SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Gundle Environmental Systems, Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
402806-103
(CUSIP Number)
Ezra G. Levin, Esq.
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, New York 10022
(212) 715-9227
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
July 27, 1995
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box: []
Check the following box if a fee is being paid with this
statement: [x]
<PAGE> Page 1 of 9 pages
<PAGE>
SCHEDULE 13D
CUSIP No. 402806-103 Page 2 of 9 Pages
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WEMBLEY, LTD. n/a
_________________________________________________________________
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) []
(b) []
_______________________________________________________________
3) SEC USE ONLY
_______________________________________________________________
4) SOURCE OF FUNDS
00
________________________________________________________________
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
[]
_______________________________________________________________
6) CITIZENSHIP OR PLACE OF ORGANIZATION
BRITISH VIRGIN ISLANDS
_______________________________________________________________
7) SOLE VOTING POWER
7,000,000 (See Item 5)
NUMBER _______________________________________________
OF 8) SHARED VOTING POWER
SHARES 0
BENEFICIALLY _______________________________________________
OWNED BY 9) SOLE DISPOSITIVE POWER
EACH 7,000,000 (See Item 5)
REPORTING ______________________________________________
PERSON 10) SHARED DISPOSITIVE POWER
WITH 0
_________________________________________________________________
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,000,000 (See Item 5)
_________________________________________________________________
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES []
_________________________________________________________________
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 40% (See Item 5)
_________________________________________________________________
14) TYPE OF REPORTING PERSON
CO
________________________________________________________________
<PAGE>
<PAGE>
Schedule 13D
Item 1. Security and Issuer.
The class of equity securities to which this Statement on
Schedule 13D (the "Statement") relates is the common stock, par
value $.01 per share (the "Common Stock") of Gundle Environmental
Systems, Inc., a Delaware corporation (the "Company"). The
principal executive offices of the Company are located at 19103
Gundle Road, Houston, TX 77073.
Item 2. Identity and Background.
(a) Wembley, Ltd.
(b) State of Organization: British Virgin Islands
Address: International Trust Company
B.V.I. Limited
Columbus Centre Building
P.O. Box 659
Road Town
Tortola
British Virgin Islands
(c) Principal Business
Activity: Shareholder of the Company
(formerly the sole stockholder
of SLT Environmental, Inc., a
Delaware corporation).
(d)-(e) During the last five years, Wembley, Ltd. has neither
been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) nor been
a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction which,
as a result of such proceeding, rendered it subject to
a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities
subject to, Federal or state securities laws or
finding any violation with respect to such laws.
Pursuant to Instruction C to this Form, information required by
Item 2 provided on behalf of the executive officers and directors
of Wembley, Ltd. is included on Appendix I hereto, which is
incorporated herein by reference.
Item 3. Source and Amount of Funds or Other Consideration.
<PAGE> 3
<PAGE>
The 7,000,000 shares of Common Stock were issued to Wembley,
Ltd. pursuant to the terms of a merger agreement (the "Merger
Agreement") dated as of March 28, 1995 between the Company and
SLT Environmental, Inc., a wholly-owned subsidiary of Wembley,
Ltd. ("SLT"). A copy of the Merger Agreement is attached hereto
as Exhibit A. As of the date of the Merger Agreement, Wembley,
Ltd. owned all of the 100 issued and outstanding shares of the
common stock, par value $1.00 per share of SLT (the "SLT Stock").
Pursuant to the terms of the Merger Agreement, each share of SLT
Stock was converted into 70,000 shares of Common Stock, as a
result of which, upon the consummation of the merger on July 27,
1995 (the "Effective Date"), Wembley, Ltd. owned 7,000,000 shares
of Common Stock. On the Effective Date, the closing price of a
share of Common Stock on the American Stock Exchange was $7.00
per share and the total value of the 7,000,000 shares, based
upon that price was $49,000,000.
Item 4. Purpose of Transaction.
The Common Stock was acquired by Wembley, Ltd. in order
to effect the merger of the Company and SLT.
Wembley, Ltd. has no plans or proposals which would result
in any of the events or outcomes listed in (a) through (j) of
this Item 4. However, as a result of the consummation of the
transactions contemplated by the Merger Agreement, the following
events or results have occurred:
(a) Not Applicable;
(b) A merger of SLT with and into the Company was effected;
(c) Not Applicable;
(d) Samir T. Badawi, Ahmed Khalawi and William P. Reid,
each nominees of SLT, were elected to serve as three of
the Company's seven directors until the first annual
meeting of stockholders of the Company next following
the Effective Date;
The Company's Bylaws have been amended and restated by
operation of law (i) to authorize a board of neither
more than seven nor fewer than five directors, as set
by the board from time to time, and (ii) to require the
affirmative vote of 60% of the full board to expand or
contract the board beyond the prescribed limits.
(e) Additional Common Stock Authorization. The Company's
Certificate of Incorporation has been amended and
restated by operation of law to increase to 30,000,000
the authorized number of shares of Common Stock.
<PAGE> 4
<PAGE>
Additional Preferred Stock Authorization. The
Company's Certificate of Incorporation has been
amended and restated to increase to 1,000,000 the
authorized number of shares of the Company's preferred
stock, par value $1.00 per share, undesignated as to
series.
(f) Not Applicable;
(g) Not Applicable;
(h) Not Applicable;
(i) Not Applicable;
(j) Not Applicable.
Item 5. Interest in Securities of the Issuer.
(a) Wembley, Ltd. beneficially owns an aggregate of
7,000,000 shares, representing approximately 40%, of the Common
Stock.
(b) The Board of Directors of Wembley, Ltd. has the
sole power to vote or direct the vote and dispose or direct the
disposition of the Common Stock. By reason of their position as
directors, Messrs. Badawi and Khalawi may be deemed to possess,
indirectly, sole and/or shared power to vote and dispose of the
Common Stock. The filing of this Statement on Schedule 13D shall
not, however, be construed as an admission that, for purposes of
Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as
amended, any person other than Wembley, Ltd. has beneficial
ownership of the Common Stock.
(c) Not Applicable.
(d) Not applicable.
(e) Not applicable.
<PAGE> 5
<PAGE>
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
The Company has entered into a registration rights agreement
(the "Registration Rights Agreement") with Wembley, Ltd. (among
others) a copy of which is attached hereto as Exhibit B. Subject
to certain conditions, Wembley, Ltd. will have three demand
registration rights exercisable at any time beginning one year
after the Effective Date through the seventh anniversary of the
Effective Date. In addition, the Registration Rights Agreement
affords to Wembley, Ltd. the right to participate in
registrations initiated by the Company or, under certain
conditions, another party.
Item 7. Material to be Filed as Exhibits.
Exhibit A: Merger Agreement dated as of March 28, 1995
between the Company and SLT.
Exhibit B: Registration Rights Agreement dated as of July
27, 1995 by and among the Company, Wembley, Ltd.
and Odyssey Partners, L.P.
<PAGE> 6
<PAGE>
SIGNATURES
After reasonable inquiry and to the best knowledge and
belief of the undersigned, the undersigned certifies that the
information set forth in this Schedule 13D is true, complete and
correct.
Date: July 27, 1995
WEMBLEY, LTD.
/s/ Ahmed Khalawi
Ahmed Khalawi
Director
/s/ Samir T. Badawi
Samir T. Badawi
Director
<PAGE> 7
<PAGE>
SCHEDULE I
Item 2. Identity and Background, cont.
Wembley, Ltd. has no executive officers. The Board of
Directors makes all decisions concerning the business of Wembley,
Ltd. including, without limitation, the voting and disposition of
the issued and outstanding common stock of the Company.
(a) Directors of Wembley, Ltd.: Samir T. Badawi
Ahmed Khalawi.
(b) Business Address: Al-Amoudi Center Office No. 103
P.O. Box 2477 (Madina Road)
Jeddah 21451
Kingdom of Saudi Arabia
(c) Principal Business
Activity: Both men serve as directors and
advisors to Wembley, Ltd.
Mr. Badawi is also Chairman of the
Board of the Company.
(d)-(e) During the last five years, neither director has
been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) or
been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction
which, as a result of such proceeding, rendered him
subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state
securities laws or finding any violation with
respect to such laws.
<PAGE> 8
________________________________________________________________
PLAN AND AGREEMENT OF MERGER
of
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
and
SLT ENVIRONMENTAL, INC.
_________
Dated as of March 28, 1995
_________________________________________________________________
<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I
MERGER . . . . . . . . . . . . . 2
1.1. Surviving Corporation. . . . . . . . . . . . . . . 2
1.2. Stockholder Approval . . . . . . . . . . . . . . . 2
1.3. Effective Date . . . . . . . . . . . . . . . . . . 2
1.4. Name and Continued Corporate Existence
of Surviving Corporation . . . . . . . . . . . . 2
1.4.1. Name and Existence . . . . . . . . . . . . 2
1.4.2. Federal Income Tax Treatment of Merger . . 2
1.5. Governing Law and Certificate of Incorporation
of Surviving Corporation . . . . . . . . . . . . 3
1.5.1. Delaware Law Governs and Gundle
Certificate of Incorporation,
as Amended and Restated, Survives. . . . . 3
1.6. Bylaws of Surviving Corporation . . . . . . . . . 3
1.6.1. Gundle Bylaws Survive . . . . . . . . . . 3
1.7. Directors and Officers of Surviving
Corporation . . . . . . . . . . . . . . . . . . 3
1.7.1. Directors of Surviving Corporation. . . . . 3
1.7.2. Vacancies . . . . . . . . . . . . . . . . . 4
1.8. Capital Stock of Surviving Corporation . . . . . . 4
1.8.1. Capital Stock of Surviving Corporation. . . 4
1.9. Conversion of Securities upon Merger . . . . . . . 4
1.9.1. General . . . . . . . . . . . . . . . . . . 4
1.9.2. Conversion of SLT Common Stock. . . . . . . 4
1.9.3. Exchange of SLT Common Stock
Certificates . . . . . . . . . . . . . . . 4
1.9.4. Gundle Fractional Shares. . . . . . . . . . 5
1.9.5. SLT's Transfer Books Closed . . . . . . . . 5
1.10. Assets and Liabilities. . . . . . . . . . . . . . 5
1.10.1. Assets and Liabilities of Merging
Corporations Become Those of
Surviving Corporation. . . . . . . . . . 5
1.10.2. Conveyances to Surviving Corporation . . . 6
1.10.3. Accounting Treatment . . . . . . . . . . . 6
1.10.4. Unclaimed Merger Consideration;
No Escheat . . . . . . . . . . . . . . . 6
1.10.5. Dissenting Stockholders of SLT . . . . . . 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF SLT . . . . . . . . . . . . . 6
2.1. Representations and Warranties of SLT. . . . . . . 6
2.1.1. Organization and Standing . . . . . . . . . 6
2.1.2. Agreement Authorized and its
Effect on Other Obligations. . . . . . . . 7
2.1.3. Capitalization . . . . . . . . . . . . . . 7
-i-
PAGE
<PAGE>
2.1.4. Subsidiaries. . . . . . . . . . . . . . . . 7
2.1.5. Financial Statements. . . . . . . . . . . . 8
2.1.6. Liabilities . . . . . . . . . . . . . . . . 8
2.1.7. Additional SLT Information. . . . . . . . . 8
2.1.7.1. Real Estate. . . . . . . . . . . . 8
2.1.7.2. Machinery and Equipment. . . . . . 9
2.1.7.3. Inventory. . . . . . . . . . . . . 9
2.1.7.4. Receivables. . . . . . . . . . . . 9
2.1.7.5. Payables . . . . . . . . . . . . . 9
2.1.7.6. Insurance. . . . . . . . . . . . . 9
2.1.7.7. Material Contracts . . . . . . . . 9
2.1.7.8. Employee Compensation Plans. . . . 9
2.1.7.9. Certain Salaries . . . . . . . . . 10
2.1.7.10. Bank Accounts . . . . . . . . . . 10
2.1.7.11. Employee Agreements . . . . . . . 10
2.1.7.12. Patents . . . . . . . . . . . . . 10
2.1.7.13. Trade Names . . . . . . . . . . . 10
2.1.7.14. Promissory Notes. . . . . . . . . 10
2.1.7.15. Guaranties. . . . . . . . . . . . 10
2.1.7.16. Financial Statements. . . . . . . 10
2.1.7.17. Reserves and Accruals . . . . . . 10
2.1.7.18. Material Leases . . . . . . . . . 10
2.1.7.19. Environment . . . . . . . . . . . 11
2.1.8. No Undisclosed Defaults . . . . . . . . . . 11
2.1.9. Absence of Certain Changes and Events . . . 11
2.1.9.1. Financial Change. . . . . . . . . 11
2.1.9.2. Property Damage . . . . . . . . . 11
2.1.9.3. Dividends . . . . . . . . . . . . 11
2.1.9.4. Capitalization Change . . . . . . 11
2.1.9.5. Labor Disputes. . . . . . . . . . 11
2.1.9.6. Other Material Changes. . . . . . 11
2.1.10. Taxes. . . . . . . . . . . . . . . . . . . 12
2.1.11. Intellectual Property. . . . . . . . . . . 12
2.1.12. Title to Properties. . . . . . . . . . . . 13
2.1.13. Litigation . . . . . . . . . . . . . . . . 13
2.1.14.1. Environmental Conditions. . . . . 13
2.1.14.2. Permits, etc. . . . . . . . . . . 13
2.1.15. Compliance with Other Laws . . . . . . . . 15
2.1.16. Finder's Fee . . . . . . . . . . . . . . . 15
2.1.17. Compliance with ERISA. . . . . . . . . . . 15
2.1.17.1. Prohibited Transactions . . . . . 15
2.1.17.2. Plan Termination; Material
Liabilities. . . . . . . . . . . 15
2.1.17.3. Accumulated Funding Deficiency. . 16
2.1.17.4. Relationship of Benefits to
Pension Plan Assets. . . . . . . 16
2.1.17.5. Execution of Agreements . . . . . 16
2.1.17.6. Fiduciary Liability . . . . . . . 16
2.1.17.7. Pending Claims. . . . . . . . . . 16
2.1.17.8. Multiemployer Plans . . . . . . . 16
2.1.17.9. No Reportable Event . . . . . . . 17
<PAGE> -ii-<PAGE>
2.1.18. Investigations; Litigation . . . . . . . . 17
2.1.19. Product Warranty . . . . . . . . . . . . . 17
2.1.20. Information for Gundle Proxy Statement . . 17
2.1.21. Compliance with Export Laws. . . . . . . . 17
2.1.22. FIRPTA; Investment Company . . . . . . . . 18
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GUNDLE. . . . . 18
3.1. Representations and Warranties of Gundle . . . . . . . 18
3.1.1. Organization and Standing. . . . . . . . . . . 18
3.1.2. Agreement Authorized and its Effect
on Other Obligations . . . . . . . . . . . . 18
3.1.3. Capitalization . . . . . . . . . . . . . . . . 18
3.1.4. Subsidiaries . . . . . . . . . . . . . . . . . 19
3.1.5. Reports and Financial Statements . . . . . . . 19
3.1.6. Liabilities. . . . . . . . . . . . . . . . . . 19
3.1.7. Additional Gundle Information. . . . . . . . . 20
3.1.7.1. Real Estate . . . . . . . . . . . . 20
3.1.7.2. Machinery and Equipment . . . . . . 20
3.1.7.3. Inventory . . . . . . . . . . . . . 20
3.1.7.4. Receivables . . . . . . . . . . . . 20
3.1.7.5. Payables. . . . . . . . . . . . . . 20
3.1.7.6. Insurance . . . . . . . . . . . . . 20
3.1.7.7. Material Contracts. . . . . . . . . 20
3.1.7.8. Employee Compensation Plans . . . . 21
3.1.7.9. Certain Salaries. . . . . . . . . . 21
3.1.7.10. Employee Agreements . . . . . . . . 21
3.1.7.11. Patents . . . . . . . . . . . . . . 21
3.1.7.12. Trade Names . . . . . . . . . . . . 21
3.1.7.13. Promissory Notes. . . . . . . . . . 21
3.1.7.14. Guaranties. . . . . . . . . . . . . 21
3.1.7.15. Reserves and Accruals . . . . . . . 21
3.1.7.16. Material Leases . . . . . . . . . . 21
3.1.7.17. Environment . . . . . . . . . . . . 22
3.1.8. No Undisclosed Defaults . . . . . . . . . . . 22
3.1.9. Absence of Certain Changes and
Events in Gundle. . . . . . . . . . . . . . . 22
3.1.9.1. Financial Change. . . . . . . . . . 22
3.1.9.2. Property Damage . . . . . . . . . . 22
3.1.9.3. Dividends . . . . . . . . . . . . . 22
3.1.9.4. Capitalization Change . . . . . . . 22
3.1.9.5. Labor Disputes. . . . . . . . . . . 22
3.1.9.6. Other Material Changes. . . . . . . 23
3.1.10. Taxes . . . . . . . . . . . . . . . . . . . . 23
3.1.11. Intellectual Property . . . . . . . . . . . . 23
3.1.12. Title to Properties . . . . . . . . . . . . . 23
3.1.13. Litigation. . . . . . . . . . . . . . . . . . 24
3.1.14. Environmental Compliance. . . . . . . . . . . 24
3.1.14.1. Environmental Conditions. . . . . . 24
3.1.14.2. Permits, etc.. . . . . . . . . . . 24
3.1.15. Compliance with Other Laws. . . . . . . . . . 25
<PAGE> -iii-
3.1.16. Finder's Fee. . . . . . . . . . . . . . . . . 25
3.1.17. ERISA . . . . . . . . . . . . . . . . . . . . 25
3.1.18. Investigations; Litigation. . . . . . . . . . 26
3.1.19. Product Warranty. . . . . . . . . . . . . . . 26
3.1.20. Information for Proxy Statement . . . . . . . 26
3.1.21. Compliance with Export Laws . . . . . . . . . 26
3.1.22. FIRPTA; Investment Company. . . . . . . . . . 26
ARTICLE IV
OBLIGATIONS PENDING EFFECTIVE DATE . . . . . 27
4.1. Agreements of Gundle and SLT. . . . . . . . . . . . .
27
4.1.1. Maintenance of Present Business . . . . . . . 27
4.1.2. Maintenance of Properties . . . . . . . . . . 27
4.1.3. Maintenance of Books and Records. . . . . . . 27
4.1.4. Compliance with Law . . . . . . . . . . . . . 27
4.1.5. Inspection of Each Merging Corporation. . . . 27
4.2. Additional Agreements of Gundle and SLT . . . . . . . 27
4.2.1. Hart-Scott-Rodino . . . . . . . . . . . . . . 27
4.2.2. Proxy Statement . . . . . . . . . . . . . . . 28
4.2.3. Notice of Material Developments . . . . . . . 28
4.3. Additional Agreements of SLT. . . . . . . . . . . . . 28
4.3.1. Prohibition of Certain Employment
Contracts . . . . . . . . . . . . . . . . . . 28
4.3.2. Prohibition of Certain Loans. . . . . . . . . 29
4.3.3. Prohibition of Certain Commitments. . . . . . 29
4.3.4. Disposal of Assets. . . . . . . . . . . . . . 29
4.3.5. Maintenance of Insurance. . . . . . . . . . . 29
4.3.6. SLT Acquisition Proposals . . . . . . . . . . 29
4.3.7. No Amendment to Certificate of
Incorporation, etc. . . . . . . . . . . . . . 31
4.3.8. No Issuance, Sale, or Purchase
of Securities . . . . . . . . . . . . . . . . 32
4.3.9. Prohibition on Dividends. . . . . . . . . . . 32
4.3.10. Supplemental Financial Statements . . . . . . 32
4.4. Additional Agreements of Gundle . . . . . . . . . . . 32
4.4.1. Prohibition of Certain Employment
Contracts . . . . . . . . . . . . . . . . . . 32
4.4.2. Prohibition of Certain Loans. . . . . . . . . 32
4.4.3. Prohibition of Certain Commitments. . . . . . 32
4.4.4. Disposal of Assets. . . . . . . . . . . . . . 33
4.4.5. Maintenance of Insurance. . . . . . . . . . . 33
4.4.6. Acquisition Proposals . . . . . . . . . . . . 33
4.4.7. No Amendment to Certificate of
Incorporation, etc. . . . . . . . . . . . . . 35
4.4.8. No Issuance, Sale, or Purchase
of Securities . . . . . . . . . . . . . . . . 35
4.4.9. Prohibition on Dividends. . . . . . . . . . . 36
4.4.10. Stockholders' Meeting . . . . . . . . . . . . 36
4.4.11. Issuance of Gundle Common Stock . . . . . . . 36
4.4.12. Listing of Gundle Stock . . . . . . . . . . . 36
<PAGE> -iv-
4.4.13. Notice of Material Developments . . . . . . . 36
4.4.14. Refinancing of Outstanding Indebtedness . . . 36
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS. . . . . 37
5.1. Conditions Precedent to Obligations of SLT. . . . . . 37
5.1.1. Representations and Warranties
of Gundle True at Effective Date. . . . . . . 37
5.1.2. No Material Litigation. . . . . . . . . . . . 37
5.1.3. Opinion of Gundle Counsel . . . . . . . . . . 37
5.1.4. Stockholder Approval. . . . . . . . . . . . . 38
5.1.5. Hart-Scott-Rodino, etc. . . . . . . . . . . . 38
5.1.6. Listing of Gundle Common Stock. . . . . . . . 38
5.1.7. Consent of Certain Parties in
Privity With Gundle . . . . . . . . . . . . . 38
5.2. Conditions Precedent to Obligations of Gundle . . . . 39
5.2.1. Representations and Warranties of SLT
True at Effective Date. . . . . . . . . . . . 39
5.2.2. No Material Litigation. . . . . . . . . . . . 39
5.2.3. Opinion of SLT's Counsel. . . . . . . . . . . 39
5.2.4. Stockholder Approval. . . . . . . . . . . . . 40
5.2.5. Hart-Scott-Rodino, etc. . . . . . . . . . . . 40
5.2.6. Consent of Certain Parties in
Privity with SLT. . . . . . . . . . . . . . . 40
5.2.7. Employment Agreement With
William P. Reid . . . . . . . . . . . . . . . 40
5.2.8. Insurance . . . . . . . . . . . . . . . . . . 40
5.2.9. Ancillary Matters . . . . . . . . . . . . . . 40
ARTICLE VI
TERMINATION AND ABANDONMENT. . . . . . . 41
6.1. Termination . . . . . . . . . . . . . . . . . . . . . 41
6.1.1. By Mutual Consent . . . . . . . . . . . . . . 41
6.1.2. By Gundle Because of Dissenting
Stockholders. . . . . . . . . . . . . . . . . 41
6.1.3. By Gundle Because of Conditions Precedent . . 41
6.1.4. By Gundle Due to a Superior
Gundle Transaction Proposal . . . . . . . . . 41
6.1.5. By Gundle Because of Material
Adverse Change. . . . . . . . . . . . . . . . 41
6.1.6. By SLT Because of Conditions Precedent. . . . 41
6.1.7. By SLT Due to a Superior SLT
Transaction Proposal. . . . . . . . . . . . . 41
6.1.8. By SLT Because of Material Adverse Change . . 41
6.1.9. By Gundle or SLT Because of
Legal Proceedings . . . . . . . . . . . . . . 42
6.1.10. By Gundle or SLT if Merger not Effective by
July 31, 1995 . . . . . . . . . . . . . . . . 42
6.2. Termination by Board of Directors . . . . . . . . . . 42
6.3. Effect of Termination . . . . . . . . . . . . . . . . 42
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6.4. Waiver of Conditions. . . . . . . . . . . . . . . . . 42
6.5. Expense on Termination. . . . . . . . . . . . . . . . 42
ARTICLE VII
ADDITIONAL AGREEMENTS . . . . . . . . 43
7.1. Indemnification by SLT as to Proxy Statement. . . . . 43
7.2. Indemnification by Gundle as to Proxy Statement . . . 43
7.3. Undertaking to File Reports and Cooperate in
Rule 144 and Rule 145 Transactions. . . . . . . . . . 43
7.4. Gundle Investment Suitability and Related
Matters . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VIII
MISCELLANEOUS. . . . . . . . . . . 44
8.1. Entirety. . . . . . . . . . . . . . . . . . . . . . . 44
8.2. Counterparts. . . . . . . . . . . . . . . . . . . . . 44
8.3. Notices and Waivers . . . . . . . . . . . . . . . . . 44
8.4. Termination of Representations, Warranties, etc.. . . 45
8.5. Table of Contents and Captions. . . . . . . . . . . . 45
8.6. Successors and Assigns. . . . . . . . . . . . . . . . 45
8.7. Severability. . . . . . . . . . . . . . . . . . . . . 45
8.8. Applicable Law. . . . . . . . . . . . . . . . . . . . 45
8.9. Public Announcements. . . . . . . . . . . . . . . . . 46
8.10. Definitions . . . . . . . . . . . . . . . . . . . . . 46
8.11. Accounting Treatment. . . . . . . . . . . . . . . . . 47
APPENDICES
Amended and Restated Certificate of
Incorporation of Gundle. . . . . . . . . . . . . . . . App. I
Amended and Restated Bylaws of Gundle. . . . . . . . App. II
Registration Rights Agreement. . . . . . . . . . . . App. III
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PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER, dated as of March 28, 1995, by
and among Gundle Environmental Systems, Inc., a Delaware
corporation ("Gundle" or the "Surviving Corporation") and SLT
Environmental, Inc., a Delaware corporation ("SLT"). Gundle and
SLT are hereinafter collectively referred to as the "Merging
Corporations."
W I T N E S S E T H:
WHEREAS, Gundle is a corporation duly organized and validly
existing under the laws of the State of Delaware, with its
registered office at 1209 Orange Street, Wilmington, Delaware
19801 and its principal executive office at 19103 Gundle Road,
Houston, Texas 77073;
WHEREAS, the authorized capital stock of Gundle consists of
1,000 shares of preferred stock, no par value, of which at
December 31, 1994, no shares were issued or outstanding; and
15,000,000 shares of common stock, par value $.01 per share
("Gundle Common Stock"), of which at December 31, 1994,
10,184,568 shares were issued and outstanding, and an additional
494,539 shares were reserved for issuance in conjunction with
various employee benefit plans; at the same date, 500,000 shares
of Common Stock were held in Gundle's treasury;
WHEREAS, SLT is a corporation duly organized and validly
existing under the laws of the State of Delaware, with its
registered office at 1209 Orange Street, Wilmington, Delaware
19801 and the principal executive office of its primary North
American subsidiary located at 200 South Trade Center Parkway,
Conroe, Texas 77385;
WHEREAS, the authorized capital stock of SLT consists of
1,000 shares of common stock, par value $1 per share (the "SLT
Common Stock"), of which at December 31, 1994, 100 shares were
issued and outstanding; at the same date, no shares were reserved
for issuance or held in SLT's treasury; and
WHEREAS, the respective boards of directors of Gundle and
SLT deem it desirable and in the best interests of their
respective corporations and their respective stockholders that
SLT be merged into Gundle, pursuant to the provisions of Section
251 of the General Corporation Law of the State of Delaware, in
exchange for the consideration herein provided for, and have
proposed, declared advisable, and approved such merger pursuant
to this Plan and Agreement of Merger (the "Agreement"), which
Agreement has been duly approved by resolutions of the respective
boards of directors of Gundle and SLT;
PAGE
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NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, and in order to
set forth the terms and conditions of the merger, the mode of
carrying the same into effect, the manner and basis of converting
the presently outstanding shares of SLT Common Stock into shares
of Gundle Common Stock, and such other details and provisions as
are deemed necessary or proper, the parties hereto agree as
follows:
ARTICLE I
MERGER
1.1. Surviving Corporation. Subject to the adoption and
approval of this Agreement by the requisite vote of the
stockholders of each of the Merging Corporations and to the other
conditions hereinafter set forth, Gundle and SLT shall be, upon
the Effective Date of the merger as defined in Section 1.3
hereof, merged into a single surviving corporation, which shall
be Gundle, one of the Merging Corporations, which shall continue
its corporate existence and remain a Delaware corporation
governed by and subject to the laws of that state.
1.2. Stockholder Approval. This Agreement shall be
submitted for adoption and approval by the stockholders of each
of the Merging Corporations in accordance with their respective
certificates of incorporation and the applicable laws of the
State of Delaware, at separate meetings called and held for such
purpose.
1.3. Effective Date. The merger shall become effective
upon the filing by Gundle of a Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with
Section 251(c) of the General Corporation Law of the State of
Delaware. The date upon which the merger shall become effective
is referred to in this Agreement as the "Effective Date."
1.4. Name and Continued Corporate Existence of Surviving
Corporation
1.4.1. Name and Existence. On the Effective Date,
the Certificate of Incorporation of Gundle, the corporation
whose corporate existence is to survive the merger and
continue thereafter as the surviving corporation, shall be
amended and restated in its entirety into the form annexed
hereto as Appendix I (the "Restated Certificate of
Incorporation"). In all other respects the identity,
existence, purposes, powers, objects, franchises, rights,
and immunities of Gundle, the surviving corporation of the
merger, shall continue unaffected and unimpaired by the
merger, and the corporate identity, existence, purposes,
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powers, objects, franchises, rights, and immunities of SLT
shall be wholly merged into Gundle, the Surviving
Corporation, and Gundle shall be fully vested therewith.
Accordingly, on the Effective Date, the separate existence
of SLT, except insofar as continued by statute, shall cease.
1.4.2. Federal Income Tax Treatment of Merger. The
merger is intended to qualify as and, subject to the
requirements of Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"), shall be characterized as
a tax-free merger transaction described in Section 368(a)(1)(A) of
the Code.
1.5. Governing Law and Certificate of Incorporation of
Surviving Corporation
1.5.1. Delaware Law Governs and Gundle Certificate of
Incorporation, as Amended and Restated, Survives. The laws
of Delaware shall continue to govern the Surviving
Corporation. On the Effective Date, the Restated
Certificate of Incorporation shall be the certificate of
incorporation of Gundle until further amended in the manner
provided by law.
1.6. Bylaws of Surviving Corporation
1.6.1. Gundle Bylaws Survive. Effective as of the
Effective Date, the bylaws of Gundle shall be amended and
restated in their entirety in the form attached hereto as
Appendix II (the "Restated Bylaws"), and the Restated Bylaws
shall be the bylaws of the Surviving Corporation until
altered, amended, or repealed, or until new bylaws shall be
adopted in accordance with the provisions of law, the
Restated Certificate of Incorporation and the Restated
Bylaws.
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1.7. Directors and Officers of Surviving Corporation
1.7.1. Directors of Surviving Corporation. The names
and addresses of the persons who, upon the Effective Date,
shall constitute the board of directors of the Surviving
Corporation, and who shall hold office until the first
annual meeting of stockholders of the Surviving Corporation
next following the Effective Date, are as follows:
Name Address
Samir T. Badawi, Chairman 27 Rue du Bois de Boulogne
92200 Neuilly/Seine France
Thomas L. Caltrider,
Vice Chairman 19103 Gundle Road
Houston, Texas 77073
Hugh L. Rice 90 Madison Street
Suite 600
Denver, Colorado 80206
Brian D. Young 520 Madison Avenue
New York, New York 10022
T. William Porter 700 Louisiana Street
Suite 3500
Houston, Texas 77002
William P. Reid 23 Misty Grove Circle
The Woodlands, Texas 77381
and one additional nominee to be selected by SLT before the
mailing by Gundle of a proxy statement relating to a
shareholder vote with respect to the merger contemplated by
this Agreement.
1.7.2. Vacancies. On or after the Effective Date, if
a vacancy shall exist for any reason in the board of
directors or in any of the offices of the Surviving
Corporation, such vacancy shall be filled in the manner
provided in the Restated Certificate of Incorporation and/or
Restated Bylaws of the Surviving Corporation.
1.8. Capital Stock of Surviving Corporation
1.8.1 Capital Stock of Surviving Corporation. The
authorized number of shares of capital stock of the
Surviving Corporation, and the par value, designations,
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preferences, rights, and limitations thereof, and the
express terms thereof, shall be as set forth in the Restated
Certificate of Incorporation.
1.9. Conversion of Securities upon Merger
1.9.1. General. The manner and basis of converting the
issued and outstanding shares of the capital stock of SLT
into shares of the capital stock of Gundle shall be as
hereinafter set forth in this Section 1.9.
1.9.2. Conversion of SLT Common Stock. On the
Effective Date, each share of SLT Common Stock then issued
and outstanding, without any action on the part of the
holders thereof, shall automatically become and be converted
into the right to receive certificates evidencing 70,000
fully paid and nonassessable shares of issued and
outstanding Gundle Common Stock (the "Gundle Shares") upon
surrender, in accordance with Section 1.9.3 hereof, of
certificates theretofore evidencing shares of SLT Common
Stock. The Gundle Shares are hereinafter referred to
collectively as the "Merger Consideration."
1.9.3. Exchange of SLT Common Stock Certificates.
Commencing on the Effective Date, each holder of an
outstanding certificate or certificates theretofore
representing shares of SLT Common Stock may surrender the
same to an exchange agent designated by Gundle, and such
holder shall be entitled upon such surrender to receive in
exchange therefor a certificate or certificates
representing the number of whole Gundle Shares into which
the shares of SLT Common Stock theretofore represented by
the certificate or certificates so surrendered shall have
been converted as aforesaid. However, before surrender,
each outstanding certificate representing issued and
outstanding SLT Common Stock shall be deemed, for all
purposes, only to evidence ownership of the number of whole
Gundle Shares into which such shares have been so converted.
Unless and until such outstanding certificates formerly
representing SLT Common Stock are so surrendered, no
dividend payable to holders of record of Gundle Common Stock
as of any date after the Effective Date shall be paid to the
holders of such outstanding certificates in respect thereof.
Upon surrender of such outstanding certificates, however,
there shall be paid to the holders of the certificates of
Gundle Shares issued in partial exchange therefor the amount
of dividends, if any, which theretofore (but after the
Effective Date) became payable with respect to such full
Gundle Shares. No interest shall be payable with respect to
the payment of such dividends on surrender of outstanding
certificates. The holder of fractional share interests, as
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such, shall not be entitled to any dividends or to any
distribution in the event of liquidation or to any voting or
other privileges of a stockholder of Gundle.
1.9.4. Gundle Fractional Shares. No certificates for
fractional share interests of Gundle Common Stock will be
issued, but, in lieu thereof, Gundle will settle all such
fractional share interests in cash on the basis of the
closing price for Gundle Common Stock on the American Stock
Exchange on the last trading day before the Effective Date.
1.9.5. SLT's Transfer Books Closed. Upon the Effective
Date, the stock transfer books of SLT shall be deemed
closed, and no transfer of any certificates theretofore
representing shares of SLT shall thereafter be made or
consummated.
1.10. Assets and Liabilities
1.10.1. Assets and Liabilities of Merging Corporations
Become Those of Surviving Corporation. On the Effective
Date, all rights, privileges, powers, immunities, and
franchises of each of the Merging Corporations, both of a
public and private nature, and all property, real, personal,
and mixed, and all debts due on whatever account, as well as
stock subscriptions and all other choses or things in
action, and all and every other interest of or belonging to
or due to either of the Merging Corporations, shall be taken
by and deemed to be transferred to and shall be vested in
the Surviving Corporation without further act or deed, and
all such rights, privileges, powers, immunities, and
franchises, property, debts, choses or things in action, and
all and every other interest of each of the Merging
Corporations shall be thereafter as effectually the property
of the Surviving Corporation as they were of the respective
Merging Corporations, and the title to any real or other
property, or any interest therein, whether vested by deed or
otherwise, in either of the Merging Corporations, shall not
revert or be in any way impaired by reason of the merger,
provided, however, that all rights of creditors and all
liens upon any properties of each of the Merging
Corporations shall be preserved unimpaired, and all debts,
liabilities, restrictions, obligations, and duties of the
respective Merging Corporations, including without
limitation all obligations, liabilities and duties as lessee
under any existing lease, shall thenceforth attach to the
Surviving Corporation and may be enforced against and by it
to the same extent as if such debts, liabilities, duties,
restrictions and obligations had been incurred or contracted
by it. Any action or proceeding pending by or against
either of the Merging Corporations may be prosecuted to
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judgment as if the merger had not taken place, or the
Surviving Corporation may be substituted in place of either
of the Merging Corporations.
1.10.2. Conveyances to Surviving Corporation. The
Merging Corporations hereby agree, respectively, that from
time to time, as and when requested by the Surviving
Corporation, or by its successors and assigns, they will
execute and deliver or cause to be executed and delivered,
all such deeds, conveyances, assignments, permits, licenses
and other instruments, and will take or cause to be taken
such further or other action as the Surviving Corporation,
its successors or assigns, may deem necessary or desirable
to vest or perfect in or confirm to the Surviving
Corporation, its successors and assigns, title to and
possession of all the property, rights, privileges, powers,
immunities, franchises, and interests referred to in this
Section 1.10.2 and otherwise carry out the intent and
purposes of this Agreement.
1.10.3. Accounting Treatment. The assets and
liabilities of the Merging Corporations shall be taken up on
the books of the Surviving Corporation in accordance with
generally accepted accounting principles, and the capital
surplus and retained earnings accounts of the Surviving
Corporation shall be determined, in accordance with generally
accepted accounting principles, by the board of directors of
the Surviving Corporation. Nothing herein shall prevent the
board of directors of the Surviving Corporation from making
any future changes in its accounts in accordance with law.
1.10.4. Unclaimed Merger Consideration; No Escheat.
Subject to any contrary provision of governing law, all
consideration deposited with the exchange agent or held by
Gundle for the payment of the consideration into which the
outstanding shares of SLT Common Stock shall have been
converted, and remaining unclaimed for one year after the
Effective Date, shall be paid or delivered to Gundle; and the
holder of any unexchanged certificate or certificates which
before the Effective Date represented shares of SLT Common
Stock shall thereafter look only to Gundle for exchange or
payment thereof upon surrender of such certificate or
certificates to Gundle.
1.10.5. Dissenting Stockholders of SLT. SLT (or Gundle
on behalf of SLT) agrees that, if the merger contemplated
hereby becomes effective, it will promptly pay to any
dissenting stockholder of SLT the amount, if any, to which
such holder is entitled under the provisions of Section 262
of the Delaware General Corporation Law, provided such
dissenter acts in strict compliance with such provisions.
<PAGE> 7<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF SLT
2.1. Representations and Warranties of SLT. SLT represents
and warrants as follows:
2.1.1. Organization and Standing. SLT is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Delaware, has full requisite
corporate power and authority to carry on its business as
it is currently conducted, and to own and operate the
properties currently owned and operated by it, and is duly
qualified or licensed to do business and is in good standing
as a foreign corporation authorized to do business in all
jurisdictions in which the character of the properties owned
or the nature of the business conducted by it would make
such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not have a
material adverse effect on the financial condition,
properties or business of SLT.
2.1.2. Agreement Authorized and its Effect on Other
Obligations. This Agreement has been approved by the
requisite majority of the stockholders of SLT. The
consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate
action on the part of SLT, and this Agreement is a valid and
binding obligation of SLT enforceable against SLT (subject
to normal equitable principles) in accordance with its
terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, debtor relief or
similar laws affecting the rights of creditors generally.
At the Effective Date, the consummation of the merger
contemplated by this Agreement will not conflict with or
result in a violation or breach of any term or provision of,
nor constitute a default under (i) the certificate of
incorporation or bylaws of SLT or (ii) any obligation,
indenture, mortgage, deed of trust, lease, contract or other
agreement to which SLT or any of its subsidiaries is a party
or by which any of them or their properties are bound, other
than such violations, breaches or defaults as would not
result in any material adverse change in the financial
condition, properties or businesses of SLT and its
subsidiaries taken as a whole.
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2.1.3. Capitalization. The authorized capitalization of
SLT consists of 1,000 shares of common stock, par value $1
per share (the "SLT Common Stock"), of which at
December 31, 1994, 100 shares were issued and outstanding;
at the same date, no shares were reserved for issuance or
held in SLT's treasury. There exist no outstanding options,
subscriptions, warrants, calls, or similar commitments to
purchase, issue or sell or to convert any securities or
obligations into any of the authorized or issued capital
stock of SLT or any securities or obligations convertible
into or exchangeable for such capital stock.
2.1.4. Subsidiaries. Schedule 2.1.4 lists the
subsidiary corporations of SLT existing at December 31,
1994, and shows as to each of such subsidiary corporations
the percentage of the total outstanding stock thereof which
is owned by SLT. All outstanding shares of stock of the
subsidiary corporations owned by SLT are validly issued,
fully paid, and nonassessable, and SLT has good and
marketable title thereto free and clear of any mortgage,
pledge, lien, charge, security interest, option, right of
first refusal, preferential purchase right, defect,
encumbrance or other right or interest of any other person
(collectively, an "Encumbrance"). Each such subsidiary is a
corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction under which it
is incorporated and has full requisite corporate power and
authority to own its property and carry on its business as
presently conducted by it and is, or on the Effective Date
will be, duly qualified or licensed to do business and is,
or on the Effective Date will be, in good standing as a
foreign corporation authorized to do business in all
jurisdictions in which the character of the properties owned
or the nature of the business conducted makes such
qualification or licensing necessary, except where the
failure to be so qualified or licensed would not have a
material adverse effect on the financial condition,
properties or business of such subsidiary. As hereinafter
used in this Article II, the term "SLT" also includes any
and all of its directly and indirectly held subsidiaries,
except where the context indicates to the contrary.
2.1.5. Financial Statements. SLT has delivered to
Gundle copies of SLT's audited consolidated balance sheet
and related statements of income, retained earnings, and
cash flows, with appended notes which are an integral part
of such statements, as at and for SLT's fiscal years ended
December 31, 1989, 1990, 1991, 1992, 1993 and 1994. Such
financial statements are complete in all material respects,
present fairly the financial condition of SLT as at the
dates indicated, and the results of operations for the
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respective periods indicated, and have been prepared in
accordance with generally accepted accounting principles
applied on a consistent basis, except as noted therein. The
accounts receivable reflected in the December 31, 1994
audited consolidated balance sheet, or which have been
thereafter acquired by SLT, have been collected or are
current and collectible at the aggregate recorded amounts
thereof less applicable reserves computed in accordance with
generally accepted accounting principles, which reserves are
adequate. The inventories of SLT reflected in the
December 31, 1994 audited consolidated balance sheet, or
which have thereafter been acquired by it, consist of items
of a quality and quantity usable and salable in the normal
course of SLT's business, and the values at which
inventories are carried are in accordance with generally
accepted accounting principles.
2.1.6. Liabilities. SLT does not have any liabilities
or obligations, either accrued, absolute, contingent, or
otherwise, or have any knowledge of any potential
liabilities or obligations, which would materially adversely
affect the value and conduct of the business of SLT, other
than those (i) reflected or reserved against in the
December 31, 1994 audited consolidated balance sheet of SLT,
(ii) incurred in the ordinary course of business since
December 31, 1994 or (iii) set forth on Schedule 2.1.6
hereto.
2.1.7. Additional SLT Information. Attached as Schedule
2.1.7 are true, complete and correct lists of the following
items (which will be periodically updated by SLT and
delivered to Gundle through the Effective Date), and SLT
agrees that upon the request of Gundle, it will furnish to
Gundle true, complete and correct copies of any documents
referred to in such lists:
2.1.7.1. Real Estate. All real property and
structures thereon owned, leased or subject to a
contract of purchase and sale, or lease commitment, by
SLT, with a description of the nature and amount of any
Encumbrances thereto;
2.1.7.2. Machinery and Equipment. All machinery,
transportation equipment, tools, equipment, furnishings,
and fixtures (excluding such items as did not have a
cost basis of $1,000 or more at their respective dates
of acquisition by SLT) owned, leased or subject to a
contract of purchase and sale, or lease commitment, by
SLT with a description of the nature and amount of any
Encumbrances thereon;
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2.1.7.3. Inventory. All inventory items or
groups of inventory items owned by SLT, together with
the amount of any Encumbrances thereon;
2.1.7.4. Receivables. All accounts and notes
receivable of SLT, together with (i) aging schedules by
invoice date and due date, (ii) the amounts provided for
as an allowance for bad debts, (iii) the identity and
location of any asset in which SLT holds a security
interest to secure payment of the underlying
indebtedness, and (iv) a description of the nature and
amount of any Encumbrances on such accounts and notes
receivable;
2.1.7.5. Payables. All accounts and notes
payable of SLT, together with an appropriate aging
schedule;
2.1.7.6. Insurance. All insurance policies or
bonds currently maintained by SLT, including title
insurance policies, with respect to SLT, including those
covering SLT's properties, buildings, machinery,
equipment, fixtures, employees and operations, as well
as a listing of any premiums, audit adjustments or
retroactive adjustments due or pending on such policies
or any predecessor policies;
2.1.7.7. Material Contracts. All contracts
(including purchase and sale contracts, representative
contracts and construction contracts) made not in the
ordinary course of business, including leases under
which SLT is lessor or lessee, which are to be performed
in whole or in part after the Effective Date, and which
involve or may involve aggregate payments by or to SLT
of $50,000 or more after such date;
2.1.7.8. Employee Compensation Plans. All bonus,
incentive compensation, deferred compensation, profit-
sharing, retirement, pension, welfare, group insurance,
death benefit, or other fringe benefit plans,
arrangements or trust agreements of SLT, together with
copies of the most recent reports with respect to such
plans, arrangements, or trust agreements filed with any
governmental agency and all Internal Revenue Service
determination letters that have been received with
respect to such plans (collectively, "Employee Plans");
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2.1.7.9. Certain Salaries. The names and salary
rates of all present officers and employees of SLT whose
current regular annual salary rate is $50,000 or more,
together with any bonuses paid or payable to such
persons for the fiscal year ended December 31, 1994, or
since that date, and, to the extent existing on the date
of this Agreement, all arrangements with respect to any
bonuses to be paid to them from and after the date of
this Agreement;
2.1.7.10. Bank Accounts. The name of each bank
in which SLT has an account and the names of all persons
authorized to draw thereon;
2.1.7.11. Employee Agreements. Any collective
bargaining agreements of SLT with any labor union or
other representative of employees, including amendments,
supplements, and written or oral understandings, and all
employment and consulting agreements of SLT;
2.1.7.12. Patents. All patents, trademarks,
copyrights and other intellectual property rights owned,
licensed, or used by SLT;
2.1.7.13. Trade Names. All trade names and
fictitious names used or held by SLT, whether and where
such names are registered and where used;
2.1.7.14. Promissory Notes. All long-term and
short-term promissory notes, installment contracts, loan
agreements, credit agreements, and any other agreements
of SLT relating thereto or with respect to collateral
securing the same;
2.1.7.15. Guaranties. All indebtedness,
liabilities and commitments of others and as to which
SLT is a guarantor, endorser, co-maker, surety, or
accommodation maker, or is contingently liable therefor
(excluding liabilities as an endorser of checks and the
like in the ordinary course of business) and all letters
of credit, whether stand-by or documentary, issued by
any third party;
2.1.7.16. Financial Statements. Financial
statements (which may be in summary form) containing the
information described in Paragraphs 2.1.5 and Paragraph
4.3.10, prepared in the manner described in such
Paragraphs;
2.1.7.17. Reserves and Accruals. All accounting
reserves and accruals maintained in the SLT financial
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statements as of December 31, 1994, including a report
on the status of all unresolved warranty claims in
existence on such date;
2.1.7.18. Material Leases. All material leases
to which SLT is a party; and
2.1.7.19. Environment. All environmental permits,
approvals, certi-fications, licenses, registrations,
orders and decrees applicable to current operations
conducted by SLT and all environmental audits,
assessments, investigations and reviews conducted within
the last five years on any property owned or used by
SLT.
Schedule 2.1.7 shall be true, complete and correct as of
the Effective Date, except for items contained in Paragraphs
2.1.7.1; 2.1.7.2; 2.1.7.4; 2.1.7.5; and 2.1.7.16; and
2.1.7.17, which are true, complete and correct as of
December 31, 1994; and the items contained in Paragraph
2.1.7.3, which are true, complete and correct as of
March 31, 1995. The items contained in Paragraph 2.1.7.3
may be provided to Gundle after the date of the execution of
this Agreement but before the Effective Date.
2.1.8. No Undisclosed Defaults. Except as may be
specified in Schedule 2.1.8, SLT is not a party to, or bound
by, any material contract or arrangement of any kind to be
performed after the Effective Date, nor is SLT in default in
any material obligation or covenant on their part to be
performed under any material obligation, lease, contract,
order, plan or other arrangement except as identified in
Schedule 2.1.8.
2.1.9. Absence of Certain Changes and Events. Except
as set forth in Schedule 2.1.9 hereto, other than as a
result of the transactions contemplated by this Agreement,
since December 31, 1994, there has not been:
2.1.9.1. Financial Change. Any material adverse
change in the financial condition, backlog, operations,
assets, liabilities or business of SLT;
2.1.9.2. Property Damage. Any material damage,
destruction, or loss to the business or properties of
SLT (whether or not covered by insurance);
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2.1.9.3. Dividends. Any declaration, setting
aside, or payment of any dividend or other distribution
in respect of the common stock of SLT, or any direct or
indirect redemption, purchase or any other acquisition
by SLT of any such stock;
2.1.9.4. Capitalization Change. Any change in
the capital stock or in the number of shares or classes
of SLT's authorized or outstanding capital stock as
described in Paragraph 2.1.3;
2.1.9.5. Labor Disputes. Any labor dispute
(other than routine grievances); or
2.1.9.6. Other Material Changes. Any other event
or condition known to SLT particularly pertaining to
and adversely affecting the operations, assets or
business of SLT (other than events or conditions which
are of a general or industry-wide nature and of general
public knowledge) which would constitute a material
adverse change.
2.1.10. Taxes. Except as set forth in Schedule
2.1.10, and except with respect to failures which, in the
aggregate, would not result in a material adverse change to
SLT, proper and accurate Federal, state and local income,
value added, sales, use, franchise, gross revenue, turnover,
excise, payroll, property, employment, customs duties and
any and all other tax returns, reports, and estimates have
been filed with appropriate governmental agencies, domestic
and foreign, by SLT for each period for which any returns,
reports, or estimates were due (taking into account any
extensions of time to file before the date hereof); all
taxes shown by such returns to be payable and any other
taxes due and payable have been paid other than those being
contested in good faith by SLT; and the tax provision
reflected in SLT's financial statements as of December 31,
1994 is adequate, in accordance with generally accepted
accounting principles, to cover liabilities of SLT at the
date thereof for all taxes, including any interest,
penalties and additions to taxes of any character whatsoever
applicable to SLT or its assets or business. Except as set
forth on Schedule 2.1.10, no waiver of any statute of
limitations executed by SLT with respect to federal or state
income or other tax is in effect for any period. The
Federal income tax returns of SLT have never been examined
by the Internal Revenue Service. There are no tax liens on
any assets of SLT except for taxes not yet currently due and
those which could not reasonably be expected to result in a
material adverse change to SLT. The net operating loss and
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other tax carryovers available to SLT and each of its
subsidiaries reflected on its most recently filed Federal
income tax return as of the date hereof are as set forth on
Schedule 2.1.10, and except as set forth on Schedule
2.1.10 or resulting from the transactions contemplated by
this Agreement, the ability of SLT and each of its
subsidiaries to use such carryovers will not have been
affected by Sections 382, 383 or 384 of the Code or by the
SRLY or CRCO limitations of Treasury Regulations Sections
1.1502-21 or 1.1502-22.
2.1.11. Intellectual Property. Except as set forth in
Schedule 2.1.11, SLT owns or possesses licenses to use all
patents, patent applications, trademarks and service marks
(including registrations and applications therefor), trade
names, copyrights and written know-how, trade secrets and
all other similar proprietary data and the goodwill
associated therewith (collectively, the "Intellectual
Property") that are either material to the business of SLT
or that are necessary for the manufacture, use or sale of
any products manufactured, used or sold by SLT, including
all such Intellectual Property listed in Schedule 2.1.7.
The Intellectual Property is owned or licensed by SLT free
and clear of any Encumbrance other than such Encumbrances as
are listed in Schedule 2.1.11. Except as otherwise
indicated in such Schedule, SLT has not granted to any other
person any license to use any Intellectual Property. SLT
has not received any notice of infringement,
misappropriation, or conflict with, the intellectual
property rights of others in connection with the use by SLT
of the Intellectual Property.
2.1.12. Title to Properties. With minor exceptions
which in the aggregate are not material, and except for
merchandise and other property sold, used or otherwise
disposed of in the ordinary course of business for fair
value, SLT has good and marketable title to all its
properties, interests in properties and assets, real and
personal, reflected in the December 31, 1994 financial
statements referred to in Paragraph 2.1.5 or in Schedule
2.1.7, free and clear of any Encumbrance of any nature
whatsoever, except (i) liens and Encumbrances reflected in
the balance sheet of SLT dated December 31, 1994 referred to
in Paragraph 2.1.5 or in Schedule 2.1.7, (ii) liens for
current taxes not yet due and payable, and (iii) such
imperfections of title, easements and Encumbrances, if any,
as are not substantial in character, amount, or extent and
do not and will not materially detract from the value, or
interfere with the present use, of the property subject
thereto or affected thereby, or otherwise materially impair
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business operations. All leases pursuant to which SLT
leases (whether as lessee or lessor) any substantial amount
of real or personal property are in good standing, valid,
and effective; and there is not, under any such leases, any
existing or prospective default or event of default or event
which with notice or lapse of time, or both, would
constitute a default by SLT and in respect to which SLT has
not taken adequate steps to prevent a default from
occurring. The buildings and premises of SLT that are used
in its business are in good operating condition and repair,
subject only to ordinary wear and tear. All major items of
equipment of SLT are in good operating condition and in a
state of reasonable maintenance and repair, ordinary wear
and tear excepted, and are free from any known defects
except as may be repaired by routine maintenance and such
minor defects as to not substantially interfere with the
continued use thereof in the conduct of normal operations.
2.1.13. Litigation. Except to the extent set forth in
Schedule 2.1.13, there is no suit, action, or legal,
administrative, arbitration, or other proceeding or
governmental investigation pending to which SLT is a party
or, to the knowledge of SLT, might become a party or which
particularly affects SLT, nor is any change in the zoning or
building ordinances directly affecting the real property or
leasehold interests of SLT, pending or, to the knowledge of
SLT, threatened.
2.1.14. Environmental Compliance. Except as set forth
in Schedule 2.1.14;
2.1.14.1. Environmental Conditions. There are no
environmental conditions or circumstances, such as the
presence or release of any hazardous substance, on any
property presently or previously owned by SLT that
could result in a material adverse change to SLT.
2.1.14.2. Permits, etc. SLT has in full force
and effect all environmental permits, licenses,
approvals and other authorizations required to conduct
its operations and is operating in compliance
thereunder.
2.1.14.3. Compliance. SLT's operations and use
of its assets do not violate any applicable federal,
state or local law, statute, ordinance, rule,
regulation, order or notice requirement pertaining to
(a) the condition or protection of air, groundwater,
surface water, soil, or other environmental media,
(b) the environment, including natural resources or any
<PAGE> 16
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activity which affects the environment, or (c) the
regulation of any pollutants, contaminants, waste,
substances (whether or not hazardous or toxic),
including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act
(42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C.
Section 1609 et seq.), the Clean Water Act (33 U.S.C. Section 1251
et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.),
the Toxic Substances Control Act (17 U.S.C. Section 2601
et seq.), the Federal Insecticide Fungicide and
Rodenticide Act (7 U.S.C. Section 136 et seq.), the Safe
Drinking Water Act (42 U.S.C. Section 201 and Section 300f
et seq.), the Rivers and Harbors Act (33 U.S.C. Section 401
et seq.), the Oil Pollution Act (33 U.S.C. Section 2701
et seq.) and analogous state and local provisions, as
any of the foregoing may have been amended or
supplemented from time to time (collectively the
"Applicable Environmental Laws"), except for violations
which, either singly or in the aggregate, would not
result in a material adverse change to SLT.
2.1.14.4. Past Compliance. None of the
operations or assets of SLT has ever been conducted or
used in such a manner as to constitute violation of any
of the Applicable Environmental Laws, except for
violations which, either singly or in the aggregate,
would not result in a material adverse change to SLT.
2.1.14.5. Environmental Claims. No notice has
been served on SLT from any entity, governmental agency
or individual regarding any existing, pending or
threatened investigation or inquiry related to alleged
violations under any Applicable Environmental Laws, or
regarding any claims for remedial obligations or
contribution under any Applicable Environmental Laws,
other than any of the foregoing which, either singly or
in the aggregate, would not result in a material
adverse change to SLT.
2.1.14.6. Renewals. SLT does not know of any
reason Gundle would not be able to renew any of the
permits, licenses, or other authorizations required
pursuant to any Applicable Environmental Laws to
operate and use any of SLT's assets for their current
purposes and uses.
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2.1.14.7. Asbestos and PCBs. No asbestos or
polychlorinated biphenyls ("PCB") are currently being
used or have ever been used by SLT in its operations or
on its properties.
2.1.15. Compliance with Other Laws. Except as set
forth in Schedule 2.1.15, SLT is not in violation of or in
default with respect to, or in alleged violation of or
alleged default with respect to, the Occupational Safety and
Health Act (29 U.S.C. Sections 651 et seq.) as amended ("OSHA"),
or any other applicable law or any applicable rule,
regulation, or any writ or decree of any court or any
governmental commission, board, bureau, agency, or
instrumentality, or delinquent with respect to any report
required to be filed with any governmental commission,
board, bureau, agency or instrumentality, except for
violations which, either singly or in the aggregate, do not
and are not expected to result in a material adverse change
in the financial condition, properties or business of SLT.
2.1.16. Finder's Fee. All negotiations relative to
this Agreement and the transactions contemplated hereby have
been carried on by SLT and its counsel directly with Gundle
and its counsel, without the intervention of any other
person as the result of any act of SLT, and so far as is
known to SLT, without the intervention of any other person
in such manner as to give rise to any valid claim against
any of the parties hereto for a brokerage commission,
finder's fee or any similar payments.
2.1.17. Compliance with ERISA. Each benefit plan set
forth on Schedule 2.1.17 (the "Benefit Plans") complies
currently, and has complied in the past, in form and
operation, with the applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), the Internal Revenue Code of 1986, as amended
(the "Code"), and other applicable laws. All contributions
required to be made to each Benefit Plan under the terms of
such Benefit Plans, ERISA or other applicable laws have been
timely made.
2.1.17.1. Prohibited Transactions. SLT has not
engaged in any transaction in connection with which it
could be subject (either directly or indirectly) to a
material liability for either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code.
<PAGE> 18
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2.1.17.2. Plan Termination; Material Liabilities.
There has been no termination of an "employee pension
benefit plan" as defined in ERISA which is subject to
Title IV of ERISA (a "Statutory Plan") or trust created
under any Statutory Plan that would give rise to a
material liability to the Pension Benefit Guaranty
Corporation ("PBGC") on the part of SLT. All Statutory
Plans intended to be tax-qualified under Section 401(a)
or 403(a) of the Code have complied in the past, both
in form and operation, with every provision of the
Code, every regulation promulgated pursuant thereto,
and every ruling, notice or announcement issued by the
Internal Revenue Service necessary to maintain the
qualified status of such Statutory Plans. No
material liability to the PBGC has been or is expected
to be incurred with respect to any Statutory Plan. The
PBGC has not instituted proceedings to terminate any
Statutory Plan. There exists no condition or set of
circumstances which presents a material risk of
termination or partial termination of any Statutory
Plan by the PBGC.
2.1.17.3. Accumulated Funding Deficiency. Full
payment has been made of all amounts which are required
under the terms of each Statutory Plan, ERISA or other
applicable laws, domestic and foreign, to have been
paid as contributions to such Statutory Plan as of
December 31, 1994, and no accumulated funding
deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, exists
with respect to any Statutory Plan or, other than as
set forth on Schedule 2.1.17.3, with respect to any
foreign employee pension benefit plan maintained by SLT
or any of its subsidiaries.
2.1.17.4 Relationship of Benefits to Pension Plan
Assets. The current value of all accrued benefits,
both vested and unvested, under all Statutory Plans
does not exceed the current value of the assets of such
Statutory Plans allocable to such accrued benefits,
except as disclosed in the financial statements
described in Paragraph 2.1.5. For purposes of the
representation in this Paragraph 2.1.17.4, the term
"current value" has the meaning specified in Section
4062(b)(1)(A) of ERISA, the term "accrued benefit" has
the meaning specified in Section 3 of ERISA and
"current value" is based upon the same actuarial
assumptions used by SLT for funding.
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2.1.17.5. Execution of Agreements. The execution
and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not involve
any transaction which is subject to the prohibitions of
Section 406 of ERISA or in connection with which a tax
could be imposed pursuant to Section 4975 of the Code.
2.1.17.6. Fiduciary Liability. There have been
no acts, failures to act, omissions or transactions
involving a Statutory Plan or the assets thereof which
could result in imposition on SLT (whether direct or
indirect) of damages or liability in actions brought
under Section 502 or Sections 404 through 409 of ERISA.
2.1.17.7. Pending Claims. There are no claims,
pending or threatened, involving any of the Benefit
Plans by any current or former employee (or beneficiary
thereof) of SLT which allege any violation of ERISA or
the terms of the Benefit Plans, nor is there any
reasonable basis to anticipate any claims involving
such Benefit Plans which would likely be successfully
maintained against SLT.
2.1.17.8. Multiemployer Plans. Except as set
forth in Schedule 2.1.17.8, neither SLT nor any trade
or business (whether or not incorporated) which
together with SLT would be deemed to be a "single
employer" within the meaning of Section 4001(b) of
ERISA or Subsections 414(b), (c), (m) or (o) of the
Code sponsors, maintains, or contributes to, or has at
any time in the six-year period preceding the date of
this Agreement sponsored, maintained or contributed to,
any plan (not exempt from the provisions of ERISA),
including, but not limited to, any plan which is a
"multiemployer plan" as such term is defined in Section
3(37) or 4001(a)(3) of ERISA.
2.1.17.9. No Reportable Event. There has been no
"reportable event" (within the meaning of Section
4043(b) of ERISA with respect to a Statutory Plan) or
any "prohibited transaction" (as such term is defined
in Section 406 of ERISA and Section 4975(c) of the
Code) with respect to any of the Employee Plans. All
reporting and disclosure requirements under Title I of
ERISA have been met.
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2.1.18. Investigations; Litigation. Except as
required pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1978 and the rules and regulations
promulgated thereunder (collectively, "HSR") and any
applicable comparable foreign laws and regulations, (i) no
investigation or review by any governmental entity with
respect to SLT or any of the transactions contemplated by
this Agreement is pending or, to the best of SLT's
knowledge, threatened, nor has any governmental entity
indicated to SLT an intention to conduct the same, and
(ii) there is no action, suit or proceeding pending or, to
the best of SLT's knowledge, threatened against or affecting
SLT at law or in equity, or before any federal, state,
municipal or other governmental department, commission,
board, bureau, agency or instrumentality, which either
individually or in the aggregate, does or is likely to
result in any material adverse change in the financial
condition, properties or businesses of SLT.
2.1.19. Product Warranty. There are no existing
liabilities or, to the knowledge of SLT, potential
liabilities, arising from claims regarding the performance
or design of the products sold by SLT either in the past or
at present that in the aggregate would constitute a material
adverse change.
2.1.20. Information for Gundle Proxy Statement. All
information and data (including financial statements)
concerning SLT which is or will be included in the proxy
statement (the "Proxy Statement") to be used by Gundle in
connection with the transactions contemplated by this
Agreement will be furnished by SLT for inclusion therein and
will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements contained therein not misleading.
2.1.21. Compliance with Export Laws. All exports by
SLT of equipment, software and other technology have been
made in compliance with all federal and other applicable
laws, rules and regulations and in connection therewith, SLT
has obtained all required approvals of the U.S. Department
of Commerce and Department of Treasury.
2.1.22 FIRPTA; Investment Company. SLT is not a
United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code, nor is
it an "investment company," or an "affiliated person of" or
"promoter" or "principal underwriter" of an investment
company, as those terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company
Act").
<PAGE> 21 <PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GUNDLE
3.1. Representations and Warranties of Gundle. Gundle
represents and warrants as follows:
3.1.1. Organization and Standing. Gundle is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, has full
requisite corporate power and authority to carry on its
business as it is currently conducted, and to own and
operate the properties currently owned and operated by it,
and is duly qualified or licensed to do business and is in
good standing as a foreign corporation authorized to do
business in all jurisdictions in which the character of the
properties owned or the nature of the business conducted by
it would make such qualification or licensing necessary,
except where the failure to be so qualified or licensed
would not have a material adverse effect on the financial
condition, properties or business of Gundle.
3.1.2. Agreement Authorized and its Effect on Other
Obligations. Upon approval of this Agreement by the
stockholders of Gundle, the consummation of the transactions
contemplated hereby will have been duly and validly
authorized by all necessary corporate action on the part of
Gundle, and this Agreement will be a valid and binding
obligation of Gundle enforceable against Gundle (subject to
normal equitable principles) in accordance with its terms,
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, debtor relief or similar laws
affecting the rights of creditors generally. At the
Effective Date, the consummation of the merger contemplated
by this Agreement will not conflict with or result in a
violation or breach of any term or provision of, nor
constitute a default under (i) the certificate of
incorporation or bylaws of Gundle or (ii) any obligation,
indenture, mortgage, deed of trust, lease, contract or other
agreement to which Gundle or any of its subsidiaries is a
party or by which any of them or their properties are bound,
other than such violations, breaches or defaults as would
not result in any material adverse change in the financial
condition, properties or business of Gundle and its
subsidiaries taken as a whole.
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3.1.3. Capitalization. The capitalization of Gundle
consists of 1,000 shares of preferred stock, no par value,
of which at December 31, 1994 no shares were issued or
outstanding; and 15,000,000 shares of Gundle Common Stock,
of which at December 31, 1994, 10,184,568 shares were issued
and outstanding and 494,539 shares were reserved for
issuance in connection with various employee benefit plans;
at the same date, 500,000 shares of Gundle Common Stock were
held in Gundle's treasury.
3.1.4. Subsidiaries. All outstanding shares of stock
of the subsidiary corporations owned by Gundle are validly
issued, fully paid, and nonassessable, and Gundle has good
and marketable title thereto free and clear of any
Encumbrance. Each such subsidiary is a corporation duly
organized, validly existing, and in good standing under the
laws of the jurisdiction under which it is incorporated and
has full requisite corporate power and authority to own its
property and carry on its business as presently conducted by
it and is, or on the Effective Date will be, duly qualified
or licensed to do business and is, or on the Effective Date
will be, in good standing as a foreign corporation
authorized to do business in all jurisdictions in which the
character of the properties owned or the nature of the
business conducted makes such qualification or licensing
necessary, except where the failure to be so qualified or
licensed would not have a material adverse effect on the
financial condition, properties or business of such
subsidiary. As hereinafter used in this Article III, the
term "Gundle" also includes any and all of its directly and
indirectly held subsidiaries, except where the context
indicates to the contrary.
3.1.5. Reports and Financial Statements. Gundle has
previously furnished to SLT true and complete copies of
(a) all annual reports filed with the Securities and
Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since December 31, 1991, (b) Gundle's quarterly and
other reports filed with the Commission since December 31,
1992, (c) all definitive proxy solicitation materials filed
with the Commission since December 31, 1991, and (d) any
registration statements declared effective by the Commission
since December 31, 1991. The consolidated financial
statements of Gundle and its subsidiaries included in
Gundle's most recent report on Form 10-K and most recent
report on Form 10-Q, and any other reports filed with the
Commission by Gundle under the Exchange Act (the "Reports")
were, or will be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis
<PAGE> 23
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during the periods involved and fairly present, or will
present, the consolidated financial position for Gundle and
its subsidiaries as of the dates thereof and the
consolidated results of their operations and changes in
financial position for the periods then ended; and the
Reports did not and will not contain any 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, in light of the circumstances under which they were
made, not misleading. Since December 31, 1991, Gundle has
filed with the Commission all reports required to be filed
by Gundle under the Exchange Act and the rules and
regulations of the Commission.
3.1.6. Liabilities. Gundle does not have any
liabilities or obligations, either accrued, absolute,
contingent, or otherwise, or have any knowledge of any
potential liabilities or obligations, which would materially
adversely affect the value and conduct of the business of
Gundle, other than those (i) disclosed in the Reports or
(ii) set forth on Schedule 3.1.6 hereto.
3.1.7. Additional Gundle Information. Attached as
Schedule 3.1.7 are true, complete and correct lists of the
following items, other than such items as are contained or
disclosed in the Reports (and the Exhibits filed pursuant
thereto) (all of which will be periodically updated by
Gundle and delivered to SLT through the Effective Date), and
Gundle agrees that upon the request of SLT, it will furnish
to SLT true, complete and correct copies of any documents
referred to in such lists:
3.1.7.1. Real Estate. All real property and
structures thereon owned, leased or subject to a
contract of purchase and sale, or lease commitment, by
Gundle, with a description of the nature and amount of
any Encumbrances thereto;
3.1.7.2. Machinery and Equipment. All machinery,
transportation equipment, tools, equipment,
furnishings, and fixtures (excluding such items as did
not have a cost basis of $1,000 or more at their
respective dates of acquisition by Gundle) owned,
leased or subject to a contract of purchase and sale,
or lease commitment, by Gundle with a description of
the nature and amount of any Encumbrances thereon;
3.1.7.3 Inventory. All inventory items or groups
of inventory items owned by Gundle, together with the
amount of any Encumbrances thereon;
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3.1.7.4. Receivables. All accounts and notes
receivable of Gundle, together with (i) aging schedules
by invoice date and due date, (ii) the amounts provided
for as an allowance for bad debts, (iii) the identity
and location of any asset in which Gundle holds a
security interest to secure payment of the underlying
indebtedness, and (iv) a description of the nature and
amount of any Encumbrances on such accounts and notes
receivable;
3.1.7.5. Payables. All accounts and notes
payable of Gundle, together with an appropriate aging
schedule;
3.1.7.6. Insurance. All insurance policies or
bonds currently maintained by Gundle, including title
insurance policies, with respect to Gundle, including
those covering Gundle's properties, buildings,
machinery, equipment, fixtures, employees and
operations, as well as a listing of any premiums, audit
adjustments or retroactive adjustments due or pending
on such policies or any predecessor policies;
3.1.7.7. Material Contracts. All contracts
(including purchase and sale contracts, representative
contracts and construction contracts) made not in the
ordinary course of business, including leases under
which Gundle is lessor or lessee, which are to be
performed in whole or in part after the Effective Date,
and which involve or may involve aggregate payments by
or to Gundle of $50,000 or more after such date;
3.1.7.8. Employee Compensation Plans. All
Employee Plans;
3.1.7.9. Certain Salaries. The names and salary
rates of all present officers and employees of Gundle
whose current regular annual salary rate is $50,000 or
more, together with any bonuses paid or payable to such
persons for the fiscal year ended March 31, 1994, and,
to the extent existing on the date of this Agreement,
all arrangements with respect to any bonuses to be paid
to them from and after the date of this Agreement;
3.1.7.10. Employee Agreements. Any collective
bargaining agreements of Gundle with any labor union or
other representative of employees, including
amendments, supplements, and written or oral
understandings, and all employment and consulting
agreements of Gundle;
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3.1.7.11. Patents. All patents, trademarks,
copyrights and other intellectual property rights
owned, licensed, or used by Gundle;
3.1.7.12. Trade Names. All trade names and
fictitious names used or held by Gundle, whether and
where such names are registered and where used;
3.1.7.13. Promissory Notes. All long-term and
short-term promissory notes, installment contracts,
loan agreements, credit agreements, and any other
agreements of Gundle relating thereto or with respect
to collateral securing the same;
3.1.7.14. Guaranties. All indebtedness,
liabilities and commitments of others and as to which
Gundle is a guarantor, endorser, co-maker, surety, or
accommodation maker, or is contingently liable therefor
(excluding liabilities as an endorser of checks and the
like in the ordinary course of business) and all
letters of credit, whether stand-by or documentary,
issued by any third party;
3.1.7.15. Reserves and Accruals. All accounting
reserves and accruals maintained in the Gundle
financial statements as of December 31, 1994, including
a report on the status of all unresolved warranty
claims in existence on such dates.
3.1.7.16. Material Leases. All material leases
to which Gundle is a party.
3.1.7.17. Environment. All environmental permits,
approvals, certifications, licenses, registrations,
orders and decrees applicable to current operations
conducted by Gundle and all environmental audits,
assessments, investigations and reviews conducted
within the last five years on any property owned or
used by Gundle.
Schedule 3.1.7 shall be true, complete and correct as
of the Effective Date, except for items contained in Para-
graphs 3.1.7.1; 3.1.7.2; 3.1.7.4; 3.1.7.5; and 3.1.7.17,
which are true, complete and correct as of December 31,
1994; and the items contained in Paragraph 3.1.7.3, which
are true, complete and correct as of December 31, 1994. In
addition, the items contained in Paragraph 3.1.7.3 may be
provided to SLT after the date of the execution of this
Agreement but before the Effective Date. In addition,
Gundle shall, on SLT's request, furnish SLT copies of all
Reports filed by Gundle with the Commission after the date
hereof through the Effective Date.
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3.1.8. No Undisclosed Defaults. Except as may be
specified in the Reports or in Schedule 3.1.8, Gundle is not
a party to, or bound by, any material contract or
arrangement of any kind to be performed after the Effective
Date, nor is Gundle in default in any material obligation or
covenant on its part to be performed under any material
obligation, lease, contract, order, plan or other
arrangement except as identified in the Reports or in
Schedule 3.1.8.
3.1.9. Absence of Certain Changes and Events in
Gundle. Except as set forth in Schedule 3.1.9 hereto, other
than as a result of the transactions contemplated by this
Agreement, since December 31, 1994, there has not been:
3.1.9.1. Financial Change. Any material adverse
change in the financial condition, operations, assets
or business of Gundle;
3.1.9.2. Property Damage. Any material damage,
destruction, or loss to the business or properties of
Gundle (whether or not covered by insurance);
3.1.9.3. Dividends. Any declaration, setting
aside, or payment of any dividend or other distribution
in respect of any dividend or other distribution in
respect of Gundle's capital stock, or any direct or
indirect redemption, purchase or any other acquisition
of such stock;
3.1.9.4. Capitalization Change. Any change in
the capital stock or in the number of shares or classes
of Gundle's authorized or outstanding capital stock as
described in Paragraph 3.1.3;
3.1.9.5. Labor Disputes. Any labor dispute
(other than routine grievances); or
3.1.9.6. Other Material Changes. Any other event
or condition known to Gundle particularly pertaining to
and adversely affecting the operations, assets or
business of Gundle (other than events or conditions
which are of a general or industry-wide nature and of
general public knowledge) which would constitute a
material adverse change.
3.1.10. Taxes. Except as set forth in Schedule 3.1.10,
and except with respect to failures which in the aggregate,
would not result in a material adverse change on Gundle,
proper and accurate Federal, state and local income, value
added, sales, use, franchise, gross revenue, turnover,
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excise, payroll, property, employment, customs duties and
any and all other tax returns, reports, and estimates have
been filed with appropriate governmental agencies, domestic
and foreign, by Gundle for each period for which any
returns, reports, or estimates were due (taking into account
any extensions of time to file before the date hereof); all
taxes shown by such returns to be payable and any other
taxes due and payable have been paid other than those being
contested in good faith by Gundle; and the tax provision
reflected in Gundle's financial statements as of
December 31, 1994 is adequate, in accordance with generally
accepted accounting principles, to cover liabilities of
Gundle at the date thereof for all taxes, including any
interest, penalties and additions to taxes of any character
whatsoever applicable to Gundle or its assets or business.
Except as set forth on Schedule 3.1.10, no waiver of any
statute of limitations executed by Gundle with respect to
Federal or state income or other tax is in effect for any
period. The Federal income tax returns of Gundle have never
been examined by the Internal Revenue Service. There are no
tax liens on any assets of Gundle except for taxes not yet
currently due and those which could not reasonably be
expected to result in a material adverse change to Gundle.
3.1.11. Intellectual Property. Except as set forth in
Schedule 3.1.11, Gundle owns or possesses licenses to use
all Intellectual Property that is either material to the
business of Gundle or that is necessary for the manufacture,
use or sale of any products manufactured, used or sold by
Gundle, including all such Intellectual Property listed in
the Reports. The Intellectual Property is owned or licensed
by Gundle free and clear of any Encumbrance other than such
Encumbrances as are listed in Schedule 3.1.11. Except as
otherwise indicated in such Schedule, Gundle has not granted
to any other person any license to use any Intellectual
Property. Gundle has not received any notice of
infringement, misappropriation, or conflict with, the
intellectual property rights of others in connection with
the use by Gundle of its Intellectual Property.
3.1.12. Title to Properties. With minor exceptions
which in the aggregate are not material, and except for
merchandise and other property sold, used or otherwise
disposed of in the ordinary course of business for fair
value, Gundle has good and marketable title to all its
properties, interests in properties and assets, real and
personal, reflected in the December 31, 1994 financial
statements contained in the Reports, free and clear of any
Encumbrance of any nature whatsoever, except (i) liens and
Encumbrances reflected in the balance sheet of Gundle dated
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December 31, 1994 included in the Reports, (ii) liens for
current taxes not yet due and payable, and (iii) such
imperfections of title, easements and Encumbrances, if any,
as are not substantial in character, amount, or extent and
do not and will not materially detract from the value, or
interfere with the present use, of the property subject
thereto or affected thereby, or otherwise materially impair
business operations. All leases pursuant to which Gundle
leases (whether as lessee or lessor) any substantial amount
of real or personal property are in good standing, valid,
and effective; and there is not, under any such leases, any
existing or prospective default or event of default or event
which with notice or lapse of time, or both, would
constitute a default by Gundle and in respect to which
Gundle has not taken adequate steps to prevent a default
from occurring. The buildings and premises of Gundle that
are used in its business are in good operating condition and
repair, subject only to ordinary wear and tear. All major
items of equipment of Gundle are in good operating condition
and in a state of reasonable maintenance and repair,
ordinary wear and tear excepted, and are free from any known
defects except as may be repaired by routine maintenance and
such minor defects as to not substantially interfere with
the continued use thereof in the conduct of normal
operations.
3.1.13. Litigation. Except to the extent set forth in
the Reports or in Schedule 3.1.13, there is no suit, action,
or legal, administrative, arbitration, or other proceeding
or governmental investigation pending to which Gundle is a
party or, to the knowledge of Gundle, might become a party
or which particularly affects Gundle, nor is any change in
the zoning or building ordinances directly affecting the
real property or leasehold interests of Gundle, pending or,
to the knowledge of Gundle, threatened.
3.1.14. Environmental Compliance. Except as set forth
in Schedule 3.1.14;
3.1.14.1. Environmental Conditions. There are no
environmental conditions or circumstances such as the
presence or release of any hazardous substance on any
property presently or previously owned by Gundle that
could result in a material adverse change to Gundle.
3.1.14.2. Permits, etc. Gundle has in full force
and effect all environmental permits, licenses,
approvals and other authorizations required to conduct
its operations and is operating in compliance
thereunder.
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3.1.14.3. Compliance. Gundle's operations and
use of its assets do not violate any Applicable
Environmental Laws, except for violations which, either
singly or in the aggregate, would not result in a
material adverse change to Gundle.
3.1.14.4. Past Compliance. None of the
operations or assets of Gundle has ever been conducted
or used in such a manner as to constitute violation of
any of the Applicable Environmental Laws except for
violations which, either singly or in the aggregate,
would not result in a material adverse change to
Gundle.
3.1.14.5. Environmental Claims. No notice has
been served on Gundle from any entity, governmental
agency or individual regarding any existing, pending or
threatened investigation or inquiry related to alleged
violations under any Applicable Environmental Laws, or
regarding any claims for remedial obligations or
contribution under any Applicable Environmental Laws,
other than any of the foregoing which, either singly or
in the aggregate, would not result in a material
adverse change to Gundle.
3.1.14.6. Renewals. Gundle does not know of any
reason Gundle would not be able to renew any of the
permits, licenses, or other authorizations required
pursuant to any Applicable Environmental Laws to
operate and use any of Gundle's assets for their
current purposes and uses.
3.1.14.7. Asbestos and PCBs. No asbestos or
polychlorinated biphenyls ("PCB") are currently being
used or have ever been used by Gundle in its operations
or on its properties.
3.1.15. Compliance with Other Laws. Except as set
forth in the Reports or in Schedule 3.1.15, Gundle is not in
violation of or in default with respect to, or in alleged
violation of or alleged default with respect to, OSHA or any
other applicable law or any applicable rule, regulation, or
any writ or decree of any court or any governmental
commission, board, bureau, agency, or instrumentality, or
delinquent with respect to any report required to be filed
with any governmental commission, board, bureau, agency or
instrumentality, except for violations which, either singly
or in the aggregate, do not and are not expected to result
in a material adverse change in the financial condition,
properties or business of Gundle.
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3.1.16. Finder's Fee. All negotiations relative to
this Agreement and the transactions contemplated hereby have
been carried on by Gundle and its counsel, directly with SLT
or its counsel, without the intervention of any other person
as the result of an act of Gundle and, so far as known to
Gundle, without the intervention of any other person in such
manner as to give rise to any valid claim against any of the
parties hereto for a brokerage commission, finder's fee, or
any similar payments, other than financial advisory fees to
be paid by Gundle to Smith Barney Inc. ("Smith Barney") for
the rendition of a fairness opinion in connection with the
merger contemplated by this Agreement.
3.1.17. ERISA. Gundle does not now maintain, sponsor
or contribute to, and never has maintained, sponsored or
contributed to, any program or arrangement that is an
"employee pension benefit plan" or a "multi-employer plan"
as such terms are defined in Sections 3(2) and 3(37)
respectively, of ERISA. Gundle does not maintain or
contribute, now or at anytime previously, to a "defined
benefit plan", as defined in Section 3(35) of ERISA.
3.1.18. Investigations; Litigation. Except as
required pursuant to HSR and any applicable comparable
foreign laws and regulations, (i) no investigation or review
by any governmental entity with respect to Gundle in
connection with any of the transactions contemplated by this
Agreement is pending or, to the best of Gundle's knowledge,
threatened, nor has any governmental entity indicated to
Gundle an intention to conduct the same and (ii) there is no
action, suit or proceeding pending or, to the best of
Gundle's knowledge, threatened against or affecting Gundle
or its subsidiaries at law or in equity, or before any
federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, which
either individually or in the aggregate, does or is likely
to have a material adverse affect in its financial
condition, properties or business taken as a whole.
3.1.19. Product Warranty. There are no existing
liabilities or, to the knowledge of Gundle, potential
liabilities, arising from claims regarding the performance
or design of the products sold by Gundle either in the past
or at present that in the aggregate would constitute a
material adverse change.
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3.1.20. Information for Proxy Statement. All
information and data (including financial statements)
concerning Gundle which is or will be included in the Proxy
Statement to be used by Gundle in connection with the
transactions contemplated by this Agreement will be
furnished by Gundle for inclusion therein and will not
contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements contained therein not misleading.
3.1.21. Compliance with Export Laws. All exports by
Gundle of equipment, software and other technology have been
made in compliance with all federal and other applicable
laws, rules and regulations and in connection therewith,
Gundle has obtained all required approvals of the U.S.
Department of Commerce and Department of Treasury.
3.1.22. FIRPTA; Investment Company. Gundle is not a
United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code, nor is
it an "investment company," or an "affiliated person of" or
"promoter" or "principal underwriter" of an investment
company, as those terms are defined in the Investment
Company Act.
ARTICLE IV
OBLIGATIONS PENDING EFFECTIVE DATE
4.1 Agreements of Gundle and SLT. Each of Gundle and SLT
agrees that from the date hereof to the Effective Date, it will
(and unless otherwise indicated by the context, since
December 31, 1994, it has):
4.1.1. Maintenance of Present Business. Other than as
contemplated by this Agreement, operate its business only in
the usual, regular, and ordinary manner so as to maintain
the goodwill it now enjoys and, to the extent consistent
with such operation, use all reasonable efforts to preserve
intact its present business organization, keep available the
services of its present officers and employees, and preserve
its relationships with customers, suppliers, jobbers,
distributors, and others having business dealings with it;
4.1.2. Maintenance of Properties. At its expense,
maintain all of its property and assets in customary repair,
order, and condition, reasonable wear and use and damage by
fire or unavoidable casualty excepted;
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4.1.3. Maintenance of Books and Records. Maintain its
books of account and records in the usual, regular, and
ordinary manner, in accordance with generally accepted
accounting principles applied on a consistent basis;
4.1.4. Compliance with Law. Duly comply in all
material respects with all laws applicable to it and to the
conduct of its business; and
4.1.5. Inspection of Each Merging Corporation. Permit
the other party hereto, and their officers and authorized
representatives, during normal business hours, to inspect
its records and to consult with its officers, employees,
attorneys, and agents for the purpose of determining the
accuracy of the representations and warranties hereinabove
made and the compliance with covenants contained in this
Agreement. Gundle and SLT each agrees that it and its
officers and representatives shall hold all data and
information obtained with respect to the other party hereto
in confidence and each further agrees that it will not use
such data or information or disclose the same to others,
except to the extent such data or information either are, or
become, published or a matter of public knowledge.
4.2. Additional Agreements of Gundle and SLT. Gundle and
SLT agree to take the following actions after the date hereof:
4.2.1. Hart-Scott-Rodino. Each party shall file such
materials as are required under the HSR Act with respect to
the transaction contemplated hereby and shall cooperate with
the other party to the extent necessary to assist the other
party in the preparation of such filings.
4.2.2. Proxy Statement. Gundle and SLT shall
cooperate in the preparation and prompt filing of a Proxy
Statement with the Commission under the Exchange Act with
respect to the meeting of Gundle's stockholders called for
the purpose of, among other things, securing stockholder
approval of the merger contemplated by this Agreement. Each
of Gundle and SLT shall use all reasonable efforts to have
the Proxy Statement cleared by the Commission.
4.2.3. Notice of Material Developments. Each of
Gundle and SLT will promptly notify the other party in
writing of any "material adverse change" in, or any changes
which, in the aggregate, could result in a "material adverse
change" in, the consolidated financial condition, business
or affairs of such party, whether or not occurring in the
ordinary course of business. As used in this Agreement, the
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term "material adverse change" means any change, event,
circumstance or condition (collectively, a "Change") which
when considered with all other Changes would reasonably be
expected to result in a "loss" having the effect of so
fundamentally adversely affecting the business or financial
prospects of Gundle or SLT, as the case may be, that the
benefits reasonably expected to be obtained by such party as
a result of the merger contemplated by this Agreement would
be jeopardized with relative certainty. In no event shall a
change in the trading price of the Gundle Common Stock on
the American Stock Exchange between the date hereof and the
Effective Date, in and of itself, constitute a material
adverse change. The term "loss" shall mean any and all
direct or indirect payments, obligations, assessments,
losses, loss of income, liabilities, fines, penalties, costs
and expenses paid or incurred or more likely than not to be
paid or incurred, or diminutions in value of any kind or
character (whether or not known or unknown, conditional or
unconditional, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise) that are more likely than not to
occur, including without limitation penalties, interest on
any amount payable to a third party as a result of the
foregoing and any legal or other expenses reasonably
incurred or more likely than not to be incurred in
connection with investigating or defending any demands,
claims, actions or causes of action that, if adversely
determined, would likely result in losses, and all amounts
paid in settlement of claims or actions; provided, however,
that losses shall be net of any insurance proceeds entitled
to be received from a nonaffiliated insurance company on
account of such losses (after taking into account any costs
incurred in obtaining such proceeds and any increase in
insurance premiums as a result of a claim with respect to
such proceeds);
4.3. Additional Agreements of SLT. SLT agrees that from
December 31, 1994 it has not, and from the date hereof to the
Effective Date, it will:
4.3.1. Prohibition of Certain Employment Contracts.
Not enter into any contracts of employment which (i) cannot
be terminated on notice of 14 days or less or (ii) provide
for any severance payments or benefits covering a period
beyond the termination date (other than those which Gundle
has previously approved) except as may be required by law;
4.3.2. Prohibition of Certain Loans. Not incur any
borrowings except (i) the refinancing of indebtedness now
outstanding or additional borrowings under its existing
revolving credit facilities, (ii) the prepayment by
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customers of amounts due or to become due for goods sold or
services rendered or to be rendered in the future,
(iii) trade payables incurred in the ordinary course of
business, (iv) other borrowings incurred in the ordinary
course of business to finance normal operations or (v) as is
otherwise agreed to in writing by Gundle;
4.3.3. Prohibition of Certain Commitments. Not enter
into commitments of a capital expenditure nature or incur
any contingent liability which would exceed $375,000, in the
aggregate, except (i) as may be necessary for the
maintenance of existing facilities, machinery and equipment
in good operating condition and repair in the ordinary
course of business, (ii) as may be required by law or
(iii) as is otherwise agreed to in writing by Gundle;
4.3.4. Disposal of Assets. Not sell, dispose of, or
encumber, any property or assets, except (i) in the ordinary
course of business or (ii) as is otherwise agreed to in
writing by Gundle;
4.3.5. Maintenance of Insurance. Maintain insurance
upon all its properties and with respect to the conduct of
its business of such kinds and in such amounts as is
customary in the type of business in which it is engaged,
but not less than that presently carried by it, which
insurance may be added to from time to time in its
discretion; provided, that if during the period from the
date hereof to and including the Effective Date any of its
property or assets are damaged or destroyed by fire or other
casualty, the obligations of Gundle and SLT under this
Agreement shall not be affected thereby (subject, however,
to the provision that the coverage limits of such policies
are adequate in amount to cover the replacement value of
such property or assets and loss of profits during
replacement, less commercially reasonable deductible, if of
material significance to the assets or operations of SLT)
but it shall promptly notify Gundle in writing thereof and
proceed with the repair or restoration of such property or
assets in such manner and to such extent as may be approved
by Gundle, and upon the Effective Date all proceeds of
insurance and claims of every kind arising as a result of
any such damage or destruction shall remain the property of
Surviving Corporation;
4.3.6. SLT Acquisition Proposals. Not directly or
indirectly:
4.3.6.1. No Solicitation. Authorize or permit
any of its respective agents to: (i) solicit, initiate,
encourage (including by way of furnishing information)
or take any other action to facilitate, any inquiry or
the making of any proposal which constitutes, or may
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reasonably be expected to lead to, any acquisition or
purchase of a substantial amount of assets of, or any
equity interest in, SLT or any merger, consolidation,
business combination, sale of substantially all assets,
sale of securities, recapitalization, liquidation,
dissolution or similar transaction involving SLT (other
than the transactions contemplated by this Agreement) or
any other material corporate transaction the
consummation of which would or could reasonably be
expected to impede, interfere with, prevent or
materially delay the merger contemplated by this
Agreement (collectively, "SLT Transaction Proposals") or
agree to or endorse any SLT Transaction Proposal or (ii)
propose, enter into or participate in any discussions or
negotiations regarding any of the foregoing, or furnish
to another person any information with respect to its
business, properties or assets or any of the foregoing,
or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, an effort or
attempt by any other person to do or seek any of the
foregoing, provided, however, that the foregoing clauses
(i) and (ii) shall not prohibit SLT from (A) furnishing
information pursuant to an appropriate confidentiality
letter concerning SLT and its businesses, properties or
assets to a third party who has made a Superior SLT
Transaction Proposal (as defined below), (B) engaging in
discussions or negotiations with such a third party who
has made a Superior SLT Transaction Proposal or (C)
following receipt of a Superior SLT Transaction
Proposal, taking and disclosing to its shareholders a
position with respect thereto or changing the
recommendation by SLT's board of directors or the vote
of SLT's shareholders in favor of this Agreement or the
merger contemplated hereby, but in each case referred to
in the foregoing clauses (A) through (C) only after the
board of directors of SLT concludes in good faith
following advice of its outside counsel that such action
is reasonably necessary for the board of directors of
SLT to comply with its fiduciary obligations to
stockholders under applicable law. If the board of
directors of SLT receives an SLT Transaction Proposal,
then SLT shall immediately inform Gundle of the terms
and conditions of such proposal and the identity of the
person making it and shall keep Gundle fully informed of
the status and details of any such SLT Transaction
Proposal and of all steps it is taking in response to
such SLT Transaction Proposal; provided that nothing
contained in this Paragraph 4.3.6.1 shall prohibit SLT
or its board of directors from making such disclosure to
SLT's stockholders which, in the good faith judgment of
SLT's board of directors, may be required under
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applicable law. For purposes of this Agreement, the
term "Superior SLT Transaction Proposal" shall mean a
bona fide SLT Transaction Proposal that the board of
directors of SLT determines in good faith after
consultation with (and based in part on the advice of)
its independent financial advisors to be more favorable
to SLT's stockholders than the merger contemplated by
this Agreement, is reasonably capable of being financed
and is not subject to any material contingencies
relating to financing.
4.3.6.2. Acceptance of Superior SLT Transaction
Proposals. If (i) (A) this Agreement is terminated by
SLT pursuant to Paragraph 6.1.7 hereof, (B) SLT shall
violate the covenant set forth in Paragraph 4.3.6.1
hereof, or (C) SLT modifies or withdraws its board of
directors' recommendation or stockholders' vote in favor
of the transactions contemplated by this Agreement or
(ii) SLT enters into an agreement which provides for
Another SLT Transaction (as defined below) or Another
SLT Transaction is consummated (with any third party
which before termination of this Agreement has
communicated to it for the purpose of making an SLT
Transaction Proposal), in either case within twelve
months after the date of termination of this Agreement,
then, in any such event, SLT shall pay to Gundle within
two days after demand by Gundle in the case of the
occurrence of any of the events specified in clause (i)
above, and immediately upon the first to occur of the
entering into an agreement providing for, or the
consummation of, Another SLT Transaction in the case of
clause (ii) above (by wire transfer of immediately
available funds to an account designated by Gundle for
such purpose), a Break-Up Fee (the "Break-Up Fee") in an
amount equal to $3,000,000, plus transaction expenses,
including legal fees. SLT agrees that the Break-Up Fee
is a reasonable determination, in light of the
uncertainty and difficulty of ascertaining the exact
amount thereof, of the loss that Gundle would actually
sustain in respect of one of the events described in
this Paragraph 4.3.6.2. For purposes of this Paragraph
4.3.6.2, the term "Another SLT Transaction" shall mean
any transaction pursuant to which (i) any person, entity
or group (within the meaning of Section 13(d)(3) of the
Exchange Act) (each, a "Third Party") acquires 50% or
more of the outstanding SLT Common Stock, (ii) a Third
Party acquires 25% or more of the total assets of SLT
taken as a whole, (iii) a Third Party merges,
consolidates or combines in any other way with SLT other
than in a transaction in which holders of SLT Common
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Stock continue to own at least 75% of the equity of the
surviving corporation, or (iv) SLT distributes or
transfers to its stockholders, by dividend or otherwise,
assets constituting 25% or more of the market value or
earning power of SLT on a consolidated basis (it being
understood that stock of subsidiaries constitute assets
of SLT for purposes of this Paragraph 4.3.6.2).
Notwithstanding anything contained in this Agreement to
the contrary, Gundle agrees that if Gundle terminates
this Agreement because SLT has violated the covenant set
forth in Paragraph 4.3.6.1 hereof and SLT pays the
Break-Up Fee to Gundle in accordance with this Paragraph
4.3.6.2 solely because SLT shall have violated the
covenant set forth in Paragraph 4.3.6.1 hereof, then
following such payment SLT shall have no further
liability to Gundle under this Agreement. Gundle
further agrees that in all other circumstances where it
has been paid the Break-Up Fee by SLT, such Break-Up Fee
will be credited against any other damages for which SLT
may be found liable to Gundle in connection with this
Agreement. SLT shall only be obligated to pay the
Break-Up Fee once, notwithstanding that it may have more
than one obligation to do so under this Paragraph
4.3.6.2.
4.3.7. No Amendment to Certificate of Incorporation,
etc. Not amend its certificate of incorporation or bylaws
or other organizational documents or merge or consolidate
with or into any other corporation or change in any manner
the rights of its capital stock or the character of its
business;
4.3.8. No Issuance, Sale, or Purchase of Securities.
Not issue or sell, or issue options or rights to subscribe
to, or enter into any contract or commitment to issue or
sell (upon conversion or otherwise), any shares of its
capital stock or subdivide or in any way reclassify any
shares of its capital stock, or acquire, or agree to
acquire, any shares of its capital stock;
4.3.9. Prohibition on Dividends. Not declare or pay
any dividend on shares of its capital stock or make any
other distribution of assets to the holders thereof;
4.3.10. Supplemental Financial Statements. Deliver to
Gundle, within 45 days after the end of each fiscal quarter
of SLT beginning March 31, 1995 and through the Effective
Date, unaudited consolidated balance sheets and related
unaudited statements of income, retained earnings and cash
flows as of the end of each fiscal quarter of SLT, and as of
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the corresponding fiscal quarter of the previous fiscal
year. SLT hereby represents and warrants that such
unaudited consolidated financial statement shall (i) be
complete in all material respects except for the omission of
notes and schedules contained in audited financial
statements, (ii) present fairly the financial condition of
SLT as at the dates indicated and the results of operations
for the respective periods indicated (iii) shall have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as noted
therein and (iv) shall contain all adjustments which SLT
considers necessary for a fair presentation of its results
for each respective fiscal period.
4.4 Additional Agreements of Gundle. Gundle agrees that
from December 31, 1994 it has not, and from the date hereof to
the Effective Date, it will:
4.4.1. Prohibition of Certain Employment Contracts.
Not enter into any contracts of employment which (i) cannot
be terminated on notice of 14 days or less or (ii) provide
for any severance payments or benefits covering a period
beyond the termination date (other than those to which SLT
has previously been approved) except as may be required by
law;
4.4.2. Prohibition of Certain Loans. Except as
contemplated by Paragraph 4.4.14, not incur any borrowings
except (i) the refinancing of indebtedness now outstanding
or additional borrowings under its existing revolving credit
facilities, (ii) the prepayment by customers of amounts due
or to become due for goods sold or services rendered or to
be rendered in the future, (iii) trade payables incurred in
the ordinary course of business, (iv) other borrowings
incurred in the ordinary course of business to finance
normal operations or (v) as is otherwise agreed to in
writing by SLT;
4.4.3. Prohibition of Certain Commitments. Not (a)
enter into commitments of a capital expenditure nature or
incur any contingent liability which would exceed $375,000,
in the aggregate, except (i) as may be necessary for the
maintenance of existing facilities, machinery and equipment
in good operating condition and repair in the ordinary
course of business, (ii) as may be required by law or
(iii) as is otherwise agreed to in writing by SLT or
(b) enter into any agreement with any affiliate of Gundle
without SLT's written consent;
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4.4.4. Disposal of Assets. Not sell, dispose of, or
encumber, any property or assets, except (i) in the ordinary
course of business or (ii) as is otherwise agreed to in
writing by SLT;
4.4.5. Maintenance of Insurance. Maintain insurance
upon all its properties and with respect to the conduct of
its business of such kinds and in such amounts as is
customary in the type of business in which it is engaged,
but not less than that presently carried by it, which
insurance may be added to from time to time in its
discretion; provided, that if during the period from the
date hereof to and including the Effective Date any of its
property or assets are damaged or destroyed by fire or other
casualty, the obligations of Gundle and SLT under this
Agreement shall not be affected thereby (subject, however,
to the provision that the coverage limits of such policies
are adequate in amount to cover the replacement value of
such property or assets and loss of profits during
replacement, less commercially reasonable deductible, if of
material significance to the assets or operations of Gundle)
but it shall promptly notify SLT in writing thereof and
proceed with the repair or restoration of such property or
assets in such manner and to such extent as may be approved
by SLT, and upon the Effective Date all proceeds of
insurance and claims of every kind arising as a result of
any such damage or destruction shall remain the property of
Surviving Corporation;
4.4.6. Acquisition Proposals. Not directly or
indirectly:
4.4.6.1 No Solicitation. Authorize or permit any
of its respective agents to: (i) solicit, initiate,
encourage (including by way of furnishing information)
or take any other action to facilitate, any inquiry or
the making of any proposal which constitutes, or may
reasonably be expected to lead to, any acquisition or
purchase of a substantial amount of assets of, or any
equity interest in, Gundle or any tender offer
(including a self tender offer) or exchange offer,
merger, consolidation, business combination, sale of
substantially all assets, sale of securities,
recapitalization, liquidation, dissolution or similar
transaction involving Gundle (other than the
transactions contemplated by this Agreement) or any
other material corporate transaction the consummation
of which would or could reasonably be expected to
impede, interfere with, prevent or materially delay the
merger contemplated by this Agreement (collectively,
"Gundle Transaction Proposals") or agree to or endorse
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any Gundle Transaction Proposal or (ii) propose, enter
into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to another
person any information with respect to its business,
properties or assets or any of the foregoing, or
otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, an effort or
attempt by any other person to do or seek any of the
foregoing, provided, however, that the foregoing
clauses (i) and (ii) shall not prohibit Gundle from (A)
furnishing information pursuant to an appropriate
confidentiality letter concerning Gundle and its
businesses, properties or assets to a third party who
has made a Superior Gundle Transaction Proposal (as
defined below), (B) engaging in discussions or
negotiations with such a third party who has made a
Superior Gundle Transaction Proposal or (C) following
receipt of a Superior Gundle Transaction Proposal,
taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) under the Exchange Act or
changing the recommendation by Gundle's board of
directors of this Agreement or the merger contemplated
hereby, but in each case referred to in the foregoing
clauses (A) through (C) only after the board of
directors of Gundle concludes in good faith following
advice of its outside counsel that such action is
reasonably necessary for the board of directors of
Gundle to comply with its fiduciary obligations to
stockholders under applicable law. If the board of
directors of Gundle receives a Gundle Transaction
Proposal, then Gundle shall immediately inform SLT of
the terms and conditions of such proposal and the
identity of the person making it and shall keep SLT
fully informed of the status and details of any such
Gundle Transaction Proposal and of all steps it is
taking in response to such Gundle Transaction Proposal;
provided that nothing contained in this Paragraph
4.4.6.1 shall prohibit Gundle or its board of directors
from disclosing to the Gundle stockholders a position
with respect to a tender offer by a third party
pursuant to Rule 14d-9 and 14e-2 promulgated under the
Exchange Act or from making such disclosure to Gundle's
stockholders which, in the good faith judgment of
Gundle's board of directors may be required under
applicable law. For purposes of this Agreement, the
term "Superior Gundle Transaction Proposal" shall mean
a bona fide Gundle Transaction Proposal that the board
of directors of Gundle determines in good faith after
consultation with (and based in part on advice of) its
independent financial advisors to be more favorable to
Gundle's stockholders than the merger contemplated by
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this Agreement, is reasonably capable of being financed
and is not subject to any material contingencies
relating to financing.
4.4.6.2. Acceptance of Superior Transaction
Proposals. If (i) (A) this Agreement is terminated by
Gundle pursuant to Paragraph 6.1.4 hereof, (B) Gundle
shall violate the covenant set forth in Paragraph
4.4.6.1 hereof, or (C) Gundle modifies or withdraws its
recommendation that the Gundle stockholders vote their
Gundle Common Stock in favor of the transactions
contemplated by this Agreement or (ii) Gundle enters
into an agreement which provides for Another Gundle
Transaction (as defined below) or Another Gundle
Transaction is consummated (with any third party which
before termination of this Agreement has communicated
to it for the purpose of making a Gundle Transaction
Proposal), in either case within twelve months after
the date of termination of this Agreement, then, in any
such event, Gundle shall pay to SLT within two days
after demand by SLT in the case of the occurrence of
any of the events specified in clause (i) above, and
immediately upon the first to occur of the entering
into an agreement providing for, or the consummation
of, Another Gundle Transaction in the case of clause
(ii) above (by wire transfer of immediately available
funds to an account designated by SLT for such
purpose), a Break-Up Fee in an amount equal to
$3,000,000, plus transaction expenses, including legal
fees. Gundle agrees that the Break-Up Fee is a
reasonable determination, in light of the uncertainty
and difficulty of ascertaining the exact amount
thereof, of the loss that SLT would actually sustain in
respect of one of the events described in this
Paragraph 4.4.6.2. For purposes of this Paragraph
4.4.6.2, the term "Another Gundle Transaction" shall
mean any transaction pursuant to which (i) any Third
Party acquires 50% or more of the outstanding Gundle
Common Stock, (ii) a Third Party acquires 25% or more
of the total assets of Gundle taken as a whole, (iii) a
Third Party merges, consolidates or combines in any
other way with Gundle other than in a transaction in
which holders of Gundle Common Stock continue to own at
least 75% of the equity of the surviving corporation,
or (iv) Gundle distributes or transfers to its
stockholders, by dividend or otherwise, assets
constituting 25% or more of the market value or earning
power of Gundle on a consolidated basis (it being
understood that stock of subsidiaries constitute assets
of Gundle for purposes of this Paragraph 4.4.6.2).
Notwithstanding anything contained in this Agreement to
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the contrary, SLT agrees that if SLT terminates this
Agreement because Gundle has violated the covenant set
forth in Paragraph 4.4.6.1 hereof and Gundle pays the
Break-Up Fee to SLT in accordance with this Paragraph
4.4.6.2 solely because Gundle shall have violated the
covenant set forth in Paragraph 4.4.6.1 hereof, then
following such payment Gundle shall have no further
liability to SLT under this Agreement. SLT further
agrees that in all other circumstances where it has
been paid the Break-Up Fee by Gundle, such Break-Up Fee
will be credited against any other damages for which
Gundle may be found liable to SLT in connection with
this Agreement. Gundle shall only be obligated to pay
the Break-Up Fee once, notwithstanding that it may have
more than one obligation to do so under this Paragraph
4.4.6.2.
4.4.7. No Amendment to Certificate of Incorporation,
etc. Except as otherwise provided herein, not amend its
certificate of incorporation or bylaws or other
organizational documents or merge into any other corporation
or change in any manner the rights of its Common Stock;
provided, that nothing in this Paragraph shall restrict or
prohibit the issuance by Gundle of shares of Gundle Common
Stock under presently outstanding obligations pursuant to
existing employee benefit plans;
4.4.8. No Issuance, Sale, or Purchase of Securities.
Not issue or sell, or issue options or rights to subscribe
to, or enter into any contract or commitment to issue or
sell (upon conversion or otherwise), any shares of its
capital stock or subdivide or in any way reclassify any
shares of its capital stock, or acquire, or agree to
acquire, any shares of its capital stock;
4.4.9. Prohibition on Dividends. Not declare or pay
any dividend on shares of its capital stock or make any
other distribution of assets to the holders thereof;
4.4.10. Stockholders' Meeting. Promptly call and hold
a meeting of stockholders for the purpose of considering and
acting upon proposals to (i) approve the merger contemplated
by this Agreement, (ii) elect the board of directors set
forth in Section 1.7.1., (iii) increase the authorized
number of shares of its preferred stock from the present
1,000 shares of preferred stock, no par value, to 1,000,000
shares of preferred stock, par value $1 per share,
undesignated as to series, (iv) increase the authorized
number of shares of Gundle Common Stock to 30,000,000 shares
from the present 15,000,000, and (v) change the name of the
Surviving Corporation to Gundle/SLT Environmental, Inc.;
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4.4.11. Issuance of Gundle Common Stock. Gundle shall
take all action it deems reasonably necessary to insure that
the issuance of Gundle Common Stock to the shareholders of
SLT in connection with the merger contemplated by this
Agreement should be made pursuant to an exemption from
registration under the Securities Act of 1933, as amended.
Gundle also shall take any action reasonably required to be
taken under state blue sky or securities laws in connection
with the issuance of the Gundle Common Stock pursuant to the
merger;
4.4.12. Listing of Gundle Stock. Take such steps as
are required to accomplish, as of the Effective Date, the
listing on the American Stock Exchange of the shares of
Gundle Common Stock to be issued pursuant to this Agreement;
4.4.13. Notice of Material Developments. Promptly
furnish to SLT copies of all communications from Gundle to
its stockholders and all reports filed by it with the
Commission and the American Stock Exchange, and relating to
periodic or other material developments concerning Gundle's
financial condition, business, or affairs; and
4.4.14. Refinancing of Outstanding Indebtedness. Use
all reasonable commercial efforts to arrange for the payment
or assumption by it of all outstanding debt of SLT on the
Effective Date on such terms as are reasonably satisfactory
to Gundle, including (i) the borrowing by Gundle of up to an
additional $35,000,000 to fund any such repayment and
(ii) the amendment or refunding of its present long-term and
revolving indebtedness, in either such case on terms
acceptable to it in its sole discretion; provided that any
such assumption or refinancing shall provide for the
release, as of the Effective Date, of any outstanding
guaranties or other forms of credit support presently
provided to SLT by its stockholders, except for letters of
credit aggregating not more than $4,000,000 guaranteed by
such stockholders, which shall remain outstanding until the
maturity of the bonds secured by such letters of credit or
December 31, 1995, whichever is first to occur (the
"Refinancing"). Gundle shall permit members of SLT's senior
management to participate in the negotiation of the terms
and conditions of the Refinancing, provided, however, that
Gundle shall not be obligated to consummate the Refinancing
on terms other than those it believes to be in the best
interests of Gundle and its shareholders.
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ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of SLT. The
obligations of SLT to consummate and effect the merger hereunder
shall be subject to the satisfaction of the following conditions,
or to the waiver thereof by SLT in the manner contemplated by
Section 6.4 before the Effective Date or closing date:
5.1.1 Representations and Warranties of Gundle True at
Effective Date. The representations and warranties of
Gundle herein contained shall be, in all material respects,
true as of and at the Effective Date with the same effect as
though made at such date, except as affected by transactions
permitted or contemplated by this Agreement; Gundle shall
have performed and complied with all covenants required by
this Agreement to be performed or complied, in all material
respects, with by Gundle before the Effective Date; and
Gundle shall have delivered to SLT a certificate, dated the
Effective Date and signed by its chairman of the board or
its president, and by its chief financial or accounting
officer, and its secretary, to both such effects.
5.1.2. No Material Litigation. No suit, action, or
other proceeding shall be pending, or to Gundle's knowledge,
threatened, before any court or governmental agency in which
it will be, or it is, sought to restrain or prohibit or to
obtain damages or other relief in connection with this
Agreement or the consummation of the merger contemplated
hereby or which might result in a material adverse change in
the value of the consolidated assets and business of Gundle.
5.1.3. Opinion of Gundle Counsel. SLT shall have
received a favorable opinion, dated as of the Effective
Date, from Porter & Hedges, L.L.P., counsel for Gundle, in
form and substance satisfactory to SLT, to the effect that
(i) Gundle has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of Delaware; (ii) all corporate proceedings
required to be taken by or on the part of Gundle to
authorize the execution of this Agreement and the
Registration Rights Agreement in the form of Appendix III
hereto (the "Registration Rights Agreement") and the
implementation of the merger contemplated hereby have been
taken; (iii) the shares of Gundle Common Stock which are to
be delivered in accordance with this Agreement will, when
issued, be validly issued, fully paid and nonassessable
outstanding securities of Gundle; (iv) this Agreement and
the Registration Rights Agreement have been duly executed
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and delivered by, and are the legal, valid and binding
obligations of Gundle and are enforceable against Gundle in
accordance with their respective terms, except as
enforceability may be limited by (a) equitable principles of
general applicability or (b) bankruptcy, insolvency,
reorganization, fraudulent conveyance or similar laws
affecting the rights of creditors generally and except that
no opinion need be expressed as to the enforceability of any
indemnification provisions of this Agreement or of the
Registration Rights Agreement; and (v) except as specified
by such counsel (such exceptions to be acceptable to SLT)
such counsel does not know of any material litigation,
proceedings, or governmental investigation pending or
threatened against or relating to Gundle, any of its
subsidiaries, or their respective properties or businesses
in which it is sought to restrain, prohibit or otherwise
affect the consummation of the transactions contemplated by
this Agreement or the Registration Rights Agreement. Such
opinion also shall cover such other matters incident to the
transactions herein contemplated as SLT and its counsel may
reasonably request. In rendering such opinion, such counsel
may rely upon (i) certificates of public officials and of
officers of Gundle as to matters of fact and (ii) the
opinion or opinions of other counsel, which opinions shall
be reasonably satisfactory to SLT, as to matters other than
federal or Texas law.
5.1.4. Stockholder Approval. The approval of a
majority of the stockholders of SLT of the merger
contemplated by this Agreement on or before the date of this
Agreement, and such approval shall not have been amended,
modified or rescinded on or before the Effective Date.
5.1.5. Hart-Scott-Rodino, etc. All waiting periods
required by HSR shall have expired with respect to the
transactions contemplated by this Agreement, or early
termination with respect thereto shall have been obtained
without the imposition of any governmental request or order
requiring the sale or disposition or holding separate
(through a trust or otherwise) of particular assets or
businesses of Gundle, its affiliates or any component of SLT
or other actions as a precondition to the expiration of any
waiting period or the receipt of any necessary governmental
approval or consent. In addition, any approvals required
under any state or foreign laws comparable to HSR shall have
been obtained.
5.1.6. Listing of Gundle Common Stock. The American
Stock Exchange shall have agreed that on the Effective Date
it will list the shares of Gundle Common Stock issuable at
the Effective Date of this Agreement.
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5.1.7. Consent of Certain Parties in Privity With
Gundle. The holders of any material indebtedness of Gundle,
the lessors of any material property leased by Gundle, and
the other parties to any other material agreements to which
Gundle is a party shall, when and to the extent necessary in
the reasonable opinion of SLT, have consented to the merger
contemplated hereby.
5.1.8. Registration Rights Agreement. Gundle shall
have executed and delivered to SLT the Registration Rights
Agreement.
5.1.9. Ancillary Matters. Gundle shall have concluded
the Refinancing, subject only to consummation of the merger
contemplated by this Agreement.
5.2. Conditions Precedent to Obligations of Gundle. The
obligations of Gundle to consummate and effect the merger
hereunder shall be subject to the satisfaction of the following
conditions, or to the waiver thereof by Gundle in the manner
contemplated by Section 6.4 before the Effective Date or closing
date.
5.2.1 Representations and Warranties of SLT True at
Effective Date. The representations and warranties of SLT
herein contained shall be, in all material respects, true as
of and at the Effective Date with the same effect as though
made at such date, except as affected by transactions
permitted or contemplated by this Agreement; SLT shall have
performed and complied with all covenants required by this
Agreement to be performed or complied with, in all material
respects, by it before the Effective Date; and SLT shall
have delivered to Gundle a certificate, dated the Effective
Date and signed by its chairman of the board or its
president, and by its chief financial or accounting officer,
and by its secretary to both such effects.
5.2.2. No Material Litigation. No suit, action, or
other proceeding shall be pending, or to SLT's knowledge,
threatened, before any court or governmental agency in which
it will be, or it is, sought to restrain or prohibit or to
obtain damages or other relief in connection with this
Agreement or the consummation of the merger contemplated
hereby or which might result in a material adverse change in
the value of the assets and business of SLT.
5.2.3. Opinion of SLT's Counsel. Gundle shall have
received a favorable opinion, dated the Effective Date, from
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, counsel to
SLT, in form and substance satisfactory to Gundle, to the
effect that (i) SLT has been duly incorporated and is
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validly existing as a corporation in good standing under the
laws of the State of Delaware; (ii) all outstanding shares
of the SLT Common Stock have been validly issued and are
fully paid and nonassessable; (iii) all corporate or other
proceedings required to be taken by or on the part of SLT to
authorize the execution of this Agreement and the
implementation of the merger contemplated hereby have been
taken; (iv) this Agreement has been duly executed and
delivered by, and is the legal, valid and binding obligation
of SLT and is enforceable against SLT in accordance with its
terms, except as the enforceability may be limited by (a)
equitable principles of general applicability or (b)
bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws affecting the rights of creditors
generally and except that no opinion need be expressed as to
the enforceability of any indemnification provisions of this
Agreement; and (v) except as specified by such counsel (such
exceptions to be acceptable to Gundle) such counsel does not
know of any material litigation, proceedings or governmental
investigation, pending or threatened against or relating to
SLT or its properties or businesses in which it is sought to
restrain, prohibit or otherwise affect consummation of the
transactions contemplated by this Agreement. Such opinion
shall also cover such other matters incident to the
transactions herein contemplated as Gundle and its counsel
may reasonably request. In rendering such opinion, such
counsel may rely upon (i) certificates of public officials
and of officers of SLT as to matters of fact and (ii) on the
opinion or opinions of other counsel, which opinions shall
be reasonably satisfactory to Gundle, as to matters other
than federal or New York law.
5.2.4. Stockholder Approval. At the meeting of
stockholders of Gundle to be held before the Effective Date,
the holders of the requisite majority of the outstanding
shares of Gundle Common Stock shall have approved the merger
contemplated by this Agreement.
5.2.5. Hart-Scott-Rodino, etc. All waiting periods
required by HSR shall have expired with respect to the
transactions contemplated by this Agreement, or early
termination with respect thereto shall have been obtained
without the imposition of any governmental request or order
requiring the sale or disposition or holding separate
(through a trust or otherwise) of particular assets or
businesses of Gundle, its affiliates or any component of SLT
or other actions as a precondition to the expiration of any
waiting period or the receipt of any necessary governmental
approval or consent. In addition, any approvals required
under any state or foreign laws comparable to HSR shall have
been obtained.
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5.2.6. Consent of Certain Parties in Privity with SLT.
The holders of any material indebtedness of SLT, the lessors
of any material property leased by SLT, and the other
parties to any other material agreements to which SLT is a
party shall, when and to the extent necessary in the
reasonable opinion of Gundle, have consented to the merger
contemplated hereby.
5.2.7. Employment Agreement With William P. Reid. On
or before the date of execution of this Agreement, William
P. Reid will have executed an employment agreement in form
and substance satisfactory to Gundle, such agreement to take
effect on the Effective Date, and to be in full force and
effect on the Effective Date.
5.2.8. Insurance. Gundle shall have purchased
directors and officers liability insurance containing
coverage at least equal to that currently maintained by
Gundle with respect to matters occurring before the
Effective Date, and insuring all persons for a period of at
least six years following the Effective Date who were
directors or officers of Gundle before the Effective Date,
but who cease to be directors or officers of Gundle after
the Effective Date (the "Retiring Directors and Officers").
The Retiring Directors and Officers shall be third party
beneficiaries to such insurance policy.
5.2.9. Ancillary Matters. Gundle shall have concluded
the Refinancing, subject only to consummation of the merger
contemplated by this Agreement, and it shall have received a
favorable opinion from Smith Barney for inclusion in the
Proxy Statement as to the fairness, from a financial point
of view, to Gundle of the consideration to be paid by Gundle
in the merger, which opinion shall not have been withdrawn
at the Effective Date.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.1. Termination. Anything contained in this Agreement to
the contrary notwithstanding, this Agreement may be terminated
and the merger contemplated hereby abandoned at any time (whether
before or after the approval and adoption thereof by the
stockholders of SLT or Gundle) before the Effective Date:
6.1.1. By Mutual Consent. By mutual consent of Gundle
and SLT.
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6.1.2. By Gundle Because of Dissenting Stockholders.
By Gundle, if the holders of any shares of SLT Common Stock
elect to exercise the right to dissent under applicable
provisions of Delaware law in connection with the merger
contemplated by this Agreement.
6.1.3. By Gundle Because of Conditions Precedent. By
Gundle, if any condition set forth in Paragraph 5.2 hereof
has not been met and has not been waived.
6.1.4. By Gundle Due to a Superior Gundle Transaction
Proposal. By Gundle if, before the Effective Date, Gundle's
board of directors shall have withdrawn or modified in a
manner adverse to SLT its approval or recommendation of this
Agreement or the merger contemplated hereby under the terms,
conditions and procedures set forth in Paragraph 4.4.6.2.
6.1.5. By Gundle Because of Material Adverse Change.
By Gundle, if there has been a material adverse change in
the financial condition or business of SLT since the date of
the most recent financial statements referred to in
Paragraph 2.1.5.
6.1.6. By SLT Because of Conditions Precedent. By
SLT, if any condition set forth in Paragraph 5.1 hereof has
not been met and has not been waived.
6.1.7. By SLT Due to a Superior SLT Transaction
Proposal. By SLT if, before the Effective Date, SLT's
stockholders or board of directors shall have withdrawn or
modified in a manner adverse to Gundle their approval of
this Agreement or the merger contemplated hereby under the
terms, conditions and procedures set forth in Paragraph
4.3.6.2.
6.1.8. By SLT Because of Material Adverse Change. By
SLT, if there has been a material adverse change in the
financial condition or business of Gundle since the date of
the financial statements contained in the most recent Report
referred to in Paragraph 3.1.5 filed with the Commission
under the Exchange Act.
6.1.9. By Gundle or SLT Because of Legal Proceedings.
By either Gundle or SLT if any suit, action, or other
proceeding shall be pending or threatened by the federal or
a state government before any court or governmental agency,
in which it is sought to restrain, prohibit, or otherwise
affect the consummation of the merger contemplated hereby.
6.1.10. By Gundle or SLT if Merger not Effective by
July 31, 1995. By either Gundle or SLT, if the merger shall
not have become effective on or before July 31, 1995.
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6.2. Termination by Board of Directors. An election of
Gundle to terminate this Agreement and abandon the merger as
provided in Paragraph 6.1 shall be exercised on behalf of Gundle
by its board of directors. An election of SLT to terminate this
Agreement and abandon the merger as provided in Paragraph 6.1
shall be exercised on behalf of SLT by its board of directors.
6.3. Effect of Termination. In the event of the
termination and abandonment of this Agreement pursuant to and in
accordance with the provisions of Paragraph 6.1 hereof, this
Agreement shall become void and have no effect, without any
liability on the part of any party hereto (or its stockholders or
controlling persons or directors or officers), except as
otherwise provided in this Agreement; provided, however, that no
party hereto shall waive any term or condition hereof, unless in
the judgment of the board of directors taking the action, such
waiver will not have a materially adverse effect on the benefits
intended under this Agreement to the stockholders of its
corporation.
6.4. Waiver of Conditions. Subject to the requirements of
any applicable law, any of the terms or conditions of this
Agreement may be waived at any time by the party which is
entitled to the benefit thereof, by action taken by its board of
directors, the executive committee of its board of directors, or
its chief executive officer.
6.5. Expense on Termination. If the merger contemplated
hereby is abandoned pursuant to and in accordance with the
provisions of Paragraph 6.1 hereof, all expenses will be paid by
the party incurring them, provided, however, that if either
Gundle or SLT abandons this Agreement due to the failure of the
other party to obtain the requisite approval of a majority of its
stockholders, then the party that failed to obtain such
shareholder approval shall pay all of the other party's
reasonable costs and expenses, including legal fees and expenses,
incurred in connection with the negotiation and implementation of
this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Indemnification by SLT as to Proxy Statement. SLT
agrees to indemnify and hold harmless Gundle and its officers and
directors and each person who controls Gundle within the meaning
of Section 15 of the Securities Act of 1933, as amended (the
"Securities Act") or Section 20 of the Exchange Act against any
and all losses, claims, damages, or liabilities, joint or
several, to which any of them may become subject under the
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Securities Act, the Exchange Act or any other statute or common
law, and to reimburse them for any legal or other expenses
incurred by them in connection with investigating any claims and
defending any actions, to the extent such losses, claims,
damages, liabilities, or actions arise out of or are based upon
(i) any false, misleading or untrue statement or alleged false,
misleading or untrue statement of a material fact, insofar as it
relates to SLT, contained in the Proxy Statement in the form
mailed to the stockholders of Gundle, or (ii) the omission or
alleged omission to state in the Proxy Statement a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and insofar as the same relates to SLT.
7.2. Indemnification by Gundle as to Proxy Statement.
Gundle agrees to indemnify and hold harmless SLT and its officers
and directors and each person who controls SLT within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any and all losses, claims, damages, or liabilities,
joint or several, to which any of them may become subject under
the Securities Act, the Exchange Act or any other statute or
common law, and to reimburse them for any legal or other expenses
incurred by them in connection with investigating any claims and
defending any actions, to the extent such losses, claims,
damages, liabilities, or actions arise out of or are based upon
(i) any false, misleading or untrue statement or alleged false,
misleading or untrue statement of a material fact, insofar as it
relates to Gundle contained in the Proxy Statement in the form
mailed to the stockholders of Gundle or (ii) the omission or
alleged omission to state in the Proxy Statement a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and insofar as the same relates to
Gundle.
7.3. Undertaking to File Reports and Cooperate in Rule 144
and Rule 145 Transactions. For as long as any stockholders of
SLT who are subject to Rule 144 or Rule 145 of the Securities Act
continue to hold the shares of Gundle Common Stock issued
pursuant to the terms hereof, Gundle will use reasonable
commercial efforts to timely file all annual, quarterly and other
reports required to be filed by it under Section 13 or 15(d) of
the Exchange Act and the rules and regulations of the Commission
thereunder, as amended from time to time. If any such
stockholder proposes to sell any Gundle Common Stock pursuant to
Rule 144 and 145, Gundle shall cooperate with such stockholders
so as to enable such sales to be made in accordance with
applicable laws, rules and regulations, the requirements of
Gundle's transfer agent, and the reasonable requirements of the
broker through which the sales are proposed to be executed.
Without limiting the generality of the foregoing, Gundle shall,
upon request, furnish with respect to each such sale (i) a
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written statement certifying that Gundle has complied with the
public information requirements of Rule 144 and 145 and (ii) an
opinion of Gundle's counsel regarding such matters as Gundle's
transfer agent or such stockholder's broker may reasonably desire
to confirm.
7.4. Gundle Investment Suitability and Related Matters.
Gundle acknowledges that (i) through its own operations, it is
knowledgeable in operations of the type conducted by SLT,
(ii) SLT has made available to Gundle extensive legal, financial,
accounting and other business records for examination by Gundle,
(iii) SLT has made its principal executive and operating
personnel available for consultation with the designated
representatives of Gundle, (iv) through its employees, counsel
and other representatives, Gundle has made an extensive
investigation of SLT's assets and liabilities, business and
financial affairs, and operations, (v) it is aware of the risks
associated with ownership of SLT, (vi) it is capable of bearing
the financial risks associated with such ownership, and
(vii) while recognizing that it cannot efficaciously waive the
protections afforded to it under the Securities Act, Gundle
regards itself as an entity of such financial capacity,
sophistication, and prudence that it does not require the
protections afforded to it by the Securities Act, and is relying
upon its own investigation of SLT in making its decision to
"purchase" SLT.
ARTICLE VIII
MISCELLANEOUS
8.1. Entirety. This Agreement and embodies the entire
agreement between the parties with respect to the subject matter
hereof, and all prior agreements between the parties with respect
thereto are hereby superseded in their entirety.
8.2. Counterparts. Any number of counterparts of this
Agreement may be executed and each such counterpart shall be
deemed to be an original instrument, but all such counterparts
together shall constitute but one instrument.
8.3. Notices and Waivers. Any notice or waiver to be given
to any party hereto shall be in writing and shall be delivered by
courier, sent by facsimile transmission or first class registered
or certified mail, postage prepaid.
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<PAGE>
If to Gundle
Addressed to: With a copy to:
Gundle Environmental Systems, Porter & Hedges, L.L.P.
Inc. 700 Louisiana, 35th Floor
19103 Gundle Road Houston, Texas 77210-4744
Houston, Texas 77073 Attention: T. William Porter
Attention: Thomas L. Caltrider Facsimile: (713) 228-1331
Facsimile: (713) 230-2504
If to SLT
Addressed to: With a copy to:
SLT Environmental, Inc. Kramer, Levin, Naftalis,
200 South Trade Center Parkway Nessen, Kamin & Frankel
Conroe, Texas 77385 919 Third Avenue, 40th Floor
Attention: William P. Reid New York, New York 10022
Facsimile: (409) 273-3808 Attention: Ezra G. Levin
Facsimile: (212) 715-8000
Any communication so addressed and mailed by first-class
registered or certified mail, postage prepaid, shall be deemed to
be received on the third business day after so mailed, and if
delivered by courier or facsimile to such address, upon delivery
during normal business hours on any business day.
8.4. Termination of Representations, Warranties, etc. The
respective representations and warranties contained in Articles
II and III shall expire with, and be terminated and extinguished
by, the merger pursuant to this Agreement at the time of the
consummation thereof on the Effective Date. This Paragraph 8.4
shall have no effect upon any other right or obligation of the
parties in connection with this Agreement or otherwise, whether
to be exercised or performed before or after the Effective Date.
8.5. Table of Contents and Captions. The table of contents
and captions contained in this Agreement are solely for
convenient reference and shall not be deemed to affect the
meaning or interpretation of any article, section, or paragraph
hereof.
8.6 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of and be enforceable
by the successors and assigns of the parties hereto.
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<PAGE>
8.7. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remainder
of the terms, provisions, covenants and restrictions shall remain
in full force and effect and shall in no way be affected,
impaired or invalidated. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid,
void or unenforceable.
8.8. Applicable Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the
State of Texas (except to the extent that the form and content of
the Certificate of Merger and the consequences of the filing
thereof shall be governed by the general corporation law of the
State of Delaware).
8.9. Public Announcements. The parties agree that before
the Effective Date that they shall consult with each other before
the making of any public announcement regarding the existence of
this Agreement, the contents hereof or the transactions
contemplated hereby, and to obtain the prior approval of the
other party as to the content of such announcement, which
approval shall not be unreasonably withheld. However, the
foregoing shall not apply to any announcement or written
statement which, upon the written advice of counsel, is required
by law to be made, except that the party required to make such
announcement shall, whenever practicable, consult with and
solicit prior approval from such other party concerning the
timing and content of such legally required announcement or
statement before it is made.
8.10. Definitions. The following terms are defined in the
paragraphs indicated:
Term Section
Another Gundle Transaction 4.4.6.7
Another SLT Transaction 4.3.6.2
Applicable Environmental Laws 2.1.14.3
Benefit Plans 2.1.17
Break-Up Fee 4.3.6.2; 4.4.6.2
Code 1.4.2
Commission 3.1.5
Effective Date 1.3
Employee Plans 2.1.7.8
Encumbrance 2.1.4
Environmental Laws 2.1.14
ERISA 2.1.17
Exchange Act 3.1.5
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Existing Gundle Directors 7.4.6
Gundle Common Stock 3.1.3
Gundle Restricted Shares 7.4.2
Gundle Shares 1.9.2
Gundle Transaction Proposal 4.4.6.1
HSR 2.1.18
Intellectual Property 2.1.11
Investment Company Act 2.1.22
Material adverse change 4.2.3
Merger Consideration 1.9.2
Merging Corporations 1.1
OSHA 2.1.15
PBGC 2.1.17.2
PCB 2.1.14
Proxy Statement 2.1.20
Refinancing 4.4.14
Registration Rights Agreement 5.1.3
Reports 3.1.5
Restated Certificate of 1.4.1
Incorporation
SLT Common Stock 2.1.3
SLT Transaction Proposal 4.3.6.1
Securities Act 7.1
Statutory Plan 2.4.17.2
Superior Gundle Transaction
Proposal 4.4.6.1
Superior SLT Transaction Proposal 4.3.6.1
Third Party 4.2.6.2; 4.3.6.2
Transaction Proposal 4.4.6.1
8.11. Accounting Treatment. The parties hereto intend that
the merger contemplated by this Agreement be accounted for by
Gundle, the Surviving Corporation, using the pooling of interests
method of accounting.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed in their respective corporate names by
their respective duly authorized representatives, all as of the
day and year first above written.
The Parties to the Merger Contemplated by this Agreement:
SLT ENVIRONMENTAL, INC.
By:_____________________________
William P. Reid, President
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
By:______________________________
Thomas L. Caltrider, President
<PAGE> 57
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") dated
as of the 27th day of July, 1995, is by and among Gundle
Environmental Systems, a Delaware corporation (the "Company"),
and each of the holders of common stock, par value $.01 per
share, of the Company, listed on Schedule A attached hereto (the
"Stockholders").
W I T N E S S E T H:
WHEREAS, the Stockholders are owners of issued and
outstanding shares of Common Stock of the Company, which shares,
as of the date hereof, are owned in the respective amounts set
forth on Schedule A hereto; and
WHEREAS, Odyssey (defined below) previously was granted
registration rights in exchange for good and valuable
consideration, the sufficiency of which is hereby acknowledged,
which registration rights are being memorialized in this written
Agreement; and
WHEREAS, Wembley (defined below) was the former sole
stockholder of SLT Environmental, Inc. ("SLT"); and
WHEREAS, Wembley was issued the number of shares of
Common Stock set forth opposite its name on Schedule A hereto
pursuant to the Plan and Agreement of Merger of Gundle
Environmental Systems, Inc. and SLT Environmental, Inc., dated as
of March __, 1995 (the "Merger Agreement"), pursuant to which SLT
was merged with and into the Company; and
WHEREAS, the execution and delivery of this Agreement
by parties hereto is a condition precedent to the closing of the
merger contemplated by the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual
agreements and promises herein contained and other good and
valuable consideration, the sufficiency of which is hereby
acknowledged, the Stockholders and the Company, each with the
other, do hereby agree as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have
the following respective meanings:
"Common Stock" means the Common Stock, par value $.01
per share, of the Company.
"Commission" means the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
"Demand Notice" means a notice by a Stockholder
pursuant to Section 2.1 demanding that the Company register all
or a portion of such Stockholder's Registrable Securities in
either an Underwritten Public Offering or a Shelf Registration.
"Demand Registration" means a registration that is an
Underwritten Public Offering or Shelf Registration which the
Company is required to effect on behalf of a Stockholder pursuant
to Section 2.1.
"Demanding Stockholder" means a Stockholder demanding
registration pursuant to Section 2.1.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar Federal statute and the rules
and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
"Notice of Registration" means a notice by the Company
to the Stockholders that the Company has either determined to
conduct a Primary Offering or that Company has received a Demand
Notice from a Stockholder.
"Odyssey" means Odyssey Partners, L.P., a Delaware
limited partnership.
"Person" means any natural person or any corporation,
partnership, trust or other legal entity.
"Piggyback Registration" means a registration of shares
of Registrable Securities owned by a Stockholder who is
participating in a Primary Offering or Demand Registration under
the terms and conditions set forth in Section 2.2.
"Primary Offering" means an Underwritten Public
Offering pursuant to which the Company receives net proceeds of
at least $5,000,000 in cash.
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<PAGE>
"Registrable Securities" means the shares of Common
Stock set forth opposite the name of each Stockholder on Schedule
A hereto.
"The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and
the declaration or ordering by the Commission of the
effectiveness of such registration statement under the Securities
Act.
"Securities Act" means the Securities Act of 1933, as
amended, or any similar federal statute and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Shelf Registration" means a registration meeting the
requirements of Rule 415 under the Securities Act or any similar
rule in effect under the Securities Act.
"Stockholder" means each holder of shares of Common
Stock listed on Schedule A.
"Underwritten Public Offering" means a public offering
(including a Shelf Registration) of Common Stock for cash which
is offered and sold in a registered transaction on a firm
commitment underwritten basis through one or more underwriters,
all pursuant to an underwriting agreement between the Company or
a Stockholder and such underwriters.
"Wembley" means Wembley, Ltd., a British Virgin Islands
company.
ARTICLE II
REGISTRATION RIGHTS
2.1 Demand Registration Rights. Subject to Section 2.1.1,
(a) beginning on the date hereof, upon receipt by the Company of
a Demand Notice from Odyssey requesting registration of all or
part of the Registrable Securities owned by Odyssey and
(b) beginning on the first anniversary of the date hereof, upon
receipt by the Company of a Demand Notice from Wembley requesting
registration of all or part of the registerable securities owned
by Wembley, the Company agrees to use its best efforts to effect,
as soon as practicable, all registrations, qualifications and
compliances (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate
qualifications under the applicable blue sky or other state
securities laws and appropriate compliance with exemptive
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regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested
and as would permit or facilitate the sale and distribution of
all or such portion of the Registrable Securities owned by the
Stockholder giving such Demand Notice as is specified in such
Demand Notice; provided that the Company shall not be obligated
to take any action to effect any such registration, qualification
or compliance pursuant to this Section 2.1 in any jurisdiction in
which the Company would be required to execute a general consent
to service of process or to register as a dealer or to cause any
officer or employee of the Company to register as a salesman in
effecting such registration, qualification or compliance. The
Company shall use its best efforts to prepare and file a
registration statement covering the Registrable Securities so
requested to be registered pursuant to this Section 2.1 within 45
days after such request is received.
2.1.1 Limitations on Demands. Odyssey may make one
request for a Demand Registration and Wembley may make up to
three requests for Demand Registration under this Agreement.
Odyssey may make its request for a Demand Registration
requesting the registration of all or any portion of its
Registrable Securities at any time after the date hereof
through the seventh anniversary of the date hereof under the
procedures set forth in Section 2.1. Wembley may make its
requests for Demand Registrations at any time after the
first anniversary of the date hereof through the seventh
anniversary of the date hereof, in each case, under the
procedures set forth in Section 2.1. From the first
anniversary of the date hereof until the second anniversary
hereof, Wembley's demand Registration Rights shall be
limited to up to 1,400,000 shares of its Registrable
Securities. At any time after the second anniversary of the
date of this Agreement, Wembley may make a request for a
Demand Registration with respect to up to 3.5 million shares
of its Registrable Securities, or for such greater number of
its Registrable Securities as the board of directors of the
Company may authorize by action of a majority of the entire
board. If all of the Registrable Securities requested to be
registered pursuant to Section 2.1 by a Stockholder are not
so included in a Demand Registration, then such request
shall not count as a requested Demand Registration hereunder
provided, however, if Wembley makes a request for a Demand
Registration with respect to more than 3.5 million shares of
its Registrable Securities, and a majority of the entire
board does not approve the registration of the shares
requested to be registered in excess of 3.5 million, then
such a request shall count as a requested Demand
Registration hereunder provided such registration statement
includes at least 3.5 million shares of Registrable
Securities for Wembley.
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<PAGE>
2.1.2 Underwriting. (a) If a Demand Registration
requested by a Stockholder pursuant to Section 2.1 is for a
Shelf Registration, then the Company will use its best
efforts to effect such registration on Form S-3 or any
successor form thereto and to keep such registration
statement effective under the Securities Act until the first
to occur of the expiration of two years from the date of
effectiveness or the date upon which all such Registrable
Securities have been sold.
(b) If the Demand Registration requested by a
Stockholder pursuant to Section 2.1 is for an Underwritten
Public Offering, the Demanding Stockholder shall include in
its request made pursuant to Section 2.1 the name of the
managing underwriter or underwriters that such Stockholder
proposes to employ in connection with the public offering
proposed to be made pursuant to the registration requested;
provided that if the Company reasonably objects to any
managing underwriter or underwriters proposed by the
Demanding Stockholder, the Demanding Stockholder
shall propose another managing underwriter or underwriters
that is or are acceptable to the Company. The Company shall
use its best efforts to enter into an underwriting agreement
in customary form with the underwriter or underwriters
selected for such underwriting in the manner set forth
above. The Company will take such customary actions as are
necessary to comply with the terms and obligations of such
underwriting agreement and will furnish such underwriters
and their respective representatives full access to all
information reasonably requested in connection with their
"due diligence" review of the Company and its operations.
If the Demanding Stockholder disapproves of the terms of its
Underwritten Public Offering, such Demanding Stockholder may
elect to withdraw therefrom by written notice to the Company
and the managing underwriter. The withdrawal pursuant to
this Section 2.1.2 of a portion of the shares of Registrable
Securities from a registration effected pursuant to Section
2.1 that is declared effective by the Commission shall not
give rise to any additional demand registration right with
respect to the Registrable Securities so withdrawn.
2.2 Piggyback Registration. If at any time or from
time to time after the date hereof (a) the Company shall
determine to make a Primary Offering or Shelf Offering for its
own account (but not including an offering that is registered on
Commission Forms S-4, S-8 or any successor forms thereto) or (b)
a Stockholder shall request that the Company effect a Demand
Registration, then the Company will:
(i) promptly give to each Stockholder a Notice of
Registration (which shall include a list of the
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jurisdictions in which the Company or the Demanding
Stockholder intends to attempt to qualify the offer and sale
of such securities under the applicable blue sky or other
state securities laws); and
(ii) use its best efforts to include in such
registration (and any related qualification or compliance
under blue sky laws), and in any Underwritten Public
Offering or Shelf Offering involved therein, all the
Registrable Securities specified in any written request or
requests by any Stockholder received by the Company within
10 days after such Notice of Registration is given.
2.2.1 Limitations on Piggyback Registrations.
Odyssey may make a request for the inclusion of all or any
portion of its Registrable Securities in any registration
effected pursuant to Section 2.2 at any time after the date
hereof through the seventh anniversary of the date hereof
under the procedures set forth in Section 2.2. Wembley may
make a request for the inclusion of its Registrable
Securities in any registration effected pursuant to Section
2.2 at any time after the first anniversary of the date
hereof through the seventh anniversary of the date hereof
under the procedures set forth under Section 2.2, provided
that, Wembley may not register more than an aggregate of
1,400,000 shares of its Registrable Securities under Section
2.2 until after the second anniversary of the date hereof.
Wembley may make a request for the inclusion of all or any
portion of its Registrable Securities in any registration
effected pursuant to Section 2.2 at any time after the
second anniversary of the date hereof through the seventh
anniversary of the date hereof under the procedures set
forth under Section 2.2. In addition to the foregoing
limitations, the number of Registrable Securities that may
be included in any registration effected pursuant to Section
2.2 shall be further limited as provided in Section 2.2.2.
2.2.2. Underwriting. (a) If the Primary Offering or
Demand Registration through which a Stockholder desires to
register Registrable Securities pursuant to Section 2.2 is
for a Shelf Registration, then the Company will use its best
efforts to effect such registration on Form S-3 or any
successor form thereof and to keep such registration
statement effective underthe Securities Act until the first
to occur of the expiration of two years from the date of
effectiveness or the date upon which all such Registrable
Securities have been sold.
(b) If the registration to be effected is an
Underwritten Public Offering, the right of any Stockholder
to registration pursuant to Section 2.2 shall be conditioned
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upon such Stockholder's participation in the Underwritten
Public Offering and the inclusion of such Stockholder's
Registrable Securities in the Underwritten Public Offering
to the extent provided herein. All Stockholders proposing
to distribute Registrable Securities through such
Underwritten Public Offering, together with the Company,
shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such
Underwritten Public Offering by the Company, unless the
registration is effected pursuant to Section 2.1, in
which event the underwriter or underwriters shall be
selected as provided in Section 2.1.2(b).
(c) Notwithstanding any other provisions of Section
2.2, if the managing underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the managing underwriter and the Company or
Demanding Stockholder, as the case may be, may limit the
Registrable Securities to be included in any registration of
an Underwritten Public Offering as set forth below. In such
event, the Company shall so advise all Stockholders owning
Registrable Securities which otherwise would be registered
and underwritten pursuant thereto, and the number of shares
of Registrable Securities that will be included in the
registration and Underwritten Public Offering shall be
allocated as follows:
(i) In the case of a Primary Offering in which
Stockholders are participating pursuant to
Section 2.2, the shares of Common Stock and
Registrable Securities included in the
registration shall be allocated first 100% to
the Company and then pro rata to each
Stockholder participating in such offering
based on the proportions of Registrable
Securities each Stockholder has requested to
be included in such registration. For
instance, if the Company desires to register
3,000,000 shares of Common Stock, Wembley
desires to register 3,000,000 shares of
Common Stock, and Odyssey esires to register
1,500,000 shares of Common Stock, but the
managing underwriter informs the Company that
only 6,000,000 shares of Common Stock can be
sold in the offering, then such registration
statement shall include 3,000,000 shares for
the Company, 2,000,000 shares for Wembley and
1,000,000 shares for Odyssey.
(ii) In the case of a Demand Registration, such
registration statement shall include first
all of the shares requested to be registered
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by the Demanding Stockholder, and to the
extent the underwriters can sell additional
shares, such registration shall include
Registrable Securities requested to be
registered by the other Stockholder. For
instance, if after the third anniversary of
the date hereof, Wembley makes a request for
a Demand Registration of 3,000,000 shares
of its Registrable Securities, and Odyssey,
pursuant to Section 2.2, requests the
registration of 1,000,000 shares of its
Registrable Securities, but the managing
underwriter informs Wembley that only
3,500,000 shares can be sold in the offering,
then such registration statement shall
include 3,000,000 shares for Wembley and
500,000 shares for Odyssey.
(d) No Registrable Securities excluded from the
Underwritten Public Offering by reason of the managing
underwriter's marketing limitation shall be included in such
registration. If any Stockholder disapproves of the terms
of the Underwritten Public Offering, such Stockholder may
elect to withdraw therefrom by written notice to the Company
and the managing underwriter. The Registrable Securities so
withdrawn also shall be withdrawn from registration;
provided, however, that, if by the withdrawal of such
Registrable Securities a greater number of Registrable
Securities held by other Stockholders may, in the opinion of
the managing underwriter, be included in such registration
(subject to any limitation imposed by the underwriters),
then the Company or the Demanding Stockholder, as the case
may be, shall offer to the other Stockholder the right to
include additional Registrable Securities in the
registration.
2.3 Termination of Registration. Notwithstanding any other
provision of this Agreement, at any time before or after the
filing of a registration statement that is subject to Section
2.2., the Company may, in its sole discretion, abandon or
terminate a Primary Offering without the consent of any
Stockholder, and a Demanding Stockholder may, in its sole
discretion, abandon or terminate a Demand Registration without
the consent of the Company or the other Stockholder.
2.4 Registration Expenses. All expenses (except for costs
of any underwriting and selling discounts and commissions) of any
registrations permitted pursuant to this Agreement and of all
other offerings by the Company (including, but not limited to,
the expenses of any interim audit required by any underwriters in
the event of an offering requested pursuant to Section 2.1, any
qualifications under the blue-sky or other state securities laws,
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compliance with governmental requirements of preparing and filing
any post-effective amendments required for the lawful distribu-
tion of any securities to the public in connection with a
registration and of supplying prospectuses, offering circulars or
other documents), will be paid by the Company provided, however,
that the Stockholders shall be responsible for their fees and
expenses of their counsel.
2.5 Registration Procedures. In the case of such
registration, qualification or compliance effected by the Company
pursuant to Article II in which any Stockholder's Registrable
Securities are included, the Company will, at its expense:
(a) prepare and file with the Commission a
registration statement with respect to the Common Stock to
be registered, and use its best efforts to cause such
registration statement to become and remain effective for
such period as may be reasonably necessary to effect the
sale of the Common Stock, not to exceed nine months in the
case of an Underwritten Public Offering, and not to exceed
two years in the case of a Shelf Registration;
(b) prepare and file with the Commission such
amendments to such registration statement and supplements to
the prospectus contained therein as may be necessary to keep
such registration statement effective for such period as may
be reasonably necessary to effect the sale of such Common
Stock, not to exceed nine months in the case of an
Underwritten Public Offering, and not to exceed two years in
the case of a Shelf Registration;
(c) furnish to the Stockholders participating in such
registration and to the underwriters, if any, of the Common
Stock being registered such reasonable number of copies of
the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public
offering of such Common Stock;
(d) use its diligent good faith efforts to register or
qualify the Common Stock covered by such registration
statement under such state securities or blue sky laws of
such jurisdictions as such participating Stockholders may
reasonably request in writing within 20 days following the
original filing of such registration statement; provided,
however, that in the case of an Underwritten Public
Offering, the managing underwriter shall advise the Company
with respect to blue sky qualification and related matters;
(e) notify counsel for the Stockholders participating
in such registration, promptly after it shall receive notice
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thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming a
part of such registration statement has been filed;
(f) notify counsel for the Stockholders promptly of
any request by the Commission for the amending or
supplementing of such registration statement or prospectus
or for additional information;
(g) prepare and file with the Commission, promptly
upon the request of any Stockholder, any amendments or
supplements to such registration statement or prospectus
which, in the opinion of counsel for such Stockholder (and
concurred in by counsel for the Company), is required under
the Securities Act or the rules and regulations thereunder
in connection with the distribution of the Common Stock;
(h) prepare and promptly file with the Commission and
promptly notify counsel for the Stockholders of the filing
of such amendment or supplement to such registration
statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus
relating to such Common Stock is required to be delivered
under the Securities Act, any event shall have occurred as
the result of which any such prospectus or any other
prospectus as then in effect would include an 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 in which they were made, not
misleading;
(i) advise counsel for the Stockholders, promptly
after it shall receive notice or obtain knowledge thereof,
of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement
or the initiation or threatening of any proceeding for such
purpose, and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if
such stop order should be issued; and
(j) not file any amendment or supplement to such
registration statement or prospectus if, in the opinion of
counsel for the Stockholders, such amendment or supplement
does not comply in all material respects with the
requirements of the Securities Act or the rules and
regulations thereunder, after having been furnished with a
copy substantially in the form thereof at least two business
days before the filing thereof; provided, however, that if
in the opinion of counsel for the Company, the filing of
such amendment or supplement is reasonably necessary to
protect the Company from any liabilities under any
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applicable federal or state law and such filing will not
violate applicable law, the Company may make such filing.
2.6 Related Registration Matters. (a) The Company will use
its reasonable efforts to enter into an underwriting agreement in
connection with any Underwritten Public Offering subject to the
provisions of Sections 2.1 and 2.2 hereof in which any
Stockholder's Registrable Securities are included, which
agreement shall contain such terms, provisions and agreements as
are customary and appropriate for such registration. In
connection with any Underwritten Public Offering or Shelf
Registration in which any Stockholder's Registrable Securities
are included, to the extent not provided in the underwriting
agreement, if any, related to such offering, the Company also
shall use its reasonable efforts to:
(1) List the shares of Common Stock included in such
offering on any national securities exchange on which the
Common Stock is approved for listing;
(2) Cause customary opinions of counsel, comfort
letters of accountants and other appropriate documents to be
delivered by representatives of the Company; and
(3) As soon as practicable after the effective date of
the registration statement, and, in any event, within 16
months thereafter, make "generally available to its
securities holders" (within the meaning of Rule 158 under
the Securities Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Securities Act
and covering a period of at least 12 consecutive months
beginning after the effective date of the registration
statement.
(b) The Company shall be entitled to postpone the
filing of any registration statement under this Agreement
for up to 45 days or require that the parties refrain from
effecting any public sales or distributions of the
Registrable Securities, pursuant to a Shelf Registration
that has been declared effective by the Commission or other-
wise, if the board of directors of the Company in good faith
determines in its sole discretion that such registration, public
sales, or distributions would interfere in any material respect
with any transaction involving the Company that in the sole
discretion of the board of directors is material to the Company.
The board of directors shall, as promptly as practicable, give
the Stockholders written notice of any such development. In the
event of a postponement of the filing of a registration statement
required to be filed under this Agreement, or a request by the
board of directors that the Stockholders refrain from effecting
any public sales or distributions of the Registrable Securities,
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the Company shall be required to file such registration statement
or lift such restrictions regarding effecting public sales or
distributions of the Registrable Securities, as the case may be,
as soon as reasonably practicable after the board of directors
shall determine, in its sole discretion, that the filing of such
registration statement and the offering thereunder or the public
sales or distributions by the Stockholders of the Registrable
Securities, as the case may be, shall not interfere with such
transaction, provided, that in any event no postponement of the
filing of a registration statement required under this Agreement
or a requirement that the Stockholders refrain from effecting
public sales or distributions in the Registrable Securities
extend for more than 45 days.
(c) If the Company or any subsidiary of the Company
plans to repurchase or bid for securities of the Company in the
open market, and the board of directors of the Company determines
in its sole discretion that any such repurchase or bid may not
under Rule 10b-6 ("Rule 10b-6") under the Exchange Act, be
commenced or consummated, the Company shall be entitled, for a
period not to exceed 20 days (subject to extension as described
herein), to require that any Stockholder suspend or postpone any
distribution of securities of the Company (a "Rule 10b-6
Election"). The Company shall, as promptly practicable, give the
Stockholders written notice of any Rule 10b-6 Election, stating
the basis for the Rule 10b-6 Election and specifying the
securities and the distribution of which is required to be
suspended or postponed. As promptly as practicable following the
determination by the board of directors that the Stockholders may
recommence their distribution without causing the Company or a
subsidiary of the Company to be in violation of Rule 10b-6, the
Company shall give the Stockholders written notice of such
determination. If the board of directors has not permitted the
Stockholders to recommence their distribution by the 20th day
following such suspension and on such 20th day delivers written
evidence to the Stockholder subject to suspension that during
such period the Company or subsidiary repurchased at least 50,000
shares of Common Stock of the Company, then the board of
directors shall be entitled to extend the suspension of such
distribution by up to another 20 days. The board of directors
may exercise a Rule 10b-6 Election in respect to up to two
additional 20 day extension periods after the first, provided
that the volume and notice provisions required herein are
complied with in respect to each such additional extension
period.
(d) If the Company shall have given any Stockholder at
least 10 business days prior written notice of any proposed
distribution within the meaning of Rule 10b-6 of any securities
of the Company, describing in reasonable detail the type and
number of securities proposed to be distributed, the intended
method of distribution, and any other material information
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regarding the distribution, such Stockholders may only bid for or
purchase securities of the Company in accordance with Rule 10b-6.
The Company shall notify each Stockholder in writing as promptly
as practicable following the completion or abandonment of such
proposed distribution period.
(e) If the Company shall register any Underwritten
Public Offering (other than a registration on Form S-8 of (i) an
employee stock option, stock purchase or compensation plan or of
securities issued or issuable pursuant to such plan, or (ii) a
dividend reinvestment plan) or any underwritten Demand
Registration initiated at the request of a holder of Registrable
Securities, each Stockholder agrees, to the extent requested in
writing by the managing underwriter administering such offering
as reasonably practicable before the commencement of the 10 day
period referred below, not to effect any public sale or
distribution of securities of the Company other than as part of
such underwritten offering during the 10 day period before the
effective date of the registration statement covering such
Underwritten Public Offering or Demand Registration and during
the period ending on the earlier of (i) the date such sale or
distribution is permitted by such managing underwriter and (ii)
45 days after such effective date.
2.7 Indemnification.
(a) In the case of each registration effected by the
Company pursuant to this Agreement in which any stock-
holder's Registrable Securities are included, the Company
agrees to indemnify, defend and hold harmless such
Stockholder, its officers and directors, each underwriter of
the shares of Common Stock so registered and each person who
controls any such underwriter within the meaning of Section
15 of the Securities Act, against any and all losses,
claims, damages or liabilities (including reasonable
attorneys' fees) to which they or any of them may become
subject under the Securities Act or any other statute or
common law, including any amount paid in settlement of
any litigation, commenced or threatened, if such settlement
is effected with the written consent of the Company (subject
to subsection (c) of this Section 2.7), insofar as any 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 the registration
statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto,
or in any Blue Sky application, or 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; provided, however, that, notwithstanding the
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foregoing, the Company may agree to indemnify each such
underwriter and person who so controls such underwriter to
such other extent as the Company and such underwriter shall
agree; and provided further, that the indemnification
agreement contained in this subsection (a) shall not
(i) apply to such losses, claims, damages, liabilities or
actions arising out of, or based upon, any such untrue
statement or alleged untrue statement, or any such omission
or alleged omission, if such statement or omission was made
in reliance upon and in conformity with information
furnished to the Company in writing by a Stockholder or such
underwriter claiming rights of indemnification pursuant to
this Section 2.7 for use in connection with the preparation
of the registration statement or any preliminary prospectus
or prospectus contained in the registration statement or any
such amendment thereof or supplement thereto; (ii) inure to
the benefit of any underwriter (or to the benefit of any
person controlling such underwriter) from whom the person
asserting any such losses, claims, damages, expenses or
liabilities purchased the securities which are the subject
thereof, if such underwriter failed to send or give a copy
of the final prospectus, as then amended or supplemented, to
such person and if the untrue statement or omission alleged
had been corrected in such final prospectus; or (iii) inure
to the benefit of any person to the extent such person's
claim for indemnification hereunder arises out of or is
based on any violation by such person of applicable law, as
determined by a final, unappealable decision of a court of
competent jurisdiction.
(b) In the case of each registration effected by the
Company pursuant to this Agreement in which any Stock-
holder's Registrable Securities are included, such Stock-
holder (the "indemnifying person") shall be obligated, in
the same manner and to the same extent as set forth in
subsection (a) of this Section 2.7, to indemnify and hold
harmless the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the
Securities Act, its directors and officers, with respect to
any statement or alleged untrue statement in, or omission or
alleged omission from, such registration statement or any
post-effective amendment thereof or any preliminary
prospectus or final prospectus (as amended or supplemented,
if amended or supplemented as aforesaid) contained in such
registration statement, if such statement or omission was
made in reliance upon and in conformity with information
furnished in writing to the Company by such indemnifying
person for use in connection with the preparation of such
registration statement or any preliminary prospectus or
final prospectus contained in such registration statement or
any such amendment thereof or supplement thereto; provided,
however, that the liability of each Stockholder hereunder
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shall be limited to the proceeds received by each Stock-
holder from the sale of Registrable Securities covered by
such registration statement, amendment, supplement,
prospectus or Blue Sky application, as the case may be.
(c) Each person to be indemnified pursuant to this
Section 2.7 will, promptly after its receipt of written
notice of the commencement of any action against such
indemnified person in respect of which indemnity may be
sought from an indemnifying person under this Section 2.7,
notify the indemnifying person in writing of the commence-
ment thereof, provided, however that the failure of any
person to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this
Agreement except to the extent that such indemnifying party
is actually prejudiced by such failure to give notice. If
any such action shall be brought against any indemnified
person and it shall notify an indemnifying person of the
commencement thereof, the indemnifying person will be
entitled to participate therein and, to the extent it may
desire, jointly with any other indemnifying person similarly
notified, to assume the defense thereof with counsel
satisfactory to such indemnified person, and after notice
from the indemnifying person to such indemnified person of
its election so to assume the defense thereof, the
indemnifying person will not be liable to such indemnified
person under this Section 2.7 for any legal or other
expenses subsequently incurred by such indemnified person in
connection with the defense thereof other than reasonable
costs of investigation unless (i) the indemnified person
shall have employed counsel in an action in which the
indemnified person and indemnifying person are both
defendants and there is a conflict of interest between such
parties that would prevent counsel from adequately
representing both parties, (ii) the indemnifying person
shall not have employed counsel satisfactory within the
exercise of reasonable judgment of the indemnified person to
represent the indemnified person within a reasonable time
after the notice of the commencement of the action or
(iii) the indemnifying person has authorized the employment
of counsel for the indemnified person at the expense of the
indemnifying person. The undertaking contained in this
Section 2.7 shall be in addition to any liabilities which
the indemnifying person may have pursuant to law.
2.8 Information by Stockholders. Each Stockholder
requesting to be included in any registration shall furnish to
the Company such information regarding such Stockholder and the
distribution proposed by such Stockholder as the Company may
request and as shall be reasonably required in connection with
any registration, qualification or compliance referred to in
Article II.
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2.9 Rule 144 Reporting. With a view to making available to
the Stockholders the benefits of certain rules and regulations of
the Commission which may permit the sale of the Registrable
Securities to the public without registration, the Company agrees
to:
(a) Commission Reports. File with the Commission in a
timely manner all reports and other documents required of
the Company under Sections 13 or 15(d) of the Exchange Act;
and
(b) Other Information. Furnish to each Stockholder
forthwith upon its request (i) a written statement by the
Company as to the Company's compliance with the public
information requirements of Commission Rule 144, (ii) a copy
of the most recent annual or quarterly report of the
Company, and (iii) such other reports and documents as may
be reasonably requested in availing any Stockholder of any
rule or regulation of the Commission permitting the sale of
any such securities without registration.
2.10 Rights Non-Transferable. The registration rights
provided by this Agreement are for the sole benefit of the
Stockholders, are personal in nature, and shall not be available
to any subsequent holder of the Registrable Securities.
2.11 Limitation on Third Party Piggyback Registrations.
Without the consent of both Odyssey and Wembley, the Company will
not enter into any agreement that permits any Person not a party
to this Agreement to participate in any Demand Registration or
Piggyback Registration under this Agreement.
ARTICLE III
MISCELLANEOUS
3.1 Remedies. Each party hereto acknowledges that a remedy
at law for any breach or attempted breach of this Agreement will
be inadequate, agrees that each other party hereto shall be
entitled to specific performance and injunctive and other
equitable relief in case of any such breach or attempted breach,
and further agrees to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such
injunctive or any other equitable relief.
3.2 Effect of Sale. Any Stockholder who sells all of his
Registrable Securities pursuant to the terms of this Agreement
shall cease to be a party to this Agreement and shall have no
further rights or obligations hereunder.
3.3 Amendment. This Agreement may be amended from time to
time by an instrument in writing signed by all Persons who are
parties to this Agreement.
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3.4 Notices. Any notice, request, reply instruction or
other communication (herein severally and collectively called
"notice") in this Agreement provided or permitted to be given to
the Company or to any Stockholder must be given in writing and
may be given or served by depositing the same in the United
States mail, in certified or registered form, postage fully
prepaid, addressed to the party or parties to be notified, with
return postage fully requested, or by delivering the same in
person to such party or parties. Notice deposited in the United
States mail, mailed in the manner hereinabove described, shall be
effective upon deposit. Notice given in any other manner shall
be effective only if and when received by the party to be
notified. For purpose of notice hereunder, the address of the
Company shall be 19103 Gundle Road, Houston, Texas 77073 and the
respective addresses of the Stockholders shall be the addresses
hereinafter set forth on Schedule A hereto.
3.5 Governing Law. This Agreement shall be subject to and
governed by the laws of the State of Texas.
3.6 Successors and Assigns. This Agreement shall be
binding upon and inure to the parties to this Agreement alone and
no implication that any other person has any rights under this
Agreement shall be made from the provisions hereof, provided,
however, that the obligations of the Company pursuant to this
Agreement shall be binding upon the Company's successors.
3.7 Invalid Provisions. Should any portion of this
Agreement be adjudged or held to be invalid, unenforceable or
void, such holding shall not have the effect of invalidating or
voiding the remainder of this Agreement and the parties hereby
agree that the portion so held invalid, unenforceable or void
shall, if possible, be deemed amended or reduced in scope, or to
otherwise be stricken from this Agreement to the extent required
for the purposes of validity and enforcement thereof.
3.8 Section Headings. The section headings contained
herein are for reference purposes only and shall not in any way
affect the meaning and interpretation of this Agreement.
3.9 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original, and such
counterparts together shall constitute only one instrument.
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SIGNATURE PAGE - REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by themselves or by their respective
duly authorized representatives as of the date first above set
forth.
COMPANY:
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
By:________________________
Thomas L. Caltrider, President
STOCKHOLDERS:
ODYSSEY PARTNERS, L.P.
___________________________
By: Jack Nash, General Partner
WEMBLEY, LTD.
By:________________________
Samir Badawi, Authorized Officer
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Schedule A to
Registration Rights Agreement
HOLDERS OF REGISTRABLE SECURITIES
Shares of Registrable
Name and Address Securities Owned
- ---------------- ---------------------
Odyssey Partners, L.P. 2,071,656
31 West 52nd Street
New York, NY 10019
Wembley, Inc. 7,000,000
Columbus Centre Building
Post Office Box 659
Road Town
Tortola
British Virgin Islands
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