0001047469-11-006248.txt : 20110711 0001047469-11-006248.hdr.sgml : 20110711 20110711172643 ACCESSION NUMBER: 0001047469-11-006248 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 45 FILED AS OF DATE: 20110711 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GSE Holding, Inc. CENTRAL INDEX KEY: 0001275712 IRS NUMBER: 770619069 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-175475 FILM NUMBER: 11962427 BUSINESS ADDRESS: STREET 1: 10 SOUTH WACKER DR. STREET 2: SUITE 3175 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 281-443-8564 MAIL ADDRESS: STREET 1: 19103 GUNDLE ROAD CITY: HOUSTON STATE: TX ZIP: 77073 FORMER COMPANY: FORMER CONFORMED NAME: GEO HOLDINGS CORP DATE OF NAME CHANGE: 20040108 S-1 1 a2204569zs-1.htm S-1

As filed with the Securities and Exchange Commission on July 11, 2011

No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

GSE Holding, Inc.
(Exact name of registrant as specified in its charter)


Delaware	3081	77-0619069
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

19103 Gundle Road
Houston, Texas 77073
(281) 443-8564

Mark C. Arnold
President and Chief Executive Officer
GSE Holding, Inc.
19103 Gundle Road
Houston, Texas 77073
(281) 443-8564
(Name, address, including zip code and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:


Gerald T. Nowak, P.C. Theodore A. Peto Kirkland & Ellis LLP 300 North LaSalle Chicago, Illinois 60654 (312) 862-2000		Colin J. Diamond White & Case LLP 1155 Avenue of the Americas New York, New York 10036 (212) 819-8200

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one):


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee(1)



Common Stock, $0.01 par value per share	$143,750,000	$16,689.38

⁽¹⁾: Includes shares of common stock that the underwriters may purchase (including pursuant to the option to purchase additional shares) from the selling stockholders.
⁽²⁾: Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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The information contained in this preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 11, 2011

PRELIMINARY PROSPECTUS

Shares

GSE Holding, Inc.

Common Stock

We are offering shares of our common stock and the selling stockholders identified in this prospectus are offering shares of our common stock. This is our initial public offering and no public market currently exists for our common stock. We expect the initial public offering price to be between $ and $ per share. We intend to apply to list our common stock on The New York Stock Exchange, or NYSE, under the symbol "GSE".

Investing in our common stock involves a high degree of risk. Please read "Risk Factors" beginning on page 15 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	PER SHARE	TOTAL

Public Offering Price	$	$
Underwriting Discounts and Commissions	$	$
Proceeds to GSE Holding, Inc. before expenses	$	$
Proceeds to the selling stockholders before expenses	$	$

Delivery of the shares of common stock is expected to be made on or about , 2011. The selling stockholders have granted the underwriters an option for a period of 30 days to purchase an additional shares of our common stock on the same terms and conditions set forth above solely to cover over-allotments.


Jefferies		Oppenheimer & Co.

Prospectus dated , 2011

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		Page

Prospectus Summary			3
Risk Factors			15
Forward-Looking Statements			30
Use of Proceeds			31
Dividend Policy			32
Capitalization			33
Dilution			35
Selected Historical Consolidated Financial and Operating Data			37
Management's Discussion and Analysis of Financial Condition and Results of Operations			40
Business			68
Management			85
Executive Compensation			93
Principal and Selling Stockholders			115
Certain Relationships and Related Party Transactions			117
Description of Capital Stock			119
Shares Available for Future Sale			123
Material U.S. Federal Income Tax Considerations for Non-U.S. Holders			126
Underwriting (Conflicts of Interest)			130
Notice to Investors			135
Legal Matters			140
Experts			140
Where You Can Find More Information			140
Index to Consolidated Financial Statements			F-1

Until , 2011, U.S. federal securities laws may require all dealers that effect transactions in our securities, whether or not participating in this offering, to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

You should rely only on the information contained in this prospectus, in any amendment or supplement to this prospectus or in any free-writing prospectus prepared by us or on our behalf. We have not, and the underwriters have not, authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any jurisdiction where the offer or sale is not permitted. The information in this prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date.

Market and Industry Data

We obtained the industry, market and competitive position data throughout this prospectus from our own internal estimates and research, as well as from industry and general publications and research and surveys and studies conducted by third parties. Industry and general publications, surveys and studies conducted by third parties generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources. While we believe our internal company research is reliable and the definitions of our market

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and industry are appropriate, neither such research nor these definitions have been verified by any independent source.

Trademarks, Service Marks and Trade Names

This prospectus includes our trademarks, service marks and trade names, such as "GSE," our logo, and "Gundle," which are protected under applicable intellectual property laws and are the property of GSE Holding, Inc. or its subsidiaries. This prospectus also contains trademarks, service marks and trade names of other companies, which are the property of their respective owners. Solely for convenience, marks and trade names referred to in this prospectus may appear without the ® or ^TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these marks and trade names. Third-party marks and trade names used herein are for informational purposes only and in no way constitute or are intended to be a commercial use of such names and marks. The use of such third-party names and marks in no way constitutes or should be construed to be an approval, endorsement or sponsorship of us, or our products or services, by the owners of such third-party names and marks.

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Prospectus Summary

This summary highlights key information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our common stock. For a more complete understanding of us and this offering, you should read and carefully consider the entire prospectus, including the more detailed information set forth under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes. Some of the statements in this prospectus are forward-looking statements. See "Forward-Looking Statements." Unless we state otherwise or the context otherwise requires, the terms "we," "us," "our," "GSE," "GSE Holding," "our business" and "our company" refer to GSE Holding, Inc. and its consolidated subsidiaries as a combined entity.

Our Business

We are the leading global provider of highly engineered geosynthetic containment solutions for environmental protection and confinement applications. Our products are used in a wide range of infrastructure end markets such as mining, waste management, liquid containment (including water infrastructure, agriculture and aquaculture), coal ash containment and shale oil and gas. We are one of a few providers with the full suite of products required to deliver customized solutions for complex projects on a global basis, including geomembranes, drainage products, geosynthetic clay liners, or GCLs, nonwoven geotextiles, and specialty products. We have a global infrastructure that includes seven manufacturing facilities located in the United States, Germany, Chile, Egypt and Thailand, 18 regional sales offices located in 12 countries and engineers and technical salespeople located on four continents. We generate the majority of our sales outside of North America, including high-growth emerging and frontier markets in Asia, Latin America, Africa and the Middle East. Our comprehensive product offering and global infrastructure, along with our extensive relationships with customers and end-users, provide us with access to high-growth markets worldwide, visibility into upcoming projects and the flexibility to serve customers regardless of geographic location.

Geosynthetic lining solutions are mission-critical, and often mandated by regulatory authorities, for the safe containment of materials and groundwater protection across a wide range of applications. Our technologically advanced products are manufactured primarily from polyethylene resins and proprietary additives, and are engineered to high performance specifications such as relative impermeability, structural integrity and resistance to weathering, ultraviolet degradation and extended chemical exposure. Our products are low in cost relative to the total development expenditure of a typical project, as well as to the remediation cost and adverse environmental impact that would result from not using a geosynthetic lining solution. We believe that we have a strong brand name that is known in the industry for quality, reliability and innovation, each of which are critical factors when purchasing a product that is often required to last in perpetuity.

We are one of a few providers that possess the manufacturing capabilities and product breadth to develop solutions that meet the specific performance and regulatory standards required to supply large, complex projects on a global basis. Our manufacturing facilities have one of the broadest geographic presences in the industry and are strategically located to allow us to serve the fastest growing end markets and geographies, to effectively manage our cost structure and to maintain proximity to our customers and suppliers. In addition, we have a global network of engineers and salespeople that work with customers to provide customized solutions. Our engineers also collaborate with international standards organizations to develop regional specifications and standards for existing and new applications; consequently, we help public and private industry engineers to establish the framework of specifications for our industry's products. We believe that our global infrastructure provides us with a competitive advantage, particularly in emerging and frontier markets, as we are well positioned to capture new opportunities from the implementation and enforcement of more stringent environmental regulations driven by increasing environmental awareness globally.

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We serve leading mining, waste management and power companies; independent installers and dealers; general contractors and government agencies. Our solutions have been integral components of projects by blue-chip companies such as Arizona Public Service Company, Inc., Barrick Gold Corp., BHP Billiton plc, the Charoen Pokphand Group Co. Ltd., Newmont Mining Corp., Rio Tinto Limited, Veolia Environnement S.A. and Waste Management, Inc. Our customer base is geographically diversified with 58% of our sales in 2010 generated outside North America including in emerging and frontier markets in Asia (14%), Latin America (11%), Africa (10%) and the Middle East (3%). We define emerging markets as nations with rapid growth in business activity and industrialization, such as China and India, and frontier markets as countries that are earlier in their development cycles but could exhibit similar characteristics in the future, such as Vietnam and many African countries. We serve over 1,300 customers annually, and our largest customer accounted for less than 5% of our sales in 2010. We maintain strong, longstanding relationships with our customer base, with an average tenure of 13 years with our top 10 customers.

Our sales grew by 34% to $375.3 million in the twelve months ended March 31, 2011 from $281.1 million in the twelve months ended March 31, 2010, and our Adjusted EBITDA grew by 67% to $38.5 million from $23.0 million in the same period. See note (3) to the table set forth in "— Summary Historical Consolidated Financial and Operating Data" for a reconciliation of Adjusted EBITDA to net loss. We have focused on product innovation and strategic growth initiatives in new markets and applications, as exemplified by the ongoing diversification of our sales. Emerging and frontier markets accounted for 38% of our sales in 2010, up from 28% in 2008. Despite challenging economic conditions in early 2010, we were able to meaningfully streamline our operations and implement successful performance improvements that have enhanced our profitability and provided us with significant operating leverage. As a result of these initiatives, we have been able to increase our Adjusted Gross Margins by 10% to 19% in the quarter ended March 31, 2011 from 9% in the same period in the prior year and we believe there is an ongoing opportunity for improvement. See note (2) to the Consolidated Statement of Operations Data table in "Selected Historical Consolidated Financial and Operations Data." Among other initiatives, we diversified our resin sources, implemented margin management and pricing programs, eliminated two high-cost manufacturing locations, sold a non-core labor-intensive installation business and permanently reduced our headcount by approximately 38% since December 2008.

Our Industry

Alvarez & Marsal Private Equity Performance Improvement Group, LLC, or A&M, estimates that the market for geosynthetics used in environmental containment applications will be $1.7 billion in 2011, and is expected to grow at an annual rate of 6% to $2.1 billion by 2015. According to A&M, we are the largest market participant with 24% global geomembrane market share, and we are the market leader in several key markets and geographies, as shown by our 40% market share in the mining end market, our 19% market share in waste management end market, and our 11% market share in liquid containment end market. Our industry is highly fragmented due to its relevance to a wide variety of products, applications, end markets and geographies. For the most part, other market participants are small, privately held companies that compete on a local or regional basis and offer only one or a few products. Globally, demand for geosynthetics is influenced by environmental regulations, particularly those involving heap leach mining, landfills and waste ponds for industrial and energy process by-products. For these markets, some type of geosynthetic is typically required to comply with environmental standards for groundwater protection. In the United States, one example of applicable legislation is the Resource Conservation and Recovery Act of 1976, as amended, or RCRA, which provides legal guidelines for the storage, treatment and disposal of hazardous and nonhazardous solid waste.

We focus primarily on the global mining, waste management and liquid containment end markets, and are developing new end markets such as coal ash containment and shale oil and gas. We believe that there are highly attractive near- to medium-term trends in each of these sectors.

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Mining. In the heap leach extraction process used in the mining industry, geosynthetic systems prevent the leakage of the valuable leachate into which the metal is dissolved, protect the ground and soil from contamination and provide drainage solutions. In all other processes, geosynthetics are used as containment solutions for the tailing ponds in which water borne tailings are stored in order to allow the separation of solid particles from water. The size of the geosynthetic opportunity in mining end markets is directly related to the amount of global mining activity, which is driven by demand for metals and minerals and the need for new mining infrastructure to satisfy this demand. Our products are especially relevant to mining applications focused on copper, gold, silver, uranium and phosphate. According to The Datamonitor Group, or Datamonitor, the global copper industry alone is expected to produce 19.4 million metric tons in 2015, representing an increase of 22.5% over 2010 production levels. The global mining industry is expected to increase annual capital expenditures by 113% to $168 billion in 2018 from $79 billion in 2009, according to the McKinsey Basic Materials Institute.

Waste Management. Geosynthetics are used in the management of municipal solid waste, or MSW, as liners to prevent landfill runoff from entering the surrounding environment and as caps to prevent the escape of greenhouse gases, control odors and limit rainwater infiltration. Key Note Publications, or Key Note, estimates that 2.0 billion tons of MSW were generated worldwide in 2006 and nearly 3.0 billion tons are expected to be generated in 2011, representing annual growth of approximately 8%. While growth in North American and European waste management markets has historically trended with growth in gross domestic product, or GDP, we believe the construction and expansion of landfills for the containment of this waste will drive global geosynthetic demand in emerging markets. According to Key Note, developing nations, such as China and India, represent more than half of global MSW generation and also require the most investment in their waste management infrastructure. We believe that increased wealth, the positive correlation between MSW generation and per capita GDP and heightened environmental regulation will move disposal practices in Asia and other emerging markets away from current open dumping and open burning practices towards landfilling and other more environmentally friendly methods of disposal. China has addressed the need for increased sound waste disposal resources in its twelfth five-year plan, the most recent in a series of economic development initiatives, which mandates the investment of 180 billion Yuan, or approximately $28 billion, in the urban waste disposal sector between 2011 and 2015.

Liquid Containment. Geosynthetic products are used in a wide variety of liquid containment applications in civil engineering and infrastructure end markets such as water infrastructure, agriculture and aquaculture.

•: Water Infrastructure. Our products are used to prevent water leakage in water transportation and storage applications, such as reservoirs and canals. Frost & Sullivan estimates that approximately $6 trillion of global investment in the water industry will be required through the next twenty years, and that investment in water infrastructure alone will exceed $525 billion by 2016. This will be magnified in emerging economies in South America, Asia Pacific, Middle East and Africa, where population expansion and urbanization coupled with water scarcity and pollution will cause investment to outpace global rates.
•: Agriculture and Aquaculture. Irrigation waterways for agriculture end markets and fish farming ponds for aquaculture end markets employ geosynthetic products to prevent the leakage of water. According to the World Fish Center, aquaculture is among the fastest growing food production sectors in the world, with fish production expected to increase by as much as 67% between 2008 and 2030 to 110 million tons. In 2008, Asia represented over 90% of global aquaculture production, driven by increasing urbanization and affluence, higher per capita consumption and more protein-rich diets.

Coal Ash Containment. Coal-burning power plants produce coal ash, a pollutant that can contaminate soil and groundwater, as a byproduct of the combustion process. The Parthenon Group, or Parthenon, estimates that 135 million tons of coal ash were produced in 2009 in the United States. Approximately 55% of this was disposed of in surface impoundments, landfills and minefills, which are often unlined or insufficiently lined. In December 2008, a coal ash containment failure at The Tennessee Valley Authority's fossil fuel

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plant in Kingston, Tennessee resulted in the release of approximately 5.4 million cubic yards of coal ash into the Emory River. The clean-up costs and timeline associated with the failure are estimated to be in excess of $1 billion and four years, respectively. Following this incident, between May and November 2010, the United States Environmental Protection Agency, or EPA, announced plans to regulate the disposal of coal ash generated by coal-fired electric utilities under RCRA, published proposed rules for the regulation and held a public comment period. According to Parthenon, demand for geosynthetics is expected to accelerate to between 235 million and 410 million square feet annually between 2011 and 2014 assuming EPA regulates coal ash disposal under Subtitle C or Subtitle D in 2011 and mandates that new and replacement coal ash impoundments and landfills are lined. Utilities have already begun constructing disposal facilities that meet the requirements of the regulation in advance of it coming into effect.

Shale Oil and Gas. Geosynthetic solutions are used in a number of applications in the drilling and production of shale oil and gas, including to effectively line storage and disposal ponds for both the freshwater required for hydraulic fracturing, or fracking, and for flowback water, a by-product containing high levels of the salt, down-well chemicals and metals used in the fracking process. According to Spears & Associates, Inc., $1.0 trillion of capital is expected to be spent in onshore oil and gas drilling and completion in the United States between 2011 and 2016. A portion of this capital will be used to develop over 103,000 horizontal wells in this period, the significant majority of which we believe will be in shale plays. We believe that the majority of producing shale wells will ultimately require appropriately lined ponds for the containment of freshwater, fracking chemicals and flowback water. These expenditures will support anticipated growth in domestic shale oil and gas production. While total domestic natural gas production is projected by the Energy Information Administration, or EIA, to grow by 25% to 26.3 trillion cubic feet, or tcf, in 2035 from 21.0 tcf in 2009, shale gas production is expected to grow by over 250% to account for 47% of total natural gas production by 2035 compared to 16% in 2009.

Our Competitive Strengths

Market leader with strong brand recognition. We are the largest producer of polyethylene geomembranes in the world. We believe this market position provides us with a number of competitive advantages, including the ability to attract and retain large multinational customers that rely on our global scale and full product breadth for on-time product delivery, as well as flexibility and economies of scale in manufacturing and raw materials procurement. We believe that our established reputation for quality, reliability and technological innovation is an important factor in our customers' purchasing decisions, and is supported by our 30-year corporate history without a product failure resulting in significant liability or environmental damage. Our market position and brand name also create barriers to entry, given the importance of long-term customer relationships, the necessity of meeting the global logistical needs of customers, and the significant investment that would be required to replicate our existing footprint.

Global infrastructure provides key competitive advantages. Our network of manufacturing facilities and sales and engineering personnel strategically located around the world positions us well to:

•: Opportunistically access the most attractive regions and sub-sectors of our markets. Sustained high prices for precious and industrial metals combined with global industrialization and demand, especially from emerging markets, has expanded mine production in areas such as Chile, Africa, China and Indonesia. In addition, we believe that continued urbanization, GDP growth and increasing environmental regulation will create ongoing demand for environmentally sound waste management infrastructure in China and India. We have a strong, established local presence in the regions where each of these opportunities is located.
•: Focus on complex, high-priority applications. Our ability to supply customers with products from any of our seven manufacturing facilities located on five continents allows us to target large and complex projects for which geosynthetics must be delivered on a strict schedule, particularly for our customers in the mining industry. We are able to provide our customers the confidence of on-time delivery, even for large orders delivered over the course of several months, which provides us with an advantage over

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regional competitors who may have capacity constraints as a result of their limited facilities. In addition, our global engineering presence allows us to have a local technical dialogue with our customers that allows us to effectively tailor our solutions for these complex projects, which we believe differentiates us from other industry participants.

•: Capitalize on regional differences in the costs of our raw materials. Our suppliers sell resins through local markets, and we are able to source raw materials, which primarily consist of resin, for our global operations from the most cost-efficient region. We regularly take advantage of more attractive prices for resin, net of transportation costs, in regions other than where it is ultimately utilized. Our ability to source resins on a global basis provides us with leverage over regional raw material suppliers, which allows us to ensure a consistent supply of competitively priced raw materials.
•: Maintain strong, global relationships with our customers and end-users. We have been able to develop strong, long-term relationships with our multinational customers and end-users as a result of our ability to serve them on a global basis, despite the potentially remote locations of their projects.

Mission-critical solutions customized from broad product offering. Reliable geosynthetic solutions are critical to the safe and profitable operation of our customers' facilities. In addition, remediation cost and environmental impact of a product failure can be significant relative to the cost of our solutions. We believe we are able to command premium pricing relative to the industry due to the quality and reliability of our products and the significance that our customers place on these factors when purchasing geosynthetics. In addition, we are among a limited number of geosynthetic providers with the product breadth to provide solutions that can be customized for each application. Our ability to create a tailored solution for each project that achieves the necessary physical characteristics using layers of geomembranes, drainage products, GCLs and nonwoven geotextiles provides us with a competitive advantage against regional competitors that have more limited product offerings.

Innovation-driven culture with a history of new product and application development and commercialization. We believe we are the pioneer in the industry as the first company to have developed lining systems from high-density polyethylene. We have continued our tradition of innovation through our 30-year history. We believe we act as the primary innovator in the industry by applying our global engineering expertise to originate new, proprietary products, develop new applications for our products and work with customers to tailor solutions to their requirements. We have a portfolio of over 35 patents worldwide that have been developed by our in-house engineering personnel. Our engineers work closely with customers and end-users to develop new applications and end markets for our products, and with international standards development organizations to gain acceptance for these uses by these parties. We are a leader in the national and international standards setting process for the geosynthetics industry and hold leadership positions on numerous industry standards development organizations.

Highly experienced management team. Our senior management team averages over 25 years of experience in geosynthetics and related industries and is responsible for the operational transformation and strategic realignment that was undertaken during 2009 and 2010 to improve our profitability and further diversify our end markets. See "Business — Our History" and "Business — Supply Chain Management" for additional information on the operational transformation and the strategic realignment. Our new executive management team has instilled a pervasive culture based on innovation, customer service and profitability. Acting as a cohesive global group, our management team is well-equipped to execute on our strategic growth and profitability initiatives.

Our Growth Strategy

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production capacity and market opportunities are aligned to address these regions. In addition, we seek to continue expanding our share in key end markets by further developing our targeted product offering for these markets and continuing to grow relationships with existing and new customers globally. By pursuing these strategies, we believe we can improve our access to high-growth regions and markets, enhance our operational flexibility and continue to target high-value projects globally.

Accelerate new product development. We plan to continue to expand the breadth of our product offering, which allows us to customize products for specific applications and deepen our relevance to key end markets. Through our extensive global engineering and product development capabilities, we plan to enhance our core products as well as develop new products and solutions. With respect to our core products, our strategy focuses on developing tiers of products that are fit-for-purpose, so that product specifications are determined by the application, thereby maximizing our overall customer value proposition. For instance, heap leach mining applications, in which valuable metals dissolved in harsh chemicals need to be contained, do not require similar geosynthetic products as aquaculture applications, where water needs to be contained. Our intention is to maximize our profitability by continuing to match relevant product specifications to each of our end markets on a global basis. With respect to our new products, our strategy involves developing solutions engineered to resolve common problems in our end markets and applications. These next generation products often provide higher technical capabilities and higher margins. For instance, we have developed a lining solution that allows for leak detection during installation and throughout the project lifecycle, thereby reducing the risk of long-term environmental damage and providing a liability management tool for the end-user.

Continue to develop new end markets and applications for our products. As environmental regulations continue to be adopted in our domestic and international end markets, we will continue to respond to these regulations by cultivating new applications for our products. We believe we are well-positioned to develop new addressable markets as a result of our position as the innovator in the industry, our strong engineering and product development capabilities, our deep relationships with customers and end-users and our experience working with relevant governmental agencies. For instance, we are developing a proprietary product that effectively addresses the requirements of the emerging domestic coal ash containment market. We have been proactively working with coal-fired electric utilities that must ultimately comply with pending coal ash regulation to discuss the merits of this proprietary product and form partnerships to address this market. We have developed a similar approach to address the increasing demand for our products in the shale oil and gas end markets. As a result of these efforts, we anticipate having the critical first-mover advantage in these important high-growth, high-margin markets.

Focus on continued sales and operational excellence. We believe we have a clear strategy for ongoing improvement in our profitability by focusing on both higher-margin products and end markets, as well as continued operational improvement. We anticipate that as our product mix continues to shift towards higher-value proprietary products, our pricing power and profitability will continue to improve. We also expect that our core product strategy of matching product specifications with the application will have a positive impact on our profitability. In addition, we expect to continue to see the benefits of the operational transformation we implemented in 2010. We believe that as our volumes increase, the operating leverage we have created through facility and business line rationalizations will continue to have a positive impact on our profitability. Finally, we expect our margin management and supply chain diversification initiatives to become increasingly effective as they continue to become refined.

Selectively pursue investment and acquisition opportunities. We plan to pursue strategic investment opportunities, both organic and acquisitive in nature. In an effort to ensure we have manufacturing capacity located where it would be most advantageous, we intend to make capital investments in our facilities that serve the Asian, Middle Eastern and African markets, as well as in our facilities which we expect will serve the domestic coal ash containment markets. In addition, given the fragmented nature of the geosynthetics industry, we believe that there may be opportunities to pursue value-added acquisitions at attractive

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valuations in the future, which may augment our geographic footprint, broaden our product offerings, expand our technological capabilities and capitalize on potential operating synergies.

Risk Factors

Investing in shares of our common stock involves a high degree of risk. See "Risk Factors" beginning on page 15 of this prospectus for a discussion of factors you should carefully consider before investing in our common stock. If any of these risks actually occurs, our business, financial condition, results of operations, cash flows and prospects would likely be materially and adversely affected. As a result, the trading price of our common stock would likely decline, and you could lose all or part of your investment. Below is a summary of some of the principal risks related to our business.

•: Our business depends on the levels of capital investment expenditures by our customers, which are affected by factors such as the state of domestic and global economics, the cyclical nature of our customers' markets, our customers' liquidity and the condition of global credit and capital markets.
•: Our future sales depend, in part, on our ability to bid and win new orders. Our failure to effectively obtain future orders could adversely affect our profitability.
•: Increases in prices or disruptions in supply of our raw materials could adversely impact our financial condition.
•: Our future growth depends, in part, on developing new applications and end markets for our products.
•: Unexpected equipment failures or significant damage to one or more of our manufacturing facilities would increase our costs and reduce our sales due to production curtailments or shutdowns.
•: We operate in a highly competitive industry.

Our Principal Stockholder

Our principal stockholder, CHS Capital LLC, or CHS, acquired its interest in us on May 18, 2004, which we refer to as the Acquisition. CHS beneficially owns substantially all of our outstanding shares of common stock. CHS is a Chicago-based private equity firm with 23 years of experience investing in the middle market. Targeting well-managed companies with enterprise values between $75 million and $500 million, CHS partners with management teams to focus on accelerating growth and enhancing capabilities and resources. CHS has specialized expertise in the consumer and business services; distribution; and industrial, infrastructure and energy sectors and has completed 74 platform investments and 235 add-on investments. Founded in 1988, CHS has formed five private equity funds and has $2.3 billion of committed capital in active investment funds. CHS currently manages 15 portfolio investments with combined annual revenues in excess of $4.5 billion.

Our Corporate Information

We are incorporated in Delaware and our corporate offices are located at 19103 Gundle Road, Houston, Texas 77073. Our telephone number is (281) 443-8564. Our website address is www.gseworld.com. None of the information on our website or any other website identified herein is part of this prospectus or the registration statement of which it forms a part.

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The Offering


Common stock offered by us		shares.
Common stock offered by the selling stockholders		shares ( shares if the underwriters exercise their over-allotment in full).
Common stock outstanding after this offering		shares.
Use of proceeds		We estimate that the net proceeds to us from this offering will be approximately $ million, based upon an assumed offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus) after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds to us from this offering:
		• to repay $ million of borrowings under our Senior Secured Credit Facilities; and
		• for working capital and general corporate purposes.
		See "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Company Resources."
		We will not receive any proceeds from the shares sold by the selling stockholders.
Dividend policy		We have no current plans to pay dividends on our common stock in the foreseeable future. See "Dividend Policy."
Risk factors		See "Risk Factors" for a discussion of risks you should carefully consider before deciding to invest in our common stock.
Proposed New York Stock Exchange symbol		"GSE"

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Conflicts of interest		Affiliates of Jefferies & Company, Inc. are lenders under our term loan facilities and revolving credit facility, or our Senior Secured Credit Facilities, and will each receive their pro rata portion of the net proceeds from this offering through the repayment of the borrowings they have extended under our Senior Secured Credit Facilities. Because the portion of the net proceeds that may be so paid to affiliates of Jefferies & Company, Inc. may be at least five percent of the net offering proceeds, not including underwriting compensation, this offering will be made in accordance with Rule 5121 of the Financial Industry Regulatory Authority, Inc., or FINRA, which requires that a Qualified Independent Underwriter, or QIU, participate in the preparation of this prospectus and exercise the usual standards of due diligence with respect thereto. Oppenheimer & Co. Inc. is assuming the responsibilities of acting as QIU in connection with this offering. We have agreed, subject to certain terms and conditions, to indemnify Oppenheimer & Co. Inc. against certain liabilities incurred in connection with it acting as QIU in this offering, including liabilities under the Securities Act of 1933, as amended, or the Securities Act. For more information, see "Underwriting (Conflicts of Interest)."

The number of shares of our common stock to be outstanding following this offering is based on (i) shares of our common stock outstanding as of March 31, 2011, (ii) shares of our common stock to be issued and sold by us in this offering, (iii) shares of our common stock to be issued to certain of our executive officers pursuant to bonus letter agreements and (iv) shares of our common stock to be issued pursuant to the exercise of options by certain selling stockholders for the purpose of selling such shares in this offering. In this prospectus, unless otherwise indicated, the number of shares of common stock outstanding and the other information based thereon does not reflect shares of common stock that have been reserved for issuance under our GEO Holdings Corp. 2004 Stock Option Plan, or our 2004 Stock Option Plan, and our GSE 2011 Omnibus Incentive Compensation Plan, or our 2011 Plan (excluding shares of common stock to be issued to certain selling stockholders as described above) under which, as of March 31, 2011, options to purchase shares of common stock had been granted at a weighted average exercise price of $ per share.

Unless otherwise indicated, this prospectus:

•: assumes an initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus);
•: assumes no exercise of the underwriters' option to purchase up to an additional shares of common stock from the selling stockholders to cover over-allotments; and
•: gives effect to a -for- stock split effected on , 2011.

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Summary Historical Consolidated Financial and Operating Data

The following tables set forth our summary historical consolidated financial and operating data as of the dates and for the periods indicated. Our summary historical consolidated financial data as of December 31, 2009 and 2010 and for the years ended December 31, 2008, 2009 and 2010 have been derived from our audited consolidated financial statements that are included elsewhere in this prospectus. Our summary historical consolidated financial data as of March 31, 2011 and for the three months ended March 31, 2010 and 2011 have been derived from our unaudited condensed consolidated financial statements that are included elsewhere in this prospectus and contain all adjustments, consisting of normal recurring adjustments, that management considers necessary for a fair presentation of our financial position, results of operations and cash flows for the periods presented.

The following summary historical consolidated financial and operating data have been retrospectively reclassified to exclude discontinued operations for all periods presented. In March 2008, we exited the synthetic turf business, which operated as GSE GeoSport Surfaces, or GeoSport. In April 2010, we sold our 75.5% interest in GSE Bentoliner (Canada), Inc., or Bentoliner. In June 2010, we divested our United States Installation Business, or U.S. Installation. In July 2010, we closed GSE Lining Technology Limited, or GSE UK, our manufacturing facility located in the United Kingdom. See note 3, "Discontinued Operations," to our audited consolidated financial statements included elsewhere in this prospectus.

The summary historical consolidated financial and operating data presented below should be read together with "Capitalization," "Selected Historical Consolidated Financial and Operating Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus.



		Years Ended December 31,									Three Months Ended March 31,
		2008			2009			2010			2010			2011
											(unaudited)
		(in thousands, except per share data)
Consolidated Statement of Operations Data:
Sales		$	408,995		$	291,199		$	342,783		$	55,923		$	88,462
Cost of products			356,281			255,442			298,540			53,064			74,008

Gross profit			52,714			35,757			44,243			2,859			14,454
Selling, general and administrative expenses			27,407			31,776			40,078			7,789			9,343
Amortization of intangibles			3,044			2,619			2,284			577			394

Operating income (loss)			22,263			1,362			1,881			(5,507	)		4,717
Other expenses (income):
	Interest expense, net of interest income		20,819			19,188			19,454			4,741			4,841
	Foreign currency transaction (gain) loss		(413	)		375			(1,386	)		(970	)		1,290
	Change in fair value of derivatives		(2,682	)		210			59			(65	)		—
	Other income, net		(690	)		(3,031	)		(2,193	)		(680	)		(424	)

Income (loss) from continuing operations before income taxes			5,229			(15,380	)		(14,053	)		(8,533	)		(990	)
Income tax expense (benefit)			6,414			(4,537	)		(2,069	)		37			127

Loss from continuing operations			(1,185	)		(10,843	)		(11,984	)		(8,570	)		(1,117	)
Income (loss) from discontinued operations, net of income taxes			(746	)		(2,846	)		(4,428	)		(4,129	)		386

Net loss			(1,931	)		(13,689	)		(16,412	)		(12,699	)		(731	)
Non-controlling interest in consolidated subsidiary			14			(51	)		25			25			—

Net loss attributable to GSE Holding, Inc.		$	(1,917	)	$	(13,740	)	$	(16,387	)	$	(12,674	)	$	(731	)

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		Years Ended December 31,									Three Months Ended March 31,
		2008			2009			2010			2010			2011
											(unaudited)
		(in thousands, except per share data)
Net loss per common share:
	Basic and diluted(1)		(0.64	)		(4.60	)		(5.49	)		(4.24	)		(0.24	)
Weighted average common shares used in computing net loss per share (in thousands):
	Basic and diluted		2,985			2,985			2,985			2,985			2,985
Other Financial Data (unaudited):
Adjusted gross margin(2)			15.2	%		15.4	%		15.6	%		9.2	%		19.0	%
Adjusted EBITDA(3)		$	39,131		$	21,746		$	28,424		$	(290	)	$	9,775
Capital expenditures			5,836			2,842			3,337			380			1,747
Operating Data (unaudited):
Volume shipped (thousands of pounds)			339,251			298,620			337,811			61,498			74,982
											As of March 31, 2011,
											Actual			As Adjusted(4)
											(unaudited)
											(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents											$	7,557		$
Accounts receivable, net												64,097
Inventories, net												67,612
Total assets												277,606
Total debt, including current portion												174,002
Total stockholders' equity												39,235

(1): We recorded a net loss in each of the periods presented. Potential common shares are anti-dilutive in periods in which we record a net loss because they would reduce the respective period's net loss per share. Anti-dilutive potential common shares are excluded from the calculation of diluted earnings per share. As a result, diluted net loss per share was equal to basic net loss per share in each of the periods presented.
(2): Adjusted gross margin represents the difference between sales and cost of products, excluding depreciation expense included in cost of products, divided by sales and, accordingly, does not take into account the non-cash impact of depreciation expense included in the cost of products of $9.4 million, $9.1 million and $9.1 million in 2008, 2009 and 2010, respectively, and of $2.3 million in each of the three months ended March 31, 2010 and 2011.
(3): Adjusted EBITDA represents net loss before interest expense, income tax expense, depreciation and amortization of intangibles, change in the fair value of derivatives, loss (gain) on foreign currency transactions, restructuring expenses, extraordinary and non-recurring professional fees, stock-based compensation expense, loss (gain) on asset sales and management fees paid to CHS. Disclosure in this prospectus of Adjusted EBITDA, which is a "non-GAAP financial measure," as defined under the rules of the Securities and Exchange Commission, or SEC, is intended as a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA should not be considered as an alternative to net income, income from continuing operations or any other performance measure derived in accordance with GAAP. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by unusual or non-recurring items.
: We believe this measure is meaningful to our investors to enhance their understanding of our financial performance. Although Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs, we understand that it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance and to compare our performance with the performance of other companies that report Adjusted EBITDA. Adjusted EBITDA should be considered in addition to, not as a substitute for, net income, income from continuing operations and other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. The following table reconciles net loss to Adjusted EBITDA for the periods presented in this table and elsewhere in this prospectus.

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	Year Ended December 31,									Three Months Ended March 31,

	2008			2009			2010			2010			2011
	(in thousands)
Net loss attributable to GSE Holding, Inc.	$	(1,917	)	$	(13,740	)	$	(16,387	)	$	(12,674	)	$	(731	)
(Income) loss from discontinued operations, net of income taxes		746			2,846			4,428			4,129			(386	)
Interest expense, net of interest rate swap		20,398			18,005			18,935			4,395			4,841
Income tax expense (benefit)		6,414			(4,537	)		(2,069	)		37			127
Depreciation and amortization expense		13,219			12,703			12,700			3,181			3,045
Change in the fair value of derivatives(a)		(2,682	)		210			59			(65	)		—
Foreign currency transaction (gain) loss(b)		(413	)		375			(1,386	)		(970	)		1,290
Restructuring expense(c)		—			1,444			1,096			268			355
Professional fees(d)		262			1,436			8,904			894			651
Stock-based compensation expense(e)		450			28			67			14			75
Management fees(f)		2,004			2,004			2,019			501			500
Other(g)		650			972			58			—			8

Adjusted EBITDA	$	39,131		$	21,746		$	28,424		$	(290	)	$	9,775

(a): Represents the mark-to-market change in the value of three interest rate swaps, including one entered into in July 2010 in connection with our German revolving credit facility, one entered into in January 2005 and one in June 2009, each as a mechanism to convert $75.0 million of fixed rate debt to variable rate debt.
(b): Primarily related to gains and losses incurred on purchases, sales, intercompany loans and dividends denominated in non-functional currencies.
(c): Represents severance costs primarily related to the restructuring and productivity improvement programs we adopted during the fourth quarter of 2009.
(d): Represents consulting and other advisory fees related to recruiting a new chief executive officer in 2008 and 2009 and the restructuring and productivity improvement programs adopted by us during the fourth quarter of 2009, which primarily consists of fees related to the engagement of an independent consulting firm that specializes in performance improvements for portfolio companies of private equity firms.
(e): Represents the compensation expense attributable to each respective period based on the calculated value of employee stock options.
(f): Represents management fees that will terminate in connection with this offering. See "Certain Relationships and Related Party Transactions — Management Agreement."
(g): 2008 and 2009 include $0.6 million of disaster recovery expense associated with Hurricane Ike and $1.0 million of death benefits paid to the estate of our former President and Chief Executive Officer, respectively. Otherwise, relates to gains and losses on asset sales.

(4): As adjusted to reflect (i) the refinancing of our senior notes as described in "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Refinancing Transactions; Description of Long-Term Indebtedness," (ii) our one-time payment of $3.0 million to CHS IV, in consideration for the termination of the management agreement between us and CHS IV, as described in "Certain Relationships and Related Party Transactions—Management Agreement," (iii) the issuance of shares of common stock by us in this offering and (iv) the application of the net proceeds from this offering as set forth in "Use of Proceeds."

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Risk Factors

This offering and an investment in our common stock involve a high degree of risk. You should carefully consider the risks described below, together with the financial and other information contained in this prospectus, before you decide to purchase shares of our common stock. If any of the following risks actually occurs, our business, financial condition, results of operations, cash flows and prospects could be materially and adversely affected. As a result, the trading price of our common stock could decline and you could lose all or part of your investment in our common stock.

Risks related to our business

Our business depends on the levels of capital investment expenditures by our customers, which are affected by factors such as the state of domestic and global economies, the cyclical nature of our customers' markets, our customers' liquidity and the condition of global credit and capital markets.

Our products are generally integrated into complex, large-scale projects undertaken by our customers. As such, demand for most of our products depends on the levels of new capital investment expenditures by our customers. The levels of capital expenditures by our customers, in turn, depend on general economic conditions, availability of credit, economic conditions within their respective industries and geographies and expectations of future market behavior. The ability of our customers to finance capital investment may also be affected by factors independent of the conditions in their industry, such as the condition of global credit and capital markets.

The businesses of many of our customers, particularly mining, waste management and liquid containment companies are, to varying degrees, cyclical and have experienced periodic downturns that may adversely impact our sales in the future as they have in the past. The demand for our products by these customers depends, in part, on overall levels of industrial production and construction, general economic conditions and business confidence levels. During economic downturns, our customers in these industries have historically tended to delay large capital projects, as they did during the global recession in 2007 through 2009, which had a negative effect on our results of operations. Additionally, fluctuating energy demand forecasts and lingering uncertainty concerning commodity pricing can cause our customers to be more conservative in their capital planning, which may also reduce demand for our products. Significant fluctuations or reductions in copper, gold and silver prices, for example, generally depress the level of mining activity and result in a corresponding decline in the demand for our products among mining customers, as occurred during 2007 through 2009. Reduced demand for our products could result in the delay or cancellation of existing orders or lead to excess manufacturing capacity, which unfavorably impacts our absorption of fixed manufacturing costs. Any of these outcomes could adversely affect our business, financial condition, results of operations and cash flows.

While growth in North American and European markets have historically trended with GDP growth, emerging markets present significant growth opportunities. If we are not successful in shifting sales to the growing emerging and frontier markets, the growth in our sales could moderate. Additionally, some of our customers may delay capital investment even during favorable conditions in their markets. Lingering effects of global financial markets and banking systems disruptions experienced in 2007 through 2009 continue to make credit and capital markets difficult for some companies to access. Difficulties in accessing these markets and the associated costs can have a negative effect on investment in large capital projects, even during favorable market conditions. In addition, the liquidity and financial position of our customers could impact their ability to pay in full or on a timely basis. Any of these factors, whether individually or in the aggregate, could have a material adverse effect on our customers and, in turn, our business, financial condition, results of operations and cash flows.

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Our future sales depend, in part, on our ability to bid and win new orders. Our failure to effectively obtain future orders could adversely affect our profitability.

Our future sales and overall results of operations require us to successfully bid on new orders that are frequently subject to competitive bidding processes. For example, in 2010, the substantial majority of our sales consisted of supplying products for projects pursuant to competitive bids. Our sales from major projects depend, in part, on the level of capital expenditures in our principal end markets, including the mining, waste management, liquid containment, coal ash containment and shale oil and gas industries. The number of such projects we win in any particular year fluctuates, and is dependent on the number of projects available and our ability to bid successfully for such projects. Proposals and negotiations are complex and frequently involve a lengthy bidding and selection process, which is affected by a number of factors, such as competitive position, market conditions, financing arrangements and required governmental approvals. If negative market conditions arise, or if we fail to secure adequate financial arrangements or required governmental approvals, we may not be able to pursue particular projects, which could adversely affect our profitability.

Increases in prices or disruptions in supply of our raw materials could adversely impact our financial condition.

Pricing for our products is driven to a large extent by the costs of polyethylene resin and other raw materials, which significantly impact our operating results. In 2010, raw materials cost represented 72% of our cost of products. Our principal raw material, polyethylene resin, is occasionally in short supply and subject to substantial price fluctuation in response to availability of manufacturing capacity, market demand and the price of feedstocks, including crude oil and natural gas. In recent months, for example, the industrywide price of polyethylene resin has increased from $0.78 per pound in June 2010 to $0.96 per pound in May 2011 based on publicly available CID data. Our performance depends, in part, on our ability to reflect changes in resin costs in the selling prices for our products. In the past we have generally been successful in managing increased raw material costs and have increased selling prices only when necessary, but we may not be able to do so in the future.

We do not enter into long-term purchase orders for the delivery of raw materials. Our orders with suppliers are flexible and do not contain minimum purchase volumes or fixed prices. Accordingly, our suppliers may change their prices and other purchase terms on a monthly basis. We believe we have improved our raw material purchasing practices over recent years with the implementation of advanced pricing and forecasting tools, more centralized procurement and additional sourcing relationships, which has decreased our raw material costs. However, competitive market conditions in our industry and contractual arrangements with certain of our customers may limit our ability to pass the full cost of higher resin or other raw material pricing through to our customers promptly or completely. Even in cases in which our contractual arrangements with our customers permit us to pass on the cost of higher resin, enforcing such provisions may have a negative effect on our relationships with our customers. For example, in early 2010, we sought to enforce re-pricing provisions against a number of our customers to offset a dramatic increase in resin prices. As a result, we experienced a slower customer order rate for several months following the re-pricing, which adversely affected our results of operations. Raw material shortages or significant increases in the price of raw materials increase our costs and may reduce our operating income if we are not able to pass through all of the increases to our customers.

Additionally, if any of our key polyethylene resin suppliers were unable to deliver resin to us for an extended period of time, or if we were no longer able to purchase resin at competitively advantageous prices, we may not be able to satisfy our resin requirements through other suppliers on competitive terms, or at all, which could have a material adverse effect on our results of operations. Increases in resin prices or a significant interruption in resin supply could have a material adverse effect on our financial condition, results of operations or cash flows. We do not currently enter into derivative instruments to offset the impact of resin price fluctuations and do not intend to do so for the foreseeable future.

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Our future growth depends, in part, on developing new applications and end markets for our products.

Changes in legislative, regulatory or industry requirements or competitive technologies may render certain of our products obsolete. We place a high priority on developing new products, as well as enhancing our existing products, and our success depends on our ability to anticipate changes in regulatory and technology standards and to cultivate new applications for our products as the geosynthetics industry evolves. If we are unable to develop and introduce new applications and new addressable markets for our products in response to changes in environmental regulations, changing market conditions or customer requirements or demands, our competitiveness could be materially and adversely affected. For example, we have spent considerable resources developing higher-value products that are currently only sold in the North American market. If we are unable to introduce these products to other markets, our margin growth may be moderated. Furthermore, we cannot be certain that any new or enhanced product will generate sufficient sales to justify the expenses and resources devoted to such product diversification effort.

Unexpected equipment failures or significant damage to one or more of our manufacturing facilities would increase our costs and reduce our sales due to production curtailments or shutdowns.

We operate seven manufacturing facilities on five continents. Our operations have been centrally managed and coordinated from our facility in Houston, Texas since 2010. An interruption or suspension of production capabilities at these facilities, or significant damage to one or more of our facilities, as a result of equipment failure, fire, explosions, long-term mechanical breakdowns, violent weather conditions or other natural disasters, work stoppages, power outages, war, terrorist activities, political conflict or other hostilities or any other cause, could result in our inability to manufacture our products, which would reduce our sales and earnings for the affected period, affect our relationships with our most significant customers and distributors and cause us to lose future sales. For example, our facility in Houston, Texas was impacted by Hurricane Ike in 2008 and had to be shut down for a period of 12 days. A similar natural disaster in the future could have a material adverse effect on our global operations. Our business interruption insurance may not be sufficient to cover all of our losses from a natural disaster, in which case our reimbursed losses could be substantial.

We operate in a highly competitive industry.

We sell our products in a very competitive marketplace that is characterized by a small number of large, global producers, including Agru Kunststofftechnik GmbH and a large number of small, local or regional producers. The principal resin types that we use in our products are high-density polyethylene and linear low-density polyethylene. We compete both with companies that use the same raw materials that we do and with companies that use different raw materials. Additionally, companies that manufacture geosynthetic products that are not currently competing with us may decide to do so in the future. Competition is primarily based on product performance, quality and pricing. Pricing remains very competitive on a regional basis, with excess capacity in the industry impacting margins. Moreover, our current and potential competitors may have substantially greater financial resources, name recognition, research and development, marketing and human resources than we have. In addition, our competitors may succeed in developing new or enhanced products that are better than our products. These companies may also prove to be more successful than we are in marketing and selling these products. We may not be able to compete successfully with any of these companies. Increased competition as to any of our products could result in price reductions, reduced margins and loss of market share, which could negatively affect our business, financial condition, results of operations, cash flows or prospects.

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We may not be able to manage our expansion of operations effectively.

We anticipate continued expansion of our business to address growth in demand for our products, as well as to capture new market opportunities. To manage the potential growth of our operations, we will be required to improve our operational and financial systems, procedures and controls, increase manufacturing capacity and output and expand, train and manage our internal personnel. Furthermore, we will need to maintain and expand our relationships with our customers, suppliers and other third parties. We cannot assure you that our current and planned operations, personnel, systems or internal procedures and controls will be adequate to support our future growth. If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities, execute our business strategies or respond to competitive pressures.

Our inability to deliver our products on time could affect our future sales and profitability and our relationships with our customers.

Our ability to meet customer delivery schedules for our products is dependent on a number of factors including, but not limited to, access to the raw materials required for production, an adequately trained and capable workforce, project engineering expertise for certain large projects, sufficient manufacturing plant capacity and appropriate planning and scheduling of manufacturing resources. Our failure to deliver in accordance with customer expectations may result in damage to existing customer relationships and result in the loss of future business. Any such loss of future business could negatively impact our financial performance and cause adverse changes in the market price of our common stock.

We are subject to certain risks associated with our international operations that could harm our revenues and profitability.

We have significant international operations, and we intend to increase our international manufacturing and distribution capacity in the future. Certain risks are inherent in international operations, including:

•: difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;
•: foreign customers with longer payment cycles than customers in the United States;
•: tax rates in certain foreign countries that exceed those in the United States and foreign earnings subject to withholding requirements;
•: imposition of tariffs, quotas, exchange controls or other trade barriers;
•: general economic conditions, political unrest and terrorist attacks;
•: exposure to possible expropriation or other governmental actions;
•: increased complexity and costs of staffing and managing widespread operations;
•: import and export licensing requirements;
•: restrictions on repatriating foreign profits back to the United States;
•: increased risk of corruption, self-dealing or other unethical practices among business partners in less developed regions of the world that may be difficult to deter or remedy;
•: difficulties protecting our intellectual property; and
•: difficulties associated with complying with a variety of foreign laws and regulations, some of which may conflict with U.S. laws.

In addition, foreign operations involve uncertainties arising from local business practices, cultural considerations and international political and trade tensions. For example, our operations in Egypt were briefly suspended earlier this year due to political unrest in that country. As we continue to expand our business globally, our success will be dependent, in part, on our ability to anticipate and effectively manage these and other risks. We cannot assure you that we will be able to manage effectively these risks or that these and other factors will not have a material adverse effect on our international operations or our business, financial condition, results of operations or cash flows.

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Our international operations are subject to political and economic risks for conducting business in corrupt environments.

Although a portion of our international business is currently in regions where the risk level and established legal systems are similar to those in the United States, we also conduct business in developing countries. We are focusing on increasing our sales in regions such as South America, Southeast Asia, India, China and the Middle East, which are less developed, have less stable legal systems and financial markets and are generally recognized as potentially more corrupt business environments than the United States and thus present greater political, economic and operational risks. We emphasize compliance with the law and have various internal policies and procedures in place and conduct ongoing training of employees with regard to business ethics and key legal requirements such as the U.S. Foreign Corrupt Practices Act, or the FCPA, and similar anti-corruption laws and regulations in other jurisdictions. These laws and regulations generally prohibit companies and their intermediaries from making improper payments to non-U.S. government officials for the purpose of obtaining or retaining business or securing an improper business advantage. Despite such policies and procedures and the FCPA training we provide to our employees, we cannot guarantee that our employees will adhere to our code of business conduct, other company policies or the anti-corruption laws of a particular nation. If we are found to be liable for FCPA or similar anti-corruption law or regulatory violations, whether due to our or others' actions or inadvertence, we could be subject to civil and criminal penalties or other sanctions and could incur significant costs for investigation, litigation, fees, settlements and judgments, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Currency exchange rate fluctuations could have an adverse effect on our results of operations and cash flows.

We generate a significant portion of our sales, and incur a significant portion of our expenses, in currencies other than U.S. dollars. In 2010 and the three months ended March 31, 2011, 39% and 28% of our sales, respectively, were denominated in a currency other than the U.S. dollar, and as of March 31, 2011, 26% of our assets and 11% of our liabilities were denominated in a currency other than the U.S. dollar. To the extent that we are unable to match sales received in foreign currencies with costs paid in the same currency, exchange rate fluctuations in any such currency could have an adverse effect on our results of operations and cash flows. During times of a strengthening U.S. dollar, our reported sales from our international operations will be reduced because the applicable local currency will be translated into fewer U.S. dollars. We do not currently enter into derivative instruments to offset the impact of currency exchange rate fluctuations and do not intend to do so for the foreseeable future.

Our operating results may be subject to quarterly fluctuations due to the possible delayed recognition of large orders in our financial statements.

Our sales efforts for many of our products involve discussions with the end-users during the planning phase of projects. The planning, designing and manufacturing process can be lengthy. The typical planning and design phase for our projects ranges from six months to four years. As a result, there is often a delay between the investment of resources in developing and supplying a product and the recognition in our financial statements of the sales of the product. Our long sales cycle and the unpredictable period of time between the placement of an order and our ability to recognize the sales associated with the order make sales predictions difficult, particularly on a quarterly basis, and can cause our operating results to fluctuate significantly from quarter to quarter.

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The costs and difficulties of acquiring and integrating complementary businesses and technologies could impede our future growth and adversely affect our competitiveness.

As part of our growth strategy, we will consider acquiring complementary businesses. Future acquisitions could result in the incurrence of debt and contingent liabilities, which could have a material adverse effect on our business, financial condition and results of operations. Risks we could face with respect to acquisitions include:

•: greater than expected costs and management time and effort involved in identifying, completing and integrating acquisitions;
•: risks associated with unanticipated events or liabilities;
•: potential disruption of our ongoing business and difficulty in maintaining our standards, controls, information systems and procedures;
•: entering into markets and acquiring technologies in areas in which we have little experience;
•: the inability to successfully integrate the products, services and personnel of any acquisition into our operations;
•: a need to incur debt, which may reduce our cash available for operations and other uses; and
•: the realization of little, if any, return on our investment.

If we are unable to retain key executives and other personnel, our growth may be hindered.

Our success largely depends on maintaining our staff of qualified professionals, many of whom have numerous years of experience and specialized expertise in our business. The market for qualified professionals is competitive, and we may not continue to be successful in our efforts to attract and retain these professionals. In particular, our President and Chief Executive Officer, Mark C. Arnold, has considerable industry experience and would be difficult to replace. As such, our future operations could be harmed if any of our senior executives or other key personnel ceased working for us. We are currently conducting a search for a permanent Chief Financial Officer to replace Mr. Lowrey. Finding a permanent Chief Financial Officer that holds the background, skills and qualifications we are searching for may be difficult and time-consuming, and we may not be able to recruit a qualified replacement. If we are unable to find a suitable replacement, our future operations could be harmed. Our future operations could also be harmed if we are unable to attract, hire, train and retain qualified managerial, sales, operations, engineering and other technical personnel.

Although we have employment and non-competition agreements with certain of our key employees, those agreements may not assure the retention of our employees, and we may not be able to enforce all of the provisions in any employment or non-competition agreement. In addition, we do not have key person insurance on any of our senior executives or other key personnel. The loss of any member of our senior management team or other key employee could damage critical customer relationships, result in the loss of vital knowledge, experience and expertise, lead to unanticipated recruitment and training costs and make it more difficult to successfully operate our business and execute our business strategy.

We may be adversely affected by environmental and health and safety regulations to which we are subject.

We are required to comply with a variety of federal, state, local and foreign laws governing the protection of the environment, the exposure of persons and property to hazardous substances and occupational health and safety. These laws regulate, among other things, the generation, storage, handling, use and transportation of hazardous materials; the disposal and release of wastes and other substances into soil, air or water; and our obligations relating to the health and safety of our workers and the public. We are also required to obtain and comply with environmental permits and licenses for certain operations. We cannot assure you that we are at all times in full compliance with all environmental laws, permits or licenses. If we violate or fail to comply with these requirements, we could be subject to private party or governmental

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claims, the issuance of administrative, civil and criminal fines or penalties, the denial, modification or revocation of permits, licenses or other authorizations, the imposition of injunctive obligations or other limitations on our operations, including the cessation of operations, and requirements to perform site investigatory, remedial or other corrective action. In some instances, such actions could be material and could result in adverse impacts on our operations and financial condition. Certain environmental requirements, and the interpretation of those requirements by regulators and courts, change frequently and might also become more stringent over time. We therefore cannot assure you that we will not incur material costs or liabilities related to our future compliance with these requirements. We have made and will continue to make capital and other expenditures to comply with environmental requirements. Because of the nature of our business, changes in environmental laws and the costs associated with complying with such requirements could have a material adverse effect on our business.

We are also subject to laws governing the cleanup of contaminated property. Under these laws, we could be held liable for costs and damages relating to contamination of our past or present facilities and at third-party sites to which our facilities sent wastes or hazardous substances. The amount of such liability could be material. We cannot assure you that we will not have liability for any such contamination, nor can we assure you that we will not experience an accident or become liable for any other contamination that may have occurred in the past (including such liability to buyers of properties or businesses that we have sold).

Product liability and indemnification claims could have a material adverse effect on our operating results. Our ability to maintain insurance may be limited, and our coverage may not be sufficient for all claims.

Our products are used in, among other things, containment systems for the prevention of groundwater contamination. Our products are also used in significant public works projects. Accordingly, we face an inherent business risk of exposure to product liability claims (including claims for strict liability and negligence) and claims for breach of contract in the event that the failure of our products or their installation results, or is alleged to result, in property damage, damage to the environment or personal injury. We agree in most cases to indemnify the site owner, general contractor and others for certain damages resulting from our negligence and that of our employees. We cannot assure you that we will not incur significant costs to defend product liability and breach of contract claims or that we will not experience any material product liability losses or indemnification obligations in the future. Such costs, losses and obligations may have a material adverse impact on our financial condition, results of operations or cash flows.

Although we maintain insurance within ranges of coverage consistent with industry practice, this insurance may not be available at economically feasible premiums and may not be sufficient to cover all such losses. In addition, our insurance policies are subject to large deductibles. An unsuccessful outcome in legal actions and claims against us may have a material adverse impact on our financial condition, results of operations or cash flows. Even if we are successful in defending against a claim relating to our products, claims of this nature could cause our customers to lose confidence in our products and our company.

We may experience significant warranty claims that increase our costs.

We provide our customers of geosynthetic products with limited material product warranties. Our limited product warranties are typically five years but occasionally extend up to 20 years. These warranties are generally limited to repair or replacement of defective products or workmanship, often on a prorated basis, up to the dollar amount of the original order. In some foreign orders, we may be required to provide the customer with specified contractual limited warranties as to material quality. Our product warranty liability in many foreign countries is dictated by local laws in addition to the warranty specified in the orders. Failure of our products to operate properly or to meet specifications may increase our costs by requiring additional engineering resources, product replacement or monetary reimbursement to a customer. We have received warranty claims in the past, and we expect to continue to receive them in the future. Warranty

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claims are not covered by insurance, and substantial warranty claims in any period could have a material adverse effect on our financial condition, results of operations or cash flows as well as on our reputation.

A significant portion of our business is conducted through foreign subsidiaries and our failure to generate sufficient cash flow from these subsidiaries, or otherwise repatriate or receive cash from these subsidiaries, could result in our inability to repay our indebtedness.

In 2010, 58% of our sales were generated outside of North America. As of December 31, 2010, 62%, or $9.3 million, of our cash was held outside of the United States, including $3.3 million in Europe.

In general, when an entity in a foreign jurisdiction repatriates cash to the United States, the amount of such cash is treated as a dividend taxable at current U.S. tax rates. Accordingly, upon the distribution of cash to us from our non-U.S. subsidiaries, we will be subject to U.S. income taxes. Although foreign tax credits may be available to reduce the amount of the additional tax liability, these credits may be limited based on our tax attributes. The U.S. tax effects of potential dividends and related foreign tax credits associated with earnings indefinitely reinvested have not been realized pursuant to ASC-740-10.

While we have been able to meet the regular interest payment obligations on our indebtedness to date from cash generated through our U.S. operations, we may not be able to do so in the future or may seek to repatriate cash for other uses, and our ability to withdraw cash from foreign subsidiaries will depend upon the results of operations of these subsidiaries and may be subject to legal, contractual or other restrictions and other business considerations. Our foreign subsidiaries may enter into financing arrangements that limit their ability to make loans or other payments to fund payments of our debt. In particular, to the extent our foreign subsidiaries incur additional indebtedness, the ability of our foreign subsidiaries to provide us with cash may be limited. In addition, dividend and interest payments to us from our foreign subsidiaries may be subject to foreign withholding taxes, which could reduce the amount of funds we receive from our foreign subsidiaries. Dividends and other distributions from our foreign subsidiaries may also be subject to fluctuations in currency exchange rates and legal and other restrictions on repatriation, which could further reduce the amount of funds we receive from our foreign subsidiaries.

Our substantial level of indebtedness could have a material adverse effect on our financial condition.

We have a substantial amount of indebtedness. After giving effect to this offering and the application of the net proceeds therefrom, as of March 31, 2011, we would have had approximately $ million of total indebtedness. Our high level of indebtedness could have important consequences to you, including the following:

•: our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;
•: we must use a substantial portion of our cash flow from operations to pay interest and principal on our indebtedness, which will reduce the funds available to us for other purposes such as capital expenditures;
•: we may be limited in our ability to borrow additional funds;
•: we may have a higher level of indebtedness than some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in planning for, or responding to, changing conditions in our industry, including increased competition; and
•: we may be more vulnerable to economic downturns and adverse developments in our business.

We expect to utilize cash flow from operations to pay our expenses and to pay principal and interest on our indebtedness. Our ability to meet our expenses thus depends on our future performance, which will be affected by financial, business, economic and other factors. We will not be able to control many of these factors, such as economic conditions in the markets where we operate and pressure from competitors. We cannot be certain that our cash flow will be sufficient to allow us to pay principal and interest on our

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indebtedness and meet our other obligations. If we do not have enough liquidity, we may be required to refinance all or part of our existing debt, sell assets or borrow more money. We cannot guarantee that we will be able to do so on terms acceptable to us, or at all. In addition, the terms of our existing or future debt agreements, including the Senior Secured Credit Facilities, may restrict us from pursuing any of these alternatives.

Our Senior Secured Credit Facilities impose significant operating and financial restrictions, which may prevent us from capitalizing on business opportunities and taking certain corporate actions.

Our Senior Secured Credit Facilities impose, and any future financing agreements that we may enter into will likely impose, significant operating and financial restrictions on us. These restrictions may limit our ability to finance future operations or capital needs or to engage in, expand or pursue our business activities, including our ability to:

•: incur additional indebtedness;
•: create liens or other encumbrances;
•: pay dividends or make certain other payments, investments, loans and guarantees; and
•: sell or otherwise dispose of assets and merge or consolidate with another entity.

In addition, our Senior Secured Credit Facilities require us to meet certain financial ratios and financial condition tests. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Refinancing Transactions; Description of Long-Term Indebtedness." Events beyond our control could affect our ability to meet these financial ratios and financial condition tests. Our failure to comply with these obligations could cause an event of default under our Senior Secured Credit Facilities. If an event of default occurs, our lenders could elect to declare all amounts outstanding under our Senior Secured Credit Facilities, including accrued and unpaid interest, to be immediately due and payable; the lenders could foreclose upon the assets securing our Senior Secured Credit Facilities; and the lenders under our Revolving Credit Facility could terminate their commitments to lend us money, which could have a material adverse effect on our business and prospects.

Our product deliveries have traditionally fluctuated seasonally and such fluctuations could affect our stock price.

Due to the significant amount of our projects in the northern hemisphere (North America, Europe and portions of Asia), our operating results are impacted by seasonal weather patterns in those markets. In the northern hemisphere, the greatest volume of geosynthetic product deliveries typically occurs during the summer and fall of each year due to milder weather, which results in seasonal fluctuations of sales. As a result, our sales in the first and fourth quarters of the calendar year have historically been lower than sales in the second and third quarters. We may not be able to use our manufacturing capacity at our various locations to mitigate the impact of seasonal fluctuations on our manufacturing and delivery schedules. Changes in our quarterly operating results due to seasonal fluctuations could negatively affect our stock price.

We rely primarily on trade secrets and contractual restrictions, and not patents, to protect our proprietary rights. Failure to protect our intellectual property rights may undermine our competitive position, and protecting our rights or defending against third-party allegations of infringement may be costly.

Our commercial success depends on our proprietary information and technologies. We rely primarily on a combination of know-how, trade secrets, trademarks and contractual restrictions to protect our intellectual property rights. We own several patents addressing limited aspects of our products. The measures we take to protect our intellectual property rights may be insufficient. Failure to protect, monitor and control the use of our existing intellectual property rights could cause us to lose our competitive advantage and incur significant expenses. Although we enter into confidentiality and nondisclosure agreements with our

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employees, consultants, advisors and partners to protect our intellectual property rights, these agreements could be breached and may not provide meaningful protection for our trade secrets. It is possible that our competitors or others could independently develop the same or similar technologies or otherwise obtain access to our unpatented technologies. In such cases, our trade secrets would not prevent third parties from competing with us. As a result, our results of operations may be adversely affected. Furthermore, third parties or employees may infringe or misappropriate our proprietary technologies or other intellectual property rights, which could also harm our business and results of operations. From time to time, we may discover such violations of our intellectual property rights. For example, we are aware of third-party use of our trademarks and designs, and there may be other third parties using trademarks or names similar to ours of whom we are unaware. Monitoring unauthorized use of intellectual property rights can be difficult and expensive, and adequate remedies may not be available. Moreover, the laws of certain foreign countries do not protect intellectual property rights to the same extent as the laws of the United States.

In addition, third parties may claim that our products infringe or otherwise violate their patents or other proprietary rights and seek corresponding damages or injunctive relief. Defending ourselves against such claims, with or without merit, could be time-consuming and result in costly litigation. An adverse outcome in any such litigation could subject us to significant liability to third parties (potentially including treble damages) or temporary or permanent injunctions prohibiting the manufacture or sale of our products, the use of our technologies or the conduct of our business. Any adverse outcome could also require us to seek licenses from third parties (which may not be available on acceptable terms, or at all) or make substantial one-time or ongoing royalty payments. Protracted litigation could also result in our customers or potential customers deferring or limiting their purchase or use of our products until such litigation is resolved. In addition, we may not have insurance coverage in connection with such litigation and may have to bear all costs arising from any such litigation to the extent we are unable to recover them from other parties. Any of these outcomes could have a material adverse effect on our business, financial condition, results of operations, cash flows and prospects.

Although we make efforts to develop and protect our intellectual property, the validity, enforceability and commercial value of our intellectual property rights may be reduced or eliminated by the discovery of prior inventions by third parties, the discovery of similar marks previously used by third parties, non-use or non-enforcement by us, the successful independent development by third parties of the same or similar confidential or proprietary innovations or changes in the supply or distribution chains that render our rights obsolete. We have in the past and may in the future be subject to opposition proceedings with respect to applications for registrations of our intellectual property, including but not limited to our trade names and trademarks. As we rely in part on brand names and trademark protection to enforce our intellectual property rights, barriers to our registration of our brand names and trademarks in various countries may restrict our ability to promote and maintain a cohesive brand through our key markets.

We are dependent on information systems and information technology, and a major interruption could adversely impact our operations and financial results.

We use critical information systems to operate, monitor and manage business on a day-to-day basis. Any disruption to these information systems could adversely impact operations and result in increased costs and an inability to maintain financial controls or issue financial reports. Information systems could be interrupted, delayed or damaged by any number of factors, including natural disasters, telecommunications failures, power loss, acts of war or terrorism, computer viruses or physical or electronic security breaches. These or other events could cause loss of critical data, or prevent us from meeting our operating and financial commitments. Although we have business continuity plans in place to reduce the negative impact of information technology system failures on our operation, these plans may not be completely effective.

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Our tax returns and positions are subject to review and audit by federal, state and local taxing authorities and adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition.

Our federal income tax returns for 2008 are currently under audit by the Internal Revenue Service. While we do not expect any material adverse tax treatment to derive from this audit, the potential financial statement impact cannot be estimated at this time. An unfavorable outcome from any tax audit could result in higher tax costs, penalties and interest, thereby negatively and adversely impacting financial condition, results of operations or cash flows.

Risks related to this offering and ownership of our common stock

An active public market for our common stock may not develop following this offering, which could limit your ability to sell your shares of our common stock at an attractive price, or at all.

Prior to this offering, there has been no public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market in our common stock or how liquid that market might become. An active public market for our common stock may not develop or be sustained after the offering. If an active public market does not develop or is not sustained, it may be difficult for you to sell your shares of our common stock at a price that is attractive to you, or at all.

Our existing stockholders will exert significant influence over us after the consummation of this offering, and their interests may not coincide with yours.

After this offering, CHS and its affiliates will own, in the aggregate, % of our outstanding common stock (or % if the underwriters exercise their over-allotment option in full). As a result, CHS and its affiliates could control substantially all matters requiring stockholder approval for the foreseeable future, including approval of significant corporate transactions. In addition, following this offering, pursuant to the terms of our Stockholders Agreement (as described below in "Management — Stockholders Agreement"), CHS will continue to have the ability to designate three members of our Board of Directors and to require all other parties to the Stockholders Agreement to sell their respective shares of our common stock, on substantially the same terms and conditions as CHS is selling its shares, in the event that CHS approves a sale of us. After giving effect to this offering, the parties to the Stockholders Agreement, other than CHS, will own in the aggregate % of our outstanding common stock (or % if the underwriters exercise their over-allotment option in full). The interests of these stockholders may not always coincide with our interests as a company or the interests of other stockholders, including you. In addition, this concentration of ownership may delay or prevent a change in control of our company, even if that change in control would benefit our stockholders. This significant concentration of stock ownership and voting power may adversely affect the trading price of our common stock due to investors' perception that conflicts of interest may exist or arise. See "Principal and Selling Stockholders" and "Certain Relationships and Related Party Transactions" for further information about the equity interests held by CHS and its affiliates.

Moreover, our certificate of incorporation contains a provision renouncing our interest or expectancy in, or in being offered an opportunity to participate in, any business opportunity that may from time to time be presented to CHS or its affiliates (other than us), subsidiaries, officers, directors, agents, stockholders, members, partners and employees and that may be a business opportunity for any such person, even if the opportunity is one that we might reasonably have pursued or had the ability or desire to pursue if granted the opportunity to do so. Neither CHS nor any of its affiliates (other than us) has any duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us. See "Description of Capital Stock — Anti-Takeover Effects of Provisions of Our Certificate of Incorporation, Our Bylaws and Delaware Law — Corporate Opportunity."

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Our stock price may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

After this offering, the market price for our common stock is likely to be volatile, in part because our shares have not been traded publicly. In addition, the market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including:

•: quarterly variations in our operating results compared to market expectations;
•: size of the public float;
•: stock price performance of our competitors;
•: fluctuations in stock market prices and volumes;
•: actions by competitors;
•: changes in senior management or key personnel;
•: changes in financial estimates by securities analysts;
•: negative earnings or other announcements by us or other industrial companies;
•: downgrades in our credit ratings or the credit ratings of our competitors;
•: issuances of capital stock; and
•: global economic, legal and regulatory factors unrelated to our performance.

Numerous factors affect our business and cause variations in our operating results and affect our sales, including overall economic trends; our ability to identify and respond effectively to changing legislative, regulatory or industry requirements; actions by competitors; pricing; our ability to source and distribute products effectively; changes in environmental and safety laws and regulations; and weather conditions.

The initial public offering price of our common stock will be determined by negotiations between us and the underwriters based on a number of factors and may not be indicative of prices that will prevail following the consummation of this offering. Volatility in the market price of our common stock may prevent investors from being able to sell their common stock at or above the initial public offering price. As a result, you may suffer a loss on your investment.

In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many industrial companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.

Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.

Sales of substantial amounts of our common stock in the public market after this offering, or the perception that these sales may occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional shares. Upon consummation of this offering, we will have shares of common stock outstanding. The shares of our common stock offered pursuant to this offering, including the shares of our common stock offered by the selling stockholders, will be freely tradable without restriction under the Securities Act, except for any shares of our common stock that may be held or acquired by our directors, executive officers and other affiliates, as that term is defined in the Securities Act, which will be subject to the resale restrictions imposed by Rule 144 under the Securities Act.

We expect that the remaining shares, representing % of our total outstanding shares of common stock following this offering, will become available for resale in the public market as shown in the chart below. We, each of our directors and executive officers, substantially all of our stockholders and

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participants in the directed share program have signed lock-up agreements for a period of 180 days following the date of this prospectus, subject to extension in the case of an earnings release or material news or a material event relating to us. Jefferies & Company, Inc. and Oppenheimer & Co. Inc. may, in their sole discretion, release all or any portion of the shares of common stock subject to lock-up agreements. As restrictions on resale end, the market price of our shares of common stock could drop significantly if the holders of these restricted shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.



Number of Shares and % of Total Outstanding		Date Available for Sale Into Public Market

shares or %		On the date of this prospectus
shares or %		Up to and including 180 days after the date of this prospectus
shares or %		More than 180 days after the date of this prospectus, of which shares, or %, are subject to volume, manner of sale and other limitations under Rule 144.

Following this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register all shares of our common stock subject to outstanding options under our existing option plan as well as all shares of our common stock that may be covered by additional options and other awards granted under our new 2011 Omnibus Incentive Compensation Plan. See "Compensation Discussion and Analysis — Equity Incentives — 2011 Omnibus Incentive Compensation Plan." Once these shares are registered, they can be sold in the public market upon issuance, subject to restrictions under the securities laws applicable to resales by affiliates.

In addition, commencing 180 days following this offering, CHS will have the right, subject to certain exceptions and conditions, to require us to register their shares of our common stock under the Securities Act, and holders of an additional shares of our common stock will have the right to participate in future registrations of securities by us. Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See "Shares Available for Future Sale."

Anti-takeover provisions in our charter documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.

Our certificate of incorporation and bylaws contain provisions that may make the acquisition of our company more difficult without the approval of our Board of Directors. These include provisions, among other things:

•: authorizing our Board of Directors, without further action by the stockholders, to issue blank check preferred stock;
•: limiting the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;
•: requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our Board of Directors;
•: authorizing our Board of Directors, without stockholder approval, to amend our amended and restated bylaws;

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•: limiting the determination of the number of directors on our Board of Directors and the filling of vacancies or newly created seats on our Board of Directors to our Board of Directors then in office; and
•: subject to certain exceptions, limiting our ability to engage in certain business combinations with an "interested stockholder" for a three-year period following the time that the stockholder became an interested stockholder.

These provisions, alone or together, could delay hostile takeovers and changes in control of our company or changes in our management.

As a Delaware corporation, we are also subject to provisions of Delaware law, which may impair a takeover attempt that our stockholders may find beneficial. Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

If you purchase shares of our common stock sold in this offering, you will incur immediate and substantial dilution.

If you purchase shares of our common stock in this offering, you will incur immediate and substantial dilution in the amount of $ per share, because the initial public offering price of $ per share is substantially higher than the pro forma net tangible book value per share of our outstanding common stock. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they purchased their shares. In addition, you may also experience additional dilution upon future equity issuances or the exercise of stock options to purchase our common stock granted to our employees, consultants and directors under our stock option and equity incentive plans. See "Dilution."

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

We do not expect to pay any cash dividends for the foreseeable future.

We do not anticipate that we will pay any cash dividends on our common stock for the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, capital requirements, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our Board of Directors deems relevant. Additionally, our operating subsidiaries are currently restricted from paying cash dividends by the agreements governing their indebtedness, and we expect these restrictions to continue in the future. Accordingly, if you purchase shares in this offering, realization of a gain on your investment will depend on the appreciation of the price of our common stock, which may never occur. Investors seeking cash dividends in the foreseeable future should not purchase our common stock. See "Dividend Policy."

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We will incur increased costs as a result of becoming a public company.

As a public company, we will incur significant legal, accounting, insurance and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also have incurred and will incur costs associated with the Sarbanes-Oxley Act of 2002 and related rules implemented by the Securities and Exchange Commission, or SEC, and the NYSE. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.

Compliance with Section 404 of the Sarbanes-Oxley Act of 2002 will require significant expenditures and effort by management, and if our independent registered public accounting firm is unable to provide an unqualified attestation report on our internal controls, our stock price could be adversely affected.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and related rules and regulations and beginning with our Annual Report on Form 10-K for the year ending December 31, 2012, our management will be required to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. We are currently in the process of reviewing, documenting and testing our internal control over financial reporting. We may encounter problems or delays in completing the implementation of any changes necessary to make a favorable assessment of our internal control over financial reporting. In addition, in connection with the attestation process by our independent registered public accounting firm, we may encounter problems or delays in completing the implementation of any requested improvements and receiving a favorable attestation. If we cannot favorably assess the effectiveness of our internal control over financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified attestation report on our internal controls, investors could lose confidence in our financial information and our stock price could decline.

Although we do not plan to take advantage of the NYSE's "controlled company" exemption from certain NYSE corporate governance requirements even if we are eligible to do so, if we elect to do so in the future, our stockholders will not have the same protections afforded to stockholders of companies that are subject to such requirements.

Under the NYSE rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a "controlled company" and may elect not to comply with certain NYSE corporate governance requirements. We may be eligible to take advantage of the "controlled company" exception in light of the collective voting power of our sponsors and their respective affiliates after giving effect to this offering. We currently do not intend to rely on this exception even if we are so eligible, but may elect to do so in the future. If we were to elect to be treated as a "controlled company" in the future, we would be exempt from certain NYSE corporate governance requirements, including the requirements that our Board of Directors consist of a majority of independent directors and that we have compensation and nominating and corporate governance committees comprised entirely of independent directors, and our stockholders would not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

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Forward-Looking Statements

This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this prospectus are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "will," "should," "can have," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. The statements we make regarding the following subjects are forward-looking by their nature. These statements include, but are not limited to, statements about:

•: our beliefs concerning our capital expenditure requirements and liquidity needs;
•: our beliefs regarding the impact of future regulations;
•: our ability to secure project bids;
•: our expectations with respect to our executive officers' and directors' future compensation;
•: our beliefs regarding the anti-takeover effects of certain provisions of our certificate of incorporation, our bylaws and Delaware law;
•: our plans to strategically pursue emerging growth opportunities in diverse regions and end markets;
•: our expectations regarding future demand for our products;
•: our expectation that sales and total gross profits derived from outside North America will increase;
•: our expectation that our core product strategy of matching product specifications with the application will have a positive impact on our profitability;
•: our belief in the sufficiency of our cash flows to meet our needs; and
•: our expectations about future dividends and our plans to retain any future earnings.

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed in "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this prospectus. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.

We cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this prospectus are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

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Use of Proceeds

We estimate that we will receive net proceeds from this offering of approximately $ million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders, including any shares sold by the selling stockholders in connection with the exercise of the underwriters' option to purchase additional shares.

We currently intend to use the net proceeds to us from this offering:

•: to repay $ million of borrowings under our First Lien Term Loan and $ million of borrowings under our Revolving Credit Facility; and
•: for working capital and general corporate purposes.

A $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease the net proceeds we receive from this offering by approximately $ million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

As of the date of this prospectus, we had $ million in outstanding borrowings under our First Lien Credit Facility, consisting of $ million under our First Lien Term Loan and $ million under our Revolving Credit Facility, which matures in May 2016 and accrues interest at either (x) the Base Rate, as defined in our First Lien Credit Facility, plus four and one-half percent (4.50%) per annum or (y) the LIBOR Rate plus five and one-half percent (5.50%) per annum. We entered into our First Lien Credit Facility in May 2011 and used a portion of the net proceeds, together with cash on hand and the proceeds from our Second Lien Term Loan, to repay in full our old revolving credit facility, to fund the repurchase of our 11% Senior Notes due 2012, or our Senior Notes, and to pay related fees and expenses.

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Dividend Policy

Since the consummation of the Acquisition on May 18, 2004, we have not declared or paid any cash dividends on our capital stock. We do not intend to pay any cash dividends on our common stock for the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, capital requirements, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our Board of Directors deems relevant. In particular, our operating subsidiaries are currently restricted from paying cash dividends by the agreements governing their indebtedness, and we expect these restrictions to continue for the foreseeable future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."

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Capitalization

The following table sets forth our cash and cash equivalents and our capitalization as of March 31, 2011:

•

on an actual basis;

•

on an as adjusted basis to reflect the Refinancing Transactions described in "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Refinancing Transactions; Description of Long-Term Indebtedness;" and

•

on an as adjusted basis to reflect:

•: the Refinancing Transactions;
•: our one-time payment of $3.0 million to CHS IV, in consideration for the termination of the management agreement between us and CHS IV as described in "Certain Relationships and Related Party Transactions — Management Agreement;"
•: our issuance of shares of our common stock to certain of our executive officers pursuant to bonus letter agreements;
•: our issuance of shares of our common stock pursuant to the exercise of options by certain selling stockholders for the purpose of selling such shares in this offering; and
•: our issuance and sale of shares of common stock in this offering at an assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus) after deducting underwriting discounts and commissions and estimated offering expenses payable by us and the application of net proceeds from the offering as described in "Use of Proceeds."

You should read the following table in conjunction with "Use of Proceeds," "Selected Historical Consolidated Financial and Operating Data," "Management's Discussion and Analysis of Financial Condition

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and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus.



		As of March 31, 2011
		Actual			As Adjusted for the Refinancing Transactions			As Adjusted for the Refinancing Transactions and This Offering⁽¹⁾
		(unaudited) (in thousands, except share data)
Cash and cash equivalents		$	7,557		$	8,089

Debt, including current portion:
	Revolving Credit Facility		—			9,747
	First Lien Term Loan		—			135,000
	Second Lien Term Loan		—			40,000
	Original issue discount on Senior Secured Credit Facilities		—			(2,950	)
	Old revolving credit facility		17,184			—
	Senior notes		150,000			—
	Net unamortized premiums and discounts		(511	)		—
	Other debt		7,329			7,329

Total debt, including current portion		$	174,002		$	189,126
Stockholders' equity:
	Common stock, $.01 par value per share, 3,700,000 shares authorized, 2,985,360 shares issued and outstanding, actual; $ par value per share, authorized, shares issued and outstanding, on an as adjusted basis		30			30
	Additional paid-in capital		61,485			61,485
	Accumulated deficit		(27,128	)		(29,674	)
	Accumulated other comprehensive income		4,848			4,848

Total stockholders' equity		$	39,235		$	36,689

Total capitalization		$	205,680		$	217,726

⁽¹⁾: A $1.00 increase or decrease in the assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus) would increase or decrease the net proceeds from this offering available to us and correspondingly increase or decrease the amount of cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. See "Use of Proceeds."

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Dilution

If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock immediately after this offering. Dilution results from the fact that the per share offering price of the common stock is substantially in excess of the book value per share attributable to the existing stockholders for the presently outstanding stock.

Our pro forma net tangible book value as of March 31, 2011 was approximately $ million, or approximately $ per share. Pro forma net tangible book value per share represents the amount of our total tangible assets less the amount of our total liabilities, divided by the number of shares of common stock outstanding at March 31, 2011 after giving effect to our issuance of shares of our common stock to certain of our executive officers pursuant to bonus letter agreements and of shares of our common stock pursuant to the exercise of options by certain selling stockholders for the purpose of selling such shares in this offering.

After giving effect to the sale of shares of common stock in this offering at an assumed initial public offering price of $ per share after deducting underwriting discounts and commissions and estimated expenses payable by us in connection with this offering, our pro forma net tangible book value as of March 31, 2011 would have been approximately $ million, or $ per share of common stock. This represents an immediate increase in pro forma net tangible book value per share of $ to existing stockholders and immediate dilution in pro forma net tangible book value per share of $ to new investors purchasing shares in this offering at the initial public offering price. The following table illustrates this per share dilution to new investors:



Assumed initial public offering price per share		$	$

	Pro forma net tangible book value per share as of March 31, 2011 (after giving effect to the Refinancing Transactions)
	Increase in pro forma net tangible book value per share attributable to this offering
	Pro forma net tangible book value per share as of March 31, 2011 (after giving effect to the Refinancing Transactions and this offering)

Dilution per share to new investors⁽¹⁾		$	$

⁽¹⁾: Dilution is determined by subtracting pro forma net tangible book value per share after giving effect to the Refinancing Transactions and this offering from the initial public offering price paid by a new investor.

The following table summarizes on the same pro forma basis as of March 31, 2011, the number of shares of our common stock purchased from us, the aggregate cash consideration paid to us and the average price per share paid to us by existing stockholders and by new investors purchasing shares in this offering. The table assumes an initial public offering price of $ per share (the midpoint of the range set forth on

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the cover page of this prospectus) after deducting underwriting discounts and commissions and estimated offering expenses payable by us in connection with this offering:



	Shares Purchased
					Total Consideration
					Total Consideration				Average Price Per Share
	Number	Percentage			Amount	Percentage			Average Price Per Share
Existing stockholders				%	$			%	$
New investors
Total			100	%	$		100	%

A $1.00 increase or decrease in the assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus) would increase or decrease our pro forma net tangible book value by $ million, or $ per share, and the dilution in net tangible book value per share to investors in this offering by $ per share, assuming that the number of shares offered by us, as set forth on the cover of this prospectus, remains the same. The as adjusted information is illustrative only, and following the consummation of this offering, will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing.

Except as otherwise indicated, the discussion and tables above assume no exercise of the underwriters' option to purchase additional shares, no exercise of any outstanding options and no sale of common stock by the selling stockholders. The sale of shares of common stock to be sold by the selling stockholders in this offering will reduce the number of shares held by existing stockholders to , or % of the total shares outstanding, and will increase the number of shares held by investors participating in this offering to , or % of the total shares outstanding. If the underwriters' option to purchase additional shares is exercised in full, the number of shares of common stock held by existing stockholders will be further reduced to , or % of the total number of shares of common stock to be outstanding upon the closing of this offering, and the number of shares of common stock held by investors participating in this offering will be further increased to shares or % of the total number of shares of common stock to be outstanding upon the closing of this offering.

The tables and calculations above are based on shares of common stock issued and outstanding as of March 31, 2011 and do not reflect shares of common stock that have been reserved for issuance under our 2004 Stock Option Plan and 2011 Plan (excluding shares of common stock to be issued to certain selling stockholders as described above).

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Selected Historical Consolidated Financial and Operating Data

The following tables set forth our selected historical consolidated financial and operating data as of the dates and for the periods indicated. Our selected historical consolidated financial data as of December 31, 2009 and 2010 and for the years ended December 31, 2008, 2009 and 2010 have been derived from our audited consolidated financial statements that are included elsewhere in this prospectus. Our selected historical consolidated financial data as of December 31, 2008 and as of and for the years ended December 31, 2006 and 2007 have been derived from our audited consolidated financial statements, that are not included in this prospectus. The selected historical consolidated financial data as of March 31, 2011 and for the three months ended March 31, 2010 and 2011 have been derived from our unaudited condensed consolidated financial statements that are included elsewhere in this prospectus and contain all adjustments, consisting of normal recurring adjustments, that management considers necessary for a fair presentation of our financial position, results of operations and cash flows for the periods presented.

The following selected historical consolidated financial and operating data have been retrospectively reclassified to exclude discontinued operations. In March 2008, we exited GeoSport. In April 2010, we sold our 75.5% interest in Bentoliner. In June 2010, we divested U.S. Installation. In July 2010, we closed GSE UK. The presentation of our results includes a reclassification of the financial results of GeoSport, Bentoliner, U.S. Installation and GSE UK to discontinued operations for all periods presented. See note 3, "Discontinued Operations," to our audited consolidated financial statements included elsewhere in this prospectus.

The selected historical consolidated financial and operating data provided below should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus.

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		Years Ended December 31,															Three Months Ended March 31,
		2006			2007			2008			2009			2010			2010			2011
																	(unaudited)
		(in thousands, except per share and volume data)
Consolidated Statement of Operations Data:
Sales		$	317,284		$	345,647		$	408,995		$	291,199		$	342,783		$	55,923		$	88,462
Cost of products			268,675			289,905			356,281			255,442			298,540			53,064			74,008

Gross profit			48,609			55,742			52,714			35,757			44,243			2,859			14,454
Selling, general and administrative expenses			27,797			27,258			27,407			31,776			40,078			7,789			9,343
Amortization of intangibles			5,247			3,564			3,044			2,619			2,284			577			394

Operating income (loss)			15,565			24,920			22,263			1,362			1,881			(5,507	)		4,717
Other expenses (income):
	Interest expense, net of interest income		20,913			23,298			20,819			19,188			19,454			4,741			4,841
	Foreign currency transaction (gain) loss		(190	)		1,013			(413	)		375			(1,386	)		(970	)		1,290
	Change in fair value of derivatives		223			(2,922	)		(2,682	)		210			59			(65	)		—
	Other (income) expense, net		(408	)		2,301			(690	)		(3,031	)		(2,193	)		(680	)		(424	)

Income (loss) from continuing operations
	before income taxes		(4,973	)		1,230			5,229			(15,380	)		(14,053	)		(8,533	)		(990	)
Income tax expense (benefit)			411			4,357			6,414			(4,537	)		(2,069	)		37			127

	Loss from continuing operations		(5,384	)		(3,127	)		(1,185	)		(10,843	)		(11,984	)		(8,570	)		(1,117	)
Income (loss) from discontinued
	operations, net of income taxes		2,871			2,397			(746	)		(2,846	)		(4,428	)		(4,129	)		386

	Net loss		(2,513	)		(730	)		(1,931	)		(13,689	)		(16,412	)		(12,699	)		(731	)
Non-controlling interest in consolidated subsidiary			—			(109	)		14			(51	)		25			25			—

Net loss attributable to GSE Holding, Inc.		$	(2,513	)	$	(839	)	$	(1,917	)	$	(13,740	)	$	(16,387	)	$	(12,674	)	$	(731	)

Net loss per share:
	Basic and diluted(1)	$	(0.84	)	$	(0.28	)	$	(0.64	)	$	(4.60	)	$	(5.49	)	$	(4.24	)	$	(0.24	)
Weighted average number of shares of common stock used in computing net loss per shares:
	Basic and diluted		2,985			2,985			2,985			2,985			2,985			2,985			2,985
Other Financial Data (unaudited):
Adjusted gross margin(2)			18.0	%		18.6	%		15.2	%		15.4	%		15.6	%		9.2	%		19.0	%
Adjusted EBITDA(3)		$	36,170		$	41,220		$	39,131		$	21,746		$	28,424		$	(290	)	$	9,775
Capital expenditures			7,037			6,973			5,836			2,842			3,337			380			1,747
Operating Data (unaudited):
Volume shipped (thousands of pounds)			310,489			331,952			339,251			298,620			337,811			61,498			74,982



											As of March 31, 2011
	As of December 31,										As of March 31, 2011
	As of December 31,												As Adjusted(4)
	2006		2007		2008		2009		2010		Actual		As Adjusted(4)
	(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	13,691	$	13,386	$	6,740	$	20,814	$	15,184	$	7,557	$
Accounts receivable, net		79,495		81,849		68,397		48,822		69,661		64,097
Inventories, net		40,323		50,359		68,080		39,277		56,020		67,612
Total assets		330,954		333,624		320,100		258,010		278,451		277,606
Total debt, including current portion		179,875		185,767		189,959		155,849		182,329		174,002
Total stockholders' equity		71,525		75,205		68,962		58,259		36,778		39,235

(1): We recorded a net loss in each of the periods presented. Potential common shares are anti-dilutive in periods in which we record a net loss because they would reduce the respective period's net loss per share. Anti-dilutive potential common shares are excluded from the calculation of diluted earnings per share. As a result, diluted net loss per share was equal to basic net loss per share in each of the periods presented.
(2): Adjusted gross margin represents the difference between sales and cost of products, excluding depreciation expense included in cost of products, divided by sales and, accordingly, does not take into account the non-cash impact of depreciation expense included in the cost of products of $9.4 million, $9.1 million and $9.1 million in 2008, 2009 and 2010, respectively, and of $2.3 million in each of the three months ended March 31, 2010 and 2011.

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(3): Adjusted EBITDA represents net loss before interest expense, income tax expense, depreciation and amortization of intangibles, change in the fair value of derivatives, loss (gain) on foreign currency transactions, restructuring expenses, extraordinary and non-recurring professional fees, stock-based compensation expense, loss (gain) on asset sales and management fees paid to CHS. Disclosure in this prospectus of Adjusted EBITDA, which is a "non-GAAP financial measure," as defined under the rules of the Securities and Exchange Commission, or SEC, is intended as a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA should not be considered as an alternative to net income, income from continuing operations or any other performance measure derived in accordance with GAAP. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by unusual or non-recurring items.

We believe this measure is meaningful to our investors to enhance their understanding of our financial performance. Although Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs, we understand that it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance and to compare our performance with the performance of other companies that report Adjusted EBITDA. Adjusted EBITDA should be considered in addition to, not as a substitute for, net income, income from continuing operations and other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. The following table reconciles net loss from continuing operations to Adjusted EBITDA for the periods presented in this table and elsewhere in this prospectus.



	Year Ended December 31,															Three Months Ended March 31,
	2006			2007			2008			2009			2010			2010			2011
	(in thousands)
Net loss attributable to GSE Holding, Inc.	$	(2,513	)	$	(839	)	$	(1,917	)	$	(13,740	)	$	(16,387	)	$	(12,674	)	$	(731	)
(Income) loss from discontinued operations, net of income taxes		(2,871	)		(2,397	)		746			2,846			4,428			4,129			(386	)
Interest expense, net of interest rate swap		22,638			24,641			20,398			18,005			18,935			4,395			4,841
Income tax expense (benefit)		411			4,357			6,414			(4,537	)		(2,069	)		37			127
Depreciation and amortization expense		14,495			13,016			13,219			12,703			12,700			3,181			3,045
Change in the fair value of derivatives(a)		223			(2,922	)		(2,682	)		210			59			(65	)		—
Foreign currency transaction (gain) loss(b)		(190	)		1,013			(413	)		375			(1,386	)		(970	)		1,290
Restructuring expense(c)		344			—			—			1,444			1,096			268			355
Professional fees(d)		—			655			262			1,436			8,904			894			651
Stock-based compensation expense(e)		223			200			450			28			67			14			75
Management fees(f)		2,147			2,001			2,004			2,004			2,019			501			500
Other(g)		1,263			1,495			650			972			58			—			8

Adjusted EBITDA	$	36,170		$	41,220		$	39,131		$	21,746		$	28,424		$	(290	)	$	9,775

(a): Represents the mark-to-market change in the value of three interest rate swaps, including one entered into in July 2010 in connection with our German revolving credit facility, one entered into in January 2005 and one in June 2009, each as a mechanism to convert $75.0 million of fixed rate debt to variable rate debt.
(b): Primarily related to gains and losses incurred on purchases, sales, intercompany loans and dividends denominated in non-functional currencies.
(c): Represents severance costs primarily related to the restructuring and productivity improvement programs we adopted during the fourth quarter of 2009.
(d): Represents consulting and other advisory fees related to the consent solicitation in 2007, recruiting a new chief executive officer in 2008 and 2009 and the restructuring and productivity improvement programs adopted by us during the fourth quarter of 2009, which primarily consists of fees related to the engagement of an independent consulting firm that specializes in performance improvements for portfolio companies of private equity firms.
(e): Represents the compensation expense attributable to each respective period based on the calculated value of employee stock options.
(f): Represents management fees that will terminate in connection with this offering. See "Certain Relationships and Related Party Transactions — Management Agreement."
(g): 2006, 2007, 2008 and 2009 include $0.9 million in legal fees and expenses, $1.5 million of consent solicitation fee, $0.6 million of disaster recovery expense associated with Hurricane Ike and $1.0 million of death benefits paid to the estate of our former President and Chief Executive Officer, respectively. Otherwise, relates to gains and losses on asset sales.

(4): As adjusted to reflect (i) the refinancing of our senior notes as described in "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Refinancing Transactions; Description of Long-Term Indebtedness," (ii) our one-time payment of $3.0 million to CHS IV, in consideration for the termination of the management agreement between us and CHS IV, as described in "Certain Relationships and Related Party Transactions — Management Agreement," (iii) the issuance of shares of common stock by us in this offering and (iv) the application of the net proceeds from this offering as set forth in "Use of Proceeds."

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Management's Discussion and Analysis
of Financial Condition and Results of Operations

You should read this discussion together with our consolidated financial statements and the related notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly in "Forward-Looking Statements" and "Risk Factors."

Overview

We are the leading global provider of highly engineered geosynthetic containment solutions for environmental protection and confinement applications. Our products are used in a wide range of infrastructure end markets such as mining, waste management, liquid containment (including water infrastructure, agriculture and aquaculture and industrial wastewater management), coal ash containment and shale oil and gas. We are one of the few providers with the full suite of products required to deliver customized solutions for complex projects on a global basis, including geomembranes, drainage products, geosynthetic clay liners, or GCLs, nonwoven geotextiles, and specialty products. We have a global infrastructure that includes seven manufacturing facilities located in the United States, Germany, Chile, Egypt and Thailand, 18 regional sales offices located in 12 countries and engineers and technical salespeople located on four continents. We generate the majority of our sales outside of the United States, including in high-growth emerging markets in Asia, Latin America, Africa and the Middle East. Our comprehensive product offering and global infrastructure, along with our deep relationships with customers and end-users, provide us with access to high-growth markets worldwide and the flexibility to serve customers regardless of project location.

Sales. We derive our sales from selling innovative and reliable geosynthetic solutions that have been customized from our broad product offering, including geomembranes, drainage products, GCLs, nonwoven geotextiles and specialty products. We focus primarily on the global mining, waste management and liquid containment end markets, and are developing new end markets such as coal ash containment and shale oil and gas. Our products are used in a variety of material containment and environmental protection applications by end-users in these industries, including some of the largest mining, waste management, power and other civil and industrial infrastructure companies in the world. In 2010, we served over 1,300 customers and no single customer generated more than 5% of our total sales.

Depending on the size and complexity of the application, we may identify opportunities for new projects years before we ultimately deliver our products. During this time, the project owners typically conduct feasibility analyses and arrange funding for the project while our engineering and sales personnel work with the project's design engineers to advise on the technical details of the geosynthetic solution required for the project. Before construction commences, our customers may issue requests for proposals, or RFPs, which establish certain specifications for the desired geosynthetic products, including design and performance criteria based on our advice. We respond to these RFPs by proposing product specifications for our geosynthetic solutions, providing details regarding production and anticipated delivery schedules and stipulating contractual terms such as product pricing. By leveraging our customer relationships, reputation for quality and innovation, full product breadth and engineering capabilities to work with end-users during the planning phase of these large and complex projects, our products are often specified for a project prior to the issuance of a RFP. This means that our customers often indicate in their RFPs that only GSE products may be used for a particular application, whether by identifying characteristics of our products that our competitors cannot manufacture or by expressly specifying our brand name. Similarly, in many instances our customers choose to work exclusively with us on a particular application, bypassing the RFP process altogether.

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Our sales from major projects depends, in part, on the level of capital expenditures in our principal end markets. The number of such projects we win in any particular year fluctuates, and is dependent on the number of projects available and our ability to bid successfully for such projects. Negotiations with our customers are complex and frequently involve a lengthy bidding and selection process, which is affected by a number of factors, such as competitive position (including the timing of our introduction to a project and our relationships to those involved in the project), market conditions, financing arrangements and required governmental approvals. We do not typically enter into long-term contracts with our customers; rather, we receive orders from our customers that contractually govern our participation in a project.

In North America during 2010, an average order represented $152,000 of sales for us and required between two and four weeks to deliver, though our largest order in 2010 represented $2.7 million of sales.

Cost of products. Cost of products is our primary operating expense, accounting for 87.1%, 87.8% and 87.1% of our sales for the years ended December 31, 2008, 2009 and 2010, respectively. Cost of products includes primarily the direct cost of raw materials and labor used in the manufacture of our products as well as indirect costs such as labor, depreciation, insurance, supplies, tools, repairs and shipping and handling. Our principal products are manufactured primarily from specially formulated high-grade polyethylene resins with chemical additives that enable the end product to better resist weathering, ultraviolet degradation, and chemical exposure. High-density polyethylene, or HDPE, is our primary raw material. We also use linear low density polyethylene, or LLDPE, polypropylene and blow molding resin. Raw material costs represented 74.4%, 70.0% and 72.3% of our total cost of products for the years ended December 31, 2008, 2009 and 2010, illustrating the importance of effectively managing material costs to maintaining stable levels of profitability.

Selling, general and administrative expenses

Selling, general and administrative, or SG&A, expenses represent overhead costs associated with support functions such as finance, human resources, legal, information technology and sales and marketing costs. Primary drivers of SG&A expenses include personnel costs, severance costs and sales force commissions. Selling, general and administrative expenses were 6.7%, 10.9% and 11.7% of sales for the years ended December 31, 2008, 2009 and 2010, respectively. The years ended December 31, 2009 and 2010 were impacted by professional fees and restructuring costs.

Discontinued operations

The discussion below of our results of operations excludes the impact of the following discontinued operations for all periods presented:

•: In March 2008 we exited GeoSport, our geosynthetic turf business;
•: In April 2010 we sold our 75.5% interest in GSE Bentoliner (Canada);
•: In June 2010 we divested U.S. Installation; and
•: In July 2010 we closed GSE UK, our manufacturing facility in the United Kingdom.

The presentation of our results for 2008 includes a reclassification of the financial results of GeoSport, Bentoliner, U.S. Installation and GSE UK to discontinued operations. The presentation of our results for 2009, 2010 and the three months ended March 31, 2010 includes a reclassification of the financial results of Bentoliner, U.S. Installation and GSE UK to discontinued operations. See note 3, "Discontinued Operations," to our audited consolidated financial statements included elsewhere in this prospectus.

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Segment data

We have organized our operations into two principal reporting segments: North America, which represents the United States, Canada and Mexico; and International, which represents the rest of our global operations. For the years ended December 31, 2008, 2009 and 2010 we derived 55%, 53% and 58%, respectively, of our sales and 49%, 29% and 26%, respectively, of our gross profit from our International segment. We generate a greater proportion of our gross profit, as compared to our sales, in our North America segment because our product mix in this segment is focused on higher-margin products. We expect the percentage of total gross profit derived from outside North America to increase in future periods as we continue to focus on selling these higher-value products in our International segment. For the three months ended March 31, 2011, we derived 51.0% of our sales and 28.4% of our gross profit from our International segment. We expect the percentage of sales derived from outside North America to increase in future periods as we continue to expand globally. See note 17, "Segment Information," to our audited consolidated financial statements included elsewhere in this prospectus.

Key Drivers

The following are the key drivers of our business:

Timing of Projects. Our financial results are influenced by the timing of projects that are developed and constructed by the end-users of our products in our primary end markets, including mining, waste management and liquid containment.

Mining projects and associated capital expenditures are driven by global commodity supply and demand factors. Our products are used primarily in metal mining, including copper, silver, uranium and gold. Metal mining projects are typically characterized by long lead times and large capital investment by the owners of the projects. In addition, these projects are often located in remote geographies with limited infrastructure, such as power and roads, creating complex logistics management requirements and long supplier lead times.

In our waste management end market, landfill construction and expansion projects are driven by waste volume generation and the need for additional municipal solid waste disposal resources. In developed markets, landfill construction and expansion projects are influenced by economic factors, particularly retail sales and consumer spending, housing starts and commercial and infrastructure construction. In emerging markets, waste management projects are also driven primarily by increased per capita GDP, which is positively correlated with waste generation, as well as by increasing environmental awareness and regulation, as discussed further below.

Finally, projects in our liquid containment end markets, including water management infrastructure, agriculture and aquaculture and industrial wastewater treatment applications, are driven by investment in civil and industrial infrastructure globally. This global spending is influenced by increased urbanization, increased wealth and protein-rich diets in developing economies necessitating higher levels of food production, population growth and other secular and economic factors, in both developed and emerging markets.

Environmental Regulations. Our business is influenced by international levels of environmental regulation and mandated geosynthetics specifications, which vary across jurisdictions and by end market. For example, China has addressed the need for increased environmentally sound, solid waste disposal resources in its twelfth five-year plan, the most recent in a series of economic development initiatives, which mandates the investment of 180 billion Yuan, or approximately $28 billion, in the urban waste disposal sector between 2011 and 2015. Environmental regulations often require the use of geosynthetic products to contain materials and protect groundwater in various types of projects. In emerging markets, waste management and water infrastructure projects are driven by an ongoing increase in environmental awareness and regulation that has developed through the continued urbanization and increased affluence of these economies.

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Although environmental regulations may not be as stringent or may not be enforced in emerging markets, we believe these regulations will continue to develop and to be enforced more diligently. In developed markets, existing regulations, which often specify our products, tend to be highly specific and stringently enforced. As a result, regulatory changes in developed markets tend to impact new end markets, such as coal ash containment in the United States.

Seasonality. Due to the significant amount of our projects in the northern hemisphere (North America and Europe), our operating results are impacted by seasonal weather patterns in these markets. Our sales in the first and fourth quarters of the calendar year have historically been lower than sales in the second and third quarters. This is primarily due to lower activity levels in our primary end markets during the winter months in the northern hemisphere. The impact of this seasonality is partially mitigated by our mining and liquid containment end markets, which are located predominantly in the southern hemisphere. As our mining end market becomes a greater source of our sales, we expect seasonality to be further mitigated.

Resin Cost Volatility. Resin-based material, derived from crude petroleum and natural gas, accounted for 74.4%, 70.0% and 72.3% of our cost of products for the years ended December 31, 2008, 2009 and 2010, respectively. Our ability to both manage the cost of our resin purchases as well as pass fluctuations in the cost of resin through to our customers is critical to our profitability. Fluctuations in the price of crude oil impact on cost of resin. In addition, planned and unplanned outages in facilities that produce polyethylene and its feedstock materials have historically impacted the cost of resin. In 2010, we implemented successful performance initiatives that focused on reducing the risk of volatility in resin costs on our profitability. We have developed policies, procedures, tools and organizational training procedures to enable better resin cost management and facilitate the efficient pass through of increases in our resin costs to our customers. These initiatives included diversifying our resin sources, hiring a polyethylene expert to lead procurement, implementing pricing tools that account for projected resin pricing, institutionalizing a bid approval process, creating a plant sourcing decision model, and running a large project tracking process. As a result of these policies, we successfully managed volatile resin prices between June 2010 and May 2011, when polyethylene resin prices fluctuated 23.1% between $0.78 per pound and $0.96 per pound, according to publicly available CID data. While the significant majority of our products are sold under orders that include 30-day re-pricing provisions at our option, and while we have taken advantage of this option in the past, the policies, processes, tools and organizational training procedures described above allow us to limit the need to re-price projects already under contract. This, in turn, helps us better manage our relationships with our customers. We believe that managing the risks associated with volatility in resin costs is now among our critical and core competencies.

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Results of Operations

The following table sets forth the components of our consolidated statements of operations as a percentage of sales for the periods indicated.



		Year Ended December 31,									Three Months Ended March 31
		2008			2009			2010			2010			2011
Sales			100	%		100	%		100	%		100	%		100	%
Cost of products			87			88			87			95			84

	Gross profit		13			12			13			5			16
Selling, general and administrative expenses			7			11			11			14			11
Amortization of intangibles			1			1			1			1			—

	Operating income (loss)		5			—			1			(10	)		5
Other expenses (income):
	Interest expense, net of interest income		5			6			6			8			5
	Foreign exchange (gain) loss		—			—			—			(2	)		1
	Change in fair value of derivatives		(1	)		—			—			—			—
	Other income, net		—			(1	)		(1	)		(1	)		—

Income (loss) from continuing operations before income taxes			1			(5	)		(4	)		(15	)		(1	)
Income tax expense (benefit)			1			(1	)		(1	)		—			—

	Loss from continuing operations		—			(4	)		(3	)		(15	)		(1	)

Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010

The following table sets forth our consolidated statements of operations for the three months ended March 31, 2011 and 2010.



		Three Months Ended March 31,
		Three Months Ended March 31,						Period over Period Change
		2010			2011			Period over Period Change
		(unaudited) (in thousands)
Sales		$	55,923		$	88,462		$	32,539		58	%
Costs of products			53,064			74,008			20,944		39

	Gross profit		2,859			14,454			11,595		406
Selling, general and administrative expenses			7,789			9,343			1,554		20
Amortization of intangibles			577			394			(183	)	32

	Operating (loss) income		(5,507	)		4,717			10,224		186
Other expenses (income):
	Interest expense, net of interest income		4,741			4,841			100		2
	Foreign currency transaction (gain) loss		(970	)		1,290			2,260		233
	Change in fair value of derivatives		(65	)		—			65		100
	Other income, net		(680	)		(424	)		256		38

Loss from continuing operations before income taxes			(8,533	)		(990	)		7,543		88
Income tax expense			37			127			90		243

	Loss from continuing operations	$	(8,570	)	$	(1,117	)	$	7,453		87	%

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Sales

Sales increased $32.5 million, or 58.2%, to $88.5 million for the three months ended March 31, 2011 from $55.9 million for the three months ended March 31, 2010. Volume shipped (pounds), which excludes our GCL products, increased 26.9% year over year. Volume increases contributed approximately $15.0 million to the increase in sales. Increases in sales prices, in response to higher raw material costs, contributed $17.5 million to the increase in sales. We experienced growth in each of our end markets including solid waste, mining, liquid containment, coal ash and other specialty products.

North American sales were $43.4 million for the three months ended March 31, 2011 compared to $21.3 million for the three months ended March 31, 2010, an increase of $22.1 million, or 103.8%. The increase in sales was due to increases in the number of projects in our primary end markets, improved market share in high end drainage products, and higher volume requirements with existing large customers. North American sales were also positively affected by increased sales of specialty products sold to private customers at negotiated prices. In addition, GCL sales increased approximately $7.2 million in 2011 which was more than 400% of 2010 sales.

International sales increased $10.5 million, or 30.3%, to $45.1 million for the three months ended March 31, 2011, as compared to $34.6 million for the three months ended March 31, 2010. Sales to emerging markets increased $10 million, or 69%, driven primarily by increased mining activity, particularly in Chile.

Cost of Products

Cost of products increased $20.9 million, or 39.5%, to $74.0 million for the three months ended March 31, 2011 from $53.1 million for the three months ended March 31, 2010. The increase in cost of products during the three months ended March 31, 2011 was due to the increase in volume shipped coupled with the increase in raw material costs.

Gross Profit

Gross profit for the three months ended March 31, 2011 increased $11.6 million to $14.5 million compared to $2.9 million for the three months ended March 31, 2010. Gross profit as a percentage of sales was 16.3% for the three months ended March 31, 2011, compared with 5.1% for the three months ended March 31, 2010. The increase in gross profit was the result primarily of improved pricing and supply chain practices. During 2010, we implemented a margin management tool which significantly improved the pricing of our products in relation to market conditions and raw material prices. See note 3, "Discontinued Operations," to our audited consolidated financial statements and note 2, "Discontinued Operations," to our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

North American gross profit was $10.4 million for the three months ended March 31, 2011 compared to $2.4 million for the three months ended March 31, 2010, an increase of $8.0 million. The increase in gross profit was due to a 45.6% increase in volume shipped during the three months ended March 31, 2011, higher margins on the sale of specialty products sold to private customers at negotiated prices and additional gross margin resulting from the increase in the sale of GCL products in the three months ended March 31, 2011. North American gross profit as a percentage of sales was 24.0% for the three months ended March 31, 2011 compared to 11.3% for the three months ended March 31, 2010.

International gross profit was $4.1 million for the three months ended March 31, 2011, an increase of $3.6 million, compared to the gross profit of $0.5 million for the three months ended March 31, 2010. The improvement in International gross profit during the three months ended March 31, 2011 was due to increased sales volumes and improved unit margins, primarily related to our textured product sales in China and Australia. International gross profit as a percentage of sales was 9.1% for the three months ended March 31, 2011 compared to 1.3% for the three months ended March 31, 2010.

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Selling, General and Administrative Expenses

SG&A expenses for the three months ended March 31, 2011 were $9.3 million compared to $7.8 million for the three months ended March 31, 2010, an increase of $1.5 million, or 20.0%. The increase in SG&A expenses for the three months ended March 31, 2011 was driven primarily by higher personnel costs, including increases in incentive compensation of $0.6 million, increases in severance expense of $0.3 million and increases in sales force commissions of $0.3 million as compared to the three months ended March 31, 2010. SG&A as a percentage of sales was 10.6% and 13.9% for the three months ended March 31, 2011 and 2010, respectively.

Other Expenses (Income)

Amortization of intangibles was $0.4 million for the three months ended March 31, 2011 compared to $0.6 million for the three months ended March 31, 2010. The decrease was related primarily to the normal decline in amortization because amortization expense is primarily calculated using an accelerated method, which results in less amortization expense in the later stages of the original estimated useful lives.

Interest expense was $4.8 million for the three months ended March 31, 2011 compared to $4.7 million for the three months ended March 31, 2010. The $0.1 million increase in interest expense over the three months ended, March 31, 2011 was due to our old revolving credit facility having higher balances outstanding during the three months ended March 31, 2011 as compared to the three months ended March 31, 2010. Weighted average debt balance outstanding was $173.2 million and $159.1 million for the three months ended March 31, 2011 and 2010, respectively; effective interest rates were 11.2% and 11.9% for March 31, 2011 and 2010, respectively.

Foreign currency transaction loss was $1.3 million for the three months ended March 31, 2011 compared to a foreign currency transaction gain of approximately $1.0 million for the three months ended March 31, 2010. The $2.3 million decrease for the three months ended March 31, 2011 was due to unfavorable currency exchange rates, primarily related to the Euro, compared to the three months ended March 31, 2010.

There was no change in the fair value of derivatives during the three months ended March 31, 2011 as a result of the counter party to our interest rate swap exercising its optional early termination provision of the agreement during the second quarter of 2010.

Other income was $0.4 million for the three months ended March 31, 2011 compared to $0.7 million for the three months ended March 31, 2010. Other income for the three months ended March 31, 2011 and 2010 includes $0.4 million and $0.3 million, respectively, related to discounts offered by our vendors for early payments. Other income for the three months ended March 31, 2010 also includes $0.3 million of net interest income related to the interest rate swap. See note 10, "Fair Value of Financial Instruments," to our audited consolidated financial statements included elsewhere in this prospectus.

Income Tax Expense

Income tax expense from continuing operations for the three months ended March 31, 2011 was $0.1 million compared to less than $0.1 million for the three months ended March 31, 2010. Our provision for income taxes is recorded at the estimated annual effective tax rates for each tax jurisdiction based on fiscal year to date results. For the three months ended March 31, 2011 and 2010, our effective tax rates were (12.8%) and (0.4%), respectively. The difference in the effective tax rate compared with the U.S. federal statutory rate is due to the mix of the international jurisdictional rates and the changes in valuation allowance.

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Year Ended December 31, 2010 Compared to Year Ended December 31, 2009



		Year Ended December 31,
		Year Ended December 31,						Period over Period Change
		2009			2010			Period over Period Change
		(in thousands)
Sales		$	291,199		$	342,783		$	51,584		18	%
Cost of products			255,442			298,540			43,098		17

	Gross profit		35,757			44,243			8,486		24
Selling, general and administrative expenses			31,776			40,078			8,302		26
Amortization of intangibles			2,619			2,284			(335	)	13

	Operating income		1,362			1,881			519		38
Other expenses (income):
	Interest expense, net of interest income		19,188			19,454			266		1
	Foreign currency transaction (gain) loss		375			(1,386	)		(1,761	)	470
	Change in fair value of derivatives		210			59			(151	)	72
	Other (income), net		(3,031	)		(2,193	)		838		28

Loss from continuing operations before income taxes			(15,380	)		(14,053	)		1,327		9
Income tax (benefit)			(4,537	)		(2,069	)		2,468		54

	Loss from continuing operations	$	(10,843	)	$	(11,984	)	$	(1,141	)	11	%

Sales

Sales increased $51.6 million, or 17.7%, to $342.8 million for the year ended December 31, 2010 compared to $291.2 million for the year ended December 31, 2009. Units shipped (pounds), which excludes our GCL products, increased 14.5% year over year. Volume increases attributed approximately $40.4 million to the increase in sales, primarily due to the positive worldwide economic climate. Many projects that were delayed in 2009 began manufacturing and shipping in 2010. During 2010, increased sales in the mining and coal ash markets were partially offset by declines in the solid waste market. Increases in sales prices, in response to higher raw material costs, contributed $19.2 million to the year over year sales increase. These increases were partially offset by a decrease of approximately $8.0 million from changes in foreign currency exchange rates, principally from the Euro.

North American sales were $143.0 million for the year ended December 31, 2010, compared to $137.5 million for the year ended December 31, 2009, an increase of approximately $5.5 million, or 4.0%. Increased sales in the mining, coal ash and other specialty products end markets were partially offset by declines in solid waste and liquid containment market applications.

International sales increased $46.1 million, or 30.0%, to $199.8 million for the year ended December 31, 2010, from $153.7 million for the year ended December 31, 2009. International sales volumes increased due to increased activity in Africa and China coupled with improved demand in the mining industry in Latin America.

Cost of Products

Cost of products increased $43.1 million, or 16.9%, to $298.5 million for the year ended December 31, 2010 compared to $255.4 million for the year ended December 31, 2009. The increase in cost of products during 2010 was due to an increase in sales volumes and the increase in raw material costs.

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Gross Profit

Gross profit for the year ended December 31, 2010 increased $8.5 million, or 23.7%, to $44.2 million compared to $35.8 million for the year ended December 31, 2009. Gross profit as a percentage of sales was 12.9% for 2010, compared to 12.3% for 2009. During 2010, we implemented a margin management tool which significantly improved the pricing of our products in relation to market conditions and raw material prices.

North American gross profit was $24.0 million in 2010 compared to $25.4 million in 2009, a decrease of $1.4 million, or 5.5%. The decrease in gross profit was due to the increase in resin prices and the lag in corresponding price increases during the first half of 2010. North American gross profit as a percentage of sales was 16.8% in 2010 compared to 18.5% in 2009.

International gross profit was $20.2 million in 2010, an increase of $9.8 million, or 94.2%, compared to the gross profit of $10.4 million in 2009. The improvement in international gross profit in 2010 was due to increased sales volumes and improved margins. International gross profit was negatively affected by a decrease of $1.3 million related changes in foreign currency exchange rates. International gross profit as a percentage of sales was 10.1% in 2010 compared to 6.8% in 2009.

Selling, General and Administrative Expenses

SG&A expenses for the year ended December 31, 2010 were $40.1 million compared to $31.8 million for the year ended December 31, 2009 million, an increase of $8.3 million or 26.1%. SG&A expenses for the year ended December 31, 2010 include professional fees of $8.9 million and severance costs of $1.0 million related to the restructuring and productivity improvement programs we adopted during the fourth quarter of 2009. SG&A expenses also include $1.5 million management incentive program costs and an increase of approximately $0.9 million in sales force commissions relating to the introduction of the 2010 commission compensation program. Professional fees of $8.9 million include $8.3 million related to the engagement of A&M, an independent consulting firm, which specializes in private equity portfolio company performance improvement. A&M was an integral part of the detailed productivity and efficiency review and assessment of our operations.

SG&A expenses for 2009 included an additional provision for doubtful accounts of $1.7 million related to uncertainty of collections in the economic downturn, professional fees of $1.7 million related to the restructuring and productivity improvement programs, severance related costs of $1.2 million, and $1.0 million related to the death benefits payable to the estate of our former President and Chief Executive Officer, who passed away during 2009.

SG&A expenses were 11.7% and 10.9% of sales for the years ended December 31, 2010 and 2009, respectively.

Other Expenses (Income)

Amortization of intangibles was $2.3 million for the year ended December 31, 2010 compared to $2.6 million for the year ended December 31, 2009. The decrease during 2010 was related primarily to the normal decline in amortization as amortization expense is primarily calculated using an accelerated method which results in less amortization expense in the later stages of the original estimated useful lives.

Interest expense was $19.5 million for the year ended December 31, 2010 compared to $19.2 million for the year ended December 31, 2009. The $0.3 million increase in interest expense during 2010 was due to increased interest expense relating to our old revolving credit facility having higher balances outstanding during 2010 compared to 2009. Weighted average debt balance outstanding was $169.8 million and $168.6 million in 2010 and 2009, respectively. The effective interest rates were 11.5% and 11.4% for 2010 and 2009, respectively.

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Gains from foreign currency transactions were $1.4 million for the year ended December 31, 2010 compared to losses of $0.4 million for the year ended December 31, 2009. The $1.8 million change was due to unfavorable currency exchange rates, primarily related to the Euro, during 2010 compared to 2009.

The change in the fair value of derivatives was an expense of $0.1 million for the year ended December 31, 2010 compared to $0.2 million for the year ended December 31, 2009 due to the net change in the mark-to-market value of our interest rate swap.

Other income was $2.2 million for the year ended December 31, 2010 compared to $3.0 million for the year ended December 31, 2009. Other income for the year ended December 31, 2010 and 2009 includes $1.6 million and $0.8 million, respectively, related to discounts offered by our vendors for early payments, and $0.5 million and $1.2 million, respectively, related to the interest rate swap. Other income in 2009 also includes $0.8 million of business interruption insurance proceeds.

Income Tax Benefit

Income tax benefit from continuing operations for the year ended December 31, 2010 was $2.1 million compared to $4.5 million for the year ended December 31, 2009. Our provision for income taxes is recorded at statutory rates for each tax jurisdiction based on total fiscal year to date results, adjusted for certain permanent differences. For the years ended December 31, 2010 and 2009, our effective income tax rates were 14.7% and 29.5%, respectively. The difference in the effective tax rate compared with the U.S. federal statutory rate was due to the mix of the international jurisdictional rates and the increase in the valuation allowance on our foreign tax credit and net operating loss carryforward.

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008



		Year Ended December 31,
		Year Ended December 31,						Period over Period Change
		2008			2009			Period over Period Change
		(in thousands)
Sales		$	408,995		$	291,199		$	(117,796	)	29	%
Cost of products			356,281			255,442			(100,839	)	28

	Gross profit		52,714			35,757			(16,957	)	32
Selling, general and administrative expenses			27,407			31,776			4,369		16
Amortization of intangibles			3,044			2,619			(425	)	14

	Operating income		22,263			1,362			(20,901	)	94
Other expenses (income):
	Interest expense, net of interest income		20,819			19,188			(1,631	)	8
	Foreign currency transaction (gain) loss		(413	)		375			788		191
	Change in fair value of derivatives		(2,682	)		210			2,892		108
	Other income, net		(690	)		(3,031	)		(2,341	)	341

Loss from continuing operations before income taxes			5,229			(15,380	)		(20,609	)	394
Income tax expense (benefit)			6,414			(4,537	)		(10,951	)	171

	Loss from continuing operations	$	(1,185	)	$	(10,843	)	$	(9,658	)	815	%

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Sales

Sales decreased $117.8 million, or 28.8%, to $291.2 million for the year ended December 31, 2009 compared to $409.0 million for the year ended December 31, 2008. Units shipped (pounds), which excludes our GCL products, decreased 12.2% year over year. Volume decreases attributed approximately $50.0 million to the decline in sales, primarily due to the global economic downturn which curtailed spending dramatically in all regions of the world. Decreases in sales prices, in response to lower raw material costs, attributed $63.0 million to the decline in sales. Sales were also negatively impacted by approximately $4.8 million from changes in foreign currency exchange rates, principally from the Euro.

North American sales were $137.5 million for the year ended December 31, 2009 compared to $183.7 million for the year ended December 31, 2008, a decrease of $46.2 million, or 25.1%. The decrease in sales was due to decreases in product sales prices of approximately $25.7 million due to lower raw material costs and a decrease in sales volumes of approximately $20.5 million. The decrease sales volumes was primarily due to Mexico, where there is higher than average exposure to large mining projects and a lower than average exposure to landfill projects. Mining activity tends to be more cyclical than landfill projects, causing larger variances in unit volume for these regions. North America also experienced declines in its liquid containment market.

International sales decreased $71.6 million, or 31.8%, to $153.7 million for the year ended December 31, 2009, compared to $225.3 million for the year ended December 31, 2008. The decrease in sales was due to decreases in product sales prices of approximately $37.3 million due to lower raw material costs, a decrease in sales volumes of approximately $29.5 million related to the global economic downturn and a decrease of approximately $4.8 million from changes in foreign currency exchange rates, principally from the Euro.

Cost of products

Costs of products decreased $100.8 million, or 28.3%, to $255.4 million for the year ended December 31, 2009 compared to $356.3 million for the year ended December 31, 2008. The decrease in costs of products during 2009 was due to a decrease in sales volumes and the decrease in the costs of raw materials.

Gross Profit

Gross profit for the year ended December 31, 2009 decreased $17.0 million, or 32.2%, to $35.8 million compared to $52.7 million for the year ended December 31, 2008. Gross profit as a percentage of sales was 12.3% for 2009, compared to 12.9% for 2008. Raw material prices dramatically fell at the end of the fourth quarter of 2008 and throughout the first quarter of 2009. Due to the weighted average cost method, which approximates the first-in, first-out method of accounting for inventory, raw material costs lag prevailing market prices by approximately two months. This resulted in high raw material costs in the first quarter of 2009, as higher cost inventory was consumed. The sharp fall in raw material costs was realized in the second quarter of 2009, which led to a quarter with abnormally high gross margins. Raw material prices (and costs) increased slightly in the third and fourth quarters of 2009, however, and we were not able to achieve adequate selling prices to maintain gross profit.

During the year ended December 31, 2009, North American gross profit was $25.4 million, a decrease of $1.4 million, or 5.2% when compared to $26.8 million for 2008. The decrease in gross profit in North America was due to a decrease of 11.2% in sales volumes. North America benefited from several large, high-margin projects in 2009 which helped maintain gross profit, in particular, with two large United States customers.

International gross profit decreased $15.5 million or 59.8% to $10.4 million during the year ended December 31, 2009 compared to $25.9 million for the year ended December 31, 2008. The decrease in

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International gross profit in operations was due a 13.1% decrease in sales volumes and a decrease of approximately $0.3 million from changes in foreign currency exchange rates, principally the Euro.

Selling, General and Administrative Expenses

SG&A expenses for the year ended December 31, 2009 were $31.8 million compared to $27.4 million for the year ended December 31, 2008, an increase of $4.4 million or 15.9%. SG&A increased during 2009 due to an additional provision for doubtful accounts of $1.7 million, professional fees of $1.7 million related to the restructuring and productivity improvement programs, severance related costs of $1.4 million, and $1.0 million related to the death benefits payable to the estate of our former President and Chief Executive Officer, who passed away during 2009. These increases were partially offset by a decrease of $0.4 million due to the net weakening of the functional currencies of our foreign operations against the U.S. dollar and a decrease of $0.4 million in the North America operations related to stock based compensation when compared to 2008. Excluding the aforementioned items from our calculations for the 2009 period, ongoing SG&A costs decreased $0.4 million during 2009 compared to 2008.

SG&A expenses were 10.9% and 6.7% of sales for the years ended December 31, 2009 and 2008, respectively.

Other Expenses (Income)

Amortization of intangibles was $2.6 million for the year ended December 31, 2009 compared to $3.0 million for the year ended December 31, 2008. The decrease during 2009 was related primarily to the normal decline in amortization, as amortization expense is primarily calculated using an accelerated method which results in less amortization expense in the later stages of the original estimated useful lives.

Interest expense was $19.2 million for the year ended December 31, 2009 compared to $20.8 million for the year ended December 31, 2008. The $1.6 million decrease in interest expense during 2009 was due to reduced interest expense relating to our old revolving credit facility having lower balances outstanding coupled with lower effective interest rates during 2009 and a decrease in interest expense for international operations due to reduced borrowings on credit facilities.

Foreign currency transaction loss was $0.4 million for the year ended December 31, 2009 compared to a $0.4 million foreign exchange gain for the year ended December 31, 2008. The $0.8 million change was due to unfavorable currency exchange rates during 2009 compared to the prior period.

Losses from the change in the fair value of derivatives were $0.2 million for the year ended December 31, 2009 compared to gains of $2.7 million during the prior period due to the net change in the mark-to-market value of the interest rate swap. See note 10, "Fair Value of Financial Instruments," to our audited financial statements included elsewhere in this prospectus for additional information.

Other income was $3.0 million for the year ended December 31, 2009 as compared to other income of $0.7 million for the year ended December 31, 2008. Other income for 2009 includes $1.2 million of income related to the interest rate swap, $0.9 million of business interruption insurance proceeds and other income of $0.9 million including discounts. Other income for 2008 included income related to the interest rate swap.

Income Tax (Benefit)

Income tax benefit from continuing operations for the year ended December 31, 2009 was $4.5 million compared to an income tax provision of $6.4 million for the year ended December 31, 2008. Our provision for income taxes is recorded at statutory rates for each tax jurisdiction based on total fiscal year to date results, adjusted for certain permanent differences. The difference in the effective rate compared with the U.S. federal statutory rate is due primarily to the mix of the international jurisdictional rates. The unusually high effective tax rate of 123% for the year ended December 31, 2008, was due to foreign earnings

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deemed repatriated and an increase in the valuation allowance on our foreign tax credit and net operating loss carryforward.

Quarterly Financial Information

The following tables set forth certain historical unaudited consolidated quarterly income statement data for each of the nine quarters ended March 31, 2011. This unaudited information has been prepared on a basis consistent with our annual financial statements and includes all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the unaudited quarterly data. This information should be read together with our audited consolidated financial statements and the related notes, included elsewhere in this prospectus. The results of operations for any quarter are not necessarily indicative of results that we may achieve for any subsequent periods.



		Three Month Ended
		March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			March 31, 2010			June 30, 2010			September 30, 2010			December 31, 2010			March 31, 2011
Selected Quarterly Financial Information
Sales		$	66,036		$	78,114		$	83,848		$	63,201		$	55,923		$	98,012		$	99,103		$	89,745		$	88,462
Cost of Products			64,156			62,097			70,488			58,701			53,064			86,138			83,634			75,704			74,008

	Gross Profit		1,880			16,017			13,360			4,500			2,859			11,874			15,469			14,041			14,454
Operating Income (Loss)			(6,737	)		8,996			5,532			(6,429	)		(5,507	)		3,094			6,696			(2,402	)		4,717
Adjusted EBITDA			(1,584	)		12,624			10,199			507			(290	)		9,157			11,530			8,027			9,775
As a percentage of sales:
Sales			100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Gross Profit			2.8	%		20.5	%		15.9	%		7.1	%		5.1	%		12.1	%		15.6	%		15.6	%		16.3	%
Adjusted EBITDA			(2.4	)%		16.2	%		12.2	%		0.8	%		(0.5	)%		9.3	%		11.6	%		8.9	%		11.0	%

Adjusted EBITDA represents net loss before interest expense, income tax expense, depreciation and amortization of intangibles, change in the fair value of derivatives, loss (gain) on foreign currency transactions, restructuring expenses, extraordinary and non-recurring professional fees, stock-based compensation expense, loss (gain) on asset sales and management fees paid to CHS. Disclosure in this prospectus of Adjusted EBITDA, which is a "non-GAAP financial measure," as defined under the rules of the SEC, is intended as a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA should not be considered as an alternative to net income, income from continuing operations or any other performance measure derived in accordance with GAAP. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by unusual or non-recurring items.

We believe this measure is meaningful to our investors to enhance their understanding of our financial performance. Although Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs, we understand that it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance and to compare our performance with the performance of other companies that report Adjusted EBITDA. Adjusted EBITDA should be considered in addition to, not as a substitute for, net income, income from continuing operations and other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted EBITDA may not be comparable to similarly

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titled measures reported by other companies. The following table reconciles net loss from continuing operations to Adjusted EBITDA for the periods presented in this table and elsewhere in this prospectus.



		March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			March 31, 2010			June 30, 2010			September 30, 2010			December 31, 2010			March 31, 2011
Net loss attributable to GSE Holding, Inc.		$	(9,146	)	$	2,760		$	1,001		$	(8,355	)	$	(12,674	)	$	2,945		$	4		$	(6,662	)	$	(731	)
(Income) loss from discontinued operations, net of income tax			790			(963	)		273			2,746			4,129			(1,304	)		159			1,444		$	(386	)
Interest expense, net of interest rate swap			4,553			5,956			4,379			3,117			4,395			4,695			4,935			4,910			4,841
Income tax expense (benefit)			(1,235	)		(222	)		(72	)		(3,008	)		37			(1,294	)		232			(1,044	)		127
Depreciation and amortization expense			3,129			3,092			3,103			3,379			3,181			3,148			3,157			3,214			3,045
Change in the fair value of derivatives(a)			133			622			(509	)		(36	)		(65	)		124			—			—			—
Foreign exchange (gain) loss(b)			(808	)		1,067			335			(219	)		(970	)		(1,601	)		1,853			(668	)		1,290
Restructuring expense(c)			400			—			66			978			268			640			74			114			355
Professional fees(d)			133			69			105			1,129			894			1,286			614			6,110			651
Stock-based compensation expense(e)			—			—			—			28			14			—			—			53			75
Management fees(f)			501			501			501			501			501			500			518			500			500
Other(g)			(34	)		(258	)		1,017			247			—			18			(16	)		56			8

	Adjusted EBITDA	$	(1,584	)	$	12,624		$	10,199		$	507		$	(290	)	$	9,157		$	11,530		$	8,027		$	9,775

(a): Represents the mark-to-market change in the value of three interest rate swaps, including one entered into in July 2010 in connection with our German revolving credit facility and one entered into in January 2005 and one in June 2009, each as a mechanism to convert $75.0 million of fixed rate debt to variable rate debt.
(b): Primarily related to gains and losses incurred on purchases, sales, intercompany loans and dividends denominated in non-functional currencies.
(c): Represents severance costs primarily related to the restructuring and productivity improvement programs adopted by us during the fourth quarter of 2009.
(d): Represents consulting and other advisory fees related to recruiting a new chief executive officer through the third quarter of 2009 and the restructuring and productivity improvement programs adopted by us during the fourth quarter of 2009 which primarily consists of fees related to the engagement of an independent consulting firm that specializes in performance improvements for portfolio companies of private equity firms.
(e): Represents the compensation expense attributable to each respective period based on the calculated value of employee stock options.
(f): Represents management fees that will terminate in connection with this offering. See "Certain Relationships and Related Party Transactions — Management Agreement."
(g): The three months ended September 30, 2009 included $1.0 million in death benefits paid to our former President and Chief Executive Officer. Otherwise, relates to gains and losses on asset sales.

Liquidity and Capital Resources

General

We rely on cash flows from operations as our primary source of liquidity. We do, however, have access to additional liquidity, if needed, through borrowings under our Senior Secured Credit Facilities. See "— The Refinancing Transactions; Description of Long-Term Indebtedness" for a description of our long-term debt. Our primary liquidity needs are to finance working capital, capital expenditures and debt service. The most significant components of our working capital are cash and cash equivalents, accounts receivable, inventories, accounts payable and other current liabilities. Our working capital position has benefited from growth in sales and Adjusted EBITDA, improvements in gross margin, increases in backlog and orders, and low annual maintenance and capital expenditure requirements.

We believe that cash generated from operations and the availability of borrowings under our Senior Secured Credit Facilities and other financing arrangements will be sufficient to meet working capital requirements, anticipated capital expenditures and scheduled interest payments on our indebtedness for at least the next 12 months. We cannot assure you, however, that our business will generate enough cash flow from

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operations or that future borrowing will be available to us in an amount sufficient to enable us to service our indebtedness, or to fund our other liquidity needs. In addition, upon the occurrence of certain events, such as a change of control, we could be required to repay or refinance our indebtedness. We cannot assure you that we will be able to refinance any of our indebtedness, on commercially reasonable terms or at all. We are repaying a portion of our outstanding indebtedness with the proceeds from this offering. See "Use of Proceeds."

Cash and Cash Equivalents

As of March 31, 2011, we had $7.6 million in cash and cash equivalents. We maintain cash and cash equivalents at various financial institutions located in the United States, Germany, Thailand, Egypt and Chile. $1.1 million, or 14.5%, was held in domestic accounts with various institutions and approximately $6.5 million, or 85.5%, was held in accounts outside of the United States with various financial institutions.

Accounts Receivable

As of March 31, 2011, we had $64.1 million in trade accounts receivable. We evaluate the creditworthiness of our customers on at least an annual basis and from time to time require customers to provide letters of credit to guarantee payments. No single customer accounted for 5% or more of sales during 2010.

The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in existing receivables. The allowance is reviewed monthly and we establish reserves for doubtful accounts on a case-by-case basis when it is believed that the required payment of specific amounts owed to us is unlikely to occur.

Inventory

As of March 31, 2011, we had $67.6 million in inventory. Inventory is recorded at the lower of cost or market. Cost, which includes material, labor and overhead, is determined by the weighted average cost method, which approximates the first-in, first-out cost method. See note 3, "Inventory," to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for additional information.

Other Current Liabilities

As of March 31, 2011, we had $60.1 million in accounts payable and accrued liabilities. Over half of this balance, or $33.9 million, was attributable to trade accounts payable, primarily from the purchase of raw material, including polyethylene resins. We currently purchase raw materials from at least two significant suppliers at each of our manufacturing locations. Polyethylene resins are occasionally in short supply and are subject to substantial price fluctuation in response to market demand. We have not encountered any significant prolonged difficulty to date in obtaining raw materials in sufficient quantities to support our operations at current or expected near-term levels. However, any disruption in raw material supply or abrupt increases in raw material prices could have an adverse effect upon our operations.

The Refinancing Transactions; Description of Long-Term Indebtedness

On May 27, 2011, we entered into a five-year, $160.0 million first lien senior secured credit facility consisting of $135.0 million of term loan commitments, or our First Lien Term Loan, and $25.0 million of revolving loan commitments, or our Revolving Credit Facility, which we refer to collectively as our First Lien Credit Facility. On May 27, 2011, we also entered into a five-year, $40.0 million second lien senior secured credit facility consisting of $40.0 million of term loan commitments, or our Second Lien Term Loan, which we refer to collectively with our First Lien Credit Facility as our Senior Secured Credit Facilities.

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A portion of the net proceeds from our Senior Secured Credit Facilities, together with cash on hand, was used to refinance our old revolving credit facility and Senior Notes.

First Lien Credit Facility

As of May 27, 2011, we had $15.3 million of capacity available under our Revolving Credit Facility after taking into account outstanding loan advances and letters of credit. The First Lien Credit Facility will mature in May 2016. Any borrowings under our First Lien Credit Facility will incur interest expense that is variable in relation to the LIBOR (and/or Prime) rate. In addition to paying interest on outstanding borrowings under our First Lien Credit Facility, we are required to pay a 0.75% per annum commitment fee to the lenders in respect of the unutilized commitments thereunder and letter of credit fees equal to the LIBOR margin on the undrawn amount of all outstanding letters of credit. At May 27, 2011, we had $144.7 million outstanding borrowings under our First Lien Credit Facility consisting of $135.0 million in term loans and $9.7 million in revolving loans, and the interest rate on such loans was 7.75%.

Second Lien Term Loan

Our Second Lien Term Loan will mature in May 2016. All borrowings under our Second Lien Term Loan will incur interest expense that is variable in relation to the LIBOR (and/or Prime) rate. At May 27, 2011, we had $40.0 million outstanding borrowings under our Second Lien Term Loan and the interest rate on the Second Lien Term Loan was 11.0%.

Guarantees; Security. The obligations under our Senior Secured Credit Facilities are guaranteed on a senior secured basis by GSE Holding and each of its and our existing and future wholly owned domestic subsidiaries, other than GSE International, Inc. and any other excluded subsidiaries. The obligations under our First Lien Credit Facility are secured by a first priority perfected security interest in substantially all of our and the guarantors' assets, subject to certain exceptions, permitted liens and permitted encumbrances under our First Lien Credit Facility. The obligations under our Second Lien Term Loan are also secured by liens on substantially all of our and the guarantors' assets, subject to certain exceptions, permitted liens and permitted encumbrances; provided, however, that the liens granted under our Second Lien Term Loan are contractually subordinated to the liens that secure our First Lien Credit Facility.

Restrictive Covenants. Our Senior Secured Credit Facilities contain various restrictive covenants that include, among other things, restrictions or limitations on our ability to incur additional indebtedness or issue disqualified capital stock unless certain financial tests are satisfied; pay dividends, redeem subordinated debt or make other restricted payments; make certain loans, investments or acquisitions; issue stock of subsidiaries; grant or permit certain liens on our assets; enter into certain transactions with affiliates; merge, consolidate or transfer substantially all of our assets; incur dividend or other payment restrictions affecting certain of our subsidiaries; transfer or sell assets including, but not limited to, capital stock of our subsidiaries; and change the business we conduct. However, all of these covenants are subject to exceptions.

Non-Dollar Denominated Debt

As of March 31, 2011, we had five local international credit facilities.

We have credit facilities with two German banks in the amount of €6.4 million ($9.1 million). As of March 31, 2011, we had €1.8 million ($2.6 million) available under these credit facilities with €1.6 million ($2.3 million) of bank guarantees outstanding and €3.0 million ($4.2 million) outstanding under the line of credit. These credit facilities are secured by a corporate guarantee and bear interest at various market rates. These credit facilities are used primarily for performance guarantees, warranties and temporary working capital requirements.

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We have two credit facilities with Egyptian banks in the amount of EGP 15.0 million ($2.5 million). These credit facilities bear interest at various market rates and are primarily for cash management purposes. We had EGP 10.8 million ($1.8 million) available under these credit facilities with EGP 2.7 million ($0.4 million) of bank guarantees outstanding with EGP 1.5 million ($0.3 million) outstanding under the credit facilities as of March 31, 2011.

On March 6, 2009, we entered into a BAHT 50.0 million ($1.7 million) revolving credit facility with Export-Import Bank of Thailand, or EXIM, which has a termination date at EXIM's or our discretion. This revolving credit facility bears interest at EXIM prime rate less 0.75% for BAHT borrowings and at London Interbank Offer Rates (LIBOR) plus 3.5% for U.S. dollar borrowings. Repayments of principal are required within 90 days from the date of each draw down borrowing and interest is payable once a month on the last day of the month. The credit facility is secured by a BAHT 15.0 million ($0.5 million) mortgage on land, building and equipment. We had BAHT 0.4 million ($14 thousand) available under these credit facilities with BAHT 32.2 million ($1.1 million) of letters of credit outstanding with BAHT 17.4 million ($0.6 million) outstanding under the credit facility as of March 31, 2011.

For purposes of presenting in U.S. dollars, the amounts outstanding and the amounts available for borrowing under our non-dollar denominated debt, in each case as of March 31, 2011, we have used the U.S. dollar foreign currency exchange rates in late New York trading on March 31, 2011 as quoted in The Wall Street Journal of €1.00 to $1.4174, EGP 1.00 to $0.1678 and BAHT 1.00 to $0.03305.

Senior Notes

We issued, pursuant to an indenture dated as of May 18, 2004, as amended, between us, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee, $150.0 million aggregate principal amount of 11% Senior Notes due 2012.

We used a portion of the net proceeds from our Senior Secured Credit Facilities, together with cash on hand, to fund the repayment of all outstanding indebtedness under our Senior Notes. On May 27, 2011, we purchased approximately $132.4 million aggregate principal amount of the notes pursuant to a tender offer. We will redeem the remaining outstanding notes on July 11, 2011.

Other Debt

In conjunction with the acquisition of SL Limitada, we entered into a five year installment obligation with the seller of SL Limitada for $4.5 million, secured by a share pledge agreement for 30% of the equity of GSE Lining Technology Chile, S.A., our indirect wholly owned subsidiary. The installment obligation bore interest at 5% for the first two years, converting to a variable rate based on LIBOR for the remaining term. Payments were in five annual principal and interest amounts beginning on January 1, 2007. There is no balance outstanding on March 31, 2011 as the final installment of $0.9 million was paid in January 2011.

In connection with the acquisition of ProGreen Sport Surfaces, which became our GeoSport business, we entered into a three-year unsecured promissory note in the original principal amount of $2.7 million. The note bore interest at the rate of 5.13% per annum and was payable in three equal annual principal payments of $0.9 million plus accrued interest commencing October 13, 2007. We elected to not make the final installment of $0.9 million on the note payable, plus accrued interest, to the former owners of ProGreen during the fourth quarter of 2009, as we were in dispute with ProGreen over $1.3 million in warranty claims. ProGreen filed a lawsuit in the United States District Court for the Southern District of Texas to recover the $0.9 million outstanding balance plus interest and attorneys' fees from us. In April 2011, we and ProGreen entered into a settlement agreement to jointly dismiss the lawsuit filed by ProGreen. As part of that settlement we agreed to pay ProGreen $0.65 million and ProGreen forgave the $0.35 million remaining balance of the note payable plus accrued interest.

We have a BAHT 225.7 million ($7.5 million) term loan with a Thailand bank, bearing interest at the bank's Minimum Lending Rate, or MLR, less 1.00% for the first two years and MLR less 0.50%, thereafter,

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which is secured by equipment, building and lease rights of the property where the equipment and building are located. As of March 31, 2011, the bank's MLR is 6.625%. The promissory note required monthly payments of interest only for the first six months beginning in October 2007 with monthly payments of BAHT 1.4 million ($46 thousand) plus interest beginning April 2008, increasing to BAHT 3.5 million ($0.1 million) in July 2008, and finally increasing to BAHT 3.8 million ($0.1 million) beginning in December 2008 and maturing in May 2013. The term loan has a balance outstanding on March 31, 2011 of BAHT 68.9 million ($2.3 million).

Foreign Earnings

Undistributed retained earnings of our foreign subsidiaries amounted to approximately $20.4 million at December 31, 2010. Provision for U.S. federal and state income taxes has not been provided for earnings considered to be indefinitely reinvested. Upon distribution of those earnings in the form of dividends or otherwise, we would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the amount of unrecognized deferred tax asset/liability, if any, for the temporary differences related to investments in foreign subsidiaries that are essentially permanent in duration is not practicable.

Cash Flow Analysis

A summary of operating, investing and financing activities are shown in the following table:



	Year Ended December 31,									Three Months Ended March 31,
	2008			2009			2010			2010			2011
										(unaudited)
	(in thousands)
Net cash provided by (used in) operating activities — continuing operations	$	(5,400	)	$	45,250		$	(26,541	)	$	(15,897	)	$	(1,998	)
Net cash provided by (used in) operating activities — discontinued operations		(171	)		4.053			(3,219	)		(2,063	)		3,883
Net cash provided by (used in) investing activities — continuing operations		(5,706	)		(2,697	)		(3,337	)		(380	)		(1,747	)
Net cash provided by (used in) investing activities — discontinued operations		(259	)		75			2,284			—			—
Net cash provided by (used in) financing activities — continuing operations		5,454			(32,691	)		25,691			6,332			(7,617	)
Net cash provided by (used in) financing activities — discontinued operations		(1,170	)								—			—
Effect of exchange rate changes on cash — continuing operations		272			(59	)		(228	)		(526	)		(185	)
Effect of exchange rate changes on cash — discontinued operations		334			143			(280	)		(143	)		37
(Decrease) increase in cash and cash equivalents		(6,646	)		14,074			(5,630	)		(12,677	)		(7,627	)
Cash and cash equivalents at end of period		6,740			20,814			15,184			8,137			7,557

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Net Cash Provided by (Used in) Operating Activities

Net cash provided by (used in) operating activities consists primarily of net loss adjusted for non-cash items, including depreciation and amortization, and the effect of changes in working capital.

Net cash used in operating activities was $2.0 million for the three months ended March 31, 2011 compared to $15.9 million in the three months ended March 31, 2010. The $13.9 million decrease in cash used in operating activities was due primarily to a reduction in our operating loss as a result of the restructuring and productivity improvement programs we initiated following a detailed review during the fourth quarter of 2009. See note 2, "Discontinued Operations," to our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

Net cash used in operating activities was $26.5 million for the year ended December 31, 2010 compared to net cash provided by operating activities of $45.3 million in 2009. The $71.8 million decrease was related primarily to the increased accounts receivable and inventory levels, partially offset by the increase in accounts payable and accrued liabilities.

Net cash provided by operating activities was $45.3 million for the year ended December 31, 2009 compared to net cash used in operating activities of $5.4 million in 2008. The $50.7 million increase in cash provided by operating activities was due primarily to the reduction in inventory levels and the collection of accounts receivable.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by (used in) investing activities consists primarily of:

•: capital expenditures for growth, including real estate and buildings;
•: capital expenditures for facility maintenance, including machinery and equipment improvements; and
•: corporate overhead, including information technology and expenses associated with operations at our headquarters.

Net cash used in investing activities during the three months ended March 31, 2011 was $1.7 million, compared to $0.4 million during the three months ended March 31, 2010. Capital expenditures during the three months ended March 31, 2011 consisted of $0.9 million of maintenance expenditures and $0.8 million related to improving the functionality of our Enterprise Resource Planning system, or ERP system. Capital expenditures during the three months ended March 31, 2010 consisted of $0.4 million of maintenance expenditures.

We currently anticipate total 2011 capital expenditures to be approximately $11.0 million, which includes $6.0 million of growth capital expenditures and $5.0 million of maintenance expenditures, including $3.0 million related to adding global functionality to the existing ERP system. We expect to fund capital expenditures with cash on hand. There are currently no material contractual obligations or commitments related to these planned capital expenditures.

Net cash used in investing activities during the year ended December 31, 2010 was $3.3 million compared to $2.7 million in 2009. Capital expenditures during 2010 were $3.3 million, which included $2.8 million of maintenance expenditures and $0.5 million related to improving the functionality of our ERP system. Capital expenditures during 2009 included $1.6 million of maintenance expenditures and $1.2 million related to improving the functionality of our ERP system.

Net cash used in investing activities was $5.7 million during the year ended December 31, 2008, principally from the purchase of plant, property and equipment.

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Net Cash Provided by (Used in) Financing Activities

Net Cash provided by (used in) financing activities consist primarily of borrowings and repayments related to our credit facilities and fees and expenses paid in connection with our credit facilities.

Net cash used in financing activities was $7.6 million during the three months ended March 31, 2011, compared to net cash provided by financing activities of $6.3 million during the three months ended March 31, 2010. This change was attributable primarily to our use of excess cash flows during 2011 to make additional repayments of lines of credit during the three months ended March 31, 2011, compared to the same period during 2010.

Net cash provided by financing activities was $25.7 million for the year ended December 31, 2010, compared to net cash used in financing activities of $32.7 million for the year ended December 31, 2009. Net cash provided by financing activities in 2010 was a result of $27.9 million of net proceeds from credit lines, reduced by long-term debt repayments of $2.2 million. Net cash used in financing activities during 2009 was a result of $32.5 million of net repayments on credit lines and long-term debt repayments of $2.3 million partially offset by $2.1 million of proceeds resulting from the early termination of our interest rate swap.

Net cash used in financing activities was $32.7 million for the year ended December 31, 2009, compared to net cash provided by financing activities of $5.5 million during the year ended December 31, 2008. Proceeds from lines of credit and repayments of lines of credit were the principal drivers of net cash provided by financing activities during 2008 totaling $154.5 million and $148.3 million, respectively.

Off-Balance Sheet Arrangements

As of March 31, 2011, we had no off-balance sheet arrangements. In addition, we do not have any interest in entities referred to as variable interest entities, which includes special purposes entities and other structured finance entities.

Contractual Obligations

Contractual Obligations as of December 31, 2010

The following table represents a summary of our estimated future payments under material contractual cash obligations as of December 31, 2010 prior to the Refinancing Transactions.

Changes in our business needs, cancellation provisions, changing interest rates and other factors may result in actual payments differing from these estimates. We cannot provide certainty regarding the timing and amounts of payments.



		Payments Due by Period
		Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
		(in thousands)
Contractual Obligations:
Long-Term Debt⁽¹⁾		$	178,571	$	3,317	$	175,254	$	—	$	—
Interest Payments⁽²⁾			24,724		17,459		7,265		—		—
Operating Leases⁽³⁾			2,112		487		473		268		884
Consulting obligation⁽⁴⁾			833		833		—		—		—

	Total	$	206,240	$	22,096	$	182,992	$	268	$	884

⁽¹⁾: Represents principal payments on our Revolving Credit Facility, Senior Notes and other long-term debt as of December 31, 2010. On May 27, 2011, we entered into our Senior Secured Credit Facilities, a portion of the net proceeds of which, together with cash on hand, was used to refinance our old

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revolving credit facility and Senior Notes. See "— The Refinancing Transactions; Description of Long-Term Indebtedness" above for additional details.

⁽²⁾: Represents interest payments on our long-term debt.
⁽³⁾: We enter into operating leases in the normal course of business. Our operating leases include the leases of certain of our manufacturing and warehouse facilities.
⁽⁴⁾: Consists of fees payable to CHS IV for the rendering of management, consulting, financial and other advisory services pursuant to the terms of our management services agreement dated May 18, 2004, which had an initial term of seven years with subsequent annual renewals. The management services agreement calls for annual management fees of $2.0 million, five months of which have been reflected in this table related to the renewal period in place as of December 31, 2010. Excludes the one-time cash fee payable to CHS IV concurrently with this offering. See "— Pro Forma Contractual Obligations as of December 31, 2010" below and "Certain Relationships and Related Party Transactions — Management Agreement."

Pro Forma Contractual Obligations as of December 31, 2010

The following table represents a summary of our estimated future payments under material contractual cash obligations as of December 31, 2010, on a pro forma basis after giving effect to the Refinancing Transactions, termination of our management agreement with our sponsor, and assuming our receipt of the net proceeds from our sale of common stock in this offering, as if those transactions had occurred as of December 31, 2010.



		Payments Due by Period
		Total	Less than 1 Year	1-3 Years	3-5 Years	More than 5 Years
		(in thousands)
Contractual Obligations:
Long-Term Debt⁽¹⁾		$	$	$	$	$
Interest Payments⁽²⁾
Operating Leases⁽³⁾
Consulting obligation⁽⁴⁾

	Total	$	$	$	$	$

⁽¹⁾: Represents the scheduled principal payments on our Senior Secured Credit Facilities and other long-term debt and excludes other mandatory principal prepayments that are based on excess cash flow. On May 27, 2011, we entered into our Senior Secured Credit Facilities, a portion of the net proceeds of which, together with cash on hand, was used to refinance our old revolving credit facility and Senior Notes. See "— The Refinancing Transactions; Description of Long-Term Indebtedness" above for additional details.
⁽²⁾: Represents interest payments on our long-term debt based on the principal payment assumptions described in note 1 above.
⁽³⁾: We enter into operating leases in the normal course of business. Our operating leases include the leases of certain of our manufacturing facilities, sales offices and warehouses.

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⁽⁴⁾: Represents the one-time cash fee payable to CHS IV concurrently with this offering in connection with the termination of the management services agreement. See "Certain Relationships and Related Party Transactions — Management Agreement."

Contingencies

We are involved in various legal and administrative proceedings and disputes that arise from time to time in the ordinary course of doing business. Some of these proceedings may result in fines, penalties or judgments being assessed against us, which, from time to time, may adversely affect our financial results. See note 15 to our audited consolidated financial statements and note 15 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus. We have considered these proceedings and disputes in determining the necessity of any reserves for losses that are probable and reasonably estimable. Our recorded reserves are based on estimates developed with consideration given to the potential merits of claims or quantification of any performance obligations. In doing so, we take into account our history of claims, the limitations of any insurance coverage, advice from outside counsel, the possible range of outcomes to such claims and obligations and their associated financial impact (if known and reasonably estimable), and management's strategy with regard to the settlement or defense of such claims and obligations. While the ultimate outcome of those claims, lawsuits or performance obligations cannot be predicted with certainty, we believe, based on our understanding of the facts of these claims and performance obligations, that adequate provisions have been recorded in the accounts where required. In addition, we believe it is not reasonably possible that resolution of these legal actions will, individually or in the aggregate, have a material adverse effect on our financial condition or results of operations. It is possible, however, that charges related to these matters could be significant to our results or cash flows in any single accounting period.

In addition, we provide our customers limited material product warranties. Our limited product warranties are typically five years but occasionally extend up to 20 years. These warranties are generally limited to repair or replacement of defective products or workmanship, often on a prorated basis, up to the dollar amount of the original order. In some foreign orders, we may be required to provide the customer with specified contractual limited warranties as to material quality. Our product warranty liability in many foreign countries is dictated by local laws in addition to the warranty specified in the orders. Failure of our products to operate properly or to meet specifications may increase our costs by requiring additional engineering resources, product replacement or monetary reimbursement to a customer. We have received warranty claims in the past, and we expect to continue to receive them in the future. Warranty claims are not covered by insurance, and substantial warranty claims in any period could have a material adverse effect on our financial condition, results of operations or cash flows as well as on our reputation. See note 2, "Summary of Significant Accounting Policies," to our audited consolidated financial statements and note 7, "Warranty Reserves," to our unaudited condensed consolidated financial statements contained elsewhere in this prospectus.

Furthermore, in certain direct sales and raw material acquisition situations, we are required to post performance bonds or bank guarantees as part of the contractual guarantee for performance. The performance bonds or bank guarantees can be in the full amount of the orders. To date we have not received any claims against any of the posted securities, most of which terminate at the final completion date of the orders. As of March 31, 2011, we had $6.4 million of bonds outstanding and $5.7 million of guarantees issued under bank lines. See note 15, "Commitments and Contingencies," to our audited consolidated financial statements and note 13, "Commitments and Contingencies," to our unaudited condensed consolidated financial statements contained elsewhere in this prospectus.

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Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We base our estimates and assumptions on historical experience and on various other information and data that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies involve areas that require significant judgments and estimates on the part of management in the course of preparing of our financial statements.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized and represent the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We record a valuation allowance when it is more likely than not that some of our net deferred tax assets will not be realized. In determining the need for valuation allowances, we consider our projected future taxable income and the availability of tax planning strategies. In the case of our net operating loss carryforwards, we have provided deferred income tax benefits only to the extent we believe we will be able to utilize them in future tax filings. If in the future we determine that we will be able to realize more of the related net deferred tax assets, we will make an adjustment to the allowance, which would increase our income in the period that such a determination is made.

We operate in various tax jurisdictions and are subject to audit by various tax authorities. We are currently being audited by the United States Internal Revenue Service for the 2008 taxable year. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained following an examination. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized upon effective settlement. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Accounts Receivable

Accounts receivable from our customers in connection with sales transactions are recorded at the invoiced amounts and do not bear interest. We record an allowance for doubtful accounts, which reflects our best estimate of the amount of probable credit losses in our existing receivables. The allowance is reviewed and adjusted, if necessary, on at least a quarterly basis. In addition, we establish reserves for doubtful accounts on a case-by-case basis when we believe that the required payment of specific amounts owed to us is unlikely to occur.

We have receivables from customers in various countries, and generally do not require collateral or other security to support customer receivables unless credit capacity is not evident. In the case where credit capacity does not exist or cannot be appropriately determined, unsecured exposure security instruments such as upfront cash payments, down payments, credit cards, letters of credit, standby letters of credit, bank guarantees or personal guarantees are required. In addition, in the U.S., in cases when a customer's project is state or federally sponsored or owned, a payment or security bond is required by law in most

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jurisdictions. If the customers' financial condition was to deteriorate or their access to freely convertible currency was restricted, resulting in impairment of their ability to make the required payments, additional allowances may be required. In the event of a default by a U.S. customer, we may also have the option to file liens against property owners to the extent permissible under applicable state laws.

Inventories

Our inventories are stated at the lower of cost or market. Cost, which includes materials, labor and overhead, is determined by the weighted average cost method, which approximates the first-in, first-out cost method.

We perform an analysis of our inventory levels and resulting valuation on at least a quarterly basis, or more frequently if circumstances dictate. As a result of this analysis we may record or adjust existing provisions, as appropriate, to write-down slow-moving, excess or obsolete inventory to estimated net realizable value. The process for evaluating inventory often requires us to make subjective judgments and estimates concerning anticipated customer demand and future sales levels, as well as the quantities and prices at which such inventories will be able to be sold in the normal course of business. If actual conditions are less favorable than those reflected in our estimates, additional inventory write-downs to market value may be required and future periods' gross margin rates may be unfavorably or favorably affected.

Goodwill

We review goodwill to determine potential impairment annually, or more frequently if events and circumstances indicate that the asset might be impaired. The goodwill impairment analysis is comprised of two steps. The first step requires the comparison of the fair value of the applicable reporting unit to its respective carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired and we would not be required to perform further testing. If the carry value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit's goodwill. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then we would record an impairment loss equal to the difference.

Our reporting units are one level below our operating segments. We have determined our reporting units to be Europe Africa, North America, Asia Pacific and Latin America. Goodwill allocated to Europe Africa, North America, Asia Pacific and Latin America represents 45%, 39%, 9% and 7%, respectively, as of December 31, 2010. The fair value exceeds the carrying value of net assets by 28%, 15%, 160% and 22% for Europe/Africa, North America, Asia Pacific and Latin America, respectively, as of December 1, 2010, the date of our last impairment analyses.

In performing the annual goodwill impairment test we considered three generally accepted approaches for valuing a business: the income, market and cost approaches. Based on the nature of our business, and the current and expected financial performance, we determined that the market and income approaches were the most appropriate methods for estimating the fair value of each reporting unit. For the income approach we used the discounted cash flow method, and considered such factors sales, depreciation, amortization, capital expenditures, incremental working capital requirements, tax rate and discount rate. Consideration of these factors inherently involves a significant amount of judgment, and significant movements in sales or changes in the underlying assumptions may result in fluctuations of estimated fair value.

For the market approach we used both the guidelines public company and the comparable transaction methods. We considered such factors as appropriate guideline companies, appropriate comparable transactions and control premiums.

Erosion in capital markets, material reductions in our expected cash flow forecasts, significant reductions in our market capitalization or a significant decline in economic conditions, in addition to changes to the

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underlying assumptions used in our valuation approach described above, could all lead to future impairment of goodwill.

Stock-Based Compensation

All share-based payments to employees, including grants of employee stock options, are measured at their respective grant date calculated values, and expensed in our consolidated statements of operations over the requisite service period (generally the grant's vesting period). We use a calculated value to measure the compensation expense for share-based awards made to employees, as we have concluded that it is impracticable to determine the expected volatility of our share price, given the lack of historical stock trading activity. Instead, we use an industry measure of volatility in calculating this value.

The value of each option award is estimated on its respective grant date using the Black-Scholes option pricing model. In connection with the model, we use assumptions, including the risk-free interest rate, expected option life, expected volatility and expected dividend yield. The expected option life is based on our best estimate of the anticipated exercise activity for the grants, taking into consideration historical exercise patterns for previous grants to the extent we believe that such information is predictive. The specific industry measure we use to calculate expected volatility is the Dow Jones Building and Material Index fund, which includes public companies that we believe are most comparable to our business.

We recognize compensation expense for all stock-based awards with graded vesting on a straight-line basis over the vesting period of the entire award. While the applicable guidance requires that we consider the impact of estimated forfeitures in recognizing the associated compensation expense, there has been no impact on the vast majority of our option awards, as they were fully vested upon the grant date.

Revenue Recognition

GAAP guidance establishes the following four criteria that must be met in order for revenue to be recognized: (1) persuasive evidence of an arrangement exists, (2) product delivery has occurred, (3) the sales price to the customer is fixed or determinable and (4) collectability is reasonably assured. Specifically, for our direct sales of products to customers, we recognize revenues when products are shipped (as this is the point that title and risk of loss pass to the customer), we have no further obligation to the customer with respect to the delivered products, and collectability of the amount billed is reasonably assured.

Recently Issued Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2011-05, Comprehensive Income: Presentation of Comprehensive Income, to allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments do not change the guidance regarding the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments should be applied retrospectively, and is effective for fiscal years and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. The adoption is not expected to have a material impact on our results of operations, financial position or cash flows.

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU represents the converged guidance of the FASB and the IASB on fair value measurement, and results in common requirements for measuring fair value and for disclosing information about fair value measurements,

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including a consistent meaning of the term "fair value." These amendments change some of the terminology used to describe many of the existing requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments should be applied prospectively, and they are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The adoption is not expected to have a material impact on our results of operations, consolidated financial position or cash flows.

In December 2010, the FASB issued ASU No. 2010-28, Intangibles — Goodwill and Other: When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. The amendments in this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing event or circumstance-driven guidance related to goodwill impairment testing between annual tests. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The adoption is not expected to have a material impact on our results of operations, consolidated financial position or cash flows.

In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements, which clarifies certain existing disclosure requirements in ASC 820, Fair Value Measurements and Disclosures, as well as requires disclosures related to significant transfers between each level and additional information about Level 3 activity. ASU 2010-06 begins phasing in the first fiscal period after December 15, 2009. We did not make nor do we anticipate a significant transfer between each level as of December 31, 2010. As such, we do not believe this ASU will have a material impact on our results of operations, consolidated financial position or cash flows.

In September 2009, FASB issued ASC 105, formerly FASB Statement No. 168, The FASB Accounting Standards Codification (Codification) and the Hierarchy of Generally Accepted Accounting Principles (GAAP) — A Replacement of FASB Statement No. 162. ASC 105 establishes the Codification as the single source of authoritative GAAP in the United States, other than rules and interpretive releases issued by the SEC. The Codification is a reorganization of current GAAP into a topical format that eliminates the current GAAP hierarchy and establishes instead two levels of guidance authoritative and non-authoritative. All non-grandfathered, non-SEC accounting literature that is not included in the Codification will become non-authoritative. The Codification was effective for interim and annual periods ending after September 15, 2009. As the Codification was not intended to change or alter existing GAAP, it did not have a material impact on our consolidated financial statements.

In May 2009, the FASB issued ASC 855-10, Subsequent Events, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In February 2010, the FASB issued Accounting Standards Update (ASU) 2010-09, which provided amended guidance on subsequent events. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The adoption of this statement did not have a material impact on our consolidated financial position or results of operations.

Quantitative and Qualitative Disclosures About Market Risk

We are subject to various market risks, primarily related to changes in interest rates, foreign currency exchange rates and raw material supply prices. Our financial position, results of operations or cash flows may be negatively impacted in the event of adverse movements in the respective market rates or prices in each of these risk categories. Our exposure in each category is limited to those risks that arise in the normal course of business, as we do not engage in speculative, non-operating transactions, nor do we utilize financial instruments for trading purposes.

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Interest Rate Risk

In order to manage both interest rates and underlying borrowing costs, we use a combination of fixed-rate and floating-rate debt instruments. In certain circumstances, we may use derivatives, such as interest rate swaps, as a further means to manage the level of our exposure to variable interest rate risk. Generally, such derivatives are executed with major reputable financial or lending institutions with investment grade credit ratings, with the objective of reducing counterparty credit risk.

At both December 31, 2010 and 2009, we had $150.0 million aggregate principal amount of senior notes outstanding, bearing interest at a fixed rate of 11.0% per annum. In addition, we had $17.2 million and $24.1 million in variable rate borrowings outstanding under our old revolving credit facility at March 31, 2011 and December 31, 2010, respectively, bearing interest at various rates, reflecting either a base rate or LIBOR plus a spread of up to 200 basis points. There were no borrowings outstanding under our old revolving credit facility at December 31, 2009. We also had amounts outstanding at both December 31, 2010 and 2009 under various international term loans and credit facilities used to provide international operations with local access to funds for cash management and temporary working capital needs.

We had one interest rate swap in place at December 31, 2010, which was a €1.0 million ($1.3 million, based on December 31, 2010 exchange rate) notional pay fixed-receive floating swap used to hedge the exposure to variable interest rates for a portion of one of our international credit facilities. At December 31, 2009, we had a $75.0 million notional value pay floating-receive fixed interest rate swap in place, which effectively converted $75.0 million of our fixed-rate senior notes to variable-rate debt, with an underlying benchmark rate based on LIBOR. This swap was terminated effective May 15, 2010.

The fair value of our Senior Notes at December 31, 2010 and 2009 was $142.2 million and $148.5 million, respectively, and at March 31, 2011, the fair value was $149.3 million. These fair values reflect the application of current interest rates offered for debt with similar remaining terms and maturities as of the respective measurement dates. The fair value of these senior notes was subject to fluctuations resulting from changes in the applicable market interest rates, but they have since been repaid in connection with the Refinancing Transactions discussed below.

In May 2011, we refinanced our Senior Notes as well as $27 million in borrowings under our old revolving credit facility, with a portion of the proceeds from the Senior Secured Credit Facilities. See "— The Refinancing Transactions; Description of Long-Term Indebtedness" above. Borrowings under each of the Senior Secured Credit Facilities bears interest at a floating rate based on LIBOR or Prime, at our option. At June 30, 2011, we had $152.1 million in outstanding borrowings under these new facilities consisting of $135.0 million in term loans and $17.1 million in revolving loans at a weighted average interest rate of 7.0%. See note 18, "Subsequent Events," to our audited consolidated financial statements included elsewhere in this prospectus for further discussion of this refinancing.

Our results of operations and cash flows would be affected by changes in the applicable underlying benchmark interest rates due to the impact such changes would have on the interest payable on variable-rate debt outstanding under the Senior Secured Credit Facilities and, to the extent applicable, our interest rate-related derivative instruments. Holding other variables constant, including levels of indebtedness under the Senior Secured Credit Facilities, a 50 basis point increase in interest rates would result in an increase of approximately $0.9 million in annual interest expense.

The hypothetical changes and assumptions may be different from actual changes and events in the future, and the computations do not take into account management's possible actions if such changes actually occurred over time. Considering these limitations, actual effects on future earnings could differ from those calculated above.

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Foreign Currency Exchange Rate Risk

We maintain operations in countries outside of the United States, including Germany, Chile, Thailand and Egypt, some of which use the respective local foreign currency as their functional currency. Each foreign operation may enter into contractual arrangements with customers or vendors that are denominated in currencies other than its respective functional currency. As a result, our results of operations may be affected by exposure to changes in foreign currency exchange rates and economic conditions in the regions in which we purchase raw material inventory or sell and distribute our products. Exposure to variability in foreign currency exchange rates from these transactions is managed, to the extent possible, through the use of natural hedges which result from purchases and sales occurring in the same foreign currency within a similar period of time, thereby offsetting each other to varying degrees.

In addition, we also execute intercompany lending transactions, and a foreign subsidiary may pay dividends to its respective parent, or ultimately, the United States parent. These transactions are denominated in various foreign currencies which results in exposure to exchange rate risk that could impact our results of operations.

The total foreign currency transaction gains (losses), attributable to non-functional currency purchases and sales, and intercompany loans and dividends was $1.4 million and $(0.4) million for the years ended December 31, 2010 and 2009, respectively, representing less than 0.5% of sales and cost of products. In addition, the gain attributable to these foreign currency transactions during the three months ended March 31, 2011 was $1.3 million, representing approximately 1.5% of sales in that period. Given the relative size of these gains and losses, we do not believe that any reasonable near-term changes in applicable rates would have a material impact on our result of operations.

We did not enter into any foreign currency hedging transactions in the three month period ended March 31, 2011 or the year ended December 31, 2010, nor do we anticipate using derivative instruments to mange foreign currency exchange rate risk in the foreseeable future.

In addition to the transaction-related gains or losses that are reflected within the results of operations, we are subject to foreign currency translation risk, as the financial statements for our foreign subsidiaries are measured and recorded in the respective subsidiary's functional currency and then translated into U.S. Dollars for consolidated financial reporting purposes. The resulting translation adjustments are recorded within accumulated other comprehensive income, a component of stockholders' equity, on the consolidated balance sheet.

Raw Material Supply and Price Risk

Our primary raw materials used in the production of our products are polyethylene resins. As these resins are petroleum-based materials, changes in the price of feedstocks, such as crude oil or natural gas, as well as changes in market supply and demand may cause the cost of these resins to fluctuate significantly. During 2010, raw material cost accounted for approximately 72% of our cost of products. Given the significance of these costs and the inherent volatility in supplier pricing, our ability to reflect changes in the cost of resins in our products' selling prices in an efficient manner, passing the increase on to our customers, contributes to the management of our overall supply price risk and its potential impact on our results of operations.

We have not historically entered, nor do we intend to enter, into long-term purchase orders for the delivery of raw materials. Our orders with suppliers are flexible and do not contain minimum purchase volumes or fixed prices. Accordingly, our suppliers may change their selling prices or other relevant terms on a monthly basis, exposing us to pricing risk. Our recent implementation of advanced pricing and forecasting tools, more centralized procurement and additional sources of supply have increased our focus on product margins and resulted in overall lower supply costs.

Holding all other variables constant, a 1.0% increase in resin prices would have increased cost of products by approximately $2.8 million, based on our consolidated 2010 sales volume.

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Business

Our Business

We serve leading mining, waste management and power companies; independent installers and dealers; general contractors and government agencies. Our solutions have been integral components of projects by blue-chip companies such as Arizona Public Service Company, Inc., Barrick Gold Corp., BHP Billiton plc, the Charoen Pokphand Group Co. Ltd., Newmont Mining Corp., Rio Tinto Limited, Veolia Environnement S.A. and Waste Management, Inc. Our customer base is geographically diversified with 58% of our sales in 2010 generated outside North America including emerging and frontier markets in Asia (14%), Latin America (11%), Africa (10%) and the Middle East (3%). We define emerging markets as nations with rapid growth in business activity and industrialization, such as China and India, and frontier markets as countries that are earlier in their development cycles but could exhibit similar characteristics in the future, such as

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Vietnam and many African countries. We serve over 1,300 customers annually, and our largest customer accounted for less than 5% of our sales in 2010. We maintain strong, longstanding relationships with our customer base, with an average tenure of 13 years with our top 10 customers.

Our sales grew by 34% to $375.3 million in the twelve months ended March 31, 2011 from $238.5 million in the twelve months ended March 31, 2010, and our Adjusted EBITDA grew by 67% to $38.5 million from $23.0 million in the same period. See note (3) to the table set forth in "— Summary Historical Consolidated Financial and Operating Data" for a reconciliation of Adjusted EBITDA to net loss. We have focused on product innovation and strategic growth initiatives in new markets and applications, as exemplified by the ongoing diversification of our sales. Emerging and frontier markets accounted for 38% of our sales in 2010, up from 28% in 2008. Despite challenging economic conditions in early 2010, we were able to meaningfully streamline our operations and implement successful performance improvements that have enhanced our profitability and provided us with significant operating leverage. As a result of these initiatives, we have been able to increase our Adjusted Gross Margins by 10% to 19% in the quarter ended March 31, 2011 from 9% in the same period in the prior year, and we believe there is an ongoing opportunity for improvement. See note (2) to the Consolidated Statement of Operations Data table in "Selected Historical Consolidated Financial and Operating Data." Among other initiatives, we diversified our resin sources, implemented margin management and pricing programs, eliminated two high-cost manufacturing locations, sold a non-core labor-intensive installation business and permanently reduced our headcount by approximately 38% since December 2008.

Our Industry

A&M estimates that the market for geosynthetics used in environmental containment applications will be $1.7 billion in 2011, and is expected to grow at an annual rate of 6% to $2.1 billion by 2015. According to A&M, we are the largest market participant with 24% global geomembrane market share, and we are the market leader in several key markets and geographies, as shown by our 40% market share in the mining end market, our 19% market share in waste management end market, and our 11% market share in the liquid containment end market. Our industry is highly fragmented due to its relevance to a wide variety of products, applications, end markets and geographies. For the most part, other market participants are small, privately held companies that compete on a local or regional basis and offer only one or a few products. Globally, demand for geosynthetics is influenced by environmental regulations, particularly those involving heap leach mining, landfills and waste ponds for industrial and energy process by-products. For these markets, some type of geosynthetic is typically required to comply with environmental standards for groundwater protection. In the United States, one example of applicable legislation is RCRA, which provides legal guidelines for the storage, treatment and disposal of hazardous and nonhazardous solid waste.

Mining. In the heap leach extraction process used in the mining industry, geosynthetic systems prevent the leakage of the valuable leachate into which the metal is dissolved, protect the ground and soil from contamination and provide drainage solutions. In all other processes, geosynthetics are used as containment solutions for the tailing ponds in which water borne tailings are stored in order to allow the separation of solid particles from water. The size of the geosynthetic opportunity in mining end markets is directly related to the amount of global mining activity, which is driven by demand for metals and minerals and the need for new mining infrastructure to satisfy this demand. Our products are especially relevant to mining applications focused on copper, gold, silver, uranium and phosphate. According to Datamonitor, the global copper industry alone is expected to produce 19.4 million metric tons in 2015, representing an increase of 22.5% over 2010 production levels. The global mining industry is expected to increase annual capital

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expenditures by 113% to $168 billion in 2018 from $79 billion in 2009, according to the McKinsey Basic Materials Institute.

Waste Management. Geosynthetics are used in the management of MSW as liners to prevent landfill runoff from entering the surrounding environment and as caps to prevent the escape of greenhouse gases, control odors and limit rainwater infiltration. Key Note estimates that 2.0 billion tons of MSW were generated worldwide in 2006 and nearly 3.0 billion tons are expected to be generated in 2011, representing annual growth of approximately 8%. While growth in North American and European waste management markets has historically trended with GDP growth, we believe the construction and expansion of landfills for the containment of this waste will drive global geosynthetic demand in emerging markets. According to Key Note, developing nations, such as China and India, represent more than half of global MSW generation and also require the most investment in their waste management infrastructure. We believe that increased wealth, the positive correlation between MSW generation and per capita GDP and heightened environmental regulation will move disposal practices in Asia and other emerging markets away from current open dumping and open burning practices towards landfilling and other more environmentally friendly methods of disposal. China has addressed the need for increased sound waste disposal resources in its twelfth five-year plan, the most recent in a series of economic development initiatives, which mandates the investment of 180 billion Yuan, or approximately $28 billion, in the urban waste disposal sector between 2011 and 2015.

•: Water Infrastructure. Our products are used to prevent water leakage in water transportation and storage applications, such as reservoirs and canals. Frost & Sullivan estimates that approximately $6 trillion of global investment in the water industry will be required through the next twenty years, and that investment in water infrastructure alone will exceed $525 billion by 2016. This will be magnified in emerging economies in South America, Asia Pacific, Middle East and Africa, where population expansion and urbanization coupled with water scarcity and pollution will cause investment to outpace global rates.
•: Agriculture and Aquaculture. Irrigation waterways for agriculture end markets and fish farming ponds for aquaculture end markets employ geosynthetic products to prevent the leakage of water. According to the World Fish Center, aquaculture is among the fastest growing food production sectors in the world, with fish production expected to increase by as much as 67% between 2008 and 2030 to 110 million tons. In 2008, Asia represented over 90% of global aquaculture production, driven by increasing urbanization and affluence, higher per capita consumption and more protein-rich diets.

Coal Ash Containment. Coal-burning power plants produce coal ash, a pollutant that can contaminate soil and groundwater, as a byproduct of the combustion process. Parthenon estimates that 135 million tons of coal ash were produced in 2009 in the United States. Approximately 55% of this was disposed of in surface impoundments, landfills and minefills, which are often unlined or insufficiently lined. In December 2008, a coal ash containment failure at The Tennessee Valley Authority's fossil fuel plant in Kingston, Tennessee resulted in the release of approximately 5.4 million cubic yards of coal ash into the Emory River. The clean-up costs and timeline associated with the failure are estimated to be in excess of $1 billion and four years, respectively. Following this incident, between May and November 2010, the EPA announced plans to regulate the disposal of coal ash generated by coal-fired electric utilities under RCRA, published proposed rules for the regulation and held a public comment period. According to Parthenon, demand for geosynthetics is expected to accelerate to between 235 million and 410 million square feet annually between 2011 and 2014 assuming EPA regulates coal ash disposal under Subtitle C or Subtitle D in 2011 and mandates that new and replacement coal ash impoundments and landfills are lined. Utilities have already begun constructing disposal facilities that meet the requirements of the regulation in advance of it coming into effect.

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Shale Oil and Gas. Geosynthetic solutions are used in a number of applications in the drilling and production of shale oil and gas, including to effectively line storage and disposal ponds for both the freshwater required for hydraulic fracturing, or fracking, and for flowback water, a by-product containing high levels of the salt, down-well chemicals and metals used in the fracking process. According to Spears & Associates, Inc., $1.0 trillion of capital is expected to be spent in onshore oil and gas drilling and completion in the United States between 2011 and 2016. A portion of this capital will be used to develop over 103,000 horizontal wells in this period, the significant majority of which we believe will be in shale plays. We believe that the majority of producing shale wells will ultimately require appropriately lined ponds for the containment of freshwater, fracking chemicals and flowback water. These expenditures will support anticipated growth in domestic shale oil and gas production. While total domestic natural gas production is projected by the EIA, to grow by 25% to 26.3 trillion cubic feet, or tcf, in 2035 from 21.0 tcf in 2009, shale gas production is expected to grow by over 250% to account for 47% of total natural gas production by 2035 compared to 16% in 2009.

Our Competitive Strengths

Global infrastructure provides key competitive advantages. Our network of manufacturing facilities and sales and engineering personnel strategically located around the world positions us well to:

•: Opportunistically access the most attractive regions and sub-sectors of our markets. Sustained high prices for precious and industrial metals combined with global industrialization and demand, especially from emerging markets, has expanded mine production in areas such as Chile, Africa, China and Indonesia. In addition, we believe that continued urbanization, GDP growth and increasing environmental regulation will create ongoing demand for environmentally sound waste management infrastructure in China and India. We have a strong, established local presence in the regions where each of these opportunities is located.
•: Focus on complex, high-priority applications. Our ability to supply customers with products from any of our seven manufacturing facilities located on five continents allows us to target large and complex projects for which geosynthetics must be delivered on a strict schedule, particularly for our customers in the mining industry. We are able to provide our customers the confidence of on-time delivery, even for large orders delivered over the course of several months, which provides us with an advantage over regional competitors who may have capacity constraints as a result of their limited facilities. In addition, our global engineering presence allows us to have a local technical dialogue with our customers that allows us to effectively tailor our solutions for these complex projects, which we believe differentiates us from other industry participants.
•: Capitalize on regional differences in the costs of our raw materials. Our suppliers sell resins through local markets, and we are able to source raw materials, which primarily consist of resin, for our global operations from the most cost-efficient region. We regularly take advantage of more attractive prices for resin, net of transportation costs, in regions other than where it is ultimately utilized. Our ability to source resins on a global basis provides us with leverage over regional raw material suppliers, which allows us to ensure a consistent supply of competitively priced raw materials.

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•: Maintain strong, global relationships with our customers and end-users. We have been able to develop strong, long-term relationships with our multinational customers and end-users as a result of our ability to serve them on a global basis, despite the potentially remote locations of their projects.

Our Growth Strategy

Leverage global infrastructure to expand market share in certain geographies and end markets. We are focused on continuing to utilize our international presence to improve our penetration of high-growth emerging markets, where we generated 38% of our sales in 2010. We are particularly focused on pursuing attractive growth opportunities in Asia, the Middle East and Africa. We plan to expand sales and engineering coverage in certain of these regions and evaluate the deployment of manufacturing lines so that regional production capacity and market opportunities are aligned to address these regions. In addition, we seek to continue expanding our share in key end markets by further developing our targeted product offering for these markets and continuing to grow relationships with existing and new customers globally. By pursuing these strategies, we believe we can improve our access to high-growth regions and markets, enhance our operational flexibility and continue to target high-value projects globally.

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products, our strategy focuses on developing tiers of products that are fit-for-purpose, so that product specifications are determined by the application, thereby maximizing our overall customer value proposition. For instance, heap leach mining applications, in which valuable metals dissolved in harsh chemicals need to be contained, do not require similar geosynthetic products as aquaculture applications, where water needs to be contained. Our intention is to maximize our profitability by continuing to match relevant product specifications to each of our end markets on a global basis. With respect to our new products, our strategy involves developing solutions engineered to resolve common problems in our end markets and applications. These next generation products often provide higher technical capabilities and higher margins. For instance, we have developed a lining solution that allows for leak detection during installation and throughout the project lifecycle, thereby reducing the risk of long-term environmental damage and providing a liability management tool for the end-user.

Our History

We were founded in 1981 by Clifford Gundle under the name Gundle Corporation, and we believe we were the first company to develop lining systems from high-density polyethylene. We grew significantly, and in 1986, an affiliate of Odyssey acquired a majority ownership interest in us and we completed an initial public offering and our shares were listed on the New York Stock Exchange. Between 1995 and 2002, we completed a series of acquisitions that broadened our global reach, added manufacturing capabilities,

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expanded our distribution network and enhanced our product offering. These included the two transformational acquisitions of SLT Environmental, Inc. and Serrot International, Inc., each of which significantly improved our global scale and the latter of which established us as the global leader in geosynthetic containment solutions.

In May 2004, CHS acquired a majority ownership interest in us and our shares ceased to be publicly traded. In the seven years following our acquisition by CHS, we strategically diversified our end market and geographic exposure, and in December 2005 we completed the acquisition of the operating assets of SL Limitada, which improved our penetration of the South American and mining markets. In 2009 and 2010, we undertook a restructuring initiative that streamlined our business and implemented successful performance improvements, including the following.

•: We sold our interest in Bentoliner and subsequently consolidated our GCL manufacturing capacity into our facility in Spearfish, South Dakota.
•: We divested our U.S. Installation business to one of our customers, thereby eliminating potential channel conflicts with our installation customers. As a result of the labor-intensive nature of installation as compared to manufacturing, the divestiture of the non-core U.S. Installation business allowed us to reduce complexity in corporate overhead, reduce costs and improve our profitability.
•: We closed GSE UK, our facility in Soham, the United Kingdom, and transferred the equipment to our more efficient facilities, from which we are able to more cost-effectively serve former customers of GSE UK.
•: We optimized our supply chain by diversifying our resin suppliers, and we implemented margin management and pricing decision tools.
•: We have focused on product innovation and strategic growth initiatives in new end markets and applications, as exemplified by the ongoing diversification of our sales.

Products

We develop, manufacture and market a broad array of geosynthetic products used in the environmental containment and management of solids, liquids and gases for organizations engaged in mining, waste management, liquid containment, coal ash containment, shale oil and gas and other industrial and civil applications. Our product breadth enables us to fully meet the needs of our customers by providing all products required in geosynthetic lining systems. We categorize our products into geomembranes, drainage products, geosynthetic clay liners, or GCLs, nonwoven geotextiles and specialty products, each of which can be used on a stand-alone basis or packaged into solutions to serve a range of applications.

Geomembranes

Geomembranes are synthetic polymeric lining materials used as barriers in geotechnical engineering applications in end markets that include mining, solid waste containment and liquid containment. Geomembranes are manufactured from polyethylene and polypropylene resins with additives designed to resist weathering, ultraviolet degradation and chemical exposure for extended time periods. Our geomembrane liners are available in thicknesses of 20 mil to 240 mil, where 1 mil is equivalent to 1/1000th of an inch, and seamless widths of up to 34.5 feet. We provide an extensive product offering with a range of geomembrane liners to meet the needs of specific applications. Some of our most popular types of geomembranes include:

•: GSE HDPE. High-density polyethylene, or HDPE, liners are the most widely used material for lining applications in the geosynthetic products industry. GSE HDPE liners provide chemical resistance, relative impermeability, resistance to ultraviolet light and durability under high levels of tension. Common applications for GSE HDPE liners include mining heap leach pads, landfill cells, coal ash impoundments and hazardous waste containment systems.

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•: GSE LLDPE. Linear low density polyethylene, or LLDPE, liners offer greater flexibility than HDPE liners, allowing increased conformity to an uneven ground. High elongation properties allow these liners to conform to irregularities in the subgrade, which is the leveled-off surface of earth or rock underlying a foundation, that may cause punctures and tears in other liners. Common applications for LLDPE liners include landfill caps and mining heap leach pads.
•: GSE Textured. Textured liners create increased frictional resistance between the soil layers and the liner system, which allows the liner system to maintain its integrity on steep slopes and under harsh conditions. These liners maximize the volume of material that can be contained within the geomembrane. Common applications for GSE Textured liners include landfill liners and mining heap leach pads located on steeper slopes.
•: GSE White. This co-extruded, HDPE or LLDPE geomembrane liner reduces heat build-up through its light-reflective properties. By reflecting light and heat, the liner expands and contracts less during installation, reducing the likelihood of wrinkles and associated stress. In addition, the lower temperatures on the surface of the liner enable installers to work more effectively. The liner's reflective nature also protects subgrade soils from drying out and cracking, and the white surface greatly improves detection of installation damage by revealing scoring and abrasions as black marks exposed against the white surface. GSE White liners are commonly used in conjunction with nuclear power plants, mining and landfill projects.
•: GSE Conductive. This premium grade, HDPE geomembrane liner allows for easy and efficient spark testing of the installed material to detect post-installation damage and locate potential leaks. This product is used in applications that have a high risk of containment failure.

Drainage Products

Drainage products, such as geonets and geocomposites, typically are installed along with geomembranes in a liner system to keep liquids from accumulating on the liners. These drainage products provide the transmission avenues for liquid and gas collection and leak detection systems. Our primary drainage products are GSE HyperNet and GSE FabriNet.

•: GSE HyperNet. Our geonet product consists of two sets of HDPE strands intertwined to form a channel along which fluid is conveyed for drainage. This drainage capability has traditionally been provided by thick layers of aggregates, such as sand or gravel. GSE HyperNet has better performance characteristics and is easier to install than traditional aggregates. GSE HyperNet liners are commonly used as part of a landfill liner system.
•: GSE FabriNet. Our geocomposite product is produced by heat bonding nonwoven geotextiles to one or both surfaces of the GSE HyperNet. This permeable textile serves as a separator and a filter, keeping soils out of the GSE HyperNet drainage layer, which allows the product to perform its intended function of transmitting liquids and gases. GSE FabriNet liners are commonly used as part of a landfill liner system.

Geosynthetic Clay Liners

GCLs are synthetic clay liners that typically are installed as the bottom layer of a liner system. They are constructed of sodium bentonite clay, which is a highly impermeable substance and often replaces the thick layers of compacted natural clay that are sometimes used as a subgrade layer. We offer two varieties of GCLs:

•: GSE GundSeal. This GCL combines HDPE liners with highly expansive sodium bentonite clay. The sodium bentonite clay is adhered directly to the liner and serves as a support layer to the liner, sealing any small punctures in the overlaying liner by expanding or swelling upon contact with liquids. Common applications of GSE GundSeal include landfill liners and water containment pond liners.

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•: GSE Bentoliner. This GCL combines durable geotextile outer layers with an inner layer of low permeability sodium bentonite clay. The geotextile's thermally bonded fibers reinforce and protect the bentonite layer, providing high internal strength and resistance to destructive chemical components, such as those found in coal ash. GSE Bentoliner includes patent-pending coal ash-resistant GCL. GSE Bentoliner offers an array of application usages for low to high loads and flat to steep slopes in landfill liners, mining heap lead pads and water containment pond liners.

Nonwoven Geotextiles

Nonwoven geotextiles are synthetic, staple fiber, nonwoven needle-punched fabrics used in environmental and other industrial applications that include filtration, soil stabilization, separation, drainage and gas transmission, cushion and liner protection applications. Our nonwoven geotextile products are available in many weights and thicknesses to meet specific product requirements. They are used primarily internally to manufacture our geocomposite and Bentoliner products. Sales of nonwoven geotextiles represented 3% of our total product sales in each of 2008, 2009 and 2010.

Specialty Products

We offer other specialty polysynthetic products that were developed for unique solutions and do not fall under the above categories. Examples include:

•: GSE CurtainWall and GSE GundWall. These specialty products are vertical barrier systems that block the lateral migration of subsurface fluids. GSE CurtainWall is best suited for trench-style installations, while GSE GundWall is more commonly installed with trenchless, vibratory and installation techniques.
•: GSE StudLiner. GSE StudLiner is a studded geomembrane that protects against corrosion and deterioration of concrete structures, including tanks, pipes, drainage channels and tunnels. Common applications for GSE StudLiner include industrial, municipal and civil applications, such as concrete storage tank protection.
•: Pre-Fabricated Products. These products include pipe boots, corners, sumps or other ancillary parts that are fit to the liner in order to reduce installation time and simplify the process.

End Markets and Applications

Our broad selection of geosynthetic products are used in a variety of end markets and applications. End markets for our products include mining, solid waste containment, liquid containment, coal ash containment, shale oil and gas and other industrial and civil applications.

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Mining

Our products are used in heap leach mining processes and other mining processes. Heap leach mining enables the low-cost extraction of metals from low-grade ores. Heap leaching entails placing mined ore on a large geosynthetic leach pad and pouring an acid leachate over the ore to dissolve the ore, separating targeted minerals or metals in the process. The use of geosynthetic materials prevents the contamination of the soil and groundwater by these chemical solutions and contains the valuable dissolved ore in the leachate, ensuring its recovery. Geomembranes, drainage products and geosynthetic clay liners are used to line the soil, drain the leachate and recapture and recycle the solutions along with the extracted precious metals.

In other mining processes, geosynthetics are used as containment solutions for the tailing ponds in which water-borne tailings, or the materials left over from separating the valuable fraction from the uneconomic fraction of an ore, are stored in order to allow the separation of solid particles from water. As a result of the potentially environmentally hazardous composition of tailing, modern-day mining procedures make tailings areas environmentally safe after closure, as the storage and disposal facilities for tailings, typically a dam or pond, is often the most important environmental liability for a mining project. Geosynthetic solutions are used to appropriately line tailing ponds for the confinement of tailings and groundwater protection purposes.

Solid Waste Containment

One of the primary applications for our products is the construction of landfill liner systems for solid waste containment. Geomembranes function as drainage products and liners to prevent landfill runoff from entering the surrounding environment and as caps to prevent the escape of greenhouse gases, to control odors and to limit rainwater infiltration. Our suite of products and wide industry expertise allows a customer to employ us as its single-source provider for the numerous landfill liner products needed to construct a landfill liner system. The primary purpose of a liner in a landfill is to protect the soil and groundwater from contamination. Liners can also be used upon the closing of a landfill, when a landfill cap is installed on top of the waste to prevent the degrading waste gas from escaping into the atmosphere.

Liquid Containment

Our geosynthetic products are also used globally in a wide variety of liquid containment applications. Water treatment facilities, canals, irrigation waterways, reservoirs, dams, tunnels and other civil engineering and nonbuilding construction projects require geosynthetic products for liquid containment. Geomembranes are used in agriculture, aquaculture and other water management applications to contain water, a scarce resource in certain climates, protect against the leakage of environmentally contaminated substances, retain the structural integrity of canals and ponds and protect against soil erosion and weed growth.

Coal Ash Containment

Our products are used in the ponds, landfills and surface impoundments which are used to contain the ash that is produced as a byproduct of the coal combustion process. Because coal ash is a contaminant which contains the same metals and other components as the coal which is burned, geosynthetic solutions are used in groundwater protection applications by electric utilities and other non-utility, industrial coal burning sites.

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Shale Oil and Gas

Our geosynthetic solutions are used in a number of applications in the drilling and production of shale oil and gas, including to effectively line storage and disposal ponds for both the freshwater required for fracking and for flowback water, a by-product containing high levels of the salt, down-well chemicals and metals used in the fracking process.

Supply Chain Management

Resin-based material, derived from crude petroleum and natural gas, accounted for 74%, 70% and 72% of our cost of products in 2008, 2009 and 2010, respectively. Our ability to both manage the cost of our resin purchases as well as pass fluctuations in the cost of our raw materials through to our customers is critical to our profitability. In early 2010 we implemented successful performance initiatives that focused on reducing the risk of volatility in resin costs on our profitability. We have developed the policies, processes, tools and organizational training procedures listed below to enable better resin cost management and facilitate the efficient pass through of increases in our resin costs to our customers. As a result of these policies, we successfully managed volatile resin prices between June 2010 and May 2011, when polyethylene resin prices fluctuated 23.1% between $0.78 per pound and $0.96 per pound, according to publicly available CID data.

•: We have increased the number of our raw material suppliers. In addition, we now conduct our purchasing on a global basis to facilitate a consistent supply of competitively-priced raw material at each of our manufacturing facilities. In addition to providing us with better leverage with suppliers, this practice has enabled us to better manage our working capital on a global basis. In 2010, our largest supplier accounted for 17% of our costs of products, down from 34% in 2009.
•: We hired a highly experienced polyethylene expert to lead our global procurement effort, implement best practices in global resin purchasing and better forecast our resin costs.
•: We have implemented pricing tools and training guidelines for our sales force and finance team that facilitate effective margin evaluation. The new tools and training guidelines provide all personnel involved in selling our products and approving bid submissions with access to the information required to effectively manage our profitability and the training to appropriately use this information. The pricing tool uses a continuously updated cost model that takes into account our internally forecasted resin pricing, developed by the polyethylene expert mentioned above. As a result, all of our quotes include product pricing that reflects delivered cost (including forecasted resin prices) and calculates our anticipated project profitability.
•: We have institutionalized a stringent internal bid approval and escalation process using the pricing tool described above. As a result, bids often reach our Chief Financial Officer for approval, depending on the order size and anticipated profitability. This policy has allowed us to track and manage the success of our sales force in using the pricing tool and to be more nimble in our pricing and cost management decision making. We also review all sales managers' salaries and incent them with a commission program that is based on gross profit.
•: We have created a plant sourcing decision model that we run for certain large projects in order to determine the manufacturing facility with the lowest delivered cost for each project. This decision model considers the impact of regional resin cost fluctuations, plant capacity, manufacturing costs and transportation costs. This model allows us to better manage our profitability across regions.
•: We have also globally implemented a large project tracking process that provides better visibility into our sales pipeline and increases our ability to manage working capital, plant capacity and profitability. For some larger, longer-run projects, we may purchase the resin required for the project in advance, using either our balance sheet or liquidity provided by the customer, in order to better manage the risk volatile resin prices present to our profitability. Even for these large and complex orders, however, delivery of our products usually occurs over a relatively short timeframe, which

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protects us from extended exposure to fluctuating resin prices when we have not purchased resin in advance.

While the significant majority of our products are sold under contracts that provide for 30-day re-pricing provisions at our option, and while we have taken advantage of this option in the past, the policies, processes, tools and organizational training procedures described above allow us to limit the need to re-price projects already under contract. This in turn helps us better manage our relationships with our customers. We believe that managing the risks associated with volatility in resin costs is now among our critical and core competencies.

Manufacturing, Quality Control and Safety

We manufacture our products to standards or special project specifications through different processes, resulting in a broad array of products for liner systems. The following table summarizes the different processes we use:



Manufacturing Process	Products	Description
Round Die	Geomembranes	Blended polymer foundation is extruded vertically from a round die through two concentric die lips, then cut, flattened and rolled onto the take-up core.
Flat Cast	Geomembranes	Blended polymer foundation is extruded horizontally between two flat die lips and rolled onto the take-up core.
Texturing	Geomembranes	Molten polymer is sprayed onto previously extruded sheet creating a textured surface.
Geonet and Geocomposite	Drainage Products	Blended polymer formulation is extruded downward to form a net, which is cut and formed into rolls. The geocomposite is produced by attaching nonwoven geotextile to the geonet.
GundSeal GCL	GCLs	Geomembrane is fed through rollers and applied with a bentonite clay and adhesive mix.
Needle-punched Blanket GCL	GCLs	Bentonite clay is sealed between two layers of nonwoven geotextiles through a stitch bonding process.
Needle-punched Nonwoven	Nonwoven Geotextile	Synthetic fibers are carded into a web, which is interlocked by repeatedly passing barbed felting needles in and out of the web.

Our capabilities in round die and flat cast manufacturing provide us with significant competitive advantages by enhancing the depth and variety of our geomembrane product line. Round die manufacturing allows us to produce liners with multiple layers, which is necessary in the production of certain specialized products, such as GSE White. Additionally, the round die process offers co-extrusion capabilities that allow for the simultaneous texturing and production of the liner. The flat cast manufacturing process allows us to precisely control the thickness of geomembranes. In addition, we are able to produce HDPE and LLDPE geomembranes at a low cost through flat cast manufacturing.

The size, cost and sophistication of our manufacturing lines create a competitive advantage in the markets in which we operate. In addition, the sophistication of the manufacturing process requires an operational

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expertise that we have developed over 30 years. The production line must be sensitively calibrated to ensure that the speed of the line and the rate of extrusion produce a finished good that meets requirements for integrity and width. Our experienced production engineers are a valuable asset to us because of their ability to efficiently and effectively manage the manufacturing processes.

Our global manufacturing quality assurance program establishes rigorous quality control standards for the manufacture of geosynthetic products. Quality assurance laboratories at each manufacturing facility oversee all quality control initiatives. All raw materials, including polyethylene resin, are subject to tests that must comply with our specifications before entering the manufacturing process. Finished products are also tested; the quality assurance laboratories test a strip from every finished product to ensure that it complies with product specifications. The laboratories catalog every strip in the event the integrity of a product in the field is ever questioned. In addition, thickness readings are taken continuously over the length and width of the roll to ensure product consistency.

Our operations are centrally managed and coordinated. Our central organizational structure was implemented in 2010 and has resulted in the ability to improve performance through a common set of metrics and the sharing of best practices across our global infrastructure. Centralized engineering direction and product specifications create a network that can manufacture our products to our specifications on a global basis. Additionally, global customer inquiries are evaluated using a sourcing model that compares delivered cost from various manufacturing locations to arrive at the optimal cost equation for serving global demand.

Safety is also coordinated on a global basis by a Global Safety Director based in Houston. This effort is developing a strong safety culture across our company. Safety awareness is driven through global training initiatives supported by employee involvement in building our safety culture. The results of these programs are manifested in a 2010 global OSHA incidence rate of 2.68 versus the plastics process industry average of 4.10 in the United States. Through the first quarter of 2011, we have achieved a global OSHA incidence rate of 2.20.

Facilities

We have manufacturing facilities at seven locations around the world, providing access to diversified end markets and geographies. Our facilities are strategically located to enable us to serve the fastest growing markets and to effectively manage our cost structure. Our global operating infrastructure has proven to be a valuable competitive advantage in marketing our products to international markets and controlling manufacturing and distribution costs. We maintain the broadest global reach among our competitors in the geosynthetics industry who have a narrower geographic or product focus. The following table provides the plant location and number of personnel:



Location	Personnel
Houston, Texas (Headquarters) (Richey)		182
Kingstree, South Carolina		41
Spearfish, South Dakota		22
Hamburg, Germany (Rechlin)		134
6th of October City, Egypt		50
Bangkok, Thailand (Rayong)		99
Santiago, Chile (Antofagasta)		53

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Our global manufacturing infrastructure enables us to shift our manufacturing capacity among our worldwide locations to best meet changing global geosynthetic demand and to optimize our supply chain based on regional resin price fluctuations and transportation costs.

Sales and Marketing

Our sales and marketing efforts are conducted through a global network of sales professionals in more than 30 countries who facilitate sales to end markets in approximately 90 countries. Our sales efforts are targeted primarily at national or regional waste management companies, independent installers of geosynthetic liners and mining, power and industrial companies. Our product sales consist primarily of sales to general contractors, independent installers of geosynthetic liners and facility owners who are responsible for product specifications and the design and awarding of orders.

Our customer relationships enable us to capture greater market share. By leveraging customer relationships to work with end-users in the planning phase of projects, our products are often specified prior to the issuance of a request for proposal. Our products are typically sold through responsiveness to customers' proposals that establish the design and performance criteria for the desired products. We are able to favorably leverage our product breadth, engineering capabilities and customer and end-user relationships in order to generate orders.

We provide customers with limited material warranties on products, typically from one to five years. These warranties are generally limited to repair or replacement of defective products or workmanship, often on a prorated basis, up to the dollar amount of the original order.

Environmental Legislation

The enactment of numerous environmental laws and corresponding regulations has enhanced the market for our geosynthetic products.

In the United States, the Resource Conservation and Recovery Act of 1976, as amended, or RCRA, provides the legal framework for the storage, treatment and disposal of hazardous and non-hazardous solid waste. Of particular importance to us has been the impact of Subtitle D of RCRA, which regulates the disposal of municipal solid waste, or MSW, at roughly 2,300 U.S. landfills. State regulations adopted under this title impose stringent compliance standards with regard to groundwater protections, which is what our products are designed to provide. Subtitle D regulations specify the use of a composite liner system consisting of highly impermeable clay and a geomembrane liner. The liner must be at least 30 mils thick. In addition, amendments to RCRA require all new hazardous waste landfills to use liner systems composed of two or more liners, with leachate collection and drainage systems above and between the liners. These same amendments require double liners for surface impoundments or ponds used in the containment of certain hazardous liquids.

Also of importance to our business, the Comprehensive Environmental Response, Compensation and Liability Act, or Superfund, enacted in 1980, governs cleanup of abandoned or uncontrolled hazardous waste sites. Our products are used in cleanup work at these sites. For example, the EPA has published a presumptive remedy requiring the use of a "liner cap" in closed municipal solid waste landfills. This liner cap is designed to prevent groundwater contamination and assist in the containment of subterranean liquid waste plumes. Our products have been installed in landfills throughout the United States.

In 1993, the State of Florida published regulations requiring gypsum waste generated as a by-product of phosphate mining to be stored on composite liners with a synthetic component. Our liners meet the specifications set forth in the Florida regulations.

In May 2010 the EPA proposed regulating coal ash as a form of waste under RCRA, which is expected to result in coal ash containment being regulated similar to other wastes (although the specific waste

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classification of coal ash is yet to be determined). Although these regulations would likely apply only to coal-burning electric utilities, such utilities account for 60% of all coal ash produced. The EPA has announced that it is developing federal standards for the disposal of coal ash that will require the use of synthetic liner systems similar to those required by solid waste landfill regulations. This represents a significant growth opportunity for us, and we are already experiencing increased sales in our coal ash containment end market as customers anticipate and preemptively prepare for the potential new regulations.

Environmental laws and regulations in the United States, and in other countries, particularly in the European Community and Japan, have increased the demand for our geosynthetic products. In particular, activities that have an impact on groundwater quality have been the subject of increasing scrutiny by regulators, and may be the subject of future changes to existing laws and regulations. These activities include agricultural irrigation, animal feedlots and compounds, aquaculture facilities, industrial storm water runoff containment areas, canals, mining leach pads and tunnels.

Customers

We have developed strong customer relationships through our history of providing high-quality products. We serve over 1,300 customers worldwide that include primarily municipal and private companies engaged in mining, solid waste management, liquid containment, coal ash containment, shale oil and gas and other industrial and civil applications, as well as the independent installers, distributors and engineering and civil works construction companies serving these end-users. We have solidified relationships with this customer group through our product breadth, high levels of product performance and geographic reach. Our strong and diverse customer base spans a number of end markets in six continents; thus we are not overly dependent on any one customer or group of customers. In 2010, our top ten customers represented 25.6% of our total net sales, with no customer representing more than 5% of our total sales.

We estimate that approximately 85% of our customer base in 2010 represented repeat customers, or customers that have purchased products from us at least once previously, including independent installers of our products. We have developed longstanding relationships with our repeat customers, and our top ten customers have an average relationship tenure with us of 13 years. Independent installers have consistently been among our top ten customers, but they vary year-to-year based on their respective success in winning orders. We also serve smaller customers that may only have a one-time need for a geosynthetic product. Our diverse customer base across a range of end markets and geographies helps support stable demand for our products.

Suppliers

Our principal products are manufactured primarily from specially formulated high grade polyethylene resins with chemical additives that enable the end product to resist weathering, ultraviolet degradation and chemical exposure. We maintain close, longstanding relationships with our suppliers to ensure supply and quality of resins. We maintain at least two primary suppliers for each manufacturing location in order to protect against potential supply shortages and to avoid reliance on a single supplier. We believe that because of our scale and manufacturing locations, we are able to negotiate resin prices less than or equal to any of our competitors. With seven manufacturing facilities on five continents and a global network of distributors, we are also able to optimize freight costs by reducing shipping distances and negotiating attractive rates with local distributors.

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Competition

The geosynthetics industry is relatively fragmented due to the wide variety of products, functions, markets and geographies. We are one of the few companies that offer multiple types of geosynthetic products. A&M estimates that over 150 companies produce geosynthetics, and we estimate that there are approximately 30 companies that compete in the production of geomembranes, which is our largest product type. The majority of competitors in the geomembrane market are small and medium-sized, privately held companies that offer only one or a few product types or lack a global market reach. We maintain a significant competitive advantage as the only industry participant with both (i) the ability to supply our customers with a complete geosynthetic lining solution, including composite liners and drainage products and (ii) the geographic reach to effectively serve a global market and respond to demand internationally. We have also leveraged our global presence by centralizing purchasing to ensure raw materials are purchased at the most economical prices, thereby taking advantage of economies of scale to which smaller competitors do not have access. Other competitive factors include the performance of our lining systems, quality and pricing. We lead the global geomembrane market with 24% market share.

One of our primary competitors in North America and Europe is Agru Kunststofftechnik GmbH, or Agru, a family-owned company based in Austria, which focuses primarily on piping systems. This company's American affiliate, Agru America, produces geomembranes and other geosynthetics primarily for lining applications to protect against leaching wastes and fluids from reservoirs. Agru has facilities in Austria, Germany and the United States.

In less developed regions of the world, the competitive landscape is more fragmented than in the United States and European markets. Many competitors in these developing regions are low-cost geosynthetic manufacturers that lack the product quality and consistency to compete in more mature markets. As international regulations become increasingly stringent, greater importance will be placed on manufacturers such as us that have the technical expertise and industry certifications required to supply geosynthetic products that comply with these regulations.

Intellectual Property

Our intellectual property portfolio is one of the means by which we attempt to protect our competitive position. We rely primarily on a combination of know-how, trade secrets, trademarks and contractual restrictions to protect our products. We also own several patents addressing limited aspects of our products. We are constantly seeking ways to protect our intellectual property through registrations in relevant jurisdictions. We have actively monitored and challenged violations of our intellectual property rights in the past, and we intend to continue to actively protect our intellectual property rights in the future to the fullest extent possible.

We have received patents from the U.S. Patent and Trademark Office, or USPTO. Some of these patents have been issued in select foreign countries and certain patent applications are being prosecuted in such jurisdictions. We have registered our trademark and logo with the USPTO, and have registered our trademark in select foreign countries. Although in the aggregate our patents are important in the operation of our business, we do not believe the loss, by expiration or otherwise, of any one patent or group of patents would materially affect our business.

Employees

As of December 31, 2010, we employed 525 employees worldwide, of whom 208 were located in the United States. Given the seasonal nature of our business, we shift our total labor force throughout the year to accommodate for peak manufacturing periods and to lower costs through off-season periods. The shifts in our labor force are not material. Except for approximately 27 of our employees at our facility in Chile, none of our employees are subject to a collective bargaining agreement. Our workforces in certain foreign

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countries, such as Germany, have worker representative committees or work councils with which we maintain strong relationships. We believe our employee relations are good.

Legal Proceedings

In the ordinary course of our business, we have been involved in various disputes and litigation. Although the outcome of any such disputes and litigation cannot be predicted with certainty, we do not believe that there are any pending or threatened actions, suits or proceedings against or affecting us which, if determined adversely to us, would, individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations.

Regulation

We are required to comply with a variety of federal, state, local and foreign laws governing the protection of the environment, the exposure of persons and property to wastes and occupational health and safety. These laws regulate, among other things, the generation, storage, handling, use and transportation of waste materials; the disposal and release of wastes and other substances into soil, air or water; and our obligations relating to the health and safety of our workers and the public. We are also required to obtain and comply with environmental permits and licenses for certain operations. If we violate or fail to comply with these requirements, we could be subject to private party or governmental claims, the issuance of administrative, civil and criminal fines or penalties, the denial, modification or revocation of permits, licenses or other authorizations, the imposition of injunctive obligations or other limitations on our operations, including the cessation of operations, and requirements to perform site investigatory, remedial or other corrective action. In some instances, such actions could be material and could result in adverse impacts on our operations and financial condition. Certain environmental requirements, and the interpretation of those requirements by regulators and courts, change frequently and might also become more stringent over time. We may incur material costs or liabilities related to our future compliance with those requirements. We have made and will continue to make capital and other expenditures to comply with environmental requirements. Because of the nature of our business, changes in environmental laws and the costs associated with complying with such requirements could have a material adverse effect on our business.

We are also subject to laws governing the cleanup of contaminated property. Under these laws, we could be held liable for costs and damages relating to contamination of our past or present facilities (including liability to buyers of properties or businesses that we have sold) and at third-party sites to which our facilities sent wastes. The amount of such liability could be material.

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Management

The following table sets forth certain information about our executive officers and directors as of the date of this prospectus.



Name	Age		Position
Executive Officers
Mark C. Arnold		52	President, Chief Executive Officer and Director
Charles B. Lowrey		47	Interim Senior Vice President and Chief Financial Officer
Gregg Taylor		51	Chief Accounting Officer
Peter R. McCourt		51	Vice President of Global Sales and Marketing
Jeffery D. Nigh		48	Vice President of Global Operations
Joellyn Champagne		52	Vice President of Global Human Resources
Directors
Daniel J. Hennessy		53	Non-executive director, Chairman of the Board
Michael G. Evans^(1),^(2),⁽³⁾		56	Independent Director
Marcus J. George^(1),^(2),⁽³⁾		41	Non-executive Director
Richard E. Goodrich⁽¹⁾		67	Independent Director, Chairman of the Audit Committee
Robert C. Griffin⁽²⁾		63	Independent Director, Chairman of the Nominating and Corporate Governance Committee
Charles A. Sorrentino⁽²⁾		66	Independent Director, Chairman of the Compensation Committee

⁽¹⁾: Audit Committee Member
⁽²⁾: Compensation Committee Member
⁽³⁾: Nominating and Corporate Governance Committee Member

Our Executive Officers

Mark C. Arnold. Mr. Arnold has served as our President and Chief Executive Officer since September 2009. Prior to joining GSE, Mr. Arnold was Vice President and General Manager at the Lubrizol Corporation. In addition, Mr. Arnold brings to GSE over 15 years of experience in the global civil construction markets at Advanced Drainage Systems, Inc., or ADS, the leading manufacturer of polyethylene pipe. Mr. Arnold's assignments included: Vice President of International Operations, Vice President of Sales Engineering and Market Development and Director of Distribution Operations. Prior to ADS, Mr. Arnold worked for General Electric. Mr. Arnold's GE career began in GE's Manufacturing Management Program, and was followed by assignments in GE's Aircraft Engines business as a Process Engineer, Quality Manager, Engine Program Manager and Manager of Technical Marketing and Sales Engineering. He holds a Bachelor of Science in Industrial and Systems Engineering from Ohio University, a Masters of Business Administration from Cleveland State University and a Masters of Science in International Strategic Studies from the U.S. Army War College. Mr. Arnold is also a Brigadier General in the U.S. Army Reserve.

Charles B. Lowrey. Mr. Lowrey was our Interim Senior Vice President and Chief Financial Officer from January 2010 through October 2010 and has served in the same role from January 2011 to the present. Mr. Lowrey comes to GSE as a Managing Director of A&M. For over 25 years, Mr. Lowrey has served private equity and corporate clients in interim leadership and performance improvement engagements across a spectrum of industries, including environmental services, manufacturing, energy, construction and retail. Prior to joining A&M, Mr. Lowrey spent two years as a Managing Director at BearingPoint and was formerly a Partner with Arthur Andersen. During his tenure at Arthur Andersen, he served both Browning Ferris Industries, Inc. and Waste Management. Mr. Lowrey earned a Bachelor of Science degree majoring in

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Economics and Computer Information Systems from Houston Baptist University and earned his Master of Business Administration from the University of Houston. Mr. Lowrey is a Certified Public Accountant in the State of Texas.

Gregg Taylor. Mr. Taylor joined GSE as Chief Accounting Officer in May 2010. He is responsible for leading all financial reporting, performance analysis and accounting operations worldwide. Before joining GSE, Mr. Taylor was a business consultant for four years at Alvarez & Marsal Business Consulting LLC, preceded by 11 years at Accenture where he held Senior Director and Partner positions, respectively. Throughout his consulting career, Mr. Taylor served private equity and corporate clients across multiple industries, including manufacturing, energy, healthcare, high-tech and retail. He has held multiple interim finance leadership positions including Chief Accounting Officer for a U.S. waste equipment manufacturer and Corporate Controller for a global energy equipment manufacturer. Mr. Taylor also has extensive finance systems experience having implemented multiple ERP, data warehouse and business analytic solutions for his clients. Prior to consulting, he worked for ten years for a large U.S. pharmaceutical distributor where he held Accounting Director, Regional Controller and Divisional Controller positions. Mr. Taylor earned a Bachelor of Business Administration degree with a major in Accounting from the University of Texas at Arlington and is a Certified Public Accountant (currently inactive) in the State of Texas.

Peter R. McCourt. Mr. McCourt joined GSE as Vice President of Global Sales and Marketing in July 2010. Mr. McCourt is in charge of leading our global sales and marketing efforts, while building and maintaining customer relationships and strategic partnerships. Mr. McCourt has spent over 20 years in international sales and marketing leadership roles. Most recently, Mr. McCourt was a Vice President of Sales for eight years with ERICO International in Solon, Ohio. Prior to joining ERICO, he was at the Hilti Corporation in Schaan, Liechtenstein for 13 years, where he held several major positions, including President and General Manager, Director of Sales, Director of Marketing and Product Manager and Regional Sales Manager. As an employee of global companies that operate in the non-residential construction and civil engineering markets, Mr. McCourt gained exposure to many different business practices and cultures by having sales management experience in Europe, Asia and North America.

Jeffery D. Nigh. Mr. Nigh joined GSE as Vice President of Global Operations in October 2010. Mr. Nigh is responsible for leading all manufacturing, logistics and purchasing activities worldwide. Mr. Nigh began his career at Union Camp Corporation as a Process Engineer. He subsequently held the position of Assistant Plant Manager for a large paper mill, where he was later promoted to Manufacturing Engineering Manager and Plant Manager. After graduating from Harvard Business School, Mr. Nigh joined the global consulting firm McKinsey & Company in Atlanta. After a successful consulting assignment at Springs Industries, the leading manufacturer of textile home furnishings, he joined Springs as President of its Basic Bedding Division. Mr. Nigh was subsequently promoted to implement a new ERP information system for Springs Industries' global manufacturing. Following that multinational assignment, Mr. Nigh was subsequently promoted to several senior roles at Springs, including Vice President and General Manager of global Bedding business, Executive Vice President of global supply chain and Asian sourcing, President of Utility Bedding, and President of Springs Renewables LLC. Mr. Nigh has worked at various U.S., Brazil and Asia locations during these assignments. Mr. Nigh was a national merit scholar and graduated from Georgia Institute of Technology with a Bachelor of Science in Chemical Engineering. Additionally, Mr. Nigh earned his Master of Business Management degree from Harvard Business School.

Joellyn Champagne. Ms. Champagne joined GSE as Vice President of Global Human Resources in January 2011. She is responsible for leading our human resources function worldwide and is an accomplished executive with over twenty years of human resources, legal and management experience. Ms. Champagne has served in numerous HR leadership positions in corporate environments with national health care companies and within the oil and gas industry. Prior to GSE, Ms. Champagne worked for General Electric. During her tenure with GE, Ms. Champagne held assignments in Commercial Finance as Senior Vice President for Belmont Senior Living and led the North America Services division of GE Oil and Gas. Prior to

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this, Ms. Champagne held numerous positions in the healthcare industry. Ms. Champagne also dedicated several years to public service and served the City of Houston as an Assistant City Attorney, Assistant Director of the Houston Municipal Courts and as the Chief of Staff for the Houston Housing Authority. Ms. Champagne filed a personal bankruptcy petition in 2003 and received a discharge in 2004. Ms. Champagne earned a Masters of Law degree from the University of Houston and a Law degree from Thurgood Marshall School of Law.

Directors

We believe that our Board of Directors should be composed of individuals with sophistication and experience in many substantive areas that impact our business. We believe experience, qualifications or skills in a combination of the following areas are the most important to our business: manufacturing; sales and distribution; accounting, finance and capital structure; strategic planning and leadership of complex organizations; legal/regulatory and government affairs; people management; and board practices of other major corporations. We believe that all of our current board members possess the professional and personal qualifications necessary for board service, and have highlighted in the individual biographies below the specific experience, qualifications, attributes and skills that led to the conclusion that each board member should serve as a director.

Daniel J. Hennessy. Mr. Hennessy became a director in 2004. Mr. Hennessy was a founder of CHS in 1988 and now serves as a partner of CHS. Prior to founding CHS, Mr. Hennessy was a Vice President with Citicorp Mezzanine Investments and Citicorp Leveraged Capital Group in Chicago. Before joining Citicorp, he was employed by Continental Illinois National Bank. Mr. Hennessy has extensive experience managing private equity investments and portfolio companies focused on infrastructure and industrial products. He holds a B.A. from Boston College and an M.B.A. from the University of Michigan. Mr. Hennessy serves as a non-voting observer on the Board of Directors of Thermon Group Holdings, Inc. (NYSE: THR), and has served as a director of Waddington North America, Inc.

Michael G. Evans. Mr. Evans became a director in 2004. Mr. Evans currently serves as President and CEO of Waddington North America, Inc., a designer and manufacturer of plastic disposable tableware and packaging, and has served in this position since 1995. In July 2000, the U.K. parent company of John Waddington Ltd., a U.K. public company, divested its North American business operations, which included Waddington North America. From 1978 until the divestiture, Mr. Evans served in various capacities for John Waddington Ltd. in the U.K. and the United States, including as a director of John Waddington Ltd. from 1996 through 2000.

Marcus J. George. Mr. George became a director in 2004. Mr. George joined CHS in 1997 and was promoted to Partner in 2007. Prior to CHS, Mr. George was employed by Heller Financial, Inc. in the Corporate Finance Group. He also worked for KPMG. Mr. George brings to the Board of Directors substantial experience in private equity investments focused on infrastructure and industrial products. He holds a Bachelor of Business Administration from the University of Notre Dame and an M.B.A. from the University of Chicago. Mr. George serves on the Board of Directors of Thermon Group Holdings, Inc. (NYSE: THR) and KB Alloys, LLC, and has served as a director of Waddington North America, Inc.

Richard E. Goodrich. Mr. Goodrich became director and Chairman of our Audit Committee in 2004. From 2001 to 2005, Mr. Goodrich served as Executive Vice President and Chief Financial Officer of Chicago Bridge & Iron Company N.V. (NYSE: CBI),an engineering, procurement and construction company that provides services to customers in the chemicals and energy industries. Mr. Goodrich served as acting Chief Financial Officer of Chicago Bridge & Iron Company after that time and currently devotes part of his time to serving on the boards of public companies. Mr. Goodrich also serves as a director of Thermon Group Holdings, Inc. (NYSE: THR) and Chart Industries (NASDAQ: GTLS). Mr. Goodrich is a Certified Public Accountant having been certified in the District of Columbia in November 1970. Mr. Goodrich brings to the

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Board of Directors the experience and international operations insight of a chief financial officer of a large multinational company.

Robert C. Griffin. Mr. Griffin became a director and chairman of our Nominating and Corporate Governance Committee in June 2011. His career spans over 25 years in the financial sector. Most recently Mr. Griffin was Head of Investment Banking Americas and Management Committee Member for Barclays Capital from 2000 until his retirement in 2002. Prior to that, from 1998 to 2000, Mr. Griffin worked for Bank of America Securities as Global Head of Financial Sponsor Coverage and a member of the Montgomery Securities Subsidiary Management Committee. From 1997 to 1998, Mr. Griffin served as Group Executive Vice President for Bank of America and a member of its Senior Management Committee. Prior to that, Mr. Griffin served as a director of Sunair Services Corporation from February 2008 until its sale in December 2009 as a member of their Audit Committee and Chairman of their Special Committee. Mr. Griffin currently serves as a director of Builders FirstSource, Inc. where he is Chairman of the Audit Committee and was Chairman of their Special Committee in 2009. Mr. Griffin also currently serves as a director of Commercial Vehicle Group, Inc. where he is chairman of the audit committee and was previously chairman of the nominating and corporate governance committee. Mr. Griffin brings strong financial and management expertise to our Board through his experience as an officer and director of a public company, service on other boards and his senior leadership tenure within the financial industry.

Charles A. Sorrentino. Mr. Sorrentino became a director and chairman of our Compensation Committee in June 2011. He has served as President and Chief Executive Officer of Houston Wire & Cable Co. (NASDAQ: HWCC) since 1998. Prior to joining Houston Wire & Cable Co., from 1994 to 1998, Mr. Sorrentino served as President of Pameco Corporation (NYSE: PCN), a national heating, ventilation, air conditioning and refrigeration distributor. Pameco, a $600 million distributor, was listed on the NYSE following an initial public offering in 1997 and was later merged into a larger company. Prior to working with Pameco, Mr. Sorrentino served with PepsiCo, Inc. (NYSE: PEP) for nine years. During this time, he held a variety of positions, including Subsidiary President, Division Vice President and Region Vice President. After completing college, Mr. Sorrentino served twelve years with United Technologies (Sundstrand Corporation) (NYSE: UTX), a manufacturer of industrial, heating and air conditioning components in a variety of engineering, sales, marketing and executive management functions. Mr. Sorrentino is an independent director and non-executive Chairman of the Board of Directors of Thermon Group Holdings (NYSE: THR). Mr. Sorrentino has served as an executive of several large manufacturing companies and brings a diversity of both public and privately held company experience to the Board of Directors. Mr. Sorrentino earned a Master of Business Administration from the University of Chicago and a Bachelor of Science in Mechanical Engineering from Southern Illinois University. He also served in the United States Marine Corps.

There are no family relationships between any of our executive officers or directors.

Our Board of Directors has the power to appoint officers. Each director and officer will hold office for the term of one year and until such person's successor is chosen and qualified or until such person's death, resignation or removal.

Except as described in this prospectus, there are no arrangements or understandings between any member of the Board of Directors or executive officer and any other person pursuant to which that person was elected or appointed to his or his position. See "— Stockholders Agreement" below.

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Corporate Governance

Board Composition

Our certificate of incorporation, which will be in effect immediately prior to the consummation of this offering, will provide that our Board of Directors shall consist of such number of directors as determined from time to time by resolution adopted by a majority of the total number of directors then in office. Initially, our Board of Directors will consist of seven members. Any additional directorships resulting from an increase in the number of directors may only be filled by the directors then in office.

The composition of our Board of Directors after the consummation of this offering will have four independent directors, two directors affiliated with CHS and Mr. Arnold, as a management director. That balance, to which each of our directors contributes, is important to us for several reasons, including:

•: Each of our four independent directors will contribute an outside point of view that we value for providing multiple perspectives to the Board of Directors' oversight and direction of our company and facilitating objectivity in its decision-making process.
•: Because of their affiliation with CHS, each of Messrs. George and Hennessy is particularly attuned to strategic, financial and other matters that may affect our stockholders' investments in our company.
•: Mr. Arnold brings to the Board of Directors an invaluable, in-depth knowledge of our company and our industry, operations and business plans.

Our Board of Directors has affirmatively determined that Messrs. Evans, Goodrich, Griffin and Sorrentino are independent directors under the rules of the NYSE. We do not intend to rely on the "controlled company" exemption from certain NYSE corporate governance requirements.

Board Committees

Our Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.

The composition, duties and responsibilities of these committees are as set forth below. In the future, our board may establish other committees, as it deems appropriate, to assist it with its responsibilities.

Audit Committee

The Audit Committee provides assistance to the Board of Directors in fulfilling their oversight responsibility to the stockholders, potential stockholders and investment community relating to (1) our financial reporting process, (2) the quality and integrity of our financial statements, (3) our systems of internal accounting and financial controls, (4) the performance of our internal audit function and independent registered public auditors (5) the independent registered public auditor's qualifications and independence and (6) GSE's compliance with legal and regulatory requirements.

Our Audit Committee consists of Messrs. Goodrich (Chairman), Evans and George. The Board of Directors has determined that Mr. Goodrich is an audit committee financial expert under the SEC rules and that Messrs. Griffin and Evans are independent under the listing standards of the NYSE. Our Board of Directors has adopted a written charter for the Audit Committee, which will be available on our corporate website at www.gseworld.com upon the consummation of this offering. Our website is not part of this prospectus.

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Compensation Committee

The Compensation Committee is responsible for, among other matters: (1) reviewing key compensation goals, policies, plans and programs; (2) reviewing and approving the compensation of our directors, Chief Executive Officer and other executive officers; (3) reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and (4) administrating stock plans and other incentive compensation plans.

Our Compensation Committee consists of Messrs. Sorrentino (Chairman), Griffin, Evans and George. Our Board of Directors has adopted a written charter for the Compensation Committee, which will be available on our corporate website at www.gseworld.com upon the consummation of this offering. Our website is not part of this prospectus.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee is responsible for, among other matters: (1) identifying individuals qualified to become members of our Board of Directors, consistent with criteria approved by our Board of Directors; (2) overseeing the organization of our Board of Directors to discharge the Board of Directors' duties and responsibilities properly and efficiently; (3) identifying best practices and recommending corporate governance principles; and (4) developing and recommending to our Board of Directors a set of corporate governance guidelines and principles applicable to us.

Our Nominating and Corporate Governance Committee consists of Messrs. Griffin (Chairman), Evans and George. Our Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee, which will be available on our corporate website at www.gseworld.com upon the consummation of this offering. Our website is not part of this prospectus.

Compensation Committee Interlocks and Insider Participation

Decisions on executive compensation for 2010 were made by our Compensation Committee, based upon the recommendations of the CEO with respect to the other executives. During 2010, the Compensation Committee consisted of Messrs. Evans (Chairman), Hennessy, George and Arnold. No member of the Committee was an officer or employee of our company or had any relationship with us that is required to be disclosed as a Compensation Committee Interlock as described in Item 407(e)(4) of Regulation S-K promulgated by the SEC.

Mr. Hennessy is a partner and founder of CHS. Mr. George is a director of CHS. CHS has a controlling ownership interest in us.

Code of Business Conduct and Ethics

We have adopted a code of ethics that applies to each employee, and each employee of our subsidiaries, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Ethics is available on our website at www.gseworld.com. Any amendments to, or waivers from, any provision of the Code of Ethics (to the extent applicable to our principal executive officer, principal financial officer and principal accounting officer) shall be posted on this website. Our website is not part of this prospectus.

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Director Compensation

We do not pay our employee directors or directors affiliated with CHS fees for services as directors. However, following the consummation of this offering and the termination of the Management Agreement, our directors affiliated with CHS will receive compensation for services as non-employee directors, as described below. All of our directors are reimbursed for their reasonable expenses, if any, of attendance at meetings of the Board of Directors or a committee of the Board of Directors.

Messrs. George and Hennessy are partners of CHS. Pursuant to the Management Agreement, during fiscal 2011, we will have paid management fees and expense reimbursements of $2.0 million to CHS. CHS rendered various services to us in consideration for the aforementioned management fees. In addition, during 2011, we amended our management agreement and paid CHS a fee of $2.0 million in connection with certain refinancing transactions. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Refinancing Transactions; Description of Long-Term Indebtedness" for further information.

During 2010, we paid Messrs. Evans and Goodrich, our non-employee directors who are not affiliated with CHS:

•: an annual retainer fee of $20,000, paid quarterly in advance;
•: a committee annual retainer of $5,000, paid quarterly in advance;
•: a committee chairman annual retainer of $5,000, paid quarterly in advance; and
•: meeting fees for board and committees of $1,000, paid quarterly in arrears.

Although the independent directors are also eligible to participate in the 2004 Stock Option Plan, no awards have been granted to the independent directors as of March 31, 2011. In 2006, Mr. Goodrich purchased 2,000 shares and Mr. Evans purchased 1,351.35 shares of GSE Holding common stock at $18.50 per share, which was the price paid by CHS for the stock in connection with the Acquisition.

Effective June 20, 2011, the non-employee director compensation changed as follows:

•: the annual retainer fee increased from $20,000 to $35,000, paid quarterly in advance;
•: a new $1,500 board meeting fee, paid in advance;
•: the committee annual retainer of $5,000 changed to a $1,000 committee meeting fee, paid in advance;
•: a committee chairman annual retainer of $10,000 remained in place for the chairman of the audit committee and changed to $7,500 for the chairmen of the Compensation Committee and the Nominating and Corporate Governance Committee, in each case paid quarterly in advance; and
•: the non-executive chairman of our Board of Directors received an additional retainer fee of $52,500 per year, paid quarterly in advance.

It is expected that non-employee directors will receive an annual equity grant with a grant date fair value equal to $45,000. The grant will be in the form of options, subject to a two-year vesting requirement following our initial public offering.

Stockholders Agreement

In connection with the Acquisition, GSE Holding, CHS IV, certain co-investors and the executives exchanging GSE options for a GSE Holding option, entered into a "Stockholders Agreement" with respect to their GSE Holding securities. The Stockholders Agreement will remain in effect after this offering. The terms of the Stockholders Agreement include:

•: rights to designate three members of the board of GSE Holding;
•: transfer restrictions, subject to customary exceptions;

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•: rights of first refusal in favor of GSE Holding and, to the extent not exercised by GSE Holding, CHS IV;
•: "tag-along" rights in the event of a transfer by CHS IV, subject to certain exceptions including transfers by CHS IV to affiliates and transfers of up to 5% in the aggregate of any class of securities held by CHS IV as of the date of the agreement to employees of, directors of, consultants to and advisors to CHS IV, GSE Holding or any of their affiliates;
•: preemptive rights with respect to an offering of new securities by GSE Holding; and
•: "drag-along" rights in the event the board of GSE Holding and a majority of the stockholders of GSE Holding approve a sale of GSE Holding, subject to certain customary exceptions.

In connection with the consummation of this offering, the Stockholders Agreement will be amended to eliminate or modify certain of the rights set forth above.

Registration Agreement

In connection with the Acquisition, GSE Holding, CHS IV, certain co-investors and the executives exchanging GSE options for a GSE Holding option also entered into a Registration Agreement. Pursuant to the Registration Agreement, holders of shares of our common stock have certain registration rights.

Beginning 180 days after the registration statement of which this prospectus forms a part is declared effective by the SEC, the holders of at least a majority of our common stock originally issued, directly or indirectly, to CHS IV or CHS IV Associates may request registration under the Securities Act of all or any portion of such shares. Following such a request, we are required to offer the other stockholders that are entitled to registration rights an opportunity to include their shares in the registration statement. We refer to all such abovementioned shares as the "Registrable Shares." These "demand" registration rights are subject to certain conditions and limitations, including our right to limit the number of Registrable Shares included in the registration statement if the managing underwriters advise that including such shares would adversely affect the marketability of the offering.

The holders of any of our Registrable Shares also have certain "piggyback" rights, pursuant to which if we propose to register any shares of our common stock at any time 180 days after the registration statement of which this prospectus forms a part is declared effective by the SEC, such holders are entitled to notice of such registration and are entitled to include such Registrable Shares therein. These piggyback registration rights are subject to certain conditions and limitations, including our right to limit the number of shares included in the registration statement if the managing underwriters advise that including such shares would adversely affect the marketability of the offering.

In addition, once we qualify to use Form S-3 under the Securities Act, holders of any of our Registrable Shares are entitled to request an unlimited number of registrations on Form S-3. Pursuant to the Registration Agreement, we are obligated to pay all registration expenses, other than any underwriting discounts and commissions. Each party to the Registration Agreement has agreed not to undertake any public sale or distribution of shares of our common stock during the 180-day period following the initial public offering of our common stock. The Registration Agreement contains customary indemnification and contribution provisions.

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Executive Compensation

Compensation Discussion and Analysis

Introduction

This Compensation Discussion and Analysis describes the compensation arrangements we have with our senior officers, who we refer to as our "named executive officers," or NEOs. Our NEOs for fiscal 2010 were:



Name		Title
Mark C. Arnold		President, Chief Executive Officer and Director
Charles B. Lowrey		Interim Senior Vice President and Chief Financial Officer⁽¹⁾
Peter R. McCourt		Vice President of Global Sales and Marketing
Jeffery D. Nigh		Vice President of Global Operations
Gregg Taylor		Chief Accounting Officer
Ernest C. English		Former Chief Financial Officer⁽²⁾
Ronald B. Crowell		Former Chief Financial Officer⁽³⁾

⁽¹⁾: Mr. Lowrey served as our interim Chief Financial Officer from January 8, 2010 until September 1, 2010. Mr. Lowrey was reappointed as our Interim Chief Financial Officer on January 11, 2011.
⁽²⁾: Mr. English served as our Chief Financial Officer until January 8, 2010.
⁽³⁾: Mr. Crowell served as our Chief Financial Officer from September 1, 2010 until January 11, 2011.

Executive Compensation Objectives and Principles

The Compensation Committee of our Board of Directors is responsible for establishing the objectives and principles of our executive compensation program, for evaluating the performance of our NEOs and approving their annual compensation and for monitoring the overall effectiveness of our executive compensation program.

Our executive compensation program is designed to:

•: attract and retain talented and experienced executives in our industry;
•: reward superior performance for achieving specific annual strategic goals;
•: ensure fairness among the executive management team by recognizing the contributions each executive officer makes to our success;
•: foster a shared commitment among executives by aligning their individual goals with the goals of the executive management team and our company; and
•: compensate our executives in a manner that incentivizes them to manage our business to meet our long-term business goals and create sustainable long-term shareholder value.

Determining Executive Compensation

The Compensation Committee annually evaluates the performance of our NEOs. The Compensation Committee meets with our Chief Executive Officer to review each other NEO's performance and to discuss compensation recommendations for the other NEOs. Based upon the recommendations from our Chief Executive Officer and in accordance with the compensation objectives and policies described in this compensation discussion and analysis, the Compensation Committee approves the annual compensation packages of our NEOs other than our Chief Executive Officer, which includes base salary, cash performance awards and grants of long-term equity incentive awards as described below. The Compensation Committee evaluates the performance of our Chief Executive Officer (without the participation of our Chief Executive Officer) and determines appropriate base salary, cash performance awards and grants of long-term equity

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incentive awards based on this evaluation. Although the Compensation Committee did not engage a compensation consultant during 2010, it may do so in the future.

Elements of Compensation

Our current executive compensation program consists of the following components:

•: base salary;
•: performance-based cash incentive awards;
•: long-term equity incentives;
•: post-employment benefits; and
•: other benefits and perquisites.

Historically, base salary and the annual cash incentive bonus have been the most significant elements of our executive compensation program. Following this offering, we expect that long-term equity-based compensation will become a more significant element of our executives' total compensation. These elements, on an aggregate basis, are intended to substantially satisfy the overall objectives of our executive compensation program. Typically, we have established each of these elements of compensation at the same time to enable the Compensation Committee to simultaneously consider all of the significant elements of compensation and their impact on total compensation. We strive to achieve an appropriate mix between the various elements of our executive compensation program to meet our compensation objectives and philosophy; however, we do not apply any rigid allocation formula in setting our executive compensation, and we may make adjustments to this approach after giving due consideration to prevailing circumstances.

Base Salary

The base salary element of our executive compensation program provides a minimum, fixed level of cash compensation for the named executive officers to compensate him or her for services rendered during the fiscal year and is intended to attract and retain highly qualified executives. Base salary amounts are established at the time we hire an executive. Historically, these amounts have been highly individualized, resulting from arms-length negotiations, and have been based on our financial condition and available resources, our need for that particular position to be filled, the existing internal compensation structure for each position and the competitive market for corresponding positions within our industry. The Compensation Committee reviews each executive's base salary on an annual basis, considering the executive's scope of responsibility, individual performance and experience, business performance and our overall market competitiveness. The Compensation Committee also monitors the impact base salary increases have on the other elements of our compensation program, including the annual cash incentive bonus, which is determined as a percentage of base salary, long-term equity incentives and total compensation.

The base salary of each of our NEOs was set by our Board of Directors and is set forth in his employment letter agreement. See "— Employment agreements" below. During the fourth quarter of 2009, we engaged A&M. During the engagement, personnel from A&M functioned in several interim management roles for our company, including Mr. Lowrey, our interim Senior Vice President and Chief Financial Officer. We paid A&M for services rendered in 2010 and Mr. Lowrey was compensated by A&M for his services. Mr. Lowrey did not receive compensation directly from us for services rendered as our interim Senior Vice President and Chief Financial Officer during 2010.

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The 2010 annual base salary paid to each of our NEOs is set forth below.



Name⁽¹⁾	Base Salary
Mark C. Arnold⁽²⁾	$	403,333
Peter R. McCourt⁽³⁾	$	120,000
Jeffery D. Nigh⁽⁴⁾	$	62,083
Gregg Taylor⁽⁵⁾	$	121,212
Ronald B. Crowell⁽⁶⁾	$	105,718
Ernest C. English⁽⁷⁾	$	138,290

⁽¹⁾: A total of $9.0 million was paid by us to A&M for services rendered during 2010. Of this amount, we estimate that approximately $1.4 million was attributable to services rendered by Mr. Lowrey. Mr. Lowrey is employed by A&M, as such this estimate reflects the portion of our total payments to A&M for services rendered during 2010 by Mr. Lowrey, and does not reflect actual payments to Mr. Lowrey. Mr. Lowrey did not receive any compensation directly from us for services rendered during 2010.
⁽²⁾: Mr. Arnold's base salary was increased from $400,000 to $440,000 in September 2010.
⁽³⁾: Mr. McCourt joined GSE in July 2010 and his base salary was prorated to account for his date of hire.
⁽⁴⁾: Mr. Nigh joined GSE in October 2010 and his base salary was prorated to account for his date of hire.
⁽⁵⁾: Mr. Taylor joined GSE in May 2010 and his base salary was prorated to account for his date of hire.
⁽⁶⁾: Mr. Crowell began serving as our Chief Financial Officer on September 1, 2010.
⁽⁷⁾: Mr. English served as our Chief Financial Officer until January 8, 2010 and served as controller through May 24, 2010.

Performance-Based Cash Incentive Awards

Our performance-based cash incentive awards are designed to support our current business needs and drive consistent focus throughout the year by aligning the compensation of our NEOs with our short-term operational and performance goals. NEOs are eligible to receive such awards upon the attainment of pre-established objective financial goals and individual performance goals. This element of our executive compensation program is intended to motivate executives to work effectively to achieve these objectives and reward them when objectives are met and results are certified.

The financial targets and overall design of the performance-based cash incentive awards for executives generally mirror the annual incentive compensation program for all other eligible, salaried employees. The Compensation Committee annually assigns each executive a target award as a percentage of salary. Performance-based cash incentive awards are based on GSE's and the executive's achievement of the pre-established goals. The pre-established financial goal for 2010 was Adjusted EBITDA (including discontinued operations) of $29.5 million. See note (3) to the table set forth in "Selected Historical Consolidated Financial and Operating Data" elsewhere in this prospectus for the definition of Adjusted EBITDA.

The primary individual objectives for Mr. Arnold and Mr. Taylor for 2010 are set forth below. Mr. Nigh and Mr. McCourt joined our company in late 2010 and their awards for 2010 were based solely on our

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attainment of the pre-established Adjusted EBITDA goal. As described above, Mr. Lowrey is compensated by A&M and did not receive performance-based incentive awards from us in 2010.

•: Mark C. Arnold, Chief Executive Officer. Mr. Arnold's individual performance goals included qualitative criteria such as recruitment, retention and development of senior management, and strategic positioning of our products and services. For 2010, Mr. Arnold achieved 100% of his qualitative objectives.
•: Gregg Taylor, Chief Accounting Officer. Mr. Taylor's individual performance goals included qualitative criteria such as implementing new financial reporting and analysis systems and the absence of material weaknesses identified by auditors. For 2010, Mr. Taylor achieved 80% of his qualitative objectives.

The target performance-based cash incentive award opportunity for each eligible executive is set as a percentage of base salary. For 2010, the amount of performance-based cash incentive awards for participating executives ranged from zero to double their incentive target as set forth in the table below, based upon the extent to which the pre-established performance goals were achieved or exceeded. Pursuant to the terms of their respective employment agreements, Mr. McCourt was entitled to a guaranteed award during 2010 of $70,000 and Mr. Taylor was entitled to a guaranteed award during 2010 of $20,000. The threshold, target and maximum annual performance bonus payout opportunities of our NEOs for 2010 are set forth in the table below.



	2010
	Performance-based cash incentive award structure
Name	Threshold Payout as Percentage of Base Salary		Target Payout as Percentage of Base Salary			Maximum Payout as Percentage of Base Salary			Actual 2010 Bonus Payout
Mark C. Arnold		—		60	%		120	%	$	321,627
Charles B. Lowrey		—		—			—			—
Peter R. McCourt		—		30	%		60	%	$	87,717
Jeffery D. Nigh⁽¹⁾		—		40	%		60	%	$	26,619
Gregg Taylor		—		25	%		40	%	$	50,549
Ronald B. Crowell		—		40	%		60	%		—
Ernest C. English		—		30	%		50	%		—



Performance Goal	Goal for Threshold Payout		Goal for Target Payout		Goal for Maximum Payout		Actual Achieved
Adjusted EBITDA (including discontinued operations)	$	29.5 million	$	29.5 million	$	33.0 million	$	30.3 million

⁽¹⁾: Mr. Nigh joined GSE in October 2010 and his bonus was prorated to account for his date of hire.

Bonus Letter Agreements

We have also entered into bonus letter agreements with four of our NEOs, three of whom are currently still employed by our company, which provide for the payment of sale or IPO bonuses based upon the price of specified transactions, to encourage their assistance in maximizing the sale price and minimize employment security concerns that may arise in the course of negotiating and completing a sale or IPO. Pursuant to bonus letter agreements entered into on September 15, 2010 with Messrs. McCourt and Nigh, they will

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each be entitled to a sale bonus, payable as a one-time cash payment in an aggregate amount equal to 0.5% of the net equity proceeds, as defined in such agreements, from a sale or IPO of our company at the consummation of such sale or offering. In each case, such NEOs must remain continuously employed by our company or any of our subsidiaries until the date such sale bonus is paid. Mr. Arnold is entitled to a sale bonus, pursuant to a letter agreement with us, dated March 4, 2010. The sale bonus will be paid, as a one-time cash payment in an aggregate amount equal to 2.0% of the net equity proceeds from the sale of our company, at the consummation of such sale. In the event of an IPO instead of a sale of our company, Mr. Arnold is entitled to an IPO bonus, pursuant to a letter agreement with us, dated September 16, 2010. The IPO bonus will be paid as a one-time payment in an aggregate amount equal to 2.0% of the net equity proceeds from the IPO. The IPO bonus will not vest unless Mr. Arnold remains employed by our company or any of our subsidiaries until the consummation of the IPO. The IPO bonus will be paid to Mr. Arnold immediately prior to the IPO in the form of shares of our common stock with a fair market value equal to the amount of the IPO bonus.

Long-Term Equity Incentives

The long-term equity incentive component of our executive compensation plan is intended to align the long-term interests of management with those of our stockholders and incentivize them to manage our business to meet our long-term business goals and create sustainable long-term stockholder value. Currently, the Compensation Committee may award stock options pursuant to the 2004 Stock Option Plan. During 2010, the Compensation Committee did not award stock options to our NEOs. During 2009, the Compensation Committee granted options to purchase 30,000 shares of GSE Holding common stock with an exercise price of $22.26 per share to Mr. Arnold. The options generally vest over a four year term, at a rate of 25% on each anniversary of the grant date. During 2009, CHS granted options to purchase 10,000 shares of GSE Holding common stock at a cash purchase price of $18.50 to Mr. Arnold. As of March 31, 2011, options to purchase 195,070 shares of common stock were outstanding under the 2004 Stock Option Plan and options to purchase 92,080 remained available for issuance.

We intend to adopt the 2011 Plan in connection with our IPO. The 2011 Plan provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents and other stock-based awards. Directors, officers and other associates of us and our subsidiaries, as well as others performing consulting or advisory services for us, will be eligible for grants under the 2011 Plan. See "— Summary of Incentive Plans" below for a more detailed summary of the material terms of the 2004 Stock Option Plan and the 2011 Plan.

Post-Employment Benefits

Retirement Plan Benefits

We do not sponsor a defined benefit retirement plan as we do not believe that such a plan best serves the needs of our associates or the business at this time.

NEOs can, however, participate in the Gundle/SLT Environmental, Inc. 401(k) Plan. Employee contributions can range from 1% to 60% of eligible compensation as prescribed by law. Employees over 50 years old may contribute an additional amount as prescribed by law. We match the first 3% of employee contributions dollar-for-dollar and the next 2% at $0.50 on the dollar.

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Change of Control Severance Arrangements

We have entered into executive employment agreements with our NEOs, other than Mr. Taylor, which provide for the payment of severance and other post-termination benefits depending on the nature of the termination, including severance payments in the event of a termination following a "change in control." The Compensation Committee believes that the terms and conditions of these agreements are reasonable and assist in retaining the skilled executives needed to achieve our objectives. Information regarding the specific payments that are applicable to each termination event is provided under the heading "— Employment Agreements" and "— Potential Benefits Upon Termination or Change in Control" below.

Other Benefits and Perquisites

As employees of GSE, the NEOs are eligible to participate in a basic level of life insurance, disability insurance, and a basic level of accidental death and disability plans at no cost to the executive. They also participate in the health, dental and disability insurance plans provided to all of our employees. See "— Summary Compensation Table" below for additional information. NEOs also are eligible for annual paid time off, holidays and bereavement days provided to all of our employees. As discussed under "— Employment Agreements" below, certain executives are entitled to car allowances, executive wellness programs and other benefits.

Accounting and Tax Considerations

In determining which elements of compensation are to be paid, and how they are weighted, we also take into account whether a particular form of compensation will be deductible under Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended (the "Code"). Section 162(m) generally limits the deductibility of compensation paid to our NEOs to $1.0 million during any fiscal year unless such compensation is "performance-based" under Section 162(m). However, under a Section 162(m) transition rule for compensation plans or agreements of corporations which are privately held and which become publicly held in an initial public offering, compensation paid under a plan or agreement that existed prior to the initial public offering will not be subject to Section 162(m) until the earlier of (1) the expiration of the plan or agreement, (2) a material modification of the plan or agreement, (3) the issuance of all employer stock and other compensation that has been allocated under the plan, or (4) the first meeting of stockholders at which directors are to be elected that occurs after the close of the third calendar year following the year of the initial public offering (the "Transition Date"). After the Transition Date, rights or awards granted under the plan, other than options and stock appreciation rights, will not qualify as "performance-based compensation" for purposes of Section 162(m) unless such rights or awards are granted or vest upon pre-established objective performance goals, the material terms of which are disclosed to and approved by our stockholders.

Our compensation program is intended to maximize the deductibility of the compensation paid to our NEOs to the extent that we determine it is in our best interests. Consequently, we may rely on the exemption from Section 162(m) afforded to us by the transition rule described above for compensation paid pursuant to our pre-existing plans.

Many other Code provisions, SEC regulations and accounting rules affect the payment of executive compensation and are generally taken into consideration as programs are developed. Our goal is to create and maintain plans that are efficient, effective and in full compliance with these requirements.

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The Board's Role in Risk Oversight

The Board's role in the risk oversight process includes receiving regular updates and reports from members of senior management on areas of material risk to our company, including operational, financial, regulatory, strategic and reputational risks. The full Board or, if appropriate, one of its committees receives these updates and reports from the senior managers responsible for the oversight of particular risks within our company. These updates and reports enable the Board to understand and implement our risk identification, risk management and risk mitigation strategies.

Compensation and Risk

We believe that our performance-based compensation programs create appropriate incentives to increase long-term shareholder value. These programs have been designed and administered in a manner that discourages undue risk-taking by employees. Relevant features of these programs include:

•: limits on annual incentive and long-term performance awards, thereby defining and capping potential payouts;
•: with each increase in executive pay level, proportionately greater award opportunity derived from the long-term incentive program compared to annual incentive plan, creating a greater focus on sustained company performance over time; and
•: the application of an annual incentive metric that aligns employees against stockholders objectives of increasing Adjusted EBITDA balanced with qualitative individual performance goals.

In light of these features of our compensation program, the Board concluded that the risks arising from our employee compensation policies and practices are not reasonably likely to have a material adverse effect on us.

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Compensation Tables

Summary Compensation Table

The following table shows the compensation earned by our NEOs during the year ended December 31, 2010, referred to as fiscal year 2010.

Summary compensation table 2010

Name and Principal Position		Year		Salary ($)			Bonus ($)			Stock awards ($)		Option awards ($)(1)		Non-equity incentive plan compensation ($)			Nonqualified deferred compensation earnings ($)		All other compensation ($)		Total ($)
Mark C. Arnold			2010	$	403,333	(4)		—			—		—		321,627			—		57,760		787,720
	President, Chief Executive Officer and Director
Charles B. Lowrey(2)			2010	$	—			—			—		—		—			—		—		—
	Interim Senior Vice President & Chief Financial Officer
Peter R. McCourt			2010	$	120,000	(5)		70,000	(3)		—		—		17,717	(4)		—		7,541		215,258
	Vice President of Global Sales & Marketing
Jeffery D. Nigh			2010	$	62,083	(6)		—			—		—		26,619			—		3,910		92,612
	Vice President of Global Operations
Gregg Taylor			2010	$	121,212	(7)		20,000	(5)		—		—		30,549	(6)		—		5,700		228,761
	Chief Accounting Officer
Ronald B. Crowell			2010	$	105,718	(8)		—			—		—		—			—		8,290		114,008
	Former Chief Financial Officer
Ernest C. English			2010	$	138,289	(9)		—			—		—		—			—		49,880		118,169
	Former Chief Financial Officer

(1): The amounts reported in this column reflect the aggregate grant date fair value of option awards granted to the NEO during fiscal year 2010, computed in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718 "Stock Compensation." These amounts reflect our calculation of the value of these awards on the grant date and do not necessarily correspond to the actual value that may ultimately be realized by the officer. For accounting purposes, we use the Black-Scholes option pricing model to calculate the grant date fair value of stock options. See the "Grants of Plan-Based Awards" table for information regarding stock option awards to the NEOs during fiscal year 2010.
(2): During the fourth quarter of 2009, we engaged Alvarez & Marsal Private Equity Performance Improvement Group, LLC. During the engagement, personnel from the consulting firm functioned in several interim management roles for our company, including, but not limited to, Chief Financial Officer and Vice President of Operations. Mr. Lowrey, Senior Vice President and our interim Chief Financial Officer, is currently a managing director at the consulting firm. We paid a total of $9.0 million to A&M for services rendered during 2010. Of this amount, we estimate that approximately $1.4 million was attributable to services rendered by Mr. Lowrey. Mr. Lowrey is employed by A&M, As such this estimate reflects the portion of our total payments to A&M for services rendered during 2010 by Mr. Lowrey, and does not reflect actual payments to Mr. Lowrey. Mr. Lowrey did not receive any compensation directly from us for services rendered during 2010.
(3): Represents the portion of Mr. McCourt's bonus in 2010 which was guaranteed.
(4): Mr. Arnold's base salary was increased from $400,000 to $440,000 in September 2010.
(5): Mr. McCourt joined GSE in July 2010 and his base salary was prorated to account for his date of hire.
(6): Mr. Nigh joined GSE in October 2010 and his base salary was prorated to account for his date of hire.
(7): Mr. Taylor joined GSE in May 2010 and his base salary was prorated to account for his date of hire.
(8): Mr. Crowell began serving as our Chief Financial Officer beginning on September 1, 2010.
(9): Mr. English served as our Chief Financial Officer until January 8, 2010 and served as controller through May 24, 2010.

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All Other Compensation

Name


Mark C. Arnold	375	13,118	42,386	1,881	—	—	57,760
Charles B. Lowrey	—	—	—	—	—	—	—
Peter R. McCourt	—	3,990	3,551	—	—	—	7,541
Jeffery D. Nigh	—	1,910	2,000	—	—	—	3,910
Gregg Taylor	—	5,700	—	—	—	—	5,700
Ronald B. Crowell	—	2,946	5,344	—	—	—	8,290
Ernest C. English	—	12,247	—	—	5,806	31,827	49,880

^(A): Amounts represent reimbursement of annual club dues.
^(B): Amounts represent the annual premiums paid by us for executive employee medical, vision and dental plans and life and disability insurance.
^(C): With respect to Mr. Arnold, amounts represent $42,386 paid during 2010 for the rental of corporate housing for Mr. Arnold in Houston, Texas. With respect to Mr. McCourt, amounts represent $3,551 paid during 2010 for the rental of a corporate apartment for Mr. McCourt in Houston, Texas. With respect to Mr. Nigh, amounts represent $2,000 paid during 2010 for the rental of a corporate apartment for Mr. Nigh in Houston, Texas.
^(D): Amounts represent the annual car allowance for Mr. Arnold.
^(E): Amounts represent the annual 401(k) company contribution under the Gundle/SLT 401(k) plan.

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Grants of Plan-Based Awards

The following table sets forth awards and potential payouts to our NEOs pursuant to our incentive plans. The non-equity awards described below represent grants of annual performance-based incentive awards.

			Estimated potential payouts under non-equity incentive plan awards


Name		Grant Date	Threshold ($)		Target ($)		Maximum ($)
Mark C. Arnold
	Non-equity⁽¹⁾	January 1, 2010		—	$	264,000	$	528,000
Charles B. Lowrey		—		—		—		—
Peter R. McCourt
	Non-equity⁽¹⁾	May 28, 2010		—		72,000		144,000
Jeffery D. Nigh
	Non-equity⁽¹⁾	August 30, 2010		—		100,000		150,000
Gregg Taylor
	Non-equity⁽¹⁾	April 16, 2010		—		50,000		80,000
Ronald B. Crowell
	Non-equity⁽¹⁾	August 12, 2010		—		124,000		186,000
Ernest C. English
	Non-equity⁽¹⁾	—		—		—		—

⁽¹⁾: Represents estimated possible payouts on the grant date for performance-based cash incentive awards granted in 2010 for each of our NEOs. This is an annual cash incentive opportunity and, therefore, these awards are earned in the year of grant. See the column captioned "Non-Equity Incentive Plan Compensation" in the Summary Compensation Table for the actual payout amounts related to the 2010 performance-based cash incentives. See also "Compensation Discussion and Analysis — Performance-Based Cash Incentive" for additional information about the 2010 performance-based cash incentives. Pursuant to the terms of his employment agreement, Mr. McCourt was entitled to a guaranteed bonus during 2010 of $70,000 and Mr. Taylor was entitled to a guaranteed bonus during 2010 of $20,000.

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Outstanding Equity Awards at Fiscal Year-End

Other than Mr. Arnold, none of our NEO's had equity awards outstanding at December 31, 2010. None of our NEOs received equity awards in 2010. The following table sets forth certain information with respect to the outstanding equity awards of each of our NEOs as of December 31, 2010.

Name					Option exercise price ($/Sh)		Option expiration date


Mark C. Arnold⁽¹⁾	—	30,000	⁽¹⁾	—	$	22.26	September 14, 2019
Charles B. Lowrey	—	—		—		—	—
Peter R. McCourt	—	—		—		—	—
Jeffery D. Nigh	—	—		—		—	—
Gregg Taylor	—	—		—		—	—
Ronald B. Crowell	—	—		—		—	—
Ernest C. English	—	—		—		—	—

⁽¹⁾: Options become vested and exercisable in four equal installments on the first four anniversaries of the grant date if Mr. Arnold continues to be employed and subject to the terms of the option award. Mr. Arnold also has options to purchase 10,000 shares of GSE Holding common stock with an exercise price of $18.50 that were granted to him by CHS in 2009.

Option Exercises and Stock Vested

There were no options exercised in fiscal year 2010 by our NEOs. None of our NEOs have stock awards.

Pension Benefits

Our NEOs did not participate in or have account balances in any defined benefit plans sponsored by us.

Nonqualified Deferred Compensation

Our NEOs did not participate in or have account balances in any non-qualified deferred compensation plans sponsored by us.

Summary of Incentive Plans

2004 Stock Option Plan

The GEO Holdings Corp. 2004 Stock Option Plan, or the 2004 Stock Option Plan, became effective upon the consummation of the Acquisition. Under the 2004 Stock Option Plan, the Board of Directors may from time to time grant options to purchase common stock of GSE Holding representing up to 8% (287,150 options) of GSE Holding' common stock on a fully-diluted basis immediately following the consummation of the Acquisition to executives or other key employees or directors of GSE Holding and its subsidiaries. Both "nonqualified" stock options and "incentive" stock options may be granted under the 2004 Stock Option Plan with terms to be determined by the Board of Directors of GSE Holding (or a committee thereof). The following is a summary of the material terms of the 2004 Stock Option Plan, but

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does not include all of the provisions of the 2004 Stock Option Plan. For further information about the 2004 Stock Option Plan, we refer you to the complete copy of the 2004 Stock Option Plan, which we have filed as an exhibit to the registration statement of which this prospectus is a part.

Administration. The 2004 Stock Option Plan provides for its administration by the Compensation Committee of our Board of Directors, any committee designated by our Board of Directors to administer the 2004 Stock Option Plan or our Board of Directors. Among the committee's powers are to determine the form, amount, recipients and other terms and conditions of awards, clarify, construe or resolve any ambiguity in the 2004 Stock Option Plan or any award agreement, amend the terms of outstanding awards and adopt such rules, forms, instruments and guidelines for administering the 2004 Stock Option Plan as it deems necessary or advisable. All actions, interpretations and determinations made by the committee or by our Board of Directors within its authority are final and binding.

Shares available. The 2004 Stock Option Plan makes available an aggregate of 628,750 shares of our common stock, subject to adjustments. In the event that any outstanding award expires, is forfeited, cancelled or otherwise terminated without the issuance of common stock pursuant to the award, the shares of our common stock allocable to such award, including the unexercised portion of such award, will again be available for purposes of the 2004 Stock Option Plan. In the event that we repurchase any shares of our common stock that were previously issued pursuant to an award under the 2004 Stock Option Plan, such shares will again be available for purposes of the 2004 Stock Option Plan.

Eligibility for participation. Any of our executives, directors or other key employees who have been selected to participate in the 2004 Stock Option Plan by the committee are eligible to receive awards under the 2004 Stock Option Plan. Selection of eligible participants is within the sole and complete authority of the committee.

Types of awards. The 2004 Stock Option Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, and other awards. The committee will, with regard to each award, determine the terms and conditions of the award, including the number of shares subject to the award, the vesting terms of the award, and the purchase price for the award. Awards may be made in assumption of or in substitution for outstanding awards previously granted by us or our affiliates, or a company acquired by us or with which we combine.

Award agreement. Awards granted under the 2004 Stock Option Plan are evidenced by written award agreements, which need not be identical, that provide additional terms, conditions, restrictions and/or limitations covering the grant of the award, including, without limitation, terms providing for the acceleration of exercisability or vesting of awards in the event of a change in control or conditions regarding the participant's employment, as determined by the committee in its sole discretion; provided, however, that in the event of any conflict between the provisions of the 2004 Stock Option Plan and any such award agreement, the provisions of the 2004 Stock Option Plan will prevail.

Awards. An award granted under the 2004 Stock Option Plan will enable the holder to purchase a number of shares of our common stock on set terms. Awards will be presumed to be nonqualified stock options and are not intended to be incentive stock options unless clearly indicated by the committee in the award agreement. An award granted as an incentive stock option will, to the extent it fails to qualify as an incentive stock option, be treated as a nonqualified stock option duly granted under the plan, provided that such award otherwise meets the 2004 Stock Option Plan's requirements for nonqualified stock options. Each option will be subject to terms and conditions, including exercise price, vesting and conditions and timing of exercise, consistent with the 2004 Stock Option Plan and as the committee may impose from time to time.

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The exercise price of an award granted under the 2004 Stock Option Plan will be determined by the committee; provided that, with respect to incentive stock options, the exercise price will not be less than 100% of the fair value of a share of our common stock on the date of grant and provided further that the exercise price of an incentive stock option granted to a person holding greater than 10% of our voting power may not be less than 110% of such fair value on such date. The committee will determine the term of each award at the time of grant in its discretion; however, the term may not exceed 10 years unless otherwise provided for by the committee, or, in the case of an incentive stock option granted to a 10% stockholder, five years.

Transferability. An award will not be transferable or assignable by a participant except in the event of his death, subject to the applicable laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against us or any of our subsidiaries or affiliates; provided that, as the committee may determine in its sole discretion, an award may be transferred to or among a participant's spouse or descendants or any trust or other entity solely for the benefit of such participant and/or such participant's spouse and/or descendants.

Stockholder rights. Except as otherwise provided in the applicable award agreement, a participant has no rights as a stockholder with respect to shares of our common stock covered by any award until the participant becomes the record holder of such shares.

Adjustment of awards. Notwithstanding any other provision of the 2004 Stock Option Plan, in the event of any corporate event or transaction such as a merger, consolidation, reorganization, recapitalization, separation, stock dividend, stock split, reverse stock split, split up, spin-off, combination of shares of our common stock, exchange of shares of our common stock, dividend in kind, extraordinary cash dividend, or other like change in capital structure, other than normal cash dividends, to our stockholders, or any similar corporate event or transaction, the committee, to prevent dilution or enlargement of participants' rights under the 2004 Stock Option Plan, will, in its sole discretion, as applicable, (a) adjust the number and kind of shares of stock or other securities that may be issued under the 2004 Stock Option Plan, the number and kind of shares of our common stock or other securities subject to outstanding awards, and/or where applicable, the exercise price, base value or purchase price applicable to such awards; (b) grant a right to receive one or more payments of securities, cash and/or property, which right may be evidenced as an additional award under the 2004 Stock Option Plan, in respect of any outstanding award; or (c) provide for the settlement of any outstanding award, other than a stock option or stock appreciation right, in such securities, cash and/or other property as would have been received had the award been settled in full immediately prior to such corporate event or transaction; provided, however, that in the case of an adjustment made in accordance with (b) or (c) above, the right to any securities, cash and/or property may be issued subject to the same vesting schedule as the outstanding award being adjusted; and provided, further, that any adjustment shall comply with Section 409A of the Code to the extent applicable.

Amendment and termination. Our Board of Directors or the committee may amend, alter, suspend, discontinue or terminate the 2004 Stock Option Plan or any portion thereof or any award, or award agreement, thereunder (to the extent that our Board or the committee would have had the authority under the 2004 Stock Option Plan initially to grant such award) at any time; provided that no such amendment, alteration, suspension, discontinuation or termination will be made (i) without stockholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the 2004 Stock Option Plan or the rules of any exchange upon which our common stock is listed and (ii) without the consent of the participants, if such action would impair the rights of any participant under any award granted to such participant under the 2004 Stock Option Plan. The committee may also amend the 2004 Stock Option

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Plan, any award or any outstanding award agreement in such manner as it deems necessary to permit the granting of awards meeting the requirements of applicable laws.

2011 Omnibus Incentive Compensation Plan

We intend to adopt the GSE 2011 Omnibus Incentive Compensation Plan, or the 2011 Plan, in connection with our initial public offering. The 2011 Plan provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents and other stock-based awards. Directors, officers and other employees of us and our subsidiaries, as well as others performing consulting or advisory services for us, will be eligible for grants under the 2011 Plan. The purpose of the 2011 Plan is to provide incentives that will attract, retain and motivate highly competent officers, directors, employees and consultants by providing them with appropriate incentives and rewards either through a proprietary interest in our long-term success or compensation based on their performance in fulfilling their personal responsibilities. The following is a summary of the material terms of the 2011 Plan, but does not include all of the provisions of the 2011 Plan. For further information about the 2011 Plan, we refer you to the complete copy of the 2011 Plan, which we have filed as an exhibit to the registration statement, of which this prospectus is a part.

Administration. The 2011 Plan provides for its administration by the Compensation Committee of our Board of Directors, any committee designated by our Board of Directors to administer the 2011 Plan or our Board of Directors. Among the committee's powers are to determine the form, amount and other terms and conditions of awards, clarify, construe or resolve any ambiguity in any provision of the 2011 Plan or any award agreement, amend the terms of outstanding awards and adopt such rules, forms, instruments and guidelines for administering the 2011 Plan as it deems necessary or proper. All actions, interpretations and determinations by the committee or by our Board of Directors are final and binding.

Shares available. The 2011 Plan makes available an aggregate of shares of our common stock, subject to adjustments. In the event that any outstanding award expires, is forfeited, cancelled or otherwise terminated without consideration, shares of our common stock allocable to such award, including the unexercised portion of such award, will again be available for purposes of the 2011 Plan. If any award is exercised by tendering shares of our common stock to us, either as full or partial payment, in connection with the exercise of such award under the 2011 Plan or to satisfy our withholding obligation with respect to an award, only the number of shares of our common stock issued net of such shares tendered will be deemed delivered for purposes of determining the maximum number of shares of our common stock then available for delivery under the 2011 Plan.

Eligibility for participation. Members of our Board of Directors, as well as employees of, and consultants to, us or any of our subsidiaries and affiliates are eligible to receive awards under the 2011 Plan. The selection of participants is within the sole discretion of the committee.

Types of awards. The 2011 Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, collectively, the options, stock appreciation rights, shares of restricted stock, or the restricted stock, restricted stock units, rights to dividend equivalents and other stock-based awards, collectively, the awards. The committee will, with regard to each award, determine the terms and conditions of the award, including the number of shares subject to the award, the vesting terms of the award, and the purchase price for the award. Awards may be made in assumption of or in substitution for outstanding awards previously granted by us or our affiliates, or a company acquired by us or with which we combine.

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Award agreement. Awards granted under the 2011 Plan will be evidenced by award agreements, which need not be identical, that provide additional terms, conditions, restrictions and/or limitations covering the grant of the award, including, without limitation, terms providing for the acceleration of exercisability or vesting of awards in the event of a change in control or conditions regarding the participant's employment, as determined by the committee in its sole discretion; provided, however, that in the event of any conflict between the provisions of the 2011 Plan and any such award agreement, the provisions of the 2011 Plan will prevail.

Options. An option granted under the 2011 Plan will enable the holder to purchase a number of shares of our common stock on set terms. Options will be designated as either a nonqualified stock option or an incentive stock option. An option granted as an incentive stock option will, to the extent it fails to qualify as an incentive stock option, be treated as a nonqualified option. None of us, including any of our affiliates or the committee, will be liable to any participant or to any other person if it is determined that an option intended to be an incentive stock option does not qualify as an incentive stock option. Each option will be subject to terms and conditions, including exercise price, vesting and conditions and timing of exercise, consistent with the 2011 Plan and as the committee may impose from time to time.

The exercise price of an option granted under the 2011 Plan will be determined by the committee and it is expected that the exercise price will not be less than 100% of the fair value of a share of our common stock on the date of grant, provided the exercise price of an incentive stock option granted to a person holding greater than 10% of our voting power may not be less than 110% of such fair value on such date. The committee will determine the term of each option at the time of grant in its discretion; however, the term may not exceed 10 years or, in the case of an incentive stock option granted to a 10% stockholder, five years.

Stock appreciation rights. A stock appreciation right entitles the holder to receive, upon its exercise, the excess of the fair value of a specified number of shares of our common stock on the date of exercise over the grant price of the stock appreciation right. The payment of the value may be in the form of cash, shares of our common stock, other property or any combination thereof, as the committee determines in its sole discretion. Stock appreciation rights may be granted alone or in tandem with any option at the same time such option is granted, or a tandem SAR. A tandem SAR is only exercisable to the extent that the related option is exercisable and expires no later than the expiration of the related option. Upon the exercise of all or a portion of a tandem SAR, a participant is required to forfeit the right to purchase an equivalent portion of the related option, and vice versa. Subject to the terms of the 2011 Plan and any applicable award agreement, the grant price, which is not expected to be less than 100% of the fair value of a share of our common stock on the date of grant, term, methods of exercise, methods of settlement, and any other terms and conditions of any stock appreciation right will be determined by the committee. The committee may impose such other conditions or restrictions on the exercise of any stock appreciation right as it may deem appropriate.

Restricted stock. The committee may, in its discretion, grant awards of restricted stock. Restricted stock may be subject to such terms and conditions, including vesting, as the committee determines appropriate, including, without limitation, restrictions on the sale or other disposition of such shares of our common stock. The committee may require the participant to deliver a duly signed stock power, endorsed in blank, relating to shares of our common stock covered by such an award. The committee may also require that the stock certificates evidencing such shares be held in custody or bear restrictive legends until the restrictions thereon shall have lapsed. Unless otherwise determined by the committee and set forth in the award agreement, a participant holding restricted stock will have the right to vote and receive dividends with respect to such restricted stock.

Restricted stock units. The committee may, in its discretion, grant awards of restricted stock units, or RSUs. RSUs are awards that provide for the deferred delivery of a specified number of shares of our

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common stock. RSUs may be subject to such terms and conditions, including vesting, as the committee determines appropriate.

Dividend equivalents. The committee may, in its discretion, grant dividend equivalents based on the dividends declared on shares that are subject to any award. The grant of dividend equivalents may be treated as a separate award. Such dividend equivalents will be converted to cash or shares by such formula and at such time and subject to such limitations as may be determined by the committee. As determined by the committee, dividend equivalents granted with respect to any option or stock appreciation right may be payable regardless of whether such option or stock appreciation right is subsequently exercised.

Other share-based awards. The committee, in its discretion, may grant awards of shares of our common stock and awards that are valued, in whole or in part, by reference to, or are otherwise based on the fair market value of such shares — the other share-based awards. Such other share-based awards will be in such form, and dependent on such conditions, as the committee may determine, including, without limitation, the right to receive one or more shares of our common stock, or the equivalent cash value of such stock, upon completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. Subject to the provisions of the 2011 Plan, the committee will determine to whom and when other share-based awards will be made, the number of shares of our common stock to be awarded under, or otherwise related to, such other share-based awards, whether such other share-based awards shall be settled in cash, shares of our common stock or a combination of cash and such shares, and all other terms and conditions of such awards.

Transferability. Except as otherwise determined by the committee, an award will not be transferable or assignable by a participant except in the event of his death, subject to the applicable laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against us or any of our subsidiaries or affiliates. Any permitted transfer of the awards to heirs or legatees of a participant will not be effective to bind us unless the committee has been furnished with written notice thereof and a copy of such evidence as the committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of the 2011 Plan and any award agreement.

Adjustment of awards. Notwithstanding any other provision of the 2011 Plan, in the event of any corporate event or transaction such as a merger, consolidation, reorganization, recapitalization, separation, stock dividend, stock split, reverse stock split, split up, spin-off, combination of shares of our common stock, exchange of shares of our common stock, dividend in kind, extraordinary cash dividend, or other like change in capital structure, other than normal cash dividends, to our stockholders, or any similar corporate event or transaction, the committee, to prevent dilution or enlargement of participants' rights under the 2011 Plan, may, in its sole discretion, as applicable, (a) adjust the number and kind of shares of stock or other securities that may be issued under the 2011 Plan, the number and kind of shares of our common stock or other securities subject to outstanding awards, and/or where applicable, the exercise price, base value or purchase price applicable to such awards; (b) grant a right to receive one or more payments of securities, cash and/or property, which right may be evidenced as an additional award under the 2011 Plan, in respect of any outstanding award; or (c) provide for the settlement of any outstanding award, other than a stock option or stock appreciation right, in such securities, cash and/or other property as would have been received had the award been settled in full immediately prior to such corporate event or transaction; provided, however, that in the case of an adjustment made in accordance with (b) or (c) above, the right to any securities, cash and/or property may be issued subject to the same vesting schedule as the outstanding award being adjusted; and provided, further, that any adjustment shall comply with Section 409A of the Code to the extent applicable. Should the vesting of any award be conditioned upon our attainment of

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performance conditions, our Board of Directors may make such adjustments to the terms and conditions of such awards and the criteria therein to recognize unusual and nonrecurring events affecting us or in response to changes in applicable laws, regulations or accounting principles.

In the event we are a party to a merger or consolidation or similar transaction, including a change in control, unless otherwise prohibited under applicable law or by the applicable rules and regulations of national securities exchanges or unless the committee determines otherwise in an award agreement, the committee is authorized, but not obligated, to make adjustments in the terms and conditions of outstanding awards, including, without limitation, the continuation or assumption of such outstanding awards under the 2011 Plan by us, if we are the surviving company or corporation, or by the surviving company or corporation or its parent; substitution by the surviving company or corporation or its parent of awards with substantially the same terms for such outstanding awards; accelerated exercisability, vesting and/or lapse of restrictions under all then outstanding awards immediately prior to the occurrence of such event; upon written notice, provided that any outstanding awards must be exercised, to the extent then exercisable, within fifteen days immediately prior to the scheduled consummation of the event, or such other period as determined by the committee, in either case contingent upon the consummation of the event, at the end of which period such awards shall terminate to the extent not so exercised within such period; and cancellation of all or any portion of outstanding awards for fair value, as determined in the sole discretion of the committee, which, in the case of options and stock appreciation rights, may equal the excess, if any, of the value of the consideration to be paid in the change in control transaction to holders of the same number of shares subject to such awards or, if no such consideration is paid, fair value of our shares of common stock subject to such outstanding awards or portion thereof being canceled, over the aggregate option price or grant price, as applicable, with respect to such awards or portion thereof being canceled.

Amendment and termination. Our Board of Directors may amend, alter, suspend, discontinue, or terminate the 2011 Plan or any portion thereof or any award, or award agreement, thereunder at any time; provided that no such amendment, alteration, suspension, discontinuation or termination may be made (i) without stockholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the 2011 Plan and (ii) without the consent of the participant, if such action would materially diminish any of the rights of any participant under any award granted to such participant under the 2011 Plan; provided, however, the committee may amend the 2011 Plan, any award or any award agreement in such manner as it deems necessary to permit the granting of awards meeting the requirements of applicable laws.

Compliance with Section 409A of the Code. To the extent that the 2011 Plan and/or awards are subject to Section 409A of the Code, the committee may, in its sole discretion and without a participant's prior consent, amend the 2011 Plan and/or awards, adopt policies and procedures, or take any other actions, including amendments, policies, procedures and actions with retroactive effect, as are necessary or appropriate to (a) exempt any award from the application of Section 409A, (b) preserve the intended tax treatment of any such award, or (c) comply with the requirements of Section 409A, United States Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date of the grant. The 2011 Plan shall be interpreted at all times in such a manner that the terms and provisions of the 2011 Plan and awards comply with Section 409A and any guidance issued thereunder. Neither we nor the committee has any obligation to take any action to prevent the assessment of any excise tax on any person with respect to any award under Section 409A, and none of us or any of our subsidiaries or affiliates, or any of our employees or representatives, has any liability to a participant with respect thereto.

Effective date. The 2011 Plan will become effective prior to the consummation of this offering.

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Employment Agreements

The following summaries provide a description of the formalized agreements we have entered into with our NEOs covering the terms of their employment and/or potential severance benefits.

Mark C. Arnold

Term. Pursuant to an employment agreement dated September 14, 2009 and amended and restated on March 4, 2010, the term of Mr. Arnold's employment commenced on September 14, 2009. Mr. Arnold's employment is "at will," and either we or Mr. Arnold may terminate his employment at any time, for any reason, with or without notice to the other.

Salary and Bonus. The employment agreement provides for a base salary of $400,000 annually and, beginning in September 2010, $440,000 annually. Mr. Arnold is eligible to receive an annual bonus with the potential for awards up to 120% of Mr. Arnold's base salary, payable based on our achievement of financial performance goals and achievement of personal goals and objectives of Mr. Arnold, as established by the Board. Pursuant to the terms of his employment agreement, Mr. Arnold also has the option to purchase 10,000 shares of our common stock from CHS at a purchase price of $18.50 per share.

Automobile. Mr. Arnold's employment agreement entitles Mr. Arnold to a company vehicle for business and personal use, with our company responsible for all licenses, road taxes, tolls, parking, maintenance, gasoline, insurance and other operating costs.

Severance Payments. If Mr. Arnold's employment is terminated (i) by us without "Cause", (ii) due to his "Disability" or (iii) by Mr. Arnold's "Voluntary Termination" within six months of a "Change in Control" (each as defined in Mr. Arnold's employment agreement), Mr. Arnold will be entitled to severance payments in an amount equal to his annual base salary, payable in equal installments over a period of twelve months, and continuation of Mr. Arnold's existing group medical benefits for twelve months, with premiums to be paid by Mr. Arnold at the same rate paid by employees who have not been terminated.

Change in Control Severance Payments. If within six months after a "Change in Control" (as defined in Mr. Arnold's employment agreement), Mr. Arnold is terminated by us without Cause or is not offered a position of equal or greater scope of responsibility and annual cash consideration by the successor to us or our parent (as applicable), in addition to continued coverage under our group health plan for a period of eighteen months, Mr. Arnold will also be entitled to an aggregate amount equal to the sum of (A) thirty-six months of Mr. Arnold's base salary then in effect plus (B) an amount equal to the average of the bonuses for the three most recent years, payable in equal installments over a period of thirty-six months.

Restrictive Covenants. The employment agreement prohibits Mr. Arnold from competing with us during his employment period and for a period of one year thereafter and from disclosing our confidential information during his employment and at any time thereafter.

Ernest C. English

Separation Date. Pursuant to a separation and release agreement dated May 24, 2010, the termination of Mr. English's employment was effective as of February 19, 2010.

Severance Payments. The separation agreement does not provide for severance payments other than salary due as of the date of termination, but Mr. English received $564,000 of severance payments.

Release. The separation agreement releases and discharges us from any potential liabilities arising out of Mr. English's employment or separation from us.

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Jeffery D. Nigh

Term. Mr. Nigh's employment commenced on October 1, 2010, pursuant to an offer letter dated as such. Mr. Nigh's employment is "at will," and either we or Mr. Nigh may terminate his employment at any time, for any reason, with or without prior notice to the other.

Salary and Bonus. The offer letter provides for a base salary of $250,000 annually, and Mr. Nigh is eligible to receive an annual bonus with the potential for awards up to 60% of Mr. Nigh's base salary, based on the achievement of certain EBITDA targets and personal goals.

Change in Control Severance Payments. Pursuant to a Change in Control & Retention Agreement dated October 1, 2010, Mr. Nigh will be entitled to a lump sum payment in the amount of twelve times Mr. Nigh's monthly base salary plus the targeted bonus for the calendar year, if he experiences a "Qualifying Termination" upon or within six months following a "Change in Control" (each as defined in the Change in Control & Retention Agreement), subject to Mr. Nigh's execution of a full waiver and release of all claims against us.

Restrictive Covenants. The terms of Mr. Nigh's employment prohibit him from disclosing any of our confidential information or intellectual property during his employment and at any time thereafter.

Peter R. McCourt

Term. Mr. McCourt's employment commenced on July 1, 2010, pursuant to an offer letter dated as such. Mr. McCourt's employment is "at will," and either we or Mr. McCourt may terminate his employment at any time, for any reason, with or without prior notice to the other.

Salary and Bonus. The offer letter provides for a base salary of $240,000 annually, and Mr. McCourt is eligible to receive an annual bonus with the potential for awards up to 60% of Mr. McCourt's base salary, based on the achievement of certain EBITDA targets and personal goals.

Change in Control Severance Payments. Pursuant to a Change in Control & Retention Agreement dated June 1, 2010, Mr. McCourt will be entitled to a lump sum payment in the amount of twelve times Mr. McCourt's monthly base salary plus the targeted bonus for the calendar year, if he experiences a "Qualifying Termination" upon or within six months following a "Change in Control" (each as defined in the Change in Control & Retention Agreement), subject to Mr. McCourt's execution of a full waiver and release of all claims against us.

Gregg Taylor

Term. Mr. Taylor's employment commenced on May 24, 2010, pursuant to an offer letter dated as such. Mr. Taylor's employment is "at will," and either we or Mr. Taylor may terminate his employment at any time, for any reason, with or without prior notice to the other.

Salary and Bonus. The offer letter provides for a base salary of $200,000 annually, and Mr. Taylor is eligible for an annual performance-based bonus, with the potential for awards up to 40% of Mr. Taylor's base salary, based on the achievement of certain EBITDA targets and personal goals.

Stock Options. Pursuant to Mr. Taylor's offer letter, he was granted 10,000 stock options in our company, which were fully vested upon issuance on January 1, 2011.

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Ronald B. Crowell

Separation Date. Pursuant to a Separation and Release Agreement dated February 23, 2011, the term of Mr. Crowell's employment ended on January 11, 2011.

Severance Payments. The separation agreement provides for total severance payments in the amount of $565,000.

Release. The separation agreement releases and discharges us from any potential liabilities arising out of Mr. Crowell's employment or separation from us.

Potential Payments Upon Termination and Change in Control

This table shows the potential compensation due to NEOs upon a change in control or termination of employment — related or unrelated to a change in control — by us without cause or by the executive with good reason, due to the executive's death or disability, and by us with cause or by the executive without good reason. The amounts shown assume that a change in control or termination of employment was effective December 31, 2010. The amounts shown are only estimates of the amounts that would be due to the executives upon a change in control or termination of employment and do not reflect tax positions we may take or the accounting treatment of such payments. Actual amounts due can only be determined at the time of a change in control or separation and are subject to all of the terms and conditions of each applicable agreement with executive. Although the calculations are intended to provide reasonable estimates of the potential benefits, they are based on numerous assumptions and do not represent the actual amount an executive would receive if an eligible change in control or termination event were to occur.

	Change in Control(1)(2)										Absence of a Change in Control


	Without Cause		With Cause(3)(4)		Voluntary(5)		Death(4)		Disability(5)		Without Cause		With Cause(4)		Voluntary(4)		Death(4)		Disability(5)
Mark C. Arnold
Base Salary	$	1,338,325	$	18,333	$	1,338,325	$	18,333	$	471,450	$	471,450	$	18,333	$	18,333	$	18,333	$	471,450
Bonus		321,627		—		321,627		—		—		—		—		—		—		—
Other Benefits		19,675				19,675
Value of Accelerated Equity
Total		1,385,813		18,333		400,000		18,333		400,000		400,000		18,333		18,333		18,333		400,000
Peter McCourt(6)
Base Salary		240,000		10,000		10,000		10,000		10,000		240,000		10,000		10,000		10,000		10,000
Bonus		144,000		—		—		—		—		144,000		—		—		—		—
Value of Accelerated Equity(4)
Total		384,000		10,000		10,000		10,000		10,000		384,000		10,000		10,000		10,000		10,000
Jeffrey Nigh(6)
Base Salary		250,000		10,416		10,416		10,416		10,416		250,000		10,416		10,416		10,416		10,416
Bonus		150,000		—		—		—		—		150,000		—		—		—		—
Value of Accelerated Equity(4)
Total		400,000		10,416		10,416		10,416		10,416		400,000		10,416		10,416		10,416		10,416
Gregg Taylor(6)
Base Salary		8,333		8,333		8,333		8,333		8,333		8,333		8,333		8,333		8,333		8,333
Bonus		—		—		—		—		—		—		—		—		—		—
Value of Accelerated Equity(4)
Total		8,333		8,333		8,333		8,333		8,333		8,333		8,333		8,333		8,333		8,333

(1): Ronald B. Crowell, our former Senior Vice President and Chief Financial Officer, left us in January 2011 and was paid $565,000 in connection with the termination of his employment. Ernest C. English, our former controller, left us on May 24, 2010 and was paid $564,066 in connection with the termination of his employment.
(2): Charles B. Lowrey, our interim Senior Vice President and Chief Financial Officer, is currently a managing director at, and receives compensation from, A&M. As a result, Mr. Lowrey is not entitled to any payment from us upon a change in control or termination event.

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(3)

Pursuant to the terms of a Change in Control and Retention Agreement, if the executive's employment is terminated for cause or resigns from employment after a change in control event, then executive is not entitled to any severance benefits other than salary earned and vacation accrued up to and including the date of termination.

(4)

Pursuant to the terms of that Employment Agreement, if the executive's employment is terminated by us for cause, by the executive voluntarily (other than within six months after a change in control), or upon executive's death, the executive is entitled to base salary due through the date of termination and all benefits under our benefit plans and programs in which employee participates, subject to the terms and conditions of such plans.

With respect to Mr. Arnold, cause is defined as any of the following activities: (i) commission of a crime involving theft, fraud, embezzlement or other felony or otherwise involving dishonesty, in each case with respect to our company, (ii) willful refusal without proper legal cause to perform his duties and responsibilities (with 30 day grace period after notice), (iii) engaging in conduct which would constitute material breach of the employment agreement, our code of ethics, policies or regulations (with 20 day grace period after notice), or engaging in improper conduct which would result in material injury to our company (as determined by the Board of Directors in good faith), (iv) willful misconduct injurious to our company and (v) conduct tending to bring our company into substantial public disgrace or disrepute. Disability is defined as an illness or other disability which prevents the employee from discharging his responsibilities under the employment agreement for a period of 180 consecutive calendar days or for an aggregate of 180 calendar days in any calendar year, all as determined in good faith by the Board of Directors. Voluntary termination is defined as a decision to terminate employment communicated by written notice delivered to our company indicating the specific termination provision relied upon, the facts and circumstances claimed to provide a basis for termination and the specific termination date (which must be within 30 days) if other than the date of receipt of such notice. Change in control is defined as any of the following occurrences: (i) a merger or agreement to merger by which our stockholders own less than 50% of the surviving entity, (ii) our sale, or agreement to sell, all or substantially all of our assets to any other person or entity, (iii) our dissolution, (iv) any third person or entity together with its affiliates (other than CHS and its affiliates or a management buyout of which Arnold is a member) becomes or publicly announces its intention to become, directly or indirectly, the beneficial owner of at least 50% of our common stock or (v) if individuals appointed or requested by CHS or its affiliates cease to constitute a majority of the individuals on the Board of Directors.

With respect to Mr. Nigh and Mr. McCourt, cause is defined as any of the following activities: (i) dishonesty, gross negligence or breach of fiduciary duty, (ii) indictment for, conviction of or no contest plea to an act of theft, fraud or embezzlement, (iii) commission of a felony, (iv) material breach of any company policy and (v) substantial and continuing failure to render services in accordance with the employee's obligations (with a 30-day grace period).Change in control is defined as any of the following occurrences: (i) consummation of any sale, exchange, or other disposition of all or substantially all of the assets of our company (including assets of our affiliates) and (ii) the transfer of beneficial ownership of more than 50% of the voting power of issued and outstanding stock by any person or group.

(5)

Pursuant to the terms of that Employment Agreement, if the executive's employment is terminated by us without cause, due to executive's disability, or by executive voluntarily within six (6) months after a change in control, the executive is entitled to receive: (1) base salary due through the date of termination; (2) an amount equal to the base salary in effect on the date of termination, payable in equal installments over a period of twelve (12) months, and (3) all company semi-monthly or monthly contributions made under our benefit plans and programs in which employee participates through the date of termination, subject to the terms and conditions of such plan. Group medical benefits for employees and dependents of the employee on the date of termination are continued for twelve (12) months, with premiums to be paid by employee at the same rate paid by employees whose employment has not been terminated.

(6)

Pursuant to the terms of a Change in Control and Retention Agreement, if the executive's employment is terminated without cause in connection with a change in control experienced upon or within six months following the change of control, executive is entitled to receive the following, in addition to any salary earned and vacation accrued up to and including the date of termination 12 times the executive's monthly base salary, along with payment of the targeted bonus for the calendar year, payable as a lump sum payment within seven days of the date that executive executes a waiver and release in favor of the company. Mr. Taylor does not have a specific change in control agreement.

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Non-Employee Director Compensation and Benefits

The following table summarizes our estimate of the compensation that our non-employee directors earned for services as members of our Board or any committee thereof during 2010, including amounts for meetings through December 31, 2010.

Name	Fees earned or paid in cash ($)(1)							Total ($)


Michael G. Evans	$	35,000	—	—	—	—	—	$	35,000
Richard E. Goodrich	$	35,000	—	—	—	—	—	$	35,000

(1): Reflects annual fees paid to our non-employee directors for their board service during 2010. Other than Messrs. Evans and Goodrich, our non-employee directors did not receive compensation for services as a non-employee director during 2010. See "— Director Compensation" above. See "Certain Relationships and Related Party Transactions" for a description of our Management Agreement with CHS.

None of our non-executive directors had unexercised option awards (either exercisable or unexercisable) or unvested shares of restricted stock awards at December 31, 2010. Director compensation is reviewed annually by the Compensation Committee and, except as described above, paid quarterly. In addition, directors are reimbursed for their business expenses related to their attendance at board and committee meetings, including room, meals and transportation to and from board and committee meetings (e.g., commercial flights, cars and parking).

Director and Officer Indemnification and Limitation of Liability

Our bylaws will provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware General Corporation Law. In addition, our certificate of incorporation will provide that our directors will not be liable for monetary damages for breach of fiduciary duty, except as otherwise provided by Delaware law.

In addition, prior to the consummation of this offering, we intend to enter into indemnification agreements with each of our executive officers and directors. The indemnification agreements will provide the executive officers and directors with contractual rights to indemnification, expense advancement and reimbursement, to the fullest extent permitted under the DGCL. We also intend to enter into an indemnification priority agreement with affiliates of CHS to clarify the priority of advancement of expenses and indemnification obligations among us, our subsidiaries and any of our directors appointed by affiliates of CHS and other related matters.

There is no pending litigation or proceeding naming any of our directors or officers to which indemnification is being sought, and we are not aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.

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Principal and Selling Stockholders

The following table sets forth information as of June 30, 2011 regarding the beneficial ownership of our common stock (1) immediately prior to and (2) as adjusted to give effect to this offering by:

•: each person or group who is known by us to own beneficially more than 5.0% of our outstanding common stock;
•: each of our named executive officers;
•: each of our directors;
•: all of our executive officers and directors as a group; and
•: each selling stockholder.

Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof or to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days. Common stock subject to options that are currently exercisable or exercisable within 60 days of , 2011 are deemed to be outstanding and beneficially owned by the person holding the options. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Percentage of beneficial ownership is based on shares of common stock outstanding prior to the consummation of this offering and shares of common stock to be outstanding after the consummation of this offering, assuming no exercise of the underwriters' option to purchase additional shares, or shares, assuming full exercise of the underwriters' option to purchase additional shares. Except as disclosed in the notes to this table and subject to applicable community property laws, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder. Unless otherwise indicated in the table or notes below, the address for each beneficial owner is c/o GSE Holding, Inc., 19103 Gundle Road, Houston, Texas 77073.



	Shares Beneficially Owned Prior to This Offering						Shares To Be Sold in Base Offering	Shares To Be Sold in Over- Allotment Option	Shares Beneficially Owned After This Offering Assuming No Exercise of the Over-Allotment Option		Shares Beneficially Owned After This Offering Assuming Full Exercise of the Over-Allotment Option
Name	Number			Percent			Number	Number	Number	Percent	Number	Percent
5% Stockholders:
Code Hennessy & Simmons LLC⁽¹⁾		2,967,035			99.4	%
Nadia F. Badawi⁽²⁾		184,000			5.8	%
Executive Officers and Directors:
Mark C. Arnold⁽³⁾		30,000			*
Charles B. Lowrey		—			—
Gregg Taylor⁽⁴⁾		10,000			*
Peter R. McCourt⁽⁵⁾		—			—
Joellyn Champagne		20,000			*
Jeffery D. Nigh⁽⁶⁾		—			—
Daniel J. Hennessy⁽⁷⁾		2,967,035			99.4	%
Michael G. Evans		1,351			*
Marcus J. George⁽⁷⁾		2,967,035			99.4	%
Richard E. Goodrich		2,000			*
Robert C. Griffin		—			—
Charles A. Sorrentino		—			—
All directors and executive officers as a group (12 persons)		3,030,387	⁽⁸⁾		99.4	%

*: Represents beneficial ownership of less than 1% of our outstanding common stock.

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⁽¹⁾: Represents 2,962,166.053 shares held by Code Hennessy & Simmons IV LP and 4,869.380 shares held by CHS Associates IV. Code Hennessy & Simmons LLC, or CHS, is the general partner of CHS Associates IV as well as the general partner of CHS Management IV LP, which is the general partner of Code Hennessy & Simmons IV LP. The Investment Committee of CHS exercises sole voting and dispositive powers with respect to the shares of our company held by both Code Hennessy & Simmons IV LP and CHS Associates IV. The members of the Investment Committee are Andrew W. Code, Brian P. Simmons, Daniel J. Hennessy, Thomas J. Formolo, David O. Hawkins, Richard A. Lobo and Steven R. Brown, whom we collectively refer to as the Investment Committee Members. Each of the Investment Committee Members disclaims beneficial ownership of the shares held by Code Hennessy & Simmons IV LP and CHS Associates IV, except to the extent of a pecuniary interest therein. The address for each of the Investment Committee Members is c/o Code Hennessy & Simmons LLC, 10 South Wacker Drive, Suite 3175, Chicago, Illinois 60606.
⁽²⁾: Represents 92,000 shares owned by Nadia F. Badawi and 92,000 shares owned by Nadia F. Badawi, as trustee of the non-exempt marital trust.
⁽³⁾: Represents options to purchase 30,000 shares of our common stock. "Shares Beneficially Owned Prior to This Offering" excludes shares of our common stock to be issued immediately prior to the closing of this offering to Mr. Arnold pursuant to a bonus letter agreement. See "Executive Compensation — Compensation Discussion and Analysis — Bonus Letter Agreements."
⁽⁴⁾: Represents options to purchase 10,000 shares of our common stock.
⁽⁵⁾: "Shares Beneficially Owned Prior to This Offering" excludes shares of our common stock to be issued immediately prior to the closing of this offering to Mr. McCourt pursuant to a bonus letter agreement. See "Executive Compensation — Compensation Discussion and Analysis — Bonus Letter Agreements."
⁽⁶⁾: "Shares Beneficially Owned Prior to This Offering" excludes shares of our common stock to be issued immediately prior to the closing of this offering to Mr. Nigh pursuant to a bonus letter agreement. See "Executive Compensation — Compensation Discussion and Analysis — Bonus Letter Agreements."
⁽⁷⁾: Mr. Hennessy and Mr. George are partners of CHS. CHS is the general partner of CHS Associates IV as well as the general partner of CHS Management IV LP, which is the general partner of Code Hennessy & Simmons IV LP. Each of Mr. Hennessy and Mr. George disclaims beneficial ownership of the shares held by Code Hennessy & Simmons IV LP and CHS Associates IV. The address for Mr. Hennessy and Mr. George is c/o Code Hennessy & Simmons LLC, 10 South Wacker Driver, Suite 3175, Chicago, Illinois 60606.
⁽⁸⁾: Includes shares for which the following directors have disclaimed beneficial ownership: Mr. Hennessy and Mr. George. See note (7) above. "Shares Beneficially Owned Prior to This Offering" excludes shares of our common stock to be issued immediately prior to the closing of this offering to certain executive officers pursuant to bonus letter agreements. See notes (3), (5) and (6) above.

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Certain Relationships and Related Party Transactions

Review and Approval of Transactions with Related Persons

In connection with this offering we will adopt a written policy and procedure that prior to any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, including any indebtedness or guarantee of indebtedness, between us or any of our subsidiaries and a Related Person (as defined below) where the aggregate amount involved is expected to exceed $120,000 in any calendar year and the applicable Related Person had or will have a direct or indirect material interest, each, a Related Person Transaction, the Audit Committee must review the material facts of any Related Person Transaction and approve such transaction. If advanced approval is not feasible, then the Audit Committee must ratify the Related Person Transaction at its next regularly scheduled meeting or the transaction must be rescinded.

In considering whether to approve or ratify any Related Person Transaction, the Audit Committee shall consider all factors relevant to the Related Person Transaction, including, without limitation, the following:

•: the extent and nature of the Related Person's interest in the Related Person Transaction;
•: if applicable, the availability of comparable products or services from unaffiliated third parties;
•: whether the terms of the Related Person Transaction are no less favorable than terms generally available in transactions with unaffiliated third parties under like circumstances;
•: the benefit to us; and
•: the aggregate value of the Related Person Transaction.

For purposes of this policy and procedure, "Related Person" means: (i) any person who is or was an executive officer, director or nominee for election as a director (since the beginning of the last fiscal year); (ii) any person or group who is a greater than 5% beneficial owner of our voting securities; or (iii) any immediate family member of any of the foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons is an executive officer, a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest in such entity.

Transactions with Related Persons that are not classified as Related Person Transactions by our policy, and thus not subject to its review and approval requirements, may still need to be disclosed if required by the applicable securities laws, rules and regulations.

Other than compensation agreements and other arrangements which are described in "Executive Compensation" and the transactions described below, since January 1, 2008, we have not been a party to any Related Person Transaction.

Management Agreement

In connection with the Acquisition, we entered into a management agreement, or the Management Agreement, with CHS Management IV LP, a limited partnership (i) of which CHS is the general partner and (ii) which is the general partner of CHS IV, or CHS Management. Pursuant to the Management Agreement, CHS Management provides certain financial and management consulting services to us. In consideration of those services we pay fees to CHS Management in an aggregate annual amount of $2.0 million, payable in equal monthly installments. We also agreed to reimburse CHS Management for its reasonable travel and other out-of-pocket fees and expenses. We also provide customary indemnification to CHS Management. Under the Management Agreement, we will pay CHS Management a fee equal to 5% of any additional proceeds of our capital stock purchased from time to time by CHS Management or its affiliates. The management fee is subordinated to the prior payment in full of principal, interest and premium and all fees and other amounts due and owing under our Senior Secured Credit Facilities, but we may pay the management fee at all times except during certain events of default under our Senior Secured Credit Facilities. In the event any portion of the management fee is not paid, such amount will accrue and become

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due and payable in the next month when payment is permitted. Under this agreement, we paid CHS Management $2.0 million during each of the years ended December 31, 2008, 2009 and 2010 and $0.5 million during the three months ended March 31, 2011. In addition, upon the closing of our Senior Secured Credit Facilities in May 2011, we paid CHS Management a one-time fee of $2.0 million for its services in connection with such transaction. In connection with this offering, we plan to pay CHS Management a one-time payment of $3.0 million in connection with terminating the Management Agreement.

Consulting Fees

During the fourth quarter of 2009, we engaged Alvarez & Marsal Private Equity Performance Improvement Group, LLC, an independent consulting firm that specializes in private equity portfolio company performance improvement. During the engagement, personnel from the consulting firm functioned in several interim management roles for our company, including, but not limited to, Chief Financial Officer and Vice President of Operations. Mr. Lowrey, our Interim Senior Vice President and Chief Financial Officer, is currently a managing director at the consulting firm. We paid the consulting firm retainer fees in the amount of $2.6 million during the year ended December 31, 2010 and $0.8 million during the three months ended March 31, 2011. During 2010, we also paid the consulting firm a success fee of $6.4 million for our company having achieved agreed upon performance improvements.

Employment Agreements

We have entered into employment agreements with certain of our named executive officers. For more information regarding these agreements, see "Executive Compensation — Compensation Discussion and Analysis — Compensation Tables — Employment Agreements."

We have also entered into bonus letter agreements with each of our named executive officers. See "Executive Compensation — Compensation Discussion and Analysis — Bonus Letter Agreement."

Stock Options

Certain stock options granted to our named executive officers are described in "Executive Compensation — Compensation Discussion and Analysis — Equity Incentives." Certain stock options granted to our non-employee directors are described in "Executive Compensation — Compensation Discussion and Analysis — Non-Employee Director Compensation and Benefits."

Indemnification Agreements

Prior to the consummation of this offering, we intend to enter into indemnification agreements with each of our executive officers and directors. The indemnification agreements and the indemnification provisions included in our certificate of incorporation and bylaws, to be effective upon the consummation of this offering, will require us to indemnify our executive officers and directors to the fullest extent permitted under the Delaware General Corporation Law. See "Executive Compensation — Compensation Discussion and Analysis — Director and Officer Indemnification and Limitation of Liability."

Corporate Opportunity

See "Description of Capital Stock — Anti-Takeover Effects of Provisions of Our Certificate of Incorporation, Our Bylaws and Delaware Law — Corporate Opportunity."

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Description of Capital Stock

The following is a description of the material terms of our certificate of incorporation and bylaws as in effect upon consummation of this offering. The following description may not contain all of the information that is important to you. To understand the material terms of our common stock, you should read our certificate of incorporation and bylaws, copies of which are or will be filed with the SEC as exhibits to the registration statement, of which this prospectus is a part.

Authorized Capitalization

Our authorized capital stock consists of shares of common stock, par value $0.01 per share, and shares of preferred stock, par value $0.01 per share. On , 2011 we had shares of common stock outstanding, held of record by approximately stockholders. Based upon (1) shares of our common stock outstanding as of , 2011 and (2) the issuance of shares of common stock in this offering, there will be shares of our common stock outstanding upon consummation of this offering, and no shares of preferred stock will be outstanding.

Common Stock

Voting Rights

Each share of common stock entitles the holder to one vote with respect to each matter presented to our stockholders on which the holders of common stock are entitled to vote. Subject to any rights that may be applicable to any then outstanding preferred stock, our common stock votes as a single class on all matters relating to the election and removal of directors on our Board of Directors and as provided by law. Holders of our common stock will not have cumulative voting rights. Except in respect of matters relating to the election and removal of directors on our Board of Directors and as otherwise provided in our certificate of incorporation or required by law, all matters to be voted on by our stockholders must be approved by a majority of the shares present in person or by proxy at the meeting and entitled to vote on the subject matter. In the case of the election of directors, all matters to be voted on by our stockholders must be approved by a plurality of the shares present in person or by proxy at the meeting and entitled to vote on the election of directors.

Dividend Rights

Subject to preferences that may be applicable to any then outstanding preferred stock, holders of our outstanding shares of common stock are entitled to receive dividends, if any, as may be declared from time to time by our Board of Directors out of legally available funds. Because we are a holding company, our ability to pay dividends on our common stock is limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us, including restrictions under the terms of the agreements governing our indebtedness. See "Description of Certain Indebtedness" and "Dividend Policy."

Liquidation Rights

In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, holders of our common stock would be entitled to share ratably in our assets that are legally available for distribution to stockholders after payment of our debts and other liabilities. If we have any preferred stock outstanding at such time, holders of the preferred stock may be entitled to distribution and/or liquidation preferences. In either such case, we must pay the applicable distribution to holders of our preferred stock before we may pay distributions to the holders of our common stock.

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Other Rights

Holders of our common stock have no preemptive, conversion or other rights to subscribe for additional shares. All outstanding shares are, and all shares offered by this prospectus will be, when sold, validly issued, fully paid and nonassessable. The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.

Preferred Stock

Our certificate of incorporation authorizes our Board of Directors to provide for the issuance of shares of preferred stock in one or more series and to fix the preferences, powers and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including the dividend rate, conversion rights, voting rights, redemption rights and liquidation preference and to fix the number of shares to be included in any such series without any further vote or action by our stockholders. Any preferred stock so issued may rank senior to our common stock with respect to the payment of dividends or amounts upon liquidation, dissolution or winding up, or both. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of our company without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock. The issuance of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of common stock, including the loss of voting control to others. At present, we have no plans to issue any preferred stock.

Anti-Takeover Effects of Provisions of Our Certificate of Incorporation, Our Bylaws and Delaware Law

Some provisions of Delaware law and our certificate of incorporation and our bylaws, as will be in effect upon consummation of this offering, contain provisions that could have the effect of delaying, deterring or preventing another party from acquiring or seeking to acquire control of us. These provisions are intended to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage anyone seeking to acquire control of us to negotiate first with our Board of Directors. However, these provisions may also delay, deter or prevent a change in control or other takeover of our company that our stockholders might consider to be in their best interests, including transactions that might result in a premium being paid over the market price of our common stock and also may limit the price that investors are willing to pay in the future for our common stock. These provisions may also have the effect of preventing changes in our management.

Certificate of Incorporation and bylaws

Our certificate of incorporation and bylaws include anti-takeover provisions that:

•: authorize our Board of Directors, without further action by the stockholders, to issue up to shares of preferred stock in one or more series, and with respect to each series, to fix the number of shares constituting that series and establish the rights and other terms of that series;
•: require that actions to be taken by our stockholders may be taken only at an annual or special meeting of our stockholders and not by written consent;
•: specify that special meetings of our stockholders can be called only by our Board of Directors, the chairman of our Board of Directors or our chief executive officer and president;
•: establish advance notice procedures for stockholders to submit nominations of candidates for election to our Board of Directors and other proposals to be brought before a stockholders meeting;
•: provide that our bylaws may be amended by our Board of Directors without stockholder approval;
•: allow our directors to establish the size of the Board of Directors by action of the Board;

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•: provide that vacancies on our Board of Directors or newly created directorships resulting from an increase in the number of our directors may be filled only by a majority of directors then in office, even though less than a quorum;
•: do not give the holders of our common stock cumulative voting rights with respect to the election of directors; and
•: prohibit us from engaging in certain business combinations with any "interested stockholder" (as defined below) unless specified conditions are satisfied as described below under "— Business Combinations."

Business Combinations

We have opted out of Section 203 of the DGCL, which regulates corporate takeovers. However, our certificate of incorporation contains provisions that are similar to Section 203 of the DGCL. Specifically, our certificate of incorporation provides that we may not engage in certain "business combinations" with any "interested stockholder" for a three-year period following the time that the person became an interested stockholder, unless:

•: prior to the time that person became an interested stockholder, our Board of Directors approved either the business combination or the transaction which resulted in the person becoming an interested stockholder;
•: upon consummation of the transaction which resulted in the person becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding certain shares; or
•: at or subsequent to the time the person became an interested stockholder, the business combination is approved by the Board of Directors and by the affirmative vote of at least 66²/3% of the outstanding voting stock which is not owned by the interested stockholder.

Generally, a business combination includes a merger, consolidation, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an interested stockholder is a person who, together with that person's affiliates and associates, owns, or within the previous three years owned, 15% or more of our voting stock. However, in the case of our company, CHS and any of its respective permitted transferees receiving 15% or more of our voting stock, such stockholders will not be deemed to be interested stockholders regardless of the percentage of our voting stock owned by them. The statute could prohibit or delay mergers or other takeover or change in control attempts with respect to us and, accordingly, may discourage attempts to acquire us.

Corporate Opportunity

Our certificate of incorporation provides that we renounce any interest or expectancy in, or in being offered an opportunity to participate in, any business opportunity that may be from time to time presented to the sponsors or any of their respective affiliates (other than us and our subsidiaries), subsidiaries, officers, directors, agents, stockholders, members, partners and employees and that may be a business opportunity for such sponsor, even if the opportunity is one that we or our subsidiaries might reasonably have pursued or had the ability or desire to pursue if granted the opportunity to do so. No such person will be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person, acting in good faith, pursues or acquires any such business opportunity, directs any such business opportunity to another person or fails to present any such business opportunity, or information regarding any such business opportunity, to us unless, in the case of any such person who is our director or officer, any such business opportunity is expressly offered to such director or officer solely in his or her capacity as our director or officer. CHS has no duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us or any of our subsidiaries.

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These provisions will continue to apply with respect to a particular sponsor until the date on which no person who is our director or officer is also a director, officer, member, partner or employee of such sponsor or its affiliates (other than us and our subsidiaries).

Listing

We intend to apply to have our common stock approved for listing on the New York Stock Exchange under the symbol "GSE".

Transfer Agent and Registrar

The transfer agent and registrar for our common stock will be .

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Shares Available for Future Sale

Prior to this offering, there has been no public market for our common stock. Future sales of substantial amounts of our common stock in the public market, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock. No prediction can be made as to the effect, if any, future sales of shares, or the availability of shares for future sales, will have on the market price of our common stock prevailing from time to time. The sale of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of our common stock.

Sale of Restricted Shares

Upon consummation of this offering, we will have shares of common stock outstanding. Of these shares of common stock, the shares of common stock being sold in this offering, plus any shares sold by the selling stockholders upon exercise of the underwriters' option to purchase additional shares, will be freely tradable without restriction under the Securities Act, except for any such shares which may be held or acquired by an "affiliate" of ours, as that term is defined in Rule 144 under the Securities Act, which shares will be subject to the volume limitations and other restrictions of Rule 144 described below. The remaining shares of common stock held by our existing stockholders upon consummation of this offering (assuming no exercise of the underwriters' option to purchase additional shares) will be "restricted securities," as that phrase is defined in Rule 144, and may be resold only after registration under the Securities Act or pursuant to an exemption from such registration, including, among others, the exemptions provided by Rule 144 and 701 under the Securities Act, which rules are summarized below. These remaining shares of common stock held by our existing stockholders upon consummation of this offering will be available for sale in the public market after the expiration of the lock-up agreements described below as follows.



Number of Shares and % of Total Outstanding		Date Available for Sale Into Public Market
shares or %		On the date of this prospectus
shares or %		Up to and including 180 days after the date of this prospectus
shares or %		More than 180 days after the date of this prospectus, of which shares, or %, are subject to volume, manner of sale and other limitations under Rule 144.

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Lock-up Agreements

We, each of our officers and directors, substantially all of our stockholders and participants in the directed share program will be subject to lock-up agreements with the underwriters that will restrict the sales of the shares of our common stock held by them for 180 days, subject to certain exceptions, including the shares of common stock being sold in this offering. See "Underwriting (Conflicts of Interest)."

Rule 144

The SEC adopted amendments to Rule 144 which became effective on February 15, 2008. Under these amendments, persons who became the beneficial owner of shares of our common stock prior to the consummation of this offering may not sell their shares until the earlier of (1) the expiration of a six-month holding period, if we have been subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, and have filed all required reports for at least 90 days prior to the date of the sale, or (2) a one-year holding period.

At the expiration of the six-month holding period, a person who was not one of our affiliates at any time during the three months preceding a sale would be entitled to sell an unlimited number of shares of our common stock provided current public information about us is available, and a person who was one of our affiliates at any time during the three months preceding a sale would be entitled to sell within any three-month period only a number of shares of common stock that does not exceed the greater of either of the following:

•: 1% of the number of shares of our common stock then outstanding, which will equal approximately shares immediately after this offering, based on the number of shares of our common stock outstanding as of , 2011; or
•: the average weekly trading volume of our common stock on the NYSE during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

At the expiration of the one-year holding period, a person who was not one of our affiliates at any time during the three months preceding a sale would be entitled to sell an unlimited number of shares of our common stock without restriction. A person who was one of our affiliates at any time during the three months preceding a sale would remain subject to the volume restrictions described above.

Sales under Rule 144 by our affiliates are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 701

In general, subject to the lock-up agreements discussed above, under Rule 701, any of our employees, directors, officers, consultants or advisors who purchased shares from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering, or who purchased shares from us after that date upon the exercise of options granted before that date, are eligible to resell such shares in reliance upon Rule 144 beginning 90 days after the date of this prospectus. If such person is not an affiliate, the sale may be made subject only to the manner-of-sale restrictions of Rule 144. If such a person is an affiliate, the sale may be made under Rule 144 without compliance with its one-year minimum holding period, but subject to the other Rule 144 restrictions.

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Stock Plans

We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of our common stock issued or reserved for issuance under the 2004 Stock Option Plan and 2011 Plan. The first such registration statement is expected to be filed soon after the date of this prospectus and will automatically become effective upon filing with the SEC. Accordingly, shares registered under such registration statement will be available for sale in the open market following the effective date, unless such shares are subject to vesting restrictions with us, Rule 144 restrictions applicable to our affiliates or the lock-up agreements described above.

Registration Rights

Upon consummation of this offering, the holders of shares of common stock and shares of common stock issuable upon the exercise of outstanding options, will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates. See "Management — Registration Agreement."

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Material U.S. Federal Income Tax Considerations for Non-U.S. Holders

The following is a summary of material U.S. federal income tax consequences of the purchase, ownership and disposition of our common stock to a non-U.S. holder that purchases shares of our common stock in this offering. For purposes of this summary, a "non-U.S. holder" means a beneficial owner of our common stock that is, for U.S. federal income tax purposes:

•: a nonresident alien individual;
•: a foreign corporation (or entity treated as a foreign corporation for U.S. federal income tax purposes); or
•: a foreign estate or foreign trust.

In the case of a holder that is classified as a partnership for U.S. federal income tax purposes, the tax treatment of a partner in such partnership generally will depend upon the status of the partner and the activities of the partner and the partnership. If you are a partner in a partnership holding our common stock, then you should consult your own tax advisor.

This summary is based upon the provisions of the U.S. Internal Revenue Code of 1986, as amended, which we refer to as the Code, the Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those summarized below. We cannot assure you that a change in law, possibly with retroactive application, will not alter significantly the tax considerations that we describe in this summary. We have not sought and do not plan to seek any ruling from the U.S. Internal Revenue Service, which we refer to as the IRS, with respect to statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS or a court will agree with our statements and conclusions.

This summary does not address all aspects of U.S. federal income taxes that may be relevant to non-U.S. holders in light of their personal circumstances, and does not deal with federal taxes other than the U.S. federal income tax or with non-U.S., state or local tax considerations. Special rules, not discussed here, may apply to certain non-U.S. holders, including:

•: U.S. expatriates;
•: controlled foreign corporations;
•: passive foreign investment companies; and
•: investors in pass-through entities that are subject to special treatment under the Code.

Such non-U.S. holders should consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them.

This summary applies only to a non-U.S. holder that holds our common stock as a capital asset (within the meaning of Section 1221 of the Code).

If you are considering the purchase of our common stock, you should consult your own tax advisor concerning the particular U.S. federal income tax consequences to you of the purchase, ownership and disposition of our common stock, as well as the consequences to you arising under U.S. tax laws other than the federal income tax law or under the laws of any other taxing jurisdiction.

Dividends

As described in "Dividend Policy" above, we do not currently anticipate paying dividends. In the event that we do make a distribution of cash or property (other than certain stock distributions) with respect to our common stock (or certain redemptions that are treated as distributions with respect to common stock), any such distributions will be treated as a dividend for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits (as determined under U.S. federal income tax principles).

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Dividends paid to you generally will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the conduct of a trade or business by you within the United States and, where a tax treaty applies, are generally attributable to a United States permanent establishment, are not subject to the withholding tax, but instead are subject to United States federal income tax on a net income basis at applicable graduated individual or corporate ordinary income tax rates. Certain certification and disclosure requirements, including delivery to the withholding agent of a properly executed IRS Form W-8ECI (or other applicable form), must be satisfied for effectively connected income to be exempt from withholding. Any such dividends received by a foreign corporation that are effectively connected with its conduct of a trade or business within the United States may be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

If the amount of a distribution paid on our common stock exceeds our current and accumulated earnings and profits, such excess will be allocated ratably among each share of common stock with respect to which the distribution is paid and treated first as a tax-free return of capital to the extent of your adjusted tax basis in each such share, and thereafter as capital gain from a sale or other disposition of such share of common stock that is taxed to you as described below in "— Gain on Disposition of Common Stock." Your adjusted tax basis is generally the purchase price of such shares, reduced by the amount of any such tax-free returns of capital.

If you wish to claim the benefit of an applicable treaty rate to avoid or reduce withholding of U.S. federal income tax for dividends, then you must (a) provide the withholding agent with a properly completed IRS Form W-8BEN (or other applicable form) and certify under penalties of perjury that you are not a U.S. person and are eligible for treaty benefits, or (b) if our common stock is held through certain foreign intermediaries, satisfy the relevant certification requirements of applicable U.S. Treasury regulations. Special certification and other requirements apply to certain non-U.S. holders that act as intermediaries (including partnerships).

If you are eligible for a reduced rate of U.S. federal income tax pursuant to an income tax treaty, then you may obtain a refund or credit of any excess amounts withheld by filing timely an appropriate claim with the IRS.

Gain on Disposition of Common Stock

You generally will not be subject to U.S. federal income tax with respect to gain realized on the sale or other taxable disposition of our common stock, unless:

•: the gain is effectively connected with a trade or business you conduct in the United States, and, in cases in which certain tax treaties apply, is attributable to a United States permanent establishment;
•: you are an individual and you are present in the United States for 183 days or more in the taxable year of the sale or other taxable disposition, and certain other conditions are met; or
•: we are or have been during a specified testing period a "U.S. real property holding corporation" for U.S. federal income tax purposes, and certain other conditions are met.

If you are an individual described in the first bullet point above, you will be subject to tax on the net gain derived from the sale under regular graduated United States federal income tax rates or such lower rate as specified by an applicable income tax treaty. If you are an individual described in the second bullet point above, you will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by United States source capital losses (even though the individual is not considered a resident of the United States). If you are a foreign corporation described in the first bullet point above, you will be subject to tax on your gain under regular graduated United States federal income tax rates and, in addition, may be subject to the branch profits tax equal to 30% of your effectively connected earnings and profits or at such lower rate as may be specified by an applicable income tax treaty.

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Generally, we will be a "United States real property holding corporation" if the fair market value of our U.S. real property interests equals or exceeds 50% of the sum of the fair market values of our worldwide real property interests and other assets used or held for use in a trade or business, all as determined under applicable U.S. Treasury regulations. We believe that we have not been and are not a "U.S. real property holding corporation" for U.S. federal income tax purposes. Although we do not anticipate it based on our current business plans and operations, we may become a "U.S. real property holding corporation" in the future. If we have been or were to become a "U.S. real property holding corporation," a non-U.S. holder might be subject to U.S. federal income tax (but not the branch profits tax) with respect to gain realized on the disposition of our common stock. However, such gain would not be subject to U.S. federal income or withholding tax if (1) our common stock is regularly traded on an established securities market and (2) the non-U.S. holder disposing of our common stock did not own, actually or constructively, at any time during the five-year period preceding the disposition, more than 5% of the value of our common stock.

Information Reporting and Backup Withholding Tax

We must report annually to the IRS and to you the amount of dividends paid to you and the amount of tax, if any, withheld with respect to such dividends. The IRS may make this information available to the tax authorities in the country in which you are resident.

In addition, you may be subject to information reporting requirements and backup withholding tax (currently at a rate of 28%) with respect to dividends paid on, and the proceeds of disposition of, shares of our common stock, unless, generally, you certify under penalties of perjury (usually on IRS Form W-8BEN) that you are not a U.S. person or you otherwise establish an exemption. Additional rules relating to information reporting requirements and backup withholding tax with respect to payments of the proceeds from the disposition of shares of our common stock are as follows:

•: If the proceeds are paid to or through the U.S. office of a broker, the proceeds generally will be subject to backup withholding tax and information reporting, unless you certify under penalties of perjury (usually on IRS Form W-8BEN) that you are not a U.S. person or you otherwise establish an exemption.
•: If the proceeds are paid to or through a non-U.S. office of a broker that is not a U.S. person and is not a foreign person with certain specified U.S. connections, or a U.S.-related person, information reporting and backup withholding tax generally will not apply.
•: If the proceeds are paid to or through a non-U.S. office of a broker that is a U.S. person or a U.S.-related person, the proceeds generally will be subject to information reporting (but not to backup withholding tax), unless you certify under penalties of perjury (usually on IRS Form W-8BEN) that you are not a U.S. person.

Any amounts withheld under the backup withholding tax rules may be allowed as a refund or a credit against your U.S. federal income tax liability, provided the required information is timely furnished by you to the IRS.

New Legislation Relating to Foreign Accounts

Recently enacted legislation may impose withholding taxes on certain types of payments made to "foreign financial institutions" and certain other non-U.S. entities after December 31, 2012. The legislation imposes a 30% withholding tax on dividends on, or gross proceeds from the sale or other disposition of, our common stock paid to a foreign financial institution unless the foreign financial institution enters into an agreement with the U.S. Treasury to, among other things, undertake to identify accounts held by certain U.S. persons (including certain equity and debt holders of such institutions) or U.S.-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these reporting and other requirements. In addition, the legislation imposes a 30% withholding tax on the same types of payments to a foreign non-financial entity unless the

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entity certifies that it does not have any substantial U.S. owners (which generally includes any U.S. person who directly or indirectly own more than 10% of the entity) or furnishes identifying information regarding each substantial U.S. owner. Under certain circumstances, a non-U.S. holder of our common stock might be eligible for refunds or credits of such taxes, and a non-U.S. holder might be required to file a United States federal income tax return to claim such refunds or credits. Prospective purchasers of our common stock should consult their tax advisors regarding this legislation.

THE SUMMARY OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES ABOVE IS INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY. PROSPECTIVE PURCHASERS OF OUR COMMON STOCK ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSIDERATIONS OF PURCHASING, OWNING AND DISPOSING OF OUR COMMON STOCK.

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Underwriting (Conflicts of Interest)

Subject to the terms and conditions set forth in the underwriting agreement by and among us, the selling stockholders, Jefferies & Company, Inc. and Oppenheimer & Co. Inc., as representatives of the underwriters, we and the selling stockholders have agreed to sell to the underwriters and the underwriters have severally agreed to purchase from us and the selling stockholders, the number of shares of common stock indicated in the table below:



Underwriters		Number of Shares
Jefferies & Company, Inc.
Oppenheimer & Co. Inc.
Total

Jefferies & Company, Inc. and Oppenheimer & Co. Inc. are acting as joint book-running managers of this offering and Jefferies & Company, Inc. and Oppenheimer & Co. Inc. are acting as representatives of the underwriters named above.

The underwriting agreement provides that the obligations of the several underwriters are subject to certain conditions precedent such as the receipt by the underwriters of officers' certificates and legal opinions and approval of certain legal matters by their counsel. The underwriting agreement provides that the underwriters will purchase all of the shares, other than those shares subject to the underwriters' over-allotment option, if any of them are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated. We and the selling stockholders have agreed to indemnify the underwriters and certain of their controlling persons against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make in respect of those liabilities.

The underwriters have advised us that they currently intend to make a market in our common stock. However, the underwriters are not obligated to do so and may discontinue any market-making activities at any time without notice. No assurance can be given as to the liquidity of the trading market for our common stock.

The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and the selling stockholders and subject to prior sale. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part. In addition, the underwriters have advised us that they do not expect sales to accounts over which they have discretionary authority to exceed 5% of the shares of common stock being offered.

Commission and Expenses

The underwriters have advised us that they propose to offer the shares to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $ per share. The underwriters may allow, and certain dealers may reallow, a discount from the concession not in excess of $ per share to certain brokers and dealers. After the offering, the initial public offering price, concession and reallowance to dealers may be reduced by the representative. No such reduction will change the amount of proceeds to be received by us as set forth on the cover page of this prospectus.

The following table shows the public offering price, the underwriting discount that we and the selling stockholders are to pay the underwriters and the proceeds, before expenses, to us and the selling

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stockholders in connection with this offering. Such amounts are shown assuming both no exercise and full exercise of the underwriters' over-allotment option.



	Per Share		Total
	Without Over-Allotment Option	With Over-Allotment Option	Without Over-Allotment Option	With Over-Allotment Option
Public offering price	$	$	$	$
Underwriting discount paid by us
Proceeds to us, before expenses
Underwriting discount paid by the selling stockholders
Proceeds to the selling stockholders, before expenses

We estimate expenses payable by us in connection with this offering, other than the underwriting discount referred to above, will be approximately $ .

Determination of Offering Price

Prior to the offering, there has not been a public market for our common stock. Consequently, the initial public offering price for our common stock will be determined by negotiations between us and the underwriters. Among the factors to be considered in these negotiations will be prevailing market conditions, our financial information, market valuations of other companies that we and the underwriters believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant.

We offer no assurances that the initial public offering price will correspond to the price at which the common stock will trade in the public market subsequent to the offering or that an active trading market for the common stock will develop and continue after the offering.

Listing

We intend to apply to have our common stock approved for listing on The New York Stock Exchange under the trading symbol "GSE".

Over-Allotment Option

The selling stockholders have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of additional shares of common stock from the selling stockholders at the public offering price set forth on the cover page of this prospectus, less the underwriting discount, solely to cover over-allotments, if any. If the underwriters exercise this option, each underwriter will be obligated, subject to specified conditions, to purchase a number of additional shares proportionate to that underwriter's initial purchase commitment as indicated in the table above. This option may be exercised only if the underwriters sell more shares than the total number set forth on the cover page of this prospectus.

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No Sales of Similar Securities

We, each of our officers and directors, substantially all of our stockholders and participants in the directed share program have agreed that, without the prior written consent of each of Jefferies & Company, Inc. and Oppenheimer & Co. Inc., we and they will not directly or indirectly:

•: offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could reasonably be expected to, result in the disposition by any person at any time in the future of) any shares of common stock (including, without limitation, shares of common stock that may be deemed to be beneficially owned by us or them in accordance with the rules and regulations of the SEC and shares of common stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for common stock, or
•: enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of common stock (other than in connection with this offering), or
•: make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of our common stock or securities convertible into or exercisable or exchangeable for our common stock or any other securities, or
•: publicly disclose the intention to do any of the foregoing, in each case, for a period commencing on the date hereof and ending on the 180th day after the date of this prospectus.

The foregoing restrictions do not apply to (i) bona fide gifts, sales, transfers or other dispositions of shares of our common stock to affiliates and family members, (ii) transfers by will or intestacy, (iii) the exercise of an option to purchase shares of common stock granted on or prior to the date of this prospectus, (iv) transactions relating to shares of our common stock or other securities acquired in open market transactions, block purchases or pursuant to a public offering, (v) the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act or (vi) the sale of shares of our common stock to the underwriters pursuant to the terms of the underwriting agreement, provided that, in the case of each of the foregoing clauses (i) and (ii), the transferee agrees to be subject to the same restrictions.

The 180-day restricted period described in the preceding paragraph will be extended if:

•: during the last 17 days of the 180-day restricted period we issue an earnings release or material news or a material event relating to us occurs; or
•: prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period,

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or occurrence of a material event, unless such extension is waived in writing by Jefferies & Company, Inc. and Oppenheimer & Co. Inc. Jefferies & Company, Inc. and Oppenheimer & Co. Inc. may, in their sole discretion, release all or any portion of the shares of common stock subject to lock-up agreements.

As described below in " — Directed Share Program," any participants in the Directed Share Program shall be subject to a 180-day lock up with respect to any shares sold to them pursuant to that program. This lock up will have similar restrictions and an identical extension provision as the lock-up agreement described above.

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Stabilization

The underwriters have advised us that, pursuant to Regulation M under the Exchange Act, certain persons participating in the offering may engage in transactions, including over-allotment, stabilizing bids, syndicate covering transactions or the imposition of penalty bids, which may have the effect of stabilizing or maintaining the market price of the common stock at a level above that which might otherwise prevail in the open market. Over-allotment involves syndicate sales in excess of the offering size, which creates a syndicate short position. "Covered" short sales are sales made in an amount not greater than the underwriters' over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. "Naked" short sales are sales in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering. A stabilizing bid is a bid for the purchase of common stock on behalf of the underwriters for the purpose of fixing or maintaining the price of the common stock. A syndicate covering transaction is the bid for or the purchase of common stock on behalf of the underwriters to reduce a short position incurred by the underwriters in connection with the offering. A penalty bid is an arrangement permitting the underwriters to reclaim the selling concession otherwise accruing to a syndicate member in connection with the offering if the notes originally sold by such syndicate member are purchased in a syndicate covering transaction and therefore have not been effectively placed by such syndicate member.

None of we, the selling stockholders or any of the underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. The underwriters are not obligated to engage in these activities and, if commenced, any of the activities may be discontinued at any time.

Electronic Distribution

A prospectus in electronic format may be made available by e-mail or on the web sites or through online services maintained by one or more of the underwriters or their affiliates. In those cases, prospective investors may view offering terms online and may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares of common stock for sale to online brokerage account holders. Any such allocation for online distributions will be made by the underwriters on the same basis as other allocations. Other than the prospectus in electronic format, the information on the underwriters' web sites and any information contained in any other web site maintained by any of the underwriters is not part of this prospectus, has not been approved and/or endorsed by us or the underwriters and should not be relied upon by investors.

Directed Share Program

At our request, the underwriters have reserved for sale at the initial public offering price up to shares of our common stock for employees, directors and other persons associated with us who have expressed an interest in purchasing shares in the offering. The number of shares of common stock available for sale to the general public in the offering will be reduced to the extent these persons purchase the directed shares in the program. Any directed shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares. Each person buying shares through the directed share program has agreed that, for a period of 180 days from the date of this prospectus, he or she will not, without the prior written consent of Jefferies & Company, Inc., dispose of or hedge any common stock or any securities convertible into or exchangeable for common stock with respect to shares purchased in the

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program. For those participants who have entered into lock-up agreements as contemplated above, the lock-up agreements contemplated therein shall govern with respect to their purchases of shares of our common stock in the program. Jefferies & Company, Inc. in its sole discretion may release any of the securities subject to these lock-up agreements at any time without notice. We have agreed to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with sales of the directed shares.

Affiliations and Conflicts of Interest

The underwriters or their affiliates may from time to time in the future provide investment banking, commercial lending and financial advisory services to us and our affiliates in the ordinary course of business. The underwriters and their affiliates, as applicable, will receive customary compensation and reimbursement of expenses in connection with such services. In the course of their businesses, the underwriters and their affiliates may actively trade our securities or loans for their own account or for the accounts of customers, and, accordingly, the underwriters and their affiliates may at any time hold long or short positions in such securities or loans.

Certain of the underwriters and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. In addition, from time to time, certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future.

We intend to use at least five percent of the net proceeds of this offering to repay indebtedness owed by us to certain affiliates of the underwriters who are lenders under our Senior Secured Credit Facilities. See "Use of Proceeds." Jefferies Finance LLC and JFIN Funding LLC, affiliates of Jefferies & Company, Inc., are lenders under the credit facilities, and may receive their pro rata portion of the proceeds from this offering used to repay amounts outstanding under our Senior Secured Credit Facilities. Consequently, Jefferies & Company, Inc. has a conflict of interest within the meaning of FINRA Rule 5121, or Rule 5121. Accordingly, this offering is being made in compliance with the requirements of Rule 5121. This rule provides that if at least five percent of the net offering proceeds from the sale of debt securities, not including underwriting compensation, are used to reduce or retire the balance of a loan or credit facility extended by any underwriter or its affiliates, a Qualified Independent Underwriter, or QIU, meeting certain standards must participate in the preparation of the registration statement and the prospectus and exercise the usual standards of due diligence with respect thereto. Oppenheimer & Co. Inc. is assuming the responsibilities of acting as the QIU in connection with this offering. We have agreed to indemnify Oppenheimer & Co. Inc. against certain liabilities incurred in connection with it acting as a QIU for this offering, including liabilities under the Securities Act.

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Notice to Investors

The shares of common stock are being offered for sale only in those jurisdictions where it is lawful to make such offers. The distribution of this prospectus and the offering or sale of the shares of common stock in some jurisdictions may be restricted by law. Persons into whose possession this prospectus comes are required by us and the underwriters to inform themselves about and to observe any applicable restrictions. This prospectus may not be used for or in connection with an offer or solicitation by any person in any jurisdiction in which that offer or solicitation is not authorized or to any person to whom it is unlawful to make that offer or solicitation.

European Economic Area

In relation to each member state of the European Economic Area which has implemented the Prospectus Directive, each of which we refer to as a Relevant Member State, including each Relevant Member State that has implemented amendments to Article 3(2) of the Prospectus Directive with regard to persons to whom an offer of securities is addressed and the denomination per unit of the offer of securities, each of which we refer to as an Early Implementing Member State, with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, which we refer to as the Relevant Implementation Date, no offer of shares of our common stock offered hereby will be made in this offering to the public in that Relevant Member State (other than offers, which we refer to as Permitted Public Offers where a prospectus will be published in relation to the shares of our common stock offered hereby that has been approved by the competent authority in a Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive), except that with effect from and including that Relevant Implementation Date, offers of shares of our common stock offered hereby may be made to the public in that Relevant Member State at any time:

(a)

to "qualified investors," as defined in the Prospectus Directive, including:

(i): (in the case of Relevant Member States other than Early Implementing Member States), legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities, or any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43.0 million and (iii) an annual net turnover of more than €50.0 million as shown in its last annual or consolidated accounts; or
(ii): (in the case of Early Implementing Member States), persons or entities that are described in points (1) to (4) of Section I of Annex II to Directive 2004/39/EC, and those who are treated on request as professional clients in accordance with Annex II to Directive 2004/39/EC, or recognized as eligible counterparties in accordance with Article 24 of Directive 2004/39/EC unless they have requested that they be treated as non-professional clients; or

(b)

to fewer than 100 (or, in the case of Early Implementing Member States, 150) natural or legal persons (other than "qualified investors" as defined in the Prospectus Directive) subject to obtaining the prior consent of the book-running mangers for any such offer; or

(c)

in any other circumstances falling within Article 3(2) of the Prospectus Directive;

provided that no such offer of shares of our common stock offered hereby shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or of a supplement to a prospectus pursuant to Article 16 of the Prospectus Directive.

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Each person in a Relevant Member State (other than a Relevant Member State where there is a Permitted Public Offer) who initially acquires any shares of our common stock offered hereby or to whom any offer is made under this offering will be deemed to have represented, acknowledged and agreed to and with each book-running manager that (A) it is a "qualified investor," and (B) in the case of any shares of our common stock offered hereby acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (x) the shares of our common stock offered hereby acquired by it in this offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than "qualified investors" as defined in the Prospectus Directive, or in circumstances in which the prior consent of the Subscribers has been given to the offer or resale, or (y) where shares of our common stock offered hereby have been acquired by it on behalf of persons in any Relevant Member State other than "qualified investors" as defined in the Prospectus Directive, the offer of those shares to it is not treated under the Prospectus Directive as having been made to such persons.

For the purpose of the above provisions, the expression "an offer to the public" in relation to any shares of our common stock offered hereby in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer of any such shares to be offered so as to enable an investor to decide to purchase any such shares, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (including that Directive as amended, in the case of Early Implementing Member States) and includes any relevant implementing measure in each Relevant Member State.

United Kingdom

This prospectus is only being distributed to and is only directed at persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Director that are also (i) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, or the Order, and/or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling with Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons").

This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom who is not a relevant person should not act or rely on this document or any of its contents.

Each underwriter has represented, warranted and agreed that:

(a): it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, as amended, or the FSMA) received by it in connection with the issue or sale of the Shares in circumstances in which Section 21(1) of the FSMA does not apply to us; and
(b): it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom.

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Germany

Any offer or solicitation of securities within Germany must be in full compliance with the German Securities Prospectus Act (Wertpapierprospektgesetz — WpPG). The offer and solicitation of securities to the public in Germany requires the publication of a prospectus that has to be filed with and approved by the German Federal Financial Services Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht — BaFin). This prospectus has not been and will not be submitted for filing and approval to the BaFin and, consequently, will not be published. Therefore, this prospectus does not constitute a public offer under the German Securities Prospectus Act (Wertpapierprospektgesetz). This prospectus and any other document relating to our common stock, as well as any information contained therein, must therefore not be supplied to the public in Germany or used in connection with any offer for subscription of our common stock to the public in Germany, any public marketing of our common stock or any public solicitation for offers to subscribe for or otherwise acquire our common stock. This prospectus and other offering materials relating to the offer of our common stock are strictly confidential and may not be distributed to any person or entity other than the designated recipients hereof.

Switzerland

The securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the securities or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this prospectus nor any other offering or marketing material relating to the offering, us or the securities have been or will be filed with or approved by any Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial Market Supervisory Authority FINM, or FINMA, and the offer of securities has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of securities.

Hong Kong

No securities have been offered or sold, and no securities may be offered or sold, in Hong Kong, by means of this prospectus or any document, other than (i) to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) or (iv) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong). No advertisement, invitation or document relating to our securities has been issued or may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere) which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the securities which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

This prospectus has not been registered with the Registrar of Companies in Hong Kong. Accordingly, this prospectus may not be issued, circulated or distributed in Hong Kong, and the securities may not be offered

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for subscription to members of the public in Hong Kong. Each person acquiring the securities will be required, and is deemed by the acquisition of the securities, to confirm that he is aware of the restriction on offers of the securities described in this prospectus and the relevant offering documents and that he is not acquiring, and has not been offered any securities in circumstances that contravene any such restrictions.

Israel

In the State of Israel, the securities offered hereby may not be offered to any person or entity other than the following:

(a): a fund for joint investments in trust (i.e., mutual fund), as such term is defined in the Law for Joint Investments in Trust, 5754-1994, or a management company of such a fund;
(b): a provident fund as defined in Section 47(a)(2) of the Income Tax Ordinance of the State of Israel, or a management company of such a fund;
(c): an insurer, as defined in the Law for Oversight of Insurance Transactions, 5741-1981, a banking entity or satellite entity, as such terms are defined in the Banking Law (Licensing), 5741-1981, other than a joint services company, acting for their own account or from the account of investors of the type listed in Section 15A(b) of the Securities Law 1968;
(d): a company that is licensed as a portfolio manager, as such term is defined in Section 8(b) of the Law for the Regulation of Investment Advisors and Portfolio Managers, 5755-1995, acting on its own account or for the account of investors of the type listed in Section 15A(b) of the Securities Law 1968;
(e): a company that is licensed as an investment advisor, as such term is defined in Section 7(c) of the Law for the Regulation of Investment Advisors and Portfolio Managers, 5755-1995, acting on its own account;
(f): a company that is a member of the Tel Aviv Stock Exchange, acting on its own account or for the account of investors of the type listed in Section 15A(b) of the Securities Law 1968;
(g): an underwriter fulfilling the conditions of Section 56(c) of the Securities Law, 5728-1968;
(h): a venture capital fund (defined as an entity primarily involved in investments in companies which, at the time of investment, (i) are primarily engaged in research and development or manufacture of new technological products or processes and (ii) involve above-average risk);
(i): an entity primarily engaged in capital markets activities in which all of the equity owners meet one or more of the above criteria; and
(j): an entity, other than an entity formed for the purpose of purchasing securities in this offering, in which the stockholders equity (including pursuant to foreign accounting rules, international accounting regulations and U.S. generally accepted accounting rules, as defined in the Securities Law Regulations (Preparation of Annual Financial Statements), 1993) is in excess of NIS 250 million.

Any offeree of the securities offered hereby in the State of Israel shall be required to submit written confirmation that it falls within the scope of one of the above criteria. This prospectus will not be distributed or directed to investors in the State of Israel who do not fall within one of the above criteria.

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Singapore

This document has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore and in Singapore, the offer and sale of our securities is made pursuant to exemptions provided in sections 274 and 275 of the Securities and Futures Act, Chapter 289 of Singapore, or SFA. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our securities may not be issued, circulated or distributed, nor may our securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person as defined under Section 275(2) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with the conditions (if any) set forth in the SFA. Moreover, this document is not a prospectus as defined in the SFA. Accordingly, statutory liability under the SFA in relation to the content of prospectuses would not apply. Prospective investors in Singapore should consider carefully whether an investment in our securities is suitable for them.

Where our securities are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a): a corporation (which is not an accredited investor as defined in Section 4A of the SFA) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
(b): a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 of the SFA, except:

(1): to an institutional investor (for corporations under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions, specified in Section 275 of the SFA;
(2): where no consideration is given for the transfer; or
(3): where the transfer is by operation of law.

In addition, investors in Singapore should note that the securities acquired by them are subject to resale and transfer restrictions specified under Section 276 of the SFA, and they, therefore, should seek their own legal advice before effecting any resale or transfer of their securities.

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Legal Matters

The validity of the common stock offered hereby will be passed upon for us by Kirkland & Ellis LLP, Chicago, Illinois. Certain partners of Kirkland & Ellis LLP are members of a limited partnership that owns approximately 0.5% of our common stock. Kirkland & Ellis LLP represents entities affiliated with CHS and its affiliates in connection with legal matters. The underwriters have been represented by White & Case LLP, New York, New York.

Experts

The consolidated financial statements and schedule as of December 31, 2010 and 2009 and for each of the three years in the period ended December 31, 2010 included in this prospectus have been so included in reliance on the report of BDO USA, LLP, an independent registered public accounting firm, appearing elsewhere herein, given on the authority of said firm as experts in auditing and accounting.

Where You Can Find More Information

We have filed with the SEC a registration statement on Form S-1 with the SEC for the shares of common stock we and the selling stockholders are offering by this prospectus. This prospectus does not include all of the information contained in the registration statement. You should refer to the registration statement and its exhibits for additional information. Whenever we make reference in this prospectus to any of our contracts, orders, agreements or other documents, you should refer to the exhibits attached to the registration statement for copies of the actual contract, order, agreement or other document. When we complete this offering, we will also be required to file annual, quarterly and special reports, proxy statements and other information with the SEC.

You can read, inspect without charge and obtain a copy of the registration statement or any of our other materials we file or filed with the SEC at the SEC's Public Reference Room free of charge at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain copies of the documents at prescribed rates by contacting the SEC's Public Reference Room at (202) 551-8090. Please call the SEC, at its toll-free number at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. In addition, the SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information that we file electronically with the SEC.

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Index to Consolidated Financial Statements

		Page

Audited Consolidated Financial Statements of GSE Holding, Inc. and its Subsidiaries
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2010 and 2009		F-3
Consolidated Statements of Operations for the Years ended December 31, 2010, 2009 and 2008		F-4
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2010, 2009 and 2008		F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008		F-6
Notes to Consolidated Financial Statements		F-7
Unaudited Condensed Consolidated Financial Statements of GSE Holding, Inc. and its Subsidiaries
Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010		F-41
Condensed Consolidated Statements of Operations for the three months ended March 31, 2011 and March 31, 2010		F-42
Condensed Consolidated Statements of Cash Flows for the period from January 1, 2010 through March 31, 2010 and January 1, 2011 through March 31, 2011		F-43
Notes to Condensed Consolidated Financial Statements		F-44
Schedule of Valuation and Qualifying Accounts		F-62

F-1

Table of Contents

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
GSE Holding, Inc.
Houston, Texas

We have audited the accompanying consolidated balance sheets of GSE Holding, Inc. as of December 31, 2010 and 2009 and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2010. In connection with our audits of the financial statements, we have also audited the financial statement schedule listed in the accompanying index. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedules. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of GSE Holding, Inc. at December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/ BDO USA, LLP
Houston, TX

July 8, 2011

F-2

Table of Contents

GSE Holding, Inc.

Consolidated Balance Sheets

(In thousands, except share amounts)

				December 31,

				2010			2009
ASSETS
Current assets:
	Cash and cash equivalents			$	15,184		$	20,814
	Accounts receivable:
		Trade, net of allowance for doubtful accounts of $1,932 and $3,655			69,661			48,822
		Other			5,420			1,792
	Inventory, net				56,020			39,277
	Deferred income taxes				1,812			2,330
	Prepaid expenses and other				4,942			2,509
	Income taxes receivable				540			2,484

			Total current assets		153,579			118,028
Property, plant and equipment, net of accumulated depreciation					57,350			68,201
Goodwill					58,895			60,970
Intangible assets, net					4,121			6,683
Deferred income taxes					2,245			472
Other assets					2,261			3,656

TOTAL ASSETS				$	278,451		$	258,010

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	30,698		$	20,212
	Accrued liabilities and other				24,825			18,493
	Short-term debt				4,380			442
	Current portion of long-term debt				3,317			3,167
	Income taxes payable				144			204
	Deferred income taxes				242			573

			Total current liabilities		63,606			43,091
Other liabilities					1,088			1,118
Deferred income taxes					2,347			3,302
Long-term debt, net of current portion					174,632			152,240

			Total liabilities		241,673			199,751

Commitments and Contingencies
Stockholders' equity:
	Common stock, $.01 par value, 3,700,000 shares authorized, 2,985,360 shares issued and outstanding				30			30
	Additional paid-in capital				61,410			61,343
	Accumulated deficit				(26,397	)		(10,010	)
	Accumulated other comprehensive income				1,735			5,637

			Total GSE Holding, Inc. stockholders' equity		36,778			57,000
	Non-controlling interest in consolidated subsidiaries				—			1,259

Total stockholders' equity					36,778			58,259

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY				$	278,451		$	258,010

The accompanying notes are an integral part of these consolidated financial statements.

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GSE Holding, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

			Year Ended December 31,

			2010			2009			2008
Sales			$	342,783		$	291,199		$	408,995
Cost of products				298,540			255,442			356,281

Gross profit				44,243			35,757			52,714
Selling, general and administrative expenses				40,078			31,776			27,407
Amortization of intangibles				2,284			2,619			3,044

Operating income				1,881			1,362			22,263
Other expenses (income):
	Interest expense, net of interest income			19,454			19,188			20,819
	Foreign currency transaction (gain) loss			(1,386	)		375			(413	)
	Change in fair value of derivatives			59			210			(2,682	)
	Other income, net			(2,193	)		(3,031	)		(690	)

(Loss) income from continuing operations before income taxes				(14,053	)		(15,380	)		5,229
Income tax (benefit) provision				(2,069	)		(4,537	)		6,414

Loss from continuing operations				(11,984	)		(10,843	)		(1,185	)
Loss from discontinued operations, net of income taxes				(4,428	)		(2,846	)		(746	)

Net loss				(16,412	)		(13,689	)		(1,931	)
Non-controlling interest in consolidated subsidiary				25			(51	)		14

Net loss attributable to GSE Holding, Inc.			$	(16,387	)	$	(13,740	)	$	(1,917	)

Basic and diluted net loss per common share:
		Continuing operations	$	(4.01	)	$	(3.65	)	$	(0.39	)
		Discontinued operations		(1.48	)		(0.95	)		(0.25	)

			$	(5.49	)	$	(4.60	)	$	(0.64	)

Weighted-average common shares outstanding, basic and diluted				2,985			2,985			2,985

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Table of Contents

GSE Holding, Inc.

Consolidated Statements of Stockholders' Equity

(In thousands)

			Common Stock									Accumulated Other Comprehensive Income

			Common Stock				Additional Paid-In Capital		Retained Earnings (Deficit)						Non-Controlling Interest
			Shares		Amount		Additional Paid-In Capital		Retained Earnings (Deficit)						Non-Controlling Interest			Total
Balance at December 31, 2007				2,985,360	$	30	$	60,865	$	5,647		$	8,664		$	1,506		$	76,712
Comprehensive income (loss):
	Net loss attributable to GSE Holding, Inc.			—		—		—		(1,917	)		—			—			(1,917	)
		Non-controlling interest in consolidated subsidiaries		—		—		—		—			—			(117	)		(117	)
		Foreign currency translation adjustment		—		—		—		—			(4,777	)		—			(4,777	)

		Total comprehensive loss																	(6,811	)
Dividends paid to non-controlling interests				—		—		—		—			—			(270	)		(270	)
Stock-based compensation				—		—		450		—			—			—			450

Balance at December 31, 2008				2,985,360		30		61,315		3,730			3,887			1,119			70,081
Comprehensive income (loss):
	Net loss attributable to GSE Holding, Inc.			—		—		—		(13,740	)		—			—			(13,740	)
		Non-controlling interest in consolidated subsidiaries		—		—		—		—			—			140			140
		Foreign currency translation adjustment		—		—		—		—			1,750			—			1,750

		Total comprehensive loss																	(11,850	)
Stock-based compensation				—		—		28		—			—			—			28

Balance at December 31, 2009				2,985,360		30		61,343		(10,010	)		5,637			1,259			58,259
Comprehensive income (loss):
	Net loss attributable to GSE Holding, Inc.			—		—		—		(16,387	)		—			—			(16,387	)
		Non-controlling interest in consolidated subsidiaries		—		—		—		—			—			52			52
		Foreign currency translation adjustment		—		—		—		—			(3,902	)		—			(3,902	)

		Total comprehensive loss																	(20,237	)
Disposition of non-controlling interest in consolidated subsidiaries				—		—		—		—			—			(1,311	)		(1,311	)
Stock-based compensation				—		—		67		—			—			—			67

Balance at December 31, 2010				2,985,360	$	30	$	61,410	$	(26,397	)	$	1,735		$	—		$	36,778

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Table of Contents

GSE Holding, Inc.

Consolidated Statements of Cash Flows

(In thousands)

					Year Ended December 31,

					2010			2009			2008
Cash flows from operating activities:
	Net loss attributable to GSE Holding, Inc.				$	(16,387	)	$	(13,740	)	$	(1,917	)
	Loss from discontinued operations					4,428			2,846			746
	Adjustments to reconcile net loss to cash provided by (used in) operating activities:
		Depreciation				10,416			10,084			10,175
		Amortization of debt issuance costs				1,844			1,359			1,359
		Amortization of intangible assets				2,284			2,619			3,044
		Amortization of premium/discount on senior notes				(40	)		444			444
		Change in fair value of derivatives				59			210			(2,681	)
		Non-controlling interest in consolidated subsidiary				(25	)		51			(14	)
		Deferred income tax (benefit) provision				(1,854	)		(6,454	)		3,544
		Loss on sale of assets				57			9			10
		Stock-based compensation				67			28			450
		Revaluation of non-dollar denominated debt				345			198			(806	)
		Change in cash from operating assets and liabilities:
			Accounts receivable			(24,539	)		15,921			7,255
			Increase (decrease) in allowance accounts			(391	)		4,439			459
			Inventory			(18,053	)		27,846			(23,879	)
			Prepaid expenses and other			(6,837	)		430			4,240
			Accounts payable			10,959			612			(668	)
			Accrued liabilities			8,164			991			(1,731	)
			Income taxes (receivable) payable			2,615			(2,733	)		(5,234	)
			Other assets and liabilities			347			90			(196	)

				Net cash provided by (used in) operating activities — continuing operations		(26,541	)		45,250			(5,400	)
				Net cash provided by (used in) operating activities — discontinued operations		(3,219	)		4,053			(171	)

				Net cash provided by (used in) operating activities		(29,760	)		49,303			(5,571	)

Cash flows from investing activities:
	Purchase of property, plant and equipment					(3,337	)		(2,842	)		(5,836	)
	Proceeds from the sale of assets					—			145			130

		Net cash used in investing activities — continuing operations				(3,337	)		(2,697	)		(5,706	)
		Net cash provided by (used in) investing activities — discontinued operations				2,284			75			(259	)

		Net cash used in investing activities				(1,053	)		(2,622	)		(5,965	)

Cash flows from financing activities:
	Proceeds from lines of credit					137,865			92,915			154,530
	Repayments of lines of credit					(109,918	)		(125,413	)		(148,254	)
	Proceeds from long-term debt					—			—			832
	Repayments of long-term debt					(2,256	)		(2,256	)		(1,654	)
	Proceeds from termination of interest rate swap					—			2,063			—

		Net cash provided by (used in) financing activities — continuing operations				25,691			(32,691	)		5,454
		Net cash used in financing activities — discontinued operations				—			—			(1,170	)

		Net cash (used in) provided by financing activities				25,691			(32,691	)		4,284

Effect of exchange rate changes on cash — continuing operations						(228	)		(59	)		272
Effect of exchange rate changes on cash — discontinued operations						(280	)		143			334

Net increase (decrease) in cash and cash equivalents						(5,630	)		14,074			(6,646	)
Cash and cash equivalents at beginning of year						20,814			6,740			13,386

Cash and cash equivalents at end of year					$	15,184		$	20,814		$	6,740

Supplemental cash flow disclosure:
Cash paid for interest					$	16,341		$	16,932		$	18,982

Cash paid for income taxes					$	22		$	4,956		$	6,224

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements

1. Nature of Business

Organization and Description of Business —

GSE Holding, Inc. (the "Company"), is a Delaware corporation, formed in 2004, originally as GEO Holdings, Corp. Through its wholly-owned subsidiary Gundle/SLT Environmental, Inc. ("Gundle/SLT"), which is a Delaware corporation incorporated in 1986, the Company is a leading global manufacturer and marketer of highly engineered geosynthetic lining products for environmental protection and confinement applications. These lining products are used in a wide range of infrastructure end markets such as mining, waste management, liquid containment (including water infrastructure, agriculture and aquaculture), coal ash containment and shale oil and gas. The Company offers a full range of products, including geomembranes, drainage products, geosynthetic clay liners, nonwoven geotextiles, and other specialty products. The Company generates the majority of its sales outside of the United States, including emerging markets in Asia, Latin America, Africa and the Middle East. Its comprehensive product offering and global infrastructure, along with its extensive relationships with customers and end-users, provide it with access to high-growth markets worldwide, visibility into upcoming projects and the flexibility to serve customers regardless of geographic location. The Company believes that its market share, broad product offering, strong customer relationships, diverse end markets and global presence provide it with key competitive advantages in the environmental geosynthetic products industry. The Company manufactures its products at facilities located in the United States, Germany, Thailand, Chile and Egypt.

On May 18, 2004, GEO Sub Corp., a newly formed entity controlled by Code Hennessy & Simmons IV ("CHS IV"), merged with and into Gundle/SLT with Gundle/SLT surviving the Merger (the "Merger"), and each share of Gundle/SLT common stock converted into the right to receive $18.50 in cash, in a transaction valued at approximately $242.1 million. As a result of the Merger, all of the outstanding common stock of Gundle/SLT is owned by the Company which is controlled by CHS IV, an entity controlled by Code Hennessy & Simmons LLC ("CHS").

2. Summary of Significant Accounting Policies —

Consolidation —

The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and its majority-owned subsidiaries for which the Company controls the operating activities. All material intercompany balances and transactions have been eliminated in consolidation.

The Company reports noncontrolling interests in subsidiaries as a component of equity in the Consolidated Balance Sheets and the earnings attributable to noncontrolling interests as an adjustment to net loss to arrive at net loss attributable to GSE Holding, Inc. in the Consolidated Statements of Operations.

Discontinued Operations —

Certain amounts in the Company's consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. Operating results for businesses that the Company has exited have been reclassified from continuing to discontinued operations for all periods presented.

Cash and Cash Equivalents —

The Company considers all highly liquid short-term investments with an original maturity of three months or less to be cash equivalents.

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Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies — (Continued)

Accounts Receivable —

Accounts receivable are recorded at the invoiced amounts and do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in its existing receivables. The allowance is reviewed monthly and the Company establishes reserves for doubtful accounts on a case-by-case basis when it is believed that the required payment of specific amounts owed to the Company is unlikely to occur.

The Company has receivables from customers in various countries. The Company generally does not require collateral or other security to support customer receivables unless credit capacity is not evident. In the case where credit capacity does not exist or cannot be appropriately determined, unsecured exposure security instruments such as upfront cash payments, down payments, credit cards, letters of credit, standby letters of credit, bank guarantees or personal guarantees will be required. In addition, in the U.S. where a customer's project is state or federally sponsored or owned, a payment or security bond is required by law in most states. If the customers' financial condition was to deteriorate or their access to freely convertible currency was restricted, resulting in impairment of their ability to make the required payments, additional allowances may be required.

Inventory —

Inventory is stated at the lower of cost or market. Cost, which includes material, labor and overhead, is determined by the weighted average cost method, which approximates the first-in, first-out cost method. The Company records provisions, as appropriate, to write-down slow-moving, excess or obsolete inventory to estimated net realizable value. The process for evaluating inventory often requires the Company to make subjective judgments and estimates concerning future sales levels, as well as the quantities and prices at which such inventories will be able to be sold in the normal course of business.

Property,Plant and Equipment —

Property, plant and equipment are carried at cost, less accumulated depreciations. Depreciation is computed using the straight-line method, based on the estimated useful lives of the respective assets, which generally range from three to 30 years. Depreciation expense continues to be recognized when facilities or equipment are temporarily idled. Costs of additions and major improvements are capitalized, whereas maintenance and repairs which do not improve or extend the life of the asset are charged to expense as incurred. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and net proceeds realized thereon. Interest costs incurred in construction of assets are capitalized and depreciated over the useful life of the asset. The Company makes use of judgments and estimates in conjunction with accounting for property, plant and equipment, including amounts to be capitalized, depreciation methods and useful lives.

Impairment of Long-Lived Assets

Carrying values of property, plant and equipment and finite-lived intangible assets are reviewed for impairment at least annually or whenever events or changes in circumstances indicate that their carrying values may be impaired. The carrying values of long-lived assets or asset groups are compared to the undiscounted anticipated future cash flows related to those assets to determine whether they are recoverable. If the carrying value of a long-lived asset exceeds the future undiscounted cash flows, an

F-8

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies — (Continued)

impairment charge is recorded in the period in which such review is performed and it is determined by the amount that the carrying value exceeds fair value. This requires the Company to make long-term forecasts of its future revenues and costs related to the assets subject to review. Forecasts require assumptions about demand for the Company's products and future market conditions. Future events and unanticipated changes to assumptions could require a provision for impairment in a future period.

Goodwill and Impairment Testing —

Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Under the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 350, "Intangibles — Goodwill and Other", goodwill is subject to at least an annual assessment for impairment by applying a fair value based test. The Company reviews goodwill to determine potential impairment annually, or more frequently if events and circumstances indicate that the asset might be impaired. The goodwill impairment analysis is comprised of two steps. The first step requires the comparison of the fair value of the applicable reporting unit to its respective carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired and the Company would not be required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit's goodwill. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, then we would record an impairment loss equal to the difference. The Company's annual assessment date is as of December 1. With respect to this testing, a reporting unit is a majority owned subsidiary of the Company for which discrete financial information is available and regularly reviewed by management. Future cash flows are typically based upon a five-year future period for the business and an estimated residual value. Management judgment is required in the estimation of future operating results and to determine the appropriate residual values. Future operating results and residual values could reasonably differ from the estimates and could require a provision for impairment in a future period. The following provides the changes in the carrying amount of goodwill by reporting unit for the years ended December 31, 2009 and 2010:



(in thousands)	North America			Europe Africa			Asia Pacific		Latin America		Total
December 31, 2008	$	24,903		$	29,392		$	5,205	$	4,439	$	63,939
Goodwill impairment		—		$	(2,969	)		—		—		(2,969	)

December 31, 2009		24,903			26,423			5,205		4,439		60,970
Sale of business		(2,075	)		—			—		—		(2,075	)

December 31, 2010	$	22,828		$	26,423		$	5,205	$	4,439	$	58,895

The 2009 impairment charge is included as a component of the loss from discontinued operations (see Note 3).

F-9

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies — (Continued)

Revenue and Cost Recognition —

The Company recognizes revenues for products sold directly to customers when products are shipped, title and risk of loss passes to the buyer, the Company has no further obligation to the buyer, and collectability is reasonably assured.

Cost of sales includes all direct material and labor costs, and indirect costs such as indirect labor, depreciation, insurance, supplies, tools, repairs, and shipping and handling.

Deferred Financing Costs —

Debt issuance costs are capitalized and amortized to interest expense using the effective interest rate method over the period the related debt is anticipated to be outstanding.

Warranty Costs —

The Company's geosynthetic products are sold and installed with specified limited warranties as to material quality and workmanship that typically extend 5 years, but may extend up to 20 years. The Company accrues a warranty reserve based on estimates for warranty claims. The reserve for these costs, along with other risk-based reserves, is included in the self-insurance reserves (see Notes 8 and 15).

Accumulated Other Comprehensive Income —

Other comprehensive income generally represents all changes in stockholders' equity, except those resulting from investments by or distributions to stockholders. The Company's accumulated other comprehensive income includes foreign currency translation adjustments and is included in the Consolidated Balance Sheet and Statement of Stockholders' Equity.

Income Taxes —

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized and represent the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. They are measured using the enacted tax rates expected to apply to taxable income in the years in which the related temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The deferred income tax provision represents the change during the reporting period in the deferred tax assets and deferred tax liabilities, net of the effect of acquisitions and dispositions. Deferred tax assets include tax loss and credit carryforwards and are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Significant judgment is required in assessing the timing and amounts of deductible and taxable items.

In 2007, the Company adopted new accounting standards which require evaluation of the tax positions for all jurisdictions and for all years where the statute of limitations has not expired and the Company is required to meet a "more-likely-than-not" threshold (i.e. greater than a 50 percent likelihood of a tax position being sustained under examination) prior to recording a tax benefit. Additionally, for tax positions

F-10

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies — (Continued)

meeting this "more-likely-than-not" threshold, the amount of benefit is limited to the largest benefit that has a greater than 50 percent probability of being realized upon effective settlement.

Foreign Currency —

Results of operations for foreign subsidiaries with functional currencies other than the U.S. dollar are translated using average exchange rates during the year. Assets and liabilities of these foreign subsidiaries are translated using the exchange rates in effect at the balance sheet date and the resulting translation adjustments are recognized as a separate component of Stockholder's equity. These translation adjustments are the only component of accumulated other comprehensive income.

Each of the Company's foreign subsidiaries may enter into contractual arrangements with customers or vendors that are denominated in currencies other than its respective functional currency. As a result, the Company's results of operations may be affected by exposure to changes in foreign currency exchange rates and economic conditions in the regions in which it purchases raw material inventory or sells and distributes its products. Gains and losses arising from foreign currency transactions are recognized as incurred.

In connection with contracts performed outside of the United States, the Company routinely bids fixed-price contracts denominated in currencies different than the functional currency of the applicable subsidiary performing the work. The Company recognizes that such bidding practices, in the context of international operations, are subject to the risk of foreign currency fluctuations not present in domestic operations. Gains/losses related to these contracts are included in the Consolidated Statements of Operations.

Use of Estimates —

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Segment Reporting —

The Company's operating segments are based on the geographic regions in which it operates, which is consistent with the basis on which the Company internally reports and how its management evaluates such operations in order to make operating decisions. For external reporting purposes, the Company aggregates operating segments which have similar economic characteristics, products, production processes, types or classes of customers and distribution methods into reportable segments. Our reportable segments are North America and International.

Subsequent Events —

On June 30, 2009, the Company adopted changes issued by the FASB to account for, events that occur after the balance sheet date, but before financial statements are issued or are available to be issued, otherwise known as "subsequent events." Specifically, these changes set forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial

F-11

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies — (Continued)

statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The adoption of these changes had no impact on the financial statements as management already followed a similar approach prior to the adoption of this new guidance.

The Company performed an evaluation of subsequent events through July 8, 2011, which is the date the financial statements were available to be issued. See Note 18, Subsequent Events, for further detail on this item.

Stock-Based Compensation —

All share-based payments to employees, including grants of employee stock options, are measured at their grant date calculated value, and expensed in the Consolidated Statements of Operations over the requisite service period (generally the vesting period) of the grant. The Company uses a calculated value to measure the compensation expense for share-based awards made to employees, as it has determined that it is impracticable to determine the expected volatility of its share price. Instead, the Company uses an industry measure of volatility in calculating this value. The Company recognizes expense for all stock-based compensation with graded vesting on a straight-line basis over the vesting period of the entire award.

In 2008, pursuant to the GEO Holdings 2004 Stock Option Plan, the Board of Directors approved the grant of 107,682 options to key employees of the Company at an exercise price of $22.99 per share. The options were fully vested on the grant date and stock-based compensation expense of $420 thousand was recognized during 2008 with respect to these awards, with a corresponding increase in "Additional Paid-in Capital."

In addition, pursuant to the GEO Holdings 2004 Stock Option Plan, the Board of Directors approved the grant of all of the options (6,935) that had been forfeited by employees that had left the Company, at exercise prices ranging from $21.35 to $21.91. These options were fully vested on the grant date and stock-based compensation totaling $30 thousand was recognized in 2008 with respect to these awards, with a corresponding increase in "Additional Paid-in Capital."

In 2009 pursuant to the GEO Holdings 2004 Stock Option Plan, the Board of Directors approved a grant to key employees of options (7,000) that had been forfeited by employees who had left the Company. Although the grants were approved, 5,300 of these options were not granted and the remaining 1,700 were subsequently forfeited. Also, during 2009, the Board of Directors approved the grant of 30,000 options to a certain key executive of the Company with an exercise price of $22.26. Stock-based compensation expense of $28 thousand was recognized during 2009 with a corresponding increase in "Additional Paid-in Capital."

In 2010, pursuant to the GEO Holdings Amended and Restated 2004 Stock Option Plan, the Board of Directors approved the grant of 12,000 options to key employees of the Company at an exercise price of $22.26 per share. The options were fully vested on the grant date and stock-based compensation expense of $67 thousand was recognized during 2010 with a corresponding increase in "Additional Paid-in Capital."

F-12

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies — (Continued)

The value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in October 2010 and March 2009, respectively.

	2010			2009			2008

Risk Free Interest Rate		0.51	%		1.14	%		1.66	%
Expected Life		3 years			3 years			3 years
Expected Volatility		24.56	%		18.71	%		23.92	%
Expected Dividend Yield		0	%		0	%		0	%
Weighted-average calculated value per option	$	2.50		$	3.77		$	3.93

The expected life of the options granted is based on the Company's best estimates and expectations related to the exercising of the options issued. There was no impact from estimated forfeitures on the compensation expense attributed to the awarded options.

Since GSE Holding, Inc. is a privately held company, it has no stock trading history to estimate volatility. The Company chose to use the volatility of the Dow Jones Building and Material Index fund. This index includes public companies that the Company believes have the most similarity to the Company's business. The Company calculated volatility from the historical closing price of this index.

The following table summarizes stock option activity for GSE Holding, Inc. as of December 31, 2010:



	Shares			Range of Exercise Price	Weighted Average Exercise Price
Outstanding and exercisable at December 31, 2007		434,347		$2.32 - $21.91	$	7.81
2008 Stock Option Grant		107,682		$22.99	$	22.99
Forfeited options reissued		6,935		$21.35 - $21.91	$	21.60

Outstanding and exercisable at December 31, 2008		548,964		$2.32 - $22.99	$	10.96
Forfeited options		(66,944	)	$21.35 - $22.99	$	22.22
Options granted		30,000		$22.26	$	22.26

Outstanding and exercisable at December 31, 2009		512,020		$2.32 - $22.99	$	9.52
Forfeited options		(64,860	)	$21.35 - $22.99	$	22.28
Forfeited options reissued		12,000		$22.26	$	22.26

Outstanding and exercisable at December 31, 2010		459,160		$2.32 - $22.99	$	8.76

All outstanding stock options are held by employees and former employees of the Company and have an expiration date of 10 years from the date of grant. At December 31, 2010, the average remaining contractual life of options outstanding and exercisable was 4.7 years.

As of December 31, 2010, the intrinsic value of options outstanding and exercisable was $5.5 million. The intrinsic value of a stock option is the difference between the estimated fair value of the underlying stock and the exercise price of the option. The Company estimated the underlying value of the stock using a discounted cash flow model of future anticipated cash flows discounted back to current time and adjusted for illiquidity of the stock.

F-13

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies — (Continued)

Recent Accounting Pronouncements —

In May 2011, FASB issued Accounting Standards Update ("ASU") 2011-05, Comprehensive Income: Presentation of Comprehensive Income, to allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments do not change the guidance regarding the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments should be applied retrospectively, and is effective for fiscal years and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. The adoption is not expected to have a material impact on the Company's results of operations, financial position or cash flows.

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU represents the converged guidance of the FASB and the IASB (the "Boards") on fair value measurement, and results in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term "fair value." These amendments change some of the terminology used to describe many of the existing requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments should be applied prospectively, andthey are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The adoption is not expected to have a material impact on the Company's results of operations, financial position or cash flows.

In December 2010, the FASB issued ASU No. 2010-28, Intangibles — Goodwill and Other: When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. The amendments in this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing event or circumstance-driven guidance related to goodwill impairment testing between annual tests. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The adoption is not expected to have a material impact on the Company's results of operations, financial position or cash flows.

In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements, which clarifies certain existing disclosure requirements in ASC 820, Fair Value Measurements and Disclosures, as well as requires disclosures related to significant transfers between each level and additional information about Level 3 activity. ASU 2010-06 begins phasing in the first fiscal period after December 15, 2009. The Company did not make nor anticipates a significant transfer between each level as of December 31, 2010. As such, the Company does not believe this ASU will have any material impact on its consolidated financial position, results of operations or cash flows.

F-14

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies — (Continued)

In September 2009, FASB issued ASC 105, formerly FASB Statement No. 168, The FASB Accounting Standards Codification (Codification) and the Hierarchy of Generally Accepted Accounting Principles (GAAP)- A Replacement of FASB Statement No. 162. ASC 105 establishes the Codification as the single source of authoritative GAAP in the United States, other than rules and interpretive releases issued by the SEC. The Codification is a reorganization of current GAAP into a topical format that eliminates the current GAAP hierarchy and establishes instead two levels of guidance authoritative and non-authoritative. All non-grandfathered, non-SEC accounting literature that is not included in the Codification will become non-authoritative. The Codification was effective for interim and annual periods ending after September 15, 2009. As the Codification was not intended to change or alter existing GAAP, it did not have a material impact on the Company's consolidated financial statements.

3. Discontinued operations —

GSE Lining Technology Limited U.K. —

During the fourth quarter of 2009, the Company conducted a detailed productivity and efficiency review and assessment of all of its manufacturing facilities worldwide and adopted restructuring and productivity improvement programs across the entire Company. As part of these programs, the Company decided to close GSE Lining Technology Limited ("GSE UK"), its manufacturing facility located in the United Kingdom before the end of 2010. The decision to close GSE UK was made as the assessment determined the GSE UK facility was significantly less efficient than the Company's other facilities worldwide. The manufacturing facility ceased operations during 2010. The Company has recorded after tax losses of approximately $1.3 million and $2.5 million for the years ended December 31, 2010 and 2009, respectively, and after tax income of approximately $0.4 million for the year ended December 31, 2008, related to GSE UK. The after tax loss during the year ended December 31, 2010 included the impairment of long-lived assets of approximately $0.8 million and the after tax loss during the year ended December 31, 2009 included the impairment of goodwill of approximately $3.0 million.

F-15

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

3. Discontinued operations — (Continued)

Summarized financial information for the Company's discontinued GSE UK operations is shown below:



	Year Ended December 31,
	2010			2009			2008
	(in thousands)
Operations
Sales	$	11,770		$	13,729		$	17,642
Cost of products		10,768			11,517			15,495

Gross profit		1,002			2,212			2,147
Selling, general and administrative expenses		2,105			1,255			895
Amortization of intangibles		148			188			290
Impairment of long-lived assets		799			2,969			—
Foreign currency transaction (gain) loss		(73	)		131			388
Other income		(7	)		—			(63	)
Income tax (benefit) provision		(667	)		205			254

(Loss) Income from discontinued operations	$	(1,303	)	$	(2,536	)	$	383



	December 31,
	2010		2009
	(in thousands)
Assets
Cash	$	2,893	$	2,757
Accounts receivable		3,276		2,224
Inventory		2,248		614
Income taxes receivable		399		—
Prepaid and other current assets		25		61
Property, plant and equipment, net of accumulated depreciation		309		1,283
Customer lists and other intangible assets, net		289		456

Assets of discontinued operations	$	9,439	$	7,395

Liabilities
Accounts payable and accrued liabilities	$	483	$	805
Income taxes payable		—		50
Deferred income taxes		83		365

Liabilities of discontinued operations	$	566	$	1,220

F-16

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

3. Discontinued operations — (Continued)

United States Installation Business —

During the fourth quarter of 2009, the Company conducted a detailed review of the profitability and viability of its United States installation business and decided to exit this business during 2010. The Company sold the United States installation business effective June 30, 2010, for approximately $2.3 million in cash resulting in a gain on sale of assets of approximately $1.6 million. The Company recorded after tax income of approximately $0.7 million, $0.2 million and $2.3 million, during the years ended December 31, 2010, 2009 and 2008, respectively.

Summarized financial information for the Company's discontinued U.S. Installation operations is shown below:



	Year Ended December 31,
	2010			2009			2008
	(in thousands)
Operations
Sales	$	8,439		$	12,012		$	29,317
Cost of products		6,415			10,617			23,914

Gross profit		2,024			1,395			5,403
Selling, general and administrative expenses		2,447			1,090			1,651
(Gain) loss on sale of assets and other		(1,601	)		(75	)		19
Income tax provision		459			148			1,404

Income from discontinued operations	$	719		$	232		$	2,329



	December 31,
	2010		2009
	(in thousands)
Assets
Accounts receivable	$	325	$	3,545
Deferred tax asset		37		—
Costs and estimated earnings in excess of billings on contracts in progress		—		176
Property, plant and equipment, net of accumulated depreciation		—		837

Assets of discontinued operations	$	362	$	4,558

Liabilities
Accounts payable and accrued liabilities	$	95	$	392
Advance billings on contracts in progress		—		580
Income taxes payable		—		137
Deferred income taxes		—		14

Liabilities of discontinued operations	$	95	$	1,123

F-17

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

3. Discontinued operations — (Continued)

GSE Bentoliner (Canada), Inc. —

The Company sold its 75.5% interest in GSE Bentoliner (Canada), Inc. ("Bentoliner") to the minority stockholders of Bentoliner, for cash and other considerations on April 16, 2010, effective March 31, 2010, resulting in a loss on sale of approximately $3.0 million. The loss on sale included the write off of approximately $2.1 million of goodwill. The Company recorded an after tax loss of $3.8 million, after tax income of $0.3 million and an after tax loss of $0.4 million during the years ended December 31, 2010, 2009 and 2008, respectively.

Summarized financial information for the Company's discontinued Bentoliner operations is shown below:



	Year Ended December 31,
	2010			2009			2008
	(in thousands)
Operations
Sales	$	526		$	4,092		$	7,881
Cost of products		752			4,090			8,167

Gross (loss) profit		(226	)		2			(286	)
Selling, general and administrative expenses		18			66			79
Foreign currency transaction (gain) loss		(43	)		(398	)		208
Non-controlling interest in consolidated subsidiary		(27	)		89			(103	)
Loss on sale of assets		3,012			—			—
Other income		(9	)		(35	)		(74	)
Income tax provision (benefit)		667			10			(16	)

(Loss) income from discontinued operations	$	(3,844	)	$	270		$	(380	)

F-18

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

3. Discontinued operations — (Continued)



	December 31,
	2010		2009
	(in thousands)
Assets
Cash	$	—	$	478
Accounts receivable		—		340
Income tax receivable		—		102
Inventory		—		642
Prepaid and other		—		23
Property, plant and equipment net of accumulated depreciation		—		1,311
Goodwill		—		468

Assets of discontinued operations	$	—	$	3,364

Liabilities
Accounts payable and accrued liabilities	$	—	$	678
Deferred income taxes		—		354

Liabilities of discontinued operations	$	—	$	1,032

GSE GeoSport Surfaces —

F-19

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

3. Discontinued operations — (Continued)

Summarized financial information for the Company's discontinued GeoSport operations is shown below:



	Year Ended December 31,
	2010		2009			2008
	(in thousands)
Operations
Total sales	$	—	$	—		$	4,964
Cost of products		—		1,250			5,229

Gross loss		—		(1,250	)		(265	)
Selling, general and administrative expenses		—		—			395
Amortization of intangibles		—		—			15
Impairment of long-lived assets		—		—			4,213
Interest expense		—		—			68
Other income		—		—			(23	)
Income tax benefit		—		(438	)		(1,855	)

Loss from discontinued operations	$	—	$	(812	)	$	(3,078	)



	December 31,
	2010		2009
	(in thousands)
Assets
Property, plant and equipment, net of accumulated depreciation	$	—	$	—
Customer lists and other intangible assets, net		—		—

Assets of discontinued operations	$	—	$	—

Liabilities
Accounts payable and accrued liabilities	$	988	$	1,384
Long-term debt		900		900

Liabilities of discontinued operations	$	1,888	$	2,284

F-20

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

3. Discontinued operations — (Continued)

Other Actions —

An important element of the restructuring and productivity improvement programs across the entire Company was headcount reductions. During January 2010, the Company reduced its headcount by approximately 10% and later in 2010, there were additional headcount reductions in connection with the disposal of the United States Installation Business. As a result of these 2010 headcount reductions, the Company recognized and paid $2.6 million in severance-related costs, of which $1.5 million directly pertained to businesses reported within Discontinued Operations. The Company will continue to seek and implement cost saving measures on an ongoing basis.

During the fourth quarter of 2009, the Company engaged an independent consulting firm which specializes in private equity portfolio company performance improvement. During the engagement, personnel from the consulting firm functioned in several interim management roles for the Company, including but not limited to Chief Financial Officer (CFO) and Vice President of Operations, and were an integral part of the detailed productivity and efficiency review and assessment of the Company's operations. The Company's interim CFO is a managing director at the consulting firm. The firm charged the Company retainer fees in 2010 in the amount of $3.0 million, of which $2.6 million were recorded as a component of Selling, General and Administrative expenses and $0.4 million were recorded in Discontinued Operations. During 2010, the consulting firm earned a success fee for the Company achieving agreed upon performance improvements. The success fee earned by the consulting firm was approximately $7.6 million, of which $5.7 million was recorded as a component of Selling, General and Administrative expenses and $1.9 million was recorded in Discontinued Operations.

4. Net Loss per Share

The Company computes basic net income (loss) per share by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued. The dilutive effect of employee stock options is reflected in diluted net income (loss) per share by applying the treasury stock method.

The Company recorded a net loss for each of the years ended December 31, 2010, 2009 and 2008. Potential common shares are anti-dilutive in periods which the Company records a net loss because they would reduce the respective period's net loss per share. Anti-dilutive potential common shares are excluded from the calculation of diluted earnings per share. As a result, net diluted loss per share was equal to basic net loss per share in the years ended December 31, 2010, 2009 and 2008. There were approximately 459,000, 512,000 and 549,000 stock options outstanding, at December 31, 2010, 2009 and 2008, respectively, of which 333,600 had exercise prices lower than the average price of Company common shares as of each of those dates. These in-the-money options would have been included in the calculation of diluted earnings per share had the Company not reported a net loss in each of the respective years.

F-21

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

4. Net Loss per Share (Continued)

The basic and diluted net loss per share calculations are presented below (in thousands, except for per share amounts):



			For the year ended December 31,
			2010			2009			2008
Net loss attributable to Company common stockholders:
	From continuing operations		$	(11,959	)	$	(10,894	)	$	(1,171	)
	From discontinued operation			(4,428	)		(2,846	)		(746	)

			$	(16,387	)	$	(13,740	)	$	(1,917	)

Common share information:
	Weighted-average common shares outstanding — basic			2,985			2,985			2,985
	Dilutive effect of employee stock options			—			—			—

	Weighted-average common shares outstanding — dilutive			2,985			2,985			2,985

Basic and diluted net loss per share:
		Continuing operations	$	(4.01	)	$	(3.65	)	$	(0.39	)
		Discontinued operations		(1.48	)		(0.95	)		(0.25	)

			$	(5.49	)	$	(4.60	)	$	(0.64	)

5. Inventory —

Inventory consisted of the following at December 31:



	2010			2009
	(in thousands)
Raw materials	$	24,892		$	16,719
Finished goods		29,400			23,024
Supplies		4,185			3,669
Obsolescence and slow moving allowance		(2,457	)		(4,135	)

	$	56,020		$	39,277

F-22

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

6. Property, Plant and Equipment —

Property, plant and equipment consisted of the following at December 31:



	Useful lives years		2010			2009
			(in thousands)
Land			$	4,911		$	5,104
Buildings and improvements		7-30		23,992			24,780
Machinery and equipment		3-10		94,789			100,875
Furniture and fixtures		3-5		975			986

				124,667			131,745
Less — accumulated depreciation				(67,317	)		(63,544	)

			$	57,350		$	68,201

Depreciation expense for the years ended December 31, 2010, 2009 and 2008 was $10.4 million, $10.1 million, and $10.2 million, respectively.

7. Intangible Assets, net —

Customer lists and other intangible assets consisted of the following at December 31:



	Useful lives years		2010			2009
			(in thousands)
Customer lists		5-10	$	25,629		$	26,119
Software		3		1,500			1,500
Non-compete agreements		5-10		2,638			2,638
Other		1		468			467

				30,235			30,724
Less accumulated amortization				(26,114	)		(24,041	)

Intangible assets, net			$	4,121		$	6,683

Amortization expense for intangible assets during the years ended December 31, 2010, 2009 and 2008 was approximately $2.3 million, $2.6 million and $3.0 million, respectively.

F-23

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

7. Intangible Assets, net — (Continued)

Remaining amortization expense is expected to be recognized as follows:



Year Ending December 31,	Customer Lists		Non-compete Agreements		Total
	(in thousands)
2011	$	1,376	$	130	$	1,506
2012		785		108		893
2013		618		90		708

	$	2,779	$	328	$	3,107

8. Accrued Liabilities and Other —

Accrued liabilities and other consisted of the following as of December 31:



	2010		2009
	(in thousands)
Customer prepayments	$	4,493	$	—
Accrued operating expenses		4,472		1,372
Self-insurance reserves		3,839		4,433
Compensation and benefits		5,043		4,251
Accrued interest		2,319		1,522
Taxes, other than income		1,735		3,034
Other accrued liabilities		2,924		3,881

	$	24,825	$	18,493

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GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

9. Long-Term Debt —

Long-term debt consisted of the following at December 31:



	2010			2009
	(in thousands)
11% Senior Notes due May 2012	$	150,000		$	150,000
Revolving Credit Facility, floating interest rate		24,101			—
Term Loan — seller note with annual installments — $900,000 October 2007, 5.13%		900			900
Term Loan — seller note with annual installments — $900,000 January 2007, 5% for two years and floating thereafter		900			1,800
Term Loan — Thailand bank secured by equipment, monthly installments of $113,000, 5.625% variable through May 2013		2,670			3,773

		178,571			156,473
Less — current maturities		(3,317	)		(3,167	)
Unamortized loss on interest rate swap		(687	)		(1,171	)
Premium on senior notes		65			105

	$	174,632		$	152,240

Prior to the effects of the refinancing presented in Note 18, Subsequent Events, the following summarizes the maturities of the Company's long-term debt outstanding as of December 31, 2010, excluding the unamortized premium on the senior notes which will not result in cash payments (in thousands).



Year Ending December 31,	Amount
	(in thousands)
2011	$	3,317
2012		175,212
2013		42

	$	178,571

Senior Notes —

In connection with the Merger, the Company issued $150.0 million of 11% senior notes due in May 2012 (the "Senior Notes"). These notes are registered under the Securities Act of 1933, as amended. The Senior Notes are guaranteed by all of the Company's existing and future direct or indirect domestic subsidiaries.

The indenture governing the notes, among other things: (1) restricts the Company's ability and the ability of its subsidiaries to incur additional indebtedness, issue shares of preferred stock, incur liens, pay dividends or make certain other restricted payments and enter into certain transactions with affiliates; (2) prohibits certain restrictions on the ability of certain of the Company's subsidiaries to pay dividends or make certain payments to it; and (3) places restrictions on the Company's ability and the ability of its subsidiaries to merge or consolidate with any other person or sell, assign, transfer, lease, convey or otherwise dispose of assets. The indenture related to these notes also contains various covenants that limit the Company's

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Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

9. Long-Term Debt — (Continued)

discretion in the operation of its businesses. See Note 18, Subsequent Events, regarding the Company's repayment of the Senior Notes in connection with its May 2011 refinancing.

Credit Facility —

On July 27, 2007, the Company entered into a $51.9 million revolving credit facility as amended on August 29, 2008, with Bank of America Business Capital. The credit facility is between Gundle/SLT Environmental, Inc. and certain domestic subsidiaries, and the financial institutions party to this agreement from time to time as lenders (collectively, "Lenders"), and Bank of America, N.A., a national banking association, as agent for the Lenders ("Agent"), and has a termination date of July 27, 2012.

On May 14, 2008, the Company entered into a first amendment to the credit facility. On August 29, 2008, the Company entered into a second amendment which among other things, effective September 1, 2008, terminated the first amendment. The amended credit facility includes, among other things: a borrowing base formula based on eligible domestic and certain international assets with advance rates computed at (1) 85% of accounts receivable; (2) 65% of inventory; and (3) the lesser of (i) $18.0 million; (ii) 65% of the net book value of machinery and equipment; or (iii) if an appraisal of equipment has been performed, 85% of the net orderly liquidation value percentage of the value of the eligible equipment. The outstanding borrowings bear interest, at the Company's option, at either a base rate or LIBOR, plus an applicable margin of between 0.0% and 2.0% as determined by the Fixed Charge Coverage Ratio calculated as of the end of each fiscal quarter. The rate in effect at December 31, 2010 was 3.5%. The Company is also required to pay customary agency fees, commitment fees, and expenses. The Company paid commitment fees of approximately $72 thousand, $47 thousand and $112 thousand during the years ended December 31, 2010, 2009 and 2008, respectively.

The credit facility is guaranteed by all of the Company's existing and future direct or indirect domestic subsidiaries, excluding the Company's international subsidiaries to the extent guarantees by such subsidiaries would be prohibited by applicable tax law or could result in adverse tax consequences. The credit facility is secured by substantially all of the Company's U.S. assets, and by the Company's capital stock and the capital stock of substantially all of the Company's domestic subsidiaries and 65% of the capital stock of substantially all of the Company's first-tier international subsidiaries.

The credit facility has restrictive covenants which limit, among other things, certain business changes, certain ownership changes, permitted debt, liens, purchases and dispositions of capital assets, and other matters customarily restricted in such agreements as well as customary events of default.

As of December 31, 2010, the Company had a borrowing base capacity of $36.3 million with an outstanding loan balance of $24.1 million, net of $1.9 million of issued letters of credit, and a net availability on December 31, 2010 of $10.3 million. See Note 18, Subsequent Events, regarding the Company's repayment of borrowings under the credit facility in connection with its May 2011 refinancing.

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Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

9. Long-Term Debt — (Continued)

Non-Dollar Denominated Debt —

As of December 31, 2010, the Company had five local international credit facilities. It had credit facilities with two German banks in the amount of EUR 6.3 million ($8.4 million). These revolving credit facilities are secured by a corporate guarantee and bear interest at various market rates. These credit facilities are used primarily to guarantee the performance of European installation contracts and temporary working capital requirements. As of December 31, 2010, the Company had EUR 1.7 million ($2.3 million) available under these credit facilities with EUR 1.5 million ($2.0 million) of bank guarantees outstanding, and with EUR 3.1 ($4.1 million) outstanding under the line of credit.

The Company has two credit facilities with Egyptian banks in the amount of EGP 15.0 million ($2.7 million). These credit facilities bear interest at various market rates and are primarily for cash management purposes. The Company had EGP 10.8 million ($1.9 million) available under these credit facilities with EGP 2.7 million ($0.5 million) of bank guarantees outstanding with EGP 1.5 million ($0.3 million) outstanding under the line of credit as of December 31, 2010.

On March 6, 2009, the Company entered into a BAHT 50.0 million ($1.7 million) revolving credit facility with Export-Import Bank of Thailand ("EXIM") and has a termination date at the discretion of EXIM or the Company. This revolving credit facility bears interest at EXIM prime rate less 0.75% for BAHT borrowings and at London Interbank Offer Rates (LIBOR) plus 3.5% for U.S. dollar borrowings. Repayments of principal are required within 90 days from the date of each draw down borrowing and interest is payable once a month on the last day of the month. The credit facility is secured by a BAHT 45.1 million ($1.5 million) mortgage on land, building and equipment. The Company had BAHT 4.8 million ($0.2 million) available under these credit facilities with BAHT 40.3 million ($1.3 million) of letters of credit outstanding with no amounts outstanding under the line of credit as of December 31, 2010.

The Company has a BAHT 225.7 million ($7.5 million) term loan with a Thailand bank, bearing interest at the bank's Minimum Lending Rate ("MLR") less 1.00% for the first two years and MLR less 0.50%, thereafter, and is secured by equipment, building and lease rights of the property where the equipment and building are located. The bank's MLR was 6.125% at December 31, 2010. The promissory note required monthly payments of interest only for the first six months beginning in October 2007 with monthly payments of BAHT 1.4 million ($46 thousand) plus interest beginning April 2008, increasing to BAHT 3.5 million ($0.1 million) in July 2008, and finally increasing to BAHT 3.8 million ($0.1 million) beginning in December 2008 and maturing in May 2013. The term loan had a balance outstanding on December 31, 2010 of BAHT 80.3 million ($2.7 million).

Other Debt —

In conjunction with the acquisition of SL Limitada, the Company entered into a five year installment obligation with the Seller of SL Limitada for $4.5 million, secured by a share pledge agreement for 30% of the equity of GSE Lining Technology Chile, S.A., an indirect wholly owned subsidiary of the Company. The installment obligation bears interest at 5% for the first two years, converting to a variable rate based on LIBOR for the remaining term. Payments are in five annual principal and interest amounts beginning on January 1, 2007. The installment obligation has a balance outstanding on December 31, 2010 of $0.9 million, which was paid in January 2011.

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Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

9. Long-Term Debt — (Continued)

In connection with the ProGreen acquisition, the Company entered into a three-year unsecured promissory note in the original principal amount of $2.7 million. The note bears interest at the rate of 5.13% per annum and is payable in three equal annual principal payments of $0.9 million plus accrued interest commencing October 13, 2007. The note has a balance outstanding of $0.9 million on December 31, 2010 due to the Company electing to not make the final payment due on October 13, 2009, as the Company is in dispute with the former owners of ProGreen in regards to the $1.3 million warranty claims discussed in Note (3). ProGreen ("the Plaintiff") filed a lawsuit in the Unites States District Court for the Southern District of Texas to recover the $0.9 million outstanding balance plus interest and attorneys' fees from the Company. The Company filed its affirmative defenses and counterclaimed against the Plaintiff, for recovery of all consideration paid to the Plaintiff, as well as asserted other legal claims for damages against the Plaintiff. In March 2011, the Company and the Plaintiff resolved these actions. In connection with this resolution, the Company made payments totaling $0.7 million in full settlement of the $0.9 principal balance owed to the Plaintiff, with the residual difference recorded within other income, net.

10. Fair Value of Financial Instruments —

Effective January 1, 2008, the Company adopted FASB ASC Topic 820, "Fair Value Measurements" (formerly SFAS No. 157), for assets and liabilities measured at fair value on a recurring basis. FASB ASC Topic 820 establishes a common definition for fair value to be applied to existing GAAP that requires the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. The adoption of FASB ASC Topic 820 did not have a material impact on the Company's financial position or operating results, but did expand certain disclosures.

FASB ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, FASB ASC Topic 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of inputs used are as follows:

Level 1 — Observable inputs such as quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

In January 2005, the Company entered into a $75.0 interest rate swap as a mechanism to convert $75.0 million of fixed rate debt to variable rate debt. As of December 31, 2005, the fair value of the interest rate swap agreement of $3.1 million was recorded in other liabilities with a corresponding decrease in the carrying value of debt. On January 1, 2006, the Company began marking to market the liability for the change in value of the interest rate swap and reflecting the change in value in the line item titled "Change in Fair Value of Derivatives" in the consolidated statement of operations.In addition, in January 2006, the Company began accreting the $3.1 million reduction in the carrying value of debt as a yield

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Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

10. Fair Value of Financial Instruments — (Continued)

adjustment to interest expense over the life of the debt. During each of the years ended December 31, 2010, 2009 and 2008, accretion of this loss on the interest rate swap increased the respective annual interest expense by approximately $0.5 million. In accordance with the terms of the interest rate swap agreement, the counterparty to the interest rate swap elected the optional early termination provision of the agreement on May 15, 2009, and paid the Company approximately $2.1 million.

In June 2009, the Company entered into a $75.0 million interest rate swap as a mechanism to convert $75.0 million of fixed rate debt to variable rate debt. The variable rate is one month LIBOR plus 8.925% and a term through May 5, 2012. In July 2010, the Company entered into a EUR 1.0 million ($1.3 million) interest rate swap in connection with the German revolving credit facility. The swap has an interest rate of 3.03% and expires in July 2015. Due to the mark-to-market change in value of the interest rate swaps, the Company recorded approximately $0.1 million and $0.2 million during the years ended December 31, 2010 and 2009, respectively, as a change in fair value of derivatives in the Consolidated Statement of Operations. The fair value of the $75 million interest rate swap at December 31, 2009 was $0.1 million, based on Level 2 inputs. In accordance with the terms of the interest rate swap agreement, the counter party to the interest rate swap notified the Company on April 19, 2010 it elected the optional early termination provision of the agreement to be effective May 15, 2010. The early termination provision of the interest rate swap agreement required no cash settlement to be paid to the Company. At December 31, 2010, the fair value of the EUR 1.0 million interest rate swap was approximately EUR 12 thousand ($14 thousand), based on Level 2 inputs.

In connection with the Merger, the Company issued $150.0 million of 11% senior notes due in May 2012. Within the terms of the senior notes are two embedded derivatives that allowed for optional early redemption of the senior notes. These embedded derivatives were not considered clearly and closely related to the debt agreement and therefore were required to be valued separately from the senior notes. These options expired on May 15, 2007 and May 15, 2008. At the date of the issuance of the senior notes, the fair value of the embedded derivates was determined to be $0.3 million. This amount was recorded in other assets with a corresponding increase to the carrying value of the senior notes. This premium is amortized as a yield adjustment to interest expense over the life of the debt. Amortization of this premium reduced interest expense by approximately $40 thousand in each of the years ended December 31, 2010, 2009 and 2008, respectively.

The Company's other financial instruments consist primarily of cash and cash equivalents, trade receivables, trade payables and debt instruments. The carrying values of cash and cash equivalents, trade receivables and trade payables are considered to be representative of their respective fair values due to the short-term nature of these instruments. In addition, the carrying values of the Company's floating-rate debt instruments are deemed to approximate their respective fair values as they carry interest rates that adjust with underlying market rates. The Company had $150.0 million of fixed-rate debt instruments as of December 31, 2010 and 2009, with fair values of approximately $142.2 million and $148.5 million, respectively, based on Level 2 inputs. The fair value of long-term debt was estimated based on quoted market prices for these or similar issues or on the current rates offered to the Company for debt of the same remaining maturities.

No interest was capitalized in the consolidated financial statements for any period presented.

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GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

11. Stock Options —

GEO Holdings Corp. 2004 Stock Option Plan

The GEO Holdings Corp. ("GEO Holdings") 2004 Stock Option Plan (the "GEO Holdings Option Plan") became effective upon the consummation of the CHS Merger. Under the GEO Holdings Option Plan, the board of directors of GEO Holdings (or a committee thereof) may from time to time grant options to purchase common stock of GEO Holdings representing up to 620,750 (161,590 not issued as of December 31, 2010) shares of GEO Holdings' common stock on a fully-diluted basis immediately following the consummation of the Merger to executives or other key employees or directors of GEO Holdings and its subsidiaries. Both "nonqualified" stock options and "incentive" stock options may be granted under the GEO Holdings Option Plan with terms to be determined by the board of directors (or a committee thereof). The 333,600 options to purchase GEO Holdings common stock received by certain of the Company's executives in exchange for options to purchase GSE common stock on the closing date of the Merger pursuant to executive securities agreements, which represented approximately 10% of GEO Holdings' common stock on a fully-diluted basis immediately following the completion of the Merger, were issued under the GEO Holdings Option Plan. The weighted average exercise price of the exchanged options is $3.67 per share.

These exchanged options are exercisable at any time and expire ten years from the date of grant, unless the holder is terminated for cause, as defined in the GEO Holdings Option Plan. In connection with a termination for cause, the Company or CHS IV has (1) the obligation to repurchase such options for the original cost, which is $18.50 less the original predecessor option's exercise price (which averages $3.67), and (2) the right, but not the obligation, to purchase any outstanding common stock held as a result of exercising such options for the lesser of fair market value or original cost. Should the holder separate from the Company for any reason other than cause, the Company or CHS IV would have the right but not the obligation to purchase any of the outstanding exchanged options or common stock held as a result of exercising such options for the greater of fair market value or original cost.

See Note 2, Summary of Significant Accounting Policies — Stock-Based Compensation, regarding the Company's stock-based awards and compensation expense for each of the three years ended December 31, 2010, 2009 and 2008.

12. Income Taxes —

Domestic and foreign income (loss) from continuing operations before income taxes were as follows (in thousands):



		Year Ended December 31
		2010			2009			2008
Domestic		$	(19,440	)	$	(13,741	)	$	(5,771	)
Foreign			5,387			(1,639	)		11,000

	Total	$	(14,053	)	$	(15,380	)	$	5,229

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Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

12. Income Taxes — (Continued)

The provision (benefit) for income taxes from continuing operations consisted of the following (in thousands):



			Year Ended December 31
			2010			2009			2008
Current expense (benefit):
	U.S.
	Federal		$	(2,346	)	$	1,121		$	(377	)
	State			137			422			361

		Total U.S.		(2,209	)		1,543			(16	)
	Foreign			1,834			967			2,574

	Total current			(375	)		2,510			2,558
Deferred expense (benefit):
	U.S.
	Federal			(1,240	)		(4,617	)		2,887
	State			5			(497	)		490

		Total U.S.		(1,235	)		(5,114	)		3,377
	Foreign			(459	)		(1,933	)		479

	Total deferred			(1,694	)		(7,047	)		3,856

Total (benefit) provision for income taxes			$	(2,069	)	$	(4,537	)	$	6,414

Reconciliation between the (benefit) provision for income taxes from continuing operations and income taxes computed by applying the statutory rate is as follows (in thousands):



		Year Ended December 31
		2010			2009			2008
Tax (benefit) provision at statutory rate		$	(4,919	)	$	(5,383	)	$	1,809
Add (deduct)
	Meals and entertainment disallowance		34			34			39
	Dividends		966			605			16
	Change in valuation allowance		2,124			874			4,735
	Taxable differential for foreign subsidiaries		(528	)		310			(1,477	)
	State income tax		(10	)		(60	)		683
	Other, net		264			(917	)		609

		$	(2,069	)	$	(4,537	)	$	6,414

F-31

Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

12. Income Taxes — (Continued)

The tax effects of temporary differences that gave rise to the deferred tax assets and liabilities were:



		2010			2009
		(in thousands)
Deferred tax assets:
	Accrued expenses	$	4,624		$	5,220
	Foreign tax credit		12,816			12,111
	Net operating loss carryforward		8,845			5,768
	AMT carryforward		712			757
	Capital loss carryforward		656
	Valuation allowance		(17,209	)		(12,585	)

			10,444			11,271
Deferred tax liabilities:
	Excess book basis over tax basis for property, plant and equipment and intangible assets		(8,733	)		(11,771	)
	Other		(243	)		(573	)

			(8,976	)		(12,344	)

Total deferred tax asset (liability)		$	1,468		$	(1,073	)

At December 31, 2010, the Company has net operating loss carryforwards for U.S. federal income tax purposes of $23.9 million which will begin to expire, if unused, in 2023. The Company also has foreign tax credit carryfowards for U.S. federal income tax purposes of $12.8 million which will begin to expire, if unused, in 2011. In addition, the Company has an alternative minimum tax credit carryforward of $0.7 million, which does not expire. The valuation allowance increased in 2010 due to the net of foreign tax credits generated on foreign earnings repatriated or deemed repatriated in 2010, the redetermination of the foreign tax credit from earlier years and the increase in the net operating loss. The valuation allowance was recorded based on management's best estimate that it is more likely than not that a portion of the federal and state net operating loss carryforwards and foreign tax credits will not be realized. At December 31, 2010, the valuation allowance on foreign tax credits and federal and state net operating losses was $17.2 million.

Undistributed retained earnings of the Company's foreign subsidiaries amounted to approximately $20.4 million at December 31, 2010. Provision for U.S. federal and state income taxes has not been provided for earnings considered to be indefinitely reinvested. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the amount of the unrecognized deferred tax asset/liability, if any, for temporary differences related to investments in foreign subsidiaries that are essentially permanent in duration is not practicable.

The Company is subject to income tax in U.S. federal, state and foreign jurisdictions. Based on applicable statutes of limitations, the Company is generally no longer subject to examinations by tax authorities in years prior to 2004.

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Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

12. Income Taxes — (Continued)

The Company had no unrecognized tax benefits as of December 31, 2010 and 2009. Consistent with prior practices, the Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company did not incur any interest and penalties nor accrue any interest for the years ended December 31, 2010, 2009 and 2008.

13. Employee Benefit Plans —

The Company has a defined contribution employee benefit plan under which substantially all U.S. employees are eligible to participate. The Company matches a portion of the employees' contributions. The Company contributed approximately $0.3 million, $0.5 million and $0.5 million to the plan during the years ended December 31, 2010, 2009 and 2008, respectively.

The Company had a Corporate Retirement Plan, which was an executive nonqualified deferred compensation plan. Qualifying executive officers could elect to defer compensation and take distributions after separation from GSE service or for disability, unforeseen emergency, or death. There was no participation in this plan by a qualifying executive officer during the year ended December 31, 2010 and this plan was terminated during 2010. The participants contributed a total of approximately $118 thousand and $300 thousand to this plan and the Company made matching contributions of approximately $12 thousand and $49 thousand during the years ended December 31, 2009 and 2008, respectively.

14. Concentration of Credit and Other Risks —

Accounts receivable, as financial instruments, could potentially subject the Company to concentrations of credit risk. The Company continuously evaluates the creditworthiness of its customers and may require customers to provide letters of credit to guarantee payments. During the years ended December 31, 2010, 2009 and 2008, no single customer accounted for 10% or more of sales.

The Company currently purchases its raw material, mainly polyethylene resins from at least two suppliers at each location. Polyethylene resins are occasionally in short supply and are subject to substantial price fluctuation in response to market demand. The Company has not encountered any significant prolonged difficulty to date in obtaining raw materials in sufficient quantities to support its operations at current or expected near-term future levels. However, any disruption in raw material supply or abrupt increases in raw material prices could have an adverse effect upon the Company's operations.

15. Commitments and Contingencies —

Product Warranties and Insurance Coverage —

The Company's products are sold and installed with specified limited warranties as to material quality and workmanship. These limited warranties may last for up to 20 years, but are generally limited to repair or replacement by the Company of the defective liner or the dollar amount of the contract involved, on a prorated basis. The Company may also indemnify the site owner or general contractor for other damages resulting from negligence of the Company's employees. The Company accrues a warranty reserve based on estimates for warranty claims. This estimate is based on historical claims history and current business activities and is accrued as a cost of sales in the period such business activity occurs. As previously discussed in Note (3), the warranty reserve accrual was increased approximately $1.3 million during the fiscal year ended 2009 relating to warranty claims arising from projects that were completed prior to the

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Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

15. Commitments and Contingencies — (Continued)

exit from the synthetic turf business. The table below reflects a summary of activity of the Company's operations for warranty obligations through December 31, 2010 (in thousands):



Balance at December 31, 2007		$	1,969
	Obligations adjusted		(44	)
	Obligations paid		(169	)

Balance at December 31, 2008			1,756
	Obligations adjusted		2,079
	Obligations paid		(461	)

Balance at December 31, 2009			3,374
	Obligations adjusted		(61	)
	Obligations paid		(511	)

Balance at December 31, 2010		$	2,802

Although the Company is not exposed to the type of potential liability that might arise from being in the business of handling, transporting or storing hazardous waste or materials, the Company could be susceptible to liability for environmental damage or personal injury resulting from defects in the Company's products or negligence by Company employees in the installation of its lining systems. Such liability could be substantial because of the potential that hazardous or other waste materials might leak out of their containment system into the environment. The Company maintains liability insurance, which includes contractor's pollution liability coverage in amounts which it believes to be prudent. However, there is no assurance that this coverage will remain available to the Company. While the Company's claims experience to date may not be a meaningful measure of its potential exposure for product liability, the Company has experienced no material losses from defects in products and installations.

Bonding — Bank Guarantees —

The Company, in some direct sales and raw material acquisition situations, is required to post performance bonds or bank guarantees as part of the contractual guarantee for its performance. The performance bonds or bank guarantees can be in the full amount of the contracts. To date the Company has not received any claims against any of the posted securities, most of which terminate at the final completion date of the contracts. As of December 31, 2010, the Company had $4.4 million of bonds outstanding and $5.7 million of guarantees issued under its bank lines.

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Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

15. Commitments and Contingencies — (Continued)

Litigation and Claims —

The Company is a party to various legal actions arising in the ordinary course of our business. These legal actions cover a broad variety of claims spanning the Company's entire business. We believe it is not reasonably possible that resolution of these legal actions will, individually or in the aggregate, have a material adverse effect on our financial condition or results of operations.

Operating Leases —

The Company leases certain equipment through operating lease arrangements of varying terms. The following is a schedule of future minimum lease payments for operating leases as of December 31, 2010 (in thousands):



Year ending December 31
2011	$	487
2012		309
2013		164
2014		144
2015		124
Thereafter		884

	$	2,112

Annual rent expense under the terms of non-cancelable operating leases was less than 1% of consolidated sales during the years ended December 31, 2010, 2009 and 2008.

16. Related Party Transaction —

Management Agreement with CHS Management IV LP

In connection with the Merger, the Company entered into a management agreement with GEO Holdings and CHS Management IV LP ("CHS Management") a limited partnership (1) of which CHS is the general partner and (2) which is the general partner of CHS IV. Pursuant to the management agreement, CHS Management provides certain financial and management consulting services to GEO Holdings and to the Company. In consideration of those services, the Company pays fees to CHS Management in an aggregate annual amount of $2.0 million payable in equal monthly installments. The Company also agreed to reimburse CHS Management for its reasonable travel and other out-of-pocket expenses. The Company also provides customary indemnification to CHS Management. In connection with the structuring and implementation of the Merger and related financing transactions, GEO Holdings paid CHS management fees in the aggregate amount of $5.0 million at the completion of the Merger. Under the Management Agreement, GEO Holdings will pay CHS Management a fee equal to 5% of any additional proceeds of GEO Holdings' capital stock purchased from time to time by CHS Management or its affiliates. The management fee is subordinated to the prior payment in full of principal, interest and premium due and owing under its credit facility and the indenture governing the senior notes, but the Company may pay the management fee at all times except during certain events of default under its credit facility or under the indenture governing the senior notes. In the event any portion of the management fee is not so paid, such amount will accrue and become due and

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Table of Contents

GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

16. Related Party Transaction — (Continued)

payable in the next month when payment is permitted. Under this agreement, the Company paid and expensed CHS $2.0 million during the years ended December 31, 2010, 2009 and 2008, respectively. The amounts paid to CHS are included in selling, general and administrative expenses in the Consolidated Statements of Operations. As of December 31, 2010 and 2009, there were no amounts payable to CHS under this agreement.

Compensatory Arrangements of Certain Officers

The Company's former President and Chief Executive Officer ("CEO") passed away unexpectedly on August 5, 2009. Under the terms of the CEO's employment contract and the Company's benefit plans, the CEO's estate is to be paid approximately $1.0 million, in equal semi-monthly payments of approximately $28 thousand over an eighteen month period, beginning in September 2009. Accordingly, the Company recorded approximately $1.0 million of expense during the year ended December 31, 2009 as a component of selling, general and administrative expenses in the accompanying Consolidated Statements of Operations. As of December 31, 2010, there is approximately $0.1 million to be paid to the former CEO's estate and is recorded as a liability in accrued liabilities and other.

17. Segment Information —

The Company's operating segments are based on geographic regions, which is consistent with the basis of how management internally reports and evaluates financial information used to make operating decisions. For external reporting purposes, the Company aggregates operating segments which have similar economic characteristics, products, production processes, types or classes of customers and distribution methods into reportable segments. The Company's reportable segments are North America and International.

Management evaluates performance and allocates resources based on sales, gross margin and Adjusted EBITDA. Adjusted EBITDA represents net loss from continuing operations before interest expense, income tax expense, depreciation and amortization of intangibles, change in the fair value of derivatives, loss (gain) on revaluation of foreign assets and liabilities, restructuring expenses, extraordinary and non-recurring professional fees, stock-based compensation expense, loss (gain) on asset sales and management fees. The accounting policies of the reportable segments are the same as those described in Note 2 — Summary of Significant Accounting Policies.

In 2010, the Company sold its 75.5% interest in GSE Bentoliner (Canada) to the minority stockholders. Additionally, it closed GSE Lining Technology Limited in the UK and sold its US installation business. In 2008, the Company sold GSE GeoSport Surfaces, its synthetic turf business. As described in Note 3 — Discontinued Operations, the Company excluded the results of these components of its business from results from continuing operations. The results from those components are also excluded from the segment information presented below, as management believes results from continuing operations provides a better view of the Company. Prior to selling or discontinuing these operations, GSE Bentoliner, US Installation and GSE GeoSport were part of the North America segment. GSE Lining Technology Limited was part of the International segment.

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GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

17. Segment Information — (Continued)

The following table presents information about the results from continuing operations and assets of the Company's reportable segments for the periods presented.



		2010									2009									2008
		N. America			International			Total			N. America			International			Total			N. America			International			Total
		(in thousands)
Sales to external customers		$	142,956		$	199,827		$	342,783		$	137,504		$	153,695		$	291,199		$	183,743		$	225,252		$	408,995
Intersegment sales			18,896			12,040			30,936			7,034			8,559			15,593			9,334			8,340			17,674

	Total segment sales		161,852			211,867			373,719			144,538			162,254			306,792			193,077			233,592			426,669
Segment Gross profit			24,005			20,238			44,243			25,377			10,380			35,757			26,782			25,932			52,714
Segment Gross margin			14.8	%		9.6	%		11.8	%		17.6	%		6.4	%		11.7	%		13.9	%		11.1	%		12.4	%
Adjusted EBITDA			14,132			14,292			28,424			16,917			4,829			21,746			18,591			20,537			39,128
Segment assets			176,973			138,932			315,905			150,235			126,557			276,792			203,033			139,092			342,125

The following tables reconcile the segment information presented above to the consolidated financial information.

Sales



		Reconciliation to Consolidated Sales
		2010			2009			2008
		(in thousands)
Total segment sales		$	373,719		$	306,792		$	426,669
Intersegment sales			(30,936	)		(15,593	)		(17,674	)

	Consolidated sales	$	342,783		$	291,199		$	408,995

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GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

17. Segment Information — (Continued)

Adjusted EBITDA



	Reconciliation to Net Loss
	Year Ended December 31
	2010			2009			2008
	(in thousands)
Adjusted EBITDA	$	28,424		$	21,746		$	39,131
Loss from discontinued operations		(4,428	)		(2,846	)		(746	)
Interest expense, net of swap		(18,935	)		(18,005	)		(20,398	)
Income tax expense (benefit)		2,069			4,537			(6,414	)
Depreciation and amortization expense		(12,700	)		(12,703	)		(13,219	)
Change in fair value of derivatives		(59	)		(210	)		2,682
Foreign currency transaction (gain) loss		1,386			(375	)		413
Restructuring expense		(1,096	)		(1,444	)		—
Professional fees		(8,904	)		(1,436	)		(262	)
Stock-based compensation expense		(67	)		(28	)		(450	)
Management fees		(2,019	)		(2,004	)		(2,004	)
Other		(58	)		(972	)		(650	)

Net loss attributable to GSE Holding, Inc.	$	(16,387	)	$	(13,740	)	$	(1,917	)

Assets



		Reconciliation to Consolidated Assets
		December 31
		2010			2009			2008
		(in thousands)
Total segment assets		$	315,905		$	276,792		$	342,125
Intersegment balances			(37,395	)		(18,785	)		(21,963	)
Other			(59	)		3			(63	)

	Consolidated assets	$	278,451		$	258,010		$	320,099

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GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

17. Segment Information — (Continued)

Geographic Sales Information

The following table presents further geographic detail for sales related to continuing operations. For purposes of this disclosure, sales are attributed to individual countries on the basis of the physical location and jurisdiction of the entity invoicing the customer for the sale.



		Year ended December 31
		2010		2009		2008
		(in thousands)
North America		$	142,956	$	137,504	$	183,743
Europe Africa			104,507		82,278		105,110
Asia Pacific			49,370		37,754		58,658
Latin America			36,120		23,613		45,931
Middle East			9,830		10,050		15,553

	Total sales	$	342,783	$	291,199	$	408,995

Product Information

The Company sells four significant types of geosynthetic lining products, generally categorized as geomembranes, drainage products, geosynthetic clay liners and nonwoven geotextiles. Geomembranes are synthetic polymeric lining materials used as barriers in geotechnical engineering applications. Drainage products, such as geonets and geocomposites, are typically installed along with geomembranes in a liner system to keep liquids from accumulating on the liners. Geosynthetic clay liners are typically installed as the bottom layer of a liner system. Nonwoven geotextiles are synthetic, staple fiber, nonwoven needle-punched fabrics used in environmental and other industrial applications. All other polysynthetic products are captured in the specialty products category. Each product category is sold in each geographic segment.

The following table presents the sales of each product category for the years presented:



		Year ended December 31
		2010		2009		2008
		(in thousands)
Geomembranes		$	267,312	$	216,776	$	316,146
Drainage			31,167		32,324		38,981
Geosynthetic clay liners			18,639		20,428		23,099
Nonwoven geotextiles			10,399		8,928		12,739
Specialty products			7,208		6,950		8,849
Other			8,058		5,793		9,181

	Total sales	$	342,783	$	291,199	$	408,995

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GSE Holding, Inc.

Notes to Consolidated Financial Statements (Continued)

18. Subsequent Events —

In May 2011, the Company refinanced its $150 million 11 percent senior notes, as well as $27 million in borrowings under our existing revolving credit facility, with a portion of the proceeds from two new senior secured credit facilities. See Note 9, Long-Term Debt, for a discussion of these refinanced borrowing arrangements. These new facilities consist of (1) a five-year $160 million facility, which includes a $135 million term loan commitment and a $25 million revolving loan commitment, and (2) a five-year $40 million facility in the form of a term loan. Borrowings under each of these new facilities bears interest at a floating rate based on either Prime or LIBOR, at the Company's option. At May 27, 2011, the Company had $185 million in outstanding borrowings under these new facilities consisting of $175 million in term loans and $10 million in revolving loans at a weighted average interest rate of 9.48%.

Summarized below are the maturities of the Company's long-term debt under the new senior secured credit facilities immediately following the May 27, 2011 refinancing:



Year Ending December 31,	Amount
2011	$	675
2012		1,350
2013		1,350
2014		1,350
2015		1,350
Thereafter		178,672

	$	184,747

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GSE HOLDING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

				March 31, 2011			December 31, 2010

				(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents			$	7,557		$	15,184
	Accounts receivable:
		Trade, net of allowance for doubtful accounts of $1,525 and $1,932			64,097			69,661
		Other			4,306			5,420
	Inventory, net				67,612			56,020
	Deferred income taxes				1,717			1,812
	Prepaid expenses and other				7,302			4,942
	Income taxes receivable				658			540

			Total current assets		153,249			153,579
Property, plant and equipment, net of accumulated depreciation					57,053			57,350
Goodwill					58,895			58,895
Intangible assets, net of accumulated amortization					3,801			4,121
Deferred income taxes					2,011			2,245
Other assets					2,597			2,261

TOTAL ASSETS				$	277,606		$	278,451

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	33,918		$	30,698
	Accrued liabilities				26,214			24,825
	Income taxes payable				224			144
	Short-term debt				5,053			4,380
	Current portion of long-term debt				1,507			3,317
	Deferred income taxes				257			242

			Total current liabilities		67,173			63,606
Other liabilities					1,144			1,088
Deferred income taxes					2,612			2,347
Long-term debt, net of current portion					167,442			174,632

			Total liabilities		238,371			241,673

Commitments and Contingencies
Stockholders' equity:
	Common stock, $.01 par value, 3,700,000 shares authorized; 2,985,360 shares issued and outstanding				30			30
	Additional paid-in capital				61,485			61,410
	Accumulated deficit				(27,128	)		(26,397	)
	Accumulated other comprehensive income				4,848			1,735

			Total stockholders' equity		39,235			36,778

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY				$	277,606		$	278,451

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GSE HOLDING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

		Three Months Ended March 31,

		2011			2010
Sales		$	88,462		$	55,923
Cost of products			74,008			53,064

Gross profit			14,454			2,859
Selling, general and administrative expenses			9,343			7,789
Amortization of intangibles			394			577

Operating income (loss)			4,717			(5,507	)
Other expenses (income):
	Interest expense, net of interest income		4,841			4,741
	Foreign currency transaction loss (gain)		1,290			(970	)
	Change in fair value of derivatives		—			(65	)
	Other income, net		(424	)		(680	)

Loss from continuing operations before income taxes			(990	)		(8,533	)
Income tax provision			127			37

Loss from continuing operations			(1,117	)		(8,570	)
Income (loss) from discontinued operations, net of income taxes			386			(4,129	)

Net loss			(731	)		(12,699	)
Non-controlling interest in consolidated subsidiaries			—			25

Net loss attributable to GSE Holding, Inc.		$	(731	)	$	(12,674	)

Basic and diluted net (loss) income per common share:
	Continuing operations	$	(0.37	)	$	(2.86	)
	Discontinued operations		0.13			(1.38	)

		$	(0.24	)	$	(4.24	)

Weighted-average common shares outstanding, basic and diluted			2,985			2,985

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GSE HOLDING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

					Three Months Ended March 31,

					2011			2010
Cash flows from operating activities:
	Net loss attributable to GSE Holding, Inc.				$	(731	)	$	(12,674	)
	Net (income) loss from discontinued operations					(386	)		4,129
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Depreciation				2,651			2,604
		Amortization of debt issuance costs				461			461
		Amortization of intangible assets				394			577
		Change in fair value of derivatives and other intangibles				—			(65	)
		Non-controlling interest in consolidated subsidiaries				—			(25	)
		Deferred income tax expense (benefit)				416			464
		Revaluation of non-dollar denominated debt				79			106
		Other				72			64
		Change in cash from operating assets and liabilities:
			Accounts receivable			4,871			216
			Inventory			(11,907	)		(14,558	)
			Prepaid expenses and other			(2,238	)		(4,645	)
			Accounts payable			2,215			4,044
			Accrued liabilities			1,870			4,198
			Income taxes (receivable) payable			708			(953	)
			Other assets and liabilities			(473	)		160

				Net cash used in operating activities — continuing operations		(1,998	)		(15,897	)
				Net cash provided by (used in) operating activities — discontinued operations		3,883			(2,063	)

				Net cash provided by (used in) operating activities		1,885			(17,960	)

Cash flows from investing activities:
	Purchase of property, plant and equipment					(1,747	)		(380	)

		Net cash used in investing activities — continuing operations				(1,747	)		(380	)

Cash flows from financing activities:
	Proceeds from lines of credit					29,431			21,579
	Repayments of lines of credit					(35,809	)		(14,008	)
	Repayments of long-term debt					(1,239	)		(1,239	)

		Net cash provided by (used in) financing activities — continuing operations				(7,617	)		6,332

Effect of exchange rate changes on cash — continuing operations						(185	)		(526	)
Effect of exchange rate changes on cash — discontinued operations						37			(143	)

Net decrease in cash and cash equivalents						(7,627	)		(12,677	)
Cash and cash equivalents at beginning of period						15,184			20,814

Cash and cash equivalents at end of the period					$	7,557		$	8,137

The accompanying notes are an integral part of these condensed consolidated financial statements.

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements

1. Nature of Business and Significant Accounting Policies —

(a) Organization and Description of Business —

(b) Basis of Presentation —

The accompanying consolidated condensed financial statements have been prepared on the same basis as those in the Company's audited financial statements as of and for the year ended December 31, 2010. The December 31, 2010 Consolidated Condensed Balance Sheet data was derived from the Company's year-end audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). These condensed consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of such financial statements for the periods indicated. The Company believes that the disclosures herein are adequate to make the information presented not misleading. Operating results for the first three months of 2011 are not necessarily indicative of results to be expected for the year ending December 31, 2011. These unaudited interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements as of and for the year ended December 31, 2010, and the notes thereto.

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts as well as certain disclosures. The Company's financial statements include amounts that are based on management's best estimates and judgments. Actual results could differ from those estimates.

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

1. Nature of Business and Significant Accounting Policies — (Continued)

(c) Recent Accounting Pronouncements —

In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2011-05, Comprehensive Income: Presentation of Comprehensive Income, to allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments do not change the guidance regarding the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments should be applied retrospectively, and is effective for fiscal years and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. The adoption is not expected to have a material impact on the Company's results of operations, financial position or cash flows.

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU represents the converged guidance of the FASB and the IASB (the "Boards") on fair value measurement, and results in common requirements for measuring fair value and for disclosing information about fair value measurements, including a consistent meaning of the term "fair value." These amendments change some of the terminology used to describe many of the existing requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments should be applied prospectively, and they are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The adoption is not expected to have a material impact on the Company's results of operations, financial position or cash flows.

In December 2010, the FASB issued ASU No. 2010-28, Intangibles — Goodwill and Other: When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. The amendments in this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing event or circumstance-driven guidance related to goodwill impairment testing between annual tests. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The adoption is not expected to have a material impact on the Company's results of operations, financial position or cash flows.

In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements, which clarifies certain existing disclosure requirements in ASC 820, Fair Value Measurements and Disclosures, as well as requires disclosures related to significant transfers between each level and additional information about Level 3 activity. ASU 2010-06 begins phasing in the first fiscal period after December 15, 2009. The Company did not make nor anticipates a significant transfer between each level as of December 31, 2010. As such, the Company does not believe this ASU will have any material impact on its consolidated financial position, results of operations or cash flows.

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

2. Discontinued Operations —

GSE Lining Technology Limited U.K. —

Summarized financial information for the Company's discontinued GSE UK operations is shown below:

	Three Months Ended March 31,

	2011			2010
	(in thousands)
Operations
Sales	$	—		$	3,000
Cost of products		9			2,580

Gross (loss) profit		(9	)		420
Selling, general and administrative expenses		(3	)		169
Amortization of intangibles		—			38
Foreign currency transaction (gain) loss		(36	)		36
Income tax (benefit) provision		(3	)		59

Income from discontinued operations	$	33		$	118

	March 31, 2011		December 31, 2010

	(in thousands)
Assets
Cash	$	1,661	$	2,893
Accounts receivable		977		3,276
Inventory		481		2,248
Income taxes receivable		605		399
Prepaid and other current assets		34		25
Property, plant and equipment, net of accumulated depreciation		318		309
Customer lists and other intangible assets, net		—		289

Assets of discontinued operations	$	4,076	$	9,439

Liabilities
Accounts payable and accrued liabilities	$	90	$	483
Deferred income taxes		276		83

Liabilities of discontinued operations	$	366	$	566

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

2. Discontinued Operations — (Continued)

United States Installation Business —

During the fourth quarter of 2009, the Company conducted a detailed review of the profitability and viability of its United States installation business and decided to exit this business during 2010. The Company sold the United States installation business effective June 30, 2010, for approximately $2.3 million resulting in a gain on sale of assets of approximately $1.6 million. There were no revenues recognized or operating expenses incurred during the three months ended March 31, 2011. The Company recorded an after tax loss of $0.4 million during the three months ended March 31, 2010.

Summarized financial information for the Company's discontinued United States Installation operations is shown below:

	Three Months Ended March 31,

	2011		2010
	(in thousands)
Operations
Sales	$	—	$	1,860
Cost of products		—		2,179

Gross loss		—		(319	)
Selling, general and administrative expenses		—		342
Income tax benefit		—		(258	)

Loss from discontinued operations	$	—	$	(403	)

	March 31, 2011		December 31, 2010

	(in thousands)
Assets
Accounts receivable	$	114	$	325
Deferred tax asset		—		37

Assets of discontinued operations	$	114	$	362

Liabilities
Accounts payable and accrued liabilities	$	95	$	95

Liabilities of discontinued operations	$	95	$	95

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

2. Discontinued Operations — (Continued)

GSE Bentoliner (Canada), Inc. —

The Company sold its 75.5% interest in GSE Bentoliner (Canada), Inc. ("Bentoliner") to the minority share holders' of Bentoliner, for cash and other considerations on April 16, 2010, effective March 31, 2010, resulting in a loss on sale of approximately $3.0 million. The loss on sale included the write off of approximately $2.1 million of goodwill. There were no revenues recognized or operating expenses incurred during the three months ended March 31, 2011. The Company recorded an after tax loss of $3.8 million during the three months ended March 31, 2010.

Summarized financial information for the Company's discontinued Bentoliner operations is shown below:

	Three Months Ended March 31,

	2011		2010
	(in thousands)
Operations
Sales	$	—	$	526
Cost of products		—		752

Gross loss		—		(226	)
Selling, general and administrative expenses		—		18
Foreign currency transaction gain		—		(43	)
Non-controlling interest in consolidated subsidiary		—		(27	)
Loss on sale of assets				3,012
Other income		—		(9	)
Income tax benefit		—		667

Loss from discontinued operations	$	—	$	(3,844	)

GSE GeoSport Surfaces —

In March 2008, the Company reviewed its strategic long-term opportunities and decided to exit the synthetic turf business which operated as GSE GeoSport Surfaces ("GeoSport"). The Company made the decision to exit the synthetic turf business as overall market conditions and other factors did not permit the Company to earn an acceptable return. The Company completed the exit from the synthetic turf business as of December 31, 2008. The Company recorded an after tax income of $0.4 million during the three months ended March 31, 2011 related to forgiveness of debt. The Company elected to not make the final installment of $0.9 million on the note payable, plus accrued interest, to the former owners of GeoSport ("ProGreen") during the fourth quarter of 2009, as the Company was in dispute with ProGreen over $1.3 million in warranty claims. ProGreen filed a lawsuit in the Unites States District Court for the Southern District of Texas to recover the $0.9 million outstanding balance plus interest and attorneys' fees from the Company. In April 2011, the Company and ProGreen entered into a settlement agreement to jointly dismiss the lawsuit filed by ProGreen. As part of that settlement the Company agreed to pay ProGreen approximately $0.7 million and ProGreen forgave the $0.4 million remaining balance of the note payable plus accrued interest. The $0.4 million forgiveness of debt is included as other income in discontinued operations.

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

2. Discontinued Operations — (Continued)

Summarized financial information for the Company's discontinued GeoSport operations is shown below:

	Three Months Ended March 31,

	2011			2010
	(in thousands)
Operations
Sales	$	—		$	—
Cost of products		—			—

Gross loss		—			—
Interest expense		12			—
Other income		(365	)		—

Income from discontinued operations	$	353		$	—

	March 31, 2011		December 31, 2010

	(in thousands)
Assets
Property, plant and equipment, net of accumulated depreciation	$	—	$	—
Customer lists and other intangible assets, net		—		—

Assets of discontinued operations	$	—	$	—

Liabilities
Accounts payable and accrued liabilities	$	988	$	988
Long-term debt		—		900

Liabilities of discontinued operations	$	988	$	1,888

Other Actions —

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

3. Inventory —

Inventory consisted of the following:



	March 31, 2011			December 31, 2010
	(in thousands)
Raw materials	$	30,458		$	24,892
Finished goods		34,956			29,400
Supplies		4,277			4,185
Obsolescence and slow moving allowance		(2,079	)		(2,457	)

	$	67,612		$	56,020

4. Property, Plant and Equipment —

Property, plant and equipment consisted of the following:



	Useful lives years	March 31, 2011			December 31, 2010
		(in thousands)
Land		$	5,008		$	4,911
Buildings and improvements	7-30		24,141			23,992
Machinery and equipment	3-10		97,608			94,789
Furniture and fixtures	3-5		1,002			975

			127,759			124,667
Less — accumulated depreciation			(70,706	)		(67,317	)

		$	57,053		$	57,350

Depreciation expense for the three months ended March, 31, 2011 and 2010 was $2.7 million and $2.6 million, respectively.

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

5. Intangible Assets, net —

Customer lists and other intangible assets consisted of the following:



	Useful lives years	March 31, 2011			December 31, 2010
		(in thousands)
Customer lists	5-10	$	26,039		$	25,629
Software	3		1,500			1,500
Non-compete agreements	5-10		2,638			2,638
Other	1		468			468

			30,645			30,235
Accumulated amortization			(26,844	)		(26,114	)

		$	3,801		$	4,121

Amortization expense on intangible assets for the three months ended March 31, 2011 and 2010 was $0.4 million and $0.6 million, respectively.

6. Accrued Liabilities —

Accrued liabilities consisted of the following:



	March 31, 2011		December 31, 2010
	(in thousands)
Customer prepayments	$	890	$	4,493
Accrued operating expenses		4,036		4,472
Self-insurance reserves		4,019		3,839
Compensation and benefits		5,238		5,043
Accrued interest		6,302		2,319
Taxes, other than income		1,219		1,735
Other accrued liabilities		4,510		2,924

	$	26,214	$	24,825

7. Warranty Reserves —

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

7. Warranty Reserves — (Continued)

reflects a summary of activity of the Company's operations for warranty obligations for the three months ended March 31, 2011 and 2010, respectively (in thousands):

Three months ended March 31, 2011:


Balance at December 31, 2010		$	2,802
	Obligations adjusted		46
	Obligations paid		(89	)

Balance at March 31, 2011		$	2,759


Three months ended March 31, 2010:
Balance at December 31, 2009		$	3,374
	Obligations adjusted		(50	)
	Obligations paid		(119	)

Balance at March 31, 2010		$	3,205

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

8. Long-Term Debt —

Long-term debt consisted of the following:



	March 31, 2011			December 31, 2010
	(in thousands)
11% Senior Notes due May 2012	$	150,000		$	150,000
Revolving Credit Facility, floating interest rate		17,184			24,101
Term Loan — seller note with annual installments of $900,000 beginning October 2007, 5.13%		—			900
Term Loan — seller note with annual installments of $900,000 beginning January 2007, 5% for two years and floating thereafter		—			900
Term Loan — Thailand bank secured by equipment, monthly installments of $113,000, 5.625% variable through May 2013		2,276			2,670

		169,460			178,571
Less — current maturities		(1,507	)		(3,317	)
Unamortized loss on interest rate swap and premium on senior notes		(511	)		(622	)

	$	167,442		$	174,632

Senior Notes —

The Company's $150.0 million of 11% senior notes due in May 2012 (the "Senior Notes") are registered under the Securities Act of 1933, as amended. The Senior Notes are guaranteed by all of the Company's existing and future direct or indirect domestic subsidiaries.

Credit Facility —

The outstanding borrowings under the credit facility bear interest, at the Company's option, at either a base rate or LIBOR, plus an applicable margin of between 0.0% and 2.0% as determined by the Fixed Charge Coverage Ratio calculated as of the end of each fiscal quarter. The Company is also required to pay customary agency fees, commitment fees, and expenses. Such commitment fees were immaterial during the three months ended March 31, 2011 and 2010, respectively.

As of March 31, 2011, the Company had a borrowing base capacity of $42.5 million with an outstanding loan balance of $17.2 million, net of $1.9 million of issued letters of credit, and a net availability on March 31, 2011 of $23.4 million.

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

9. Fair Value of Financial Instruments —

Effective January 1, 2008, the Company adopted FASB Accounting Standards Codification ("ASC") Topic 820, "Fair Value Measurements" (formerly SFAS No. 157), for assets and liabilities measured at fair value on a recurring basis. FASB ASC Topic 820 establishes a common definition for fair value to be applied to existing GAAP that requires the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. The adoption of FASB ASC Topic 820 did not have a material impact on the Company's financial position or operating results, but did expand certain disclosures.

The three levels of inputs used are as follows:

Level 1 — Observable inputs such as quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

In July 2010, the Company entered into a EUR 1.0 million ($1.4 million) interest rate swap in connection with the German revolving credit facility. The swap has an interest rate of 3.03% and expires in July 2015. The mark-to-market change in value of the interest rate swap, based on Level 2 inputs was minimal during the three months ended March 31, 2011, and the Company did not record any change in fair value of derivatives in the consolidated statement of operations.

In June 2009, the Company entered into a $75.0 million interest rate swap as a mechanism to convert $75.0 million of fixed rate debt to variable rate debt. The variable rate was one month LIBOR plus 8.925% and had a term through May 5, 2012. In accordance with the terms of the interest rate swap agreement, the counterparty to the interest rate swap notified the Company on April 19, 2010 it elected the optional early termination provision of the agreement to be effective May 15, 2010. The early termination provision of the interest rate swap agreement required no cash settlement to be paid to the Company. Due to the mark-to-market change in the value of the interest rate swap, based on Level 2 inputs, the Company recorded income of approximately $0.1 million during the three months ended March 31, 2010 as a change in fair value of derivatives in the consolidated statement of operations.

The Company's other financial instruments consist primarily of cash and cash equivalents, trade receivables, trade payables and debt instruments. The book values of cash and cash equivalents, trade receivables and trade payables are considered to be representative of their respective fair values due to the short-term nature of these instruments. In addition, the carrying values of the Company's floating-rate debt instruments are deemed to approximate their respective fair values as they carry interest rates that adjust with underlying market rates. The Company had $150.0 million of fixed-rate debt instruments as of March 31, 2011 and December 31, 2010, with fair values of approximately $149.3 million and $142.2 million,

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

9. Fair Value of Financial Instruments — (Continued)

respectively, based on Level 2 inputs. The fair value of long-term debt was estimated based on quoted market prices for these or similar issues or on the current rates offered to the Company for debt of the same remaining maturities.

No interest was capitalized in the financial statements for any period presented.

10. Stock-Based Compensation —

All share-based payments to employees, including grants of employee stock options, are measured at their grant date calculated value, and expensed in the Consolidated Statements of Operations over the service period (generally the vesting period) of the grant. The Company uses a calculated value to measure the compensation expense for share-based awards made to employees, as it has determined that it is impracticable to determine the expected volatility of its share price. Instead, the Company uses an industry measure of volatility in calculating this value. The Company recognizes expense for all stock-based compensation with graded vesting on a straight-line basis over the vesting period of the entire award.

The value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model and there have been no changes from the methodology disclosed in the Company's consolidated financial statements for the year ended December 31, 2010.

The following table summarizes stock option activity for the Company as of March 31, 2011:



	Shares		Range of Exercise Price	Weighted Average Exercise Price
Outstanding and exercisable at December 31, 2010		459,160	$2.32 - $22.99	$	8.76
Forfeited options reissued		30,000	$18.50	$	18.50

Outstanding and exercisable at March 31, 2011		489,160	$2.32 - $22.99	$	9.36

All outstanding stock options are held by employees and former employees of the Company and have an expiration date of 10 years from the date of grant. At March 31, 2011, the average remaining contractual life of options outstanding and exercisable was 4.8 years.

The Company recognized less than $0.1 million of stock-based compensation expense for the three-month periods ended March 31, 2011 and 2010. No such expense was recorded in the corresponding period in 2010.

11. Income Taxes —

The Company's provision for income taxes is recorded at the estimated annual effective tax rates for each tax jurisdiction based on fiscal year to date results. The Company's effective tax rates were (12.8)% and (0.4)%, for the three months ended March 31, 2011 and 2010, respectively. The difference in the effective tax rate compared with the U.S. federal statutory rate is due to the mix of the international jurisdictional rates and the changes in the valuation allowance.

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

11. Income Taxes — (Continued)

On January 1, 2007, the Company adopted the guidance within ASC 740-10, "Income Taxes," related to the threshold for recognizing the benefits of tax provisions. ASC 740-10 defines the threshold for recognizing the benefits of tax provisions in the financial statements as "more likely than not" to be sustained upon examination by the taxing authority. If the recognition threshold is met, the tax benefit is generally measured and recognized as the tax benefit having the highest likelihood, in our judgment, of being realized upon ultimate settlement with the taxing authority, assuming full knowledge of the position and all relevant facts. The Company believes there are no uncertain tax positions requiring recognition in the financial statements. The Company files income tax returns in the U.S. federal jurisdiction, and various state and international jurisdictions. As of March 31, 2011, the 2007-2010 U.S. federal income tax returns remain open to examination. In addition, open tax years for state and international jurisdictions remain subject to examination.

The Company may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to the financial results. In the event the Company has received an assessment for interest and/or penalties, it has been classified in the consolidated statements of operations as "other (income), net".

12. Concentration of credit and other risks —

Accounts receivable, as financial instruments, could potentially subject the Company to concentrations of credit risk. The Company continuously evaluates the creditworthiness of its customers and may require customers to provide letters of credit to guarantee payments. One customer accounted for 14% of sales during the three months ended March 31, 2011, and one customer accounted for 11% of sales during 2010.

The Company currently purchases its raw material, mainly polyethylene resins from at least two significant suppliers at each location. Polyethylene resins are occasionally in short supply and are subject to substantial price fluctuation in response to market demand. The Company has not encountered any significant prolonged difficulty to date in obtaining raw materials in sufficient quantities to support its operations at current or expected near-term future levels. However, any disruption in raw material supply or abrupt increases in raw material prices could have an adverse effect upon the Company's operations.

13. Commitments and Contingencies —

Bonding — Bank Guarantees —

In certain direct sales, installation contracting and raw material acquisition situations, the Company is required to post performance bonds or bank guarantees as part of the contractual guarantee for its performance. The performance bonds or bank guarantees can be in the full amount of the contracts. To date the Company has not received any claims against any of the posted securities, most of which terminate at the final completion date of the contracts. As of March 31, 2011, the Company had $6.4 million of bonds outstanding and $5.7 million of guarantees issued under its bank lines.

Litigation and claims —

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

13. Commitments and Contingencies — (Continued)

we believe it is not reasonably possible that resolution of these legal actions will, individually or in the aggregate, have a material adverse effect on our financial condition or results of operations.

14. Related Party Transaction —

Management Agreement with CHS Management IV LP

In connection with the Merger, the Company entered into a management agreement with GEO Holdings and CHS Management IV LP ("CHS Management") a limited partnership (1) of which CHS is the general partner and (2) which is the general partner of CHS IV. Pursuant to the management agreement, CHS Management provides certain financial and management consulting services to GEO Holdings and to the Company. In consideration of those services the Company pays fees to CHS Management in an aggregate annual amount of $2.0 million payable in equal monthly installments. The Company also agreed to reimburse CHS Management for its reasonable travel and other out-of-pocket expenses. The Company also provides customary indemnification to CHS Management. Under the Management Agreement, GEO Holdings will pay CHS Management a fee equal to 5% of any additional proceeds of GEO Holdings' capital stock purchased from time to time by CHS Management or its affiliates. The management fee is subordinated to the prior payment in full of principal, interest and premium due and owing under its credit facility and the indenture governing the senior notes, but the Company may pay the management fee at all times except during certain events of default under its credit facility or under the indenture governing the senior notes. In the event any portion of the management fee is not so paid, such amount will accrue and become due and payable in the next month when payment is permitted. Under this agreement the Company paid CHS $0.5 million during the three months ended March 31, 2011 and 2010, respectively. The amounts paid to CHS are included in selling, general and administrative expenses in the Consolidated Statements of Operations. As of March 31, 2011 and December 31, 2010, there were no amounts payable to CHS under this agreement.

15. Net Loss per Share —

The Company recorded a net loss in each of the three month periods ended March 31, 2011 and 2010. Potential common shares are anti-dilutive in periods in which the Company records a net loss because they would reduce the respective period's net loss per share. Anti-dilutive potential common shares are excluded from the calculation of diluted earnings per share. As a result, net diluted loss per share was equal to basic net loss per share in the three month periods ended March 31, 2011 and 2010. There were approximately 489,160 and 512,020 stock options outstanding, at March 31, 2011 and 2010, respectively, of which 333,600 had exercise prices lower than the average price of Company common shares as of each of those dates. These in-the-money options would have been included in the calculation of diluted earnings per share had the Company not reported a net loss in each of the respective periods.

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

15. Net Loss per Share — (Continued)

The basic and diluted net income (loss) per share calculations are presented below (in thousands, except for per share amounts):



		Three months ended March 31,
		2011			2010
Net (loss) income attributable to Company common stockholders:
	From continuing operations	$	(1,117	)	$	(8,545	)
	From discontinued operations		386			(4,129	)

		$	(731	)	$	(12,674	)

Common share information:
	Weighted-average common shares outstanding — basic		2,985			2,985
	Dilutive effect of employee stock options		—			—

	Weighted-average common shares outstanding — dilutive		2,985			2,985

Basic and diluted net (loss) income per common share:
	Continuing operations	$	(0.37	)	$	(2.86	)
	Discontinued operations		0.13			(1.38	)

		$	(0.24	)	$	(4.24	)

16. Segment Information —

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

16. Segment Information — (Continued)

The following table presents information about the results from continuing operations of the Company's reportable segments:



		Three months ended March 31, 2011									Three months ended March 31, 2010
		N. America			International			Total			N. America			International			Total
		(in thousands)
Sales to external customers		$	43,418		$	45,044		$	88,462		$	21,288		$	34,635		$	55,923
Intersegment sales			2,138			5,000			7,138			6,988			2,048			9,036

	Total segment sales		45,556			50,044			95,600			28,276			36,683			64,959
Segment Gross profit			10,348			4,106			14,454			2,404			455			2,859
Segment Gross margin			22.7	%		8.2	%		15.1	%		8.5	%		1.2	%		4.4	%
Adjusted EBITDA		$	7,276		$	2,499		$	9,775		$	(263	)	$	(27	)	$	(290	)

The following tables reconcile the segment information presented above to the consolidated financial information.



		Reconciliation to Consolidated Sales
		Three months ended March 31, 2011			Three months ended March 31, 2010
		(in thousands)
Total segment sales		$	95,600		$	64,959
Intersegment sales			(7,138	)		(9,036	)

	Consolidated sales	$	88,462		$	55,923

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

16. Segment Information — (Continued)

	Reconciliation to Net Loss

	Three months ended March 31, 2011			Three months ended March 31, 2010
	(in thousands)
Adjusted EBITDA	$	9,775		$	(290	)
(Income) loss from discontinued operations		386			(4,129	)
Interest expense, net of swap		(4,841	)		(4,395	)
Income tax expense (benefit)		(127	)		(37	)
Depreciation and amortization expense		(3,045	)		(3,181	)
Change in fair value of derivatives		—			65
Foreign currency transaction loss (gain)		(1,290	)		970
Restructuring expense		(355	)		(268	)
Professional fees		(651	)		(894	)
Stock-based compensation expense		(75	)		(14	)
Management fees		(500	)		(501	)
Other		(8	)		—

Net loss attributable to GSE Holding, Inc.	$	(731	)	$	(12,674	)

The Company's assets by reportable segment as of March 31, 2011 did not change significantly from amounts presented in the Segment Information footnote to its December 31, 2010 audited financial statements.

17. Comprehensive (Loss) Income —



	Three Months Ended March 31,
	2011			2010
	(in thousands)
Net loss	$	(731	)	$	(12,674	)
Foreign currency translation adjustment		3,113			(3,477	)

Comprehensive income (loss)	$	2,382		$	(16,151	)

18. Subsequent Events —

On May 27, 2011, the Company refinanced its $150 million 11 percent senior notes, as well as $27 million in borrowings under our existing revolving credit facility, with a portion of the proceeds from two new senior secured credit facilities. See Note 8, Long-Term Debt, for a discussion of these refinanced borrowing arrangements. These new facilities consist of (1) a five-year $160 million facility, which includes a $135 million term loan commitment and a $25 million revolving loan commitment, and (2) a five-year $40 million facility in the form of a term loan. Borrowings under each of these new facilities bears interest at a floating rate based on LIBOR. At May 27, 2011, the Company had $185 million in outstanding

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GSE HOLDING, INC.

Notes to Condensed Consolidated Financial Statements (Continued)

18. Subsequent Events — (Continued)

borrowings under these new facilities, consisting of $175 million in term loans and $10 million in revolving loans at a weighted average interest rate of 9.48%.

In April 2011, the Company entered into a settlement agreement to jointly dismiss a lawsuit, which related to a dispute over certain warranty claims. As part of that settlement the Company agreed to pay the counterparty approximately $0.7 million and the counterparty forgave the $0.4 million remaining balance of a note payable plus accrued interest.

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GSE Holding Inc.
Schedule of Valuation and Qualifying Accounts

(in thousands)

	Balance at Beginning of Year		Additions		Deductions			Balance at End of Year

Allowance for Doubtful Accounts (Accounts Receivable):
Year ended December 31, 2008	$	2,369	$	459	$	(68	)	$	2,760
Year ended December 31, 2009		2,760		1,999		(1,104	)		3,655
Year ended December 31, 2010	$	3,655	$	108	$	(1,831	)	$	1,932
Obsolescence and Slow Moving Allowance (Inventory):
Year ended December 31, 2008	$	2,186	$	—	$	—		$	2,186
Year ended December 31, 2009		2,186		1,980		(31	)		4,135
Year ended December 31, 2010	$	4,135	$	—	$	(1,678	)	$	2,457
Valuation Allowance (Deferred Tax Assets):
Year ended December 31, 2008	$	8,632	$	4,548	$	—		$	13,180
Year ended December 31, 2009		13,180		—		(595	)		12,585
Year ended December 31, 2010	$	12,585	$	4,624	$	—		$	17,209

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Shares

GSE Holding, Inc.

Common Stock

PROSPECTUS

Jefferies
Oppenheimer & Co.

, 2011

Table of Contents

Part II

Information not required in prospectus

Item 13. Other expenses of issuance and distribution.

The following table sets forth all costs and expenses, other than the underwriting discounts and commissions payable by us, in connection with the offer and sale of the securities being registered. All amounts shown are estimates except for the SEC registration fee and the Financial Industry Regulatory Authority, Inc., or FINRA, filing fee.


SEC registration fee		$
FINRA filing fee
NYSE listing fee
Printing expenses
Legal fees and expenses
Accounting fees and expenses
Miscellaneous expenses

	Total expenses	$

Item 14. Indemnification of directors and officers.

Section 102(b)(7) of the DGCL allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our certificate of incorporation provides for this limitation of liability.

Section 145 of the DGCL, or Section 145, provides that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. A Delaware corporation may indemnify any persons who are, were or are threatened to be made, party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred.

Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any

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liability asserted against him and incurred by him in any such capacity, or arising out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145.

Our bylaws will provide that we must indemnify our directors and officers to the fullest extent authorized by the DGCL and must also pay expenses incurred in defending any such proceeding in advance of its final disposition upon delivery of an undertaking, by or on behalf of an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified.

We intend to enter into indemnification agreements with each of our current directors and executive officers. These agreements will require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.

The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our certificate of incorporation, our bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

We expect to maintain standard policies of insurance that provide coverage (1) to our directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act and (2) to us with respect to indemnification payments that we may make to such directors and officers.

The proposed form of Underwriting Agreement to be filed as Exhibit 1.1 to this Registration Statement provides for indemnification of our directors and officers by the underwriters against certain liabilities.

Item 15. Recent sales of unregistered securities.

Set forth below is information regarding shares of our common stock issued, and stock options granted, by us within the past three years that were not registered under the Securities Act. Also included is the consideration, if any, received by us for such shares or equity awards and information relating to the section of the Securities Act, or rule of the SEC, under which exemption from registration was claimed.

Under our 2004 Stock Option Plan, we made the following option grants: 107,682 in 2008, 31,700 in 2009 and 42,000 in 2010. We did not grant any stock options outside of our 2004 Stock Option Plan during the past three years.

We have also entered into sale bonus letter agreements with certain employees, providing for a one-time payment of approximately two percent of our outstanding shares upon consummation of this offering.

The offers, sales and issuances of the securities described above were deemed to be exempt from registration under the Securities Act in reliance upon Rule 701 of the Securities Act or Section 4(2) of the Securities Act. The offers, sales and issuances of the securities that were deemed to be exempt in reliance on Rule 701 were transactions under compensatory benefit plans and contracts relating to compensation as provided under Rule 701. The offers, sales and issuances of the securities that were deemed to be exempt in reliance upon Section 4(2) were each transactions not involving any public offering, and all recipients of these securities were accredited investors within the meaning of Rule 501 of Regulation D of the Securities Act. The recipients of the foregoing securities were our associates, directors or bona fide consultants and received the securities under our 2004 Plan. Appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions had adequate access, through employment, business or other relationships, to information about us.

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Item 16. Exhibits and financial statement schedules.

The exhibit index attached hereto is incorporated herein by reference.

Item 17. Undertakings.

(a)

The undersigned registrant hereby undertakes that:

(1): To provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser;
(2): For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective; and
(3): For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(b)

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

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Signatures

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Houston, Texas on July 11, 2011.


		GSE Holding, Inc.
		By:		/s/ MARK C. ARNOLD
		Name:		Mark C. Arnold
		Title:		President and Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each officer and director of GSE Holding, Inc. whose signature appears below constitutes and appoints Mark C. Arnold and Charles B. Lowrey, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and revocation, for him or her and in his or her name, place and stead, in any and all capacities, to execute any or all amendments including any post-effective amendments and supplements to this Registration Statement, and any additional Registration Statement filed pursuant to Rule 462(b), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities indicated on July 11, 2011.

Signature		Title

/s/ MARK C. ARNOLD Mark C. Arnold		President, Chief Executive Officer and Director (Principal Executive Officer)
/s/ CHARLES B. LOWREY Charles B. Lowrey		Interim Senior Vice President and Chief Financial Officer (Principal Financial Officer)
/s/ GREGG TAYLOR Gregg Taylor		Chief Accounting Officer (Principal Accounting Officer)
/s/ DANIEL J. HENNESSY Daniel J. Hennessy		Director and Chairman of the Board
/s/ MICHAEL G. EVANS Michael G. Evans		Director

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/s/ MARCUS J. GEORGE Marcus J. George		Director
/s/ RICHARD E. GOODRICH Richard E. Goodrich		Director
/s/ ROBERT C. GRIFFIN Robert C. Griffin		Director
/s/ CHARLES A. SORRENTINO Charles A. Sorrentino		Director

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EXHIBIT INDEX

Exhibit Number			Description

	1.1		Form of Underwriting Agreement*
	3.1		Amended and Restated Certificate of Incorporation of GSE Holding, Inc. (f/k/a GEO Holdings Corp.)
	3.2		Amended and Restated Bylaws of GSE Holding, Inc. (f/k/a GEO Holdings Corp.)
	3.3		Form of Amended and Restated Certificate of Incorporation of GSE Holding, Inc. (to become effective immediately prior to consummation of this offering)*
	3.4		Form of Amended and Restated Bylaws of GSE Holding, Inc. (to become effective immediately prior to consummation of this offering)*
	4.1		Specimen Common Stock Certificate*
	5.1		Opinion of Kirkland & Ellis LLP*
	10.1		Stockholders Agreement, dated May 18, 2004, as amended May 2, 2006, by and among GSE Holding, Inc. (f/k/a GEO Holdings Corp.), Code Hennessy & Simmons IV LP, CHS Associates IV and the stockholders party thereto
	10.2		Registration Agreement, dated May 18, 2004, as amended May 2, 2006, by and among GSE Holding, Inc. (f/k/a GEO Holdings Corp.), Code Hennessy & Simmons IV LP, CHS Associates IV and the stockholders party thereto
	10.3		Management Agreement, dated as of May 18, 2004, as amended May 27, 2011, by and among CHS Management IV LP, GSE Holding, Inc. (f/k/a GEO Holdings Corp.) and Gundle/SLT Environmental, Inc.
	10.4		First Lien Credit Agreement, dated as of May 27, 2011, by and among Gundle/SLT Environmental, Inc., General Electric Capital Corporation and the other credit parties thereto*
	10.5		First Lien Guaranty and Security Agreement, dated as of May 27, 2011 by and among Gundle/SLT Environmental, Inc., the other grantors party thereto and General Electric Capital Corporation
	10.6		Second Lien Credit Agreement, dated as of May 27, 2011, by and among Gundle/SLT Environmental, Inc., Jefferies Finance LLC and the other credit parties thereto*
	10.7		Second Lien Guaranty and Security Agreement, dated as of May 27, 2011, by and among Gundle/SLT Environmental, Inc., the other grantors party thereto and Jefferies Finance LLC
	10.8		Intercompany Subordination Agreement (First Lien), dated as of May 27, 2011, by and among GSE Holding, Inc. (f/k/a GEO Holdings Corp.), Gundle/SLT Environmental, Inc., the other parties thereto and General Electric Capital Corporation
	10.9		Intercompany Subordination Agreement (Second Lien), dated as of May 27, 2011, by and among GSE Holding, Inc. (f/k/a GEO Holdings Corp.), Gundle/SLT Environmental, Inc., the other parties thereto and Jefferies Finance LLC
	10.10		Intercreditor Agreement, dated as of May 27, 2011, by and among Gundle/SLT Environmental, Inc., the other grantors party thereto, General Electric Capital Corporation and Jefferies Finance LLC
	10.11		GSE Holding, Inc. (f/k/a GEO Holdings Corp.) 2004 Stock Option Plan
	10.12		Form of Stock Option Agreement pursuant to the GSE Holding, Inc. 2004 Stock Option Plan

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Exhibit Number			Description

	10.13		Grant of Nonqualified Stock Option, dated September 14, 2009, by and between Mark C. Arnold and GSE Holding, Inc.
	10.14		GSE 2011 Omnibus Incentive Compensation Plan*
	10.15		Form of Sale Bonus Award
	10.16		GSE Holding, Inc. (f/k/a GEO Holdings Corp.) Form of Director and Officer Indemnification Agreement*
	10.17		Executive Employment Agreement, dated September 14, 2009, by and between Mark C. Arnold and Gundle/SLT Environmental, Inc.
	10.18		Amended and Restated Executive Employment Agreement, dated March 4, 2010, by and between Mark C. Arnold and Gundle/SLT Environmental, Inc.
	10.19		Executive Employment Agreement, dated May 18, 2004, by and between Ernest C. English and GSE Lining Technology, Inc.
	10.20		Change of Control & Retention Agreement by and between Jeffery D. Nigh and GSE Lining Technology, LLC
	10.21		Change of Control & Retention Agreement, effective as of July 1, 2010, by and between Peter R. McCourt and GSE Lining Technology, LLC
	10.22		Change of Control & Retention Agreement, effective as of December 27, 2010, by and between GSE Lining Technology, LLC and Joellyn Champagne
	10.23		Offer Letter, dated April 16, 2010, by and between Gregg Taylor and GSE Lining Technology, LLC
	10.24		Offer Letter, dated August 12, 2010, by and between Ronald B. Crowell and GSE Lining Technology, LLC
	10.25		Offer Letter, dated July 13, 2009, by and between Mark C. Arnold and Gundle/SLT Environmental, Inc.
	10.26		Offer Letter, dated August 30, 2010, by and between Jeffery D. Nigh and GSE Lining Technology, LLC
	10.27		Offer Letter, dated May 28, 2010, by and between Peter McCourt and GSE Lining Technology, LLC
	10.28		Offer Letter, dated December 22, 2010, by and between Joellyn Champagne and GSE Lining Technology, LLC
	10.29		Intellectual Property and Confidentiality Agreement, dated January 17, 2011, by and between GSE Lining Technology, LLC and Joellyn Champagne
	10.30		Separation and Release Agreement, dated February 23, 2011, by and between Ronald B. Crowell and GSE Lining Technology, LLC
	21.1		List of subsidiaries
	23.1		Consent of Kirkland & Ellis LLP (included in Exhibit 5.1)
	23.2		Consent of BDO USA, LLP, independent registered public accounting firm
	23.3		Consent of Alvarez & Marsal Private Equity Performance Improvement Group, LLC
	24.1		Powers of Attorney (included on signature page)

*: To be filed by amendment.

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EX-3.1 2 a2204569zex-3_1.htm EX-3.1

Exhibit 3.1

CERTIFICATE OF

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION

GEO HOLDINGS CORP.

* * * * *

Daniel J Hennessy, being the President of GEO Holdings Corp., a corporation duly organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), DOES HEREBY CERTIFY as follows:

FIRST: The Corporation filed its original Certificate of Incorporation with the Delaware Secretary of State on December 24, 2003 (the “Certificate of Incorporation”) under the name of GEO Holdings Corp.

SECOND: The Amended and Restated Certificate of Incorporation restates and integrates and further amends the Certificate of Incorporation of this Corporation.

THIRD: That the Board of Directors of the Corporation, pursuant to a unanimous written consent, adopted resolutions authorizing the Corporation to amend, integrate and restate the Certificate of Incorporation in its entirety to read as set forth in Exhibit A attached hereto and made a part hereof (the “Restated Certificate”).

FOURTH: That the stockholders of the Corporation, pursuant to written consent, approved and adopted the Restated Certificate in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.

* * * * *

IN WITNESS WHEREOF, the undersigned, being the President hereinabove named, for the purpose of restating and integrating and further amending the Certificate of Incorporation pursuant to the General Corporation Law of the State of Delaware, under penalty of perjury does hereby declare and certify that this is the act and deed of the Corporation and the facts stated herein are true, and accordingly has hereunto signed this Certificate of Amended and Restated Certificate of Incorporation this 17th day of May, 2004.

	GEO HOLDINGS CORP.
	a Delaware corporation


	By:	/s/ Daniel J Hennessy
		Daniel J Hennessy, President

Exhibit A

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

GEO HOLDINGS CORP.

ARTICLE ONE

The name of the Corporation is GEO Holdings Corp.

ARTICLE TWO

The address of the Corporation’s registered office in the State of Delaware is 9 East Loockerman Street, Suite 1B, in the City of Dover, County of Kent, 19901. The name of its registered agent at such address is National Registered Agents, Inc.

ARTICLE THREE

The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

ARTICLE FOUR

Section 1. Authorized Shares.

The total number of shares of stock which the corporation has authority to issue is 3,700,000 shares of Common Stock, with a par value of $.01 per share.

Section 2. Voting Rights.

Except as otherwise required by applicable law, each holder of Common Stock shall be entitled to one vote for each share of Common Stock held by such holder on all matters to be voted on by the Corporation’s stockholders.

Section 3. Dividends.

As and when dividends are declared or paid with respect to shares of Common Stock, whether in cash, property or securities of the Corporation, the holders of Common Stock shall be entitled to receive such dividends pro rata at the same rate per share.

Section 4. Liquidation Rights.

Upon any liquidation, dissolution or winding up of the Corporation (whether voluntary or involuntary), the assets of the Corporation available for distribution to stockholders

shall be distributed among the holders of Common Stock pro rata according to the number of shares of Common Stock held by each such holder.

ARTICLE FIVE

The Corporation is to have perpetual existence.

ARTICLE SIX

Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.

ARTICLE SEVEN

The number of directors which constitutes the entire Board of Directors of the Corporation shall be designated in the Bylaws of the Corporation.

ARTICLE EIGHT

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation.

ARTICLE NINE

To the fullest extent permitted by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended, a director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. The Corporation shall, to the fullest extent permitted by the provisions of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, indemnify each and every present and former director and officer from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors, and administrators of such person. The Corporation may, to the extent authorized from time to time by the Corporation’s board of directors, grant indemnification rights to other employees or agents of the Corporation to the extent permitted by the provisions of the General Corporation Law of the State of Delaware. Any repeal or modification of this ARTICLE NINE shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

ARTICLE TEN

Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision

contained in the statutes) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.

ARTICLE ELEVEN

The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

ARTICLE TWELVE

The Corporation expressly elects not to be governed by Section 203 of the Delaware General Corporation Law.

* * * * *

EX-3.2 3 a2204569zex-3_2.htm EX-3.2

Exhibit 3.2

BY-LAWS

GEO HOLDINGS CORP.

A Delaware Corporation

ARTICLE I

OFFICES

Section 1. Registered Office. The registered office of the corporation in the State of Delaware shall be located at 1209 Orange Street, in the City of Wilmington, County of New Castle, 19801. The name of the corporation’s registered agent at such address shall be The Corporation Trust Company. The registered office and/or registered agent of the corporation may be changed from time to time by action of the board of directors.

Section 2. Other Offices. The corporation may also have offices at such other places, both within and without the State of Delaware, as the board of directors may from time to time determine or the business of the corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. Place and Time of Meetings. An annual meeting of the stockholders shall be held each year within one hundred twenty (120) days after the close of the immediately preceding fiscal year of the corporation for the purpose of electing directors and conducting such other proper business as may come before the meeting. The date, time and place of the annual meeting shall be determined by the president of the corporation; provided, that if the president does not act, the board of directors shall determine the date, time and place of such meeting.

Section 2. Special Meetings. Special meetings of stockholders may be called for any purpose and may be held at such time and place, within or without the State of Delaware, as shall be stated in a notice of meeting or in a duly executed waiver of notice thereof. Such meetings may be called at any time by the board of directors, the president or the holders of shares entitled to cast not less than a majority of the votes at the meeting.

Section 3. Place of Meetings. The board of directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting called by the board of directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal executive office of the corporation.

Section 4. Notice. Whenever stockholders are required or permitted to take action at a meeting, written or printed notice stating the place, date, time, and, in the case of special meetings, the purpose or purposes, of such meeting, shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting. All such notices shall be delivered, either personally or by mail, by or at the direction of the board of directors, the president or the secretary, and if mailed, such notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the stockholder at his, her or its address as the same appears on the records of the corporation. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

Section 5. Stockholders List. The officer having charge of the stock ledger of the corporation shall make, at least 10 days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at such meeting arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

Section 6. Quorum. The holders of a majority of the outstanding shares of capital stock entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders, except as otherwise provided by statute or by the certificate of incorporation. If a quorum is not present, the holders of a majority of the shares present in person or represented by proxy at the meeting, and entitled to vote at the meeting, may adjourn the meeting to another time and/or place, until a quorum shall be present.

Section 7. Adjourned Meetings. When a meeting is adjourned to another time and place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 8. Vote Required. When a quorum is present, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders, unless the question is one upon which by express provisions of an applicable law or of the certificate of incorporation a different vote is required, in which case such express provision shall govern and control the decision of such question.

Section 9. Voting Rights. Except as otherwise provided by the General Corporation Law of the State of Delaware or by the certificate of incorporation of the corporation or any

amendments thereto and subject to Section 3 of Article VI hereof, every stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of common stock held by such stockholder.

Section 10. Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him or her by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period.

Section 11. Action by Written Consent. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken and bearing the dates of signature of the stockholders who signed the consent or consents, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in the state of Delaware, or the corporation’s principal place of business, or an officer or agent of the corporation having custody of the book or books in which proceedings of meetings of the stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. All consents properly delivered in accordance with this Section shall be deemed to be recorded when so delivered. No written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered to the corporation as required by this section, written consents signed by the holders of a sufficient number of shares to take such corporate action are so recorded. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Any action taken pursuant to such written consent or consents of the stockholders shall have the same force and effect as if taken by the stockholders at a meeting thereof.

ARTICLE III

DIRECTORS

Section 1. General Powers. The business and affairs of the corporation shall be managed by or under the direction of the board of directors.

Section 2. Number, Election and Term of Office. The number of directors which shall constitute the first board shall be one (1). Thereafter, the number of directors shall be established from time to time by resolution of the board. The directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote in the election of directors. The directors shall be elected in this manner at the annual meeting of the stockholders, except as provided in Section 4 of this Article III. Each director elected shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.

Section 3. Removal and Resignation. Any director or the entire board of directors may be removed at any time, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. Whenever the holders of any class or series are entitled to elect one or more directors by the provisions of the corporation’s certificate of incorporation, the provisions of this section shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole. Any director may resign at any time upon written notice to the corporation.

Section 4. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director. Each director so chosen shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as herein provided.

Section 5. Annual Meetings. The annual meeting of each newly elected board of directors shall be held, without other notice than this by-law, immediately after and at the same place as, the annual meeting of stockholders.

Section 6. Other Meetings and Notice. Regular meetings, other than the annual meeting, of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by resolution of the board. Special meetings of the board of directors may be called by or at the request of the president on at least 24 hours notice to each director, either personally, by telephone, by mail, or by facsimile; in like manner and on like notice the president must call a special meeting on the written request of at least two of the directors.

Section 7. Quorum, Required Vote and Adjournment. A majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of directors present at a meeting at which a quorum is present shall be the act of the board of directors. If a quorum shall not be present at any meeting of the board of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 8. Committees. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation, which to the extent provided in such resolution or these by-laws shall have and may exercise the powers of the board of directors in the management and affairs of the corporation except as otherwise limited by law. The board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.

Section 9. Committee Rules. Each committee of the board of directors may fix its own rules of procedure and shall hold its meetings as provided by such rules, except as may

otherwise be provided by a resolution of the board of directors designating such committee. In the event that a member and that member’s alternate, if alternates are designated by the board of directors as provided in Section 8 of this Article III, of such committee is or are absent or disqualified, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in place of any such absent or disqualified member.

Section 10. Communications Equipment. Members of the board of directors or any committee thereof may participate in and act at any meeting of such board or committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in the meeting pursuant to this section shall constitute presence in person at the meeting.

Section 11. Waiver of Notice and Presumption of Assent. Any member of the board of directors or any committee thereof who is present at a meeting shall be conclusively presumed to have waived notice of such meeting except when such member attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Such member shall be conclusively presumed to have assented to any action taken unless his or her dissent shall be entered in the minutes of the meeting or unless his or her written dissent to such action shall be filed with the person acting as the secretary of the meeting before the adjournment thereof or shall be forwarded by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to any member who voted in favor of such action.

Section 12. Action by Written Consent. Unless otherwise restricted by the certificate of incorporation, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee.

ARTICLE IV

OFFICERS

Section 1. Number. The officers of the corporation shall be elected by the board of directors and shall consist of a chairman, if any is elected, a president/chief executive officer, a vice-president, if any is elected, a secretary, a treasurer, if any is elected, and such other officers and assistant officers as may be deemed necessary or desirable by the board of directors. Any number of offices may be held by the same person. In its discretion, the board of directors may choose not to fill any office for any period as it may deem advisable.

Section 2. Election and Term of Office. The officers of the corporation shall be elected annually by the board of directors at its first meeting held after each annual meeting of stockholders or as soon thereafter as such meeting may conveniently be held. Vacancies may be filled or new offices created and filled at any meeting of the board of directors. Each officer

shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.

Section 3. Removal. Any officer or agent elected by the board of directors may be removed by the board of directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

Section 4. Vacancies. Any vacancy occurring in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term by the board of directors then in office.

Section 5. Compensation. Compensation of all officers shall be fixed by the board of directors, and no officer shall be prevented from receiving such compensation by virtue of his or her also being a director of the corporation.

Section 6. Chairman of the Board. The chairman of the board shall be the chief executive officer of the corporation, and shall have the powers and perform the duties incident to that position. Subject to the powers of the board of directors, he or she shall be in the general and active charge of the entire business and affairs of the corporation, and shall be its chief policy making officer. He or she shall preside at all meetings of the board of directors and stockholders and shall have such other powers and perform such other duties as may be prescribed by the board of directors or provided in these by-laws. Whenever the president is unable to serve, by reason of sickness, absence or otherwise, the chairman of the board shall perform all the duties and responsibilities and exercise all the powers of the president.

Section 7. The President. The president shall, if no chairman is provided for, be the chief executive officer of the corporation; shall preside at all meetings of the stockholders and board of directors at which he or she is present; subject to the powers of the board of directors and the chairman, shall have general charge of the business, affairs and property of the corporation, and control over its officers, agents and employees; and shall see that all orders and resolutions of the board of directors are carried into effect. The president shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. The president shall have such other powers and perform such other duties as may be prescribed by the chairman or the board of directors or as may be provided in these by-laws.

Section 8. Vice-presidents. The vice-president, or if there shall be more than one, the vice-presidents in the order determined by the board of directors, shall, in the absence or disability of the president, act with all of the powers and be subject to all the restrictions of the president. The vice-presidents shall also perform such other duties and have such other powers as the board of directors the chairman, the president or these by-laws may, from time to time, prescribe.

Section 9. The Secretary and Assistant Secretaries. The secretary shall attend all meetings of the board of directors, all meetings of the committees thereof and all meetings of the stockholders and record all the proceedings of the meetings in a book or books to be kept for that purpose. Under the president’s supervision, the secretary shall give, or cause to be given, all notices required to be given by these by-laws or by law; shall have such powers and perform such duties as the board of directors, the chairman, the president or these by-laws may, from time to time, prescribe; and shall have custody of the corporate seal of the corporation. The secretary, or an assistant secretary, shall have authority to affix the corporate seal to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his or her signature. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors, the chairman, the president, or secretary may, from time to time, prescribe.

Section 10. The Treasurer and Assistant Treasurer. The treasurer shall have the custody of the corporate funds and securities; shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation; shall deposit all monies and other valuable effects in the name and to the credit of the corporation as may be ordered by the board of directors; shall cause the funds of the corporation to be disbursed when such disbursements have been duly authorized, taking proper vouchers for such disbursements; and shall render to the president and the board of directors, at its regular meeting or when the board of directors so requires, an account of the corporation; shall have such powers and perform such duties as the board of directors, the chairman, the president or these by-laws may, from time to time, prescribe. If required by the board of directors, the treasurer shall give the corporation a bond (which shall be rendered every six years) in such sums and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of the office of treasurer and for the restoration to the corporation, in case of death, resignation, retirement, or removal from office, of all books, papers, vouchers, money, and other property of whatever kind in the possession or under the control of the treasurer belonging to the corporation. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors, shall in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer. The assistant treasurers shall perform such other duties and have such other powers as the board of directors, the chairman, the president or treasurer may, from time to time, prescribe.

Section 11. Other Officers, Assistant Officers and Agents. Officers, assistant officers and agents, if any, other than those whose duties are provided for in these by-laws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the board of directors.

Section 12. Absence or Disability of Officers. In the case of the absence or disability of any officer of the corporation and of any person hereby authorized to act in such officer's place during such officer's absence or disability, the board of directors may by resolution

delegate the powers and duties of such officer to any other officer or to any director, or to any other person whom it may select.

ARTICLE V

INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

Section 1. Nature of Indemnity. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer, of the corporation or is or was serving at the request of the corporation as a director, officer, employee, fiduciary, or agent of another corporation or of a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless by the corporation to the fullest extent which it is empowered to do so by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended against all expense, liability and loss (including attorneys’ fees actually and reasonably incurred by such person in connection with such proceeding) and such indemnification shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in Section 2 hereof, the corporation shall indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the board of directors of the corporation. The corporation may, by action of its board of directors, provide indemnification to employees and agents of the corporation with the same scope and effect as the foregoing indemnification of directors and officers.

Section 2. Procedure for Indemnification of Directors and Officers. Any indemnification of a director or officer of the corporation under Section 1 of this Article V or advance of expenses under Section 5 of this Article V shall be made promptly, and in any event within 30 days, upon the written request of the director or officer. If a determination by the corporation that the director or officer is entitled to indemnification pursuant to this Article V is required, and the corporation fails to respond within sixty days to a written request for indemnity, the corporation shall be deemed to have approved the request. If the corporation denies a written request for indemnification or advancing of expenses, in whole or in part, or if payment in full pursuant to such request is not made within 30 days, the right to indemnification or advances as granted by this Article V shall be enforceable by the director or officer in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the General Corporation Law of the State of Delaware for the corporation to indemnify the claimant for the amount claimed, but the burden of such defense shall be on the corporation. Neither the failure of the corporation (including its board of directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State

of Delaware, nor an actual determination by the corporation (including its board of directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

Section 3. Article Not Exclusive. The rights to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article V shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the certificate of incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise.

Section 4. Insurance. The corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was a director, officer, employee, fiduciary, or agent of the corporation or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, whether or not the corporation would have the power to indemnify such person against such liability under this Article V.

Section 5. Expenses. Expenses incurred by any person described in Section 1 of this Article V in defending a proceeding shall be paid by the corporation in advance of such proceeding’s final disposition unless otherwise determined by the board of directors in the specific case upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate.

Section 6. Employees and Agents. Persons who are not covered by the foregoing provisions of this Article V and who are or were employees or agents of the corporation, or who are or were serving at the request of the corporation as employees or agents of another corporation, partnership, joint venture, trust or other enterprise, may be indemnified to the extent authorized at any time or from time to time by the board of directors.

Section 7. Contract Rights. The provisions of this Article V shall be deemed to be a contract right between the corporation and each director or officer who serves in any such capacity at any time while this Article V and the relevant provisions of the General Corporation Law of the State of Delaware or other applicable law are in effect, and any repeal or modification of this Article V or any such law shall not affect any rights or obligations then existing with respect to any state of facts or proceeding then existing.

Section 8. Merger or Consolidation. For purposes of this Article V, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation,

partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article V with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.

ARTICLE VI

CERTIFICATES OF STOCK

Section 1. Form. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by the chairman, president or a vice-president and the secretary or an assistant secretary of the corporation, certifying the number of shares owned by such holder in the corporation. If such a certificate is countersigned (1) by a transfer agent or an assistant transfer agent other than the corporation or its employee or (2) by a registrar, other than the corporation or its employee, the signature of any such chairman, president, vice-president, secretary, or assistant secretary may be facsimiles. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on, any such certificate or certificates shall cease to be such officer or officers of the corporation whether because of death, resignation or otherwise before such certificate or certificates have been delivered by the corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer or officers of the corporation. All certificates for shares shall be consecutively numbered or otherwise identified. The name of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the books of the corporation. Shares of stock of the corporation shall only be transferred on the books of the corporation by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the corporation of the certificate or certificates for such shares endorsed by the appropriate person or persons, with such evidence of the authenticity of such endorsement, transfer, authorization, and other matters as the corporation may reasonably require, and accompanied by all necessary stock transfer stamps. In that event, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate or certificates, and record the transaction on its books. The board of directors may appoint a bank or trust company organized under the laws of the United States or any state thereof to act as its transfer agent or registrar, or both in connection with the transfer of any class or series of securities of the corporation.

Section 2. Lost Certificates. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates previously issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his or her legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against the corporation on account of the loss, theft or destruction of any such certificate or the issuance of such new certificate.

Section 3. Fixing a Record Date for Stockholder Meetings. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

Section 4. Fixing a Record Date for Action by Written Consent. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors. If no record date has been fixed by the board of directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by statute, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the board of directors and prior action by the board of directors is required by statute, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the board of directors adopts the resolution taking such prior action.

Section 5. Fixing a Record Date for Other Purposes. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purposes of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.

Section 6. Registered Stockholders. Prior to the surrender to the corporation of the certificate or certificates for a share or shares of stock with a request to record the transfer of such share or shares, the corporation may treat the registered owner as the person entitled to receive dividends, to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner.

Section 7. Subscriptions for Stock. Unless otherwise provided for in the subscription agreement, subscriptions for shares shall be paid in full at such time, or in such installments and at such times, as shall be determined by the board of directors. Any call made by the board of directors for payment on subscriptions shall be uniform as to all shares of the same class or as to all shares of the same series. In case of default in the payment of any installment or call when such payment is due, the corporation may proceed to collect the amount due in the same manner as any debt due the corporation.

ARTICLE VII

GENERAL PROVISIONS

Section 1. Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or any other purpose and the directors may modify or abolish any such reserve in the manner in which it was created.

Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders for the payment of money by or to the corporation and all notes and other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner, as shall be determined by resolution of the board of directors or a duly authorized committee thereof.

Section 3. Contracts. The board of directors may authorize any officer or officers, or any agent or agents, of the corporation to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.

Section 4. Loans. The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in this section contained shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.

Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the board of directors.

Section 6. Corporate Seal. The board of directors shall provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the corporation and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 7. Voting Securities Owned By Corporation. Voting securities in any other corporation held by the corporation shall be voted by the president, unless the board of directors specifically confers authority to vote with respect thereto, which authority may be general or confined to specific instances, upon some other person or officer. Any person authorized to vote securities shall have the power to appoint proxies, with general power of substitution.

Section 8. Inspection of Books and Records. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean any purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in the State of Delaware or at its principal place of business.

Section 9. Section Headings. Section headings in these by-laws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

Section 10. Inconsistent Provisions. In the event that any provision of these by-laws is or becomes inconsistent with any provision of the certificate of incorporation, the General Corporation Law of the State of Delaware or any other applicable law, the provision of these by-laws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.

ARTICLE VIII

AMENDMENTS

These by-laws may be amended, altered, or repealed and new by-laws adopted at any meeting of the board of directors by a majority vote. The fact that the power to adopt, amend, alter, or repeal the by-laws has been conferred upon the board of directors shall not divest the stockholders of the same powers.

EX-10.1 4 a2204569zex-10_1.htm EX-10.1

Exhibit 10.1

STOCKHOLDERS AGREEMENT

THIS STOCKHOLDERS AGREEMENT (this “Agreement”) is made as of May 18, 2004, by and among GEO Holdings Corp., a Delaware corporation (the “Company”), Code Hennessy & Simmons IV LP, a Delaware limited partnership (“CHS”), CHS Associates IV (“CHS Associates”) and each of the other Persons who is not a member of the CHS Group (as defined below) listed on the signature pages attached hereto or who otherwise hereafter becomes a party to this Agreement by executing the Joinder attached as Exhibit A (each a “Minority Stockholder”). Members of the CHS Group and the Minority Stockholders are collectively referred to herein as the “Stockholders,” and are individually referred to herein as a “Stockholder.” Otherwise undefined capitalized terms used herein are defined in Section 8 hereof.

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

1. Board of Directors.

(a) From and after the date hereof and until the provisions of this Section 1 cease to be effective, each Stockholder shall vote all of his, her or its Stockholder Shares entitled to vote thereon and any other voting securities of the Company over which such Stockholder has voting control and shall take all other reasonable or necessary actions within his, her or its control (whether in his, her or its capacity as a stockholder, director, member of a board committee or officer of the Company or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and the Company shall take all necessary and desirable actions within its control (including, without limitation, calling special board and stockholder meetings), so that:

(i) the authorized number of directors on the Company’s board of directors (the “Board”) shall be established at four or such other number as CHS shall determine from time to time;

(ii) three representatives (or such greater number of representatives that would constitute not less than a majority of the directors on the Board) as are designated by CHS from time to time shall be elected to the Board (the “CHS Directors”);

(iii) the individual serving as the chief executive officer of the Company from time to time shall be elected to the Board (the “Executive Director”);

(iv) the composition of the board of directors of each of the Company’s subsidiaries (a “Sub Board”) shall be as determined by the Board;

(v) the removal from the Board or a Sub Board (with or without cause) of any CHS Director shall be only upon the written request of CHS;

(vi) if the Executive Director ceases to be the chief executive officer of the Company for any reason, such individual shall be removed as a director promptly after such cessation; and

(vii) in the event that any representative designated by CHS hereunder for any reason ceases to serve as a member of the Board or a Sub Board during his term of office, the resulting vacancy on the Board or the Sub Board shall be filled by a representative designated by CHS.

(b) The Company shall pay all reasonable out-of-pocket expenses incurred by each director in connection with attending regular and special meetings of the Board, any Sub Board and any committee thereof.

(c) If any party fails to designate a representative to fill a directorship pursuant to the terms of this Section 1, the election of a person to such directorship shall be accomplished in accordance with the Company’s bylaws and applicable law.

2. Restrictions on Transfer of Stockholder Shares.

(a) Transfer of Stockholder Shares. No Minority Stockholder shall sell, transfer, assign, pledge or otherwise dispose of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) (a “Transfer”) any interest in such Minority Stockholder’s Stockholder Shares without the prior written consent of the Company, except pursuant to (A) the provisions of Section 2(c) or 2(d) below, (B) a Public Sale, (C) an Employee Repurchase Event, (D) an Approved Sale (each of (A), (B), (C) and (D) an “Exempt Transfer”), or (E) the provisions of Section 2(b) below.

(b) First Refusal Rights.

(i) In the event that a Minority Stockholder proposes to Transfer any Stockholder Shares (except pursuant to an Exempt Transfer), such Minority Stockholder (a “Selling Minority Stockholder”) shall deliver written notice (an “Offer Notice”) to the Company and to CHS. The Offer Notice will disclose in reasonable detail the identity of the prospective transferee(s), the number and class of such Stockholder Shares to be transferred, and the terms and conditions of the proposed Transfer. The Selling Minority Stockholder shall not consummate any Transfer until 35 days after the Offer Notice has been given to the Company and CHS, unless the parties to the Transfer have been finally determined pursuant to this Section 2(b) before the expiration of such 35-day period. The date of the first to occur of such events is referred to herein as the “Authorization Date.”

(ii) The Company may elect to purchase all (but not less than all) of such Stockholder Shares as specified in the Offer Notice at the price and on the

terms specified therein by delivering written notice of such election to the Selling Minority Stockholder and to CHS as soon as practical but in any event within 15 days after the delivery of the Offer Notice. If the Company has not elected to purchase all of the Stockholder Shares within such 15-day period, CHS may elect to purchase all (but not less than all) of the Stockholder Shares specified in the Offer Notice at the price and on the terms specified therein by delivering written notice of such election to the Selling Minority Stockholder as soon as practical but in any event within 30 days after delivery of the Offer Notice (the “Election Period”). If, pursuant to this Section 2(b), the Company or CHS has elected to purchase all of the Stockholder Shares specified in the Offer Notice from the Selling Minority Stockholder, the Transfer will be consummated in accordance with the terms of the Offer Notice as soon as practicable after the delivery of the election notice, but in any event within 30 days after the expiration of the Election Period. If, pursuant to this Section 2(b), one of the Company or CHS has not elected to purchase all of the Stockholder Shares being offered, the Selling Minority Stockholder may, within 60 days after the expiration of the Election Period, transfer all (but not less than all) of such Stockholder Shares to the third party(ies) identified in the Offer Notice at a price no less than the price per Stockholder Share specified in the Offer Notice and on other terms no more favorable to the transferee(s) than the terms specified in the Offer Notice. Any Stockholder Shares not transferred within the 60-day period after the Election Period shall be reoffered to the Company and CHS pursuant to this Section 2(b) before any subsequent Transfer. The purchase price specified in any Offer Notice shall be payable solely in cash at the closing of the transaction or in installments over time.

(c) Minority Participation Rights. At least 30 days before a Transfer (other than an Exempt Transfer) by CHS or its Affiliates of any Stockholder Shares, CHS will deliver a written notice (the “Sale Notice”) to the Company and to each of the Minority Stockholders, specifying in reasonable detail the identity of the prospective transferee(s), the identity, number, and class or classes of Stockholder Shares to be transferred by CHS or its Affiliates, an estimate of each Minority Stockholder’s pro rata share of transaction expenses and the terms and conditions of the proposed Transfer. In the event that any Minority Stockholders holds the class of Stockholder Shares which are to be transferred, or securities exercisable, convertible or exchangeable for the class of Stockholder Shares which are to be transferred, such Minority Stockholder may elect to participate in the contemplated Transfer by delivering written notice to CHS within 15 days after delivery of the Sale Notice. If any such Minority Stockholder has elected to participate in such Transfer (each a “Participating Minority Stockholder”), then CHS or its Affiliates and each Participating Minority Stockholder will be entitled to transfer in the contemplated Transfer, at the same price and on the same terms specified in the Sale Notice, a number of Stockholder Shares of such class, or securities exercisable, convertible or exchangeable for Stockholder Shares of such class, equal to the number of Stockholder Shares of such class and securities convertible or exchangeable for Stockholder Shares of such class to be transferred in the contemplated Transfer multiplied by a fraction, the numerator of which is (A) the number of Stockholder Shares of such class and securities convertible or exchangeable for

Stockholder Shares of such class held by such Person on an as-if converted or exchanged basis, and the denominator of which is (B) the aggregate number of Stockholder Shares of such class and securities convertible or exchangeable for Stockholder Shares of such class held by CHS or its Affiliates and all Participating Minority Stockholders on an as-if converted or exchanged basis. CHS shall use its best efforts to obtain the agreement of the prospective transferee(s) to the participation of the Participating Minority Stockholders in any contemplated Transfer, and CHS or its Affiliates shall not Transfer any Stockholder Shares to the prospective transferee(s) unless (A) the prospective transferee(s) agrees to allow the participation of the Participating Minority Stockholders at the same price and on the same terms as specified in the Sale Notice, or (B) CHS agrees to purchase the number of Stockholder Shares that any Participating Minority Stockholder would have been entitled to Transfer pursuant to this Section 2(c) at the same price and on the same terms as specified in the Sale Notice. If, within 15 days after the delivery of the Sale Notice, no Minority Stockholder delivers to CHS written notice of its election to participate in the contemplated Transfer, then CHS or its Affiliates will be entitled to Transfer to the prospective transferee(s) specified in the Sale Notice the number of Stockholder Shares specified in the Sale Notice on the terms and conditions specified therein. Notwithstanding anything in this Section 2(c) to the contrary, if CHS or its Affiliates intends to simultaneously Transfer a combination of more than one class of Stockholder Shares and/or other debt or equity securities, and any Minority Stockholder holds or has the right to acquire both such classes of Stockholder Shares and/or other debt or equity securities, such Minority Stockholder may only participate in such Transfer if such Minority Stockholder Transfers all such classes of Stockholder Shares and/or other debt or equity securities in accordance with the formulae set forth in this Section 2(c) above.

(d) Permitted Transfers. Notwithstanding anything to the contrary in any other provision of this Agreement, the restrictions contained in this Sections 2 shall not apply to:

(i) any Transfer of Stockholder Shares by any Stockholder to or among any of its Affiliates;

(ii) a Transfer of Stockholder Shares by any Stockholder pursuant to the laws of descent and distribution or to or among such Stockholder’s Family Group; or

(iii) in the case of CHS, a Transfer of up to 5% in the aggregate of any class of Stockholder Shares held by CHS as of the date hereof to employees of, consultants to, and advisors to CHS, the Company, or any of their Affiliates.

3. Preemptive Right.

(a) If the Company authorizes the issuance or sale of any New Securities, the Company shall offer to sell to each holder of Common Stock and/or Rollover Common Options (a “Preemptive Holder”) a portion of such stock or securities equal to the quotient determined by dividing (1) the number of shares of Common Stock held by such holder at such time plus the number of shares of Common Stock issuable to such holder upon exercise of the Rollover

Common Options at such time by (2) the total number of shares of Common Stock then issued and outstanding plus the total number of shares of Common Stock issuable upon exercise of all then outstanding and exerciseable Rollover Common Options. Each Preemptive Holder shall be entitled to purchase such stock or securities on the same terms as such stock or securities are to be offered to third parties; provided that if such third parties are required to also purchase other securities of the Company, Preemptive Holders exercising their rights pursuant to this paragraph shall also be required to purchase the same class and series of securities (in the same proportion and on the same terms and conditions) that such third parties are required to purchase. The purchase price payable for the stock and securities offered to the Preemptive Holders hereunder shall be payable in cash or, to the extent otherwise required hereunder, by notes issued by such holders.

(b) In order to exercise its purchase rights hereunder, each Preemptive Holder must within 15 days after receipt of written notice from the Company describing in reasonable detail the stock or securities being offered, the purchase price thereof, the payment terms and such holder’s percentage allotment deliver a written notice to the Company describing its election hereunder.

(c) Upon the expiration of the offering period described above, the Company shall be entitled to sell such stock or securities which Preemptive Holders have not elected to purchase during the 90 days following such expiration on terms and conditions no more favorable to the purchasers thereof than those offered to such holders. Any stock or securities offered or sold by the Company after such 90-day period must be reoffered to the Preemptive Holders pursuant to the terms of this paragraph.

4. Sale of the Company.

(a) If the Board and the holders of a majority of the shares of Common Stock then outstanding approve a Sale of the Company to an Independent Third Party (an “Approved Sale”), each holder of Stockholder Shares entitled to vote thereon shall vote for, consent to and raise no objections against such Approved Sale. If the Approved Sale is structured as a (i) merger or consolidation, each holder of Stockholder Shares shall waive any dissenters’ rights, appraisal rights or similar rights in connection with such merger or consolidation or (ii) sale of stock, each holder of Stockholder Shares shall agree to sell all of his Stockholder Shares and rights to acquire Stockholder Shares on the terms and conditions approved by the Board and the holders of a majority of the Common Stock then outstanding; provided that such terms and conditions are no less favorable to the Minority Stockholders than the terms and conditions applicable to CHS and its Affiliates and; provided further that CHS may require each of the Minority Stockholders to sell the same percentage of his, her or its securities as CHS is selling of its securities, on the same terms as CHS and its Affiliates. Each holder of Stockholder Shares shall take all necessary or desirable actions in connection with the consummation of the Approved Sale as reasonably requested by the Company.

(b) The obligations of the holders of Stockholder Shares with respect to the Approved Sale of the Company are subject to the satisfaction of the following conditions: (i)

upon the consummation of the Approved Sale, each holder of Stockholder Shares (in his, her or its capacity as such) shall have the right to receive the same form of consideration and the same amount of consideration per share for each class of Stockholder Shares held by such holder applicable to each class; (ii) if any holders of a class of Stockholder Shares are given an option as to the form and amount of consideration to be received or any other right or benefit with respect to the Approved Sale, each holder of such class of Stockholder Shares shall be given the same option, right or benefit (other, in the case of clause (i) or this clause (ii), than any option, right or benefit to be received by a Stockholder on account of such person’s employment relationship with the Company (e.g., stay bonus, noncompetition agreement, right to reinvest or roll over equity, etc.)); and (iii) each holder of then currently exercisable rights to acquire shares of a class of Stockholder Shares shall be given an opportunity to either (A) exercise such rights prior to the consummation of the Approved Sale and participate in such sale as holders of such class of Stockholder Shares or (B) upon the consummation of the Approved Sale, receive in exchange for such rights consideration equal to the amount determined by multiplying (1) the same amount of consideration per share of a class of Stockholder Shares received by holders of such class of Stockholder Shares in connection with the Approved Sale less the exercise price per share of such class of Stockholder Shares of such rights to acquire such class of Stockholder Shares by (2) the number of shares of such class of Stockholder Shares represented by such rights.

(c) Each Stockholder will bear his, her or its pro rata share (based upon the number of shares of Common Stock to be sold) of the reasonable out-of-pocket costs of any sale of Stockholder Shares pursuant to an Approved Sale to the extent such costs are incurred for the benefit of all such holders of Stockholder Shares and are not otherwise paid by the Company or the acquiring party. Costs incurred by the holders of Stockholder Shares on their own behalf will not be considered costs of the Approved Sale. Each Stockholder transferring Stockholder Shares pursuant to an Approved Sale shall be obligated, severally, not jointly, to join on a pro rata basis (based on the number of shares of Common Stock to be sold) in any indemnification or other obligations that are part of the terms and conditions of the Approved Sale (other than any such obligations that relate specifically to a particular Stockholder, such as indemnification with respect to representations and warranties given by a Stockholder regarding such Stockholder’s title to and ownership of Stockholder Shares) (the “Company Indemnity Obligations”). Notwithstanding the foregoing, no Stockholder shall be obligated in connection with any Approved Sale to agree to indemnify or hold harmless the transferees with respect to Company Indemnity Obligations in an amount in excess of the net proceeds paid to such Stockholder in connection with the Approved Sale.

(d) In the event of a sale or exchange by the holders of Stockholder Shares of all or substantially all of the Stockholder Shares by sale, merger, recapitalization, reorganization, consolidation, combination or otherwise, including an Approved Sale. the Company and each Stockholder shall take all necessary and desirable actions in order that each holder of Stockholder Shares shall receive in exchange for such holder’s Stockholder Shares the same portion of the aggregate consideration from such sale or exchange that such holder would have received if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in the Company’s Certificate of Incorporation as in effect immediately prior to such sale or exchange.

(e) In order to secure each Minority Stockholder’s obligation to vote his Stockholder Shares entitled to vote thereon and other voting securities of the Company in accordance with the provisions of this Section 4, each Minority Stockholder who is an individual hereby appoints each CHS Director (as in effect from time to time) as his true and lawful proxy and attorney-in-fact, with full power of substitution, to vote all of his Stockholder Shares and other voting securities of the Company for the matters expressly provided for in this Section 4. Each CHS Director may exercise the irrevocable proxy granted to him hereunder at any time any Minority Stockholder who is an individual fails to comply with the provisions of this Section 4. The proxies and powers granted by each Minority Stockholder who is an individual pursuant to this Section 4(e) are coupled with an interest and are given to secure the performance of such Minority Stockholder’s obligations under this Section 4. Such proxies and powers shall be irrevocable for the term set forth in Section 4(f) below, and shall survive the death. incompetency, disability or bankruptcy of such Minority Stockholder and the subsequent holders of his, her or its Stockholder Shares.

5. Legends. Each certificate evidencing Stockholder Shares and each certificate issued in exchange for or upon the transfer of any Stockholder Shares (if such shares remain Stockholder Shares as defined herein after such transfer) shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF MAY 18, 2004, AMONG THE ISSUER AND CERTAIN OF THE ISSUER’S STOCKHOLDERS. AS SUCH AGREEMENT MAY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME. A COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

The requirement that the above legend be placed upon certificates evidencing Stockholder Shares shall cease and terminate when the securities evidenced by such certificates cease to be Stockholder Shares as defined herein.

6. Representations and Warranties.

(a) Each party hereto represents and warrants individually and not jointly and severally to the other parties hereto as follows:

(i) It has full power and authority to execute, deliver and perform its obligations under this Agreement.

(ii) This Agreement has been duly and validly authorized, executed and delivered by it, and constitutes a valid and binding obligation of it, enforceable against it in accordance with its terms except to the extent that

enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors’ rights generally.

(iii) The execution, delivery and performance of this Agreement by it does not (x) violate, conflict with, or constitute a breach of or default under its organizational documents, if any, or any material agreement to which it is a party or by which it is bound or (y) violate any law, regulation, order, writ, judgment, injunction or decree applicable to it.

(iv) No consent or approval of, or filing with, any governmental or regulatory body is required to be obtained or made by it in connection with the transactions contemplated hereby.

(v) It is not a party to any agreement which is inconsistent with the rights of any party hereunder or otherwise conflicts with the provisions hereof.

(vi) The representations and warranties contained in this Section 6 shall survive the execution and delivery of this Agreement.

(b) Each of the Stockholders hereby represents that (i) at such time at which it acquired the Stockholder Shares held by it on the date hereof, it acquired such Stockholder Shares for its own account with the intention of holding such securities for purposes of investment, (ii) at such time at which it acquired the Stockholder Shares held by it as the date hereof, it had no intention of selling such securities in a public distribution in violation of the federal securities laws or any applicable state securities laws, and (iii) in connection with such acquisition, it had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of such Stockholder Shares and had access to such other information concerning the Company as it requested.

7. Further Assurances. At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

8. Definitions.

“Affiliate” means, as to any specified Person, (i) any shareholder, equity owner, officer, or director of such Person and their family members or (ii) any other Person which, directly or indirectly, controls, is controlled by, employed by or is under common control with, any of the foregoing. For the purposes of this definition, “control” means the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“CHS Group” means CHS, CHS Associates and each other Person who becomes a party to this Agreement who is designated as a member of the CHS Group in writing by CHS.

“Common Stock” means, collectively, the Company’s common stock, par value $.01 per share, and any capital stock of any class or series of capital stock of the Company hereafter authorized which is not limited to a fixed sum or percentage of par or stated value in respect to the rights of the holders thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Company.

“Employee Repurchase Event” means a Transfer of Stockholder Shares to the Company or CHS pursuant to a mandatory repurchase or a repurchase option set forth in any Executive Securities Agreement between the Company and a Minority Stockholder.

“Family Group” means a Stockholder’s spouse and descendants (whether natural or adopted), any trust, family limited partnership or other entity that is and remains solely for the benefit of such Stockholder and/or such Stockholder’s spouse and/or descendants.

“Independent Third Party” means any Person, who immediately prior to the contemplated transaction (i) does not own in excess of 10% of the Company’s Common Stock on a fully-diluted basis (a “10% Owner”) and (ii) is not controlling, controlled by or under common control with any such 10% Owner.

“New Securities” shall mean any Common Stock of the Company, whether now authorized or not, and rights, options or warrants to purchase Common Stock of the Company, and securities of any type whatsoever which are, or may become, convertible into Common Stock of the Company; provided, however, that the term “New Securities” does not include: (i) securities offered to the public pursuant to a registration statement filed by the Company (and, in the case of rights, options or warrants, the securities issued or issuable upon exercise thereof and, if applicable, the Common Stock issued or issuable upon conversion of such securities); (ii) securities issued for the acquisition of another business by the Company by merger, purchase of substantially all the assets of such business or another reorganization resulting in the ownership by the Company of not less than a majority of the voting power of such business (and, in the case of rights, options or warrants, the securities issued or issuable upon exercise thereof and, if applicable, the Common Stock issued or issuable upon the conversion of such securities); (iii) securities issued to directors or employees of or consultants to the Company pursuant to an equity incentive plan, stock option plan, employee stock purchase plan, restricted stock plan or other employee stock plan or agreement or otherwise, in all cases approved by the Board (and, in the case of rights, options or warrants, the securities issued or issuable upon exercise thereof and, if applicable, the Common Stock issued or issuable upon the conversion of such securities); (iv) securities issued in connection with an equipment lease, commercial loan, or research, development or licensing agreement or other similar business transaction, in all cases approved by the Board (and, in the case of rights, options or warrants, the securities issued or issuable upon exercise thereof and, if applicable, the Common Stock issued or issuable upon the conversion of such securities); and (v) securities issued as a result of any stock split, stock

dividend, capital reorganization, recapitalization, or reclassification of the Company’s Common Stock, distributable on a pro rata basis to all holders of the Company’s Common Stock.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust (including any beneficiary thereof), a joint venture, an unincorporated organization, any other business entity and a governmental entity or any department, agency or political subdivision thereof.

“Public Sale” means any sale pursuant to a registered public offering under the Securities Act and, at any time after such registered public offering, any sale to the public pursuant to Rule 144 or Rule 144A promulgated under the Securities Act effected through a broker, dealer or market maker at a time when the Company is a reporting company under the Securities Exchange Act of 1934 and has filed all reports required thereunder.

“Rollover Common Options” means the options to purchase Common Stock pursuant to certain Executive Securities Agreements, each dated as of the date hereof, between the Company and certain Minority Stockholders.

“Sale of the Company” means (i) any sale, transfer or issuance or series of sales, transfers and/or issuances of capital stock of the Company by the Company or any holders thereof (including without limitation, any merger, consolidation or other transaction or series of related transactions having the same effect) which results in any Person or group of Persons (as the term “group” is used under the Securities Exchange Act), other than CHS or its Affiliates, owning capital stock of the Company possessing the voting power (under ordinary circumstances) to elect a majority of the Board, and (ii) any sale or transfer of all or substantially all of the assets of the Company and its subsidiaries in any transaction or series of transactions (other than sales in the ordinary course of business) to any Person or group of Persons (as the term “group” is used under the Securities Exchange Act), other than CHS or its Affiliates.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

“Stockholder Shares” means (i) any capital stock of the Company purchased or otherwise acquired by any Stockholder, (ii) any warrants, options, or other rights to subscribe for or to acquire, directly or indirectly, capital stock of the Company, whether or not then exercisable or convertible, (iii) any indebtedness of the Company which, by its terms, is designated as Stockholder Shares for purposes of this Agreement, (iv) any stock, notes, or other securities which are convertible into or exchangeable for, directly or indirectly, capital stock of the Company, whether or not then convertible or exchangeable, (v) any capital stock of the Company issued or issuable upon the exercise, conversion, or exchange of any of the securities referred to in clauses (i) through (iv) above, and (vi) any securities issued or issuable directly or indirectly with respect to the securities referred to in clauses (i) through (v) above by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, or other reorganization. As to any particular shares constituting

Stockholder Shares, such shares will cease to be Stockholder Shares when they have been (x) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them or (y) sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or any similar provision then in force) under the Securities Act.

9. Transfers; Transfers in Violation of Agreement. Prior to transferring any Stockholder Shares to any Person, the transferring Stockholder shall cause the prospective transferee to execute and deliver to the Company and the other Stockholders a counterpart of this Agreement. Any transfer or attempted transfer of any Stockholder Shares in violation of any provision of this Agreement shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of such Stockholder Shares as the owner of such shares for any purpose.

10. Additional Stockholders. In connection with the issuance of any additional equity securities of the Company to any Person who is not then a party hereto, the Company shall require such Person to become a party to this Agreement and succeed to all of the rights and obligations of a “Stockholder” under this Agreement by obtaining an executed Joinder to this Agreement, the form of which is attached hereto as Exhibit A, and, upon such execution, such Person shall for all purposes be a “Stockholder” party to this Agreement.

11. Miscellaneous.

(a) Amendment and Waiver. Except as otherwise provided herein, no modification, amendment, or waiver of any provision of this Agreement will be effective against the Company or the holders of Stockholder Shares unless such modification, amendment or waiver is agreed to in writing by (i) the Company, (ii) CHS and (iii) the holders of a majority of Stockholder Shares. Notwithstanding the foregoing, if an amendment or modification of this Agreement serves merely to add a party hereto, then such amendment or modification will be effective against the Company and the holders of Stockholder Shares if such amendment or modification is approved in writing by the Company, at least a majority of the holders of Stockholder Shares, and such new party hereto. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

(b) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality, or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be construed and enforced in such jurisdiction as if such invalid, illegal, or unenforceable provision had never been contained herein.

(c) Entire Agreement. Except as otherwise expressly set forth herein, this Agreement, those documents expressly referred to herein, and the other documents of even date

herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements, or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

(d) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of the holders of Stockholder Shares (or any portion thereof) as such shall be for the benefit of, and enforceable by, any subsequent holder of any Stockholder Shares (or of such portion thereof).

(e) Counterparts. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together shall constitute one and the same agreement.

(f) Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce their rights under this Agreement specifically to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any Stockholder may in its sole discretion apply to any court of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.

(g) Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, sent by first class mail (postage prepaid and return receipt requested), or sent by reputable overnight courier service (charges prepaid) or by facsimile to the Company at the address set forth below and to the other parties at their respective addresses indicated in the Company’s records, or at such address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally, three days after deposit in the U.S. mail, and one day after deposit with a reputable overnight courier service. Notices given by facsimile will be deemed given when sent and confirmed electronically. The address of the Company is:

GEO Holdings Corp.
19103 Gundle Road
Houston, TX 77073
Attention: Samir T. Badawi, Chief Executive Officer

with copies to:

Code Hennessy & Simmons LLC

10 South Wacker Drive, Suite 3175

Chicago, Illinois 60606

Facsimile: (312) 876-3854

Attention: Daniel J. Hennessy and Marcus J. George

Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, Illinois 60601

Facsimile: (312) 861-2200

Attention: Kevin R. Evanich, P.C.

(h) Governing Law. The corporate law of the State of Delaware shall govern all issues and questions concerning the relative rights and obligations of the Company and its stockholders. All other issues and questions concerning the construction, validity, enforcement, and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois.

(i) No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

(j) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company’s chief executive office is located, the time period shall automatically be extended to the business day immediately following such Saturday, Sunday or legal holiday.

(k) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

(1) Survival of Representations and Warranties; Termination of Covenants. All representations and warranties contained in this Agreement or made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby regardless of any investigation made by, or on behalf of any Stockholder. In the event any provision of this Agreement is terminated, such termination shall not relieve any party from liability for its prior breach of this Agreement or for failure by it to perform its obligations hereunder.

* * * * *

IN WITNESS WHEREOF, the parties hereto have executed this Stockholders Agreement on the day and year first above written.

	GEO HOLDINGS CORP.

	By:	/s/ Daniel J. Hennessy
	Name:	Daniel J. Hennessy
	Its:	President


	CODE HENNESSY & SIMMONS IV LP

	By:	CHS Management IV LP
	Its:	General Partner

	By:	Code Hennessy & Simmons LLC
	Its:	General Partner

	By:	/s/ Daniel J. Hennessy
	Name:	Daniel J. Hennessy
	Its:	Partner


	CHS ASSOCIATES IV

	By:	Code Hennessy & Simmons LLC
	Its:	General Partner

	By:	/s/ Daniel J. Hennessy
	Name:	Daniel J. Hennessy
	Its:	Partner

Signature Page to Stockholders Agreement

MINORITY STOCKHOLDERS

		Spouse (if applicable)

/s/ Samir T. Badawi		/s/ Spouse
Samir T. Badawi

/s/ Ernest C. English		/s/ Spouse
Ernest C. English

/s/ Gerald E. Hersh		/s/ Spouse
Gerald E. Hersh

/s/ James Steinke		/s/ Spouse
James Steinke

/s/ Paul Firrell
Paul Firrell

/s/ Dr. Mohamed Abd El Aziz Siad Ayoub		/s/ Spouse
Dr. Mohamed Abd El Aziz Siad Ayoub

/s/ Paige Walsh		/s/ Spouse
Paige Walsh


RANDOLPH STREET PARTNERS VI

By:	/s/ Kevin Evanich
Name:	Kevin Evanich
Its:	Partner

Signature Page to Stockholders Agreement

EXHIBIT A

STOCKHOLDERS AGREEMENT

Joinder

The undersigned is executing and delivering this Joinder pursuant to the Stockholders Agreement dated as of May 18, 2004 (as the same may hereafter be amended, the “Stockholders Agreement”), among GEO Holdings Corp., a Delaware corporation (the “Company”) and the other person named as parties therein.

By executing and delivering this Joinder to the Company, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the provisions of the Stockholders Agreement as a holder of Stockholder Shares in the same manner as if the undersigned were an original signatory to the Stockholders Agreement, and the undersigned’s shares of Common Stock shall be included as Stockholder Shares under the Stockholders Agreement. Any notice required to be given to the undersigned pursuant to Section 11(g) of the Stockholders Agreement shall be sent to the address set forth below.

Accordingly, the undersigned has executed and delivered this Joinder as of the day of , .


	Signature of Stockholder

	Print Name of Stockholder

	Address:

AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT

This AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT (this “Amendment”), dated as of May 2, 2006, is made by GEO Holdings Corp., a Delaware corporation (the “Company”), Code Hennessy & Simmons IV LP, a Delaware limited partnership (“CHS”) and Samir T. Badawi (“Badawi”). Capitalized terms used and not otherwise defined herein have the meanings given to such terms in the Stockholders Agreement (as defined below).

WHEREAS, the Company, CHS, Badawi and other holders of the Company’s equity securities are parties to that certain Stockholders Agreement, dated as of May 18, 2004 (the “Stockholders Agreement”);

WHEREAS, CHS intends to enter into certain Stock Purchase Agreements with employees and directors of the Company or its subsidiaries (the “Employee/Director Purchase Agreements”); and

WHEREAS, the Company, CHS and Badawi desire to amend the Stockholders Agreement as set forth herein to bind all parties to the Stockholders Agreement pursuant to Section 11(a) thereof prior to the effectiveness of the Employee/Director Purchase Agreements.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Amendment and Restatement of Section 2(d)(iii). Section 2(d)(iii) of the of the Stockholders Agreement is hereby amended and restated to read as follows:

(iii) in the case of CHS, a Transfer of up to 5% in the aggregate of any class of Stockholder Shares held by CHS as of the date hereof to employees of, directors of, consultants to, and advisors to CHS, the Company, or any of their Affiliates.

2. Amendment and Restatement of “Employee Repurchase Event” Definition. The definition of “Employee Repurchase Event” in Section 8 of the Stockholders Agreement is hereby amended and restated to read as follows:

“Employee Repurchase Event” means a Transfer of Stockholder Shares to the Company or CHS pursuant to a mandatory repurchase or a repurchase option, in each case set forth in (a) any Executive Securities Agreement between the Company and a Minority Stockholder, (b) any Stock Purchase Agreement among the Company, CHS and any Minority Stockholder or (c) any other agreement to which the Company, CHS and any Minority Stockholder are parties, in each case whether or not such Minority

Stockholder has ever been an employee of the Company or its subsidiaries.

3. Consent to Amendment. The Company and CHS hereby consent to this Amendment pursuant to Section 11(a) of the Stockholders Agreement and as such consent may otherwise be required. Unless the context otherwise requires, any other document or agreement that refers to the Stockholders Agreement shall be deemed to refer to the Stockholders Agreement, giving effect to this Amendment (and any other amendments to the Stockholders Agreement made from time pursuant to its terms).

4. Counterparts. This Amendment may be executed in multiple counterparts (which may be delivered by means of facsimile or comparable electronic transmission), each of which shall be an original and all of which taken together shall constitute one and the same agreement.

5. Governing Law. The corporate law of the State of Delaware shall govern all issues and questions concerning the relative rights and obligations of the Company and its stockholders. All other issues and questions concerning the construction, validity, enforcement, and interpretation of this Amendment and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois.

6. Descriptive Headings. The descriptive headings of this Amendment are inserted for convenience only and do not constitute a part of this Amendment.

7. Limited Amendment. This Amendment is limited by its terms and does not and shall not serve to amend or waive any provision of the Stockholders Agreement except as expressly provided for in this Amendment.

* * * * *

IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to Stockholders Agreement as of the date first above written.

	GEO HOLDINGS CORP.

	By:	/s/ Samir T. Badawi
	Name:	Samir T. Badawi
	Its:	President & CEO


	CODE HENNESSY & SIMMONS IV LP

	By	CHS Management IV LP
	Its:	General Partner

	By:	Code Hennessy & Simmons LLC
	Its:	General Partner

	By:	/s/ Daniel J. Hennessy
	Name:	Daniel J. Hennessy
	Its:	Partner

	/s/ Samir T. Badawi
	Samir T. Badawi

EX-10.2 5 a2204569zex-10_2.htm EX-10.2

Exhibit 10.2

REGISTRATION AGREEMENT

THIS REGISTRATION AGREEMENT (this “Agreement”) is made as of May 18, 2004, by and among GEO Holdings Corp., a Delaware corporation (the “Company”), Code Hennessy & Simmons IV LP, a Delaware limited partnership (“CHS”), CHS Associates IV (“CHS Associates”) and each of the other Persons who is not a member of the CHS Group (as defined below) listed on the signature pages attached hereto or who otherwise hereafter becomes a party to this agreement by executing the Joinder attached hereto as Exhibit A (the “Minority Stockholders”). The CHS Group and the Minority Stockholders are collectively referred to herein as the “Stockholders,” and are individually referred to herein as a “Stockholder.” Otherwise undefined capitalized terms used herein are defined in Section 9 hereof.

1. Demand Registrations.

(a) Requests for Registration. At any time, the holders of at least a majority of the CHS Registrable Securities may request registration under the Securities Act of all or any portion of such CHS Registrable Securities on Form S-1 or any similar long-form registration (“Long-Form Registrations”) or, if available, on Form S-2 or S-3 or any similar short-form registration (“Short-Form Registrations”). All registrations requested pursuant to this Section 1(a) are referred to herein as “Demand Registrations.” Each request for a Demand Registration shall specify the approximate number of CHS Registrable Securities requested to be registered and the anticipated per share price range for such offering. Within ten days after receipt of any such request, the Company shall give written notice of such requested registration to all holders of Other Registrable Securities and, subject to Section 1(d) below, will include in such registration, in addition to the CHS Registrable Securities that are requested to be registered pursuant hereto, all Other Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company’s notice.

(b) Long-Form Registrations. The holders of a majority of the CHS Registrable Securities shall be entitled to request unlimited Long-Form Registrations in which the Company will pay all Registration Expenses (as defined below in Section 5). All Long-Form Registrations shall be underwritten registrations.

(c) Short-Form Registrations. In addition to the Long-Form Registrations provided pursuant to Section 1(b), the holders of a majority of the CHS Registrable Securities shall be entitled to request an unlimited number of Short-Form Registrations in which the Company will pay all Registration Expenses. Demand Registrations will be Short-Form Registrations whenever the Company is permitted to use any applicable short form. After the Company has become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Company shall use its best efforts to make Short-Form Registrations on Form S-3 available for the sale of Registrable Securities. All Short-Form Registrations shall be underwritten registrations, unless otherwise agreed to by the Company.

(d) Priority on Demand Registrations. The Company will not include in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the holders of a majority of the Registrable Securities included in such registration. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that, in their opinion, the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering, exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability of the offering, the Company will include in such registration (i) first, the number of Registrable Securities requested to be included in such registration which in the opinion of such underwriters can be sold without adverse effect, pro rata among the respective holders thereof on the basis of the number of Registrable Securities owned by each such holder, and (ii) second, other securities requested to be included in such Demand Registration, pro rata among the holders of such securities on the basis of the number of such securities owned by each such holder.

(e) Restrictions on Demand Registrations. The Company will not be obligated to effect any Demand Registration within six months after the effective date of a previous Long-Form Registration with respect to the Company. The Company may postpone, for up to six months (from the date of the request), the filing or the effectiveness of a registration statement for a Demand Registration if the Company’s board of directors believes that such Demand Registration would reasonably be expected to have an adverse effect on any proposal or plan by the Company or any Subsidiary thereof to engage in any acquisition of assets (other than in the ordinary course of business) or any stock purchase, merger, consolidation, tender offer, reorganization, or similar transaction; provided, however, that in such event, the holders of Registrable Securities initially requesting such Demand Registration will be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration shall be treated as if it had never been made in the first instance, and the Company will pay all Registration Expenses in connection with such registration. The Company may delay a Demand Registration hereunder only once in any 12-month period.

(f) Selection of Underwriters. The holders of a majority of the Registrable Securities initially requesting registration hereunder will have the right to select the investment banker(s) and manager(s) to administer the offering under such Demand Registration, subject to the Company’s approval, which will not be unreasonably withheld.

(g) Other Registration Rights. The Company will not grant to any Persons the right to request that the Company register any equity securities of the Company, or any securities convertible into or exchangeable or exercisable for any such securities, without the prior written consent of the holders of at least a majority of the CHS Registrable Securities.

2. Piggyback Registrations.

(a) Right to Piggyback. Whenever the Company proposes to register any of its equity securities under the Securities Act (other than pursuant to a Demand Registration which is addressed in Section 1 above rather than this Section 2 or a registration on Form S-4 or S-8 or any successor or similar forms) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), whether for sale for its own

account or the account of a Person not a party to this Agreement, the Company will give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and, subject to Sections 2(c) and 2(d) below, will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company’s notice; provided that with respect to any Piggyback Registration, the holders of a majority of the Registrable Securities shall have the right to waive and forego, as against themselves and all other holders of Registrable Securities, the inclusion of any Registrable Securities in such Piggyback Registration.

(b) Piggyback Expenses. In all Piggyback Registrations, the Registration Expenses of the holders of Registrable Securities will be paid by the Company.

(c) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of such offering, the Company will include in such registration (i) first, the securities that the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the holders thereof on the basis of the number of Registrable Securities owned by each such holder, and (iii) third, other securities requested to be included in such registration pro rata among the holders of such securities on the basis of the number of such other securities owned by each such holder.

(d) Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s securities (it being understood that secondary registrations on behalf of holders of Registrable Securities are addressed in Section 1 above rather than in this Section 2(d)), and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company will include in such registration (i) first, the securities requested to be included therein by the holders requesting such registration, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of Registrable Securities owned by each such requesting holder, and (iii) third, other securities requested to be included in such registration pro rata among the holders of such other securities on the basis of the number of such securities owned by each such holder.

(e) Selection of Underwriters. If any Piggyback Registration is an underwritten offering, the selection of the investment banker(s) and manager(s) for the offering must be approved by the holders of a majority of the Registrable Securities included in such Piggyback Registration, which approval shall not be unreasonably withheld.

(f) Withdrawal by Company. If, at any time after giving notice of its intention to register any of its securities as set forth in Section 2(a) and before the effective date of such registration statement filed in connection with such registration, the Company shall determine, for any reason, not to register such securities, the Company may, at its sole discretion,

give written notice of such determination to each holder of Registrable Securities and thereupon shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith as provided herein).

(g) Other Registrations. If the Company has previously filed a registration statement with respect to Registrable Securities pursuant to Section 1 or pursuant to this Section 2, and if such previous registration has not been withdrawn or abandoned, the Company will not file or cause to be effected any other registration of any of its equity securities or securities convertible into or exchangeable or exercisable for its equity securities under the Securities Act (except on Form S-4 or S-8 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least six months has elapsed from the effective date of such previous registration.

3. Holdback Agreements.

(a) Each holder of Registrable Securities agrees not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such securities, whether any such aforementioned transaction is to be settled by delivery of such securities or other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement, in each case during the seven days before and the 90-day period (but in the case of the Company’s initial public offering, the 180-day period) beginning on the effective date of any underwritten public offering of the Company’s equity securities (including Demand and Piggyback Registrations) (or such longer or shorter period (but not in excess of 180 days) as may be requested in writing by the managing underwriter and agreed to in writing by the Company) (the “Market Standoff Period”), except as part of such underwritten registration if otherwise permitted. In addition, each holder of Registrable Securities agrees to execute any further letters, agreements and/or other documents requested by the Company or its underwriters which are consistent with the terms of this Section 3(a). The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

(b) The Company agrees (i) not to effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days before and during the 180-day period beginning on the effective date of any underwritten public offering of the Company’s equity securities (including Demand and Piggyback Registrations) (except as part of such underwritten registration or pursuant to registrations on Form S-4 or S-8 or any successor form), unless the underwriters managing the registered public offering otherwise agree, and (ii) to use its best efforts to cause each holder of its Common Stock, or any securities convertible into or exchangeable or exercisable for Common Stock, purchased or otherwise acquired from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during any such

period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree.

4. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company will use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company will as expeditiously as possible:

(a) prepare and (within 60 days after the end of the period within which requests for registration may be given to the Company) file with the Securities and Exchange Commission a registration statement with respect to such Registrable Securities and thereafter use its best efforts to cause such registration statement to become effective as soon as practicable but no later than 120 days after the applicable request date (provided that, before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to the counsel selected by the holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents will be subject to review of such counsel);

(b) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of either (i) not less than six months (subject to extension pursuant to Section 7(b)) or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer, or (ii) such shorter period as will terminate when all of the securities covered by such registration statement during such period have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement (but, in any event, not before the expiration of any longer period required under the Securities Act), and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement;

(c) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

(d) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this

subsection, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction);

(e) notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the discovery of the happening of any event as a result of which, the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company will prepare and furnish to such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made;

(f) use best efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be listed on a securities exchange or the National Association of Securities Dealers (“NASD”) automated quotation system and, if listed on the NASD automated quotation system, use its best efforts to secure designation of all such Registrable Securities covered by such registration statement as a “national market system security” of The Nasdaq Stock Market within the meaning of Rule 11 Aa2-1 of the Securities and Exchange Commission or, failing that, to secure The Nasdaq Stock Market’s authorization for such Registrable Securities and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such Registrable Securities with the NASD;

(g) use best efforts to provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

(h) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split, combination of shares, recapitalization, or reorganization);

(i) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant, or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate and business documents and properties of the Company, and cause the Company’s officers, directors, employees, agents, representatives, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent in connection with such registration statement;

(j) otherwise use its best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months, beginning with the first day of the Company’s first full calendar quarter after the

effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

(k) permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of the Company to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included;

(1) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any securities included in such registration statement for sale in any jurisdiction, the Company will use its reasonable best efforts promptly to obtain the withdrawal of such order;

(m) use its reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities;

(n) use best efforts to obtain a cold comfort letter from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters, which letter shall be addressed to the underwriters, and the Company shall use its reasonable best efforts to cause such cold comfort letter to also be addressed to the holders of such Registrable Securities; and

(o) use best efforts to obtain an opinion from the Company’s outside counsel in customary form and covering such matters of the type customarily covered by such opinions, which opinion shall be addressed to the underwriters and the holders of such Registrable Securities.

If any such registration or comparable statement refers to any holder by name or otherwise as the holder of any securities of the Company and if such holder, in its sole and exclusive judgment, is or might be deemed to be an underwriter or a controlling person of the Company, such holder shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to such holder and presented to the Company in writing, to the effect that the holding by such holder of such securities is not to be construed as a recommendation by such holder of the investment quality of the Company’s securities covered thereby, and that such holding does not imply that such holder shall assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such holder by name or otherwise is not required by the Securities Act or any similar federal or state statute then in force, the deletion of the reference to such holder; provided that, with respect to this clause (ii), such holder shall furnish to the Company an opinion of counsel to such effect, which opinion and counsel shall be reasonably satisfactory to the Company. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company with such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing.

5. Registration Expenses.

(a) All expenses incident to the Company’s performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, fees and disbursements of counsel for the Company, and all independent certified public accountants, underwriters (excluding discounts and commissions), and other Persons retained by the Company (all such expenses being herein called “Registration Expenses”), will be borne as provided in this Agreement, except that the Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance, and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or, if none are so listed, on a securities exchange or the NASD automated quotation system.

(b) In connection with each Demand Registration and each Piggyback Registration, the Company shall reimburse the holders of Registrable Securities for the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities.

(c) To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder will pay those Registration Expenses allocable to the registration of such holder’s securities so included, and any Registration Expenses not so allocable will be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of each seller’s securities to be so registered.

6. Indemnification.

(a) The Company agrees to indemnify and hold harmless, to the full extent permitted by law, each holder of Registrable Securities, such holder’s officers, directors, agents, partners, members, stockholders and employees and each Person who controls such holder (within the meaning of the Securities Act) (each an “Indemnitee” and, collectively, the “Indemnitees”) against any and all losses, claims, damages, liabilities, joint or several, together with reasonable costs and expenses (including reasonable attorney’s fees), to which such indemnified party may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of, are based upon, are caused by, or result from (i) any untrue or alleged untrue statement of material fact contained (A) in any registration statement, prospectus, or preliminary prospectus or any amendment thereof or supplement thereto, or (B) in any application or other document or communication (in this Section 6 collectively called an “application”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration statement under the “blue sky” or securities laws thereof, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse such

holder and each Indemnitee for any legal or any other expenses incurred by them in connection with investigating or defending any such loss, claim, liability, action, or proceeding; provided, however, that the Company shall not be liable in any such case to any such Person to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof), or expense arises out of, is based upon, is caused by, or results from an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished to the Company by such Person expressly for use therein or by such Person’s failure to deliver, if such Person is required by law to deliver, a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such Person with a sufficient number of copies of the same. In connection with any underwritten offering, the Company will indemnify such underwriters, their officers and directors, and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities.

(b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the full extent permitted by law, will indemnify and hold harmless the other holders of Registrable Securities and the Company, and their respective directors, officers, agents, and employees and each other Person who controls the Company and such holders (within the meaning of the Securities Act) against any losses, claims, damages, liabilities, together with reasonable costs and expenses (including reasonable attorney’s fees), to which such indemnified party may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of, are based upon, are caused by, or result from (i) any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or in any application, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information prepared and furnished to the Company by such holder expressly for use therein; provided, however, that the obligation to indemnify will be individual, not joint and several, to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement.

(c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party), and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not

be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.

(d) The indemnifying party shall not, except with the approval of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to each indemnified party of a release from all liability in respect to such claim or litigation without any payment or consideration provided by such indemnified party.

(e) If the indemnification provided for in this Section 6 is unavailable to, or is insufficient to hold harmless, an indemnified party under the provisions above in respect to any losses, claims, damages, or liabilities referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand from the sale of Registrable Securities pursuant to the registered offering of securities as to which indemnity is sought, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand in connection with the registration statement on the other in connection with the statement or omissions which resulted in such losses, claims, damages, or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) to the Company bear to the total net proceeds from the offering (before deducting expenses) to the sellers of Registrable Securities and any other sellers participating in the registration statement. The relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand shall be determined by reference to, among other things, whether the untrue or alleged omission to state a material fact relates to information supplied by the Company or by the sellers of Registrable Securities or other sellers participating in the registration statement and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

(f) The Company and the sellers of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if the sellers of Registrable Securities were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, and liabilities referred to in the

immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6, no seller of Registrable Securities shall be required to contribute any amount in excess of the net proceeds received by such seller from the sale of Registrable Securities covered by the registration statement filed pursuant hereto. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(g) The indemnification and contribution by any such party provided for under this Agreement shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and will remain in full force and effect regardless of any investigation made or omitted by or on behalf of the indemnified party or any officer, director, or controlling Person of such indemnified party and will survive the transfer of securities.

7. Participation in Underwritten Registrations.

(a) No Person may participate in any registration hereunder which is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s); provided that no holder of Registrable Securities will be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration), and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of such underwriting arrangements.

(b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(e) above, such Person will forthwith discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person’s receipt of the copies of a supplemented or amended prospectus as contemplated by such Section 4(e). In the event that the Company shall give any such notice, the applicable time period mentioned in Section 4(b) during which a Registration Statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this Section 7 to and including the date when each seller of a Registrable Security covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 4(e).

8. Current Public Information. At all times after the Company has filed a registration statement with the Securities and Exchange Commission pursuant to the requirements of either the Securities Act or the Securities Exchange Act, the Company will file all reports required to be filed by it under the Securities Act and the Securities Exchange Act and the rules and regulations adopted by the Securities and Exchange Commission thereunder, and will take such further action as any holder or holders of Registrable Securities may reasonably

request, all to the extent required to enable such holders to sell, without registration, Registrable Securities pursuant to Rule 144 adopted by the Securities and Exchange Commission under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the Securities and Exchange Commission.

9. Definitions.

“CHS Group” means CHS, CHS Associates and each other Person who becomes a party to this Agreement who is designated as a member of the CHS Group in writing by CHS.

“CHS Registrable Securities” means (i) all shares of Common Stock originally issued, directly or indirectly, to the CHS Group, (ii) all shares of Common Stock issued or issuable, directly or indirectly, with respect to the securities referred to in clause (i) above upon exercise, conversion, or exchange or by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, or other reorganization, and (iii) all other shares of Common Stock of the Company held by Persons holding securities described in clauses (i) and (ii) above. As to any particular CHS Registrable Securities, such securities shall cease to be CHS Registrable Securities when they have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer, or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force) or repurchased by the Company or any Subsidiary thereof or purchased or otherwise acquired by any employee of the Company, and, if such CHS Registrable Securities are purchased or otherwise acquired by any employee of the Company, then such CHS Registrable Securities shall be deemed to be Other Registrable Securities. For purposes of this Agreement, a Person shall be deemed to be a holder of CHS Registrable Securities, and the CHS Registrable Securities shall be deemed to be in existence, whenever such Person has the right to acquire directly or indirectly such CHS Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a holder of CHS Registrable Securities hereunder.

“Common Stock” means the Company’s common stock, par value $.01 per share.

“Other Registrable Securities” means (i) all shares of Common Stock originally issued, directly or indirectly, to any party to this Agreement other than members of the CHS Group, (ii) all shares of Common Stock issued or issuable, directly or indirectly, with respect to the securities referred to in clause (i) above upon exercise, conversion, or exchange or by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, or other reorganization, and (iii) any other shares of Common Stock held by Persons holding securities described in clauses (i) and (ii) above. As to any particular Other Registrable Securities, such securities shall cease to be Other Registrable Securities when they have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer, or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force) or repurchased by the Company or any Subsidiary thereof or purchased or otherwise acquired by a member of the CHS Group, and, if such Other Registrable Securities are purchased or otherwise acquired by a member of the CHS

Group, then such Other Registrable Securities shall be deemed CHS Registrable Securities. For purposes of this Agreement, a Person shall be deemed to be a holder of Other Registrable Securities, and the Other Registrable Securities shall be deemed to be in existence, whenever such Person has the right to acquire, directly or indirectly, such Other Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right other than vesting), whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a holder of Other Registrable Securities hereunder.

“Person” means an individual, a partnership, a joint venture, an association, a joint stock company, a corporation, a limited liability company, a trust (including any beneficiary thereof), an unincorporated organization, and a governmental entity or any department, agency, or political subdivision thereof.

“Registrable Securities” means, collectively, the CHS Registrable Securities and the Other Registrable Securities.

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal law then in force.

“Securities and Exchange Commission” includes any governmental body or agency succeeding to the functions thereof.

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal law then in force.

“Subsidiary” or “Subsidiaries” means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof, or (ii) if a limited liability company, partnership, association, or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association, or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association, or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association, or other business entity.

10. Company Representations. The Company represents and warrants to each holder of Registrable Securities that this Agreement constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the Company does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which the Company is a party or any judgment, order or decree to which the Company is subject other than to the extent that any such

conflict, violation or breach which would not individually or in the aggregate have a material adverse effect on the Company’s ability to consummate the issuance of the Registrable Securities and the other transactions contemplated herein.

11. Miscellaneous.

(a) No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to the Company’s securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.

(b) Adjustments Affecting Registrable Securities. The Company will not take any action, or permit any change to occur, with respect to the Company’s securities which would materially and adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would adversely affect the marketability of such Registrable Securities in any such registration (including, without limitation, effecting a stock split, combination of shares, or other recapitalization).

(c) Amendment and Waiver. Except as otherwise provided herein, no modification, amendment, or waiver of any provision of this Agreement will be effective against the Company or the holders of Registrable Securities unless such modification, amendment or waiver is agreed to in writing by (i) the Company and (ii) the holders of a majority of the outstanding Registrable Securities; provided, however, that in the event that such modification, amendment or waiver would adversely affect (such effect to be determined taking into account any other agreements or understandings entered into before or after such amendment or waiver) a holder or group of holders of Registrable Securities in a manner materially different than any other holders of Registrable Securities (such holder or group of holders, the “Affected Holders”), then such modification, amendment or waiver will require the consent of the holders of a majority of the Registrable Securities held by such Affected Holders. Notwithstanding the foregoing, if an amendment or modification of this Agreement serves merely to add a party hereto, then such amendment or modification will be effective against the Company and the holders of Registrable Securities if such amendment or modification is approved in writing by the Company, at least a majority of the holders of Registrable Securities, and such new party hereto. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

(d) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality, or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be construed and enforced in such jurisdiction as if such invalid, illegal, or unenforceable provision had never been contained herein.

(e) Entire Agreement. Except as otherwise expressly set forth herein, this Agreement, those documents expressly referred to herein, and the other documents of even date

(f) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of the holders of Registrable Securities (or any portion thereof) as such shall be for the benefit of, and enforceable by, any subsequent holder of any Registrable Securities (or of such portion thereof).

(g) Counterparts. This Agreement may be executed in separate counterparts (including by means of facsimile) each of which will be an original and all of which taken together shall constitute one and the same agreement.

(h) Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce their rights under this Agreement specifically to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any Stockholder may in its sole discretion apply to any court of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.

(i) Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, sent by first class mail (postage prepaid and return receipt requested), or sent by reputable overnight courier service (charges prepaid) to the Company or sent by facsimile at the address or facsimile number set forth below and to the other parties at their respective addresses indicated on the Company’s records, or at such address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally, three days after deposit in the U.S. mail, and one day after deposit with a reputable overnight courier service. Notices sent by facsimile will be deemed to have been given when sent and confirmed electronically. The address of the Company is:

GEO Holdings Corp.

c/o Code, Hennessy & Simmons LLC

10 South Wacker Drive, Suite 3175

Chicago, IL 60606

Facsimile: (312) 876-3854

Attn: Daniel J. Hennessy

with a copy to:

Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, IL 60601

Facsimile: (312) 861-2200

Attn: Kevin R. Evanich, P.C.

(j) Governing Law. The corporate law of the State of Delaware shall govern all issues and questions concerning the relative rights and obligations of the Company and its stockholders. All other issues and questions concerning the construction, validity, enforcement, and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois.

(k) No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

(1) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company’s chief executive office is located, the time period shall automatically be extended to the business day immediately following such Saturday, Sunday or legal holiday.

(m) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

* * * * *

IN WITNESS WHEREOF, the parties hereto have executed this Registration Agreement on the day and year first above written.

	GEO HOLDINGS CORP.

	By:	/s/ Daniel J. Hennessy
	Name:	Daniel J. Hennessy
	Its:	President


	CODE HENNESSY & SIMMONS IV LP

	By:	CHS Management IV LP
	Its:	General Partner

	By:	Code Hennessy & Simmons LLC
	Its:	General Partner

	By:	/s/ Daniel J. Hennessy
	Name:	Daniel J. Hennessy
	Its:	Partner


	CHS ASSOCIATES IV

	By:	Code Hennessy & Simmons LLC
	Its:	General Partner

	By:	/s/ Daniel J. Hennessy
	Name:	Daniel J. Hennessy
	Its:	Partner

Signature Page to Registration Agreement

MINORITY STOCKHOLDERS

		Spouse (if applicable)


/s/ Samir T. Badawi		/s/ Spouse
Samir T. Badawi


/s/ Ernest C. English		/s/ Spouse
Ernest C. English


/s/ Gerald E. Hersh		/s/ Spouse
Gerald E. Hersh


/s/ James Steinke		/s/ Spouse
James Steinke


/s/ Paul Firrell
Paul Firrell


/s/ Dr. Mohamed Abd El Aziz Siad Ayoub		/s/ Spouse
Dr. Mohamed Abd El Aziz Siad Ayoub


/s/ Paige Walsh		/s/ Spouse
Paige Walsh


RANDOLPH STREET PARTNERS VI

By:	/s/ Kevin Evanich
Name:	Kevin Evanich
Its:	Partner

Signature Page to Registration Agreement

EX-10.3 6 a2204569zex-10_3.htm EX-10.3

Exhibit 10.3

MANAGEMENT AGREEMENT

THIS MANAGEMENT AGREEMENT (this “Agreement”), dated as of May 18, 2004 is made by and among CHS Management IV LP, a Delaware limited partnership (“CHS”), GEO Holdings Corp., a Delaware corporation (“Parent”), and Gundle/SLT Environmental, Inc., a Delaware corporation (the “Company”).

WHEREAS, Parent and the Company desire to receive financial and management consulting services from CHS, and thereby obtain the benefit of the experience of CHS in business and financial management generally and its knowledge of Parent and the Company and Parent and the Company’s financial affairs in particular. CHS is willing to provide financial and management consulting services to Parent and the Company. Accordingly, the compensation arrangements set forth in this Agreement are designed to compensate CHS for such services.

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements hereinafter set forth and the mutual benefits to be derived herefrom, CHS, Parent and the Company hereby agree as follows:

TERMS

1. Engagement. Parent and the Company hereby engage CHS as a financial and management consultant, and CHS hereby agrees to provide financial and management consulting services to Parent and the Company, all on the terms and subject to the conditions set forth below.

2. Services of CHS. CHS hereby agrees during the term of this engagement to consult with the boards of directors and the management of Parent and the Company in such manner and on such business and financial matters as may be reasonably requested from time to time by the boards of directors and the management of Parent and the Company, including but not limited to: (a) business strategy; (b) budgeting of future business investments; (c) acquisition and divestiture strategies; and (d) debt and equity financings.

3. Compensation.

(a) Monthly Fee. The Company agrees to pay to CHS as compensation for services to be rendered by CHS hereunder, a monthly fee equal to $166,666.66, payable monthly in arrears on the last day of each month, commencing with the month during which the closing of the Purchase (as defined below) occurs, with the monthly payment for the month in which the Purchase is closed being pro rated for the number of days between the date of such closing and the end of such month. Such fee shall be expressly subordinated to the principal, interest and premium, if any, owing under the Company’s 11% Senior Notes due 2012 (the “Senior Notes”) and under the Credit Agreement (as such term is defined in the

Indenture (as defined below)) until all obligations under the Senior Notes and the Credit Agreement, including interest through the date of payment (whether or not such interest is allowed in a bankruptcy case), have been paid in full in cash; provided that, notwithstanding such subordination, such fee shall be permitted to be paid at all times other than during such time (a “Restricted Period”) as either (i) a Default or an Event of Default (each such term as defined in the Indenture governing the Senior Notes (as such Indenture may be amended, restated, supplemented, renewed, replaced or otherwise modified from time to time, the “Indenture”)) has occurred and is continuing with respect to the Senior Notes (it being understood that any such Default or Event of Default that results exclusively due to a default under the Credit Agreement shall not give rise under this clause (i) to the Restricted Period) or (ii) any Event of Default (as defined in the Credit Agreement) specified in any of Sections 8.01(a), 8.01(b), 8.01(g) or 8.01(h) of the Credit Agreement has occurred and is continuing; provided further that the fee shall continue to accrue during any Restricted Period and all accrued and unpaid fees will be paid upon the termination of the Restricted Period. In the event that any amount of the fee specified in this paragraph is paid by the Company to CHS during a Restricted Period, CHS agrees to turn over such amount to the Collateral Agent under the Credit Agreement, to be held as additional Collateral for the Obligations under the Credit Agreement (all capitalized terms in this sentence not otherwise defined in this Agreement shall have the meanings provided in the Credit Agreement); provided that, pursuant to pursuant to Section 11.4(b) of that certain Security Agreement, dated as of May 18, 2004, among the Company, the Guarantors party thereto and UBS AG, Stamford Branch, as Collateral Agent, the Company shall (and shall cause its subsidiaries and affiliates to) request the Collateral Agent to (and take other actions reasonably requested by CHS to cause the Collateral Agent to) return to CHS upon the end of the Restricted Period any amount so turned over; provided further that any amount turned over to the Collateral Agent and not returned to CHS upon the end of the applicable Restricted Period pursuant to the preceding proviso shall be deemed to have accrued and not been paid by the Company, and the Company shall pay CHS such unreturned amounts within 2 days after CHS’s written request. Upon a termination of this Agreement in accordance with Section 5 hereof which does not occur on the last day of a month, a pro rated monthly fee shall be paid based upon the number of days elapsed in the partial month prior to termination.

(b) Purchase. As compensation for services rendered by CHS to Parent in connection with the identification and negotiation of the Plan and Agreement of Merger, dated as of December 31, 2003, by and among Parent, the Company and GEO Sub Corp. (the “Merger Agreement”), the structuring of the transactions contemplated by the Merger Agreement and the financing of such transactions (the “Purchase”), Holdings agrees to pay $5,000,000.00 to CHS on the date hereof.

(c) Future Purchases. When and as Code Hennessy & Simmons IV LP or any of its affiliates purchase equity securities of Parent, Parent will pay to CHS a fee equal to 5.0% of the gross purchase price of such securities as compensation for services rendered by CHS to Parent in connection with the consummation of the transaction or other activity giving rise to such purchase.

4. Expense Reimbursement. Parent and the Company, as applicable, shall promptly reimburse CHS for such reasonable travel expenses and other out-of-pocket fees and expenses as may be incurred by CHS, its partners and employees in connection with the Purchase and future acquisitions, and in connection with the rendering of services hereunder.

5. Term. This Agreement shall be in effect for an initial term of seven years commencing on the date hereof, and shall be automatically renewed thereafter on a year-to-year basis unless one party gives 30 days’ prior written notice of its desire to terminate this Agreement; provided, however, that this Agreement shall terminate on a Sale of the Company (as defined in the Stockholders Agreement, dated as of the date hereof, by and among Parent, Code Hennessy & Simmons IV LP and Parent’s other stockholders). No termination of this Agreement, whether pursuant to this paragraph or otherwise, shall affect Parent’s or the Company’s obligations with respect to the fees, costs and expenses incurred by CHS in rendering services hereunder and not reimbursed by Parent or the Company as of the effective date of such termination.

6. Indemnification. Parent and the Company agree, jointly and severally, to indemnify and hold harmless CHS, its officers and employees against and from any and all loss, liability, suits, claims, costs, damages and expenses (including attorneys’ fees) arising from their performance hereunder, except as a result of their gross negligence or intentional wrongdoing.

7. CHS an Independent Contractor. CHS, Parent and the Company agree that CHS shall perform services hereunder as an independent contractor, retaining control over and responsibility for its own operations and personnel. Neither CHS nor its partners or employees shall be considered employees or agents of Parent or the Company as a result of this Agreement nor shall any of them have authority to contract in the name of or bind Parent or the Company, except as expressly agreed to in writing by Parent or the Company, respectively.

8. Notices. Any notice, report or payment required or permitted to be given or made under this Agreement by one party to the other shall be deemed to have been duly given or made if personally delivered or, if mailed, when mailed by registered or certified mail, postage prepaid, to the other party at the following addresses (or at such other address as shall be given in writing by one party to the other):

If to CHS:

CHS Management IV LP

10 South Wacker Drive

Suite 3175

Chicago, IL 60606

Facsimile: (312) 876-3854

Attn: Daniel J. Hennessy and Marcus J. George

with a copy to:

Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, IL 60601

Facsimile: (312) 861-2200

Attn: Kevin R. Evanich, P.C.

If to Parent or the Company:

Gundle/SLT Environmental, Inc.

19103 Gundle Road

Houston, Texas 77073

Facsimile: (281) 443-3399

Attn: Samir T. Badawi

9. Entire Agreement; Modification. This Agreement (a) contains the complete and entire understanding and agreement of CHS, Parent and the Company with respect to the subject matter hereof; (b) supersedes all prior and contemporaneous understandings, conditions and agreements, oral or written, express or implied, respecting the engagement of CHS in connection with the subject matter hereof; and, (c) subject to Section 13 below, may not be modified except by an instrument in writing executed by CHS, Parent and the Company.

10. Waiver of Breach. The waiver by a party of a breach of any provision of this Agreement by another party shall not operate or be construed as a waiver of any subsequent breach of that provision or any other provision hereof.

11. Assignment. None of CHS, Parent or the Company may assign its rights or obligations under this Agreement without the express written consent of each other party.

12. Choice of Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois.

13. Third Party Beneficiaries. Each of the Collateral Agent and the Administrative Agent (as each such term is defined in the Credit Agreement) and the Trustee (as such term is defined in the Indenture) shall be third party beneficiaries of the second and third sentences in Section 3(a) above. Any modification of such sentences shall require the consent of such Collateral Agent, such Administrative Agent and such Trustee.

* * * *

IN WITNESS WHEREOF, the parties hereto have caused this Management Agreement to be duly executed and delivered on the date and year first above written.

		CHS MANAGEMENT IV LP

		By:	Code Hennessy & Simmons LLC
		Its:	General Partner

		By:	/s/ Daniel J. Hennessy
		Name:	Daniel J. Hennessy
		Its:	Partner


		GEO HOLDINGS CORP.

		By:	/s/ Daniel J. Hennessy
		Name:	Daniel J. Hennessy
		Its:	President


		GUNDLE/SLT ENVIRONMENTAL, INC.

		By:	/s/ Samir T. Badawi
		Name:	Samir T. Badawi
		Its:	President and Chief Executive Officer

AMENDMENT NO. 2 TO
THE MANAGEMENT AGREEMENT

THIS AMENDMENT NO. 2 TO THE MANAGEMENT AGREEMENT (this “Amendment Agreement”), dated as of May 27, 2011 (the “Effective Date”), is entered into by and among CHS Management IV LP, a Delaware limited partnership (“CHS”), GEO Holdings Corp., a Delaware corporation (“Parent”), and Gundle/SLT Environmental, Inc., a Delaware corporation (the “Company”).

WHEREAS, the Company, Parent and CHS entered into that certain Management Agreement dated as of May 18, 2004 (as amended, restated, supplemented or otherwise modified from time to time, the “Management Agreement”);

WHEREAS, the Company, Parent and CHS desire to amend the Management Agreement as stated in this Amendment Agreement effective as of the Effective Date;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties, the Company, Parent and CHS each hereby agree as follows:

Section 1. Defined Terms. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Management Agreement.

Section 2. Addition of Section 3(d) to the Management Agreement. A new Section 3(d) shall be added to the Management Agreement and shall read as follows:

“(d) Monthly Fee. The Company agrees that the Monthly Fee payable pursuant to Section 3(a) shall be subordinated to the same extent as set forth in the succeeding sentence and further agrees to pay to CHS as compensation for services to be rendered by CHS hereunder, a monthly fee equal to $166,666.66, payable monthly in arrears on the last day of each month, commencing with the month during which the closing of the Refinancing (as defined below) occurs, with the monthly payment for the month in which the Refinancing is closed being pro rated for the number of days between the date of such closing and the end of such month. Such fee shall be expressly subordinated to the principal, interest and premium, if any, and all fees, unreimbursed drawings in respect of letters of credit and other amounts owing under each of (i) the First Lien Credit Agreement dated as of the Effective Date (as in effect from time to time, the “First Lien Credit Agreement”), by and among the Company, the other Persons party thereto that are designated as a “Credit Party”, General Electric Capital Corporation, a Delaware corporation, as agent (the “First Lien Agent”) for the several financial institutions from time to time party thereto (collectively, the “First Lien Lenders” and individually each a “First Lien Lender”) and for itself as a First Lien Lender and such First Lien Lenders, and (ii) the Second Lien Credit Agreement dated as of the Effective Date (as in effect from time to time, the “Second Lien Credit Agreement” and together with the First Lien Credit Agreement, the “Credit Agreements”, and the closing of such Credit Agreements hereinafter referred to as the “Refinancing”), by and among the Company, the other Persons party thereto that are designated as a “Credit Party”, Jefferies Finance LLC, as agent (the “Second Lien Agent” and together with the First Lien Agent, the “Agents”) for the several financial institutions from time to time party thereto (collectively, the “Second Lien Lenders” and individually each a “Second Lien Lender”) and for itself as a Second Lien Lender and such Second Lien Lenders, until all obligations under the First

Lien Credit Agreement and the Second Lien Credit Agreement, including interest, fees and expenses through the date of payment (whether or not such interest, fees and expenses are allowed in a bankruptcy case), have been paid in full in cash (other than unasserted contingent indemnification obligations) and may only be paid to the extent permitted by the Credit Agreements; provided that, notwithstanding such subordination, such fee shall be permitted to be paid at all times other than during such time (a “Restricted Period”) as an Event of Default (as defined under either of the Credit Agreements) has occurred and is continuing or would arise as a result of such payment; provided, further, that any fees not paid due to the existence of an Event of Default shall be deferred and may be paid when no Event of Default exists or would arise as a result of such payment (whether upon the waiver or cure thereof in accordance with the terms of the Credit Agreements). In the event that any amount of the fee specified in this paragraph is paid by the Company to CHS during a Restricted Period, CHS agrees to turn over such amount to the applicable Agent under the Credit Agreements, to be held as additional Collateral for the Obligations under the Credit Agreements (all capitalized terms in this sentence not otherwise defined in this Agreement shall have the meanings provided in the Credit Agreements); provided that, the Company shall (and shall cause its subsidiaries and affiliates to) request the Agents to (and take other actions reasonably requested by CHS to cause the Agents to) return to CHS upon the end of the Restricted Period any amount so turned over to the extent not applied to the Obligations (as defined under either of the Credit Agreements) under the Credit Agreements; provided further that any amount turned over to the Agents and not returned to CHS upon the end of the applicable Restricted Period pursuant to the preceding proviso shall be deemed to have accrued and not been paid by the Company, and the Company shall pay CHS such unreturned amounts within 2 days after CHS’s written request. Upon a termination of this Agreement in accordance with Section 5 hereof which does not occur on the last day of a month, a pro rated monthly fee shall be paid based upon the number of days elapsed in the partial month prior to termination. Notwithstanding anything contained herein to the contrary, in no event shall the Company be permitted or required to make a payment under this Section 3(d) in the same month that the Company makes a payment under Section 3(a).”

Section 3. Addition of Section 3(e) to the Management Agreement. A new Section 3(e) shall be added to the Management Agreement and shall read as follows:

“(e) Refinancing Fee. The Company agrees to pay to CHS as compensation for services rendered by CHS in connection with the Refinancing, a one-time fee equal to $2,000,000, payable upon the closing of the Refinancing.

Section 4. Amendment to Section 8 to the Management Agreement. Section 8 of the Management Agreement shall be amended by (i) deleting the reference to “Samir T. Badawi” and replacing such reference with “Chief Executive Officer”; and (ii) deleting the reference to “200 East Randolph Drive Chicago, IL 60601 Facsimile: (312) 861-2200” and replacing such reference with the following language:

“300 North LaSalle Street

Chicago, Illinois 60654

Facsimile: (312) 862-2200

Attn: Christopher J. Greeno, P.C.”.

Section 5. Addition of Section 14 to the Management Agreement. A new Section 14 shall be added to the Management Agreement and shall read as follows:

“Third Party Beneficiaries. Each of the Agents (as each such term is defined in the Credit Agreements set forth in Section 3(d) hereof) shall be third party beneficiaries of the first, second and third sentences in Section 3(d) above and such sentences may be enforced directly by the Agents. Until the repayment in full in cash (other than asserted contingent indemnification obligations) of the Obligations (as defined in each of the Credit Agreements), any modification of such sentences or this Section 14 shall require the consent of the Agents.”

Section 6. Miscellaneous.

6.01 Continuance of the Management Agreement. Except as specifically amended by this Amendment Agreement, the Management Agreement shall remain in full force and effect.

6.02 Counterparts. This Amendment Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which, taken together, shall constitute a single Amendment Agreement. Any counterpart may be executed by facsimile signature and such facsimile signature shall be deemed an original.

6.03 Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Amendment Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Illinois of any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois.

* * * * * *

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to the Management Agreement to be signed as of the date first above written.

		CHS MANAGEMENT IV LP

		By:	Code Hennessy & Simmons LLC
		Its:	General Partner

		By:	/s/ Steven R. Brown
		Name:	Steven R. Brown
		Its:	Member


		GEO HOLDINGS CORP.

		By:	/s/ Charles Lowrey
		Name:	Charles Lowrey
		Its:	Vice President and Chief Financial Officer


		GUNDLE/SLT ENVIRONMENTAL, INC.

		By:	/s/ Charles Lowrey
		Name:	Charles Lowrey
		Its:	Vice President and Chief Financial Officer


CONSENTED TO BY:

GENERAL ELECTRIC CAPITAL CORPORATION

By:	/s/ Richard B. Davidson
Name:	Richard B. Davidson
Its:	Duly Authorized Signatory


JEFFERIES FINANCE LLC

By:	/s/ E. Joseph Hess
Name:	E. Joseph Hess
Its:	Managing Director

Signature Page to Amendment No. 2 to Management Agreement

EX-10.5 7 a2204569zex-10_5.htm EX-10.5

Exhibit 10.5

FIRST LIEN GUARANTY AND SECURITY AGREEMENT

Dated as of May 27, 2011

among

GUNDLE/SLT ENVIRONMENTAL, INC.

and

Each Other Grantor
From Time to Time Party Hereto

and

GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent

TABLE OF CONTENTS

		Page

ARTICLE I DEFINED TERMS		1
Section 1.1	Definitions	1
Section 1.2	Certain Other Terms	5

ARTICLE II GUARANTY		6
Section 2.1	Guaranty	6
Section 2.2	Limitation of Guaranty	6
Section 2.3	Contribution	6
Section 2.4	Authorization; Other Agreements	6
Section 2.5	Guaranty Absolute and Unconditional	7
Section 2.6	Waivers	8
Section 2.7	Reliance	8

ARTICLE III GRANT OF SECURITY INTEREST		9
Section 3.1	Collateral	9
Section 3.2	Grant of Security Interest in Collateral	9

ARTICLE IV REPRESENTATIONS AND WARRANTIES		10
Section 4.1	Title; No Other Liens	10
Section 4.2	Perfection and Priority	10
Section 4.3	Jurisdiction of Organization; Chief Executive Office	11
Section 4.4	Locations of Inventory, Equipment and Books and Records	11
Section 4.5	Pledged Collateral	11
Section 4.6	Instruments and Tangible Chattel Paper Formerly Accounts	12
Section 4.7	Intellectual Property	12
Section 4.8	Commercial Tort Claims	12
Section 4.9	Specific Collateral	13
Section 4.10	Enforcement	13

ARTICLE V COVENANTS		13
Section 5.1	Maintenance of Perfected Security Interest; Further Documentation and Consents	13
Section 5.2	Changes in Locations, Name, Etc.	14
Section 5.3	Pledged Collateral	14
Section 5.4	Accounts	15
Section 5.5	Commodity Contracts	15
Section 5.6	Delivery of Instruments and Tangible Chattel Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper	16
Section 5.7	Intellectual Property	16
Section 5.8	Notices	17
Section 5.9	Notice of Commercial Tort Claims	18
Section 5.10	Controlled Securities Account	18
Section 5.11	Controlled Deposit Accounts	18

TABLE OF CONTENTS

(continued)

			Page

ARTICLE VI REMEDIAL PROVISIONS		18
Section 6.1	Code and Other Remedies	18
Section 6.2	Accounts and Payments in Respect of General Intangibles	21
Section 6.3	Pledged Collateral	22
Section 6.4	Proceeds to be Turned over to and Held by Agent	23
Section 6.5	Sale of Pledged Collateral	23
Section 6.6	Deficiency	24

ARTICLE VII THE AGENT		24
Section 7.1	Agent’s Appointment as Attorney-in-Fact	24
Section 7.2	Authorization to File Financing Statements	26
Section 7.3	Authority of Agent	26
Section 7.4	Duty; Obligations and Liabilities	26

ARTICLE VIII MISCELLANEOUS		27
Section 8.1	Reinstatement	27
Section 8.2	Release of Collateral	27
Section 8.3	Independent Obligations	28
Section 8.4	No Waiver by Course of Conduct	28
Section 8.5	Amendments in Writing	28
Section 8.6	Additional Grantors; Additional Pledged Collateral	29
Section 8.7	Notices	29
Section 8.8	Successors and Assigns	29
Section 8.9	Counterparts	29
Section 8.10	Severability	29
Section 8.11	Governing Law	29
Section 8.12	Waiver of Jury Trial	29

ANNEXES AND SCHEDULES

Annex 1		Form of Pledge Amendment
Annex 2		Form of Joinder Agreement
Annex 3		Form of Intellectual Property Security Agreement

Schedule 1		Commercial Tort Claims
Schedule 2		Filings
Schedule 3		Jurisdiction of Organization; Chief Executive Office
Schedule 4		Location of Inventory and Equipment
Schedule 5		Pledged Collateral
Schedule 6		Intellectual Property

iii

FIRST LIEN GUARANTY AND SECURITY AGREEMENT, dated as of May 27, 2011 (this “Agreement”), by Gundle/SLT Environmental, Inc., a Delaware corporation (the “Borrower”), and each of the other entities listed on the signature pages hereof or that becomes a party hereto pursuant to Section 8.6 (such entities, together with the Borrower, the “Grantors”), in favor of General Electric Capital Corporation (“GE Capital”), as administrative agent (in such capacity, together with its successors and permitted assigns, the “Agent”) for the Lenders, the L/C Issuers and each other Secured Party (each as defined in the Credit Agreement referred to below).

W I T N E S S E T H:

WHEREAS, pursuant to the First Lien Credit Agreement dated as of the date hereof (as the same may be amended, restated, supplemented and/or modified from time to time, the “Credit Agreement”) among the Borrower, Holdings, the other Persons party thereto as Credit Parties, the Lenders, the L/C Issuers from time to time party thereto and GE Capital, as Agent for the Lenders and the L/C Issuers and each other Secured Party, the Lenders and the L/C Issuers have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein;

WHEREAS, each Grantor (other than the Borrower) has agreed to guaranty the Obligations (as defined in the Credit Agreement) of the Borrower;

WHEREAS, each Grantor will derive substantial direct and indirect benefits from the making of the extensions of credit under the Credit Agreement; and

WHEREAS, it is a condition precedent to the obligation of the Lenders and the L/C Issuers to make their respective extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Agent;

NOW, THEREFORE, in consideration of the premises and to induce the Lenders, the L/C Issuers and the Agent to enter into the Credit Agreement and to induce the Lenders and the L/C Issuers to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Agent as follows:

ARTICLE I

DEFINED TERMS

Section 1.1 Definitions. (a) Capital terms used herein without definition are used as defined in the Credit Agreement.

(b) The following terms have the meanings given to them in the UCC and terms used herein without definition that are defined in the UCC have the meanings given to them in the UCC (such meanings to be equally applicable to both the singular and plural forms of the terms defined): “account”, “account debtor”, “as-extracted collateral”, “certificated security”, “chattel paper”, “commercial tort claim”, “commodity contract”, “deposit account”, “electronic chattel paper”, “equipment”, “farm products”, “fixture”, “general intangible”, “goods”, “health-care-insurance receivable”, “instruments”, “inventory”, “investment property”,

“letter-of-credit right”, “proceeds”, “record”, “securities account”, “security”, “supporting obligation” and “tangible chattel paper”.

“Agreement” means this First Lien Guaranty and Security Agreement.

“Applicable IP Office” means the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency within or outside the United States.

“Cash Collateral Account” means a deposit account or securities account subject, in each instance, to a Control Agreement, other than accounts established to cash collateralize L/C Reimbursement Obligations.

“Collateral” has the meaning specified in Section 3.1.

“Controlled Securities Account” means each securities account (including all financial assets held therein and all certificates and instruments, if any, representing or evidencing such financial assets) that is the subject of an effective Control Agreement.

“Excluded Accounts” means (i) any payroll account so long as amounts on deposit therein do not exceed the reasonably estimated payroll obligations of such Person, (ii) any withholding tax and fiduciary accounts and (iii) any petty cash deposit accounts maintained at a financial institution for which a Control Agreement has not otherwise been obtained, so long as, with respect to this clause (iii), the aggregate amount on deposit in each such petty cash account does not exceed $25,000 at any one time and the aggregate amount on deposit in all such petty cash accounts does not exceed $250,000 at any one time.

“Excluded Equity” means (a) any voting stock in excess of 65% of the outstanding voting stock of any First-Tier Foreign Subsidiary and any Excluded Subsidiary of the type described in clause (v) of the definition thereof, which, pursuant to the terms of the Credit Agreement, is not required to guaranty the Obligations and (b) any equity interests in partnerships and joint ventures and other entities that, in each case, are not Subsidiaries of the Borrower to the extent that such equity interests may not be pledged without the consent of one or more third parties (other than Holdings or any of its Subsidiaries or Affiliates) after giving effect to the applicable anti-assignment provisions of the UCC or any other Requirement of Law. For the purposes of this definition, “voting stock” means, with respect to any issuer, the issued and outstanding shares of each class of Stock of such issuer entitled to vote (within the meaning of Treasury Regulations § 1.956-2(c)(2)).

(B) to the extent that any Requirement of Law applicable thereto prohibits the creation of a Lien thereon, but only, with respect to the prohibition in (A) and (B), to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC, the Bankruptcy Code or any other Requirement of Law, or (C) the grant of a security interest in such permit, license, Contractual Obligation, general intangible, Intellectual Property or franchise would result in the loss of rights thereon or create a default thereunder, (iii) Property owned by any Grantor that is subject to a purchase money Lien or a Capital Lease permitted under the Credit Agreement if the Contractual Obligation pursuant to which such Lien is granted (or in the document providing for such Capital Lease) prohibits or requires the consent of any Person other than a Grantor or any of its Subsidiaries or Affiliates which has not been obtained as a condition to the creation of any other Lien on such equipment, and (iv) any “intent to use” Trademark applications for which a statement of use has not been filed (but only until such statement is filed); provided, however, “Excluded Property” shall not include any proceeds, products, substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions or replacements would otherwise constitute Excluded Property).

“Fraudulent Transfer Laws” has the meaning set forth in Section 2.2.

“Guaranteed Obligations” has the meaning set forth in Section 2.1.

“Guarantor” means each Grantor other than the Borrower.

“Guaranty” means the guaranty of the Guaranteed Obligations made by the Guarantors as set forth in this Agreement.

“Internet Domain Name” means all right, title and interest (and all related IP Ancillary Rights) arising under any Requirement of Law in or relating to Internet domain names.

“In-Transit Collateral” has the meaning set forth in Section 4.4.

“Loan Documents” means, collectively, the Loan Documents (as defined in the Credit Agreement) and each Secured Rate Contract.

“Material Intellectual Property” means Intellectual Property that is owned by or licensed to a Grantor and material to the conduct of any Grantor’s business.

“Pledge Amendment” has the meaning set forth in Section 8.6(b).

“Pledged Certificated Stock” means all certificated securities and any other Stock or Stock Equivalent of any Person evidenced by a certificate, instrument or other similar document (as defined in the UCC), in each case owned by any Grantor, and any distribution of property made on, in respect of or in exchange for the foregoing from time to time, including all Stock and Stock Equivalents listed on Schedule 5. Pledged Certificated Stock excludes any Excluded Property and any Cash Equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section 5.10.

“Pledged Collateral” means, collectively, the Pledged Stock and the Pledged Debt Instruments.

“Pledged Debt Instruments” means all right, title and interest of any Grantor in instruments evidencing any Indebtedness owed to such Grantor or other obligations, and any distribution of property made on, in respect of or in exchange for the foregoing from time to time, including all Indebtedness described on Schedule 5, issued by the obligors named therein. Pledged Debt Instruments excludes any Cash Equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section 5.10.

“Pledged Investment Property” means any investment property of any Grantor, and any distribution of property made on, in respect of or in exchange for the foregoing from time to time, other than any Pledged Stock or Pledged Debt Instruments. Pledged Investment Property excludes Excluded Equity and any Cash Equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section 5.10.

“Pledged Stock” means all Pledged Certificated Stock and all Pledged Uncertificated Stock.

“Pledged Uncertificated Stock” means any Stock or Stock Equivalent of any Person that is not Pledged Certificated Stock, including all right, title and interest of any Grantor as a limited or general partner in any partnership not constituting Pledged Certificated Stock or as a member of any limited liability company, all right, title and interest of any Grantor in, to and under any Organization Document of any partnership or limited liability company to which it is a party, and any distribution of property made on, in respect of or in exchange for the foregoing from time to time, including in each case those interests set forth on Schedule 5, to the extent such interests are not certificated. Pledged Uncertificated Stock excludes any Excluded Property and any Cash Equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section 5.10.

“Secured Obligations” has the meaning set forth in Section 3.2.

“Software” means (a) all computer programs, including source code and object code versions, (b) all data, databases and compilations of data, whether machine readable or otherwise, and (c) all documentation, training materials and configurations related to any of the foregoing.

“transferable records” has the meaning set forth in Section 5.6(c).

“UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York; provided, however, that, in the event that, by reason of mandatory provisions of any applicable Requirement of Law, any of the attachment, perfection or priority of the Agent’s or any other Secured Party’s security interest in any Collateral is governed by the Uniform Commercial Code of a jurisdiction other than the State of New York, “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of the definitions related to or otherwise used in such provisions.

Section 1.2 Certain Other Terms.

(a) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. The terms “herein”, “hereof” and similar terms refer to this Agreement as a whole and not to any particular Article, Section or clause in this Agreement. References herein to an Annex, Schedule, Article, Section or clause refer to the appropriate Annex or Schedule to, or Article, Section or clause in this Agreement. Where the context requires, provisions relating to any Collateral when used in relation to a Grantor shall refer to such Grantor’s Collateral or any relevant part thereof.

(b) Other Interpretive Provisions.

(i) Defined Terms. Unless otherwise specified herein or therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto.

(ii) The Agreement. The words “hereof”, “herein”, “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(iii) Certain Common Terms. The term “including” is not limiting and means “including without limitation.”

(iv) Performance; Time. Whenever any performance obligation hereunder (other than a payment obligation) shall be stated to be due or required to be satisfied on a day other than a Business Day, such performance shall be made or satisfied on the next succeeding Business Day. In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including.” If any provision of this Agreement refers to any action taken or to be taken by any Person, or which such Person is prohibited from taking, such provision shall be interpreted to encompass any and all means, direct or indirect, of taking, or not taking, such action.

(v) Contracts. Unless otherwise expressly provided herein, references to agreements and other contractual instruments, including this Agreement and the other Loan Documents, shall be deemed to include all subsequent amendments, thereto, restatements and substitutions thereof and other modifications and supplements thereto which are in effect from time to time, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document.

(vi) Laws. References to any statute or regulation are to be construed as including all statutory and regulatory provisions related thereto or consolidating, amending, replacing, supplementing or interpreting the statute or regulation.

ARTICLE II

GUARANTY

Section 2.1 Guaranty. To induce the Lenders to make the Loans and the L/C Issuers to Issue Letters of Credit and each other Secured Party to make credit available to or for the benefit of one or more Grantors, each Guarantor hereby, jointly and severally, absolutely, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, the full and punctual payment when due, whether at stated maturity or earlier, by reason of acceleration, mandatory prepayment or otherwise in accordance with any Loan Document, of all the Obligations of the Borrower whether existing on the date hereof or hereinafter incurred or created (the “Guaranteed Obligations”). This Guaranty by each Guarantor hereunder constitutes a guaranty of payment and not of collection.

Section 2.2 Limitation of Guaranty. Any term or provision of this Guaranty or any other Loan Document to the contrary notwithstanding, the maximum aggregate amount for which any Guarantor shall be liable hereunder shall not exceed the maximum amount for which such Guarantor can be liable without rendering this Guaranty or any other Loan Document, as it relates to such Guarantor, subject to avoidance under applicable Requirements of Law relating to fraudulent conveyance or fraudulent transfer (including the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act and Section 548 of the Bankruptcy Code or any applicable provisions of comparable Requirements of Law) (collectively, “Fraudulent Transfer Laws”). Any analysis of the provisions of this Guaranty for purposes of Fraudulent Transfer Laws shall take into account the right of contribution established in Section 2.3 and, for purposes of such analysis, give effect to any discharge of intercompany debt as a result of any payment made under the Guaranty.

Section 2.3 Contribution. To the extent that any Guarantor shall be required hereunder to pay any portion of any Guaranteed Obligation exceeding the greater of (a) the amount of the value actually received by such Guarantor and its Subsidiaries from the Loans and other Obligations and (b) the amount such Guarantor would otherwise have paid if such Guarantor had paid the aggregate amount of the Guaranteed Obligations (excluding the amount thereof repaid by the Borrower and Holdings) in the same proportion as such Guarantor’s net worth on the date enforcement is sought hereunder bears to the aggregate net worth of all the Guarantors on such date, then such Guarantor shall be reimbursed by such other Guarantors for the amount of such excess, pro rata, based on the respective net worth of such other Guarantors on such date.

Section 2.4 Authorization; Other Agreements. The Secured Parties are hereby authorized, without notice to or demand upon any Guarantor and without discharging or otherwise affecting the obligations of any Guarantor hereunder and without incurring any liability hereunder, from time to time, to do each of the following:

(a) (i) modify, amend, supplement or otherwise change, (ii) accelerate or otherwise change the time of payment or (iii) waive or otherwise consent to noncompliance with, any Guaranteed Obligation or any Loan Document;

(b) apply to the Guaranteed Obligations any sums by whomever paid or however realized to any Guaranteed Obligation in such order as provided in the Loan Documents;

(d) (i) sell, exchange, enforce, waive, substitute, liquidate, terminate, release, abandon, fail to perfect, subordinate, accept, substitute, surrender, exchange, affect, impair or otherwise alter or release any Collateral for any Guaranteed Obligation or any other guaranty therefor in any manner, (ii) receive, take and hold additional Collateral to secure any Guaranteed Obligation, (iii) add, release or substitute any one or more other Guarantors, makers or endorsers of any Guaranteed Obligation or any part thereof and (iv) otherwise deal in any manner with the Borrower and any other Guarantor, maker or endorser of any Guaranteed Obligation or any part thereof; and

(e) settle, release, compromise, collect or otherwise liquidate the Guaranteed Obligations.

Section 2.5 Guaranty Absolute and Unconditional. Each Guarantor hereby waives to the fullest extent permitted by law, and agrees not to assert, any defense (other than a defense of payment), whether arising in connection with or in respect of any of the following or otherwise, and hereby agrees that its obligations under this Guaranty are irrevocable, absolute and unconditional and shall not be discharged as a result of or otherwise affected by any of the following (which may not be pleaded and evidence of which may not be introduced in any proceeding with respect to this Guaranty, in each case except as otherwise agreed in writing by the Agent):

(a) the invalidity or unenforceability of any obligation of the Borrower or any other Guarantor under any Loan Document or any other agreement or instrument relating thereto (including any amendment, consent or waiver thereto), or any security for, or other guaranty of, any Guaranteed Obligation or any part thereof, or the lack of perfection or continuing perfection or failure of priority of any security for the Guaranteed Obligations or any part thereof;

(b) the absence of (i) any attempt to collect any Guaranteed Obligation or any part thereof from the Borrower or any other Guarantor or other action to enforce the same or (ii) any action to enforce any Loan Document or any Lien thereunder;

(c) the failure by any Person to take any steps to perfect and maintain any Lien on, or to preserve any rights with respect to, any Collateral;

(d) any workout, insolvency, bankruptcy proceeding, reorganization, arrangement, liquidation or dissolution by or against the Borrower, any other Guarantor or any of the Borrower’s other Subsidiaries or any procedure, agreement, order, stipulation, election, action or omission thereunder, including any discharge or disallowance of, or bar or stay against collecting, any Guaranteed Obligation (or any interest thereon) in or as a result of any such proceeding;

(e) any foreclosure, whether or not through judicial sale, and any other sale or other disposition of any Collateral or any election following the occurrence and during the continuance of an Event of Default by any Secured Party to proceed separately against any Collateral in accordance with such Secured Party’s rights under any applicable Requirement of Law; or

(f) any other defense (other than payment), setoff, counterclaim or any other circumstance that might otherwise constitute a legal or equitable discharge of the Borrower, any other Guarantor or any other Subsidiary of the Borrower, in each case other than the payment in full of the Guaranteed Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted and Letter of Credit Obligations collateralized in the manner set forth in Section 7.4 of the Credit Agreement).

Section 2.6 Waivers. Each Guarantor hereby unconditionally and irrevocably waives, to the fullest extent permitted by law, and agrees not to assert, any claim, defense (other than payment), setoff or counterclaim based on diligence, promptness, presentment, requirements for any demand or notice hereunder including any of the following: (a) any demand for payment or performance and protest and notice of protest; (b) any notice of acceptance; (c) any presentment, demand, protest or further notice or other requirements of any kind with respect to any Guaranteed Obligation (including any accrued but unpaid interest thereon) becoming immediately due and payable; and (d) any other notice in respect of any Guaranteed Obligation or any part thereof, and any defense arising by reason of any disability or other defense of the Borrower or any other Guarantor. Each Guarantor further unconditionally and irrevocably agrees, so long as any Commitment or Obligations remain outstanding not to (x) enforce or otherwise exercise any right of subrogation or any right of reimbursement or contribution or similar right against the Borrower or any other Guarantor by reason of any Loan Document or any payment made thereunder or (y) assert any claim, defense (other than payment), setoff or counterclaim it may have against any other Credit Party or set off any of its obligations to such other Credit Party against obligations of such Credit Party to such Guarantor. No obligation of any Guarantor hereunder shall be discharged in full other than by complete performance.

Section 2.7 Reliance. Each Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of the Borrower, each other Guarantor and any other guarantor, maker or endorser of any Guaranteed Obligation or any part thereof, and of all other circumstances bearing upon the risk of nonpayment of any Guaranteed Obligation or any part thereof that diligent inquiry would reveal, and each Guarantor hereby agrees that no Secured Party shall have any duty to advise any Guarantor of information known to it regarding such condition or any such circumstances. In the event any Secured Party, in its sole discretion, undertakes at any time or from time to time to provide any such information to any Guarantor, such Secured Party shall be under no obligation to (a) undertake any investigation not a part of its regular business routine, (b) disclose any information that such Secured Party, pursuant to accepted or reasonable commercial finance or banking practices, wishes to maintain confidential or (c) make any future disclosures of such information or any other information to any Guarantor.

ARTICLE III

GRANT OF SECURITY INTEREST

Section 3.1 Collateral. For the purposes of this Agreement, all of the following property now owned or at any time hereafter acquired by a Grantor or in which a Grantor now has or at any time in the future may acquire any right, title or interests is collectively referred to as the “Collateral”:

(a) all accounts, chattel paper, deposit accounts, documents, equipment, general intangibles, instruments, inventory, investment property, letter of credit rights and any supporting obligations (in each case, as defined in the UCC) related to any of the foregoing;

(b) the commercial tort claims described on Schedule 1 and on any supplement thereto received by the Agent pursuant to Section 5.9;

(d) all property of such Grantor held by any Secured Party, including all property of every description, in the custody of or in transit to such Secured Party for any purpose, including safekeeping, collection or pledge, for the account of such Grantor or as to which such Grantor may have any right or power, including but not limited to cash;

(e) all cash, Cash Equivalents and other items deposited in, or credited to, any deposit account or securities account;

(f) all other goods (including but not limited to fixtures) and personal property of such Grantor, whether tangible or intangible and wherever located; and

(g) to the extent not otherwise included, all proceeds of the foregoing; provided, that “Collateral” shall not include any Excluded Property (other than proceeds thereof unless such proceeds independently constitute Excluded Property).

Section 3.2 Grant of Security Interest in Collateral. Each Grantor, as collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Obligations of such Grantor in accordance with the terms of the Loan Documents (the “Secured Obligations”), hereby mortgages, pledges and hypothecates to the Agent for the benefit of the Secured Parties, and grants to the Agent for the benefit of the Secured Parties a Lien on and security interest in, all of its right, title and interest in, to and under the Collateral of such Grantor; provided, however, notwithstanding the foregoing, no Lien or security interest is hereby granted on any Excluded Property; provided, further, that if and when any property shall cease to be Excluded Property, a Lien on and security in such property shall be deemed granted therein.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

To induce the Lenders, the L/C Issuers and the Agent to enter into the Loan Documents, each Grantor hereby represents and warrants each of the following to the Agent, the Lenders, the L/C Issuers and the other Secured Parties:

Section 4.1 Title; No Other Liens. Except for the Lien granted to the Agent pursuant to this Agreement and other Permitted Liens under any Loan Document (including Section 4.2), such Grantor owns each item of the Collateral free and clear of any and all Liens. Such Grantor (a) is the record and beneficial owner of the Collateral pledged by it hereunder constituting instruments or certificates and (b) has rights in or the power to grant a security interest in such rights in each other item of Collateral in which a Lien is granted by it hereunder, free and clear of any other Lien.

Section 4.2 Perfection and Priority. The security interest granted pursuant to this Agreement, to the extent a security interest can be granted by a security agreement governed by New York law, constitutes a valid and continuing perfected security interest in favor of the Agent in all Collateral subject, for the following Collateral (to the extent any such item is Collateral and such steps are required herein), to the occurrence of the following: (i) in the case of all Collateral in which a security interest may be perfected by filing a financing statement under the UCC, the completion of the filings and other actions specified on Schedule 2 (which, in the case of all filings and other documents referred to on such schedule, have been delivered to the Agent in completed and duly authorized form), (ii) with respect to any deposit account or securities account or commodities account (other than Excluded Accounts), the execution of Control Agreements, (iii) in the case of all U.S. registered Copyrights, U.S. registered Trademarks and U.S. issued Patents owned by a Grantor for which UCC filings are insufficient, all appropriate filings having been made with the United States Copyright Office or the United States Patent and Trademark Office, as applicable, (iv) in the case of letter-of-credit rights that are not supporting obligations of Collateral, the execution of a Contractual Obligation granting control to the Agent over such letter-of-credit rights to the extent required under Section 5.6, (v) in the case of electronic chattel paper, the completion of all steps necessary to grant control to the Agent over such electronic chattel paper to the extent required under Section 5.6, and (vi) in the case of commercial tort claims, the notice of such commercial tort claims pursuant to Section 5.9; provided however that no Grantor is making any representation or warranty as to the perfection of a security interest in unregistered Copyrights or other unregistered Intellectual Property or any “intent to use” Trademark applications for which a statement of use has not been filed. Such security interest shall be prior to all other Liens on the Collateral described in the following clauses (i), (ii) and (iii), except for Permitted Liens having priority over the Agent’s Lien by operation of law or express written agreement of the Agent upon (i) in the case of all Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment Property, the delivery thereof to the Agent of such Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment Property to the extent required under Section 5.3 consisting of instruments and certificates, in each case properly endorsed for transfer to the Agent or in blank, (ii) in the case of all Pledged Investment Property not in certificated form, the execution of Control Agreements with respect to such investment property to the extent required under Section 5.3

and (iii) in the case of all other instruments and tangible chattel paper that are not Pledged Certificated Stock, Pledged Debt Instruments or Pledged Investment Property, the delivery thereof to the Agent of such instruments and tangible chattel paper. Except as set forth in this Section 4.2, all actions by each Grantor necessary or desirable to protect and perfect the Lien granted hereunder on the Collateral have been duly taken.

Section 4.3 Jurisdiction of Organization; Chief Executive Office. Such Grantor’s jurisdiction of organization, legal name and organizational identification number, if any, and the location of such Grantor’s chief executive office or sole place of business, in each case as of the date hereof, is specified on Schedule 3 and such Schedule 3 also lists all jurisdictions of incorporation, legal names and locations of such Grantor’s chief executive office or sole place of business for the five years preceding the date hereof.

Section 4.4 Locations of Inventory, Equipment and Books and Records. On the date hereof, such Grantor’s inventory and equipment (other than inventory or equipment in transit or on consignment in the Ordinary Course of Business, items out for repair, samples provided to customers or prospective customers in the Ordinary Course of Business), items out for repair, equipment in the possession of an employee or a processor in the Ordinary Course of Business and equipment in an aggregate amount not to exceed $2,000,000 (collectively, the “In-Transit Collateral”)) and books and records concerning the Collateral are kept at the locations listed on Schedule 4.

Section 4.5 Pledged Collateral. (a) The Pledged Stock pledged by such Grantor hereunder (i) is listed on Schedule 5 (as such Schedule is deemed updated by each Pledge Amendment delivered hereunder) and constitutes that percentage of the issued and outstanding equity of all classes of each issuer thereof as set forth on Schedule 5 and (ii) has been duly authorized, validly issued and is fully paid and nonassessable (other than Pledged Stock in limited liability companies, partnerships and, if such concepts are not applicable in the jurisdiction of organization of such Person, Foreign Subsidiaries).

(b) As of the Closing Date, all Pledged Collateral (other than Pledged Uncertificated Stock) and all Pledged Investment Property consisting of instruments and certificates has been delivered to the Agent to the extent required by and in accordance with Section 5.3(a).

(c) Upon the occurrence and during the continuance of an Event of Default, the Agent shall be entitled to exercise all of the rights of the Grantor granting the security interest in any Pledged Stock, and a transferee or assignee of such Pledged Stock shall become a holder of such Pledged Stock to the same extent as such Grantor and be entitled to participate in the management of the issuer of such Pledged Stock and, upon the transfer of the entire interest of such Grantor, such Grantor shall, by operation of law, cease to be a holder of such Pledged Stock; provided that the Agent may elect at its sole and absolute discretion to permit such Grantor to continue voting such Pledged Stock.

(d) After all Events of Default have been cured or waived, each Grantor will have the right to exercise the voting and consensual rights and powers that it would otherwise be entitled to exercise pursuant to the terms of paragraph (c) above.

Section 4.6 Instruments and Tangible Chattel Paper Formerly Accounts. No amount payable to such Grantor under or in connection with any account is evidenced by any instrument or tangible chattel paper that has not been delivered to the Agent, properly endorsed in blank for transfer, to the extent delivery is required by Section 5.6(a).

Section 4.7 Intellectual Property.

(a) Schedule 6, as updated from time to time in accordance with the terms of this Agreement, sets forth a true and complete list of the following Intellectual Property such Grantor owns: (i) Intellectual Property that is registered or subject to applications for registration, and (ii) Internet Domain Names, including for each of the foregoing items (1) the owner, (2) the title, (3) the jurisdiction in which such item has been registered or patented or otherwise arises or in which an application for registration or patent has been filed, (4) as applicable, the registration or application number and registration or application date and (5) any IP Licenses or other rights (including franchises) granted by the Grantor with respect thereto. Schedule 6, as updated from time to time in accordance with the terms of this Agreement, sets forth a true and complete list of all IP Licenses pursuant to which a Grantor is licensed Intellectual Property from a third party, other than licenses for commercially available off the shelf software which has not been substantially customized.

(b) On the Closing Date, all registered Material Intellectual Property owned by such Grantor is valid, in full force and effect, subsisting, unexpired and to the Knowledge of each such Grantor, valid and enforceable (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights, generally, and general equitable principles (whether considered in a proceeding in equity or at law)), and no such registered Material Intellectual Property owned by such Grantor as set forth on Schedule 6 has been abandoned, except to the extent such abandonment will not and could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. Except as set forth on Schedule 6, the consummation of the transactions contemplated by the Loan Documents shall not cause any breach or default of any material IP License or limit or impair the ownership, use, validity or enforceability of, or any rights of such Grantor in, any Material Intellectual Property. There are no pending (or, to the knowledge of such Grantor, threatened) actions, investigations, suits, proceedings, audits, claims, demands, orders or disputes challenging the ownership, use, validity, enforceability of, or such Grantor’s rights in, any Material Intellectual Property of such Grantor (other than office actions issued in the ordinary course of prosecution of any pending application for patents or applications for registration of other Intellectual Property), except as could not reasonably be expected to have a Material Adverse Effect. To such Grantor’s knowledge, no Person has been or is infringing, misappropriating, diluting, violating or otherwise materially impairing any Intellectual Property of such Grantor. Such Grantor, and to such Grantor’s knowledge each other party thereto, is not in material breach or default of any material IP License.

Section 4.8 Commercial Tort Claims. The only commercial tort claims of any Grantor existing on the date hereof (regardless of whether the amount, defendant or other material facts can be determined and regardless of whether such commercial tort claim has been asserted or threatened or whether litigation has been commenced for such claims) where such Grantor’s claim is in excess of $100,000 or its recovery thereunder could reasonably be expected to be

greater than $100,000, are those listed on Schedule 1, which sets forth such information separately for each Grantor.

Section 4.9 Specific Collateral. None of the Collateral is or is proceeds or products of farm products, as-extracted collateral, health-care-insurance receivables or timber to be cut.

Section 4.10 Enforcement. No Permit, notice to or filing with any Governmental Authority or any notice to or consent from any other Person is required (except for Permits or consents which have been obtained and notices or filings which have been made) for the exercise by the Agent of its rights (including voting rights) provided for in this Agreement or the enforcement of remedies in respect of the Collateral pursuant to this Agreement, including the transfer of any Collateral, except as may be required in connection with the disposition of any portion of the Pledged Collateral by laws affecting the offering and sale of securities (including, but not limited to, membership interests in a limited liability company) generally or any approvals that may be required to be obtained from any bailees or landlords to collect the Collateral.

ARTICLE V

COVENANTS

Each Grantor agrees with the Agent to the following, as long as any Obligation or Commitment remains outstanding (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted and Letter of Credit Obligations collateralized in the manner set forth in Section 7.4 of the Credit Agreement):

Section 5.1 Maintenance of Perfected Security Interest; Further Documentation and Consents. (a) Generally. Such Grantor shall (i) not use or permit any Collateral to be used unlawfully or in violation of any provision of any Loan Document, any Requirement of Law or any policy of insurance covering the Collateral and (ii) not enter into any Contractual Obligation or undertaking restricting the right or ability of such Grantor or the Agent to sell, assign, convey or transfer any Collateral, except in each case if such violation or restriction could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

(b) Except as otherwise permitted in the Loan Documents, such Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in Section 4.2 and shall defend such security interest and such priority against the claims and demands of all Persons.

(c) In addition to any statements, schedules or reports the Agent may request from time to time pursuant to the Credit Agreement, each Grantor shall, upon the reasonable request by the Agent, furnish to the Agent from time to time statements and schedules further identifying and describing the Collateral and such other documents in connection with the Collateral as the Agent may reasonably request in order to maintain and protect its interest hereunder, all in reasonable detail and in form and substance satisfactory to the Agent.

(d) At any time and from time to time, upon the reasonable written request of the Agent, such Grantor shall, for the purpose of obtaining or preserving the full benefits of this

Agreement and of the rights and powers herein granted, (i) promptly and duly execute and deliver, and have recorded, such further documents, including an authorization to file (or, as applicable, the filing) of any financing statement or amendment under the UCC (or other filings under similar Requirements of Law) in effect in any jurisdiction with respect to the security interest created hereby and (ii) take such further action as the Agent may reasonably request, including (A) using its commercially reasonable efforts to secure all approvals necessary or appropriate for the collateral assignment to or for the benefit of the Agent of any Contractual Obligation, including any IP License, held by such Grantor and to enforce the security interests granted hereunder and (B) executing and delivering any Control Agreements with respect to deposit accounts and securities accounts to the extent required hereby or under any other Loan Document.

(e) If reasonably requested by the Agent upon the occurrence and during the continuance of an Event of Default, the Grantor shall arrange for the Agent’s first priority security interest to be noted on the certificate of title of each owned Vehicle and shall file any other necessary documentation in each jurisdiction that the Agent shall deem advisable to perfect its security interests in any owned Vehicle.

(f) Such Grantor shall use its commercially reasonable efforts to obtain any required consents from any Person other than a Grantor or any of its Subsidiaries and its Affiliates with respect to any permit or license or any Contractual Obligation with such Person entered into by such Grantor that requires such consent as a condition to the creation by such Grantor of a Lien on any right, title or interest in such permit, license or Contractual Obligation or any Stock or Stock Equivalent related thereto.

Section 5.2 Changes in Locations, Name, Etc. Except upon 10 days’ prior written notice to the Agent and delivery to the Agent of (a) all documents reasonably requested by the Agent to maintain the validity, perfection and priority of the security interests provided for herein and (b) if applicable, a written supplement to Schedule 4 showing any additional locations at which inventory or equipment shall be kept, such Grantor shall not do any of the following:

(i) permit any inventory or equipment with a value in excess of $2,000,000 in the aggregate to be kept at a location other than those listed on Schedule 4, except for the In Transit Collateral;

(ii) change its jurisdiction of organization or its location (as defined in Section 9-307 of the UCC), in each case from that referred to in Section 4.3; or

(iii) change its legal name or organizational identification number, if any, or corporation, limited liability company, partnership or other organizational structure to such an extent that any financing statement filed in connection with this Agreement would become misleading.

Section 5.3 Pledged Collateral. (a) Closing Date Delivery of Pledged Collateral. On the Closing Date, such Grantor shall (i) deliver to the Agent, in suitable form for transfer and in form and substance reasonably satisfactory to the Agent, (A) all Pledged Certificated Stock, (B) all Pledged Debt Instruments and (C) all certificates and instruments evidencing Pledged

Investment Property and (ii) maintain all other Pledged Investment Property in a Controlled Securities Account.

(b) Post-Closing Delivery of Pledged Collateral. After the Closing Date, if any Grantor acquires any Pledged Debt Instruments or certificates and instruments evidencing Pledged Investment Property having a value in excess of $100,000 individually or $250,000 in the aggregate, such Grantor shall promptly, and in any event within five (5) Business Days after acquiring such Collateral, deliver to the Agent, in suitable form for transfer and in form and substance reasonably satisfactory to the Agent, all such Collateral; provided, that each Grantor shall deliver to the Agent all securities, in suitable form for transfer and in form and substance reasonably satisfactory to the Agent, to the extent the issuer of such securities is a Subsidiary of such Grantor. After the Closing Date, each Grantor shall maintain all other Pledged Investment Property in a Controlled Securities Account.

(c) Event of Default. During the continuance of an Event of Default, the Agent shall have the right, at any time in its discretion and without notice to the Grantor, to (i) transfer to or to register in its name or in the name of its nominees any Pledged Collateral or any Pledged Investment Property and (ii) exchange any certificate or instrument representing or evidencing any Pledged Collateral or any Pledged Investment Property for certificates or instruments of smaller or larger denominations.

(d) Cash Distributions with respect to Pledged Collateral. Except as provided in Article VI and subject to the limitations set forth in the Credit Agreement, such Grantor shall be entitled to receive all cash distributions paid in respect of the Pledged Collateral.

(e) Voting Rights. Except as provided in Article VI, such Grantor shall be entitled to exercise all voting, consent and corporate, partnership, limited liability company and similar rights with respect to the Pledged Collateral; provided, however, that no vote shall be cast, consent given or right exercised or other action taken by such Grantor that would impair the Collateral in any material respect or be inconsistent with or result in any violation of any provision of any Loan Document.

Section 5.4 Accounts.

(a) Such Grantor shall not, other than in the ordinary course of business, (i) grant any extension of the time of payment of any account, (ii) compromise or settle any account for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any account, (iv) allow any credit or discount on any account or (v) amend, supplement or modify any account in any manner that could adversely affect the value thereof.

(b) So long as an Event of Default is continuing, the Agent shall have the right to make test verifications of the accounts in any manner and through any medium that it reasonably considers advisable, and such Grantor shall furnish all such assistance and information as the Agent may reasonably require in connection therewith.

Section 5.5 Commodity Contracts. Such Grantor shall not have any commodity contract unless such commodity contract is subject to a Control Agreement.

Section 5.6 Delivery of Instruments and Tangible Chattel Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper. (a) If any amount in excess of $100,000 individually or $250,000 in the aggregate payable under or in connection with any Collateral owned by such Grantor shall be or become evidenced by an instrument or tangible chattel paper other than such instrument delivered in accordance with Section 5.3(a) and in the possession of the Agent and other than items deposited for collection, such Grantor shall mark all such instruments and tangible chattel paper with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the security interest of General Electric Capital Corporation, as Agent” and, at the request of the Agent, shall immediately deliver such instrument or tangible chattel paper to the Agent, duly indorsed in a manner satisfactory to the Agent.

(b) Such Grantor shall not grant “control” (within the meaning of such term under Article 9-106 of the UCC) over any investment property to any Person other than the Agent.

(c) If such Grantor is or becomes the beneficiary of a letter of credit that is (i) not a supporting obligation of any Collateral and (ii) in excess of $100,000 individually or $250,000 in the aggregate, such Grantor shall promptly, and in any event within five (5) Business Days after becoming a beneficiary, notify the Agent thereof and use commercially reasonable efforts to enter into a Contractual Obligation with the Agent, the issuer of such letter of credit or any nominated person with respect to an assignment of proceeds of such letter of credit. Such Contractual Obligation shall collaterally assign the proceeds of such letter of credit to the Agent and such collateral assignment shall be sufficient to grant control for the purposes of Section 9-107 of the UCC (or any similar section under any equivalent UCC). Such Contractual Obligation shall also direct all payments thereunder to a Cash Collateral Account. The provisions of the Contractual Obligation shall be in form and substance reasonably satisfactory to the Agent.

(d) If any Collateral owned by such Grantor shall be or become evidenced by electronic chattel paper, such Grantor shall, at the request of the Agent, take all steps necessary to grant the Agent control of all such electronic chattel paper for the purposes of Section 9-105 of the UCC (or any similar section under any equivalent UCC) and all “transferable records” as defined in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act.

Section 5.7 Intellectual Property. (a) Not less frequently than quarterly (as of the last day of each calendar quarter), each Grantor shall provide the Agent written notification of any change to Schedule 6 and the short-form intellectual property agreements and assignments as described in this Section 5.7 and other documents that the Agent reasonably requests with respect thereto.

Trademark as are currently maintained, (C) use such Trademark with the appropriate notice of registration and all other notices and legends required by applicable Requirements of Law to the extent necessary to maintain such Trademark, (D) not adopt or use any other Trademark that is confusingly similar or a colorable imitation of such Trademark unless the Agent shall obtain a perfected security interest in such other Trademark pursuant to this Agreement (subject to the qualifications set forth in Section 4.7) and (ii) not knowingly do any act or knowingly omit to do any act whereby (w) such Trademark (or any goodwill associated therewith) may be invalidated, impaired or abandoned in any way, (x) any Patent included in the Material Intellectual Property may become invalidated, impaired, abandoned or dedicated to the public, (y) any portion of the registered Copyrights included in the Material Intellectual Property may become invalidated, impaired, abandoned or dedicated to the public domain or (z) any Trade Secret that is Material Intellectual Property may become publicly available or otherwise unprotectable.

(c) Such Grantor shall notify the Agent promptly if it has actual knowledge that any application or registration relating to any Material Intellectual Property owned by such Grantor will be abandoned or dedicated to the public, or of any material adverse determination or development regarding the validity or enforceability or such Grantor’s ownership of, interest in, right to use, register, own or maintain any Material Intellectual Property (including the institution of, or any such determination or development in, any proceeding relating to the foregoing in any Applicable IP Office). Unless no longer deemed Material Intellectual Property in such Grantor’s reasonable business judgment, such Grantor shall take all actions that are necessary or reasonably requested by the Agent to maintain and pursue each application (and to obtain the relevant registration or recordation) and to maintain each registration and recordation for Material Intellectual Property owned by such Grantor.

(d) Such Grantor shall not knowingly do any act or knowingly omit to do any act to infringe, misappropriate, dilute, violate or otherwise impair the Intellectual Property of any other Person to the extent such act could reasonably be expected to result in a Material Adverse Effect. In the event that, after the date hereof, any Material Intellectual Property owned by such Grantor, to the knowledge of such Grantor is or has been infringed, misappropriated or diluted by a third party, such Grantor shall take such action as it reasonably deems appropriate under the circumstances in response thereto, including, if appropriate in the exercise of its reasonable business judgment, promptly bringing suit and recovering all damages therefor.

(e) Such Grantor shall execute and deliver to the Agent in form and substance reasonably acceptable to the Agent and suitable for (i) filing in the Applicable IP Office the short-form intellectual property security agreements in the form attached hereto as Annex 3 for all U.S. registered Copyrights, U.S. registered Trademarks and U.S. issued Patents and IP Licenses of such Grantor and (ii) recording with the appropriate Internet domain name registrar, a duly executed form of assignment for all Internet Domain Names of such Grantor (together with appropriate supporting documentation as may be requested by the Agent).

security interest or Lien must be or may be registered, recorded or filed under, or notice thereof given under, any federal statute or regulation.

Section 5.9 Notice of Commercial Tort Claims. Such Grantor agrees that, if it shall acquire any interest in any commercial tort claim where such Grantor’s claim is in excess of $100,000 or its recovery thereunder could reasonably be expected to be greater than $100,000 (whether from another Person or because such commercial tort claim shall have come into existence) and upon a Responsible Office becoming aware thereof, (i) such Grantor shall, promptly upon such acquisition, deliver to the Agent, in each case in form and substance reasonably satisfactory to the Agent, a notice of the existence and nature of such commercial tort claim and a supplement to Schedule 1 containing a specific description of such commercial tort claim, (ii) Section 3.1 shall apply to such commercial tort claim and (iii) such Grantor shall execute and deliver to the Agent, in each case in form and substance reasonably satisfactory to the Agent, any document, and take all other action, deemed by the Agent to be reasonably necessary to create, perfect and protect Agent’s Lien, on behalf of the Secured Parties, a perfected security interest having at least the priority set forth in Section 4.2 in all such commercial tort claims. Any supplement Schedule 1 delivered pursuant to this Section 5.9 shall, after the receipt thereof by the Agent, become part of Schedule 1 for all purposes hereunder other than in respect of representations and warranties made prior to the date of such receipt.

Section 5.10 Controlled Securities Account. Each Grantor shall deposit all of its Cash Equivalents, if any, in securities accounts that are Controlled Securities Accounts except for Cash Equivalents the aggregate value of which does not exceed $250,000 at any time.

Section 5.11 Controlled Deposit Accounts. Except for Excluded Accounts, each Grantor shall enter into (and thereafter maintain) Control Agreements with respect to each Deposit Account.

ARTICLE VI

REMEDIAL PROVISIONS

Section 6.1 Code and Other Remedies. (a) UCC Remedies. During the continuance of an Event of Default, the Agent may exercise, in addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to any Secured Obligation, all rights and remedies of a secured party under the UCC or any other applicable law.

(b) Disposition of Collateral. Without limiting the generality of the foregoing, the Agent may, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), during the continuance of any Event of Default (personally or through its agents or attorneys), (i) enter upon the premises where any Collateral is located, without any obligation to pay rent, through self-help, without judicial process, without first obtaining a final judgment or giving any Grantor or any other Person notice or opportunity for a hearing on the Agent’s claim or action, (ii) collect, receive, appropriate and realize upon any

Collateral and (iii) sell, assign, convey, transfer, grant option or options to purchase and deliver any Collateral (enter into Contractual Obligations to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of any Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Agent shall have the right, upon any such public sale or sales and, to the extent permitted by the UCC and other applicable Requirements of Law, upon any such private sale, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption of any Grantor, which right or equity is hereby waived and released.

(c) Management of the Collateral. Each Grantor further agrees, that, during the continuance of any Event of Default, (i) at the Agent’s request, it shall assemble the Collateral and make it available to the Agent at places that the Agent shall reasonably select, whether at such Grantor’s premises or elsewhere, (ii) without limiting the foregoing, the Agent also has the right to require that each Grantor store and keep any Collateral pending further action by the Agent and, while any such Collateral is so stored or kept, provide such guards and maintenance services as shall be necessary to protect the same and to preserve and maintain such Collateral in good condition, (iii) until the Agent is able to sell, assign, convey or transfer any Collateral, the Agent shall have the right to hold or use such Collateral to the extent that it deems appropriate for the purpose of preserving the Collateral or its value or for any other purpose deemed appropriate by the Agent and (iv) the Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of any Collateral and to enforce any of the Agent’s remedies (for the benefit of the Secured Parties), with respect to such appointment without prior notice or hearing as to such appointment. The Agent shall not have any obligation to any Grantor to maintain or preserve the rights of any Grantor as against third parties with respect to any Collateral while such Collateral is in the possession of the Agent.

(d) Application of Proceeds. The Agent shall apply the cash proceeds of any action taken by it pursuant to this Section 6.1 in such order as specified in Section 1.10(c) of the Credit Agreement to the payment in whole or in part of the Secured Obligations, as set forth in the Credit Agreement, and only after such application and after the payment by the Agent of any other amount required by the Intercreditor Agreement or any Requirement of Law, need the Agent account for the surplus, if any, to any Grantor.

(e) Direct Obligation. Neither the Agent nor any other Secured Party shall be required to make any demand upon, or pursue or exhaust any right or remedy against, any Grantor, any other Credit Party or any other Person with respect to the payment of the Obligations or to pursue or exhaust any right or remedy with respect to any Collateral therefor or any direct or indirect guaranty thereof. All of the rights and remedies of the Agent and any other Secured Party under any Loan Document shall be cumulative, may be exercised individually or concurrently and not exclusive of any other rights or remedies provided by any Requirement of Law. To the extent it may lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against the Agent or any Lender, any valuation, stay, appraisement, extension, redemption or similar laws and any and all rights or defenses it may have as a surety, now or hereafter existing, arising out of the exercise by them of any rights hereunder. If any notice of a proposed

sale or other disposition of any Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition.

(f) Commercially Reasonable. To the extent that applicable Requirements of Law impose duties on the Agent to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is not commercially unreasonable for the Agent to do any of the following:

(i) fail to incur significant costs, expenses or other Liabilities reasonably deemed as such by the Agent to prepare any Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition;

(ii) unless required by Requirements of Law, fail to obtain Permits, or other consents, for access to any Collateral to sell or for the collection or sale of any Collateral, or, for the collection or disposition of any Collateral;

(iii) fail to exercise remedies against account debtors or other Persons obligated on any Collateral or to remove Liens on any Collateral or to remove any adverse claims against any Collateral;

(iv) advertise dispositions of any Collateral through publications or media of general circulation, whether or not such Collateral is of a specialized nature, or to contact other Persons, whether or not in the same business as any Grantor, for expressions of interest in acquiring any such Collateral;

(v) exercise collection remedies against account debtors and other Persons obligated on any Collateral, directly or through the use of collection agencies or other collection specialists, hire one or more professional auctioneers to assist in the disposition of any Collateral, whether or not such Collateral is of a specialized nature, or, to the extent deemed appropriate by the Agent, obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Agent in the collection or disposition of any Collateral, or utilize Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets to dispose of any Collateral;

(vi) dispose of assets in wholesale rather than retail markets;

(vii) disclaim disposition warranties, such as title, possession or quiet enjoyment; or

(viii) purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of any Collateral or to provide to the Agent a guaranteed return from the collection or disposition of any Collateral.

Each Grantor acknowledges that the purpose of this Section 6.1 is to provide a non-exhaustive list of actions or omissions that are commercially reasonable when exercising remedies against

any Collateral and that other actions or omissions by the Secured Parties shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 6.1. Without limitation upon the foregoing, nothing contained in this Section 6.1 shall be construed to grant any rights to any Grantor or to impose any duties on the Agent that would not have been granted or imposed by this Agreement or by applicable Requirements of Law in the absence of this Section 6.1.

(g) IP Licenses. For the purpose of enabling the Agent to exercise rights and remedies under this Section 6.1 (including in order to take possession of, collect, receive, assemble, process, appropriate, remove, realize upon, sell, assign, convey, transfer or grant options to purchase any Collateral) at such time as the Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Agent, for the benefit of the Secured Parties, (i) an irrevocable, nonexclusive, worldwide license (exercisable without payment of royalty or other compensation to such Grantor), including in such license the right to sublicense, use and practice any Intellectual Property (with respect to Trademarks, subject to reasonable quality control in favor of such Grantor) now owned or hereafter acquired by such Grantor and access to all media in which any of the licensed items may be recorded or stored and to all Software, in each case to the extent permitted by any applicable licenses covering such Software, used for the compilation or printout thereof and (ii) an irrevocable license (without payment of rent or other compensation to such Grantor) to use, operate and occupy all real Property owned, operated, leased, subleased or otherwise occupied by such Grantor.

Section 6.2 Accounts and Payments in Respect of General Intangibles. (a) In addition to, and not in substitution for, any similar requirement in the Credit Agreement, if required by the Agent at any time during the continuance of an Event of Default, any payment of accounts or payment in respect of general intangibles, when collected by any Grantor, shall be promptly (and, in any event, within two (2) Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Agent, in a Cash Collateral Account, subject to withdrawal by the Agent as provided in Section 6.4. Until so turned over, such payment shall be held by such Grantor in trust for the Agent, segregated from other funds of such Grantor. Each such deposit of proceeds of accounts and payments in respect of general intangibles shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit.

(b) At any time during the continuance of an Event of Default:

(i) each Grantor shall, upon the Agent’s request, deliver to the Agent all original and other documents evidencing, and relating to, the Contractual Obligations and transactions that gave rise to any account or any payment in respect of general intangibles, including all original orders, invoices and shipping receipts and notify account debtors that the accounts or general intangibles have been collaterally assigned to the Agent and that payments in respect thereof shall be made directly to the Agent;

satisfaction the existence, amount and terms of any account or amounts due under any general intangible. In addition, the Agent may at any time enforce such Grantor’s rights against such account debtors and obligors of general intangibles; and

(iii) each Grantor shall take all actions, deliver all documents and provide all information necessary or reasonably requested by the Agent to ensure any Internet Domain Name is registered.

(c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each account and each payment in respect of general intangibles to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto. No Secured Party shall have any obligation or liability under any agreement giving rise to an account or a payment in respect of a general intangible by reason of or arising out of any Loan Document or the receipt by any Secured Party of any payment relating thereto, nor shall any Secured Party be obligated in any manner to perform any obligation of any Grantor under or pursuant to any agreement giving rise to an account or a payment in respect of a general intangible, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts that may have been assigned to it or to which it may be entitled at any time or times.

Section 6.3 Pledged Collateral. (a) Voting Rights. During the continuance of an Event of Default, upon notice by the Agent to the relevant Grantor or Grantors, the Agent or its nominee may exercise (i) any voting, consent, corporate and other right pertaining to the Pledged Collateral at any meeting of shareholders, partners or members, as the case may be, of the relevant issuer or issuers of Pledged Collateral or otherwise and (ii) any right of conversion, exchange and subscription and any other right, privilege or option pertaining to the Pledged Collateral as if it were the absolute owner thereof (including the right to exchange at its discretion any Pledged Collateral upon the merger, amalgamation, consolidation, reorganization, recapitalization or other fundamental change in the corporate or equivalent structure of any issuer of Pledged Stock, the right to deposit and deliver any Pledged Collateral with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Agent may determine), all without liability except to account for property actually received by it and except for any act constituting gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable decision; provided, however, that the Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing; provided, further, that if and when any such Event of Default shall have been cured or waived, (i) such voting rights shall automatically revert to the applicable Grantor and (ii) the Agent, at the expense of the Grantors, shall execute such documents reasonably requested by Grantors to allow the owner of any equity interest to exercise any rights associated with such equity interest.

proxies, dividend payment orders and other instruments as the Agent may from time to time reasonably request and (ii) without limiting the effect of clause (i) above, such Grantor hereby grants to the Agent an irrevocable proxy to vote all or any part of the Pledged Collateral and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Collateral would be entitled (including giving or withholding written consents of shareholders, partners or members, as the case may be, calling special meetings of shareholders, partners or members, as the case may be, and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Collateral on the record books of the issuer thereof) by any other person (including the issuer of such Pledged Collateral or any officer or agent thereof) during the continuance of an Event of Default and which proxy shall only terminate upon the payment in full of the Secured Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted and Letter of Credit Obligations collateralized in the manner set forth in Section 7.4 of the Credit Agreement).

(c) Authorization of Issuers. Each Grantor hereby expressly irrevocably authorizes and instructs, without any further instructions from such Grantor, each issuer of any Pledged Collateral pledged hereunder by such Grantor to (i) comply with any instruction received by it from the Agent in writing that states that an Event of Default is continuing and is otherwise in accordance with the terms of this Agreement and each Grantor agrees that such issuer shall be fully protected from Liabilities to such Grantor in so complying and (ii) unless otherwise expressly permitted hereby or the Credit Agreement, pay any dividend or make any other payment with respect to the Pledged Collateral directly to the Agent. The Agent hereby agrees that it shall not give any such instructions unless an Event of Default has occurred and is continuing.

Section 6.4 Proceeds to be Turned over to and Held by Agent. Unless otherwise expressly provided in the Credit Agreement or this Agreement, all proceeds of any Collateral received by any Grantor hereunder in cash or Cash Equivalents shall be held by such Grantor in trust for the Agent and the other Secured Parties, segregated from other funds of such Grantor, and to the extent required by the Credit Agreement or this Agreement shall, promptly upon receipt by any Grantor, be turned over to the Agent in the exact form received (with any necessary endorsement). All such proceeds of Collateral and any other proceeds of any Collateral received by the Agent in cash or Cash Equivalents shall be held by the Agent in a Cash Collateral Account. All proceeds being held by the Agent in a Cash Collateral Account (or by such Grantor in trust for the Agent) shall continue to be held as collateral security for the Secured Obligations and shall not constitute payment thereof until applied as provided in the Credit Agreement.

Section 6.5 Sale of Pledged Collateral. (a) Each Grantor recognizes that the Agent may be unable to effect a public sale of any Pledged Collateral by reason of certain prohibitions contained in the Securities Act and applicable state or foreign securities laws or otherwise or may determine that a public sale is impracticable, not desirable or not commercially reasonable and, accordingly, may resort to one or more private sales thereof to a restricted group of purchasers that shall be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms

less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Agent shall be under no obligation to delay a sale of any Pledged Collateral for the period of time necessary to permit the issuer thereof to register such securities for public sale under the Securities Act or under applicable state securities laws even if such issuer would agree to do so.

(b) Each Grantor agrees to use its commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of any portion of the Pledged Collateral pursuant to Section 6.1 and this Section 6.5 valid and binding and in compliance with all applicable Requirements of Law. Each Grantor further agrees that a breach of any covenant contained herein will cause irreparable injury to the Agent and other Secured Parties, that the Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained herein shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defense against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement or a defense of payment. Each Grantor waives any and all rights of contribution or rights to exercise any subrogation rights upon the sale or disposition of all or any portion of the Pledged Collateral by Agent.

Section 6.6 Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of any Collateral are insufficient to pay the Secured Obligations and the fees and disbursements of any attorney employed by the Agent or any other Secured Party to collect such deficiency.

ARTICLE VII

THE AGENT

Section 7.1 Agent’s Appointment as Attorney-in-Fact. (a) Each Grantor hereby irrevocably constitutes and appoints the Agent and any Related Person thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, upon the occurrence and during the continuance of any Event of Default, for the purpose of carrying out the terms of the Loan Documents, to take any appropriate action and to execute any document or instrument that may be necessary or desirable to accomplish the purposes of the Loan Documents, and, without limiting the generality of the foregoing, each Grantor hereby gives the Agent and its Related Persons the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any of the following when an Event of Default shall be continuing:

(i) in the name of such Grantor, in its own name or otherwise, take possession of and indorse and collect any check, draft, note, acceptance or other instrument for the payment of moneys due under any account or general intangible or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Agent

for the purpose of collecting any such moneys due under any account or general intangible or with respect to any other Collateral whenever payable;

(ii) in the case of any Intellectual Property owned by or licensed to the Grantors, execute, deliver and have recorded any document that the Agent may request to evidence, effect, publicize or record the Agent’s security interest in such Intellectual Property and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;

(iii) pay or discharge taxes and Liens levied or placed on or threatened against any Collateral, effect any repair or pay any insurance called for by the terms of the Credit Agreement (including all or any part of the premiums therefor and the costs thereof);

(iv) execute, in connection with any sale provided for in Section 6.1 or Section 6.5, any document to effect or otherwise necessary or appropriate in relation to evidence the sale of any Collateral; or

(v) (A) direct any party liable for any payment under any Collateral to make payment of any moneys due or to become due thereunder directly to the Agent or as the Agent shall direct, (B) ask or demand for, and collect and receive payment of and receipt for, any moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral, (C) sign and indorse any invoice, freight or express bill, bill of lading, storage or warehouse receipt, draft against debtors, assignment, verification, notice and other document in connection with any Collateral, (D) commence and prosecute any suit, action or proceeding at law or in equity in any court of competent jurisdiction to collect any Collateral and to enforce any other right in respect of any Collateral, (E) defend any actions, suits, proceedings, audits, claims, demands, orders or disputes brought against such Grantor with respect to any Collateral, (F) settle, compromise or adjust any such actions, suits, proceedings, audits, claims, demands, orders or disputes and, in connection therewith, give such discharges or releases as the Agent may deem appropriate, (G) assign any Intellectual Property owned by the Grantors or any IP Licenses of the Grantors throughout the world on such terms and conditions and in such manner as the Agent shall in its sole discretion determine, including the execution and filing of any document necessary to effectuate or record such assignment and (H) generally, sell, assign, convey, transfer or grant a Lien on, make any Contractual Obligation with respect to and otherwise deal with, any Collateral as fully and completely as though the Agent were the absolute owner thereof for all purposes and do, at the Agent’s option, at any time or from time to time, all acts and things that the Agent deems necessary to protect, preserve or realize upon any Collateral and the Secured Parties’ security interests therein and to effect the intent of the Loan Documents, all as fully and effectively as such Grantor might do.

(vi) If any Grantor fails to perform or comply with any Contractual Obligation contained herein, the Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such Contractual Obligation.

(b) The expenses of the Agent incurred in connection with actions undertaken as provided in this Section 7.1, together with interest thereon at a rate set forth in subsection 1.3(c) of the Credit Agreement, from the date of payment by the Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Agent within five (5) Business Days after demand.

(c) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue of this Section 7.1 and in accordance with the terms herein. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.

Section 7.2 Authorization to File Financing Statements. During the effectiveness of this Agreement, each Grantor authorizes the Agent and its Related Persons, at any time and from time to time, to file or record financing statements, amendments thereto, and other filing or recording documents or instruments with respect to any Collateral in such form and in such offices as the Agent reasonably determines appropriate to perfect the security interests of the Agent under this Agreement, and such financing statements and amendments may described the Collateral covered thereby as “all assets of the debtor, whether now existing or hereafter arising or acquired, including all proceeds thereof”; provided that, so long as no Event of Default has occurred and is continuing, prior to any filing or recordation of documents or instruments with respect to any Intellectual Property, Agent shall provide a copy of such proposed filing or recordation to the Borrower at least five (5) Business Days prior to such filing or recordation. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction. Each Grantor also hereby ratifies its authorization for the Agent to have filed any initial financing statement or amendment thereto under the UCC (or other similar laws) in effect in any jurisdiction if filed prior to the date hereof.

Section 7.3 Authority of Agent. Each Grantor acknowledges that the rights and responsibilities of the Agent under this Agreement with respect to any action taken by the Agent or the exercise or non-exercise by the Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Agent and the other Secured Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Agent and the Grantors, the Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation or entitlement to make any inquiry respecting such authority.

Section 7.4 Duty; Obligations and Liabilities. (a) The Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession shall be to deal with it in the same manner as the Agent deals with similar property for its own account. The powers conferred on the Agent hereunder are solely to protect the Agent’s interest in the Collateral and shall not impose any duty upon the Agent to exercise any such powers. The Agent shall be accountable only for amounts that it receives as a result of the exercise of such powers, and neither it nor any of its Related Persons shall be responsible to any Grantor for any

act or failure to act hereunder, except for their own gross negligence, bad faith, or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable decision. In addition, the Agent shall not be liable or responsible for any loss or damage to any Collateral, or for any diminution in the value thereof, by reason of the act or omission of any warehousemen, carrier, forwarding agency, consignee or other bailee if such Person has been selected by the Agent in good faith.

(b) No Secured Party and no Related Person thereof shall be liable for failure to demand, collect or realize upon any Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to any Collateral. The powers conferred on the Agent hereunder shall not impose any duty upon any other Secured Party to exercise any such powers. The other Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their respective officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable decision.

ARTICLE VIII

MISCELLANEOUS

Section 8.1 Reinstatement. Each Grantor agrees that, if any payment made by any Credit Party or other Person and applied to the Secured Obligations is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of any Collateral are required to be returned by any Secured Party to such Credit Party, its estate, trustee, receiver or any other party, including any Grantor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, any Lien or other Collateral securing such liability shall be and remain in full force and effect, as fully as if such payment had never been made. If, prior to any of the foregoing, (a) any Lien or other Collateral securing such Grantor’s liability hereunder shall have been released or terminated by virtue of the foregoing or (b) any provision of the Guaranty hereunder shall have been terminated, cancelled or surrendered, such Lien, other Collateral or provision shall be reinstated in full force and effect and such prior release, termination, cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of any such Grantor in respect of any Lien or other Collateral securing such obligation or the amount of such payment.

Section 8.2 Release of Collateral. (a) At the time provided in subsection 8.10(b)(iii) of the Credit Agreement, the Collateral shall automatically be released from the Lien created hereby and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors. Each Grantor (or such Grantor’s designee) is hereby authorized to file UCC-3 amendments, termination statements and other documents, such as releases of security interest with the Applicable IP Office, at such time evidencing the termination of the Liens so released;

provided, however, that in no event is any Grantor authorized to execute any instrument, agreement or document on behalf of Agent or any Lender to evidence such release pursuant to this Section 8.2. At the request of any Grantor following any such termination, the Agent shall deliver to such Grantor any Collateral of such Grantor held by the Agent hereunder and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

(b) If the Agent shall be directed or permitted pursuant to subsection 8.10(b) of the Credit Agreement to release any Lien or any Collateral, such Collateral shall be released from the Lien created hereby to the extent provided under, and subject to the terms and conditions set forth in, such subsection. In connection therewith, the Agent, at the request of any Grantor, shall execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such release.

(c) At the time provided in subsection 8.10(b) of the Credit Agreement, then, upon the request of the Borrower, unless as a condition to the consent of Agent and Lenders to such sale, if applicable, such Grantor is required to remain subject to this Agreement, a Grantor shall be released from its obligations hereunder in the event that all the Stock and Stock Equivalents of such Grantor shall be sold to any Person that is not a Credit Party, the Borrower and the Subsidiaries of the Borrower in a transaction permitted by the Loan Documents.

Section 8.3 Independent Obligations. The obligations of each Grantor hereunder are independent of and separate from the Secured Obligations and the Guaranteed Obligations. If any Secured Obligation or Guaranteed Obligation is not paid when due, or during the continuance of any Event of Default, the Agent may, at its sole election, proceed directly and at once, without notice, against any Grantor and any Collateral to collect and recover the full amount of any Secured Obligation or Guaranteed Obligation then due, without first proceeding against any other Grantor, any other Credit Party or any other Collateral and without first joining any other Grantor or any other Credit Party in any proceeding.

Section 8.4 No Waiver by Course of Conduct. No Secured Party shall by any act (except by a written instrument pursuant to Section 8.5), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by any Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Secured Party would otherwise have on any future occasion.

Section 8.5 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 9.1 of the Credit Agreement; provided, however, that annexes to this Agreement may be supplemented (but no existing provisions may be modified and no Collateral may be released) through Pledge Amendments and Joinder Agreements, in substantially the form of Annex 1 and Annex 2, respectively, in each case duly executed by the Agent and each Grantor directly affected thereby.

Section 8.6 Additional Grantors; Additional Pledged Collateral. (a) Joinder Agreements. If, at the option of the Borrower or as required pursuant to Section 4.12 of the Credit Agreement, the Borrower shall cause any Subsidiary that is not a Grantor to become a Grantor hereunder, such Subsidiary shall promptly execute and deliver to the Agent a Joinder Agreement substantially in the form of Annex 2 and shall thereafter for all purposes be a party hereto and have the same rights, benefits and obligations as a Grantor party hereto on the Closing Date.

(b) Pledge Amendments. To the extent any Pledged Collateral which is otherwise required to be delivered hereunder and has not been delivered as of the Closing Date, such Grantor shall deliver a pledge amendment duly executed by the Grantor in substantially the form of Annex 1 (each, a “Pledge Amendment”). Such Grantor authorizes the Agent to attach each Pledge Amendment to this Agreement.

Section 8.7 Notices. All notices, requests and demands to or upon the Agent or any Grantor hereunder shall be effected in the manner provided for in Section 9.2 of the Credit Agreement; provided, however, that any such notice, request or demand to or upon any Grantor shall be addressed to the Borrower’s notice address set forth in Section 9.2 of the Credit Agreement.

Section 8.8 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of each Secured Party and their successors and assigns; provided, however, that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Agent.

Section 8.9 Counterparts. This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of an executed signature page of this Agreement by facsimile transmission or by Electronic Transmission shall be as effective as delivery of a manually executed counterpart hereof.

Section 8.10 Severability. Any provision of this Agreement being held illegal, invalid or unenforceable in any jurisdiction shall not affect any part of such provision not held illegal, invalid or unenforceable, any other provision of this Agreement or any part of such provision in any other jurisdiction.

Section 8.11 Governing Law. The laws of the State of New York shall govern all matters arising out of, in connection with or relating to this Agreement, including, without limitation, its validity, interpretation, construction, performance and enforcement (without regard to conflicts of law principles).

Section 8.12 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN

CONNECTION WITH, ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER FOUNDED IN CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO OTHER PARTY AND NO RELATED PERSON OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.12. EACH GRANTOR AGREES TO BE BOUND BY THE PROVISIONS OF SUBSECTIONS 9.18(b), (c) AND (d) OF THE CREDIT AGREEMENT.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty and Security Agreement to be duly executed and delivered as of the date first above written.

	GEO HOLDINGS CORP.,
	a Delaware corporation, as a
	Grantor

	By:	/s/ Charles Lowrey
	Name:	Charles Lowrey
	Title:	Vice President, and Chief Financial Officer

	GUNDLE/SLT ENVIRONMENTAL, INC.,
	a Delaware corporation, as a
	Grantor

	By:	/s/ Charles Lowrey
	Name:	Charles Lowrey
	Title:	Vice President, and Chief Financial Officer_

	GSE LINING TECHNOLOGY, LLC,
	a Delaware corporation, as a
	Grantor

	By:	/s/ Charles Lowrey
	Name:	Charles Lowrey
	Title:	Vice President, and Chief Financial Officer_

Guaranty and Security Agreement

ACCEPTED AND AGREED
as of the date first above written:

GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent

By:	/s/ Richard B. Davidson
Name:	Richard B. Davidson
Title:	Duly Authorized Signatory	_

Guaranty and Security Agreement

ANNEX 1

FIRST LIEN GUARANTY AND SECURITY AGREEMENT

FORM OF PLEDGE AMENDMENT

This Pledge Amendment, dated as of , 20 , is delivered pursuant to Section 8.6 of the First Lien Guaranty and Security Agreement, dated as of May 27, 2011, by Gundle/SLT Environmental, Inc., a Delaware corporation (the “Borrower”), the undersigned Grantor and the other Affiliates of the Borrower from time to time party thereto as Grantors in favor of General Electric Capital Corporation, as Agent for the Secured Parties referred to therein (as the same may be modified from time to time, the “First Lien Guaranty and Security Agreement”). Capitalized terms used herein without definition are used as defined in the First Lien Guaranty and Security Agreement.

The undersigned hereby agrees that this Pledge Amendment may be attached to the First Lien Guaranty and Security Agreement and that the Pledged Collateral listed on Annex 1-A to this Pledge Amendment shall be and become part of the Collateral referred to in the First Lien Guaranty and Security Agreement and shall secure all Obligations of the undersigned.

The undersigned hereby represents and warrants that, with respect to the Pledged Collateral listed on Annex 1—A to this Pledge Amendment, each of the representations and warranties contained in Sections 4.1, 4.2, 4.5 and 4.10 of the First Lien Guaranty and Security Agreement is true and correct in all material respects and as of the date hereof as if made on and as of such date.

	[GRANTOR]

	By:
		Name:
		Title:

A1-1

Annex 1-A

PLEDGED STOCK

ISSUER	CLASS	CERTIFICATE NO(S).	PAR VALUE	NUMBER OF SHARES, UNITS OR INTERESTS

PLEDGED DEBT INSTRUMENTS

ISSUER	DESCRIPTION OF DEBT	CERTIFICATE NO(S)	FINAL MATURITY	PRINCIPAL AMOUNT

A1-2

ACKNOWLEDGED AND AGREED
as of the date first above written:

GENERAL ELECTRIC CAPITAL CORPORATION
as Agent

By:
	Name:
	Title:

A1-3

ANNEX 2

FIRST LIEN GUARANTY AND SECURITY AGREEMENT

FORM OF JOINDER AGREEMENT

This JOINDER AGREEMENT, dated as of , 20 , is delivered pursuant to Section 8.6 of the First Lien Guaranty and Security Agreement, dated as of May 27, 2011, by Gundle/SLT Environmental, Inc., a Delaware corporation (the “Borrower”) and the Affiliates of the Borrower from time to time party thereto as Grantors in favor of the General Electric Capital Corporation, as Agent for the Secured Parties referred to therein (the “First Lien Guaranty and Security Agreement”). Capitalized terms used herein without definition are used as defined in the First Lien Guaranty and Security Agreement.

By executing and delivering this Joinder Agreement, the undersigned, as provided in Section 8.6 of the First Lien Guaranty and Security Agreement, hereby becomes a party to the First Lien Guaranty and Security Agreement as a Grantor thereunder with the same force and effect as if originally named as a Grantor therein and, without limiting the generality of the foregoing, as collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of the undersigned, hereby mortgages, pledges and hypothecates to the Agent for the benefit of the Secured Parties, and grants to the Agent for the benefit of the Secured Parties a lien on and security interest in, all of its right, title and interest in, to and under the Collateral of the undersigned and expressly assumes all obligations and liabilities of a Grantor thereunder. The undersigned hereby agrees to be bound as a Grantor for the purposes of the First Lien Guaranty and Security Agreement. During the effectiveness of the First Lien Guaranty and Security Agreement, each Grantor authorizes the Agent and its Related Persons, at any time and from time to time, to file or record financing statements, amendments thereto, and other filing or recording documents or instruments with respect to any Collateral in such form and in such offices as the Agent reasonably determines appropriate to perfect the security interests of the Agent under the First Lien Guaranty and Security Agreement, and such financing statements and amendments may describe the Collateral covered thereby as “all assets of the debtor, whether now existing or hereafter arising or acquired, including all proceeds thereof”.

The information set forth in Annex 1-A is hereby added to the information set forth in Schedules 1 through 6 to the First Lien Guaranty and Security Agreement. By acknowledging and agreeing to this Joinder Agreement, the undersigned hereby agree that this Joinder Agreement may be attached to the First Lien Guaranty and Security Agreement and that the Pledged Collateral listed on Annex 1-A to this Joinder Amendment shall be and become part of the Collateral referred to in the First Lien Guaranty and Security Agreement and shall secure all Secured Obligations of the undersigned.

The undersigned hereby represents and warrants that each of the representations and warranties contained in Article IV of the First Lien Guaranty and Security Agreement applicable to it is true and correct in all material respects on and as the date hereof as if made on and as of such date.

A2-1

IN WITNESS WHEREOF, THE UNDERSIGNED HAS CAUSED THIS JOINDER AGREEMENT TO BE DULY EXECUTED AND DELIVERED AS OF THE DATE FIRST ABOVE WRITTEN.

	[Additional Grantor]


	By:
		Name:
		Title:

A2-2

ACKNOWLEDGED AND AGREED
as of the date first above written:

[EACH GRANTOR PLEDGING
ADDITIONAL COLLATERAL]

By:
	Name:
	Title:

GENERAL ELECTRIC CAPITAL CORPORATION
as Agent

By:
	Name:
	Title:

A2-3

ANNEX 3
TO
FIRST LIEN GUARANTY AND SECURITY AGREEMENT

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT(1)

THIS [COPYRIGHT] [PATENT] [TRADEMARK](2) SECURITY AGREEMENT, dated as of , 20 (this “Agreement”), is made by each of the entities listed on the signature pages hereof (each a “Grantor” and, collectively, the “Grantors”), in favor of General Electric Capital Corporation (“GE Capital”), as administrative agent (in such capacity, together with its successors and permitted assigns, the “Agent”) for the Lenders and the L/C Issuers (as defined in the Credit Agreement referred to below) and the other Secured Parties.

W I T N E S S E T H:

WHEREAS, pursuant to the First Lien Credit Agreement, dated as of May 27, 2011 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Gundle/SLT Environmental, Inc., a Delaware corporation (the “Borrower”), the other Credit Parties, the Lenders and the L/C Issuers from time to time party thereto and GE Capital, as Agent for the Lenders and the L/C Issuers, the Lenders and the L/C Issuers have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein;

WHEREAS, each Grantor has agreed, pursuant to a First Lien Guaranty and Security Agreement of even date herewith in favor of the Agent (the “First Lien Guaranty and Security Agreement”), to guarantee the Obligations (as defined in the Credit Agreement) of the Borrower; and

WHEREAS, all of the Grantors are party to the First Lien Guaranty and Security Agreement pursuant to which the Grantors are required to execute and deliver this Agreement;

Section 1. Defined Terms. Capitalized terms used herein without definition are used as defined in the First Lien Guaranty and Security Agreement.

Section 2. Grant of Security Interest in [Copyright] [Trademark] [Patent] Collateral. Each Grantor, as collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of such Grantor, hereby mortgages, pledges and hypothecates to the Agent for the benefit of the Secured Parties, and grants to the Agent for the benefit of the Secured Parties a Lien on and security interest in, all of its right, title and interest in, to and under the following Collateral of such

(1) Separate agreements should be executed relating to each Grantor’s respective Copyrights, Patents, and Trademarks.

(2) Select one term as appropriate.

A3-1

Grantor (other than any Excluded Property, but only during such time that such Collateral actually constitutes Excluded Property) (the “[Copyright] [Patent] [Trademark] Collateral”):

(a) [all of its registered U.S. Copyrights and all IP Licenses providing for the grant by or to such Grantor of any right under any Copyright, including, without limitation, those referred to on Schedule I hereto;

(b) all renewals, reversions and extensions of the foregoing; and

(c) all income, royalties, proceeds and Liabilities at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]

(a) [all of its issued U.S. Patents and all IP Licenses providing for the grant by or to such Grantor of any right under any Patent, including, without limitation, those referred to on Schedule I hereto;

(b) all reissues, reexaminations, continuations, continuations-in-part, divisionals, renewals and extensions of the foregoing; and

(a) [all of its registered U.S. Trademarks and all IP Licenses providing for the grant by or to such Grantor of any right under any Trademark, including, without limitation, those referred to on Schedule I hereto;

(b) all renewals and extensions of the foregoing;

(d) all income, royalties, proceeds and Liabilities at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.]

Section 3. First Lien Guaranty and Security Agreement. The security interest granted pursuant to this Agreement is granted in conjunction with the security interest granted to the Agent pursuant to the First Lien Guaranty and Security Agreement and each Grantor hereby

A3-2

acknowledges and agrees that the rights and remedies of the Agent with respect to the security interest in the [Copyright] [Patent] [Trademark] Collateral made and granted hereby are more fully set forth in the First Lien Guaranty and Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

Section 4. Grantor Remains Liable. Each Grantor hereby agrees that, anything herein to the contrary notwithstanding, such Grantor shall assume full and complete responsibility for the prosecution, defense, enforcement or any other necessary or desirable actions in connection with their [Copyrights] [Patents] [Trademarks] subject to a security interest hereunder.

Section 5. Counterparts. This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of an executed signature page of this Agreement by facsimile transmission or Electronic Transmission shall be as effective as delivery of a manually executed counterpart hereof.

Section 6. Termination. This Agreement shall terminate concurrently with the termination of the First Lien Guaranty and Security Agreement.

Section 7. Governing Law. The laws of the State of New York shall govern all matters arising out of, in connection with or relating to this Agreement, including, without limitation, its validity, interpretation, construction, performance and enforcement (without regard to conflicts of law principles).

Section 8. Conflict with Other Agreements. In the event of any conflict between this Agreement (or any portion thereof) and the First Lien Guaranty and Security Agreement, the First Lien Guaranty and Security Agreement shall prevail.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, each Grantor has caused this [Copyright] [Patent] [Trademark] Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

		Very truly yours,

		[GRANTOR]
		as Grantor

		By:
			Name:
			Title:

ACCEPTED AND AGREED
as of the date first above written:

GENERAL ELECTRIC CAPITAL CORPORATION
as Agent

By:
	Name:
	Title:

SCHEDULE I
TO
[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT

[Copyright] [Patent] [Trademark] Registrations

1. REGISTERED [COPYRIGHTS] [PATENTS] [TRADEMARKS]

[Include Registration Number and Date]

2. [COPYRIGHT] [PATENT] [TRADEMARK] APPLICATIONS

[Include Application Number and Date]

3. IP LICENSES

[Include complete legal description of agreement (name of agreement, parties and date)]

EX-10.7 8 a2204569zex-10_7.htm EX-10.7

Exhibit 10.7

EXHIBIT 11.1(c)
TO
SECOND LIEN CREDIT AGREEMENT

SECOND LIEN GUARANTY AND SECURITY AGREEMENT

Dated as of May 27, 2011

among

GUNDLE/SLT ENVIRONMENTAL, INC.

and

Each Other Grantor
From Time to Time Party Hereto

and

JEFFERIES FINANCE LLC,
as Agent

TABLE OF CONTENTS

		Page

ARTICLE I DEFINED TERMS		1
Section 1.1	Definitions	1
Section 1.2	Certain Other Terms	5

ARTICLE II GUARANTY		6
Section 2.1	Guaranty	6
Section 2.2	Limitation of Guaranty	6
Section 2.3	Contribution	6
Section 2.4	Authorization; Other Agreements	6
Section 2.5	Guaranty Absolute and Unconditional	7
Section 2.6	Waivers	8
Section 2.7	Reliance	8

ARTICLE III GRANT OF SECURITY INTEREST		9
Section 3.1	Collateral	9
Section 3.2	Grant of Security Interest in Collateral	9

ARTICLE IV REPRESENTATIONS AND WARRANTIES		10
Section 4.1	Title; No Other Liens	10
Section 4.2	Perfection and Priority	10
Section 4.3	Jurisdiction of Organization; Chief Executive Office	11
Section 4.4	Locations of Inventory, Equipment and Books and Records	11
Section 4.5	Pledged Collateral	11
Section 4.6	Instruments and Tangible Chattel Paper Formerly Accounts	12
Section 4.7	Intellectual Property	12
Section 4.8	Commercial Tort Claims	13
Section 4.9	Specific Collateral	13
Section 4.10	Enforcement	13

ARTICLE V COVENANTS		13
Section 5.1	Maintenance of Perfected Security Interest; Further Documentation and Consents	14
Section 5.2	Changes in Locations, Name, Etc.	15
Section 5.3	Pledged Collateral	15
Section 5.4	Accounts	16
Section 5.5	Commodity Contracts	16
Section 5.6	Delivery of Instruments and Tangible Chattel Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper	16
Section 5.7	Intellectual Property	17
Section 5.8	Notices	18
Section 5.9	Notice of Commercial Tort Claims	18
Section 5.10	Controlled Securities Account	19
Section 5.11	Controlled Deposit Accounts	19

TABLE OF CONTENTS

(continued)

		Page

ARTICLE VI REMEDIAL PROVISIONS		19
Section 6.1	Code and Other Remedies	19
Section 6.2	Accounts and Payments in Respect of General Intangibles	22
Section 6.3	Pledged Collateral	23
Section 6.4	Proceeds to be Turned over to and Held by Agent	24
Section 6.5	Sale of Pledged Collateral	24
Section 6.6	Deficiency	25

ARTICLE VII THE AGENT		25
Section 7.1	Agent’s Appointment as Attorney-in-Fact	25
Section 7.2	Authorization to File Financing Statements	27
Section 7.3	Authority of Agent	27
Section 7.4	Duty; Obligations and Liabilities	27

ARTICLE VIII MISCELLANEOUS		28
Section 8.1	Reinstatement	28
Section 8.2	Release of Collateral	28
Section 8.3	Independent Obligations	29
Section 8.4	No Waiver by Course of Conduct	29
Section 8.5	Amendments in Writing	30
Section 8.6	Additional Grantors; Additional Pledged Collateral	30
Section 8.7	Notices	30
Section 8.8	Successors and Assigns	30
Section 8.9	Counterparts	30
Section 8.10	Severability	30
Section 8.11	Governing Law	31
Section 8.12	Waiver of Jury Trial	31

ANNEXES AND SCHEDULES

Annex 1	Form of Pledge Amendment
Annex 2	Form of Joinder Agreement
Annex 3	Form of Intellectual Property Security Agreement

Schedule 1	Commercial Tort Claims
Schedule 2	Filings
Schedule 3	Jurisdiction of Organization; Chief Executive Office
Schedule 4	Location of Inventory and Equipment
Schedule 5	Pledged Collateral
Schedule 6	Intellectual Property

iii

SECOND LIEN GUARANTY AND SECURITY AGREEMENT, dated as of May 27, 2011 (this “Agreement”), by Gundle/SLT Environmental, Inc., a Delaware corporation (the “Borrower”), and each of the other entities listed on the signature pages hereof or that becomes a party hereto pursuant to Section 8.6 (such entities, together with the Borrower, the “Grantors”), in favor of Jefferies Finance LLC (“Jefferies Finance”), as administrative agent (in such capacity, together with its successors and permitted assigns, the “Agent”) for the Lenders and each other Secured Party (each as defined in the Credit Agreement referred to below).

W I T N E S S E T H:

WHEREAS, pursuant to the Second Lien Credit Agreement dated as of the date hereof (as the same may be amended, restated, supplemented and/or modified from time to time, the “Credit Agreement”) among the Borrower, Holdings, the other Persons party thereto as Credit Parties, the Lenders from time to time party thereto and Jefferies Finance, as Agent for the Lenders and each other Secured Party, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein;

WHEREAS, each Grantor (other than the Borrower) has agreed to guaranty the Obligations (as defined in the Credit Agreement) of the Borrower;

WHEREAS, each Grantor will derive substantial direct and indirect benefits from the making of the extensions of credit under the Credit Agreement;

WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Agent;

WHEREAS, pursuant to the First Lien Credit Agreement and the other First Lien Indebtedness Documents, the First Lien Lenders and the other First Lien Secured Parties have extended, and may hereafter extend, credit to the Borrower and the other Grantors; and

WHEREAS, each Grantor is concurrently granting to the First Lien Agent, for the benefit of the First Lien Secured Parties, a first priority security interest in the Collateral (it being understood that the relative rights, remedies and priorities of the Secured Parties and the First Lien Secured Parties in respect of the Collateral are governed by the Intercreditor Agreement;

NOW, THEREFORE, in consideration of the premises and to induce the Lenders and the Agent to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Agent as follows:

ARTICLE I

DEFINED TERMS

Section 1.1 Definitions. (a) Capital terms used herein without definition are used as defined in the Credit Agreement.

“Agreement” means this Second Lien Guaranty and Security Agreement.

“Applicable IP Office” means the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency within or outside the United States.

“Collateral” has the meaning specified in Section 3.1.

“Excluded Property” means, collectively, (i) Excluded Equity, (ii) any permit, license, any Contractual Obligation or other general intangible, Intellectual Property or franchise in connection with which any Grantor has any right, title to or interest (A) that prohibits or requires the consent of any Person other than a Grantor or any of its Subsidiaries or Affiliates which has not been obtained as a condition to the creation by such Grantor of a Lien on any right, title or interest in such permit, license or any Contractual Obligation or other general intangible, Intellectual Property or franchise or any Stock or Stock Equivalent related thereto, (B) to the extent that any Requirement of Law applicable thereto prohibits the creation of a Lien thereon, but only, with respect to the prohibition in (A) and (B), to the extent, and for as long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC, the Bankruptcy Code or any other Requirement of Law, or (C) the grant of a security interest in such permit, license, Contractual Obligation, general intangible, Intellectual Property or franchise would result in the loss of rights thereon or create a default thereunder, (iii) Property owned by any Grantor that is subject to a purchase money Lien or a Capital Lease permitted under the Credit Agreement if the Contractual Obligation pursuant to which such Lien is granted (or in the document providing for such Capital Lease) prohibits or requires the consent of any Person other than a Grantor or any of its Subsidiaries or Affiliates which has not been obtained as a condition to the creation of any other Lien on such equipment, and (iv) any “intent to use” Trademark applications for which a statement of use has not been filed (but only until such statement is filed); provided, however, “Excluded Property” shall not include any proceeds, products, substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions or replacements would otherwise constitute Excluded Property).

“Fraudulent Transfer Laws” has the meaning set forth in Section 2.2.

“Guaranteed Obligations” has the meaning set forth in Section 2.1.

“Guarantor” means each Grantor other than the Borrower.

“Guaranty” means the guaranty of the Guaranteed Obligations made by the Guarantors as set forth in this Agreement.

“Internet Domain Name” means all right, title and interest (and all related IP Ancillary Rights) arising under any Requirement of Law in or relating to Internet domain names.

“In-Transit Collateral” has the meaning set forth in Section 4.4.

“Loan Documents” means the Loan Documents (as defined in the Credit Agreement).

“Material Intellectual Property” means Intellectual Property that is owned by or licensed to a Grantor and material to the conduct of any Grantor’s business.

“Pledge Amendment” has the meaning set forth in Section 8.6(b).

property made on, in respect of or in exchange for the foregoing from time to time, including all Stock and Stock Equivalents listed on Schedule 5. Pledged Certificated Stock excludes any Excluded Property and any Cash Equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section 5.10.

“Pledged Collateral” means, collectively, the Pledged Stock and the Pledged Debt Instruments.

“Pledged Stock” means all Pledged Certificated Stock and all Pledged Uncertificated Stock.

“Secured Obligations” has the meaning set forth in Section 3.2.

“transferable records” has the meaning set forth in Section 5.6(c).

Uniform Commercial Code of a jurisdiction other than the State of New York, “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of the definitions related to or otherwise used in such provisions.

Section 1.2 Certain Other Terms.

(b) Other Interpretive Provisions.

(iii) Certain Common Terms. The term “including” is not limiting and means “including without limitation.”

ARTICLE II

GUARANTY

Section 2.1 Guaranty. To induce the Lenders to make the Loans to or for the benefit of the Borrower, each Guarantor hereby, jointly and severally, absolutely, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, the full and punctual payment when due, whether at stated maturity or earlier, by reason of acceleration, mandatory prepayment or otherwise in accordance with any Loan Document, of all the Obligations of the Borrower whether existing on the date hereof or hereinafter incurred or created (the “Guaranteed Obligations”). This Guaranty by each Guarantor hereunder constitutes a guaranty of payment and not of collection.

(b) apply to the Guaranteed Obligations any sums by whomever paid or however realized to any Guaranteed Obligation in such order as provided in the Loan Documents;

(e) settle, release, compromise, collect or otherwise liquidate the Guaranteed Obligations.

(c) the failure by any Person to take any steps to perfect and maintain any Lien on, or to preserve any rights with respect to, any Collateral;

(d) any workout, insolvency, bankruptcy proceeding, reorganization, arrangement, liquidation or dissolution by or against the Borrower, any other Guarantor or any

of the Borrower’s other Subsidiaries or any procedure, agreement, order, stipulation, election, action or omission thereunder, including any discharge or disallowance of, or bar or stay against collecting, any Guaranteed Obligation (or any interest thereon) in or as a result of any such proceeding;

or (c) make any future disclosures of such information or any other information to any Guarantor.

ARTICLE III

GRANT OF SECURITY INTEREST

(b) the commercial tort claims described on Schedule 1 and on any supplement thereto received by the Agent pursuant to Section 5.9;

(e) all cash, Cash Equivalents and other items deposited in, or credited to, any deposit account or securities account;

(f) all other goods (including but not limited to fixtures) and personal property of such Grantor, whether tangible or intangible and wherever located; and

Notwithstanding anything herein to the contrary, the security interest granted to the Secured Parties pursuant to this Agreement in the Collateral and the exercise of any right or remedy by the Secured Parties pursuant to this Agreement in respect of the Collateral shall be subject to and governed by the terms of the Intercreditor Agreement at any time the Intercreditor Agreement is in effect, and without limiting the foregoing, the Agent on behalf of itself and the Secured Parties hereby acknowledges and agrees (and the Secured Parties, by their acceptance of the benefits of this Agreement, hereby acknowledge and agree) that the security interest granted to the Secured Parties pursuant to this Agreement in the Collateral and their ability to exercise rights and remedies with respect thereto are expressly junior, subordinated and subject to the security interest granted to the First Lien Secured Parties in the Collateral and the rights and remedies provided to the First Lien Secured Parties with respect thereto as provided in the Intercreditor Agreement. In the event of any conflict between the terms hereof and the terms of Intercreditor Agreement, the terms of the Intercreditor Agreement shall control at any time the Intercreditor Agreement is in effect. In addition, to the extent that this Agreement requires the delivery of any Collateral to the Secured Parties at any time when the Intercreditor Agreement is in effect, such Collateral shall be delivered to the First Lien Agent to be held by the First Lien Agent as bailee for the Secured Parties pursuant to the terms of the Intercreditor Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

To induce the Lenders and the Agent to enter into the Loan Documents, each Grantor hereby represents and warrants each of the following to the Agent, the Lenders and the other Secured Parties:

States Patent and Trademark Office, as applicable, (iv) in the case of letter-of-credit rights that are not supporting obligations of Collateral, the execution of a Contractual Obligation granting control to the Agent over such letter-of-credit rights to the extent required under Section 5.6, (v) in the case of electronic chattel paper, the completion of all steps necessary to grant control to the Agent over such electronic chattel paper to the extent required under Section 5.6, and (vi) in the case of commercial tort claims, the notice of such commercial tort claims pursuant to Section 5.9; provided however that no Grantor is making any representation or warranty as to the perfection of a security interest in unregistered Copyrights or other unregistered Intellectual Property or any “intent to use” Trademark applications for which a statement of use has not been filed. Such security interest shall be prior to all other Liens on the Collateral described in the following clauses (i), (ii) and (iii), except for (x) Permitted Liens securing First Lien Indebtedness which have priority over the Agent’s Lien as provided in the Intercreditor Agreement and (y) other Permitted Liens having priority over the Agent’s Lien by operation of law or express written agreement of the Agent upon (i) in the case of all Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment Property, the delivery thereof to the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent) of such Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment Property to the extent required under Section 5.3 consisting of instruments and certificates, in each case properly endorsed for transfer to the Agent or in blank, (ii) in the case of all Pledged Investment Property not in certificated form, the execution of Control Agreements with respect to such investment property to the extent required under Section 5.3 and (iii) in the case of all other instruments and tangible chattel paper that are not Pledged Certificated Stock, Pledged Debt Instruments or Pledged Investment Property, the delivery thereof to the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent) of such instruments and tangible chattel paper. Except as set forth in this Section 4.2, all actions by each Grantor necessary or desirable to protect and perfect the Lien granted hereunder on the Collateral have been duly taken.

authorized, validly issued and is fully paid and nonassessable (other than Pledged Stock in limited liability companies, partnerships and, if such concepts are not applicable in the jurisdiction of organization of such Person, Foreign Subsidiaries).

(b) As of the Closing Date, all Pledged Collateral (other than Pledged Uncertificated Stock) and all Pledged Investment Property consisting of instruments and certificates has been delivered to the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent) to the extent required by and in accordance with Section 5.3(a).

(c) Upon the occurrence and during the continuance of an Event of Default, the Agent shall be entitled (subject to the terms of the Intercreditor Agreement) to exercise all of the rights of the Grantor granting the security interest in any Pledged Stock, and a transferee or assignee of such Pledged Stock shall become a holder of such Pledged Stock to the same extent as such Grantor and be entitled to participate in the management of the issuer of such Pledged Stock and, upon the transfer of the entire interest of such Grantor, such Grantor shall, by operation of law, cease to be a holder of such Pledged Stock; provided that the Agent may elect at its sole and absolute discretion to permit such Grantor to continue voting such Pledged Stock.

Section 4.6 Instruments and Tangible Chattel Paper Formerly Accounts. No amount payable to such Grantor under or in connection with any account is evidenced by any instrument or tangible chattel paper that has not been delivered to the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent), properly endorsed in blank for transfer, to the extent delivery is required by Section 5.6(a).

Section 4.7 Intellectual Property.

fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights, generally, and general equitable principles (whether considered in a proceeding in equity or at law)), and no such registered Material Intellectual Property owned by such Grantor as set forth on Schedule 6 has been abandoned, except to the extent such abandonment will not and could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. Except as set forth on Schedule 6, the consummation of the transactions contemplated by the Loan Documents shall not cause any breach or default of any material IP License or limit or impair the ownership, use, validity or enforceability of, or any rights of such Grantor in, any Material Intellectual Property. There are no pending (or, to the knowledge of such Grantor, threatened) actions, investigations, suits, proceedings, audits, claims, demands, orders or disputes challenging the ownership, use, validity, enforceability of, or such Grantor’s rights in, any Material Intellectual Property of such Grantor (other than office actions issued in the ordinary course of prosecution of any pending application for patents or applications for registration of other Intellectual Property), except as could not reasonably be expected to have a Material Adverse Effect. To such Grantor’s knowledge, no Person has been or is infringing, misappropriating, diluting, violating or otherwise materially impairing any Intellectual Property of such Grantor. Such Grantor, and to such Grantor’s knowledge each other party thereto, is not in material breach or default of any material IP License.

Section 4.9 Specific Collateral. None of the Collateral is or is proceeds or products of farm products, as-extracted collateral, health-care-insurance receivables or timber to be cut.

Section 4.10 Enforcement. No Permit, notice to or filing with any Governmental Authority or any notice to or consent from any other Person is required (except for Permits or consents which have been obtained and notices or filings which have been made) for the exercise by the Agent of its rights (including voting rights) provided for in this Agreement or the enforcement of remedies in respect of the Collateral pursuant to this Agreement, including the transfer of any Collateral, except pursuant to the Intercreditor Agreement and as may be required in connection with the disposition of any portion of the Pledged Collateral by laws affecting the offering and sale of securities (including, but not limited to, membership interests in a limited liability company) generally or any approvals that may be required to be obtained from any bailees or landlords to collect the Collateral.

ARTICLE V

COVENANTS

Each Grantor agrees with the Agent to the following, as long as any Obligation or Commitment remains outstanding (other than contingent indemnification obligations to the

extent no claim giving rise thereto has been asserted) and, to the extent not inconsistent with (and subject to the terms and conditions of) the Intercreditor Agreement (including, without limitation, as to the receipt and application by any Secured Party of any Collateral and/or proceeds thereof or the exercise of any rights or remedies by any Secured Party with respect thereto):

Section 5.1 Maintenance of Perfected Security Interest; Further Documentation and Consents. (a) Generally. Such Grantor shall (i) not use or permit any Collateral to be used unlawfully or in violation of any provision of any Loan Document, any Requirement of Law or any policy of insurance covering the Collateral and (ii) not enter into any Contractual Obligation or undertaking restricting the right or ability of such Grantor or the Agent to sell, assign, convey or transfer any Collateral, except (x) in the case of preceding clause (ii), the First Lien Indebtedness Documents and the Intercreditor Agreement and (y) in the case of preceding clauses (i) and (ii), if such violation or restriction could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

(d) At any time and from time to time, upon the reasonable written request of the Agent, such Grantor shall, for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, (i) promptly and duly execute and deliver, and have recorded, such further documents, including an authorization to file (or, as applicable, the filing) of any financing statement or amendment under the UCC (or other filings under similar Requirements of Law) in effect in any jurisdiction with respect to the security interest created hereby and (ii) take such further action as the Agent may reasonably request, including (A) using its commercially reasonable efforts to secure all approvals necessary or appropriate for the collateral assignment to or for the benefit of the Agent of any Contractual Obligation, including any IP License, held by such Grantor and to enforce the security interests granted hereunder and (B) executing and delivering any Control Agreements with respect to deposit accounts and securities accounts to the extent required hereby or under any other Loan Document.

(e) If reasonably requested by the Agent upon the occurrence and during the continuance of an Event of Default, the Grantor shall arrange for the Agent’s second priority security interest (and to the extent that the Intercreditor Agreement is no longer in effect, Agent’s first priority security interest) to be noted on the certificate of title of each owned

Vehicle and shall file any other necessary documentation in each jurisdiction that the Agent shall deem advisable to perfect its security interests in any owned Vehicle.

(i) permit any inventory or equipment with a value in excess of $2,000,000 in the aggregate to be kept at a location other than those listed on Schedule 4, except for the In Transit Collateral;

(ii) change its jurisdiction of organization or its location (as defined in Section 9-307 of the UCC), in each case from that referred to in Section 4.3; or

Section 5.3 Pledged Collateral. (a) Closing Date Delivery of Pledged Collateral. On the Closing Date, such Grantor shall (i) deliver to the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent), in suitable form for transfer and in form and substance reasonably satisfactory to the Agent, (A) all Pledged Certificated Stock, (B) all Pledged Debt Instruments and (C) all certificates and instruments evidencing Pledged Investment Property and (ii) maintain all other Pledged Investment Property in a Controlled Securities Account.

(b) Post-Closing Delivery of Pledged Collateral. After the Closing Date, if any Grantor acquires any Pledged Debt Instruments or certificates and instruments evidencing Pledged Investment Property having a value in excess of $100,000 individually or $250,000 in the aggregate, such Grantor shall promptly, and in any event within five (5) Business Days after acquiring such Collateral, deliver to the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent), in suitable form for transfer and in form and substance reasonably satisfactory to the Agent, all such Collateral; provided, that each Grantor shall deliver to the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent) all securities, in suitable form for transfer and in form and substance reasonably satisfactory to the Agent, to the extent the issuer of such securities is a Subsidiary of such Grantor. After the

Closing Date, each Grantor shall maintain all other Pledged Investment Property in a Controlled Securities Account.

(c) Event of Default. During the continuance of an Event of Default (but subject to the terms and conditions of the Intercreditor Agreement), the Agent shall have the right, at any time in its discretion and without notice to the Grantor, to (i) transfer to or to register in its name or in the name of its nominees any Pledged Collateral or any Pledged Investment Property and (ii) exchange any certificate or instrument representing or evidencing any Pledged Collateral or any Pledged Investment Property for certificates or instruments of smaller or larger denominations.

Section 5.4 Accounts.

(b) So long as an Event of Default is continuing (but subject to the terms and conditions of the Intercreditor Agreement), the Agent shall have the right to make test verifications of the accounts in any manner and through any medium that it reasonably considers advisable, and such Grantor shall furnish all such assistance and information as the Agent may reasonably require in connection therewith.

Section 5.5 Commodity Contracts. Such Grantor shall not have any commodity contract unless such commodity contract is subject to a Control Agreement.

Section 5.6 Delivery of Instruments and Tangible Chattel Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper. (a) If any amount in excess of $100,000 individually or $250,000 in the aggregate payable under or in connection with any Collateral owned by such Grantor shall be or become evidenced by an instrument or tangible chattel paper other than such instrument delivered in accordance with Section 5.3(a) and in the possession of the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent) and other than items deposited for collection, such Grantor shall mark all such instruments and tangible chattel paper with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the security interest of Jefferies Finance

LLC, as Agent” and, at the request of the Agent, shall immediately deliver such instrument or tangible chattel paper to the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent), duly indorsed in a manner satisfactory to the Agent.

(b) Such Grantor shall not grant “control” (within the meaning of such term under Article 9-106 of the UCC) over any investment property to any Person other than the Agent and the First Lien Agent.

(c) If such Grantor is or becomes the beneficiary of a letter of credit that is (i) not a supporting obligation of any Collateral and (ii) in excess of $100,000 individually or $250,000 in the aggregate, such Grantor shall promptly, and in any event within five (5) Business Days after becoming a beneficiary, notify the Agent thereof and use commercially reasonable efforts to enter into a Contractual Obligation with the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent), the issuer of such letter of credit or any nominated person with respect to an assignment of proceeds of such letter of credit. Such Contractual Obligation shall collaterally assign the proceeds of such letter of credit to the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent) and such collateral assignment shall be sufficient to grant control for the purposes of Section 9-107 of the UCC (or any similar section under any equivalent UCC). Such Contractual Obligation shall also direct all payments thereunder to a Cash Collateral Account (but subject to the terms and conditions of the Intercreditor Agreement). The provisions of the Contractual Obligation shall be in form and substance reasonably satisfactory to the Agent.

(d) If any Collateral owned by such Grantor shall be or become evidenced by electronic chattel paper, such Grantor shall, at the request of the Agent, take all steps necessary to grant the Agent (or, to the extent required by the Intercreditor Agreement, the First Lien Agent) control of all such electronic chattel paper for the purposes of Section 9-105 of the UCC (or any similar section under any equivalent UCC) and all “transferable records” as defined in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act.

(b) Such Grantor shall, in its reasonable business judgment, (i) (A) continue to use each Trademark included in the Material Intellectual Property to maintain such Trademark in full force and effect with respect to each class of goods for which such Trademark is currently used, free from any claim of abandonment for non-use, (B) maintain at least substantially the same standards of quality of products and services offered under such Trademark as are currently maintained, (C) use such Trademark with the appropriate notice of registration and all other notices and legends required by applicable Requirements of Law to the extent necessary to maintain such Trademark, (D) not adopt or use any other Trademark that is confusingly similar or a colorable imitation of such Trademark unless the Agent shall obtain a perfected security interest in such other Trademark pursuant to this Agreement (subject to the

qualifications set forth in Section 4.7) and (ii) not knowingly do any act or knowingly omit to do any act whereby (w) such Trademark (or any goodwill associated therewith) may be invalidated, impaired or abandoned in any way, (x) any Patent included in the Material Intellectual Property may become invalidated, impaired, abandoned or dedicated to the public, (y) any portion of the registered Copyrights included in the Material Intellectual Property may become invalidated, impaired, abandoned or dedicated to the public domain or (z) any Trade Secret that is Material Intellectual Property may become publicly available or otherwise unprotectable.

Section 5.8 Notices. Except as otherwise provided in this Agreement, such Grantor shall promptly notify the Agent in writing of its acquisition of any interest hereafter in property with a value in excess of $1,000,000 in the aggregate for all Grantors that is of a type where a security interest or Lien must be or may be registered, recorded or filed under, or notice thereof given under, any federal statute or regulation.

Section 5.9 Notice of Commercial Tort Claims. Such Grantor agrees that, if it shall acquire any interest in any commercial tort claim where such Grantor’s claim is in excess of

$100,000 or its recovery thereunder could reasonably be expected to be greater than $100,000 (whether from another Person or because such commercial tort claim shall have come into existence) and upon a Responsible Office becoming aware thereof, (i) such Grantor shall, promptly upon such acquisition, deliver to the Agent, in each case in form and substance reasonably satisfactory to the Agent, a notice of the existence and nature of such commercial tort claim and a supplement to Schedule 1 containing a specific description of such commercial tort claim, (ii) Section 3.1 shall apply to such commercial tort claim and (iii) such Grantor shall execute and deliver to the Agent, in each case in form and substance reasonably satisfactory to the Agent, any document, and take all other action, deemed by the Agent to be reasonably necessary to create, perfect and protect Agent’s Lien, on behalf of the Secured Parties, a perfected security interest having at least the priority set forth in Section 4.2 in all such commercial tort claims. Any supplement Schedule 1 delivered pursuant to this Section 5.9 shall, after the receipt thereof by the Agent, become part of Schedule 1 for all purposes hereunder other than in respect of representations and warranties made prior to the date of such receipt.

Section 5.11 Controlled Deposit Accounts. Except for Excluded Accounts, each Grantor shall enter into (and thereafter maintain) Control Agreements with respect to each Deposit Account.

ARTICLE VI

REMEDIAL PROVISIONS

(b) Disposition of Collateral. Without limiting the generality of the foregoing (but, in each case, subject to the terms and conditions of the Intercreditor Agreement), the Agent may, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), during the continuance of any Event of Default (personally or through its agents or attorneys), (i) enter upon the premises where any Collateral is located, without any obligation to pay rent, through self-help, without judicial process, without first obtaining a final judgment or giving any Grantor or any other Person notice or opportunity for a hearing on the Agent’s claim or action, (ii) collect, receive, appropriate and realize upon any Collateral and (iii) sell, assign, convey, transfer, grant option or options to purchase and deliver any Collateral (enter into Contractual Obligations to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of any Secured Party or

elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Agent shall have the right, upon any such public sale or sales and, to the extent permitted by the UCC and other applicable Requirements of Law, upon any such private sale, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption of any Grantor, which right or equity is hereby waived and released.

(c) Management of the Collateral. Each Grantor further agrees, that, during the continuance of any Event of Default (but, in each case, subject to the terms and conditions of the Intercreditor Agreement), (i) at the Agent’s request, it shall assemble the Collateral and make it available to the Agent at places that the Agent shall reasonably select, whether at such Grantor’s premises or elsewhere, (ii) without limiting the foregoing, the Agent also has the right to require that each Grantor store and keep any Collateral pending further action by the Agent and, while any such Collateral is so stored or kept, provide such guards and maintenance services as shall be necessary to protect the same and to preserve and maintain such Collateral in good condition, (iii) until the Agent is able to sell, assign, convey or transfer any Collateral, the Agent shall have the right to hold or use such Collateral to the extent that it deems appropriate for the purpose of preserving the Collateral or its value or for any other purpose deemed appropriate by the Agent and (iv) the Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of any Collateral and to enforce any of the Agent’s remedies (for the benefit of the Secured Parties), with respect to such appointment without prior notice or hearing as to such appointment. The Agent shall not have any obligation to any Grantor to maintain or preserve the rights of any Grantor as against third parties with respect to any Collateral while such Collateral is in the possession of the Agent.

(d) Application of Proceeds. Subject, in each case, to the terms and conditions of the Intercreditor Agreement, the Agent shall apply the cash proceeds of any action taken by it pursuant to this Section 6.1 in such order as specified in Section 1.10(c) of the Credit Agreement to the payment in whole or in part of the Secured Obligations, as set forth in the Credit Agreement, and only after such application and after the payment by the Agent of any other amount required by the Intercreditor Agreement or any Requirement of Law, need the Agent account for the surplus, if any, to any Grantor.

(e) Direct Obligation. Neither the Agent nor any other Secured Party shall be required to make any demand upon, or pursue or exhaust any right or remedy against, any Grantor, any other Credit Party or any other Person with respect to the payment of the Obligations or to pursue or exhaust any right or remedy with respect to any Collateral therefor or any direct or indirect guaranty thereof. All of the rights and remedies of the Agent and any other Secured Party under any Loan Document shall be cumulative, may be exercised individually or concurrently and not exclusive of any other rights or remedies provided by any Requirement of Law (but, in each case, shall be subject to the terms and conditions of the Intercreditor Agreement). To the extent it may lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against the Agent or any Lender, any valuation, stay, appraisement, extension, redemption or similar laws and any and all rights or defenses it may have as a surety, now or hereafter existing, arising out of the exercise by them of any rights hereunder. If any notice of a proposed

sale or other disposition of any Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition.

(iii) fail to exercise remedies against account debtors or other Persons obligated on any Collateral or to remove Liens on any Collateral or to remove any adverse claims against any Collateral;

(vi) dispose of assets in wholesale rather than retail markets;

(vii) disclaim disposition warranties, such as title, possession or quiet enjoyment; or

Each Grantor acknowledges that the purpose of this Section 6.1 is to provide a non-exhaustive list of actions or omissions that are commercially reasonable when exercising remedies against

(g) IP Licenses. For the purpose of enabling the Agent to exercise rights and remedies under this Section 6.1 (including in order to take possession of, collect, receive, assemble, process, appropriate, remove, realize upon, sell, assign, convey, transfer or grant options to purchase any Collateral) at such time as the Agent shall be lawfully entitled to exercise such rights and remedies (but, in each case, subject to the terms and conditions of the Intercreditor Agreement), each Grantor hereby grants to the Agent, for the benefit of the Secured Parties, (i) an irrevocable, nonexclusive, worldwide license (exercisable without payment of royalty or other compensation to such Grantor), including in such license the right to sublicense, use and practice any Intellectual Property (with respect to Trademarks, subject to reasonable quality control in favor of such Grantor) now owned or hereafter acquired by such Grantor and access to all media in which any of the licensed items may be recorded or stored and to all Software, in each case to the extent permitted by any applicable licenses covering such Software, used for the compilation or printout thereof and (ii) an irrevocable license (without payment of rent or other compensation to such Grantor) to use, operate and occupy all real Property owned, operated, leased, subleased or otherwise occupied by such Grantor.

Section 6.2 Accounts and Payments in Respect of General Intangibles. (a) In addition to, and not in substitution for, any similar requirement in the Credit Agreement, if required by the Agent at any time during the continuance of an Event of Default (but, in each case, subject to the terms and conditions of the Intercreditor Agreement), any payment of accounts or payment in respect of general intangibles, when collected by any Grantor, shall be promptly (and, in any event, within two (2) Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Agent, in a Cash Collateral Account, subject to withdrawal by the Agent as provided in Section 6.4. Until so turned over, such payment shall be held by such Grantor in trust for the Agent, segregated from other funds of such Grantor. Each such deposit of proceeds of accounts and payments in respect of general intangibles shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit.

(b) At any time during the continuance of an Event of Default (but, in each case, subject to the terms and conditions of the Intercreditor Agreement):

(ii) the Agent may, without notice, at any time during the continuance of an Event of Default, limit or terminate the authority of a Grantor to collect its accounts or amounts due under general intangibles or any thereof and, in its own name or in the name of others, communicate with account debtors to verify with them to the Agent’s satisfaction the existence, amount and terms of any account or amounts due under any general intangible. In addition, the Agent may at any time enforce such Grantor’s rights against such account debtors and obligors of general intangibles; and

(iii) each Grantor shall take all actions, deliver all documents and provide all information necessary or reasonably requested by the Agent to ensure any Internet Domain Name is registered.

Section 6.3 Pledged Collateral. (a) Voting Rights. During the continuance of an Event of Default, (but otherwise subject to the terms and conditions of the Intercreditor Agreement), upon notice by the Agent to the relevant Grantor or Grantors, the Agent or its nominee may exercise (i) any voting, consent, corporate and other right pertaining to the Pledged Collateral at any meeting of shareholders, partners or members, as the case may be, of the relevant issuer or issuers of Pledged Collateral or otherwise and (ii) any right of conversion, exchange and subscription and any other right, privilege or option pertaining to the Pledged Collateral as if it were the absolute owner thereof (including the right to exchange at its discretion any Pledged Collateral upon the merger, amalgamation, consolidation, reorganization, recapitalization or other fundamental change in the corporate or equivalent structure of any issuer of Pledged Stock, the right to deposit and deliver any Pledged Collateral with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Agent may determine), all without liability except to account for property actually received by it and except for any act constituting gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable decision; provided, however, that the Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing; provided, further, that if and when any such Event of Default shall have been cured or waived, (i) such voting rights shall automatically revert to the applicable Grantor and (ii) the Agent, at the expense of the Grantors, shall execute such documents reasonably requested by Grantors to allow the owner of any equity interest to exercise any rights associated with such equity interest.

(b) Proxies. In order to permit the Agent to exercise the voting and other consensual rights that it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions that it may be entitled to receive hereunder, (i) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Agent all such proxies, dividend payment orders and other instruments as the Agent may from time to time reasonably request and (ii) without limiting the effect of clause (i) above, such Grantor hereby grants to the Agent an irrevocable proxy to vote all or any part of the Pledged Collateral and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Collateral would be entitled (including giving or withholding written consents of shareholders, partners or members, as the case may be, calling special meetings of shareholders, partners or members, as the case may be, and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Collateral on the record books of the issuer thereof) by any other person (including the issuer of such Pledged Collateral or any officer or agent thereof) during the continuance of an Event of Default (but otherwise subject to the terms and conditions of the Intercreditor Agreement) and which proxy shall only terminate upon the payment in full of the Secured Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted).

Section 6.4 Proceeds to be Turned over to and Held by Agent. Unless otherwise expressly provided in the Credit Agreement, this Agreement or the Intercreditor Agreement, all proceeds of any Collateral received by any Grantor hereunder in cash or Cash Equivalents shall be held by such Grantor in trust for the Agent and the other Secured Parties, segregated from other funds of such Grantor, and to the extent required by the Credit Agreement, this Agreement or the Intercreditor Agreement, shall, promptly upon receipt by any Grantor, be turned over to the Agent in the exact form received (with any necessary endorsement). All such proceeds of Collateral and any other proceeds of any Collateral received by the Agent in cash or Cash Equivalents shall be held by the Agent in a Cash Collateral Account. All proceeds being held by the Agent in a Cash Collateral Account (or by such Grantor in trust for the Agent) shall continue to be held as collateral security for the Secured Obligations and shall not constitute payment thereof until applied as provided in the Credit Agreement.

may determine that a public sale is impracticable, not desirable or not commercially reasonable and, accordingly, may resort to one or more private sales thereof to a restricted group of purchasers that shall be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Agent shall be under no obligation to delay a sale of any Pledged Collateral for the period of time necessary to permit the issuer thereof to register such securities for public sale under the Securities Act or under applicable state securities laws even if such issuer would agree to do so.

ARTICLE VII

THE AGENT

Section 7.3 Authority of Agent. Each Grantor acknowledges that the rights and responsibilities of the Agent under this Agreement with respect to any action taken by the Agent or the exercise or non-exercise by the Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Agent and the other Secured Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them (subject, however, to the terms and conditions of the Intercreditor Agreement), but, as between the Agent and the Grantors, the Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation or entitlement to make any inquiry respecting such authority.

Section 7.4 Duty; Obligations and Liabilities. (a) The Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession shall be

to deal with it in the same manner as the Agent deals with similar property for its own account. The powers conferred on the Agent hereunder are solely to protect the Agent’s interest in the Collateral and shall not impose any duty upon the Agent to exercise any such powers. The Agent shall be accountable only for amounts that it receives as a result of the exercise of such powers, and neither it nor any of its Related Persons shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence, bad faith, or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable decision. In addition, the Agent shall not be liable or responsible for any loss or damage to any Collateral, or for any diminution in the value thereof, by reason of the act or omission of any warehousemen, carrier, forwarding agency, consignee or other bailee if such Person has been selected by the Agent in good faith.

ARTICLE VIII

MISCELLANEOUS

termination) of the Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors. Each Grantor (or such Grantor’s designee) is hereby authorized to file UCC-3 amendments, termination statements and other documents, such as releases of security interest with the Applicable IP Office, at such time evidencing the termination of the Liens so released; provided, however, that in no event is any Grantor authorized to execute any instrument, agreement or document on behalf of Agent or any Lender to evidence such release pursuant to this Section 8.2. At the request of any Grantor following any such termination, the Agent shall deliver to such Grantor any Collateral of such Grantor held by the Agent hereunder and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

(b) If the Agent shall be directed or permitted pursuant to subsection 8.10(b) of the Credit Agreement (or as otherwise permitted or required by the Intercreditor Agreement) to release any Lien or any Collateral, such Collateral shall be released from the Lien created hereby to the extent provided under, and subject to the terms and conditions set forth in, such subsection (or the Intercreditor Agreement, as the case may be). In connection therewith, the Agent, at the request of any Grantor, shall execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such release.

Section 8.3 Independent Obligations. The obligations of each Grantor hereunder are independent of and separate from the Secured Obligations and the Guaranteed Obligations. If any Secured Obligation or Guaranteed Obligation is not paid when due, or during the continuance of any Event of Default, the Agent may, at its sole election (but otherwise subject to the terms and conditions of the Intercreditor Agreement), proceed directly and at once, without notice, against any Grantor and any Collateral to collect and recover the full amount of any Secured Obligation or Guaranteed Obligation then due, without first proceeding against any other Grantor, any other Credit Party or any other Collateral and without first joining any other Grantor or any other Credit Party in any proceeding.

Section 8.5 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 9.1 of the Credit Agreement or as otherwise provided in the Intercreditor Agreement; provided, however, that annexes to this Agreement may be supplemented (but no existing provisions may be modified and no Collateral may be released) through Pledge Amendments and Joinder Agreements, in substantially the form of Annex 1 and Annex 2, respectively, in each case duly executed by the Agent and each Grantor directly affected thereby.

Section 8.12 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER FOUNDED IN CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO OTHER PARTY AND NO RELATED PERSON OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.12. EACH GRANTOR AGREES TO BE BOUND BY THE PROVISIONS OF SUBSECTIONS 9.18(b), (c) AND (d) OF THE CREDIT AGREEMENT.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, each of the undersigned has caused this Second Lien Guaranty and Security Agreement to be duly executed and delivered as of the date first above written.

	GEO HOLDINGS CORP.,
	a Delaware corporation, as a
	Grantor

	By:	/s/ Charles Lowrey
	Name:	Charles Lowrey
	Title:	Vice President, and Chief Financial Officer_

	GUNDLE/SLT ENVIRONMENTAL, INC.,
	a Delaware corporation, as a
	Grantor

	By:	/s/ Charles Lowrey
	Name:	Charles Lowrey
	Title:	Vice President, and Chief Financial Officer_

	GSE LINING TECHNOLOGY, LLC,
	a Delaware corporation, as a
	Grantor

	By:	/s/ Charles Lowrey
	Name:	Charles Lowrey
	Title:	Vice President, and Chief Financial Officer_

Guaranty and Security Agreement

ACCEPTED AND AGREED
as of the date first above written:

JEFFERIES FINANCE LLC,
as Agent

By:	/s/ E. J. Hess
Name:	E. J. Hess
Title:	Managing Director

Guaranty and Security Agreement

ANNEX 1

SECOND LIEN GUARANTY AND SECURITY AGREEMENT

FORM OF PLEDGE AMENDMENT

This Pledge Amendment, dated as of , 20 , is delivered pursuant to Section 8.6 of the Second Lien Guaranty and Security Agreement, dated as of May 27, 2011, by Gundle/SLT Environmental, Inc., a Delaware corporation (the “Borrower”), the undersigned Grantor and the other Affiliates of the Borrower from time to time party thereto as Grantors in favor of Jefferies Finance LLC, as Agent for the Secured Parties referred to therein (as the same may be modified from time to time, the “Second Lien Guaranty and Security Agreement”). Capitalized terms used herein without definition are used as defined in the Second Lien Guaranty and Security Agreement.

The undersigned hereby agrees that this Pledge Amendment may be attached to the Second Lien Guaranty and Security Agreement and that the Pledged Collateral listed on Annex 1-A to this Pledge Amendment shall be and become part of the Collateral referred to in the Second Lien Guaranty and Security Agreement and shall secure all Obligations of the undersigned.

The undersigned hereby represents and warrants that, with respect to the Pledged Collateral listed on Annex 1—A to this Pledge Amendment, each of the representations and warranties contained in Sections 4.1, 4.2, 4.5 and 4.10 of the Second Lien Guaranty and Security Agreement is true and correct in all material respects and as of the date hereof as if made on and as of such date.

	[GRANTOR]

	By:
		Name:
		Title:

A1-1

Annex 1-A

PLEDGED STOCK

ISSUER	CLASS	CERTIFICATE NO(S).	PAR VALUE	NUMBER OF SHARES, UNITS OR INTERESTS

PLEDGED DEBT INSTRUMENTS

ISSUER	DESCRIPTION OF DEBT	CERTIFICATE NO(S)	FINAL MATURITY	PRINCIPAL AMOUNT

A1-2

ACKNOWLEDGED AND AGREED
as of the date first above written:

JEFFERIES FINANCE LLC,
as Agent

By:
	Name:
	Title:

A1-3

ANNEX 2

SECOND LIEN GUARANTY AND SECURITY AGREEMENT

FORM OF JOINDER AGREEMENT

This JOINDER AGREEMENT, dated as of , 20 , is delivered pursuant to Section 8.6 of the Second Lien Guaranty and Security Agreement, dated as of May 27, 2011, by Gundle/SLT Environmental, Inc., a Delaware corporation (the “Borrower”) and the Affiliates of the Borrower from time to time party thereto as Grantors in favor of the Jefferies Finance LLC, as Agent for the Secured Parties referred to therein (the “Second Lien Guaranty and Security Agreement”). Capitalized terms used herein without definition are used as defined in the Second Lien Guaranty and Security Agreement.

By executing and delivering this Joinder Agreement, the undersigned, as provided in Section 8.6 of the Second Lien Guaranty and Security Agreement, hereby becomes a party to the Second Lien Guaranty and Security Agreement as a Grantor thereunder with the same force and effect as if originally named as a Grantor therein and, without limiting the generality of the foregoing, as collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of the undersigned, hereby mortgages, pledges and hypothecates to the Agent for the benefit of the Secured Parties, and grants to the Agent for the benefit of the Secured Parties a lien on and security interest in, all of its right, title and interest in, to and under the Collateral of the undersigned and expressly assumes all obligations and liabilities of a Grantor thereunder. The undersigned hereby agrees to be bound as a Grantor for the purposes of the Second Lien Guaranty and Security Agreement. During the effectiveness of the Second Lien Guaranty and Security Agreement, each Grantor authorizes the Agent and its Related Persons, at any time and from time to time, to file or record financing statements, amendments thereto, and other filing or recording documents or instruments with respect to any Collateral in such form and in such offices as the Agent reasonably determines appropriate to perfect the security interests of the Agent under the Second Lien Guaranty and Security Agreement, and such financing statements and amendments may describe the Collateral covered thereby as “all assets of the debtor, whether now existing or hereafter arising or acquired, including all proceeds thereof”.

The information set forth in Annex 1-A is hereby added to the information set forth in Schedules 1 through 6 to the Second Lien Guaranty and Security Agreement. By acknowledging and agreeing to this Joinder Agreement, the undersigned hereby agree that this Joinder Agreement may be attached to the Second Lien Guaranty and Security Agreement and that the Pledged Collateral listed on Annex 1-A to this Joinder Amendment shall be and become part of the Collateral referred to in the Second Lien Guaranty and Security Agreement and shall secure all Secured Obligations of the undersigned.

The undersigned hereby represents and warrants that each of the representations and warranties contained in Article IV of the Second Lien Guaranty and Security Agreement applicable to it is true and correct in all material respects on and as the date hereof as if made on and as of such date.

A2-1

IN WITNESS WHEREOF, THE UNDERSIGNED HAS CAUSED THIS JOINDER AGREEMENT TO BE DULY EXECUTED AND DELIVERED AS OF THE DATE FIRST ABOVE WRITTEN.

	[Additional Grantor]


	By:
		Name:
		Title:

A2-2

ACKNOWLEDGED AND AGREED
as of the date first above written:

[EACH GRANTOR PLEDGING
ADDITIONAL COLLATERAL]

By:
	Name:
	Title:

JEFFERIES FINANCE LLC,
	as Agent

By:
	Name:
	Title:

A2-3

ANNEX 3
TO
SECOND LIEN GUARANTY AND SECURITY AGREEMENT

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT(1)

THIS [COPYRIGHT] [PATENT] [TRADEMARK](2) SECURITY AGREEMENT, dated as of , 20 (this “Agreement”), is made by each of the entities listed on the signature pages hereof (each a “Grantor” and, collectively, the “Grantors”), in favor of Jefferies Finance LLC (“Jefferies Finance”), as administrative agent (in such capacity, together with its successors and permitted assigns, the “Agent”) for the Lenders (as defined in the Credit Agreement referred to below) and the other Secured Parties.

W I T N E S S E T H:

WHEREAS, pursuant to the Second Lien Credit Agreement, dated as of May 27, 2011 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Gundle/SLT Environmental, Inc., a Delaware corporation (the “Borrower”), the other Credit Parties and the Lenders and Jefferies Finance, as Agent for the Lenders, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein;

WHEREAS, each Grantor has agreed, pursuant to a Second Lien Guaranty and Security Agreement of even date herewith in favor of the Agent (the “Second Lien Guaranty and Security Agreement”), to guarantee the Obligations (as defined in the Credit Agreement) of the Borrower; and

WHEREAS, all of the Grantors are party to the Second Lien Guaranty and Security Agreement pursuant to which the Grantors are required to execute and deliver this Agreement;

Section 1. Defined Terms. Capitalized terms used herein without definition are used as defined in the Second Lien Guaranty and Security Agreement.

(1) Separate agreements should be executed relating to each Grantor’s respective Copyrights, Patents, and Trademarks.

(2) Select one term as appropriate.

A3-1

(b) all renewals, reversions and extensions of the foregoing; and

(b) all reissues, reexaminations, continuations, continuations-in-part, divisionals, renewals and extensions of the foregoing; and

(b) all renewals and extensions of the foregoing;

Section 3. Second Lien Guaranty and Security Agreement. The security interest granted pursuant to this Agreement is granted in conjunction with the security interest granted to the Agent pursuant to the Second Lien Guaranty and Security Agreement and each Grantor hereby acknowledges and agrees that the rights and remedies of the Agent with respect to the security interest in the [Copyright] [Patent] [Trademark] Collateral made and granted hereby are

A3-2

more fully set forth in the Second Lien Guaranty and Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

Section 6. Termination. This Agreement shall terminate concurrently with the termination of the Second Lien Guaranty and Security Agreement.

Section 8. Conflict with Other Agreements. In the event of any conflict between this Agreement (or any portion thereof) and the Second Lien Guaranty and Security Agreement, the Second Lien Guaranty and Security Agreement shall prevail.

[SIGNATURE PAGES FOLLOW]

A3-3

IN WITNESS WHEREOF, each Grantor has caused this [Copyright] [Patent] [Trademark] Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

		Very truly yours,

		[GRANTOR]
			as Grantor

		By:
			Name:
			Title:

ACCEPTED AND AGREED
as of the date first above written:

JEFFERIES FINANCE LLC,
	as Agent

By:
	Name:
	Title:

SCHEDULE I

TO
[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT

[Copyright] [Patent] [Trademark] Registrations

1. REGISTERED [COPYRIGHTS] [PATENTS] [TRADEMARKS]

[Include Registration Number and Date]

2. [COPYRIGHT] [PATENT] [TRADEMARK] APPLICATIONS

[Include Application Number and Date]

3. IP LICENSES

[Include complete legal description of agreement (name of agreement, parties and date)]

EX-10.8 9 a2204569zex-10_8.htm EX-10.8

Exhibit 10.8

INTERCOMPANY SUBORDINATION AGREEMENT

THIS INTERCOMPANY SUBORDINATION AGREEMENT (as amended, restated, modified and/or supplemented from time to time, this “Agreement”), dated as of May 27, 2011, made by each of the undersigned (each, a “Party” and, together with any entity that becomes a party to this Agreement pursuant to Section 9 hereof, the “Parties”) and General Electric Capital Corporation, as administrative agent (in such capacity, together with any successor administrative agent, the “Agent”), for the benefit of the Senior Creditors (as defined in Section 7 hereof). Unless otherwise defined herein, all capitalized terms used herein shall have the meanings ascribed to them in the First-Lien Credit Agreement referred to below.

W I T N E S S E T H:

WHEREAS, Gundle SLT/Environmental Inc., a Delaware corporation (the “Borrower”), the other entities party thereto designated as “Credit Parties”, the financial institutions party thereto designated as “Lenders,” “L/C Issuers” and “Swingline Lender” and the Agent, have entered into a First-Lien Credit Agreement, dated as of May 27, 2011, providing for the making of Loans to the Borrower and the issuance of, and participation in, Letters of Credit for the account of the Borrower, all as contemplated therein (as the same may be amended, amended and restated, supplemented or otherwise modified from time to time, the “First-Lien Credit Agreement”);

WHEREAS, pursuant to the Guaranty and Security Agreement, each Party (other than the Borrower) has guaranteed to the Secured Parties the payment when due of all Guaranteed Obligations;

WHEREAS, it is a condition precedent to the extensions of credit under the First-Lien Credit Agreement that this Agreement be executed and delivered by the original Parties hereto;

WHEREAS, additional Parties may from time to time become parties hereto in accordance with the requirements of the First-Lien Credit Agreement; and

WHEREAS, each of the Parties desires to execute this Agreement to satisfy the conditions described in the immediately preceding paragraphs.

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, the Parties and the Agent (for the benefit of the Senior Creditors) hereby agree as follows:

1. The Subordinated Debt (as defined in Section 7 hereof) and all payments of principal, interest and all other amounts thereunder are hereby, and shall continue to be, subject and subordinate in right of payment to the prior payment in full, in cash (other than unasserted contingent indemnification obligations), of all Senior Indebtedness to the extent, and in the

manner, set forth herein. The foregoing shall apply notwithstanding the availability of collateral to the Senior Creditors or the holders of Subordinated Debt or the actual date and time of execution, delivery, recordation, filing or perfection of any security interests granted with respect to the Senior Indebtedness or the Subordinated Debt, or the lien or priority of payment thereof, and in any instance wherein the Senior Indebtedness or any claim for the Senior Indebtedness is subordinated, avoided or disallowed, in whole or in part, under the Bankruptcy Code or other applicable federal, foreign, state or local law. In the event of a proceeding, whether voluntary or involuntary, for insolvency, liquidation, reorganization, dissolution, bankruptcy or other similar proceeding pursuant to the Bankruptcy Code or other applicable federal, foreign, state or local law (each, a “Bankruptcy Proceeding”), the Senior Indebtedness shall include all interest, fees and expenses accrued on the Senior Indebtedness, in accordance with and at the rates specified in the Senior Indebtedness, both for periods before and for periods after the commencement of any of such proceedings, even if the claim for such interest, fees and expenses is not allowed pursuant to the Bankruptcy Code or other applicable law.

2. Each Party (as a lender of any Subordinated Debt) hereby agrees that until all Senior Indebtedness has been repaid in full in cash (other than unasserted contingent indemnification obligations):

(a) Such Party shall not, without the prior written consent of the Required Senior Creditors (as defined in Section 7 hereof), which consent may be withheld or conditioned in the Required Senior Creditors’ sole discretion, commence, or join or participate in, any Enforcement Action (as defined in Section 7 hereof).

(b) In the event that (i) all or any portion of any Senior Indebtedness becomes due (whether at stated maturity, by acceleration or otherwise), (ii) any Event of Default under the First-Lien Credit Agreement, then exists or would result from such payment on the Subordinated Debt, (iii) such Party receives any payment or prepayment of principal, interest or any other amount, in whole or in part, of (or with respect to) the Subordinated Debt in violation of the terms of the First-Lien Credit Agreement or (iv) any distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, is made of all or any part of the property, assets or business of Holdings or any of its Subsidiaries or the proceeds thereof, in whatever form, to any creditor or creditors of Holdings or any of its Subsidiaries or to any holder of indebtedness of Holdings or any of its Subsidiaries or by reason of any liquidation, dissolution or other winding up of Holdings, any of its Subsidiaries or their respective businesses, or of any receivership or custodianship for Holdings or any of its Subsidiaries or of all or substantially all of their respective property, or of any insolvency or bankruptcy proceedings or assignment for the benefit of creditors or any proceeding by or against Holdings or any of its Subsidiaries for any relief under any bankruptcy, reorganization or insolvency law or laws, federal, foreign, state or local, or any law, federal, foreign, state or local relating to the relief of debtors, readjustment of indebtedness, reorganization, composition or extension, then, and in any such event, any payment or distribution of any kind or character, whether in cash, property or securities, which shall be payable or deliverable with respect to any or all of the Subordinated Debt or which has been received by any Party shall be held in trust by such Party for the benefit of the Senior Creditors and shall forthwith be paid or delivered directly to the Senior Creditors for

application to the payment of the Senior Indebtedness to the extent necessary to make payment in full in cash of all sums due under the Senior Indebtedness remaining unpaid after giving effect to any concurrent payment or distribution to the Senior Creditors. In any such event, the Senior Creditors may, but shall not be obligated to, demand, claim and collect any such payment or distribution that would, but for these subordination provisions, be payable or deliverable with respect to the Subordinated Debt. In the event of the occurrence of any event referred to in subclauses (i), (ii), (iii) or (iv) of the second preceding sentence of this clause (b) and until the Senior Indebtedness shall have been fully paid in cash (other than unasserted contingent indemnification obligations) and satisfied and all of the obligations of Holdings or any of its Subsidiaries to the Senior Creditors have been performed in full, no payment of any kind or character (whether in cash, property, securities or otherwise) shall be made to or accepted by any Party in respect of the Subordinated Debt. Notwithstanding anything to the contrary contained above, if one or more of the events referred to in subclauses (i) through (iv) of the first sentence of this clause (b) is in existence, the Required Senior Creditors may agree in writing that payments may be made with respect to the Subordinated Debt which would otherwise be prohibited pursuant to the provisions contained above, provided that any such waiver shall be specifically limited to the respective payment or payments which the Required Senior Creditors agree may be so paid to any Party in respect of the Subordinated Debt.

(c) If such Party shall acquire by indemnification, subrogation or otherwise, any lien, estate, right or other interest in any of the assets or properties of Holdings or any of its Subsidiaries, that lien, estate, right or other interest shall be subordinate in right of payment to the Senior Indebtedness and the lien of the Senior Indebtedness as provided herein, and such Party hereby waives any and all rights it may acquire by subrogation or otherwise to any lien of the Senior Indebtedness or any portion thereof until such time as all Senior Indebtedness has been repaid in full in cash (other than unasserted contingent indemnification obligations).

(d) Such Party shall not pledge, assign, hypothecate, transfer, convey or sell any Subordinated Debt or any interest in any Subordinated Debt to any entity (other than under the relevant Collateral Documents, the Second Lien Indebtedness Documents or in accordance with the relevant requirements of the First-Lien Credit Agreement to a Credit Party which is a Party hereto) without the prior written consent of the Agent (with the prior written consent of the Required Senior Creditors).

(e) In any case commenced by or against Holdings or any of its Subsidiaries under the Bankruptcy Code or any similar federal, foreign, state or local statute (a “Reorganization Proceeding”), to the extent permitted by applicable law, the Required Senior Creditors shall have the exclusive right to exercise any voting rights in respect of the claims of such Party against Holdings or any of its Subsidiaries.

(f) If, at any time, all or part of any payment with respect to Senior Indebtedness theretofore made (whether by Holdings, the Borrower, any other Credit Party or any other Person or enforcement of any right of setoff or otherwise) is rescinded or must otherwise be returned by the holders of Senior Indebtedness for any reason

whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of Holdings, the Borrower, any other Credit Party or such other Persons), the subordination provisions set forth herein shall continue to be effective or be reinstated, as the case may be, all as though such payment had not been made.

(g) Such Party shall not object to the entry of any order or orders approving any cash collateral stipulations, adequate protection stipulations or similar stipulations executed by the Senior Creditors (or their representatives) in any Reorganization Proceeding or any other proceeding under the Bankruptcy Code.

(h) Such Party waives any marshalling rights with respect to the Senior Creditors in any Reorganization Proceeding or any other proceeding under the Bankruptcy Code.

3. Each Party hereby covenants that such Party will not lend, hold or permit to exist any Intercompany Debt owed by it or to it (in accordance with the definition thereof contained herein) unless each obligee or obligor, as the case may be, with respect to such Intercompany Debt is (or concurrently with such extension becomes) a Party to this Agreement.

4. Any payments made to, or received by, any Party in respect of any guaranty or security in support of the Subordinated Debt shall be subject to the terms of this Agreement and applied on the same basis as payments made directly by the obligor under such Subordinated Debt. To the extent that Holdings or any of its Subsidiaries (other than the respective obligor or obligors which are already Parties hereto) provides a guaranty or any security in support of any Subordinated Debt, the Party which is the lender of the respective Subordinated Debt will cause each such Person to become a Party hereto (if such Person is not already a Party hereto) not later than the date of the execution and delivery of the respective guarantee or security documentation, provided that any failure to comply with the foregoing requirements of this Section 4 will have no effect whatsoever on the subordination provisions contained herein (which shall apply to all payments received with respect to any guarantee or security for any Subordinated Debt, whether or not the Person furnishings such guarantee or security is a Party hereto).

5. Each Party hereby acknowledges and agrees that no payments will be accepted by it in respect of the Subordinated Debt (unless promptly turned over to the holders of Senior Indebtedness as contemplated by Section 2 above) to the extent such payments would be prohibited under any Senior Indebtedness (or the documentation governing the same).

6. In addition to the foregoing agreements, each Party hereby acknowledges and agrees that, with respect to all Intercompany Debt (whether or not same constitutes Subordinated Debt), that (x) such Intercompany Debt (and any promissory notes or other instruments evidencing same) may be pledged, and delivered for pledge, by Holdings or any of its Subsidiaries pursuant to any Collateral Document and (y) with respect to all Intercompany Debt so pledged, the Agent shall be entitled to exercise all rights and remedies with respect to such Intercompany Debt to the maximum extent provided in the various Collateral Documents. Furthermore, with respect to all Intercompany Debt at any time owed to Holdings or any of its Subsidiaries which is a Credit Party, and notwithstanding anything to the contrary contained in the terms of such Intercompany Debt, each obligor (including any guarantor) and obligee with respect to such Intercompany Debt

hereby agrees, for the benefit of the holders from time to time of the Senior Indebtedness, that the Agent may at any time, and from time to time, acting on its own or at the request of the Required Senior Creditors, accelerate the maturity of such Intercompany Debt if (x) any obligor (including any guarantor) of such Intercompany Debt is subject to any Bankruptcy Proceeding or (y) any Event of Default under the First-Lien Credit Agreement shall have occurred and be continuing. Any such acceleration of the maturity of any Intercompany Debt shall be made by written notice by the Agent to the obligor on the respective Intercompany Debt; provided that no such notice shall be required (and the acceleration shall automatically occur) either upon the occurrence of a Bankruptcy Proceeding with respect to the respective obligor (or any guarantor) of the respective Intercompany Debt or upon (or following) any acceleration of the maturity of any Loans pursuant to the First-Lien Credit Agreement.

7. Definitions. As and in this Agreement, the terms set forth below shall have the respective meanings provided below:

“Enforcement Action” shall mean any acceleration of all or any part of the Subordinated Debt, any foreclosure proceeding, the exercise of any power of sale, the obtaining of a receiver, the seeking of default interest, the suing on, or otherwise taking action to enforce the obligation of Holdings or any of its Subsidiaries to pay any amounts relating to any Subordinated Debt, the exercising of any banker’s lien or rights of set-off or recoupment, the institution of a Bankruptcy Proceeding against Holdings or any of its Subsidiaries, or the taking of any other enforcement action against any asset or Property of Holdings or its Subsidiaries.

“Intercompany Debt” shall mean any Indebtedness, payables or other obligations, whether now existing or hereinafter incurred, owed by Holdings or any Subsidiary of Holdings to Holdings or any other Subsidiary of Holdings.

“Required Senior Creditors” shall mean the Required Lenders (or, to the extent required by Section 9.1 of the First-Lien Credit Agreement, each of the Lenders).

“Senior Creditors” shall mean the Secured Parties from time to time.

“Senior Indebtedness” shall mean all Obligations (including, without limitation, (x) all interest, fees and expenses accruing after the filing of a petition in bankruptcy or any other act which constitutes a Default or Event of Default pursuant to Section 7.1(f) and (g) of the First-Lien Credit Agreement at the stated contract rate, regardless of whether allowed or allowable in the respective bankruptcy or other preceding, and (y) all Obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), whether now existing or hereafter incurred.

“Subordinated Debt” shall mean the principal of, interest on, and all other amounts owing from time to time in respect of, all Intercompany Debt (including, without limitation, pursuant to guarantees thereof or security therefor and intercompany payables not evidenced by a note) at any time outstanding; provided that the term “Subordinated Debt” shall not include any Intercompany Debt which is (1) owed by any Person to the Borrower, (2) owed by any Person that is not a Credit Party to any other

Person or (3) owed by any Credit Party (other than the Borrower) to any other Credit Party.

8. Each Party agrees to be fully bound by all terms and provisions contained in this Agreement, both with respect to any Subordinated Debt (including any guarantees thereof and security therefor) owed to it, and with respect to all Subordinated Debt (including all guarantees thereof and security therefor) owing by it.

9. It is understood and agreed that any Subsidiary of Holdings that is required to execute a counterpart of this Agreement after the date hereof pursuant to the requirements of the First-Lien Credit Agreement shall become a Party hereunder by executing a counterpart hereof (or a joinder agreement in form and substance satisfactory to the Agent) and delivering same to the Agent.

10. No failure or delay on the part of any party hereto or any holder of Senior Indebtedness in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder.

11. Each Party hereto acknowledges that to the extent that no adequate remedy at law exists for breach of its obligations under this Agreement, in the event any Party fails to comply with its obligations hereunder, the Agent or the holders of Senior Indebtedness shall have the right to obtain specific performance of the obligations of such defaulting Party, injunctive relief or such other equitable relief as may be available.

12. Any notice to be given under this Agreement shall be in writing and shall be sent in accordance with the provisions of the First-Lien Credit Agreement.

13. In the event of any conflict between the provisions of this Agreement and the provisions of the Subordinated Debt, the provisions of this Agreement shall prevail.

14. No person other than the parties hereto, the Senior Creditors from time to time and their successors and assigns as holders of the Senior Indebtedness and the Subordinated Debt shall have any rights under this Agreement.

15. This Agreement may be executed in any number of counterparts each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

16. No amendment, supplement, modification, waiver or termination of this Agreement shall be effective against a party against whom the enforcement of such amendment, supplement, modification, waiver or termination would be asserted, unless such amendment, supplement, modification, waiver or termination was made in a writing signed by such party, provided that amendments hereto shall be effective as against the Senior Creditors only if executed and delivered by the Agent (with the written consent of the Required Senior Creditors at such time).

17. In case any one or more of the provisions confined in this Agreement, or any application thereof, shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein, and any other application thereof, shall not in any way be affected or impaired thereby.

18. (a) THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, ITS VALIDITY, INTERPRETATION, CONSTRUCTION, PERFORMANCE AND ENFORCEMENT (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF AND ANY DETERMINATIONS WITH RESPECT TO POST-JUDGMENT INTEREST) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW)).

(b) Any legal action or proceeding with respect to this Agreement shall be brought exclusively in the courts of the State of New York located in the County of New York, Borough of Manhattan, or of the United States of America sitting in the County of New York, Borough of Manhattan and, by execution and delivery of this Agreement, each Party hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts; provided that nothing in this Agreement shall limit the right of Agent to commence any proceeding in the federal or state courts of any other jurisdiction to the extent Agent determines that such action is necessary or appropriate to exercise its rights or remedies under the this Agreement. The parties hereto hereby irrevocably waives any claim that any such court lacks personal jurisdiction over such Party, and agrees not to plead or claim in any legal action or proceeding with respect to this Agreement brought in any of the aforesaid courts that any such court lacks personal jurisdiction over such Party. Each Party further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such Party at its address set forth opposite is signature below, such service to become effective 30 days after such mailing. Each Party hereby irrevocably waives any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced hereunder that such service of process was in any way invalid or ineffective. Nothing herein shall affect the right of any of the Senior Creditors to serve process in any other manner permitted by applicable Requirements of Law or commence legal proceedings or otherwise proceed against each Credit Party in any other jurisdiction.

(c) EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTIONS OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (b) ABOVE.

(d) EACH PARTY HERETO, TO THE EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY. THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.

19. This Agreement shall bind and inure to the benefit of the Agent, the other Senior Creditors and each Party and their respective successors, permitted transferees and assigns.

* * *

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.

	GEO HOLDINGS CORP.


	By:	/s/ Charles Lowry
		Name: Charles Lowry
		Title: Vice President, and Chief Financial Officer


	GUNDLE/SLT ENVIRONMENTAL, INC.


	By:	/s/ Charles Lowry
		Name: Charles Lowry
		Title: Vice President, and Chief Financial Officer


	GSE LINING TECHNOLOGY, LLC


	By:	/s/ Charles Lowry
		Name: Charles Lowry
		Title: Vice President, and Chief Financial Officer


	GSE INTERNATIONAL, INC.


	By:	/s/ Charles Lowry
		Name: Charles Lowry
		Title: Vice President, and Chief Financial Officer

[SIGNATURE PAGE TO INTERCOMPANY SUBORDINATION AGREEMENT]

	GSE LINING TECHNOLOGY CO. - EGYPT S.A.E.


	By:	/s/ Lindsey Gregg Taylor
		Name: Lindsey Gregg Taylor
		Title: Vice Chairman


	HYMA/GSE LINING TECHNOLOGY CO. S.A.E.


	By:	/s/ Mohamed A. Ayoub
		Name: Dr. Mohamed A. Ayoub
		Title: Vice President, and Managing Director


	GSE UK LTD


	By:	/s/ Brian Richards
		Name: Brian Richards
		Title: Director


	GSE LINING TECHNOLOGY CO. LTD


	By:	/s/ James T. Steinke
		Name: James T. Steinke
		Title: Regional Business Director


	GSE AUSTRALIA PTY LTD


	By:	/s/ James T. Steinke
		Name: James T. Steinke
		Title: Regional Business Director

	GENERAL ELECTRIC CAPITAL CORPORATION, as Agent


	By:	/s/ Richard B. Davidson
		Name: Richard B. Davidson
		Title: Duly Authorized Signatory


	By:
		Name:
		Title:

EX-10.9 10 a2204569zex-10_9.htm EX-10.9

Exhibit 10.9

INTERCOMPANY SUBORDINATION AGREEMENT

THIS INTERCOMPANY SUBORDINATION AGREEMENT (as amended, restated, modified and/or supplemented from time to time, this “Agreement”), dated as of May 27, 2011, made by each of the undersigned (each, a “Party” and, together with any entity that becomes a party to this Agreement pursuant to Section 9 hereof, the “Parties”) and Jefferies Finance LLC, as administrative agent (in such capacity, together with any successor administrative agent, the “Agent”), for the benefit of the Senior Creditors (as defined in Section 7 hereof). Unless otherwise defined herein, all capitalized terms used herein shall have the meanings ascribed to them in the Second Lien Credit Agreement referred to below.

W I T N E S S E T H:

WHEREAS, Gundle SLT/Environmental Inc., a Delaware corporation (the “Borrower”), the other entities party thereto designated as “Credit Parties”, the financial institutions party thereto designated as “Lenders” and the Agent, have entered into a Second Lien Credit Agreement, dated as of May 27, 2011, providing for the making of Loans to the Borrower as contemplated therein (as the same may be amended, amended and restated, supplemented or otherwise modified from time to time, the “Second Lien Credit Agreement”);

WHEREAS, pursuant to the Guaranty and Security Agreement, each Party (other than the Borrower) has guaranteed to the Secured Parties the payment when due of all Guaranteed Obligations;

WHEREAS, it is a condition precedent to the extensions of credit under the Second Lien Credit Agreement that this Agreement be executed and delivered by the original Parties hereto;

WHEREAS, additional Parties may from time to time become parties hereto in accordance with the requirements of the Second Lien Credit Agreement; and

WHEREAS, each of the Parties desires to execute this Agreement to satisfy the conditions described in the immediately preceding paragraphs.

to the Senior Creditors or the holders of Subordinated Debt or the actual date and time of execution, delivery, recordation, filing or perfection of any security interests granted with respect to the Senior Indebtedness or the Subordinated Debt, or the lien or priority of payment thereof, and in any instance wherein the Senior Indebtedness or any claim for the Senior Indebtedness is subordinated, avoided or disallowed, in whole or in part, under the Bankruptcy Code or other applicable federal, foreign, state or local law. In the event of a proceeding, whether voluntary or involuntary, for insolvency, liquidation, reorganization, dissolution, bankruptcy or other similar proceeding pursuant to the Bankruptcy Code or other applicable federal, foreign, state or local law (each, a “Bankruptcy Proceeding”), the Senior Indebtedness shall include all interest, fees and expenses accrued on the Senior Indebtedness, in accordance with and at the rates specified in the Senior Indebtedness, both for periods before and for periods after the commencement of any of such proceedings, even if the claim for such interest, fees and expenses is not allowed pursuant to the Bankruptcy Code or other applicable law.

2. Each Party (as a lender of any Subordinated Debt) hereby agrees that until all Senior Indebtedness has been repaid in full in cash (other than unasserted contingent indemnification obligations):

(b) In the event that (i) all or any portion of any Senior Indebtedness becomes due (whether at stated maturity, by acceleration or otherwise), (ii) any Event of Default under the Second Lien Credit Agreement, then exists or would result from such payment on the Subordinated Debt, (iii) such Party receives any payment or prepayment of principal, interest or any other amount, in whole or in part, of (or with respect to) the Subordinated Debt in violation of the terms of the Second Lien Credit Agreement or (iv) any distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, is made of all or any part of the property, assets or business of Holdings or any of its Subsidiaries or the proceeds thereof, in whatever form, to any creditor or creditors of Holdings or any of its Subsidiaries or to any holder of indebtedness of Holdings or any of its Subsidiaries or by reason of any liquidation, dissolution or other winding up of Holdings, any of its Subsidiaries or their respective businesses, or of any receivership or custodianship for Holdings or any of its Subsidiaries or of all or substantially all of their respective property, or of any insolvency or bankruptcy proceedings or assignment for the benefit of creditors or any proceeding by or against Holdings or any of its Subsidiaries for any relief under any bankruptcy, reorganization or insolvency law or laws, federal, foreign, state or local, or any law, federal, foreign, state or local relating to the relief of debtors, readjustment of indebtedness, reorganization, composition or extension, then, and in any such event, any payment or distribution of any kind or character, whether in cash, property or securities, which shall be payable or deliverable with respect to any or all of the Subordinated Debt or which has been received by any Party shall be held in trust by such Party for the benefit of the Senior Creditors and shall forthwith be paid or delivered directly to the Senior Creditors for application to the payment of the Senior Indebtedness to the extent necessary to make

payment in full in cash of all sums due under the Senior Indebtedness remaining unpaid after giving effect to any concurrent payment or distribution to the Senior Creditors. In any such event, the Senior Creditors may, but shall not be obligated to, demand, claim and collect any such payment or distribution that would, but for these subordination provisions, be payable or deliverable with respect to the Subordinated Debt. In the event of the occurrence of any event referred to in subclauses (i), (ii), (iii) or (iv) of the second preceding sentence of this clause (b) and until the Senior Indebtedness shall have been fully paid in cash (other than unasserted contingent indemnification obligations) and satisfied and all of the obligations of Holdings or any of its Subsidiaries to the Senior Creditors have been performed in full, no payment of any kind or character (whether in cash, property, securities or otherwise) shall be made to or accepted by any Party in respect of the Subordinated Debt. Notwithstanding anything to the contrary contained above, if one or more of the events referred to in subclauses (i) through (iv) of the first sentence of this clause (b) is in existence, the Required Senior Creditors may agree in writing that payments may be made with respect to the Subordinated Debt which would otherwise be prohibited pursuant to the provisions contained above, provided that any such waiver shall be specifically limited to the respective payment or payments which the Required Senior Creditors agree may be so paid to any Party in respect of the Subordinated Debt.

(d) Such Party shall not pledge, assign, hypothecate, transfer, convey or sell any Subordinated Debt or any interest in any Subordinated Debt to any entity (other than under the relevant Collateral Documents, the Second Lien Indebtedness Documents or in accordance with the relevant requirements of the Second Lien Credit Agreement to a Credit Party which is a Party hereto) without the prior written consent of the Agent (with the prior written consent of the Required Senior Creditors).

of Holdings, the Borrower, any other Credit Party or such other Persons), the subordination provisions set forth herein shall continue to be effective or be reinstated, as the case may be, all as though such payment had not been made.

(h) Such Party waives any marshalling rights with respect to the Senior Creditors in any Reorganization Proceeding or any other proceeding under the Bankruptcy Code.

6. In addition to the foregoing agreements, each Party hereby acknowledges and agrees that, with respect to all Intercompany Debt (whether or not same constitutes Subordinated Debt), that (x) such Intercompany Debt (and any promissory notes or other instruments evidencing same) may be pledged, and delivered for pledge, by Holdings or any of its Subsidiaries pursuant to any Collateral Document and (y) with respect to all Intercompany Debt so pledged, the Agent shall be entitled (subject to the terms and conditions of the Intercreditor Agreement) to exercise all rights and remedies with respect to such Intercompany Debt to the maximum extent provided in the various Collateral Documents. Furthermore, with respect to all Intercompany Debt at any time owed to Holdings or any of its Subsidiaries which is a Credit Party, and notwithstanding anything to the contrary contained in the terms of such Intercompany Debt, each obligor (including any guarantor) and obligee with respect to such Intercompany Debt hereby agrees, for

the benefit of the holders from time to time of the Senior Indebtedness, that the Agent may at any time, and from time to time, acting on its own or at the request of the Required Senior Creditors (subject to the terms and conditions of the Intercreditor Agreement), accelerate the maturity of such Intercompany Debt if (x) any obligor (including any guarantor) of such Intercompany Debt is subject to any Bankruptcy Proceeding or (y) any Event of Default under the Second Lien Credit Agreement shall have occurred and be continuing. Any such acceleration of the maturity of any Intercompany Debt shall be made by written notice by the Agent to the obligor on the respective Intercompany Debt; provided that no such notice shall be required (and the acceleration shall automatically occur) either upon the occurrence of a Bankruptcy Proceeding with respect to the respective obligor (or any guarantor) of the respective Intercompany Debt or upon (or following) any acceleration of the maturity of any Loans pursuant to the Second Lien Credit Agreement.

7. Definitions. As and in this Agreement, the terms set forth below shall have the respective meanings provided below:

“Required Senior Creditors” shall mean the Required Lenders (or, to the extent required by Section 9.1 of the Second Lien Credit Agreement, each of the Lenders).

“Senior Creditors” shall mean the Secured Parties from time to time.

“Senior Indebtedness” shall mean all Obligations (including, without limitation, (x) all interest, fees and expenses accruing after the filing of a petition in bankruptcy or any other act which constitutes a Default or Event of Default pursuant to Section 7.1(f) and (g) of the Second Lien Credit Agreement at the stated contract rate, regardless of whether allowed or allowable in the respective bankruptcy or other preceding, and (y) all Obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), whether now existing or hereafter incurred.

“Subordinated Debt” shall not include any Intercompany Debt which is (1) owed by any Person to the Borrower, (2) owed by any Person that is not a Credit Party to any other Person or (3) owed by any Credit Party (other than the Borrower) to any other Credit Party.

9. It is understood and agreed that any Subsidiary of Holdings that is required to execute a counterpart of this Agreement after the date hereof pursuant to the requirements of the Second Lien Credit Agreement shall become a Party hereunder by executing a counterpart hereof (or a joinder agreement in form and substance satisfactory to the Agent) and delivering same to the Agent.

12. Any notice to be given under this Agreement shall be in writing and shall be sent in accordance with the provisions of the Second Lien Credit Agreement.

13. In the event of any conflict between the provisions of this Agreement and the provisions of the Subordinated Debt, the provisions of this Agreement shall prevail.

15. This Agreement may be executed in any number of counterparts each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

(d) EACH PARTY HERETO, TO THE EXTENT PERMITTED BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING

OUT OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY. THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.

19. This Agreement shall bind and inure to the benefit of the Agent, the other Senior Creditors and each Party and their respective successors, permitted transferees and assigns.

* * *

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.

GEO HOLDINGS CORP.


By:	/s/ Charles Lowry
	Name:	Charles Lowry
	Title:	Vice President, and Chief Financial Officer


GUNDLE/SLT ENVIRONMENTAL, INC.


By:	/s/ Charles Lowry
	Name:	Charles Lowry
	Title:	Vice President, and Chief Financial Officer


GSE LINING TECHNOLOGY, LLC


By:	/s/ Charles Lowry
	Name:	Charles Lowry
	Title:	Vice President, and Chief Financial Officer


GSE INTERNATIONAL, INC.


By:	/s/ Charles Lowry
	Name:	Charles Lowry
	Title:	Vice President, and Chief Financial Officer

[SIGNATURE PAGE TO INTERCOMPANY SUBORDINATION AGREEMENT]

GSE LINING TECHNOLOGY CO. - EGYPT S.A.E.


By:	/s/ Lindsey Gregg Taylor
	Name:	Lindsey Gregg Taylor
	Title:	Vice Chairman


HYMA/GSE LINING TECHNOLOGY CO. S.A.E.


By:	/s/ Mohamed A. Ayoub
	Name:	Dr. Mohamed A. Ayoub
	Title:	Vice President, and Managing Director


GSE UK LTD


By:	/s/ Brian Richards
	Name:	Brian Richards
	Title:	Director


GSE LINING TECHNOLOGY CO. LTD


By:	/s/ James T. Steinke
	Name:	James T. Steinke
	Title:	Regional Business Director


GSE AUSTRALIA PTY LTD


By:	/s/ James T. Steinke
	Name:	James T. Steinke
	Title:	Regional Business Director

	JEFFERIES FINANCE LLC,
	as Agent

	By:
		Name:
		Title:


	By:
		Name:
		Title:

EX-10.10 11 a2204569zex-10_10.htm EX-10.10

Exhibit 10.10

EXECUTED COPY

INTERCREDITOR AGREEMENT

This INTERCREDITOR AGREEMENT, dated as of May 27, 2011, is entered into by and among GUNDLE SLT/ENVIRONMENTAL, INC., a Delaware corporation (the “Borrower”), each other Grantor (as hereinafter defined) from time to time party hereto, GENERAL ELECTRIC CAPITAL CORPORATION (“GE Capital”), in its capacity as administrative agent under the First-Lien Loan Documents (as defined below) (together with its successors and assigns in such capacity from time to time, the “First-Lien Agent”), and JEFFERIES FINANCE LLC (“Jefferies Finance”), in its capacity as administrative agent under the Second-Lien Loan Documents (as defined below) (together with its successors and assigns in such capacity from time to time, the “Second-Lien Agent”). Capitalized terms used herein but not otherwise defined herein have the meanings set forth in Section 1 below.

RECITALS

WHEREAS, the Borrower, certain of the other Grantors, the lenders party thereto from time to time, and GE Capital, as First-Lien Agent for the First-Lien Lenders, have entered into that certain First-Lien Credit Agreement, dated as of the date hereof (as amended, restated, supplemented, modified and/or Refinanced from time to time, the “First-Lien Credit Agreement”), providing for the making of term and revolving loans to the Borrower, and the issuance of, and participation in, Letters of Credit for the account of the Borrower, all as provided therein;

WHEREAS, the Borrower, certain of the other Grantors, the lenders party thereto from time to time, and Jefferies Finance, as Second-Lien Agent for the Second-Lien Lenders, have entered into that certain Second-Lien Credit Agreement, dated as of the date hereof (as amended, restated, supplemented, modified and/or Refinanced from time to time, the “Second-Lien Credit Agreement”), providing for the making of term loans to the Borrower as provided therein;

WHEREAS, the obligations of the Borrower and the other Grantors under the First-Lien Loan Documents, and all Secured Rate Contracts with one or more Secured Swap Providers, will be secured by substantially all the assets of the Borrower and the other Grantors, respectively, pursuant to the terms of the First-Lien Collateral Documents;

WHEREAS, the obligations of the Borrower and the other Grantors under the Second-Lien Loan Documents will be secured by substantially all the assets of the Borrower and the other Grantors, respectively, pursuant to the terms of the Second-Lien Collateral Documents;

WHEREAS, the First-Lien Loan Documents and the Second-Lien Loan Documents provide, among other things, that the parties thereto shall set forth in this Agreement their respective rights and remedies with respect to the Collateral; and

WHEREAS, in order to induce the First-Lien Agent and the other First-Lien Secured Parties to consent to the Grantors incurring the Second-Lien Obligations and to induce the First-Lien Secured Parties to extend credit and other financial accommodations and lend monies to or for the benefit of the Borrower or any other Grantor, the Second-Lien Agent on

behalf of the Second-Lien Secured Parties (and each Second-Lien Secured Party by its acceptance of the benefits of the Second-Lien Collateral Documents) has agreed to the subordination, intercreditor and other provisions set forth in this Agreement;

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

SECTION 1. Definitions.

1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

“Agent” means, as the context requires, collectively, the First-Lien Agent and the Second-Lien Agent.

“Agreement” means this Intercreditor Agreement, as amended, restated, renewed, extended, supplemented and/or otherwise modified from time to time in accordance with the terms hereof.

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.

“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or foreign law for the relief of debtors.

“Banks” has the meaning set forth in Section 7.4(b) .

“Borrower” has the meaning set forth in the preamble hereof.

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

“Cap Amount” means the remainder of (x) $180,000,000 minus (y) the sum of (I) the aggregate amount of any repayments of principal of term loans under the First-Lien Credit Agreement after the date hereof and (II) the aggregate amount of permanent mandatory reductions to the revolving credit commitments under the First-Lien Credit Agreement after the date hereof (excluding any such repayments and/or commitment reductions to the extent Refinanced pursuant to a replaced or amended First-Lien Credit Agreement and limited to the unfunded portion of revolving credit commitments that expire or are terminated in accordance with the terms of the First-Lien Credit Agreement unless accompanied by a permanent cash repayment of the principal amount of loans outstanding thereunder).

“Capital Lease” means any leasing or similar arrangement which, in accordance with GAAP, is classified as a capital lease.

“Cash Collateral” has the meaning set forth in Section 363(a) of the Bankruptcy Code.

“Collateral” means all of the assets and property of any Grantor of any kind whatsoever, whether real, personal or mixed, tangible or intangible, whether now owned or hereafter acquired or arising and wheresoever located, constituting First-Lien Collateral and/or Second-Lien Collateral.

“Collateral Documents” means, collectively, the First-Lien Collateral Documents and the Second-Lien Collateral Documents.

“Comparable Second-Lien Collateral Document” means, in relation to any Collateral subject (or purported to be subject) to any Lien created under any First-Lien Collateral Document, that Second-Lien Collateral Document which creates (or purports to create) a Lien on the same Collateral, granted by the same Grantor.

“Defaulting Secured Party” has the meaning set forth in Section 5.7(d) hereof.

“Discharge of First-Lien Credit Agreement Obligations” means, except to the extent otherwise provided in Section 5.6 hereof (and subject to Section 6.5 hereof), (a) payment in full in cash of all First-Lien Obligations (other than Secured Rate Contract Obligations), (b) termination (without any prior demand for payment thereunder having been made or, if made, with such demand having been fully reimbursed in cash) or cash collateralization (in an amount and manner, and on terms, satisfactory to the First-Lien Agent) of all Letters of Credit issued by any First-Lien Secured Party and (c) termination of all commitments of the First-Lien Secured Parties under the First-Lien Credit Agreement.

“Discharge of First-Lien Obligations” means, except to the extent otherwise provided in Section 5.6 hereof (and subject to Section 6.5 hereof), (a) payment in full in cash of all First-Lien Obligations, (b) termination (without any prior demand for payment thereunder having been made or, if made, with such demand having been fully reimbursed in cash) or cash collateralization (in an amount and manner, and on terms, satisfactory to the First-Lien Agent and in the case of a Secured Rate Contract, the respective Secured Swap Provider or Secured Swap Providers) of all Letters of Credit and Secured Rate Contracts issued or entered into, as the case may be, by any First-Lien Secured Party and (c) termination of all commitments of the First-Lien Secured Parties under the First-Lien Credit Agreement.

“Eligible Purchaser” has the meaning set forth in Section 5.7(a) hereof.

“First-Lien Agent” has the meaning set forth in the first paragraph of this Agreement.

“First-Lien Collateral” means all of the assets and property of any Grantor of any kind whatsoever, whether real, personal or mixed, tangible or intangible, whether now owned or hereafter acquired or arising and wheresoever located, with respect to which a Lien is now or hereafter granted (or purported to be granted, including, without limitation, any Liens granted in an Insolvency or Liquidation Proceeding) as security for any First-Lien Obligations.

“First-Lien Collateral Documents” means the Collateral Documents (as defined in the First-Lien Credit Agreement) and any other agreement, document or instrument pursuant to which a Lien is granted (or purported to be granted) securing any First-Lien Obligations or under which rights or remedies with respect to such Liens are governed, as the same may be amended, supplemented, restated, modified and/or Refinanced from time to time.

“First-Lien Credit Agreement” has the meaning set forth in the recitals hereto.

“First-Lien Documents” means and includes (i) the First-Lien Loan Documents and (ii) the Secured Rate Contracts entered into with one or more Secured Swap Providers.

“First-Lien Lenders” means the “Lenders” under, and as defined in, the First-Lien Credit Agreement; provided that the term “First-Lien Lender” shall in any event include each letter of credit issuer and each swingline lender under the First-Lien Credit Agreement.

“First-Lien Loan Documents” means the First-Lien Credit Agreement, the First-Lien Collateral Documents and the other Loan Documents (as defined in the First-Lien Credit Agreement) and each of the other agreements, documents and instruments providing for or evidencing any First-Lien Obligation and any other document or instrument executed or delivered at any time in connection with any First-Lien Obligation (including any intercreditor or joinder agreement among holders of First-Lien Obligations but excluding Secured Rate Contracts), as each may be amended, modified, restated, supplemented, replaced and/or Refinanced from time to time in accordance with the terms thereof and hereof.

“First-Lien Obligations” means (i) all Obligations of every kind, nature and description whatsoever outstanding, or otherwise owing to any of the First-Lien Secured Parties, under or in connection with the First-Lien Credit Agreement and the other First-Lien Loan Documents, and (ii) all Secured Rate Contract Obligations. “First-Lien Obligations” shall in any event include: (a) all “Obligations” as defined in the First-Lien Credit Agreement, (b) all interest accrued or accruing (or which would, absent commencement of an Insolvency or Liquidation Proceeding (and the effect of provisions such as Section 502(b)(2) of the Bankruptcy Code), accrue) on or after the commencement of an Insolvency or Liquidation Proceeding in accordance with the rate specified in the relevant First-Lien Document, whether or not the claim for such interest is allowed as a claim in such Insolvency or Liquidation Proceeding, (c) any and all fees and expenses (including attorneys’ and/or consultants’ fees and expenses) incurred by the First-Lien Agent and the other First-Lien Secured Parties on or after the commencement of an Insolvency or Liquidation Proceeding, whether or not the claim for fees and expenses is allowed under Section 506(b) of the Bankruptcy Code or any other provision of the Bankruptcy Code or Bankruptcy Law as a claim in such Insolvency or Liquidation Proceeding, and (d) all obligations and liabilities of each Grantor under each First-Lien Document to which it is a party which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due.

“First-Lien Required Lenders” means the “Required Lenders” under, and as defined in, the First-Lien Credit Agreement.

“First-Lien Secured Parties” means, at any relevant time, the Secured Parties (as defined in the First-Lien Credit Agreement) at such time.

“GAAP” means generally accepted accounting principles in the United States set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), including, without limitation, the FASB Accounting Standards CodificationTM, which are applicable to the circumstances as of the date of determination, subject to Section 11.3 of the First-Lien Credit Agreement and Section 11.3 of the Second-Lien Credit Agreement.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

“Grantors” means Holdings, the Borrower and each of the Subsidiary Guarantors that have executed and delivered, or may from time to time hereafter execute and deliver, a First-Lien Collateral Document or a Second-Lien Collateral Document.

“Indebtedness” means and includes all Obligations that constitute “Indebtedness” within the meaning of the First-Lien Credit Agreement or the Second-Lien Credit Agreement.

“Insolvency or Liquidation Proceeding” means (a) any voluntary or involuntary case or proceeding under the Bankruptcy Code or any other Bankruptcy Law with respect to any Grantor, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to any of its respective assets, (c) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to any Grantor or any of its assets, (d) any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy or (e) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Grantor.

“Letters of Credit” means “Letters of Credit” under, and as defined in, the First-Lien Credit Agreement.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or otherwise) or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease, any financing lease having substantially the same economic effect as any of the foregoing, or the filing of any financing statement naming the owner of the asset to which such lien relates as debtor, under the UCC or any comparable law) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under a lease which is not a Capital Lease.

“Loans” means “Loans” under, and as defined in, the First-Lien Credit Agreement.

“New Agent” has the meaning set forth in Section 5.6 hereof.

“Obligations” means any and all Indebtedness, obligations, liabilities and debts (including guaranty obligations, liabilities and debts) with respect to the payment and performance of (a) any principal of or interest or premium on any indebtedness or obligations under any Rate Contract, including any reimbursement obligation in respect of any letter of credit or the purchase of a risk participation in any underlying letter of credit, or any other liability, including interest that accrues on or after the commencement of any Insolvency or Liquidation Proceeding of any Grantor at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such Insolvency or Liquidation Proceeding, (b) any fees, indemnification obligations, cost or expense reimbursement obligations or other amounts, debts, charges, liabilities or monetary obligations payable or owing under the documentation governing any indebtedness or Rate Contract (including, without limitation, the retaking, holding, selling or otherwise disposing of or realizing on the Collateral), including any such fees, indemnification obligations, cost or expense reimbursement obligations or other amounts, debts, charges, liabilities or monetary obligations that accrue on or after the commencement of any Insolvency or Liquidation Proceeding of any Grantor at the rate provided for in the respective documentation, whether or not a claim for any such amounts is allowed in any such Insolvency or Liquidation Proceeding, (c) any obligation to post cash collateral in respect of letters of credit or any other obligations (including obligations under Rate Contracts), and (d) all performance obligations under the documentation governing any indebtedness, in each case, whether direct or indirect, absolute or contingent, joint or several, due or to become due, primary or secondary, liquidated or unliquidated, now existing or hereafter arising and however acquired.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Pledged Collateral” means (a) the “Pledged Collateral” under, and as defined in, the applicable First-Lien Collateral Document and Second-Lien Collateral Document, respectively, and (b) any other Collateral in the possession of the First-Lien Agent (or its agents or bailees), to the extent that possession thereof is taken to perfect a Lien thereon under the Uniform Commercial Code or other applicable local law.

“Post-Petition Financing” has the meaning set forth in Section 6.1 hereof.

“Priority Lien” has the meaning set forth in Section 5.1(c) hereof.

“Rate Contracts” means swap agreements (as such term is defined in Section 101 of the Bankruptcy Code) and any other agreements or arrangements designed to provide protection against fluctuations in interest or currency exchange rates.

“Recovery” has the meaning set forth in Section 6.5 hereof.

“Refinance” means, in respect of any indebtedness, to refinance, extend, renew, defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other indebtedness, in exchange or replacement for, such indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

“Required First-Lien Secured Parties” means (i) at all times prior to the occurrence of the Discharge of First-Lien Credit Agreement Obligations, the First-Lien Required Lenders (or, to the extent required by the First-Lien Credit Agreement, each of the First-Lien Lenders), and (ii) at all times after the occurrence of the Discharge of First-Lien Credit Agreement Obligations, the holders of at least a majority of the then outstanding Secured Rate Contract Obligations (determined by the First-Lien Agent in such reasonable manner as is acceptable to it).

“Second-Lien Agent” has the meaning set forth in the first paragraph of this Agreement.

“Second-Lien Collateral” means all of the assets and property of any Grantor of any kind whatsoever, whether real, personal or mixed, tangible or intangible, whether now owned or hereafter acquired or arising and wheresoever located, with respect to which a Lien is now or hereafter granted (or purported to be granted, including, without limitation, any Liens granted in an Insolvency or Liquidation Proceeding) as security for any Second-Lien Obligations.

“Second-Lien Collateral Documents” means the Collateral Documents (as defined in the Second-Lien Credit Agreement) and any other agreement, document, mortgage or instrument pursuant to which a Lien is granted (or purported to be granted) securing any Second-Lien Obligations or under which rights or remedies with respect to such Liens are governed, as the same may be amended, supplemented, restated or otherwise modified or Refinanced from time to time in accordance with the terms hereof and thereof.

“Second-Lien Credit Agreement” has the meaning set forth in the recitals hereto.

“Second-Lien Lenders” means the “Lenders” under, and as defined in, the Second-Lien Credit Agreement.

“Second-Lien Loan Documents” means the Second-Lien Credit Agreement, the other Loan Documents (as defined in the Second-Lien Credit Agreement) and each of the other agreements, documents and instruments providing for or evidencing any Second-Lien Obligation, and any other document or instrument executed or delivered at any time in connection with any Second-Lien Obligation, as the same may be amended, restated, modified and/or otherwise supplemented or Refinanced from time to time in accordance with the terms hereof, thereof and the First-Lien Credit Agreement; provided that any such amendment, restatement, modification, supplement or Refinancing does not increase the aggregate principal amount thereof beyond the limit set forth in the First-Lien Credit Agreement and is otherwise in accordance with the provisions of the First-Lien Credit Agreement and this Agreement.

“Second-Lien Obligations” means all Obligations of every kind, nature and description whatsoever outstanding, or otherwise owing to Second-Lien Secured Parties, under

or in connection with the Second-Lien Credit Agreement and the other Second-Lien Loan Documents. “Second-Lien Obligations” shall in any event include: (a) all “Obligations” as defined in the Second-Lien Credit Agreement, (b) all interest accrued or accruing (or which would, absent commencement of an Insolvency or Liquidation Proceeding (and the effect of provisions such as Section 502(b)(2) of the Bankruptcy Code), accrue) on or after commencement of an Insolvency or Liquidation Proceeding in accordance with the rate specified in the relevant Second-Lien Loan Document whether or not the claim for such interest is allowed as a claim in such Insolvency or Liquidation Proceeding, (c) any and all fees and expenses (including attorneys’ and/or financial consultants’ fees and expenses) incurred by the Second-Lien Agent and the other Second-Lien Secured Parties on or after the commencement of an Insolvency or Liquidation Proceeding, whether or not the claim for fees and expenses is allowed under Section 506(b) of the Bankruptcy Code or any other provision of the Bankruptcy Code or Bankruptcy Law as a claim in such Insolvency or Liquidation Proceeding, and (d) all obligations and liabilities of each Grantor under each Second-Lien Loan Document to which it is a party which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due.

“Second-Lien Secured Parties” means, at any relevant time, the Secured Parties (as defined in the Second-Lien Credit Agreement).

“Secured Parties” means, collectively, the First-Lien Secured Parties and the Second-Lien Secured Parties.

“Secured Rate Contract” means any Rate Contract between the Borrower (or its applicable Subsidiary) and the Secured Swap Provider party thereto.

“Secured Rate Contract Obligations” means all Obligations of every kind, nature and description whatsoever outstanding, or otherwise owing to a Secured Swap Provider, under or in connection with any Secured Rate Contract.

“Secured Swap Provider” has the meaning set forth in the First-Lien Credit Agreement.

“Stock” means all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting.

“Subsidiary” of a Person means any corporation, association, limited liability company, partnership, joint venture or other business entity of which more than 50% of the voting Stock, is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof.

“Subsidiary Guarantors” means each Subsidiary of the Borrower which enters into a guaranty of any First-Lien Obligations or Second-Lien Obligations.

“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.

1.2 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified, (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Exhibits or Sections shall be construed to refer to Exhibits or Sections of this Agreement, (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights, (f) terms defined in the UCC but not otherwise defined herein shall have the same meanings herein as are assigned thereto in the UCC, (g) reference to any law means such law as amended, modified, codified, replaced or re-enacted, in whole or in part, and in effect on the date hereof, including rules, regulations, enforcement procedures and any interpretations promulgated thereunder, and (h) references to Sections or clauses shall refer to those portions of this Agreement, and any references to a clause shall, unless otherwise identified, refer to the appropriate clause within the same Section in which such reference occurs.

SECTION 2. Priority of Liens.

2.1 Subordination; Etc. Notwithstanding the date, manner or order of grant, attachment or perfection of any Liens securing the Second-Lien Obligations granted on the Collateral or of any Liens securing the First-Lien Obligations granted on the Collateral and notwithstanding any provision of the UCC, or any applicable law or the Second-Lien Loan Documents or any other circumstance whatsoever (including any non-perfection of any Lien purporting to secure the First-Lien Obligations and/or Second-Lien Obligations), the Second-Lien Agent, on behalf of itself and the other Second-Lien Secured Parties, and each other Second-Lien Secured Party (by its acceptance of the benefits of the Second-Lien Loan Documents) hereby agrees that: (a) any Lien on the Collateral securing any First-Lien Obligations now or hereafter held by or on behalf of the First-Lien Agent or any First-Lien Secured Party or any agent or trustee therefor, regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be senior in all respects and prior to any Lien on the Collateral securing any of the Second-Lien Obligations; and (b) any Lien on the Collateral now or hereafter held by or on behalf of the Second-Lien Agent, any Second-Lien Secured Party or any agent or trustee therefor regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Collateral securing any First-Lien Obligations. All Liens on the Collateral securing any First-Lien Obligations shall be and remain senior in all respects and prior to all Liens on the Collateral securing any Second-Lien Obligations for all purposes, whether or not such Liens securing any First-Lien Obligations are subordinated to any Lien securing any other obligation of the Borrower, any other Grantor or any other Person. The parties hereto acknowledge and agree that it is their intent that the First-Lien Obligations (and the security

therefor) constitute a separate and distinct class (and separate and distinct claims) from the Second-Lien Obligations (and the security therefor). The priorities of the Liens provided in this Section 2.1 shall not be altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement, replacement or Refinancing of any of the First-Lien Obligations or Second-Lien Obligations, nor by any action or inaction which any of the Secured Parties may take or fail to take in respect of the Collateral.

2.2 Prohibition on Contesting Liens. Each of the Second-Lien Agent, for itself and on behalf of each Second-Lien Secured Party, and the First-Lien Agent, for itself and on behalf of each First-Lien Secured Party, agrees that it shall not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), (i) the validity or enforceability of any Collateral Document or any Obligation thereunder, (ii) the enforceability of the First-Lien Obligations or the Second-Lien Obligations, (iii) the validity, perfection, priority or enforceability of the Liens, mortgages, assignments and security interests granted pursuant to the Collateral Documents with respect to the First-Lien Obligations and the Second-Lien Obligations or (iv) the relative rights and duties of the holders of the First-Lien Obligations and the Second-Lien Obligations granted and/or established in this Agreement or any Collateral Document with respect to such Liens, mortgages, assignments and security interests; provided that nothing in this Agreement shall be construed to prevent or impair the rights of the First-Lien Agent or any First-Lien Secured Party to enforce this Agreement, including the priority of the Liens securing the First-Lien Obligations as provided in Section 2.1 hereof.

2.3 No New Liens. So long as the Discharge of First-Lien Obligations has not occurred, the parties hereto agree that no Grantor shall grant or permit any additional Liens, or take any action to perfect any additional Liens, on any asset or property to secure any Second-Lien Obligation unless it has also granted a Lien on such asset or property to secure the First-Lien Obligations and has taken all actions to perfect such Liens. To the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available to the First-Lien Agent and/or the other First-Lien Secured Parties, the Second-Lien Agent, on behalf of itself and the other Second-Lien Secured Parties, and each other Second-Lien Secured Party (by its acceptance of the benefits of the Second-Lien Loan Documents), agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.3 shall be subject to Section 4.2 hereof.

2.4 Similar Liens and Agreements. The parties hereto agree that it is their intention that neither the First-Lien Collateral nor the Second-Lien Collateral be more expansive than the Second-Lien Collateral and the First-Lien Collateral, respectively. In furtherance of the foregoing and of Section 8.9 hereof, the First-Lien Agent, the other First-Lien Secured Parties, the Second-Lien Agent and the other Second-Lien Secured Parties agree, subject to the other provisions of this Agreement:

(i) upon request by the First-Lien Agent or the Second-Lien Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the Second-Lien Collateral or the First-Lien Collateral, respectively, and the steps taken to perfect the Liens thereon

and the identity of the respective parties obligated under the Second-Lien Collateral Documents or the First-Lien Collateral Documents, respectively;

(ii) that the First-Lien Collateral Documents and the Second-Lien Collateral Documents shall be in all material respects the same forms of documents other than with respect to the priority nature of the Liens created thereunder in the respective Collateral; and

(iii) that the guarantees for the First-Lien Obligations and the Second-Lien Obligations shall be substantially in the same form.

2.5 Perfection. Each Secured Creditor shall be solely responsible for perfecting and maintaining the perfection of its Lien in the Collateral in which such Secured Creditor has been granted a Lien. The foregoing provisions of this Agreement are intended solely to govern the respective Lien priorities as among the Secured Creditors and shall not impose on any Secured Creditor any obligations in respect of the disposition of proceeds of any Collateral that would conflict with prior perfected claims therein in favor of any other Person or any order or decree of any court or governmental authority or any applicable law.

SECTION 3. Enforcement.

3.1 Exercise of Remedies. (a) The provisions of this clause (a) are subject to clause (e) below in this Section 3.1. So long as the Discharge of First-Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Borrower or any other Grantor: (i) the Second-Lien Agent and the other Second-Lien Secured Parties will not exercise or seek to exercise any rights or remedies (including set-off) with respect to any Collateral (whether available under the Second-Lien Loan Documents, pursuant to applicable law or otherwise, including, without limitation, foreclosing on the Liens of such Person in any Collateral, selling or realizing on any of the Collateral, taking possession of Collateral (unless solely for purposes of perfecting Liens on such Collateral), the exercise of any right under any lockbox agreement, control account agreement, landlord waiver or bailee’s letter or similar agreement or arrangement to which the Second-Lien Agent or any Second-Lien Secured Party is a party, the exercise of voting rights or other rights and remedies pertaining to pledged equity interests and the contacting of account debtors for payment in respect of accounts receivable owing to any Grantor) or institute or commence, or join with any Person in instituting or commencing, any action or proceeding with respect to any such rights or remedies (including any action of foreclosure, enforcement, collection or execution and any Insolvency or Liquidation Proceeding), and will not contest, protest or object to any foreclosure proceeding or any other action brought by the First-Lien Agent or any other First-Lien Secured Party on account of or in respect of the Collateral or any other exercise by the First-Lien Agent or any other First-Lien Secured Party of any rights and remedies (whether of a kind described above or otherwise) relating to the Collateral, whether available under the First-Lien Documents, pursuant to applicable law or otherwise (including the institution of any Insolvency or Liquidation Proceeding), or object to the forbearance by the First-Lien Agent or the other First-Lien Secured Parties from bringing or pursuing any foreclosure proceeding or action or any other exercise of any rights or remedies relating to the Collateral; and (ii) the First-Lien Agent shall have the exclusive right, and the Required First-Lien Secured Parties shall have the exclusive right to

instruct the First-Lien Agent, to enforce rights, exercise remedies (whether available under the First-Lien Documents, pursuant to applicable law or otherwise, including set-off and the right to credit bid their debt) and make determinations regarding the release, disposition, or restrictions with respect to the Collateral without any consultation with or the consent of the Second-Lien Agent or any other Second-Lien Secured Party, all as though the Second-Lien Obligations did not exist; provided, that (A) in any Insolvency or Liquidation Proceeding commenced by or against the Borrower or any other Grantor, the Second-Lien Agent may file a claim or statement of interest with respect to the Second-Lien Obligations, (B) the Second-Lien Agent may take any action (not adverse to the prior Liens on the Collateral securing the First-Lien Obligations, or the rights of the First-Lien Agent or the other First-Lien Secured Parties to exercise remedies in respect thereof) in order to preserve or protect its Lien on the Collateral in accordance with the terms of this Agreement, (C) the Second-Lien Secured Parties shall be entitled to file any necessary responsive or defensive pleading in opposition to any motion, claim, adversary proceeding or other pleading made by any Person objecting to or otherwise seeking the disallowance of the claims of the Second-Lien Secured Parties, including any claim secured by the Collateral, if any, in each case in accordance with the terms of this Agreement, (D) the Second-Lien Secured Parties may file any pleadings, objections, motions or agreements which assert rights or interests available to unsecured creditors of the Grantors arising under either any Insolvency or Liquidation Proceeding or applicable non-bankruptcy law, in each case not inconsistent with the terms of this Agreement and only with respect to the portion of their claim that is unsecured and (E) the Second-Lien Secured Parties may vote on any plan of reorganization, file any proof of claim, make other filings and make any arguments and motions that are, in each case, in accordance with, or not violative of, the terms of this Agreement with respect to the Second-Lien Obligations and the Collateral. In exercising rights and remedies with respect to the Collateral, the First-Lien Agent and the other First-Lien Secured Parties may enforce the provisions of the First-Lien Documents and exercise remedies thereunder and under applicable law, all in such order and in such manner as they may determine in the exercise of their sole discretion. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured creditor under the Uniform Commercial Code of any applicable jurisdiction or other applicable law and of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.

(b) The Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, agrees that it will not take or receive any Collateral or any proceeds of Collateral in connection with the exercise of any right or remedy (including setoff) with respect to any Collateral (whether available under the Second-Lien Loan Documents, applicable law or otherwise, including, without limitation, all rights and remedies of a kind described in Section 3.1(a) above), and shall not hold possessory Liens on all or any part of the Collateral (such possessory Liens to be held by First-Lien Agent, subject to the terms of Section 5.5 hereof), unless and until the Discharge of First-Lien Obligations has occurred. Without limiting the generality of the foregoing, unless and until the Discharge of First-Lien Obligations has occurred, the sole right of the Second-Lien Agent and the other Second-Lien Secured Parties with respect to the Collateral is to hold a Lien on the Collateral pursuant to the Second-Lien Collateral Documents for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of the First-Lien Obligations has occurred in accordance with the terms of the Second-Lien Loan Documents and applicable law.

(c) The Second-Lien Agent, for itself and on behalf of the Second-Lien Secured Parties, and each other Second-Lien Secured Party (by its acceptance of the benefits of the Second-Lien Loan Documents), (i) agrees that the Second-Lien Agent and the other Second-Lien Secured Parties will not take any action that would hinder, delay, limit or prohibit any exercise of rights or remedies by First-Lien Agent or the First-Lien Secured Parties with respect to all or any part of the Collateral (whether available under the First-Lien Documents, applicable law or otherwise), including any collection, sale, lease, exchange, transfer or other disposition of the Collateral, whether by foreclosure or otherwise, or that would limit, invalidate, avoid or set aside any Lien or Collateral Document or subordinate the priority of the First-Lien Obligations to the Second-Lien Obligations or grant the Liens securing the Second-Lien Obligations equal ranking to the Liens securing the First-Lien Obligations and (ii) hereby waives any and all rights it or the Second-Lien Secured Parties may have as a junior lien creditor or otherwise (whether arising under the UCC or under any other law) to object to the manner in which the First-Lien Agent or the other First-Lien Secured Parties seek to enforce or collect the First-Lien Obligations or the Liens granted in any of the First-Lien Collateral, regardless of whether any action or failure to act by or on behalf of the First-Lien Agent or First-Lien Secured Parties is adverse to the interest of the Second-Lien Secured Parties.

(d) The Second-Lien Agent hereby acknowledges and agrees that no covenant, agreement or restriction contained in the Second-Lien Collateral Documents or any other Second-Lien Loan Document shall be deemed to restrict in any way the rights and remedies of the First-Lien Agent or the other First-Lien Secured Parties with respect to the Collateral as set forth in this Agreement and the First-Lien Loan Documents.

(e) Notwithstanding anything to the contrary in preceding clauses (a) through (d) of this Section 3.1, at any time while an “event of default” exists under (and as defined in) the Second-Lien Credit Agreement, then so long as 180 days have elapsed after written notice thereof (and requesting that enforcement action be taken with respect to the Collateral) has been received by the First-Lien Agent from the Second-Lien Agent and so long as the respective “event of default” shall not have been cured or waived (or any acceleration in respect thereof rescinded), the Second-Lien Agent, for itself and on behalf of the Second-Lien Secured Parties, may, but only if the First-Lien Agent or the First-Lien Secured Parties are not pursuing in good faith enforcement proceedings, or otherwise exercising rights and remedies (including, without limitation, the solicitation of bids from third parties to conduct the liquidation of all or any portion of the Collateral, the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, auctioneers or other third parties for the purpose of valuing, marketing, promoting or selling all or any portion of the Collateral, the notification of account debtors to make payments to the First-Lien Agent or its agents, the initiation of any action to take possession of all or any portion of the Collateral, the commencement of any legal proceedings or actions against or with respect to the foreclosure and sale of all or any portion of the Collateral, diligently attempting in good faith to vacate any stay prohibiting an enforcement action with respect to all or any portion of the Collateral or diligently attempting in good faith to vacate any stay prohibiting an enforcement action with respect to the Collateral), with respect to all or any portion of the Collateral in a commercially reasonable manner (with any determination of which Collateral to proceed against, and in what order, to be made by the First-Lien Agent or such First-Lien Secured Parties in their reasonable judgment), enforce the Liens on Collateral granted pursuant to the Second-Lien Collateral Documents, provided that (x) any Collateral or any

proceeds of Collateral received by the Second-Lien Agent or such other Second-Lien Secured Party, as the case may be, in connection with the enforcement of such Lien shall be applied in accordance with Section 4 hereof and (y) the First-Lien Agent or any other First-Lien Secured Parties may at any time take over such enforcement proceedings, provided that the First-Lien Agent or such First-Lien Secured Parties, as the case may be, pursue enforcement proceedings, or otherwise exercise rights and remedies (including, without limitation, the solicitation of bids from third parties to conduct the liquidation of all or any portion of the Collateral, the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, auctioneers or other third parties for the purpose of valuing, marketing, promoting or selling all or any portion of the Collateral, the notification of account debtors to make payments to the First-Lien Agent or its agents, the initiation of any action to take possession of all or any portion of the Collateral, the commencement of any legal proceedings or actions against or with respect to the foreclosure and sale of all or any portion of the Collateral, diligently attempting in good faith to vacate any stay prohibiting an enforcement action with respect to all or any portion of the Collateral or diligently attempting in good faith to vacate any stay prohibiting an enforcement action with respect to the Collateral), with respect to all or any portion of the Collateral in a commercially reasonable manner, with any determination of which Collateral to proceed against, and in what order, to be made by the First-Lien Agent or such First-Lien Secured Parties in their reasonable judgment, and provided further that the Second-Lien Agent or Second-Lien Secured Parties, as the case may be, shall only be able to recoup (from amounts realized by the First-Lien Agent or any First-Lien Secured Parties) in any enforcement proceeding with respect to the Collateral (whether initiated by the First-Lien Agent or First-Lien Secured Parties or taken over by them as contemplated above) any expenses incurred by them in accordance with the priorities set forth in Section 4 hereof.

SECTION 4. Payments.

4.1 Application of Proceeds. So long as the Discharge of First-Lien Obligations has not occurred, any Collateral or proceeds thereof received by any Secured Creditor pursuant to the enforcement of any Collateral Document or the exercise of any rights or remedies (including setoff) with respect to all or any portion of the Collateral, whether available under any Collateral Document, pursuant to applicable law or otherwise, together with all other proceeds received by any Secured Party (including all funds received in respect of post-petition interest or fees and expenses) as a result of any such enforcement or the exercise of any such rights or remedies or from the collection, disposition or other realization on the Collateral or as a result of any distribution of or in respect of any Collateral (whether or not expressly characterized as such) upon or in any Insolvency or Liquidation Proceeding with respect to any Grantor (including, without limitation, any such distribution which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Second-Lien Obligations), or the application of any Collateral (or proceeds thereof) to the payment thereof or any distribution of Collateral (or proceeds thereof) upon the liquidation or dissolution of any Grantor, shall be paid over to the First-Lien Agent, for the benefit of the First-Lien Secured Parties, and applied by the First-Lien Agent to the First-Lien Obligations (including, without limitation, for purposes of cash collateralization of Letters of Credit and Secured Rate Contracts) in such order as specified in the relevant First-Lien Collateral Document. Upon the Discharge of the First-Lien Obligations, the First-Lien Agent shall deliver to the Second-Lien Agent any proceeds of Collateral held by it in the same form as received, with any necessary endorsements or as a court of competent

jurisdiction may otherwise direct, to be applied by the Second-Lien Agent to the Second-Lien Obligations in such order as specified in the Second-Lien Loan Documents.

4.2 Payments Over. Until such time as the Discharge of First-Lien Obligations has occurred, any Collateral or proceeds thereof (together with assets or proceeds subject to Liens referred to in the final sentence of Section 2.3 hereof) (or any distribution in respect of the Collateral, whether or not expressly characterized as such) received by the Second-Lien Agent or any other Second-Lien Secured Party in connection with the exercise of any right or remedy (including set-off) relating to the Collateral or otherwise that is inconsistent with this Agreement shall be segregated and held in trust and forthwith paid over to the First-Lien Agent for the benefit of the First-Lien Secured Parties in the same form as received, to be applied to the First-Lien Obligations in accordance with the preceding Section 4.1, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The First-Lien Agent is hereby authorized to make any such endorsements as agent for the Second-Lien Agent or any such other Second-Lien Secured Party. This authorization is coupled with an interest and is irrevocable until such time as this Agreement is terminated in accordance with its terms.

SECTION 5. Other Agreements.

5.1 Releases.

(a) If, in connection with:

(i) the exercise of any of the First-Lien Agent’s rights and remedies in respect of the Collateral (whether available under any First-Lien Document, pursuant to applicable law or otherwise and including all rights and remedies of a kind described in Section 3.1 hereof), including any sale, lease, exchange, transfer or other disposition of any such Collateral (including a sale, lease, exchange, transfer or other disposition of any such Collateral with the consent or at the direction of the First-Lien Agent given during the occurrence of an event of default under the First-Lien Documents);

(ii) the entry of an order of the Bankruptcy Court pursuant to Section 363 of the Bankruptcy Code authorizing the sale of all or any portion of the Collateral; or

(iii) any sale, lease, exchange, transfer or other disposition of any Collateral permitted under the terms of the First-Lien Loan Documents and the Second-Lien Loan Documents (other than in connection with the exercise of the First-Lien Agent’s rights and remedies in respect of the Collateral which shall be governed by preceding sub-clause (i));

there occurs the release by the First-Lien Agent, acting on its own or at the direction of the Required First-Lien Secured Parties, (x) of any of its Liens on any part of the Collateral, or (y) to the extent that any such sale, lease, exchange, transfer or other disposition is of all of the equity interests of a Grantor, of any Grantor from its obligations under its guaranty of the First-Lien Obligations, then the Liens, if any, of the Second-Lien Agent, for itself and for the benefit of the Second-Lien Secured Parties, on such Collateral, and the obligations of such Grantor under its guaranty of the Second-Lien Obligations, shall be automatically, unconditionally and simultaneously released (and the Second-Lien Secured Parties shall be deemed to have consented

under the Second-Lien Loan Documents to the underlying transaction and the foregoing release notwithstanding anything to the contrary contained in the Second-Lien Loan Documents), and the Second-Lien Agent, for itself or on behalf of any such Second-Lien Secured Parties, promptly shall execute and deliver to the First-Lien Agent or such Grantor such termination statements, releases and other documents as the First-Lien Agent or such Grantor may request to effectively confirm such release; provided however that if an “event of default” then exists under the Second-Lien Credit Agreement and the Discharge of First-Lien Obligations occurs concurrently with any such release, the Second-Lien Agent (on behalf of the Second-Lien Secured Parties) shall be entitled to receive the residual cash or cash equivalents (if any) remaining after giving effect to such release and the Discharge of the First-Lien Obligations.

(b) Until the Discharge of First-Lien Obligations occurs, the Second-Lien Agent, for itself and on behalf of the Second-Lien Secured Parties, hereby irrevocably constitutes and appoints the First-Lien Agent and any officer or agent of the First-Lien Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Second-Lien Agent or such other Second-Lien Secured Party or in the First-Lien Agent’s own name, from time to time in the First-Lien Agent’s discretion, for the purpose of carrying out the terms of this Section 5.1, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Section 5.1, including any endorsements or other instruments of transfer or release. Each Second-Lien Secured Party hereby ratifies all that said attorneys shall lawfully do or cause to be done pursuant to the power of attorney granted under this Section 5.1(b). No Person to whom this power of attorney is presented, as authority for the First-Lien Agent to take any action or actions contemplated hereby, shall be required to inquire into or seek confirmation from any Second-Lien Secured Party as to the authority of the First-Lien Agent to take any action described herein, or as to the existence of or fulfillment of any condition to this power of attorney, which is intended to grant to the First-Lien Agent the authority to take and perform the actions contemplated herein. The Second-Lien Secured Parties irrevocably waive any right to commence any suit or action, in law or equity, against any Person which acts in reliance upon or acknowledges the authority granted under this power of attorney. This power of attorney is coupled with an interest and is irrevocable until such time as this Agreement is terminated in accordance with its terms.

(c) If, prior to the Discharge of First-Lien Obligations, a subordination of the First-Lien Agent’s Lien on any Collateral is permitted (or in good faith believed by the First-Lien Agent to be permitted) under the First-Lien Credit Agreement to another Lien permitted under the First-Lien Credit Agreement (a “Priority Lien”), then the First-Lien Agent is authorized to execute and deliver a subordination agreement with respect thereto in form and substance satisfactory to it, and the Second-Lien Agent, for itself and on behalf of the Second-Lien Secured Parties, shall promptly execute and deliver to the First-Lien Agent or the relevant Grantor an identical subordination agreement subordinating the Liens of the Second-Lien Agent for the benefit of the Second-Lien Secured Parties to such Priority Lien, in each case, so long as such Priority Lien is otherwise permitted under the Second-Lien Credit Agreement or this Agreement.

5.2 Insurance. Unless and until the Discharge of First-Lien Obligations has occurred, the First-Lien Agent (acting at the direction of the Required First-Lien Secured Parties)

shall have the sole and exclusive right, subject to the rights of the Grantors under the First-Lien Loan Documents, to adjust settlement for any insurance policy covering the Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding (or any deed in lieu of condemnation) affecting the Collateral. Unless and until the Discharge of First-Lien Obligations has occurred, and subject to the rights of the Grantors under the First-Lien Loan Documents, all proceeds of any such policy and any such award (or any payments with respect to a deed in lieu of condemnation) in respect to the Collateral shall be paid to the First-Lien Agent for the benefit of the First-Lien Secured Parties pursuant to the terms of the First-Lien Documents (including, without limitation, for purposes of cash collateralization of commitments, Letters of Credit and Secured Rate Contracts) and, after the Discharge of First-Lien Obligations has occurred, to the Second-Lien Agent for the benefit of the Second-Lien Secured Parties to the extent required under the Second-Lien Loan Documents and then, to the extent no Second-Lien Obligations are outstanding, to the owner of the subject property, such other Person as may be entitled thereto or as a court of competent jurisdiction may otherwise direct. If the Second-Lien Agent or any other Second-Lien Secured Parties shall, at any time, receive any proceeds of any such insurance policy or any such award or payment in contravention of this Agreement, it shall pay such proceeds over to the First-Lien Agent in accordance with the terms of Section 4.2 of this Agreement.

5.3 Amendments to First-Lien Loan Documents and Second-Lien Loan Documents.

(a) The First-Lien Documents may be amended, restated, supplemented or otherwise modified in accordance with their terms and the First-Lien Credit Agreement may be Refinanced, in each case, without notice to, or the consent of, the Second-Lien Agent or the other Second-Lien Secured Parties, all without affecting the lien subordination or other provisions of this Agreement; provided, however, that any such amendment, restatement, supplement, modification or Refinancing of the First-Lien Credit Agreement shall not, without the consent of the Second-Lien Agent:

(i) increase the “Applicable Margin” or similar component of the interest rate by more than 2.5% per annum (excluding increases resulting from the accrual of interest at the default rate set forth in the First-Lien Credit Agreement as in effect on the date hereof); or

(ii) provide for the aggregate outstanding principal amount of the Indebtedness under the First-Lien Credit Agreement to exceed the Cap Amount (excluding, however, as a result of capitalization of interest and/or fees thereunder and excluding for the avoidance of doubt, amounts owing on account of Secured Rate Contracts).

(b) Without the prior written consent of the First-Lien Agent (acting at the direction of the Required First-Lien Secured Parties), no Second-Lien Loan Document may be amended, restated, supplemented or otherwise modified or entered into to the extent such amendment, restatement, supplement or modification, or the terms of any new Second-Lien Loan Document would contravene the provisions of this Agreement, the First-Lien Credit Agreement or any other First-Lien Loan Document; provided, however, without notice to, or the consent of,

the First-Lien Agent or the other First-Lien Secured Parties, the Second-Lien Credit Agreement may be amended to increase the “Applicable Margin” or similar component of the interest rate by up to 2.5% per annum (excluding increases resulting from the accrual of interest at the default rate as set forth in the Second-Lien Credit Agreement as in effect on the date hereof). Each of the Borrower, each other Grantor and the Second-Lien Agent agrees that each Second-Lien Collateral Document shall include the following language (or language to similar effect approved by the First-Lien Agent):

“Notwithstanding anything herein to the contrary, the lien and security interest granted to the Second-Lien Agent pursuant to this Agreement and the exercise of any right or remedy by the Second-Lien Agent hereunder are subject to the provisions of the Intercreditor Agreement, dated as of May 27, 2011 (as amended, restated, supplemented and/or otherwise modified from time to time in accordance with the terms thereof, the “Intercreditor Agreement”), among Gundle SLT/Environmental, Inc., the other Grantors from time to time party thereto, General Electric Capital Corporation, in its capacity as First-Lien Agent thereunder, and Jefferies Finance LLC, in its capacity as Second-Lien Agent thereunder. In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control.”

In addition, each of the Borrower, each other Grantor and the Second-Lien Agent agree that each Second-Lien Collateral Document covering any Collateral constituting real property shall contain such other language as the First-Lien Agent may reasonably request to reflect the subordination of such Second-Lien Collateral Document to the First-Lien Collateral Document covering such Collateral.

(c) In the event the First-Lien Agent or the other First-Lien Secured Parties and the relevant Grantor(s) enter into any amendment, waiver or consent in respect of any of the First-Lien Collateral Documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any First-Lien Collateral Document or changing in any manner the rights of the First-Lien Agent, the other First-Lien Secured Parties, the Borrower or any other Grantor thereunder, then such amendment, waiver or consent shall apply automatically to any comparable provision of the Second-Lien Credit Agreement and the Comparable Second-Lien Collateral Document without the consent of the Second-Lien Agent or the other Second-Lien Secured Parties and without any action by the Second-Lien Agent, the Borrower or any other Grantor, provided, that (A) no such amendment, waiver or consent shall have the effect of (i) removing assets subject to the Lien of the Second-Lien Collateral Documents, except to the extent that a release of such Lien is permitted by Section 5.1 of this Agreement, (ii) imposing additional duties on the Second-Lien Agent without its consent, or (iii) permitting other liens on the Collateral not permitted under the terms of the Second-Lien Loan Documents or Section 6 hereof and (B) notice of such amendment, waiver or consent shall have been given to the Second-Lien Agent (although the failure to give any such notice shall in no way affect the effectiveness of any such amendment, waiver or consent).

5.4 Rights As Unsecured Creditors. Except as otherwise set forth in this Agreement, the Second-Lien Agent and the other Second-Lien Secured Parties may exercise

rights and remedies as unsecured creditors against the Borrower or any other Grantor that has guaranteed the Second-Lien Obligations in accordance with the terms of the Second-Lien Loan Documents and applicable law in each case in respect of the unsecured portion of their claim. Except as otherwise set forth in this Agreement, nothing in this Agreement shall prohibit the receipt by the Second-Lien Agent or any other Second-Lien Secured Party of the required payments of interest, premium and principal on the Second-Lien Obligations so long as such receipt is not the direct or indirect result of the exercise by the Second-Lien Agent or any other Second-Lien Secured Party of rights or remedies as a secured creditor (including set-off) or enforcement of any Lien held by any of them; provided, however, that each Second-Lien Secured Party hereby agrees that, except as otherwise permitted by the First-Lien Credit Agreement, without the prior written consent of the First-Lien Agent, no Second-Lien Secured Party will take, demand or receive from a Grantor any prepayment of principal (whether optional, voluntary, mandatory or otherwise or by redemption, defeasance or other payment or distribution) with respect to the Second-Lien Obligations. In the event the Second-Lien Agent or any other Second-Lien Secured Party becomes a judgment lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be subordinated to the Liens securing First-Lien Obligations on the same basis as the other Liens securing the Second-Lien Obligations are so subordinated to such First-Lien Obligations under this Agreement. Nothing in this Agreement impairs or otherwise adversely affects any rights or remedies the First-Lien Agent or the other First-Lien Secured Parties may have with respect to the First-Lien Collateral.

5.5 Bailee for Perfection.

(a) If the First-Lien Agent holds any Pledged Collateral or other Collateral in its possession or control (or in the possession or control of its agents or bailees) for purposes of perfecting its Lien therein, then, in addition to holding such Pledged Collateral or other Collateral for the benefit of the First-Lien Secured Parties pursuant to the terms of the First-Lien Documents, it shall be deemed to be holding such Pledged Collateral or other Collateral as contractual representative on behalf of Second-Lien Agent and any assignee thereof solely for the purpose of perfecting the security interest granted under the Second-Lien Collateral Documents, subject to the terms and conditions of this Section 5.5. If the Second-Lien Agent holds any Pledged Collateral or other Collateral in its possession or control (or in the possession or control of its agents or bailees), then, in addition to holding such Pledged Collateral or other Collateral for the benefit of the Second-Lien Secured Parties pursuant to the terms of the Second-Lien Loan Documents, and without limiting its obligations under this Agreement to deliver such possessory Collateral to the First-Lien Agent, it shall be deemed to be holding such Pledged Collateral or other Collateral as contractual representative on behalf of the First-Lien Agent and any assignee thereof solely for the purpose of perfecting the security interest granted under the First-Lien Collateral Documents, subject to the terms and conditions of this Section 5.5.

(b) Until the Discharge of First-Lien Obligations has occurred, the First-Lien Agent shall be entitled to deal with the Pledged Collateral in accordance with the terms of the First-Lien Loan Documents as if the Liens of the Second-Lien Agent under the Second-Lien Collateral Documents did not exist. The rights of the Second-Lien Agent shall at all times be subject to the terms of this Agreement and to the First-Lien Agent’s rights under the First-Lien Loan Documents.

(c) Neither the First-Lien Agent nor the Second-Lien Agent shall have any obligation whatsoever to the First-Lien Secured Parties or the Second-Lien Secured Parties to assure that the Pledged Collateral is genuine or owned by any of the Grantors or to preserve rights or benefits of any Person except as expressly set forth in this Section 5.5. The duties or responsibilities of the First-Lien Agent and Second-Lien Agent under this Section 5.5 shall be limited solely to holding the Pledged Collateral as bailee in accordance with this Section 5.5.

(d) Neither the First-Lien Agent nor the Second-Lien Agent acting pursuant to this Section 5.5 shall have by reason of the First-Lien Documents, the Second-Lien Loan Documents, this Agreement or any other document a fiduciary relationship in respect of the First-Lien Secured Parties or any Second-Lien Secured Party.

(e) Upon the Discharge of the First-Lien Obligations, the First-Lien Agent shall deliver the remaining Pledged Collateral (if any) (or proceeds thereof) together with any necessary endorsements, first, to the Second-Lien Agent, if any Second-Lien Obligations remain outstanding, and second, to the Borrower or the relevant Grantor if no First-Lien Obligations or Second-Lien Obligations remain outstanding, subject to compliance with any order by a court of competent jurisdiction to the contrary.

5.6 When Discharge of First-Lien Obligations Deemed to Not Have Occurred. If at any time after the Discharge of First-Lien Obligations has occurred, the Borrower thereafter enters into any Refinancing of any First-Lien Loan Document evidencing a First-Lien Obligation which Refinancing is permitted hereby, then such Discharge of First-Lien Obligations shall automatically be deemed not to have occurred for all purposes of this Agreement, and the obligations under such Refinancing First-Lien Loan Document shall automatically be treated as First-Lien Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, and the First-Lien Agent under such Refinancing First-Lien Loan Documents shall be the First-Lien Agent for all purposes of this Agreement. Upon receipt of a notice stating that the Borrower has entered into a new First-Lien Loan Document (which notice shall include the identity of the new agent, such agent, the “New Agent”), the Second-Lien Agent shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as the Borrower or such New Agent may reasonably request in order to provide to the New Agent the rights contemplated hereby, in each case consistent in all material respects with the terms of this Agreement.

5.7 Option to Purchase First-Lien Debt. (a) Without prejudice to the enforcement of remedies by the First-Lien Secured Parties during the period described in Section 5.7(c) hereof, any Person or Persons (in each case who must meet all eligibility standards contained in all relevant First-Lien Loan Documents) at any time or from time to time designated by the holders of more than 50% in aggregate outstanding principal amount of the Second-Lien Obligations as being entitled to exercise all default purchase options as to the Second-Lien Obligations then outstanding (each, an “Eligible Purchaser”) shall have the right to purchase by way of assignment (and shall thereby also assume all commitments and duties of the First-Lien Secured Parties), at any time during the exercise period described in clause (c) below of this Section 5.7, all, but not less than all, of the First-Lien Obligations (other than the First-Lien Obligations of a Defaulting Secured Party), including all principal of and accrued and unpaid interest and fees on and all prepayment or acceleration penalties and premiums in respect of all

First-Lien Obligations outstanding at the time of purchase. Any purchase pursuant to this Section 5.7(a) shall be made as follows:

(1) for (x) a purchase price equal to the sum of (A) in the case of all loans, advances or other similar extensions of credit that constitute First-Lien Obligations (including unreimbursed amounts drawn in respect of Letters of Credit, but excluding the undrawn amount of then outstanding Letters of Credit), 100% of the principal amount thereof and all accrued and unpaid interest thereon through the date of purchase (without regard, however, to any acceleration prepayment penalties or premiums other than customary breakage costs), (B) in the case of any Secured Rate Contract, the aggregate amount then owing to each Secured Swap Provider thereunder pursuant to the terms of the respective Secured Rate Contract, including without limitation all amounts owing to such Secured Swap Provider as a result of the termination (or early termination) thereof (although if any such Secured Rate Contract is not so terminated on or prior to the date of purchase, an additional amount reasonably determined by the respective Secured Swap Provider party to such Secured Rate Contract to be necessary to collateralize its credit risk arising out of such Secured Rate Contract) plus (C) all accrued and unpaid fees, expenses, penalties, indemnities and other amounts through the date of purchase; and (y) an obligation on the part of the respective Eligible Purchasers (which shall be expressly provided in the assignment documentation described below) to (i) reimburse each issuing lender (or any First-Lien Secured Party required to pay same) for all amounts thereafter drawn with respect to any Letters of Credit constituting First-Lien Obligations which remain outstanding after the date of any purchase pursuant to this Section 5.7, together with all facing fees and other amounts which may at any future time be owing to the respective issuing lender with respect to such Letters of Credit, (ii) reimburse the First-Lien Secured Parties for any loss, cost, damage or expense (including reasonable attorneys’ fees and legal expenses) in connection with any commissions, fees, costs or expenses related to any issued and outstanding Letters of Credit and any checks or other payments provisionally credited to the First-Lien Obligations and/or as to which the First-Lien Secured Parties have not yet received final payment and (iii) pay over to the First-Lien Secured Parties any amounts recovered by such Eligible Purchasers on account of any acceleration prepayment premiums or penalties with respect to the First-Lien Obligations;

(2) with the purchase price described in preceding clause (a)(1)(x) payable in cash on the date of purchase against transfer to the respective Eligible Purchaser or Eligible Purchasers (without recourse and without any representation or warranty whatso-ever, whether as to the enforceability of any First-Lien Obligation or the validity, enforceability, perfection, priority or sufficiency of any Lien securing, or guarantee or other supporting obligation for, any First-Lien Obligation or as to any other matter whatsoever, except the representation and warranty that the transferor owns free and clear of all Liens and encumbrances (other than participation interests not prohibited by the First-Lien Credit Agreement, in which case the purchase price described in preceding clause (a)(1)(x) shall be appropriately adjusted so that the Eligible Purchaser or Eligible Purchasers do not pay amounts represented by any participation interest which remains in effect), and has the right to convey, whatever claims and interests it may have in respect of the First-Lien Obligations); provided that the purchase price in respect of any

outstanding Letter of Credit that remains undrawn on the date of purchase shall be payable in cash as and when such Letter of Credit is drawn upon (i) first, from the cash collateral account described in clause (a)(3) below, until the amounts contained therein have been exhausted, and (ii) thereafter, directly by the respective Eligible Purchaser or Eligible Purchasers;

(3) with such purchase accompanied by a deposit of cash collateral under the sole dominion and control of the First-Lien Agent or its designee in an amount equal to 105% of the sum of the aggregate undrawn amount of all then outstanding Letters of Credit pursuant to the First-Lien Loan Documents and the aggregate facing and similar fees which will accrue thereon through the stated maturity of the Letters of Credit (assuming no drawings thereon before stated maturity), as security for the respective Eligible Purchaser’s or Eligible Purchasers’ obligation to pay amounts as provided in preceding clause (a)(1)(y), it being understood and agreed that (x) at the time any facing or similar fees are owing to an issuer with respect to any Letter of Credit, the First-Lien Agent may apply amounts deposited with it as described above to pay same and (y) upon any drawing under any Letter of Credit, the First-Lien Agent shall apply amounts deposited with it as described above to repay the respective unpaid drawing. After giving effect to any payment made as described above in this clause (3), those amounts (if any) then on deposit with the First-Lien Agent as described in this clause (3) which exceed 105% of the sum of the aggregate undrawn amount of all then outstanding Letters of Credit and the aggregate facing and similar fees (to the respective issuers) which will accrue thereon through the stated maturity of the then outstanding Letters of Credit (assuming no drawings thereon before stated maturity), shall be returned to the respective Eligible Purchaser or Eligible Purchasers (as their interests appear). Furthermore, at such time as all Letters of Credit have been cancelled, expired or been fully drawn, as the case may be, and after all applications described above have been made, any excess cash collateral deposited as described above in this clause (3) (and not previously applied or released as provided above) shall be returned to the respective Eligible Purchaser or Eligible Purchasers, as their interests appear;

(4) with the purchase price described in preceding clause (a)(1)(x) accompanied by a waiver by the Second-Lien Agent (on behalf of itself and the other Second-Lien Secured Parties) of all claims arising out of this Agreement and the transactions contemplated hereby as a result of exercising the purchase option contemplated by this Section 5.7;

(5) with all amounts payable to the various First-Lien Secured Parties in respect of the assignments described above to be distributed to them by the First-Lien Agent in accordance with their respective holdings of the various First-Lien Obligations; and

(6) with such purchase to be made pursuant to assignment documentation in form and substance reasonably satisfactory to, and prepared by counsel for, the First-Lien Agent (with the cost of such counsel to be paid by the Grantors or, if the Grantors do not make such payment, by the respective Eligible Purchaser or Eligible Purchasers, who shall have the right to obtain reimbursement of same from the Grantors); it being

understood and agreed that the First-Lien Agent and each other First-Lien Secured Party shall retain all rights to indemnification as provided in the relevant First-Lien Loan Documents for all periods prior to any assignment by them pursuant to the provisions of this Section 5.7.

(b) The right to exercise the purchase option described in Section 5.7(a) above shall be exercisable and legally enforceable upon at least five, and no more than ten Business Days’ prior written notice of exercise (which notice, once given, shall be irrevocable and fully binding on the respective Eligible Purchaser or Eligible Purchasers) given to the First-Lien Agent by an Eligible Purchaser. Neither the First-Lien Agent nor any other First-Lien Secured Party shall have any disclosure obligation to any Eligible Purchaser, the Second-Lien Agent or any other Second-Lien Secured Party in connection with any exercise of such purchase option.

(c) The right to purchase the First-Lien Obligations as described in this Section 5.7 may only be exercised (by giving the irrevocable written notice described in preceding clause (b) stating a purchase date that occurs at least five, but no more than ten, Business Days after such notice is delivered to First-Lien Agent) during the period that (1) begins on the date occurring three Business Days after the first to occur of (x) the date of the acceleration of the final maturity of the Loans under the First-Lien Credit Agreement, (y) the occurrence of the final maturity of the Loans under the First-Lien Credit Agreement or (z) the occurrence of an Insolvency or Liquidation Proceeding with respect to the Borrower which constitutes an event of default under the First-Lien Credit Agreement (in each case, so long as the acceleration, failure to pay amounts due at final maturity or such Insolvency or Liquidation Proceeding constituting an event of default has not been rescinded or cured within such three Business Day Period, and so long as any unpaid amounts constituting First-Lien Obligations remain owing), and (2) ends on the 10th Business Day after the start of the period described in clause (1) above.

(d) The obligations of the First-Lien Secured Parties to sell their respective First-Lien Obligations under this Section 5.7 are several and not joint and several. To the extent any First-Lien Secured Party (a “Defaulting Secured Party”) breaches its obligation to sell its First-Lien Obligations under this Section 5.7, nothing in this Section 5.7 shall be deemed to require the First-Lien Agent or any other First-Lien Secured Party to purchase such Defaulting Secured Party’s First-Lien Obligations for resale to the holders of Second-Lien Obligations and in all cases, the First-Lien Agent and each First-Lien Secured Party complying with the terms of this Section 5.7 shall not be deemed to be in default of this Agreement or otherwise be deemed liable for any action or inaction of any Defaulting Secured Party; provided that nothing in this clause (d) shall require any Eligible Purchaser to purchase less than all of the First-Lien Obligations.

(e) Each Grantor irrevocably consents to any assignment effected to one or more Eligible Purchasers pursuant to this Section 5.7 (so long as they meet all eligibility standards contained in all relevant First-Lien Documents, other than obtaining the consent of any Grantor to an assignment to the extent required by such First-Lien Documents) for purposes of all First-Lien Documents and hereby agrees that no further consent from such Grantor shall be required.

(f) The purchase price and cash collateral described in Section 5.7(a) shall be remitted by wire transfer of immediately available funds to such bank account of the First-Lien Agent in New York, New York, as the First-Lien Agent may designate in writing to the Eligible Purchasers for such purpose. Interest shall be calculated to but excluding the Business Day on which such purchase and sale shall occur if the amounts so paid by the Eligible Purchasers to the bank account designated by the First-Lien Agent are received in such bank account prior to 1:00 p.m., New York City time and interest shall be calculated to and including such Business Day if the amounts so paid by the Eligible Purchasers to the bank account designated by the First-Lien Agent are received in such bank account later than 1:00 p.m., New York City time.

SECTION 6. Insolvency or Liquidation Proceedings.

6.1 Finance and Sale Issues. (a) If the Borrower or any other Grantor shall be subject to any Insolvency or Liquidation Proceeding and the First-Lien Agent (acting at the direction of the Required First-Lien Secured Parties) shall desire to permit the use of Cash Collateral on which the First-Lien Agent or any other creditor of the Borrower or any other Grantor has a Lien or to permit the Borrower or any other Grantor to obtain financing (including on a priming basis), whether from the First-Lien Secured Parties or any other third party under Section 362, 363 or 364 of the Bankruptcy Code or any other Bankruptcy Law (each, a “Post-Petition Financing”), then the Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, and each other Second-Lien Secured Party (by its acceptance of the benefits of the Second-Lien Loan Documents), agrees that it will not oppose or raise any objection to or contest (or join with or support any third party opposing, objecting to or contesting), such use of Cash Collateral or Post-Petition Financing (and shall be deemed to have waived any such objections) and will not request or accept adequate protection or any other relief in connection therewith (except as expressly agreed in writing by the First-Lien Agent or to the extent permitted by Section 6.3 hereof) so long as (i) (a) the Post-Petition Financing does not compel such Grantor to seek confirmation of a specific plan of reorganization for which all or substantially all of the material terms are set forth in the Post-Petition Financing documentation or a related document or (b) the Post-Petition Financing documentation or Cash Collateral order does not expressly require the liquidation of the Collateral prior to a default under the Post-Petition Financing documentation or Cash Collateral order, (ii) the Indebtedness under the Post-Petition Financing (other than such Indebtedness constituting First-Lien Obligations) is not secured by any Lien on any asset or property of any Grantor on a basis that is senior to the Liens securing the Second-Lien Obligations unless such Liens are senior to, or pari passu with the Liens securing the First-Lien Obligations, and (iii) the aggregate principal amount of the Post-Petition Financing, when added to the sum of (I) the Indebtedness for borrowed money constituting principal outstanding under the First-Lien Credit Agreement (except if part of the Post-Petition Financing and/or if representing interest and/or fees that have been capitalized) plus (II) the aggregate face amount of any letters of credit issued but not reimbursed under the First-Lien Credit Agreement, does not exceed the sum of (1) the Cap Amount then in effect plus (2) $30,000,000. To the extent the Liens securing the First-Lien Obligations are subordinated to or pari passu with any Liens securing such Post-Petition Financing, the Liens of the Second-Lien Secured Parties on the Collateral shall be deemed to be subordinated, without any further action on the part of any person or entity, to (i) the Liens securing such Post-Petition Financing (and all Obligations relating thereto), (ii) any “replacement Liens” granted to the First-Lien Secured Parties as adequate protection of their interests in the Collateral and (iii) any “carve-out” agreed

to by the First-Lien Agent or the Required First-Lien Secured Parties, and the Liens securing the Second-Lien Obligations shall have the same priority with respect to the Collateral relative to the Liens securing the First-Lien Obligations as if such Post-Petition Financing had not occurred. No Second Lien Secured Party shall provide any Post-Petition Financing (other than a Post-Petition Financing approved by the Required First-Lien Secured Parties as contemplated above) without the prior written consent of the First-Lien Agent, which consent may be granted or denied in its sole discretion.

(b) The Second-Lien Agent, on behalf of itself and the other Second-Lien Secured Parties, and each other Second-Lien Secured Party (by its acceptance of the benefits of the Second-Lien Loan Documents), agrees that it will raise no objection to, oppose or contest (or join with or support any third party opposing, objecting to or contesting), a sale or other disposition of any Collateral free and clear of its Liens or other claims under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if the First-Lien Secured Parties have consented to such sale or disposition of such assets.

6.2 Relief from the Automatic Stay. Until the Discharge of First-Lien Obligations has occurred, the Second-Lien Agent, on behalf of itself and the other Second-Lien Secured Parties, and each other Second-Lien Secured Party (by its acceptance of the benefits of the Second-Lien Loan Documents), agrees that none of them shall seek relief, pursuant to Section 362(d) of the Bankruptcy Code or otherwise, from the automatic stay of Section 362(a) of the Bankruptcy Code or from any other stay in any Insolvency or Liquidation Proceeding in respect of the Collateral, without the prior written consent of the First-Lien Agent, and none of them shall oppose a motion by the First-Lien Agent to lift any such stay.

6.3 Adequate Protection. The Second-Lien Agent, on behalf of itself and the other Second-Lien Secured Parties, and each other Second-Lien Secured Party (by its acceptance of the benefits of the Second-Lien Loan Documents), agrees that none of them shall (i) oppose, object to or contest (or join with or support any third party opposing, objecting to or contesting) (a) any request by the First-Lien Agent or the other First-Lien Secured Parties for adequate protection in any Insolvency or Liquidation Proceeding (or any granting of such request) or (b) any objection by the First-Lien Agent or the other First-Lien Secured Parties to any motion, relief, action or proceeding based on the First-Lien Agent or the other First-Lien Secured Parties claiming a lack of adequate protection or (ii) seek or accept any form of adequate protection under any of Sections 362, 363 and/or 364 of the Bankruptcy Code with respect to the Collateral except that, (A) if the First-Lien Agent or the First-Lien Secured Parties are granted adequate protection in the form of replacement Liens on the Grantors’ assets, the Second-Lien Secured Parties or the Second-Lien Agent on their behalf may seek or request adequate protection in the form of a replacement Lien on the same assets of the Grantors as awarded to the First-Lien Secured Parties, which Lien, however, will be subordinated to the Liens securing the First-Lien Obligations (including any replacement Liens granted in respect of the First-Lien Obligations), the Liens securing any Post-Petition Financing (and all Obligations relating thereto) and any “carve-out” agreed to by the First-Lien Agent or the Required First-Lien Secured Parties on the same basis as the other Liens securing the Second-Lien Obligations are so subordinated to the First-Lien Obligations under this Agreement, and (B) if the First-Lien Agent or the First-Lien Secured Parties are granted non-monetary adequate protection in the form of reports, notices, inspection rights, increased or additional insurance policies and similar forms of non-monetary

adequate protection, the Second-Lien Secured Parties or the Second-Lien Agent on their behalf shall be entitled to seek, and if granted receive, from the respective Grantor similar non-monetary adequate protection to the extent provided to the First-Lien Agent or the First-Lien Secured Parties. Notwithstanding anything to the contrary contained herein, the failure of the Second-Lien Secured Parties to obtain any adequate protection described in this Section 6.3 shall not impair or otherwise affect the agreements, undertakings and consents of the Second Lien Secured Parties pursuant to Section 6.1. Except as expressly set forth above, the Second-Lien Secured Parties may not seek or accept post-petition interest and/or adequate protection payments in any Insolvency or Liquidation Proceeding, and the First-Lien Secured Parties may oppose any payments proposed to be made by any Grantor to the Second-Lien Secured Parties. Furthermore, in the event that any Second-Lien Secured Party actually receives any post-petition interest and/or adequate protection payments in any Insolvency or Liquidation Proceeding, the same shall be segregated and held in trust and promptly paid over to the First-Lien Agent, for the benefit of the First-Lien Secured Parties, in the same form as received, with any necessary endorsements, and each Second-Lien Secured Party hereby authorizes the First-Lien Agent to make any such endorsements as agent for such Second-Lien Secured Party (which authorization, being coupled with an interest, is irrevocable) to be held and/or applied by First-Lien Agent in accordance with the terms of the First-Lien Documents until the Discharge of First-Lien Obligations before any of the same shall be made to one or more of the Second-Lien Secured Parties, and each Second-Lien Secured Party irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such payments to the First-Lien Agent.

6.4 No Waiver; Reorganization Securities. (a) Nothing contained herein shall prohibit or in any way limit the First-Lien Agent or any First-Lien Secured Party from objecting on any basis in any Insolvency or Liquidation Proceeding or otherwise to any action taken by the Second-Lien Agent or any other Second-Lien Secured Party, including the seeking by the Second-Lien Agent or any other Second-Lien Secured Party of adequate protection or the assertion by the Second-Lien Agent or any other Second-Lien Secured Parties of any of its rights and remedies under the Second-Lien Loan Documents or otherwise.

(b) If, in any Insolvency or Liquidation Proceeding, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed pursuant to a plan of reorganization or similar dispositive restructuring plan, both on account of First-Lien Obligations and on account of Second-Lien Obligations, then, to the extent the debt obligations distributed on account of the First-Lien Obligations and on account of the Second-Lien Obligations are secured by Liens upon the same property, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations.

6.5 Preference Issues. If any First-Lien Secured Party is required in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of the Borrower or any other Grantor any amount (a “Recovery”), then the First-Lien Obligations shall be reinstated to the extent of such Recovery and the First-Lien Secured Parties shall be entitled to a reinstatement of First-Lien Obligations with respect to all such recovered amounts. If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release,

discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement. Any amounts received by the Second-Lien Agent or any Second-Lien Secured Party on account of the Second-Lien Obligations after the termination of this Agreement shall, in the event of a reinstatement of this Agreement pursuant to this Section 6.5, be held in trust for and paid over to the First-Lien Agent for the benefit of the First-Lien Secured Parties, for application to the reinstated First-Lien Obligations. This Section 6.5 shall survive termination of this Agreement.

6.6 Post-Petition Interest.

(a) Neither the Second-Lien Agent nor any other Second-Lien Secured Party shall oppose or seek to challenge any claim by the First-Lien Agent or any other First-Lien Secured Party for allowance in any Insolvency or Liquidation Proceeding of First-Lien Obligations consisting of post-petition interest, fees or expenses. Regardless of whether any such claim for post-petition interest, fees or expenses is allowed or allowable, and without limiting the generality of the other provisions of this Agreement, this Agreement expressly is intended to include and does include the “rule of explicitness” in that this Agreement expressly entitles the First-Lien Secured Parties, and is intended to provide the First-Lien Secured Parties with the right, to receive payment from the Collateral of all post-petition interest, fees or expenses through distributions made pursuant to the provisions of this Agreement even though such interest, fees and expenses are not allowed or allowable against the bankruptcy estate of the Borrower or any other Grantor under Section 502(b)(2) or Section 506(b) of the Bankruptcy Code or under any other provision of the Bankruptcy Code or any other Bankruptcy Law.

(b) Without limiting the foregoing, it is the intention of the parties hereto that (and to the maximum extent permitted by law the parties hereto agree that) the First-Lien Obligations (and the security therefor) constitute a separate and distinct class (and separate and distinct claims and Liens) from the Second-Lien Obligations (and the security therefor).

6.7 Waivers. The Second-Lien Agent, for itself and on behalf of the other Second-Lien Secured Parties, waives any claim it may hereafter have against any First-Lien Secured Party arising out of the election by any First-Lien Secured Party of the application to the claims of any First-Lien Secured Party of Section 1111(b)(2) of the Bankruptcy Code, and/or out of any Cash Collateral or Post-Petition Financing arrangement or out of any grant of a security interest in connection with the Collateral in any Insolvency or Liquidation Proceeding. The Second-Lien Agent and the Second-Lien Secured Parties agree not to initiate or prosecute or join with any other Person to initiate or prosecute any claim, action or other proceeding (i) challenging the enforceability of the First-Lien Secured Parties’ claims as fully secured claims with respect to all or part of the First-Lien Obligations or for allowance of any First-Lien Obligations (including those consisting of post-petition interest, fees or expenses) or opposing any action by the First-Lien Agent or the First-Lien Secured Parties to enforce their rights or remedies arising under the First-Lien Documents in a manner which is not prohibited by the terms of this Agreement, (ii) challenging the enforceability, validity, priority or perfected status of any Liens on assets securing the First-Lien Obligations under the First-Lien Documents or (iii) asserting any claims which the Grantors may hold with respect to the First-Lien Secured Parties. The First-Lien Secured Parties agree not to initiate or prosecute or join with any person to initiate or prosecute any claim, action or other proceeding challenging the enforceability, validity,

priority or perfected status of any Liens on assets securing the Second-Lien Obligations under the Second-Lien Loan Documents.

6.8 Limitations. So long as the Discharge of First-Lien Obligations has not occurred, without the express written consent of the First-Lien Agent, none of the Second-Lien Secured Parties shall (or shall join with or support any third party making, opposing, objecting or contesting, as the case may be), in any Insolvency or Liquidation Proceeding involving any Grantor, (i) oppose, object to or contest the determination of the extent of any Liens held by any of the First-Lien Secured Parties or the value of any claims of First-Lien Secured Parties under Section 506(a) of the Bankruptcy Code or (ii) oppose, object to or contest the payment to the First-Lien Secured Parties of interest, fees or expenses under Section 506(b) of the Bankruptcy Code.

SECTION 7. Reliance; Waivers; Etc.

7.1 Reliance. Other than any reliance on the terms of this Agreement, the First-Lien Agent, on behalf of itself and the First-Lien Secured Parties under the First-Lien Documents, acknowledges that it and the other First-Lien Secured Parties have, independently and without reliance on the Second-Lien Agent or any other Second-Lien Secured Parties, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into such First-Lien Documents and be bound by the terms of this Agreement and they will continue to make their own credit decision in taking or not taking any action under any First-Lien Document or this Agreement. The Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, acknowledges that it and the other Second-Lien Secured Parties have, independently and without reliance on the First-Lien Agent or any other First-Lien Secured Party, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into each of the Second-Lien Loan Documents and be bound by the terms of this Agreement and they will continue to make their own credit decision in taking or not taking any action under the Second-Lien Loan Documents or this Agreement.

7.2 No Warranties or Liability. The First-Lien Agent, on behalf of itself and the First-Lien Secured Parties under the First-Lien Documents, acknowledges and agrees that each of the Second-Lien Agent and the other Second-Lien Secured Parties have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectibility or enforceability of any of the Second-Lien Loan Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon. The Second-Lien Secured Parties will be entitled to manage and supervise their respective loans and extensions of credit under the Second-Lien Loan Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate. The Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, acknowledges and agrees that each of the First-Lien Agent and the First-Lien Secured Parties have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectibility or enforceability of any of the First-Lien Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon. The First-Lien Secured Parties will be entitled to manage and supervise their respective loans and extensions of credit under their respective First-Lien Documents in accordance with law and as they may otherwise, in their sole discretion,

deem appropriate. The Second-Lien Agent and the other Second-Lien Secured Parties shall have no duty to the First-Lien Agent or any of the other First-Lien Secured Parties, and the First-Lien Agent and the other First-Lien Secured Parties shall have no duty to the Second-Lien Agent or any of the Second-Lien Secured Parties, to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of an event of default or default under any agreements with the Borrower or any other Grantor (including under the First-Lien Documents and the Second-Lien Loan Documents), regardless of any knowledge thereof which they may have or be charged with.

7.3 No Waiver of Lien Priorities.

(a) No right of the First-Lien Secured Parties, the First-Lien Agent or any of them to enforce any provision of this Agreement or any First-Lien Document shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any of the Borrower or any other Grantor or by any act or failure to act by any First-Lien Secured Party or the First-Lien Agent, or by any noncompliance by any Person with the terms, provisions and covenants of this Agreement, any of the First-Lien Documents or any of the Second-Lien Loan Documents, regardless of any knowledge thereof which the First-Lien Agent or the First-Lien Secured Parties, or any of them, may have or be otherwise charged with.

(b) Without in any way limiting the generality of the foregoing paragraph (but subject to the rights of the Borrower and the other Grantors under the First-Lien Documents and except as otherwise expressly provided in this Agreement), the First-Lien Secured Parties, the First-Lien Agent and any of them may, at any time and from time to time in accordance with the First-Lien Documents and/or applicable law, without the consent of, or notice to, the Second-Lien Agent or any other Second-Lien Secured Party, without incurring any liabilities to the Second-Lien Agent or any other Second-Lien Secured Party and without impairing or releasing the Lien priorities and other benefits provided in this Agreement (even if any right of subrogation or other right or remedy of the Second-Lien Agent or any Second-Lien Secured Parties is affected, impaired or extinguished thereby) do any one or more of the following:

(i) make loans and advances to any Grantor or issue, guaranty or obtain letters of credit for account of any Grantor or otherwise extend credit to any Grantor, in any amount and on any terms, whether pursuant to a commitment or as a discretionary advance and whether or not any default or event of default or failure of condition is then continuing;

(ii) change the manner, place or terms of payment or change or extend the time of payment of, or amend, renew, exchange, increase or alter, the terms of any of the First-Lien Obligations or any Lien on any First-Lien Collateral or guaranty thereof or any liability of the Borrower or any other Grantor, or any liability incurred directly or indirectly in respect thereof (including any increase in or extension of the First-Lien Obligations, without any restriction as to the amount, tenor or terms of any such increase or extension) or otherwise amend, renew, exchange, extend, modify or supplement in any manner any Liens held by the First-Lien Agent or any of the First-Lien Secured Parties, the First-Lien Obligations or any of the First-Lien Documents;

(iii) sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any manner and in any order any part of the First-Lien Collateral or any liability of the Borrower or any other Grantor to the First-Lien Secured Parties or the First-Lien Agent, or any liability incurred directly or indirectly in respect thereof;

(iv) settle or compromise any First-Lien Obligation or any other liability of the Borrower or any other Grantor or any security therefor or any liability incurred directly or indirectly in respect thereof and apply any sums by whomsoever paid and however realized to any liability (including the First-Lien Obligations) in any manner or order;

(v) exercise or delay in or refrain from exercising any right or remedy against the Borrower or any other Grantor or any other Person or with respect to any security, elect any remedy and otherwise deal freely with the Borrower, any other Grantor or any First-Lien Collateral and any security and any guarantor or any liability of the Borrower or any other Grantor to the First-Lien Secured Parties or any liability incurred directly or indirectly in respect thereof; and

(vi) release or discharge any First-Lien Obligation or any guaranty thereof or any agreement or obligation of the Borrower, any other Grantor or any other Person or entity with respect thereto.

(c) The Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, and each other Second-Lien Secured Party (by its acceptance of the benefits of the Second-Lien Loan Documents), agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Collateral or any other similar rights a junior secured creditor may have under applicable law.

7.4 Waiver of Liability.

(a) The Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, also agrees that the First-Lien Secured Parties and the First-Lien Agent shall have no liability to the Second-Lien Agent or any other Second-Lien Secured Parties, and the Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, hereby waives any claim against any First-Lien Secured Party or the First-Lien Agent, arising out of any and all actions which the First-Lien Secured Parties or the First-Lien Agent may take or permit or omit to take with respect to: (i) the First-Lien Documents (including, without limitation, any failure to perfect or obtain perfected security interests in the First-Lien Collateral), (ii) the collection of the First-Lien Obligations or (iii) the foreclosure upon, or sale, liquidation or other disposition of, any First-Lien Collateral. The Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, agrees that the First-Lien Secured Parties and the First-Lien Agent have no duty, express or implied, fiduciary or otherwise, to them in respect of the maintenance or preservation of the First-Lien Collateral, the First-Lien Obligations or otherwise. Neither the First-Lien

Agent nor any other First-Lien Secured Party nor any of their respective directors, officers, employees or agents will be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so, or will be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Borrower or any other Grantor or upon the request of the Second-Lien Agent, any other holder of Second-Lien Obligations or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. Without limiting the foregoing, each Second-Lien Secured Party by accepting the benefits of the Second-Lien Collateral Documents agrees that neither the First-Lien Agent nor any other First-Lien Secured Party (in directing the First-Lien Agent to take any action with respect to the Collateral) shall have any duty or obligation to realize first upon any type of Collateral or to sell, dispose of or otherwise liquidate all or any portion of the Collateral in any manner, including as a result of the application of the principles of marshaling or otherwise, that would maximize the return to any class of Secured Parties holding Obligations of any type (whether First-Lien Obligations or Second-Lien Obligations), notwithstanding that the order and timing of any such realization, sale, disposition or liquidation may affect the amount of proceeds actually received by such class of Secured Parties from such realization, sale, disposition or liquidation.

(b) With respect to its share of the Obligations, GE Capital or Jefferies Finance, as the case may be ( each a “Bank” and together, the “Banks”) shall have and may exercise the same rights and powers hereunder as, and shall be subject to the same obligations and liabilities as and to the extent set forth herein for, any other Secured Party, all as if the Banks were not the First-Lien Agent or the Second-Lien Agent, as the case may be. The term “Secured Parties” or any similar term shall, unless the context clearly otherwise indicates, include each Bank, in its individual capacity as a Secured Party. The Banks and their respective affiliates may lend money to, and generally engage in any kind of business with, the Grantors or any of their respective Affiliates as if the Banks were not acting as the First-Lien Agent or Second-Lien Agent, as the case may be, and without any duty to account therefor to any other Secured Party.

7.5 Obligations Unconditional. All rights, interests, agreements and obligations of the First-Lien Agent and the other First-Lien Secured Parties and the Second-Lien Agent and the other Second-Lien Secured Parties, respectively, hereunder (including the Lien priorities established hereby) shall remain in full force and effect irrespective of:

(a) any lack of validity or enforceability of any First-Lien Document or any Second-Lien Loan Document;

(b) any change in the time, manner or place of payment of, or in any other terms of, all or any of the First-Lien Obligations or Second-Lien Obligations, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of any First-Lien Document or any Second-Lien Loan Document;

(c) any exchange of any security interest in any Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the First-Lien Obligations or Second-Lien Obligations or any guarantee thereof;

(d) the commencement of any Insolvency or Liquidation Proceeding in respect of the Borrower or any other Grantor; or

(e) any other circumstances which otherwise might constitute a defense available to, or a discharge of, the Borrower or any other Grantor in respect of the First-Lien Obligations, or of the Second-Lien Agent or any Second-Lien Secured Party in respect of this Agreement.

SECTION 8. Miscellaneous.

8.1 Conflicts. In the event of any conflict between the provisions of this Agreement and the provisions of the First-Lien Documents or the Second-Lien Loan Documents, the provisions of this Agreement shall govern and control.

8.2 Effectiveness; Continuing Nature of this Agreement; Severability. This Agreement shall become effective when executed and delivered by the parties hereto. This is a continuing agreement of lien subordination and the First-Lien Secured Parties may continue, at any time and without notice to the Second-Lien Agent or any other Second-Lien Secured Party, to extend credit and other financial accommodations and lend monies to or for the benefit of the Borrower or any other Grantor constituting First-Lien Obligations in reliance hereon. The Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding. Without limiting the generality of the foregoing, this Agreement is intended to constitute and shall be deemed to constitute a “subordination agreement” within the meaning of Section 510(a) of the Bankruptcy Code and is intended to be and shall be interpreted to be enforceable to the maximum extent permitted pursuant to applicable nonbankruptcy law. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. All references to the Borrower or any other Grantor shall include the Borrower or such Grantor as debtor and debtor-in-possession and any receiver or trustee for the Borrower or any other Grantor (as the case may be) in any Insolvency or Liquidation Proceeding. This Agreement shall terminate and be of no further force and effect, (i) with respect to the Second-Lien Agent, the other Second-Lien Secured Parties and the Second-Lien Obligations, upon the later of (1) the date upon which the obligations under the Second-Lien Credit Agreement terminate if there are no other Second-Lien Obligations outstanding on such date and (2) if there are other Second-Lien Obligations outstanding on such date, the date upon which such Second-Lien Obligations terminate and (ii) with respect to the First-Lien Agent, the other First-Lien Secured Parties and the First-Lien Obligations, the date of the Discharge of First-Lien Obligations, subject to the rights of the First-Lien Secured Parties under Section 6.5 hereof.

8.3 Amendments; Waivers. No amendment, modification or waiver of any of the provisions of this Agreement by the Second-Lien Agent or the First-Lien Agent shall be made unless the same shall be in writing signed on behalf of each party hereto; provided that (x) the First-Lien Agent (at the direction of the Required First-Lien Secured Parties) may, without

the written consent of any other Secured Party, agree to modifications of this Agreement for the purpose of securing additional extensions of credit (including pursuant to the First-Lien Credit Agreement or any Refinancing or extension thereof) and adding new creditors as “First-Lien Secured Parties” and “Secured Parties” hereunder, so long as such extensions (and resulting additions) do not otherwise give rise to a violation of the express terms of the First-Lien Credit Agreement or the Second-Lien Credit Agreement and (y) additional Grantors may be added as parties hereto in accordance with the provisions of Section 8.18 of this Agreement. Each waiver of the terms of this Agreement, if any, shall be a waiver only with respect to the specific instance involved and shall not impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time. Notwithstanding the foregoing, no Grantor shall have any right to consent to or approve any amendment, modification or waiver of any provision of this Agreement except to the extent its rights, interests, liabilities or privileges are directly affected.

8.4 Information Concerning Financial Condition of Holdings and its Subsidiaries. The First-Lien Agent and the First-Lien Secured Parties, on the one hand, and the Second-Lien Agent and the other Second-Lien Secured Parties, on the other hand, shall each be responsible for keeping themselves informed of (a) the financial condition of Holdings and its Subsidiaries and all endorsers and/or guarantors of the First-Lien Obligations or the Second-Lien Obligations and (b) all other circumstances bearing upon the risk of nonpayment of the First-Lien Obligations or the Second-Lien Obligations. The First-Lien Agent and the other First-Lien Secured Parties shall have no duty to advise the Second-Lien Agent or any other Second-Lien Secured Party of information known to it or them regarding such condition or any such circumstances or otherwise. In the event the First-Lien Agent or any of the other First-Lien Secured Parties, in its or their sole discretion, undertakes at any time or from time to time to provide any such information to the Second-Lien Agent or any other Second-Lien Secured Party, it or they shall be under no obligation (w) to make, and the First-Lien Agent and the other First-Lien Secured Parties shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of any such information so provided, (x) to provide any additional information or to provide any such information on any subsequent occasion, (y) to undertake any investigation or (z) to disclose any information which, pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.

8.5 Subrogation. Subject to the Discharge of First-Lien Obligations, with respect to the value of any payments or distributions in cash, property or other assets that the Second-Lien Secured Parties or Second-Lien Agent pay over to the First-Lien Agent or any of the other First-Lien Secured Parties under the terms of this Agreement, the Second-Lien Secured Parties and the Second-Lien Agent shall be subrogated to the rights of the First-Lien Agent and such other First-Lien Secured Parties; provided that, the Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, hereby agrees not to assert or enforce all such rights of subrogation it may acquire as a result of any payment hereunder until the Discharge of First-Lien Obligations has occurred. Each of the Borrower and each other Grantor acknowledges and agrees that, the value of any payments or distributions in cash, property or other assets received by the Second-Lien Agent or the other Second-Lien Secured Parties and paid over to the First-Lien Agent or the other First-Lien Secured Parties pursuant to, and applied in accordance with,

this Agreement, shall not relieve or reduce any of the Obligations owed by the Borrower or any other Grantor under the Second-Lien Loan Documents.

8.6 Application of Payments. All payments received by the First-Lien Agent or the other First-Lien Secured Parties may be applied, reversed and reapplied, in whole or in part, to such part of the First-Lien Obligations as the First-Lien Secured Parties, in their sole discretion, deem appropriate in accordance with the First-Lien Documents. The Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, assents to any extension or postponement of the time of payment of the First-Lien Obligations or any part thereof and to any other indulgence with respect thereto, to any substitution, exchange or release of any security which may at any time secure any part of the First-Lien Obligations and to the addition or release of any other Person primarily or secondarily liable therefor in accordance with the First-Lien Documents.

8.7 SUBMISSION TO JURISDICTION; WAIVERS. (a) THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

(b) THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH EACH MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN SECTION 8.7(a) HEREOF. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS

REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE FIRST-LIEN DOCUMENTS AND THE SECOND-LIEN LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

8.8 Notices. All notices to the Second-Lien Secured Parties and the First-Lien Secured Parties permitted or required under this Agreement may be sent to the Second-Lien Agent and the First-Lien Agent, respectively. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, electronically mailed or sent by courier service or U.S. mail and shall be deemed to have been given when delivered in person or by courier service, upon receipt of electronic mail or four Business Days after deposit in the U.S. mail (registered or certified, with postage prepaid and properly addressed). For the purposes hereof, (i) the addresses of each Agent shall be as set forth opposite such Agent’s name on the signature pages hereto and (ii) the addresses of each Grantor shall be as set forth in the respective Collateral Documents, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.

8.9 Further Assurances. Each of the First-Lien Agent, on behalf of itself and the First-Lien Secured Parties under the First-Lien Documents, the Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, the Borrower and each other Grantor, agrees that each of them shall take such further action and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as the First-Lien Agent or the Second-Lien Agent may reasonably request to effectuate the terms of and the lien priorities contemplated by this Agreement. Each Second-Lien Secured Party, by its acceptance of the benefits of the Second-Lien Loan Documents, agrees to be bound by the agreements herein made by it and the Second-Lien Agent, on its behalf.

8.10 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES.

8.11 Binding on Successors and Assigns. This Agreement shall be binding upon First-Lien Agent, the other First-Lien Secured Parties, the Second-Lien Agent, the other Second-Lien Secured Parties and their respective successors and assigns.

8.12 Specific Performance. Each of the First-Lien Agent and the Second-Lien Agent may demand specific performance of this Agreement. Each of the First-Lien Agent, on behalf of itself and the First-Lien Secured Parties under the First-Lien Documents, and the Second-Lien Agent, on behalf of itself and the Second-Lien Secured Parties, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of specific performance in any action which may be brought by the First-Lien Agent or the Second-Lien Agent, as the case may be.

8.13 Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.

8.14 Counterparts. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement or any document or instrument delivered in connection herewith by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement or such other document or instrument, as applicable.

8.15 Authorization. By its signature, each Person executing this Agreement on behalf of a party hereto represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement. Each Second-Lien Secured Party, by its acceptance of the benefits of the Second-Lien Loan Documents, agrees to be bound by the agreements made herein.

8.16 No Third Party Beneficiaries; Effect of Agreement. This Agreement and the rights and benefits hereof shall inure to the benefit of each of the parties hereto and its respective successors and assigns and shall inure to the benefit of each of the First-Lien Secured Parties and the Second-Lien Secured Parties. No other Person shall have or be entitled to assert rights or benefits hereunder. Nothing in this Agreement shall impair, as between each of the Grantors and the First-Lien Agent and the First-Lien Secured Parties, on the one hand, and each of the Grantors and the Second-Lien Collateral and the Second-Lien Secured Parties, on the other hand, the obligations of each Grantor to pay principal, interest, fees and other amounts as provided in the First-Lien Documents and the Second-Lien Loan Documents, respectively.

8.17 Provisions Solely to Define Relative Rights. The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the First-Lien Secured Parties on the one hand and the Second-Lien Secured Parties on the other hand. None of the Borrower, any other Grantor or any other creditor thereof shall have any rights hereunder. Nothing in this Agreement is intended to or shall impair the obligations of the Borrower or any other Grantor, which are absolute and unconditional, to pay the First-Lien Obligations and the Second-Lien Obligations as and when the same shall become due and payable in accordance with the terms of the First-Lien Documents and the Second-Lien Loan Documents, respectively.

8.18 Grantors; Additional Grantors. It is understood and agreed that the Borrower and each other Grantor on the date of this Agreement shall constitute the original Grantors party hereto. The original Grantors hereby covenant and agree to cause each Subsidiary of the Borrower which becomes a Subsidiary Guarantor after the date hereof to contemporaneously become a party hereto (as a Grantor) by executing and delivering a counterpart hereof to the First-Lien Agent or by executing and delivering an assumption agreement in form and substance reasonably satisfactory to the First-Lien Agent. The parties hereto further agree that, notwithstanding any failure to take the actions required by the immediately preceding sentence, each Person which becomes a Subsidiary Guarantor at any time (and any security granted by any such Person) shall be subject to the provisions hereof as fully as

if same constituted a Grantor party hereto and had complied with the requirements of the immediately preceding sentence.

* * *

GEO HOLDINGS CORP.
as Grantor

	By:	/s/ Charles Lowrey
	Name:	Charles Lowrey
	Title:	Vice President, and Chief Financial Officer


GUNDLE SLT/ENVIRONMENTAL, INC.
as Grantor

	By:	/s/ Charles Lowrey
	Name:	Charles Lowrey
	Title:	Vice President, and Chief Financial Officer

GSE LINING TECHNOLOGY, LLC
as a Grantor

	By:	/s/ Charles Lowrey
	Name:	Charles Lowrey
	Title:	Vice President, and Chief Financial Officer

[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]

IN WITNESS WHEREOF, the parties hereto have executed this Intercreditor Agreement as of the date first written above.

Notice Address:	FIRST-LIEN AGENT

General Electric Capital Corporation	GENERAL ELECTRIC CAPITAL
500 West Monroe Street	CORPORATION, in its capacity as
Chicago, Illinois 60661	First-Lien Agent
Attn: GSE Account Officer
Telecopier No.: (312) 441-7211	By:	/s/ Richard B. Davidson
		Name:		Richard B. Davidson
With a copy to:		Title:		Duly Authorized Signatory

General Electric Capital Corporation
401 Merritt 7
Norwalk, Connecticut 06851
Attn: Barbara Gould
Facsimile: (203) 956-4216

and

General Electric Capital Corporation
500 West Monroe Street
Chicago, Illinois 60661
Attn: Corporate Counsel-Global Sponsor Finance
Telecopier No.: (312) 441-6876

	SECOND-LIEN AGENT

Notice Address:	JEFFERIES FINANCE LLC, in its capacity
	as Second-Lien Agent
Jefferies Finance LLC
520 Madison Avenue
New York, New York 10022	By:		/s/ E. Joseph Hess
Attn: Account Manager - Gundle/STL Environmental	Name:		E. Joseph Hess
Facsimile: 212-284-3444	Title:		Managing Director

Signature Page to Inter creditor Agreement

EX-10.11 12 a2204569zex-10_11.htm EX-10.11

Exhibit 10.11

GEO HOLDINGS CORP.

2004 STOCK OPTION PLAN

ARTICLE I

Purpose of Plan

The 2004 Stock Option Plan (the “Plan”) of GEO Holdings Corp., adopted by the Board of Directors of the Company (defined below) and the stockholders of the Company on May 18, 2004 (the “Approval Date”), for executive and other key employees and directors of the Company, is intended to advance the best interests of the Company and its Subsidiaries by providing those persons who have a substantial responsibility for its management and growth with additional incentives by allowing them to acquire an ownership interest in the Company and thereby encouraging them to contribute to the success of the Company and to remain in its employ. The availability and offering of stock options under the Plan also increases the Company’s ability to attract and retain individuals of exceptional managerial talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depends.

All options granted under the Plan are intended to qualify for an exemption (the “Exemption”) from the registration requirements under the Securities Act of 1933, as amended (the “Act”), pursuant to Rule 701 of the Act. In the event that any provision of the Plan would cause any option granted under the Plan to not qualify for the Exemptions, the Plan shall be deemed automatically amended to the extent necessary to cause all Options (as defined in Article IV below) granted under the Plan to qualify for the Exemptions. This Plan shall terminate on the tenth anniversary of the Approval Date.

ARTICLE II

Definitions

For purposes of the Plan, except where the context clearly indicates otherwise, the following terms shall have the meanings set forth below:

“Affiliate” shall mean, as to any specified Person, any other Person which, directly or indirectly or indirectly, controls, is controlled by, employed by or is under common control with, any of the foregoing. For the purposes of this definition, “control” means the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Board” shall mean the Board of Directors of the Company.

“Cause” shall mean (i) a Participant’s theft or embezzlement, or attempted theft or embezzlement, of money or property of the Company, a Participant’s perpetration or attempted perpetration of fraud, or a Participant’s participation in a fraud or attempted fraud, on the Company or a Participant’s unauthorized appropriation of, or a Participant’s attempt to misappropriate, any tangible or intangible assets or property of the Company, (ii) any act or acts

of disloyalty, misconduct or moral turpitude by a Participant injurious to the interest, property, operations, business or reputation of the Company or a Participant’s conviction of a crime the commission of which results in injury to the Company or (iii) a Participant’s failure or inability (other than by reason of Disability) to carry out effectively his duties and obligations to the Company or to participate effectively and actively in the management of the Company, as determined in the reasonable judgment of the Board; provided, that with respect to any Participant, the Committee may, in its discretion, apply a definition of “Cause” that is the same as in such Participant’s employment agreement with the Company or its Subsidiaries, if any.

“CHS” shall mean Code Hennessy & Simmons IV LP, a Delaware limited partnership.

“Code” shall mean the Internal Revenue Code of 1986, as amended, and any successor statute.

“Committee” shall mean the Compensation Committee, or such other committee of the Board which may be designated by the Board to administer the Plan. The Committee shall be composed of two or more directors as appointed from time to time to serve by the Board.

“Common Stock” shall mean the Company’s Common Stock, par value $.01 per share, or, in the event that the outstanding Common Stock is hereafter changed into or exchanged for different stock or securities of the Company, such other stock or securities.

“Company” shall mean GEO Holdings Corp., a Delaware corporation, and (except to the extent the context requires otherwise) any subsidiary corporation of GEO Holdings Corp. as such term is defined in Section 425(f) of the Code.

“Date of Termination” shall mean, with respect to any Participant, (i) if such Participant’s employment is terminated by the Company, the effective date of termination as specified in the written notice from the Company to such Participant terminating such Participant’s employment, (ii) if such Participant terminates his or her employment, the date the Company receives notice from such Participant terminating his or her employment or (iii) if such Participant’s employment is terminated other than pursuant to (i) or (ii), then the date determined in good faith by the Board.

“Disability” shall mean the inability, due to illness, accident, injury, physical or mental incapacity or other disability, of any Participant to carry out effectively his duties and obligations to the Company or to participate effectively and actively in the management of the Company for a period of at least 90 consecutive days or for shorter periods aggregating at least 120 days (whether or not consecutive) during any twelve-month period, as determined in the reasonable judgment of the Board; provided, that with respect to any Participant, the Committee may, in its discretion, apply a definition of “Disability” that is the same as in such Participant’s employment agreement with the Company or its Subsidiaries, if any.

“Executive Securities Agreements” shall mean those certain Executive Securities Agreements, dated as of May 18, 2004, between the Company and each of Samir T. Badawi, Ernest C. English, Gerald E. Hersh, James Steinke, Paul A. Firrell and Mohamed Ayoub.

“Fair Market Value” of each Option Share shall mean the average of the closing prices of the sales of the Company’s Common Stock on all securities exchanges on which the Company Common Stock may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day the Company Common Stock is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day the Company Common Stock is not quoted in the NASDAQ System, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which the Fair Market Value is being determined and the 20 consecutive business days prior to such day. If at any time the Company Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the Fair Market Value shall be determined in good faith by the Board.

“Family Group” shall mean a Participant’s spouse and descendants (whether natural or adopted), any trust, family limited partnership or other entity solely for the benefit of such Participant and/or such Participant’s spouse and/or descendants.

“Incentive Stock Option” shall have the meaning set forth in Section 5.2 below.

“Nonqualified Stock Option” shall have the meaning set forth in Section 5.2 below.

“Options” shall have the meaning set forth in Article IV.

“Option Agreement” shall have the meaning set forth in Section 6.3 below and shall include the Executive Securities Agreements.

“Participant” shall mean any executive or other key employee or director of the Company who has been selected to participate in the Plan by the Committee or the Board.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust (including any beneficiary thereof), a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

the Company possessing the voting power (under ordinary circumstances) to elect a majority of the Board, and (ii) any sale or transfer of all or substantially all of the assets of the Company and its subsidiaries in any transaction or series of transactions (other than sales in the ordinary course of business) to any Person or group of Persons (as the term “group” is used under the Act), other than CHS or its Affiliates.

ARTICLE III

Administration

The Plan shall be administered by the Committee; provided that if for any reason the Committee shall not have been appointed by the Board, all authority and duties of the Committee under the Plan shall be vested in and exercised by the Board. Subject to the limitations of the Plan, the Committee shall have the sole and complete authority to: (i) select Participants, (ii) grant Options (as defined in Article IV below) to Participants in such forms and amounts as it shall determine, (iii) impose such limitations, restrictions and conditions upon such Options as it shall deem appropriate, (iv) interpret the Plan and adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan, (v) correct any defect or omission or reconcile any inconsistency in the Plan or in any Option granted hereunder and (vi) make all other determinations and take all other actions necessary or advisable for the implementation and administration of the Plan. The Committee’s determinations on matters within its authority shall be conclusive and binding upon the Participants, the Company and all other Persons. All expenses associated with the administration of the Plan shall be borne by the Company. The Committee may, as approved by the Board and to the extent permissible by law, delegate any of its authority hereunder to such persons as it deems appropriate.

ARTICLE IV

Limitation on Aggregate Shares

The number of shares of Common Stock with respect to which options may be granted under the Plan (the “Options”) and which may be issued upon the exercise thereof shall not exceed, in the aggregate, 628,750 shares, any and all of which may be issued upon the exercise of Nonqualified Stock Options, Incentive Stock Options and/or such other awards as are permitted under the Plan; provided that the type and the aggregate number of shares which may be subject to Options shall be subject to adjustment in accordance with the provisions of Section 6.8 below, and further provided that to the extent any Options expire unexercised or are canceled, terminated or forfeited in any manner without the issuance of Common Stock thereunder, or if any Options are exercised and the shares of Common Stock issued thereunder are repurchased by the Company, such shares shall again be available under the Plan. The 628,750 shares of Common Stock available under the Plan may be either authorized and unissued shares, treasury shares or a combination thereof, as the Committee shall determine.

ARTICLE V

Awards

5.1 Options. The Committee may grant Options to Participants in accordance with this Article V.

5.2 Form of Option. Options granted under this Plan shall be presumed to be nonqualified stock options (the “Nonqualified Stock Options”) and are not intended to be incentive stock options within the meaning of Section 422 of the Code or any successor provision (“Incentive Stock Options”) unless clearly indicated by the Committee in the respective Option Agreement (as defined below). The Committee may grant Incentive Stock Options only to eligible employees of the Company or its subsidiaries (as defined in Section 424(f) of the Code). It is the Company’s intent that Nonqualified Stock Options granted under the Plan not be classified as Incentive Stock Options, that Incentive Stock Options be consistent with and contain or be deemed to contain all provisions required under Section 422 of the Code and any successor thereto, and that any ambiguities in construction be interpreted in order to effectuate such intent. If an Incentive Stock Option granted under the Plan does not qualify as such for any reason, then to the extent of such nonqualification, the stock option represented thereby shall be regarded as a Nonqualified Stock Option duly granted under the Plan, provided that such stock option otherwise meets the Plan’s requirements for Nonqualified Stock Options.

5.3 Exercise Price. The option exercise price per share of Common Stock shall be fixed by the Committee on the date of grant (except that with respect to Incentive Stock Options the exercise price shall be 100% of the Fair Market Value on the date of the grant and provided further that the exercise price shall be 110% of the Fair Market Value in the case of any person who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company determined with regard to the attribution rules of Section 424(d) of the Code).

5.4 Limitations on Grants. If required by the Code, the aggregate Fair Market Value (determined as of the grant date) of shares for which an Incentive Stock Option is exercisable for the first time during any calendar year under all equity incentive plans of the Company and its Subsidiaries (as defined in Section 422 of the Code or any successor thereto) may not exceed $100,000.

5.5 Exercisability. Options shall be exercisable at such time or times as the Committee shall determine at or subsequent to grant.

5.6 Payment of Exercise Price. Options shall be exercised in whole or in part by written notice to the Company (to the attention of the Company’s Secretary) accompanied by payment in full of the option exercise price. Payment of the option exercise price shall be made in cash (including check, bank draft or money order) or, in the discretion of the Committee, by delivery of a promissory note (if in accordance with policies approved by the Board).

5.7 Terms of Options. The term during which each Option may be exercised shall be determined by the Committee, but, except as otherwise provided herein, in no event shall an option be exercisable in whole or in part, in the case of a Nonqualified Stock Option or an Incentive Stock Option (other than as described below), more than ten years from the date it is granted or, in the

case of an Incentive Stock Option granted to an employee who at the time of the grant owns more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries, if required by the Code, more than five years from the date it is granted.

ARTICLE VI

General Provisions

6.1 Conditions and Limitations on Exercise. Options may be made exercisable in one or more installments, upon the happening of certain events, upon the passage of a specified period of time, upon the fulfillment of certain conditions or upon the achievement by the Company of certain performance goals, as the Committee shall decide in each case when the Options are granted.

6.2 Sale of the Company. In the event of a Sale of the Company, the Committee or the Board may provide, in its discretion, that the Options shall become immediately exercisable by any Participants who are employed by the Company at the time of the Sale of the Company and/or that all Options shall terminate if not exercised as of the date of the Sale of the Company or other prescribed period of time.

6.3 Written Agreement. Each Option granted hereunder to a Participant shall be embodied in a written agreement (an “Option Agreement”) which shall be signed by the Participant and by the Chief Executive Officer or the President of the Company for and in the name and on behalf of the Company and shall be subject to the terms and conditions of the Plan prescribed in the Agreement (including, but not limited to, (i) the right of the Company and such other Persons as the Committee shall designate (“Designees”) to repurchase from each Participant, and such Participant’s transferees, all shares of Common Stock issued or issuable to such Participant on the exercise of an Option in the event of such Participant’s termination of employment, (ii) rights of first refusal granted to the Company and Designees, (iii) holdback and other registration right restrictions in the event of a public registration of any equity securities of the Company and (iv) any other terms and conditions which the Committee shall deem necessary and desirable).

6.4 Listing, Registration and Compliance with Laws and Regulations. Options shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares subject to the Options upon any securities exchange or under any state or federal securities or other law or regulation, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition to or in connection with the granting of the Options or the issuance or purchase of shares thereunder, no Options may be granted or exercised, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. The holders of such Options shall supply the Company with such certificates, representations and information as the Company shall request and shall otherwise cooperate with the Company in obtaining such listing, registration, qualification, consent or approval. In the case of officers and other Persons subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, the Committee may at any time impose any limitations upon the exercise of an Option that, in the Committee’s discretion, are necessary or desirable in order to comply with such Section 16(b) and the rules and regulations thereunder. If the Company, as part

of an offering of securities or otherwise, finds it desirable because of federal or state regulatory requirements to reduce the period during which any Options may be exercised, the Committee, may, in its discretion and without the Participant’s consent, so reduce such period on not less than 15 days written notice to the holders thereof.

6.5 Nontransferability. Options may not be transferred other than by will or the laws of descent and distribution or, as the Committee may determine in its discretion, to or among a Participant’s Family Group and, during the lifetime of the Participant, may be exercised only by such Participant (or his Family Group (if applicable), legal guardian or legal representative). In the event of the death of a Participant, exercise of Options granted hereunder shall be made only (a) by the executor or administrator of the estate of the deceased Participant or the Person or Persons to whom the deceased Participant’s rights under the Option shall pass by will or the laws of descent and distribution; and (b) to the extent that the deceased Participant was entitled thereto at the date of his death, unless otherwise provided by the Committee in such Participant’s Option Agreement.

6.6 Expiration of Options.

(a) Normal Expiration. In no event shall any part of any Option be exercisable after the date of expiration thereof (the “Expiration Date”), as determined by the Committee pursuant to Section 5.7 above.

(b) Early Expiration Upon Termination of Employment. Except as otherwise provided by the Committee in the Option Agreement, any portion of a Participant’s Option (whether or not vested and exercisable on the Date of Termination) shall expire and be forfeited as of the date of such termination; provided that (i) if any Participant dies or becomes subject to any Disability, the portion of such Participant’s Option that is vested and exercisable shall expire 180 days after the date of such Participant’s death or Disability, but in no event after the Expiration Date, (ii) if any Participant retires (with the approval of the Board), such Participant’s Option that is vested and exercisable shall expire 90 days after the date of such Participant’s retirement, but in no event after the Expiration Date, and (iii) if any Participant is discharged other than for Cause, such Participant’s Option that is vested and exercisable shall expire 30 days after such Participant’s Date of Termination, but in no event after the Expiration Date.

6.7 Withholding of Taxes. The Company shall be entitled, if necessary or desirable and to the extent required by law, to withhold from any Participant from any amounts due and payable by the Company to such Participant (or secure payment from such Participant in lieu of withholding) the amount of any withholding or other tax due from the Company with respect to any shares issuable under the Options, and the Company may defer such issuance unless indemnified to its satisfaction.

6.8 Adjustments. In the event of a reorganization, recapitalization, stock dividend or stock split, or combination or other change in the shares of the Common Stock (an “Adjustment Transaction”), the Board or the Committee may, in order to prevent the dilution or enlargement of rights under the Options, make proportional adjustments in the number and type of shares covered by the Options and the exercise price specified herein, so (i) that the Options (or any replacements thereof) represent the right to purchase the shares of stock, securities or other property (including cash) as may be issuable or payable as a result of such Adjustment Transaction with respect to or in

exchange for the number of shares of Common Stock purchasable and receivable upon exercise of the Options had such exercise occurred in full immediately prior to such Adjustment Transaction, and (ii) the aggregate exercise price for the Options remains unchanged. The issuance by the Company of shares of stock of any class, or options or securities exercisable or convertible into shares of stock of any class, for cash or property, or for labor or services either upon direct sale, or upon the exercise of rights or warrants to subscribe therefor, or upon exercise or conversion of other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock then subject to any Options.

6.9 Rights of Participants. Nothing in this Plan or in any Option Agreement shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment at any time (with or without Cause), nor confer upon any Participant any right to continue in the employ of the Company for any period of time or to continue his present (or any other) rate of compensation, and except as otherwise provided under this Plan or by the Committee in the Option Agreement, in the event of any Participant’s termination of employment (including, but not limited to, the termination of a Participant’s employment by the Company without Cause) any portion of such Participant’s Option that was not previously vested and exercisable shall expire and be forfeited as of the date of such termination. No employee shall have a right to be selected as a Participant or, having been so selected, to be selected again as a Participant.

6.10 Amendment, Suspension and Termination of Plan. The Board or the Committee may suspend or terminate the Plan or any portion thereof at any time and may amend it from time to time in such respects as the Board or the Committee may deem advisable; provided that no such amendment shall be made without stockholder approval to the extent such approval is required by law, agreement or the rules of any exchange upon which the Common Stock is listed, and no such amendment, suspension or termination shall impair the rights of Participants under outstanding Options without the consent of the Participants affected thereby. No Options shall be granted hereunder after the tenth anniversary of the adoption of the Plan.

6.11 Amendment, Modification and Cancellation of Outstanding Options. The Committee may amend or modify any Option in any manner to the extent that the Committee would have had the authority under the Plan initially to grant such Option; provided that no such amendment or modification shall impair the rights of any Participant under any Option without the consent of such Participant. With the Participant’s consent, the Committee may cancel any Option and issue a new Option to such Participant.

6.12 Stockholder Approval. This Plan shall be subject to approval by the stockholders of the Company within twelve (12) months before or after this Plan is adopted by the Board. Any Option exercised before stockholder approval is obtained must be rescinded if stockholder approval is not obtained within twelve (12) months before or after the Plan is adopted. Shares issued upon the exercise of any such Option shall not be counted in determining whether such approval is obtained.

6.13 Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or the Committee, the members of the Committee shall be indemnified by the Company against all costs and expenses reasonably incurred by them in connection with any action, suit or proceeding to which they or any of them may be party by reason

of any action taken or failure to act under or in connection with the Plan or any Option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding; provided that any such Committee member shall be entitled to the indemnification rights set forth in this Section 6.12 only if such member has acted in good faith and in a manner that such member reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe that such conduct was unlawful, and further provided that upon the institution of any such action, suit or proceeding a Committee member shall give the Company written notice thereof and an opportunity, at its own expense, to handle and defend the same before such Committee member undertakes to handle and defend it on his own behalf.

* * * * *

EX-10.12 13 a2204569zex-10_12.htm EX-10.12

Exhibit 10.12

GEO HOLDINGS CORP.

[ ] [ ], [ ]

[ ]

Re: GEO Holdings Corp. (the “Company”)

Grant of Nonqualified Stock Option

Dear [ ]:

The Company is pleased to advise you that its Board of Directors has granted to you a stock option (an “Option”), as provided below, under the GEO Holdings Corp. Amended and Restated 2004 Stock Option Plan (the “Plan”), a copy of which is attached hereto and incorporated herein by reference.

1. Definitions. For the purposes of this Agreement, the following terms shall have the meanings set forth below:

“Board” shall mean the Board of Directors of the Company.

“Cause” shall mean (i) your theft or embezzlement, or attempted theft or embezzlement, of money or property of the Company, your perpetration or attempted perpetration of fraud, or your participation in a fraud or attempted fraud, on the Company or your unauthorized appropriation of, or your attempt to misappropriate, any tangible or intangible assets or property of the Company, (ii) any act or acts of disloyalty, misconduct or moral turpitude by you injurious to the interest, property, operations, business or reputation of the Company or your conviction of a crime the commission of which results in injury to the Company, or (iii) any act that would constitute “Cause” as contemplated by your employment agreement with the Company, if any.

“CHS” shall mean Code Hennessy & Simmons IV LP, a Delaware limited partnership.

“Code” shall mean the Internal Revenue Code of 1986, as amended, and any successor statute.

“Committee” shall mean the Compensation Committee of the Board, or such other committee of the Board which may be designated by the Board to administer the Plan. The Committee shall be composed of two or more directors as appointed from time to time to serve by the Board; provided that if for any reason the Committee shall not have been appointed by the Board, all authority and duties of the Committee under this Agreement shall be vested in and exercised by the Board.

“Disability” shall mean any “Disability” as defined in your employment agreement with the Company, if any; provided, that, for purposes of Section 3(a), the Participant’s condition shall only be treated as a “Disability” if such condition also constitutes a “disability” with the meaning of Section 409(a)(2)(C) of the Code (and under Treasury Regulations or other IRS guidance issued under Section 409A of the Code from time to time).

“Fair Market Value” of each Option Share shall mean the average of the closing prices of the sales of the Common Stock on all securities exchanges on which the Common Stock may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day the Common Stock is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day the Common Stock is not quoted in the NASDAQ System, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which the Fair Market Value is being determined and the 20 consecutive business days prior to such day. If at any time the Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the Fair Market Value shall be determined in good faith by the Board.

“Family Group” shall mean a person’s spouse and descendants (whether natural or adopted), any trust, family limited partnership or other entity that is and remains solely for the benefit of such person and/or such person’s spouse and/or descendants.

“Good Reason” shall mean (i) a material diminution of your title, authority, status or responsibilities or (ii) a material breach by the Company of this Agreement or your employment agreement with the Company; provided, however, that the Company shall have the opportunity to cure the reasons allegedly constituting Good Reason for thirty (30) days following receipt by the Company of a notice of termination from you detailing the alleged Good Reason; provided, further, that if the Company takes actions within such thirty (30) day period that are reasonably expected to cure all detriment otherwise resulting to you from such reasons, then such reasons shall not consititute Good Reason for any purpose hereunder.

“Independent Third Party” means any person or entity, who immediately prior to the contemplated transaction (i) does not own in excess of 10% of the Common Stock on a

fully-diluted basis (a “10% Owner”) and (ii) is not controlling, controlled by or under common control with any such 10% Owner.

“Investors” means CHS and CHS Associates IV, a Delaware general partnership.

“Minority Stockholders” shall mean the holders of Common Stock other than the Investors and their Affiliates.

“Option Shares” shall mean (i) all shares of Common Stock issued or issuable upon the exercise of an Option and (ii) all shares of Common Stock issued with respect to the Common Stock referred to in clause (i) above by way of stock dividend or stock split or in connection with any conversion, merger, consolidation or recapitalization or other reorganization affecting the Common Stock. Option Shares shall continue to be Option Shares in the hands of any holder other than you (except for the Company or the Investors and, to the extent that you are permitted to transfer Option Shares pursuant to Section 14 or 15 hereof, purchasers pursuant to a public offering under the Securities Act), and each such transferee thereof shall succeed to the rights and obligations of a holder of Option Shares hereunder.

“Public Sale” means any sale of Option Shares to the public pursuant to an offering registered under the Securities Act or to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 adopted under the Securities Act.

“Sale of the Company” shall mean (i) any sale, transfer or issuance or series of sales, transfers and/or issuances of capital stock of the Company by the Company or any holders thereof (including without limitation, any merger, consolidation or other transaction or series of related transactions having the same effect) which results in any Person or group of Persons (as the term “group” is used under the Securities Exchange Act of 1934, as amended), other than CHS or its Affiliates, owning capital stock of the Company possessing the voting power (under ordinary circumstances) to elect a majority of the Board, and (ii) any sale or transfer of all or substantially all of the assets of the Company and its subsidiaries in any transaction or series of transactions (other than sales in the ordinary course of business) to any Person or group of Persons (as the term “group” is used under the the Securities Exchange Act of 1934, as amended), other than CHS or its Affiliates; provided that, for purposes of Section 3(a), a transaction shall not constitute a Sale of the Company unless it also is a “change in the ownership or effective control of” the Company, or a “change in the ownership of a substantial portion of the assets” of the Company (in each case as determined under Section 409(a)(2)(A)(v) of the Code (and under Treasury Regulations or other IRS guidance issued under Section 409A of the Code from time to time).

“Securities Act” shall mean the Securities Act of 1933, as amended, and any successor statute.

“Stockholders Agreement” shall mean that certain Stockholders Agreement, dated as of May 18, 2004, by and among the Company and certain investors, as amended from time to time.

2. Option.

(a) Terms. Your Option is for the purchase of up to [ ] shares of Common Stock (the “Option Shares”) at a price per share of [ ] (the “Exercise Price”), payable upon exercise as set forth in Section 2(b) below. Your Option shall expire at the close of business on [ ] (the “Expiration Date”), subject to earlier expiration as provided in Section 3(b) or Section 4(b) below. Your Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Code.

(b) Payment of Option Price. Subject to Section 3 below, your Option may be exercised in whole or in part upon payment of an amount (the “Option Price”) equal to the product of (i) the Exercise Price multiplied by (ii) the number of Option Shares to be acquired. Payment shall be made in cash (including check, bank draft or money order) or, in the discretion of the Committee, by delivery of a promissory note (if in accordance with policies approved by the Board).

3. Exercisability/Vesting.

(a) Normal Vesting. Your Option may be exercised only to the extent it has become vested and the vested portion of your Option shall be exercisable only upon the earliest of one or more of the following events: (i) a separation from service with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code, (ii) your death, (iii) your Disability, (iv) the Expiration Date, and (v) a Sale of the Company; provided that, with respect to Options that become exercisable pursuant to clause (i) of this Section 3(a), if you are a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code, then your Option shall become exercisable six months after the separation from service. Each event specified in clauses (i) through (v) of this Section 3(a)(i) is intended to constitute a “date specified under the plan” within the meaning of Treasury Regulation § 1.409A-3(d). Your Option shall vest and become exercisable with respect to your Option Shares in accordance with the following schedule:

	CUMULATIVE PERCENTAGE OF
DATE	OPTION VESTED ON SUCH DATE

1st Anniversary of the date hereof	25.00	%
2nd Anniversary of the date hereof	50.00	%
3rd Anniversary of the date hereof	75.00	%
4th Anniversary of the date hereof	100.00	%

if and only if you have been continuously employed by the Company from the date of this Agreement through each such anniversary date.

(b) Effect on Vesting in Case of Employment Termination. Notwithstanding Section 3(a) above and subject to Section 4 below, unless otherwise determined by the Committee, if your employment terminates other than as a result of your resignation or your discharge by the Company for Cause, your Option shall be vested and fully exercisable with respect to that portion of your Option that was vested and exercisable on the date your employment with the Company ceased, and any portion of your Option that was not vested and exercisable on such date shall expire and be forfeited. If you resign or are discharged by the Company for Cause, all of your Option not previously exercised shall expire and be forfeited whether exercisable or not. The number of Option Shares with respect to which your Option may be exercised shall not increase once you cease to be employed by the Company.

(c) Acceleration of Vesting on Sale of the Company. If you have been continuously employed by the Company from the date of this Agreement until a Sale of the Company, the portion of your outstanding Option which has not become vested at the date of such event shall immediately vest and become exercisable with respect to 100% of the Option Shares simultaneously with the consummation of the Sale of the Company. In any event, any portion of your Option which has not been exercised prior to or in connection with the Sale of the Company shall expire and be forfeited, unless otherwise determined by the Committee or the Board.

(d) Section 409A. The permitted exercise of your Option specified in Sections 3 and 4 are intended to comply with the provisions of Section 409A(a)(2) of the Code. The Company may reduce or expand the period of time following an event in which the vested portion of your Option may be exercised if Internal Revenue Service guidance specifies that such a reduction is required or that such an expansion is permitted under the provisions of Section 409A(a)(2) of the Code. In addition, the Company may (but shall be under no obligation to) make any other changes to this Option Agreement it determines are necessary to comply with the provisions of Section 409A(a)(2) of the Code.

4. Expiration of Option.

(a) Normal Expiration. Your Options shall be exercisable only upon one or more of the events described in Section 3(a) above and, except as set forth in Section 4(b), to the extent not exercised in accordance with Section 3(a) upon the occurrence of such event, the Option shall immediately terminate and cease to be exercisable.

(b) Early Expiration Upon Termination of Employment. Except as otherwise provided herein, any portion of your Option that was not vested and exercisable as of the date your employment with the Company terminated shall expire and be forfeited on such date, and any portion of your Option that was vested and exercisable as of the date your employment with the Company terminated shall also expire and be forfeited; provided that:

(i) if you die or become subject to any Disability, the portion of your Option that is vested and exercisable shall expire 180 days from the date of your death or Disability, but in no event after the earlier of (A) the Expiration Date and (B) the later of the last day of the calendar year in which the event permitting exercise occurs and the 15th day of the third month following the date on which the event permitting exercise occurs,

(ii) if you retire (with the approval of the Committee or the Board), the portion of your Option that is vested and exercisable shall expire 90 days from the date of your retirement, but in no event after the (i) earlier of (A) the Expiration Date and (B) the later of the last day of the calendar year in which the event permitting exercise occurs and the 15th day of the third month following the date on which the event permitting exercise occurs, and

(iii) if you are discharged by the Company other than for Cause, the portion of your Option that is vested and exercisable shall expire (A) 90 days from the date of your discharge if you have been employed for a period of up to five (5) years, (B) 180 days from the date of your discharge if you have been employed for a period of up to five (5) years and one day to ten (10) years, and (C) 365 days from the date of your discharge if you have been employed for a period greater than (10) years, but in no event after the earlier of (X) the Expiration Date and (Y) the later of the last day of the calendar year in which the event permitting exercise occurs and the 15th day of the third month following the date on which the event permitting exercise occurs.

5. Procedure for Exercise. You may exercise all or any portion of your Option, to the extent it has vested and is exercisable under Section 3(a), by delivering written notice to the Company (to the attention of the Company’s Secretary) and your written acknowledgement that you have reviewed and have been afforded an opportunity to ask questions of management of the Company with respect to all financial and other information provided to you regarding the Company, together with payment of the Option Price in accordance with the provisions of Section 2(b) above. As a condition to any exercise of your Option, you shall (a) permit the Company to deliver to you all financial and other information regarding the Company it believes necessary to enable you to make an informed investment decision, (b) make all customary investment representations which the Company requires and, (c) if required by the Company, sign and agree to become bound by any other agreement(s) to which all or substantially all of the Company’s stockholders are party.

6. Securities Laws Restrictions and Other Restrictions on Transfer of Option Shares. You represent and warrant that when you exercise your Option you shall be purchasing Option Shares for your own account and not on behalf of others. You understand and acknowledge that federal and state securities laws govern and restrict your right to offer, sell or otherwise dispose of any Option Shares unless your offer, sale or other disposition thereof is registered or qualified under the Securities Act and applicable state securities laws, or in the

opinion of the Company’s counsel, such offer, sale or other disposition is exempt from registration or qualification thereunder. You agree that you shall not offer, sell or otherwise dispose of any Option Shares in any manner which would: (a) require the Company to file any registration statement with the Securities and Exchange Commission (or any similar filing under state law) or to amend or supplement any such filing or (b) violate or cause the Company to violate the Securities Act, the rules and regulations promulgated thereunder or any other state or federal law. You further understand that the certificates for any Option Shares you purchase shall bear such legends as the Company deems necessary or desirable in connection with the Securities Act or other rules, regulations or laws.

7. Non-Transferability of Option. Your Option is personal to you and is not transferable by you other than by will or the laws of descent and distribution. During your lifetime only you (or your guardian or legal representative) may exercise your Option. In the event of your death, your Option may be exercised only (a) by the executor or administrator of your estate or the person or persons to whom your rights under the Option shall pass by will or the laws of descent and distribution and (b) to the extent that you were entitled hereunder at the date of your death.

8. Conformity with Plan. Your Option is intended to conform in all respects with, and is subject to all applicable provisions of, the Plan (which is incorporated herein by reference). Inconsistencies between this Agreement and the Plan shall be resolved in accordance with the terms of the Plan. By executing and returning the enclosed copy of this Agreement, you acknowledge your receipt of this Agreement and the Plan and agree to be bound by all of the terms of this Agreement and the Plan.

9. Rights of Participants. Nothing in this Agreement shall interfere with or limit in any way the right of the Company to terminate your employment at any time (with or without Cause), nor confer upon you any right to continue in the employ of the Company for any period of time or to continue your present (or any other) rate of compensation, and in the event of your termination of employment (including, but not limited to, termination by the Company without Cause), any portion of your Option that was not previously vested and exercisable shall expire and be forfeited, except as otherwise provided herein. Nothing in this Agreement shall confer upon you any right to be selected again as a Plan participant, and nothing in the Plan or this Agreement shall provide for any adjustment to the number of Option Shares subject to your Option upon the occurrence of subsequent events except as provided in Section 11 below.

10. Withholding of Taxes. The Company shall be entitled, if necessary or desirable, to withhold from you from any amounts due and payable by the Company to you (or secure payment from you in lieu of withholding) the amount of any withholding or other tax due from the Company with respect to any Option Shares issuable under this Plan, and the Company may defer such issuance unless indemnified by you to its satisfaction.

11. Adjustments. In the event of a reorganization, recapitalization, stock dividend or stock split, or combination or other change in the shares of Common Stock, the Board or the Committee shall make such adjustments in the number and type of shares authorized by the Plan, the number and type of shares covered by your Option and the Exercise Price specified herein as may be determined to be appropriate and equitable. The issuance by the Company of shares of stock of any class, or options or securities exercisable or convertible into shares of stock of any class, for cash or property, or for labor or services either upon direct sale, or upon the exercise of rights or warrants to subscribe therefor, or upon exercise or conversion of other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock then subject to any Options.

12. Right to Purchase Option Shares Upon Your Termination of Employment.

(a) Repurchase of Option Shares. If your employment with the Company shall terminate, including upon your death, Disability, resignation or termination with or without Cause (the date on which such termination occurs being referred to as the “Termination Date”), then the Company shall have the option to repurchase all or any part of the Option Shares issued or issuable upon exercise of your Option, whether held by you or by one or more of your transferees, at the price determined in accordance with the provisions of this Section 12 and Section 13 hereof (the “Repurchase Option”).

(b) Repurchase by Company. The Company may elect to purchase all or any portion of the Option Shares by delivery of written notice (the “Repurchase Notice”) to you or any other holders of the Option Shares within 13 months after the Termination Date. The Repurchase Notice shall set forth the number of Option Shares to be acquired from you and such other holder(s), the aggregate consideration to be paid for such shares and the time and place for the closing of the transaction. The number of Option Shares to be repurchased by the Company shall first be satisfied to the extent possible from the Option Shares held by you at the time of delivery of the Repurchase Notice. If the number of Option Shares then held by you is less than the total number of Option Shares the Company has elected to purchase, then the Company shall purchase the remaining shares elected to be purchased from the other holders thereof, pro rata according to the number of shares held by each such holder at the time of delivery of such Repurchase Notice (determined as close as practical to the nearest whole share).

(c) Repurchase by Investors. If for any reason the Company does not elect to purchase all of the Option Shares pursuant to the Repurchase Option, then the Investors shall be entitled to exercise the Company’s Repurchase Option in the manner set forth in this Section 12 for all or any portion of the number of Option Shares the Company has not elected to purchase (the “Available Shares”). As soon as practicable after the Company has determined that there shall be Available Shares, but in any event within 13 months after the Termination Date, the Company shall deliver written notice (the “Option Notice”) to the Investors setting forth the number of Available Shares and the price for each Available Share. The Investors may elect to purchase any number of Available Shares by delivering written notice to the Company within 20

days after receipt of the Option Notice from the Company. As soon as practicable, and in any event within five days after the expiration of such 20-day period, the Company shall notify you and any other holder(s) of Option Shares as to the number of Option Shares being purchased from you by the Investors (the “Supplemental Repurchase Notice”). At the time the Company delivers the Supplemental Repurchase Notice to you and such other holder(s) of Option Shares, the Investors shall also receive written notice from the Company setting forth the number of shares they are entitled to purchase, the aggregate purchase price and the time and place of the closing of the transaction.

(d) Closing of Repurchase of Option Shares. The purchase of Option Shares pursuant to this Section 12 shall be closed at the Company’s executive offices within 60 days after the expiration of the 13 months period referred to in Section 12(b). At the closing, the purchaser or purchasers shall pay the purchase price in the manner specified in Section 13(b) and you and any other holders of Option Shares being purchased shall deliver the certificate or certificates representing such shares to the purchaser or purchasers or their nominees, accompanied by duly executed stock powers. Any purchaser of Option Shares under this Section 12 shall be entitled to receive customary representations and warranties from you and any other selling holders of Option Shares regarding the sale of such shares (including representations and warranties regarding good title to such shares, free and clear of any liens or encumbrances) and to require all sellers’ signatures to be guaranteed by a national bank or reputable securities broker.

13. Purchase Price for Option Shares.

(a) Purchase Price. The purchase price per share to be paid for the Option Shares purchased by the Company and the Investors pursuant to Section 12 shall be equal to the Fair Market Value of such Option Shares as of the Termination Date; provided that if your employment with the Company terminates due to a resignation by you without Good Reason or your discharge by the Company for Cause, then the purchase price per share to be paid for the Option Shares purchased by the Company and the Investors pursuant to Section 12 shall be equal to the lower of (i) the Exercise Price of such Option Shares or (ii) the Fair Market Value of such Option Shares as of the Termination Date.

(b) Manner of Payment. If the Company purchases all or any portion of such Option Shares, including Option Shares held by one or more transferees, then the Company shall pay for such Option Shares by check or wire transfer of funds; provided that, if such cash payment would (i) cause the Company to violate state or federal securities laws, or the General Corporation Law of the State of Delaware, or (ii) cause the Company to breach any agreement to which it is a party relating to the indebtedness for borrowed money or any other material agreement ((i) and (ii) are collectively referred to as the “Reasons for Deferral”), then the Company shall have the right to pay such amount within 30 days after no Reason for Deferral exists so long as the Company also pays interest at the “prime rate” as listed in The Wall Street Journal in its “Money Rates” section on the Date of Termination (or if no such rate is published

on such date, on the latest preceding date on which such rate is published) for the deferral period at the time when such payment is made. Alternatively, if and to the extent any such laws or restrictions prohibit the repurchase of Option Shares hereunder for cash, the Company may, at its sole option, repurchase such Option Shares, in which case the amount of the purchase price which is not able to be paid in cash shall be paid for by the issuance of a subordinated promissory note, which, subject to the approval of the senior lender(s) of the Company, shall be payable as soon as the Company is permitted to pay such note under such laws or restrictions and shall bear interest (payable annually) at a rate per annum equal to the “prime rate” as listed in The Wall Street Journal in its “Money Rates” section on the date such note is issued. If the Investors elect to purchase all or any portion of the Available Shares, the Investors shall pay for such Option Shares by certified check or wire transfer of funds.

14. Restrictions on Transfer.

(a) Transfer of Option Shares. The holders of Option Shares shall not sell, transfer, assign, pledge, or otherwise dispose of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) (a “Transfer”) any interest in any Option Shares without the prior written consent of the Company, except pursuant to (i) a Sale of the Company, (ii) a repurchase pursuant to Sections 12 and 13 above or (iii) the provisions of Section 14(b) hereof.

(b) Certain Permitted Transfers. The restrictions set forth in this Section 14 shall not apply with respect to any Transfer of Option Shares made (i) pursuant to applicable laws of descent and distribution or to such person’s legal guardian in case of any mental incapacity or among such person’s Family Group, or (ii) at such time as the Investors sell Common Shares in a Public Sale, but in the case of this clause (ii) only to extent of the number of Option Shares held by you multiplied by a fraction, the numerator of which is the number of Common Shares sold by the Investors in such Public Sale and the denominator of which is the total number of Common Shares held by the Investors prior to the Public Sale; provided, that the restrictions contained in this Section 14 will continue to be applicable to the Option Shares after any Transfer of the type referred to in clause (i) and the transferees of such Option Shares will agree in writing to be bound by the provisions of this Agreement. Any transferee of Option Shares pursuant to a transfer in accordance with the provisions of this Section 14(b) is herein referred to as a “Permitted Transferee.” Upon the transfer of Option Shares pursuant to this Section 14(b), you will deliver a written notice (a “Transfer Notice”) to the Company. In the case of a Transfer pursuant to clause (i) hereof, the Transfer Notice will disclose in reasonable detail the identity of the Permitted Transferee(s).

(c) Termination of Restrictions. The restrictions set forth in this Section 14 will continue with respect to each Option Share until the earlier of (i) the date on which such Option Share has been transferred in a Public Sale in compliance with the terms hereof, (ii) the date on which such Option Share is repurchased pursuant to Section 12 and 13 above and (iii) the consummation of a Sale of the Company.

15. Sale of the Company.

(a) If the Board and the holders of a majority of the shares of Common Stock then outstanding approve a Sale of the Company to an Independent Third Party (an “Approved Sale”), each holder of Option Shares entitled to vote thereon shall vote for, consent to and raise no objections against such Approved Sale. If the Approved Sale is structured as a (i) merger or consolidation, each holder of Option Shares shall waive any dissenters’ rights, appraisal rights or similar rights in connection with such merger or consolidation or (ii) sale of stock, each holder of Option Shares shall agree to sell all of his Option Shares and rights to acquire equity securities of the Company on the terms and conditions approved by the Board and the holders of a majority of the Common Stock then outstanding; provided that such terms and conditions are no less favorable to the Minority Stockholders than the terms and conditions applicable to CHS and its Affiliates and; provided further that CHS may require you to sell the same percentage of your securities as CHS is selling of its securities, on the same terms as CHS and its Affiliates. Each holder of Option Shares shall take all necessary or desirable actions in connection with the consummation of the Approved Sale as reasonably requested by the Company.

(b) The obligations of the holders of Option Shares with respect to the Approved Sale of the Company are subject to the satisfaction of the following conditions: (i) upon the consummation of the Approved Sale, each holder of Option Shares (in his, her or its capacity as such) shall have the right to receive the same form of consideration and the same amount of consideration per share for each class of Option Shares held by such holder applicable to each class; (ii) if any holders of a class of Option Shares are given an option as to the form and amount of consideration to be received or any other right or benefit with respect to the Approved Sale, each holder of such class of Option Shares shall be given the same option, right or benefit (other, in the case of clause (i) or this clause (ii), than any option, right or benefit to be received by a stockholder on account of such person’s employment relationship with the Company (e.g., stay bonus, noncompetition agreement, right to reinvest or roll over equity, etc.)); and (iii) each holder of then currently exercisable rights to acquire shares of a class of Option Shares shall be given an opportunity to either (A) exercise such rights prior to the consummation of the Approved Sale and participate in such sale as holders of such class of Option Shares or (B) upon the consummation of the Approved Sale, receive in exchange for such rights consideration equal to the amount determined by multiplying (1) the same amount of consideration per share of a class of Option Shares received by holders of such class of Option Shares in connection with the Approved Sale less the exercise price per share of such class of Option Shares of such rights to acquire such class of Option Shares by (2) the number of shares of such class of Option Shares represented by such rights.

(c) Each stockholder will bear his, her or its pro rata share (based upon the number of shares of Common Stock to be sold) of the reasonable out-of-pocket costs of any sale of Option Shares pursuant to an Approved Sale to the extent such costs are incurred for the benefit of all such holders of the Company’s capital stock and are not otherwise paid by the Company or the acquiring party. Costs incurred by the holders of the Company’s capital stock

on their own behalf will not be considered costs of the Approved Sale. Each person transferring Option Shares pursuant to an Approved Sale shall be obligated, severally, not jointly, to join on a pro rata basis (based on the number of shares of Common Stock to be sold) in any indemnification or other obligations that are part of the terms and conditions of the Approved Sale (other than any such obligations that relate specifically to a particular stockholder, such as indemnification with respect to representations and warranties given by a stockholder regarding such stockholder’s title to and ownership of Option Shares) (the “Company Indemnity Obligations”). Notwithstanding the foregoing, no stockholder shall be obligated in connection with any Approved Sale to agree to indemnify or hold harmless the transferees with respect to Company Indemnity Obligations in an amount in excess of the net proceeds paid to such stockholder in connection with the Approved Sale.

(d) In the event of a sale or exchange by the holders of the Company’s capital stock of all or substantially all of the Company’s capital stock by sale, merger, recapitalization, reorganization, consolidation, combination or otherwise, including an Approved Sale, the Company and each holder of Option Shares shall take all necessary and desirable actions in order that each holder of Option Shares shall receive in exchange for such holder’s Option Shares the same portion of the aggregate consideration from such sale or exchange that such holder would have received if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in the Company’s Certificate of Incorporation as in effect immediately prior to such sale or exchange.

(e) If the Company or the holders of the Company’s securities enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), you shall, at the request of the Company, appoint a purchaser representative (as such term is defined in Rule 501) reasonably acceptable to the Company. If you appoint the purchaser representative designated by the Company, the Company shall pay the fees of such purchaser representative, but if you decline to appoint the purchaser representative designated by the Company you shall appoint another purchaser representative (reasonably acceptable to the Company), and you shall be responsible for the fees of the purchaser representative so appointed.

(f) In order to secure each the obligation of each holder of Option Shares to vote his Option Shares entitled to vote thereon and other voting securities of the Company in accordance with the provisions of this Section 15, each holder of Option Shares who is an individual hereby appoints each CHS Director (as defined in the Stockholders Agreement, and as in effect from time to time) as his true and lawful proxy and attorney-in-fact, with full power of substitution, to vote all of his Option Shares and other voting securities of the Company for the matters expressly provided for in this Section 15. Each CHS Director may exercise the irrevocable proxy granted to him hereunder at any time any holder of Option Shares who is an individual fails to comply with the provisions of this Section 15. The proxies and powers granted by each holder of Option Shares who is an individual pursuant to this Section 15(f) are

coupled with an interest and are given to secure the performance of the obligations of such holder of Option Shares under this Section 15. Such proxies and powers shall be irrevocable and shall survive the death, incompetency, disability or bankruptcy of such holder of Option Shares and the subsequent holders of his, her or its Option Shares.

16. Additional Restrictions on Transfer.

(a) Restrictive Legend. The certificates representing the Option Shares shall bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON , HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN OPTION AGREEMENT BETWEEN THE COMPANY AND AND AN EXECUTIVE OF THE COMPANY, DATED AS OF , , A COPY OF WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.”

(b) Opinion of Counsel. You may not sell, transfer or dispose of any Option Shares (except pursuant to an effective registration statement under the Securities Act) without first delivering to the Company an opinion of counsel reasonably acceptable in form and substance to the Company that registration under the Securities Act or any applicable state securities law is not required in connection with such transfer.

(c) Holdback. You agree not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any Option Shares or other equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such securities, whether any such aforementioned transaction is to be settled by delivery of such securities or other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement, in each case during the seven days before and the 90-day period (but in the case of the Company’s initial public offering, the 180-day period) beginning on the effective date of any underwritten public offering of the Company’s equity securities (or such longer or shorter

period (but not in excess of 180 days) as may be requested in writing by the managing underwriter and agreed to in writing by the Company) (the “Market Standoff Period”), except as part of such underwritten registration if otherwise permitted. In addition, you agree to execute any further letters, agreements and/or other documents requested by the Company or its underwriters which are consistent with the terms of this Section 16(c). The Company may impose stop transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

17. Remedies. The parties hereto (and the Investors as third-party beneficiaries) shall be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto acknowledge and agree that money damages would not be an adequate remedy for any breach of the provisions of this Agreement and that any party hereto (and any Investor as a third-party beneficiary) shall be entitled to specific performance and/or injunctive relief (without posting bond or other security) from any court of law or equity of competent jurisdiction in order to enforce or prevent any violation of the provisions of this Agreement.

18. Amendment. Except as otherwise provided herein, any provision of this Agreement may be amended or waived only with the prior written consent of you and the Company; provided that no provision of Section 1, 12, 13, 14, 15, 16 or 17 or of this Section 18 may be amended or waived without the prior written consent of the Investors.

19. Successors and Assigns. Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not.

20. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

21. Counterparts. This Agreement may be executed simultaneously in any number of counterparts and may be delivered by means of facsimile or comparable electronic transmission, each of which shall constitute an original, but all of which taken together shall constitute one and the same Agreement.

22. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

23. Governing Law. The corporate law of Delaware shall govern all questions concerning the relative rights of the Company and its stockholders. All other questions

concerning the construction, validity and interpretation of this Agreement shall be governed by the internal law, and not the law of conflicts, of Illinois.

24. Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when delivered personally or mailed by certified or registered mail, return receipt requested and postage prepaid, to the recipient. Such notices, demands and other communications shall be sent to you and to the Company and the Investors at the addresses indicated below:

If to the Optionee:

[ ]

If to the Company:

GEO Holdings Corp.

c/o Gundle/SLT Environmental, Inc.

19103 Gundle Road

Houston, TX 77073

Attention: President

with copies to:

Code Hennessy & Simmons LLC

10 South Wacker Drive, Suite 3175

Chicago, IL 60606

Attention: Daniel J. Hennessy and Marcus J. George

and

Kirkland & Ellis LLP

300 North LaSalle Drive

Chicago, IL 60654

Attention: Kevin R. Evanich, P.C.

If to either Investor:

c/o Code Hennessy & Simmons LLC

10 South Wacker Drive, Suite 3175

Chicago, IL 60606

Attention: Daniel J. Hennessy and Marcus J. George

with a copy to:

Kirkland & Ellis LLP

300 North LaSalle Drive

Chicago, IL 60654

Attention: Kevin R. Evanich, P.C.

or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

25. Third-Party Beneficiary. The Company and you acknowledge that the Investors are third-party beneficiaries under this Agreement.

26. Rule 701 Compensation. The Company and you acknowledge and agree that this Agreement has been executed and delivered, and the Option has been granted hereunder, in connection with and as a part of the compensation and incentive arrangements between the Company and you and not a part of a capital raising effort of the Company. The grant of the Option hereunder and any issuance of Option Shares upon exercise of the Option are intended to qualify as an exempt offering under Rule 701 of the Securities Act.

27. Entire Agreement. This Agreement and the Plan constitute the entire understanding between you and the Company, and supersedes all other agreements, whether written or oral, with respect to the acquisition by you of Common Stock of the Company (other than any written Executive Securities Agreement executed by the Company to which you are a party, if any). If there are any conflicts in terms and conditions between this Agreement and the Plan, the terms and conditions of the Plan shall govern, unless otherwise determined by the Committee or the Board.

* * * * *

Please execute the extra copy of this Agreement in the space below and return it to the Company’s Secretary at its executive offices to confirm your understanding and acceptance of the agreements contained in this Agreement.

		Very truly yours,

		GEO HOLDINGS CORP.

		By:
			Name:
			Title:

Enclosures:	(1)	Extra copy of this Agreement
	(2)	Copy of the Plan

The undersigned hereby acknowledges having read this Agreement and the Plan and hereby agrees to be bound by all provisions set forth herein and in the Plan.

Dated as of		OPTIONEE


		Name:

CONSENT

The undersigned spouse of [ ] hereby acknowledges that I have read the foregoing Stock Option Agreement and that I understand its contents. I am aware that the Agreement provides for the repurchase of my spouse’s shares of Common Stock under certain circumstances and imposes other restrictions on the transfer of such Common Stock. I agree that my spouse’s interest in the Common Stock is subject to this Agreement and any interest I may have in such Common Stock shall be irrevocably bound by this Agreement and further that the my community property interest, if any, shall be similarly bound by this Agreement.

I am aware that the legal, financial and other matters contained in this Agreement are complex and I am free to seek advice with respect thereto from independent counsel. I have either sought such advice or determined after carefully reviewing this Agreement that I will waive such right.


		[Spouse]


		Witness

EX-10.13 14 a2204569zex-10_13.htm EX-10.13

Exhibit 10.13

GEO HOLDINGS CORP.

September 14, 2009

Mark C. Arnold
2311 Hoxton Court
Columbus, Ohio 43220

Re: GEO Holdings Corp. (the “Company”)

Grant of Nonqualified Stock Option

Dear Mark: