed with Indebtedness (other than Indebtedness under the Asset-Based Facility)), minus (c) the aggregate principal amount of the Loans repaid or prepaid (whether voluntary or mandatory) during such period. "Excess Cash Flow Payment Date" means, with respect to any fiscal year of the Borrower beginning with the fiscal year ending December 31, 2004, the tenth Business Day following the 90th day after the end of such fiscal year; provided, however, if on such date, Availability (after giving effect to the prepayment required by Section 2.04(b)(i)) is less than $50,000,000 or the Fixed Charge Coverage Ratio is less than 1.0 to 1.0, then the "Excess Cash Flow Payment Date" shall be the earlier of (a) the third Business Day thereafter that Availability (after giving effect to the prepayment required by Section 2.04(b)(i)) is at least $50,000,000 and the Fixed Charge Coverage Ratio is at least 1.0 to 1.0 and (b) the date that the prepayment described in Section 2.04(b)(iii) is otherwise permitted under the Asset-Based Facility. For purposes of this definition, the terms "Availability" and "Fixed Charge Coverage Ratio" shall have the meanings assigned thereto in the Asset-Based Facility (as in effect on the Closing Date). "Exchange Act" means the Security Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Existing Financings" means (a) that certain Third Amended and Restated Revolving Credit Agreement dated as of June 21, 2002 between the Borrower, the Lenders party thereto and JPMorgan Chase Bank, as Administrative Agent, (b) that certain Second Amended and Restated Term Loan Agreement dated as of June 21, 2002 between the Borrower, the Lenders party thereto and JPMorgan Chase Bank, as Administrative Agent, (c) that certain Amended and Restated Note Agreement dated as of June 21, 2002, between the Borrower and the noteholders party thereto and (d)the accounts receivable facility originally evidenced by that certain Receivables Transfer Agreement by and among Park Avenue Receivables Corporation, Westlake AR Corporation, Westlake Management Services, Inc., and The Chase Manhattan Bank, dated as of October 29, 1997, and the other agreements related thereto. "Existing Indebtedness" means the Indebtedness of the Borrower and its Subsidiaries (other than Indebtedness under this Agreement) in existence on the Closing Date and set forth on Schedule 1.01(a), including all reimbursement obligations with respect to letters of credit outstanding as of that date, in each case until such amounts are repaid. "Fair Market Value" means the price that could be negotiated in an arm's-length transaction between a willing buyer and a willing seller not involving distress or necessity of either party, determined in good faith by the board of directors of the Borrower (unless otherwise provided in this Agreement). 9 "Federal Funds Rate" means, for any day, the rate per annum (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to Bank of America on such day on such transactions as determined by the Administrative Agent. "Fee Letter" means the letter agreement, dated June 26, 2003, among the Borrower, the Administrative Agent and BAS. "Fixed Charge Coverage Ratio" means, with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (a) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect (in accordance with Regulation S-X under the Securities Act) as if they had occurred on the first day of the four-quarter reference period; (b) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded; (c) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date; (d) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period; (e) any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period; and (f) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months). "Fixed Charges" means, with respect to any specified Person for any period, the sum, without duplication, of: (a) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs 10 and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations; plus (b) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus (c) any interest accruing on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus (d) the product of (i) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Borrower (other than Disqualified Stock) or to the Borrower or a Restricted Subsidiary of the Borrower, times (i) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. However, interest payments on Indebtedness of a Joint Venture shall, in each case, not be deemed Fixed Charges of the Borrower or any Restricted Subsidiary as of any date of determination when such Indebtedness is not considered Indebtedness of the Borrower or any Restricted Subsidiary. "Foreign Lender" has the meaning specified in Section 11.15(a)(i). "Foreign Subsidiary" means any Restricted Subsidiary that is not a Domestic Subsidiary. "FRB" means the Board of Governors of the Federal Reserve System of the United States. "Fully Satisfied" means, with respect to the Obligations as of any date, that, as of such date, (a) all principal of and interest accrued to such date which constitute Obligations shall have been irrevocably paid in full in cash and (b) all fees, expenses and other amounts then due and payable which constitute Obligations shall have been irrevocably paid in cash. "GAAP" means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied. "General Partner" means a Restricted Subsidiary of the Borrower or any of its Restricted Subsidiaries that has no assets and conducts no operations other than its ownership of a general partnership interest in a Joint Venture. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Guarantors" means a collective reference to the Persons identified as "Guarantors" on the signature pages hereto, and each other Person that subsequently becomes a Guarantor by executing a Joinder Agreement as contemplated by Section 7.12, and "Guarantor" means any one of them. 11 "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection or deposit in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements (other than with respect to the obligations of a Joint Venture, solely by virtue of a Restricted Subsidiary being the General Partner of such Joint Venture if, as of the date of determination, no payment on such Indebtedness has been made by such General Partner of such Joint Venture and such arrangement would not be classified and accounted for, in accordance with GAAP, as a liability on a consolidated balance sheet of the Borrower), or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise). "Guaranty" means the Guaranty made by the Guarantors in favor of the Administrative Agent and the Lenders pursuant to Article IV hereof. "Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. "Hedging Obligations" means with respect to any specified Person, the obligations of such Persons under (a) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements, (b) other agreements or arrangements designed to manage interest rate risk and (c) other agreements on arrangements designed to protect such Person against fluctuations in currency exchange rates, currency values or commodity prices. "Indebtedness" means, with respect to any specified Person, without duplication, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (c) in respect of banker's acceptances, (d) representing Capital Lease Obligations on Attributable Debt in respect of sale and leaseback transactions, (e) representing the balance deferred and unpaid of the purchase price of any property due more than six months after such property is acquired, or (f) representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit, Attributable Debt and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date will be (i) the accreted value of the Indebtedness, in the case of any Indebtedness issued within original issue discount; (ii) the principal amount of the Indebtedness, in the case of any other Indebtedness, and (iii) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of (A) the Fair Market Value of such assets at the date of determination, and (B) the amount of the Indebtedness of the other Person. "Indemnified Liabilities" has the meaning set forth in Section 11.05. "Indemnitees" has the meaning set forth in Section 11.05. "Intellectual Property" has the meaning set forth in Section 6.17. 12 "Intercreditor Agreement" means that certain Intercreditor Agreement dated as of the Closing Date among the Administrative Agent, on behalf of itself and the Lenders, and the administrative agent under the Asset-Based Facility, on behalf of itself and the lenders thereunder, as amended, modified, restated or supplemented from time to time. "Interest Payment Date" means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date. "Interest Period" means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its Loan Notice; provided that: (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (iii) no Interest Period shall extend beyond the Maturity Date. "Investment Grade" means a rating of Baa3 or better by Moody's and BBB- or better by S&P (or, if either such entity ceases to rate the Senior Notes for reasons outside of the control of the Borrower, the equivalent investment grade credit rating from any other "nationally recognized statistical rating organization" within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Borrower as a replacement agency). "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, loans, fees, compensation and advances to officers, directors and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Investment" excludes trade credit and accounts receivable in the ordinary course of business and reimbursement obligations in respect of letters of credit and tender, bid, performance, government contract, surety and appeal bonds, in each case solely with respect to obligations of the Borrower or any of its Restricted Subsidiaries. If the Borrower or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, the Borrower will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Borrower's Investments in such Restricted Subsidiary that were not sold or disposed of in an amount determined as provided in the final paragraph of Section 8.02. The acquisition by the Borrower or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Borrower or such Restricted Subsidiary in such third Person in an amount equal to the 13 Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in the final paragraph of Section 8.02. Except as otherwise provided in this Agreement, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value. "Involuntary Disposition" means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any Property of any Consolidated Party. "Involuntary Disposition Prepayment Event" means, with respect to any Involuntary Disposition affecting the Collateral, the failure of the Loan Parties to apply (or cause to be applied) an amount equal to the Casualty Proceeds of such Involuntary Disposition, if any, either (a) to prepay the Loans or (b) to repair or replace the Property affected by such Involuntary Disposition, in each case within 300 days following receipt by a Consolidated Party of the Casualty Proceeds of such Involuntary Disposition as required by Section 7.07(b). "IRS" means the United States Internal Revenue Service. "Joinder Agreement" means a Joinder Agreement substantially in the form of Exhibit 7.12 hereto, executed and delivered by a new Guarantor in accordance with the provisions of Section 7.12. "Joint Venture" means any joint venture between the Borrower and/or any Restricted Subsidiary and any other Person, and such joint venture is: (a) owned 50% or less by the Borrower and/or any of its Restricted Subsidiaries; and (b) not directly or indirectly Controlled by or under direct or indirect common Control of the Borrower and/or any of its Restricted Subsidiaries. "Laws" means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law. "Lenders" means each of the Persons identified as a "Lender" on the signature pages hereto, any Person which becomes a Lender by executing a New Commitment Agreement pursuant to Section 2.01(b), and their successors and assigns, and "Lender" means any one of them. "Lending Office" means, as to any Lender, the office or offices of such Lender described as such in such Lender's Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option on other agreement to give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Limited Recourse Stock Pledge" means the pledge of Equity Interests in any Joint Venture or Unrestricted Subsidiary to secure Non-Recourse Debt of such Joint Venture or such Unrestricted Subsidiary, which pledge is made by a Restricted Subsidiary of the Borrower, the activities of which are 14 limited to making and managing Investments, and owning Equity Interests, in such Joint Venture or Unrestricted Subsidiary, but only for so long as its activities are so limited. "Loan" means any extension of credit by a Lender to the Borrower under Article II in the form of a Tranche B Term Loan. "Loan Documents" means this Agreement, each Note, each Joinder Agreement, the Collateral Documents and the Fee Letter. "Loan Notice" means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit 2.02. "Loan Parties" means, collectively, the Borrower and each Guarantor. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent) or condition (financial or otherwise) of the Borrower or the Borrower and its Restricted Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party; or (d) a material adverse effect on the Collateral (or the value thereof). "Maturity Date" means July 31, 2010. "Moody's" means Moody's Investors Service, Inc. and any successor thereto. "Mortgage Instruments" shall have the meaning assigned such term in Section 5.01(d). "Mortgage Policies" shall have the meaning assigned such term in Section 5.01(d). "Mortgaged Properties" shall have the meaning assigned such term in Section 5.01(d). "Multiemployer Plan" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions. "Net Income" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: (a) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with: (i) any Asset Sale or any disposition pursuant to a sale and leaseback transaction or (ii) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (b) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by the Borrower or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (a) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment 15 banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, (b) taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, (c) amounts required to be paid to holders of minority interests in Restricted Subsidiaries or Joint Ventures as a result of such Asset Sale, (d) amounts required to be applied to the repayment of Indebtedness secured by a Permitted Lien (ranking senior to any Lien of the Administrative Agent) on the asset or assets that were the subject of such Asset Sale, or which must by the terms of such Lien or by applicable Law be repaid out of the proceeds of such Asset Sale, (e) all payments made with respect to liabilities directly associated with the assets which are the subject of the Asset Sale, including, without limitation, trade payables and other accrued liabilities, and (f) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "New Commitment Agreement" has the meaning assigned to such term in Section 2.01(b). "Non-Recourse Debt" means Indebtedness (a) as to which neither the Borrower nor any of its Restricted Subsidiaries (i) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (ii) is directly or indirectly liable as a guarantor or otherwise, or (iii) constitutes the lender; (b) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Borrower or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and (c) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Borrower or any of its Restricted Subsidiaries, other than the Equity Interests of a Joint Venture that is not a Restricted Subsidiary or of an Unrestricted Subsidiary pledged by the Borrower or any of its Restricted Subsidiaries as a Limited Recourse Stock Pledge. "Note" or "Notes" has the meaning specified in Section 2.10(a). "Obligations" means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. "Organization Documents" means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity. "Parent" means Westlake Polymer and Petrochemical, Inc., a Delaware corporation. "Pari Passu Indebtedness" means, in the case of the Obligations, any senior Indebtedness of the Loan Parties. 16 "Participant" has the meaning specified in Section 11.07(d). "PBGC" means the Pension Benefit Guaranty Corporation or any Governmental Authority succeeding to the functions thereof. "Pension Plan" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years. "Permitted Business" means the petrochemical, chemicals, and vinyls or plastic fabrications business and any other businesses related, incidental, complementary or ancillary thereto. "Permitted Group" means any group of investors that is deemed to be a "person" (as that term is used in Section 13(d)(3) of the Exchange Act) at any time prior to the Borrower's initial public offering of common stock, provided that no single Person (other than the Principals and their Related Parties) Beneficially Owns (together with its Affiliates) more of the Voting Stock of the Borrower that is Beneficially Owned by such group of investors than is then collectively Beneficially Owned by the Principals and their Related Parties in the aggregate. "Permitted Investments" means (a) any Investment in any Loan Party; (b) any Investment in Cash Equivalents; (c) any Investment by the Borrower or any Restricted Subsidiary in a Person, if as a result of such Investment (i) such Person becomes a Loan Party or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, a Loan Party; (d) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 8.01; (e) any acquisition of assets or Capital Stock solely in exchange for the, or out of the net cash proceeds of a substantially concurrent, issuance of Equity Interests (other than Disqualified Stock) of the Borrower; (f) any Investments received in settlement, compromise or resolution of (i) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Borrower or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (ii) litigation, arbitration or other disputes with Persons who are not Affiliates; (g) Investments represented by Hedging Obligations; (h) loans or advances to employees made in the ordinary course of business of the Borrower or the Restricted Subsidiary in an aggregate principal amount not to exceed $2,000,000 at any one time outstanding; (i) Investments in an Accounts Receivable Subsidiary that, as conclusively determined by the board of directors of the Borrower, are necessary or advisable to effect a Receivables Facility; (j) Limited Recourse Stock Pledges; (k) additional Investments in a Subsidiary holding an interest in Suzhou Huasu Plastics Co. Ltd. in an aggregate amount not to exceed $8,500,000; (l) Investments in Joint Ventures in an aggregate amount not to exceed $25,000,000; and (m) other Investments in any Person (excluding contributions of Collateral to such Person) having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (m) that are at the time outstanding not to exceed $10,000,000. "Permitted Liens" means: (a) Liens on assets of any Loan Party (other than Collateral) securing Pari Passu Indebtedness that is permitted by this Agreement to be incurred and/or securing Hedging Obligations related thereto; 17 (b) Liens in favor of any Loan Party; (c) Liens on property of a Person existing at the time such Person becomes a Subsidiary or is merged with or into or consolidated with the Borrower or any Subsidiary; provided that such Liens were in existence prior to the contemplation of such acquisition, merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Borrower or the Subsidiary or that becomes a Subsidiary; (d) Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Borrower or any Subsidiary, provided that such Liens were in existence prior to, and not incurred in contemplation of, such acquisition; (e) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (d) of the second paragraph of Section 8.03 covering only the assets acquired with or financed by such Indebtedness; (f) Liens existing on the Closing Date and set forth on Schedule 1.01(b); (g) Liens imposed by law, such as carriers', warehousemen's, landlord's and mechanics' Liens, in each case, incurred in the ordinary course of business; provided that such Liens secure only amounts not yet due and payable or, if due and payable, are unfiled and no other action has been taken to enforce the same or are being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established; (h) Liens created by the Loan Documents; (i) Liens securing reimbursement obligations with respect to commercial letters of credit obtained in the ordinary course of business, consistent with past practices, which encumber documents and other property or assets relating to such letters of credit and products and proceeds thereof; (j) Liens incurred or assumed in connection with the issuance of revenue bonds the interest on which is exempt from federal income taxation pursuant to Section 103(b) of the Code, including, without limitation, liens as a cash collateral account securing existing reimbursement obligations with respect to a letter of credit issued pursuant thereto; (k) customary Liens for the fees, costs and expenses of trustees and escrow agents pursuant to any indenture, escrow agreement or similar agreement establishing a trust or escrow arrangement; (l) Liens on assets of the Borrower or any Restricted Subsidiary arising as a result of a sale and leaseback transaction with respect to such assets; provided that the proceeds from such sale and leaseback transaction are applied to the repayment of Indebtedness or acquisition of assets or the making of capital expenditures pursuant to Section 8.01(b) or 8.01(c), as applicable; (m) Liens (on assets other than the Collateral Account, real property, fixtures and equipment) that secure the Asset-Based Facility, which to the extent that such Liens attach to Collateral, are subject to the Intercreditor Agreement; (n) the interest of a lessor or licensor under an operating lease or license under which the Borrower or any of its Restricted Subsidiaries are lessee, sublessee, or licensee, including protective financing statement filings; 18 (o) Limited Recourse Stock Pledges; (p) Liens encumbering customary initial deposits and margin deposits, netting provisions and setoff rights, in each case securing Indebtedness under Hedging Obligations; (q) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred by this Agreement; provided, however, that: (i) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and (ii) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount or, if greater, committed amount, of the Permitted Referencing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such refinancings, refunding, extension, renewal or replacement; (r) Liens on accounts receivable and related property deemed to arise in connection with any Receivables Facility; and (s) Liens incurred in the ordinary course of business of the Borrower or any Restricted Subsidiary with respect to obligations that do not exceed $10,000,000 at any one time outstanding. "Permitted Payments to Parent" means, without duplication as to amounts: (a) payments to the Parent to permit the Parent to pay when due, or the incurrence by the Borrower or any Restricted Subsidiary of expenses on behalf of Parent with respect to, reasonable accounting, legal and administrative expenses of the Parent, in an aggregate amount not to exceed $1,000,000 million per annum; and (b) for so long as the Borrower is a member of a group filing a consolidated or combined tax return with the Parent, payments to the Parent in the amount of the relevant tax (including any penalties and interest) that the Borrower would owe if the Borrower were filing a separate tax return (or a separate consolidated or combined return with its Subsidiaries that are members of the consolidated or combined group), taking into account any carryovers and carrybacks of tax attributes (such as net operating losses) of the Borrower and such Subsidiaries from other taxable years. "Permitted Refinancing Indebtedness" means any Indebtedness of the Borrower or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Borrower or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that (a) the principal amount (or initial accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount outstanding, or in the case of a revolving line of credit, available (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (b) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (c) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Obligations, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Obligations on subordination terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (d) such Indebtedness is incurred either by the Borrower or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. 19 "Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "Principals" means T.T. Chao, his descendents, including by adoption, and the spouses of any such individuals. "Plan" means any "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate. "Principal Amortization Payment" means a principal payment on the Tranche B Term Loan as set forth in Section 2.06. "Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "Pro Rata Share" means as to each Lender, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the principal amount of the Term Loan held by such Lender at such time and the denominator of which is the aggregate principal amount of the Term Loan at such time. The initial Pro Rata Share of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable. "Real Properties" means, at any time, a collective reference to each of the facilities and real properties owned, leased or operated by the Consolidated Parties at such time. "Receivables Facility" means one or more receivables financing facilities or arrangements, as amended from time to time, pursuant to which the Borrower or any of its Restricted Subsidiaries sells (including a sale in exchange for a promissory note of or Equity Interest in an Accounts Receivable Subsidiary) its accounts receivable, related assets and the provision of billing, collection and other services in connection therewith, in each case to an Accounts Receivable Subsidiary. "Receivables Fees" means distributions or payments made directly or by means of discounts with respect to any participation interests issued or sold in connection with, and other fees paid to a Person that is not the Borrower or a Restricted Subsidiary in connection with, any Receivables Facility. "Register" has the meaning set forth in Section 11.07(c). "Related Party" means (a) any controlling stockholder, 80% (or more) owned Subsidiary, or immediate family member (in the case of an individual) of any Principal or (b) any Person, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a 50% or more controlling interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately preceding clause (a). "Reportable Event" means, any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. 20 "Required Lenders" means, at any time, Lenders holding in the aggregate more than 50% of the outstanding Loans. The unfunded Commitments of, and the outstanding Loans held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders. "Responsible Officer" means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Payment" means (a) the declaration or payment of any dividend or the making of any other distribution on account of the Borrower's or any of its Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Borrower or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Borrower's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Borrower or to the Borrower or a Restricted Subsidiary); (b) the purchase, redemption or other acquisition or retirement for value (including, without limitation, in connection with any merger or consolidation involving the Borrower) of any Equity Interests of the Borrower or any direct or indirect parent of the Borrower; (c) any payment on or with respect to, or purchase, redemption, defeaseance or other acquisition or retirement for value of, any Indebtedness of any Loan Party that is contractually subordinated to the Obligations (excluding any intercompany Indebtedness between or among the Borrower and any of its Restricted Subsidiaries), except a payment of interest or principal at or after the Stated Maturity of such interest or principal; (d) any Restricted Investment; or (e) any voluntary, optional or other non-scheduled payment, prepayment, redemption, acquisition for value (including without limitation, by way of depositing money or securities with the trustee with respect thereto before due for the purpose of paying when due), refund, refinance or exchange of any Indebtedness of such the Borrower or any of its Restricted Subsidiaries (other than Indebtedness under the Loan Documents or the Asset-Based Facility) (in each case, whether or not mandatory). "Restricted Subsidiary" of a Person means any Subsidiary of the such Person that is not an Unrestricted Subsidiary. Unless the context otherwise requires, each reference to a "Restricted Subsidiary" shall refer to a Subsidiary of the Borrower. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto. "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. "Security Agreement" means the security and pledge agreement in the form of Exhibit 1.01 dated as of the Closing Date executed in favor of the Administrative Agent by each of the Loan Parties, as amended, modified, restated or supplemented from time to time. "Senior Note" means any one of the 8 3/4 % Notes due 2011 issued by the Borrower in favor of the Senior Noteholders pursuant to the Senior Note Indenture, as such Senior Notes may be amended, modified, restated or supplemented and in effect from time to time in accordance with the terms hereof. 21 "Senior Note Indenture" means the Indenture, dated as of the Closing Date, by and among the Borrower and the Senior Noteholders, as the same may be amended, modified, restated or supplemented and in effect from time to time in accordance with the terms hereof. "Senior Noteholder" means any one of the holders from time to time of the Senior Notes. "Solvent" or "Solvency" means, with respect to any Person as of a particular date, that on such date (a) such Person is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the ordinary course of business, (b) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature in their ordinary course, (c) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person's Property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged or is to engage, (d) the fair value of the Property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person and (e) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Specified Facilities" means the Calcasieu Parish, Louisiana ethylene, styrene and polyethylene facilities and the Marshall County, Kentucky ethylene, chlor-alkali, vinyl chloride monomer and polyvinyl chloride facilities. "Specified Permitted Liens" means Liens of the type described in clauses (d), (e), (f), (g), (h), (m) and (n) of the definition of "Permitted Liens". "Stated Maturity" means, with respect to any installment of interest on principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest on principal prior to the date originally scheduled for the payment thereof. "Styrene Plant Sale" means an Asset Sale of the plant, properties and equipment comprising the styrene manufacturing facility located in Calcasieu Parish, Louisiana and owned by Westlake Styrene Corporation. "Subsidiary" means, with respect to any specified Person: (a) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (b) any partnership (i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (ii) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of the Borrower. "Tranche B Term Loan" has the meaning specified in Section 2.01(b). 22 "Tranche B Term Loan Commitment" means, as to each Lender, its obligation to make its portion of the Tranche B Term Loan to the Borrower pursuant to Section 2.01(a), in the principal amount set forth opposite such Lender's name on Schedule 2.01 or in the Assignment and Assumption or New Commitment Agreement, as applicable, pursuant to which such Lender becomes a party hereto. The aggregate principal amount of the Tranche B Term Loan Commitments of all of the Lenders as in effect on the Closing Date is ONE HUNDRED TWENTY MILLION DOLLARS ($120,000,000) and may be increased from time to time in accordance with Section 2.01(b). "Type" means, with respect to any Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan. "Unfunded Pension Liability" means the excess of a Pension Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. "United States" and "U.S." mean the United States of America. "Unrestricted Subsidiary" means (i) any Accounts Receivable Subsidiary, (ii) Westlake International Investments Corporation, a British Virgin Islands corporation, (iii) any Subsidiary of an Unrestricted Subsidiary and (iv) any other Subsidiary of the Borrower that is designated by the board of directors of the Borrower as an Unrestricted Subsidiary pursuant to a board resolution, but only to the extent that such Subsidiary: (A) has no Indebtedness other than Non-Recourse Debt; (B) is not party to any agreement, contract, arrangement or understanding with the Borrower or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Borrower or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Borrower; (C) is a Person with respect to which neither the Borrower nor any of its Restricted Subsidiaries has any direct or indirect obligation (1) to subscribe for additional Equity Interests or (2) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (D) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Borrower or any of its Restricted Subsidiaries. Any designation of a Subsidiary of the Borrower as an Unrestricted Subsidiary will be evidenced to the Administrative Agent by filing with the Administrative Agent a certified copy of the board resolution of the Borrower giving effect to such designation and an officers' certificate certifying that such designation complied with the preceding conditions and was permitted by Section 8.02. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and, if such Indebtedness is not permitted to be incurred by Section 8.03, an Event of Default shall exist. The board of directors of the Borrower may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Borrower of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under Section 8.03, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default would be in existence following such designation. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors of such Person. 23 "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, times (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment times (b) the then outstanding principal amount of such Indebtedness. "Wholly-Owned Subsidiary" of any specified Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) will at the time be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person and one or more Wholly-Owned Subsidiaries of such Person. 1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document: (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) (i) The words "herein," "hereto," "hereof" and "hereunder" and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof. (ii) Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference appears. (iii) The term "including" is by way of example and not limitation. (iv) The term "documents" includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form. (c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document. 1.03 ACCOUNTING TERMS. (a) Except as otherwise specifically prescribed herein, all accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements. (b) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the 24 Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. 1.04 ROUNDING. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number). 1.05 REFERENCES TO AGREEMENTS AND LAWS. Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law. 1.06 TIMES OF DAY. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable). ARTICLE II THE COMMITMENTS AND BORROWINGS 2.01 LOANS. (a) Tranche B Term Loan. Subject to the terms and conditions set forth herein, each Lender severally agrees to make its portion of a term loan (the "Tranche B Term Loan") to the Borrower on the Closing Date (or on the effective date of any increase in the Tranche B Term Loan Commitment pursuant to Section 2.01(b), as applicable) in an amount not to exceed such Lender's Tranche B Term Loan Commitment. Amounts repaid on the Tranche B Term Loan may not be reborrowed. The Tranche B Term Loan may consist of Base Rate Loans or Eurodollar Rate Loans, as further provided herein. (b) Increases of the Tranche B Term Loan Commitments. The Borrower shall have the right upon at least fifteen (15) Business Days' prior written notice to the Administrative Agent to increase the Tranche B Term Loan Commitments by up to $50,000,000 in the aggregate, in a single increase, at any time and from time to time during the period commencing on the Closing Date and ending on the fourth anniversary of the Closing Date, subject, however, in any such case, to satisfaction of the following conditions precedent: (i) no Default exists on the date on which such increase is to become effective; (ii) the representations and warranties set forth in Article VI of this Agreement shall be true and correct in all material respects on and as of the date on which such increase is to 25 become effective, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date; (iii) such increase shall be an integral multiple of $1,000,000 and shall in no event be less than $5,000,000; (iv) such requested increase shall be effective on such date only to the extent that, on or before such date, (A) the Administrative Agent shall have received and accepted a corresponding amount of Additional Commitment(s) pursuant to a commitment letter(s) reasonably acceptable to the Administrative Agent from one or more lenders reasonably acceptable to the Administrative Agent and, with respect to any lender that is not at such time a Lender hereunder, the Borrower, (B) each such lender has executed an agreement in the form of Exhibit 2.01 (hereto (each such agreement a "New Commitment Agreement"), accepted in writing therein by the Administrative Agent and, with respect to any lender that is not at such time a Lender hereunder, the Borrower, with respect to the Additional Commitment of such lender and (C) the Administrative Agent shall have received from the Borrower a Loan Notice with respect to the funding of such Additional Commitment; (v) the Borrower shall have paid to each Lender (that is a Lender prior to giving effect to such Additional Commitment(s)) an amount equal to the product of (A) the amount of such Lender's Commitment (prior to giving effect to such Additional Commitment(s)) multiplied by (B) the weighted average (expressed as a percentage and determined as of the date of payment thereof) of the commitment, upfront and/or other similar fees paid by the Loan Parties in respect of any Additional Commitment(s) pertaining to any such increase; (vi) the Administrative Agent shall have received all documents (including resolutions of the board of directors of the Borrower) it may reasonably request relating to the corporate or other necessary authority for and the validity of such increase in the Aggregate Revolving Commitments, and any other matters relevant thereto, all in form and substance reasonably satisfactory to the Administrative Agent; and (vii) the Borrower shall have purchased additional title insurance with respect to the Mortgaged Properties such that after giving effect to the funding of such Additional Commitment, the amount of title insurance on the Mortgaged Properties shall not be less than the outstanding amount of the Loans. Upon the effectiveness of the increase in the Tranche B Term Loan Commitments pursuant to this Section 2.01(b), (i) the Pro Rata Shares of each Lender shall be automatically adjusted to give effect to such increase, provided that the amount of each Lender's Tranche B Term Loan Commitment (other than a Lender whose Tranche B Term Loan Commitment shall have been increased in connection with such increase) shall remain unchanged, (ii) the Borrower, the Administrative Agent and the Lenders will use all commercially reasonable efforts to assign and assume outstanding Tranche B Term Loans to conform the respective amounts thereof held by each Lender to the respective Pro Rata Shares, as so adjusted, it being understood that the parties hereto shall use commercially reasonable efforts to avoid prepayment or assignment of any affected Tranche B Term Loan that is a Eurodollar Rate Loan on a day other than the last day of the Interest Period applicable thereto and (iii) beginning with the date of the next Principal Amortization Payment next succeeding the date of such increase, the amount of each Principal Amortization Payment on the Tranche B Term Loans shall be increased by the minimum amount that, when allocated ratably (based on outstandings) among all of the Lenders holding Tranche B Term Loans immediately after giving effect to such increase in the Tranche B Term Loan Commitments, would provide (assuming all other things to be equal) for each of the Lenders holding Tranche B Term Loans immediately prior to giving effect to such 26 increase in the Tranche B Term Commitments to receive in connection with such Principal Amortization Payment an amount at least equal to the amount that such Lender would have received had such increase in the Tranche B Term Loan Commitments (and the corresponding adjustment to such Principal Amortization Payment pursuant to this Section 2.01(b)) not taken place. At such time as the Borrower has received and accepted Additional Commitments in an aggregate amount equal to $50,000,000, the Borrower's ability to solicit and accept commitments pursuant to this Section 2.01(b) shall terminate. 2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS. (a) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the irrevocable notice from the Borrower to the Administrative Agent, which may be given by telephone (provided that such telephonic notice complies with the information requirements of the form of Loan Notice attached hereto). Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans; provided, however, all Borrowings made on the Closing Date shall be made as Base Rate Loans. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower on behalf of the Borrower. Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. (b) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Pro Rata Share of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent's Office not later than 1:00 p.m. on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 5.02 (and, if such Borrowing is the initial Borrowing, Section 5.01), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower. 27 (c) Subject to Section 3.05, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of a Default, no Loans may be requested as, converted to or continued as Eurodollar Rate Loans having Interest Periods greater than one month without the consent of the Required Lenders. During the existence of an Event of Default, no Loans may be converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders. (d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate. The determination of the Eurodollar Rate by the Administrative Agent shall be conclusive in the absence of manifest error. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America's prime rate used in determining the Base Rate promptly following the public announcement of such change. (e) After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than four (4) Interest Periods in effect with respect to the Tranche B Term Loan. 2.03 [INTENTIONALLY OMITTED]. 2.04 PREPAYMENTS. (a) Voluntary Prepayments of Loans. (i) General. The Borrower may, upon notice to the Administrative Agent, at any time after the first anniversary of the Closing Date (i) voluntarily prepay Base Rate Loans in whole or in part without premium or penalty, and (ii) subject to Section 3.05 hereof, voluntarily prepay Eurodollar Rate Loans in whole or in part on the last day of the applicable Interest Period without premium or penalty; provided that (A) such notice must be received by the Administrative Agent not later than 11:00 a.m. (x) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (y) on the date of prepayment of Base Rate Loans; (B) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if less, the entire principal amount thereof then outstanding); (C) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (or, if less, the entire principal amount thereof then outstanding); and (D) any prepayment of the Tranche B Term Loan shall be applied to remaining Principal Amortization Payments in inverse order of maturities thereof. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender's Pro Rata Share of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 3.05. Each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Pro Rata Shares. (ii) Certain Prepayments Permitted Prior to First Anniversary of the Closing Date. Notwithstanding the foregoing clause (i), the Borrower shall be permitted to prepay up to 35% of the outstanding principal of the Tranche B Term loan prior to the first anniversary of the Closing 28 Date with the net proceeds from the issuance of Capital Stock by the Borrower subject to the satisfaction of the following conditions: (A) after giving effect to such prepayment, the outstanding principal amount of the Tranche B Term Loan shall not be less than the sum of (1) $65,000,000 plus (2) 65% of all Additional Commitments that have been funded; (B) such prepayment occurs not later than 90 days after the date of such issuance of Capital Stock; and (C) such prepayment shall be subject to an additional premium equal to the amount of such prepayment multiplied by 1%. (b) Mandatory Prepayments. (i) Excess Cash Flow. If Excess Cash Flow for any fiscal year is at least $2,000,000 then on the Excess Cash Flow Payment Date for such fiscal year, the Borrower shall prepay the Loans in an amount equal to 50% of such Excess Cash Flow (such prepayment to be applied as set forth in clause (iv) below). (ii) (A) Asset Sales. (1) Collateral. Within 5 days after the receipt of any Net Proceeds from an Asset Sale of Collateral (but subject to the applicable reinvestment provisions of Section 8.01(c), if any), the Borrower shall prepay the Loans in an aggregate amount equal to 100% of the Net Proceeds of the related Asset Sale (such prepayment to be applied as set forth in clause (iv) below). In connection with any such prepayment, the Borrower shall deliver to the Administrative Agent a notice of such prepayment together with a certificate of a Responsible Officer, on behalf of the Borrower, setting forth in reasonable detail the calculation of the Net Proceeds from the related Asset Sale; the Borrower will also endeavor to provide such documentation to the Administrative Agent at least three days notice prior to such prepayment. (2) Other Assets. Immediately upon the failure of the Loan Parties to apply (or cause to be applied) the Net Proceeds of any Asset Sale of assets other than Collateral in the manner contemplated by the terms of Section 8.01(b), the Borrower shall prepay the Loans in an aggregate amount equal to 100% of the Net Proceeds of the related Asset Sale not applied (or caused to be applied) by the Loan Parties in the manner contemplated by the terms of Section 8.01(b) (such prepayment to be applied as set forth in clause (iv) below). In connection with any such prepayment, the Borrower shall deliver to the Administrative Agent a notice of such prepayment together with a certificate of a Responsible Officer, on behalf of the Borrower, setting forth in reasonable detail the calculation of the Net Proceeds from the related Asset Sale. (B) Involuntary Dispositions. Immediately upon the occurrence of an Involuntary Disposition Prepayment Event, the Borrower shall prepay the Loans in an aggregate amount equal to 100% of the Casualty Proceeds of the related 29 Involuntary Disposition (such prepayment to be applied as set forth in clause (iv) below). In connection with any such prepayment, the Borrower shall deliver to the Administrative Agent a notice of such prepayment together with a certificate of a Responsible Officer, on behalf of the Borrower, setting forth in reasonable detail the calculation of the Casualty Proceeds from the related Involuntary Disposition; the Borrower will also endeavor to provide such documentation to the Administrative Agent at least three days notice prior to such prepayment. (iii) Certain Issuances of Equity. If, prior to the first anniversary of the Closing Date, the Borrower elects to prepay any portion of the Senior Notes with the net proceeds from the issuance of Capital Stock by the Borrower, the Borrower shall immediately make a ratable prepayment of the Loans (but in no event shall such prepayment exceed 35% of the outstanding principal of the Tranche B Term Loan) which prepayment shall comply with clauses (A) through (C) of Section 2.04(a)(ii) (such prepayment to be applied as set forth in clause (iv) below). (iv) Application of Mandatory Prepayments. All amounts required to be paid pursuant to this Section 2.04(b) shall be applied to prepay the Tranche B Term Loan (to remaining Principal Amortization Payments in inverse order of maturities thereof). Within the parameters of the applications set forth above, prepayments shall be applied first to Base Rate Loans and then to Eurodollar Rate Loans in direct order of Interest Period maturities. All prepayments under this Section 2.04(b) shall be subject to Section 3.05, but otherwise without premium or penalty, and shall be accompanied by interest on the principal amount prepaid through the date of prepayment. (v) Prepayment Account. If the Borrower is required to make a mandatory prepayment of Eurodollar Rate Loans under this Section 2.04(b), the Borrower shall have the right, in lieu of making such prepayment in full, to deposit an amount equal to such mandatory prepayment with the Administrative Agent in a cash collateral account maintained (pursuant to documentation reasonably satisfactory to the Administrative Agent) by and in the sole dominion and control of the Administrative Agent. Any amounts so deposited shall be held by the Administrative Agent as collateral for the prepayment of such Eurodollar Rate Loans and shall be applied to the prepayment of the applicable Eurodollar Rate Loans at the end of the current Interest Periods applicable thereto. At the request of the Borrower, amounts so deposited shall be invested by the Administrative Agent, as instructed by the Borrower, in Cash Equivalents maturing prior to the date or dates on which it is anticipated that such amounts will be applied to prepay such Eurodollar Rate Loans; any interest earned on such Cash Equivalents will be for the account of the Borrower and the Borrower will deposit with the Administrative Agent the amount of any loss on any such Cash Equivalents to the extent necessary in order that the amount of the prepayment to be made with the deposited amounts may not be reduced. 2.05 [INTENTIONALLY OMITTED]. 2.06 REPAYMENT OF LOANS. The Borrower shall repay the outstanding principal amount of the Tranche B Term Loan in consecutive quarterly installments as follows (as such installments may hereafter be adjusted as a result of prepayments made pursuant to Section 2.04 or as the result of an increase in the amount of the Tranche B Term Loan Commitments pursuant to Section 2.01(b)), unless accelerated sooner pursuant to Section 9.02: 30
PRINCIPAL AMORTIZATION PAYMENT (EXPRESSED AS A PAYMENT DATE PERCENTAGE OF THE TRANCHE (THE LAST BUSINESS DAY OF B TERM LOAN EACH OF THE FOLLOWING COMMITMENT ON THE MONTHS) CLOSING DATE) ----------------------------- -------------------------- September, 2003, December, 2003, March, 2004 and June, 2004 0.25% September, 2004, December, 2004, March, 2005 and June, 2005 0.25% September, 2005, December, 2005, March, 2006 and June, 2006 0.25% September, 2006, December, 2006, March, 2007 and June, 2007 0.25% September, 2007, December, 2007, March, 2008 and June, 2008 0.25% September, 2008, December, 2008, March, 2009 and June, 2009 0.25% September, 2009, December, 2009 and March, 2010 23.50% Maturity Date Balance
2.07 INTEREST. (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate. (b) If any amount payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Furthermore, upon the request of the Required Lenders, while any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand. (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law. 31 2.08 FEES. (a) The Borrower shall pay to the BAS and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever. (b) The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever, except as expressly provided in such writing. 2.09 COMPUTATION OF INTEREST AND FEES. All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America's "prime rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.11(a), bear interest for one day. 2.10 EVIDENCE OF DEBT. (a) The Borrowings made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Borrowings made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a promissory note (a "Note") which shall evidence such Lender's Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto. (b) In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. 2.11 PAYMENTS GENERALLY. (a) All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent's Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Pro Rata Share (or other applicable share as provided 32 herein) of such payment in like funds as received by wire transfer to such Lender's Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. (b) If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. (c) Unless the Borrower or any Lender has notified the Administrative Agent, prior to the date any payment is required to be made by it to the Administrative Agent hereunder, that the Borrower or such Lender, as the case may be, will not make such payment, the Administrative Agent may assume that the Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Administrative Agent in immediately available funds, then: (i) if the Borrower failed to make such payment, each Lender shall forthwith on demand repay to the Administrative Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Administrative Agent to such Lender to the date such amount is repaid to the Administrative Agent in immediately available funds at the Federal Funds Rate from time to time in effect; and (ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrower to the date such amount is recovered by the Administrative Agent (the "Compensation Period") at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent may make a demand therefor upon the Borrower, and the Borrower shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights which the Administrative Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder. A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (c) shall be conclusive, absent manifest error. (d) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Borrowing set forth in Article V are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest. (e) The obligations of the Lenders hereunder to make Loans are several and not joint. The failure of any Lender to make any Loan on any date required hereunder shall not relieve any other Lender 33 of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan. (f) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner. 2.12 SHARING OF PAYMENTS. If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Loans made by it any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact, and (b) purchase from the other Lenders such participations in the Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Loans or such participations, as the case may be, pro rata with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender under any of the circumstances described in Section 11.06 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender's ratable share (according to the proportion of (i) the amount of such paying Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon. The Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 11.09) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased. ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 3.01 TAXES. (a) Any and all payments by any Loan Party to or for the account of the Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of the Administrative Agent and each Lender, taxes imposed on or measured by its overall net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which the Administrative Agent or such Lender, as the case may be, is organized or maintains a lending office (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as "Taxes"). If any Loan Party shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary 34 so that after making all required deductions (including deductions applicable to additional sums payable under this Section), each of the Administrative Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Loan Party shall make such deductions, (iii) such Loan Party shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after the date of such payment, such Loan Party shall furnish to the Administrative Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof. (b) In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as "Other Taxes"). (c) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, the Borrower shall also pay to the Administrative Agent or to such Lender, as the case may be, at the time interest is paid, such additional amount that the Administrative Agent or such Lender specifies is necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) that the Administrative Agent or such Lender would have received if such Taxes or Other Taxes had not been imposed. (d) The Borrower agrees to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by the Administrative Agent and such Lender, (ii) amounts payable under Section 3.01(c) and (iii) any liability (including additions to tax, penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Payment under this subsection (d) shall be made within 30 days after the date the Lender or the Administrative Agent makes a demand therefor (which demand shall be accompanied by a certificate of the type described in Section 3.06(a)). 3.02 ILLEGALITY. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, together with an explanation of the circumstances, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender. 35 3.03 INABILITY TO DETERMINE RATES. If the Required Lenders determine that for any reason adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or that the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein. 3.04 INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY; RESERVES ON EURODOLLAR RATE LOANS. (a) If any Lender determines that as a result of the introduction of or any change in or in the interpretation of any Law after the Closing Date, or such Lender's compliance with any guideline, request, directive or other instruction issued or made after the Closing Date by any central bank or Governmental Authority, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Loans, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Lending Office, and (iii) reserve requirements contemplated by Section 3.04(c)), then from time to time upon demand of such Lender, which shall include a certificate of the type described in Section 3.06(a), (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction. (b) If any Lender determines that the introduction of any Law after the Closing Date regarding capital adequacy or any change therein or in the interpretation thereof by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender's desired return on capital), then from time to time upon demand of such Lender, which shall include a certificate of the type described in Section 3.06(a), (with a copy of such demand to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction. (c) The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as "Eurocurrency liabilities"), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 15 days' prior notice, which shall include a certificate of the type described in Section 3.06(a), (with a copy to the Administrative Agent) of such additional interest from 36 such Lender. If a Lender fails to give notice 15 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 15 days from receipt of such notice. 3.05 FUNDING LOSSES. Upon demand of any Lender, which shall include a certificate of the type described in Section 3.06(a), (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of: (a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); (b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or (c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 11.16; including any loss or expense (other than any loss of anticipated profits) arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing. For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded. 3.06 MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION. (a) A certificate of the Administrative Agent or any Lender claiming compensation under this Article III and setting forth in reasonable detail the additional amount or amounts to be paid to it hereunder shall be delivered to the Borrower by the Agent or such Lender and shall be conclusive in the absence of manifest error. In determining such amount, the Administrative Agent or such Lender may use any reasonable averaging and attribution methods. (b) Upon any Lender's making a claim for compensation under Section 3.01 or 3.04 or if the circumstances described in Section 3.02 exist with respect to any Lender, the Borrower may replace such Lender in accordance with Section 11.16. 3.07 SURVIVAL. All of the Borrower's obligations under this Article III shall survive the repayment of all other Obligations hereunder. 37 ARTICLE IV GUARANTY 4.01 THE GUARANTY. Each of the Guarantors hereby jointly and severally guarantees to each Lender and the Administrative Agent as hereinafter provided, as primary obligor and not as surety, the prompt payment of the Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) strictly in accordance with the terms thereof. The Guarantors hereby further agree that if any of the Obligations are not paid in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise), the Guarantors will, jointly and severally, promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration, as a mandatory cash collateralization or otherwise) in accordance with the terms of such extension or renewal. Notwithstanding any provision to the contrary contained herein or in any other of the Loan Documents, the obligations of each Guarantor under this Agreement and the other Loan Documents shall be limited to an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under the Debtor Relief Laws or any comparable provisions of any applicable state law. 4.02 OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantors under Section 4.01 are joint and several, absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Loan Documents, or any other agreement or instrument referred to therein, or any substitution, release, impairment or exchange of any other guarantee of or security for any of the Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 4.02 that the obligations of the Guarantors hereunder shall be absolute and unconditional under any and all circumstances. Each Guarantor agrees that such Guarantor shall have no right of subrogation, indemnity, reimbursement or contribution against the Borrower or any other Guarantor for amounts paid under this Article IV until such time as the Obligations have been Fully Satisfied. Without limiting the generality of the foregoing, it is agreed that, to the fullest extent permitted by law, the occurrence of any one or more of the following shall not alter or impair the liability of any Guarantor hereunder which shall remain absolute and unconditional as described above: (a) at any time or from time to time, without notice to any Guarantor, the time for any performance of or compliance with any of the Obligations shall be extended, or such performance or compliance shall be waived; (b) any of the acts mentioned in any of the provisions of any of the Loan Documents or any other agreement or instrument referred to in the Loan Documents shall be done or omitted; (c) the maturity of any of the Obligations shall be accelerated, or any of the Obligations shall be modified, supplemented or amended in any respect, or any right under any of the Loan Documents or any other agreement or instrument referred to in the Loan Documents shall be waived or any other guarantee of any of the Obligations or any security therefor shall be released, impaired or exchanged in whole or in part or otherwise dealt with; 38 (d) any Lien granted to, or in favor of, the Administrative Agent or any Lender or Lenders as security for any of the Obligations shall fail to attach or be perfected; or (e) any of the Obligations shall be determined to be void or voidable (including, without limitation, for the benefit of any creditor of any Guarantor) or shall be subordinated to the claims of any Person (including, without limitation, any creditor of any Guarantor). With respect to its obligations hereunder, each Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Administrative Agent or any Lender exhaust any right, power or remedy or proceed against any Person under any of the Loan Documents or any other agreement or instrument referred to in the Loan Documents, or against any other Person under any other guarantee of, or security for, any of the Obligations. 4.03 REINSTATEMENT. The obligations of the Guarantors under this Article IV shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Obligations is rescinded or must be otherwise restored by any holder of any of the Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify the Administrative Agent and each Lender on demand for all reasonable costs and expenses (including, without limitation, fees and expenses of counsel) incurred by the Administrative Agent or such Lender in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law. 4.04 CERTAIN ADDITIONAL WAIVERS. Each Guarantor agrees that such Guarantor shall have no right of recourse to security for the Obligations, except through the exercise of rights of subrogation pursuant to Section 4.02 and through the exercise of rights of contribution pursuant to Section 4.06, unless and until such time as all Obligations are Fully Satisfied. 4.05 REMEDIES. The Guarantors agree that, to the fullest extent permitted by law, as between the Guarantors, on the one hand, and the Administrative Agent and the Lenders, on the other hand, the Obligations may be declared to be forthwith due and payable as provided in Section 9.02 (and shall be deemed to have become automatically due and payable in the circumstances provided in said Section 9.02) for purposes of Section 4.01 notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing the Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such declaration (or the Obligations being deemed to have become automatically due and payable), the Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Guarantors for purposes of Section 4.01. The Guarantors acknowledge and agree that their obligations hereunder are secured in accordance with the terms of the Collateral Documents and that the Lenders may exercise their remedies thereunder in accordance with the terms thereof. 4.06 RIGHTS OF CONTRIBUTION. The Guarantors hereby agree as among themselves that, if any Guarantor shall make an Excess Payment (as defined below), such Guarantor shall have a right of contribution from each other Guarantor in an amount equal to such other Guarantor's Contribution Share (as defined below) of such Excess Payment. 39 The payment obligations of any Guarantor under this Section 4.06 shall be subordinate and subject in right of payment to the Obligations until such time as the Obligations have been Fully Satisfied, and none of the Guarantors shall exercise any right or remedy under this Section 4.06 against any other Guarantor until such Obligations have been Fully Satisfied. For purposes of this Section 4.06, (a) "Excess Payment" shall mean the amount paid by any Guarantor in excess of its Ratable Share of any Guaranteed Obligations; (b) "Ratable Share" shall mean, for any Guarantor in respect of any payment of Obligations, the ratio (expressed as a percentage) as of the date of such payment of Guaranteed Obligations of (i) the amount by which the aggregate present fair salable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Guarantor (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder) to (ii) the amount by which the aggregate present fair salable value of all assets and other properties of all of the Loan Parties exceeds the amount of all of the debts and liabilities (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of the Loan Parties hereunder) of the Loan Parties; provided, however, that, for purposes of calculating the Ratable Shares of the Guarantors in respect of any payment of Obligations, any Guarantor that became a Guarantor subsequent to the date of any such payment shall be deemed to have been a Guarantor on the date of such payment and the financial information for such Guarantor as of the date such Guarantor became a Guarantor shall be utilized for such Guarantor in connection with such payment; (c) "Contribution Share" shall mean, for any Guarantor in respect of any Excess Payment made by any other Guarantor, the ratio (expressed as a percentage) as of the date of such Excess Payment of (i) the amount by which the aggregate present fair salable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Guarantor (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder) to (ii) the amount by which the aggregate present fair salable value of all assets and other properties of the Loan Parties other than the maker of such Excess Payment exceeds the amount of all of the debts and liabilities (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of the Loan Parties) of the Loan Parties other than the maker of such Excess Payment; provided, however, that, for purposes of calculating the Contribution Shares of the Guarantors in respect of any Excess Payment, any Guarantor that became a Guarantor subsequent to the date of any such Excess Payment shall be deemed to have been a Guarantor on the date of such Excess Payment and the financial information for such Guarantor as of the date such Guarantor became a Guarantor shall be utilized for such Guarantor in connection with such Excess Payment; and (d) "Guaranteed Obligations" shall mean the Obligations guaranteed by the Guarantors pursuant to this Article IV. This Section 4.06 shall not be deemed to affect any right of subrogation, indemnity, reimbursement or contribution that any Guarantor may have under Law against the Borrower in respect of any payment of Guaranteed Obligations. Notwithstanding the foregoing, all rights of contribution against any Guarantor shall terminate from and after such time, if ever, that such Guarantor shall be relieved of its obligations in accordance with Section 10.11. 4.07 GUARANTEE OF PAYMENT; CONTINUING GUARANTEE. The guarantee in this Article IV is a guaranty of payment and not of collection, is a continuing guarantee, and shall apply to all Obligations whenever arising. ARTICLE V CONDITIONS PRECEDENT TO BORROWINGS 5.01 CONDITIONS OF CLOSING DATE AND INITIAL BORROWING. The occurrence of the Closing Date, the effectiveness of this Agreement and the obligation of each Lender to make its initial Borrowing hereunder is subject to satisfaction of the following conditions precedent: 40 (a) Loan Documents, Organization Documents, Etc. The Administrative Agent's receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party on behalf of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and its legal counsel: (i) executed counterparts of this Agreement and the other Loan Documents; (ii) copies of the Organization Documents of each Loan Party certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and certified by a Responsible Officer of such Loan Party to be true and correct as of the Closing Date; (iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer of each Loan Party signed on behalf of each Loan Party in connection with this Agreement and the other Loan Documents to which such Loan Party is a party; and (iv) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and is validly existing, in good standing and qualified to engage in business in (A) the jurisdiction of its incorporation or organization and (B) each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. (b) Opinions of Counsel. The Administrative Agent shall have received, in each case dated as of the Closing Date and in form and substance reasonably satisfactory to the Administrative Agent: (i) a legal opinion of Baker Botts, general counsel for the Loan Parties; and (ii) a legal opinion of special local counsel for the Loan Parties for each state in which any Mortgaged Property is located. (c) Personal Property Collateral. The Administrative Agent shall have received: (i) searches of Uniform Commercial Code filings in the jurisdiction of the chief executive office of each Loan Party and each jurisdiction where any Collateral is located or where a filing would need to be made in order to perfect the Administrative Agent's security interest in the Collateral, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Permitted Liens; (ii) UCC financing statements for each appropriate jurisdiction as is necessary, in the Administrative Agent's sole discretion, to perfect the Administrative Agent's security interest in the Collateral; 41 (iii) searches of ownership of, and Liens on, intellectual property of each Loan Party in the appropriate governmental offices; (iv) duly executed notices of grant of security interest in the form required by the Security Agreement as are necessary, in the Administrative Agent's sole discretion, to perfect the Administrative Agent's security interest in the Collateral consisting of intellectual property; and (v) in the case of any personal property Collateral located at a premises leased by a Loan Party, such estoppel letters, consents and waivers from the landlords on such real property as may be required by the Administrative Agent. (d) Real Property Collateral. The Administrative Agent shall have received, in form and substance reasonably satisfactory to the Administrative Agent: (i) fully executed and notarized mortgages, deeds of trust or deeds to secure debt (each, as the same may be amended, modified, restated or supplemented from time to time, a "Mortgage Instrument" and collectively the "Mortgage Instruments") encumbering the fee or leasehold interest of any Loan Party in each of the Real Properties designated in Schedule 6.20(a) as a "Mortgaged Property" (each a "Mortgaged Property" and collectively the "Mortgaged Properties"); (ii) in the case of each real property leasehold interest of any Loan Party constituting Mortgaged Property, (a) such estoppel letters, consents and waivers from the landlords on such real property as may be required by the Administrative Agent, which estoppel letters shall be in the form and substance reasonably satisfactory to the Administrative Agent and (b) evidence that the applicable lease, a memorandum of lease with respect thereto, or other evidence of such lease in form and substance reasonably satisfactory to the Administrative Agent, has been or will be recorded in all places to the extent necessary or desirable, in the reasonable judgment of the Administrative Agent, so as to enable the Mortgage Instrument encumbering such leasehold interest to effectively create a valid and enforceable first priority lien (subject to Specified Permitted Liens) on such leasehold interest in favor of the Administrative Agent (or such other Person as may be required or desired under local law) for the benefit of Lenders; (iii) maps or plats of an existing boundary survey of the sites of the real property covered by the Mortgage Instruments prepared by an independent professional licensed land surveyor and dated a date reasonably satisfactory to each of the Administrative Agent and the title insurance company, which maps or plats and the surveys on which they are based shall be sufficient to delete any standard printed survey exception contained in the applicable title policy; (iv) ALTA mortgagee title insurance policies (the "Mortgage Policies") with respect to each Mortgaged Property, assuring the Administrative Agent that each of the Mortgage Instruments creates a valid and enforceable first priority mortgage lien on the applicable Mortgaged Property, free and clear of all defects and encumbrances except Specified Permitted Liens, which Mortgage Policies shall otherwise be in form and substance reasonably satisfactory to the Administrative Agent and shall include such endorsements as are reasonably requested by the Administrative Agent and are available in the applicable jurisdictions; 42 (v) evidence as to (A) whether any Mortgaged Property is in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards (a "Flood Hazard Property") and (B) if any Mortgaged Property is a Flood Hazard Property, (1) whether the community in which such Mortgaged Property is located is participating in the National Flood Insurance Program, (2) the applicable Loan Party's written acknowledgment of receipt of written notification from the Administrative Agent (a) as to the fact that such Mortgaged Property is a Flood Hazard Property and (b) as to whether the community in which each such Flood Hazard Property is located is participating in the National Flood Insurance Program and (3) copies of insurance policies or certificates of insurance of the Consolidated Parties evidencing flood insurance satisfactory to the Administrative Agent and naming the Administrative Agent as sole loss payee on behalf of the Lenders; and (vi) evidence reasonably satisfactory to the Administrative Agent that each of the Mortgaged Properties, and the uses of the Mortgaged Properties, are in compliance in all material respects with all applicable zoning laws (the evidence submitted as to which should include the zoning designation made for each of the Mortgaged Properties, the permitted uses of each such Mortgaged Properties under such zoning designation and, if available, zoning requirements as to parking, lot size, ingress, egress and building setbacks); a zoning endorsement to the Mortgage Policies shall be deemed to satisfy this requirement. (e) Evidence of Insurance. Receipt by the Administrative Agent of copies of insurance policies or certificates of insurance of the Loan Parties evidencing liability and casualty insurance meeting the requirements set forth in the Loan Documents, including, but not limited to, naming the Administrative Agent as additional insured (in the case of liability insurance) or loss payee (in the case of hazard insurance) on behalf of the Lenders. (f) Consummation of Related Financings. The Borrower (i) shall (or the initial purchaser of the Senior Notes shall) have initiated funding of Senior Notes in an aggregate principal amount of $380 million and (ii) shall have borrowed approximately $23 million under the Asset-Based Facility. BAS shall be satisfied with the terms and conditions of the Senior Note Indenture and the Asset-Based Facility, and the Administrative Agent shall have received a copy, certified on behalf of the Borrower by a Responsible Officer of the Borrower as true and complete, of the Senior Note Indenture and the loan documents evidencing the Asset-Based Facility, all as originally executed and delivered, together with all exhibits and schedules thereto. (g) Officer's Certificates. The Administrative Agent shall have received a certificate or certificates executed on behalf of the Borrower by a Responsible Officer of the Borrower as of the Closing Date, in form and substance satisfactory to the Administrative Agent, stating that (A) the conditions specified in Sections 5.02(a) and (b) have been satisfied, (B) each Loan Party is in compliance with all existing financial obligations, (C) all governmental, shareholder and third party consents and approvals, if any, with respect to the Loan Documents and the transactions contemplated thereby have been obtained, (D) no action, suit, investigation or proceeding is pending or threatened in any court or before any arbitrator or governmental instrumentality that purports to affect any Loan Party or any transaction contemplated by the Loan Documents, if such action, suit, investigation or proceeding could have a Material Adverse Effect and (E) immediately after giving effect to the initial Borrowing, (1) no Default or Event of Default exists and (2) all representations and warranties contained herein and in the other Loan Documents are true and correct in all material respects. 43 (h) Fees. Any fees required to be paid on or before the Closing Date shall have been paid. (i) Attorney Costs. The Borrower shall have paid all Attorney Costs of the Administrative Agent to the extent invoiced prior to the Closing Date, plus such additional amounts of Attorney Costs as shall constitute its reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent). (j) Existing Financings. The Administrative Agent shall have received evidence, in form and substance satisfactory to the Administrative Agent, that the Existing Financings have been or concurrently with the Closing Date is being terminated and all Liens securing the Existing Financings have been or concurrently with the Closing Date are being released. (k) Accuracy of Representations and Warranties. The representations and warranties of the Borrower and each other Loan Party contained in Article VI or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the Closing Date. (l) No Default. No Default shall exist and be continuing as of the Closing Date. (m) Intercreditor Agreement. The Administrative Agent shall have received an executed copy of the Intercreditor Agreement. (n) Other. Receipt by the Lenders of such other documents, instruments, agreements or information as reasonably requested by any Lender, including, but not limited to, information regarding litigation, tax, accounting, labor, insurance, pension liabilities (actual or contingent), real estate leases, material contracts, debt agreements, property ownership and contingent liabilities of the Consolidated Parties. 5.02 CONDITIONS TO ALL BORROWINGS. The obligation of each Lender to honor any Loan Notice (other than a Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurodollar Rate Loans) is subject to the following conditions precedent: (a) The representations and warranties of the Borrower and each other Loan Party contained in Article VI or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such Borrowing, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 5.02, the representations and warranties contained in subsections (a) and (b) of Section 6.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 7.01. (b) No Default shall exist, or would result from, such proposed Borrowing. (c) There shall not have been commenced against any Consolidated Party an involuntary case under any applicable Debtor Relief Law, now or hereafter in effect, or any case, proceeding or other action for the appointment of a receiver, liquidator, assignee, custodian, trustee, 44 sequestrator (or similar official) of such Person or for any substantial part of its Property or for the winding up or liquidation of its affairs, and such involuntary case or other case, proceeding or other action shall remain undismissed. (d) The Administrative Agent shall have received a Loan Notice in accordance with the requirements hereof. Each Loan Notice (other than a Loan Notice requesting only a conversion of Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 5.02(a), (b) and (c) have been satisfied on and as of the date of the applicable Borrowing. ARTICLE VI REPRESENTATIONS AND WARRANTIES The Loan Parties represent and warrant to the Administrative Agent and the Lenders that: 6.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each Consolidated Party (a) is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents, if any, to which it is a party and (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person's Organization Documents; (b) conflict with or result in any breach or contravention of, or result in or require the creation of any Lien under, (i) any Contractual Obligation to which such Person is a party or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law (including, without limitation, Regulation U or Regulation X issued by the FRB). 6.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, except for (a) consents, authorizations, notices and filings described in Schedule 6.03, all of which have been obtained or made and (b) filings to perfect the Liens created by the Collateral Documents. 45 6.04 BINDING EFFECT. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms except as enforceability may be limited by applicable Debtor Relief Laws and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 6.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT. (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Consolidated Parties as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Consolidated Parties as of the date thereof, including liabilities for taxes, material commitments and Indebtedness. (b) The unaudited consolidated financial statements of the Consolidated Parties dated March 31, 2003, and the related consolidated statements of income or operations, shareholders' equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Consolidated Parties as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments. (c) During the period from December 31, 2002 to and including the Closing Date, there has been no sale, transfer or other disposition by any Consolidated Party of any material part of the business or Property of the Consolidated Parties, taken as a whole, and no purchase or other acquisition by any of them of any business or property (including any Capital Stock of any other Person) material in relation to the consolidated financial condition of the Consolidated Parties, taken as a whole, in each case, which is not reflected in the foregoing financial statements or in the notes thereto and has not otherwise been disclosed in writing to the Lenders on or prior to the Closing Date. (d) The financial statements delivered pursuant to Section 7.01(a) and (b) have been prepared in accordance with GAAP (except as may otherwise be permitted under Section 7.01(a) and (b)) and present fairly (on the basis disclosed in the footnotes to such financial statements) the consolidated and consolidating financial condition, results of operations and cash flows of the Consolidated Parties as of such date and for such periods. (e) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect. 6.06 LITIGATION. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Loan Parties after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Consolidated Party or against any of its properties or revenues that (a) purport to adversely affect or expressly pertain to this Agreement or any 46 other Loan Document, or any of the transactions contemplated hereby or (b) either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect. 6.07 NO DEFAULT. No Consolidated Party is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document. 6.08 OWNERSHIP OF PROPERTY; LIENS. Each Consolidated Party has good record title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of the Consolidated Parties is subject to no Liens, other than Permitted Liens. 6.09 ENVIRONMENTAL COMPLIANCE. Except as would not reasonably be expected to have a Material Adverse Effect: (a) Each of the Real Properties and all operations at the Real Properties are in compliance with all applicable Environmental Laws, there is no violation of any Environmental Law with respect to the Real Properties or the Businesses, and there are no conditions relating to the Real Properties or the Businesses that could give rise to liability under any applicable Environmental Laws. (b) None of the Real Properties contains, or has previously contained, any Hazardous Materials at, on or under the Real Properties in amounts or concentrations that constitute or constituted a violation of, or could give rise to liability under, Environmental Laws. (c) No Consolidated Party has received any written or verbal notice of, or inquiry from any Governmental Authority regarding, any violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Real Properties or the Businesses, nor does any Responsible Officer of any Loan Party have knowledge or reason to believe that any such notice will be received or is being threatened. (d) Hazardous Materials have not been transported or disposed of from the Real Properties, or generated, treated, stored or disposed of at, on or under any of the Real Properties or any other location, in each case by or on behalf of any Consolidated Party in violation of, or in a manner that could give rise to liability under, any applicable Environmental Law. (e) No judicial proceeding or governmental or administrative action is pending or, to the best knowledge of the Responsible Officers of the Loan Parties, threatened, under any Environmental Law to which any Consolidated Party is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Consolidated Parties, the Real Properties or the Businesses. 47 (f) There has been no release, or threat of release, of Hazardous Materials at or from the Real Properties, or arising from or related to the operations (including, without limitation, disposal) of any Consolidated Party in connection with the Real Properties or otherwise in connection with the Businesses, in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws. 6.10 INSURANCE. The properties of the Borrower and its Restricted Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Restricted Subsidiary operates. The present insurance coverage of the Loan Parties is outlined as to carrier, policy number, expiration date, type and amount on Schedule 6.10. 6.11 TAXES. The Consolidated Parties have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against the Borrower or any Restricted Subsidiary that would, if made, have a Material Adverse Effect. 6.12 ERISA COMPLIANCE. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Loan Parties, nothing has occurred which would prevent, or cause the loss of, such qualification. Each Loan Party and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. (b) There are no pending or, to the best knowledge of the Loan Parties, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect. (c) (i) No ERISA Event has occurred within the past five years or is reasonably expected to occur which could reasonably be expected to have a Material Adverse Effect; (ii) no Pension Plan has any Unfunded Pension Liability in excess of $20,000,000; (iii) no Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) no Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan which could 48 reasonably be expected to have a Material Adverse Effect; and (v) no Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA. 6.13 SUBSIDIARIES. Set forth on Schedule 6.13 is a complete and accurate list as of the Closing Date with respect to the Borrower and each of its direct and indirect Subsidiaries of (i) jurisdiction of incorporation and (ii) number and percentage of outstanding shares of each class owned (directly or indirectly) by the Consolidated Parties. Neither the Borrower nor any of its Restricted Subsidiaries has outstanding any securities convertible into or exchangeable for its Capital Stock nor does any such Person have outstanding any rights to subscribe for or to purchase or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to its Capital Stock. 6.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. (a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. (b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, (ii) is or is required to be registered as an "investment company" under the Investment Company Act of 1940 or (iii) subject to regulation under any other Law which limits its ability to incur Indebtedness. 6.15 DISCLOSURE. Each Loan Party has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Restricted Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other written information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projections, estimates and pro forma financial information, the Loan Parties represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. 6.16 COMPLIANCE WITH LAWS. Each Consolidated Party is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 49 6.17 INTELLECTUAL PROPERTY. Each Consolidated Party owns, or has the legal right to use, all material trademarks, service marks, trade names, trade dress, patents, copyrights, technology, know-how and processes (the "Intellectual Property") necessary for each of them to conduct its business as currently conducted. Set forth on Schedule 6.17 is a list of all Intellectual Property registered or pending registration with the United States Copyright Office or the United States Patent and Trademark Office and owned by each Loan Party or that any Loan Party has the right to use. No claim has been asserted by any Person against any Loan Party and is pending that challenges or questions the use of the Intellectual Property or the validity or effectiveness of the Intellectual Property, nor does any Loan Party know of any such claim, and, to the knowledge of the Responsible Officers of the Loan Parties, the use of the Intellectual Property by any Consolidated Party or the granting of a right or a license in respect of the Intellectual Property from any Consolidated Party does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. As of the Closing Date, none of the Intellectual Property of the Loan Parties is subject to any licensing agreement or similar arrangement except as set forth on Schedule 6.17. 6.18 SOLVENCY. The Loan Parties are Solvent on a consolidated basis. 6.19 TAX SHELTER REGULATIONS. The Borrower does not intend to treat the Loans as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event the Borrower determines to take any action inconsistent with such intention, it will promptly notify the Administrative Agent thereof. If the Borrower so notifies the Administrative Agent, the Borrower acknowledges that one or more of the Lenders may treat its Committed Loans as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will maintain the lists and other records required by such Treasury Regulation. 6.20 BUSINESS LOCATIONS. Set forth on Schedule 6.20(a) is a list of all Real Properties located in the United States that are owned or leased by the Loan Parties as of the Closing Date that constitute Collateral. Set forth on Schedule 6.20(b) is a list of all locations where any Collateral of a Loan Party is located as of the Closing Date. Set forth on Schedule 6.20(c) is the chief executive office, taxpayer identification number, organizational identification number, jurisdiction of incorporation or formation and principal place of business of each Loan Party as of the Closing Date. 6.21 LABOR MATTERS. Except as set forth on Schedule 6.21, there are no collective bargaining agreements covering the employees of a Consolidated Party as of the Closing Date. None of the Consolidated Parties has suffered any strikes, walkouts, work stoppages or other material labor difficulty within the last five years. The Consolidated Parties have no Multiemployer Plans. 6.22 NATURE OF BUSINESS. As of the Closing Date, the Consolidated Parties are primarily engaged in a Permitted Business. 50 6.23 REPRESENTATIONS AND WARRANTIES FROM OTHER LOAN DOCUMENTS. Each of the representations and warranties made by any of the Loan Parties in any of the other Loan Documents is true and correct in all material respects, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date. 6.24 COLLATERAL DOCUMENTS. The provisions of the Collateral Documents are effective to create in favor of the Administrative Agent for the benefit of the Lenders and any other secured parties identified therein, a legal, valid and enforceable first priority (subject to Specified Permitted Liens) security interest in all right, title and interest of the Loan Parties in the Collateral described therein and all proceeds thereof. Except for filings completed prior to the Closing Date and as contemplated by this Agreement and the Collateral Documents, no filing or other action will be necessary to perfect or protect such security interest. ARTICLE VII AFFIRMATIVE COVENANTS So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, each Loan Party shall, and shall (except in the case of the covenants set forth in Sections 7.01, 7.02, 7.03 and 7.11) cause each Restricted Subsidiary to: 7.01 FINANCIAL STATEMENTS. Deliver to the Administrative Agent, in form and detail satisfactory to the Administrative Agent and the Required Lenders: (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a consolidated balance sheet of the Consolidated Parties as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any "going concern" or like qualification, exception, assumption or explanatory language or any qualification, exception, assumption or explanatory language as to the scope of such audit; and (b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, a consolidated balance sheet of the Consolidated Parties as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of the Borrower's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of the Consolidated Parties in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes. 51 7.02 CERTIFICATES; OTHER INFORMATION. Deliver to the Administrative Agent, in form and detail satisfactory to the Administrative Agent and the Required Lenders: (a) concurrently with the delivery of the financial statements referred to in Section 7.01(a), a certificate of its independent certified public accountants certifying such financial statements; (b) at least 30 days after the end of each fiscal year of the Borrower, beginning with the fiscal year ending December 31, 2003, annual financial projections for the next fiscal year; (c) within 90 days after the end of each fiscal year of the Borrower, a certificate in the form of Exhibit 7.01 containing information regarding the calculation of Excess Cash Flow; (d) promptly after the same are available, (i) copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934 or to a holder of any Indebtedness owed by any Consolidated Party in its capacity as such a holder and not otherwise required to be delivered to the Administrative Agent pursuant hereto and (ii) upon the request of the Administrative Agent, all reports and material written information to and from the United States Environmental Protection Agency, or any state or local agency responsible for environmental matters, the United States Occupational Health and Safety Administration, or any state or local agency responsible for health and safety matters, or any successor agencies or authorities concerning environmental, health or safety matters; (e) promptly upon receipt thereof, a copy of any "management letter" submitted by independent accountants to any Consolidated Party in connection with any annual, interim or special audit of the books of such Person; (f) promptly after the Borrower has notified the Administrative Agent of any intention by the Borrower to treat the Loans as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form; and (g) promptly, such additional information regarding the business, financial or corporate affairs of the Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request. Documents required to be delivered pursuant to Section 7.01(a) or (b) or Section 7.02(f) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto, on the Borrower's website on the Internet at the website address listed on Schedule 11.02; or (ii) on which such documents are posted on the Borrower's behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Borrower shall deliver paper copies of such documents to the Administrative 52 Agent or any Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent and each Lender of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents. 7.03 NOTICES AND INFORMATION. (a) Upon knowledge obtained by a Responsible Officer of any Loan Party, promptly notify the Administrative Agent and each Lender of the occurrence of any Default. (b) Upon knowledge obtained by a Responsible Officer of any Loan Party, promptly notify the Administrative Agent and each Lender of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Restricted Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Restricted Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Restricted Subsidiary, including pursuant to any applicable Environmental Laws. (c) Promptly notify the Administrative Agent and each Lender of the occurrence of any ERISA Event. (d) Promptly notify the Administrative Agent and each Lender of any material change in accounting policies or financial reporting practices by the Borrower or any Restricted Subsidiary. (e) Following the occurrence of any event or the discovery of any condition which the Administrative Agent or the Required Lenders reasonably believe has caused (or could be reasonably expected to cause) the representations and warranties set forth in Section 6.09 to be untrue in any material respect and upon the request of the Administrative Agent, the Loan Parties will furnish or cause to be furnished to the Administrative Agent, at the Loan Parties' expense, a report of an environmental assessment of reasonable scope, form and depth, (including, where appropriate, invasive soil or groundwater sampling) by a consultant reasonably acceptable to the Administrative Agent as to the nature and extent of the presence of any Hazardous Materials on any Real Properties and as to the compliance by any Consolidated Party with Environmental Laws at such Real Properties. If the Loan Parties fail to deliver such an environmental report within seventy-five (75) days after receipt of such written request then the Administrative Agent may arrange for same, and the Consolidated Parties hereby grant to the Administrative Agent and its representatives access to the Real Properties to reasonably undertake such an assessment (including, where appropriate, invasive soil or groundwater sampling). The reasonable cost of any assessment arranged for by the Administrative Agent pursuant to this provision will be payable by the Loan Parties on demand and added to the obligations secured by the Collateral Documents. (f) At the time of delivery of the financial statements and reports provided for in Section 7.01, deliver to the Administrative Agent a report signed on behalf of the Borrower by a Responsible Officer of the Borrower on behalf of the Borrower setting forth (i) to the extent necessary or used in connection with the Specified Facilities, a list of registration numbers for all patents, trademarks, service marks, trade names and copyrights awarded to any Loan Party since the last day of the immediately preceding fiscal year and (ii) a list 53 of all patent applications, trademark applications, service mark applications, trade name applications and copyright applications submitted by any Loan Party since the last day of the immediately preceding fiscal year and the status of each such application, all in such form as shall be reasonably satisfactory to the Administrative Agent. Each notice pursuant to this Section 7.03(a) through (e) shall be accompanied by a statement of a Responsible Officer of the Borrower on behalf of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 7.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached. 7.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Restricted Subsidiary; and (b) all lawful claims which, if unpaid, would by law become a Lien upon its property. 7.05 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction not prohibited by this Agreement; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business; and (c) preserve or renew all of its material registered copyrights, patents, trademarks, trade names and service marks. 7.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear and Involuntary Dispositions excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities. 7.07 MAINTENANCE OF INSURANCE. (a) Maintain in full force and effect insurance (including worker's compensation insurance, liability insurance, property insurance and, except with respect to North American Pipe Corporation, Westlake Profiles Limited and North American Profiles Limited, business interruption insurance) in such amounts, covering such risks and liabilities and with such deductibles or self-insurance retentions as are in accordance with normal industry practice. The Administrative Agent shall be named as loss payee or mortgagee, as its interest may appear, and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral, and each provider of any such insurance shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to the Administrative Agent, that it will give the Administrative Agent thirty (30) days prior written notice before any such policy or policies shall be altered or canceled (ten (10) days prior written notice if such policy or policies are being cancelled for any failure to pay premiums). (b) In the event that the Consolidated Parties receive net cash proceeds ("Casualty Proceeds") on account of Involuntary Dispositions affecting the Collateral, the Loan Parties shall, within 300 days, apply (or cause to be applied) an amount equal to such Casualty Proceeds to (i) repair or replace the related 54 Collateral or (ii) prepay the Loans in accordance with the terms of Section 2.04(b)(ii)(B). All insurance proceeds on account of Collateral shall be subject to the security interest of the Administrative Agent (for the ratable benefit of the Lenders) under the Collateral Documents. Pending final application of any Casualty Proceeds, the Loan Parties shall deposit such Casualty Proceeds in the Collateral Account. At the request of the Borrower, amounts so deposited shall be invested by the Administrative Agent, as instructed by the Borrower, in Cash Equivalents; any interest earned on such Cash Equivalents will be for the account of the Borrower and the Borrower will deposit with the Administrative Agent the amount of any loss on any such Cash Equivalents to the extent necessary in order that the amount of the prepayment to be made with the deposited amounts may not be reduced. Provided that no Event of Default exists, the Administrative Agent will release amounts on deposit in the Collateral Account upon written request of the Borrower certifying that such amounts will be applied in accordance with this Section 7.07(b) within five (5) Business Days. In the case of any Involuntary Disposition that includes both Collateral and other assets, the Loan Parties shall deliver to the Administrative Agent satisfactory evidence of the amount of the Casualty Proceeds that are attributable to Collateral; if the Administrative Agent is not satisfied with such evidence, the Administrative Agent may, at the expense of the Loan Parties, retain an independent third party to perform such valuation. 7.08 COMPLIANCE WITH LAWS. Comply with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect. 7.09 BOOKS AND RECORDS. (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Restricted Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Restricted Subsidiary, as the case may be. 7.10 INSPECTION RIGHTS. Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice. The Loan Parties agree that the Administrative Agent, and its representatives, may conduct an annual audit of the Collateral, at the expense of the Loan Parties. 7.11 USE OF PROCEEDS. Use the proceeds of the Borrowings to repay certain existing Indebtedness on the Closing Date and for general corporate purposes not in contravention of any Law or of any Loan Document. 55 7.12 ADDITIONAL GUARANTORS. Notify the Administrative Agent at the time that (a) any Person becomes a Domestic Subsidiary or (b) any Subsidiary of any Loan Party guarantees the Borrower's obligations under the Senior Note Indenture or the Asset-Based Facility, and promptly thereafter (and in any event within 30 days), cause such Person to (i) become a Guarantor by executing and delivering to the Administrative Agent a Joinder Agreement, and (ii) deliver to the Administrative Agent documents of the types referred to in clauses (iii) and (iv) of Section 5.01(a) and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (a)), all in form, content and scope reasonably satisfactory to the Administrative Agent. 7.13 PLEDGED ASSETS. Each Loan Party will cause (i) all of its owned and leased real property, fixtures and equipment comprising or used for or in connection with the Specified Facilities that is (a) located on, contiguous to or connected with and in reasonable proximity to, any Specified Facility and (b) necessary or used for or in connection with the ownership, expansion, operation, use or maintenance of any Specified Facility and (ii) all of its general intangibles (including patents, copyrights, trademarks, trade secrets and other intellectual property, whether owned or licensed, customer and supplier contracts, drawings, plans books and records, employment, consulting, operating, maintenance or services agreements and other contractual rights, public and private licenses, permits, franchises, powers, authorities, pollution and environmental credits and allowances, goodwill and other intangible property of every type or description) at any time owned or acquired by any Loan Party that is necessary or used for or in connection with, or in any respect related, incidental or ancillary to, the ownership, expansion, operation, use, maintenance or sale or other disposition of any Specified Facility, to be subject at all times to first priority, perfected and, in the case of real Property (whether leased or owned), title insured Liens in favor of the Administrative Agent to secure the Obligations pursuant to the terms and conditions of the Collateral Documents or such other additional security documents as the Administrative Agent shall reasonably request, subject in any case to Specified Permitted Liens and rights of lenders under the Asset-Based Facility as provided in the Intercreditor Agreement. In furtherance of the foregoing, the Loan Parties agree to deliver such other documentation as the Administrative Agent may reasonably request (subject to reasonable time limitations) in connection with the foregoing, including, without limitation, appropriate UCC-1 financing statements, real estate title insurance policies, surveys, environmental reports, landlord's waivers, certified resolutions and other organizational and authorizing documents of such Person, favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to above and the perfection of the Administrative Agent's Liens thereunder) and other items of the types required to be delivered pursuant to Section 5.01(c) and (d), all in form, content and scope reasonably satisfactory to the Administrative Agent. 7.14 FURTHER ASSURANCES. Within 30 days following the Closing Date, the Loan Parties shall deliver to the Administrative Agent satisfactory evidence that the mechanics lien in the amount of $650,000 in favor of Cambridge Lee encumbering the Mortgaged Property located in Calvert City, Kentucky has either (a) been satisfied in full and released, (b) has been fully bonded or (c) has been otherwise discharged, released or terminated. 56 ARTICLE VIII NEGATIVE COVENANTS So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied: 8.01 ASSET SALES. (a) No Loan Party shall, nor shall it permit any Restricted Subsidiary to, directly or indirectly consummate an Asset Sale unless: (i) the consideration received at the time of such Asset Sale is at least equal to the Fair Market Value (as determined by the Borrower's board of directors and evidenced by a resolution of the board of directors set forth in an officers' certificate delivered to the Administrative Agent) of the assets or Equity Interests issued or sold or otherwise disposed of; and (ii) at least 75% of the consideration received in such Asset Sale is in the form of cash or Cash Equivalents or a controlling interest in a business engaged in a Permitted Business. For purposes of this provision, each of the following will also be deemed to be cash: (A) any liabilities, as shown on its most recent balance sheet, of the Consolidated Parties (other than contingent liabilities and liabilities that are by their terms subordinated to the Obligations) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Consolidated Parties from further liability; (B) any securities, notes or other obligations received by the Consolidated Parties from such transferee that are promptly, subject to ordinary settlement periods, converted or monetized by the Consolidated Parties into cash, to the extent of the cash received in that conversion or monetization; and (C) any Capital Stock or assets of the kind referred to in clauses (ii) or (iv) of Section 8.01(b). (b) Within 300 days after the receipt of any Net Proceeds from an Asset Sale of assets other than Collateral, the Borrower shall apply those Net Proceeds, at its option: (i) to repay the Loans pursuant to Section 2.04(b)(ii)(A) or to repay Indebtedness outstanding under the Asset-Based Facility (so long as there is a corresponding permanent reduction of the commitments thereunder); (ii) to acquire all or substantially all of the assets of, or any Capital Stock of, any Person or division thereof conducting a Permitted Business, if, in the case of any such acquisition of Capital Stock and after giving effect thereto, such Person will be a Restricted Subsidiary (or enter into a binding commitment for any such acquisition); provided that such binding commitment shall be treated as a permitted application of Net Proceeds from the date of such commitment until and only until the earlier of (x) the date on which such acquisition is consummated and (y) the 180th day following the expiration of the aforementioned 300-day period. If the acquisition or expenditure contemplated by such binding commitment is not consummated on or before such 180th day and the Borrower shall not have applied (or caused to be applied) such Net Proceeds pursuant to clause (i), (iii) or (iv) of this Section 8.01(b) on or before such 180th day, such commitment shall be deemed not to have been a permitted application of Net Proceeds; (iii) to make a capital expenditure; or (iv) to acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business. Pending the final application of any Net Proceeds, the Consolidated Parties may invest the Net Proceeds in any manner that is not prohibited by this Agreement. 57 (c) Within 5 days after the receipt of any Net Proceeds from an Asset Sale of Collateral (including any Collateral that is transferred in connection with the sale or other disposition of the Capital Stock of a Subsidiary), the Borrower shall apply those Net Proceeds to repay the Loans pursuant to Section 2.04(b)(ii)(A); provided, however, in connection with (i) the Styrene Plant Sale and (ii) other Asset Sales to the extent that the net book value of the Collateral subject to such Asset Sale (or a series of related Asset Sales) does not exceed $10,000,000, in each case, within 300 days after the receipt of the Net Proceeds from such Asset Sale, the Borrower shall apply those Net Proceeds, at its option to either repay the Loans pursuant to Section 2.04(b)(ii)(A) or to acquire replacement assets that are used or useful in a Specified Facility and are pledged as Collateral to the Administrative Agent, on behalf of the Lenders, pursuant to the Collateral Documents; pending the final application of such Net Proceeds, the Loan Parties shall deposit such Net Proceeds in the Collateral Account. At the request of the Borrower, amounts so deposited shall be invested by the Administrative Agent, as instructed by the Borrower, in Cash Equivalents; any interest earned on such Cash Equivalents will be for the account of the Borrower and the Borrower will deposit with the Administrative Agent the amount of any loss on any such Cash Equivalents to the extent necessary in order that the amount of the prepayment to be made with the deposited amounts may not be reduced. Provided that no Event of Default exists, the Administrative Agent will release amounts on deposit in the Collateral Account upon written request of the Borrower certifying that such amounts will be applied in accordance with this Section 8.01(c) within five (5) Business Days. In the case of any Asset Sale that includes both Collateral and other assets, the Loan Parties shall deliver to the Administrative Agent satisfactory evidence of the amount of the Net Proceeds that are attributable to Collateral; if the Administrative Agent is not satisfied with such evidence, the Administrative Agent may, at the expense of the Loan Parties, retain an independent third party to perform such valuation. 8.02 RESTRICTED PAYMENTS. (a) No Loan Party shall, nor shall it permit any Restricted Subsidiary to, directly or indirectly make any Restricted Payment unless, at the time of and after giving effect to such Restricted Payment: (i) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; and (ii) the Borrower would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 8.03; and (iii) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Borrower and its Restricted Subsidiaries since the Closing Date (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (vi), (vii), (viii), (ix) and (x) of Section 8.02(b), is less than the sum, without duplication, of: (A) 50% of the Consolidated Net Income for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the Closing Date to the end of the Borrower's most recently ended fiscal quarter for which the financial statements required to be delivered pursuant to Section 7.01 are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); provided, however, that if at any time after the Closing Date the Senior Notes are rated Investment Grade, the percentage will be 100% 58 of Consolidated Net Income for such period; provided, further, however, that if such Restricted Payment is to be made in reliance upon an additional amount permitted pursuant to the immediately preceding proviso, the Senior Notes must be rated Investment Grade at the time such Restricted Payment is declared or, if not declared, made, plus (B) 100% of the aggregate net cash proceeds received by the Borrower since the Closing Date as a contribution to its common equity capital or by the Borrower or any of its Restricted Subsidiaries from the issue or sale of Equity Interests of the Borrower (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Borrower or any of its Restricted Subsidiaries that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary), plus (C) to the extent that any Restricted Investment that was made after the Closing Date is sold for cash or otherwise liquidated, repaid for cash or otherwise reduced, the lesser of (i) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (ii) the initial amount of such Restricted Investment, plus (D) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary after the Closing Date, the Fair Market Value of the Borrower's Investment in such Subsidiary as of the date of such redesignation, plus (E) 50% of any dividends received by a Loan Party after the Closing Date from an Unrestricted Subsidiary or a Joint Venture, to the extent that such dividends were not otherwise included in Consolidated Net Income of the Borrower for such period; provided, however, that if at any time after the Closing Date the Senior Notes are rated Investment Grade, the percentage will be 100% of any such dividends; provided, further, however, that if such Restricted Payment is to be made in reliance upon an additional amount permitted pursuant to the immediately preceding proviso, the Senior Notes must be rated Investment Grade at the time such Restricted Payment is declared or, if not declared, made. (b) So long as no Default has occurred and is continuing or would be caused thereby, Section 8.02(a) will not prohibit: (i) the payment of any dividend within 60 days after the date of declaration of the dividend, if at the date of declaration the dividend payment would have complied with the provisions of this Agreement; (ii) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent issuance or sale (other than to a Subsidiary) of, Equity Interests of the Borrower (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to the Borrower; provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from Section 8.02(a)(iii)(B); (iii) the defeasance, redemption, repurchase or other acquisition of Indebtedness of any Loan Party that is contractually subordinated to the Obligations with the net cash proceeds 59 from a substantially concurrent incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary to another Consolidated Party, or the purchase, redemption or other acquisition or retirement of any such Equity Interests held by a Consolidated Party; (v) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Borrower or any Restricted Subsidiary held by any current or former officer, director or employee of the Borrower or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stock option agreement, shareholders' agreement or similar plan or agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $1,000,000 in any twelve-month period; (vi) the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options; (vii) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Borrower or any Restricted Subsidiary issued on or after the Closing Date in accordance with the Fixed Charge Coverage Ratio set forth in the first paragraph of Section 8.03; (viii) distributions or payments of Receivables Fees; (ix) Permitted Payments to the Parent; and (x) other Restricted Payments in an aggregate amount not to exceed $25,000,000 since the Closing Date. (c) The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Borrower or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this covenant will be determined by the board of directors whose resolution with respect thereto will be delivered to the Administrative Agent. The board of directors' determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the Fair Market Value exceeds $15,000,000. 8.03 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK. No Loan Party shall, nor shall it permit any Restricted Subsidiary to, directly or indirectly create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt), and the Borrower will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Borrower may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and the Guarantors may incur Indebtedness or issue preferred stock, if the Fixed Charge Coverage Ratio for the Borrower's most recently ended four full fiscal quarters for which the financial statements required to be delivered pursuant to Section 7.01 are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred stock is issued would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom and, in the case of Acquired 60 Debt, giving pro forma effect to the applicable transaction related thereto), as if the additional Indebtedness had been incurred (and such transaction had occurred) or the preferred stock or Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. The first paragraph of this Section 8.03 will not prohibit the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (a) the Loans; (b) the Existing Indebtedness; (c) (i) Indebtedness (including letters of credit) under the Asset-Based Facility or a Receivables Facility in an aggregate outstanding principal amount not to exceed $200,000,000, and (ii) Indebtedness under the Senior Notes issued on the Closing Date in an aggregate principal amount not to exceed $380,000,000 (and notes with identical terms as the Senior Notes that are registered pursuant to the registration rights agreement set forth in the Senior Note Indenture and issued in exchange for the Senior Notes); (d) Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used or usable in a Permitted Business, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (d), not to exceed $10,000,000 at any time outstanding; (e) Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, refund, refinance, renew, defease or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Agreement to be incurred under the first paragraph of this Section 8.03 or clauses (b), (c)(i), (d), (e) or (p) of this paragraph; (f) intercompany Indebtedness between or among the Borrower and any of its Restricted Subsidiaries; provided, however, that (i) if a Loan Party is the obligor on such Indebtedness and the payee is not a Loan Party, such Indebtedness must be expressly subordinated to the prior payment in full in cash of the Obligations and (ii) (A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Borrower or a Restricted Subsidiary and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Borrower or a Restricted Subsidiary will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Borrower or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (f); (g) the issuance by any Restricted Subsidiary to the Borrower or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that (i) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Borrower or a Restricted Subsidiary, and (ii) any sale or other transfer of any such preferred stock to a Person that is not either the Borrower or a Restricted Subsidiary, will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (g); (h) Hedging Obligations in the ordinary course of business and not for speculative purposes; (i) the guarantee by any Loan Party of Indebtedness of a Consolidated Party that was permitted to be incurred by another provision of this Section 8.03; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Obligations, then the guarantee shall be subordinated to the same extent as the Indebtedness guaranteed; (j) Indebtedness in respect of workers' compensation claims; self-insurance obligations; bankers' acceptances; performance, appeal, completion, guarantee and surety bonds; or similar requirements in the ordinary course of business; (k) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days; (l) Indebtedness of Foreign Subsidiaries in an aggregate principal amount at any time outstanding pursuant to this clause (l), including all Permitted Refinancing Indebtedness incurred to refund, refinance, defease, renew, extend or replace Indebtedness incurred pursuant to this clause (l), not to exceed $10,000,000; (m) Indebtedness arising from agreements of the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred in connection with the disposition of any business, assets or subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the 61 Borrower or such Restricted Subsidiary in connection with such disposition; (n) Indebtedness consisting of take-or-pay obligations contained in supply agreements entered into in the ordinary course of business; (o) Indebtedness of the Borrower to any of its Subsidiaries incurred in connection with the purchase of accounts receivable and related assets by the Borrower from any such Subsidiary which assets are subsequently conveyed by the Borrower in connection with a Receivable Facility; and (p) additional Indebtedness of the Loan Parties in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to extend, refund, refinance, renew, defease or replace any Indebtedness incurred pursuant to this clause (p), and the issuance by the Borrower of any Disqualified Stock and by any Restricted Subsidiary of any additional preferred stock, not to exceed $50,000,000. For purposes of determining compliance with this Section 8.03, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (a) through (o) of the preceding paragraph, or is entitled to be incurred pursuant to the first paragraph of this Section 8.03, the Borrower will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; provided, in each such case, that the amount thereof is included in Fixed Charges of the Borrower as accrued. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Borrower or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. 8.04 LIENS. No Loan Party shall, nor shall it permit any Restricted Subsidiary to, directly or indirectly create, incur, assume or suffer to exist any Lien, except Permitted Liens. No Loan Party shall, nor shall it permit any Restricted Subsidiary to, directly or indirectly create, incur, assume or suffer to exist any Lien on any Collateral, except Specified Permitted Liens. 8.05 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. No Loan Party shall, nor shall it permit any Restricted Subsidiary to, directly or indirectly create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (a) pay dividends or make any other distributions on its Capital Stock to the Borrower or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any indebtedness owed to the Borrower or any of its Restricted Subsidiaries; (b) make loans or advances to the Borrower or any of its Restricted Subsidiaries; or (c) transfer any of its properties or assets to the Borrower or any of its Restricted Subsidiaries. However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of: (i) agreements governing Existing Indebtedness, the Senior Note Indenture and the Asset-Based Facility each as in effect on the Closing Date and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacement or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the Closing Date; (ii) 62 the Loan Documents; (iii) applicable Law; (iv) any instrument governing Indebtedness or Capital Stock of a Person as in effect at the time of the acquisition by the Borrower or any of its Restricted Subsidiaries of such Person or the properties or assets of such Person (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Agreement to be incurred; (v) customary non-assignment provisions in contracts and leases entered into in the ordinary course of business; (vi) construction loans and purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property constructed, purchased or leased of the nature described in clause (c) of the preceding paragraph; (vii) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition; (viii) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (ix) Indebtedness secured by Permitted Liens that limit the right of the debtor to dispose of the assets subject to such Liens; (x) any restriction under an agreement governing Indebtedness of a Foreign Subsidiary permitted under Section 8.03; (xi) provisions limiting or prohibiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into with the approval of the Borrower's board of directors, which limitation or prohibition is applicable only to the assets that are the subject of such agreements; and (xii) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. 8.06 MERGER, CONSOLIDATION OR SALE OF ASSETS. The Borrower shall not, directly or indirectly, consolidate or merge with or into another Person (whether or not the Borrower is the surviving corporation) unless (i) the Borrower is the surviving or continuing Person, (ii) immediately after giving effect to such transaction, no Default or Event of Default exists and (iii) the Borrower shall, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph Section 8.03. The Borrower shall not, directly or indirectly, sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Borrower and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person. This Section 8.06 will not apply to (a) a merger or consolidation of the Borrower with an Affiliate for the purpose of reincorporating or reorganizing the Borrower in another jurisdiction or (b) a merger or consolidation of the Borrower with a Wholly-Owned Subsidiary so long as the Borrower is the surviving corporation. In addition, the Borrower may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. 8.07 TRANSACTIONS WITH AFFILIATES. No Loan Party shall, nor shall it permit any Restricted Subsidiary to, directly or indirectly make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the 63 Borrower (each, an "Affiliate Transaction"), unless (a) the Affiliate Transaction is on terms that are no less favorable to the Borrower or the relevant Restricted Subsidiary than those that might reasonably have been obtained in a comparable transaction by the Borrower or such Restricted Subsidiary with an unrelated Person and (b) the Borrower delivers to the Administrative Agent: (i) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5,000,000, a resolution of the board of directors set forth in an officers' certificate certifying that such Affiliate Transaction complies with this covenant and such Affiliate Transaction been approved by a majority of the members of the board of directors and (ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15,000,000, an opinion as to the fairness to the Borrower or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. Notwithstanding the foregoing, the following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph: (1) any fees, compensation and other payments paid to any officer or employee pursuant to any employment agreement, employee or director benefit plan, officer and director indemnification agreement or any similar arrangement entered into by the Borrower or any of its Restricted Subsidiaries in the ordinary course of business; (2) transactions between or among the Borrower and/or its Restricted Subsidiaries; (3) transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliate of the Borrower solely because the Borrower owns, directly or through a Restricted Subsidiary, an Equity Interest in, or Controls, such Person; (4) payment of reasonable directors' fees to Persons who are not otherwise Affiliates of the Borrower; (5) any issuance of Equity Interests (other than Disqualified Stock) of the Borrower to Affiliates of the Borrower; (6) Restricted Payments not prohibited by Section 8.02; (7) loans or advances to employees in the ordinary course of business not to exceed $2,000,000 in the aggregate at any one time outstanding; (8) sales (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) of accounts receivable, related assets and the provision of billing, collection and other services in connection therewith, in each case, to an Accounts Receivable Subsidiary in connection with any Receivables Facility; (9) transactions pursuant to any contract or agreement in effect on the Closing Date, as the same may be amended, modified, extended or replaced from time to time, so long as any such contract or agreement as so amended, modified, extended or replaced is, taken as a whole, not materially less favorable to the Borrower and its Restricted Subsidiaries; (10) any transaction or series of transactions between the Borrower or any Restricted Subsidiary and any of their Joint Ventures, provided that (a) such transaction or series of transactions is in the ordinary course of business between the Borrower or such Restricted Subsidiary and such 64 Joint Venture, and (b) with respect to any such Affiliate Transaction involving aggregate consideration in excess of $5,000,000, such Affiliate Transaction complies with clause (a) of the initial paragraph above and such Affiliate Transaction has been approved by the board of directors; and (11) Permitted Investments and Permitted Payments to the Parent. 8.08 SALE AND LEASEBACK TRANSACTIONS. No Loan Party shall, nor shall it permit any Restricted Subsidiary to, directly or indirectly enter into any sale and leaseback transaction; provided that the Borrower or any Restricted Subsidiary may enter into a sale and leaseback transaction if (a) the Borrower or that Restricted Subsidiary, as applicable, could have (i) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the Fixed Charge Coverage Ratio test in the first paragraph of Section 8.03 and (ii) incurred a Lien to secure such Indebtedness pursuant to Section 8.04, (b) the gross cash proceeds of that sale and leaseback transaction are at least equal to the Fair Market Value, as determined in good faith by the board of directors and set forth in an officers' certificate delivered to the Administrative Agent, of the property that is the subject of that sale and leaseback transaction and (c) the transfer of assets in that sale and leaseback transaction is permitted by, and the Borrower applies the proceeds of such transaction in compliance with, Section 8.01(b) or 8.01(c), as applicable. 8.09 ANTI-LAYERING. The Borrower will not incur, and will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Pari Passu Indebtedness of the Borrower or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Obligations on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Borrower solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis. 8.10 ORGANIZATION DOCUMENTS; FISCAL YEAR. No Loan Party shall, nor shall it permit any Restricted Subsidiary to, (a) amend, modify or change its Organization Documents in a manner materially adverse to the Lenders or (b) change its fiscal year. 8.11 SPECIFIED FACILITIES. No Loan Party shall, nor shall it permit any Subsidiary to, operate its primary petrochemical manufacturing facilities producing ethylene, styrene, polyethylene, chlor-alkali, vinyl chloride monomer and polyvinyl chloride other than on properties in Calcasieu Parish, Louisiana or Marshall County, Kentucky that are subject to Mortgage Instruments. 8.12 ACCOUNTS RECEIVABLE FACILITIES. No Loan Party shall, nor shall it permit any Restricted Subsidiary to sell (including a sale in exchange for a promissory note of or Equity Interest in such Accounts Receivable Subsidiary) accounts receivable and related assets to any Accounts Receivable Subsidiary unless the aggregate consideration received in each such sale is at least equal to the aggregate fair market value of the receivables sold. 65 8.13 DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES. The board of directors of the Borrower shall not designate any Restricted Subsidiary to be an Unrestricted Subsidiary. The board of directors of the Borrower may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default. 8.14 COLLATERAL ACCOUNT. The Loan Parties shall not deposit any funds in the Collateral Account other than Net Proceeds from Asset Sales of Collateral and Casualty Proceeds from Involuntary Dispositions affecting the Collateral. ARTICLE IX EVENTS OF DEFAULT AND REMEDIES 9.01 EVENTS OF DEFAULT. An Event of Default shall exist upon the occurrence of any of the following specified events (each an "Event of Default"): (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within three days after the same becomes due, any interest on any Loan or any fee due hereunder or any other amount payable hereunder or under any other Loan Document; or (b) Specific Covenants. The Borrower fails to perform or observe any term, covenant or agreement contained in any of (i) Section 7.05(a), 7.10, 7.11, 7.12 or 7.13 or Article VIII; or (ii) Section 7.01, 7.02, 7.03 and such failure continues for a period of five (5) Business Days; or (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or (d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or (e) Other Indebtedness. Any Loan Party or any of its Restricted Subsidiaries shall default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed (or the payment of which is guaranteed by a Loan Party or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the Closing Date, if that default (i) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (ii) results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $20,000,000 million or more and has not been discharged in full or such acceleration has not been rescinded or annulled within 30 days of such maturity or acceleration; or 66 (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Restricted Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or (g) Inability to Pay Debts; Attachment. (i) The Borrower or any Restricted Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or (h) Judgments. There is entered against the Borrower or any Restricted Subsidiary (i) any one or more final judgments or orders for the payment of money in an aggregate amount exceeding $20,000,000 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 60 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $20,000,000, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $20,000,000; or (j) Invalidity of Loan Documents; Guarantees. (i) Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Person acting on behalf of a Loan Party with actual or apparent authority contests in any manner the validity or enforceability of any Loan Document; or any Person acting on behalf of a Loan Party with actual or apparent authority denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or (ii) except as the result of or in connection with a dissolution, merger or disposition of a Subsidiary not prohibited by this Agreement, the Guaranty given by any Guarantor hereunder or any provision thereof shall cease to be in full force and effect, or any Person acting by or on behalf of such Guarantor with actual or apparent authority shall deny or disaffirm such Guarantor's obligations under its Guaranty; or 67 (k) Senior Note Indenture. There shall occur and be continuing any "Event of Default" (or any comparable term) under, and as defined in, the Senior Note Indenture; or (l) Asset-Based Facility. There shall occur and be continuing any "Event of Default" (or any comparable term) under, and as defined in, the Asset-Based Facility beyond any applicable grace period set forth in the Asset-Based Facility; or (m) Change of Control. There occurs any Change of Control. 9.02 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions: (a) declare the commitment of each Lender to make Loans to be terminated, whereupon such commitments and obligation shall be terminated; (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; and (c) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable law; provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Administrative Agent or any Lender. 9.03 APPLICATION OF FUNDS. After the acceleration of the Obligations as provided for in Section 9.02(b) (or after the Loans have automatically become immediately due and payable as set forth in the proviso to Section 9.02), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order: First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including Attorney Costs and amounts payable under Article III) payable to the Administrative Agent in its capacity as such; Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders (including Attorney Costs and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Second payable to them; Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them; 68 Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them; Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law. ARTICLE X ADMINISTRATIVE AGENT 10.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT. Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Loan Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" herein and in the other Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. 10.02 DELEGATION OF DUTIES. The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct. 10.03 LIABILITY OF ADMINISTRATIVE AGENT. No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by any Loan Party or any officer thereof, contained herein or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Loan Party or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the 69 observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or any Affiliate thereof. 10.04 RELIANCE BY ADMINISTRATIVE AGENT. (a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Loan Party), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under any Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders (or such greater number of Lenders as may be expressly required hereby in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders. (b) For purposes of determining compliance with the conditions specified in Section 5.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto. 10.05 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default and stating that such notice is a "notice of default." The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to such Default as may be directed by the Required Lenders in accordance with Article IX; provided, however, that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable or in the best interest of the Lenders. 10.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE AGENT. Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial 70 and other condition and creditworthiness of the Loan Parties and their respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower and the other Loan Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their respective Affiliates which may come into the possession of any Agent-Related Person. 10.07 INDEMNIFICATION OF ADMINISTRATIVE AGENT. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan Party and without limiting the obligation of any Loan Party to do so), pro rata, and hold harmless each Agent-Related Person from and against any and all Indemnified Liabilities incurred by it; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities to the extent determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Agent-Related Person's own gross negligence or willful misconduct; provided, however, that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrower. The undertaking in this Section shall survive termination of the payment of all other Obligations and the resignation of the Administrative Agent. 10.08 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Loan Parties and their respective Affiliates as though Bank of America were not the Administrative Agent hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding any Loan Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" include Bank of America in its individual capacity. 71 10.09 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign as Administrative Agent upon 30 days' notice to the Lenders. If the Administrative Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders, which successor administrative agent shall be consented to by the Borrower at all times other than during the existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, the Person acting as such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term "Administrative Agent" shall mean such successor administrative agent, and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated without any other or further act or deed on the part of any Lender. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article X and Sections 11.04 and 11.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. 10.10 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.08 and 11.04) allowed in such judicial proceeding; and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.08 and 11.04. 72 Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding. 10.11 COLLATERAL AND GUARANTY MATTERS. The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion, (a) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon payment in full of all Obligations (other than contingent indemnification obligations), (ii) that is transferred or to be transferred as part of or in connection with any Asset Sale permitted hereunder or under any other Loan Document, or (iii) subject to Section 11.01, if approved, authorized or ratified in writing by the Required Lenders; (b) to subordinate any Lien on any Property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such Property that is permitted by clause (e) of the definition of "Permitted Liens"; and (c) to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder. Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent's authority to release or subordinate its interest in particular types or items of Property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 10.11. 10.12 OTHER AGENTS; ARRANGERS AND MANAGERS. None of the Lenders or other Persons identified on the facing page or signature pages of this Agreement as a "syndication agent," "documentation agent," "co-agent," "book manager," "lead manager," "arranger," "lead arranger" or "co-arranger" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than, in the case of such Lenders, those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. 10.13 INTERCREDITOR AGREEMENT. Each Lender hereby authorizes the Administrative Agent to enter into, on behalf of the Lenders, the Intercreditor Agreement, and to take such action as is necessary to exercise its rights and perform its obligations thereunder. 73 ARTICLE XI MISCELLANEOUS 11.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall: (a) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 9.02) without the written consent of such Lender (it being understood and agreed that a waiver of any condition precedent set forth in Section 5.02 or of any Default or Event of Default or mandatory reduction in the Commitments shall not constitute a change in the terms of any Commitment of any Lender); (b) postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; (c) reduce the principal of, or the rate of interest specified herein on, any Loan or any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of "Default Rate" or to waive any obligation of the Borrower to pay interest at the Default Rate; (d) change Section 2.12 or Section 9.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender; (e) change any provision of this Section or the definition of "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; (f) (i) except as the result of or in connection with an Asset Sale not prohibited by this Agreement, release all or substantially all of the Collateral and (ii) except as otherwise provided in Section 10.11, release all or substantially all of the Guarantors, in each case without the written consent of each Lender; and (g) except as the result of or in connection with a dissolution, merger or disposition of a Loan Party not prohibited by this Agreement, release the Borrower or substantially all of the other Loan Parties from its or their obligations under the Loan Documents without the written consent of each Lender; and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (ii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. 74 Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender. Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (x) each Lender is entitled to vote as such Lender sees fit on any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent provisions set forth herein and (y) the Required Lenders shall determine whether or not to allow a Loan Party to use cash collateral in the context of a bankruptcy or insolvency proceeding and such determination shall be binding on all of the Lenders. 11.02 NOTICES AND OTHER COMMUNICATIONS; FACSIMILE COPIES. (a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or (subject to subsection (c) below) electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows: (i) if to the Borrower or the Administrative Agent, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 11.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and (ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Borrower and the Administrative Agent. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided, however, that notices and other communications to the Administrative Agent pursuant to Article II shall not be effective until actually received by such Person. In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder. (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually-signed originals and shall be binding on all Loan Parties, the Administrative Agent and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature. (c) Limited Use of Electronic Mail. Electronic mail and Internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information as 75 provided in Section 7.02, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose. (d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording. 11.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 11.04 ATTORNEY COSTS, EXPENSES AND TAXES. The Loan Parties jointly and severally agree (a) to pay or reimburse the Administrative Agent for all costs and expenses incurred in connection with the development, preparation, negotiation and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and (b) to pay or reimburse the Administrative Agent and each Lender for all costs and expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any "workout" or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by the Administrative Agent and the cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender. All amounts due under this Section 11.04 shall be payable within ten Business Days after demand therefor. The agreements in this Section shall survive the repayment of all other Obligations. 11.05 INDEMNIFICATION BY THE BORROWER. Whether or not the transactions contemplated hereby are consummated, the Loan Parties jointly and severally shall indemnify and hold harmless each Agent-Related Person, each Lender and their respective Affiliates, directors, officers, trustees, employees, counsel, agents and attorneys-in-fact (collectively the "Indemnitees") from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Loan Document or any other 76 agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) any Commitment or Loan or the use or proposed use of the proceeds therefrom, (c) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by the Borrower, any Subsidiary or any other Loan Party, or any Environmental Liability related in any way to the Borrower, any Subsidiary or any other Loan Party, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"), IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE NEGLIGENCE OF THE INDEMNITEE; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through IntraLinks or other similar information transmission systems in connection with this Agreement, nor shall any Indemnitee have any liability for any indirect or consequential damages relating to this Agreement or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date). All amounts due under this Section 11.05 shall be payable within ten Business Days after demand therefor. The agreements in this Section shall survive the resignation of the Administrative Agent, the replacement of any Lender and the repayment, satisfaction or discharge of all the other Obligations. 11.06 PAYMENTS SET ASIDE. To the extent that any payment by or on behalf of any Loan Party is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. 11.07 SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) or (h) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent 77 provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans; provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund (as defined in subsection (g) of this Section) with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $1,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Loans or the Commitment assigned; and (iii) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500. Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, 11.04 and 11.05 with respect to facts and circumstances occurring prior to the effective date of such assignment). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section. (c) The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrower's Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall 78 provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 11.01 that directly affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.09 as though it were a Lender, provided such Participant agrees to be subject to Section 2.12 as though it were a Lender. (e) A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 11.15 as though it were a Lender. (f) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. (g) As used herein, the following terms have the following meanings: "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent, and (ii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, "Eligible Assignee" shall not include the Borrower or any of the Borrower's Affiliates or Subsidiaries. "Fund" means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. "Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. (h) Notwithstanding anything to the contrary contained herein, any Lender that is a Fund may create a security interest in all or any portion of the Loans owing to it and the Note, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities, provided that unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section 11.07, (i) no such pledge shall release the pledging Lender from any of its obligations under the Loan Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Loan Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise. 79 11.08 CONFIDENTIALITY. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, trustees, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested by any Governmental Authority or representative thereof; (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement so long as such Eligible Assignee or Participant (prospective or otherwise) agrees to be bound by such provisions or (ii) any direct or indirect contractual counterparty or prospective counterparty (or such contractual counterparty's or prospective counterparty's professional advisor) to any credit derivative transaction relating to obligations of the Loan Parties; (g) with the consent of the Borrower; (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower; or (i) to the National Association of Insurance Commissioners or any other similar organization. In addition, the Administrative Agent and the Lenders may, to the extent permitted by Law, disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Administrative Agent and the Lenders in connection with the administration and management of this Agreement, the other Loan Documents, the Commitments, and the Borrowings; provided, however, without the consent of the Borrower (not to be unreasonably withheld), such disclosure and information shall be limited to the matters presented in the "Summary of Indicative Terms and Conditions" contained in the Confidential Offering Memorandum dated June, 2003, as updated from time to time. For the purposes of this Section, "Information" means all information received from any Loan Party relating to any Loan Party or its business, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Loan Party; provided that, in the case of information received from a Loan Party after the date hereof, such information is clearly identified in writing at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Notwithstanding anything herein to the contrary, "Information" shall not include, and the Administrative Agent and each Lender may disclose without limitation of any kind, any information with respect to the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Administrative Agent or such Lender relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the tax treatment or tax structure of the Loans and transactions contemplated hereby. 11.09 SET-OFF. In addition to any rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of any Event of Default, each Lender is authorized at any time and from time to time, without prior notice to the Borrower or any other Loan Party, any such notice being waived by the 80 Borrower (on its own behalf and on behalf of each Loan Party) to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender to or for the credit or the account of the respective Loan Parties against any and all Obligations owing to such Lender hereunder or under any other Loan Document, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or indebtedness. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. 11.10 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the "Maximum Rate"). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder. 11.11 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 11.12 INTEGRATION. This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. 11.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Borrowing, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied. 81 11.14 SEVERABILITY. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 11.15 TAX FORMS. (a) (i) Each Lender that is not a "United States person" within the meaning of Section 7701(a)(30) of the Code (a "Foreign Lender") shall deliver to the Administrative Agent, prior to receipt of any payment subject to withholding under the Code (or upon accepting an assignment of an interest herein), two duly signed completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Foreign Lender and entitling it to an exemption from, or reduction of, withholding tax on all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement) or such other evidence satisfactory to the Borrower and the Administrative Agent that such Foreign Lender is entitled to an exemption from, or reduction of, U.S. withholding tax, including any exemption pursuant to Section 881(c) of the Code. Thereafter and from time to time, each such Foreign Lender shall (A) promptly submit to the Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the Administrative Agent of any available exemption from or reduction of, United States withholding taxes in respect of all payments to be made to such Foreign Lender by the Borrower pursuant to this Agreement, (B) promptly notify the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (C) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws that the Borrower make any deduction or withholding for taxes from amounts payable to such Foreign Lender. (ii) Each Foreign Lender, to the extent it does not act or ceases to act for its own account with respect to any portion of any sums paid or payable to such Lender under any of the Loan Documents (for example, in the case of a typical participation by such Lender), shall deliver to the Administrative Agent on the date when such Foreign Lender ceases to act for its own account with respect to any portion of any such sums paid or payable, and at such other times as may be necessary in the determination of the Administrative Agent (in the reasonable exercise of its discretion), (A) two duly signed completed copies of the forms or statements required to be provided by such Lender as set forth above, to establish the portion of any such sums paid or payable with respect to which such Lender acts for its own account that is not subject to U.S. withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or any successor thereto), together with any information such Lender chooses to transmit with such form, and any other certificate or statement of exemption required under the Code, to establish that such Lender is not acting for its own account with respect to a portion of any such sums payable to such Lender. 82 (iii) The Borrower shall not be required to pay any additional amount to any Foreign Lender under Section 3.01 (A) with respect to any Taxes required to be deducted or withheld on the basis of the information, certificates or statements of exemption such Lender transmits with an IRS Form W-8IMY pursuant to this Section 11.15(a) or (B) if such Lender shall have failed to satisfy the foregoing provisions of this Section 11.15(a); provided that if such Lender shall have satisfied the requirement of this Section 11.15(a) on the date such Lender became a Lender or ceased to act for its own account with respect to any payment under any of the Loan Documents, nothing in this Section 11.15(a) shall relieve the Borrower of its obligation to pay any amounts pursuant to Section 3.01 in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender or other Person for the account of which such Lender receives any sums payable under any of the Loan Documents is not subject to withholding or is subject to withholding at a reduced rate. (iv) The Administrative Agent may, without reduction, withhold any Taxes required to be deducted and withheld from any payment under any of the Loan Documents with respect to which the Borrower is not required to pay additional amounts under this Section 11.15(a). (b) Upon the request of the Administrative Agent, each Lender that is a "United States person" within the meaning of Section 7701(a)(30) of the Code shall deliver to the Administrative Agent two duly signed completed copies of IRS Form W-9. If such Lender fails to deliver such forms, then the Administrative Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable back-up withholding tax imposed by the Code, without reduction. (c) If any Governmental Authority asserts that the Administrative Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the Administrative Agent therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, and costs and expenses (including Attorney Costs) of the Administrative Agent. The obligation of the Lenders under this Section shall survive the repayment of all other Obligations hereunder and the resignation of the Administrative Agent. 11.16 REPLACEMENT OF LENDERS. Under any circumstances set forth herein providing that the Borrower shall have the right to replace a Lender as a party to this Agreement, the Borrower may, upon notice to such Lender and the Administrative Agent, replace such Lender by causing such Lender to assign its Commitment and outstanding Loans (with the assignment fee to be paid by the Borrower in such instance) pursuant to Section 11.07(b) to one or more other Lenders or Eligible Assignees procured by the Borrower. The Borrower shall (x) pay in full all principal, interest, fees and other amounts owing to such Lender through the date of replacement (including any amounts payable pursuant to Section 3.05) and (y) release such Lender from its obligations under the Loan Documents. Any Lender being replaced shall execute and deliver an Assignment and Assumption with respect to such Lender's Commitment and outstanding Loans. 11.17 GOVERNING LAW. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO 83 AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH OF THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE. 11.18 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 11.19 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. 84 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. BORROWER: WESTLAKE CHEMICAL CORPORATION By: /s/ A. Chao ------------------------------------------------ Albert Chao President GUARANTORS: GEISMAR VINYLS COMPANY LP By: GEISMAR HOLDINGS, INC., its general partner WESTLAKE PETROCHEMICALS LP By: WESTLAKE CHEMICAL INVESTMENTS, INC., its general partner WESTLAKE POLYMERS LP By: WESTLAKE CHEMICAL INVESTMENTS, INC., its general partner WESTLAKE STYRENE LP By: WESTLAKE CHEMICAL HOLDINGS, INC., its general partner WPT LP By: WESTLAKE CHEMICAL HOLDINGS, INC., its general partner By: /s/ Tai-Li Keng ----------------------------------- Tai-Li Keng Vice-President GEISMAR HOLDINGS, INC. GRAMERCY CHLOR-ALKALI CORPORATION GVGP, INC. NORTH AMERICAN PIPE CORPORATION NORTH AMERICAN PROFILES, INC. VAN BUREN PIPE CORPORATION WESTECH BUILDING PRODUCTS, INC. WESTLAKE CHEMICAL HOLDINGS, INC. WESTLAKE CHEMICAL INVESTMENTS, INC. WESTLAKE CHEMICAL MANUFACTURING, INC. WESTLAKE CHEMICAL PRODUCTS, INC. WESTLAKE DEVELOPMENT CORPORATION WESTLAKE MANAGEMENT SERVICES, INC. WESTLAKE OLEFINS CORPORATION WESTLAKE OVERSEAS CORPORATION WESTLAKE PVC CORPORATION WESTLAKE RESOURCES CORPORATION WESTLAKE VINYL CORPORATION WESTLAKE VINYLS, INC. By: /s/ Tai-Li Keng -------------------------------------------- Tai-Li Keng Vice-President ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A., as Administrative Agent By: /s/ Mary F. Edwards ------------------------------------------- Name: Mary F. Edwards Title: Agency Officer LENDERS: BANK OF AMERICA, N.A., as a Lender By: /s/ Edward Hamilton ------------------------------------------- Name: Edward Hamilton Title: Senior Vice President Exhibit 1.01 FORM OF SECURITY AGREEMENT SECURITY AGREEMENT THIS SECURITY AGREEMENT (this "Security Agreement") dated as of July 31, 2003 is by and among the parties identified as "Grantors" on the signature pages hereto and such other parties as may become Grantors hereunder after the date hereof (individually a "Grantor", and collectively the "Grantors") and BANK OF AMERICA, N.A., as administrative agent (in such capacity, the "Administrative Agent") for the holders of the Secured Obligations referenced below. WITNESSETH WHEREAS, a $120 million credit facility has been established in favor of Westlake Chemical Corporation, a Delaware corporation (the "Borrower"), pursuant to the terms of that Credit Agreement (as amended, modified, supplemented and extended from time to time, the "Credit Agreement") dated as of the date hereof among the Borrower, the Guarantors identified therein, the Lenders identified therein and Bank of America, N.A., as Administrative Agent; and WHEREAS, this Security Agreement is required under the terms of the Credit Agreement. NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. (a) Capitalized terms used and not otherwise defined herein shall have the meanings provided in the Credit Agreement. (b) The following terms shall have the meanings assigned thereto in the Uniform Commercial Code in effect in the State of New York on the date hereof: Accession, Account, As-Extracted Collateral, Chattel Paper, Commercial Tort Claim, Consumer Goods, Deposit Account, Documents, Equipment, Farm Products, Fixtures, General Intangibles, Instrument, Inventory, Letter-of-Credit Rights, Manufactured Home, Proceeds, Software, Standing Timber and Supporting Obligation. (c) As used herein, the following terms shall have the meanings set forth below: "Collateral" has the meaning provided in Section 2 hereof. "Collateral Account" means the deposit account maintained by the Borrower with the Administrative Agent (and subject to the security interest of the Administrative Agent) into which Net Proceeds from Asset Sales of Collateral and Casualty Proceeds from Involuntary Dispositions affecting Collateral shall be deposited pending final application of such proceeds in accordance with the terms of the Credit Agreement. "Copyright License" means any agreement, written or oral, providing for the grant by or to a Grantor of any right to use any Copyright, including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement. "Copyrights" means (a) all registered United States copyrights in all Works, now existing or hereafter created or acquired, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, registrations, recordings and applications in the United States Copyright Office including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement, and (b) all renewals thereof including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement. "Patent License" means any agreement, whether written or oral, providing for the grant by or to a Grantor of any right to manufacture, use or sell any invention covered by a Patent, including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement. "Patents" means (a) all letters patent of the United States or any other country and all reissues and extensions thereof, including, without limitation, any letters patent referred to in Schedule 6.17 to the Credit Agreement, and (b) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement. "Secured Obligations" means, without duplication, (i) all of the obligations of the Loan Parties to the Lenders and the Administrative Agent, under the Credit Agreement or any other Loan Document (including, but not limited to, any interest accruing after the commencement of a proceeding by or against any Loan Party under any Debtor Relief Laws, regardless of whether such interest is an allowed claim under such proceeding), whether now existing or hereafter arising, due or to become due, direct or indirect, absolute or contingent, howsoever evidenced, created, held or acquired, whether primary, secondary, direct, contingent, or joint and several, as such obligations may be amended, modified, increased, extended, renewed or replaced from time to time, and (ii) all costs and expenses incurred in connection with enforcement and collection of the obligations described in the foregoing clause (i), including reasonable attorneys' fees. "Specified Facilities" means, with respect to the Grantors, (a) the Calcasieu Parish, Louisiana ethylene, styrene, and polyethylene facilities, and (b) the Marshall County, Kentucky chlor-alkali, vinyl chloride monomer and polyvinyl chloride complexes (each, individually, a "Specified Facility"). "Trademark License" means any agreement, written or oral, providing for the grant by or to a Grantor of any right to use any Trademark, including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement. "Trademarks" means (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof, or otherwise, including, without limitation, any thereof referred to in Schedule 6.17 to the Credit Agreement, and (b) all renewals thereof. "UCC" means the Uniform Commercial Code. "Work" means any work that is subject to copyright protection pursuant to Title 17 of the United States Code. 2. Grant of Security Interest in the Collateral. To secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Secured Obligations, each Grantor hereby grants to the Administrative Agent, for the benefit of the holders of the Secured Obligations, a continuing security interest in, and a right to set off against, any and all right, title and interest of such Grantor in all of the following property that is (i) located on, contiguous to, connected with or in reasonable proximity to any Specified Facility or (ii) arising from, necessary or used in connection with, 2 or in any respect related, incidental or ancillary to, the ownership, expansion, operation, use, maintenance or sale or other disposition of any Specified Facility, whether now owned or existing or owned, acquired, or arising hereafter (collectively, the "Collateral"): (a) the Collateral Account; (b) those Commercial Tort Claims identified on Schedule 2(d) attached hereto and other causes of action; (c) all Documents; (d) all Equipment; (e) all Fixtures; (f) all General Intangibles; Patents; Patent Licenses; Trademarks; Trademark Licenses; Copyrights; Copyright Licenses; trade secrets; goodwill; other intellectual property (whether owned or licensed); drawings; blueprints; specifications; plans; books and records; employment, consulting, operating, maintenance or services agreements; utility contracts; other contractual rights; public and private licenses, permits, franchises, certificates, registrations, privileges, entitlements, powers, authorities, pollution and environmental credits and allowances; loan commitments and financing arrangements incurred or obtained to finance additions, repairs or improvements to a Specified Facility, Fixtures or Equipment; bonds; leases; rights to indemnification; any award, remuneration, settlement, or compensation heretofore made or hereafter to be made by any Governmental Authority to any Grantor); surety bonds; and insurance policies and the proceeds therefrom payable or to be payable thereunder; (g) all Instruments; (h) Letter-of-Credit Rights; (i) all Software; (j) all Supporting Obligations; and (k) to the extent not otherwise included, all Accessions and all Proceeds of any and all of the foregoing. The Grantors and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest created hereby in the Collateral (i) constitutes continuing collateral security for all of the Secured Obligations, whether now existing or hereafter arising and (ii) is not to be construed as an assignment of any Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks or Trademark Licenses. Notwithstanding the forgoing, the Collateral shall in no event include Inventory, Accounts, Deposit Accounts (other than the Collateral Account), Chattel Paper or contracts to supply Inventory or services to customers of the Grantors. 3. [Reserved] 3 4. Representations and Warranties. Each Grantor hereby represents and warrants to the Administrative Agent, for the benefit of the holders of the Secured Obligations, that so long as any of the Secured Obligations remains outstanding and until all of the commitments relating thereto have been terminated: (a) Legal Name; Chief Executive Office; Etc.. As of the date hereof: (i) Each Grantor's exact legal name, taxpayer identification number, organization identification number, and state of formation are (and for the prior five years have been) as set forth on Schedule 6.20(c) to the Credit Agreement. (ii) Each Grantor's chief executive office is located (and for the prior five years has been) at the location set forth on Schedule 6.20(c) to the Credit Agreement attached hereto. (iii) Other than as set forth on Schedule 4(a) attached hereto, no Grantor has been party to a merger, consolidation or other change in structure or used any tradename in the prior five years. (b) Ownership. Each Grantor is the legal and beneficial owner, lessee or licensee of its Collateral and has the right to pledge, sell, assign or transfer the same. (c) Security Interest/Priority. This Security Agreement creates a valid security interest in favor of the Administrative Agent, for the benefit of the holders of the Secured Obligations, in the Collateral of such Grantor and, when properly perfected by filing, shall constitute a valid perfected security interest in such Collateral, to the extent such security interest can be perfected by filing under the UCC, free and clear of all Liens except for Permitted Liens. (d) Types of Collateral. None of the Collateral consists of, or is the Accessions or the Proceeds of, As-Extracted Collateral, Consumer Goods, Farm Products, Manufactured Homes, or Standing Timber. (e) Copyrights, Patents and Trademarks. (i) Schedule 6.17 to the Credit Agreement includes all Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses owned by any Grantor in its own name, or to which any Grantor is a party, as of the date hereof. (ii) Each Copyright, Patent and Trademark of such Grantor is valid (to the Grantor's knowledge), subsisting, unexpired, enforceable (to the Grantor's knowledge) and has not been abandoned. (iii) Except as set forth in Schedule 6.17 to the Credit Agreement, none of the Copyrights, Patents and Trademarks of any Grantor is the subject of any licensing or franchise agreement. (iv) No holding, decision or judgment has been rendered by any Governmental Authority that would limit, cancel or question the validity of any Copyright, Patent or Trademark of any Grantor. (v) No action or proceeding is pending seeking to limit, cancel or question the validity of any Copyright, Patent or Trademark of any Grantor, or that, if adversely 4 determined, could reasonably be expected to have a material adverse effect on the value of any Copyright, Patent or Trademark of any Grantor. (vi) All applications pertaining to the Copyrights, Patents and Trademarks of each Grantor have been duly and properly filed, and all registrations or letters pertaining to such Copyrights, Patents and Trademarks have been duly and properly filed and issued, and all of such Copyrights, Patents and Trademarks are , to the Grantor's knowledge, valid and enforceable. (vii) No Grantor has made any assignment or agreement in conflict with the security interest in the Copyrights, Patents or Trademarks of any Grantor hereunder. 5. Covenants. Each Grantor covenants that, so long as any of the Secured Obligations remains outstanding and until all of the commitments relating thereto have been terminated, such Grantor shall: (a) Other Liens. Defend the Collateral against the claims and demands of all other parties claiming an interest therein other than Permitted Liens. (b) Instruments; Documents. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, or if any property constituting Collateral shall be stored or shipped subject to a Document, ensure that such Instrument or Document is either in the possession of such Grantor at all times or, if requested by the Administrative Agent, is immediately delivered to the Administrative Agent, and duly endorsed in a manner satisfactory to the Administrative Agent. For purposes of clarification, amounts payable in connection with a Grantor's inventory shall not be subject to this clause (b). (c) Change in Structure, Location or Type. Not, without providing ten days prior written notice to the Administrative Agent (i) change its name or state of formation, (ii) be party to a merger, consolidation or other change in structure or (iii) use any tradename other than as set forth on Schedule 4(a) attached hereto. (d) Perfection of Security Interest. Execute and deliver to the Administrative Agent such agreements, assignments or instruments (including affidavits, notices, reaffirmations and amendments and restatements of existing documents, as the Administrative Agent may reasonably request) and do all such other things as the Administrative Agent may reasonably deem necessary, appropriate or convenient (i) to assure to the Administrative Agent the effectiveness and priority of its security interests hereunder, including (A) such instruments as the Administrative Agent may from time to time reasonably request in order to perfect and maintain the security interests granted hereunder in accordance with the UCC, (B) with regard to Copyrights, a Notice of Grant of Security Interest in Copyrights for filing with the United States Copyright Office in the form of Schedule 5(d)(i) attached hereto, (C) with regard to Patents, a Notice of Grant of Security Interest in Patents for filing with the United States Patent and Trademark Office in the form of Schedule 5(d)(ii) attached hereto and (D) with regard to Trademarks, a Notice of Grant of Security Interest in Trademarks for filing with the United States Patent and Trademark Office in the form of Schedule 5(d)(iii) attached hereto, (ii) to consummate the transactions contemplated hereby and (iii) to otherwise protect and assure the Administrative Agent of its rights and interests hereunder. To that end, each Grantor authorizes the Administrative Agent to file one or more financing statements (with collateral descriptions broader and/or less specific than the description of the Collateral contained herein) disclosing the Administrative Agent's security interest in any or all of the Collateral of such Grantor without such Grantor's signature thereon, and further each Grantor also hereby irrevocably makes, constitutes and appoints the Administrative Agent, its nominee or any other Person whom the Administrative Agent may designate, as such Grantor's attorney-in-fact with full power and for the 5 limited purpose to sign in the name of such Grantor any such financing statements (including renewal statements), amendments and supplements, notices or any similar documents that in the Administrative Agent's reasonable discretion would be necessary, appropriate or convenient in order to perfect and maintain perfection of the security interests granted hereunder, such power, being coupled with an interest, being and remaining irrevocable so long as the Secured Obligations remain unpaid and until the commitments relating thereto shall have been terminated. Each Grantor hereby agrees that a carbon, photographic or other reproduction of this Security Agreement or any such financing statement is sufficient for filing as a financing statement by the Administrative Agent without notice thereof to such Grantor wherever the Administrative Agent may in its sole discretion desire to file the same. In the event for any reason the law of any jurisdiction other than New York becomes or is applicable to the Collateral of any Grantor or any part thereof, or to any of the Secured Obligations, such Grantor agrees to execute and deliver all such instruments and to do all such other things as the Administrative Agent in its sole discretion reasonably deems necessary, appropriate or convenient to preserve, protect and enforce the security interests of the Administrative Agent under the law of such other jurisdiction (and, if a Grantor shall fail to do so promptly upon the request of the Administrative Agent, then the Administrative Agent may execute any and all such requested documents on behalf of such Grantor pursuant to the power of attorney granted hereinabove). If any Collateral is in the possession or control of a Grantor's agents and the Administrative Agent so requests, such Grantor agrees to notify such agents in writing of the Administrative Agent's security interest therein and, upon the Administrative Agent's request, instruct them to hold all such Collateral for the account of the holders of the Secured Obligations and subject to the Administrative Agent's instructions. Each Grantor agrees to mark its books and records to reflect the security interest of the Administrative Agent in the Collateral. (e) Control. Execute and deliver all agreements, assignments, instruments or other documents as the Administrative Agent shall reasonably request (including, without limitation, a "Control Agreement" substantially in the form of Schedule 5(e) or in such other form as may be agreed by the Borrower and the Administrative Agent) for the purpose of obtaining and maintaining control within the meaning of the UCC with respect to the Collateral Account or any Letter-of-Credit Rights constitution Collateral. (d) Collateral held by Warehouseman, Bailee, etc. If any Collateral is at any time in the possession or control of a warehouseman, bailee, agent or processor of such Grantor, (i) notify the Administrative Agent of such possession or control, (ii) notify such Person of the Administrative Agent's security interest in such Collateral, (iii) instruct such Person to hold all such Collateral for the Administrative Agent's account and subject to the Administrative Agent's instructions and (iv) use its best efforts to obtain an acknowledgment from such Person that it is holding such Collateral for the benefit of the Administrative Agent. For purposes of clarification, no Grantor's inventory nor amounts payable in connection with such inventory shall be subject to this clause (d). (e) Covenants Relating to Copyrights. (i) Not do any act or knowingly omit to do any act whereby any material Copyright may become invalidated and (A) not do any act, or knowingly omit to do any act, whereby any material Copyright may become injected into the public domain; (B) notify the Administrative Agent immediately if it knows that any material Copyright may become injected into the public domain or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any court or tribunal in the United States or any other country) regarding a Grantor's ownership of any such Copyright or its validity; (C) take all necessary steps as it shall deem appropriate under the circumstances, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of each material Copyright owned by a 6 Grantor including, without limitation, filing of applications for renewal where necessary; and (D) promptly notify the Administrative Agent of any material infringement of any material Copyright of a Grantor of which it becomes aware and take such actions as it shall reasonably deem appropriate under the circumstances to protect such Copyright, including, where appropriate, the bringing of suit for infringement, seeking injunctive relief and seeking to recover any and all damages for such infringement. (ii) Not make any assignment or agreement in conflict with the security interest in the Copyrights of each Grantor hereunder. (f) Covenants Relating to Patents and Trademarks. (i) (A) Continue to use each Trademark on each and every trademark class of goods applicable to its current line as reflected in its current catalogs, brochures and price lists in order to maintain such Trademark in full force free from any claim of abandonment for non-use unless it determines in its reasonable business judgement to cease any such use, (B) maintain as in the past the quality of products and services offered under such Trademark, (C) employ such Trademark with the appropriate notice of registration, (D) not adopt or use any mark that is confusingly similar or a colorable imitation of such Trademark unless the Administrative Agent, for the ratable benefit of the holders of the Secured Obligations, shall obtain a perfected security interest in such mark pursuant to this Security Agreement, and (E) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any Trademark may become invalidated. (ii) Not do any act, or omit to do any act, whereby any Patent may become abandoned or dedicated. (iii) Notify the Administrative Agent promptly if it knows that any application or registration relating to any Patent or Trademark may become abandoned or dedicated, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office or any court or tribunal in any country) regarding a Grantor's ownership of any Patent or Trademark or its right to register the same or to keep and maintain the same. (iv) Whenever a Grantor, either by itself or through an agent, employee, licensee or designee, shall file an application for the registration of any Patent or Trademark with the United States Patent and Trademark Office or any similar office or agency in any other country or any political subdivision thereof, the Grantor shall report such filing to the Administrative Agent and the holders of the Secured Obligations within five Business Days after the last day of the fiscal quarter in which such filing occurs. Upon request of the Administrative Agent, a Grantor shall execute and deliver any and all agreements, instruments, documents and papers as the Administrative Agent may reasonably request to evidence the security interest of the Administrative Agent and the holders of the Secured Obligations in any Patent or Trademark and the goodwill and general intangibles of a Grantor relating thereto or represented thereby. (v) Take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the Patents and Trademarks, including, without limitation, filing of applications for renewal, 7 affidavits of use and affidavits of incontestability, unless it determines in its reasonable business judgement not to maintain or pursue the application or registration. (vi) Promptly notify the Administrative Agent and the holders of the Secured Obligations after it learns that any Patent or Trademark included in the Collateral is infringed, misappropriated or diluted by a third party and promptly sue for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to recover any and all damages for such infringement, misappropriation or dilution, or to take such other actions as it shall reasonably deem appropriate under the circumstances to protect such Patent or Trademark. (vii) Not make any assignment or agreement in conflict with the security interest in the Patents or Trademarks of each Grantor hereunder. (g) Insurance. Insure, repair and replace the Collateral of such Grantor as set forth in the Credit Agreement. All insurance proceeds shall be subject to the security interest of the Administrative Agent hereunder. (h) Commercial Tort Claims. (i) Promptly notify the Administrative Agent in writing of the initiation of any Commercial Tort Claim before any Governmental Authority by or in favor of such Grantor or any of its Subsidiaries. (ii) Execute and deliver such statements, documents and notices and do and cause to be done all such things as the Administrative Agent may reasonably deem necessary, appropriate or convenient, or as are required by law, to create, perfect and maintain the Administrative Agent's security interest in any Commercial Tort Claim. 6. Advances by Administrative Agent. On failure of any Grantor to perform any of the covenants and agreements contained herein, the Administrative Agent may, at its sole option and in its sole discretion, perform the same and in so doing may expend such sums as the Administrative Agent may reasonably deem advisable in the performance thereof, including, without limitation, the payment of any insurance premiums, the payment of any taxes, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending against any adverse claim and all other expenditures that the Administrative Agent may make for the protection of the security hereof or that may be compelled to make by operation of law. All such sums and amounts so expended shall be repayable by the Grantors on a joint and several basis (subject to Section 22 hereof) promptly upon timely notice thereof and demand therefor, shall constitute additional Secured Obligations and shall bear interest from the date said amounts are expended at the Default Rate. No such performance of any covenant or agreement by the Administrative Agent on behalf of any Grantor, and no such advance or expenditure therefor, shall relieve the Grantors of any default under the terms of this Security Agreement, the other Loan Documents or any other documents relating to the Secured Obligations. The Administrative Agent may make any payment hereby authorized in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by a Grantor in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP. 8 7. Remedies. (a) General Remedies. Upon the occurrence of an Event of Default and during the continuation thereof, the Administrative Agent shall have, in addition to the rights and remedies provided herein, in the Loan Documents, in any other documents relating to the Secured Obligations, or by law (including, without limitation, levy of attachment and garnishment), the rights and remedies of a secured party under the UCC of the jurisdiction applicable to the affected Collateral and, further, the Administrative Agent may, with or without judicial process or the aid and assistance of others, (i) enter on any premises on which any of the Collateral may be located and, without resistance or interference by the Grantors, take possession of the Collateral, (ii) dispose of any Collateral on any such premises, (iii) require the Grantors to assemble and make available to the Administrative Agent at the expense of the Grantors any Collateral at any place and time designated by the Administrative Agent that is reasonably convenient to both parties, (iv) remove any Collateral from any such premises for the purpose of effecting sale or other disposition thereof, and/or (v) without demand and without advertisement, notice, hearing or process of law, all of which each of the Grantors hereby waives to the fullest extent permitted by law, at any place and time or times, sell and deliver any or all Collateral held by or for it at public or private sale, by one or more contracts, in one or more parcels, for cash, upon credit or otherwise, at such prices and upon such terms as the Administrative Agent deems advisable, in its sole discretion (subject to any and all mandatory legal requirements). Each of the Grantors acknowledges that any private sale referenced above may be at prices and on terms less favorable to the seller than the prices and terms that might have been obtained at a public sale and agrees that such private sale shall be deemed to have been made in a commercially reasonable manner. Neither the Administrative Agent's compliance with applicable law nor its disclaimer of warranties relating to the Collateral shall be considered to adversely affect the commercial reasonableness of any sale. In addition to all other sums due the Administrative Agent and the holders of the Secured Obligations with respect to the Secured Obligations, the Grantors shall pay the Administrative Agent and each of the holders of the Secured Obligations all reasonable documented costs and expenses incurred by the Administrative Agent or any such holder of the Secured Obligations, including, but not limited to, reasonable attorneys' fees, and court costs, in obtaining or liquidating the Collateral, in enforcing payment of the Secured Obligations, or in the prosecution or defense of any action or proceeding by or against the Administrative Agent or the holders of the Secured Obligations or the Grantors concerning any matter arising out of or connected with this Security Agreement, any Collateral or the Secured Obligations, including, without limitation, any of the foregoing arising in, arising under or related to a case under the Bankruptcy Code. To the extent the rights of notice cannot be legally waived hereunder, each Grantor agrees that any requirement of reasonable notice shall be met if such notice is personally served on or mailed, postage prepaid, to the Borrower in accordance with the notice provisions of Section 11.02 of the Credit Agreement at least ten Business Days before the time of sale or other event giving rise to the requirement of such notice. The Administrative Agent shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. To the extent permitted by law, any holder of the Secured Obligations may be a purchaser at any such sale. To the extent permitted by applicable law, each of the Grantors hereby waives all of its rights of redemption with respect to any such sale. Subject to the provisions of applicable law, the Administrative Agent and the holders of the Secured Obligations may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, to the extent permitted by law, be made at the time and place to which the sale was postponed, or the Administrative Agent may further postpone such sale by announcement made at such time and place. (b) Access. In addition to the rights and remedies hereunder, upon the occurrence of an Event of Default and during the continuation thereof, the Administrative Agent shall have the right to enter and remain upon the various premises of the Grantors without cost or charge to the Administrative Agent, and use the same, together with materials, supplies, books and records of the Grantors for the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting the sale of the Collateral, whether by foreclosure, auction or otherwise. In addition, the Administrative Agent may remove Collateral, or any part 9 thereof, from such premises and/or any records with respect thereto, in order to effectively collect or liquidate such Collateral. (c) Nonexclusive Nature of Remedies. Failure by the Administrative Agent or the holders of the Secured Obligations to exercise any right, remedy or option under this Security Agreement, any other Loan Document, any other documents relating to the Secured Obligations, or as provided by law, or any delay by the Administrative Agent or the holders of the Secured Obligations in exercising the same, shall not operate as a waiver of any such right, remedy or option. No waiver hereunder shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated, which in the case of the Administrative Agent or the holders of the Secured Obligations shall only be granted as provided herein. To the extent permitted by law, neither the Administrative Agent, the holders of the Secured Obligations, nor any party acting as attorney for the Administrative Agent or the holders of the Secured Obligations, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder. The rights and remedies of the Administrative Agent and the holders of the Secured Obligations under this Security Agreement shall be cumulative and not exclusive of any other right or remedy that the Administrative Agent or the holders of the Secured Obligations may have. (d) Retention of Collateral. To the extent permitted under applicable law, in addition to the rights and remedies hereunder, upon the occurrence of an Event of Default, the Administrative Agent may, after providing the notices required by Sections 9-620 and 9-621 of the UCC or otherwise complying with the requirements of applicable law of the relevant jurisdiction, accept or retain all or any portion of the Collateral in satisfaction of the Secured Obligations. Unless and until the Administrative Agent shall have provided such notices, however, the Administrative Agent shall not be deemed to have accepted or retained any Collateral in satisfaction of any Secured Obligations for any reason. (e) Deficiency. In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the Administrative Agent or the holders of the Secured Obligations are legally entitled, the Grantors shall be jointly and severally liable for the deficiency (subject to Section 22 hereof), together with interest thereon at the Default Rate, together with the costs of collection and reasonable attorneys' fees. Any surplus remaining after the full payment and satisfaction of the Secured Obligations shall be returned to the Grantors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto. 8. Rights of the Administrative Agent. (a) Power of Attorney. In addition to other powers of attorney contained herein, each Grantor hereby designates and appoints the Administrative Agent, on behalf of the holders of the Secured Obligations, and each of its designees or agents, as attorney-in-fact of such Grantor, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence and during the continuation of an Event of Default: (i) to demand, collect, settle, compromise and adjust, and give discharges and releases concerning the Collateral, all as the Administrative Agent may reasonably deem appropriate; (ii) to commence and prosecute any actions at any court for the purposes of collecting any of the Collateral and enforcing any other right in respect thereof; (iii) to defend, settle or compromise any action brought and, in connection therewith, give such discharge or release as the Administrative Agent may reasonably deem appropriate; 10 (iv) to receive, open and dispose of mail addressed to a Grantor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the goods giving rise to the Collateral on behalf of and in the name of such Grantor, or securing, or relating to such Collateral; (v) to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral; (vi) to direct any parties liable for any payment in connection with any of the Collateral to make payment of any and all monies due and to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (vii) to receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time in respect of or arising out of any Collateral; (viii) to sell, assign, transfer, make any agreement in respect of, or otherwise deal with or exercise rights in respect of, any Collateral or the goods or services that have given rise thereto, as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes; (ix) to adjust and settle claims under any insurance policy relating thereto; (x) to execute and deliver all assignments, conveyances, statements, financing statements, renewal financing statements, security and pledge agreements, affidavits, notices and other agreements, instruments and documents that the Administrative Agent may reasonably deem appropriate in order to perfect and maintain the security interests and liens granted in this Security Agreement and in order to fully consummate all of the transactions contemplated therein; (xi) to institute any foreclosure proceedings that the Administrative Agent may reasonably deem appropriate; and (xii) to do and perform all such other acts and things as the Administrative Agent may reasonably deem appropriate or convenient in connection with the Collateral. This power of attorney is a power coupled with an interest and shall be irrevocable for so long as any of the Secured Obligations shall remain outstanding and until all of the commitments relating thereto shall have been terminated. The Administrative Agent shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Administrative Agent in this Security Agreement, and shall not be liable for any failure to do so or any delay in doing so. The Administrative Agent shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence or willful misconduct. This power of attorney is conferred on the Administrative Agent solely to protect, preserve and realize upon its security interest in the Collateral. (b) Performance by the Administrative Agent of Obligations. If any Grantor fails to perform any agreement or obligation contained herein, the Administrative Agent itself may perform, or cause performance of, such agreement or obligation, and the expenses of the Administrative Agent incurred in connection therewith shall be payable by the Grantors on a joint and several basis (subject to Section 22 hereof). 11 (c) The Administrative Agent's Duty of Care. Other than the exercise of reasonable care to assure the safe custody of the Collateral while being held by the Administrative Agent hereunder, the Administrative Agent shall have no duty or liability to preserve rights pertaining thereto, it being understood and agreed that the Grantors shall be responsible for preservation of all rights in the Collateral, and the Administrative Agent shall be relieved of all responsibility for the Collateral upon surrendering it or tendering the surrender of it to the Grantors. The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry, it being understood that the Administrative Agent shall not have responsibility for taking any necessary steps to preserve rights against any parties with respect to any of the Collateral. In the event of a public or private sale of Collateral pursuant to Section 7 hereof, the Administrative Agent shall have no obligation to clean, repair or otherwise prepare the Collateral for sale. 9. Rights of Required Lenders. All rights of the Administrative Agent hereunder, if not exercised by the Administrative Agent, may be exercised by the Required Lenders. 10. Application of Proceeds. Upon the occurrence and during the continuation of an Event of Default, any payments in respect of the Secured Obligations and any proceeds of the Collateral, when received by the Administrative Agent or any of the holders of the Secured Obligations in cash or its equivalent, will be applied in reduction of the Secured Obligations in the order set forth in the Credit Agreement or other document relating to the Secured Obligations, and each Grantor irrevocably waives the right to direct the application of such payments and proceeds and acknowledges and agrees that the Administrative Agent shall have the continuing and exclusive right to apply and reapply any and all such payments and proceeds in the Administrative Agent's sole discretion, notwithstanding any entry to the contrary upon any of its books and records. 11. Continuing Agreement. (a) This Security Agreement shall be a continuing agreement in every respect and shall remain in full force and effect so long as any of the Secured Obligations remains outstanding and until all of the commitments relating thereto have been terminated (other than any obligations with respect to the indemnities and the representations and warranties set forth in the Loan Documents). Upon such payment and termination, this Security Agreement and the liens and security interests of the Administrative Agent hereunder shall be automatically terminated and the Administrative Agent shall, upon the request and at the expense of the Grantors, execute and deliver all UCC termination statements and/or other documents reasonably requested by the Grantors evidencing such termination. Notwithstanding the foregoing, all releases and indemnities provided hereunder (in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the indemnified party) shall survive termination of this Security Agreement. (b) This Security Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any holder of the Secured Obligations as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made; provided that in the event payment of all or any part of the Secured Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including, without limitation, attorneys' fees, the allocated cost of internal counsel and disbursements) incurred by the Administrative Agent or any holder of the Secured Obligations in defending and enforcing such reinstatement shall be deemed to be included as a part of the Secured Obligations. 12 12. Amendments and Waivers. This Security Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged or terminated except as set forth in Section 11.01 of the Credit Agreement. 13. Successors in Interest. This Security Agreement shall create a continuing security interest in the Collateral and shall be binding upon each Grantor, its successors and assigns, and shall inure, together with the rights and remedies of the Administrative Agent and the holders of the Secured Obligations hereunder, to the benefit of the Administrative Agent and the holders of the Secured Obligations and their successors and permitted assigns; provided, however, that none of the Grantors may assign its rights or delegate its duties hereunder without the prior written consent of the requisite Lenders under the Credit Agreement. To the fullest extent permitted by law, each Grantor hereby releases the Administrative Agent and each holder of the Secured Obligations, their respective successors and assigns and their respective officers, attorneys, employees and agents, from any liability for any act or omission or any error of judgment or mistake of fact or of law relating to this Security Agreement or the Collateral, except for any liability arising from the gross negligence or willful misconduct of the Administrative Agent or such holder, or their respective officers, attorneys, employees or agents. 14. Notices. All notices required or permitted to be given under this Security Agreement shall be given as provided in Section 11.02 of the Credit Agreement. 15. Counterparts. This Security Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Security Agreement to produce or account for more than one such counterpart. 16. Headings. The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Security Agreement. 17. Governing Law; Submission to Jurisdiction; Venue. (a) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, the LAW OF THE STATE OF NEW YORK applicable to agreements made and to be performed entirely within such State; PROVIDED THAT THE ADMINISTRATIVE Agent AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT, EACH PARTY TO THIS SECURITY AGREEMENT CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH PARTY TO THIS SECURITY AGREEMENT IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH PARTY TO THIS SECURITY AGREEMENT WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE. 13 18. Waiver of Right to Trial by Jury. EACH PARTY TO THIS SECURITY AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS SECURITY AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 19. Severability. If any provision of this Security Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions. 20. Survival. All representations and warranties of the Grantors hereunder shall survive the execution and delivery of this Security Agreement, the other Loan Documents and the other documents relating to the Secured Obligations, the delivery of the Notes and the extension of credit thereunder or in connection therewith. 21. Other Security. To the extent that any of the Secured Obligations are now or hereafter secured by property other than the Collateral (including, without limitation, real property and securities owned by a Grantor), or by a guarantee, endorsement or property of any other Person, then the Administrative Agent shall have the right to proceed against such other property, guarantee or endorsement upon the occurrence of any Event of Default, and the Administrative Agent shall have the right, in its sole discretion, to determine which rights, security, liens, security interests or remedies the Administrative Agent shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them or the Secured Obligations or any of the rights of the Administrative Agent or the holders of the Secured Obligations under this Security Agreement, under any of the other Loan Documents or under any other document relating to the Secured Obligations. 22. Joint and Several Obligations of Grantors. (a) Subject to subsection (c) of this Section 22, each of the Grantors is accepting joint and several liability hereunder in consideration of the financial accommodation to be provided by the holders of the Secured Obligations, for the mutual benefit, directly and indirectly, of each of the Grantors and in consideration of the undertakings of each of the Grantors to accept joint and several liability for the obligations of each of them. (b) Subject to subsection (c) of this Section 22, each of the Grantors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Grantors with respect to the payment and performance of all of the Secured Obligations arising under this Security Agreement, the other Loan Documents and any other documents relating to the Secured Obligations, it being the intention of the parties hereto that all the Secured Obligations shall be the joint and several obligations of each of the Grantors without preferences or distinction among them. 14 (c) Notwithstanding any provision to the contrary contained herein, in any other of the Loan Documents or in any other documents relating to the Secured Obligations, the obligations of each Guarantor under the Credit Agreement and the other Loan Documents shall be limited to an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under Section 548 of the Bankruptcy Code or any comparable provisions of any applicable state law. 23. Entire Agreement This SECURITY AGREEMENT and the other Loan Documents represent the final agreement AMONG the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements AMONG the parties. [Signature Pages Follow] 15 Each of the parties hereto has caused a counterpart of this Security Agreement to be duly executed and delivered as of the date first above written. GRANTORS: WESTLAKE CHEMICAL CORPORATION By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- GEISMAR HOLDINGS, INC. By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- GEISMAR VINYLS COMPANY LP By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- GRAMERCY CHLOR-ALKALI CORPORATION By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- GVGP, INC. By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- NORTH AMERICAN PIPE CORPORATION By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- NORTH AMERICAN PROFILES, INC. By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- VAN BUREN PIPE CORPORATION By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- 16 WESTECH BUILDING PRODUCTS, INC. By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- WESTLAKE CHEMICAL HOLDINGS, INC. By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- WESTLAKE CHEMICAL INVESTMENTS, INC. By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- WESTLAKE CHEMICAL MANUFACTURING, INC. By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- WESTLAKE CHEMICAL PRODUCTS, INC. By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- WESTLAKE DEVELOPMENT CORPORATION By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- WESTLAKE MANAGEMENT SERVICES, INC. By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- WESTLAKE OLEFINS CORPORATION By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- 17 WESTLAKE OVERSEAS CORPORATION By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- WESTLAKE PETROCHEMICALS LP By: ------------------------------------------ Name: ---------------------------------------- Title: ----------------------------------------- WESTLAKE POLYMERS LP By: ------------------------------------------ Name: ---------------------------------------- Title: ----------------------------------------- WESTLAKE PVC CORPORATION By: ------------------------------------------ Name: ---------------------------------------- Title: ----------------------------------------- WESTLAKE RESOURCES CORPORATION By: ------------------------------------------ Name: ---------------------------------------- Title: ----------------------------------------- WESTLAKE STYRENE LP By: ------------------------------------------ Name: ---------------------------------------- Title: ----------------------------------------- WESTLAKE VINYL CORPORATION By: ------------------------------------------ Name: ---------------------------------------- Title: ----------------------------------------- WESTLAKE VINYLS, INC. By: ------------------------------------------ Name: ---------------------------------------- Title: ----------------------------------------- 18 WPT LP By: ---------------------------------------- Name: ---------------------------------------- Title: ---------------------------------------- Accepted and agreed to as of the date first above written. BANK OF AMERICA, N.A.., as Administrative Agent By: ---------------------------------- Name: Title: 19 SCHEDULE 5(d)(i) GRANT OF SECURITY INTEREST IN COPYRIGHTS United States Copyright Office Ladies and Gentlemen: Please be advised that the undersigned Grantor hereby grants a continuing security interest in and continuing lien upon, the copyrights and copyright applications on Schedule 1 attached hereto to the Administrative Agent for the ratable benefit of the holders of the Secured Obligations, pursuant to and as more fully set forth in the Security Agreement dated as of July 31, 2003 (the "Security Agreement") by and among the Grantors party thereto (each an "Grantor" and collectively, the "Grantors") and Bank of America, N.A., as Administrative Agent (the "Administrative Agent") for the holders of the Secured Obligations referenced therein, which Security Agreement is hereby made a part hereof by reference as though set forth in its entirety. Capitalized terms used herein and not otherwise defined shall have the meaning assigned thereto in the Security Agreement. The undersigned Grantor and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest in the copyrights and copyright applications set forth on Schedule 1 attached hereto (i) may only be terminated in accordance with the terms of the Security Agreement and (ii) is not to be construed as an assignment of any copyright or copyright application. Very truly yours, ---------------------------------- [Grantor] By: ----------------------------------------- Name: Title: Acknowledged and Accepted: BANK OF AMERICA, N.A., as Administrative Agent By: ----------------------------------------- Name: Title: SCHEDULE 5(d)(ii) GRANT OF SECURITY INTEREST IN PATENTS United States Patent and Trademark Office Ladies and Gentlemen: Please be advised that the undersigned Grantor hereby grants a continuing security interest in and continuing lien upon, the patents and patent applications set forth on Schedule 1 attached hereto to the Administrative Agent for the ratable benefit of the holders of the Secured Obligations, pursuant to and as more fully set forth in the Security Agreement dated as of July 31, 2003 (the "Security Agreement") by and among the Grantors party thereto (each an "Grantor" and collectively, the "Grantors") and Bank of America, N.A., as Administrative Agent (the "Administrative Agent") for the holders of the Secured Obligations referenced therein, which Security Agreement is hereby made a part hereof by reference as though set forth in its entirety. Capitalized terms used herein and not otherwise defined shall have the meaning assigned thereto in the Security Agreement. The undersigned Grantor and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest in the patents and patent applications set forth on Schedule 1 attached hereto (i) may only be terminated in accordance with the terms of the Security Agreement and (ii) is not to be construed as an assignment of any patent or patent application. Very truly yours, ---------------------------------- [Grantor] By: ------------------------------- Name: Title: Acknowledged and Accepted: BANK OF AMERICA, N.A., as Administrative Agent By: ----------------------------------------- Name: Title: 21 SCHEDULE 5(d)(iii) GRANT OF SECURITY INTEREST IN TRADEMARKS United States Patent and Trademark Office Ladies and Gentlemen: Please be advised that the undersigned Grantor hereby grants a continuing security interest in and continuing lien upon, the trademarks and trademark applications set forth on Schedule 1 attached hereto to the Administrative Agent for the ratable benefit of the holders of the Secured Obligations, pursuant to and as more fully set forth in the Security Agreement dated as of July 31, 2003 (the "Security Agreement") by and among the Grantors party thereto (each an "Grantor" and collectively, the "Grantors") and Bank of America, N.A., as Administrative Agent (the "Administrative Agent") for the holders of the Secured Obligations referenced therein, which Security Agreement is hereby made a part hereof by reference as though set forth in its entirety. Capitalized terms used herein and not otherwise defined shall have the meaning assigned thereto in the Security Agreement. The undersigned Grantor and the Administrative Agent, on behalf of the holders of the Secured Obligations, hereby acknowledge and agree that the security interest in the trademarks and trademark applications set forth on Schedule 1 attached hereto (i) may only be terminated in accordance with the terms of the Security Agreement and (ii) is not to be construed as an assignment of any trademark or trademark application. Very truly yours, ---------------------------------- [Grantor] By: ------------------------------- Name: Title: Acknowledged and Accepted: BANK OF AMERICA, N.A., as Administrative Agent By: ----------------------------------------- Name: Title: 22 SCHEDULE 5(e) [FORM OF ACCOUNT CONTROL AGREEMENT] THIS DEPOSIT ACCOUNT CONTROL AGREEMENT (this "Agreement") is entered into as of ____________ ___, 20___, among Westlake Chemical Corporation (the "Company"), Bank of America, N.A. (the "Bank"), and Bank of America, N.A, in its capacity as administrative agent (in such capacity, the "Agent") for the Lenders under that certain Credit Agreement (the "Credit Agreement") dated as of July 31, 2003 among the Company, the Guarantors identified therein, the Lenders identified therein and Agent. Capitalized terms used and not otherwise defined herein shall have the meanings provided in the Credit Agreement. W I T N E S S E T H WHEREAS, a $120 million credit facility has been established in favor of the Company pursuant to the terms of the Credit Agreement. WHEREAS, this Agreement is required under the terms of the Credit Agreement and the Security Agreement. NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: A. Bank has agreed to establish and maintain for Company deposit account number _______________ (the "Collateral Account"). B. Company has assigned to Agent a security interest in the Collateral Account. C. Company, Agent and Bank are entering into this Agreement to evidence Agent's security interest in the Collateral Account and to provide for the disposition of amounts deposited in the Collateral Account. Accordingly, Company, Agent and Bank agree as follows: 1. (a) This Agreement evidences Agent's control over the Collateral Account. Notwithstanding anything to the contrary in the agreement between Bank and Company governing the Collateral Account, Bank will comply with instructions originated by Agent as set forth herein directing the disposition of funds in the Collateral Account without further consent of the Company or any other Person. (b) Company represents and warrants to Agent and Bank that it has not assigned or granted a security interest in the Collateral Account, except to Agent. (c) Company will not permit the Collateral Account to become subject to any other pledge, assignment, lien, charge or encumbrance of any kind, other than Agent's security interest referred to herein. 2. Bank shall prevent Company from making any withdrawals from the Collateral Account without the prior consent of the Agent. Company covenants to Agent it will not close the Collateral Account. Bank shall have no liability in the event Company breaches this covenant to Agent. Funds are not available if, in the reasonable determination of Bank, they are subject to a hold, dispute or legal process preventing their withdrawal. 3. Bank agrees it shall not offset, charge, deduct or otherwise withdraw funds from the Collateral Account, except as permitted by Section 4, until it has been advised in writing by Agent that all of 23 Company's obligations that are secured by the Collateral Account are paid in full. Agent shall notify Bank promptly in writing upon payment in full of Company's obligations. 4. Bank is permitted to charge the Collateral Account: (a) for its fees and charges relating to the Collateral Account and other fees associated with this Agreement; and (b) in the event any check deposited into the Collateral Account is returned unpaid for any reason or for any breach of warranty claim. 5. (a) If the balances in the Collateral Account are not sufficient to compensate Bank for any fees or charges due Bank in connection with the Collateral Account or this Agreement, Company agrees to pay Bank on demand the amount due Bank. Company will have breached this Agreement if it has not paid Bank, within five days after such demand, the amount due Bank. (b) If the balances in the Collateral Account are not sufficient to compensate Bank for any returned check, Company agrees to pay Bank on demand the amount due Bank. If Company fails to so pay Bank immediately upon demand, Agent agrees to pay Bank within five days after Bank's demand to Agent to pay any amount received by Agent with respect to such returned check. The failure to so pay Bank shall constitute a breach of this Agreement. 6. (a) Bank will not be liable to Company or Agent for any expense, claim, loss, damage or cost ("Damages") arising out of or relating to its performance under this Agreement other than those Damages which result directly from its acts or omissions constituting gross negligence or intentional misconduct. (b) In no event will Bank be liable for any special, indirect, exemplary or consequential damages, including but not limited to lost profits. (c) Bank will be excused from failing to act or delay in acting, and no such failure or delay shall constitute a breach of this Agreement or otherwise give rise to any liability of Bank, if (i) such failure or delay is caused by circumstances beyond Bank's reasonable control, including but not limited to legal constraint, emergency conditions, action or inaction of governmental, civil or military authority, fire, strike, lockout or other labor dispute, war, riot, theft, flood, earthquake or other natural disaster, breakdown of public or private or common carrier communications or transmission facilities, equipment failure, or negligence or default of Company or Agent or (ii) such failure or delay resulted from Bank's reasonable belief that the action would have violated any guideline, rule or regulation of any governmental authority. (d) Bank shall have no duty to inquire or determine whether Company's obligations to Agent are in default or whether Agent is entitled to provide the Notice to Bank. Bank may rely on notices and communications it believes in good faith to be genuine and given by the appropriate party. (e) Notwithstanding any of the other provisions in this Agreement, in the event of the commencement of a case pursuant to Title 11, United States Code, filed by or against Company, or in the event of the commencement of any similar case under then applicable federal or state law providing for the relief of debtors or the protection of creditors by or against Company, Bank may act as Bank deems necessary to comply with all applicable provisions of governing statutes and shall not be in violation of this Agreement as a result. (f) Bank shall be permitted to comply with any writ, levy order or other similar judicial or regulatory order or process concerning the Collateral Account and shall not be in violation of this Agreement for so doing. 24 7. Company and Agent shall jointly and severally indemnify Bank against, and hold it harmless from, any and all liabilities, claims, costs, expenses and damages of any nature (including but not limited to allocated costs of staff counsel, other reasonable attorney's fees and any fees and expenses) in any way arising out of or relating to disputes or legal actions concerning Bank's provision of the services described in this Agreement. This section does not apply to any cost or damage attributable to the gross negligence or intentional misconduct of Bank. Company's and Agent's obligations under this section shall survive termination of this Agreement. 8. Company and Agent shall jointly and severally pay to Bank, upon receipt of Bank's invoice, all costs, expenses and attorneys' fees (including allocated costs for in-house legal services) incurred by Bank in connection with the enforcement of this Agreement and any instrument or agreement required hereunder, including but not limited to any such costs, expenses and fees arising out of the resolution of any conflict, dispute, motion regarding entitlement to rights or rights of action, or other action to enforce Bank's rights in a case arising under Title 11, United States Code. Company agrees to pay Bank, upon receipt of Bank's invoice, all costs, expenses and attorneys' fees (including allocated costs for in-house legal services) incurred by Bank in the preparation and administration of this Agreement (including any amendments hereto or instruments or agreements required hereunder). 9. Termination and Assignment of this Agreement shall be as follows: (a) Agent may terminate this Agreement by providing notice to Company and Bank that all of Company's obligations which are secured by the Collateral Account are paid in full. Agent may also terminate or it may assign this Agreement upon 30 days' prior written notice to Company and Bank. Bank may terminate this Agreement upon 30 days' prior written notice to Company and Agent. Company may not terminate this Agreement except with the written consent of Agent and upon prior written notice to Bank. (b) Notwithstanding subsection 9(a), Bank may terminate this Agreement at any time by written notice to Company and Agent if either Company or Agent breaches any of the terms of this Agreement, or any other agreement with Bank. Furthermore, as such time as the Obligations under the Credit Agreement have been Fully Satisfied, any remaining balances in the Collateral Account shall be distributed to the Company. 10. (a) Each party represents and warrants to the other parties that (i) this Agreement constitutes its duly authorized, legal, valid, binding and enforceable obligation; (ii) the performance of its obligations under this Agreement and the consummation of the transactions contemplated hereunder will not (A) constitute or result in a breach of its certificate or articles of incorporation, by-laws or partnership agreement, as applicable, or the provisions of any material contract to which it is a party or by which it is bound or (B) result in the violation of any law, regulation, judgment, decree or governmental order applicable to it; and (iii) all approvals and authorizations required to permit the execution, delivery, performance and consummation of this Agreement and the transactions contemplated hereunder have been obtained. (b) The parties each agree that it shall be deemed to make and renew each representation and warranty in subsection 10(a) on and as of each day on which Company uses the services set forth in this Agreement. 11. (a) This Agreement may be amended only by a writing signed by Company, Agent and Bank; except that Bank's charges are subject to change by Bank upon 30 days' prior written notice to Company. (b) This Agreement may be executed in counterparts; all such counterparts shall constitute but one and the same agreement. 25 (c) This Agreement controls in the event of any conflict between this Agreement and any other document or written or oral statement. This Agreement supersedes all prior understandings, writings, proposals, representations and communications, oral or written, of any party relating to the subject matter hereof. (d) This Agreement shall be interpreted in accordance with North Carolina law without reference to that state's principles of conflicts of law. 12. Any written notice or other written communication to be given under this Agreement shall be addressed to each party at its address set forth on the signature page of this Agreement or to such other address as a party may specify in writing. Except as otherwise expressly provided herein, any such notice shall be effective upon receipt. 14. Nothing contained in the Agreement shall create any agency, fiduciary, joint venture or partnership relationship between Bank and Company or Agent. 26 IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers as of the day and year first above written. Company: WESTLAKE CHEMICAL Address for notices: CORPORATION By: ------------------------------- Name: Title: Agent: Bank of America, N.A. Address for notices: By: ------------------------------- Name: Title: Bank: Bank of America, N.A. Address for notices: By: ------------------------------- Name: Title: Exhibit 2.01 FORM OF NEW COMMITMENT AGREEMENT Reference is made to the Credit Agreement dated as of July 31, 2003 among Westlake Chemical Corporation, a Delaware corporation (the "Borrower"), certain Subsidiaries of the Borrower as Guarantors, the Lenders identified therein and Bank of America, N.A., as Administrative Agent (as the same may be amended, modified, extended or restated from time to time, the "Credit Agreement"). All of the defined terms in the Credit Agreement are incorporated herein by reference. 1. Effective as of the Effective Date set forth below, the undersigned Lender hereby confirms its Additional Commitment, in an aggregate principal amount of up to the amount (and the Pro Rata Share) specified below to make Tranche B Term Loans in accordance with the provisions of Section 2.01 of the Credit Agreement. If the undersigned Lender is already a Lender under the Credit Agreement, such Lender acknowledges and agrees that such Additional Commitment is in addition to any existing Tranche B Term Loan Commitment of such Lender under the Credit Agreement. If the undersigned Lender is not already a Lender under the Credit Agreement, such Lender hereby (a) represents and warrants that it has full power and authority, and has taken all action necessary, to execute and deliver this New Commitment Agreement and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (b) acknowledges, agrees and confirms that, by its execution of this New Commitment Agreement, such Lender will, as of the Effective Date, be a party to the Credit Agreement and the Intercreditor Agreement and be bound by the provisions of the Credit Agreement and, to the extent of its Commitment, have the rights and obligations of a Lender under the Credit Agreement and of a Bank under the Intercreditor Agreement and (c) attaches all documentation required to be delivered pursuant to Section 11.15 of the Credit Agreement. 2. This New Commitment Agreement shall be governed by and construed in accordance with the laws of the State of New York. Amount of Additional Commitment $ --------------- Tranche B Term Loan Commitment (after giving effect to the Additional Commitment) $ --------------- Pro Rata Share (after giving effect to the Additional Commitment) % --------------- Effective Date of Additional Commitment , 20 --------- -- The terms set forth above are hereby agreed to: [LENDER] Address for Notices: ----------------------------- By: ----------------------------- ---------------------------- ----------------------------- Title: Ph: -------------------------- Fx: -------------------------- CONSENTED TO: BANK OF AMERICA, N.A., as Administrative Agent WESTLAKE CHEMICAL CORPORATION By: By: ------------------------------ ------------------------------- Title: Title: 29 Exhibit 2.02 FORM OF LOAN NOTICE Date: ---------- To: Bank of America, N.A., as Administrative Agent Re: Credit Agreement (as amended, modified, supplemented and extended from time to time, the "Credit Agreement") dated as of July 31, 2003 among Westlake Chemical Corporation, a Delaware corporation (the "Borrower"), the Guarantors identified therein, the Lenders identified therein, and Bank of America, N.A., as Administrative Agent. Capitalized terms used but not otherwise defined herein have the meanings provided in the Credit Agreement. Ladies and Gentlemen: The undersigned hereby requests a Loan in the form of [a Borrowing][a conversion][a continuation of Eurodollar Rate Loans]: 1. On ______________ (a Business Day). 2. In the amount of $[___________], comprised of [Base Rate Loans][Eurodollar Rate Loans with an Interest Period of [______] months. With respect to the Borrowing of this Loan, the Borrower hereby represents and warrants that the conditions set forth in Section 5.02 of the Credit Agreement have been satisfied on and as of the date of such Borrowing. WESTLAKE CHEMICAL CORPORATION, a Delaware corporation By: ------------------------------------ Name: Title: Exhibit 7.13 FORM OF JOINDER AGREEMENT THIS JOINDER AGREEMENT (the "Agreement"), dated as of _____________, 20__, is by and between _____________________, a ___________________ (the "Subsidiary"), and BANK OF AMERICA, N.A., in its capacity as Administrative Agent under that certain Credit Agreement (as it may be amended, modified, restated or supplemented from time to time, the "Credit Agreement"), dated as of July 31, 2003, by and among Westlake Chemical Corporation, a Delaware corporation (the "Borrower"), the Guarantors, the Lenders and Bank of America, N.A., as Administrative Agent. All of the defined terms in the Credit Agreement are incorporated herein by reference. The Loan Parties are required by Section 7.12 of the Credit Agreement to cause the Subsidiary to become a "Guarantor". Accordingly, the Subsidiary hereby agrees as follows with the Agent, for the benefit of the Lenders: 1. The Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this Agreement, the Subsidiary will be deemed to be a party to the Credit Agreement and a "Guarantor" for all purposes of the Credit Agreement, and shall have all of the obligations of a Guarantor thereunder as if it had executed the Credit Agreement. The Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions applicable to the Guarantors contained in the Credit Agreement. Without limiting the generality of the foregoing terms of this paragraph 1, the Subsidiary hereby jointly and severally together with the other Guarantors, guarantees to each Lender and the Agent, as provided in Article IV of the Credit Agreement, the prompt payment and performance of the Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof. 2. The Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this Agreement, the Subsidiary will be deemed to be a party to the Security Agreement, and shall have all the obligations of a "Grantor" (as such term is defined in the Security Agreement) thereunder as if it had executed the Security Agreement. The Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Security Agreement. Without limiting generality of the foregoing terms of this paragraph 2, the Subsidiary hereby grants to the Agent, for the benefit of the Lenders, a continuing security interest in, and a right of set off against any and all right, title and interest of the Subsidiary in and to the Collateral (as such term is defined in Section 2 of the Security Agreement) of the Subsidiary. The Subsidiary hereby represents and warrants to the Agent that: (i) The Subsidiary's chief executive office, tax payer identification number, organization identification number, and chief place of business are (and for the prior four months have been) located at the locations set forth on Schedule 1 attached hereto and the Subsidiary keeps its books and records at such locations. (ii) The type of Collateral owned by the Subsidiary and the location of all Collateral owned by the Subsidiary is as shown on Schedule 2 attached hereto. (iii) The Subsidiary's legal name and jurisdiction of incorporation is as shown in this Agreement and the Subsidiary has not in the past four months changed its name, been party to a merger, consolidation or other change in structure or used any tradename except as set forth in Schedule 3 attached hereto. (iv) The patents, copyrights, and trademarks listed on Schedule 4 attached hereto constitute all of the registrations and applications for the patents and trademarks owned by the Subsidiary. 3. The address of the Subsidiary for purposes of all notices and other communications is ____________________, ____________________________, Attention of ______________ (Facsimile No. ____________). 4. The Subsidiary hereby waives acceptance by the Agent and the Lenders of the guaranty by the Subsidiary under Section 4 of the Credit Agreement upon the execution of this Agreement by the Subsidiary. 5. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute one contract. 6. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the Subsidiary has caused this Joinder Agreement to be duly executed by its authorized officers, and the Agent, for the benefit of the Lenders, has caused the same to be accepted by its authorized officer, as of the day and year first above written. [SUBSIDIARY] By: Name: Title: Acknowledged and accepted: BANK OF AMERICA, N.A., as Administrative Agent By: Name: Title: 32 Schedule 1 TO FORM OF JOINDER AGREEMENT [Chief Executive Office, Tax Identification Number, Organization Identification Number and Chief Place of Business of Subsidiary] 33 Schedule 2 TO FORM OF JOINDER AGREEMENT [Types and Locations of Collateral] 34 Schedule 3 TO FORM OF JOINDER AGREEMENT [Tradenames] 35 Schedule 4 TO FORM OF JOINDER AGREEMENT [Patents, Copyrights, and Trademarks] 36 Exhibit 11.07 FORM OF ASSIGNMENT AND ASSUMPTION This Assignment and Assumption (this "Assignment and Assumption") is dated as of the Effective Date set forth below and is entered into by and between ____________________ (the "Assignor") and _______________________ (the "Assignee"). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the "Credit Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full. For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor's rights and obligations as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the "Assigned Interest"). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor. 1. Assignor: ------------------------------ 2. Assignee: ------------------------------ 3. Borrower: ------------------------------ 4. Agent: Bank of America, N.A., as the administrative agent under the Credit Agreement 5. Credit Agreement: The $120,000,000 Credit Agreement dated as of July 31, 2003 among Westlake Chemical Corporation, a Delaware corporation, the Guarantors party thereto, the Lenders parties thereto and Bank of America, N.A., as Agent. 6. Assigned Interest:
Aggregate Amount of Amount of Commitment/Loans for Commitment/Loans Percentage Assigned of Facility Assigned all Lenders Assigned Commitment/Loans ----------------- -------------------- ---------------- ---------------------- Tranche B Term Loan $ $ % $ $ % $ $ %
[7. Trade Date: ] ----------------- Effective Date: _____________ ___, 20___ [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.] The terms set forth in this Assignment and Assumption are hereby agreed to: ASSIGNOR [NAME OF ASSIGNOR] By: -------------------------------- Title: ASSIGNEE [NAME OF ASSIGNEE] By: -------------------------------- Title: [Consented to and](1) Accepted: BANK OF AMERICA, N.A. as Agent By ----------------------------- Title: - ---------- (1) To be added only if the consent of the Agent is required by the terms of the Credit Agreement. 2 ANNEX 1 STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION 1. Representations and Warranties. 1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document. 1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 7.1 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Agent or any other Lender, (v) if it is a not a United States person under Section 7701(a)(30) of the Code, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee and (vi) Assignee is an "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended; and (b) agrees that (i) it will, independently and without reliance on the Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender. 2. Payments. From and after the Effective Date, the Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date. 3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York. EX-10.3 71 h08423exv10w3.txt WESTLAKE GROUP PERFORMANCE UNIT PLAN EXHIBIT 10.3 CONFORMED COPY WESTLAKE GROUP PERFORMANCE UNIT PLAN ---------- EFFECTIVE JANUARY 1, 1991 CONFIDENTIAL WESTLAKE GROUP PERFORMANCE UNIT PLAN ---------- EFFECTIVE JANUARY 1, 1991 1.0 PURPOSE 1.1 The objective of the Westlake Group Performance Unit Plan (The Plan) is to reward selected Key Employees with a piece of the future of the Company whose value the Key Employees help to enhance. 1.2 The Plan is designed to provide selected Key Employees with a sense of ownership in the Company and an opportunity to benefit from the increase in the value of the Company and thus to aid in attracting and retaining Key Employees. 2.0 ADMINISTRATION 2.1 The Chairman's Office (CO) shall have total and complete discretion to determine who receives Performance Units (PUs); the amount and value of PUs; and the time of issuance of PUs. 2.2 No decision by CO shall be considered an ongoing rule or regulation unless so expressly stated by CO. 2.3 Decisions and determinations of CO shall be final and binding on all parties. 3.0 VALUATION OF PUs 3.1 PU will be assigned a base value of $1.00. 3.2 PU will entitle Key Employee (when eligible to exercise) to a payment measured as follows: Book Value at Exercise Valuation Date -- Book Value at Grant Date Cash Value = ----------------------------------------------------------------- x $1.00 x # of Vested Units Book Value at Grant Date
3.3 Book Value to be defined by CO and determined on an annual basis and shall exclude any new infusions of capital or increases in capital through any mergers with any other company during the period between the grant date and the date of exercise. 3.4 Each new grant will be based upon the book value as of the date of the new grant. 3.5 At the discretion of the CO, a dividend may be withdrawn at any time which may reduce the original book value base for any grant year. To maintain the same growth ratio as if the dividend had been left in the business, the following ratio will be applied to the book value at the exercise date. In the event of multiple dividend withdrawals during the life of the grant, this ratio will be applied each time so that the rate of growth that otherwise may have occurred without the withdrawals will remain the same. Ratio (R) = Book Value Before Dividend Withdrawal (W/D) ------------------------------------------- Book Value Before W/D -- W/D Amount 4.0 EXERCISE OF PU RIGHTS 4.1 Vested PUs can only be converted to cash during April of each calendar year. 4.2 Conversion of PUs to cash extinguishes all rights associated with such converted PUs. 4.3 Upon an initial public offering of stock in any Westlake companies, a participant will be allowed to convert the value of unexercised PUs into common stock on a basis more favorable than the public offering price as determined by CO. 5.0 VESTING & AWARD CONDITIONS 5.1 50% of PUs awarded in each grant shall be vested 2 years after the date of award (vesting date) if the employee is still employed by Westlake at such time. Vested PUs are exercisable in any April following the vesting date. 5.2 Remaining 50% of PUs awarded in each grant shall be vested 7 years after date of award if employee is still employed by Westlake at such time. Vested PUs are exercisable in any April following the vesting date. 5.3 Key employees awarded PUs under the 1990 grant of the plan shall be vested in 50% of PUs after 1 year from the date of award and 50% after 6 years. All subsequent grants will follow the vesting schedule above. 5.4 If employment of participant terminates other than for death, disability, or normal retirement, participant may only exercise any vested PUs during the next exercise period. Failure to exercise during the next exercise period will result in the forfeiture of vested PUs. 5.5 All non-vested PUs held at termination of employment except in the case of death or disability or normal retirement shall be forfeited. 5.6 Upon total and permanent disability as determined by CO or upon death or normal retirement of a participant, all PUs become vested immediately and shall be automatically exercised during the next exercise period. In the case of death, the proceeds will be distributed to the participant's designated beneficiary. 5.7 All PUs must be exercised within 10 years of award pursuant to IRS guidelines. 6.0 CHANGE OF OWNERSHIP 6.1 In case of more than a 50% change in ownership of the stock or underlying assets of Westlake, a provision in the plan as determined by the CO will protect the rights of participants in previously granted awards, or the plan may be terminated with all outstanding vested units becoming eligible for exercise at a date as determined by CO. 7.0 LIMITATION OF LIABILITIES 7.1 CO reserves the right at any time to amend or terminate the PU Plan; but such action shall not adversely affect any plan participant (or beneficiary) with respect to vested PUs previously awarded and then any outstanding units at such termination will become exercisable at a date as determined by CO. 7.2 CO and Westlake Group of Companies shall not be liable to plan participants or beneficiaries for any decision, action or lack of action taken in connection with the PU Plan. 7.3 The Plan shall not establish any right on the part of employees to receive PUs except as solely determined by CO. 7.4 The Plan shall not give any employee or any other persons any rights or interest in any specific asset or assets of a Westlake Company. 7.5 The Plan shall not in any way be evidence of any agreement or understanding, express or implied, that a Westlake Company will employ a plan participant in any particular position or at any specific rate of pay. 8.0 TAX CONSIDERATIONS 8.1 Company is not allowed a current deduction for awards of PUs based upon current IRS guidelines. 8.2 Employees have no taxable income until PUs are exercised or deemed exercised at date of expiration. 8.3 Company gets a tax deduction for its taxable year which includes last day of employee's tax year in which the employee's payments becomes taxable. 9.0 BENEFICIARY 9.1 Each participant should select a beneficiary to receive payments payable at the first exercise period following the Key Employee's death. APPROVED: /s/ James Chao ---------------------- James Chao - President DATE: 1/24/92 ---------------------- EX-10.4 72 h08423exv10w4.txt CONTRIBUTION PLAN EXHIBIT 10.4 December 10, 1999 Mr. Warren Wilder 6645 Westchester Houston, TX 77005 Dear Warren: On behalf of the Westlake Group I am pleased to confirm our offer to you to join Westlake Management Services Corporation. The provisions of this offer are summarized below. POSITION: Vice President, Planning & Business Development LOCATION: Houston, Corporate Office REPORTING: You will report to the Chairman's Office. BASE PAY: $165,000 per year. QUARTERLY INCENTIVE: You will become eligible for participation in the Quarterly Incentive Plan. This plan currently has a maximum payment of 2% of annual base pay per quarter. MANAGEMENT BONUS: In this position you will be eligible for participation in the annual Management Incentive bonus program. Your target bonus will be 40%. As discussed the actual payment will be conditioned on the performance of the company and your individual contributions and may be higher or lower than the target. SIGN ON: As an incentive for you to accept our offer you will be paid a signing bonus of $100,000. This will be paid at the rate of $40,000 upon employment and $30,000 on January 1, 2001; and $30,000 on January 1, 2002. LONG TERM INCENTIVE: You will be eligible for awards under the provisions of the Performance Unit Plan (PUP) with a target grant equal to 40%. In this regard you will be provided an initial grant of units at the date of hire in an amount equal to a projected cash value of 40% of your base salary based upon the provisions of the plan. VACATION: You will be eligible for 3 weeks vacation during 2000. Beginning in 2001 you will become eligible for 4 weeks vacation. PROFIT SHARING: You will be eligible for any profit sharing payments made to employees at the discretion of the Chairman's Office. BENEFITS: You will be eligible for all benefits provided to regular, full-time employees of Westlake Management Services pursuant to the terms and conditions of the plan documents, as summarized in the packet provided to you earlier for your review. CLUB: You will become eligible for membership in the University Club under our Corporate Membership Plan. This will entitle you to athletic and dining privileges. START DATE: We would hope to have you on board no later than February 1, 2000. We can discuss the actual timing and logistics over the next few days. TERM OF EMPLOYMENT: Your employment with Westlake will be on an at-will basis without promissory or contractual rights to retention. However, in the event of your involuntary termination, other than for cause, death, retirement or disability, you will be provided with the following: 1. 12 months base pay at the then current rate. 2. An amount equal to the target bonus at the then current percentage, times the corporate performance factor as determined at the next bonus calculation period. 3. Continuation of health care benefits for a period equal to 12 months. Warren, this offer is contingent upon the following. - The successful completion of a drug-screen. Arrangements will be made to complete this as soon as possible. Linda Taylor from my office will make arrangements through our HR Department to assist you in this regard. - Verification of your eligibility to work in the United States under the provisions of the Immigration and Naturalization Services guidelines. (verified at employment) - Completion of all pre-employment reference and background checks, including a credit check. We are excited that you have elected to join us and look forward to many years of working with you as we continue to build the Westlake team. Once you have completed your review of the summary above please acknowledge your acceptance by signing below and returning a copy to my attention. Best regards, /s/ David R. Hansen David R. Hansen Sr. Vice President, Administration AGREED: /s/ Warren Wilder - ------------------------ Warren Wilder EX-10.5 73 h08423exv10w5.txt 1ST AMEND. FED. INCOME TAX ALLOCATION AGREEMENT EXHIBIT 10.5 CONFORMED COPY FIRST AMENDED AND RESTATED FEDERAL INCOME TAX ALLOCATION AGREEMENT Agreement made and entered into effective as of the 10th day of May 2002 by and among Gulf Polymer & Petrochemical, Inc. (GPPI), a Delaware corporation and Westlake Chemical Corporation, a Delaware corporation; Westlake Olefins Corporation, a Delaware corporation; Westlake Polymers LP, a Delaware limited partnership, as successor in interest to Westlake Polymers Corporation, a Delaware corporation; Westlake Petrochemicals LP, a Delaware limited partnership, as successor in interest to Westlake Petrochemicals Corporation, a Delaware corporation and WPE Corporation, a Delaware corporation; Westlake Management Services, Inc., a Delaware corporation; Westlake Resources Corporation, a Delaware corporation; Westlake Monomers Corporation, a Delaware corporation; Westlake PVC Corporation, a Delaware corporation; North American Pipe Corporation, a Delaware corporation; Westlake Vinyl Corporation, a Delaware corporation; Westlake International Corporation, a Delaware corporation; Van Buren Pipe Corporation (formerly NAPCO Manufacturing Corporation), a Delaware corporation; Westech Building Products, Inc. (formerly PVC Pipe Manufacturing Corporation), a Delaware corporation; WPT LP, a Delaware limited partnership, as successor in interest to WPT Corporation, a Delaware corporation; Westlake AR Corporation, a Delaware corporation; Westlake CA&O Corporation, a Delaware corporation; Westlake Polymer & Petrochemical, Inc., a Delaware corporation; Westlake Technology Corporation, a Delaware corporation; Westlake Styrene LP, a Delaware limited partnership, as successor in interest to Westlake Styrene Corporation, a Delaware Corporation; North American Profiles, Inc. (formerly Westech Windows, Inc.) a Delaware Corporation, Westlake Chemical Holdings, Inc., a Delaware Corporation; Westlake Chemical Manufacturing, Inc., a Delaware corporation; Westlake Chemical Investments, Inc., a Delaware corporation; Westlake Chemical Products, Inc., a Delaware corporation; Westlake Development Corporation, a Delaware corporation; Gramercy Chlor-Alkali Corporation, a Delaware corporation (collectively, the "GPPI Subsidiaries" and individually a "GPPI Subsidiary"). WHEREAS, GPPI is the common parent and each of the GPPI Subsidiaries is a member of an affiliated group of corporations within the meaning of Section 1504 (a) of the Internal Revenue Code of 1986, as amended (the "Code") (such affiliated group as constituted from time to time is hereinafter referred to as the GPPI Group) which files a consolidated federal income tax return; and WHEREAS, GPPI and the GPPI Subsidiaries agree that it would be mutually beneficial to provide for payments by the GPPI subsidiaries to GPPI (or by GPPI to the GPPI Subsidiaries) in respect of the federal income tax payable (or federal income tax receivable) by the GPPI Group; WHEREAS, GPPI and the GPPI subsidiaries entered into as of the 7th day of April, 1995 a Federal Income Tax Allocation Agreement which agreement was amended effective August 29, 1997, April 6, 2000 and January 1, 2001 to include additional GPPI subsidiaries (the agreement as amended being hereinafter referred to as the "Agreement"); and, WHEREAS, GPPI and the GPPI subsidiaries desire to amend and restate the Agreement in its entirety. NOW, THEREFORE, in consideration of their covenants contained herein, GPPI, and the GPPI Subsidiaries do hereby agree to amend and restate the Agreement in its entirety according to the terms contained herein. 1. Consolidated Federal Income Tax Returns and Payment of Consolidated Tax Liability If GPPI files consolidated federal income tax returns, so long as my GPPI Subsidiary is a member of the GPPI Group, it shall join in the filing by GPPI of its consolidated federal income tax return, and shall file such consents, elections and other documents as my be necessary or appropriate to carry out the purposes of this Section 1. GPPI shall be responsible for the payment of all federal income taxes for the GPPI Group to the Internal Revenue Service ("IRS"), and shall be entitled to receive all refunds of such taxes. GPPI is hereby irrevocably constituted the exclusive agent and attorney-in-fact of the GPPI Group to file such returns, pay such taxes, and take any action reasonably necessary or appropriate in connection with the determination of the ultimate liability of the GPPI Group for such tax, including, without limiting the generality of the foregoing, contesting the assessment of any deficiency, entering into any closing agreement, compromise or settlement, filing any amended return, and prosecuting any action for a refund, on behalf of the GPPI Group. 2. Payment by the GPPI Subsidiaries to GPPI in Respect of the GPPI Subsidiaries' Tax Liability (a) During each of GPPI's taxable years for which it files a consolidated federal income tax return in which any GPPI Subsidiary is a member (a "Consolidated Return Year") each GPPI Subsidiary will deposit with GPPI prior to or concurrent with the due date of each quarterly estimated tax payment of GPPI to the IRS, an amount established by an officer of GPPI and such GPPI Subsidiary as appropriately reflecting the estimated tax (if any) which would be payable by such GPPI Subsidiary on such date if it filed a separate federal income tax return for such year. On or prior to the 30th day following the filing of the GPPI Group's consolidated federal income tax return for a Consolidated Return Year, payment shall be made by such GPPI Subsidiary to GPPI or by GPPI to such GPPI Subsidiary, as appropriate, to reflect the difference between the amounts paid by such GPPI Subsidiary to GPPI in respect of the estimated taxes for such Consolidated Return Year and the amount of federal income tax which such GPPI Subsidiary would have paid for such Consolidated Return year if it had filed a separate federal income tax return for such year. (b) In computing the amount of a GPPI Subsidiary's federal income tax for any Consolidated Return Year under (a) above, such GPPI Subsidiary will not take into account any tax attribute from any prior years (computed on the basis described in (a) above) to the extent that any such attribute was the basis for a payment by GPPI to such GPPI Subsidiary with respect to a prior Consolidated Return Year under Section 3 below; provided, however, that such incident shall be taken into account (i) in the event such payment is refunded by such GPPI Subsidiary to GPPI pursuant to Section 4(a); or (ii) if such GPPI Subsidiary elects to refund such prior payments to GPPI. 3. Payment by GPPI to the GPPI Subsidiaries for Use of the GPPI Subsidiaries' Tax Attributes , If for any Consolidated Return Year, any GPPI Subsidiary has a tax attribute (such as a net operating loss or credit) that reduces the consolidated tax liability of the GPPI Group, GPPI shall pay to such GPPI Subsidiary the amount of such reduction within 30 days after the filing of the return, or in the case of a refund--30 days within receipt of a refund. If the GPPI Group has sufficient taxable income to absorb the tax attributes of all GPPI Subsidiaries that have such tax attributes, the amount of reduction shall equal the excess amount that would be paid by the GPPI Group if the GPPI Subsidiary did not have such tax attribute. If the GPPI Group does not have sufficient taxable income to absorb the tax attributes of all GPPI Subsidiaries, the amount of the reduction shall be computed as follows: First, as to each Subsidiary that has such tax attributes, compute the amount by which such GPPI Subsidiary's attributes would reduce the consolidated tax liability (the "Maximum Reduction") of the GPPI Group if the GPPI Group had sufficient taxable income to absorb the tax attributes of all GPPI Subsidiaries. Second, compute the actual tax reduction (the "Actual Reduction") in the consolidated tax liability of the GPPI Group caused by all the tax attributes of all GPPI Subsidiaries that have such tax attributes, such amount being the difference between the amount of the GPPI Group consolidated tax liability if the GPPI Subsidiaries had not incurred all such tax attributes over the actual consolidated tax liability of the GPPI Group. The amount of reduction attributable to the attributes of any GPPI Subsidiary shall then equal the product of the Actual Reduction and a fraction, the numerator of which is the Maximum Reduction with respect to such GPPI Subsidiary and the denominator of which is the aggregate Maximum Reductions for all GPPI Subsidiaries. 4. Audit Adjustments and Other Matters (a) In the event a "determination" within the meaning of section 1313 of the Code is reached or upon filing of an amended return which results in any adjustment to the tax returns of the GPPI Group or of any GPPI Subsidiary, the liabilities of GPPI and the GPPI Subsidiaries under Sections 2 and 3 above, including any applicable penalties and interest thereon, shall be redetermined to give effect to such adjustment. Payments by GPPI and the GPPI Subsidiaries to reflect any such finally-determined liabilities, including interest payable thereon measured from the date 120 days after the end of the year to which such adjustment relates, shall be made within 120 days after the determination causing such adjustment is reached. (b) If any payment required by this Agreement is not timely paid, interest shall accrue on the unpaid amount at the rate provided with respect to deficiencies under the Code or under any successor act. (c) An officer of GPPI and each GPPI Subsidiary affected by a particular calculation required under this Agreement will review such calculation and agree thereto. The final decision of such officers will control for financial reporting and for purposes of settlement between GPPI and such GPPI Subsidiary, unless otherwise determined by the respective Boards of Directors of GPPI and such GPPI Subsidiary. (d) GPPI and each GPPI Subsidiary will each have access to the books, records and papers of the other which bear upon the calculations and determinations hereunder and will each have the right to participate in and be kept fully informed about IRS examinations, similar state examinations, and other administrative and judicial proceedings which could bear upon the amount of payments hereunder. (e) For purposes of this Agreement, the federal income tax liability which each member of the GPPI Group would incur if it were filing a separate return, and any payments made in respect thereof, shall be determined in accordance with Treas. Reg. Section 1.1552-1(a)(2) Notwithstanding the foregoing, in the event that alternative minimum tax is payable, the alternative minimum tax shall be apportioned among GPPI and the GPPI Group in accordance with Sections 2 and 3 above. 5. Term (a) This First Amended and Restated Federal Income Tax Allocation Agreement shall retain the effective date of the Agreement, November 1, 1993, and shall continue in effect until terminated or canceled, as hereinafter provided. If terminated or canceled, the Agreement shall nevertheless continue to apply to all Consolidated Return Years and that part of any Consolidated Return Year ending prior to the date of cancellation or termination including adjustments pursuant to Section 4 with respect to such years. (b) This Agreement may be canceled by GPPI as of the first day of any month with respect to any GPPI Subsidiary by giving such GPPI Subsidiary notice of such cancellation. (c) This Agreement shall terminate with respect to a particular GPPI Subsidiary if GPPI and such GPPI Subsidiary cease to be included in the same consolidated federal income tax return of the GPPI Group. 6. General (a) This Agreement supersedes all prior agreements between GPPI and the GPPI Subsidiaries pertaining to the subject matter of this Agreement. (b) GPPI and each GPPI Subsidiary agree that if such Subsidiary merges into, is consolidated with, or transfers substantially all its assets to another consolidated corporation within the GPPI Group, such surviving corporation shall succeed to the rights and obligations of such GPPI Subsidiary herein, and all covenants and agreements in this Agreement shall be binding upon, and shall inure to the benefit of, such surviving corporation. (c) The parties intend that this Agreement shall apply to all corporations which are or which may become members of the GPPI Group. GPPI and the GPPI Subsidiaries agree that they will make every reasonable effort to ensure that any corporation that becomes a member of the GPPI Group agrees to be bound by the terms of this Agreement. (d) Except as provided in (b) above, this Agreement may not be assigned by any party without the other parties' prior written consent. (e) The validity, interpretation and performance of this Agreement will be controlled and construed under the laws of the State of Delaware. (f) This Agreement may be executed simultaneously in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (g) All notices hereunder shall be in writing. IN WITNESS WHEREOF, the. parties hereto have duly executed this Agreement on the day and year first above indicated. [SIGNATURES ON FOLLOWING PAGE] GULF POLYMER AND PETROCHEMICAL, INC. WESTLAKE CHEMICAL CORPORATION WESTLAKE OLEFINS CORPORATION WESTLAKE MANAGEMENT SERVICES, INC. WESTLAKE RESOURCES CORPORATION WESTLAKE MONOMERS CORPORATION WESTLAKE PVC CORPORATION WESTLAKE VINYL CORPORATION WESTLAKE INTERNATIONAL CORPORATION WESTLAKE CA&O CORPORATION WESTLAKE TECHNOLOGY CORPORATION WESTLAKE POLYMER & PETROCHEMICAL, INC WESTLAKE AR CORPORATION WESTLAKE CHEMICAL INVESTMENTS, INC. WESTLAKE CHEMICAL HOLDINGS, INC. WESTLAKE DEVELOPMENT CORPORATION GRAMERCY CHLOR-ALKALI CORPORATION By: /s/ A. Chao ------------------------------------------------ Albert Chao, President WESTLAKE POLYMERS LP WESTLAKE PETROCHEMICALS LP By: WESTLAKE CHEMICAL INVESTMENTS, INC., General Partner By: /s/ A. Chao ------------------------------------------------ Albert Chao, President WPT LP WESTLAKE STYRENE LP By: WESTLAKE CHEMICAL HOLDINGS, INC., General Partner By: /s/ A. Chao ------------------------------------------------ Albert Chao, President WESTLAKE CHEMICAL MANUFACTURING, INC. WESTLAKE CHEMICAL PRODUCTS, INC. By: /s/ Harold F. Kalbach, Jr. ------------------------------------------------ Harold F. Kalbach, Jr. Vice President NORTH AMERICAN PIPE CORPORATION VAN BUREN PIPE CORPORATION WESTECH BUILDING PRODUCTS, INC. NORTH AMERICAN PROFILES, INC. By: /s/ John A. Labuda ------------------------------------------------ John A. Labuda, President EX-10.6 74 h08423exv10w6.txt AMEND. TO TAX ALLOCATION AGREEMENT T EXHIBIT 10.6 CONFORMED COPY AMENDMENT TO THE FIRST AMENDED AND RESTATED FEDERAL INCOME TAX ALLOCATION AGREEMENT Amendment dated as of August 1, 2003 (this "Amendment") to the First Amended and Restated Federal Income Tax Allocation Agreement dated as of May 10, 2002 (the "Tax Allocation Agreement") by and among Gulf Polymer & Petrochemical, Inc., a Delaware corporation ("GPPI") and the following entities: Westlake Chemical Corporation, a Delaware corporation ("WCC"); Westlake Olefins Corporation, a Delaware corporation; Westlake Polymers LP, a Delaware limited partnership, as successor in interest to Westlake Polymers Corporation, a Delaware corporation; Westlake Petrochemicals LP, a Delaware limited partnership, as successor in interest to Westlake Petrochemicals Corporation, a Delaware corporation and WPE Corporation, a Delaware corporation; Westlake Management Services, Inc., a Delaware corporation; Westlake Resources Corporation, a Delaware corporation; Westlake Monomers Corporation, a Delaware corporation; Westlake PVC Corporation, a Delaware corporation; North American Pipe Corporation, a Delaware corporation; Westlake Vinyl Corporation, a Delaware corporation; Westlake International Corporation, a Delaware corporation; Van Buren Pipe Corporation (formerly NAPCO Manufacturing Corporation), a Delaware corporation; Westech Building Products, Inc. (formerly PVC Pipe Manufacturing Corporation), a Delaware corporation; WPT LP, a Delaware limited partnership, as successor in interest to WPT Corporation, a Delaware corporation; Westlake AR Corporation, a Delaware corporation; Westlake CA&O Corporation, a Delaware corporation; Westlake Polymer & Petrochemical, Inc., a Delaware corporation; Westlake Technology Corporation, a Delaware corporation; Westlake Styrene LP, a Delaware limited partnership, as successor in interest to Westlake Styrene Corporation, a Delaware Corporation; North American Profiles, Inc. (formerly Westech Windows, Inc.) a Delaware Corporation, Westlake Chemical Holdings, Inc., a Delaware Corporation; Westlake Chemical Manufacturing, Inc., a Delaware corporation; Westlake Chemical Investments, Inc., a Delaware corporation; Westlake Chemical Products, Inc., a Delaware corporation; Westlake Development Corporation, a Delaware corporation; Gramercy Chlor-Alkali Corporation, a Delaware corporation (collectively, the "GPPI Subsidiaries" and each individually a "GPPI Subsidiary"). WHEREAS, certain of the GPPI Subsidiaries have entered into an Indenture dated as of July 31, 2003 (the "Indenture") by and among WCC, each of the guarantors named therein and JPMorgan Chase Bank, as trustee, in regard to 8 3/4% Senior Notes due 2011 of WCC; and WHEREAS, the Indenture restricts certain payments by WCC and its Restricted Subsidiaries (as defined in the Indenture) and certain transactions between WCC and its Restricted Subsidiaries, on one hand, and any other affiliate thereof, on the other hand; and WHEREAS, GPPI and the GPPI Subsidiaries desire to amend the Tax Allocation Agreement to prohibit any payments by WCC and its Restricted Subsidiaries that would not constitute Permitted Payments to Parent (as defined in the Indenture); and WHEREAS, the Tax Allocation Agreement, as amended by this Amendment, is, taken as a whole, not materially less favorable to WCC and its Restricted Subsidiaries than the Tax Allocation Agreement prior to this Amendment; NOW, THEREFORE, in consideration of the premises and mutual agreements set forth herein and in the Tax Allocation Agreement, the parties agree as follows: Section 1. New Section 7 to Tax Allocation Agreement. The following is hereby added to the Tax Allocation Agreement as a new Section 7: 7. Prohibited Payments. Notwithstanding anything to the contrary in this Agreement, no payment shall be made under this Agreement by Westlake Chemical Corporation or any other GPPI Subsidiary that is a "Restricted Subsidiary" under the Indenture, dated as of July 31, 2003 (as amended and supplemented from time to time, the "Indenture"), by and among Westlake Chemical Corporation, each of the guarantors named therein and JPMorgan Chase Bank, as trustee, unless such payment would constitute a "Permitted Payment to Parent" under the Indenture. Section 2. Miscellaneous. (a) This Amendment shall be effective as of the date first above written, and, except as set forth herein, the Tax Allocation Agreement shall remain in full force and effect and shall be otherwise unaffected hereby. (b) This Amendment may be executed in two or more counterparts, each of which shall be deemed to be an original, but all for which together shall constitute one and the same instrument. (c) The validity, interpretation and performance of this Amendment will be controlled and construed under the laws of the State of Delaware. [Signature pages follow.] IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment on the date first indicated above. GULF POLYMER AND PETROCHEMICAL, INC. WESTLAKE CHEMICAL CORPORATION WESTLAKE OLEFINS CORPORATION WESTLAKE MANAGEMENT SERVICES, INC. WESTLAKE RESOURCES CORPORATION WESTLAKE VINYLS, INC., AS SUCCESSOR IN INTEREST TO WESTLAKE MONOMERS CORPORATION AND WESTLAKE CA&O CORPORATION WESTLAKE PVC CORPORATION WESTLAKE VINYL CORPORATION WESTLAKE INTERNATIONAL CORPORATION WESTLAKE TECHNOLOGY CORPORATION WESTLAKE POLYMER & PETROCHEMICAL, INC. WESTLAKE AR CORPORATION WESTLAKE CHEMICAL INVESTMENTS, INC. WESTLAKE CHEMICAL HOLDINGS, INC. WESTLAKE DEVELOPMENT CORPORATION GRAMERCY CHLOR-ALKALI CORPORATION GVGP, INC. By: /s/ A. Chao --------------------------------------- Albert Chao, President WESTLAKE POLYMERS LP WESTLAKE PETROCHEMICALS LP BY: WESTLAKE CHEMICAL INVESTMENTS, INC., GENERAL PARTNER By: /s/ A. Chao --------------------------------------- Albert Chao, President WPT LP WESTLAKE STYRENE LP BY: WESTLAKE CHEMICAL HOLDINGS, INC., GENERAL PARTNER By: /s/ A. Chao --------------------------------------- Albert Chao, President WESTLAKE CHEMICAL MANUFACTURING, INC. WESTLAKE CHEMICAL PRODUCTS, INC. By: /s/ Harold. F. Kalbach, Jr. --------------------------------------- Harold F. Kalbach, Jr., Vice President NORTH AMERICAN PIPE CORPORATION VAN BUREN PIPE CORPORATION WESTECH BUILDING PRODUCTS, INC. NORTH AMERICAN PROFILES, INC. By: /s/ John A. Labuda --------------------------------------- John A. Labuda, President GEISMAR VINYLS COMPANY LP BY: GVGP, INC., GENERAL PARTNER By: /s/ A. Chao --------------------------------------- Albert Chao, President EX-12.1 75 h08423exv12w1.txt COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.1 WESTLAKE CHEMICAL CORPORATION STATEMENT SETTING FORTH DETAIL FOR COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (millions of dollars)
Six Months Ended Year Ended December 31, June 30, ------------------------------------------------------- -------------------- 1998 1999 2000 2001 2002 2002 2003 -------- -------- -------- -------- -------- -------- -------- Fixed charges: Interest expense $ 35.9 $ 42.0 $ 32.0 $ 31.9 $ 32.9 $ 16.2 $ 16.5 Capitalized interest 6.3 0.0 0.0 1.6 0.4 0.4 0.0 Amortization of debt costs 0.7 0.8 2.0 1.5 3.1 0.9 2.2 Portion of rentals representative of interest 6.3 6.2 6.3 6.6 6.1 2.8 3.0 -------- -------- -------- -------- -------- -------- -------- Total fixed charges $ 49.2 $ 49.0 $ 40.3 $ 41.6 $ 42.5 $ 20.3 $ 21.7 ======== ======== ======== ======== ======== ======== ======== Earnings before fixed charges: Pretax income $ (68.8) $ 84.3 $ 89.8 $ (118.6) $ (16.6) $ (32.4) $ 20.7 Fixed charges 49.2 49.0 40.3 41.6 42.5 20.3 21.7 Equity investment (income)/loss (0.6) (0.2) 0.0 (1.2) (0.8) (0.8) (0.8) Equity investment distribution 0.0 0.0 0.0 0.0 0.7 0.0 0.0 Capitalized interest (6.3) 0.0 0.0 (1.6) (0.4) (0.4) 0.0 Amortization of capitalized interest 1.4 1.7 1.6 1.7 1.7 0.9 0.8 -------- -------- -------- -------- -------- -------- -------- Total earnings before fixed charges $ (25.1) $ 134.8 $ 131.7 $ (78.1) $ 27.1 ($ 12.4) $ 42.4 ======== ======== ======== ======== ======== ======== ======== Ratio of earnings to fixed charges: Earnings before fixed charges $ (25.1) $ 134.8 $ 131.7 $ (78.1) $ 27.1 $ (12.4) $ 42.4 Fixed charges $ 49.2 $ 49.0 $ 40.3 $ 41.6 $ 42.5 $ 20.3 $ 21.7 Ratio of earnings to fixed charges -- 2.8 3.3 -- -- -- 2.0 ======== ======== ======== ======== ======== ======== ========
EX-21 76 h08423exv21.txt SUBSIDIARIES OF THE REGISTRANT . . . EXHIBIT 21 WESTLAKE CHEMICAL CORPORATION SUBSIDIARIES
JURISDICTION OF INCORPORATION COMPANY OR ORGANIZATION Geismar Holdings, Inc. Delaware Geismar Vinyls Company LP Delaware Gramercy Chlor-Alkali Corporation Delaware GVGP, Inc. Delaware North American Pipe Corporation Delaware North American Profiles, Inc. Delaware North American Profiles Limited Canada Van Buren Pipe Corporation Delaware Westech Building Products, Inc. Delaware Westlake AR Corporation Delaware Westlake Chemical Holdings, Inc. Delaware Westlake Chemical Investments, Inc. Delaware Westlake Chemical Manufacturing, Inc. Delaware Westlake Chemical Products, Inc. Delaware Westlake Development Corporation Delaware Westlake International Investments Corporation British Virgin Islands Westlake Management Services, Inc. Delaware Westlake Olefins Corporation Delaware Westlake Overseas Corporation U.S. Virgin Islands Westlake Petrochemicals LP Delaware Westlake Polymers LP Delaware Westlake Profiles Limited Canada Westlake PVC Corporation Delaware Westlake Resources Corporation Delaware Westlake Styrene LP Delaware Westlake Vinyl Corporation Delaware Westlake Vinyls, Inc. Delaware WPT LP Delaware
GEISMAR HOLDINGS, INC. GVGP, INC. SUBSIDIARIES
JURISDICTION OF INCORPORATION COMPANY OR ORGANIZATION Geismar Vinyls Company LP Delaware
NORTH AMERICAN PIPE CORPORATION SUBSIDIARIES
JURISDICTION OF INCORPORATION COMPANY OR ORGANIZATION North American Profiles, Inc. Delaware Van Buren Pipe Corporation Delaware Westech Building Products, Inc. Delaware
WESTLAKE CHEMICAL HOLDINGS, INC. WESTLAKE CHEMICAL MANUFACTURING, INC. SUBSIDIARIES
JURISDICTION OF INCORPORATION COMPANY OR ORGANIZATION Westlake Styrene LP Delaware WPT LP Delaware
WESTLAKE CHEMICAL INVESTMENTS, INC. WESTLAKE CHEMICAL PRODUCTS, INC. SUBSIDIARIES
JURISDICTION OF INCORPORATION COMPANY OR ORGANIZATION Westlake Petrochemicals LP Delaware Westlake Polymers LP Delaware Westlake Overseas Corporation U.S. Virgin Islands
WESTLAKE MANAGEMENT SERVICES, INC. SUBSIDIARIES
JURISDICTION OF INCORPORATION COMPANY OR ORGANIZATION Westlake AR Corporation Delaware
WESTLAKE OLEFINS CORPORATION SUBSIDIARIES
JURISDICTION OF INCORPORATION COMPANY OR ORGANIZATION Westlake AR Corporation Delaware Westlake Chemical Investments, Inc. Delaware Westlake Chemical Products, Inc. Delaware Westlake International Investments Corporation British Virgin Islands Westlake Management Services, Inc. Delaware Westlake Overseas Corporation U.S. Virgin Islands Westlake Petrochemicals LP Delaware Westlake Polymers LP Delaware Westlake Resources Corporation Delaware
WESTLAKE POLYMERS LP SUBSIDIARIES
JURISDICTION OF INCORPORATION COMPANY OR ORGANIZATION Westlake Overseas Corporation U.S. Virgin Islands
WESTLAKE VINYL CORPORATION SUBSIDIARIES
JURISDICTION OF INCORPORATION COMPANY OR ORGANIZATION Geismar Holdings, Inc. Delaware Geismar Vinyls Company LP Delaware GVGP, Inc. Delaware Westlake PVC Corporation Delaware Westlake Vinyls, Inc. Delaware
EX-23.1 77 h08423exv23w1.txt CONSENT OF PRICEWATERHOUSECOOPERS LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in this Registration Statement on Form S-4 of Westlake Chemical Corporation of our report dated March 24, 2003, except for Notes 17 and 18 which are as of June 23, 2003, and Note 19 which is as of September 19, 2003, relating to the consolidated financial statements and financial statement schedule of Westlake Chemical Corporation, which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement. PricewaterhouseCoopers LLP Houston, Texas September 19, 2003 EX-25.1 78 h08423exv25w1.txt STATEMENT OF ELIGIBILITY ON FORM T-1 EXHIBIT 25.1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE --------------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________ --------------------------------------------------- JPMORGAN CHASE BANK (Exact name of trustee as specified in its charter) NEW YORK 13-4994650 State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 PARK AVENUE NEW YORK, NEW YORK 10017 (Address of principal executive offices) (Zip Code) WILLIAM H. MCDAVID GENERAL COUNSEL 270 PARK AVENUE NEW YORK, NEW YORK 10017 TELEPHONE: (212) 270-2611 (Name, address and telephone number of agent for service) WESTLAKE CHEMICAL CORPORATION (Exact name of obligor as specified in its charter) SEE TABLE OF ADDITIONAL REGISTRANT GUARANTORS BELOW DELAWARE 76-0346924 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 2801 POST OAK BOULEVARD, SUITE 600 HOUSTON, TEXAS 77056 (Address of principal executive offices) (Zip Code) 8 3/4% SENIOR NOTES DUE 2011 (Title of indenture securities) ================================================================================ TABLE OF ADDITIONAL REGISTRANT GUARANTORS
ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA STATE OR OTHER CODE, OF REGISTRANT JURISDICTION OF IRS EMPLOYER GUARANTOR'S PRINCIPAL NAME INCORPORATION ID NO. EXECUTIVE OFFICE ---- --------------- ------------ ---------------------- Geismar Holdings, Inc. Delaware 33-1036002 * Geismar Vinyls Company LP Delaware 06-1641487 * Gramercy Chlor-Alkali Corporation Delaware 76-0669252 * GVGP, Inc. Delaware 71-0921650 * North American Pipe Corporation Delaware 76-0370735 * North American Profiles, Inc. Delaware 76-0636880 * Van Buren Pipe Corporation Delaware 76-0441452 * Westech Building Products, Inc. Delaware 76-0498816 * Westlake Chemical Holdings, Inc. Delaware 76-0664308 * Westlake Chemical Investments, Inc. Delaware 76-0664309 * Westlake Chemical Manufacturing, Inc. Delaware 51-0405162 * Westlake Chemical Products, Inc. Delaware 51-0405164 * Westlake Development Corporation Delaware 76-0666307 * Westlake Management Services, Inc. Delaware 76-0321065 * Westlake Olefins Corporation Delaware 52-1629821 * Westlake Overseas Corporation United States 66-0443812 * Virgin Islands Westlake Petrochemicals LP Delaware 76-0553330 * Westlake Polymers LP Delaware 76-0144230 * Westlake PVC Corporation Delaware 76-0346192 * Westlake Resources Corporation Delaware 76-0321064 * Westlake Styrene LP Delaware 76-0294926 * Westlake Vinyl Corporation Delaware 76-0414632 * Westlake Vinyls, Inc. Delaware 76-0542667 * WPT LP Delaware 76-0469048 *
* The address for each Additional Registrant Guarantor is 2801 Post Oak Boulevard, Suite 600, Houston, Texas 77056, and the telephone number for each is (713) 960-9111. GENERAL ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551. Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. ITEM 2. AFFILIATIONS WITH THE OBLIGOR AND GUARANTORS. IF THE OBLIGOR OR ANY GUARANTOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. ITEMS 3 THROUGH 15, INCLUSIVE, ARE NOT APPLICABLE BY VIRTUE OF T-1 GENERAL INSTRUCTION B. [REMAINDER OF PAGE INTENTIONALLY BLANK] ITEM 16. LIST OF EXHIBITS LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the Restated Organization Certificate of the Trustee dated March 25, 1997 and the Certificate of Amendment dated October 22, 2001 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-76894, which exhibit is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which exhibit is incorporated by reference). On November 11, 2001, in connection with the merger of The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York, the surviving corporation was renamed JPMorgan Chase Bank. 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-76894, which exhibit is incorporated by reference.) 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which exhibit is incorporated by reference). On November 11, 2001, in connection with the merger of The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York, the surviving corporation was renamed JPMorgan Chase Bank. 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, JPMorgan Chase Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Houston and State of Texas, on the 15th day of September, 2003. JPMORGAN CHASE BANK By: /s/ Dennis J. Roemlein ------------------------------ Dennis J. Roemlein Vice President Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF JPMorgan Chase Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business June 30, 2003, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. DOLLAR AMOUNTS IN MILLION ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ................... $ 22,657 Interest-bearing balances ............................................ 10,600 Securities: Held to maturity securities................................................ 268 Available for sale securities.............................................. 76,771 Federal funds sold and securities purchased under agreements to resell .... Federal funds sold in domestic offices................................ 3,844 Securities purchased under agreements to resell....................... 86,290 Loans and lease financing receivables: Loans and leases held for sale........................................ 31,108 Loans and leases, net of unearned income......................$166,046 Less: Allowance for loan and lease losses..................... 3,735 Loans and leases, net of unearned income and allowance ............... 162,311 Trading Assets............................................................. 186,546 Premises and fixed assets (including capitalized leases)................... 6,142 Other real estate owned.................................................... 133 Investments in unconsolidated subsidiaries and associated companies........ 696 Customers' liability to this bank on acceptances outstanding............... 225 Intangible assets Goodwill.............................................................. 2,201 Other Intangible assets............................................... 3,058 Other assets............................................................... 68,983 -------- TOTAL ASSETS............................................................... $661,833 ========
LIABILITIES Deposits In domestic offices .................................................. $189,571 Noninterest-bearing ..........................................$ 82,747 Interest-bearing ............................................. 106,824 In foreign offices, Edge and Agreement subsidiaries and IBF's ........ 125,990 Noninterest-bearing...........................................$ 6,025 Interest-bearing ............................................. 119,965 Federal funds purchased and securities sold under agreements to repurchase: Federal funds purchased in domestic offices........................... 4,978 Securities sold under agreements to repurchase........................ 114,181 Trading liabilities ....................................................... 129,299 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases)............................. 10,186 Bank's liability on acceptances executed and outstanding................... 225 Subordinated notes and debentures ......................................... 8,202 Other liabilities ......................................................... 41,452 TOTAL LIABILITIES ......................................................... 624,084 Minority Interest in consolidated subsidiaries ............................ 104 EQUITY CAPITAL Perpetual preferred stock and related surplus.............................. 0 Common stock .............................................................. 1,785 Surplus (exclude all surplus related to preferred stock)................... 16,304 Retained earnings.......................................................... 18,426 Accumulated other comprehensive income..................................... 1,130 Other equity capital components............................................ 0 TOTAL EQUITY CAPITAL ...................................................... 37,645 -------- TOTAL LIABILITIES, MINORITY INTEREST, AND EQUITY CAPITAL................... $661,833 ========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. WILLIAM B. HARRISON, JR. ) HANS W. BECHERER ) FRANK A. BENNACK, JR. ) EX-99.1 79 h08423exv99w1.txt FORM OF LETTER TO DEPOSITORY TRUST PARTICIPANTS EXHIBIT 99.1 WESTLAKE CHEMICAL CORPORATION LETTER TO DEPOSITORY TRUST COMPANY PARTICIPANTS FOR TENDER OF ALL OUTSTANDING 8 3/4% SENIOR NOTES DUE 2011 IN EXCHANGE FOR REGISTERED 8 3/4% SENIOR NOTES DUE 2011 FULLY AND UNCONDITIONALLY GUARANTEED BY ALL DOMESTIC RESTRICTED SUBSIDIARIES OF WESTLAKE CHEMICAL CORPORATION - -------------------------------------------------------------------------------- THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [__________], 200[_], UNLESS EXTENDED. OUTSTANDING NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. - -------------------------------------------------------------------------------- To Depository Trust Company Participants: We are enclosing with this letter the materials listed below relating to the offer by Westlake Chemical Corporation to exchange its 8 3/4% Senior Notes due 2011 fully and unconditionally guaranteed by all of its domestic restricted subsidiaries (the "New Notes"), the issuance of which has been registered under the Securities Act of 1933, for a like principal amount of its issued and outstanding unregistered 8 3/4% Senior Notes due 2011 fully and unconditionally guaranteed by all of its domestic restricted subsidiaries (the "Old Notes"), upon the terms and subject to the conditions set forth in Westlake's prospectus dated [__________], 200[_] and the related letter of transmittal. We are enclosing copies of the following documents: 1. Prospectus dated [__________], 200[_]; 2. Letter of transmittal, together with accompanying Substitute Form W-9 Guidelines; 3. Notice of guaranteed delivery; and 4. Letter that may be sent to your clients for whose account you hold Old Notes in your name or in the name of your nominee, with space provided for obtaining that client's instruction with regard to the exchange offer. We urge you to contact your clients promptly. Please note that the exchange offer will expire at 5:00 p.m., New York City time, on [__________], 200[_], unless extended. The exchange offer is not conditioned upon any minimum aggregate principal amount of Old Notes being tendered for exchange. Pursuant to the letter of transmittal, each holder of Old Notes will represent to Westlake and the guarantors that: o any New Notes received are being acquired in the ordinary course of business of the person receiving such New Notes; o such person does not have an arrangement or understanding with any person to participate in the distribution of the Old Notes or the New Notes within the meaning of the Securities Act; o such person is not an "affiliate," as defined in Rule 405 under the Securities Act, of Westlake or any guarantor, or, if it is such an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; o if such person is not a broker-dealer, it is not engaged in, and does not intend to engage in, a distribution of New Notes; o if such person is a broker-dealer, it will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, and it will deliver a prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a prospectus, it will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act; o if such person is a broker-dealer, it did not purchase the Old Notes to be exchanged for the New Notes from Westlake or any guarantor; and o such person is not acting on behalf of any person who could not truthfully and completely make the foregoing representations. The enclosed Letter to Clients contains an authorization by the beneficial owners of the Old Notes for you to make the foregoing representations. Westlake will not pay any fee or commission to any broker or dealer or to any other person (other than the Exchange Agent) in connection with the solicitation of tenders of Old Notes under the exchange offer. Westlake will pay or cause to be paid any transfer taxes payable on the transfer of Old Notes to it, except as otherwise provided in Instruction 7 of the enclosed letter of transmittal. Additional copies of the enclosed materials may be obtained from us upon request. Very truly yours, JPMORGAN CHASE BANK 2 EX-99.2 80 h08423exv99w2.txt FORM OF LETTER TO CLIENTS EXHIBIT 99.2 WESTLAKE CHEMICAL CORPORATION LETTER TO CLIENTS FOR TENDER OF ALL OUTSTANDING 8 3/4% SENIOR NOTES DUE 2011 IN EXCHANGE FOR REGISTERED 8 3/4% SENIOR NOTES DUE 2011 FULLY AND UNCONDITIONALLY GUARANTEED BY ALL DOMESTIC RESTRICTED SUBSIDIARIES OF WESTLAKE CHEMICAL CORPORATION - -------------------------------------------------------------------------------- THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [__________], 200[_], UNLESS EXTENDED. OUTSTANDING NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. - -------------------------------------------------------------------------------- To Our Clients: We are enclosing with this letter a prospectus dated [__________], 200[_] of Westlake Chemical Corporation and the related letter of transmittal. These two documents together constitute Westlake's offer to exchange its 8 3/4% Senior Notes due 2011, fully and unconditionally guaranteed by all of its domestic restricted subsidiaries (the "New Notes"), the issuance of which has been registered under the Securities Act of 1933, for a like principal amount of its issued and outstanding unregistered 8 3/4% Senior Notes due 2011 fully and unconditionally guaranteed by all of its domestic restricted subsidiaries (the "Old Notes"). The exchange offer is not conditioned upon any minimum aggregate principal amount of Old Notes being tendered for exchange. We are the holder of record of Old Notes held by us for your own account. A tender of your Old Notes held by us can be made only by us as the record holder according to your instructions. The letter of transmittal is furnished to you for your information only and cannot be used by you to tender Old Notes held by us for your account. We request instructions as to whether you wish to tender any or all of the Old Notes held by us for your account under the terms and conditions of the exchange offer. We also request that you confirm that we may, on your behalf, make the representations contained in the letter of transmittal. Pursuant to the letter of transmittal, each holder of Old Notes will represent to Westlake and the guarantors that: o any New Notes received are being acquired in the ordinary course of business of the person receiving such New Notes; o such person does not have an arrangement or understanding with any person to participate in the distribution of the Old Notes or the New Notes within the meaning of the Securities Act; o such person is not an "affiliate," as defined in Rule 405 under the Securities Act, of Westlake or any guarantor, or, if it is such an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; o if such person is not a broker-dealer, it is not engaged in, and does not intend to engage in, a distribution of New Notes; o if such person is a broker-dealer, it will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, and it will deliver a prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a prospectus, it will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act; o if such person is a broker-dealer, it did not purchase the Old Notes to be exchanged for the New Notes from Westlake or any guarantor; and o such person is not acting on behalf of any person who could not truthfully and completely make the foregoing representations. Very truly yours, PLEASE RETURN YOUR INSTRUCTIONS TO US IN THE ENCLOSED ENVELOPE WITHIN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER. INSTRUCTION TO DTC PARTICIPANT To Participant of DTC: The undersigned hereby acknowledges receipt and review of the prospectus dated [__________], 200[_] of Westlake Chemical Corporation and the related letter of transmittal. These two documents together constitute Westlake's offer to exchange its 8 3/4% Senior Notes due 2011, fully and unconditionally guaranteed by all of its domestic restricted subsidiaries (the "New Notes"), the issuance of which has been registered under the Securities Act of 1933, for a like principal amount of its issued and outstanding unregistered 8 3/4% Senior Notes due 2011 fully and unconditionally guaranteed by all of its domestic restricted subsidiaries (the "Old Notes"). This will instruct you, the registered holder and DTC participant, as to the action to be taken by you relating to the exchange offer for the Old Notes held by you for the account of the undersigned. The aggregate principal amount of the Old Notes held by you for the account of the undersigned is (fill in amount): $__________. With respect to the exchange offer, the undersigned hereby instructs you (check appropriate box): [ ] TO TENDER ALL OLD NOTES HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED. [ ] TO TENDER THE FOLLOWING AMOUNT OF OLD NOTES HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED: $__________. [ ] NOT TO TENDER ANY OLD NOTES HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED. IF NO BOX IS CHECKED, A SIGNED AND RETURNED INSTRUCTION TO DTC PARTICIPANT WILL BE DEEMED TO INSTRUCT YOU TO TENDER ALL OLD NOTES HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED. If the undersigned instructs you to tender the Old Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations contained in the letter of transmittal that are to be made with respect to the undersigned as a beneficial owner, including, but not limited to, the representations that: o any New Notes received are being acquired in the ordinary course of business of the undersigned; o the undersigned does not have an arrangement or understanding with any person to participate in the distribution of the Old Notes or the New Notes within the meaning of the Securities Act; o the undersigned is not an "affiliate," as defined in Rule 405 under the Securities Act, of Westlake or any guarantor, or, if it is such an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; o if the undersigned is not a broker-dealer, it is not engaged in, and does not intend to engage in, a distribution of New Notes; o if the undersigned is a broker-dealer, it will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, and it will deliver a prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act; o if the undersigned is a broker-dealer, it did not purchase the Old Notes to be exchanged for the New Notes from Westlake or any guarantor; and o the undersigned is not acting on behalf of any person who could not truthfully and completely make the foregoing representations. SIGN HERE Name of beneficial owner(s): -------------------------------------------------- Signature(s): ----------------------------------------------------------------- Name(s) (please print): ------------------------------------------------------- Address: ---------------------------------------------------------------------- Telephone Number: ------------------------------------------------------------- Taxpayer Identification or Social Security Number: ---------------------------- Date: ------------------------------------------------------------------------- EX-99.3 81 h08423exv99w3.txt FORM OF NOTICE OF GUARANTEED DELIVERY EXHIBIT 99.3 WESTLAKE CHEMICAL CORPORATION NOTICE OF GUARANTEED DELIVERY FOR TENDER OF ALL OUTSTANDING 8 3/4% SENIOR NOTES DUE 2011 IN EXCHANGE FOR REGISTERED 8 3/4% SENIOR NOTES DUE 2011 FULLY AND UNCONDITIONALLY GUARANTEED BY ALL DOMESTIC RESTRICTED SUBSIDIARIES OF WESTLAKE CHEMICAL CORPORATION This form, or one substantially equivalent hereto, must be used by a holder to accept the Exchange Offer of Westlake Chemical Corporation (the "Issuer") and its domestic restricted subsidiaries (the "Guarantors") and to tender outstanding unregistered 8 3/4% Senior Notes due 2011 fully and unconditionally guaranteed by the Guarantors (the "Old Notes"), to JPMorgan Chase Bank, as exchange agent (the "Exchange Agent"), pursuant to the guaranteed delivery procedures described in "The Exchange Offer -- Guaranteed Delivery Procedures" of the Issuer's prospectus dated [__________], 200[_] (the "Prospectus") and in Instruction 2 to the related letter of transmittal. Any holder who wishes to tender Old Notes pursuant to such guaranteed delivery procedures must ensure that the Exchange Agent receives this notice of guaranteed delivery, properly completed and duly executed, prior to the Expiration Date (as defined below) of the Exchange Offer. Capitalized terms used but not defined in this letter have the meanings given to them in the letter of transmittal. - -------------------------------------------------------------------------------- THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [__________], 200[_], UNLESS EXTENDED (THE "EXPIRATION DATE"). OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. - -------------------------------------------------------------------------------- The Exchange Agent for the Exchange Offer is: JPMorgan Chase Bank [telephone number] BY OVERNIGHT DELIVERY, COURIER OR MAIL (IF BY MAIL, REGISTERED OR CERTIFIED MAIL RECOMMENDED): JPMorgan Chase Bank [address] New York, New York [ZIP] Attention: [_____________] BY FACSIMILE TRANSMISSION (ELIGIBLE INSTITUTIONS ONLY): [TELEPHONE NUMBER] Attention: [_____________] Confirm by Telephone: [TELEPHONE NUMBER] DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE TO A NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS NOTICE OF GUARANTEED DELIVERY SHOULD BE READ CAREFULLY BEFORE THE NOTICE OF GUARANTEED DELIVERY IS COMPLETED. This notice of guaranteed delivery is not to be used to guarantee signatures. If a signature on a letter of transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, that signature guarantee must appear in the applicable space in the box provided on the letter of transmittal for guarantee of signatures. Ladies and Gentlemen: The undersigned hereby tenders to the Issuer and the Guarantors, in accordance with their offer, upon the terms and subject to the conditions set forth in the Prospectus and the related letter of transmittal, receipt of which is hereby acknowledged, the principal amount of Old Notes set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery Procedures" and in Instruction 2 of the letter of transmittal. The undersigned hereby tenders the Old Notes listed below:
CERTIFICATE NUMBER(s) (IF KNOWN) OF OLD NOTES AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL OR ACCOUNT NUMBER AT DTC AMOUNT REPRESENTED AMOUNT TENDERED ------------------------ ------------------ --------------- - ----------------------------------------------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE - -------------------------------------- ------------------------------------ - -------------------------------------- ------------------------------------ Names of Registered Holder(s) Signature(s) of Registered Holder(s) or Authorized Signatory - -------------------------------------- - -------------------------------------- Address Dated: ---------------------------- - -------------------------------------- Area Code and Telephone Number(s) This notice of guaranteed delivery must be signed by the registered holder(s) of Old Notes exactly as the name(s) of such person(s) appear(s) on certificates for Old Notes or on a security position listing as the owner of Old Notes, or by person(s) authorized to become holder(s) by endorsements and documents transmitted with this notice of guaranteed delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person must provide the following information: PLEASE PRINT NAME(s) AND ADDRESS(es) Name(s): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Capacity: - -------------------------------------------------------------------------------- Address(es): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GUARANTEE (not to be used for signature guarantee) The undersigned, a firm that is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees deposit with the Exchange Agent of the letter of transmittal (or facsimile thereof or agent's message in lieu thereof), together with the Old Notes tendered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Old Notes into the Exchange Agent's account at the DTC described in the Prospectus under the caption "The Exchange Offer -- Procedures for Tendering -- Book-Entry Transfer" and in the letter of transmittal) and any other required documents, all by 5:00 p.m., New York City time, within three New York Stock Exchange trading days following the Expiration Date. Name of Firm: ------------------------- -------------------------------- (Authorized Signature) Address: ------------------------------ (Include ZIP Code) Name: -------------------------- Area Code and Telephone Number: Title: -------------------------- (Please Type or Print) - ---------------------------------------- Date: -------------------------- DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS. 3 INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY 1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed and duly executed copy of this notice of guaranteed delivery (or facsimile hereof or an agent's message and notice of guaranteed delivery in lieu hereof) and any other documents required by this notice of guaranteed delivery with respect to the Old Notes must be received by the Exchange Agent at its address set forth herein prior to the Expiration Date. Delivery of such notice of guaranteed delivery may be made by facsimile transmission, mail, courier or overnight delivery. THE METHOD OF DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY AND ANY OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. As an alternative to delivery by mail, holders may wish to consider using an overnight or courier service. In all cases, sufficient time should be allowed to assure timely delivery. For a description of the guaranteed delivery procedures, see Instruction 2 of the letter of transmittal. 2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this notice of guaranteed delivery (or facsimile hereof) is signed by the registered holder(s) of the Old Notes referred to herein, the signature(s) must correspond exactly with the name(s) written on the face of the Old Notes without alteration, enlargement or any change whatsoever. If this notice of guaranteed delivery (or facsimile hereof) is signed by a participant in the DTC whose name appears on a security position listing as the owner of the Old Notes, the signature must correspond with the name as it appears on the security position listing as the owner of the Old Notes. If this notice of guaranteed delivery (or facsimile hereof) is signed by a person other than the registered holder(s) of any Old Notes listed or a participant of the DTC, this notice of guaranteed delivery must be accompanied by appropriate bond powers, signed as the name(s) of the registered holder(s) appear(s) on the Old Notes or signed as the name(s) of the participant appears on the DTC's security position listing. If this notice of guaranteed delivery (or facsimile hereof) is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing and submit herewith evidence satisfactory to the Exchange Agent of such person's authority to so act. 3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance and requests for additional copies of the Prospectus and this notice of guaranteed delivery may be directed to the Exchange Agent at the address or telephone number set forth on the cover page hereof. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer. 4 EX-99.4 82 h08423exv99w4.txt FORM OF LETTER OF TRANSMITTAL EXHIBIT 99.4 WESTLAKE CHEMICAL CORPORATION LETTER OF TRANSMITTAL FOR TENDER OF ALL OUTSTANDING 8 3/4% SENIOR NOTES DUE 2011 IN EXCHANGE FOR REGISTERED 8 3/4% SENIOR NOTES DUE 2011 FULLY AND UNCONDITIONALLY GUARANTEED BY ALL DOMESTIC RESTRICTED SUBSIDIARIES OF WESTLAKE CHEMICAL CORPORATION - -------------------------------------------------------------------------------- THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [__________], 200[_], UNLESS EXTENDED (THE "EXPIRATION DATE"). OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. - -------------------------------------------------------------------------------- Deliver to the Exchange Agent: JPMorgan Chase Bank [telephone number] BY OVERNIGHT DELIVERY, COURIER OR MAIL (IF BY MAIL, REGISTERED OR CERTIFIED MAIL RECOMMENDED): JPMorgan Chase Bank [address] New York, New York [ZIP] Attention: [_____________] BY FACSIMILE TRANSMISSION (ELIGIBLE INSTITUTIONS ONLY): [TELEPHONE NUMBER] Attention: [_____________] Confirm by Telephone: [TELEPHONE NUMBER] DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE TO A NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED. The undersigned hereby acknowledges receipt and review of the prospectus dated [__________], 200[_] (the "Prospectus"), of Westlake Chemical Corporation (the "Issuer") and this letter of transmittal. These two documents together constitute the offer by the Issuer and its domestic restricted subsidiaries (the "Guarantors") to exchange the Issuer's 8 3/4% Senior Notes due 2011 fully and unconditionally guaranteed by the Guarantors (the "New Notes"), the issuance of which has been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of the Issuer's issued and outstanding unregistered 8 3/4% Senior Notes due 2011 fully and unconditionally guaranteed by the Guarantors (the "Old Notes"). The offer to exchange the New Notes for the Old Notes is referred to as the "Exchange Offer." The Issuer reserves the right, at any time or from time to time, to extend the period of time during which the Exchange Offer for the Old Notes is open, at its discretion, in which event the term "Expiration Date" shall mean the latest date to which the Exchange Offer is extended. The Issuer shall notify JPMorgan Chase Bank (the "Exchange Agent") of any extension by oral or written notice and shall make a public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. This letter of transmittal is to be used by a holder of Old Notes if (i) certificates of Old Notes are to be forwarded herewith or (ii) delivery of Old Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company ("DTC") pursuant to the procedures set forth in the Prospectus under the caption "The Exchange Offer -- Procedures for Tendering -- Book-Entry Transfer" and an "agent's message" is not delivered as described in the Prospectus under the caption "The Exchange Offer - -- Procedures for Tendering -- Tendering Though DTC's Automated Tender Offer Program." Tenders by book-entry transfer may also be made by delivering an agent's message in lieu of this letter of transmittal pursuant to DTC's Automated Tender Offer Program ("ATOP"). Holders of Old Notes whose Old Notes are not immediately available, or who are unable to deliver their Old Notes, this letter of transmittal and all other documents required hereby to the Exchange Agent or to comply with the applicable procedures under DTC's ATOP on or prior to the Expiration Date, must tender their Old Notes according to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 2. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. The term "holder" with respect to the Exchange Offer for Old Notes means any person in whose name such Old Notes are registered on the books of the security registrar for the Old Notes, any person who holds such Old Notes and has obtained a properly completed bond power from the registered holder or any participant in the DTC system whose name appears on a security position listing as the holder of such Old Notes and who desires to deliver such Old Notes by book-entry transfer at DTC. The undersigned has completed, executed and delivered this letter of transmittal to indicate the action the undersigned desires to take with respect to such Exchange Offer. Holders who wish to tender their Old Notes must complete this letter of transmittal in its entirety (unless such Old Notes are to be tendered by book-entry transfer and an agent's message is delivered in lieu hereof pursuant to DTC's ATOP). PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT. List below the Old Notes tendered under this letter of transmittal. If the space below is inadequate, list the registered numbers and principal amounts on a separate signed schedule and affix the list to this letter of transmittal.
- --------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF OLD NOTES TENDERED - --------------------------------------------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON OLD NOTES (PLEASE FILL IN, IF BLANK) OLD NOTE(S) TENDERED - --------------------------------------------------------------------------------------------------------------------- AGGREGATE PRINCIPAL AMOUNT REPRESENTED PRINCIPAL AMOUNT REGISTERED NUMBER(S)* BY NOTE(S) TENDERED** ------------------------------------------------------------------------------------ ------------------------------------------------ ------------------------------------------------ ------------------------------------------------------------------------------------ Total - ---------------------------------------------------------------------------------------------------------------------
* Need not be completed by book-entry holders. ** Unless otherwise indicated, any tendering holder of Old Notes will be deemed to have tendered the entire aggregate principal amount represented by such Old Notes. All tenders must be in integral multiples of $1,000. 2 [ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH. [ ] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC (FOR USE BY ELIGIBLE INSTITUTIONS ONLY): Name of Tendering Institution: __________________________________________________________________________ DTC Account Number(s): __________________________________________________________________________________ Transaction Code Number(s): _____________________________________________________________________________ [ ] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY EITHER ENCLOSED HEREWITH OR PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT (COPY ATTACHED) (FOR USE BY ELIGIBLE GUARANTOR INSTITUTIONS ONLY): Name(s) of Registered Holder(s) of Old Notes: ___________________________________________________________ Date of Execution of Notice of Guaranteed Delivery: _____________________________________________________ Window Ticket Number (if available): ____________________________________________________________________ Name of Eligible Guarantor Institution that Guaranteed Delivery: ________________________________________ DTC Account Number(s) (if delivered by book-entry transfer): ____________________________________________ Transaction Code Number(s) (if delivered by book-entry transfer): _______________________________________ Name of Tendering Institution (if delivered by book-entry transfer): ____________________________________ [ ] CHECK HERE AND COMPLETE THE FOLLOWING IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO: Name: ___________________________________________________________________________________________________ Address: ________________________________________________________________________________________________
3 SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Subject to the terms and conditions of the Exchange Offer, the undersigned hereby tenders to the Issuer and the Guarantors for exchange the principal amount of Old Notes (including the related guarantees) indicated above. Subject to and effective upon the acceptance for exchange of the principal amount of Old Notes tendered in accordance with this letter of transmittal, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Issuer and the Guarantors all right, title and interest in and to such Old Notes tendered for exchange hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent the true and lawful agent and attorney-in-fact for the undersigned (with full knowledge that said Exchange Agent also acts as the agent for the Issuer and the Guarantors in connection with the Exchange Offer) with respect to the tendered Old Notes with full power of substitution to (i) deliver such Old Notes, or transfer ownership of such Old Notes on the account books maintained by DTC, to the Issuer and the Guarantors, as applicable, and deliver all accompanying evidences of transfer and authenticity, and (ii) present such Old Notes for transfer on the books of the Issuer and receive all benefits and otherwise exercise all rights of beneficial ownership of such Old Notes, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, exchange, assign and transfer the Old Notes tendered hereby and to acquire the New Notes issuable upon the exchange of such tendered Old Notes, and that the Issuer and the Guarantors will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim, when the same are accepted for exchange by the Issuer and the Guarantors. The undersigned acknowledges that the Exchange Offer is being made in reliance upon interpretations set forth in no-action letters issued to third parties by the staff of the Securities and Exchange Commission (the "SEC"), including Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated (available June 5, 1991), Mary Kay Cosmetics, Inc. (available June 5, 1991), Shearman & Sterling (available July 2, 1993) and similar no-action letters (the "Prior No-Action Letters"), that the New Notes issued in exchange for the Old Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder that is an "affiliate" of the Issuer or any Guarantor within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act; provided that such New Notes are acquired in the ordinary course of such holders' business and such holders are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of such New Notes. The SEC has not, however, considered the Exchange Offer in the context of a no-action letter, and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer as it has in other interpretations to other parties. The undersigned hereby further represents to the Issuer and the Guarantors that (i) any New Notes received are being acquired in the ordinary course of business of the person receiving such New Notes, whether or not the undersigned, (ii) neither the undersigned nor any such other person has an arrangement or understanding with any person to participate in the distribution of the Old Notes or the New Notes within the meaning of the Securities Act and (iii) neither the holder nor any such other person is an "affiliate," as defined in Rule 405 under the Securities Act, of the Issuer or any Guarantor or, if it is such an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of New Notes. If the undersigned is a broker-dealer, the undersigned represents that it will receive New Notes for its own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, and it acknowledges that it will deliver a prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. If the undersigned is a broker-dealer, the undersigned represents that it did not purchase the Old Notes to be exchanged for the New Notes from the Issuer or any Guarantor. Additionally, the undersigned represents that it is not acting on 4 behalf of any person who could not truthfully and completely make the foregoing representations and the representations in the immediately preceding paragraph. The undersigned acknowledges that if the undersigned is tendering Old Notes in the Exchange Offer with the intention of participating in any manner in a distribution of the New Notes (i) the undersigned cannot rely on the position of the staff of the SEC set forth in the Prior No-Action Letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction of the New Notes, in which case the registration statement must contain the selling security holder information required by Item 507 or Item 508, as applicable, of Regulation S-K under the Securities Act and (ii) failure to comply with such requirements in such instance could result in the undersigned incurring liability for which the undersigned is not indemnified by the Issuer or any Guarantor. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Issuer to be necessary or desirable to complete the exchange, assignment and transfer of the Old Notes tendered hereby, including the transfer of such Old Notes on the account books maintained by DTC. For purposes of the Exchange Offer, the Issuer and the Guarantors shall be deemed to have accepted for exchange validly tendered Old Notes when, as and if the Issuer gives oral or written notice thereof to the Exchange Agent. Any tendered Old Notes that are not accepted for exchange pursuant to the Exchange Offer for any reason will be returned, without expense, to the undersigned as promptly as practicable after the Expiration Date. All authority conferred or agreed to be conferred by this letter of transmittal shall survive the death, incapacity or dissolution of the undersigned, and every obligation of the undersigned under this letter of transmittal shall be binding upon the undersigned's successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives. This tender may be withdrawn only in accordance with the procedures set forth in the Prospectus under the caption "The Exchange Offer -- Withdrawal of Tenders." The undersigned acknowledges that the acceptance by the Issuer and the Guarantors of properly tendered Old Notes pursuant to the procedures described under the caption "The Exchange Offer -- Procedures for Tendering" in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned, the Issuer and the Guarantors upon the terms and subject to the conditions of the Exchange Offer. The Exchange Offer is subject to certain conditions set forth in the Prospectus under the caption "The Exchange Offer -- Conditions to the Exchange Offer." The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by the Issuer), the Issuer and the Guarantors may not be required to exchange any of the Old Notes tendered hereby. Unless otherwise indicated under "Special Issuance Instructions," please issue the New Notes issued in exchange for the Old Notes accepted for exchange, and return any Old Notes not tendered or not exchanged, in the name(s) of the undersigned (or, in the case of a book-entry delivery of Old Notes, please credit the account indicated above maintained at DTC). Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail or deliver the New Notes issued in exchange for the Old Notes accepted for exchange and any Old Notes not tendered or not exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the New Notes issued in exchange for the Old Notes accepted for exchange in the name(s) of, and return any Old Notes not tendered or not exchanged to, the person(s) (or account(s)) so indicated. The undersigned recognizes that neither the Issuer nor any Guarantor has any obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Old Notes from the name of the registered holder(s) thereof if the Issuer and the Guarantors do not accept for exchange any of the Old Notes so tendered for exchange. 5 _____________________________________________________________________________________________________________________ SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 5 AND 6) (SEE INSTRUCTIONS 5 AND 6) To be completed ONLY if (i) Old Notes in a principal To be completed ONLY if Old Notes in a principal amount not tendered, or New Notes issued in exchange amount not tendered, or New Notes issued in exchange for Old Notes accepted for exchange, are to be issued for Old Notes accepted for exchange, are to be mailed in the name of someone other than the undersigned, or or delivered to someone other than the undersigned, (ii) Old Notes tendered by book-entry transfer that or to the undersigned at an address other than that are not exchanged are to be returned by credit to an shown below the undersigned's signature. Mail or account maintained at DTC other than the DTC Account deliver New Notes and/or Old Notes to: Number set forth above. Issue New Notes and/or Old Notes to: Name: ______________________________________________ Name: _______________________________________________ Address: ___________________________________________ Address: ____________________________________________ _____________________________________________________ ______________________________________________________ (include ZIP Code) (include ZIP Code) _____________________________________________________ ______________________________________________________ (Tax Identification or Social Security Number) (Tax Identification or Social Security Number) (PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT) _____________________________________________________________________________________________________________________ [ ] Credit unexchanged Old Notes delivered by book-entry transfer to the DTC account number set forth below: DTC Account Number: _________________________________________________________________________________________________
6 IMPORTANT PLEASE SIGN HERE WHETHER OR NOT OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY (complete accompanying Substitute Form W-9 below) X ______________________________________________________________________________ X ______________________________________________________________________________ (Signature(s) of Registered Holder(s) of Old Notes) Dated _____________________________ (The above lines must be signed by the registered holder(s) of Old Notes as your/their name(s) appear(s) on the Old Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by a properly completed bond power from the registered holder(s), a copy of which must be transmitted with this letter of transmittal. If Old Notes to which this letter of transmittal relate are held of record by two or more joint holders, then all such holders must sign this letter of transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, then such person must (i) set forth his or her full title below and (ii) unless waived by the Issuer, submit evidence satisfactory to the Issuer of such person's authority so to act. See Instruction 5 regarding the completion of this letter of transmittal, printed below.) Name(s): ______________________________________________________________________ (PLEASE TYPE OR PRINT) Capacity (Full Title): ________________________________________________________ Address: ______________________________________________________________________ ________________________________________________________________________________ (Include ZIP Code) Area Code and Telephone Number: _______________________________________________ Taxpayer Identification or Social Security Number: ____________________________ 7 MEDALLION SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 5) Certain signatures must be guaranteed by an Eligible Institution. Please read Instruction 5 of this letter of transmittal to determine whether a signature guarantee is required for the tender of your Old Notes. Signature(s) Guaranteed by an Eligible Institution: _________________________________________________________ (Authorized Signature) ________________________________________________________________________________ (Title) ________________________________________________________________________________ (Name of Firm) ________________________________________________________________________________ (Address, Include Zip Code) ________________________________________________________________________________ (Area Code and Telephone Number) Dated ___________________________________ 8 INSTRUCTIONS TO LETTER OF TRANSMITTAL FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES OR AGENT'S MESSAGE AND BOOK-ENTRY CONFIRMATIONS. All physically delivered Old Notes or any confirmation of a book-entry transfer to the Exchange Agent's account at DTC of Old Notes tendered by book-entry transfer (a "Book-Entry Confirmation"), as well as a properly completed and duly executed copy of this letter of transmittal or facsimile hereof (or an agent's message in lieu hereof pursuant to DTC's ATOP), and any other documents required by this letter of transmittal, must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date, or the tendering holder must comply with the guaranteed delivery procedures set forth below. THE METHOD OF DELIVERY OF THE TENDERED OLD NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR COURIER SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE ISSUER OR ANY GUARANTOR. 2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Old Notes and (a) whose Old Notes are not immediately available, (b) who cannot deliver their Old Notes, this letter of transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date or (c) who are unable to comply with the applicable procedures under DTC's ATOP prior to the Expiration Date, must tender their Old Notes according to the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedures: (i) such tender must be made by or through a firm that is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (an "Eligible Guarantor Institution"); (ii) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Guarantor Institution a properly completed and duly executed notice of guaranteed delivery (by facsimile transmission, mail, courier or overnight delivery) or a properly transmitted agent's message and notice of guaranteed delivery setting forth the name and address of the holder of the Old Notes, the registration number(s) of such Old Notes and the total principal amount of Old Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the Expiration Date, this letter of transmittal (or facsimile hereof or an agent's message in lieu hereof) together with the Old Notes in proper form for transfer (or a Book-Entry Confirmation) and any other documents required hereby, will be deposited by the Eligible Guarantor Institution with the Exchange Agent; and (iii) this letter of transmittal (or facsimile hereof or an agent's message in lieu hereof) together with the certificates for all physically tendered Old Notes in proper form for transfer (or Book-Entry Confirmation, as the case may be) and all other documents required hereby are received by the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date. Any holder of Old Notes who wishes to tender Old Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the notice of guaranteed delivery prior to 5:00 p.m., New York City time, on the Expiration Date. Upon request of the Exchange Agent, a notice of guaranteed delivery will be sent to holders who wish to tender their Old Notes according to the guaranteed delivery procedures set forth above. See "The Exchange Offer-- Guaranteed Delivery Procedures" section of the Prospectus. 3. TENDER BY HOLDER. Only a registered holder of Old Notes may tender such Old Notes in the Exchange Offer. Any beneficial holder of Old Notes who is not the registered holder and who wishes to tender should arrange with the registered holder to execute and deliver this letter of transmittal on his behalf or must, prior to completing and executing this letter of transmittal and delivering his Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such holder's name or obtain a properly completed bond power from the registered holder. 4. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in integral multiples of $1,000. If less than the entire principal amount of any Old Notes is tendered, the tendering holder should fill in the principal 9 amount tendered in the fourth column of the box entitled "Description of Old Notes Tendered" above. The entire principal amount of Old Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire principal amount of all Old Notes is not tendered, then Old Notes for the principal amount of Old Notes not tendered and New Notes issued in exchange for any Old Notes accepted will be returned to the holder as promptly as practicable after the Old Notes are accepted for exchange. 5. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS; MEDALLION GUARANTEE OF SIGNATURES. If this letter of transmittal (or facsimile hereof) is signed by the record holder(s) of the Old Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Old Notes without alteration, enlargement or any change whatsoever. If this letter of transmittal (or facsimile hereof) is signed by a participant in DTC, the signature must correspond with the name as it appears on the security position listing as the holder of the Old Notes. If any tendered Old Notes are owned of record by two or more joint owners, all of such owners must sign this letter of transmittal. If this letter of transmittal (or facsimile hereof) is signed by the registered holder(s) of Old Notes listed and tendered hereby and the New Notes issued in exchange therefor are to be issued (or any untendered principal amount of Old Notes is to be reissued) to the registered holder(s), then said holder(s) need not and should not endorse any tendered Old Notes, nor provide a separate bond power. In any other case, such holder(s) must either properly endorse the Old Notes tendered or transmit a properly completed separate bond power with this letter of transmittal, with the signatures on the endorsement or bond power guaranteed by an Eligible Guarantor Institution that is a member in good standing of a recognized Medallion Program approved by the Securities Transfer Association, Inc., including the Security Transfer Agent Medallion Program, the New York Stock Exchange, Inc. Medallion Signature Program or the Stock Exchanges Medallion Program (an "Eligible Institution"). If this letter of transmittal (or facsimile hereof) or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Issuer, evidence satisfactory to the Issuer of their authority to act must be submitted with this letter of transmittal. NO SIGNATURE GUARANTEE IS REQUIRED IF (I) THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) IS SIGNED BY THE REGISTERED HOLDER(S) OF THE OLD NOTES TENDERED HEREIN (OR BY A PARTICIPANT IN DTC WHOSE NAME APPEARS ON A SECURITY POSITION LISTING AS THE OWNER OF THE TENDERED OLD NOTES) AND THE NEW NOTES ARE TO BE ISSUED DIRECTLY TO SUCH REGISTERED HOLDER(S) (OR, IF SIGNED BY A PARTICIPANT IN DTC, DEPOSITED TO SUCH PARTICIPANT'S ACCOUNT AT DTC) AND NEITHER THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" NOR THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" HAS BEEN COMPLETED OR (II) SUCH OLD NOTES ARE TENDERED FOR THE ACCOUNT OF AN ELIGIBLE GUARANTOR INSTITUTION. IN ALL OTHER CASES, ALL SIGNATURES ON THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. 6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should indicate, in the applicable box or boxes, the name and address to which New Notes or substitute Old Notes for principal amounts not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this letter of transmittal. In the case of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated. Holders tendering Old Notes by book-entry transfer may request that Old Notes not exchanged be credited to such account maintained at DTC as such noteholder may designate hereon. If no such instructions are given, such Old Notes not exchanged will be returned to the name and address (or account number) of the person signing this letter of transmittal. 7. TRANSFER TAXES. The Issuer and the Guarantors will pay or cause to be paid all transfer taxes, if any, applicable to the exchange of Old Notes pursuant to the Exchange Offer. If, however, New Notes or Old Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Old Notes tendered hereby, or if tendered Old Notes are registered in the name of any person other than the person signing this letter of transmittal, or if a transfer tax is imposed for any reason other than the exchange of Old Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this letter of transmittal, the amount of such transfer taxes will be billed directly to such tendering holder and the 10 Exchange Agent will retain possession of an amount of New Notes with a face amount at least equal to the amount of such transfer taxes due by such tendering holder pending receipt by the Exchange Agent of the amount of such taxes. 8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a holder of any Old Notes or New Notes must provide the Issuer (as payor) with its correct taxpayer identification number ("TIN"), which, in the case of a holder who is an individual, is his or her social security number. If the Issuer is not provided with the correct TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue Service and backup withholding at the applicable rate on interest and principal payments on the New Notes as provided by applicable law. To prevent backup withholding, each tendering holder must provide such holder's correct TIN by completing the Substitute Form W-9 set forth herein, certifying that the TIN provided is correct (or that such holder is awaiting a TIN), and that (i) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of failure to report all interest or dividends or (ii) the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding. If the New Notes will be registered in more than one name or will not be in the name of the actual owner, consult the instructions on Internal Revenue Service Form W-9, which may be obtained from the Exchange Agent, for information on which TIN to report. If a tendering holder does not have a TIN, such holder should consult the instructions on Form W-9 concerning applying for a TIN, check the box in Part 3 of the Substitute Form W-9, write "applied for" in lieu of its TIN and sign and date the form and the Certificate of Awaiting Taxpayer Identification Number. Checking this box, writing "applied for" on the form and signing such certificate means that such holder has already applied for a TIN or that such holder intends to apply for one in the near future. If such holder does not provide its TIN to the Issuer within 60 days, backup withholding will begin and continue until such holder furnishes its TIN to the Issuer. Certain foreign individuals and entities will not be subject to backup withholding or information reporting if they submit a Form W-8, signed under penalties of perjury, attesting to their foreign status. A Form W-8 can be obtained from the Exchange Agent. The Issuer reserves the right in its sole discretion to take whatever steps are necessary to comply with the Issuer's obligations regarding backup withholding. 9. VALIDITY OF TENDERS. All questions as to the validity, form, eligibility, time of receipt, acceptance and withdrawal of tendered Old Notes will be determined by the Issuer in its sole discretion, which determination will be final and binding. The Issuer reserves the absolute right to reject any and all Old Notes not properly tendered or any Old Notes the Issuer's acceptance of which might, in the opinion of the Issuer's counsel, be unlawful. The Issuer also reserves the absolute right to waive any conditions of the Exchange Offer or defects or irregularities of tenders as to particular Old Notes. The Issuer's interpretation of the terms and conditions of the Exchange Offer (including this letter of transmittal and the instructions hereto) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Issuer shall determine. Neither the Issuer, any Guarantor, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Old Notes nor shall any of them incur any liability for failure to give such notification. 10. WAIVER OF CONDITIONS. The Issuer reserves the absolute right to waive, in whole or part, any of the conditions to the Exchange Offer set forth in the Prospectus. 11. NO CONDITIONAL TENDER. No alternative, conditional, irregular or contingent tender of Old Notes will be accepted. 12. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose Old Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further 11 instructions. This letter of transmittal and related documents cannot be processed until the procedures for replacing lost, stolen or destroyed Old Notes have been followed. 13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or for additional copies of the Prospectus or this letter of transmittal may be directed to the Exchange Agent at the address or telephone number set forth on the cover page of this letter of transmittal. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer. 14. WITHDRAWAL. Tenders may be withdrawn only pursuant to the limited withdrawal rights set forth in the Prospectus under the caption "The Exchange Offer -- Withdrawal of Tenders." IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU HEREOF (TOGETHER WITH THE OLD NOTES DELIVERED BY BOOK-ENTRY TRANSFER OR IN ORIGINAL HARD COPY FORM) MUST BE RECEIVED BY THE EXCHANGE AGENT, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT, PRIOR TO THE EXPIRATION DATE. 12 - ------------------------------------------------------------------------------------------------------------------------------------ -------------------------------------- Social Security Number SUBSTITUTE PART 1 - Please Provide Your TIN in the Box at Right or FORM W-9 (or Complete Part 3) and Certify by Signing and Dating Below -------------------------------------- Employer Identification Number - ------------------------------------------------------------------------------------------------------------------------------------ PART 2 - Certification - Under penalties of perjury, I PART 3 certify that: Department of the Treasury (1) The number shown on this form is my correct Awaiting TIN [ ] Internal Revenue Service Taxpayer Identification Number (or I have Payor's Request for Taxpayer checked the box in part 3 and executed the Identification Number (TIN) Certificate of Awaiting Taxpayer Identification Number below), (2) I am not subject to backup withholding because: Please complete the Certificate of - ----------------------------- (a) I am exempt from backup withholding, or (b) Awaiting Taxpayer Identification Name I have not been notified by the Internal Revenue Number below. Service (IRS) that I am subject to backup - ----------------------------- withholding as a result of failure to report all Address (Number and Street) interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and - ----------------------------- City, State and ZIP Code (3) I am a U.S. Person (including a U.S. resident alien). ----------------------------------------------------------------------------------------------- Certificate Instructions - You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if, after being notified by the IRS that you are subject to backup withholding, you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2). SIGNATURE DATE , 200 --------------------------------- ---------------------- -- - ------------------------------------------------------------------------------------------------------------------------------------
FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING AT THE APPLICABLE RATE OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE NEW NOTES. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9 - -------------------------------------------------------------------------------- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number to the payor within 60 days, the payor is required to withhold the applicable percentage of (1) any reportable payments thereafter made to me until the payor receives a number and (2) any withdrawal to the extent of reportable payments made to me during the 60-day period. , 200 - -------------------------------------------- -------------------- -- SIGNATURE DATE - ------------------------------------------------------------------------------- 13 -----END PRIVACY-ENHANCED MESSAGE-----