Exhibit 2.1
PLAN AND AGREEMENT OF MERGER
of
GEO SUB CORP.
and
GUNDLE/SLT ENVIRONMENTAL, INC.
---------------
Dated as of December 31, 2003
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Table of Contents
Page
ARTICLE I.
MERGER
1.1. Surviving Corporation .................................................................... 2
1.2. Stockholder Approval ..................................................................... 2
1.3. Effective Date ........................................................................... 2
1.4. Continued Corporate Existence of Surviving Corporation ................................... 2
1.5. Governing Law and Certificate of Incorporation of Surviving Corporation .................. 2
1.6. Bylaws of Surviving Corporation .......................................................... 2
1.7. Directors and Officers of Surviving Corporation. ......................................... 3
1.7.1. Directors of Surviving Corporation ............................................... 3
1.7.2. Officers of the Surviving Corporation ............................................ 3
1.7.3. Vacancies ........................................................................ 3
1.8. Capital Stock of Surviving Corporation. 3
1.8.1. Capital Stock of Surviving Corporation ........................................... 3
1.9. Conversion of Securities upon Merger. .................................................... 3
1.9.1. General .......................................................................... 3
1.9.2. Conversion of Merger Sub Common Stock ............................................ 3
1.9.3. Conversion of GSE's Common Stock; Treatment of GSE Options ....................... 4
1.9.4. Exchange of Merger Sub's Stock Certificates ...................................... 4
1.9.5. Exchange of GSE's Stock Certificates and Options ................................. 4
1.9.6. Withholding Rights ............................................................... 6
1.9.7. Unclaimed Funds; Escheat ......................................................... 6
1.9.8. Merger Sub's Transfer Books Closed ............................................... 6
1.9.9. GSE's Transfer Books Closed ...................................................... 6
1.9.10. GSE Fractional Shares ............................................................ 6
1.10. Assets and Liabilities ................................................................... 6
1.10.1. Assets and Liabilities of Merging Corporations Become Those of ................... 6
Surviving Corporation
1.10.2. Conveyances to Surviving Corporation ............................................. 7
1.10.3. Accounting Treatment ............................................................. 7
1.10.4. Dissenting Stockholders of GSE .................................................. 7
1.11. Payoff of Indebtedness ................................................................... 8
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
2.1. Representations and Warranties of Parent and Merger Sub .................................. 8
2.1.1. Organization and Standing ........................................................ 8
2.1.2. Agreement Authorized and its Effect on Other Obligations ......................... 8
2.1.3. Financial Capability ............................................................. 9
2.1.4. Capitalization ................................................................... 9
2.1.5. No Undisclosed Defaults .......................................................... 9
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2.1.6. Litigation ....................................................................... 9
2.1.7. Broker's Fee ..................................................................... 9
2.1.8. Investigations; Litigation ....................................................... 9
2.1.9. Information for GSE Proxy Statement .............................................. 10
2.1.10. Investment Purpose ............................................................... 10
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF GSE
3.1. Representations and Warranties of GSE .................................................... 10
3.1.1. Organization and Standing ........................................................ 10
3.1.2. Agreement Authorized and its Effect on Other Obligations ......................... 10
3.1.3. Capitalization ................................................................... 11
3.1.4. Subsidiaries ..................................................................... 11
3.1.5. Reports and Financial Statements ................................................. 12
3.1.6. Liabilities ...................................................................... 12
3.1.7. Additional GSE Information ....................................................... 12
3.1.8. No Undisclosed Defaults .......................................................... 15
3.1.9. Absence of Certain Changes and Events in GSE ..................................... 15
3.1.10. Taxes ............................................................................ 17
3.1.11. Intellectual Property ............................................................ 18
3.1.12. Title to Personal Property ....................................................... 19
3.1.13. Owned Real Property .............................................................. 19
3.1.14. Leased Real Property ............................................................. 20
3.1.15. Litigation ....................................................................... 20
3.1.16. Environmental Compliance ......................................................... 20
3.1.17. Compliance with Other Laws ....................................................... 21
3.1.18. Broker's Fee ..................................................................... 22
3.1.19. Benefit Plan Compliance .......................................................... 22
3.1.20. Investigations; Litigation ....................................................... 23
3.1.21. Information for Proxy Statement .................................................. 23
3.1.22. Compliance with Export Laws ...................................................... 23
3.1.23. FIRPTA; Investment Company ....................................................... 23
3.1.24. Labor Matters .................................................................... 24
3.1.25. Insurance ........................................................................ 24
3.1.26. Product Warranty ................................................................. 24
ARTICLE IV.
OBLIGATIONS PENDING EFFECTIVE DATE
4.1. Agreements of GSE and Parent ............................................................. 25
4.1.1. Pre-Merger Notification Filings .................................................. 25
4.1.2. Proxy Statement .................................................................. 25
4.1.3. Notice of Material Developments .................................................. 26
4.1.4. Further Assurances ............................................................... 26
4.2. Additional Agreements of GSE ............................................................. 27
4.2.1. Maintenance of Present Business .................................................. 27
4.2.2. Maintenance of Properties ........................................................ 27
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4.2.4. Compliance with Law .............................................. 27
4.2.5. Inspection of GSE ................................................ 27
4.2.6. Prohibition of Certain Employment Arrangements ................... 27
4.2.7. Prohibition of Certain Loans ..................................... 28
4.2.8. Prohibition of Certain Commitments ............................... 28
4.2.9. Disposal of Assets ............................................... 28
4.2.10. Maintenance of Insurance ......................................... 28
4.2.11. GSE Acquisition Proposals ........................................ 29
4.2.12. No Amendment to Certificate of Incorporation, etc ................ 30
4.2.13. No Issuance, Sale, or Purchase of Securities ..................... 31
4.2.14. Prohibition on Dividends ......................................... 31
4.2.15. Stockholders Meeting ............................................. 31
4.2.16. Notice of Material Developments .................................. 31
4.2.17. Acquisitions ..................................................... 31
4.2.18. Affiliate Transactions ........................................... 31
4.2.19. Litigation ....................................................... 31
4.2.20. Accounting Methods; Income Tax Elections ......................... 32
4.2.21. Third Party Confidentiality and Standstill Agreements ............ 32
4.2.22. SEC Reports ...................................................... 32
4.2.23. Delisting ........................................................ 32
4.2.24. Debt Financing ................................................... 32
4.3. Additional Agreements of Parent .......................................... 33
4.3.1. Financing ........................................................ 33
4.3.2. No Amendment to Merger Sub Certificate of Incorporation, etc ..... 33
4.3.3. Limitation on Issuance of Merger Sub Stock ....................... 33
4.3.4. Adoption of Stock Option Plan .................................... 33
ARTICLE V.
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of Parent and Merger Sub ............. 33
5.1.1. Representations and Warranties of GSE True at Effective Date ..... 33
5.1.2. Opinion of GSE Counsel ........................................... 34
5.1.3. Stockholder Approval ............................................. 34
5.1.4. Xxxx-Xxxxx-Xxxxxx, etc ........................................... 34
5.1.5. Consents ......................................................... 34
5.1.6. Financing ........................................................ 35
5.1.7. No Litigation .................................................... 35
5.1.8. Certified Copies ................................................. 35
5.1.9. Title Insurance .................................................. 35
5.1.10. Survey ........................................................... 35
5.1.11. Payoff Letters ................................................... 36
5.1.12. Employment Agreements ............................................ 36
5.1.13. Dissenting Shares ................................................ 36
5.1.14. Executive Options ................................................ 36
5.1.15. TransAmerica Payoff .............................................. 36
5.1.16. Thailand and Egypt Shareholders Agreements ....................... 36
5.1.17. Directors Options ................................................ 37
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5.2. Conditions Precedent to Obligations of GSE ............................... 37
5.2.1. Representations and Warranties of Parent and Merger Sub True at
Effective Date ................................................... 37
5.2.2. Opinion of Counsel to Parent and Merger Sub ...................... 37
5.2.3. Stockholder Approval ............................................. 38
5.2.4. Xxxx-Xxxxx-Xxxxxx, etc ........................................... 38
5.2.5. Financing Completed .............................................. 38
ARTICLE VI.
TERMINATION AND ABANDONMENT
6.1. Termination .............................................................. 38
6.1.1. By Mutual Consent ................................................ 38
6.1.2. By Parent Because of Dissenting Stockholders ..................... 38
6.1.3. By GSE Because of Conditions Precedent ........................... 39
6.1.4. By GSE or Parent Due to a Superior GSE Transaction Proposal ...... 39
6.1.5. By Parent Because of Conditions Precedent ........................ 39
6.1.6. By Parent Because of Material Adverse Change ..................... 39
6.1.7. By GSE or Parent Because of Legal Proceedings .................... 39
6.1.8. By GSE or Parent if Merger due to Lapse of Time .................. 40
6.2. Termination by Board of Directors ........................................ 40
6.3. Effect of Termination .................................................... 40
6.4. Waiver of Conditions ..................................................... 40
6.5. Expense on Termination ................................................... 40
ARTICLE VII.
ADDITIONAL AGREEMENTS
7.1. Indemnification by Parent as to Proxy Statement .......................... 40
7.2. Indemnification by GSE as to Proxy Statement ............................. 41
7.3. Concerning GSE's Directors and Officers .................................. 41
7.3.1. Indemnification .................................................. 41
7.3.2. Eligibility Determination ........................................ 41
7.3.3. Advance Defense Costs ............................................ 42
7.3.4. Separate Counsel in Certain Events ............................... 42
7.3.5. Notice of Claim .................................................. 42
7.3.6. Insurance Tail ................................................... 42
7.3.7. Existing Rights Preserved ........................................ 43
7.3.8. Indemnified Parties are Third Party Beneficiaries ................ 43
7.4. Employee Benefits ........................................................ 43
7.5. Option Notice ............................................................ 44
ARTICLE VIII.
MISCELLANEOUS
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
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8.6. Successors and Assigns ............................................... 45
8.7. Severability ........................................................ 45
8.8. Injunctive and Other Relief ......................................... 45
8.9. Submission to Jurisdiction ........................................... 45
8.10. Public Announcements ................................................. 46
8.11. Definitions .......................................................... 46
APPENDICES
Amended and Restated Certificate of Incorporation of GSE ................... App. I
Amended and Restated Bylaws of GSE ......................................... App. II
GEO Holdings Corp. 2004 Stock Option Plan .................................. App. III
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PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER, dated as of December 31, 2003 ("Agreement"),
by and among GEO Holdings Corp., a Delaware corporation ("Parent"), GEO Sub
Corp., a Delaware corporation and a wholly-owned subsidiary of Parent ("Merger
Sub"), and Gundle/SLT Environmental, Inc., a Delaware corporation ("GSE"). GSE
and Merger Sub are hereinafter collectively referred to as the "Merging
Corporations."
W I T N E S S E T H:
WHEREAS, Parent is a corporation duly organized and validly existing under
the laws of Delaware, with its principal executive office at 00 Xxxxx Xxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000;
WHEREAS, Merger Sub is a corporation duly organized and validly existing
under the laws of Delaware, with its registered office at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, and its principal executive office at 00 Xxxxx
Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000;
WHEREAS, all the issued and outstanding shares of common stock, par value
$0.01 per share, of Merger Sub are presently held by Parent;
WHEREAS, GSE is a corporation duly organized and validly existing under the
laws of the State of Delaware, with its registered office at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000 and its principal executive office at 00000 Xxxxxx
Xxxx, Xxxxxxx, Xxxxx 00000;
WHEREAS, the authorized capital stock of GSE consists of 1,000,000 shares
of preferred stock, par value $1 per share, of which no shares are issued or
outstanding; and 30,000,000 shares of common stock, par value $.01 per share
("GSE Common Stock"), of which at December 30, 2003 11,529,657 shares were
issued and outstanding; an additional 1,841,461 shares were reserved for
issuance in conjunction with various employee benefit plans (of which 1,484,000
relate to outstanding stock options and the remaining 357,461 are available to
cover any future stock based benefit grants), and 7,089,261 shares of GSE Common
Stock were held in GSE's treasury;
WHEREAS, the board of directors of Parent and the respective boards of
directors of Merger Sub and GSE deem it desirable and in the best interests of
their respective entities and their respective stockholders, members or other
owners, that Merger Sub be merged with and into GSE, 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 Agreement, which Agreement
has been duly approved by resolutions of the respective boards of directors of
GSE, Merger Sub and Parent;
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 (i) the presently outstanding shares of Merger
Sub Common Stock into shares of the Surviving Corporation and (ii) the presently
outstanding shares of GSE Common Stock into consideration herein provided
for, 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 GSE and to the other
conditions hereinafter set forth, GSE and Merger Sub shall be, upon the
Effective Date of the merger as defined in Paragraph 1.3 hereof, merged into a
single surviving corporation, which shall be GSE, 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 GSE in accordance with its certificate of
incorporation, bylaws and the applicable laws of the State of Delaware, at a
meeting called and held for such purpose. Parent, the sole stockholder of Merger
Sub, has adopted and approved this Agreement and the merger contemplated hereby
concurrently with execution of this Agreement.
1.3. Effective Date. The merger shall become effective upon the filing by
GSE and Merger Sub of a Certificate of Merger with the Secretary of State of the
State of Delaware in accordance with Section 251(c) of the Delaware General
Corporation Law ("DGCL"). The date upon which the merger shall become effective
is referred to in this Agreement as the "Effective Date."
1.4. Continued Corporate Existence of Surviving Corporation. On the
Effective Date, the Certificate of Incorporation of GSE shall be amended and
restated in its entirety into the form annexed hereto as Appendix I and shall be
the Certificate of Incorporation of the Surviving Corporation (the "Restated
Certificate of Incorporation"). In all other respects the identity, existence,
purposes, powers, objects, franchises, rights, and immunities of GSE, the
surviving corporation of the merger, shall continue unaffected and unimpaired by
the merger, and the corporate identity, existence, purposes, powers, objects,
franchises, rights, and immunities of Merger Sub shall be wholly merged into
GSE, the "Surviving Corporation," and GSE shall be fully vested therewith.
Accordingly, on the Effective Date, the separate existence of Merger Sub, except
insofar as continued by statute, shall cease.
1.5. Governing Law and Certificate of Incorporation of Surviving
Corporation . 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 the Surviving Corporation until
further amended in the manner provided by law.
1.6. Bylaws of Surviving Corporation. Effective as of the Effective Date,
the bylaws of GSE 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
---- -------
Xxxxxx X. Xxxxxxxx 00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxxxx 00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxx 00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxxx 00000 Xxxxxx Xxxx, Xxxxxxx, Xxxxx 00000
1.7.2. Officers of the Surviving Corporation. The incumbent officers
of GSE immediately prior to the Effective Date shall continue to hold their
respective offices in the Surviving Corporation from and after the
Effective Date and until the first meeting of directors following the next
annual meeting of stockholders thereof, or until their successors are
theretofore or thereafter selected in accordance with the Restated Bylaws.
1.7.3. 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, 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 each of the Merging Corporations
into shares of the capital stock of the Surviving Corporation or other
consideration herein provided for shall be as hereinafter set forth in this
Paragraph 1.9.
1.9.2. Conversion of Merger Sub Common Stock. On the Effective Date,
each share of Merger Sub Common Stock then issued and outstanding, without
any action on the part of the holders thereof, shall automatically become
and be converted into one fully paid and nonassessable share of issued and
outstanding Surviving Corporation Common Stock (the "GSE Shares").
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1.9.3. Conversion of GSE's Common Stock; Treatment of GSE Options.
1.9.3.1. Conversion of Stock. On the Effective Date, each share of
common stock, par value $.01 per share, of GSE then issued and outstanding
(excluding any GSE shares then owned by Parent or Merger Sub, any such
shares which may then be held in the treasury of GSE (all of which shares
shall cease to exist) and Dissenting Shares), without any action on the
part of the holders thereof, shall automatically become and be converted
into the right to receive $18.50 in cash from the Surviving Corporation
upon surrender, in accordance with Paragraph 1.9.5, of certificates
theretofore evidencing shares of GSE Common Stock (collectively, the "GSE
Merger Consideration").
1.9.3.2. Cancellation of Employee Options. Effective immediately prior
to the consummation of the transactions contemplated by this Agreement, the
Company shall cancel each option to acquire equity securities of GSE
(except for the Rollover Options and the Director Options (as defined
below)), and each holder of such an option shall thereafter be entitled to
receive, for each share subject to each such option, the amount by which
$18.50 exceeds the exercise price for such share (the aggregate of such
amounts, the "GSE Employee Option Consideration") upon surrender, in
accordance with Paragraph 1.9.5, of the associated option agreement and
such other instruments of assignment that the Surviving Corporation may
reasonably request. Each such option shall be deemed to be fully vested and
exercisable in its entirety.
1.9.3.3. Surrender of Director Options. Effective as of the Effective
Date, each holder of an option under the Company's 1996 Nonqualified Stock
Option Plan for Non-Employee Directors or any other option to acquire GSE's
capital stock not described in Paragraph 1.9.3.2 (a "Director Option")
shall be entitled to receive, for each share subject to each such option,
the amount by which $18.50 exceeds the exercise price for such share (the
aggregate of such amounts, together with the "GSE Employee Option
Consideration", the "GSE Option Consideration") upon surrender, in
accordance with Paragraph 1.9.5, of the associated option agreement for
cancellation and such other instruments of assignment that the Surviving
Corporation may reasonably request. Each such option shall be deemed to be
fully vested and exercisable in its entirety.
1.9.4. Exchange of Merger Sub's Stock Certificates. On the Effective Date,
Parent shall surrender the outstanding certificates theretofore representing
shares of Merger Sub Common Stock to GSE and shall receive in exchange therefor
a certificate or certificates representing the number of GSE Shares into which
the shares of Merger Sub Common Stock theretofore represented by the certificate
or certificates so surrendered shall have been converted as aforesaid.
1.9.5. Exchange of GSE's Stock Certificates and Options
1.9.5.1. Stock Certificates. As promptly as practicable after the
Effective Date, each holder of an outstanding certificate or certificates
theretofore
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representing shares of GSE Common Stock other than Dissenting Shares may
surrender the same to an exchange agent of the Surviving Corporation to be
designated by Parent ("Exchange Agent") and such holder shall be entitled
upon such surrender to receive in exchange therefor a certified or bank
cashier's check in the amount of $18.50 per share of GSE Common Stock
represented by such certificate or such integral multiple thereof into
which the shares of common stock of GSE theretofore represented by the
certificate or certificates so surrendered shall have been converted as
aforesaid. From and after the Effective Date and to the date of such
surrender, each outstanding certificate which prior to the Effective Date
represented shares of GSE Common Stock shall represent the right, and only
the right, to receive payment in cash of the amounts into which the shares
of GSE Common Stock have been so automatically converted; no interest shall
accrue or be payable with respect to such amounts pending the surrender of
GSE certificates in exchange therefor.
1.9.5.2. Employee Options. As promptly as practicable after the
Effective Date, each holder of an option to acquire equity securities of
GSE canceled pursuant to Paragraph 1.9.3.2 may surrender the associated
option agreement and such other instruments of assignment that the
Surviving Corporation may reasonably request to the Exchange Agent and such
holder shall be entitled upon such surrender to receive in exchange
therefor a certified or bank cashier's check in an amount equal to, for
each such share subject to each such surrendered option, the amount by
which $18.50 exceeds the exercise price for such share or such integral
multiple thereof into which the options to acquire equity GSE equity
securities theretofore represented by the documents so surrendered shall be
entitled as aforesaid. From and after the Effective Date and to the date of
such surrender, any agreement which prior to the Effective Date represented
an option to acquire equity securities of GSE that is canceled pursuant to
Paragraph 1.9.3.2 shall represent the right, and only the right, to receive
payment in cash of the amounts to which the holder of such option is
entitled as provided for herein; no interest shall accrue or be payable
with respect to such amounts pending the surrender of the option agreement
(or any other documentation) in exchange therefor.
1.9.5.3. Director Options. As promptly as practicable after the
Effective Date, each holder of a Director Option may surrender the
associated option agreement and such other instruments of assignment that
the Surviving Corporation may reasonably request to the Exchange Agent and
such holder shall be entitled upon such surrender to receive in exchange
therefor a certified or bank cashier's check in an amount equal to, for
each such share subject to each such surrendered option, the amount by
which $18.50 exceeds the exercise price for such share or such integral
multiple thereof into which the options to acquire equity GSE equity
securities theretofore represented by the documents so surrendered shall be
entitled as aforesaid. Upon such surrender, each Director Option shall be
canceled. No interest shall accrue or be payable with respect to such
amounts pending the surrender of the option agreement (or any other
documentation) in exchange therefor.
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1.9.6. Withholding Rights. Parent, the Exchange Agent and the
Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
an outstanding certificate or certificates representing GSE Common Stock or
an option as described in Paragraph 1.9.3 such amounts as Parent, the
Exchange Agent or the Surviving Corporation is required to deduct and
withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or any provision of state,
local, or foreign tax law. To the extent that amounts are so withheld and
paid over to the appropriate taxing authority by Parent, the Exchange Agent
or the Surviving Corporation, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the
certificate representing GSE Common Stock or an option as described in
Paragraph 1.9.3 in respect of which such deduction and withholding was made
by Parent, the Exchange Agent or the Surviving Corporation.
1.9.7. Unclaimed Funds; Escheat. All funds deposited with the Exchange
Agent or held by the Surviving Corporation, in trust, for the payment of
the amounts into which the outstanding shares of GSE Common Stock shall
have been converted in the merger, and remaining unclaimed for 180 days
after the Effective Date shall be paid to the Surviving Corporation; and
the holder of any unexchanged certificate or certificates which prior to
the Effective Date represented shares of GSE Common Stock shall thereafter
look only to the Surviving Corporation for payment thereof upon surrender
of such certificate or certificates to the Surviving Corporation.
Notwithstanding the foregoing, none of the Surviving Corporation, Parent or
Merger Sub will be liable to any former holder of GSE Common Stock for any
portion of the GSE Merger Consideration delivered to any public official
pursuant to any applicable abandoned property, escheat or comparable law.
1.9.8. Merger Sub's Transfer Books Closed. Upon the Effective Date,
the stock transfer books of Merger Sub shall be deemed closed, and no
transfer of any certificates theretofore representing shares of Merger Sub
Common Stock shall thereafter be made or consummated.
1.9.9. GSE's Transfer Books Closed. Upon the Effective Date, the stock
transfer books of GSE shall be deemed closed, and no transfer of any
certificates theretofore representing shares of GSE Common Stock shall
thereafter be made or consummated.
1.9.10. GSE Fractional Shares. No certificates for fractional share
interests of GSE Shares will be issued in exchange for any fractional share
interest in Merger Sub Common Stock, but, in lieu thereof, GSE will settle
any such fractional share interests in cash on the basis of the closing
price for GSE Common Stock on the New York Stock Exchange on the last
trading day before the Effective Date.
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,
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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 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 Paragraph 1.10 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.
1.10.4. Dissenting Stockholders of GSE. Notwithstanding anything in
this Agreement to the contrary, any shares of GSE Common Stock issued and
outstanding immediately prior to the Effective Date and held by a holder (a
"Dissenting Stockholder") who has not voted in favor of the merger or
consented thereto in writing and who has properly demanded appraisal for
such Common Shares in accordance with the DGCL ("Dissenting Shares") shall
not be converted into a right to receive the merger consideration on the
Effective Date in accordance with Paragraph 1.9.5 hereof, but shall
represent and become the right to receive such consideration as may be
determined to be due to such Dissenting Stockholder pursuant to the laws of
the State of Delaware, unless and until such holder fails to perfect or
withdraws or otherwise loses such holder's right to appraisal and payment
under the DGCL. If, after the Effective Date, such holder fails
7
to perfect or withdraws or otherwise loses such holder's right to
appraisal, such former Dissenting Shares held by such holder shall be
treated as if they had been converted as of the Effective Date into a right
to receive, upon surrender as provided above, the merger consideration,
without any interest thereon, in accordance with Paragraph 1.9.5 hereof.
GSE shall give Merger Sub prompt notice of any demands received by GSE for
appraisal of GSE Common Stock, withdrawals of such demands and any other
instruments served pursuant to the DGCL and received by GSE and Merger Sub
shall have the right to direct all negotiations and proceedings with
respect to such demands. GSE shall not, except with the prior written
consent of Merger Sub, make any payment with respect to, or settle or offer
to settle, any such demands.
1.11. Payoff of Indebtedness. On the Effective Date, GSE shall repay the
indebtedness set forth on Schedule 1.11 pursuant to the Payoff Letters.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
2.1. Representations and Warranties of Parent and Merger Sub. Parent and
Merger Sub jointly and severally represent and warrant as follows:
2.1.1. Organization and Standing. Parent is duly organized and
validly existing as a corporation under the laws of the State of Delaware.
Merger Sub is a newly formed corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware; Merger Sub
has engaged in no business other than in connection with this Agreement.
Parent and Merger Sub each has the full requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby.
2.1.2. Agreement Authorized and its Effect on Other Obligations. This
Agreement has been approved by the Parent as the sole stockholder of Merger
Sub, which approval shall remain in full force and effect through
consummation of the merger contemplated by this Agreement or earlier
termination pursuant to and in accordance with the provisions of Paragraph
6.1 hereof. The consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action on the
part of Parent and Merger Sub, and this Agreement is a valid and binding
obligation of Parent and Merger Sub enforceable against each of them
(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 Merger Sub or the
comparable organizational documents of Parent or (ii) any obligation,
indenture, mortgage, deed of trust, lease, contract or other agreement to
which Parent or any of its subsidiaries (including Merger Sub) is a party
or by which any of them or their properties are bound, other than such
violations, breaches or defaults as would not materially and adversely
affect their performance under this Agreement or consummation of the
transactions herein contemplated.
8
2.1.3. Financial Capability. An executed commitment letter (the "Debt
Financing Letter") is included as Schedule 2.1.3 attached hereto. As of the
date hereof, the Debt Financing Letter is in full force and effect and has
not been amended in any material respect. Assuming all of the
representations and warranties of the Company set forth herein are true,
subject to the terms and conditions of the Debt Financing Letter, the funds
contemplated to be received pursuant to the Debt Financing Letter, together
with the rollover contributions to be made as contemplated by this
Agreement and the equity funds to be provided by equity investors in
Parent, will be sufficient to consummate the Merger and to pay all related
fees and expenses.
2.1.4. Capitalization. The authorized capitalization of Merger Sub
consists of 1,000 shares of common stock, par value $0.01 per share (the
"Merger Sub Common Stock"), at the date hereof, 100 shares were issued and
outstanding, all the outstanding shares of which were owned of record and
beneficially by Parent and certificated only in units of one share or
integral multiples thereof. 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 Merger Sub or any securities or
obligations convertible into or exchangeable for such capital stock.
2.1.5. No Undisclosed Defaults. Merger Sub 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 Merger Sub in default in any material
obligation or covenant on their part to be performed under any material
obligation or other arrangement.
2.1.6. Litigation. There is no suit, action, or legal,
administrative, arbitration, or other proceeding or governmental
investigation pending to which Parent or Merger Sub is a party or, to the
knowledge of Parent and Merger Sub, might become a party that would
materially and adversely affect their performance under this Agreement or
the consummation of the transactions herein contemplated.
2.1.7. Broker's Fee. Neither Parent nor Merger Sub has any liability
or obligation to pay any fees or commissions to any broker, finder or agent
with respect to the transactions contemplated by this Agreement, or any
other transaction, for which GSE could become liable or obligated.
2.1.8. Investigations; Litigation. Except as required pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1978, as amended, 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 Parent or Merger Sub or
any of the transactions contemplated by this Agreement is pending or, to
the best knowledge of Parent and Merger Sub, threatened, nor has any
governmental entity indicated to Parent or Merger Sub an intention to
conduct the same, and (ii) there is no action, suit or proceeding pending
or, to the best knowledge of Parent and Merger Sub, threatened against or
affecting Parent or Merger Sub at law or in equity, or before any federal,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, which either
9
individually or in the aggregate, will or is likely to (i) prevent the
consummation of the transactions contemplated by this Agreement or (ii)
result in any Material Adverse Change (as defined in Paragraph 4.1.3) in
Parent and/or Merger Sub.
2.1.9. Information for GSE Proxy Statement. All information and data
(including financial statements) concerning Parent and Merger Sub which is
or will be included in the proxy statement of GSE containing information
required by Regulation 14A under the Exchange Act, and, if applicable, Rule
13e-3 and Schedule 13E-3 under the Exchange Act (together with all
amendments and supplements thereto, the "Proxy Statement") to be used by
GSE in connection with the transactions contemplated by this Agreement will
be furnished by Parent and Merger Sub 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.
2.1.10. Investment Purpose. Parent is acquiring the GSE Shares
pursuant to the merger contemplated hereby for its own account and for
investment purposes only and not with a view toward or for sale in
connection with, any distribution thereof, nor with the present intention
of distributing or selling the GSE Shares.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF GSE
3.1. Representations and Warranties of GSE. GSE represents and warrants to
Parent as follows (provided that, except for Schedule 3.1.6 (Liabilities),
Schedule 3.1.10 (Taxes), Schedule, 3.1.15 (Litigation), Schedule 3.1.16
(Environmental Compliance) (which shall be the only schedules applicable to the
subject matter thereof, subject to express cross-references to other schedules
on Schedule 3.1.6 or Schedule 3.1.16), any item or matter required to be
disclosed on a particular schedule pursuant to Paragraph 3 of this Agreement
shall be deemed to have been disclosed if information for such item or matter
complying with such disclosure requirements is set forth on another schedule
under this Agreement to the extent that it is reasonably apparent from a reading
of such disclosure item that it would also qualify or apply to such other
schedule):
3.1.1. Organization and Standing. GSE 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 result in a Material Adverse Change.
GSE has the full requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
3.1.2. Agreement Authorized and its Effect on Other Obligations.
Upon approval of this Agreement by the stockholders of GSE, the
consummation of the transactions contemplated hereby will have been duly
and validly authorized by all
10
necessary corporate action on the part of GSE, and this Agreement is a
valid and binding obligation of GSE enforceable against GSE (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.
Neither the execution and delivery of this Agreement nor the consummation
of the merger contemplated by this Agreement will conflict with or result
in a violation or breach of any term or provision of, result in the
acceleration of, or constitute a default under (i) the certificate of
incorporation or bylaws of GSE, (ii) except as set forth in Schedule 3.1.2,
any obligation, indenture, mortgage, deed of trust, lease, contract or
other agreement to which GSE or any of its subsidiaries is a party or by
which any of them or their properties are bound, or (iii) any constitution,
statute, regulation, rule, injunction, judgment, order, ruling or other
restriction of any government, agency, or court to which GSE or its direct
or indirect Subsidiaries is subject.
3.1.3. Capitalization. The entire authorized Capital Stock of GSE
consists of 1,000,000 shares of preferred stock, $1 par value, of which no
shares are issued or outstanding; and 30,000,000 shares of GSE Common
Stock, of which, at December 30, 2003, 11,529,657 shares were issued and
outstanding, an additional 1,841,461 shares were reserved for issuance in
connection with various Benefit Plans (of which 1,484,000 related to
outstanding stock options and the remaining 357,461 are available to cover
any subsequent stock based benefit grants); and 7,089,261 shares of GSE
Common Stock are held in GSE's treasury; provided that the only changes in
any of the foregoing between December 30, 2003 and the date of this
Agreement shall be due only to the exercise, between December 30, 2003 and
the date of this Agreement, of stock options for GSE Common Stock issued
and outstanding as of December 30, 2003 and the issuance of shares of GSE
Common Stock (not to exceed 3,000) pursuant to GSE's employee stock
purchase plan. All of the issued and outstanding shares of GSE Capital
Stock have been duly authorized and are validly issued, fully paid, and
non-assessable. Other than as set forth on Schedule 3.1.3, there are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or
commitments that could require GSE to issue, sell or otherwise cause to
become outstanding any of its capital stock. Other than as set forth on
Schedule 3.1.3, there are no outstanding or authorized stock appreciation,
phantom stock, profit participation or similar rights with respect to GSE.
3.1.4. Subsidiaries. All outstanding equity securities of the
entities owned in whole or in part by GSE and the owners thereof are set
forth on Schedule 3.1.4 and, (a) if such securities are shares of stock of
a corporation, all such shares are validly issued, fully paid, and
nonassessable, and, (b) with respect to all such equity securities, except
as set forth in Schedule 3.1.4, GSE 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 of any other person or entity (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
11
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 result in a Material Adverse Change.
As hereinafter used in this Article III, the term "GSE" also includes
any and all of its directly and indirectly held subsidiaries (including,
without limitation, each entity set forth on Schedule 3.1.4), except where
the context requires the contrary. References to GSE's "subsidiaries" in
this Agreement shall include any and all of GSE's directly and indirectly
held subsidiaries (including, without limitation, each entity set forth on
Schedule 3.1.4).
3.1.5. Reports and Financial Statements. GSE has previously
furnished to Parent 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, 1999, (b) GSE's quarterly and other reports filed
with the Commission since December 31, 2002, (c) all definitive proxy
solicitation materials filed with the Commission since December 31, 1999,
and (d) any registration statements declared effective by the Commission
since December 31, 1999 (items (a)-(d) collectively, the "Reports"). The
consolidated financial statements of GSE and its subsidiaries included in
GSE'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 GSE under the Exchange
Act were, or will be, prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
involved ("GAAP") and fairly present, or will present, the consolidated
financial position for GSE 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. GSE has filed with the Commission all Reports required to be
filed by GSE under the Exchange Act and the rules and regulations of the
Commission. Each of the Reports has complied in all material respects with
the Exchange Act or the Securities Act of 1933, as amended, as applicable.
3.1.6. Liabilities. GSE does not have any material liabilities or
obligations (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due) or have any
knowledge of any potential liabilities or obligations (including any
liability for taxes) other than those (i) disclosed in the Reports, (ii)
incurred in the ordinary course of business consistent with past practice
since September 30, 2003, (iii) professional expenses incurred in
connection with the merger contemplated by this Agreement since September
30, 2003 or (iv) set forth on Schedule 3.1.6 hereto.
3.1.7. Additional GSE Information. Attached as Schedule 3.1.7 are
true, complete and correct lists of the following items, and GSE agrees
that upon the request of
12
Parent, it will furnish to Parent true, complete and correct copies of any
documents referred to in such lists:
3.1.7.1. Real Estate. (a) The address of each parcel of land,
together with all buildings, improvements and fixtures (it being
understood that such improvements and fixtures are disclosed on
Schedule 3.1.7.2) located thereon owned by GSE, (the "Owned Real
Property") and (b) all leases, subleases, licenses, concessions and
other agreements (written or oral) (the "Leases"), pursuant to which
GSE holds a leasehold or subleasehold estate in, or are granted the
right to use or occupy, any land, buildings, improvements, fixtures or
other interest in real property which is used in their operations as
currently conducted (the "Leased Real Property") and the address of
each Leased Real Property;
3.1.7.2. Machinery and Equipment. All machinery, transportation
equipment, equipment, furnishings, and fixtures (excluding such items
as did not have a cost basis of $2,000 or more at their respective
dates of acquisition by GSE) owned, leased (other than in the ordinary
course of business) or subject to a contract of purchase and sale, or
lease commitment, by GSE with a description of the nature and amount
of any Encumbrances thereon, all as of November 30, 2003; provided
that there have been no material acquisitions or dispositions of any
of the foregoing or any agreements for the acquisition or disposition
of the foregoing between November 30, 2003 and the date of this
Agreement;
3.1.7.3. Inventory and Construction Contracts. All inventory
items or groups of inventory items owned by GSE, classified by
location and type of inventory, together with a list of each
construction contract (including the revenue recognized through
November 30, 2003, and estimated revenue and cost to complete) which
is to be performed in whole or in part after the date of this
Agreement;
3.1.7.4. Receivables. All accounts and notes receivable of GSE,
together with an aging schedule as of November 30, 2003;
3.1.7.5. Payables. All accounts and notes payable of GSE,
together with an aging schedule as of November 30, 2003;
3.1.7.6. Insurance. All insurance policies or bonds maintained by
GSE effective as of January 1, 2004, including title insurance
policies, with respect to GSE, including those covering GSE'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. Each contract including each lease
under which GSE is lessor or lessee, which is to be performed in whole
or in part after the date of this Agreement, and which involves or may
involve aggregate payments by or to GSE of $100,000 or more after such
date or which is otherwise
13
material to the business of GSE (the "Material Contracts"). Except as
disclosed on Schedule 3.1.7.7, (i) GSE is not, and, to GSE's
knowledge, no other party is, in default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any Material Contract to which it is a party
and (ii) to GSE's knowledge, there has not occurred any event that,
with the lapse of time or giving of notice or both, would constitute
such a default. All contracts listed on Schedule 3.1.7.7 are valid and
binding, in full force and effect and enforceable against GSE, and to
GSE's knowledge, the other parties thereto, in accordance with their
respective terms (subject to normal equitable principles).
3.1.7.8. Employee Benefit Plans. All written or oral, qualified
or non-qualified bonus, incentive compensation, deferred compensation,
profit-sharing, stock option, stock purchase, retirement, pension,
welfare, group insurance, death benefit, or other fringe benefit
plans, arrangements or trust agreements sponsored, maintained or
contributed to by GSE effective as of January 1, 2004, or under which
GSE has any liability, together with copies of the most recent annual
reports with respect to such plans, or trust or other funding
arrangements filed with any governmental agency and all Internal
Revenue Service determination letters that have been received with
respect to such plans (collectively, "GSE Benefit Plans"). "Foreign
Plan" shall mean any GSE Benefit Plan that is established pursuant to
or governed by laws of a jurisdiction other than the United States or
a jurisdiction thereof. "Benefit Plan" shall mean any GSE Benefit Plan
that is not a Foreign Plan;
3.1.7.9. Certain Salaries. The names and salary rates of all
present officers and employees of GSE whose current regular annual
salary rate is $100,000 or more, except for such officers and
employees, whose compensation is not disclosable pursuant to the rules
and regulations of the Exchange Act but whose names and salary rates
have otherwise been disclosed to Parent, together with any bonuses
paid or estimated bonuses payable to such persons for the fiscal year
ended December 31, 2003, 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. Bank Accounts. The name of each bank in which GSE has
an account and the names of all persons authorized to draw thereon;
3.1.7.11. Employee Agreements. Any collective bargaining
agreements of GSE with any labor union or any agreements or
arrangements with other representative of employees, including
amendments, supplements, and written or oral understandings, and all
current employment and consulting agreements of GSE providing for
compensation in excess of $100,000 per year;
3.1.7.12. Intellectual Property Rights. All patents, trademarks,
registered copyrights, material unregistered copyrights, domain names,
applications filed with respect to any of the foregoing, and license
agreements with respect to Intellectual Property Rights, excluding
off-the-shelf computer software licenses.
14
3.1.7.13. Trade Names. All trade names and fictitious names
used or held by GSE, whether and where such names are registered and
where used;
3.1.7.14. Promissory Notes. All long-term and short-term
promissory notes, installment contracts for the payment of money, loan
agreements, credit agreements, and any other agreements of GSE
relating thereto or with respect to collateral securing the same which
are to be performed in whole or in part after the date of this
Agreement;
3.1.7.15. Guaranties. All indebtedness, liabilities and
commitments of others and as to which GSE is a guarantor, endorser,
co-maker, surety, or accommodation maker, or is contingently liable
therefore (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;
3.1.7.16. Reserves and Accruals. All accounting reserves and
accruals maintained in the GSE financial statements (in the aggregate)
as of November 30, 2003;
3.1.7.17. Environment. All environmental permits, approvals,
certifications, licenses, registrations, orders and decrees applicable
to current operations conducted by GSE and all environmental audits,
assessments, investigations and reviews on any property currently
owned or used by GSE that are either material or are otherwise
reasonably available to GSE.
3.1.8. No Undisclosed Defaults. Except as may be specified in the
Reports or in Schedule 3.1.8, GSE is not 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.
3.1.9. Absence of Certain Changes and Events in GSE. Except as set
forth in Schedule 3.1.9 hereto, other than as a result of the transactions
contemplated by this Agreement, since June 30, 2003, GSE has conducted its
business only in the ordinary course and in a manner consistent with past
practice and there has not been:
3.1.9.1. Financial Change. Any Material Adverse Change in the
financial condition, operations, assets or business of GSE;
3.1.9.2. Property Damage. Any material damage, destruction, or
loss to the business or properties of GSE (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 GSE's capital stock, or any direct or
indirect redemption, purchase or any other acquisition of such stock
by GSE;
15
3.1.9.4. Capitalization Change. Any change in the capital
stock or in the number of shares or classes of GSE's authorized
capital stock as described in Paragraph 3.1.3;
3.1.9.5. Labor Disputes. Any labor dispute (other than routine
grievances);
3.1.9.6. Change in Accounting Method or Practice. Any change
in any method of accounting or accounting practice by GSE, except for
any such change required by reason of a concurrent change in United
States generally accepted accounting principles;
3.1.9.7. Revaluation of Assets. Any revaluation by GSE of a
material asset (including, without limitation, writing down of the
value of inventory or writing-off of notes or accounts receivable
except in the ordinary course of business consistent with past
practice to the extent that any such write-downs or write-offs are
not, individually or in the aggregate, material to GSE);
3.1.9.8. Contracts. Any transaction or commitment made, or any
contract or agreement entered into, by GSE relating to its assets or
business (including, without limitation, the acquisition, disposition,
leasing or licensing of any tangible or intangible assets) or any
relinquishment by GSE of any contract or other right, in either case,
material to GSE taken as a whole, other than transactions and
commitments in the ordinary course of business consistent with past
practice and those contemplated by this Agreement;
3.1.9.9. Guarantees. Any incurrence, assumption or guarantee
by GSE of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent
with past practices;
3.1.9.10. Benefits. Any material increase in the benefits
under, or the establishment, material amendment or termination of, any
Benefit Plan or Foreign Plan (as defined in Paragraph 3.1.7.8) (other
than as required by laws of the applicable foreign jurisdiction)
covering current or former employees, officers or directors of GSE, or
any material increase (other than as provided by the terms of
contracts disclosed on Schedule 3.1.7) in the compensation payable or
to become payable to or any other material change in the employment
terms for any directors or officers of GSE or any other employee
earning noncontingent cash compensation in excess of $100,000 per
year, other than as provided in the agreements listed on Schedules
3.1.7.8, 3.1.7.9 or 3.1.7.11, and except for such officers and
employees whose compensation is not disclosable pursuant to the rules
and regulations of the Exchange Act but that have been otherwise
disclosed to Parent;
3.1.9.11. Encumbrances. Any creation or assumption by GSE of
any Encumbrance on any material asset(s) (alone or in the aggregate)
other than in the ordinary course of business consistent with past
practice;
16
3.1.9.12. Loans. Any making of any loan, advance or capital
contributions to or investment in any entity or person other than
loans, advances or capital contributions to or investments in
wholly-owned subsidiaries made in the ordinary course of business
consistent with past practice;
3.1.9.13. Employment Agreements. Any entry by GSE into any
employment, consulting, severance, termination or indemnification
agreement with any director or officer of GSE or entry into any such
agreement with any person for a noncontingent cash amount in excess of
$100,000 per year or outside the ordinary course of business, other
than as provided in the agreements listed on Schedules 3.1.7.8,
3.1.7.9 or 3.1.7.11;
3.1.9.14. Subsidiaries. Any authorization of, or agreement by
GSE to take, any of the actions described in this Paragraph 3.1.9,
except as expressly contemplated by this Agreement;
3.1.9.15. Other Material Changes. Any other event or condition
known to GSE particularly pertaining to and adversely affecting the
operations, assets or business of GSE (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 in GSE;
3.1.9.16. No Commitments. Any commitment to any of the
foregoing, except for the transactions expressly contemplated to be
consummated pursuant to this Agreement.
3.1.10. Taxes. Except as set forth in Schedule 3.1.10, 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, estimates and
other documents (including schedules or any related or supporting
information) required to be filed with any governmental entity have been
timely filed with appropriate governmental agencies, domestic and foreign,
by GSE 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 such tax returns have been prepared in compliance with all
applicable laws and regulations and all such tax returns are true, complete
and accurate in all material respects; all taxes due and payable have been
paid and the tax provision reflected in GSE's consolidated financial
statements as of November 30, 2003 is adequate, in accordance with GAAP,
and equals or exceeds the liabilities of GSE at the date thereof for all
taxes, including any interest, penalties and additions to taxes of any
character whatsoever applicable to GSE or its assets or business. Except as
set forth on Schedule 3.1.10, no waiver of any statute of limitations
executed by GSE with respect to Federal or state income or other tax is in
effect for any period. There are no tax liens on any assets of GSE except
for taxes not yet currently due. Except as set forth on Schedule 3.1.10,
(i) no foreign, federal, state, or local tax audits or administrative or
judicial tax proceedings are pending or being conducted with respect to GSE
or any of its subsidiaries; (ii) GSE has not received from any foreign,
federal, state, or local taxing authority (including jurisdictions where
GSE has not filed tax returns or
17
paid taxes) any (a) notice indicating an intent to open an audit or other
review, (b) request for information related to tax matters, or (c) notice
of deficiency or proposed adjustment for any amount of tax proposed,
asserted, or assessed by any taxing authority against GSE; (iii) GSE is not
a party to any agreement, contract, arrangement or plan that has resulted
or would result, separately or in the aggregate, in the payment of any
"excess parachute payment" within the meaning of Code (S)280G (or any
corresponding provision of state, local or foreign Tax law); (iv) to GSE's
knowledge, GSE has disclosed on its federal income tax returns all
positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Code (S)6662;
(v) GSE is not a party to or bound by any tax allocation, sharing, or
similar agreement; (vi) GSE will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Effective Date as a
result of any: (a) change in method of accounting for a taxable period
ending on or prior to the Effective Date; (b) "closing agreement" as
described in Code (S)7121 (or any corresponding or similar provision of
state, local or foreign income Tax law) executed on or prior to the
Effective Date; (c) intercompany transactions occurring at or prior to the
consummation of the transactions contemplated by this Agreement or any
excess loss account in existence upon the consummation of the transactions
contemplated by this Agreement described in Treasury Regulations under Code
(S)1502 (or any corresponding or similar provision of state, local or
foreign income Tax law); (d) installment sale, long-term construction
contract or open transaction disposition made on or prior to the Effective
Date; or (e) prepaid amount received on or prior to the Effective Date;
(vii) GSE has not distributed stock of another entity, or has had its stock
distributed by another entity, in a transaction that was purported or
intended to be governed in whole or in part by Code (S)355 or Code (S)361;
and (viii) GSE and its Subsidiaries have, in all material respects,
properly and in a timely manner documented their transfer pricing
methodology in compliance with Code (S)(S)482 and 6662 (and any related
sections), the Treasury regulations promulgated thereunder and any
comparable provisions of state, local or foreign Tax law or regulation.
Schedule 3.1.10 attached hereto lists all federal, state, local, and
foreign income tax returns currently required to be filed with respect to
GSE, together with due dates for such filings and the tax years with
respect to all GSE federal, state, local, and foreign income tax returns
for which the statute of limitations has not yet expired. GSE has made
available to Parent correct and complete copies of all federal income tax
returns, examination reports, and statements of deficiencies assessed
against or agreed to by GSE filed or received since December 31, 1998.
3.1.11. Intellectual Property. Except as set forth in Schedule 3.1.11,
GSE owns or possesses written licenses to use (a) patents, patent
applications and patent disclosures, (b) trademarks, service marks, trade
dress, trade names, logos, slogans and corporate names (and all
translations, adaptations, derivations and combinations of the foregoing)
and Internet domain names, together with all of the goodwill associated
with each of the foregoing, (c) copyrights and copyrightable works, (d)
mask works, (e) registrations and applications for any of the foregoing,
(f) computer software (including, without limitation, source code,
executable code, data, databases and documentation), (g) trade secrets and
other confidential information (including, without limitation, ideas,
formulas,
18
compositions, inventions (whether patentable or unpatentable and whether or
not reduced to practice), know-how, manufacturing and production processes
and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, financial and
marketing plans and customer and supplier lists and information) and (h)
all other intellectual property rights in any jurisdiction throughout the
world (collectively, "Intellectual Property Rights") that is used in the
business of GSE, including all such Intellectual Property Rights listed in
the Reports. The Intellectual Property Rights owned or licensed by GSE are
free and clear of any Encumbrances other than such Encumbrances as are
listed in Schedule 3.1.11. Except as otherwise indicated in such Schedule,
GSE has not granted to any other person or entity any license to use any
Intellectual Property Rights. Except as set forth on Schedule 3.1.11, the
business of GSE as presently conducted does not infringe and the business
of GSE as presently proposed to be conducted will not infringe the
Intellectual Property Rights of any third party and, except as set forth in
Schedule 3.1.11, GSE has not received any notice of infringement,
misappropriation, or conflict with, or unsolicited offer or demand to
license the Intellectual Property Rights of any third party. Except as set
forth in Schedule 3.1.11, the Intellectual Property Rights of GSE are not
being infringed by any third party. Except as set forth in Schedule 3.1.11,
the execution of this Agreement and consummation of the merger will not
adversely affect the ownership or license of any Intellectual Property
Rights of GSE.
3.1.12. Title to Personal Property. 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, GSE has good and marketable title to all its personal property,
interests in personal property and assets, reflected in the September 30,
2003 financial statements contained in the Reports, free and clear of any
Encumbrance of any nature whatsoever, except (i) Encumbrances reflected in
the Reports, (ii) Encumbrances 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 GSE
leases (whether as lessee or lessor) any substantial amount of personal
property are 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 GSE and in
respect to which GSE has not taken adequate steps to prevent a default from
occurring. The personal property used in GSE's business is in good
operating condition and repair, subject only to ordinary wear and tear. All
major items of equipment of GSE 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. Owned Real Property. Except as set forth in Schedule 3.1.13,
with respect to each parcel of Owned Real Property: (i) GSE has good and
marketable fee simple title to such parcel, which shall be free and clear
of all Encumbrances as of the Effective date,
19
except (a) Encumbrances for current taxes and other statutory Encumbrances
not yet due and payable or that are being contested in good faith and for
which adequate reserves have been established, (b) carriers',
warehousemen's, landlords' and mechanics' liens and other similar statutory
Encumbrances arising in the ordinary course of business which are not yet
due and payable or delinquent, (c) Encumbrances, pledges or deposits
incurred or made in connection with workmen's compensation, unemployment
insurance and other social security benefits, and (d) such imperfections or
minor defects of title, easements, rights of way and other similar
restrictions (if any) as, individually or in the aggregate, are
insubstantial in character, amount or extent, do not materially detract
from the value or interfere with the present or proposed use of the Owned
Real Property ("Permitted Encumbrances"); (ii) there are no outstanding
options, rights of first offer or rights of first refusal to purchase such
parcel or any portion thereof or interest therein; and (iii) GSE is not a
party to any agreement or option to purchase any real property or interest
therein. Except as set forth on Schedule 3.1.13, there are no leases,
licenses, concessions or other agreements (written or oral) conveying or
granting to any third party a leasehold estate in any Owned Real Property
or any portion thereof.
3.1.14. Leased Real Property. Except as set forth in Schedule 3.1.14,
with respect to each of the Leases: (i) such Lease is legal, valid,
binding, enforceable and in full force and effect against GSE and, to GSE's
knowledge, the other parties thereto in accordance with their respective
terms (subject to normal equitable principles); (ii) the transactions
contemplated in this Agreement do not require the consent of any other
party to such Lease, will not result in a breach of or default under such
Lease, or otherwise cause such Lease to cease to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
Effective Date; (iii) neither GSE nor any other party to the Lease is in
breach or default under such Lease, and no event has occurred or
circumstance exists which, with the delivery of notice, passage of time or
both, would constitute such a breach or default or permit the termination,
modification or acceleration of rent under such Lease; (iv) there are no
disputes with respect to such Lease; (v) no security deposit or portion
thereof deposited with respect such Lease has been applied in respect of a
breach or default under such Lease which has not been re-deposited in full;
(vi) there are no forbearance programs in effect with respect to such
Lease; and (vii) GSE has not assigned, subleased, mortgaged, deeded in
trust or otherwise transferred or encumbered such Lease or any interest
therein.
3.1.15. Litigation. Except to the extent set forth in Schedule 3.1.15,
there is no suit, action, or legal, administrative, arbitration, or other
proceeding or governmental investigation pending to which GSE is a party
or, to the knowledge of GSE, might become a party or which particularly
affects GSE, nor is any change in the zoning or building ordinances
directly affecting the real property or leasehold interests of GSE, pending
or, to the knowledge of GSE, threatened.
3.1.16. Environmental Compliance. Except as set forth in Schedule
3.1.16:
3.1.16.1. Environmental Conditions. There are no environmental
conditions or circumstances such as the presence or release of any
hazardous
20
substance on any property that could reasonably be expected to give
rise to a material liability to GSE.
3.1.16.2. Permits, etc. GSE 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.
3.1.16.3. Compliance. GSE's operations and use of its assets
do not violate in any material respect any applicable federal, state,
foreign or local law, statute, ordinance, rule, regulation, order or
notice or other legally-binding 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 activity which affects the environment, or (c) the
regulation of, or the protection of humans from exposure to, any
pollutants, contaminants, waste, hazardous or toxic substances,
including, without limitation, the Comprehensive Environmental
Response Compensation and Liability Act (42 U.S.C. (S) 9601 et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 1609
et seq.), the Clean Water Act (33 U.S.C. (S) 1251 et seq.), the Clean
Air Act (42 U.S.C. (S) 7401 et seq.), the Toxic Substances Control
Act (17 U.S.C. (S) 2601 et seq.), the Federal Insecticide Fungicide
and Rodenticide Act (7 U.S.C. (S) 136 et seq.), the Safe Drinking
Water Act (42 U.S.C. (S) 201 and (S) 300f et seq.), the Rivers and
Harbors Act (33 U.S.C. (S) 401 et seq.), the Oil Pollution Act (33
U.S.C. (S) 2701 et seq.), and analogous provisions, as any of the
foregoing may have been amended or supplemented from time to time
(collectively, the "Applicable Environmental Laws").
3.1.16.4. Past Compliance. None of the operations or assets
of GSE has ever been conducted or used by GSE in such a manner as to
constitute a material violation of any of the Applicable
Environmental Laws.
3.1.16.5. Environmental Claims. No written notice or material
oral notice has been received by GSE 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 material claims for
remedial obligations, contribution or damages for injuries to
persons, entities, property or natural resources under any Applicable
Environmental Laws.
3.1.16.6. Renewals. GSE does not know of any reason GSE 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 GSE's assets for their current purposes and
uses.
3.1.17. Compliance with Other Laws. Except as set forth in Schedule
3.1.17, GSE 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. (S) (S) 651 et
21
seq.), as amended ("OSHA") or any other applicable law (including any real
property 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.
3.1.18. Broker's Fee. GSE has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement, or any other transaction, for
which Parent or Merger Sub could become liable or obligated, other than
financial advisory fees to be paid by GSE to Xxxxxx Xxxxxxxx Advisors, Inc.
("HWCo") in connection with the merger contemplated by this Agreement.
3.1.19. Benefit Plan Compliance. Except as otherwise stated in
Schedule 3.1.19, each of the Benefit Plans is in compliance 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
Plan, ERISA or other applicable laws have been timely made.
3.1.19.1. Prohibited Transactions. GSE has not engaged in any
transaction in connection with which it could be subject (either
directly or indirectly) to a material liability or a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code.
3.1.19.2. Plan Termination; Material Liabilities. There has
been no termination of an "employee pension benefit plan" as defined
in ERISA Section 3(2) 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 GSE and none of the
Benefit Plans is a Statutory Plan.
3.1.19.3. 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 or penalty could be imposed pursuant to Section 4975 of
the Code or other applicable laws.
3.1.19.4. Pending Claims. Except as disclosed in Schedule
3.1.19, there are no claims known to GSE, whether pending or
threatened, involving any of the Benefit Plans or Foreign Plans by
any current or former employee (or beneficiary thereof) of GSE or any
other person or entity which allege any violation of ERISA or other
applicable laws, or the terms of the Benefit Plans or Foreign Plans.
3.1.19.5. Multiemployer Plans. Neither GSE nor any trade or
business (whether or not incorporated) which together with GSE would
be deemed to be a
22
"single employer" within the meaning of Section 4001(b) of ERISA or
Subsections 404(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 which is a "multiemployer plan" as such term
is defined in Section 3(37) or 4001(a)(3) of ERISA and which is
subject to Title IV of ERISA.
3.1.19.6. Reports. All reports required to be filed or
distributed under ERISA, the Code or any other applicable laws with
respect to any Benefit Plan have been filed or distributed in a
timely manner.
3.1.19.7. Foreign Plans. Each Foreign Plan is in compliance
in form and operation with applicable laws of its applicable
jurisdiction. All contributions required to be made to each Foreign
Plan under applicable laws have been timely made. No material
liability to any governmental agency or regulatory body or any labor
union or employee representative has been or is expected to be
incurred with respect to any Foreign Plan other than in the ordinary
course for the payment of benefits.
3.1.20. 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 GSE in
connection with any of the transactions contemplated by this Agreement is
pending or, to the best of GSE's knowledge, threatened, nor has any
governmental entity indicated to GSE an intention to conduct the same and
(ii) there is no action, suit or proceeding pending or, to the best of
GSE's knowledge, threatened against or affecting GSE at law or in equity,
or before any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality.
3.1.21. Information for Proxy Statement. (a) Each document required
to be filed by the GSE with the SEC in connection with the merger
transaction (the "Company Disclosure Documents"), including, without
limitation, the Proxy Statement, will, when filed, comply as to form in all
material respects with the applicable requirements of the Exchange Act; (b)
all information and data (including financial statements) concerning GSE
which is or will be included in the Company Disclosure Documents to be used
by GSE in connection with the transactions contemplated by this Agreement
will be furnished by GSE 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.
3.1.22. Compliance with Export Laws. All exports by GSE 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, GSE has obtained all required approvals of the U.S.
Department of Commerce and Department of Treasury.
3.1.23. FIRPTA; Investment Company. GSE is not a United States real
property holding corporation within the meaning of (S) 897(c)(2) of the
Code during the applicable
23
period specified in (S) 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.
3.1.24. Labor Matters. Except as set forth on Schedule 3.1.24, (a)
there is no labor strike, dispute, slowdown, stoppage or lockout actually
pending, or, to the knowledge of GSE, threatened against GSE, and during
the past three years there has not been any such action, (b) to the
knowledge of GSE, no union claims to represent the employees of GSE, (c)
GSE is not a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to
with any labor organization or employee association applicable to employees
of GSE, (d) none of the employees of GSE is represented by any labor
organization and GSE does not have any knowledge of any current union
organizing activities among the employees of GSE, nor to GSE's knowledge
does any question concerning representation exist concerning such
employees, (e) GSE is, and has at all times been, in material compliance
with all applicable Laws respecting employment and employment practices,
terms and conditions of employment, wages, hours of work and occupational
safety and health, and are not engaged in any unfair labor practices as
defined in the National Labor Relations Act or other applicable law,
ordinance or regulation, (f) there is no unfair labor practice charge or
complaint against GSE pending or, to the knowledge of GSE, threatened
before the National Labor Relations Board or any similar state or foreign
agency, (g) there is no material grievance arising out of any collective
bargaining agreement or other grievance procedure, and (h) no charges with
respect to or relating to GSE are pending before the Equal Employment
Opportunity Commission or any other agency responsible for the prevention
of unlawful employment practices.
3.1.25. Insurance. Except as set forth on Schedule 3.1.25, GSE has
policies of insurance and bonds of the type and in amounts customarily
carried by persons or entities conducting businesses or owning assets
similar to those of GSE. All premiums when due and payable under all such
policies and bonds have been paid and GSE is otherwise in compliance in all
material respects with the terms of such policies and bonds. Except as
forth on Schedule 3.1.25, GSE does not maintain any material self-insurance
or co-insurance programs. Except as disclosed on Schedule 3.1.15, GSE does
not have any disputed claim or claims aggregating $250,000 or more with any
insurance provider relating to any claim for insurance coverage under any
policy or insurance maintained by GSE.
3.1.26. Product Warranty. Except as set forth on Schedule 3.1.26,
each product manufactured, sold, leased or delivered by GSE has been in
conformity with all applicable contractual commitments and all express and
implied warranties, and GSE does not have any liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against any of them
giving rise to any liability) for replacement or repair thereof or other
damages in connection therewith, subject only to the reserve for product
warranty set forth in the GSE financial statements as of November 30, 2003
as adjusted for the passage of time through the Effective Date in
accordance with past custom and practice of GSE. Copies of the current
standard terms and conditions of sale or lease for GSE (containing
24
applicable guaranty, warranty or other indemnity provisions) have been
provided to Parent.
ARTICLE IV.
OBLIGATIONS PENDING EFFECTIVE DATE
4.1. Agreements of GSE and Parent. GSE and Parent (for itself and on
behalf of Merger Sub) agree to take the following actions after the date hereof:
4.1.1. Pre-Merger Notification Filings. Each party shall promptly
file such materials as are required under the HSR Act and any applicable
comparable laws of foreign jurisdictions i.e., German Merger Control Law,
U.K. Fair Trade Act of 1976, Canada Competition Act and Investment Canada
Act, if applicable with respect to the merger contemplated hereby and shall
cooperate with the other party to the extent necessary to assist the other
party in the preparation of such filings and shall use its best efforts to
obtain all governmental approvals contemplated by this Paragraph and to
eliminate any concern on the part of any court or government authority
regarding the legality of the proposed transaction, including, if required
by federal, state or foreign antitrust authorities, promptly taking all
steps to secure government antitrust clearance, including, without
limitation, (i) all steps to make arrangements for, or to effect the sale
or other disposition of, particular assets or businesses of Parent, of
Merger Sub, or of GSE or any of its subsidiaries, the ownership of which
causes such authorities to withhold such clearance, and (ii) agreeing to
enter into a hold-separate agreement with said antitrust authorities
pending such sale or other disposition of assets, businesses or voting
securities of Parent, of Merger Sub or of GSE or any of its subsidiaries,
including without limitation, pursuant to a trust or other arrangement that
restricts, limits or prohibits access by Parent to any business, subsidiary
or asset of Parent, to GSE or to the capital stock or other voting shares
thereof;
4.1.2. Proxy Statement. GSE and Parent (for itself and Merger Sub)
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
GSE's stockholders called for the purpose of, among other things, securing
stockholder approval of the merger contemplated by this Agreement. Each of
GSE and Parent (for itself and Merger Sub) shall use all reasonable efforts
to have the Proxy Statement cleared by the Commission. The Proxy Statement
shall contain statements of GSE's board of directors that it has (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, are fair to and in the best interests of the
stockholders of the Company, (ii) declared the Merger and this Agreement to
be advisable and (iii) recommended unanimously that the stockholders of the
Company vote in favor of the approval of the Merger and the adoption of
this Agreement, which recommendations shall not be withdrawn, amended or
modified in a manner adverse to Parent or Merger Sub (unless withdrawn,
modified or changed in accordance with the terms of Paragraph 4.2.11).
Parent and its counsel shall be given an opportunity to review and comment
upon the Proxy Statement and any amendment or supplement thereto and any
response to comments from the Commission prior to the filing thereof with
the Commission, and GSE shall consider any such comments in good faith. GSE
agrees to provide to Parent
25
and its counsel any comments which GSE or its counsel may receive from the
staff of the Commission with respect to the Proxy Statement promptly after
receipt thereof. Parent (for itself and Merger Sub) will promptly supply to
the Company in writing, for inclusion in the Proxy Statement, all
information concerning Parent and Merger Sub required by law, rule or
regulation to be included in the Proxy Statement. Each of GSE and Parent
(for itself and Merger Sub) shall use reasonable efforts to cause the Proxy
Statement to be mailed to GSE's stockholders as promptly as practicable;
4.1.3. Notice of Material Developments. GSE and Parent (for itself
and Merger Sub) will promptly notify the other party in writing of (a)
receipt of any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection
with the transactions contemplated by this Agreement, (b) any claims,
actions, proceedings or governmental investigations commenced or, to its
knowledge, threatened, involving or affecting GSE or any of its
subsidiaries or any of their property or assets that involves a demand of
$100,000 or greater or that otherwise is material, (c) the occurrence, or
failure to occur, of any event that would be likely to cause any
representation or warranty made by such party contained in this Agreement
to be untrue or inaccurate in any material respect, (d) any failure of the
Company or Merger Sub, as the case may be, or of any officer, director,
employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder,
(e) the occurrence of any event that would constitute a material breach of
any of the representations or warranties set forth in this Agreement had
such representations or warranties been made as of the occurrence of such
event and (f) any "Material Adverse Change" of such party, whether or not
occurring in the ordinary course of busine(S) As used in this Agreement,
the term "Material Adverse Change" means any change, event, circumstance or
condition (collectively, a "Change") that, when considered with all other
Changes in the aggregate would reasonably be expected to have a material
and adverse effect on the business, operations, assets, liabilities,
properties, conditions (financial or otherwise) or results of operation of
GSE or Parent, as the case may be. The foregoing to the contrary
notwithstanding, in no event shall any of the following constitute a
"Material Adverse Change" in GSE: (i) fluctuations in the trading price of
the GSE Common Stock on the New York Stock Exchange between the date hereof
and the Effective Date, or (ii) fluctuations in working capital associated
with GSE's normal operating cycle, or (iii) the satisfaction of obligations
or contingencies disclosed in GSE's most recent report on Form 10-K, or
(iv) political or economic events (including acts of war and terrorist
incidents) not having an effect (directly or indirectly) upon GSE's
business or financial condition. Notwithstanding anything in this Agreement
to the contrary, no notification pursuant to this Paragraph 4.1.3 shall
affect the representations, warranties or covenants of any party or the
conditions to the obligations of any party hereunder, nor shall it limit or
otherwise affect the remedies available hereunder to the party receiving
such notice;
4.1.4. Further Assurances. Each of Parent (for itself and on behalf
of Merger Sub) and GSE shall use all reasonable efforts to fulfill, or
obtain the fulfillment of, the conditions to be fulfilled or obtained by it
prior to the Effective Date, including, without limitation, the execution
and delivery of all agreements contemplated hereunder to be so executed and
delivered, and to otherwise take, or cause to be taken all action, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws,
26
regulations and agreements to consummate and make effective the Merger and
the other transactions contemplated by this Agreement.
4.2. Additional Agreements of GSE. GSE agrees that (except as set forth in
Paragraph 4.2.11) from June 30, 2003 it and its subsidiaries have, and from the
date hereof to the Effective Date GSE will, and will cause each of its
subsidiaries and its and their respective officers, employees and agents to,
operate in the ordinary course of business, consistent with past practice and to
(unless Parent has consented in writing in advance):
4.2.1. Maintenance of Present Busine(S) 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 commercially 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;
4.2.2. 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
and it shall not demolish or remove any of the existing improvements or
erect new improvements on its property or any portion thereof without the
prior written consent of Parent.
4.2.3. Maintenance of Books and Records. Maintain its books of
account and records in the usual, regular, and ordinary manner, in
accordance with GAAP applied on a consistent basis.
4.2.4. Compliance with Law. Duly comply in all material respects
with all laws applicable to it and to the conduct of its business;
4.2.5. Inspection of GSE. Permit Parent and Merger Sub and their
officers and authorized representatives, during normal business hours, to
inspect its records and premises and to consult with its officers,
employees, attorneys, and agents with such financial and operating data and
other information with respect to GSE that Parent or Merger Sub personally
request. Parent and Merger Sub jointly and severally each agrees that it
and its officers, employees, agents, counsel, accountants, financial
advisors and other 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;
4.2.6. Prohibition of Certain Employment Arrangements. (a) not grant
or agree to any increase in any manner in the compensation or fringe
benefits of, or pay any bonus to, any current or former director, officer
or employee except for increases and bonuses expressly contemplated by or
required under existing employment agreements, bonus plans and other
agreements and arrangements listed on Schedules 3.1.7.8, 3.1.7.9 and
3.1.7.11 and except for increases and bonuses that are not material and are
granted in the
27
ordinary course of business (it being understood that, without limitation,
any increase or bonus granted to any person with compensation exceeding
$100,000 per year shall be deemed material) and (b) not enter into or
materially amend any contracts of employment, severance or termination with
any current or former director, officer or employee 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 Effective Date (other
than any approved in advance by Parent) except as may be required by law or
(iii) is not in the ordinary course of business;
4.2.7. Prohibition of Certain Loans. Not incur, assume or prepay
any borrowings or guarantee any such borrowings except (i) additional
borrowings under its existing credit facilities in an aggregate amount not
to exceed $5,000,000 as of the Effective Date, (ii) the prepayment by
customers of amounts for goods sold or services to be rendered in the
future, (iii) trade payables incurred in the ordinary course of business
consistent with past practice, (iv) other borrowings incurred in the
ordinary course of business consistent with past practice to finance normal
operations or (v) as is otherwise agreed to in writing by Parent;
4.2.8. Prohibition of Certain Commitments. Except for items
disclosed on Schedule 3.1.6, not enter into commitments of a capital
expenditure nature or incur any contingent liability which would exceed
$1,000,000 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
consistent with past practice, (ii) as may be required by law or (iii) as
is otherwise agreed to in writing by Parent;
4.2.9. Disposal of Assets. Except as disclosed on Schedule 3.1.9.8,
not sell, lease, dispose of, or encumber, any property or assets, except
(i) in the ordinary course of business consistent with past practice or
(ii) as is otherwise agreed to in writing by Parent;
4.2.10. 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 GSE, Parent and Merger Sub 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 GSE) but it shall promptly
notify Parent 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 Parent, 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;
28
4.2.11. GSE Acquisition Proposals. GSE agrees that, from November 19,
2003:
4.2.11.1. No Solicitation. It will not, and will not directly or
indirectly authorize or permit any of its affiliates, representatives
or agents or any of their respective officers, directors or employees
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 direct or indirect acquisition or purchase of
15% or more of the assets (by value) or GSE Common Stock, any tender
offer or exchange offer that if consummated would result in any person
or entity beneficially owning 15% or more of the GSE Common Stock, or
any merger, consolidation, business combination, sale of substantially
all assets, sale of securities, recapitalization, liquidation,
dissolution or similar transaction involving GSE (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, "GSE Transaction Proposals") or agree to or endorse any
GSE Transaction Proposal or (ii) propose, enter into or participate in
any discussions or negotiations regarding any of the foregoing, or
furnish to another person or entity 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 or
entity to do or seek to do any of the foregoing, provided, however,
that the foregoing clauses (i) and (ii) shall not prohibit GSE from
(a) furnishing information pursuant to an appropriate confidentiality
and standstill letter no more favorable to such person or entity than
the confidentiality agreement with Parent concerning GSE and its
businesses, properties or assets to such person or entity who has made
a Superior GSE Transaction Proposal (as defined below) or (b) engaging
in discussions or negotiations with such a third party who has made a
Superior GSE Transaction Proposal but in each case referred to in the
foregoing clauses (a) and (b) only after the board of directors of GSE
concludes in good faith following advice of its outside counsel that
such action would be required for the board of directors of GSE to
comply with its fiduciary obligations to stockholders under applicable
law. If the board of directors of GSE receives a GSE Transaction
Proposal, then GSE shall immediately inform Parent of the terms and
conditions of such proposal and the identity of the person or entity
making it and shall keep Parent fully informed of the status and
details of any such GSE Transaction Proposal and of all steps it is
taking in response to such GSE Transaction Proposal; provided that
nothing contained in this Subparagraph 4.2.11.1 shall prohibit GSE or
its board of directors from making any disclosure to GSE's
stockholders which, in the good faith judgment of GSE's board of
directors, may be required under applicable law. For purposes of this
Agreement, the term "Superior GSE Transaction Proposal" shall mean a
bonafide GSE Transaction Proposal made by any person or entity (other
than Parent and Merger Sub) to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more that 50% of
the voting power of the GSE Common Stock then outstanding or all or
substantially all of
29
the assets of GSE and otherwise on terms that the board of directors
of GSE determines in good faith after consultation with (and based in
part on the advice of) its independent financial advisors to be more
favorable, from a financial point of view, to GSE's stockholders than
the merger contemplated by this Agreement and for which financing, to
the extent required, is fully committed;
4.2.11.2. GSE Transaction Proposals. Except as set forth in this
Paragraph 4.2.11, neither the Board of Directors of GSE nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of Directors or such committee of the
merger contemplated hereby or this Agreement; (ii) approve or
recommend, or propose to approve or recommend, any GSE Transaction
Proposal; or (iii) authorize or permit GSE or any of its subsidiaries
to enter into Another GSE Transaction. Notwithstanding the foregoing
but subject to compliance with Subparagraph 4.2.11.3, if GSE has
received a Superior GSE Transaction Proposal, the Board of Directors
of GSE may, to the extent required by its fiduciary responsibilities
to the GSE stockholders under applicable law, as determined in good
faith by the Board of Directors of GSE (after consultation with
outside legal counsel), withdraw or modify its approval or
recommendation of the merger contemplated hereby and this Agreement;
provided, that the Board of Directors of GSE shall have also approved
or recommended the Superior GSE Transaction Proposal.
4.2.11.3. Acceptance of Superior GSE Transaction Proposals. If
any of the following events shall occur, then, GSE shall pay to Parent
immediately upon the occurrence of either of the events specified in
clause (i) below (by wire transfer of immediately available funds to
an account designated by Parent for such purpose), a Break-Up Fee (the
"Break-Up Fee") in an amount equal to $7,000,000.00:
(i) this Agreement is terminated pursuant to (a) Paragraph 6.1.4
hereof or (b) Paragraph 6.1.3(iii) or Paragraph 6.1.5(iii) due to a
failure of the condition in Paragraph 5.1.3 or Paragraph 5.2.3 if,
within twelve months after the termination of this Agreement a
definitive agreement is executed with respect to Another GSE
Transaction or Another GSE Transaction is consummated.
For purposes of this Subparagraph 4.2.11, the term "Another GSE
Transaction" shall mean any transaction with any person, entity or
group involving a GSE Transaction Proposal. GSE 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 Subparagraph
4.2.11.2.
4.2.12. No Amendment to Certificate of Incorporation, etc. Not amend
its certificate of incorporation or bylaws or other organizational
documents (including, without limitation, by way of a designation by the
board of directors of rights, preferences or privileges of any series of
preferred stock) or merge or consolidate with or
30
into any other corporation or change in any manner the rights of its
capital stock or the character of its business;
4.2.13. 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 any securities convertible into capital
stock (other than GSE Common Stock as may be required under stock options,
GSE's employee stock purchase plan (provided that no more than 3,000 shares
shall be sold under such plan) or other rights previously granted to
directors and/or employees under any Benefit Plan) or subdivide or in any
way reclassify any shares of its capital stock, or redeem, repurchase or
otherwise acquire, or agree to redeem, repurchase or otherwise acquire, any
shares of its capital stock or any other equity interest of it or its
subsidiaries (other than 23,000 shares of capital stock purchased prior to
December 31, 2003 and held as treasury shares);
4.2.14. Prohibition on Dividends. Not declare or pay any dividend on
or make any other distribution of assets in respect of any shares of
capital stock to the holders thereof;
4.2.15. Stockholders Meeting. Promptly call, give notice of, convene
and use all commercially reasonable efforts to hold a special meeting of
stockholders for the purpose of considering and acting upon approval of the
merger contemplated by this Agreement ("GSE Stockholder Meeting");
4.2.16. Notice of Material Developments. Promptly furnish to Parent
copies of all communications from GSE to its stockholders and all Reports
relating to periodic or other material developments concerning GSE's
financial condition, business, or affairs;
4.2.17. Acquisitions. Not acquire or agree to acquire, including,
without limitation, by merging or consolidating with, or purchasing all or
substantially all the assets or capital stock or other equity interests of,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, other than
purchases of inventory or supplies in the ordinary course of business
consistent with past practice;
4.2.18. Affiliate Transactions. Not enter into, amend, modify or
supplement any agreement, transaction, commitment or arrangement with any
current or former officer, director, employee or other affiliate of GSE or
any of its subsidiaries (or any affiliate of any of the foregoing) other
than agreements, transactions, commitments and arrangements otherwise
expressly contemplated by this Agreement;
4.2.19. Litigation. Not settle or compromise any pending or threatened
suit, action, claim or litigation (except for (a) settlements in which
GSE's sole obligation is to make a cash payment of $50,000 or less and (b)
settlements of lawsuits first initiated by GSE as plaintiff in which the
settlement involves only a payment of money to GSE (and, for the avoidance
of doubt, does not involve any obligations of GSE);
31
4.2.20. Accounting Methods; Income Tax Elections. Not make or change
any election, change an annual accounting period, adopt or change any
accounting method, policy or procedure (including any tax accounting
method, policy or procedure), file any amended Tax Return, enter into any
closing agreement, settle any Tax claim or assessment, surrender any right
to claim a refund of Taxes, consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment, or take any
other similar action, or omit to take any action relating to the filing of
any Tax Return or the payment of any Tax, if such election, adoption,
change, amendment, agreement, settlement, surrender, consent or other
action or omission would have the effect of materially increasing the
present or future Tax liability or materially decreasing any present or
future Tax asset of any of the Company or any of its subsidiaries.
4.2.21. Third Party Confidentiality and Standstill Agreements. Not
terminate, amend, modify or waive any material provision of any
confidentiality or standstill agreement to which GSE is a party. During
such period, GSE agrees to enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreements, including, but not
limited to, seeking injunctions to prevent any breaches of such agreements
to enforce specifically the terms and provisions thereof in a court with
appropriate jurisdiction.
4.2.22. SEC Reports. File on a timely basis all forms, reports,
statements, schedules and other documents (the "SEC Reports") with the
Commission required to be filed by it with the Commission under the
Exchange Act, the Securities Act and the published rules and regulations of
the Commission under either of the foregoing applicable to such SEC
Reports, which SEC Reports shall comply in all material respects with the
requirements of the Exchange Act, the Securities Act and the published
rules and regulations of the Commission thereunder, each as applicable to
such SEC Reports.
4.2.23. Delisting. Each of the parties hereto agrees to cooperate with
the other party in taking, or causing to be taken, all actions necessary
(i) to delist the GSE Shares from the New York Stock Exchange, Inc.
("NYSE") and (ii) to terminate the registration of the GSE Shares under the
Exchange Act; provided that such delisting and termination shall not be
effective until the Effective Date.
4.2.24. Debt Financing. Provide all reasonable cooperation in
connection with the arrangement of any financing to be obtained by Parent
and its subsidiaries or the Surviving Corporation in connection with the
transactions contemplated by this Agreement (the "Financing") including,
without limitation, (a) permitting Parent's financing sources and their
officers and authorized representatives, during normal business hours, to
inspect its records and premises and to consult with its officers,
employees, attorneys, and agents with such financial and operating data and
other information with respect to GSE that Parent's financing sources
personally request, (b) making GSE's senior officers and other
representatives reasonably available to Parent's financing sources in
connection with such Financing, to reasonably participate in due diligence
sessions and to reasonably participate in presentations related to the
Financing, including, without limitation, presentations to rating agencies
and (c) reasonably assisting in the preparation of one or more appropriate
offering documents and assisting Parent's
32
financing sources in preparing other appropriate marketing materials, in
each case to be used in connection with the Financing.
4.3. Additional Agreements of Parent. Parent (for itself and on behalf of
Merger Sub) agrees that from the date hereof:
4.3.1. Financing. It will provide, or cause to be provided, to Merger
Sub equity financing and debt financing contemplated by the Debt Financing
Letter (subject to the terms and conditions thereof) such that net proceeds
to Merger Sub, together with the rollover contributions described in this
Agreement, will constitute an aggregate amount not less than the GSE Merger
Consideration and the GSE Option Consideration and which is not and will
not be restricted against use for such purposes (the "Merger Financing").
4.3.2. No Amendment to Merger Sub Certificate of Incorporation, etc.
It will cause Merger Sub to 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; it will not permit Merger Sub to engage in any business
other than as necessary to satisfy the obligations of Merger Sub under this
Agreement.
4.3.3. Limitation on Issuance of Merger Sub Stock. It will cause
Merger Sub to not issue or sell any shares of its capital stock other than
to Parent in connection with the Merger Financing.
4.3.4. Adoption of Stock Option Plan. Parent shall adopt prior to or
on the Effective Date the GEO Holdings Corp. 2004 Stock Option Plan in the
form attached hereto as Appendix III.
ARTICLE V.
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate and effect the merger
hereunder shall be subject to the satisfaction of the following conditions, or
to the waiver thereof by Parent (for itself and on behalf of Merger Sub) in the
manner contemplated by Paragraph 6.4:
5.1.1. Representations and Warranties of GSE True at Effective Date.
The representations and warranties of GSE herein contained shall be, in all
material respects, true (except if such representations and warranties are
qualified by materiality or similar qualifiers, which representations and
warranties shall be in all respects true) as of the date of this Agreement
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; GSE shall have performed all obligations and complied with all
covenants required by this Agreement to be performed or complied, in all
material respects (except if such covenants are qualified by materiality or
similar qualifiers, which covenants shall have been complied with by GSE in
all respects), with by GSE before the Effective Date; and GSE shall have
delivered to Parent and Merger Sub a certificate, dated the Effective Date
33
and signed by its chief executive officer, its chief financial officer and
its secretary, to both such effects.
5.1.2. Opinion of GSE Counsel. Parent and Merger Sub shall have
received a favorable opinion, dated as of the Effective Date, from Xxxxxx &
Xxxxxx, L.L.P., counsel for GSE, in form and substance satisfactory to
Parent and addressed to Parent, Merger Sub and Merger Sub's senior and
subordinated lenders, to the effect that (i) GSE 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 GSE to authorize the execution of this Agreement and
the implementation of the merger contemplated hereby have been taken; (iii)
the GSE Shares which are to be delivered in accordance with this Agreement
will, when issued, be validly issued, fully paid and nonassessable
outstanding securities of GSE; (iv) this Agreement has been duly executed
and delivered by, and is the legal, valid and binding obligation of GSE and
is enforceable against GSE in accordance with its 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; and (v) except as specified
by such counsel (such exceptions to be acceptable to Parent) such counsel
does not know of any material litigation, proceedings, or governmental
investigation pending or threatened against or relating to GSE, any of its
subsidiaries, or their respective properties or businesses in which it is
sought to restrain or prohibit the consummation of the transactions
contemplated by this Agreement. Such opinion also shall cover such other
matters incident to the transactions herein contemplated as Parent and its
counsel may reasonably request and shall be subject to customary exceptions
and qualifications reasonably satisfactory to Parent. In rendering such
opinion, such counsel may rely upon (i) certificates of public officials
and of officers of GSE as to matters of fact and (ii) the opinion or
opinions of other counsel, which opinions shall be reasonably satisfactory
to Parent, as to matters other than federal or Texas law or matters
governed by the General Corporation Law of the State of Delaware.
5.1.3. Stockholder Approval. At the GSE Stockholder Meeting, the
holders of the requisite majority of the outstanding shares of GSE Common
Stock shall have approved the merger contemplated by this Agreement in
accordance with the General Corporation Law of the State of Delaware.
5.1.4. Xxxx-Xxxxx-Xxxxxx, 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. In addition, any approvals required under any state or foreign
laws comparable to HSR shall have been obtained.
5.1.5. Consents. Merger Sub shall have received evidence, in form and
substance reasonably satisfactory to it, that all licenses, permits,
consents, approvals, authorizations, qualifications and orders of
governmental entities and other third parties (i) necessary for the
consummation of the transactions contemplated by this Agreement and (ii) as
34
otherwise set forth in Schedule 5.1.5 have been obtained, all on terms and
conditions reasonably satisfactory to Merger Sub in its sole discretion.
5.1.6. Financing. Merger Sub shall have received the proceeds of the
financing contemplated by the Debt Financing Letter in accordance with
definitive agreements relating to such financing satisfactory to Parent in
its sole discretion, in the amounts necessary to consummate the Merger and
to pay all related fees and expenses.
5.1.7. No Litigation. There shall not be pending by or before any
governmental entity any suit, action or proceeding (i) challenging or
seeking to restrain or prohibit the consummation of the merger or any of
the other transactions contemplated hereby or seeking to obtain from Merger
Sub or any of its affiliates any damages related to the Merger or the other
transactions contemplated hereby, (ii) seeking to prohibit or limit the
ownership or operation by GSE or any of its subsidiaries of any material
portion of the business or assets of GSE or any of its subsidiaries, to
dispose of or hold separate any material portion of the business or assets
of GSE or any of its subsidiaries, as a result of the Merger or any of the
other transactions contemplated hereby or (iii) seeking to impose
limitations on the ability of Merger Sub (or any designee of Merger Sub),
to acquire or hold, or exercise full rights of ownership of, any GSE Common
Stock, including, without limitation, the right to vote GSE Common Stock on
all matters properly presented to the stockholders of GSE.
5.1.8. Certified Copies. GSE shall have delivered certified copies of
(i) the resolutions duly adopted by the GSE board of directors authorizing
the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, (ii) the resolutions duly adopted by the
GSE stockholders adopting this Agreement and (iii) the certificate of
incorporation and the bylaws of GSE as then in effect immediately prior to
the Effective Time.
5.1.9. Title Insurance. GSE shall have obtained and delivered to
Parent no later than fifteen (15) days prior to the Effective Date, a
commitment for the most recent form of ALTA Owner's Title Insurance Policy
(or other form of policy reasonably acceptable to Parent) for each parcel
of Owned Real Property (other than Owned Real Property located outside the
United States) (collectively, the "Title Commitments"), issued by a title
insurance company satisfactory to the parties hereto (the "Title Company"),
together with a copy of all documents referenced in the Title Commitments.
GSE shall have caused the Title Company to issue title insurance policies
(which may be in the form of a xxxx-up of the Title Commitments) in
accordance with the Title Commitments, insuring GSE's fee simple title to
each parcel of Owned Real Property as of the Effective Date, subject only
to the Permitted Encumbrances, in such amount as Parent reasonably
determines to be the fair market value of the Real Property insured
thereunder (collectively, the "Title Policies"). Each of the Title Policies
shall have such other endorsements as reasonably requested by Parent. GSE
shall pay all costs and expenses with respect to the Title Commitments and
Title Policies.
5.1.10. Survey . GSE shall have obtained and delivered to Parent no
later than fifteen (15) days prior to the Effective Date, a survey for each
parcel of Real Property for
35
which a Title Policy is required, dated no earlier than the date of this
Agreement, prepared by a licensed surveyor satisfactory to the parties
hereto, and conforming to 1999 ALTA/ACSM Minimum Detail Requirements for
Urban Land Title Surveys, including such Table A Items reasonably requested
by Parent and certified to Parent, Merger Sub, the title holder of the such
Real Property, Parent's Lender and the Title Company, in a form
satisfactory to each of such parties (the "Surveys"). The Surveys shall not
disclose any encroachment from or onto any of the Real Property or any
portion thereof or any other survey defect which has not been cured or
insured over to Parent's reasonable satisfaction prior to the Effective
Date. GSE shall pay all costs and expenses with respect to the Surveys.
5.1.11. Payoff Letters. GSE shall have delivered to Parent payoff
letters and lien releases (collectively, the "Payoff Letters") executed by
the issuers of the indebtedness set forth on Schedule 1.11, which payoff
letters and lien releases shall be satisfactory in form and substance to
Parent.
5.1.12. Employment Agreements. The executives identified on Schedule
5.1.14 shall have executed and delivered employment agreements satisfactory
in form and substance to Parent.
5.1.13. Dissenting Shares. The number of Dissenting Shares shall not
exceed 5% of GSE's issued and outstanding Common Stock.
5.1.14. Executive Options. The executives identified on Schedule
5.1.14 shall have executed and delivered an Executive Securities Agreement
in form and substance satisfactory to Parent providing for, among other
things, such executive to contribute to Parent options held by such
executives for the purchase of GSE Common Stock in such amounts set forth
opposite such executive's name on Schedule 5.1.14 (the "Rollover Options")
in exchange for the issuance by Parent of an option for the purchase of its
capital stock, and the transactions contemplated by each such agreement
shall be consummated on the Effective Date.
5.1.15. TransAmerica Payoff. Without limiting the condition in
Paragraph 5.1.11 above, the Payoff Letter with respect to the loan pursuant
to that certain Loan and Security Agreement among GSE, subsidiaries of the
Company and TransAmerica Equipment Financial Services Corp., dated as of
February 4, 2002, shall permit the complete payoff of such loan in
connection with the consummation of the transactions contemplated by this
Agreement and acknowledge the termination of all obligations of GSE and its
subsidiaries under such agreement upon the payment to the lender under such
agreement of an amount equal to the obligations outstanding on the
Effective Date under such agreement (without giving effect to any penalties
or other obligations arising from the repayment of such loan) plus an
amount not to exceed $800,000.
5.1.16. Thailand and Egypt Shareholders Agreements. With respect to
GSE Lining Technology Company Limited ("GSE Thailand"), Xxxx GSE
Manufacturing Co. SAE ("GSE Egypt I") and Xxxx/GSE Lining Technology Co.
SAE (together with GSE Egypt I, the "GSE Egypt Entities"): (i) on the
Effective Date, the identity of the
36
shareholders of GSE Thailand and the GSE Egypt Entities, and the number of
each class or series of each such entity's shares held by each such
shareholder, shall be as set forth on Schedule 3.1.4 and, (ii) to the
extent permitted by applicable law, each such shareholder of GSE Thailand
and each Egypt Entity shall have executed and delivered to GSE (and GSE
shall have provided a copy to Parent of) an agreement satisfactory to
Parent providing for, among other things, restrictions on the transfers of
such the shares of each such entity's capital stock and requiring the
transfer of any such shares to GSE or a person or entity designated by it
at GSE's discretion, and such agreement shall be in effect on the Effective
Date without amendment or waiver of any of the provisions thereof.
5.1.17. Directors Options. Each holder of any Director Options shall
have surrendered to the Company documentation satisfactory to Parent for
the cancellation of all Director Options held by such holder pursuant to
Paragraphs 1.9.3.3 and 1.9.5.3.
5.2. Conditions Precedent to Obligations of GSE. The obligations of GSE to
consummate and effect the merger hereunder shall be subject to the satisfaction
of the following conditions, or to the waiver thereof by GSE in the manner
contemplated by Paragraph 6.4:
5.2.1. Representations and Warranties of Parent and Merger Sub True
at Effective Date. The representations and warranties of Parent and Merger
Sub herein contained shall be, in all material respects, true as of the
date of this Agreement 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; Parent and Merger Sub shall have performed
all obligations and complied with all covenants and agreements required by
this Agreement to be performed or complied with, in all material respects,
by them before the Effective Date; and Parent and Merger Sub shall have
delivered to GSE a certificate, dated the Effective Date and signed by
their respective chief executive and chief financial officers, and by their
respective corporate secretaries to both such effects.
5.2.2. Opinion of Counsel to Parent and Merger Sub. GSE shall have
received a favorable opinion, dated the Effective Date, from Xxxxxxxx &
Xxxxx LLP, counsel to Parent and Merger Sub, in form and substance
satisfactory to GSE, to the effect that (i) Parent has been duly formed and
is validly existing as a corporation under the laws of the State of
Delaware; (ii) Merger Sub has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware; (iii) all outstanding shares of the Merger Sub Common Stock have
been validly issued and are fully paid and nonassessable and owned of
record by Parent; (iv) all corporate or other proceedings required to be
taken by or on the part of both Parent and Merger Sub to authorize the
execution of this Agreement and the implementation of the merger
contemplated hereby have been taken; (v) this Agreement has been duly
executed and delivered by, and is the legal, valid and binding obligation
of both Parent and Merger Sub and is enforceable against each of them 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 (vi) except
37
as specified by such counsel (such exceptions to be acceptable to GSE) such
counsel does not know of any material litigation, proceedings or
governmental investigation, pending or threatened against or relating to
Parent or Merger Sub or its properties or businesses in which it is sought
to restrain or prohibit consummation of the transactions contemplated by
this Agreement. Such opinion shall also cover such other matters incident
to the transactions herein contemplated as GSE and its counsel may
reasonably request and shall be subject to customary exceptions and
qualifications reasonably satisfactory to GSE. In rendering such opinion,
such counsel may rely upon (i) certificates of public officials and of
officers of Parent and Merger Sub as to matters of fact and (ii) on the
opinion or opinions of other counsel, which opinions shall be reasonably
satisfactory to GSE, as to matters other than federal or Illinois law or
governed by the General Corporation Law of the State of Delaware.
5.2.3. Stockholder Approval. At the GSE Stockholder Meeting, the
holders of the requisite majority of the outstanding shares of GSE Common
Stock shall have approved the merger contemplated by this Agreement.
5.2.4. Xxxx-Xxxxx-Xxxxxx, 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. In addition, any approvals required under any state or foreign
laws comparable to HSR shall have been obtained.
5.2.5. Financing Completed. Parent and Merger Sub shall have
concluded the debt financing contemplated by the Debt Financing Letter, the
proceeds of which (together with the equity financing proceeds) in an
amount at least equal to (i) the GSE Merger Consideration shall have been
deposited by Merger Sub (in trust for the benefit of the holders of GSE
Common Stock being converted into the right to receive cash on the
Effective Date) with the Exchange Agent pursuant to an agreement that is in
form and substance acceptable to GSE, and (ii) the GSE Option Consideration
shall have been deposited by Merger Sub in a segregated account for use in
satisfying the Surviving Corporation's obligations under Paragraphs 1.9.5.2
and 1.9.5.3.
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 (including after the approval and adoption thereof
by the stockholders of Merger Sub or GSE) before the Effective Date:
6.1.1. By Mutual Consent. By mutual consent of GSE and Parent (for
itself and on behalf of Merger Sub);
6.1.2. By Parent Because of Dissenting Stockholders. By Parent (for
itself and on behalf of Merger Sub), if the holders of 5% or more shares of
the outstanding GSE Common Stock elect to exercise the right to dissent
under applicable provisions of Delaware law in connection with the merger
contemplated by this Agreement;
38
6.1.3. By GSE Because of Conditions Precedent. By GSE, if through no
material fault of GSE (i) any of the representations and warranties of
Parent and Merger Sub contained in this Agreement were untrue when made or
have since become untrue, such that the failure of the applicable
representations and warranties to be true and correct would cause the
condition set forth in Paragraph 5.2.1 to be deemed not to be fulfilled, or
(ii) Parent and/or Merger Sub shall have breached or failed to comply in
any material respect with any of their respective obligations under this
Agreement and shall not have cured such breach or failure to comply within
ten business days after notice from GSE, or (iii) any other events and
circumstances have occurred such that, in any such case, the conditions set
forth in Paragraph 5.2 applicable to GSE's obligation to consummate the
merger contemplated by this Agreement could not be satisfied within five
business days after the conditions set forth in Paragraph 5.1 are first
either satisfied or unconditionally capable of being satisfied by GSE;
6.1.4. By GSE or Parent Due to a Superior GSE Transaction Proposal.
By either GSE or Parent (for itself and on behalf of Merger Sub) if, before
the Effective Date, (i) GSE's board of directors shall have withdrawn, or
modified in a manner adverse to, its approval or recommendation of this
Agreement or the merger contemplated hereby or (ii) GSE shall have entered
into an agreement providing for a Superior GSE Transaction, provided that
GSE shall have the right to terminate under this Paragraph 6.1.4 only if
GSE has complied in full with the terms, conditions and procedures set
forth in Subparagraph 4.2.11.2;
6.1.5. By Parent Because of Conditions Precedent. By Parent (for
itself and on behalf of Merger Sub), if through no material fault of Parent
or Merger Sub (i) any of the representations and warranties of GSE
contained in this Agreement were untrue when made or have since become
untrue, such that the failure of the applicable representations and
warranties to be true and correct would cause the condition set forth in
Paragraph 5.1.1 to be deemed not to be fulfilled, or (ii) GSE shall have
breached or failed to comply in any material respect with any of its
obligations under this Agreement and shall not have cured such breach or
failure to comply within ten business days after notice from Parent, or
(iii) any other events and circumstances have occurred such that, in any
such case, the conditions set forth in Paragraph 5.1 applicable to the
obligation of Parent and Merger Sub to consummate the merger contemplated
by this Agreement could not be satisfied within five business days after
the conditions set forth in Paragraph 5.2 are first either satisfied or
unconditionally capable of being satisfied by Parent and Merger Sub;
6.1.6. By Parent Because of Material Adverse Change. By Parent (for
itself and on behalf of Merger Sub), if there has been a Material Adverse
Change in GSE since the date of the financial statements contained in the
most recent Report (prior to the date of this Agreement) filed with the
Commission under the Exchange Act;
6.1.7. By GSE or Parent Because of Legal Proceedings. By either GSE
or Parent (for itself and on behalf of Merger Sub) if any party shall be
subject to any final, nonappealable order, decree or injunction of a court
of competent jurisdiction or governmental regulatory body that makes
illegal, enjoins or prevents the consummation of the merger contemplated by
this Agreement substantially as an entirety; or
39
6.1.8. By GSE or Parent if Merger due to Lapse of Time. By either
GSE or Parent (for itself and on behalf of Merger Sub), if the merger shall
not have become effective on or before June 30, 2004; provided, however,
that the right to terminate this Agreement under this Paragraph 6.1.8 shall
not be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Effective Date to occur on or before such date; provided further that such
time period shall be tolled for (i) a number of days equal to the number of
days not to exceed 90 during which any party shall be subject to a nonfinal
order, decree, ruling or action restraining, enjoining or otherwise
prohibiting the consummation of the merger contemplated by this Agreement
or the holding of the GSE Stockholder Meeting, and (ii) in addition, the
number of days not to exceed 90 during which any party shall have failed to
achieve "deemed substantial compliance" under HSR within 30 days following
a second request from the United States Federal Trade Commission (or the
Antitrust Division of the Department of Justice) for information concerning
the transactions contemplated by this Agreement, such that any party not
then in default of any obligation hereunder shall have the right to
terminate this Agreement under this Paragraph 6.1.8, at any time after
December 27, 2004.
6.2. Termination by Board of Directors. An election of GSE to terminate
this Agreement and abandon the merger as provided in Paragraph 6.1 shall be
exercised on behalf of GSE by its board of directors. An election of Parent or
Merger Sub to terminate this Agreement and abandon the merger as provided in
Paragraph 6.1 shall be exercised on behalf of Parent or Merger Sub by Parent's
board of directors.
6.3. Effect of Termination. In the event of the termination and abandonment
of this Agreement pursuant to and in strict compliance with the provisions of
Paragraph 6.1.4, GSE shall be subject to the remedies referred to in
Subparagraph 4.2.11.3. In all other events (excepting the obligations referred
to in Paragraphs 4.2.5 (regarding confidentiality), 6.5, 7.1, 7.2 and 8.1
hereof), this Agreement shall become void and have no effect after termination
and abandonment without any liability pursuant to this Agreement on the part of
any party hereto (or its stockholders or controlling persons or directors or
officers); provided that such termination shall not relieve any party of any
liability for any willful breach of this Agreement.
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 in writing
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.
ARTICLE VII.
ADDITIONAL AGREEMENTS
7.1. Indemnification by Parent as to Proxy Statement. Parent agrees to
indemnify and hold harmless GSE and its officers and directors and each person
or entity who controls GSE
40
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 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
Parent or Merger Sub, if such statement was provided to GSE by Parent or Merger
Sub in writing expressly for inclusion in the Proxy Statement and such statement
was contained in the Proxy Statement in the form mailed to the stockholders of
GSE, 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 if such omission was omitted from a writing provided to
GSE by Parent or Merger Sub expressly for inclusion in the Proxy Statement, and
insofar as the same relates to Parent or Merger Sub.
7.2. Indemnification by GSE as to Proxy Statement. GSE agrees to indemnify
and hold harmless Parent, Merger Sub and the officers and directors and each
person or entity who controls each of them 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 GSE
contained in the Proxy Statement in the form mailed to the stockholders of GSE
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 GSE.
7.3. Concerning GSE's Directors and Officers. Parent and GSE jointly and
severally agree that:
7.3.1. Indemnification. From and after the Effective Date, the
Surviving Corporation shall indemnify, defend and hold harmless each person
who is now, or has been at any time prior to the Effective Date, an officer
or director of GSE (collectively, the "Indemnified Parties") from and
against all losses, claims, damages and expenses to the extent not covered
by insurance and paid (including reasonable attorney's fees and expenses)
arising out of or relating to actions or omissions or alleged actions or
omissions, of such person by virtue of his or her service as an officer or
director of GSE occurring at or prior to the Effective Date to the fullest
extent permitted by the DGCL, but excluding any of the foregoing which
relate to any violation or alleged violation of the Exchange Act with
respect to xxxxxxx xxxxxxx;
7.3.2. Eligibility Determination. Any initial determination required
to be made with respect to whether any Indemnified Party may be entitled to
indemnification will, if
41
requested by such Indemnified Party, be made by independent legal counsel
selected by the Indemnified Party;
7.3.3. Advance Defense Costs. To the fullest extent permitted under
the DGCL, the Surviving Corporation shall pay on an as-incurred basis the
reasonable fees and expenses of each Indemnified Party (including
reasonable fees and expenses of counsel) in advance of the final
disposition of any action, suit, proceeding or investigation that is the
subject of the right to indemnification, subject to receipt from the
Indemnified Party to whom expenses are advanced of the undertaking to repay
such advances in the event such Indemnified Party is determined by final
nonappealable order of a court of competent jurisdiction to be not entitled
to indemnification;
7.3.4. Separate Counsel in Certain Events. In the event any action,
suit, investigation or proceeding is brought against any Indemnified
Parties and under applicable standards of professional conduct there is a
conflict of interest on any significant issue between the position of the
Surviving Corporation and an Indemnified Party, the Indemnified Parties may
retain counsel, which counsel shall be reasonably satisfactory to the
Surviving Corporation, and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided however, that (i)
the Surviving Corporation shall have the right to assume the defense
thereof (which right shall not affect the right of the Indemnified Parties
to be reimbursed for separate counsel as specified above), (ii) the
Indemnified Parties will cooperate in the defense of any such matter, and
(iii) the Surviving Corporation shall not be liable for any settlement
effected without its prior written consent. The Indemnified Parties as a
group may not retain more than one counsel to represent them with respect
to each such matter unless under applicable standards of professional
conduct there is a conflict of interest on any significant issue between
the positions of two or more Indemnified Parties;
7.3.5. Notice of Claim. Upon learning of any loss, claim, damage or
expense which may give rise to a claim for indemnity hereunder, any
Indemnified Party shall promptly notify the Surviving Corporation thereof
in writing, but any failure to give such notice shall not affect the
indemnification obligations of the Surviving Corporation under this
Paragraph 7.3 unless such failure jeopardizes or prejudices the Surviving
Corporation in any material respect;
7.3.6. Insurance Tail. For a period of six years after the
Effective Date, the Surviving Corporation will use its commercially
reasonable efforts to cause to be maintained in effect policies of
directors' and officers' liability insurance substantially equivalent in
scope and amount of coverage to the policies maintained by GSE as of the
date of this Agreement with respect to claims arising from or relating to
actions or omissions, or alleged actions or omissions, occurring on or
prior to the Effective Date. Notwithstanding the provisions of this
Paragraph 7.3.6, the Surviving Corporation will not be obligated to make
total premium payments with respect to such policies of insurance to the
extent such premiums exceed 300 percent of the last annual premium paid by
GSE prior to the date of this Agreement. If the annual premium costs
necessary to maintain such insurance coverage exceed the foregoing amount,
GSE will use its
42
commercially reasonable efforts to maintain the most advantageous policies
of directors' and officers' liability insurance reasonably obtainable for
an annual premium not exceeding the foregoing amount, provided that
Indemnified Parties may be required to make application and provide
customary representations and warranties to the insurance carrier for the
purpose of obtaining such insurance. GSE further agrees (i) to cooperate
with Parent and Merger Sub and to provide Parent and Merger Sub (and their
Affiliates) and their insurance broker(s) with any documents or information
requested by Parent and/or Merger Sub and to allow Parent and Merger Sub
(and their Affiliates) and their insurance broker(s) to approach the
current insurance carriers of GSE and any additional carriers to negotiate
and acquire any directors' and officers' liability insurance coverage, (ii)
to designate the broker of record for purposes of negotiating all such
directors' and officers' liability insurance policies, and (iii) if
requested by Parent and/or Merger Sub, to cancel all existing directors'
and officers' liability insurance policies prior to the Effective Time in
connection with the corresponding purchase of replacement coverage or
extensions, as directed by Parent and/or Merger Sub;
7.3.7. Existing Rights Preserved. The provisions relating to
director and officer indemnification, abrogation of liability and
advancement of expenses in the certificate of incorporation and/or bylaws
of GSE as in effect immediately prior to the date hereof will apply to each
Indemnified Party with respect to all matters occurring on or prior to the
Effective Date. The foregoing will not be deemed to restrict the right of
the Surviving Corporation to modify the provisions of its certificate of
incorporation and/or bylaws relating to director and officer
indemnification, abrogation of liability or advancement of expenses with
respect to events or occurrences after the Effective Date but such
modifications shall not adversely affect the rights of the Indemnified
Parties as set forth in this Agreement or in any preexisting written
contract of indemnity between an Indemnified Party and GSE;
7.3.8. Indemnified Parties are Third Party Beneficiaries. Anything
else in this Agreement to the contrary notwithstanding, the provisions of
this Paragraph 7.3 will survive the consummation of the merger, and each
Indemnified Party will, for all purposes, be a third party beneficiary of
the covenants and agreements contained in this Paragraph 7.3 and,
accordingly, will be treated as a party to this Agreement for purposes of
the rights and remedies relating to enforcement of such covenants and
agreements and will be entitled to enforce any such rights and exercise any
such remedies directly against Parent and/or the Surviving Corporation.
7.4. Employee Benefits. For a period of one year from the Effective Date,
the Surviving Corporation shall continue providing benefits and compensation to
or for the benefit of current employees of GSE who continue to be employed after
the Effective Date at levels substantially equivalent in the aggregate to those
in effect on the Effective Date; provided, however, that such undertaking does
not include any obligation to cause any new benefit to be granted to any
employee after the Effective Date under any GSE Benefit Plan, the Surviving
Corporation's sole obligation (except to the limited extent otherwise provided
in Paragraph 7.5) with respect to which shall be to continue to honor previously
granted benefits in accordance with their terms, as the same may have been
changed by operation of law (in the case of stock based benefits) upon
consummation of the merger contemplated by this Agreement.
43
7.5. Option Notice. On or promptly following the Effective Date, the
Surviving Corporation shall transmit a written notice to each holder (at his
record address) of an "in-the-money" stock option (determined using the price
set forth in Paragraph 1.9.3 above) canceled pursuant to Paragraph 1.9.3.2
informing such holder of such holder's rights and obligations under Paragraphs
1.9.3.2 and 1.9.5.2.
ARTICLE VII.
MISCELLANEOUS
8.1. Entirety. This Agreement (including the other agreements referenced
herein) 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, except that the Confidentiality
Agreement dated as of November 19, 2003 (the "Confidentiality Agreement") by and
between Parent and HWCo (of which GSE is an express third party beneficiary)
remains in full force and effect in accordance with its terms and is unaffected
by this Agreement.
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.
If to GSE
Addressed to: With a copy to:
Gundle/SLT Environmental, Inc. Xxxxxx & Xxxxxx, L.L.P.
00000 Xxxxxx Xxxx 000 Xxxxxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx Attention: T. Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to Parent and Merger Sub
Addressed to: With a copy to:
GEO Holdings Corp. Xxxxxxxx & Xxxxx LLP
c/o Code Xxxxxxxx & Xxxxxxx LLC 000 Xxxx Xxxxxxxx Xxxxx
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000 Xxxxxxx, Xxxxxxxx 00000
Xxxxxxx, Xxxxxxxx 00000 Attention: Xxxxx X. Xxxxxxx, P.C.
Attention: Xxxxxx X. Xxxxxxxx Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
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
44
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,
Paragraph or Subparagraph hereof.
8.6. Successors and Assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned or delegated by GSE without
the prior written consent of Parent. Parent and Merger Sub may assign in whole
or in part its rights and obligations pursuant to this Agreement to one or more
of its affiliates or to any of its lenders as collateral security; provided,
however, that if Parent or Merger Sub assigns all or any of such party's rights,
interests or obligations under this Agreement, such assigning party shall remain
liable for such party's obligations under this Agreement. 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.
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. Injunctive and Other Relief. The parties hereto agree that in the
event of a breach of any provision of this Agreement, Parent or Merger Sub may
be without an adequate remedy at law. The parties therefore agree that in the
event of a breach of any provision of this Agreement, the Parent or Merger Sub
may expect to institute and prosecute proceedings in any court of competent
jurisdiction to enforce specific performance or to enjoin the continuing breach
of such provision, as well as to obtain damages for breach of this Agreement,
and such aggrieved party may take any such actions without the necessity of
posting a bond. By seeking or obtaining any such relief, the aggrieved party
will not be precluded from seeking or obtaining any other relief to which it may
be entitled.
8.9. Submission to Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the internal law, and not the law of
conflicts, 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 DGCL), and each of the parties hereto hereby irrevocably and
unconditionally agrees (i) that the United States District Courts situated in
Xxxxxx County, Texas, and the District Courts of the State of Texas situated in
Xxxxxx
45
County, Texas, shall have exclusive jurisdiction with respect to any dispute,
difference, or disagreement arising out of any alleged breach of this Agreement
by any party hereto, (ii) that proper venue may be laid in such courts, (iii)
that such courts are a convenient forum for any such action or proceeding, and
(iv) that any objection that it might otherwise have to such jurisdiction, venue
or convenience is hereby waived and it will not plead or claim the same. Each
party also agrees that service or process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party at it's
address set forth in Paragraph 8.3 hereof.
8.10. 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 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. Notwithstanding anything in this Agreement or the
Confidentiality Agreement to the contrary, Parent, Merger Sub and GSE (and each
employee representative, or other agent of the taxpayer) may disclose to any and
all persons and entities, without limitation of any kind, the tax treatment and
tax structure of the transaction and all materials of any kind (including
opinions or other tax analyses) that are provided to them relating to such tax
treatment and tax structure except to the extent necessary to comply with any
applicable federal or state securities laws; provided, however, that such
disclosure may not be made until the earlier of date of the public announcement
of discussions relating to the transaction, the date of the public announcement
of the transaction, or the date of the execution of an agreement to enter into
the transaction. This authorization is not intended to permit disclosure of any
other information including (without limitation) (a) any portion of any
materials to the extent not related to the Tax treatment or Tax structure of the
transaction, (b) the identities of participants or potential participants in the
transaction, (c) the existence or status of any negotiations, (d) any pricing or
financial information (except to the extent such pricing or financial
information is related to the Tax treatment or Tax structure of the transaction)
or (e) any other term or detail not relevant to the Tax treatment or the Tax
structure of the transaction.
8.11. Definitions. The following terms are defined herein at the place
indicated:
Term Location
Agreement Premises
Another GSE Transaction 4.2.11.3
Applicable Environmental Laws 3.1.16.3
Benefit Plans 3.1.7.8
Break-Up Fee 4.2.11.3
Commission 3.1.5
DGCL 1.3
Effective Date 1.3
Encumbrance 3.1.4
46
ERISA 3.1.19
Exchange Act 3.1.5
Exchange Agent 1.9.5
GAAP 3.1.5
GSE Common Stock Premises
GSE Merger Consideration 1.9.3
GSE Option Consideration 7.5
GSE Shares 1.9.2
GSE Stockholder Meeting 4.2.15
GSE Transaction Proposal 4.2.11.1
HSR 2.1.8
HWCo 3.1.18
Intellectual Property Rights 3.1.11
Material Adverse Change 4.1.3
Merging Corporations Introduction
Merger Financing 4.3.1
Merger Sub Common Stock 2.1.4
OSHA 3.1.17
PBGC 3.1.19.2
Proxy Statement 2.1.9
Reports 3.1.5
Restated Bylaws 1.6
Restated Certificate of Incorporation 1.4
Rollover Options 5.1.14
Statutory Plan 3.1.19.2
Superior GSE Transaction Proposal 4.2.11.1
Securities Act 7.1
Surviving Corporation 1.4
[Signatures appear on following page.]
47
IN WITNESS WHEREOF, the parties hereto have caused this Plan and Agreement
of Merger 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 Merging Corporations in the Merger Contemplated by this Agreement:
GEO SUB CORP. ("Merger Sub")
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxx,
President
GUNDLE/SLT ENVIRONMENTAL, INC. ("GSE")
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx,
Chairman of the Board, President
and Chief Executive Officer
Additional Party to this Agreement:
GEO HOLDINGS CORP. ("Parent")
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxx,
President
Schedules and Appendices to Plan and agreement of merger
Appendices:
Appendix I - Restated Articles of Incorporation
Appendix II - Restated Bylaws
Appendix III - Stock Option Plan
Schedules:
Schedule 1.11 - Payoff of Indebtedness
Schedule 2.1.3 - Financial Capability
Schedule 3.1.2 - Agreement Authorized and its Effect on Other Obligations
Schedule 3.1.3 Capitalization
Schedule 3.1.4 - Subsidiaries
Schedule 3.1.6 - Liabilities
Schedule 3.1.7. - Assets
Schedule 3.1.7.1 - Real Estate - Owned and Leased
Schedule 3.1.7.2 - Machinery & Equipment
Schedule 3.1.7.3- Inventory and Construction Contracts
Schedule 3.1.7.4 - Receivables
Schedule 3.1.7.5 - Payables
Schedule 3.1.7.6 - Insurance
Schedule 3.1.7.7 - Material Contracts
Schedule 3.1.7.8 - Employee Benefit Plans
Schedule 3.1.7.9 - Certain Salaries and Bonuses
Schedule 3.1.7.10 - Bank Accounts
Schedule 3.1.7.11 - Employee Agreements
Schedule 3.1.7.12 - Intellectual Property
Schedule 3.1.7.13 - Trade Names
Schedule 3.1.7.14 - Promissory Notes
Schedule 3.1.7.15 - Guarantees
Schedule 3.1.7.16 - Reserves and Accruals
Schedule 3.1.7.17 - Environment
Schedule 3.1.8 - Undisclosed Defaults
Schedule 3.1.9 - Material Changes
Schedule 3.1.10 - Taxes
Schedule 3.1.11 - Intellectual Property
Schedule 3.1.13 - Owned Real Property
Schedule 3.1.14 - Leased Real Property
Schedule 3.1.15 - Litigation
Schedule 3.1.16 - Environmental Compliance
Schedule 3.1.17 - Compliance with Other Laws
Schedule 3.1.19 - Benefit Plan Compliance
Schedule 3.1.24 - Labor Matters
Schedule 3.1.25 - Insurance
Schedule 3.1.26 - Product Warranty
Schedule 5.1.5 - Consents
Schedule 5.1.14 - Executive Options
