<PAGE>   1
                                                                    EXHIBIT 10.H


                   [GUNDLE/SLT ENVIRONMENTAL, INC. LETTERHEAD]

                                 March 10, 1997



Mr. William P. Reid
President and Chief Executive Officer
Gundle/SLT Environmental, Inc.
19103 Gundle Road
Houston, Texas 77073

Dear Mr. Reid:

         Gundle/SLT Environmental, Inc. (the "Company") considers the
establishment and maintenance of a sound and vital management to be essential
for the protection and enhancement of the best interests of the Company and its
shareholders. In view of your experience and performance in the business of the
Company and its subsidiaries, the Company desires to secure your services for an
extended period. In addition, the Company recognizes that, as is the case with
many publicly-held corporations, the possibility of a change in control may
arise and that such possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders.

         Accordingly, the board of directors of the Company (the "Board") has
determined that appropriate steps should be taken to assure the Company of the
continuation of your services and to reinforce and encourage the attention and
dedication of members of the Company's management to their assigned duties
without distraction in circumstances arising from the possibility of a change in
control of the Company. In particular the Board believes it important, should
the Company or its shareholders receive a proposal for or notice of transfer of
control of the Company, that you be able to assess and advise the Board whether
such transfer would be or is in the best interests of the Company and its
shareholders, and to take such other action regarding such proposal or transfer
as the Board might determine to be appropriate without being influenced by the
uncertainties of your own situation.

         In order to induce you to remain in the employ of the Company, this
letter agreement (the "Agreement"), which has been approved by the Board and
which supersedes the previous employment agreement between you and the Company
dated October 13, 1989 (as amended March 28, 1995) in its entirety, sets forth
the terms of your continued employment by the Company and the compensation and
severance benefits which the Company agrees will be provided to you in the event
of a change in control and if your employment with the Company should be
terminated under the circumstances described below.




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Mr. William P. Reid
March 10, 1997
Page 2



         Reference is made to Annex I hereto for definitions of certain terms
used in this Agreement, and such definitions are incorporated herein by such
reference with the same effect as if set forth herein. Certain capitalized terms
used in this Agreement in connection with the description of various Plans are
defined in the respective Plans, but if any conflicts with a definition herein
contained, the latter shall prevail.

         1. Term of Employment. The Company hereby agrees to continue your
employment and you hereby agree to serve the Company for an employment period
commencing on the date hereof and initially ending December 31, 1999; provided,
however, that on each successive December 1 commencing in 1997, the employment
period shall automatically be extended for one additional year (with the date to
which the employment period has most recently been extended being hereinafter
referred to as the "Expiration Date" and the period commencing the date hereof
and ending on the Expiration Date being hereinafter referred to as the
"Employment Period"), subject to prior termination of the Employment Period
pursuant to Section 4 of this Agreement.

         2. Duties.

                  (a) During the Employment Period, you shall serve the Company
as its President and Chief Executive Officer and perform your duties and
responsibilities diligently, faithfully and loyally and devote such time to the
Company's affairs as may be necessary to the end of achieving the proper,
efficient and successful operation of the Company's business. In such capacities
you shall (i) generally have the duties of such offices as specified in the
Bylaws, (ii) report directly to the Board and (iii) have general executive
supervision and management of the business and affairs of the Company, subject
to the direction of the Board or any Committee thereof. The foregoing shall not,
however, be deemed to restrict you from attending to matters or engaging in
activities not directly related to the business of the Company, if reasonable in
scope and time commitment and not otherwise in violation of this Agreement.

                  (b) If during the Employment Period, (i) a tender offer or
exchange offer is made for more than 20% of the Company's outstanding Voting
Securities or (ii) a transaction is proposed which, if consummated, would result
in a Change of Control, you agree that you will not leave your employment with
the Company (other than as a result of Disability or upon Retirement) and will
also render the services contemplated in the introductory paragraphs of this
Agreement until such time as such tender offer, exchange offer or proposed
transaction is abandoned or terminated or a Change of Control has occurred.




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Mr. William P. Reid
March 10, 1997
Page 3



         3. Compensation.

                  (a) Base Salary. As compensation for your services, the
Company agrees to pay you basic compensation at the rate of $325,000 per annum
through December 31, 1997 ("Base Salary"), payable on a current basis in equal
installments not less frequently than monthly, subject only to such payroll and
withholding deductions as may be required by law or the terms of Plans in which
you are a participant. For periods subsequent to December 31, 1997, your Base
Salary shall be established annually by the Compensation Committee of the Board
and paid on the same basis as for the prior year, but no such adjustment shall
result in a Base Salary for any year of less than the highest annual rate so
authorized by the Board to be paid to you during any previous calendar year(s)
of the Company ended during the Employment Period, except upon your prior
written consent.

                  (b) Plans. In addition to your Base Salary, you will
participate in the Bonus Plan and LTIP Plan, and be eligible to participate in
the Defined Contribution Plan and Other Plans, for each year during the
Employment Period.

                  (c) Other. The Company shall reimburse you for all expenses
paid or incurred by you in the performance of your duties under this Agreement
in accordance with the Company's normal expense reimbursement policies
applicable to senior executives.

         4. Termination. Upon compliance by the initiating party with any
applicable procedures set forth in Section 5 hereof, your employment with the
Company:

                  (a) shall terminate automatically upon your death or
         Retirement;

                  (b) may be terminated prior to the Expiration Date at the
         discretion of the Board upon your Disability;

                  (c) may be terminated prior to the Expiration Date at the
         discretion of the Board for Cause;

                  (d) may be terminated prior to the Expiration Date at your
         discretion, other than for Good Reason;

                  (e) may be terminated prior to the Expiration Date at the
         discretion of the Board prior to a Change of Control without Cause;



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Mr. William P. Reid
March 10, 1997
Page 4



                  (f) may be terminated prior to the Expiration Date at the
         discretion of the Board at or after a Change of Control without Cause;

                  (g) may be terminated prior to the Expiration Date at your
         discretion for Good Reason prior to a Change of Control; or

                  (h) may be terminated prior to the Expiration Date at your
         discretion for Good Reason at or after a Change of Control.

         5.       Procedures for Termination. If it is intended that your 
                  employment be terminated:

                  (a) pursuant to Section 4(b), the Company shall transmit to
         you written notice setting forth the particulars upon which the Company
         bases its determination that a Disability exists, together with a Board
         resolution adopted by at least two-thirds of the members of the Board
         requiring that you resume your duties within 30 days following the date
         thereof, failing which a "final discharge" shall then occur;

                  (b) pursuant to Section 4(c), the Company shall transmit to
         you written notice setting forth the Cause for which you are proposed
         to be dismissed in sufficient detail to permit a reasonable assessment
         of the bona fides thereof, and setting a meeting of the Board not less
         than 30 days following the date of such notice at which the Board shall
         consider your termination and at which you and your counsel shall have
         the opportunity to be heard, following which the Board shall either by
         resolution withdraw the notice, or if it so finds in its good faith
         opinion, issue its report within ten days thereafter that Cause exists
         and specifying the particulars of its findings, in which latter event a
         "final discharge" shall occur. After receipt of a notice of intended
         termination for Cause, you shall not have any authority to incur any
         obligation of any kind whatsoever on behalf of the Company pending
         withdrawal of such notice or "final discharge;"

                  (c) pursuant to Section 4(d), you shall transmit to the
         Company written notice specifying that your resignation is other than
         for Good Reason;

                  (d) pursuant to Section 4(e) or 4(f) the Company shall
         transmit to you written notice specifying that your termination is
         without Cause;

                  (e) pursuant to Section 4(g) or 4(h), you shall transmit to
         the Company written notice setting forth the particulars upon which you
         base your determination that Good



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Mr. William P. Reid
March 10, 1997
Page 5



         Reason exists and, only if the stated basis therefor is capable of
         being cured, requesting a cure within 10 days, failing which a "final
         separation" shall then occur, and if such stated basis is not capable
         of cure by the Company, "final separation" shall occur co-extensive
         with delivery of the notice.

         For purposes of this Agreement, a "Termination Date" shall be deemed to
have occurred upon (i) the happening of any event contemplated by Section 4(a)
[death or Retirement], (ii) the date of "final discharge" in the case of
termination initiated under Sections 5(a) [Disability] or 5(b)[Cause], (iii) the
date of "final separation" in the case of a termination initiated under Section
5(e) [Good Reason], or (iv) the 30th day following the date of any notice
contemplated by Sections 5(c) [resignation without Good Reason] or 5(d)
[discharge without Good Reason; provided, that any proceeding initiated pursuant
to Section 11 hereof within 15 days after the giving of any notice under this
Section 5 shall (anything else in this Agreement to the contrary
notwithstanding) automatically toll the effectiveness of any Termination Date
until final resolution of such proceeding. Each notice which complies with the
requirements of this Section 5 is hereinafter referred to as a "Termination
Notice".

         6. Effect of Termination. If your employment is terminated:

                  (a) pursuant to Sections 4(a) [death or Retirement], 4(b)
         [Disability], 4(c) [Cause], or 4(d) [resignation without Good Reason],
         then you shall be entitled to receive (i) payment when due of your Base
         Salary through the end of the first monthly pay period ended after the
         Termination Date and (ii) all benefits under the Plans in which you are
         at the time a participant, to the extent the same are vested under the
         terms thereof at the Termination Date, and (except as otherwise
         provided herein) all other obligations of the Company under this
         Agreement shall thereupon cease; or

                  (b) pursuant to Sections 4(e) [discharge without Cause prior
         to Change of Control] or 4(g) [resignation for Good Reason prior to
         Change of Control], then you shall become entitled to all benefits
         conferred upon you by the Termination Package, and (except as otherwise
         provided herein) all other obligations of the Company under this
         Agreement shall thereupon cease; or

                  (c) pursuant to Sections 4(f) [discharge without Cause after
         Change of Control] or 4(h) [resignation for Good Reason after Change of
         Control], then you shall become entitled to all benefits conferred upon
         you by the Severance Package, and (except as



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Mr. William P. Reid
March 10, 1997
Page 6



         otherwise provided herein) all other obligations of the Company under
         this Agreement shall thereupon cease.

         You shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment, nor shall the amount
of any payment provided for in this Agreement be reduced by any compensation
earned by you as the result of employment by another employer after any
Effective Date or Termination Date.

         7. LTIP Benefit Acceleration at Effective Date. Immediately upon any
Effective Date, all contingent compensation rights issued to you under the LTIP
Plan which are then outstanding shall become vested, exercisable, distributable
and unrestricted (any contrary provision in the LTIP Plan notwithstanding) for a
period of 183 days following the Effective Date (the "Exercise Period") whether
or not during such period you continue to be employed by the Company. During the
Exercise Period, you shall have the right immediately upon any written request
by you to the Company, if approved in writing by any person (acting solely in
his individual capacity and when so acting, such concurring person shall do so
without any contrary "fiduciary" or other duty to the Company) who was at the
Effective Date an officer or director of the Company, to (i) exercise all or any
portion of all your options covered (including, at your sole election, any
associated Tandem SAR) by the LTIP Plan and to have the underlying Shares issued
to you, (ii) have issued to you on a non-forfeitable basis any or all Shares
covered by Restricted Stock Awards held by you under the LTIP Plan, (iii) have
issued to you any or all Performance Shares and/or Performance Units held by you
in the LTIP Plan, (iv) exercise all or any portion of any LTIP Plan Freestanding
SAR held by you, and (v) obtain the full benefit of any other contingent
compensation rights to which you may be entitled under the LTIP Plan, in each
case as though all applicable Performance Targets had been met for all
Performance Periods (including those extending beyond the Effective Date) and
any and all other LTIP Plan contingencies had been satisfied in full at the
Effective Date and the maximum possible benefit thereunder had been earned in
full at the Effective Date. To the extent you have not exercised or requested
performance of such benefits following the Effective Date and prior to
expiration of the Exercise Period, all terms applicable to any such benefit
prior to the Effective Date shall again become fully applicable as though an
Effective Date had never occurred.

         8. Excise Tax. To the extent that the acceleration of vesting or any
payment, distribution or issuance made to you pursuant to this Agreement
following any Effective Date or Change of Control is subject to federal income,
excise, or other tax at a rate above the rate ordinarily applicable to like
payments paid in the ordinary course of business ("Penalty Tax"), whether as a
result of the provisions of Section 280G(b)(1) and 4999(a) of the Internal
Revenue



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Mr. William P. Reid
March 10, 1997
Page 7



Code of 1986, as amended, any similar or analogous provisions of any statute
adopted subsequent to the date hereof, or otherwise, then the Company shall pay
you an additional amount of cash (the "Additional Amount") such that the net
amount received by you, after paying any applicable Penalty Tax and any federal
or state income tax on such Additional Amount, shall be equal to the amount that
you would have received if such Penalty Tax were not applicable.

         9. Deferral of Payments; Early Payments. At any time prior to a
Termination Date, you may irrevocably direct the Company that any amounts which
are or should become payable to you under the Termination Package, the Severance
Package or pursuant to Section 7 hereof shall be paid to you in three equal
installments, payable on or within ten days following the Termination Date, and
on the first and second anniversaries of the initial installment payment. In
addition, if any payment to you in respect of a stock-based benefit which is
precipitated by the occurrence of an Effective Date or a Termination Date and
which would, in and of itself, give rise to a short-swing profit under Section
16(b) of the Exchange Act, then both the payment and the entitlement to payment
thereof, shall automatically be deferred until the earliest date (not later than
183 days following a Termination Date) at which the payment of such benefit
would not, in and of itself, result in a short-swing profit. The Company and you
further agree that when it has become apparent in our collective best judgment
(as expressed by the Compensation Committee of the Board, in the case of the
Company) that a Change of Control is likely to occur and further, that a likely
consequence thereof will be the occurrence of a Termination Date, the Company
and you will use reasonable good faith efforts to undertake and conclude
negotiations intended to result in the payment to you of a portion of the
Termination Package or Severance Package earlier than would otherwise be the
case hereunder, thereby increasing the benefit conferred upon you and the tax
efficiency of such payments to the Company, with any consequent tax savings to
be allocated between you and the Company in such reasonable proportions as we
shall agree; unless so agreed to by both parties in writing, no such negotiation
or agreement shall affect the Company's obligations to you under any other
provision of this Agreement.

         10. Conditional Share Purchase Obligation.

                  (a) If a Change of Control occurs as a consequence of a tender
offer or exchange offer (the "Tender Offer"), the Company shall, if requested by
you, purchase from you (whether a Termination Date has occurred following the
Change of Control) for cash on any business day selected by you upon not less
than ten days' notice to the Company, which day shall not be less than ten days
following consummation of the Tender Offer nor more than three years after the
Effective Date, up to that number of Shares which shall be equal to the product
of (x) the number of Shares acquired by you upon exercise or distribution of any
benefit under the Bonus



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Mr. William P. Reid
March 10, 1997
Page 8



Plan or LTIP Plan prior to consummation of the Tender Offer, multiplied by (y)
the decimal equivalent of (I) the number of Shares accepted for purchase or
exchange in the Tender Offer, divided by (II) the number of Shares timely and
validly tendered pursuant to the Tender Offer. In the event the above obligation
to purchase Shares occurs by reason of a cash tender offer or a combination cash
tender offer and exchange offer, the cash price per share to be paid to you
hereunder shall be equal to the highest price paid in cash pursuant to the
Tender Offer. In the event such obligation occurs by reason of an exchange
offer, the cash price per share to be paid to you hereunder shall be equal to
the closing price, if traded on a stock exchange, or the average bid and asked
prices, if traded in the over-the-counter market, of the security of the person
so exchanged for the Shares (the "Exchange Security") on the first day on which
the Exchange Security could have been sold by you on such exchange or in the
over-the-counter market, as the case may be, in a regular broker's transaction
had your Shares been tendered and accepted, multiplied by the number of Exchange
Securities (or fraction thereof) issued in the Tender Offer for each Company
Share; and

                  (b) if a Change of Control occurs pursuant to a Tender Offer
and (i) a merger, consolidation, reorganization, sale, spin-off, or purchase of
assets under which all remaining outstanding Shares will be converted into or
become exchangeable for cash, or for securities ("Merger Security") issued or to
be issued by the Person who made the Tender offer (or a subsidiary or affiliate
of such Person), is thereafter proposed to the Company or its shareholders, and
(ii) such merger, consolidation, reorganization or purchase of assets occurs
less than three years after the Effective Date, and (iii) the amounts of cash
into which each Share would be converted if the transaction is effected wholly
for cash, or the Merger Security Value (as defined below) if such transaction is
effected wholly for Merger Securities, or the sum of the cash and the Merger
Security Value if the Transaction is effected partly for cash and partly for
Merger Securities, as the case may be, is less than 95% of the per share price
that would have been paid by the Company for such portion of your Shares had you
exercised your option to require the Company to purchase such Shares under
Section 10(a) above, the Company shall pay you (whether or not a Termination
Date has occurred following a Change of Control), an amount in cash equal to the
difference between the aggregate price you would have received from the number
of Shares the Company would have been required to purchase from you had you
exercised such option under Section 10(a) and the amount of cash and/or the
Merger Security Value received for the same number of Shares in such merger,
consolidation, reorganization or purchase of assets. Such cash payment shall be
made to you on a business day selected by you upon no less than ten calendar
days' notice to the Company or its Successor (as hereinafter defined). For
purposes of this Section 10(b), "Merger Security Value" shall mean the closing
price, if traded on a stock exchange, or the average bid and asked prices if
traded in the over-the-counter market, of the Merger Security

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Mr. William P. Reid
March 10, 1997
Page 9



on the first day on which the Merger Security could have been sold by you on
such exchange or in the over-the-counter market, as the case may be, in a
regular broker's transaction, multiplied by the number of Merger Securities (or
fraction thereof) for which each Share was exchangeable or into which each Share
was convertible. If no public market develops for the Merger Security within 30
days from the date of its issue, however, "Merger Security Value" shall mean the
fair market value of such Merger Security (on a per unit basis) in the written
opinion of a nationally recognized investment banking firm acceptable to you) on
the effective date of the merger, consolidation, reorganization or purchase of
assets, as the case may be, multiplied by the number of Merger Securities (or
fraction thereof) for which each Share was exchangeable or into which each Share
was convertible.

         11. Dispute Resolution. It is irrevocably agreed that if any dispute
arises between us under this Agreement, or as to any interpretive matter under
or alleged breach of this Agreement, the exclusive remedy of each of us shall be
to commence binding arbitration proceedings under the rules of the American
Arbitration Association (the "Rules"), with any such arbitration proceeding to
be conducted in Houston, Texas, applying the substantive law of the State of
Texas ("Arbitration"). If Arbitration is commenced prior to an Effective Date,
each of us will deposit with the arbitrator(s), 50% of the arbitrator's
preliminary estimate of the costs of arbitration (excluding counsel fees and
expenses) as security for costs; if Arbitration is commenced after an Effective
Date, the Company will be solely responsible for all costs thereof and shall
deposit with the arbitrator(s) 100% of the arbitrator(s) preliminary estimate
thereof. Notwithstanding any contrary provision of the Rules or Texas law, the
Company shall have the burden of proof with respect to any of the following
which are at issue in Arbitration: (i) that Cause or Disability existed at the
time any notice was given to you under Section 5 based upon either them and/or
the sufficiency of such notice; and (ii) that Good Reason did not exist at the
time notice was given to the Company under Section 5 based upon Good Reason (but
only if such notice was dated on or after an Effective Date) and/or the
sufficiency of such notice; and (iii) that a Change of Control has not occurred.
Any final ruling of the arbitrator(s) in an Arbitration shall be final and
binding for all purposes, and judgment on any Arbitration award may be entered
and enforced in any court having jurisdiction.

         The Company and you irrevocably agree that in the event the
arbitrator(s) shall determine (after hearing) that any matter presented in
Arbitration is one which under Texas law is not susceptible to arbitration, in
such event (and only in such event), (i) exclusive jurisdiction over the
non-arbitrable issue shall be in the lowest Texas state court of general
jurisdiction sitting in Harris County, Texas, (ii) we are each at the time
present in Texas for the purpose of conferring personal jurisdiction; (iii) any
such action may be brought in such courts, and any objection that



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Mr. William P. Reid
March 10, 1997
Page 10



the Company or you may now or hereafter have to the venue of such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court is waived, and we each agree not to plead or claim the same,
(iv) service of process in any such proceeding or action may be effected by
mailing a copy thereof by registered or certified mail, return receipt requested
(or any substantially similar form of mail), postage prepaid, to such party at
the address provided in Section 14 hereof, (v) no punitive or consequential
damages shall be awarded in any such action or proceeding and we each agree not
to plead or claim the same; and (vi) prior to any trial on the merits, we will
submit any such non-arbitrable issue to court supervised, non-binding mediation.

         If proceedings are commenced prior to an Effective Date, all actual
costs of Arbitration or court proceedings involving any non-arbitrable issue
(excluding, in each case, counsel fees and expenses), shall be apportioned by
the arbitrator(s) or the court in such manner as shall be deemed equitable in
light of any final Arbitration award or judgment; if commenced on or after an
Effective Date, all such costs shall be borne exclusively by the Company.

         Anything else in this Section to the contrary notwithstanding, nothing
in this Agreement shall impair your ability to seek specific performance of your
right to be paid under, and to receive all other benefits conferred by, Section
3 of this Agreement during the pendency of any dispute or proceeding concerning
Sections 5, 6, 7 and/or 9 hereof.

         12. Successors; Binding Agreement.

                  (a) Upon your written request, the Company will seek to have
any Successor (as defined below), by agreement in form and substance
satisfactory to you, expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it. If there has been a Change of Control prior to, or a Change of Control will
result from, any such succession, then failure of the Company to obtain at your
request such agreement prior to or upon the effectiveness of any such succession
(other than by merger or consolidation) shall constitute Good Reason for
termination by you of your employment and, upon delivery of a Notice of
Termination by you to the Company, you shall be entitled to the benefits
provided in Section 6(c) hereof. "Successor" shall mean any Person that succeeds
to, or has the ability to control, the Company's business as a whole, directly
by merger, consolidation or spin-off or indirectly by purchase of the Company's
Voting Securities or acquisition of all or substantially all of the assets of
the Company.




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Mr. William P. Reid
March 10, 1997
Page 11



                  (b) This Agreement shall inure to the benefit of and be
enforceable by your personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

         13. Fees and Expenses. The Company shall pay all legal fees and
reasonable expenses incurred by you (including costs of arbitration) as a result
of (a) your termination following a Change of Control (including all such fees
and expenses, if any, incurred in contesting or disputing any such termination)
or (b) your seeking to obtain, assert or enforce any right or benefit conferred
upon you by this Agreement.

         14. Notices. Any and all notices required or permitted to be given
hereunder shall be in writing and shall be deemed to have been given when
delivered in person to the persons specified below or deposited in the United
States mail, certified or registered mail, postage prepaid and addressed as
follows:

   If to the Company:                 Gundle/SLT Environmental, Inc.
                                      19103 Gundle Road
                                      Houston, Texas 77073
                                             Attention: Chairman, Compensation
                                             Committee of the Board of Directors

   If to you:                         William P. Reid
                                      23 Misty Grove Circle
                                      The Woodlands, Texas 77381

         Either party may change, by the giving of notice in accordance with
this Section 14, the address to which notices are thereafter to be sent.

         15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

         16. Survival. All obligations undertaken and benefits conferred
pursuant to this Agreement, except those set forth in Sections 1 and 2, shall
survive the Employment Period and continue thereafter until performed in full.




<PAGE>   12


Mr. William P. Reid
March 10, 1997
Page 12


         17. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in writing signed by you and the Chairman of the Compensation Committee of the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of, or of compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the internal laws of the State of Texas.

         If this letter correctly sets forth our understanding with respect to
the subject matter hereof, please sign and return one copy of this letter to the
Company.

                               Sincerely,

                               GUNDLE/SLT ENVIRONMENTAL, INC.


                               BY:
                                  --------------------------------------------
                                        T. William Porter
                                        Chairman of the Compensation Committee
                                        of the Board


Agreed to as of the 10th
day of March, 1997


------------------------------
William P. Reid
<PAGE>   13
                    ANNEX I TO AGREEMENT DATED MARCH 10, 1997
                                     BETWEEN
                         GUNDLE/SLT ENVIRONMENTAL, INC.
                                       AND
                                 WILLIAM P. REID


                                  DEFINITION OF
                                  CERTAIN TERMS



         "BONUS PLAN" means for calendar 1997 and each subsequent year, the
Company's Management Incentive Plan or any other Plan adopted by the Board which
provides for the payment of additional compensation on an annual basis to senior
executive officers contingent upon the Company's results of operations for that
specific year, as such Plan shall be amended or modified to, but not on or
after, any Effective Date.

         "BYLAWS" means the bylaws of the Company as in effect at the date
hereof and as the same shall be amended or otherwise modified to, but not on or
after, any Effective Date.

         "CAUSE" means (i) your conviction by a court of competent jurisdiction,
from which conviction no further appeal can be taken, of a felony-grade crime
involving scienter, or (ii) your willful failure to perform substantially your
duties with the Company (other than a failure due to physical or mental illness)
which is materially and demonstrably injurious to the Company, or (iii) only
prior to an Effective Date, the engaging by you in any "business" engaged in
activities in direct competition with the Company, whether as an employee,
officer or director or through the beneficial ownership by you of 10% or more of
the Voting Securities of such "business." No act or failure to act on your part
shall be considered "willful" unless done, or omitted to be done, by you in bad
faith and without reasonable belief that your action or omission was in, or not
opposed to, the best interests of the Company.

         "CHANGE OF CONTROL" means the earliest date at which:

         (i) Any Person (other than Wembley Investments, Ltd.) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's outstanding Voting Securities, other than
through the purchase of Voting Securities directly from the Company through a
private placement; or

         (ii) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company's shareholders,
was approved by a vote of at least two-thirds of the directors comprising


                                       A-1

<PAGE>   14

the Incumbent Board shall from and after such election be deemed to be a member
of the Incumbent Board; or

         (iii) the Company is merged or consolidated with another corporation or
entity and as a result of such merger or consolidation less than 50% of the
outstanding Voting Securities of the surviving or resulting corporation or
entity shall then be owned by the former stockholders of the Company; or

         (iv) a tender offer or exchange offer is made and consummated by a
Person other than the Company for the ownership of 20% or more of the Voting
Securities of the Company then outstanding; or

         (v) all or substantially all of the assets of the Company are sold or
transferred to a Person as to which (A) the Incumbent Board does not have
authority (whether by law or contract) to directly control the use or further
disposition of such assets and (B) the financial results of the Company and such
Person are not consolidated for financial reporting purposes.

         Anything else in this definition to the contrary notwithstanding, no
Change of Control shall be deemed to have occurred by virtue of any transaction
which results in you, or a group of Persons which includes you, acquiring more
than 50% of either the combined voting power of the Company's outstanding Voting
Securities or the Voting Securities of any other corporation or entity which
acquires all or substantially all of the assets of the Company, whether by way
of merger, consolidation, sale of such assets or otherwise.

         "CHARTER" means the certificate of incorporation of the Company as in
effect at the date hereof and as the same shall be amended or otherwise modified
to, but not on or after, any Effective Date.

         "DEFINED CONTRIBUTION PLAN" means the Company's 401(k) Plan as the same
shall be amended or modified to, but not on or after, any Effective Date.

         "DISABILITY" means your continuing full-time absence from your duties
with the Company for 180 days or longer as a result of physical or mental
incapacity.

         "EFFECTIVE DATE" means the earliest date upon which (i) any of the
events set forth under the definition of Change of Control shall have occurred,
(ii) the receipt by the Company of a Schedule 13D stating the intention of any
Person to take actions which, if accomplished, would constitute a Change of
Control, or (iii) the public announcement by any Person of its intention to take
any such action, in each case without regard for any contingency or condition
which has not been satisfied on such date.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.


                                       A-2

<PAGE>   15



         "GOOD REASON" means any of the following:

                  (i) except as a result of your death or Retirement, or
         following the receipt by you of a Notice of Termination for Cause or
         due to Disability, a change in your status, title(s) or position(s) as
         an officer of the Company which, in your reasonable judgment, does not
         represent a promotion, with commensurate adjustment of compensation,
         from your status, title(s) and position(s) or the assignment to you of
         any duties or responsibilities which, in your reasonable judgment, are
         inconsistent with such status, title(s) or position(s), or the
         withdrawal from you of any duties or responsibilities which in your
         reasonable opinion are consistent with such status, title(s) or
         position(s), or any removal of you from or any failure to reappoint or
         reelect you to such position(s); or

                  (ii)     a reduction by the Company in your base salary; or

                  (iii) the failure by the Company to continue in effect any
         Plan in which you were then participating other than as a result of the
         normal expiration or amendment of any such Plan in accordance with its
         terms, or the taking of any action, or the failure to act, by the
         Company which would adversely affect your continued participation in
         any such Plan on at least as favorable a basis to you as is the case on
         the date hereof, or which would materially reduce your benefits under
         any of such Plan or deprive you of any material benefit enjoyed by you
         on the date hereof, except as proposed by the President and Chief
         Executive Officer to the Board or the Compensation Committee thereof;
         or

                  (iv) the Company's requiring you to be based anywhere other
         than the Company's principal executive offices as they were located as
         of the date hereof except for required travel on the Company's business
         to an extent substantially consistent with your business travel
         obligations on behalf of the Company prior to the date hereof; or

                  (v) the failure by the Company upon a Change of Control to
         obtain the assumption of this Agreement by any Successor (other than by
         merger or consolidation); or

                  (vi) any purported termination by the Company of your
         employment which is not effected pursuant to a Notice of Termination;
         and for purposes of this Agreement, no such purported termination shall
         be effective; or

                  (vii) any refusal by the Company to continue to allow you to
         attend to matters or engage in activities not directly related to the
         business of the Company which you attended to or were engaged in prior
         to the date hereof and which do not otherwise violate your obligations
         hereunder; or

                  (viii) any continuing material default by the Company in the
         performance of its obligations under this Agreement, whether before or
         after a Change of Control.



                                       A-3

<PAGE>   16



         "LTIP PLAN" means the Company's 1995 Incentive Stock Plan, as the same
shall be amended or modified to, but not on or after, any Effective Date.

         "OTHER PLANS" means any thrift, bonus or incentive, stock option,
deferred compensation or stock accumulation, pension, medical, disability,
accident or life insurance plan, program or policy of the Company which is
intended to benefit the chief executive officer and/or executive officers of the
Company (other than the Bonus Plan, Defined Contribution Plan or LTIP Plan).

         "PERSON" means any individual, corporation, partnership, group,
association or other "person," as such term is used in Sections 13(d) and 14(d)
of the Exchange Act, other than the Company or any Plans sponsored by the
Company.

         "PLANS" means the Bonus Plan, Defined Benefit Plan, Defined
Contribution Plan, LTIP Plan and Other Plans.

         "RETIREMENT" means termination of your employment on or after the last
day of the year in which you become 65 years of age.

         "SEVERANCE PACKAGE" means your right to receive, and the Company's
obligation to pay and/or perform on, the following:

                  (a) on or within ten days following an applicable Termination
         Date, the Company shall pay to you a lump sum, cash amount equal to the
         sum of (i) three times the highest annual rate of Base Salary in effect
         during the current year or any of the three years preceding the
         Termination Date and (ii) three times the greater of (A) the maximum
         award you would have been eligible to receive under the Bonus Plan in
         respect of the current year, regardless of any limitations otherwise
         applicable to the Bonus Plan (i.e., the failure to have completed any
         vesting period or the current measurement period, or the failure to
         achieve any performance goal applicable to all or any portion of the
         measurement period) or (B) the largest award earned (whether or not
         paid) under the Bonus Plan in respect of any of the three years
         preceding the Termination Date, or (C) 50% of your Base Pay at the
         applicable Termination Date or (D) $100,000; and

                  (b) in addition to your entitlement to the vested portion of
         your interest in the Defined Contribution Plan in accordance with the
         terms of that plan, the Company shall pay to you, on or within ten days
         following the applicable Termination Date, an amount in cash equal to
         the unvested portion of the Company's contributions to your account;
         and

                  (c) immediately upon an applicable Termination Date, all
         options and rights to other forms of contingent incentive compensation
         granted to you under the LTIP Plan which are not then fully vested,
         exercisable, distributable or otherwise performable by the Company
         shall immediately become fully vested, exercisable, distributable or
         otherwise performable by the Company as though all applicable
         Performance Targets had been met or achieved at maximum levels for all
         Performance Periods (including those extending beyond the Termination
         Date) and any and all other LTIP Plan contingencies had been satisfied
         in full


                                       A-4

<PAGE>   17



         at the Termination Date and the maximum benefits thereunder had been
         earned at the Termination Date; and

                  (d) following an applicable Termination Date, you shall
         receive all benefits under and in accordance with the terms of the
         Plans (other than the Bonus, Defined Contribution and LTIP Plans and
         medical, disability, accident and life insurance plans and programs for
         all of which separate provision is made herein) in which you are at the
         time a participant, but only to the extent the same are vested under
         the terms of such Plans at the Termination Date; and

                  (e) unless you give notice to the Company pursuant to the next
         sentence within 90 days following an applicable Termination Date, the
         Company shall maintain in full force and effect, at its sole expense
         for the continued benefit of you and your dependents during the period
         from the Termination Date through the earlier of (i) three years from
         the Termination Date or (ii) the commencement date of equivalent
         benefits from a new employer, all insured and self-insured employee
         welfare benefit Plans in which you were entitled to participate
         immediately prior to the Termination Date. Alternatively, if you notify
         the Company that you so elect, the Company shall pay you within five
         days of such notification an amount in cash equal to three times the
         average annual cost incurred by the Company during the preceding three
         calendar years as a result of your participation in such welfare
         benefit Plans (or such fewer whole calendar years as you have so
         participated). If your participation in any such welfare benefit Plan
         is barred, the Company, at its sole cost and expense, shall arrange to
         have issued for the benefit of you and your dependents individual
         policies of insurance providing benefits substantially similar (on an
         after-tax basis) to those which you are entitled to receive under such
         Plans. You shall not be required to pay any premiums or other charges
         for such policies. At the end of three years after the Termination
         Date, the Company, provided you have not previously received or are not
         then receiving equivalent benefits from a new employer, shall arrange,
         at its sole cost and expense, to enable you to convert you and your
         dependents' coverage under such Plans to individual policies or
         programs upon the same terms as employees of the Company may apply for
         such conversions.

         Anything else in this Agreement to the contrary notwithstanding, if an
applicable Termination Date results from a merger or a tender offer or an
exchange offer, then unless otherwise agreed to by both parties in writing, all
amounts to which you shall at the closing thereof, or which you may upon
subsequent notice or lapse of time, become entitled under this Severance Package
or Section 10 shall be accelerated to, and become immediately due and payable
contemporaneously with, such closing.

         "SHARES" means shares of Common Stock, $.01 par value, of the Company
at the date of this Agreement, as the same shall be subsequently amended,
modified or changed. The term "market value," when used with respect to a Share
means the closing price therefor on the New York Stock Exchange or if not listed
thereon, on such other exchange as shall at the time constitute the principal
exchange for trading in Shares.



                                       A-5

<PAGE>   18


         "TERMINATION PACKAGE" means your right to receive, and the Company's
obligation to pay and/or perform on, the following:

                  (a) on or within ten days following an applicable Termination
         Date, the Company shall pay to you a lump sum cash amount equal to the
         sum of (i) the highest annual rate of Base Salary in effect during the
         current year or any of the two years preceding the Termination Date and
         (ii) the greater of (A) the maximum award you would have been eligible
         to receive under the Bonus Plan in respect of the current year,
         regardless of any limitations otherwise applicable to the Bonus Plan
         (i.e., the failure to have completed any vesting period or the current
         measurement period, or the failure to achieve any performance goal
         applicable to all or any portion of the measurement period) or (B) the
         largest award earned (whether or not paid) under the Bonus Plan in
         respect of any of the three years preceding the Termination Date; and

                  (b) following an applicable Termination Date, you shall
         receive all benefits under and in accordance with the terms of the
         Plans (other than the Bonus Plan and welfare benefit Plans, for which
         separate provision is made herein) in which you are at the time a
         participant, but only to the extent the same are vested under the terms
         of such Plans at the Termination Date; and

                  (c) the Company shall maintain in full force and effect, at
         its sole expense for the continued benefit of you and your dependents
         during the period from the Termination Date through the earlier of (i)
         one year from the Termination Date or (ii) the commencement date of
         equivalent benefits from a new employer, all insured and self-insured
         employee pension, medical, dental, disability, accident and life
         insurance welfare benefit Plans in which you were entitled to
         participate immediately prior to the Termination Date. If your
         participation in any such welfare benefit Plan is barred, the Company,
         at its sole cost and expense, shall arrange to have issued for the
         benefit of you and your dependents individual policies of insurance
         providing benefits substantially similar (on an after-tax basis) to
         those which you are entitled to receive under such Plans.

         "VOTING SECURITIES" means, with respect to any corporation or business
enterprise, those securities which under ordinary circumstances are entitled to
vote for the election of directors or others charged with comparable duties
under applicable law.




                                       A-6