<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 15, 1997
REGISTRATION NO. 333-36887
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
MPW INDUSTRIAL SERVICES GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
Ohio 7349 31-1567260
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
OF INCORPORATION OR CLASSIFICATION CODE NUMBER)
ORGANIZATION)
</TABLE>
------------------------
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
(614) 927-8790
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
Daniel P. Buettin
Vice President, Chief Financial Officer and Secretary
MPW Industrial Services Group, Inc.
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
(614) 927-8790
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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<S> <C>
Robert J. Gilker, Esq. Timothy R. Bryant, Esq.
Jones, Day, Reavis & Pogue McDermott, Will & Emery
1900 Huntington Center 227 West Monroe Street
Columbus, Ohio 43215 Chicago, Illinois 60606-5096
(614) 469-3939 (312) 372-2000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO 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 of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
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.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED OCTOBER 15, 1997
3,750,000 SHARES
MPW INDUSTRIAL SERVICES GROUP, INC. [LOGO]
COMMON STOCK
------------------------
All of the shares of common stock (the "Common Stock") offered hereby
(the "Offering") are being offered by MPW Industrial Services Group, Inc. ("MPW"
or the "Company"). Prior to the Offering, there has been no public market for
the Common Stock. It is currently estimated that the initial public offering
price will be between $9.00 and $11.00 per share. See "Underwriting" for a
discussion of the factors considered in determining the initial public offering
price. Application has been made to list the Common Stock for quotation on the
Nasdaq National Market under the symbol "MPWG."
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 6 HEREOF.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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========================================================================================================
PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS COMPANY (1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................................... $ $ $
- --------------------------------------------------------------------------------------------------------
Total (2).................................... $ $ $
========================================================================================================
</TABLE>
(1) Before deducting expenses estimated at $600,000, which are payable by the
Company.
(2) The Company has granted the Underwriters a 30-day option to purchase up to
562,500 additional shares of Common Stock solely to cover over-allotments,
if any. To the extent the option is exercised, the Underwriters will offer
the additional shares at the Price to Public shown above. If the option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
------------------------
The shares of Common Stock are offered by the Underwriters, subject to
prior sale, when, as and if delivered to and accepted by them, and subject to
certain other conditions. It is expected that delivery of the shares of Common
Stock will be made on or about , 1997 at the offices of Raymond
James & Associates, Inc., St. Petersburg, Florida.
RAYMOND JAMES & ASSOCIATES, INC. ROBERT W. BAIRD & CO.
INCORPORATED
The date of this Prospectus is , 1997
<PAGE> 3
The inside front cover of the Prospectus will contain pictures as follows:
1. Under the "MPW" logo in the upper left-hand corner is a background
picture containing two MPW employees at a pulp and paper mill cleaning
the inside of a lime kiln. The MPW employee on the right, with the
four-inch, black flex hose, is vacuuming the soft lime from the lime
kiln with a vacuum system. The second employee is working ahead of the
vacuum hose loosening the adhered hardened lime from the kiln with a
Jackhammer. Both employees are wearing white tyvek coveralls, dust
masks, gloves, boots and hard hats to provide proper safety protection
from the lime environment.
2. On top of the background picture are four pictures as follows: (i) above
the caption "PROCESS WATER PURIFICATION" is a photograph of an MPW 48(#)
mobile semi-trailer containing a portable, reverse osmosis water
treatment system; (ii) above the caption "TECHNOLOGY-BASED SERVICES" is
a photograph of an MPW employee reviewing a blueprint of the design and
construction of a new piece of equipment while cutting material with
cutting equipment. The employee is wearing a protective face shield and
hard hat; (iii) above the caption "INDUSTRIAL CONTAINER CLEANING" is a
photograph of an MPW employee, wearing a hard hat and coveralls,
aligning the cleaning system of container cleaning equipment suspended
over a large paint container about to be cleaned; and (iv) above the
caption "WATER BLASTING SERVICES" is a photograph of an MPW employee
demonstrating a water blasting technique with a water blasting gun. The
employee is wearing coveralls, gloves, protective goggles and a hard
hat.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENTS, STABILIZING TRANSACTIONS, SYNDICATE SHORT COVERING
TRANSACTIONS, AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. Unless otherwise indicated, the
information in this Prospectus assumes no exercise of the Underwriters'
over-allotment option. Except where the context otherwise requires, references
to the terms "MPW" and the "Company" refer to MPW Industrial Services Group,
Inc. and its subsidiaries. References to fiscal years are references to the
twelve-month period ending on June 30 of the stated year.
THE COMPANY
MPW Industrial Services Group, Inc. is a leading provider of
technology-based industrial services, including industrial cleaning and facility
support services, industrial air filtration services, industrial container
cleaning, industrial process water purification and other specialized services.
In fiscal 1997, the Company provided services to more than 500 customers,
located primarily in the Midwestern and Southeastern United States. The Company
serves customers in a broad range of industries including automotive, electric
power, chemical, pulp and paper, steel, transportation, aerospace and other
heavy manufacturing. The Company's services typically are performed within large
industrial facilities and require the use of Company-owned equipment and
specially trained personnel. The Company believes that its services are
generally recurring in nature and are essential to manufacturing efficiency and
safety at its customers' facilities. The Company has over 25 years of experience
and currently has more than 1,300 employees, a network of 31 offices and over
1,000 pieces of operating equipment.
The Company was founded in 1972 by Monte R. Black, Chairman and Chief
Executive Officer, as a local power washing business. Since that time, the
Company has grown primarily by broadening its customer base, expanding the scope
of services it offers and increasing the number of locations from which it
provides services. These remain the principal elements of the Company's strategy
for generating internal revenue growth in the future. In recent years, the
Company has expanded from its historical strength in industrial cleaning and
facility support services into other industrial services including air
filtration, container cleaning and process water purification. MPW believes that
diversification into other in-plant and related services provides opportunities
to expand the Company's presence within the facilities in which it already
operates. MPW believes it can also generate internal growth by gaining access to
other facilities owned and operated by its existing customers.
An independent market research firm has performed a study for the Company
that indicates the industrial cleaning and maintenance market is estimated to be
in excess of $12 billion in annual revenues, and is estimated to exceed 9,500
firms. The Company believes the industry has begun a period of consolidation as
firms combine to improve personnel and equipment utilization, increase market
share, reduce cost of capital and acquire additional service lines useful to
their customers.
The industrial services industry has benefitted from a trend toward
outsourcing among industrial concerns as a means of reducing costs and enhancing
operational efficiency. With outsourcing, companies contract with reliable
suppliers for the performance of certain non-core functions, allowing them to
focus on core business activities. Outsourcing allows companies to convert fixed
costs to variable costs, streamline their organizations and shift the cost of
specialized equipment to service providers like MPW.
In recent years, the Company added several key members to its management
team and developed a strategy to more aggressively pursue acquisitions and
internal growth initiatives, as well as to implement systems, controls and other
infrastructure necessary to support future growth. In April 1996, the Company
expanded into the complementary business of industrial air filtration services
through the acquisition of Weston Engineering ("Weston"), with revenues of $8.6
million for the twelve-month period ended June 30, 1996. In October 1997, the
Company signed a definitive agreement to acquire ESI International ("ESI"),
another industrial air filtration services business, with revenues of $6.7
million for the twelve-month period ended June 30, 1997.
3
<PAGE> 5
The Company's objective is to be the premier provider of technology-based
industrial cleaning, facility support and related services to industrial
customers. The principal elements of MPW's competitive strategy are the
following:
- Industrial Market Focus. MPW focuses only on the industrial market and
offers a diverse range of services to maximize market share within a
specific industrial facility.
- Ongoing Customer Relationships. In fiscal 1997, over 95% of the
Company's revenues were derived from customers for whom MPW performed
work during the preceding fiscal year.
- Quality Workforce. MPW uses broad and proactive recruiting, safety and
training programs to develop a quality workforce.
- Technology-Based Services. Customers retain MPW to perform services
requiring technology, experience or equipment that would be difficult or
costly for customers to duplicate. Advanced equipment and skilled
personnel are essential for minimizing task completion time and facility
downtime.
- Responsiveness to Customers. The ability to provide immediate response
is a critical component of the Company's strategy. The Company maintains
a culture of responsiveness to its customers by establishing facilities
close to or within its customers' locations and using a decentralized
operational structure.
The Company's principal executive offices are located at 9711 Lancaster
Road, S.E., Hebron, Ohio 43025 and its telephone number is (614) 927-8790.
THE OFFERING
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<S> <C>
Common Stock offered by the Company.......... 3,750,000 shares
Common Stock to be outstanding after the
Offering................................... 9,950,000 shares (1)
Use of Proceeds.............................. To repay the outstanding principal amount of
the promissory notes (the "AAA Notes") issued
in connection with a dividend of
undistributed S Corporation earnings (the
"Distribution"), to repay indebtedness and
for general corporate purposes, including
potential acquisitions. See "Use of Proceeds"
and "Prior S Corporation Status."
Proposed Nasdaq National Market symbol....... MPWG
</TABLE>
- ---------------
(1) Excludes 1,204,000 shares of Common Stock issuable upon exercise of
outstanding stock options at a weighted average exercise price of $3.94 per
share. See "Executive Compensation -- Stock Option Plans." Also excludes
67,800 shares of Common Stock to be issued in connection with the Company's
repurchase of certain minority stock ownership interests. See "Certain
Related Party and Other Transactions."
The business of the Company operates primarily through its wholly-owned
subsidiary, MPW Industrial Services, Inc. ("Industrial"), which, prior to the
Offering, was an S Corporation for tax purposes. Prior to the Offering, (i) the
shareholders of Industrial exchanged their shares of Industrial for shares of
the Company, and (ii) the Company effected a 4-to-1 stock split. As a result of
these transactions, Industrial's S Corporation status was terminated and the
shareholders of Industrial owned all of the outstanding Common Stock of MPW.
Unless otherwise indicated, the information in this Prospectus assumes the
consummation of the above transactions.
This Prospectus contains certain forward-looking statements that are based
on the beliefs of the Company's management, as well as assumptions made by, and
information currently available to, the Company's management. The Company's
future results, performance or achievements could differ materially from those
expressed in, or implied by, any such forward-looking statements. See "Risk
Factors" for a discussion of factors that could cause or contribute to such
material differences.
4
<PAGE> 6
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA (1)
--------------------------------------------------------- ----------------------------
THREE MONTHS THREE MONTHS
ENDED YEAR ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------------------- ----------------- JUNE 30, -----------------
1994 1995 1996 1997 1996 1997 1997 1996 1997
------- ------- ------- ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues.............................. $49,172 $56,305 $58,430 $72,908 $19,422 $21,865 $72,908 $19,422 $21,865
Costs and expenses:
Cost of services.................... 31,759 37,768 37,543 48,460 12,641 14,380 48,460 12,641 14,380
Selling, general and administrative
expenses.......................... 9,265 10,208 11,009 13,603 3,205 3,545 14,311 3,382 3,587
Depreciation and amortization (2)... 4,589 4,356 4,933 3,655 935 866 3,042 750 841
Deferred stock option compensation
(3)............................... -- -- -- 2,764 2,189 160 -- -- --
Non-recurring item (4).............. 1,011 -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total costs and expenses............ 46,624 52,332 53,485 68,482 18,970 18,951 65,813 16,773 18,808
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from operations................ 2,548 3,973 4,945 4,426 452 2,914 7,095 2,649 3,057
Interest expense, net................. 274 104 541 974 214 335 9 3 3
Minority earnings..................... -- -- 172 207 125 99 -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from continuing operations
before income taxes................. 2,274 3,869 4,232 3,245 113 2,480 7,086 2,646 3,054
Provision for income taxes (5)........ 134 331 360 1,085 44 149 2,834 1,058 1,222
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from continuing operations..... 2,140 3,538 3,872 2,160 69 2,331 4,252 1,588 1,832
Discontinued operations, net of income
taxes............................... 268 367 163 -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income............................ $ 2,408 $ 3,905 $ 4,035 $ 2,160 $ 69 $ 2,331 $ 4,252 $ 1,588 $ 1,832
======= ======= ======= ======= ======= ======= ======= ======= =======
Earnings per common share............. $ 0.40 $ 0.15 $ 0.17
======= ======= =======
Weighted average common shares
outstanding......................... 10,747 10,747 10,747
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------------
PRO FORMA
ACTUAL AS ADJUSTED (6)
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<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................................... $ 9,234 $14,792
Net property and equipment................................................................ 23,119 17,406
Total assets.............................................................................. 46,671 46,917
Total debt and capital leases, including current maturities............................... 15,089 --
Total shareholders' equity................................................................ 17,921 36,658
</TABLE>
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(1) The pro forma statement of income data give effect to the following
adjustments as if the transactions had been completed as of the beginning of
the periods indicated: (i) the adjustments to historical lease costs for
certain facilities leased by the Company from related parties and the
recharacterization of such leases from capital to operating; (ii) the
elimination of deferred stock option compensation; (iii) the reduction of
interest expense related to existing debt obligations to be repaid from the
net proceeds from the Offering; (iv) the elimination of minority earnings as
a result of the Company's purchase of certain minority stock ownership
interests; and (v) the recording of federal and state income taxes as if all
operations of the Company had been taxed as a C Corporation.
The pro forma weighted average common shares outstanding has been increased
by the 3,750,000 shares of the Offering, the net proceeds of which will fund
the Distribution and the retirement of existing debt obligations, and the
Company's issuance of 67,800 shares of Common Stock in exchange for certain
minority stock ownership interests. See "Selected Unaudited Condensed Pro
Forma Financial Data" and related Notes thereto, included elsewhere in this
Prospectus.
The Company expects that its quarter ended December 31, 1997 will be
affected by two non-recurring adjustments. The Company will incur a non-cash
expense of approximately $2.6 million, net of tax, associated with the
elimination of repurchase obligations contained in certain of its stock
option plans. Also, in connection with the termination of S Corporation
status, the Company will record a non-cash benefit from net deferred tax
assets of approximately $3.3 million. These adjustments have not been
reflected in the pro forma statement of income data.
(2) Effective July 1, 1996, the Company changed its useful life assumptions for
certain categories of property and equipment, resulting in a $1,620,000
reduction in depreciation and amortization expense in fiscal 1997. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview" and Note 3 to the Consolidated Financial Statements.
(3) Represents compensation expense related to the Company's obligation, under
certain conditions, to repurchase securities issued under certain of the
Company's stock option plans. Such repurchase obligation terminates
effective with the Offering.
(4) Represents charges related principally to the termination of certain
workers' compensation insurance with the State of Ohio's Bureau of Workers'
Compensation by the Company. This change occurred effective October 1, 1993
whereby the Company restructured its primary workers' compensation insurance
program with respect to the State of Ohio.
(5) Certain of the Company's subsidiaries were historically taxed as C
Corporations and appropriate provisions for federal and state income taxes
were recorded.
(6) Adjusted to reflect the following as if they had occurred on September 30,
1997: (i) the Distribution and a related sale of certain assets; (ii) the
recognition of net deferred tax assets resulting from the termination of S
Corporation status; (iii) the elimination of deferred stock option
compensation related to certain of the Company's stock option plans; (iv)
the issuance of Common Stock in connection with the Company's purchase of
certain minority stock ownership interests; (v) the elimination of capital
lease liability as a result of restructuring certain lease agreements with
related parties; and (vi) the sale of 3,750,000 shares of Common Stock
hereby offered by the Company and the application of the net proceeds
therefrom.
5
<PAGE> 7
RISK FACTORS
An investment in the Common Stock offered by this Prospectus involves a
high degree of risk. In addition to the other information in this Prospectus,
the following risk factors should be considered carefully in evaluating an
investment in the Common Stock.
HIGHLY COMPETITIVE INDUSTRY
The industrial services industry is highly competitive and fragmented and
requires substantial labor and capital resources. Each of the markets in which
the Company competes or will likely compete is served by one or more of the
larger national or regional industrial services companies, as well as numerous
local industrial services companies of varying sizes and resources. The larger
industrial services companies may have significantly greater financial and other
resources than the Company. From time to time, these or other competitors may
reduce the price of their services in an effort to expand market share. These
practices may either require MPW to reduce the pricing of its services or result
in a loss of business. Any inability of the Company to compete with larger and
better capitalized companies could have a material adverse effect on the
Company. See "Business -- Competition."
DEPENDENCE ON CUSTOMER OUTSOURCING
The Company's business and growth strategies depend in large part on the
continuation of a trend toward outsourcing industrial services. The decision to
outsource is dependent upon customer perception that outsourcing may provide
higher quality services at a lower overall cost and such decision is subject to
change at the customer's discretion. There can be no assurance that the trend
toward outsourcing industrial services will continue, as organizations, due to
perceptions of quality or pricing advantages, may elect to perform such services
in-house. In addition, labor unions representing employees of certain of the
Company's current and prospective customers have generally opposed the
outsourcing trend and sought to direct to union employees the performance of
services typical of those offered by the Company. A reversal of the trend toward
outsourcing could have a material adverse effect on the Company. See
"Business -- Industry Overview."
CONCENTRATION OF CUSTOMERS
In fiscal 1997, MPW's ten largest customers represented 42.1% of revenues.
General Motors Corporation represented 10.4% of fiscal 1997 revenues.
Substantially all of the Company's arrangements to perform services may be
terminated or modified by its customers at will and without penalty. Although
MPW has historically maintained long-term relationships with many customers, a
portion of the Company's services are project oriented and the Company has few
long-term contracts. If MPW were to lose one or more large customers and were
not successful in replacing the lost revenues in a reasonable time period, this
loss could have a material adverse effect on the Company.
AVAILABILITY OF LABOR PERSONNEL
MPW's industrial cleaning and facility support services are labor
intensive. The Company employs a large number of hourly workers in order to
provide its services and incurs substantial expenses for recruiting and training
new personnel. The current low unemployment rate in certain geographic areas in
which MPW operates has contracted the labor pool available to the Company in
those areas. The Company has historically experienced a high level of turnover,
and there can be no assurance that the Company will be able to successfully
attract and retain employees. A change in labor market conditions that either
further reduces the availability of hourly workers or increases significantly
the cost of such labor could have a material adverse effect on the Company.
RISKS RELATED TO GROWTH THROUGH ACQUISITIONS
One of MPW's business strategies is to increase its revenues, earnings and
market share through the acquisition of businesses that complement its existing
operations, expand its service capabilities or provide it with an entry into
markets it does not currently serve. Growth through acquisitions involves
substantial risks, including the risk of improper valuation of the acquired
business and the risk of inadequate integration. There can be no assurance that
suitable acquisition candidates will be available, that the Company will have
access to financing or that MPW will be able to acquire or profitably integrate
such additional businesses. The Company may compete for acquisition and
expansion opportunities with companies that have significantly greater financial
resources than the Company. In addition, to the extent that consolidation
becomes more prevalent in the industry, the prices
6
<PAGE> 8
for attractive acquisition candidates may be increased, and there can be no
assurance that businesses acquired in the future will achieve levels of
profitability that justify the investment therein. See "Business -- Strategy."
DEPENDENCE ON SENIOR MANAGEMENT
MPW's success is largely dependent upon the efforts of the members of its
senior management team, particularly Monte R. Black, Chairman and Chief
Executive Officer, and Ira O. Kane, President and Chief Operating Officer. If
these executive officers or certain other officers of the Company do not to
continue in their present positions, or if a material number of other managers
fail to continue with the Company, MPW's business could be adversely affected.
See "Management."
FLUCTUATIONS IN QUARTERLY RESULTS AND GENERAL ECONOMIC CONDITIONS
The Company's quarterly results of operations may fluctuate as a result of
a number of factors over which the Company has no control, including its
customers' budgetary constraints, the timing and duration of its customers'
planned maintenance activities and shutdowns, changes in its competitors'
pricing policies and general economic conditions. Also, certain operating and
fixed costs remain relatively constant throughout the fiscal year, which when
offset by differing levels of revenues may result in fluctuations in quarterly
operating results. The Company's results of operations tend to vary seasonally,
with the third quarter generating the least amount of revenues, higher revenues
in the second quarter and the greatest amount of revenues in the first and
fourth quarters. Many of the Company's customers operate in industries, such as
automobile and steel production, which have shown historical sensitivity to
recessions and other adverse conditions in the general economy. A general or
regional economic downturn may result in a reduction of demand for the Company's
services.
NO PRIOR PUBLIC MARKET, DETERMINATION OF OFFERING PRICE AND POTENTIAL STOCK
PRICE VOLATILITY
Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock was determined by
negotiation between the Company and the Underwriters and may bear no
relationship to the price at which the Common Stock will trade after the
Offering. See "Underwriting" for the factors considered in determining the
initial public offering price. MPW has made application to list the Common Stock
for quotation on the Nasdaq National Market; however, there can be no assurance
that an active trading market will develop subsequent to the Offering or, if
developed, that it will be sustained. After the Offering, the market price of
the Common Stock may be subject to significant fluctuations in response to
numerous factors, including the timing of any acquisitions by the Company,
variations in the Company's annual or quarterly financial results or those of
its competitors, changes by financial analysts in their estimates of the future
earnings of the Company, conditions in the economy in general or in the
Company's industry in particular, unfavorable publicity or changes in applicable
laws and regulations. The stock market has also, from time-to-time, experienced
significant price and volume fluctuations that have often been unrelated to the
operating performance of companies whose securities are publicly traded.
Following periods of volatility in the market price of a company's securities,
securities class action litigation frequently has been commenced against such
companies. Such litigation could result in substantial costs and a diversion of
management's attention and resources, which could have a material adverse effect
on the Company. Any adverse determination in such litigation could also subject
the Company to significant liabilities.
VOTING CONTROL OF CURRENT SHAREHOLDERS
Upon the completion of the Offering, Monte R. Black, Chairman and Chief
Executive Officer, will own beneficially, directly and indirectly, approximately
62.3% of the outstanding Common Stock (approximately 59.0% assuming exercise of
the Underwriters' over-allotment option). Accordingly, Mr. Black will be able to
exercise control over the Company's affairs, the election of individuals to the
Board of Directors and the outcome of other matters submitted to a vote of
shareholders. See "Principal Shareholders."
DILUTION
Purchasers of the Common Stock offered hereby will experience an immediate
and substantial dilution of $6.61 in the net tangible book value per share of
their investment (assuming an initial public offering price of $10.00 per
share). In the event MPW issues additional Common Stock in the future, including
Common Stock that may be issued in connection with future acquisitions,
purchasers of Common Stock in the Offering may experience further dilution in
the net tangible book value per share of the Common Stock. See "Dilution."
7
<PAGE> 9
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market following
the Offering, or the perception that such sales could occur, could adversely
affect prevailing market prices for the Common Stock. Upon consummation of the
Offering, 9,950,000 shares of Common Stock will be outstanding. The shares of
Common Stock sold in the Offering are freely saleable in the public market,
unless acquired by affiliates of MPW. All of the shares outstanding prior to
completion of the Offering are subject to contractual or other restrictions that
prohibit the shareholder from offering, selling, transferring, pledging,
contracting to do the same or otherwise disposing of such shares for a period of
180 days after the date of this Prospectus without the consent of Raymond James
& Associates, Inc. After this 180-day period expires, 6,200,000 shares will be
eligible for resale in the public market under Rule 144 promulgated under the
Securities Act of 1933, as amended ("Securities Act"). See "Shares Eligible for
Future Sale." After the completion of the Offering, the Company intends to file
a registration statement under the Securities Act to register up to 1,204,000
shares issuable upon exercise of stock options granted or to be granted under
its stock option plans. After the filing of such registration statement and
subject to certain restrictions under Rule 144, these shares will be freely
saleable in the public market immediately following exercise of such options.
See "Description of Capital Stock," "Executive Compensation -- Stock Option
Plans," "Shares Eligible for Future Sale" and "Certain Related Party and Other
Transactions."
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Amended and Restated Articles of
Incorporation (the "Articles of Incorporation") and the Amended and Restated
Code of Regulations (the "Code of Regulations") and of the Ohio General
Corporation Law (the "OGCL"), together or separately, could discourage potential
acquisition proposals, delay or prevent a change in control of the Company and
limit the price that certain investors might be willing to pay in the future for
the Common Stock, including provisions that (i) require certain supermajority
votes; and (ii) establish certain advance notice procedures for nomination of
candidates for election as directors and for shareholder proposals to be
considered at shareholders' meetings. The Board of Directors of the Company will
also have authority to issue one or more series of preferred stock without
further shareholder approval and upon terms as the Board of Directors may
determine. Issuance of preferred stock could adversely affect holders of the
Common Stock in the event of liquidation of the Company or delay, defer or
prevent an attempt to obtain control of the Company by means of a tender offer,
merger, proxy contest or otherwise. Additionally, Section 1701.831 of the OGCL
contains provisions that require shareholder approval of any proposed "control
share acquisition" of any Ohio corporation; and Chapter 1704 of the OGCL
contains provisions that restrict certain business combinations and other
transactions between an Ohio corporation and interested shareholders. See
"Description of Capital Stock -- Ohio Law and Certain Charter Provisions."
DIVIDEND POLICY
The Company currently anticipates that, after the completion of the
Offering, all of its earnings will be retained for development and expansion of
the Company's business and does not anticipate paying any cash dividends on the
Common Stock in the foreseeable future. The Company's credit facilities contain
covenants that prohibit the payment of cash dividends. See "Dividend Policy."
8
<PAGE> 10
PRIOR S CORPORATION STATUS
Effective July 1, 1987, MPW Industrial Services, Inc. ("Industrial")
elected to be treated as an S Corporation under subchapter S of the Internal
Revenue Code of 1986, as amended, for federal income tax purposes and under
comparable state tax laws. As a result of the S Corporation election,
Industrial's shareholders have been taxed directly on Industrial's income,
whether or not such income was distributed, and Industrial has not been subject
to federal income tax at the corporate level.
Since 1987, Industrial has made periodic distributions to its shareholders.
The balance of taxed or taxable accumulated undistributed earnings that have not
been distributed is reflected in an "accumulated adjustments account" (the "AAA
account"). Prior to the Offering, Industrial terminated its S Corporation status
and declared a dividend of $22.4 million evidenced by promissory notes (the "AAA
Notes"), an amount approximately equal to the undistributed earnings in the AAA
account on which the shareholders either have paid or will be required to pay
income taxes (the "Distribution"). A portion of the proceeds of the Offering
will be used to repay the AAA Notes. See "Use of Proceeds" and "Certain Related
Party and Other Transactions."
The existing shareholders have agreed to indemnify the Company for any
federal and state taxes (including penalties and interest, if any) payable by
the Company as a result of Industrial not qualifying as an S Corporation for any
period prior to the termination of its S Corporation status.
USE OF PROCEEDS
The net proceeds to the Company from the sale of 3,750,000 shares of Common
Stock offered hereby are estimated to be $34.3 million at an assumed initial
offering price of $10.00 per share ($39.5 million if the Underwriters'
over-allotment option is exercised in full). Of the net proceeds to be received
by the Company, approximately $13.4 million will be used to repay a portion of
the outstanding principal amount of the AAA Notes, and approximately $13.0
million will be used to repay outstanding indebtedness including amounts owed
under a revolving credit facility and long-term note arrangement with the
Company's principal banks (the "Banks"). The net proceeds will also be used to
pay when due the remaining $5.4 million outstanding principal amount of the AAA
Notes (approximately $1.1 million due on December 31, 1997 and the balance of
$4.3 million due on April 15, 1998), which amount approximates the income tax
liability of Industrial's shareholders for income earned from January 1, 1997
through the termination of S Corporation status. The remaining net proceeds, if
any, will be used for general corporate purposes, including potential
acquisitions. Although the Company regularly engages in discussions relating to
potential acquisitions, it is not currently a party to any letters of intent or
other agreements with respect to any probable acquisitions other than the
acquisition of ESI. Pending specific application of the net proceeds, the
Company intends to invest unused net proceeds in short-term investment grade
securities or money market instruments.
As of September 30, 1997, the Company's revolving credit facility had an
outstanding balance of $7.1 million and a weighted average interest rate of
7.06%. The revolving credit facility bears interest at the prime rate less 0.5%
or, at the Company's option, the Eurodollar market rate plus 1.0%. Under the
long-term note arrangement, the Company entered into promissory notes with the
Banks with an aggregate outstanding balance as of September 30, 1997 of $5.9
million. The long-term notes bear interest at the prime rate less 0.25% or, at
the Company's option, the Eurodollar market rate plus 1.25%. The weighted
average interest rate for the notes as of September 30, 1997 was 6.91%.
DIVIDEND POLICY
The Company anticipates that all future earnings will be retained to
finance the Company's operations and for the growth and development of its
business. Accordingly, the Company does not currently anticipate paying cash
dividends on its Common Stock. The payment of any future dividends will be
subject to the discretion of the Board of Directors of the Company and will
depend on the Company's results of operations, financial condition, contractual
restrictions, restrictions imposed by applicable law and other factors that the
Board of Directors deem relevant. The Company's credit facilities contain
covenants that prohibit the payment of cash dividends.
9
<PAGE> 11
CAPITALIZATION
The following table sets forth the current maturities of long-term debt and
capitalization as of September 30, 1997 on an actual basis, pro forma as of such
date to reflect the transactions set forth in Note (1) hereto, and pro forma as
adjusted to reflect the transactions set forth in Note (1) hereto and
application of the estimated net proceeds from the sale of the 3,750,000 shares
of Common Stock offered hereby at an assumed initial offering price of $10.00
per share, after deducting the estimated underwriting discounts and commissions
and offering expenses. See "Use of Proceeds." This table should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------------------------
PRO FORMA
ACTUAL PRO FORMA (1) AS ADJUSTED
------- ------------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Current maturities of long-term debt and capital lease
obligations............................................ $ 965 $ 880 $ --
======= ======= =======
Long-term debt, excluding current maturities............. $12,096 $30,896 $ --
Capital lease obligations, excluding current
maturities............................................. 2,028 -- --
Shareholders' equity:
Preferred stock, $0.01 par value; 5,000,000 shares
authorized; no shares outstanding................... -- -- --
Common stock, no par value; 30,000,000 shares
authorized; 6,200,000 shares outstanding, Actual;
6,267,800 shares outstanding, Pro Forma; 10,017,800
shares outstanding, Pro Forma As Adjusted........... 62 63 100
Additional paid-in capital............................. 1,070 1,055 35,293
Retained earnings...................................... 16,789 1,265 1,265
------- ------- -------
Total shareholders' equity..................... 17,921 2,383 36,658
------- ------- -------
Total capitalization........................... $32,045 $33,279 $36,658
======= ======= =======
</TABLE>
- ---------------
(1) Pro forma data assume the following transactions had occurred on September
30, 1997: (i) the issuance of $18.8 million of AAA Notes; (ii) the
recognition of net deferred tax assets resulting from the termination of S
Corporation status; (iii) the elimination of deferred stock option
compensation related to certain of the Company's stock option plans; (iv)
the issuance of Common Stock in connection with the Company's purchase of
certain minority stock ownership interests; (v) the elimination of capital
lease liability as a result of restructuring certain lease agreements with
related parties; and (vi) the reclassification of the remaining AAA account
from retained earnings to additional paid-in capital as a result of
termination of S Corporation status. See "Prior S Corporation Status" and
Note 14 to the Consolidated Financial Statements.
10
<PAGE> 12
DILUTION
The Company's net tangible book value as of September 30, 1997 was $15.4
million (excluding intangible assets of $2.5 million), or $2.48 per share of
Common Stock. Net tangible book value per share represents the amount of the
Company's total tangible assets less its total liabilities, divided by the total
number of shares of Common Stock outstanding. After giving effect to the
adjustments described in Note (1) hereto, the pro forma net tangible book value
as of September 30, 1997 would have been $(335,000) or $(0.05) per share.
After giving effect to the adjustments described in Note (1) hereto and to
the sale by the Company of Common Stock in the Offering at an assumed initial
public offering price of $10.00 per share (and after deduction of the estimated
underwriting discounts and commissions and offering expenses), the pro forma net
tangible book value as of September 30, 1997 would have been approximately $33.9
million or $3.39 per share of Common Stock. This represents an immediate
increase in pro forma net tangible book value of $3.44 per share to existing
shareholders and an immediate dilution in net tangible book value of $6.61 per
share to purchasers of Common Stock in the Offering, as illustrated in the
following table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............................ $10.00
Net tangible book value per share at September 30, 1997.................. $ 2.48
Adjustment in net tangible book value per share (1)...................... (2.53)
------
Pro forma net tangible book value per share.............................. (0.05)
------
Increase per share attributable to existing shareholders................... 3.44
------
Pro forma net tangible book value per share after the Offering............. 3.39
------
Net tangible book value dilution per share to new investors................ $ 6.61
======
</TABLE>
- ---------------
(1) Pro forma data assume the following transactions had occurred on September
30, 1997: (i) the issuance of $18.8 million of AAA Notes; (ii) the
recognition of net deferred tax assets resulting from the termination of S
Corporation status; (iii) the elimination of deferred stock option
compensation related to certain of the Company's stock option plans; and
(iv) the issuance of Common Stock in connection with the Company's purchase
of certain minority stock ownership interests. See "Prior S Corporation
Status" and Note 14 to the Consolidated Financial Statements.
The Company had outstanding stock options exercisable for 1,204,000 shares
of Common Stock at a weighted average exercise price of $3.94 per share. If
these options are exercised, further dilution to new investors will occur. The
Company may also issue additional shares to effect future potential business
acquisitions or upon exercise of future stock option grants or equity awards,
which could also result in additional dilution to then existing shareholders.
See "Executive Compensation -- Stock Option Plans."
11
<PAGE> 13
SELECTED CONSOLIDATED FINANCIAL DATA
The selected financial data presented below as of and for each of the years
in the five-year period ended June 30, 1997 have been derived from the
Consolidated Financial Statements, which have been audited by Ernst & Young LLP,
independent auditors. The selected financial data set forth below for the
Company as of and for the three months ended September 30, 1996 and 1997 have
been derived from unaudited consolidated financial statements of the Company
that have been prepared on the same basis as the audited Consolidated Financial
Statements and include all adjustments, consisting of normal recurring
adjustments, that the Company considers necessary for a fair presentation of the
financial position and results of operations for the periods presented.
Operating results for the three-month period ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the full fiscal
year. The selected consolidated financial data below should be read in
conjunction with the audited Consolidated Financial Statements and Notes thereto
included elsewhere in this Prospectus and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
----------------------------------------------- -----------------
1993 1994 1995 1996 1997 1996 1997
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues......................... $47,875 $49,172 $56,305 $58,430 $72,908 $19,422 $21,865
Costs and expenses:
Cost of services............... 31,696 31,759 37,768 37,543 48,460 12,641 14,380
Selling, general and
administrative expenses..... 8,260 9,265 10,208 11,009 13,603 3,205 3,545
Depreciation and amortization
(1)......................... 4,493 4,589 4,356 4,933 3,655 935 866
Deferred stock option
compensation (2)............ -- -- -- -- 2,764 2,189 160
Non-recurring item (3)......... -- 1,011 -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total costs and expenses....... 44,449 46,624 52,332 53,485 68,482 18,970 18,951
------- ------- ------- ------- ------- ------- -------
Income from operations........... 3,426 2,548 3,973 4,945 4,426 452 2,914
Interest expense, net............ 479 274 104 541 974 214 335
Minority earnings................ -- -- -- 172 207 125 99
------- ------- ------- ------- ------- ------- -------
Income from continuing operations
before income taxes............ 2,947 2,274 3,869 4,232 3,245 113 2,480
Provision for income taxes (4)... 112 134 331 360 1,085 44 149
------- ------- ------- ------- ------- ------- -------
Income from continuing
operations..................... 2,835 2,140 3,538 3,872 2,160 69 2,331
Discontinued operations, net of
income taxes................... 121 268 367 163 -- -- --
------- ------- ------- ------- ------- ------- -------
Net income....................... $ 2,956 $ 2,408 $ 3,905 $ 4,035 $ 2,160 $ 69 $ 2,331
======= ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
----------------------------------------------- SEPTEMBER 30,
1993 1994 1995 1996 1997 1997
------- ------- ------- ------- ------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................. $ 6,106 $ 4,394 $ 3,906 $ 2,521 $ 7,069 $ 9,234
Net property and equipment....... 14,391 13,004 12,775 21,258 23,400 23,119
Total assets..................... 26,948 26,579 27,695 39,468 45,518 46,671
Total debt and capital leases,
including current maturities... 5,163 2,328 1,234 12,471 14,732 15,089
Total shareholders' equity....... 16,808 16,681 16,605 16,067 16,711 17,921
</TABLE>
- ---------------
(1) Effective July 1, 1996, the Company changed its useful life assumptions for
certain categories of property and equipment, resulting in a $1,620,000
reduction in depreciation and amortization expense in fiscal 1997. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview" and Note 3 to the Consolidated Financial Statements.
(2) Represents compensation expense related to the Company's obligation, under
certain conditions, to repurchase securities issued under certain of the
Company's stock option plans. Such repurchase obligation terminates
effective with the Offering.
(3) Represents charges related principally to the termination of certain
workers' compensation insurance with the State of Ohio's Bureau of Workers'
Compensation by the Company. This change occurred effective October 1, 1993
whereby the Company restructured its primary workers' compensation program
with respect to the State of Ohio.
(4) Certain of the Company's subsidiaries were historically taxed as C
Corporations and appropriate provisions for federal and state income taxes
were recorded.
12
<PAGE> 14
SELECTED UNAUDITED CONDENSED PRO FORMA FINANCIAL DATA
The selected unaudited condensed pro forma financial data have been derived
from the historical financial statements of the Company. The unaudited pro forma
statement of income data for the year ended June 30, 1997 and the three months
ended September 30, 1997 give effect to the Offering and certain other
transactions described below as if these transactions had been completed by the
beginning of each such period. The unaudited condensed pro forma balance sheet
data give effect to such transactions and to the Offering and the use of the net
proceeds therefrom after deducting underwriting discounts and estimated expenses
payable by the Company as if such transactions had occurred on September 30,
1997. See "Prior S Corporation Status" and "Use of Proceeds." The Company
expects that its quarter ended December 31, 1997 will be affected by two
non-recurring adjustments. The Company will incur a non-cash expense of
approximately $2.6 million, net of tax, associated with the elimination of
repurchase obligations contained in certain of its stock option plans. Also, in
connection with the termination of S Corporation status, the Company will record
a non-cash benefit from net deferred tax assets of approximately $3.3 million.
These adjustments have not been reflected in the pro forma statement of income
data. The selected unaudited condensed pro forma financial data and accompanying
Notes should be read in conjunction with the Consolidated Financial Statements
and the Notes thereto appearing elsewhere herein. The unaudited pro forma
financial data is provided for informational purposes only and does not purport
to represent what the Company's financial position or results of operations
actually would have been had the transactions described therein been completed
as of the date or at the beginning of the period indicated, or to project the
Company's financial position or results of operations at any future date or for
any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
YEAR ENDED JUNE 30, 1997 1997
------------------------------------ ------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- --------- ---------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues..................................... $ 72,908 $ -- $72,908 $ 21,865 $ -- $21,865
Costs and expenses:
Cost of services........................... 48,460 -- 48,460 14,380 -- 14,380
Selling, general and administrative
expenses................................. 13,603 708(1) 14,311 3,545 42(1) 3,587
Depreciation and amortization.............. 3,655 (613)(1) 3,042 866 (25)(1) 841
Deferred stock option compensation......... 2,764 (2,764)(2) -- 160 (160)(2) --
------- ------- ------- ------- ------- -------
Total costs and expenses................... 68,482 (2,669) 65,813 18,951 (143) 18,808
------- ------- ------- ------- ------- -------
Income from operations....................... 4,426 2,669 7,095 2,914 143 3,057
Interest expense, net........................ 974 (347)(1) 9 335 (85)(1) 3
(618)(3) (247)(3)
Minority earnings............................ 207 (207)(4) -- 99 (99)(4) --
------- ------- ------- ------- ------- -------
Income before income taxes................... 3,245 3,841 7,086 2,480 574 3,054
Provision for income taxes................... 1,085 1,749(5) 2,834 149 1,073(5) 1,222
------- ------- ------- ------- ------- -------
Net income................................... $ 2,160 $ 2,092 $ 4,252 $ 2,331 $ (499) $ 1,832
======= ======= ======= ======= ======= =======
Earnings per common share.................... $ 0.40 $ 0.17
======= =======
Weighted average common shares outstanding
(6)........................................ 10,747 10,747
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
--------------------------------------------------------------------
PRO FORMA OFFERING PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA ADJUSTMENTS (7) AS ADJUSTED
---------- ----------- --------- --------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Assets:
Current assets..................................... $ 20,458 $ 2,094(8) $22,552 $ 2,499 $25,051
Net property and equipment......................... 23,119 (2,113)(1) 17,406 -- 17,406
(3,600)(9)
Other assets....................................... 3,094 200(10) 4,460 -- 4,460
1,166(8)
------- -------- ------- -------- -------
Total assets....................................... $ 46,671 $ (2,253) $44,418 $ 2,499 $46,917
======= ======== ======= ======== =======
Liabilities and equity:
Current liabilities, excluding current maturities
of long-term debt................................ $ 10,259 $ -- $10,259 $ -- $10,259
Current maturities of long-term debt............... 965 (85)(1) 880 (880) --
Long-term debt, excluding current maturities....... 12,096 22,400(11) 30,896 (30,896) --
(3,600)(9)
Capital leases, excluding current maturities....... 2,028 (2,028)(1) -- -- --
Deferred stock option compensation................. 2,924 (2,924)(2) -- -- --
Minority interest.................................. 478 (478)(4) -- -- --
Shareholders' equity............................... 17,921 (15,538)(12) 2,383 34,275 36,658
------- -------- ------- -------- -------
Total liabilities and equity....................... $ 46,671 $ (2,253) $44,418 $ 2,499 $46,917
======= ======== ======= ======== =======
</TABLE>
13
<PAGE> 15
- ---------------
(1) Reflects the adjustment of historical lease costs for certain facilities
leased by the Company from related parties and the recharacterization of
such leases from capital to operating pursuant to restructured lease
agreements to take effect in connection with the Offering.
(2) Reflects the elimination of deferred stock option compensation related to
the Company's obligation, under certain conditions, to repurchase
securities issued under certain of the Company's stock option plans. Such
repurchase obligation terminates effective with the Offering.
(3) Reflects the reduction in interest expense related to the repayment of
existing debt obligations from the net proceeds of the Offering.
(4) Reflects the elimination of minority earnings and liability as a result of
the issuance of Common Stock in connection with the Company's purchase of
certain minority stock ownership interests to take effect upon completion
of the Offering.
(5) Reflects the recording of federal and state income taxes at an effective
rate of 40% as if all operations of the Company had been taxed as a C
Corporation.
(6) Based on the weighted average common shares outstanding as adjusted for the
Company's sale of 3,750,000 shares of Common Stock in the Offering, the net
proceeds of which will be used to fund the Distribution and the reduction
of existing debt obligations, and the Company's issuance of 67,800 shares
of Common Stock in exchange for certain minority stock ownership interests.
(7) Reflects the sale of 3,750,000 shares of Common Stock offered by the
Company and the application of the net proceeds therefrom.
(8) Reflects the recognition of net deferred tax assets resulting from the
termination of S Corporation status.
(9) Reflects the sale of a corporate aircraft to an entity controlled by the
Company's principal shareholder.
(10) Reflects increase in goodwill related to purchase of minority stock
ownership interests.
(11) Reflects the Distribution.
(12) Reflects adjustments to shareholders' equity as follows (in thousands):
<TABLE>
<S> <C>
AAA account distribution............................................ $(22,400)
Elimination of deferred stock option compensation................... 2,924
Common stock issued to acquire minority stock ownership interests... 678
Recognition of net deferred tax assets.............................. 3,260
--------
$(15,538)
========
</TABLE>
14
<PAGE> 16
(13) The following table presents the Company's unaudited consolidated quarterly
financial results on a pro forma basis represented by the individual line
items reflected in the Company's consolidated statements of income for each
of the four quarters in fiscal 1997. This information has been presented on
the same basis as the Selected Unaudited Condensed Pro Forma Financial Data
appearing previously and, in the Company's opinion, contains all necessary
adjustments (consisting of normal recurring adjustments) to present fairly
the Company's unaudited quarterly results. Interim operating results,
however, are not necessarily indicative of the Company's results for any
future period. See "Risk Factors -- Fluctuations in Quarterly Results and
General Economic Conditions."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------- YEAR ENDED
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, JUNE 30,
1996 1996 1997 1997 1997
------------- ------------- ------------- ------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues.................... $19,422 $18,157 $15,994 $19,335 $ 72,908
Costs and expenses:
Cost of services.......... 12,641 11,925 10,900 12,994 48,460
Selling, general and
administrative
expenses............... 3,382 3,476 3,588 3,865 14,311
Depreciation and
amortization........... 750 759 764 769 3,042
------- ------- ------- ------- -------
Total costs and
expenses............... 16,773 16,160 15,252 17,628 65,813
------- ------- ------- ------- -------
Income from operations...... 2,649 1,997 742 1,707 7,095
Interest expense, net....... 3 2 2 2 9
------- ------- ------- ------- -------
Income before income
taxes..................... 2,646 1,995 740 1,705 7,086
Provision for income
taxes..................... 1,058 798 296 682 2,834
------- ------- ------- ------- -------
Net income.................. $ 1,588 $ 1,197 $ 444 $ 1,023 $ 4,252
======= ======= ======= ======= =======
Earnings per common share... $ 0.15 $ 0.11 $ 0.04 $ 0.10 $ 0.40
======= ======= ======= ======= =======
Weighted average common
shares outstanding........ 10,747 10,747 10,747 10,747 10,747
</TABLE>
15
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Prospectus contains certain forward-looking statements that are based
on the beliefs of the Company's management, as well as assumptions made by, and
information currently available to, the Company's management. The Company's
future results, performance or achievements could differ materially from those
expressed in, or implied by, any such forward-looking statements. See "Risk
Factors" for a discussion of factors that could cause or contribute to such
material differences.
OVERVIEW
The Company has been providing industrial services to customers for over 25
years. In recent years, the Company added several key members to its management
team and developed a strategy to more aggressively pursue acquisitions and
internal growth initiatives, as well as to implement systems, controls and other
infrastructure necessary to support future growth.
In April 1996, the Company expanded into the complementary business of
industrial air filtration services through the acquisition of Weston, with
revenues of $8.6 million for the twelve-month period ended June 30, 1996. In
October 1997, the Company signed a definitive agreement to acquire ESI, another
industrial air filtration services business, with revenues of $6.7 million for
the twelve-month period ended June 30, 1997. The Company intends to continuously
evaluate opportunities to make acquisitions consistent with its growth strategy.
MPW primarily derives its revenues by providing industrial services and
materials under time and materials or fixed price agreements with its customers.
Revenues from time and materials agreements are recognized based on labor and
materials expended. Revenues from fixed price agreements are recorded based on
the percentage of completion method.
Cost of services includes all direct labor, materials, subcontractor and
other costs related to the performance of MPW's services. Cost of services also
includes all costs associated with the Company's operating equipment, excluding
depreciation and amortization.
Selling, general and administrative expenses include management salaries,
clerical and administrative overhead, professional services, costs associated
with marketing and sales efforts and costs associated with the Company's
information systems.
Depreciation and amortization consists of depreciation of operating
equipment and amortization of capital leases and goodwill. Depreciation is
calculated using the straight-line method over the estimated useful lives of
property and equipment. Capital leases are amortized on a straight-line basis
over the lease term and goodwill is amortized on a straight-line basis over a
period not exceeding 25 years. Depreciation and amortization as a percentage of
revenues declined in fiscal 1997 primarily as a result of the Company's decision
to change its estimates of the useful lives of certain property and equipment,
effective July 1, 1996. The Company made this change in order to more accurately
reflect the Company's actual history of useful lives. The Company used the net
book value of each of its property and equipment assets as of July 1, 1996 and
applied the remaining useful life of each asset in the calculation of
depreciation from that date forward. The change reduced fiscal 1997 depreciation
and amortization expense by $1.6 million.
The Company's consolidated results of operations include deferred stock
option compensation in the amounts of $2.8 million for fiscal 1997 and $160,000
for the three months ended September 30, 1997. Under the terms of the Company's
1991 and 1994 stock option plans (the "Prior Stock Option Plans"), the Company
was obligated to repurchase Common Stock issued by exercise of stock options at
prices determined by a formula. The Company recorded deferred stock option
compensation to reflect the appreciation relating to options granted and
outstanding under the Prior Stock Option Plans. See Note 11 to the Consolidated
Financial Statements. The Company's redemption obligation under the Prior Stock
Option Plans terminates upon completion of the Offering. Deferred stock option
compensation relating to the Company's redemption obligation will no longer be
required to be reported in the Company's results of operations in future
periods.
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<PAGE> 18
Effective December 31, 1995, MPW disposed of its 70% interest in B&B
Underground. See Note 4 to the Consolidated Financial Statements. The operations
and subsequent sale of the Company's interest in B&B Underground have been
accounted for as discontinued operations and the Consolidated Financial
Statements have been restated to report this business separately as discontinued
operations for all periods presented.
Prior to the Offering, Industrial's S Corporation status was terminated. As
such, the Company will be subject to applicable corporate income tax rates for
all periods after this date. See "Prior S Corporation Status" and Note 9 to the
Consolidated Financial Statements.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
consolidated statement of income data as a percentage of revenues:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
---------------------------- ---------------------
1995 1996 1997 (1) 1996 (1) 1997 (1)
----- ----- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues........................... 100.0% 100.0% 100.0% 100.0% 100.0%
Costs and expenses
Cost of services................. 67.1 64.3 66.5 65.1 65.8
Selling, general and
administrative expenses....... 18.1 18.8 18.7 16.5 16.2
Depreciation and amortization.... 7.7 8.4 5.0 4.8 4.0
----- ----- ----- ----- -----
Total costs and expenses......... 92.9 91.5 90.1 86.4 85.9
----- ----- ----- ----- -----
Income from operations............. 7.1 8.5 9.9 13.6 14.1
Interest expense, net............ 0.2 0.9 1.3 1.1 1.5
Minority earnings................ -- 0.3 0.3 0.6 0.5
----- ----- ----- ----- -----
Income from continuing operations
before income taxes.............. 6.9% 7.2% 8.2% 11.9% 12.1%
===== ===== ===== ===== =====
</TABLE>
- ---------------
(1) Excludes deferred stock option compensation of $2.8 million for the year
ended June 30, 1997 and $2.2 million and $160,000 for the three months ended
September 30, 1996 and 1997, respectively. Including the effect of such
expense, income from operations as a percentage of revenues would have been
6.1% for the year ended June 30, 1997 and 2.3% and 13.3% for the three
months ended September 30, 1996 and 1997, respectively. Including the effect
of such expense, income from continuing operations before income taxes as a
percentage of revenues would have been 4.5% for the year ended June 30, 1997
and 0.6% and 11.3% for the three months ended September 30, 1996 and 1997,
respectively.
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996
Revenues. Revenues increased by $2.4 million, or 12.6%, to $21.9 million
for the three months ended September 30, 1997 from $19.4 million for the three
months ended September 30, 1996 as a result of internal growth in each of the
Company's principal service lines.
Cost of Services. Cost of services increased by $1.7 million, or 13.8%, to
$14.4 million for the three months ended September 30, 1997 from $12.6 million
for the three months ended September 30, 1996. Cost of services as a percentage
of revenues increased to 65.8% for the three months ended September 30, 1997
from 65.1% for the three months ended September 30, 1996 as a result of certain
projects performed in the prior year's quarter that experienced higher margins
than projects performed in the current year's quarter.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $340,000, or 10.6%, to $3.5 million for the
three months ended September 30, 1997 from $3.2 million for the three months
ended September 30, 1996. This increase was primarily due to the Weston
acquisition, the commencement of operations of the container cleaning facility
and an increase in other infrastructure investments in support of the Company's
growth. Selling, general and administrative expenses decreased as a percentage
of revenues to 16.2% for the three months ended September 30, 1997 from 16.5%
for the three months ended September 30, 1996.
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<PAGE> 19
Depreciation and Amortization. Depreciation and amortization decreased by
$69,000, or 7.4%, to $866,000 for the three months ended September 30, 1997 from
$935,000 for the three months ended September 30, 1996 and decreased as a
percentage of revenues to 4.0% for the three months ended September 30, 1997
from 4.8% for the three months ended September 30, 1996. This decrease was
primarily the result of the expiration of capital leases in April 1997 offset by
increases in depreciation as a result of capital expenditures.
Income from Operations. Income from operations increased $433,000, or
16.4%, to $3.1 million for the three months ended September 30, 1997 from $2.6
million for the three months ended September 30, 1996 and increased as a
percentage of revenues to 14.1% for the three months ended September 30, 1997
from 13.6% for the three months ended September 30, 1996. The increase was due
to the factors discussed above. Income from operations for the three months
ended September 30, 1996 and 1997 have been calculated to exclude deferred stock
option compensation of $2.2 million and $160,000, respectively.
Interest Expense, net. Interest expense, net increased $121,000 to
$335,000 for the three months ended September 30, 1997 from $214,000 for the
three months ended September 30, 1996. This increase was primarily the result of
an increase in the Company's borrowings under its credit facility to support the
Company's working capital needs and the commencement of a capital lease with
respect to the Company's container cleaning facility.
Income from Continuing Operations before Income Taxes. For the reasons
described above, the Company's income from continuing operations before income
taxes increased by $338,000, or 14.7%, to $2.6 million for the three months
ended September 30, 1997 from $2.3 million for the three months ended September
30, 1996. Income from continuing operations before income taxes as a percentage
of revenues increased to 12.1% from 11.9% for the three months ended September
30, 1997 and 1996, respectively.
FISCAL 1997 COMPARED TO FISCAL 1996
Revenues. Revenues increased by $14.5 million, or 24.8%, to $72.9 million
in fiscal 1997 from $58.4 million in fiscal 1996. This increase resulted
primarily from the April 1996 acquisition of Weston, internal growth and
revenues generated from the Company's industrial container cleaning facility
that began full scale operations in September 1996. Revenues, exclusive of
revenues resulting from the Weston acquisition, increased $5.4 million, or 9.7%,
in fiscal 1997 over fiscal 1996. In addition to the opening of the Company's new
industrial container cleaning facility in September 1996, internal growth was
aided by three new offices opened in fiscal 1997 and related new customers,
price increases and increased volume of services provided to certain existing
customers.
Cost of Services. Cost of services increased by $10.9 million, or 29.1%,
to $48.5 million in fiscal 1997 from $37.5 million in fiscal 1996 and increased
as a percentage of revenues to 66.5% in fiscal 1997 from 64.3% in fiscal 1996.
As a percentage of revenues, exclusive of the effect of the Weston acquisition,
costs of services increased to 64.8% for fiscal 1997 from 63.6% for fiscal 1996,
which was primarily a result of investments made in personnel and infrastructure
during fiscal 1996 and fiscal 1997 to strengthen the Company's service delivery
capabilities in certain of its operations. The Weston operations tend to have
higher cost of services as a percentage of revenues than the average for other
Company operations.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $2.6 million, or 23.6%, to $13.6 million in
fiscal 1997 from $11.0 million in fiscal 1996. This increase was primarily due
to the Weston acquisition, the commencement of operations of the container
cleaning facility and an increase in other infrastructure investments in support
of the Company's growth. Selling, general and administrative expenses decreased
as a percentage of revenues to 18.7% for fiscal 1997 from 18.8% for fiscal 1996
primarily due to the benefits of absorbing certain fixed selling, general and
administrative expenses over an increased revenue base.
Depreciation and Amortization. Depreciation and amortization decreased by
$1.3 million, or 25.9%, to $3.7 million in fiscal 1997 from $4.9 million in
fiscal 1996 and decreased as a percentage of revenues to 5.0% for fiscal 1997
from 8.4% for fiscal 1996. Effective July 1, 1996, the Company changed its
estimates for the remaining useful lives of certain property and equipment to
more accurately reflect the Company's actual history
18
<PAGE> 20
of useful lives. The Company used the net book value of each of its property and
equipment assets as of July 1, 1996 and applied the remaining useful life of
each asset in the calculation of depreciation from that date forward.
Income from Operations. Income from operations increased $2.3 million, or
45.4%, to $7.2 million in fiscal 1997 from $4.9 million in fiscal 1996 and
increased as a percentage of revenues to 9.9% for fiscal 1997 from 8.5% for
fiscal 1996. The increase was due to the factors discussed above. The $7.2
million of fiscal 1997 income from operations has been calculated to exclude
$2.8 million of deferred stock option compensation.
Interest Expense, net. Interest expense, net increased $433,000 to
$974,000 in fiscal 1997 from $541,000 in fiscal 1996. This increase was
primarily the result of increased borrowings under the Company's credit
facilities due to the Weston acquisition, the completion of the Company's
industrial container cleaning facility and certain other capital expenditures.
Income from Continuing Operations before Income Taxes. For the reasons
described above, the Company's income from continuing operations before income
taxes increased by $1.8 million, or 42.0%, to $6.0 million in fiscal 1997 from
$4.2 million in fiscal 1996 and increased as a percentage of revenues to 8.2%
for fiscal 1997 from 7.2% for fiscal 1996.
FISCAL 1996 COMPARED TO FISCAL 1995
Revenues. Revenues increased $2.1 million, or 3.8%, to $58.4 million in
fiscal 1996 from $56.3 million in fiscal 1995. This increase resulted primarily
from the Company's internal growth and the April 1996 acquisition of Weston.
Such increase, however, was net of the loss of revenues from two significant
customers in fiscal 1996 and suspension of the Company's industrial container
cleaning operations during fiscal 1996 to complete the construction of its new
container cleaning facility, which began full scale operations in September
1996. Excluding revenues from the customers lost and from the industrial
container cleaning operations in fiscal years 1995 and 1996, the Company's
revenues would have increased 16.8% in fiscal 1996 over fiscal 1995.
Cost of Services. Cost of services decreased by $225,000, or 0.6%, to
$37.5 million in fiscal 1996 from $37.8 million in fiscal 1995 and decreased as
a percentage of revenues to 64.3% for fiscal 1996 from 67.1% for fiscal 1995.
The decrease was primarily a result of the Company's initiatives to improve
safety, reduce turnover and control insurance costs and, to a lesser extent, the
result of increased utilization of the Company's equipment and operations
personnel.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $801,000, or 7.8%, to $11.0 million in
fiscal 1996 from $10.2 million in fiscal 1995 and increased as a percentage of
revenues to 18.8% for fiscal 1996 from 18.1% for fiscal 1995. The increase was
primarily due to the loss of customer revenues and suspension of industrial
container cleaning operations in fiscal 1996.
Depreciation and Amortization. Depreciation and amortization increased by
$577,000, or 13.2%, to $4.9 million in fiscal 1996 from $4.4 million in fiscal
1995 and increased as a percentage of revenues to 8.4% for fiscal 1996 from 7.7%
for fiscal 1995. The increase was a result of depreciation related to increased
capital expenditures during fiscal 1996. During fiscal 1996, the Company had a
total of $14.3 million in capital expenditures, including its new industrial
container cleaning facility, capital equipment required as a result of the
Company's growth and a corporate aircraft. The aircraft was sold by the Company
at fair market value prior to the Offering. See "Certain Related Party and Other
Transactions."
Income from Operations. Income from operations increased $1.0 million, or
24.5%, to $4.9 million in fiscal 1996 from $4.0 million in fiscal 1995 and
increased as a percentage of revenues to 8.5% for fiscal 1996 from 7.1% for
fiscal 1995. The increase was due primarily to the factors discussed above.
Interest Expense, net. Interest expense, net increased $437,000 to
$541,000 in fiscal 1996 from $104,000 in fiscal 1995. This increase was
primarily the result of increased borrowings under the Company's credit
facilities due to the Weston acquisition, the construction of the Company's
industrial container cleaning facility and capital expenditures.
19
<PAGE> 21
Income from Continuing Operations before Income Taxes. For the reasons
described above, the Company's income from continuing operations before income
taxes increased by $363,000, or 9.4%, to $4.2 million in fiscal 1996 from $3.9
million in fiscal 1995 and increased as a percentage of revenues to 7.2% for
fiscal 1996 from 6.9% for fiscal 1995.
QUARTERLY RESULTS AND SEASONALITY
The Company's results of operations tend to vary seasonally, with the third
quarter generating the least amount of revenues, higher revenues in the second
quarter and the greatest amount of revenues in the first and fourth quarters.
The Company's quarterly results of operations may fluctuate significantly as a
result of a number of factors over which the Company has no control, including
its customers' budgetary constraints, the timing and duration of its customers'
planned maintenance activities and shutdowns, changes in its competitors'
pricing policies, and general economic conditions. Also, certain operating and
fixed costs remain relatively constant throughout the fiscal year, which when
offset by differing levels of revenues may result in fluctuations in quarterly
operating results.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity have been internally generated
cash flows from operations and borrowings under credit arrangements. Principal
uses of liquidity are capital expenditures, acquisitions and working capital
associated with the Company's growth. The Company plans to repay all or a
significant portion of its existing bank debt with proceeds from the Offering.
To provide additional liquidity, the Company has obtained a commitment from Bank
One and National City Bank, the Company's current banks, to provide a credit
facility of approximately $50.0 million following the Offering. See "Use of
Proceeds." The Company believes that the new credit facility will facilitate the
Company's expansion strategy by making increased resources available for
potential capital expenditures and acquisitions of other businesses. See
"Business -- Strategy."
During fiscal 1995, 1996 and 1997, net cash provided by operating
activities was $10.1 million, $7.4 million and $ 5.0 million, respectively. At
September 30, 1997, the Company had cash and cash equivalents of $532,000,
working capital of $9.2 million and had availability under its existing credit
agreements of $7.9 million.
Capital expenditures totaled $5.4 million, $14.3 million and $5.9 million
in fiscal 1995, 1996 and 1997, respectively, primarily for additional operating
equipment. During fiscal 1996, the Company completed its industrial container
cleaning facility for a total cost of approximately $5.8 million. The Company's
policy is to generally purchase or construct equipment required for its
operations rather than to lease such equipment.
During fiscal 1995, 1996, and 1997, the Company made distributions to its
shareholders primarily to fund their payment of taxes due on S Corporation
income in the amounts of $4.0 million, $4.6 million and $2.3 million,
respectively.
The Company is party to various credit arrangements with the Banks (the
"Existing Credit Agreement"). The Company currently has a $12.0 million
revolving credit facility that matures on December 31, 1998. The Company's
current borrowing rate under the revolving credit facility is the prime rate
minus 0.5% or, at the Company's option, the Eurodollar market rate plus 1.0%.
Outstanding borrowings under the revolving credit facility were $7.1 million as
of September 30, 1997. The Company's weighted average interest rate on the
revolving credit facility as of September 30, 1997 was 7.06%. In addition, the
Company has term loans with the Banks totaling $5.9 million as of September 30,
1997, with maturities ranging from December 31, 2002 to July 31, 2006. The
Company's current borrowing rate for the term loans is the Eurodollar market
rate plus 1.25%. The Company's weighted average interest rate for the term loans
as of September 30, 1997 was 6.91%. The Company expects to repay the outstanding
balance of the revolving credit facility and the term notes with the proceeds of
the Offering.
Following the Offering, the Company expects to enter into a new credit
agreement with the Banks (the "New Credit Agreement") to replace its Existing
Credit Agreement. The New Credit Agreement will provide the Company with a $50.0
million, three-year, unsecured revolving credit facility with similar terms and
conditions
20
<PAGE> 22
as are in the Existing Credit Agreement. The Company believes that the New
Credit Agreement will provide it with additional financial and operating
flexibility. Specifically, the New Credit Agreement will increase the Company's
borrowing capacity, will permit the Company to continue to borrow at
Eurodollar-based rates and will facilitate capital expenditures and
acquisitions. Availability under the New Credit Agreement will be based on the
relationship of the Company's total long-term debt to equity and the pricing of
such funding will change in accordance with formulas based on aggregate
borrowings and financial performance as measured by interest coverage and by the
ratio of debt to equity, similar to the Existing Credit Agreement.
The Company believes that the proceeds from the Offering, cash on hand,
cash flow from operations and available borrowings under its Existing Credit
Agreement will be sufficient to fund its currently planned capital projects and
operations.
The Company continually seeks opportunities to expand its industrial
services business. If acquisition opportunities develop, the Company may be
required to obtain additional financing.
INFLATION
The effects of inflation on the Company's operations were not significant
during the periods presented in the Consolidated Financial Statements.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted for financial
statements issued for periods ending after December 15, 1997. This statement
establishes standards for computing and presenting earnings per share. It
requires dual presentation of basic and diluted earnings per share on the face
of the income statement and a reconciliation between the computations. The
Company has not yet determined the impact of Statement No. 128 on its reported
earnings per share.
In June 1997, the Financial Accounting Standards Board issued Statement No.
131, Disclosures about Segments of an Enterprise and Related Information, which
is effective for fiscal years beginning after December 15, 1997. This statement
establishes requirements for reporting information about operating segments.
This statement may require a change in the way the Company presently reports
financial information; however, the extent of the change, if any, has not been
determined.
21
<PAGE> 23
BUSINESS
GENERAL
MPW Industrial Services Group, Inc. is a leading provider of
technology-based industrial services, including industrial cleaning and facility
support services, industrial air filtration services, industrial container
cleaning, industrial process water purification and other specialized services.
In fiscal 1997, the Company provided services to more than 500 customers,
located primarily in the Midwestern and Southeastern United States. The Company
serves customers in a broad range of industries including automotive, electric
power, chemical, pulp and paper, steel, transportation, aerospace and other
heavy manufacturing. The Company's services typically are performed within large
industrial facilities and require the use of Company-owned equipment and
specially trained personnel. The Company believes that its services are
generally recurring in nature and are essential to manufacturing efficiency and
safety at its customers' facilities. The Company has over 25 years of experience
and currently has more than 1,300 employees, a network of 31 offices and over
1,000 pieces of operating equipment.
INDUSTRY OVERVIEW
The industrial services industry encompasses a broad range of manufacturing
support activities such as cleaning, maintenance, turn around services,
demolition and remediation. Farkas Berkowitz & Company, an independent market
research firm, has performed a study for the Company that indicates that the
industrial cleaning and maintenance market is in excess of $12 billion in annual
revenues.
The industrial services market is experiencing growth as increased
competition is driving manufacturers to improve efficiency by reducing efforts
expended on non-core operating activities. To increase efficiency, many
companies are outsourcing non-core services and reducing their number of
suppliers by developing mutually beneficial partnerships. Outsourcing allows
companies to convert fixed costs to variable costs and streamline their
organizations. More specifically, companies who outsource these types of
services can reduce the number of permanent employees dedicated to non-core
activities, increase their access to new technologies, reduce capital costs by
shifting the costs of specialized equipment to their service providers and
reduce liabilities by redirecting accountability. By reducing the number of
suppliers, companies are able to lower administrative costs and supervision,
increase suppliers' accountability and reduce potential liabilities. The Company
believes that the outsourcing of such non-core functions allows manufacturers to
better focus on revenue producing activities.
The industrial cleaning and facility support segment of the industrial
services market is fragmented and is estimated to exceed 9,500 firms, most of
which are small and local in scope, with a limited number of national or major
regional firms. The ability to offer customers a broad range of services at
multiple locations is becoming an important factor as more companies realize the
benefits of outsourcing. The Company believes that the industrial services
industry has begun a period of consolidation as firms combine to improve
personnel and equipment utilization, increase their market penetration, reduce
capital costs and acquire additional skills useful to the customers they serve.
STRATEGY
The Company's primary long-term objective is to be the premier provider of
technology-based industrial cleaning, facility support and related services to
industrial customers. The Company's principal competitive advantages are the
quality of the equipment that it uses, its ability to respond quickly to
customer needs and its reputation for competent and professional personnel. MPW
intends to maintain its primary focus on providing industrial cleaning and
related services while continuing to offer complementary services as a means to
expand existing relationships and attract new opportunities. The principal
elements of the Company's competitive and growth strategies are the following:
COMPETITIVE STRATEGY
Industrial Market Focus. The Company attributes its growth and
profitability, in part, to its specialization in services required by customers
in basic manufacturing and process industries. This focus enables it to develop
22
<PAGE> 24
customer-specific expertise, build customer relationships and provide
high-quality services. The Company's exclusive focus differentiates it from
certain of its competitors that provide services outside industrial markets.
Ongoing Customer Relationships. In fiscal 1997, 95.7% of the Company's
revenues were derived from customers for whom it performed work during the
preceding fiscal year. The Company's goal is to have its customers view MPW as
an extension of their support and maintenance departments. The Company attempts
to develop long-term relationships with its customers rather than have its
services perceived as one-time assignments. To develop these relationships, the
Company remains in communication with most customers on a daily or weekly basis.
Quality Workforce. The Company strives to provide its customers with
quality operations personnel. The Company devotes substantial resources to
safety, training and development programs, and offers benefit programs to
attract and retain personnel. The Company has a broad and proactive recruiting
program that utilizes dedicated recruitment personnel, advertising, employment
agencies, referral networks, job fairs and other initiatives to attract and
screen personnel. The Company believes that minimization of employee turnover is
one of its principal challenges and, therefore, provides economic incentives for
supervisory personnel to reduce turnover.
Technology-Based Services. Customers retain MPW to perform services
requiring technology, experience or equipment that would be difficult or costly
for customers to duplicate. Advanced equipment and skilled personnel are
essential for minimizing task completion time and facility downtime. As of
September 30, 1997, the Company had gross investment of $51.4 million in
property and equipment. The Company has fabrication and design capabilities that
allow it to customize equipment to meet unique operational challenges and
customer circumstances.
Responsiveness to Customers. The ability to provide immediate response
with respect to cleaning and maintenance of equipment or facilities is a
critical component to the Company's services. The Company maintains a culture of
responsiveness to its customers by establishing facilities close to or within
its customers' locations and using a decentralized operational structure. The
Company believes that this responsiveness, including its 24-hour per day
customer service centers and Company-developed software for maintenance
management, will continue to be a strong factor in the development of new
customer relationships and in expanding relationships with existing customers.
GROWTH STRATEGY
Expand Services Within Existing Customer Facilities. The Company intends
to achieve strong internal growth by continuing to focus its resources within
its existing customer facilities to capitalize on the trends toward outsourcing
and supplier reduction. The Company believes that it can become the leading
provider of industrial services within each of these existing facilities. The
Company pursues opportunities for cross-selling its services throughout its
customer base.
Leverage Existing Customer Relationships. MPW is focused on gaining access
to additional facilities owned and operated by its existing customers. When one
of MPW's customers seeks to outsource additional services within current or at
additional facilities, MPW believes its relationships result in an advantage
over competitors without a history of service to the customer. Favorable
references from satisfied personnel in one facility can be instrumental in
capturing such additional work. The Company believes that its efforts to develop
long-term partnerships with its customers will allow it to penetrate multiple
facilities of a given customer without incurring the same level of sales and
marketing costs associated with more traditional growth efforts.
Increase Concentration Within Regional Markets. The Company pursues a
strategy of disciplined expansion into markets within its principal geographic
regions that have a critical mass of industrial facilities. Consistent with this
strategy, the Company opened three new offices during fiscal 1997. Upon entering
a new geographic location, the Company uses its local presence as a selling
feature to penetrate industrial facilities in the area. The Company believes
that its geographic expansion will be predominantly in the Midwestern and
Southeastern United States in order to facilitate resource sharing and
coordination of the delivery of services.
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<PAGE> 25
Grow Through Selective Acquisitions. MPW intends to pursue acquisitions
that enable it to (i) increase its market share, (ii) expand the services that
it provides to customers or (iii) expand its geographic presence. The Company
seeks acquisition candidates with strong local reputations, a stable customer
base, strong management and efficient operating equipment. The industrial
services industry is fragmented with a significant number of small regional and
local companies that offer a more limited range of services than the Company.
MPW has acquired and intends to acquire such businesses, including the recent
acquisition of Weston and the pending acquisition of ESI, each of which provided
or will provide either a new line of services or a new market. The Company
believes it will be successful in competing for acquisitions based on (i) the
reputation of the Company, (ii) the Company's entrepreneurial operating
environment, (iii) its proactive acquisition program, and (iv) the Company's
greater visibility and resources as a public company.
SERVICES
The Company provides technology-based industrial services to over 500
customers from its 31 locations. Although industrial cleaning and facility
support services comprise the Company's primary service lines, MPW provides
other related services, such as air filtration, container cleaning and process
water purification. The ability to offer multiple industrial services is a
critical component of the Company's strategy.
The Company is focused on helping customers to maximize the performance of
their equipment through effective cleaning and to minimize equipment downtime
required to perform maintenance functions. Both factors lead to increased
efficiency and productivity in customer facilities. Several factors are critical
to the Company's ability to provide value-added services, including substantial
commitments to fleet and equipment maintenance and employee training. The
Company believes that the condition of its equipment and the knowledge and
training of its employees are critical components to each of its service
offerings.
The Company has developed PC-based software to assist in task design,
scheduling, execution and monitoring for facility support services and large and
complex projects. With this software, customers can obtain real-time progress
and cost reports on such projects.
The Company's industrial cleaning and facility support services principally
include dry vacuuming, wet vacuuming, industrial power washing, water blasting,
ultra-high pressure water blasting, cryojetic cleaning and chemical cleaning.
Additionally, MPW performs industrial air filtration, container cleaning and
process water purification. The following is a description of the Company's
primary service lines.
INDUSTRIAL CLEANING AND FACILITY SUPPORT
The cornerstone of the Company's business is its industrial cleaning and
facility support services that are provided primarily at customer facilities.
These services accounted for 76% of the Company's fiscal 1997 revenues. The
Company's industrial cleaning and facility support operations are provided on
both a daily recurring basis and a project-by-project basis, as well as pursuant
to longer-term arrangements. The Company uses conventional cleaning techniques
and employs a number of specialized technologies including the following:
Dry Vacuum. The Company's dry vacuum cleaning operation removes sand,
grain, resins, coke, fly ash, powder and dozens of other materials for customers
on regular cleaning schedules, during regularly scheduled outages and in
emergency spill situations. The Company's fleet of dry vacuum vehicles has both
trucks and chassis custom-built to the Company's specifications for maximum
versatility, performance and durability. The dry vacuum vehicles operate around
the clock if required, both on dry vacuum projects and as power boosters for wet
vacuum tankers. MPW performs its dry vacuum services for customers in
environments, such as heavy industrial boilers and precipitator ductwork, and
provides site cleaning at steel mills, foundries, pulp and paper plants, mines,
grain processing plants, aluminum plants and electric generating facilities.
Wet Vacuum. The Company's wet vacuum cleaning operations provide for the
removal of liquid and semi-solid waste for customers involved in the steel,
cement, foundry, aluminum, pulp and paper, mining and grain processing
industries as well as customers involved in electric power generation. The
Company's custom fabricated vacuum tankers, with custom hydraulics and up to
6,500 gallon capacities, can handle liquids, sludges and semi-solids with
pumping capacities ranging from 1,200 cfm to 4,500 cfm. The Company's wet vacuum
24
<PAGE> 26
equipment includes transport tankers, vacuum tankers, straight truck turbo
vacuums and straight truck maxi vacuums.
Industrial Power Wash. The Company's customized, hot high-pressure wash
trucks, ideally suited for off-road heavy equipment cleaning, are totally
self-contained, complete with water supply and 1,500,000 btu kerosene heaters
and can deliver flow rates from 65 gpm to 180 gpm at pressures up to 3,000 psi.
Beyond truck and equipment washing, the Company's industrial power wash business
also services such diverse industrial needs as brick cleaning, building
restoration, factory floor and ceiling cleaning and mill cleaning. MPW also
performs hydrostatic pipeline testing to detect pipeline leaks through the
injection of water at a prescribed pressure. In connection with its industrial
power wash business, the Company has instituted certain environmental safeguards
ranging from the use of environmentally acceptable soaps and degreasers to
post-wash evaluation of residue.
Water Blasting. MPW began its water blasting business by cleaning kettles
and reactors in the paint and resin manufacturing industries. With custom-built
high pressure pumps capable of up to 20,000 psi, and specially designed
components for variable flow rates and coverage, the Company has the equipment
and technology necessary for a variety of water blasting projects. The Company's
water blasting projects have included such diverse services as exterior
cleaning; removal of latex, phosphates, resins, coke, fly ash, black liquor,
water scale, mastics, rust, asphalt, metal burrs, cement and other materials;
the cleaning of piping, heat exchangers and boilers; and the cutting of grooves
in cement pipes. The Company uses water blasting technology in paper mills,
chemical plants, paint plants, oil refineries, power plants and various other
industrial environments.
Ultra-High Pressure Water Blasting. The Company provides ultra-high
pressure industrial cleaning and cutting services using specially designed and
fabricated equipment. Such ultra-high pressure services, ranging from 20,000 psi
to 40,000 psi, provide several benefits over conventional water blasting
methods, including the ability to apply ultra-high pressure cleaning methods
with a very low volume of water, the minimization of surface damage or
degradation, the reduction or elimination of by-products or waste products that
may require clean-up or disposal, the elimination of certain safety hazards as a
"non-spark generating" technique, the elimination of airborne contaminants, and
reduced preparatory and clean-up times. By introducing an abrasive material into
the water stream, ultra-high pressure cleaning can also be used to cut virtually
any material without the use of heat or open flames. The Company provides its
ultra-high pressure cleaning and cutting services primarily to the automotive
and power generation industries.
Cryojetic Cleaning. The Company's cryojetic cleaning process uses dry ice
pellets to remove surface contaminants without abrasives or chemicals, making it
well suited for sensitive cleaning applications, such as removing slag, epoxies,
urethanes or oils from such surfaces as hot molds, printed circuit boards, paint
hooks, storage vessels and radioactive surfaces. MPW's cryojetic system
incorporates the principles of mass transfer, thermal shock and supersonic
velocity, and utilizes dry ice pellets to create an inert non-abrasive, non-
contaminating cleaning medium. Once the dry ice has performed its cleaning
function, it evaporates, leaving only the removed surface contaminate material
as waste. The Company's cryojetic cleaning operation serves utility, automotive,
aerospace, electronics, chemical, tire, rubber and petroleum concerns.
Chemical Cleaning. Using equipment that is specially designed and
maintained, the Company's dedicated team of chemical technicians, engineers and
service engineers provide chemical cleaning services to a variety of customers.
Applications include the cleaning of boilers, cooling systems, condensers, heat
exchangers, tanks, piping systems and evaporators. The Company's chemical
cleaning operations primarily serve customers in the chemical, power utility,
paper, petroleum and steel industries. The Company utilizes mobile laboratories
that allow an analysis of solvents to be made on-site. The customers retain and
dispose of chemicals used in the cleaning process in accordance with their own
environmental programs.
Other Specialized Services. In response to special customer and industry
requirements, the Company has developed sophisticated equipment and technologies
designed to bring higher quality, greater efficiency and safety to the cleaning
process. Examples of such specialized services include: (i) on-line boiler
de-slagging for the electric power industry using high energy, robotically
controlled machinery; (ii) closed loop continuous line
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cleaning to reduce levels of contamination for the nuclear power industry; and
(iii) combination washing and filtration processes to reduce contaminants for
the gas pipeline industry.
INDUSTRIAL AIR FILTRATION SERVICES
MPW entered the industrial air filtration services market in April 1996
through the acquisition of Weston and expects to further expand this business
through its pending acquisition of ESI. The Company provides engineering and
consulting services through the identification of various contaminant sources
and the management of air flow. In addition, the Company installs and regularly
services filtration devices in 15 of the approximately 70 automotive paint shops
in the North American automotive market. Sophisticated air purification systems
are an integral part of quality assurance and production efficiency in
automotive production facilities.
Through the Weston acquisition, the Company is a major authorized
distributor of filters and filtration media and ancillary products used in
production automobile paint shops. The Company also manages certain other
commodity products, such as brushes, gloves, rags and equipment covers, used in
automotive paint shops. The Company markets products manufactured by over 100
different suppliers, primarily to major U.S. auto manufacturers. The Company
typically prices its filters and related products to recover the costs of
providing engineering and consulting support to customers.
INDUSTRIAL CONTAINER CLEANING
The Company's industrial container cleaning operations began in April 1993
within a single customer's facility. In 1996, the Company completed its
dedicated facility located in Chesterfield, Michigan, which is primarily
intended to serve the Mt. Clemens, Michigan facility of E.I. duPont de Nemours'
("duPont") automotive paint division. The automotive industry uses 30 to 575
gallon paint resin containers (called "totes") in the vehicle painting process.
Totes are portable stainless steel or aluminum containers that are filled with
paint resin and are refilled after use. In order to produce a high-quality paint
finish, these totes must be thoroughly cleaned between each use. The Company
utilizes a patented technology to high pressure clean totes. Effective October
1995, the Company entered into a five-year contract, with two three-year
options, with duPont. Under the terms of the contract, the Company is entitled
to a minimum of 45% of the annual tote volume of the Mt. Clemens facility.
Although the Company currently provides industrial container cleaning services
to only one customer, the Company expects to service additional customers at its
Chesterfield facility in the future.
INDUSTRIAL PROCESS WATER PURIFICATION
The Company's industrial water purification operation is based at its
14,000 square foot resin regeneration facility located in Newark, Ohio and
provides pure feed water to customers primarily in the utility, steel and
automotive industries. MPW's water purification business offers reverse osmosis
treatment, deionization technologies and water filtration through a mobile fleet
of equipment and through temporary and permanent on-site servicing. The Company
also provides its water purification services on an emergency response basis.
MPW's industrial process water purification projects are typically priced on a
per gallon basis with the exception of emergency response projects.
The Company's mobile trailers feature an independent valve structure that
allows for maximum flexibility on every site. Because each tank is individually
accessible, it is used only for one pre-designated purpose, so the possibility
of cross-contamination is eliminated. The Company's mobile water units work in
tandem with existing water purification systems or function independently at a
particular site. The Company also offers service exchange, an economical
solution for small quantity requirements. Service exchange tanks are maintained
to the same high standards as the Company's mobile operations and provide an
ideal means of attaining on-site efficiency without incurring capital investment
costs.
MARKETING
MPW markets its services principally through the efforts of 12 marketing
personnel who are in regular contact with existing and prospective customers as
well as MPW account managers. The Company believes that it attracts and retains
customers primarily because of its reputation for quality work, its ability to
respond
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effectively and efficiently to customers' needs and its broad service line.
During fiscal 1997, 95.7% of the Company's revenues were derived from customers
for which the Company performed services in the prior year. The Company engages
in cross-selling as a means to obtain incremental business from its current
customers for new services.
While the Company has long term commitments with certain customers for the
provision of services, most orders for services are received on a job-by-job
basis. In certain instances the Company maintains equipment at the locations of
customers that have issued blanket purchase orders to the Company for the
provision of services over an extended period. Such blanket orders do not
obligate the customer to purchase a specified dollar amount of services. Blanket
orders permit the Company to be contacted to perform services when needed. Such
blanket orders, in combination with the location of the Company's personnel and
equipment, allow the Company to expedite its response to a particular customer's
needs and may constitute a competitive advantage versus service providers
without on-site equipment. The Company provides its services primarily at
prescribed rates or based upon competitive bidding and in some cases through
direct negotiation with the customer. The Company generally does not have any
meaningful backlog of service orders. The Company does not consider backlog to
be an important indicator of future performance.
The Company does not typically provide a separate written guaranty or
warranty to customers for the services it provides. Due to the size and type of
customers serviced, the Company does not generally experience significant delays
or other problems in collecting its accounts receivable.
CUSTOMERS
During fiscal 1997, MPW had sales to more than 500 customers and its ten
largest customers represented 42.1% of revenues. General Motors Corporation
represented approximately 10.4% of MPW's fiscal 1997 revenues. No other customer
represented more than 6% of MPW's fiscal 1997 revenues. MPW's customers are
diversified across a broad range of industries and across several different
markets.
The Company relies heavily on repeat customers and uses both the written
and verbal referrals of its satisfied customers to help generate new customers.
Many of the Company's customers or prospective customers have a qualification
procedure for becoming an approved bidder or vendor based upon the satisfaction
of particular performance and safety standards set by the customer. Such
customers often maintain a list of vendors meeting such standards and award
contracts for individual jobs only to such suppliers. The Company strives to
maintain its status as a preferred or qualified vendor.
EMPLOYEES
As of September 30, 1997, the Company employed over 1,300 full-time
employees. Of these, approximately 75 employees were employed by Aquatech
Environmental, Inc., a subsidiary located in Michigan and a signatory to a
collective bargaining agreement with certain unions. The Company has not
experienced any work stoppages. The Company believes that its relations with
employees are good.
SAFETY, TRAINING AND QUALITY ASSURANCE
Performance of the Company's services requires the use of equipment and
exposure to conditions that can be dangerous. Although the Company is committed
to a policy of operating safely and prudently, the Company has been and is
subject to claims by employees, customers and third parties for property damage
and personal injuries resulting from performance of the Company's services. To
minimize these risks, the Company has adopted broad training and educational
programs and comprehensive safety policies and regulations. In addition, the
Company's management regularly monitors compliance with regulations promulgated
by OSHA and other regulatory authorities and is responsible for directing the
Company's overall safety, training, quality assurance and environmental
compliance programs. In addition, most of the Company's service facilities have
a designated safety/training manager, who has responsibility for overseeing the
Company's safety policies and procedures at the facility.
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<PAGE> 29
The Company performs onsite services using employees who have completed
applicable Company safety and training programs. In addition, the Company's
policies require that employees complete a minimum amount of training and
service with the Company prior to performing more sophisticated and technical
jobs.
EQUIPMENT
Much of the equipment used by the Company is readily available (e.g.,
diesel and electrical motors, vehicular chassis, etc.). The design of other
pieces, especially components assembled into the Company's water cleaning
equipment, is proprietary to the Company. Such components are fabricated in the
Company's machine shops and assembled into finished pieces of equipment at the
Company's headquarters facility in Hebron, Ohio.
The Company operates over 1,000 pieces of equipment, including 650 vehicles
and other pieces of mobile equipment, such as vacuum trucks, wash trucks,
industrial water trailers, tank trucks, pickup trucks and passenger vehicles.
PROPRIETARY TECHNOLOGY
The Company has developed proprietary technology and know-how that it uses
in connection with its provision of cleaning services to customers. Certain of
the equipment used by the Company contains components that are readily available
in the industry; however, the Company custom designs and fabricates many
components. The design of these custom components and the design of certain
equipment used in specialized operations are proprietary to the Company. The
Company owns a substantial number of vehicles and other pieces of production
equipment that have been specially made or customized for MPW. Some of the water
cleaning services provided by the Company are dependent upon the Company's
proprietary technologies and self-designed equipment, tools and accessories.
This technology is not only encompassed by the techniques used by its service
personnel in providing services, but is inherent in the design of the component
parts of the equipment used by the Company in providing those services.
Other than the licensed patented technology with respect to tote cleaning,
the Company does not operate under any licenses or franchises granted by third
parties. The Company has not granted any right to others in connection with the
use of its own technology.
FACILITIES
The Company currently services customers through its Hebron, Ohio
headquarters, 18 leased office locations and 12 offices located on customer
facilities. The 18 leased facilities range from 3,000 to 18,000 square feet in
which the Company houses equipment and maintains a small sales and
administrative staff. The 12 on-site offices are workspaces within a customer
facility that the Company either leases from, or is permitted to occupy by, the
customer. Each location is equipped to perform minor equipment maintenance. The
Company leases its principal executive offices and main fabrication, maintenance
and training facility in Hebron, Ohio, consisting of approximately 67,000 square
feet. The Company also leases its industrial water facility located in Newark,
Ohio and its industrial container cleaning facility located in Chesterfield,
Michigan. The Newark facility consists of approximately 14,000 square feet and
the Chesterfield facility consists of approximately 36,000 square feet. See
"Certain Related Party and Other Transactions."
Most of the Company's facilities are in sufficient proximity to another of
the Company's facilities to enable the Company to transfer equipment and
personnel between locations to respond to fluctuating service demands and to
perform larger projects. The Company believes that such location strategy
maximizes utilization of equipment and personnel. Operating and sales personnel
staff the Company's service facilities and operate under the direction of a
divisional and regional management in accordance with policies, procedures and
objectives established by the Company's management.
COMPETITION
The market for industrial services is fragmented. There are many
competitors, no one of which MPW believes holds a substantial market share. The
Company competes with a number of companies in substantially
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all of the regions in which it operates. Most of these competitors are local
operations with limited service offerings; however, there are a few large
national and regional competitors. In recent years there has been a greater
concentration of resources in the industrial cleaning industry. In October 1996,
ServiceMaster L.P. acquired Premier Manufacturing Support Services, Inc., one of
the leading providers of outsourcing services to the automotive industry. In
July 1997, Philip Services Corp. (formerly Philip Environmental, Inc.) acquired
Allwaste, Inc. and Serv-Tech, Inc., both competitors of the Company. Some of the
larger industrial services companies have significantly greater financial and
other resources than the Company.
The Company believes that the principal competitive factors in the
industrial services industry are experience, capability and price
competitiveness. The Company's principal competitive advantages are the quality
of the equipment that it uses, its ability to respond quickly to customer needs
and its reputation for competent and professional personnel. MPW positions
itself competitively as a value leader and not a price leader, though it remains
necessary for MPW to price its services at levels where its customers will
achieve cost savings versus performing the same services themselves.
REGULATION
The Company's operations are subject to numerous rules and regulations at
the federal, state and local levels. All of the Company's operations are subject
to regulations issued by the United States Department of Labor under the
Occupational Safety and Health Act ("OSHA"). These regulations have strict
requirements for protecting employees involved with any materials that are
classified as hazardous.
The Company's services are structured to avoid any involvement in the
disposal of hazardous wastes and the Company does not believe that its current
activities are subject to the regulations pertaining to hazardous waste
treatment, storage or disposal facilities, nor those regulations pertaining to
hazardous waste generators or transporters. Typically, all hazardous materials
handled by the Company are disposed of by the customer.
The Company believes that it has obtained the permits and licenses required
to perform its business and believes that it is in substantial compliance with
all federal, state and local laws and regulations governing its business. To
date, the Company has not been subject to any significant fines, penalties or
other liabilities under such laws and regulations. However, no assurance can be
given that future changes in such law and regulations, or interpretations
thereof, will not have an adverse impact on the Company's operations.
INSURANCE
Much of the work performed by the Company is pursuant to contracts that
require the Company to indemnify the customer for injury or damage occurring on
the work site. The terms of such indemnity agreements vary, but generally they
provide that the Company is required to indemnify the customer for losses
resulting from or incurred in connection with the actions of the Company in
providing its services whether or not the Company has been negligent. Liability
for such indemnification claims is covered primarily by the Company's insurance
policies.
Although the Company believes that its insurance coverage is consistent
with industry practice, there are exclusions from the Company's insurance
coverage for matters of environmental pollution and other types of environmental
damage claims. An uninsured or partially insured claim, if successful and of
sufficient magnitude, could have a material adverse effect on the Company or its
financial condition.
LEGAL MATTERS
Various legal actions arising in the ordinary course of business are
pending against the Company. None of the litigation pending against the Company,
individually or collectively, is expected to have a material adverse effect on
the Company.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding MPW's current
Directors, executive officers and the persons who will serve as Directors
following completion of the Offering.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ ---- ---------------------------------------------------------------
<S> <C> <C>
Monte R. Black................ 47 Chairman of the Board of Directors and Chief Executive Officer
Ira O. Kane................... 50 President and Chief Operating Officer, Director
Daniel P. Buettin............. 44 Vice President, Chief Financial Officer and Secretary
Brad A. Martyn................ 36 Corporate Controller
Robert E. Oyster.............. 51 Director
Timothy A. Walsh.............. 36 Director
Scott N. Whitlock............. 55 Director
Gerald Nilsson-Weiskott (1)... 48 Director Nominee
</TABLE>
- ---------------
(1) The Company has reached an agreement with Dr. Nilsson-Weiskott to join the
Board of Directors upon the consummation of the Offering.
Monte R. Black founded the Company in 1972 and has served as Chief
Executive Officer and Chairman of the Board of Directors since that time.
Ira O. Kane has served as President, Chief Operating Officer and a Director
of the Company since March 1994. Prior to joining the Company, Mr. Kane served
as chairman of the board of directors and executive vice president of NSC
Corporation, an asbestos abatement and industrial services company, from June
1993 until February 1994. Prior to joining NSC Corporation, Mr. Kane served as a
director and an executive vice president of OHM Corporation, an environmental
services company, from January 1984 until June 1993. Prior to joining OHM
Corporation, Mr. Kane was a partner with Crabbe, Brown, Jones, Potts & Schmidt,
a law firm.
Daniel P. Buettin has served as Vice President, Chief Financial Officer and
Secretary of the Company since September 1995. Prior to joining the Company, Mr.
Buettin served in the following capacities with OHM Corporation: (i) chief
financial officer and vice president of finance from November 1994 until June
1995; (ii) vice president and general manager-midwest region from April 1992
until November 1994; and (iii) corporate controller from February 1987 until
April 1992. Before joining OHM Corporation, Mr. Buettin was employed by Arthur
Andersen & Co., a public accounting firm.
Brad A. Martyn has served as Corporate Controller of the Company since
December 1995. Prior to joining the Company, Mr. Martyn served in the following
capacities for OHM Corporation: (i) corporate director of finance from May 1995
until November 1995; (ii) controller-eastern operations from August 1994 until
May 1995; (iii) controller-southern region from February 1990 until August 1994;
and (iv) corporate tax manager from May 1987 until February 1990. Before joining
OHM Corporation, Mr. Martyn was employed by Arthur Andersen & Co.
Robert E. Oyster has served as a Director of the Company since February
1995. Mr. Oyster served in the following capacities with Sun Television and
Appliances, Inc., an electronics retailer: (i) chairman of the board of
directors and chief executive officer from June 1995 until June 1996; (ii)
president and chief operating officer from November 1989 until February 1996;
and (iii) chief financial officer and treasurer from June 1979 until June 1996.
Prior to this time, Mr. Oyster was employed by KPMG Peat Marwick, a public
accounting firm.
Timothy A. Walsh has served as a Director of the Company since September
1994. Mr. Walsh has served as executive vice president-finance and treasurer for
Farm Family Holdings, Inc., a property and casualty insurance company, since
October 1996. Prior to this time, Mr. Walsh served in the following capacities
with Farm Family Insurance Company, a subsidiary of Farm Family Holdings, Inc.:
(i) senior vice president-finance from March 1996 to November 1996; and (ii)
director of corporate development from September 1995 to March 1996.
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Prior to this time, Mr. Walsh served as Vice President-Finance, Chief Financial
Officer and Secretary of the Company from April 1994 until August 1995 and as
corporate controller for NSC Corporation from June 1992 until April 1994. Before
joining NSC Corporation Mr. Walsh was employed by KPMG Peat Marwick.
Scott N. Whitlock has served as a Director of the Company since November
1995. Mr. Whitlock has been of counsel with Vorys, Sater, Seymour and Pease, a
law firm, since August 1995. Prior to this time, Mr. Whitlock served in the
following capacities with Honda of America Mfg., Inc., an automobile
manufacturer: (i) executive vice president from January 1990 to April 1995; and
(ii) senior vice president and manager of Honda's Marysville, Ohio plant from
January 1985 to January 1990. Before joining Honda of America, Mr. Whitlock was
a partner with Vorys, Sater, Seymour and Pease.
Gerald Nilsson-Weiskott has agreed to serve as a Director of the Company
commencing upon the closing of the Offering. Dr. Nilsson-Weiskott founded and
has served as senior partner of Organizational Horizons Incorporated, a
comprehensive human resource consulting firm, since 1983. Dr. Nilsson-Weiskott
also served as director of marketing and development of Healthy Lifestyle
Consultants, a behavioral health company, from 1979 until March 1997. Prior to
this time, Dr. Nilsson-Weiskott served as the director of training of The Ohio
State University Consultation and Counseling Services.
BOARD OF DIRECTORS
Each Director will hold office until the next annual meeting of
shareholders, at which time he, or his successor, will be elected by a majority
vote of the shareholders. See "Risk Factors -- Voting Control of Management."
MPW's Board of Directors intends to establish an Audit Committee and a
Compensation Committee upon completion of the Offering. The Audit Committee will
be responsible for reviewing with management the financial controls, accounting
and audit and reporting activities of the Company. The Audit Committee will
review the qualifications of the Company's independent auditors, make
recommendations to the Board of Directors regarding the selection and engagement
of independent auditors, review the scope, fees and results of any audit, review
non-audit services and related fees provided by independent auditors, and review
the Company's general policies and procedures with respect to audits, accounting
and financial controls. The Audit Committee will consist of at least three
Directors who are not employees of the Company ("Non-Employee Directors").
The Compensation Committee will be responsible for establishing
compensation policies and administering all salary, bonus and incentive
compensation plans for the Company's officers and key employees. The
Compensation Committee will also administer the Company's 1997 Stock Option Plan
and other employee benefit plans. See "Executive Compensation -- Stock Option
Plans." The Compensation Committee will consist of at least three Non-Employee
Directors.
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EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding compensation
earned by the Company's Chief Executive Officer and each of the Company's
executive officers whose salary and bonus exceeded $100,000 for services
rendered to the Company during fiscal 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
----------------- ---------------------
SALARY BONUS SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS(#) (1)
- ---------------------------------------------------- ---- ------- ------- ---------------------
<S> <C> <C> <C> <C>
Monte R. Black 1997 453,131 100,000 --
Chairman of the Board and Chief Executive Officer
Ira O. Kane 1997 200,000 175,000 518,000
President and Chief Operating Officer
Daniel P. Buettin 1997 110,000 55,000 148,000
Vice President, Chief Financial Officer and
Secretary
Brad A. Martyn 1997 89,375 32,750 74,000
Corporate Controller
</TABLE>
- ---------------
(1) Pursuant to prior contractual obligations of the Company, the stock options
are effective as of periods prior to date of grant.
The Company expects that for the 1998 fiscal year (i) the annual base
salary of Messrs. Black, Kane, Buettin and Martyn will be $450,000, $300,000,
$168,000 and $120,000, respectively, and (ii) such officers will receive bonus
compensation based on the achievement of certain performance objectives. The
Company expects that such bonus compensation will not exceed 50% of the annual
base salaries of Messrs. Black, Kane and Buettin and 35% of the annual base
salary of Mr. Martyn, in each case, subject to the approval of the Compensation
Committee.
EMPLOYMENT AND SEVERANCE AGREEMENTS WITH CERTAIN EXECUTIVES
Ira O. Kane entered into an employment agreement with the Company with a
term extending through June 30, 1999. Mr. Kane's employment agreement provides
for a minimum annual base salary of $300,000 and incentive compensation. In
general, Mr. Kane's employment agreement provides that if he is terminated for
any reason other than cause, he will receive a lump sum severance payment equal
to the greater of (i) the remaining base salary that would have been distributed
to him by the Company under the remaining term of his employment agreement or
(ii) one year's base salary, and the incentive compensation earned by Mr. Kane
for the most recent fiscal year. In the event that Mr. Kane is terminated
without cause following the term of his employment agreement, he will receive a
severance payment of one year's base salary and the incentive compensation
earned for the prior year. In addition, Mr. Kane's employment agreement provides
for the continuation of certain employee benefits for the longer of the
remaining term of the agreement or one year following his termination.
Mr. Kane has agreed pursuant to his employment agreement not to compete
with MPW for the longer of the term of his employment agreement or one year
following the payment of the foregoing severance benefit.
The Company has also entered into separate severance agreements (the
"Severance Agreements"), which are designed to ensure the continuity of
management in the event of a change in control, with Mr. Black, Mr. Kane, Mr.
Buettin and Mr. Martyn. The Severance Agreements provide that following a change
in control such executives will be entitled to severance compensation upon
termination of employment during the period commencing with the occurrence of
the change in control and continuing until the earliest of (i) the third
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<PAGE> 34
anniversary of the occurrence of the change in control, (ii) death or (iii)
attainment of age 65 and the occurrence of one or more certain additional
events.
Under the Severance Agreements, severance compensation will be a lump sum
payment in an amount equal to three times the sum of (i) base pay at the highest
rate in effect for the three calendar years immediately preceding the year in
which the change in control occurs, plus (ii) incentive pay in an amount equal
to not less than the highest aggregate annual bonus, incentive or other payments
of cash compensation made or to be made in regard to services rendered in any
fiscal year during the three fiscal years immediately preceding the year in
which the change in control occurs, less the sum of (iii) any and all payments
received from the Company, a successor or their affiliates following a change in
control, plus (iv) any future payments to be made in accordance with any
employment agreements or other contracts between the Company and such other
entities. For three years following termination, the Company will arrange to
provide the executives with welfare benefits substantially similar to those they
were receiving or were entitled to receive immediately prior to the termination
date, with such three-year period qualifying as service with the Company for the
purpose of determining service credits and benefits under the Company's various
retirement benefit plans.
The Company has agreed to pay any and all legal fees incurred by these
executives in connection with the interpretation, enforcement or defense of
their rights under the Severance Agreements. The terms of the Severance
Agreements run until the later of (i) the close of business on June 30, 2002 or
(ii) the expiration of the three-year period of severance benefit coverage.
Beginning in fiscal 2003, the Severance Agreements will automatically be renewed
for successive one year terms unless the Company or the executive gives notice
of intent to terminate before such renewal.
In the event of a termination of employment following a change in control,
at the option of Mr. Kane, the terms of his employment agreement may govern such
termination in lieu of the terms of his Severance Agreement.
STOCK OPTION PLANS
1997 Stock Option Plan. The Company has adopted a 1997 Stock Option Plan
(the "1997 Plan") that will become effective upon the completion of the
Offering. Options under the 1997 Plan may be (i) options that are intended to
qualify under particular provisions of the Code; (ii) options that are not
intended to so qualify; or (iii) combinations of the foregoing. Such options may
be granted from time to time to attract and retain outstanding individuals as
directors, officers and employees of the Company, and to furnish incentives to
such persons to increase the Company's profits. The exercise price of stock
options granted will be determined by the Compensation Committee administering
the 1997 Plan. These stock options will vest over a period of time determined by
the Compensation Committee and will expire after ten years. The 1997 Plan
authorizes the granting of options up to an aggregate of 700,000 shares of
Common Stock. The Compensation Committee will administer the 1997 Plan and make
the determination as to the grant of awards thereunder.
The Board of Directors has granted under the 1997 Plan stock options to
acquire 225,000 shares of Common Stock at an exercise price equal to the initial
public offering price per share effective upon the consummation of the Offering.
Under the 1997 Plan, each director who is not an associate of the Company
or of a subsidiary will receive, on the first business day after the first
annual meeting of shareholders, a grant of a non-qualified stock option to
purchase 2,000 shares of Common Stock and, on the first business day after each
subsequent annual meeting of shareholders, a grant of a non-qualified stock
option to purchase 1,000 shares of Common Stock, in each case at an exercise
price equal to the fair market value of the Common Stock on the date of grant. A
director option will be exercisable until the earlier of (i) the tenth
anniversary of the date of grant and (ii) three months (one year in the case of
a director who becomes disabled or dies) after the date the director ceases to
be a director. The exercise price of the director options may be satisfied in
cash or, in the discretion of the Committee, by exchanging Common Stock owned by
the director, or by a combination of cash and Common Stock.
Other Employee Stock Option Plans. On September 12, 1991, the Company
adopted an Employee Stock Option Plan (the "1991 Plan") that provides for the
granting of up to 200,000 stock options to key management
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<PAGE> 35
personnel. Under the 1991 Plan, the exercise per share price is equal to
approximately two times the net book value per share of the Company as of the
date of grant. Each option is issued for a term of ten years and vests ratably
over a five-year period. See Note 11 to the Consolidated Financial Statements.
Under the terms of the 1991 Plan, the Company may be obligated to repurchase
Common Stock issued upon exercise of stock options at a price equal to two times
the net book value per share of the Company as of the date of the repurchase;
this obligation terminates upon completion of the Offering. Pursuant to the 1991
Plan, options covering 64,000 shares of Common Stock have been granted and are
outstanding. Following completion of the Offering, no additional options will be
granted under the 1991 Plan.
On April 7, 1996, the Company adopted a second Employee Stock Option Plan
(the "1994 Plan") that provides for the granting of up to 1,000,000 stock
options to executive officers and key employees of the Company. Under the 1994
Plan, the exercise price of such options is equal to the adjusted net book value
per share of the Company as of the date of grant. Each option is issued for a
term of ten years and vests over periods ranging from three to five years. See
Note 11 to the Consolidated Financial Statements. Under the terms of the 1994
Plan, the Company may be obligated to repurchase Common Stock issued upon
exercise of stock options at a price ranging from one to two times the net book
value per share of the Company as of the date of the repurchase; this obligation
terminates upon completion of the Offering. Pursuant to the 1994 Plan, options
covering 915,000 shares of Common Stock have been granted and are outstanding.
Following completion of the Offering, no additional options will be granted
under the 1994 Plan.
Stock Options Granted in Last Fiscal Year. The following table sets forth
stock options granted by the Company to the executive officers under the 1994
Plan during fiscal 1997.
OPTION GRANTS IN FISCAL 1997 (1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
-------------------------------------------------------------------- RATES OF
% OF TOTAL STOCK PRICE
NUMBER OF SHARES OPTIONS APPRECIATION FOR
OF COMMON STOCK GRANTED TO EXERCISE OR OPTION TERM (4)
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR (2) ($/SH) (3) DATE 5% ($) 10% ($)
- ------------------------------ ------------------ --------------- ----------- --------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ira O. Kane................... 518,000 64.3% 2.14 8/1/06 697,900 1,768,800
Daniel P. Buettin............. 74,000 9.2 2.62 8/1/06 122,000 309,300
Daniel P. Buettin............. 74,000 9.2 2.92 8/1/06 135,700 343,800
Brad A. Martyn................ 37,000 4.6 2.71 8/1/06 62,900 159,500
Brad A. Martyn................ 37,000 4.6 3.23 6/30/07 75,200 190,500
</TABLE>
- ---------------
(1) Options were granted under the Company's 1994 Plan during fiscal 1997 but,
as a result of prior contractual commitments of the Company, were effective
as of earlier dates.
(2) Based on an aggregate of 806,000 shares subject to options granted to
employees of MPW in fiscal 1997.
(3) The exercise price per share of the options granted was equal to the
adjusted net book value per share of the Company as of the date the option
became effective. See Note 11 to the Consolidated Financial Statements.
(4) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date, and are not intended to forecast possible future
appreciation, if any, in the price of the Common Stock. The gains shown are
net of the option exercise price, but do not include deductions for federal
or state income taxes or other expenses associated with the exercise of the
options or the sale of the underlying shares of Common Stock. The actual
gains, if any, on the stock option exercises will depend on the future
performance of the Common Stock, the option holder's continued employment
through the option period and the date on which the options are exercised.
34
<PAGE> 36
Aggregate Stock Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values. The following table sets forth information concerning the number
of unexercised options and the fiscal 1997 year-end value of such unexercised
options on an aggregated basis held by each of the executive officers. The
Company has not granted any stock appreciation rights and no options were
exercised in fiscal 1997.
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($) (1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ira O. Kane........................ 518,000 -- 4,070,125 --
Daniel P. Buettin.................. 18,500 129,500 136,484 933,731
Brad A. Martyn..................... 9,250 64,750 67,479 452,926
</TABLE>
- ---------------
(1) No public trading market for the Common Stock existed at the end of fiscal
1997. Accordingly, as permitted by the rules of the Securities and Exchange
Commission, these values have been calculated on the basis of the assumed
initial public offering price of $10.00 less the exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has never had a Compensation Committee or other committee of
the Board of Directors performing similar functions. Previously, decisions
concerning compensation of executive officers of the Company were made by the
Company's Chief Executive Officer. The Board of Directors will establish a
Compensation Committee effective upon completion of the Offering. See
"Management -- Board of Directors."
DIRECTOR COMPENSATION
Directors who are employees of the Company will not receive compensation
for serving as Directors. Non-Employee Directors will be paid a quarterly fee of
$1,500 as well as additional fees of $1,000 for each meeting of the Board of
Directors or of a committee of the Board of Directors attended by such Director.
All Directors of the Company will also be reimbursed for reasonable travel
expenses to and from meetings of the Board of Directors and committees.
35
<PAGE> 37
CERTAIN RELATED PARTY AND OTHER TRANSACTIONS
On August 9, 1996, MPW sold certain real estate and a commercial building
located in Chesterfield, Michigan, which currently serves as MPW's industrial
container cleaning facility, to the Black Family Limited Partnership, an Ohio
limited partnership in which Monte R. Black serves as the sole general partner,
for an aggregate consideration of $2.2 million. As part of the same transaction,
the partnership and MPW entered into a long-term lease arrangement with respect
to the facility for a term of ten years at an annual payment amount of
approximately $421,000, payable monthly. In connection with the Offering, MPW
will enter into an amended triple net lease agreement through June 30, 2004,
with options to renew for two additional five-year periods, which lease provides
for an annual rental of $288,000, payable monthly. The lease agreement provides
for an adjustment on January 1, 2001 to the annual rental based on the fair
market value of such facility. The Company believes that the terms of this lease
are no less favorable to the Company than those reasonably available from
unrelated third parties for comparable space. See "Business -- Facilities."
As part of an industrial revenue bond financing in 1986, Monte R. and Susan
K. Black constructed an approximately 67,000 square foot building in Hebron,
Ohio, which the Company leased for a ten-year term. Annual rent payments on the
building and equipment during this ten-year term were $726,000, payable monthly.
In connection with the Offering, the Company will enter into an amended triple
net lease agreement through June 30, 2004, with options to renew for two
additional five-year periods, which provides for an annual rental of $600,000,
payable monthly. The lease agreement provides for an adjustment on January 1,
2001 to the annual rental based on the fair market value of such facility. The
Company believes that the terms of this lease are no less favorable to the
Company than those reasonably available from unrelated third parties for
comparable space. See "Business -- Facilities."
In 1989 the Company entered into a five-year agreement to rent certain real
estate and a commercial building located in Newark, Ohio from Monte R. and Susan
K. Black. In 1993 the Company extended the lease for an additional five-year
term. Annual lease payments were $46,920, payable monthly. Effective July 1,
1997, the Company has entered into a triple net lease agreement through June 30,
2004, with options to renew for two additional five-year periods, which provides
for an annual rental of $66,000, payable monthly. The Company believes that the
terms of this lease are no less favorable to the Company than those reasonably
available from unrelated third parties for comparable space. See
"Business -- Facilities."
The Company provides certain operational, administrative and financial
services to Pro-Kleen Industrial Services, Inc. ("Pro-Kleen"), a portable
sanitation services company wholly-owned by Monte R. Black. At September 30,
1997, the amount due from Pro-Kleen in connection with such services was
$72,000.
Prior to the Offering, the Company sold a corporate aircraft at a fair
market value of $3.6 million to an entity controlled by Monte R. Black in
exchange for forgiveness of $3.6 million of AAA Notes. The Company expects to
lease such aircraft for business use from Mr. Black on terms no less favorable
to the Company than those reasonably available from unrelated third parties.
The Company's Board of Directors has approved a stock exchange agreement
with the minority shareholders of Aquatech Environmental, Inc. (the "Aquatech
Agreement"). Effective upon the consummation of the Offering, the Aquatech
Agreement provides for the exchange of 67,800 shares of Common Stock of the
Company for all of the outstanding shares of Aquatech Environmental, Inc. held
by the minority shareholders.
36
<PAGE> 38
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, as of the date of this
Prospectus, with respect to the beneficial ownership of the Common Stock by: (i)
each person or entity known by the Company to own beneficially 5% or more of the
outstanding Common Stock; (ii) each director, director nominee and named
executive officer of the Company; and (iii) the Company's executive officers and
directors as a group. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, Common Stock subject to
options to purchase Common Stock held by that person that are currently
exercisable, or will become exercisable within 60 days after the date of this
Prospectus, are deemed outstanding. Such shares, however, are not deemed
outstanding for purposes of computing the percentage ownership of any other
person. Unless otherwise noted, each person has sole investment and voting power
with respect to the shares indicated (subject to applicable marital property
laws).
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED BEFORE OFFERING OWNED AFTER OFFERING
------------------------ ------------------------
PERCENT OF PERCENT OF
NUMBER OUTSTANDING NUMBER OUTSTANDING
OF SHARES SHARES OF SHARES SHARES
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Monte R. Black (1).............................. 6,200,000 100.0% 6,200,000 62.3%
Susan K. Black.................................. 620,000 10.0% 620,000 6.2%
Monte R. Black and Susan K. Black 1994
Irrevocable Trust............................. 503,784 8.1% 503,784 5.1%
Ira O. Kane (2)................................. 518,000 7.7% 518,000 4.9%
Robert E. Oyster................................ -- -- -- --
Timothy A. Walsh................................ -- -- -- --
Scott N. Whitlock............................... -- -- -- --
Daniel P. Buettin (3)........................... 55,500 * 55,500 *
Brad A. Martyn (4).............................. 14,800 * 14,800 *
Gerald Nilsson-Weiskott......................... -- -- -- --
All directors and executive officers as a group
(7 persons) (5)............................... 6,788,300 100.0% 6,788,300 64.4%
</TABLE>
- ---------------
* Less than 1%.
(1) Includes (i) 620,000 shares held by Mr. Black's wife, Susan K. Black, and
(ii) an aggregate of 503,784 shares held in trust for Mr. Black's children.
Mr. Black disclaims beneficial ownership of the foregoing shares.
(2) Includes 518,000 shares subject to options to purchase Common Stock
exercisable until August 1, 2006.
(3) Includes 55,500 shares subject to options to purchase Common Stock
exercisable until August 1, 2006.
(4) Includes 14,800 shares subject to options to purchase Common Stock
exercisable until August 1, 2006.
(5) Includes 588,300 shares subject to options to purchase Common Stock
exercisable until August 1, 2006.
37
<PAGE> 39
DESCRIPTION OF CAPITAL STOCK
GENERAL
Immediately prior to the issuance of the shares offered hereby, the
authorized capital of the Company will consist of 30,000,000 shares of Common
Stock, no par value per share, and 5,000,000 shares of undesignated preferred
stock, par value $0.01 per share (the "Preferred Stock"). The following summary
description of the capital stock of the Company is qualified in its entirety by
reference to the Articles of Incorporation of the Company and Code of
Regulations of the Company, a copy of each of which is filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
COMMON STOCK
As of September 30, 1997, assuming no exercise of options, there were
6,200,000 shares of Common Stock outstanding held of record by three
shareholders. There will be 9,950,000 shares of Common Stock outstanding after
giving effect to the sale of Common Stock offered hereby and assuming no
exercise of the Underwriters' over-allotment option. In addition, there are
1,204,000 shares of Common Stock issuable upon exercise of outstanding stock
options and 67,800 shares of Common Stock to be issued in connection with the
Company's repurchase of certain minority stock ownership interests. See "Certain
Related Party and Other Transactions." All outstanding shares are, and the
Common Stock offered hereby will be, duly authorized, validly issued, fully paid
and nonassessable immediately following the closing of the Offering.
Holders of Common Stock are entitled to one vote per share on all matters
to be voted upon by the shareholders. The holders of Common Stock are not
entitled to cumulative voting rights. Holders of Common Stock are entitled to
receive dividends and other distributions when, as and if declared from time to
time by the Board of Directors out of funds legally available for such purposes
subject to any preferential rights of, and any sinking fund or redemption or
purchase rights with respect to, outstanding shares of Preferred Stock, if any.
In the event of a voluntary or involuntary liquidation, dissolution or winding
up of MPW, the holders of Common Stock would be entitled to share ratably in all
assets remaining after payment of liabilities subject to prior distribution
rights and payment of any distributions owing to holders of shares of Preferred
Stock then outstanding, if any. Holders of the Common Stock have no preemptive
or conversion rights, and the Common Stock are not subject to further calls or
assessment by the Company. There are no redemption or sinking fund provisions
applicable to the Common Stock.
PREFERRED STOCK
There are no shares of Preferred Stock outstanding. The Board of Directors
has the authority, without further action by the shareholders, to issue
Preferred Stock in one or more series and to fix the rights, designations,
preferences, privileges, qualifications, and restrictions thereof, including
dividend rights, conversion rights, terms and rights of redemption, liquidation
preferences and sinking fund terms (any or all of which may be greater than the
rights of the Common Stock). The Board of Directors also has the authority,
without further action by the shareholders and to the extent now or hereafter
permitted by law, to amend the Articles of Incorporation to fix the voting
rights of any unissued or treasury shares of any class of Preferred Stock. The
Board of Directors, without shareholder approval, can issue shares of Preferred
Stock with conversion, voting and other rights that could adversely affect the
rights of the holders of Common Stock.
OHIO LAW AND CERTAIN CHARTER PROVISIONS
Control of the Company by Monte R. Black, as well as certain statutory
provisions of Ohio law and the Company's Articles of Incorporation and Code of
Regulations, may have the effect of deterring hostile takeovers or delaying or
preventing changes in control or changes in management of the Company, including
transactions in which shareholders of the Company might otherwise receive a
premium over the then current market price for their shares. The size of the
Board of Directors is fixed by the Company's Code of Regulations at not less
than five nor more than nine directors. Each director will hold office until the
next annual meeting of shareholders, at which time his successor is elected.
38
<PAGE> 40
The Company's Articles of Incorporation and Code of Regulations contain
various provisions that may have the effect, either alone or in combination with
each other, of making more difficult or discouraging a business combination or
an attempt to obtain control of the Company that is not approved by the Board of
Directors. These provisions include the following: (i) the right of the Board of
Directors to issue unissued and unreserved Common Stock without shareholder
approval; (ii) the right of the Board of Directors to issue shares of Preferred
Stock, without shareholder approval, in one or more series and to designate the
number of shares of each such series and the relative rights and preferences of
such series, including voting rights (to the extent now or hereafter permitted
by law), terms of redemption, redemption prices and conversion rights; (iii) a
limitation on the removal of directors except upon the vote of 80% of the
outstanding shares; (iv) a limitation on the ability of shareholders to call a
special meeting except upon the consent of shareholders representing 50% of the
outstanding shares entitled to vote at such meeting; and (vi) a limitation on
the ability of shareholders to fill vacancies in the Board of Directors except
after a vote to increase the number of directors at a meeting called for that
purpose.
The Company's Code of Regulations also contains provisions requiring
advance notice to the Company of (i) nominations of candidates for election to
the Board of Directors who are not nominated by the Company, and (ii) proposals
to be brought before the Company's annual meeting of shareholders (other than
proposals made by the Company). Without compliance with these provisions, any
such nominations or shareholder proposals may not be considered by the Company.
Section 1701.831 of the OGCL (the "Control Share Acquisition Statute")
requires shareholder approval of any proposed "control share acquisition" of an
Ohio corporation. A "control share acquisition" is defined as the acquisition,
directly or indirectly, by any person (including any individual, partnership,
corporation, limited liability company, society, association or two or more
persons who have a joint or common interest) of stock of a corporation that,
when added to all other stock of the corporation that may be voted, directly or
indirectly, by the acquiring person, would entitle such person to exercise or
direct the exercise of 20% or more (but less than 33 1/3%) of the voting power
of the corporation in the election of directors or 33 1/3% or more (but less
than a majority) of such voting power or a majority or more of such voting
power. Under the Control Share Acquisition Statute, the control share
acquisition must be approved in advance by the holders of a majority of the
outstanding voting stock represented at a meeting at which a quorum is present
and by the holders of a majority of the portion of the outstanding voting stock
represented at such a meeting excluding the voting stock owned by the acquiring
shareholder and certain "interested shares," including shares owned by officers
elected or appointed by the directors of the corporation and by directors of the
corporation who are also associates of the corporation.
The Control Share Acquisition Statute applies not only to traditional
tender offers but also to open market purchases, privately negotiated
transactions and original issuances by the Company, whether friendly or
unfriendly. The procedural requirements of the Control Share Acquisition Statute
could render approval of any control share acquisition difficult in that a
majority of the voting power of the Company, excluding "interested shares," must
be represented at the meeting and must be voted in favor of the acquisition. The
Company recognizes that any corporate defense against persons seeking to acquire
control may have the effect of discouraging or preventing offers that some
shareholders might find financially attractive. On the other hand, the need on
the part of the acquiring person to convince the shareholders of the Company of
the value and validity of his offer may cause such offer to be more financially
attractive in order to gain shareholder approval.
Chapter 1704 of the OGCL (the "Merger Moratorium Statute") generally
prohibits a wide range of business combinations and other transactions
(including mergers, consolidations, asset sales, loans, disproportionate
distributions of property and disproportionate issuances or transfers of shares
or rights to acquire shares) between the Company and a person, other than Monte
R. Black, that owns, alone or with other related parties, shares representing at
least 10% of the voting power of the Company (an "Interested Shareholder") for a
period of three years after such person becomes an Interested Shareholder,
unless, prior to the date that the Interested Shareholder became such, the board
of directors approves either the transaction or the acquisition of the Common
Stock that resulted in the person becoming an Interested Shareholder. Following
the three-year moratorium period, the Company may engage in covered transactions
with an Interested Shareholder only if, among other things, (i) the transaction
receives the approval of the holders of 66 2/3% of all the voting stock and the
approval of the holders of a majority of the voting stock held by persons other
than an Interested Shareholder or (ii) the remaining shareholders receive an
amount for their shares equal to the higher of the highest amount paid in the
39
<PAGE> 41
past by the Interested Shareholder for the Common Stock or the amount that would
be due the shareholders if the Company were to dissolve. The legislative history
of the Merger Moratorium Statute indicates that it is designed to prevent many
of the self-dealing activities that often accompany highly-leveraged
acquisitions by prohibiting an Interested Shareholder from using the Company or
its assets or stock for his benefit. The Merger Moratorium Statute will likely
encourage potential tender offerors to negotiate with the Board of Directors of
the Company to ensure that the shareholders of the Company receive fair and
equitable consideration for their stock.
Other provisions of the OGCL may also have the effect of deterring hostile
takeovers or delaying or preventing changes in control or changes in management
of the Company.
DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY
Under Ohio law, a director of the Company will not be found to have
violated his fiduciary duties unless there is proof by clear and convincing
evidence that the director has not acted in good faith, in a manner he
reasonably believes to be in or not opposed to the best interests of the
Company, or with the care that an ordinarily prudent person in a like position
would use under similar circumstances. In general, a director of the Company is
liable for monetary damages for any action or omission as a director only if
proven by clear and convincing evidence that such act or omission was undertaken
either with deliberate intent to cause injury to the Company or with reckless
disregard for the best interests of the Company.
Under Ohio law, the Company must indemnify its directors, as well as its
officers, employees and agents, against expenses where any such person is
successful on the merits or otherwise in defense of an action, suit or
proceeding. The Company may indemnify such persons in actions, suits and
proceedings (including derivative suits) if the individual has acted in good
faith and in a manner that he believes to be in or not opposed to the best
interests of the Company. In the case of a criminal proceeding, the individual
must also have no reasonable cause to believe that his conduct was unlawful.
Indemnification may be made only if ordered by a court or if authorized in a
specific case upon a determination that the applicable standard of conduct has
been met. Such a determination may be made by a majority of the disinterested
directors, by independent legal counsel or by the shareholders. In order to
obtain reimbursement for expenses in advance of the final disposition of any
action, the individual must provide an undertaking to repay the amount if
ultimately he is determined not to be entitled to indemnification.
In general, Ohio law requires that all expenses, including attorneys' fees,
incurred by a director in defending any action, suit or proceeding be paid by
the Company as they are incurred in advance of final disposition if the director
agrees to repay such amounts if, proven by clear and convincing evidence that
his action or omission was undertaken with deliberate intent to cause injury to
the Company or with reckless disregard for the best interests of the Company and
if the director reasonably cooperates with the Company concerning the action,
suit or proceeding.
The Company's Amended Code of Regulations provides for indemnification that
is coextensive with that permitted under Ohio law. The Company's Amended Code of
Regulations authorizes the Company to enter into indemnification agreements with
each present and future director and such officers, employees or agents as
specified in the Amended Code of Regulations. The Amended Code of Regulations
also authorizes the Company to enter into agreements to indemnify such persons
to the maximum extent permitted by applicable law. The indemnification so
granted may exceed the indemnification specifically authorized by the OGCL Each
agreement represents a contractual obligation of the Company that can not be
altered unilaterally.
TRANSFER AGENT
The transfer agent for the Common Stock will be National City Bank,
Cleveland, Ohio.
40
<PAGE> 42
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 9,950,000 shares of
Common Stock outstanding. All of the shares offered hereby will be freely
saleable in the public market after completion of the Offering, unless acquired
by affiliates of the Company. All of the shares outstanding prior to completion
of the Offering are subject to contractual restrictions that prohibit the
shareholders from selling or otherwise disposing of shares for a period of 180
days after the date of this Prospectus without the consent of Raymond James &
Associates, Inc. After this 180-day period expires, 6,200,000 shares will be
eligible for resale in the public market under Rule 144 promulgated under the
Securities Act. Upon the expiration of the 180-day period, Common Stock then
held by affiliates of the Company will be subject to certain volume and other
limitations discussed below under Rule 144.
The Company, and the Company's directors, officers and shareholders have
agreed not to sell, contract to sell or otherwise dispose of any Common Stock
for a period of 180 days after the date of this Prospectus, except as
consideration for business acquisitions or upon exercise of currently
outstanding stock options, without the prior written consent of Raymond James &
Associates, Inc.
In general, under Rule 144 as amended effective April 29, 1997, a person
(or persons whose shares are aggregated), including persons who may be deemed
affiliates of the Company, who has beneficially owned his or her shares for at
least one year is entitled to sell within any three-month period that number of
shares that does not exceed the greater of 1% of the outstanding Common Stock
(approximately 100,000 shares after completion of the Offering) or the average
weekly trading volume during the four calendar weeks preceding each such sale.
Sales under Rule 144 also are subject to certain manner of sale provisions,
notice requirements and the availability of current public information about the
Company. Under Rule 144(k), a person (or persons whose shares are aggregated)
who is not or has not been deemed an "affiliate" of the Company for at least
three months and who has beneficially owned his or her shares for at least two
years would be entitled to sell such shares under Rule 144 without regard to the
limitations discussed above.
There has been no public market for the Common Stock prior to the Offering
and no assurance can be given that an active public market for the Common Stock
will develop or be sustained after completion of the Offering, and no prediction
can be made as to the effect, if any, that sales of stock under Rule 144 or the
availability of shares for sale will have on the market price of the Common
Stock prevailing from time to time after the Offering. Sales of substantial
amounts of the Common Stock, or the perception that such sales could occur,
could adversely affect the prevailing market price of the Common Stock and could
impair the Company's ability to raise capital or effect acquisitions through the
issuance of Common Stock.
41
<PAGE> 43
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters") have severally agreed to purchase
from the Company the following respective number of shares of Common Stock at
the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus:
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
--------------------------------------------------------------------- ----------------
<S> <C>
Raymond James & Associates, Inc. ....................................
Robert W. Baird & Co. Incorporated...................................
---------
Total...................................................... 3,750,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the Common Stock offered hereby, if any of
such shares are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Common Stock to the public at the initial public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain other dealers. After commencement of the
initial public offering, the offering price and other selling terms may be
changed by the Underwriters.
The Company has granted the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to 562,500
additional shares of Common Stock at the initial public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof that the number of shares of Common Stock to be purchased by
it shown in the above table bears to the total number of shares offered by the
Company hereunder, and the Company will be obligated, pursuant to the option, to
sell such shares to the Underwriters. The Underwriters may exercise such option
only to cover over-allotments made in connection with the sale of the Common
Stock offered hereby. If purchased, the Underwriters will offer such additional
shares on the same terms as those on which the 3,750,000 shares of Common Stock
are being offered.
The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934 (the "Exchange Act"). Over-allotment
involves syndicate sales in excess of the offering size, which creates a
syndicate short position. Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not exceed a specified
maximum. Syndicate covering transactions involve purchases of the securities in
the open
42
<PAGE> 44
market after the distribution has been completed in order to cover syndicate
short positions. Penalty bids permit the Underwriters to reclaim a selling
concession from a syndicate member when the securities originally sold by such
syndicate member are purchased in a syndicate covering transaction to cover
syndicate short positions. Such stabilizing transactions, syndicate covering
transactions and penalty bids may cause the price of the securities to be higher
than it would otherwise be in the absence of such transactions.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
The Company has agreed not to sell, contract to sell or otherwise dispose
of any Common Stock for a period of 180 days after the date of this Prospectus,
except as consideration for business acquisitions or upon exercise of currently
outstanding stock options, without the prior written consent of Raymond James &
Associates, Inc. All shareholders, directors and officers of the Company have
agreed not to sell, contract to sell or otherwise dispose of any Common Stock
for a period of 180 days without the prior written consent of Raymond James &
Associates, Inc. See "Shares Eligible For Future Sale."
The Underwriters have advised the Company that they do not intend to
confirm sales to any account over which they exercise discretionary authority.
Prior to the Offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price for the Common Stock will
be determined by negotiations between the Company and the Underwriters. Among
the factors to be considered in such negotiations are prevailing market
conditions, the results of operations of the Company in recent periods, the
market capitalizations and stages of development of other companies which the
Company and the Underwriters believe to be comparable to the Company, estimates
of the business potential of the Company, the present state of the Company's
development and other factors deemed relevant.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for MPW by Jones, Day, Reavis & Pogue, Columbus, Ohio. Certain legal
matters related to the Offering will be passed upon for the Underwriters by
McDermott, Will & Emery, Chicago, Illinois.
EXPERTS
The consolidated financial statements of MPW Industrial Services Group,
Inc. as of June 30, 1996 and 1997, and for each of the three years in the period
ended June 30, 1997, included herein and in the Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein and in the Registration Statement, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
SHAREHOLDER REPORTS
The Company intends to furnish its shareholders with annual reports
containing consolidated financial statements audited by its independent
auditors.
43
<PAGE> 45
MPW INDUSTRIAL SERVICES GROUP, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Report of Independent Auditors......................................................... F-2
Consolidated Balance Sheets as of June 30, 1996 and 1997 and September 30, 1997
(unaudited).......................................................................... F-3
Consolidated Statements of Income for the years ended June 30, 1995, 1996 and 1997 and
for the three months ended September 30, 1996 and 1997 (unaudited)................... F-4
Consolidated Statements of Changes in Shareholders' Equity for the years ended June 30,
1995, 1996 and 1997 and for the three months ended September 30, 1997 (unaudited).... F-5
Consolidated Statements of Cash Flows for the years ended June 30, 1995, 1996 and 1997
and for the three months ended September 30, 1996 and 1997 (unaudited)............... F-6
Notes to Consolidated Financial Statements............................................. F-7
</TABLE>
F-1
<PAGE> 46
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
MPW INDUSTRIAL SERVICES GROUP, INC.
We have audited the accompanying consolidated balance sheets of MPW
Industrial Services Group, Inc. and subsidiaries as of June 30, 1996 and 1997,
and the related consolidated statements of income, changes in shareholders'
equity, and cash flows for each of the three years in the period ended June 30,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of MPW Industrial
Services Group, Inc. and subsidiaries at June 30, 1996 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1997, in conformity with generally
accepted accounting principles.
Columbus, Ohio
September 30, 1997,
except for Notes 14 and 15
as to which the date is , 1997
The foregoing report is in the form that will be signed upon the completion
of the reorganization of the Company as described in Note 14 to the consolidated
financial statements.
ERNST & YOUNG LLP
Columbus, Ohio
October 15, 1997
F-2
<PAGE> 47
MPW INDUSTRIAL SERVICES GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30,
-------------------
1996 1997
------- ------- SEPTEMBER 30, PRO FORMA
1997 SEPTEMBER 30,
------------- 1997
(UNAUDITED) -------------
(UNAUDITED)
(NOTE 15)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................... $ 508 $ 489 $ 532
Accounts receivable (net of allowances of
$764 and $714 at June 30, 1996 and 1997,
respectively)............................ 11,517 13,560 15,074
Inventories................................. 1,632 3,361 3,353
Prepaid expenses............................ 532 960 1,022
Other current assets........................ 614 596 477
------- ------- -------
14,803 18,966 20,458
Property and equipment, net................... 21,258 23,400 23,119
Noncurrent assets:
Costs in excess of net assets of acquired
businesses, net.......................... 2,630 2,518 2,491
Other assets................................ 777 634 603
------- ------- -------
Total assets.................................. $39,468 $45,518 $46,671
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................ $ 4,077 $ 3,414 $ 3,748
Accrued compensation and related taxes...... 2,078 3,052 2,368
Current maturities of noncurrent
liabilities.............................. 1,524 965 965
Other accrued liabilities................... 4,603 4,466 4,143
------- ------- -------
12,282 11,897 11,224
Noncurrent liabilities:
Long-term debt.............................. 8,814 11,719 12,096
Capital leases.............................. 2,133 2,048 2,028
Deferred stock option compensation.......... -- 2,764 2,924
------- ------- -------
10,947 16,531 17,048
Commitments and contingencies................. -- -- --
Minority interest............................. 172 379 478
Shareholders' equity:
Preferred stock, $0.01 par value; 5,000,000
shares authorized; no shares issued and
outstanding.............................. -- -- --
Common stock, no par value; 30,000,000
shares authorized; 6,200,000 shares
issued and outstanding; 6,267,800 shares
pro forma................................ 62 62 62 $ 63
Additional paid-in capital.................. 64 1,070 1,070 1,055
Retained earnings........................... 15,941 15,579 16,789 1,265
------- ------- ------- ----
16,067 16,711 17,921 $ 2,383
====
------- ------- -------
Total liabilities and shareholders' equity.... $39,468 $45,518 $46,671
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 48
MPW INDUSTRIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
------------------------------- -------------------
1995 1996 1997 1996 1997
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues............................... $56,305 $58,430 $72,908 $19,422 $21,865
Costs and expenses:
Cost of services..................... 37,768 37,543 48,460 12,641 14,380
Selling, general and administrative
expenses.......................... 10,208 11,009 13,603 3,205 3,545
Depreciation and amortization........ 4,356 4,933 3,655 935 866
Deferred stock option compensation... -- -- 2,764 2,189 160
------- ------- ------- ------- -------
Total costs and expenses............. 52,332 53,485 68,482 18,970 18,951
------- ------- ------- ------- -------
Income from operations................. 3,973 4,945 4,426 452 2,914
Interest expense, net.................. 104 541 974 214 335
Minority earnings...................... -- 172 207 125 99
------- ------- ------- ------- -------
Income from continuing operations
before income taxes.................. 3,869 4,232 3,245 113 2,480
Provision for income taxes............. 331 360 1,085 44 149
------- ------- ------- ------- -------
Income from continuing operations...... 3,538 3,872 2,160 69 2,331
Discontinued operations, net of income
taxes................................ 367 163 -- -- --
------- ------- ------- ------- -------
Net income............................. $ 3,905 $ 4,035 $ 2,160 $ 69 $ 2,331
======= ======= ======= ======= =======
Unaudited pro forma information (Note
15):
Historical income from continuing operations before taxes... $ 3,245 $ 113 $ 2,480
Pro forma adjustments other than income taxes............... 3,841 2,533 574
------- ------- -------
Pro forma income before income taxes........................ 7,086 2,646 3,054
Pro forma taxes on income................................... 2,834 1,058 1,222
------- ------- -------
Pro forma net income........................................ $ 4,252 $ 1,588 $ 1,832
======= ======= =======
Pro forma net income per common share....................... $ 0.40 $ 0.15 $ 0.17
======= ======= =======
Weighted average common shares outstanding.................. 10,747 10,747 10,747
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 49
MPW INDUSTRIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON RETAINED
STOCK EARNINGS
------ --------
<S> <C> <C>
Balance at July 1, 1994................................................ $ 126 $ 16,555
Net income........................................................... -- 3,905
Distributions........................................................ -- (3,953)
Deferred translation adjustment...................................... -- (28)
------ -------
Balance at June 30, 1995............................................... 126 16,479
Net income........................................................... -- 4,035
Distributions........................................................ -- (4,616)
Deferred translation adjustment...................................... -- 43
------ -------
Balance at June 30, 1996............................................... 126 15,941
Net income........................................................... -- 2,160
Distributions........................................................ -- (1,161)
Distribution of previously consolidated affiliate.................... -- (1,359)
Capital contributions................................................ 1,006 --
Deferred translation adjustment...................................... -- (2)
------ -------
Balance at June 30, 1997............................................... 1,132 15,579
Net income........................................................... -- 2,331
Distributions........................................................ -- (1,121)
------ -------
Balance at September 30, 1997 (unaudited).............................. $1,132 $ 16,789
====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 50
MPW INDUSTRIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
---------------------------- -----------------
1995 1996 1997 1996 1997
------- -------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income....................................... $ 3,905 $ 4,035 $ 2,160 $ 69 $ 2,331
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation................................ 3,865 4,421 2,953 756 811
Amortization................................ 491 512 702 179 55
(Gain) loss on disposals of assets.......... (80) (100) 76 15 (4)
Gain on disposition of discontinued
operation................................. -- (114) -- -- --
Minority interest........................... 74 172 207 125 99
Effect of exchange rate changes on cash..... (28) 43 (2) (2) --
Deferred stock option compensation.......... -- -- 2,764 2,189 160
Changes in operating assets and liabilities:
Accounts receivable....................... (577) (796) (2,043) (2,383) (1,514)
Inventories............................... 53 2 (1,729) 160 8
Prepaid expenses and other assets......... 215 (714) (267) (504) 88
Accounts payable.......................... (530) 722 (663) 92 334
Other accrued liabilities................. 2,742 (792) 837 (223) (1,007)
------- -------- -------- ------- -------
Net cash provided by operating activities........ 10,130 7,391 4,995 473 1,361
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment.............. (5,418) (14,269) (5,932) (1,619) (558)
Purchase of business, net of acquired cash....... -- (1,771) -- -- --
Proceeds from sale of affiliate.................. -- 500 -- -- --
Proceeds from disposal of property and
equipment...................................... 1,046 3,020 151 95 4
------- -------- -------- ------- -------
Net cash used in investing activities............ (4,372) (12,520) (5,781) (1,524) (554)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility.......... -- 15,556 32,668 9,031 11,414
Payments on revolving credit facility............ -- (13,521) (28,883) (6,196) (10,817)
Proceeds from notes payable...................... -- 7,600 -- -- --
Payments on notes payable........................ (521) (673) (880) (220) (220)
Payments on capital lease obligations............ (573) (634) (644) (180) (20)
Proceeds from capital contributions.............. -- -- 773 -- --
Distributions to shareholders.................... (3,953) (4,616) (2,267) (853) (1,121)
------- -------- -------- ------- -------
Net cash provided by (used in) financing
activities..................................... (5,047) 3,712 767 1,582 (764)
------- -------- -------- ------- -------
Increase (decrease) in cash and cash
equivalents.................................... 711 (1,417) (19) 531 43
Cash and cash equivalents at beginning of year... 1,214 1,925 508 508 489
------- -------- -------- ------- -------
Cash and cash equivalents at end of year......... $ 1,925 $ 508 $ 489 $ 1,039 $ 532
======= ======== ======== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-6
<PAGE> 51
MPW INDUSTRIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 (UNAUDITED))
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS MPW Industrial Services
Group, Inc. ("MPW" or the "Company") is an industrial services firm that
provides industrial cleaning and facility support services, industrial process
water purification, industrial air filtration services and other specialized
services. Such services are typically provided at customer facilities. MPW also
operates a process facility for industrial containers cleaning. The Company's
principal customers are large industrial facilities in the automotive, electric
power, chemical, pulp and paper, steel, transportation, aerospace and other
heavy manufacturing industries. MPW provides services primarily in the
Midwestern and Southeastern United States.
The accompanying consolidated financial statements include the accounts of
the Company including MPW Industrial Services, Inc. ("Industrial"), Weston
Engineering, Inc. ("Weston"), and Aquatech Environmental, Inc. ("Aquatech")
which is 70% owned by the Company. The minority shareholders' interests in the
equity and net income of Aquatech are presented separately in the accompanying
financial statements. All intercompany transactions and balances have been
eliminated.
REVENUES AND COST RECOGNITION The Company primarily derives its revenues
from services under time and materials, fixed price and unit price contracts.
Revenues from time and materials type contracts are recorded based on
performance and efforts expended. Contract costs include all direct labor,
material, per diem, subcontract and other direct and indirect project costs
related to contract performance. Revenues derived from non-contract activities
are recorded as services are performed or goods are sold.
During fiscal 1997, the Company had revenues from General Motors
Corporation which represented 10.4% of consolidated revenues. In prior years, no
customer represented more than 7% of consolidated revenues.
DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments are used
by the Company in the management of its interest rate exposure. The
differentials to be paid or received under interest rate swap agreements and any
associated costs of such agreements are recognized in income over the life of
the swap agreement as adjustments to interest expense in the accompanying
financial statements.
INVENTORIES Inventories, primarily consisting of products purchased for
resale and operating supplies, are stated at the lower of cost or market. Cost
is determined using the first-in, first-out (FIFO) method.
PROPERTY AND EQUIPMENT Property and equipment, including assets under
capital leases, are recorded at cost and include expenditures which
substantially increase the useful lives of the assets. Maintenance and repairs
that do not improve or extend the life of the respective assets are expensed as
incurred. Depreciation is provided over the estimated useful lives of the
respective assets using the straight-line method. Amortization of capital leases
is provided over the lease terms using the straight-line method.
COSTS IN EXCESS OF NET ASSETS OF ACQUIRED BUSINESSES Costs in excess of
net assets of acquired businesses ("goodwill"), resulting primarily from certain
acquisitions accounted for using the purchase method of accounting, is amortized
on a straight-line basis over periods not exceeding 25 years. Accumulated
amortization of goodwill as of June 30, 1996 and 1997 was $145,000 and $256,000,
respectively.
FINANCIAL INSTRUMENTS Financial instruments consist primarily of cash,
accounts receivable, accounts payable and long-term debt. The carrying value of
all financial instruments at June 30, 1996 and 1997 approximated their fair
value.
INCOME TAXES The shareholders of Industrial have elected under Subchapter
S of the Internal Revenue Code to include income of Industrial in their own
income for income tax purposes. The accompanying financial statements do not
include provisions for federal income taxes and certain state income taxes for
Industrial. Other members of the Company are subject to income taxes and income
tax provisions are made in the accompanying financial statements. Deferred tax
assets and liabilities are recorded based on differences between the financial
F-7
<PAGE> 52
MPW INDUSTRIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 (UNAUDITED))
reporting and tax basis of assets and liabilities which are measured by applying
enacted tax rates for years in which such differences are expected to reverse.
STATEMENT OF CASH FLOWS The Company considers all short-term deposits and
highly liquid investments purchased with an original maturity of three months or
less to be cash equivalents. Cash paid for income taxes for fiscal 1995, 1996
and 1997 was $150,000, $224,000 and $525,000, respectively. Cash paid for
interest was $153,000, $315,000 and $1,255,000 for fiscal 1995, 1996 and 1997,
respectively. Distributions to shareholders during fiscal 1996 included a note
receivable of $250,000.
USE OF ESTIMATES The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the accompanying
financial statements. Actual results could differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial
Accounting Standards Board issued Statement No. 128, Earnings per Share, which
is required to be adopted for financial statements issued for periods ending
after December 15, 1997. This statement establishes standards for computing and
presenting earnings per share. It requires dual presentation of basic and
diluted earnings per share on the face of the income statement and a
reconciliation between the computations. The Company has not yet determined the
impact of Statement 128 on its reported earnings per share.
In June 1997, the Financial Accounting Standards Board issued Statement No.
131, Disclosures about Segments of an Enterprise and Related Information, which
is effective for fiscal years beginning after December 15, 1997. This statement
establishes requirements for reporting information about operating segments.
This statement may require a change in the way the Company presently reports
financial information; however, the extent of the change, if any, has not been
determined.
INTERIM FINANCIAL REPORTING In the opinion of management, the unaudited
information as of September 30, 1997 and for the three months ended September
30, 1996 and 1997 includes all adjustments, consisting of normal recurring
adjustments, the Company considers necessary for a fair presentation of such
financial statements in accordance with generally accepted accounting
principles. Operating results for the three months ended September 30, 1997 are
not necessarily indicative of the results that may be expected for the year
ending June 30, 1998.
NOTE 2. ACQUISITIONS
Effective April 1, 1996, the Company purchased substantially all of the
assets of Weston Engineering, a Michigan partnership, for $2,050,000 and assumed
certain liabilities. The transaction was financed through borrowings under the
Company's loan agreement. The assets and liabilities assumed were merged into a
newly created, wholly-owned subsidiary, Weston Engineering, Inc. The acquisition
has been accounted for using the purchase method of accounting and, accordingly,
the acquired assets and assumed liabilities, including goodwill, have been
recorded at their estimated fair values as of April 1, 1996. The accompanying
financial statements include the results of operations of Weston from the
effective acquisition date through June 30, 1997.
The following table sets forth the unaudited consolidated pro forma results
of operations for fiscal 1995 and 1996 giving effect to the acquisition of
Weston as if such acquisition had occurred on July 1, 1994.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Revenues....................................... $64,628 $64,781
Net income..................................... 3,547 3,944
</TABLE>
F-8
<PAGE> 53
MPW INDUSTRIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 (UNAUDITED))
NOTE 3. CHANGE IN ACCOUNTING ESTIMATE
Effective July 1, 1996, the Company changed its estimates for the useful
lives of certain property and equipment to more accurately reflect the Company's
actual history of useful lives. The Company utilized the net book value of each
of its property and equipment assets as of July 1, 1996 and applied the
remaining useful life of each asset in the calculation of depreciation from that
date forward. In fiscal 1997, the effect of applying these changes was a
reduction in depreciation expense of $1,620,000.
NOTE 4. DISCONTINUED OPERATIONS
Effective December 31, 1995, the Company disposed of its 70% interest in
B&B Underground, a general partnership, to the remaining partner for $750,000.
Under the terms of the agreement, $500,000 was received during fiscal 1996 with
the remainder to be received in five equal annual installments of $50,000 plus
interest. The transaction resulted in a gain of $114,000. The sale of the
Company's interest in B&B Underground has been accounted for as discontinued
operations and, accordingly, the accompanying consolidated statements of income
have been restated to report this business separately as discontinued
operations.
The results of operations of B&B Underground are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenues.......................................... $ 2,692 $ 968
Operating income.................................. 511 21
Net income........................................ 367 49
</TABLE>
NOTE 5. PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
JUNE 30,
---------------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Land and buildings................................ $ 5,830 $ 2,200
Motor vehicles and transportation equipment....... 30,526 32,613
Machinery and equipment........................... 9,559 9,627
Leasehold improvements............................ 2,748 3,323
Furniture and fixtures............................ 2,051 1,610
Construction in progress.......................... 1,248 1,486
-------- -------
51,962 50,859
Less accumulated depreciation and amortization.... (30,704) (27,459)
-------- -------
$ 21,258 $ 23,400
======== =======
</TABLE>
F-9
<PAGE> 54
MPW INDUSTRIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 (UNAUDITED))
NOTE 6. OTHER ACCRUED LIABILITIES
Other accrued liabilities are summarized as follows:
<TABLE>
<CAPTION>
JUNE 30,
-------------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Insurance retention reserves........................ $ 3,054 $ 2,722
Other............................................... 1,549 1,744
-------- -------
$ 4,603 $ 4,466
======== =======
</TABLE>
NOTE 7. LONG-TERM DEBT
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
JUNE 30,
-------------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Revolving credit facility.......................... $ 2,744 $ 6,529
Notes payable to financial institutions............ 6,950 6,070
------ ------
9,694 12,599
Less current maturities............................ (880) (880)
------ ------
$ 8,814 $11,719
====== ======
</TABLE>
The Company has a loan agreement with two banks which, as amended in
September 1997, provides for a revolving credit facility and three separate
notes payable.
The revolving credit facility provides for $12,000,000 in aggregate
borrowings, is unsecured and bears interest at the prime rate less 0.50% or, at
the Company's option, the Eurodollar market rate plus 1.25%. The facility allows
for up to $3,000,000 in letters of credit and limits total cash borrowings based
on the ratio of debt to equity. The revolving credit facility expires on
December 31, 1998, at which time the principal balance outstanding may be
converted to a five-year term note, at the term note interest rate, with equal
quarterly principal payments. There were $1,302,000, and $1,062,000 of letters
of credit outstanding at June 30, 1996 and 1997, respectively. The weighted
average rate for the revolving credit facility was 7.44% at June 30, 1997.
The Company has three separate notes payable to financial institutions. The
first note, in the amount of $2,800,000, is unsecured and has principal payments
of $100,000 due quarterly through July 31, 2003. The outstanding balance at June
30, 1997 was $2,400,000. The second note, in the amount of $2,350,000, is
secured by a corporate aircraft and has principal payments of $75,000 due
quarterly through September 30, 2002 with the remaining principal due on
December 31, 2002. The outstanding balance at June 30, 1997 was $2,050,000. The
third note, in the amount of $1,800,000, is unsecured and has principal payments
of $45,000 due quarterly through July 31, 2006. The outstanding balance at June
30, 1997 was $1,620,000.
The notes bear interest at the prime rate less 0.25% or, at the Company's
option, the Eurodollar market rate plus 1.50%. The rate in effect for the notes
at June 30, 1997 was 6.94%. The Company entered into a forward interest rate
swap agreement with its principal bank which consists of an original notional
amount of $1,755,000 of floating to fixed rate interest rate swap. This
agreement contains the same terms, including principal payment provisions, as
the third bank note discussed above through October 31, 1999. This swap fixes
the effective interest rate on the third bank note at 7.50%.
F-10
<PAGE> 55
MPW INDUSTRIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 (UNAUDITED))
The loan agreement provides for changes in the interest rate formulas based
on aggregate borrowings and financial performance as measured by interest
coverage and by the ratio of funded debt to equity. The loan agreement also
provides covenants which impose minimum levels for interest coverage and
tangible net worth and ceiling levels for funded debt to equity and
distributions to shareholders.
The aggregate maturities of long-term debt for the five years ending June
30 are: 1998, $880,000; 1999, $7,409,000; 2000, $880,000; 2001, $880,000; 2002,
$880,000; 2003 and thereafter, $1,670,000.
NOTE 8. LEASE COMMITMENTS
The Company leases certain land, buildings and equipment under
noncancelable leases with entities controlled by its principal shareholder.
These leases, which expire in 1997 and 2001, may be extended for additional
terms ranging from one to five years. Each lease has been treated as a capital
lease in the accompanying financial statements. Property and equipment includes
the following amounts related to capital leases:
<TABLE>
<CAPTION>
JUNE 30,
-------------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land and buildings.................................. $ 5,830 $ 2,200
Machinery and equipment............................. 1,000 --
------- -------
6,830 2,200
Less accumulated amortization....................... (4,244) (206)
------- -------
$ 2,586 $ 1,994
======= =======
</TABLE>
The present value of future minimum lease payments for capital leases are
recorded as liabilities in the accompanying financial statements and are
summarized, by year and in the aggregate, as follows:
<TABLE>
<S> <C>
Year ending June 30 (in thousands):
1998...................................................... $ 421
1999...................................................... 421
2000...................................................... 421
2001...................................................... 421
2002...................................................... 485
Thereafter................................................ 2,005
--------
4,174
Less amount representing interest......................... (2,041)
--------
Present value of future minimum lease payments............ 2,133
Less current maturities................................... (85)
--------
Long-term maturities...................................... $ 2,048
========
</TABLE>
Rental expense related to all operating leases, including short-term
rentals, was approximately $753,000, $541,000 and $944,000 for fiscal 1995, 1996
and 1997, respectively.
F-11
<PAGE> 56
MPW INDUSTRIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 (UNAUDITED))
NOTE 9. INCOME TAXES
The shareholders of Industrial have elected under Subchapter S of the
Internal Revenue Code to include the income of Industrial in their own income
for federal income tax purposes. Accordingly, the earnings of Industrial are not
subject to federal and certain state income taxes. The accompanying financial
statements do, however, include provisions for income taxes for federal, state,
provincial and local tax purposes for members of the Company which are subject
to corporate income taxes. Certain of these subsidiaries file a federal income
tax return on a separate company basis. In addition, the provision for income
taxes includes certain state tax provisions for Industrial in states that do not
recognize Industrial's S Corporation tax status. The pre-tax income or loss of
the subsidiaries that are subject to corporate income tax was approximately
$499,000, $(185,000), and $1,492,000 for fiscal 1995, 1996, and 1997,
respectively. The temporary differences between book and tax income for these
subsidiaries have been insignificant.
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------
1995 1996 1997
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
United States:
Federal................................... $ 200 $ 133 $ 663
State and local........................... 103 227 317
Canada:
Federal................................... 20 -- 80
Provincial................................ 8 -- 25
---- ---- ------
$ 331 $ 360 $1,085
==== ==== ======
</TABLE>
NOTE 10. EMPLOYEE BENEFITS
The Company sponsors a Savings Plan, which qualifies for tax-deferred
contributions under Section 401(k) of the Internal Revenue Code, (the "401(k)
Plan") that covers substantially all employees of the Company who are over 21
years of age with at least one year of continuous service. Employees covered by
collective bargaining agreements are excluded from the plan. Contributions by
eligible employees are matched at a rate of 50% of the first 6% of the
employee's earnings contributed. Additional discretionary contributions may be
made to the 401(k) Plan by the Company. Matching contributions approximated
$131,000, $142,000 and $160,000 for fiscal 1995, 1996 and 1997, respectively.
NOTE 11. STOCK OPTION PLANS
1991 STOCK OPTION PLAN The Company's 1991 Stock Option Plan (the "1991
Plan") provides for the granting of up to 200,000 stock options to key
management personnel. The exercise price of such options is equal to
approximately two times the net book value per share of the Company as of the
date of the grant. Each option is issued for a term of ten years and vests
ratably over a five year period. Under the terms of the 1991 Plan, the Company
may be obligated to repurchase common stock issued by exercise of the stock
options at a price equal to two times the net book value per share of the
Company as of the date of the repurchase.
1994 STOCK OPTION PLAN The Company's 1994 Stock Option Plan (the "1994
Plan"), provides for the granting of up to 1,000,000 stock options to officers
and key employees of the Company. The exercise price of such options is equal to
the adjusted net book value per share of the Company as of the date of the
grant. Each option is issued for a term of ten years and vests over periods
ranging from three to five years. Under the terms of the 1994 Plan, the Company
may be obligated to purchase common stock issued by exercise of the stock
options at prices ranging from one to two times the adjusted net book value per
share of the Company as of the date of
F-12
<PAGE> 57
MPW INDUSTRIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 (UNAUDITED))
each purchase, subject to certain restrictions, including limitations on
redemption during employment, terms for settlement in the event of termination
of employment and limitations imposed by loan agreements of the Company.
The following table summarizes stock option activity:
<TABLE>
<CAPTION>
NUMBER OF
SHARES PRICE PER
(#) SHARE ($)
--------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
Outstanding at July 1, 1994 and 1995 68 3.65
Granted....................................... -- --
Expired or canceled........................... (4) 3.65
Exercised..................................... -- --
---
Outstanding at June 30, 1996.................... 64 3.65
Granted....................................... 880 2.14 - 3.23
Expired or canceled........................... (74) 2.62
Exercised..................................... -- --
---
Outstanding at June 30, 1997.................... 870 2.14 - 3.65
===
</TABLE>
Adjusted net book value of the Company is defined in the 1994 Plan as an
amount equal to shareholders' equity as shown on the consolidated financial
statements of the Company plus distributions made to shareholders, other than
distributions made for the payment of income taxes, as a result of Subchapter S
status, of any member of the consolidated group. Other provisions provide
certain anti-dilution rights, restrict the sale or transfer of options, provide
for vesting in the event of a change in control of the Company and provide for
termination of the Company's redemption and anti-dilution obligations in the
event of a registration pursuant to the Securities Exchange Act of 1933.
The Company has recorded compensation expense to reflect the value of the
options at each date of grant and the appreciation in the options outstanding
under the stock option plans. This expense totaled $2,764,000 for fiscal 1997,
of which $1,980,000 related to prior years' service of the participants.
During 1995, the Financial Accounting Standards Board issued Statement No.
123 ("SFAS No. 123"), Accounting for Stock-Based Compensation, effective June 1,
1996. This statement set forth standards for accounting for stock-based
compensation. The Company has elected to adopt the disclosure only provision of
SFAS No. 123 and to continue to account for stock-based compensation under the
provisions of Accounting Principles Board Opinion No. 25. However, because the
Company's stock option plans are variable plans, the pro forma information
regarding net income and earnings per share required by SFAS No. 123 would not
be materially different than reported amounts.
NOTE 12. RELATED PARTY TRANSACTIONS
On August 9, 1996, the Company sold certain land and a commercial building
to an entity controlled by its principal shareholder for $2,200,000. The
transaction resulted in no gain or loss. MPW rents certain land, buildings and
equipment, including the commercial real estate described above, from entities
controlled by its principal shareholder under long-term lease agreements. Total
payments related to these leases were $726,000, $726,000 and $991,000 for fiscal
1995, 1996 and 1997, respectively. The Company is also a guarantor of a mortgage
note issued to an entity controlled by the Company's principal shareholder on
this facility. At June 30, 1997, there was $2,017,000 outstanding on this
mortgage note.
F-13
<PAGE> 58
MPW INDUSTRIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 (UNAUDITED))
MPW provides certain operational, administrative and financial services to
Pro-Kleen Industrial Services, Inc. ("Pro-Kleen"), a portable sanitation
services company wholly-owned by MPW's principal shareholder. At June 30, 1996
and 1997, the amount due from Pro-Kleen was $421,000 and $148,000, respectively.
These amounts have been included in other current assets in the accompanying
financial statements.
During fiscal 1997, the Company's shareholders contributed $1,006,000 of
which $773,000 was cash and $233,000 was in the form of a note receivable.
NOTE 13. COMMITMENTS AND CONTINGENCIES
The Company is subject to various claims and lawsuits in the ordinary
course of its business. In the opinion of management, the outcome of these
actions, which is not clearly determinable at the present time, is either
adequately covered by insurance, or will not, in the aggregate, have a material
adverse effect upon the financial position or the results of future operations
of the Company.
NOTE 14. SUBSEQUENT EVENTS (UNAUDITED)
On October 1, 1997, the Company filed a registration statement with the
Securities and Exchange Commission for the sale of 3,750,000 shares of its
authorized and unissued common shares.
In connection with the planned public offering (the "Offering"), the
consolidated group will be restructured resulting in the creation of a new
holding company, MPW Industrial Services Group, Inc., an Ohio corporation. The
outstanding shares of the existing company will be converted into common shares
of the new company on a 4 for 1 basis. The authorized capital stock of the new
company will consist of 5,000,000 preferred shares, $0.01 par, and 30,000,000
common shares, no par value. These changes have been reflected in the
accompanying financial statements.
In connection with the reorganization, Industrial's S Corporation status
will be terminated. Prior to the termination, Industrial will make a
distribution totaling $22,400,000 of the undistributed earnings associated with
Industrial's S Corporation status. The distribution will be in the form of
promissory notes (the "AAA Notes"), of which, $3,600,000 will be redeemed in
consideration for the purchase of a corporate aircraft from the Company at its
fair market value. The Company will also enter into a lease agreement with an
entity controlled by its principal shareholder to lease the corporate aircraft
at current market rates.
The Company also plans to adopt a new stock option plan (the "1997 Plan").
The purpose of the 1997 Plan is to attract and retain key personnel, including
consultants and advisors to the Company, to enhance their interest in the
Company's continued success and to allow associates an opportunity to have an
ownership in the Company through stock options, stock awards and a stock
purchase plan. The maximum number of common shares available to be issued under
the 1997 Plan will be 700,000 shares of Common Stock.
In addition, the following actions are anticipated in connection with the
Offering:
1. The net proceeds of the Offering will be used to repay the remaining
balance of the AAA Notes of $18,800,000, with approximately $13,400,000
paid upon the closing of the Offering, $1,100,000 payable on December 31,
1997 and $4,300,000 payable on April 15, 1998. After the payment of the
$13,400,000 of AAA Notes with the Offering proceeds, the Company's
principal shareholder will repay certain indebtedness for which the
Company currently has a corporate guarantee. As a result of this
repayment, the corporate guarantee will be eliminated. In addition,
approximately $13,000,000 of the net proceeds from the Offering will be
used to repay existing debt of the Company.
2. The Company's obligation to repurchase securities issued under certain
of the Company's stock option plans terminates. As a result of this
termination, the Company will incur a non-recurring, non-cash
F-14
<PAGE> 59
MPW INDUSTRIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 (UNAUDITED))
expense of approximately $2,621,000, net of tax. This expense will result
in a concurrent increase in additional paid-in capital, and will not have
an adverse impact on shareholders' equity.
3. The Company will purchase certain minority stock ownership interests
from minority shareholders. Such purchase will be made through the
issuance of 67,800 shares of Common Stock in exchange for the shares of
the minority shareholders.
4. The Company will restructure certain lease agreements with its principal
shareholder for facilities currently used by the Company.
In October 1997, the Company signed a definitive agreement to acquire ESI
International, Inc. and ESI North, Limited for a combination of cash, promissory
notes and Common Stock for aggregate consideration of approximately $4,900,000
and approximately $900,000 of assumed liabilities.
NOTE 15. PRO FORMA INFORMATION (UNAUDITED)
PRO FORMA BALANCE SHEET INFORMATION
The pro forma balance sheet information as of September 30, 1997 reflects
the following transactions as if they had occurred at that date:
1. In connection with the termination of the S Corporation status:
- The distribution of undistributed earnings totaling $22,400,000.
- The recognition of net deferred tax assets of $3,260,000.
- The reclassification of remaining undistributed earnings of the S
Corporation from retained earnings to additional paid-in capital.
2. The elimination of the deferred stock option compensation of
$2,924,000 related to the Company's obligation, under certain
conditions, to repurchase securities issued under certain of the
Company's stock option plans. Such repurchase obligation terminates
effective with the Offering.
3. The issuance of 67,800 shares of Common Stock in connection with the
Company's purchase of certain minority stock ownership interests
effective with the Offering.
F-15
<PAGE> 60
MPW INDUSTRIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 (UNAUDITED))
PRO FORMA STATEMENTS OF INCOME ADJUSTMENTS
The following adjustments for fiscal 1997 and the three months ended
September 30, 1996 and September 30, 1997 have been reflected in the pro forma
statements of income information:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1997 SEPTEMBER 30, 1996 SEPTEMBER 30, 1997
------------- ------------------ ------------------
<S> <C> <C> <C> <C>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1. Reduction of historical lease costs for
certain facilities leased by the Company
from related parties pursuant to
restructured lease agreements to take
effect in connection with the Offering. $ 252 $ 68 $ 68
2. Elimination of deferred stock option
compensation related to the Company's
obligation, under certain conditions, to
repurchase securities issued under certain
of the Company's stock option plans. Such
repurchase obligation terminates effective
with the Offering. 2,764 2,189 160
3. Elimination of interest expense, net
related to the repayment of existing debt
from the proceeds of the Offering. 618 151 247
4. Elimination of minority earnings as a
result of the Company's purchase of
certain minority stock ownership interests
effective with the Offering. 207 125 99
------ ------
Total $ 3,841 $2,533 $ 574
====== ======
</TABLE>
In addition to the above adjustments, the pro forma financial results also
reflect an adjustment to pro forma taxes on income based on an effective rate of
40%.
PRO FORMA NET INCOME PER SHARE
Pro forma net income per share is based on the weighted average number of
common shares outstanding during the period (using the treasury stock method),
plus the estimated number of shares required to fund the planned distribution to
shareholders, the estimated number of shares to be issued to repay existing
debt, and the shares to be issued to acquire the minority interest of a
subsidiary.
F-16
<PAGE> 61
The inside back cover of the Prospectus will contain pictures as follows:
1. A background photograph of the sun setting against the outline of an
industrial plant.
2. Above the "MPW Industrial Services Group, Inc." logo in the bottom right
corner and on top of the background photograph is an outline of a map of
the Midwestern and Southeastern United States denoting locations of MPW
headquarters with a blue star, office locations with a green circle and
on-site locations with a red square.
3. On top of the background photograph are three pictures as follows: (i)
above the caption "CORPORATE HEADQUARTERS" is a photograph of MPW's
corporate headquarters in Hebron, Ohio; (ii) above the caption "HIGH
POWER CLEANING EQUIPMENT" is a picture of one of MPW's tractor trucks
with a 48(feet) semi-trailer. Mounted on the semi-trailer is a mobile,
high volume, water blasting power unit and (iii) above the caption "AIR
FILTRATION MANAGEMENT SERIES" is a photograph of the Company's air
filtration laboratory.
<PAGE> 62
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER TO SELL IS NOT AUTHORIZED, OR IN WHICH THE PERSON IS NOT AUTHORIZED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Prior S Corporation Status............ 9
Use of Proceeds....................... 9
Dividend Policy....................... 9
Capitalization........................ 10
Dilution.............................. 11
Selected Consolidated Financial
Data................................ 12
Selected Unaudited Condensed Pro Forma
Financial Data...................... 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 16
Business.............................. 22
Management............................ 30
Executive Compensation................ 32
Certain Related Party and Other
Transactions........................ 36
Principal Shareholders................ 37
Description of Capital Stock.......... 38
Shares Eligible for Future Sale....... 41
Underwriting.......................... 42
Legal Matters......................... 43
Experts............................... 43
Shareholder Reports................... 43
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
------------------------
THROUGH AND INCLUDING , 1997, ALL DEALERS EFFECTING TRANSACTIONS
IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================
3,750,000 SHARES
[MPW LOGO]
COMMON STOCK
------------------------
PROSPECTUS
------------------------
RAYMOND JAMES &
ASSOCIATES, INC.
ROBERT W. BAIRD & CO.
INCORPORATED
, 1997
======================================================
<PAGE> 63
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated (except for the Securities and
Exchange Commission registration fee, the National Association of Securities
Dealers, Inc. filing fee and the Nasdaq National Market listing fee) payable by
the Company in connection with the distribution of the Common Stock:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee....................... $14,375
National Association of Securities Dealers, Inc. Filing Fee............... 5,244
Nasdaq National Market Listing Fee........................................
Printing and Engraving Costs..............................................
Accounting Fees and Expenses..............................................
Legal Fees and Expenses...................................................
Transfer Agent Fees.......................................................
Miscellaneous Expenses....................................................
Total........................................................... $
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Division (E) of Section 1701.13 of the Ohio General Corporation Law governs
indemnification by a corporation and provides as follows:
(E) (1) A corporation may indemnify or agree to indemnify any person
who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, other than an action by
or in the right of the corporation, by reason of the fact that he 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, trustee, officer,
employee, member, manager, or agent of another corporation, domestic or
foreign, nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust or other enterprise, against expenses,
including attorney's fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit, or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if he
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, he had reasonable cause to believe that
his conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any person who
was or is a party, or is threatened to be made a party, to any threatened,
pending, or completed action or suit by or in the right of the corporation
to procure a judgment in its favor, by reason of the fact that he is or was
a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, trustee, officer,
employee, member, manager, or agent of another corporation, domestic or
foreign, nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any of the following:
(a) Any claim, issue, or matter as to which such person is adjudged
to be liable for negligence or misconduct in the performance of his duty
to the corporation unless, and only to the extent that, the court of
common pleas or the court in which such action or suit was brought
determines, upon application, that, despite the adjudication of
liability, but in view of all the circumstances of the case,
II-1
<PAGE> 64
such person is fairly and reasonably entitled to indemnity for such
expenses as the court of common pleas or such other court shall deem
proper;
(b) Any action or suit in which the only liability asserted against
a director is pursuant to section 1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer, employee, member,
manager, or agent has been successful on the merits or otherwise in defense
of any action, suit, or proceeding referred to in division (E)(1) or (2) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses, including attorney's fees, actually and
reasonably incurred by him in connection with the action, suit, or
proceeding.
(4) Any indemnification under division (E)(1) or (2) of this section,
unless ordered by a court, shall be made by the corporation only as
authorized in the specific case, upon a determination that indemnification
of the director, trustee, officer, employee, member, manager, or agent is
proper in the circumstances because he has met the applicable standard of
conduct set forth in division (E)(1) or (2) of this section. Such
determination shall be made as follows:
(a) By a majority vote of a quorum consisting of directors of the
indemnifying corporation who were not and are not parties to or
threatened by the action, suit, or proceeding referred to in division
(E)(1) or (2) of this section;
(b) If the quorum described in division (E)(4)(a) of this section
is not obtainable or if a majority vote of a quorum of disinterested
directors so directs, in a written opinion by independent legal counsel
other than an attorney, or a firm having associated with it an attorney,
who has been retained by or who has performed services for the
corporation or any person to be indemnified within the past five years;
(c) By the shareholders; or
(d) By the court of common pleas or the court in which such action,
suit, or proceeding referred to in division (E)(1) or (2) of this
section was brought.
Any determination made by the disinterested directors under division
(E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this
section shall be promptly communicated to the person who threatened or brought
the action or suit by or in the right of the corporation under division (E)(2)
of this section, and, within ten days after receipt of such notification, such
person shall have the right to petition the court of common pleas or the court
in which such action or suit was brought to review the reasonableness of such
determination.
(5)(a) Unless at the time of a director's act or omission that is the
subject of an action, suit, or proceeding referred to in division (E)(1) or
(2) of this section, the articles or the regulations of a corporation
state, by specific reference to this division, that the provisions of this
division do not apply to the corporation and unless the only liability
asserted against a director in an action, suit, or proceeding referred to
in division (E)(1) or (2) of this section is pursuant to section 1701.95 of
the Revised Code, expenses, including attorney's fees, incurred by a
director in defending the action, suit, or proceeding shall be paid by the
corporation as they are incurred, in advance of the final disposition of
the action, suit, or proceeding, upon receipt of an undertaking by or on
behalf of the director in which he agrees to both of the following:
(i) Repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or failure
to act involved an act or omission undertaken with deliberate intent to
cause injury to the corporation or undertaken with reckless disregard
for the best interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning the
action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a director,
trustee, officer, employee, member, manager, or agent in defending any
action, suit, or proceeding referred to in division (E)(1) or (2) of
this section, may be paid by the corporation as they are incurred, in
advance of the final disposition of the action, suit, or proceeding, as
authorized by the directors in the specific case, upon receipt of an
undertaking by or on behalf of the director, trustee, officer, employee,
member, manager, or agent to repay such amount, if it ultimately is
determined that he is not entitled to be indemnified by the corporation.
II-2
<PAGE> 65
(6) The indemnification authorized by this section shall not be
exclusive of, and shall be in addition to, any other rights granted to
those seeking indemnification under the articles, the regulations, any
agreement, a vote of shareholders or disinterested directors, or otherwise,
both as to action in their official capacities and as to action in another
capacity while holding their offices or positions, and shall continue as to
a person who has ceased to be a director, trustee, officer, employee,
member, manager, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
(7) A corporation may purchase and maintain insurance or furnish
similar protection, including, but not limited to, trust funds, letters of
credit, or self-insurance, on behalf of or for 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, trustee, officer,
employee, member, manager, or agent of another corporation, domestic or
foreign, nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust, or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under this section.
Insurance may be purchased from or maintained with a person in which the
corporation has a financial interest.
(8) The authority of a corporation to indemnify persons pursuant to
division (E)(1) or (2) of this section does not limit the payment of
expenses as they are incurred, indemnification, insurance, or other
protection that may be provided pursuant to divisions (E)(5), (6), and (7)
of this section. Divisions (E)(1) and (2) of this section do not create any
obligation to repay or return payments made by the corporation pursuant to
division (E)(5), (6), or (7) .
(9) As used in division (E) of this section, "corporation" includes
all constituent entities in a consolidation or merger and the new or
surviving corporation, so that any person who is or was a director,
officer, employee, trustee, member, manager, or agent of such a constituent
entity, or is or was serving at the request of such constituent entity as a
director, trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited
liability company, or a partnership, joint venture, trust, or other
enterprise, shall stand in the same position under this section with
respect to the new or surviving corporation as he would if he had served
the new or surviving corporation in the same capacity.
Section 29 of the Company's Code of Regulations governs indemnification by
the Company and provides as follows:
29. INDEMNIFICATION. The Corporation shall indemnify, to the full
extent then permitted by law, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a member of the
Board of Directors or an officer of the Corporation, or is or was serving
at the request of the Corporation as a director, trustee, officer, employee
or agent of another corporation, partnership, limited liability company,
joint venture, trust or other enterprise. The Corporation shall pay, to the
full extent then required by law, expenses, including attorney's fees,
incurred by a member of the Board of Directors in defending any such
action, suit or proceeding as they are incurred, in advance of the final
disposition thereof, and may pay, in the same manner and to the full extent
then permitted by law, such expenses incurred by any other person. The
indemnification and payment of expenses provided hereby shall not be
exclusive of, and shall be in addition to, any other rights granted to
those seeking indemnification under any law, the Articles of Incorporation,
any agreement, vote of shareholders or disinterested members of the Board
of Directors, or otherwise, both as to action in official capacities and as
to action in another capacity while he or she is a member of the Board of
Directors or an officer of the Corporation, and shall continue as to a
person who has ceased to be a member of the Board of Directors or an
officer of the Corporation or as to a person who has served at the request
of the Corporation as a director, trustee, officer, employee or agent of
another corporation, and shall inure to the benefit of the heirs,
executors, and administrators of such persons.
Reference is also made to Section 10 of the Underwriting Agreement
contained in Exhibit 1 hereto, indemnifying directors and officers of the
Company against certain liabilities.
II-3
<PAGE> 66
In addition, the Company intends to purchase insurance coverage that will
insure directors and officers against certain liabilities that might be incurred
by them in such capacity.
The Company has also entered into indemnification and severance agreements
with certain directors and executive officers that will be effective upon
consummation of the Offering.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Prior to the Offering, the Company entered into a subscription agreement
with each of the shareholders of MPW Industrial Services, Inc. ("Industrial"),
Monte R. Black, Susan K. Black and the Monte R. Black and Susan K. Black 1994
Irrevocable Trust. Pursuant to this subscription agreement, Industrial's
shareholders subscribed for shares in the Company, the consideration for which
was a one to one exchange for shares in Industrial. On , the Company's
Board of Directors accepted this subscription agreement, and the shareholders
received an aggregate of share certificates reflecting their ownership
interest in the Company.
In addition, the Company's Board of Directors has approved a stock exchange
agreement with the minority shareholders of Aquatech Environmental, Inc. (the
"Aquatech Agreement"). Effective upon the consummation of the Offering, the
Aquatech Agreement provides for the exchange of 67,800 shares of Common Stock of
the Company for all of the outstanding shares of Aquatech Environmental, Inc.
held by the minority shareholders.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
A. Exhibit Index
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------------------------------------------------------------------
<C> <S>
1 Form of Underwriting Agreement
3(a) Amended and Restated Articles of Incorporation of the Company effective October
, 1997
3(b) Amended and Restated Code of Regulations of the Company effective October , 1997
4(a) Form of Stock Certificate for Common Stock of the Company
4(b) Loan Agreement by and between MPW Industrial Services, Inc., affiliates and Bank
One, Columbus, NA**
4(c) First Amendment to Loan Agreement by and between MPW Industrial Services, Inc.,
affiliates and Bank One, Columbus, NA**
5 Opinion of Jones, Day, Reavis & Pogue
10(a) 1997 Stock Option Plan
10(b) 1994 Stock Option Plan**
10(c) 1991 Stock Option Plan**
10(d) Form of Employment Agreement by and between MPW Industrial Services Group, Inc.
and Ira O. Kane**
10(e) Form of Severance Agreement by and between MPW Industrial Services Group, Inc. and
Executive Officers**
10(f) Form of Indemnification Agreement by and between MPW Industrial Services Group,
Inc. and Directors**
10(g) Form of Indemnification Agreement by and between MPW Industrial Services Group,
Inc. and persons who are a Director and an Officer**
10(h) Form of Indemnification Agreement by and between MPW Industrial Services Group,
Inc. and Executive Officers**
10(i) Form of Lease for Hebron, Ohio facility**
10(j) Form of Lease for Newark, Ohio facility**
10(k) Lease for Chesterfield, Michigan facility**
10(l) Form of First Lease Amendment for Chesterfield, Michigan facility**
21 List of Subsidiaries**
23(a) Consent of Independent Auditors**
23(b) Consent of Counsel (included in Exhibit 5 hereto)
</TABLE>
II-4
<PAGE> 67
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
----------------------------------------------------------------------------------
<S> <C>
23(c) Consent of Gerald Nilsson-Weiskott, director nominee*
24 Powers of Attorney*
27 Financial Data Schedule**
</TABLE>
B. Financial Statement Schedules
<TABLE>
<CAPTION>
SCHEDULE
NUMBER DESCRIPTION
----------- ----------------------------------------------------------------------
<S> <C>
Schedule II Valuation and Qualifying Accounts*
</TABLE>
- ---------------
* Previously filed
** Filed herewith
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that:
(a)(1) For the purpose 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.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each such 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 he 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 Act 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 Act and will be governed by the final
adjudication of such issue.
(c) To provide to the underwriters 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.
II-5
<PAGE> 68
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HEBRON,
STATE OF OHIO, ON THIS 15TH DAY OF OCTOBER 1997.
MPW INDUSTRIAL SERVICES GROUP, INC.
By: /s/ DANIEL P. BUETTIN
------------------------------------
Daniel P. Buettin
Vice President, Chief Financial
Officer and Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities indicated on October 15, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- --------------------------------------------
<S> <C>
* Chief Executive Officer and Chairman of the
- --------------------------------------------- Board of Directors (Principal Executive
Monte R. Black Officer)
* President and Chief Operating Officer;
- --------------------------------------------- Director
Ira O. Kane
/s/ DANIEL P. BUETTIN Vice President, Chief Financial Officer and
- --------------------------------------------- Secretary (Principal Financial Officer)
Daniel P. Buettin
* Corporate Controller and Assistant Secretary
- --------------------------------------------- (Principal Accounting Officer)
Brad A. Martyn
* Director
- ---------------------------------------------
Robert E. Oyster
* Director
- ---------------------------------------------
Timothy A. Walsh
* Director
- ---------------------------------------------
Scott N. Whitlock
</TABLE>
* This Amendment to the Registration Statement has been signed on behalf of the
above-named directors and officers of the Company by Daniel P. Buettin, Vice
President, Chief Financial Officer and Secretary of the Company, as
attorney-in-fact pursuant to a power of attorney filed with the Securities and
Exchange Commission as Exhibit 24 to this Registration Statement.
Dated: October 15, 1997
By: /s/ DANIEL P. BUETTIN
------------------------------------
Daniel P. Buettin
Attorney-in-Fact
<PAGE> 69
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------------------------------------------------------------------
<S> <C>
1 Form of Underwriting Agreement
3 (a) Amended and Restated Articles of Incorporation of the Company effective October
, 1997
3 (b) Amended and Restated Code of Regulations of the Company effective October , 1997
4 (a) Form of Stock Certificate for Common Stock of the Company
4 (b) Loan Agreement by and between MPW Industrial Services, Inc., affiliates and Bank
One, Columbus, NA**
4 (c) First Amendment to Loan Agreement by and between MPW Industrial Services, Inc.,
affiliates and Bank One, Columbus, NA**
5 Opinion of Jones, Day, Reavis & Pogue
10 (a) 1997 Stock Option Plan
10 (b) 1994 Stock Option Plan**
10 (c) 1991 Stock Option Plan**
10 (d) Form of Employment Agreement by and between MPW Industrial Services Group, Inc.
and Ira O. Kane**
10 (e) Form of Severance Agreement by and between MPW Industrial Services Group, Inc. and
Executive Officers**
10 (f) Form of Indemnification Agreement by and between MPW Industrial Services Group,
Inc. and Directors**
10 (g) Form of Indemnification Agreement by and between MPW Industrial Services Group,
Inc. and persons who are a Director and an Officer**
10 (h) Form of Indemnification Agreement by and between MPW Industrial Services Group,
Inc. and Executive Officers**
10 (i) Form of Lease for Hebron, Ohio facility**
10 (j) Form of Lease for Newark, Ohio facility**
10 (k) Lease for Chesterfield, Michigan facility**
10 (l) Form of First Lease Amendment for Chesterfield, Michigan facility**
21 List of Subsidiaries**
23 (a) Consent of Independent Auditors**
23 (b) Consent of Counsel (included in Exhibit 5 hereto)
23 (c) Consent of Gerald Nilsson-Weiskott, director nominee*
24 Powers of Attorney*
27 Financial Data Schedule**
</TABLE>
- ---------------
* Previously filed
** Filed herewith
<PAGE> 1
Exhibit 4(b)
LOAN AGREEMENT
--------------
THIS LOAN AGREEMENT (the "Agreement") dated as of the 30th day of June, 1996
(the "Agreement"), by and between MPW Industrial Services, Inc. ("MPW Inc."),
MPW Industrial Services, LTD. ("MPW LTD."), MPW Management Services Corp. ("MPW
Corp.") , Weston Engineering, Inc. ("Weston"), Pro Kleen Industrial Services,
Inc. ("Pro Kleen"), and Aquatech Environmental, Inc. ("Aquatech") (MPW Inc., MPW
LTD., MPW Corp., Weston, Pro Kleen and Aquatech jointly and severally the
"Borrowers") ( MPW Inc., MPW LTD., MPW Corp., Weston, and Aquatech jointly and
severally the "Companies") and Bank One, Columbus, NA, 100 East Broad Street,
Columbus, Ohio 43271 ("Bank One").
RECITALS:
---------
WHEREAS, Borrowers desire to obtain certain credit facilities; and
WHEREAS, Bank One is willing to make available certain credit facilities upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties agree as follows:
SECTION 1. CREDIT COMMITMENTS
-----------------------------
CREDIT COMMITMENTS. Bank One hereby agrees, on the terms and conditions of this
Agreement, to make available to Borrowers the credit facilities described in
Sections 2 and 3 of this Agreement.
SECTION 2. REVOLVING CREDIT FACILITY AND LETTERS OF CREDIT
----------------------------------------------------------
2.1 REVOLVING CREDIT COMMITMENT.
2.1.1 AVAILABILITY. At any time, the "Revolving Credit Commitment" shall be
an amount equal to Twelve Million Dollars ($12,000,000.00) less the
aggregate stated amounts of any outstanding Letter(s) of Credit,
provided, however, that upon any draws under any Letter(s) of Credit,
Bank One may treat such draw as a request for a Variable Rate Loan so
long as the Revolving Credit Commitment is not thereby exceeded. The
Revolving Credit Commitment shall be available to the Company,
subject to the limitations herein, in whole or in part and from time
to time until June 30, 1998, and any amounts borrowed may be repaid
in whole or in part and reborrowed until such date. Each borrowing
under the Revolving Credit Commitment, except as otherwise provided
in Section 2.2.1, shall be in an amount not less than $1,000 or any
larger amount which is an integral multiple of $1,000 (a "Revolving
Credit Loan"); provided, however, any Revolving Credit Loan in the
form of a Eurodollar Rate Loan shall be in an amount not less than
$500,000 or any larger amount which is an integral multiple of
$100,000.
- 1 -
<PAGE> 2
2.1.2 CONVERSION OPTIONS. Borrowers may elect from time to time to convert
all or a portion of the Variable Rate Loans then outstanding to
Eurodollar Rate Loans by giving Bank One irrevocable telephone notice
of such election as provided in this Section 2.1.2. Each Eurodollar
Rate Loan shall automatically convert to a Variable Rate Loan upon
its maturity unless Borrowers elect to continue such Variable Rate
Loan as a Eurodollar Rate Loan by giving Bank One the irrevocable
telephone notice of such election as provided in this Section 2.1.2.
Any such notice pursuant to this Section 2.1.2 shall be received by
Bank One not later than 10:30 a.m. Columbus, Ohio time on the
Eurodollar Banking Day immediately prior to the proposed conversion
date, which shall be a Eurodollar Banking Day, and shall specify (i)
the conversion date and (ii) the length of the Interest Period. If no
Event of Default or Default then exists, such conversion shall be
made on the requested conversion date. All or any part of the
outstanding Revolving Credit Loans may be converted as provided
herein, provided that partial conversions of Revolving Credit Loans
shall be in the aggregate principal amount of $500,000 or in
additional amounts of $100,000 or integral multiples thereof.
2.1.3 REVOLVING CREDIT NOTE. The obligation of Borrowers to repay the
unpaid principal amount of each Revolving Credit Loan shall be
evidenced by a master promissory note (the "Revolving Credit Note")
of the Borrowers executed by duly authorized officers thereof, dated
as of the date of this Agreement, and in the form of Exhibit 2.1.3
attached hereto.
2.1.4 COMMITMENT FEES. Borrowers shall pay to Bank One a Commitment Fee
(the "Commitment Fee") based on the daily average amount of the
Revolving Credit Commitment not drawn down in Revolving Credit Loans
(the "Unused Commitment") for the period beginning with the date
hereof and ending June 30, 1998 or on the sooner termination in full
of the Revolving Credit Commitment. The Commitment Fee shall be
payable quarterly in arrears on the last day of each March, June,
September and December and when the Revolving Credit Commitment is
fully terminated, on the date of such termination. The amount of the
Commitment Fee shall be equal to one-quarter percent (1/4%) per annum
of the Unused Commitment (computed on the basis of the actual number
of days elapsed over a Business Year).
2.1.5 CANCELLATION OR REDUCTION OF THE COMMITMENT BY BORROWERS.
(a) The Revolving Credit Commitment may be cancelled or may be
reduced permanently from time to time by Borrowers in the amount of
$500,000 or any larger amount which is a whole multiple of $100,000
at any time upon one Domestic Banking Day's written notice to Bank
One of Borrowers' election to do so, which notice shall specify the
date when such cancellation or reduction shall be effective and on
the effective date of such reduction the Revolving Credit Commitment
shall be reduced; provided that:
(i) any such cancellation or reduction shall be irrevocable;
- 2 -
<PAGE> 3
(ii) in the event of a cancellation of the Revolving Credit
Commitment, the Revolving Credit Note shall be paid in full and all
Commitment Fees due to the date of cancellation shall be paid in
full;
(iii) in the event of a reduction of the Revolving Credit
Commitment to a level which is below the principal amount of the then
outstanding Revolving Credit Loans, the Revolving Credit Loans shall
be prepaid so that the aggregate unpaid principal amount of the
Revolving Credit Loans do not exceed the Revolving Credit Commitment
as so reduced; and
(iv) no cancellation or reduction shall take place which will
require Borrowers to prepay a Eurodollar Rate Loan in order to reduce
the then outstanding principal balance on the Revolving Credit Loans
to the level of the Revolving Credit Commitment following such
cancellation or reduction, except with the consent of Bank One, which
consent may be withheld at the discretion of Bank One or granted on
such terms and for such consideration as Bank One shall determine.
(b) All principal payments made pursuant to this Section 2.1.5 shall
be accompanied by such additional consideration as may be required
pursuant to any other provision of this Agreement.
2.2 LETTERS OF CREDIT.
2.2.1 LETTER OF CREDIT COMMITMENT. Any authorized signer of Borrowers may
request that Bank One issue a letter or letters of credit in an
aggregate undrawn amount of the Revolving Credit Commitment up to a
maximum of Three Million Dollars ($3,000,000.00) (including the
existing letters of credit set forth on Exhibit 2.2 prior to their
expiration) from time to time for the benefit of Borrowers (the
"Letter of Credit Commitment"). The Letter of Credit Commitment shall
be available to the Borrowers subject to the limitations herein, in
whole or in part and from time to time until June 30, 1998; provided
that the termination date of any such Letter(s) of Credit shall be no
later than June 30, 2003.
2.2.2 REIMBURSEMENT. Borrowers agree that, at the sole discretion of Bank
One, whenever amounts become due to Bank One from Borrowers for
reimbursement of any draws under any Letter(s) of Credit, Bank One
may (but shall not be obligated to) treat such event as a request for
a Variable Rate Loan under this Agreement and directly apply the
proceeds of such Variable Rate Loan to the payment of the then
outstanding reimbursement obligations of Borrowers for draws under
such Letter(s) of Credit. Any amounts which are drawn under any
Letter(s) of Credit after June 30, 1998 shall be payable by Borrowers
immediately and shall not become a Variable Rate Loan since the
Revolving Credit Commitment shall have matured.
- 3 -
<PAGE> 4
2.3 CONVERSION OPTION.
2.3.1 CONVERSION. Provided no Default or Event of Default then exists,
Borrowers may, on or before June 30, 1998, exchange the Revolving
Credit Note for a note having a principal amount equal to the then
unpaid principal balance of the Revolving Credit Loans (the
"Conversion Option Loan") and the Revolving Credit Note will
thereafter be cancelled and the Revolving Credit Commitment
terminated.
2.3.2 CONVERSION OPTION NOTE. The Conversion Option Loan shall be evidenced
by the promissory note of Borrowers executed by duly authorized
officers thereof and shall be in the form of Exhibit 2.3.2 attached
hereto with blanks appropriately completed (the "Conversion Option
Note").
SECTION 3. ADDITIONAL CREDIT FACILITIES.
----------------------------------------
3.1 AMENDED AND RESTATED AIRPLANE LOAN.
3.1.1 LOAN. Bank One has lent to MPW, Inc. the sum of Three Million Dollars
($3,000,000.00) (the "Airplane Loan").
3.1.2 AIRPLANE NOTE. Borrowers shall execute and deliver to Bank One the
amended and restated promissory note executed by duly authorized
officers thereof in the form of Exhibit 3.1 attached hereto (the
"Aircraft Note").
3.2 WESTON ACQUISITION LOAN.
3.2.1 LOAN. Bank One agrees to lend to Borrowers the sum of Two Million
Eight Hundred Thousand Dollars ($2,800,000.00) (the "Weston
Acquisition Loan").
3.2.2 WESTON ACQUISITION NOTE. Borrowers shall execute and deliver to Bank
One the promissory note executed by duly authorized officers thereof
in the form of Exhibit 3.2 attached hereto (the "Weston Acquisition
Note").
3.3 EQUIPMENT LOAN.
3.3.1 LOAN. Bank One agrees to lend to Borrowers the sum of One Million
Eight Hundred Thousand Dollars ($1,800,000.00) (the "Equipment
Loan").
3.3.2 EQUIPMENT NOTE. Borrowers shall execute and deliver to Bank One the
promissory note executed by duly authorized officers thereof in the
form of Exhibit 3.3 attached hereto (the "Equipment Note").
3.4 MORTGAGE LOAN. Bank One agrees to lend to the Black Family Limited
Partnership the sum of Two Million Two Hundred Thousand Dollars
($2,200,000.00), which shall be guaranteed by MPW, Inc. (the "MPW
Mortgage Guaranty").
- 4 -
<PAGE> 5
3.5 CERTAIN LETTERS OF CREDIT. Bank One has issued two letters of credit,
copies of which are attached hereto as Exhibit 3.5, pursuant to the
Letter of Credit Agreement. Pursuant to the Letter of Credit
Agreement, MPW, Inc. has guaranteed the reimbursement obligations of
the Account Party to Bank One (the "MPW Reimbursement Obligations").
SECTION 4. PROVISIONS APPLICABLE TO ALL LOANS.
----------------------------------------------
4.1 REVOLVING CREDIT LOAN.
4.1.1 ELECTION. Each Revolving Credit Loan shall, at the election of
Borrowers made in accordance with the provisions of this Section
4.1.1, be made either in the form of (i) a Variable Rate Loan at a
rate of interest in accordance with Section 4.1.1 (individually a
"Variable Rate Loan" and collectively the "Variable Rate Loans") or
(ii) a Eurodollar Rate Loan at a rate of interest in accordance with
Section 4.1.1 (individually a "Eurodollar Rate Loan" and collectively
the "Eurodollar Rate Loans"). The aggregate unpaid principal amount
of the Variable Rate Loans and the Eurodollar Rate Loans at any one
time outstanding shall not exceed the Revolving Credit Commitment.
Each Revolving Credit Loan shall be made pursuant to Borrowers'
request therefore to Bank One which request for a Revolving Credit
Loan shall specify (i) the total amount of the Revolving Credit Loan;
(ii) the borrowing date (the "Borrowing Date"), which shall be a
Domestic Banking Day in the case of a Variable Rate Loan and a
Eurodollar Banking Day in the case of a Eurodollar Rate Loan; and
(iii) whether the Revolving Credit Loan is to be a Variable Rate Loan
or a Eurodollar Rate Loan (and in the case of a Eurodollar Rate Loan,
the length of the Interest Period). Requests for Variable Rate Loans
may be made on the applicable Borrowing Date. Requests for Eurodollar
Rate Loans shall be made not later than 10:30 a.m. Columbus, Ohio
time on the Eurodollar Banking Day immediately prior to the
applicable Borrowing Date.
In the case of a request for a Eurodollar Rate Loan, Bank One shall,
not later than 10:30 a.m. Columbus, Ohio time on the applicable
Borrowing Date, give notice to Borrowers of the Adjusted Eurodollar
Rate (including information as to the calculation thereof) applicable
for the period requested by Borrowers. Borrowers shall not later than
12:00 p.m. Columbus, Ohio time on the applicable Borrowing Date give
notice by telephone confirmed in writing to Bank One whether they
elect (i) to complete such borrowing in the form of a Eurodollar Rate
Loan; (ii) to complete such borrowing as a Variable Rate Loan; or
(iii) to cancel its request for a Revolving Credit Loan. Failure by
Borrowers to timely deliver such notice shall constitute cancellation
of such request.
4.1.2 INTEREST RATE ON REVOLVING CREDIT LOANS. Revolving Credit Loans shall
bear interest at the rate(s) set forth on Exhibit 4.1.2.
- 5 -
<PAGE> 6
4.2. TERM LOANS.
4.2.1 ELECTION. Unless Borrowers have elected to cause all or a portion of
a Term Note to bear interest at an Adjusted Eurodollar Rate, a Term
Note shall bear interest at a Variable Rate in accordance with
Section 4.2.2. Borrowers may elect to have all or a portion of any
Term Note bear interest at an Adjusted Eurodollar Rate in accordance
with Section 4.2.2. by providing a request therefor to Bank One not
later than 10:30 a.m. Columbus, Ohio time on the Eurodollar Banking
Day immediately prior to the applicable Effective Date, which request
shall specify (i) the effective date of the Adjusted Eurodollar Rate
(the "Effective Date"), which shall be a Eurodollar Banking Day, (ii)
the principal amount of the Term Note to bear interest at the
Adjusted Eurodollar Rate, which shall be not less than $500,000 or in
additional amounts of $100,000 or integral multiples thereof and
(iii) the length of the Interest Period. Bank One shall not later
than 10:30 a.m. Columbus, Ohio time on the applicable Effective Date,
give notice to Borrowers of the Adjusted Eurodollar Rate (including
information as to the calculation thereof) applicable for the period
requested by Borrowers. Borrowers shall not later than 12:00 p.m.
Columbus, Ohio time on the applicable Effective Date give notice by
telephone to Bank One as to whether or not it elects to have all or a
portion of the Term Note bear interest at the Adjusted Eurodollar
Rate commencing as of the Effective Date and if so, the Interest
Period. In the event Borrowers elect not to have the Term Note bear
interest at the Adjusted Eurodollar Rate or fails to timely deliver
such notice of election, the Term Note shall continue to bear
interest at the Variable Rate (or other applicable Adjusted
Eurodollar Rate then in effect) and such portion of the Term Loan
bearing interest at an Adjusted Eurodollar Rate shall upon expiration
of such Interest Period bear interest at the Variable Rate. Each
election to have a portion of the Term Note bear interest at the
Adjusted Eurodollar Rate shall be recorded and endorsed by Bank One
on the schedule attached to the Term Note; provided, however, that
the failure of Bank One to make such recordation shall not limit or
otherwise affect the obligations of Borrowers under the Term Note.
4.2.2 INTEREST RATE ON TERM LOANS. Term Loans shall bear interest at the
rate(s) set forth on Exhibit 4.2.2.
4.3 INTEREST PAYMENT DATES.
4.3.1 Revolving Credit Loans. Interest on each Revolving Credit Loan
shall be calculated on the basis of the actual number of days elapsed
over a Business Year. Interest on each Variable Rate Loan shall be
payable on the last day of each fiscal quarter (the "Interest Payment
Date") payable on each December 31, March 31, June 30 and September
30 during this Agreement. Interest on each Eurodollar Rate Loan shall
be payable on the last day of the Interest Period, but not less
frequently than quarterly.
4.3.2 Term Loans. Interest on the portion of any Term Note bearing
interest at an Adjusted Eurodollar Rate shall be payable on the last
day of the Interest Period. Interest on the portion of any Term Note
bearing interest at a Variable Rate shall be payable on each Interest
Payment Date, but not less frequently than quarterly.
- 6 -
<PAGE> 7
4.4 PRINCIPAL PAYMENT DATES. Principal payments on the Notes shall be due
and payable in accordance with the terms thereof.
4.5 OPTIONAL PREPAYMENTS.
4.5.1 Variable Rate Loans. Outstanding Variable Rate Loans or amounts
due on Term Notes bearing interest at a Variable Rate may be prepaid,
at Borrowers' option, in whole or in part at any time or from time to
time, without premium or penalty, in principal amounts of $1,000 or
integral multiples thereof, by giving written, telegraphic or oral
notice to Bank One not later than 2:00 p.m. Columbus, Ohio time on
the Domestic Banking Day on which prepayment is to be made. When such
notice of prepayment has been given to Bank One, the applicable
principal amounts of the Variable Rate Loans shall become due and
payable on the designated prepayment date. Interest on the principal
of the Revolving Credit Notes repaid, accrued to such prepayment
date, shall be due and payable on the next Interest Payment Date.
Eurodollar Loans may only be prepaid as provided for in Section
4.7(e) and Section 2.1.5.
4.5.2 Eurodollar Eurodollar Loans and amounts due on Term Notes
bearing interest at a Eurodollar Rate may only be prepaid as provided
for in Section 4.7(e) and Section 2.1.5.
4.6 DEFAULT RATE. Notwithstanding anything to the contrary contained
herein or in the Notes, on and after an Event of Default resulting
from the failure to timely pay principal of or interest on the Notes
or on or after any other Event of Default in which Bank One has
exercised its rights under Section 9.1 of this Agreement (subject to
notice and cure provisions provided herein), the Loans, including
Eurodollar Rate Loans and Term Loans bearing interest at an Adjusted
Eurodollar Rate, shall bear interest at a rate per annum equal to two
percent (2%) in excess of the Prime Rate from the date of such Event
of Default until paid in full.
4.7 ADDITIONAL PROVISIONS AND LIMITATIONS FOR EURODOLLAR RATE LOANS. The
additional provisions and limitations set forth below shall apply
with respect to Eurodollar Rate Loans on both the Term Loans and on
the Revolving Credit Commitment:
(a) If Bank One shall, prior to making any Eurodollar Rate Loan in
good faith, determine that it is unable to reasonably ascertain the
Eurodollar Rate or to acquire Eurodollar deposits on reasonable terms
in an amount sufficient to meet a request for a Eurodollar Rate Loan,
Bank One shall promptly notify Borrowers. In such event, the
Borrowers may request a Variable Rate Loan of like amount without
regard to the notice requirement of Section 4.1 or Section 4.2 or may
cancel such request.
(b) The obligation of Bank One to make Eurodollar Rate Loans
hereunder shall be suspended in the event that after the date hereof
any change in any law or regulation or in any interpretation thereof
by any governmental authority charged with its administration shall,
in the sole opinion of Bank One, make it unlawful for Bank One to
comply with its obligation to make or maintain any Eurodollar Rate
Loan hereunder for the duration of such illegality. Bank One shall
promptly notify Borrowers of such suspension, and, if
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<PAGE> 8
and when, in the sole opinion of Bank One, such illegality ceases to
exist, such suspension shall cease and Bank One shall promptly notify
Borrowers of such termination of such suspension.
(c) If Bank One has Eurodollar Rate Loans outstanding and after the
date hereof there shall occur any change in applicable law,
regulation or interpretation (including any request, guideline or
policy not having the force of law by any authority charged with the
administration or interpretation thereof) (i) which change directly
affects transactions in Eurodollars, (ii) which involves new or
additional taxes, reserves (costs already included in the
Eurocurrency Liability not included) or deposit requirements in
regard to the Eurodollar Rate Loans or changes in the basis of
taxation of payments on such Eurodollar Rate Loans, or (iii) which,
if the Eurodollar Rate Loans made hereunder by Bank One were to have
been matched with Eurodollar deposits corresponding in amounts to
such Eurodollar Rate Loans and having maturity dates, which are the
same as such Eurodollar Rate Loans regardless of whether or not such
Eurodollar Rate Loans are in fact so matched, actually increases the
cost to Bank One of making or maintaining the Eurodollar Rate Loans
hereunder or reduces the amount of any payments (whether of
principal, interest or otherwise) receivable by Bank One as to any
Eurodollar Rate Loans or requires Bank One to make any payment on or
calculated by reference to the gross amount of any sum received by it
as to such Eurodollar Rate Loans, then where the amount of any such
additional cost, reduction or payment is deemed material by Bank One:
(i) Bank One shall promptly notify Borrowers of the occurrence of
such event;
(ii) Bank One shall promptly deliver to Borrowers a certificate
stating the change which has occurred, together with the date thereof
and the amount of and the manner of calculating the increased cost on
any outstanding Eurodollar Rate Loan; and
(iii) upon receipt of such certificate from Bank One, Borrowers
shall pay to Bank One on demand the amount or amounts of such
additional cost with respect to such outstanding Eurodollar Rate Loan
as additional compensation hereunder.
(d) The certificate of Bank One delivered to Borrowers as to the
additional amount payable pursuant to Section 4.7(c) shall (in the
absence of manifest error in the transmission or calculation) be
prima facie evidence of the amount thereof. The protection of this
Section 4.7(d) shall be available to Bank One regardless of any
possible contention of invalidity or inapplicability of the law,
regulation or condition which has been imposed. However, if Borrowers
have made a payment of any additional amounts pursuant to Section
4.7(c) and any subsequent event occurs which reduces the amount of
the increased cost incurred by Bank One, then Bank One shall promptly
refund to Borrowers an amount equal to such reduction in the amount
of increased cost.
(e) Borrowers shall be entitled, in addition to its other rights, to
prepay any outstanding Eurodollar Rate Loan (all such prepayments
shall be in full and not in part with interest accrued to the date of
such prepayments) by substituting a Variable Rate Loan of equal
principal amount therefor. As a condition of such prepayments other
than as required by
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<PAGE> 9
sub-section 4.7(b), Borrowers shall promptly pay to Bank One, upon
Bank One's written request, such amount or amounts as in the
reasonable judgment of Bank One will compensate Bank One for any
loss, premium or penalty incurred or to be incurred by Bank One
because of such prepayment.
4.8 PAYMENTS. All payments and prepayments by Borrowers to be made in
respect of the Commitment Fee or of principal or interest on the
Notes shall become due at 1:30 p.m. Columbus, Ohio time on the day
when due, and shall be made to Bank One in federal funds or other
immediately available lawful money of the United States of America.
Whenever any payment to be made hereunder shall be due other than on
a Domestic Banking Day, such payment shall be made on the next
succeeding Domestic Banking Day and such extension of time shall in
such case be included in the computation of interest or fees
hereunder.
4.9 SETOFFS. Upon the occurrence, and during the continuation, of any
Event of Default, Bank One shall have the right to set off against
all obligations of Borrowers to Bank One under this Agreement and the
Notes, whether matured or unmatured, all amounts owing to Borrowers
by Bank One, whether or not then due and payable, and all funds or
property of Borrowers on deposit with or otherwise held or in the
custody of Bank One for the beneficial account of Borrowers, except
for (a) funds necessary to cover checks for the payment of taxes or
employee contributions in which Borrowers have no beneficial interest
issued to third parties prior to the date any setoff is claimed by
Bank One and (b) accounts maintained, but not substantially
overfunded, for the payment of taxes or employee contributions in
which Borrowers have no beneficial interest. Such funds shall be
charged against accrued interest on and/or principal of the Notes or
Commitment Fees as Bank One may determine in its discretion.
4.10 INTEREST CALCULATION. Interest upon the Notes shall be calculated on
a 365 day year basis and shall be calculated by dividing the actual
number of days which elapsed during the period interest accrued by a
year of 365 days times the interest rate in effect.
SECTION 5. CONDITIONS OF BORROWING.
-----------------------------------
The obligation of Bank One to make the Loans to Borrowers provided for hereunder
shall be subject to the following conditions:
5.1 CONDITIONS PRECEDENT TO THE INITIAL REVOLVING CREDIT LOAN. Prior to
the disbursement of the initial Revolving Credit Loan hereunder,
Borrowers shall furnish to Bank One the following, each dated the
date of the disbursement of the initial Revolving Credit Loan, in
form and substance satisfactory to Bank One and counsel for Bank One:
(a) The duly executed Revolving Credit Note in the form of the
attached Exhibit 2.1.3;
(b) Certified copies of the resolutions of the board of directors or
general partners of each Borrower authorizing the execution, delivery
and performance of the Borrower's obligations under this Agreement
and the Notes;
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<PAGE> 10
(c) A certificate of the Secretary, Assistant Secretary, or general
partners of each Borrower which shall certify the names of the
person(s) of each Borrower authorized to sign this Agreement and the
Notes and any other documents or certificates to be delivered
pursuant to this Agreement by Borrowers, together with the true
signatures of such person(s). Bank One may conclusively rely upon
such certificate until it shall receive a further certificate of the
Secretary, Assistant Secretary or general partners cancelling or
amending the prior certificate and submitting the signatures of the
person(s) named in such further certificate;
(d) Evidence that each Borrower has in effect insurance and
endorsements of the character and amount described in Section 7.4;
(e) An opinion satisfactory to Bank One by counsel acceptable to Bank
One, which shall include, but not be limited to, the following: that
the Opinion Borrowers are duly organized and existing corporations;
that the execution hereof has been duly authorized by all necessary
corporate action; that there is no prohibition, either by law, in
their articles of incorporation, code of regulations, by-laws or in
any agreement for borrowed money to which they are a party, which in
any way prohibits or would be violated by the execution or carrying
out of this Agreement in any respect; that this Agreement has been
duly executed and is the valid and binding obligation of Opinion
Borrowers jointly and severally; and that the Notes are duly executed
and represent valid and binding obligations of the Opinion Borrowers,
jointly and severally.
(f) Such other opinions, certificates, affidavits, documents and
filings as Bank One may deem reasonably necessary or appropriate.
5.2 CONDITIONS PRECEDENT TO EACH LOAN. At the time of each Revolving
Credit Loan after the initial Revolving Credit Loan and at the time
of making the Term Loans, the following conditions shall be satisfied
(and the request or application by Borrowers for a Revolving Credit
Loan or the Term Loans shall constitute a representation and warranty
to such effect): (i) Borrowers shall be in compliance with all of the
provisions, warranties and covenants contained in this Agreement with
which they are to comply and (ii) there shall exist no Default or
Event of Default.
5.3 ADDITIONAL CONDITIONS PRECEDENT TO TERM LOAN. In addition to the
conditions stated in Section 5.2, at the time of the making of the
Conversion Option Loan, Borrowers shall deliver a properly executed
Conversion Option Note to Bank One as provided in Section 2.3.2.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
------------------------------------------
In borrowing hereunder, Borrowers represent and warrant to Bank One, which
representations and warranties will survive the execution and delivery of this
Agreement and the Notes, that:
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<PAGE> 11
6.1 ORGANIZATION & AUTHORITY TO EXECUTE LOAN DOCUMENTS. Borrowers are
duly organized and existing corporations under the laws of the
jurisdictions of their incorporation and are qualified to do business
in all states where such qualification is necessary, except such
jurisdiction, if any, where failure to be qualified will not have a
material and adverse effect on the Borrowers taken as a whole; the
execution hereof has been duly authorized by all necessary corporate
action; there is no prohibition, either by law, in their articles of
incorporation, code of regulations, by-laws, or in any agreement to
which they are a party, which in any way prohibits or would be
violated by the execution and carrying out of this Agreement in any
respect; this Agreement has been duly executed and is the valid and
binding obligation of Borrowers jointly and severally; and, the Notes
issued and delivered to Bank One as payee pursuant to the provisions
hereof will also be a valid and binding obligation of Borrowers,
jointly and severally.
6.2 COMBINED FINANCIAL STATEMENTS. Borrowers have furnished to Bank One
the most recent Combined Audited Financial Statements as required in
Section 7.1 hereof which are free of material mistatements according
to generally accepted accounting principles and which fairly reflect
their financial condition as of the date stated therein. "Audited
Financial Statements" shall mean Financial Statements which have been
audited, prepared, and certified, without qualification, by any of
the "Big 6" accounting firms or by another firm of independent
certified public accountants of recognized standing and acceptable to
Bank One.
6.3 NO GUARANTIES OF OTHERS' OBLIGATIONS. None of the Borrowers have made
material investments in, advances to or guaranties of the obligations
of any Person, corporation or other entity except as disclosed in the
Financial Statements described in Sections 7.1 and 7.2, or as set
forth in Sections 3.3 and 3.5, or as disclosed to Bank One in
writing.
6.4 COMPLIANCE WITH OCCUPATIONAL SAFETY & HEALTH ACT. Borrowers as a
whole are not in violation of any requirement of any applicable
occupational safety and health act or any standard, rule or order
promulgated pursuant thereto or any regulation prescribed pursuant
thereto, the violation of which involves (i) the probable occurrence
of a material adverse effect on the business, operation or condition
of the Borrowers as a whole or (ii) the ability of the Borrowers as a
whole to perform this Agreement.
6.5 NO UNDISCLOSED LIABILITIES. Borrowers have no material liabilities,
direct or contingent, except as disclosed in the Financial Statements
described in Sections 7.1 and 7.2.
6.6 NO UNDISCLOSED SUBSIDIARIES. There exist as of the date hereof no
Subsidiaries of any Borrower except as disclosed to Bank One in
writing prior to the execution of this Agreement.
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<PAGE> 12
6.7 GOOD TITLE TO ASSETS AND NO UNDISCLOSED LIENS. Borrowers have good
and marketable title to all the property and assets reflected as
being owned by them in the Financial Statements described in Sections
7.1 and 7.2 , subject to no liens, other than liens reflected on said
Financial Statements or Permitted Liens, except property and assets
disposed of since such date in the ordinary course of business.
6.8 POSSESS NECESSARY PATENTS, TRADEMARKS, & LICENSES. Borrowers own or
possess all material patents, trademarks, service marks, trade names,
copyrights, permits and licenses, or rights with respect to the
foregoing, necessary for the present and planned future conduct of
the business, without any known conflict with the rights of others,
except as disclosed to Bank One in writing. At the date of this
Agreement, there is no such patent, trademark, service mark, trade
name, copyright, permit, license or charter of material importance to
the conduct of the business of any of the Borrowers other than has
been disclosed to Bank One in writing.
6.9 NO UNDISCLOSED INTEREST IN THE TITLE TO ASSETS. None of the assets or
property, the value of which is reflected in the Financial Statements
described in Sections 7.1 and 7.2, is held by any Borrower as lessee
or conditional vendee, or pursuant to a title retention agreement of
any kind, except as set forth in said Financial Statements or the
notes relating thereto or as disclosed to Bank One in writing.
6.10 NO UNDISCLOSED FINANCING STATEMENTS. To the best of Borrowers'
knowledge, no financing or continuation statement which names any
Borrower as debtor has been filed under the Uniform Commercial Code
in any state or other jurisdiction except as set forth in the
Financial Statements described in Sections 7.1 and 7.2, as disclosed
to Bank One in writing, or with respect to purchase money liens
permitted pursuant to Section 8.1, and no Borrower has agreed to or
consented to cause or to permit in the future (upon the happening of
a contingency or otherwise) any of their property, whether now owned
or hereafter acquired, to be subject to a lien, except Permitted
Liens.
6.11 LEASES ARE VALID AND ENFORCEABLE. Each material lease of real estate
or personal property to which any Borrower is a party as lessee is
valid, binding, and enforceable by the Borrower as lessee in all
material respects in accordance with its terms, entitles the lessee
to undisturbed possession of the real estate or personal property
covered thereby during the full term thereof and no event of default
thereunder or event which with the giving of notice or lapse of time
or both would constitute an event of default with respect to the
Borrowers thereunder has occurred.
6.12 NO LAWSUITS OR JUDGMENTS. There is no action, suit or proceeding at
law or in equity or any arbitration proceeding or investigation,
inquiry or other proceeding by or before any court or governmental
instrumentality or other agency now pending or, to the knowledge of
any Borrower threatened or affecting any Borrower or any property or
rights of any Borrower, except such of the foregoing which, would not
be reasonably likely in the aggregate to have a material adverse
effect on Borrowers taken as a whole or which does not seek to enjoin
the consummation of any transaction contemplated by this Agreement.
No judgment, decree or order of any federal, state or municipal
court,
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<PAGE> 13
board or other governmental or administrative agency has been issued
against or binds Borrowers taken as a whole which has, or is likely
to have, any material adverse effect on the business or assets or the
condition, financial or otherwise, of Borrowers taken as a whole.
6.13 FILING AND PAYMENT OF TAXES. Borrowers have duly filed or caused to
be filed all federal, state and local tax returns which are required
to be filed, and have duly paid or caused to be duly paid, all taxes
as shown on said returns or on any assessment received by them, to
the extent that such taxes have become due. Borrowers have made
provisions which are believed by the officers of Borrowers to be
adequate for the payment of such taxes for the years that have not
been audited by the respective tax authorities.
6.14 NO ADVERSE EFFECT FROM OBLIGATION OF CONTRACTS/LAW. No Contractual
Obligation of or Requirement of Law upon Borrowers taken as a whole
materially and adversely affects their business, properties or
assets, operations or conditions (financial or otherwise), or the
ability of Borrowers taken as a whole to perform this Agreement, or
any other agreement or instrument herein or therein contemplated.
6.15 NO ADVERSE EFFECT FROM DEFAULT OF CONTRACTS/LAW. Borrowers are not in
default under any applicable Contractual Obligation or Requirement of
Law so as to affect adversely and materially the business or assets
or the condition, financial or otherwise, of Borrowers taken as a
whole or the ability of Borrowers taken as a whole to perform this
Agreement, or any other agreement or instrument herein or therein
contemplated.
6.16 NO DEFAULT OF THIS AGREEMENT. There does not exist any Event of
Default or any condition or circumstance which constitutes or with
lapse of time or the giving of notice or both would constitute an
Event of Default.
6.17 INSURANCE. All of the properties and operations of Borrowers of a
character usually insured against by Persons of established
reputation engaged in the same or a similar business similarly
situated are adequately insured, by financially sound and reputable
insurers against loss or damage of the kinds and in the amounts
customarily insured against by such Persons: and Borrowers carry,
with such insurers in customary amounts, such other insurance,
including public and product liability insurance, as is usually
carried by Persons of established reputation engaged in the same or a
similar business similarly situated; provided, however, that
Borrowers may elect to maintain at any time self-insurance coverage
(including deductible amounts) up to maximums as set forth on Exhibit
6.17.
6.18 NO UNTRUE OR MISLEADING STATEMENTS OR OMISSIONS. Neither this
Agreement nor any other agreement, instrument or certificate
contemplated by or made or delivered pursuant to or in connection
with this Agreement, contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
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<PAGE> 14
6.19 COMPLIANCE WITH ERISA. Borrowers are in compliance in all material
respects with the applicable provisions of the Employee Income
Security Act of 1974, as amended and any regulations promulgated
thereunder (hereinafter referred to as "ERISA") ERISA, and no
"reportable event" as such term is defined in Section 4043 of ERISA,
has occurred with respect to any Plan of Borrowers.
6.20 ENVIRONMENTAL. (1) Borrowers are in compliance in all material
respects with all Environmental Laws and health and safety
regulations; (2) there are no material governmental investigations of
the environmental matters of the Borrowers; (3) there are no
contingent liabilities which could reasonably be expected to have a
material adverse effect on the financial condition or operations of
the Borrowers taken as a whole; and (4) the transactions set forth
herein and contemplated hereby shall not subject Bank One or any of
Bank One's parent, subsidiary or affiliated entities to any
Environmental Law (including, without limitation, any clean-up
responsibility law or restrictive transfer law or regulation).
6.21 COMPLIANCE WITH FEDERAL RESERVE REGS S,T,U,OR X. None of the
Borrowers are engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System
as it is now and may from time to time hereafter be in effect) and no
part of the proceeds of any loan will be used to purchase or carry
any such margin stock or to reduce or retire any indebtedness
incurred for any such purpose. No part of the proceeds of the loan
hereunder will be used for any purpose which violates, or which is
inconsistent with the provisions of Regulations S, T, U or X of said
Board of Governors.
SECTION 7. AFFIRMATIVE COVENANTS.
---------------------------------
Until all indebtedness of Borrowers to Bank One has been paid:
7.1 ANNUAL COMBINED FINANCIAL STATEMENTS.
7.1.1 Of Companies. Companies shall furnish to Bank One within ninety (90)
days after the close of each fiscal year annual Combined Audited
Financial Statements which fairly reflect their financial condition
as of the date stated therein.
7.1.2 Of Pro Kleen. Pro Kleen shall furnish to Bank One within ninety (90)
days after the close of each fiscal year annual Financial Statements
which fairly reflect its financial condition as of the date stated
therein.
7.2 PERIODIC COMBINED FINANCIAL STATEMENTS.
7.2.1 Of Companies. Companies shall furnish to Bank One within sixty (60)
days after the close of each quarter of each fiscal year, Combined
Financial Statements which fairly reflect their financial condition
as of the date stated therein and which are certified as true and
correct in all material respects by the Chief Executive Officer or
Chief Financial
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<PAGE> 15
Officer of each of the Companies. At the same time, Companies shall
furnish to Bank One a letter detailing all distributions required for
the payment of taxes.
7.2.2 Of Pro Kleen. Pro Kleen shall furnish to Bank One within sixty (60)
days after the close of each quarter of each fiscal year, Financial
Statements which fairly reflect its financial condition as of the
date stated therein and which are certified as true and correct in
all material respects by the Chief Executive Officer or Chief
Financial Officer of Pro Kleen.
7.3 NO DEFAULT CERTIFICATE. The Financial Statements called for by the
above paragraph(s) must be accompanied by a certificate signed by the
Chief Executive Officer or Chief Financial Officer of each Borrower
stating that, except as disclosed in the certificate, they have no
knowledge of any Event of Default or event which, with the lapse of
time or notice or both, would become an Event of Default hereunder,
and if an annual audit, review, or compilation is required by the
above paragraph(s), Borrowers will cause their independent certified
public accountants to provide Bank One with a similar certificate and
such certificate must accompany the audit, review, or compilation.
7.4 INSURANCE. Borrowers shall at all times:
a. Either: (1) maintain adequate insurance including, but not
limited to, workers' compensation upon all of its properties and
operations of a character usually insured against by Persons of
established reputation engaged in the same or a similar business
similarly situated by financially sound and reputable insurers
against loss or damage of the kinds and in the amounts
customarily insured against by such Persons with Bank One named
as loss payee; or (2) be self insured without breach of Section
6.17.
b. Maintain with such insurers in customary amounts such other
insurance, including public and product liability insurance as is
usually carried by Persons of established reputation engaged in
the same or a similar business similarly situated.
c. At the request of Bank One, furnish a statement of its insurance
coverage.
d. All insurance policies shall contain a provision requiring the
insurance company to provide Bank One not less than ten days
written notice prior to cancellation of any such policy.
7.5 CONCURRENT PAYMENT OF OTHER BANK ONE INDEBTEDNESS. Borrowers shall
promptly pay when due any amounts owing to Bank One on account of
other indebtedness owing by any of the Borrowers from time to time
during the term of this Agreement and the Notes executed hereunder.
7.6 BANK ONE TO BE PRIMARY DEPOSITORY. If Bank One has a market presence
in any Borrower's business location, Bank One shall be the primary
depository and principal bank of account.
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<PAGE> 16
7.7 CHANGES IN ARTICLES OF INC., CODE OF REGS OR BY-LAWS. Borrowers shall
promptly provide Bank One with written notice after changes are made
of any amendments to or changes in their Articles of Incorporation,
code of regulations and/or by-laws, including such changes as might
affect the structure, condition, operation or management of Borrowers
and Borrowers' obligations to Bank One under the terms of this
Agreement and shall make such amended articles, code of regulations
or by-laws available for inspection by Bank One upon demand.
7.8 PAYMENT OF TAXES. Borrowers shall promptly pay and discharge all
taxes and assessments levied and assessed or imposed upon its
property or income as well as all claims which, if unpaid, might by
law become a lien or charge upon such property; provided, however,
that nothing herein contained shall require Borrowers to pay any such
taxes, assessments or claims so long as Borrowers shall in good faith
contest the validity and stay the execution and enforcement thereof.
7.9 COMPLIANCE WITH LAWS. Borrowers will promptly comply in all material
respects, with all applicable statutes, laws, ordinances and
governmental rules, regulations and orders to which it is subject or
which are applicable to each Borrower's business, property and assets
if noncompliance therewith would materially and adversely affect the
businesses of the Borrowers taken as a whole.
7.10 PRESERVE AND MAINTAIN CORPORATE RIGHTS. Each Borrower shall preserve
and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction which it shall select, and qualify and
remain qualified as a foreign corporation in each jurisdiction where
such qualification is necessary, except such jurisdictions, if any,
where the failure to preserve and maintain its corporate existence,
rights, franchises and privileges, or qualify or remain qualified
will not have a material adverse effect on the business or property
of it; provided, however that nothing herein shall prevent any merger
or consolidation permitted hereunder.
7.11 PAYMENT OF LEGAL, FILING, AND CLOSING COSTS. Borrowers will pay or
reimburse all fees and expenses incurred by Bank One in connection
with the preparation of this Agreement, the Notes and related
documents and will also pay all out-of-pocket expenses of Bank One in
connection with the closing, collection and enforcement of this
Agreement, the Notes and other agreements and documents contemplated
herein. Borrowers shall, upon request, promptly reimburse Bank One
for all amounts expended, advanced or incurred by Bank One to satisfy
any obligation of Borrowers under this Agreement and other agreements
and documents contemplated herein, or in the collection and
enforcement of the Notes and Bank One's rights under this Agreement
including all court costs, attorney's fees, fees of auditors and
accountants and investigation expenses reasonably incurred by Bank
One in connection with such collection and enforcement, together with
interest at the post-maturity rate set forth herein on such amount
from the date of written demand by Bank One for reimbursement until
the date Bank One is actually reimbursed.
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<PAGE> 17
7.12 [INTENTIONALLY OMITTED]
7.13 MAINTAIN AND PRESERVE ASSETS AND MANAGEMENT. Borrowers shall use
reasonable efforts in good faith to maintain and preserve in good
working order and condition, ordinary wear and tear excepted, all of
Borrowers' properties necessary for the conduct of their business, if
failure to maintain and preserve such properties would over a
substantial period of time materially and adversely affect the
Borrowers taken as a whole. In addition, MPW, Inc. shall maintain a
management team for the management of MPW, Inc. and the Borrowers
which is reasonably similar, in terms of collective expertise and
experience, as is existing at the time of execution of this
Agreement.
7.14 ERISA REPORTS. Each Borrower will promptly furnish to Bank One (i) if
requested by Bank One, promptly after the filing thereof with the
United States Secretary of Labor or the Pension Benefit Guaranty
Corporation, copies of each annual and other report with respect to
each Plan or any other trust created thereunder, and (ii) immediately
upon becoming aware of the occurrence of any "reportable event" as
such term is defined in Section 4043 of ERISA, or of any "prohibited
transaction" as such term is defined in Section 4975 of the Internal
Revenue Code of 1986, as amended, in connection with any Plan or any
trust created thereunder, a written notice signed by the Chief
Executive Officer or Chief Financial Officer of Borrower specifying
the nature thereof, what action the Borrower is taking or proposes to
take with respect thereto and, when known, any action taken by the
Internal Revenue Service with respect thereto. Each Borrower will
fund all current service pension liabilities as they are incurred
under the provisions of all Plans from time to time in effect for the
benefit of employees of Borrower, and comply with all applicable
provisions of ERISA.
7.15 NOTIFICATION OF CERTAIN ADVERSE EVENTS. The Borrowers shall promptly
notify Bank One if it learns of the occurrence of (i) any event which
constitutes a Default, together with a detailed statement by a
responsible officer of the steps being taken to cure the effect of
such Default; or (ii) the receipt of any notice or the taking of any
other action by the holder of any material promissory note, debenture
or other evidence of indebtedness of a Borrower or of any security
(as defined in the Securities Act of 1933, as amended) of a Borrower
with respect to a claim of default, together with a detailed
statement by a responsible officer specifying the notice given or
other action taken by such holder and the nature of the claimed
default and what action Borrower is taking or proposes to take with
respect thereto; or (iii) any legal, judicial or regulatory
proceedings affecting Borrower or any of the properties of Borrower
in which the amount involved is material and is not covered by
insurance or which is reasonably likely to have a material adverse
effect on the Borrowers taken as a whole; (iv) any dispute between
Borrower and any governmental or regulatory body or any other Person
which is reasonably likely to have a material adverse effect on the
Borrowers taken as a whole; or (v) any event or condition having a
material adverse effect on the Borrowers taken as a whole.
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<PAGE> 18
7.16 ENVIRONMENTAL MATTERS. Borrowers shall comply in all material
respects with all applicable Environmental Laws.
Borrowers also covenant and agree to hold harmless and indemnify Bank
One and any of its officers, directors, employees and affiliates and
each of their officers, directors and employees from any and all
liabilities, losses, damages, penalties, fines, claims, suits, costs,
fees (including attorneys fees), and expenses, including, but not
limited to, liability for cleanup costs, the relocation of tenants
occupying the Premises or any portion thereof, containment costs,
bodily injury and property damage and all costs, fees (including
attorneys fees) and expenses incurred by Bank One and any of its
officers, directors, employees and affiliates and each of their
officers, directors and employees for the defense of any claim or
cause of action arising from the location, release, emission or
discharge of Pollutants on the Premises or into the environment. As
the term is used herein, "Pollutants" shall mean any "hazardous
substances" as defined in the Comprehensive Environmental Response,
Compensation and Liability Act as is now or hereafter amended or
supplemented, and regulations adopted pursuant thereto, "hazardous
waste" as defined under the Solid Waste Disposal Act, "air
pollutants" as defined under the Clean Air Act, "toxic pollutants" as
defined under the Clean Air Act or the Toxic Substances and Control
Act or other toxic or hazardous wastes or materials.
7.17 INSPECTION OF BOOKS AND RECORDS. Upon request by Bank One, Borrowers
shall make available for inspection during normal business hours to
duly authorized representatives of Bank One any of their books and
records, and shall furnish to Bank One any information regarding
their business affairs and financial condition including copies of
any contracts entered into by Borrowers within a reasonable time
after receipt of written request therefor.
7.18 INSPECTION OF PROPERTY. Borrowers shall make available for
inspection, during normal business hours and upon not less than
seventy-two (72) hours prior written notice from Bank One, to duly
authorized representatives of Bank One any of their property and
assets for the purpose of ascertaining that the covenants and
conditions of this Agreement are being complied with.
7.19 PAYMENT IN FULL UPON TRANSFER OF CERTAIN STOCK. In the event that
Monte R. Black should sell, assign, deed into trust, pledge,
mortgage, dispose of or otherwise encumber all or a controlling
interest of his/her/its stock in any of the Borrowers without prior
written permission of Bank One, Borrowers shall within ten (10) days
of the event pay to Bank One all amounts due and owing from Borrowers
to Bank One under this Agreement and the Notes.
SECTION 8. NEGATIVE COVENANTS.
------------------------------
Except with the prior written consent of Bank One, each Borrower shall not:
8.1 ENCUMBERING ASSETS. Create, incur, assume or permit to continue any
mortgage, pledge, encumbrance, lien or charge of any kind upon or
security interest in any of its
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property or assets, whether now owned or hereafter acquired, except
Permitted Liens as defined herein;
8.2 INCURRING OTHER DEBT. Create, incur, assume or suffer to exist any
Funded Debt or Current Debt except: (1) debt represented by the Notes
issued hereunder; (2) other indebtedness to Bank One; (3) Funded Debt
which, in the sole opinion of counsel for Bank One is satisfactorily
subordinated to all indebtedness owing Bank One; (4) unsecured
indebtedness to trade creditors arising out of the ordinary course of
each Borrower's business; (5) an aggregate amount not to exceed
$500,000.00 for purchase money debt, project financing and assumed
liabilities of any acquired business; (6) any intercompany debt; (7)
existing and currently anticipated capitalized leases between
Borrowers and Monte Black or the Black Family Limited Partnership as
provided on the most recent Combined Financial Statements; (8)
Executive Option Liabilities; and (9) unsecured Funded Debt, not to
exceed Four Million Dollars in the aggregate, to Bank One and/or
National City Bank of Columbus.
8.3 GUARANTY OF OTHERS' DEBTS. Assume, guarantee, endorse, contingently
agree to purchase or otherwise become liable upon the obligation of
any Person (except intercompany guarantees or guarantees existing on
the date of this agreement) in an amount in excess of Five Hundred
Thousand Dollars ($500,000.00);
8.4 MERGER OR CONSOLIDATION. Merge or consolidate with any other
corporation or any other business entity except that Borrowers may
merge or consolidate with each other;
8.5 TRANSFER OF SUBSTANTIAL PORTION OF ASSETS. Liquidate or sell, lease,
transfer or otherwise dispose of all or a substantial part of its
assets other than in the ordinary course of business without prior
written approval of Bank One which shall not be unreasonably
withheld. All proceeds from any such sale, lease or transfer shall be
remitted by Borrowers to Bank One to be applied to the Notes
previously described herein;
8.6 DISPOSING OF NOTES/ACCOUNTS RECEIVABLE. Discount or sell any of its
notes or accounts receivables;
8.7 MAKING LOANS. Make any loans or advances (except intercompany loans)
in any one fiscal year in excess of an aggregate of Seven Hundred
Fifty Thousand Dollars ($750,000);
8.8 AMOUNT OF COMBINED TANGIBLE NET WORTH. Permit Combined Tangible Net
Worth to be less than Thirteen Million Dollars ($13,000,000) at June
30, 1996 and thereafter; and furthermore thereafter, less than
Thirteen Million Dollars ($13,000,000) plus fifty percent (50.00%) of
Adjusted Net Income, measured quarterly, provided, however, that the
required Combined Tangible Net Worth shall not decrease under any
circumstances;
8.9 RATIO OF COMBINED LIABILITIES TO NET WORTH. Permit the ratio of Total
Combined Liabilities to Combined Tangible Net Worth to exceed the
ratio of 1.25 to 1.0;
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<PAGE> 20
8.10 RATIO OF COMBINED AVAILABLE INCOME TO FIXED CHARGES. Permit the ratio
of Combined Available Income to Combined Fixed Charges to be less
than 1.50 to 1.0;
8.11 DISTRIBUTIONS. Declare or pay any dividends, purchase, redeem,
retire, or otherwise acquire for value any of their capital stock now
or hereafter outstanding, return any capital to their shareholders or
make any distribution of assets to their shareholders, including, but
not limited to, cash payments made pursuant to MPW, Inc.'s 1994 Stock
Option Plan and 1991 Stock Option Plan; provided, however, that
Companies may, computed on a cumulative Combined basis, declare and
pay cash dividends to their shareholders in any fiscal year in an
aggregate amount not to exceed: (1) distributions required for the
payment of taxes, plus (2) fifty percent (50.00%) of Adjusted Net
Income; and
8.12 INTEREST IN PRO KLEEN. Companies shall not make any additional
investment in or loan to Pro Kleen which is greater than Two Hundred
Fifty Thousand Dollars ($250,000.00) in any one fiscal year or
greater than One Million Dollars ($1,000,000.00) during the term of
this Agreement in the aggregate, computed on a cumulative Combined
basis.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
------------------------------------------
If any of the following events ("Events of Default") shall occur and be
continuing:
9.1. Borrowers shall default in the payment of any installment of the
principal of the Notes or the MPW Reimbursement Obligations or the
MPW Mortgage Guaranty or any indebtedness described in Section 8.2(8)
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment or by acceleration or
otherwise, provided such default shall continue for a period of ten
(10) calendar days;
9.2. Borrowers shall default in the payment of interest on the Notes or
the MPW Reimbursement Obligations or the MPW Mortgage Guaranty or any
indebtedness described in Section 8.2(8) when and as the same shall
become due and payable, whether at the due date thereof or at a date
fixed for prepayment or by acceleration or otherwise, provided such
default shall continue for a period of ten (10) calendar days;
9.3. Borrowers shall default with regard to: (1) any payment of principal
or interest beyond any applicable grace period if such default causes
the acceleration of the indebtedness, provided such default shall
continue for a period of ten (10) calendar days, or (2) the
performance or observance of any covenant, condition or agreement of
any other material instrument of indebtedness executed by any of the
Borrowers beyond any applicable grace period if such default causes
the acceleration of the indebtedness;
9.4. Any representation or warranty made by Borrowers in this Agreement or
in connection with the loan(s) hereunder, or in any security
agreement, mortgage, report, certificate, financial statement or
other agreement, document or instrument furnished in connection with
this Agreement or the loan(s) hereunder shall prove to be false or
misleading in any
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<PAGE> 21
material respect at the time made;
9.5. Borrowers shall fail to observe or perform any covenant, condition or
agreement in Section 8 of the Agreement; provided such failure shall
continue unremedied for a period of twenty (20) days;
9.6. Borrowers shall fail to observe or perform any covenant, condition or
agreement to be observed or performed pursuant to the terms of this
Agreement (excluding Section 8), provided such default shall continue
unremedied for twenty (20) days after written notice, which notice
shall include a description of the Event of Default thereof to the
Borrowers by Bank One;
9.7. Final judgment for the payment of money in excess of One Hundred
Thousand Dollars ($100,000) shall be rendered against any Borrower
and the same shall remain undischarged for a period of thirty (30)
consecutive days during which the execution shall not be effectively
stayed; or the collateral is threatened with or subject to levy,
attachment, condemnation or forfeiture proceedings;
9.8. Any Borrower shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator for it or for any of its property,
(ii) admit in writing its inability to pay its debts as they mature,
(iii) make a general assignment for the benefit of creditors, (iv) be
adjudicated a bankrupt or insolvent, or (v) file a voluntary petition
in bankruptcy, or a petition or an answer seeking reorganization or
an arrangement with creditors to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute, or an answer admitting the material
allegations of a petition filed against it in any proceeding under
any such law or if corporate action shall be taken by any Borrower
for the purpose of effecting any of the foregoing;
9.9. An order, judgment or decree shall be entered without the
application, approval or consent of any Borrower by any court of
competent jurisdiction, approving a petition seeking reorganization
of any Borrower or appointing a receiver, trustee or liquidator of
any Borrower or of all or a substantial part of the assets thereof,
and such order, judgment or decree shall continue unstayed and in
effect for any period of sixty (60) days;
then upon the occurrence of any such Event of Default, Bank One shall
have the option to cease disbursements under the Revolving Credit
Note and/or to terminate its commitment to lend and/or to terminate
its commitment to issue/renew Letter(s) of Credit and to declare all
amounts due under the Revolving Credit Note to be immediately due and
payable both as to principal and interest. The Notes shall then
become immediately due and payable without presentment, demand,
protest, or notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the Notes to the contrary
notwithstanding. It is understood that the remedies of Bank One
hereunder shall be cumulative in nature rather than exclusive and
that the failure of Bank One to exercise its rights upon a Default by
Borrowers hereunder shall not be deemed to be a waiver by Bank One of
that Event of Default or any of its rights hereunder.
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<PAGE> 22
SECTION 10. DEFINITIONS.
------------------------
10.1 DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meaning:
"Accounts" shall have the meaning provided in the Uniform Commercial
Code.
"Adjusted Eurodollar Rate" shall mean the rate per annum equal to the
following:
Eurodollar Rate
----------------------------
1 - Eurocurrency Liabilities
as adjusted to the next higher 1/16 of one percent.
"Adjusted Net Income" is net income reported in the Financial
Statements, minus distributions required for the payment of taxes,
plus Executive Option Noncash Expense, minus cash payments made
pursuant to MPW, Inc.'s 1994 Stock Option Plan and 1991 Stock Option
Plan.
"Affiliate" of a Person shall mean any other Person directly or
indirectly controlling, under common control with, or controlled by
such Person. An Affiliate of the Company shall include any officer,
director, or record or beneficial owner of 5% or more of the
outstanding capital stock of any class of the Company. For purposes
of the definition of Affiliate, "control" when used with respect to
any specific Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings relative to the
foregoing.
"Agreement" is defined in the preamble.
"Airplane Loan" is defined in Section 3.1.1.
"Airplane Note" is defined in Section 3.1.2.
"Audited Financial Statements" is defined in Section 6.2.
"Available Income" shall mean, as of the date of determination, the
sum of the Combined Companies' (i) net income or loss during the
period, and (ii) interest expense for the period, and (iii) Executive
Option Noncash Expense.
"Bank One" is defined in the preamble.
"Borrowers" is defined in the preamble.
"Borrowing Date" is defined in Section 4.1.1.
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<PAGE> 23
"Business Year" shall mean a year of 365 days.
"Code" means the Internal Revenue Code of 1986, as amended.
"Combined Tangible Net Worth" shall mean the Combined net worth of
Companies (after eliminating all inter-company accounts and all
effects of the Executive Option Noncash Expense), less all Combined
Intangible Assets of Companies. Net worth and Intangible Assets shall
be determined in accordance with generally accepted accounting
principles applied on a consistent basis; provided, however, that
combined tangible net worth shall include no appraisal surplus of any
type or description.
"Combined" shall include all Companies and all Subsidiaries and shall
mean, in reference to financial statements and reports, any
covenants, representations, warranties, or agreements of Companies
under this Agreement, or Definitions in this section, that the same
are prepared or determined in accordance with generally accepted
accounting principles applied on a consistent basis, but eliminating
all inter-company transactions on any combined statements or reports;
provided, however, that the interim financial statements and reports
referred to in Section 7.2 shall not require footnotes, and provided
further, however, the the interim financial statements and reports
referred to in Section 7.2 shall be subject to year end audit
adjustments.
"Commitment Fee" is defined in Section 2.1.4.
"Companies" is defined in the preamble.
"Contractual Obligation" shall mean for any Borrower any obligation,
covenant, representation, warranty or condition contained in any
evidence of indebtedness or any agreement or instrument under or
pursuant to which any evidence of indebtedness has been issued, or
any other material agreement, instrument or guaranty, to which any
Borrower is a party or by which any Borrower or any of its assets or
properties are bound.
"Conversion Option Loan" is defined in Section 2.3.1.
"Conversion Option Note" is defined in Section 2.3.2.
"Current Debt" shall mean any obligation for borrowed money (and any
negotiable instruments and drafts accepted representing extensions of
credit whether or not representing obligations for borrowed money)
payable on demand or within a period of one (1) year from the date of
the creation thereof.
"Current Maturities" shall mean the aggregate principal amount of
Borrowers' Funded Debt due within one (1) year from the date of
determination thereof.
"Debt" shall mean for any Borrower:
(i) any indebtedness for borrowed money which any Borrower
directly or indirectly
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<PAGE> 24
created, incurred, assumed, endorsed (other than for collection
in the ordinary course of business), discounted with recourse or
in respect of which any Borrower is otherwise directly or
indirectly liable including, without limitation, indebtedness in
effect guaranteed by any Borrower through any agreement
(contingent or otherwise) to purchase, repurchase or otherwise
acquire such indebtedness or any security therefore, or to
provide funds for the payment or discharge of such indebtedness
or any liability of the obligor of such indebtedness (whether in
the form of loans, advances, stock purchases, capital
contributions or otherwise) or to maintain the solvency or other
financial condition of the obligor of such indebtedness, or to
make payment for any products, materials or supplies or for any
transportation or service regardless of the nondelivery or
nonfurnishing thereof, in any such case if the purpose or intent
of such agreement is to provide assurance that such indebtedness
will be paid or discharged, or that any agreement relating
thereto will be complied with, or that the holders of such
indebtedness will be protected against loss in respect thereof,
(ii) any indebtedness, whether or not for borrowed money, which
any Borrower has incurred, assumed, guaranteed or with respect to
which any Borrower has become directly or indirectly liable
(including, without limitation, through any agreement of the
character referred to in clause (i) hereof) and which represents
or has been incurred to finance the purchase price of any
property or business, whether by purchase, consolidation, merger
or otherwise,
(iii) any indebtedness, whether or not for borrowed money, which
is secured by any mortgage, pledge, security interest, lien or
conditional sale or other title retention agreement existing on
any property owned or held by any Borrower subject thereto,
whether or not any Borrower has any personal liability for such
indebtedness.
"Domestic Banking Days" shall mean days other than Saturdays, Sundays
and other legal holidays or days on which the principal office of
Bank One is closed.
"Effective Date" is defined in Section 4.2.1.
"Environmental Laws" means any judgment, decree, order, law, license,
rule or regulation pertaining to environmental matters, including
without limitation, those arising under the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances Control Act or any other federal,
state or local statute, regulation, ordinance, order, or decree, or
common law, whether in existence now or hereafter enacted, and as
such may be amended from time to time, relating to health, safety, or
the environment.
"Equipment Loan " is defined in Section 3.3.1.
"Equipment Note" is defined in Section 3.3.2.
"Eurocurrency Liabilities" means the aggregate of the rates
(expressed as a decimal
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<PAGE> 25
fraction) of reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System
or other governmental authority having jurisdiction with respect
thereto), as now and from time to time hereafter in effect to which
Bank One is subject, dealing with reserve requirements prescribed for
eurocurrency funding maintained by a member bank of such system.
"Eurodollar Banking Days" shall mean days which are both Domestic
Banking Days and London Banking Days.
"Eurodollar Rate" "Eurodollar Rate" as of the date of each Eurodollar
Rate Loan means the rate of interest at which Bank One was offered
deposits in United States Dollars in the London Interbank Market on
the London Banking Day preceding the date of such Eurodollar Rate
Loan for delivery on the date of such Eurodollar Rate Loan, such
deposits to be for a like period as and in an amount equal to the
amount of such Eurodollar Rate Loan.
"Eurodollar Rate Loan" is defined in Section 4.1.1.
"Event of Default" shall mean any of the events specified in Section
9 provided that there has been satisfied any requirements in
connection with such event for the giving of notice, or the lapse of
time, or the happening of any further condition, event or act, and
"Default" shall mean any of such events, whether or not any such
requirement has been satisfied.
"Executive Option Liability" means any liability arising out of
grants of stock options to employees of any Borrower pursuant to MPW,
Inc.'s 1994 Stock Option Plan and 1991 Stock Option Plan.
"Executive Option Noncash Expense" means any noncash charges arising
out of grants of stock options to employees of any Borrower pursuant
to MPW, Inc.'s 1994 Stock Option Plan and 1991 Stock Option Plan.
"Financial Statements" shall mean for any period a balance sheet as
of the close of the period pursuant to Sections 7.1 and 7.2, an
operating statement for the period (including detailed expense
schedules in the form of Exhibit 10.1.FS), a statement of changes in
cash flows and a reconciliation of retained earnings, all prepared in
accordance with generally accepted accounting principles applied on a
consistent basis; provided, however, that the interim financial
statements and reports referred to in Section 7.2 shall not require
footnotes, and provided further, however, the the interim financial
statements and reports referred to in Section 7.2 shall be subject to
year end audit adjustments.
"Fixed Charges" shall mean, for any period, the aggregate of (i)
Companies' interest expense during the period, and (ii) Companies'
Current Maturities of long term debt and leases.
"Funded Debt" shall mean any Debt of Borrowers as defined in this
section, payable
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<PAGE> 26
more than one (1) year from the date of the creation thereof, which
under generally accepted accounting principles is shown on the
balance sheet as a liability, and shall include all capitalized lease
obligations of every type and description.
"Indebtedness" as applied to any Person, shall mean all obligations
of that Person which are included in clauses (i), (ii), (iii), (iv)
and (v) of the definition of Liabilities below, irrespective of
whether or not any such obligations also would be included within any
other clause of such definition.
"Intangible Assets" shall mean the aggregate amount of all goodwill,
patents, trademarks, franchises, licenses, excess of cost over book
value of assets acquired, deferred expenses (excluding prepaids) of
any type or description, appraisal surplus and any other assets
classified as intangible assets under generally accepted accounting
principles, which are carried as assets on the Financial Statements
of Borrowers.
"Interest Payment Date" is defined in Section 4.3.1.
"Interest Period" with respect to any Eurodollar Rate Loan or Term
Loan bearing interest at an Adjusted Eurodollar Rate, means:
(a) Initially, the period commencing on, as the case may be, the
Borrowing Date or conversion date with respect to a Eurodollar Rate
Loan or the Effective Date with respect to a Term Loan bearing
interest at an Adjusted Eurodollar Rate and ending one month, two
months, three months, six months or one year thereafter as selected
by Borrowers in their notice of borrowing as provided in Sections
4.1.1 and 4.2.1, as applicable, or its notice of conversion as
provided in Section 4.1.1.; and
(b) Thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Rate Loan or
Term Loan bearing interest at an Adjusted Eurodollar Rate and ending
one month, two months, three months, six months or one year
thereafter as selected by Borrowers by irrevocable notice to Bank One
pursuant to Section 4.1.1 or Section 4.2.1, as applicable, not later
than 10:30 a.m. Columbus, Ohio time on the Eurodollar Banking Day
immediately prior to the last day of the then current Interest Period
with respect to such Eurodollar Rate Loan or Term Loan bearing
interest at an Adjusted Eurodollar Rate; provided that the foregoing
provisions relating to Interest Periods are subject to the following:
(i) If any Interest Period would otherwise end on a day which is
not a Eurodollar Banking Day, that Interest Period shall be
extended to the next succeeding Eurodollar Banking Day, unless
the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Eurodollar Banking
Day;
(ii) No Interest Period with respect to a Eurodollar Rate Loan
may end after June 30, 1998 and no Interest Period with respect
to a Term Loan bearing interest at an Adjusted Eurodollar Rate
may end after June 30, 2003;
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<PAGE> 27
(iii) If Borrowers shall fail to give the applicable notice as
provided above in clause (b), Borrowers shall be deemed to have
selected a conversion of a Eurodollar Rate Loan into a Variable
Rate Loan as provided in Section 4.1.1 hereof or to have such
portion of Term Loan bear interest at the Variable Rate as
provided in Section 4.2.1 hereof;
(iv) Any Interest Period that begins on the last day of a
calendar month (Or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Eurodollar Banking Day of
a calendar month; and
(v) The Company shall select Interest Periods so as not to
require a prepayment (to the extent practicable) or a scheduled
payment of a Eurodollar Rate Loan or a Term Loan bearing interest
at an Adjusted Eurodollar Rate during an Interest Period for such
Eurodollar Rate Loan or Term Loan.
"Letter of Credit Agreement" means that certain Amended and Restated
Letter of Credit Agreement among Monte R. Black, Susan K. Black and
Bank One, Columbus, N.A. dated as of April 15, 1991.
"Letter of Credit Commitment" is defined in Section 2.2.1.
"Letter(s) of Credit" shall mean any letter(s) of credit, other than
the two letters of credit issued pursuant to the Letter of Credit
Agreement, issued by Bank One at the request of and for the benefit
of Borrowers from time to time under the Letter of Credit Commitment
and under terms and conditions acceptable to Bank One including, but
not limited to, any normal charges of Bank One, except that the
letter of credit fee shall not exceed 1% per annum of the stated
amount on each letter of credit.
"Liabilities" as applied to any Person shall mean: (i) all
obligations of that Person to repay or pay money borrowed from
another Person or the deferred portion of the purchase price of
services or property (other than inventory purchased in the ordinary
course of business unless evidenced by a note payable); (ii) all
obligations of that Person properly treated as capital lease
obligations or their equivalent under GAAP; (iii) all obligations of
that Person under bankers acceptances; (iv) all obligations of that
Person under letters of credit; (v) obligations of others which that
Person has directly or indirectly guaranteed, endorsed (otherwise
than for collection or deposit in the ordinary course of business),
discounted or sold with recourse or agreed (contingently or
otherwise) to purchase or repurchase or otherwise acquire, or in
respect of which that Person has agreed to supply or advance funds
(whether by way of loan, stock purchase, capital contribution or
otherwise) or otherwise to become directly or indirectly liable; (vi)
all obligations evidenced or secured by any mortgage, pledge, lien or
conditional sale or other title retention agreement to which any
property or asset owned or held by that Person is subject, whether or
not the obligation evidenced or secured thereby shall have been
assumed; and (vii) all other items (except items of capital stock,
capital surplus and retained earnings) which in accordance with GAAP
would be included in determining total liabilities as shown on the
liability side of a balance sheet of that Person as of the
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<PAGE> 28
date Liabilities is to be determined.
"Lien" means any mortgage, deed of trust, pledge, charge,
encumbrance, lien (statutory or other) or security interest of any
nature whatsoever (including those created by, arising under or
evidenced by any conditional sale or other title retention
agreement), and any assignment or deposit arrangement intended or
having the effect of security.
"Loans" means, jointly and severally, the Airplane Loan, the
Conversion Option Loan, the Equipment Loan, the Revolving Credit
Loan, and the Weston Acquisition Loan.
"London Banking Days" shall mean days on which transactions are
carried out in the London Interbank Market.
"MPW Reimbursement Obligations" is defined in Section 3.5.
"MPW Mortgage Guaranty" is defined in Section 3.4.
"Notes" means, jointly and severally, the Airplane Note, the
Conversion Option Note, the Equipment Note, the Revolving Credit
Note, and the Weston Acquisition Note.
"Opinion Borrowers" means, jointly and severally, the Borrowers other
than MPW LTD.
"Permitted Liens" shall mean:
(i) Liens securing taxes, assessments, fees or other governmental
charges or levies, or the claims of materialmen, mechanics, carriers,
warehousemen, landlords, and other similar Persons;
(ii) Liens incurred or deposits made in the ordinary course of
business (a) in connection with workman's compensation, unemployment
insurance, social security and other similar laws, or (b) to secure
the performance of bids, tenders, sales, contracts, public or
statutory obligations, customs, appeal and performance bonds, or (c)
other similar obligations not incurred in connection with the
borrowing of money, the obtaining of advances, or the payment of the
deferred purchase price of property;
(iii) Reservations, exceptions, encroachments, easements, rights of
way, covenants, conditions, restriction, leases and other similar
title exceptions or encumbrances affecting real property, provided
they do not in the aggregate materially detract from the value of
such properties or materially interfere with their use in the
ordinary conduct of Borrowers' business;
(iv) Liens in favor of Bank One;
(v) Purchase money liens in an aggregate amount not to exceed
$500,000.00;
(vi) Liens in respect of judgments or awards with respect to, which
the Borrowers are, in good faith, prosecuting an appeal or proceeding
for review and with respect to which a
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<PAGE> 29
stay of execution upon such appeal or proceeding for review has been
granted; and
(vi) Notice filings by any creditor in respect of any operating
leases.
"Person" shall mean and include an individual, sole proprietorship,
trust, partnership, corporation, unincorporated organization and a
government or any department or agency thereof.
"Plan" shall mean any plan, benefit or program of benefits or
perquisites which has been or is being currently provided to one or
more employees or which may in the future be established, maintained,
or contributed to by any of the Borrowers (or in which any Borrower
or any of its employees participate, which provides benefits to
employees or former employees of a Borrower), including any "employee
benefit plan" an defined in ERISA, any payroll practice or personnel
policy, and any system of governmental or other benefits to the costs
of which any of the Borrowers contributes by any means.
"Pollutants" is defined in Section 7.16.
"Premises" shall mean any premises which have at any time been owned
or occupied by or have been under lease to any Borrower or any
Subsidiary.
"Prime Rate" shall mean the Prime Rate of Bank One as such rate is
announced from time to time by Bank One, which rate may not be the
lowest or best rate offered by Bank One.
"Requirement of Law" shall mean for any Borrower, any term,
condition, or provision of any law, rule, judgment, regulation,
order, writ, injunction or decree of any court or government,
domestic or foreign, or any ruling of any arbitrator to which any
Borrower is a party or by which any Borrower or any of its assets or
property is bound or affected or from which any Borrower derives
benefits, and if any Borrower is a corporation, its charter
documents, code of regulations and by-laws.
"Revolving Credit Commitment" is defined in Section 2.1.1.
"Revolving Credit Loan" is defined in Section 2.1.1.
"Revolving Credit Note" is defined in Section 2.1.3.
"Securities" shall mean any authorized or outstanding shares of
capital stock or any bonds, debentures, notes or other forms of
indebtedness or equity interest in any corporation.
"State" shall mean the State of Ohio.
"Subordinated Debt" shall mean any Funded Debt of Borrowers which, as
evidenced by the documentation thereof in a form acceptable to Bank
One, is satisfactorily subordinated to all indebtedness of Borrowers
to Bank One, in the sole opinion of Bank One.
- 29 -
<PAGE> 30
"Subsidiary" shall mean, with respect to the Companies, any
corporation of which more than 50% of the outstanding stock having
ordinary voting power to elect a majority of the board of directors
of such corporation is at the time directly or indirectly owned by
the Companies, or by one or more of their Subsidiaries, or by the
Companies and one or more of their Subsidiaries taken together.
"Term Loan" means, jointly and severally, the Airplane Loan, the
Conversion Option Loan, the Equipment Loan, and the Weston
Acquisition Loan.
"Term Note" means, jointly and severally, the Airplane Note, the
Conversion Option Note, the Equipment Note, and the Weston
Acquisition Note.
"Total Combined Liabilities" shall mean all Combined Liabilities of
the Companies (after eliminating all inter-company accounts and any
Executive Option Liabilities), except any non-current provision for
deferred federal income taxes, all determined in accordance with
generally accepted accounting principles applied on a consistent
basis. For purposes of this definition of Total Combined Liabilities,
"Combined Liabilities" means long term liabilities plus Current
Maturities of long term debt and leases plus the outstanding
principal balance on the Revolving Credit Note.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as
adopted in the State, as amended from time to time.
"Unused Commitment" is defined in Section 2.1.4.
"Variable Rate Loan" is defined in Section 4.1.1.
"Weston Acquisition Loan" is defined in Section 3.2.1.
"Weston Acquisition Note" is defined in Section 3.2.2.
10.2 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. All accounting terms not
specifically defined herein shall have the meanings of such terms as
used in accordance with generally accepted accounting principles in
the United States applied on a consistent basis.
SECTION 11. MISCELLANEOUS.
--------------------------
11.1 SUCCESSORS AND ASSIGNS. All covenants, representations, warranties
and agreements in this Agreement made by or on behalf of the parties
hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or
not, provided that the rights and obligations of the parties under
this Agreement shall not be assignable without the prior written
consent of the other parties hereof. However, Bank One may assign
this Agreement and related documents at any time, without the consent
of Borrowers, after the occurrence of an Event of Default.
- 30 -
<PAGE> 31
11.2 NOTICE. Notice shall be deemed to have been properly given to
Borrowers when deposited in the United States mail, registered or
certified, postage prepaid, and addressed to Borrowers at 9711
Lancaster Road, SE, Hebron, Ohio 43025 whether or not the same is
actually received by Borrowers. Any communication to Bank One shall
be deemed properly given if similarly mailed to the address of its
Main Office at 100 East Broad Street, Columbus, Ohio 43271. Such
addresses may be changed upon giving notice to the other party as
provided herein.
11.3 WAIVER. No delay on the part of Bank One in exercising any right,
power or privilege granted hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof.
The rights and remedies herein expressly specified, are cumulative
and not exclusive of any other rights and remedies which Bank One
would otherwise have.
11.4 DURATION. This Agreement and all covenants, agreements,
representations and warranties made herein and in the various
certificates delivered pursuant hereto shall survive the making of
the loan(s) by Bank One and the execution and delivery to Bank One by
Borrowers of the Notes and shall continue in full force and effect
until Borrowers no longer retain the right to borrow hereunder and
the Notes are paid in full.
11.5 GOVERNING LAW AND JURISDICTION. This Agreement shall in all respects
be interpreted in accordance with and enforceable under the laws of
the State of Ohio. In event of a dispute hereunder, it is agreed that
exclusive venue lies in a Court of competent jurisdiction in Franklin
County, Ohio.
11.6 AMENDMENTS. Notwithstanding any provision to the contrary contained
herein, any term of this Agreement may be amended by consent of the
parties; provided that no amendment, modification or waiver of any
provision of this Agreement or of the Notes shall be effective unless
the same shall be in writing and signed by Borrowers and Bank One.
11.7 SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement or in the Notes shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or the Notes.
11.8 CAPTIONS. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.
11.9 ILLEGALITY. Notwithstanding any other provision in this Agreement, in
the event that it becomes unlawful for Bank One to honor its
obligation to make or maintain loan(s) hereunder, then Bank One shall
promptly notify the Borrowers thereof and Bank One's obligation to
make or maintain loan(s) hereunder shall be suspended until such time
as Bank One may again make and maintain such affected loan(s) and the
Borrowers shall, upon the request of Bank One on the date specified,
prepay any of such loan(s) then outstanding together with accrued
interest and any other amounts due under the Notes and this
Agreement.
- 31 -
<PAGE> 32
11.10 ENTIRE AGREEMENT. This Agreement together with all other documents
executed in connection with this Agreement constitute the ONLY
agreement and understanding between Bank One and Borrowers and
supersede any and all prior agreements and understandings, oral or
written, relating to this Agreement and all other documents executed
in connection with this Agreement. Borrowers acknowledge that they
have not relied on any oral promises or representations by Bank One
other than those set forth in this Agreement and all other documents
executed in connection with this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.
MPW Industrial Services, Inc. Bank One, Columbus, N.A.
By: /s/ MONTE R. BLACK By: /s/ THOMAS E. REDMOND
------------------------------ ----------------------------
Its: Chairman of the Board and CEO Its: Vice President
----------------------------- ---------------------------
Date: August 9, 1996 Date: August 9, 1996
---------------------------- --------------------------
MPW Industrial Services, LTD. MPW Management Services Corp.
By: /s/ DANIEL P. BUETTIN By: /s/ DANIEL P. BUETTIN
------------------------------ ----------------------------
Its: Vice President and CFO Its: Vice President and CFO
----------------------------- ---------------------------
Date: August 9, 1996 Date: August 9, 1996
---------------------------- --------------------------
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: /s/ DANIEL P. BUETTIN By: /s/ PETER G. SCHUMACHER
------------------------------ ----------------------------
Its: Vice President and CFO Its: Vice President, Treasurer
----------------------------- and Assistant Secretary
---------------------------
Date: August 9, 1996 Date: August 9, 1996
---------------------------- --------------------------
Pro Kleen Industrial Services, Inc.
By: /s/ DANIEL P. BUETTIN
------------------------------
- 32 -
<PAGE> 33
Its: Vice President, Secretary
and Treasurer
-----------------------------
Date: August 9, 1996
----------------------------
- 33 -
<PAGE> 34
SCHEDULE OF EXHIBITS
to
LOAN AGREEMENT DATED AS OF JUNE 30, 1996
by an between
Bank One, Columbus, NA
and
MPW Industrial Services, Inc.
MPW Industrial Services, LTD.
MPW Management Services Corp.
Weston Engineering, Inc.
Pro Kleen Industrial Services, Inc.
And
Aquatech Environmental Services, Inc.
Exhibit 2.1.3 Form of Revolving Credit Note
Exhibit 2.2 Existing Letters of Credit Under Revolving
Credit Commitment
Exhibit 2.3.2 Form of Conversion Option Note
Exhibit 3.1 Form of Airplane Note
Exhibit 3.2 Form of Weston Acquisition Note
Exhibit 3.3 Form of Equipment Note
Exhibit 3.5 Certain Letters of Credit
Exhibit 4.1.2 Interest Rate on Revolving Credit Loans
Exhibit 4.2.2 Interest Rate on Term Loans
Exhibit 6.17 Self Insurance
Exhibit 10.1.FS Form of Detailed Expense Schedules
- 34 -
<PAGE> 35
EXHIBIT 2.1.3
REVOLVING CREDIT NOTE
$12,000,000 Columbus, Ohio August __, 1996
On or before June 30, 1998, for value received, the undersigned, jointly
and severally, hereby promises to pay to the order of Bank One, Columbus, NA
(the "Lender") or its assigns, as further provided herein, the principal amount
of Twelve Million Dollars ($12,000,000) or, if such principal is less, the
aggregate unpaid principal amount of all Revolving Credit Loans made by the
Lender to the Borrowers pursuant to the Loan Agreement referred to in Section 1
hereof, together with interest on the unpaid principal balance from time to time
outstanding hereunder until paid in full at the rates determined in accordance
with the provisions of the Loan Agreement payable quarterly on the last day of
each fiscal quarter commencing September 30, 1996 and thereafter, on each
December 31, March 31, June 30, and September 30. Both principal and interest
are payable in federal funds or other immediately available money of the United
States of America at the Main Office of the Lender, 100 East Broad Street,
Columbus, Ohio.
Section 1. Loan Agreement. This Revolving Credit Note is the Revolving
Credit Note referred to in the Loan Agreement dated as of June 30, 1996 (the
"Agreement") between and among the undersigned and the Lender, as the same may
be amended, modified or supplemented from time to time, which Agreement, as
amended, is incorporated by reference herein. All capitalized terms used herein
shall have the same meanings as are assigned to such terms in the Agreement.
This Revolving Credit Note is entitled to the benefits of and is subject to the
terms, conditions and provisions of the Agreement. The Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events, and also for repayments and reborrowings on
account of the principal hereof prior to maturity upon the terms, conditions and
provisions specified therein.
Section 2. Setoff. Any and all moneys now or at any time hereafter owing
to the undersigned from the holder hereof, are hereby pledged for the security
of this and all other Indebtedness from the undersigned to the holder hereof,
and may, upon the occurrence and during the continuation of any Event of
Default, be paid and applied thereon whether such Indebtedness be then due or is
to become due, except for (a) funds necessary to cover checks for the payment of
taxes or employee contributions in which the undersigned has no beneficial
interest issued to third parties prior to the date any setoff is claimed by the
Lender and (b) accounts maintained, but not substantially overfunded, for the
payment of taxes or employee contributions in which the unsersigned has no
beneficial interest.
MPW Industrial Services, Inc.
By:
------------------------
Its:
-----------------------
- 35 -
<PAGE> 36
Date:
----------------------
MPW Industrial Services, LTD. MPW Management Services Corp.
By: By:
------------------------ ----------------------------
Its: Its:
----------------------- ---------------------------
Date: Date:
---------------------- --------------------------
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: By:
------------------------ ----------------------------
Its: Its:
----------------------- ---------------------------
Date: Date:
---------------------- --------------------------
Pro Kleen Industrial Services, Inc.
By:
------------------------
Its:
-----------------------
Date:
----------------------
- 36 -
<PAGE> 37
EXHIBIT 2.2
EXISTING LETTERS OF CREDIT UNDER REVOLVING CREDIT COMMITMENT
1. Account Party: MPW Industrial Services, Inc.; Amount: $100,000; Beneficiary:
American Home Assurance Co.
2. Account Party: MPW Industrial Services, Inc.; Amount: $652,000; Beneficiary:
American Home Assurance Co.
3. Account Party: MPW Industrial Services, Inc.; Amount: $550,000; Beneficiary:
Reliance National Indemnity Corp.
- 37 -
<PAGE> 38
EXHIBIT 2.3.2
CONVERSION OPTION NOTE
$________________ Columbus, Ohio ________ __, 19__
For value received, the undersigned, jointly and severally, hereby promises to
pay to the order of Bank One, Columbus, NA (the "Lender") or its assigns, as
further provided herein, the principal amount of ___________________________ in
_______ consecutive quarterly installments of principal in the amounts provided
for in Section 3 hereof, the first of such installment to be due and payable on
_____________________, 19___ and the remaining of such installments to be due
and payable quarterly on the last day of each March, June, September and
December until June 30, 2003 when any remaining unpaid principal and interest
shall be paid in full. Interest on the unpaid principal balance hereunder at the
rates of interest determined in accordance with the Loan Agreement referred to
in Section 1 hereof shall be due and payable quarterly on the last day of each
March, June, September, and December commencing on the last day of the quarter
in which this Term Note is executed and delivered by the undersigned to the
Lender. Both principal and interest are payable in federal funds or other
immediately available money of the United States of America at the Main Office
of the Lender, 100 East Broad Street, Columbus, Ohio.
Section 1. Loan Agreement. This Term Note is the Term Note referred to in the
Loan Agreement dated as of June 30, 1996 (the "Agreement") between and among the
undersigned and the Lender, as the amended, modified or supplemented from time
to time, same may be which Agreement, as amended, is incorporated by reference
herein. All capitalized terms used herein shall have the same meanings as are
assigned to such terms in the Agreement. This Term Note is entitled to the
benefits of and is subject to the terms, conditions and provisions of the
Agreement. The Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events,
and also for repayments of principal prior to maturity hereof upon the terms,
conditions and provisions specified therein.
Section 2. Prepayments. Subject to the provisions of the Agreement, the
principal of this Term Note may be prepaid in whole at any time or in part from
time to time in any amount, provided that each partial prepayment shall be
applied to the principal installments in the inverse order of their respective
maturities. Each prepayment shall be accompanied by the payment of accrued
interest on the principal so prepaid to the date of such prepayment and such
additional amounts as may be due pursuant to the Agreement.
Section 3. Principal Payments. The principal hereof shall be payable in
consecutive quarterly installments on the last day of each March, June,
September and December, commencing ______________________, 19____ in the amount
of $_________________________ until June 30, 2003, at which time all remaining
unpaid principal shall be paid in full.
- 38-
<PAGE> 39
Section 4. Setoff. Any and all moneys now or at any time hereafter owing to the
undersigned from the holder hereof, are hereby pledged for the security of this
and all other Indebtedness from the undersigned to the holder hereof, and may,
upon the occurrence and during the continuation of any Event of Default, be paid
and applied thereon whether such Indebtedness be then due or is to become due,
except for (a) funds necessary to cover checks for the payment of taxes or
employee contributions in which the undersigned has no beneficial interest
issued to third parties prior to the date any setoff is claimed by the Lender
and (b) accounts maintained, but not substantially overfunded, for the payment
of taxes or employee contributions in which the undersigned has no beneficial
interest.
MPW Industrial Services, Inc.
By:
------------------------
Its:
-----------------------
Date:
----------------------
MPW Industrial Services, LTD. MPW Management Services Corp.
By: By:
------------------------ ----------------------------
Its: Its:
----------------------- ---------------------------
Date: Date:
---------------------- --------------------------
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: By:
------------------------ ----------------------------
Its: Its:
----------------------- ---------------------------
Date: Date:
---------------------- --------------------------
Pro Kleen Industrial Services, Inc.
By:
------------------------
Its:
-----------------------
Date:
----------------------
- 39-
<PAGE> 40
EXHIBIT 3.1
AMENDED AND RESTATED
AIRPLANE NOTE
$2,350,000 Columbus, Ohio August __, 1996
For value received, the undersigned, jointly and severally, hereby promises to
pay to the order of Bank One, Columbus, NA (the "Lender") or its assigns, as
further provided herein, the principal amount of Two Million Three Hundred Fifty
Thousand and no/100 Dollars ($2, 350,000.00) in consecutive quarterly
installments of principal in the amounts provided for in Section 3 hereof, the
first of such installment to be due and payable on September 30, 1996, and the
remainder of such installments to be due and payable quarterly on the last day
of each March, June, September or December until December 31, 2002 when any
remaining unpaid principal and interest shall be paid in full. Interest on the
unpaid principal balance hereunder at the rates of interest determined in
accordance with the Loan Agreement referred to in Section 1 hereof shall be due
and payable quarterly on the last day of each March, June, September, and
December commencing on the last day of the quarter in which this Aircraft Note
is executed and delivered by the undersigned to the Lender. Both principal and
interest are payable in federal funds or other immediately available money of
the United States of America at the Main Office of the Lender, 100 East Broad
Street, Columbus, Ohio.
Section 1. Loan Agreement. This Aircraft Note is the Aircraft Note referred to
in the Loan Agreement dated as of June 30, 1996 (the "Agreement") between and
among the undersigned and the Lender, as is amended, modified or supplemented
from time to time, same may be which Agreement, as amended, is incorporated by
reference herein. All capitalized terms used herein shall have the same meanings
as are assigned to such terms in the Agreement. This Aircraft Note is entitled
to the benefits of and is subject to the terms, conditions and provisions of the
Agreement. The Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events,
and also for repayments of principal prior to maturity hereof upon the terms,
conditions and provisions specified therein.
Section 2. Prepayments. Subject to the provisions of the Agreement, the
principal of this Aircraft Note may be prepaid in whole at any time or in part
from time to time in any amount, provided that each partial prepayment shall be
applied to the principal installments in the inverse order of their respective
maturities. Each prepayment shall be accompanied by the payment of accrued
interest on the principal so prepaid to the date of such prepayment and such
additional amounts as may be due pursuant to the Agreement.
Section 3. Principal Payments. The principal hereof shall be payable in
consecutive quarterly installments on the last day of each March, June,
September and December, commencing September 30, 1996 in the amount of Seventy
Five Thousand Dollars ($75,000.00) until December 31, 2002, at which time all
remaining unpaid principal shall be paid in full.
- 40 -
<PAGE> 41
Section 4. Setoff. Any and all moneys now or at any time hereafter owing to the
undersigned from the holder hereof, are hereby pledged for the security of this
and all other Indebtedness from the undersigned to the holder hereof, and may,
upon the occurrence and during the continuation of any Event of Default, be paid
and applied thereon whether such Indebtedness be then due or is to become due,
except for (a) funds necessary to cover checks for the payment of taxes or
employee contributions in which the undersigned has no beneficial interest
issued to third parties prior to the date any setoff is claimed by the Lender
and (b) accounts maintained, but not substantially overfunded, for the payment
of taxes or employee contributions in which the undersigned has no beneficial
interest.
Section 5. Amendment and Restatement. This Aircraft Note is an amendment and
restatement of the Aircraft Note dated ________________________, 1995, and not a
novation.
MPW Industrial Services, Inc.
By:
------------------------
Its:
-----------------------
Date:
----------------------
MPW Industrial Services, LTD. MPW Management Services Corp.
By: By:
------------------------ ----------------------------
Its: Its:
----------------------- ---------------------------
Date: Date:
---------------------- --------------------------
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: By:
------------------------ ----------------------------
Its: Its:
----------------------- ---------------------------
Date: Date:
---------------------- --------------------------
Pro Kleen Industrial Services, Inc.
By:
------------------------
Its:
-----------------------
Date:
----------------------
- 41 -
<PAGE> 42
EXHIBIT 3.2
WESTON ACQUISITION NOTE
$2,800,000 Columbus, Ohio August __, 1996
For value received, the undersigned, jointly and severally, hereby promises to
pay to the order of Bank One, Columbus, NA (the "Lender") or its assigns, as
further provided herein, the principal amount of Two Million Eight Hundred
Thousand Dollars ($2,800,000) on or before July 31, 2003. Interest on the unpaid
principal balance hereunder at the rates of interest determined in accordance
with the Loan Agreement referred to in Section 1 hereof shall be due and payable
quarterly on the last day of each March, June, September, and December
commencing on the last day of the quarter in which this Weston Acquisition Note
is executed and delivered by the undersigned to the Lender. Both principal and
interest are payable in federal funds or other immediately available money of
the United States of America at the Main Office of the Lender, 100 East Broad
Street, Columbus, Ohio.
Section 1. Loan Agreement. This Weston Acquisition Note is the Weston
Acquisition Note referred to in the Loan Agreement dated as of June 30, 1996,
(the "Agreement") between and among the undersigned and the Lender, as is
amended, modified or supplemented from time to time, same may be which
Agreement, as amended, is incorporated by reference herein. All capitalized
terms used herein shall have the same meanings as are assigned to such terms in
the Agreement. This Weston Acquisition Note is entitled to the benefits of and
is subject to the terms, conditions and provisions of the Agreement. The
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events, and also for
repayments of principal prior to maturity hereof upon the terms, conditions and
provisions specified therein.
Section 2. Prepayments. Subject to the provisions of the Agreement, the
principal of this Weston Acquisition Note may be prepaid in whole at any time or
in part from time to time in any amount, provided that each partial prepayment
shall be applied to the principal installments in the inverse order of their
respective maturities. Each prepayment shall be accompanied by the payment of
accrued interest on the principal so prepaid to the date of such prepayment and
such additional amounts as may be due pursuant to the Agreement.
Section 3. Principal Payments. The principal hereof shall be payable in
consecutive quarterly installments on the last day of each March, June,
September and December, commencing September 30, 1996 in the amount of One
Hundred Thousand Dollars ($100,000.00) until July 31, 2003, at which time all
remaining unpaid principal shall be paid in full.
Section 4. Setoff. Any and all moneys now or at any time hereafter owing to the
undersigned from the holder hereof, are hereby pledged for the security of this
and all other Indebtedness from the undersigned to the holder hereof, and may,
upon the occurrence and during the continuation of any Event of Default, be paid
and applied thereon whether such Indebtedness be then due or is
- 42 -
<PAGE> 43
to become due, except for (a) funds necessary to cover checks for the payment of
taxes or employee contributions in which the undersigned has no beneficial
interest issued to third parties prior to the date any setoff is claimed by the
Lender and (b) accounts maintained, but not substantially overfunded, for the
payment of taxes or employee contributions in which the undersigned has no
beneficial interest.
MPW Industrial Services, Inc.
By:
------------------------
Its:
-----------------------
Date:
----------------------
MPW Industrial Services, LTD. MPW Management Services Corp.
By: By:
------------------------ ----------------------------
Its: Its:
----------------------- ---------------------------
Date: Date:
---------------------- --------------------------
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: By:
------------------------ ----------------------------
Its: Its:
----------------------- ---------------------------
Date: Date:
---------------------- --------------------------
Pro Kleen Industrial Services, Inc.
By:
------------------------
Its:
-----------------------
Date:
----------------------
- 43 -
<PAGE> 44
EXHIBIT 3.3
EQUIPMENT NOTE
$1,800,000 Columbus, Ohio August __, 1996
For value received, the undersigned, jointly and severally, hereby promises to
pay to the order of Bank One, Columbus, NA (the "Lender") or its assigns, as
further provided herein, the principal amount of One Million Eight Hundred
Thousand Dollars ($1,800,000) on or before July 31, 2006. Interest on the unpaid
principal balance hereunder at the rates of interest determined in accordance
with the Loan Agreement referred to in Section 1 hereof shall be due and payable
quarterly on the last day of each March, June, September, and December
commencing on the last day of the quarter in which this Equipment Note is
executed and delivered by the undersigned to the Lender. Both principal and
interest are payable in federal funds or other immediately available money of
the United States of America at the Main Office of the Lender, 100 East Broad
Street, Columbus, Ohio.
Section 1. Loan Agreement. This Equipment Note is the Equipment Note referred to
in the Loan Agreement dated as of June 30, 1996, (the "Agreement") between and
among the undersigned and the Lender, as is amended, modified or supplemented
from time to time, same may be which Agreement, as amended, is incorporated by
reference herein. All capitalized terms used herein shall have the same meanings
as are assigned to such terms in the Agreement. This Equipment Note is entitled
to the benefits of and is subject to the terms, conditions and provisions of the
Agreement. The Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events,
and also for repayments of principal prior to maturity hereof upon the terms,
conditions and provisions specified therein.
Section 2. Prepayments. Subject to the provisions of the Agreement, the
principal of this Equipment Note may be prepaid in whole at any time or in part
from time to time in any amount, provided that each partial prepayment shall be
applied to the principal installments in the inverse order of their respective
maturities. Each prepayment shall be accompanied by the payment of accrued
interest on the principal so prepaid to the date of such prepayment and such
additional amounts as may be due pursuant to the Agreement.
Section 3. Principal Payments. The principal hereof shall be payable in
consecutive quarterly installments on the last day of each March, June,
September and December, commencing September 30, 1996 in the amount of Forty
Five Thousand Dollars ($45,000.00) until July 31, 2006, at which time all
remaining unpaid principal shall be paid in full.
Section 4. Setoff. Any and all moneys now or at any time hereafter owing to the
undersigned from the holder hereof, are hereby pledged for the security of this
and all other Indebtedness from the undersigned to the holder hereof, and may,
upon the occurrence and during the continuation of any Event of Default, be paid
and applied thereon whether such Indebtedness be then due or is to become due,
except for (a) funds necessary to cover checks for the payment of taxes or
- 44 -
<PAGE> 45
employee contributions in which the undersigned has no beneficial interest
issued to third parties prior to the date any setoff is claimed by the Lender
and (b) accounts maintained, but not substantially overfunded, for the payment
of taxes or employee contributions in which the undersigned has no beneficial
interest.
MPW Industrial Services, Inc.
By:
------------------------
Its:
-----------------------
Date:
----------------------
MPW Industrial Services, LTD. MPW Management Services Corp.
By: By:
------------------------ ----------------------------
Its: Its:
----------------------- ---------------------------
Date: Date:
---------------------- --------------------------
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: By:
------------------------ ----------------------------
Its: Its:
----------------------- ---------------------------
Date: Date:
---------------------- --------------------------
Pro Kleen Industrial Services, Inc.
By:
------------------------
Its:
-----------------------
Date:
----------------------
- 45 -
<PAGE> 46
EXHIBIT 3.5
CERTAIN LETTERS OF CREDIT
See Exhibit A Hereto
- 46 -
<PAGE> 47
EXHIBIT 4.1.2
INTEREST ON REVOLVING CREDIT LOANS
(b) Interest on Variable Rate Loans. From its date, each Variable Rate
Loan shall bear interest on the unpaid principal balance at a fluctuating
rate per annum equal to the Prime Rate minus twenty-five (25) basis
points. Any change in the interest rate on a Variable Rate Loan due to a
change in the Prime Rate shall take effect on the date of such change in
the Prime Rate. The interest rate shall be adjusted downwards or upwards
on the first day of each fiscal quarter based upon the Companies'
quarterly Combined Financial Statements for the most recent fiscal quarter
which have been received by Bank One pursuant to Section 7.2 as follows:
(i) if the ratio of Total Combined Liabilities to Combined Tangible Net
Worth is greater than 0.25 to 1.00 and less than or equal to 1.00 to 1.00,
and if the ratio of Combined Available Income to Combined Fixed Charges is
greater than 1.75 to 1.00, then the interest rate on the Variable Rate
Loans shall be equal to the Prime Rate minus fifty (50) basis points per
annum, or (ii) if the ratio of Total Combined Liabilities to Combined
Tangible Net Worth is less than or equal to 0.25 to 1.00, and if the ratio
of Combined Available Income to Combined Fixed Charges is greater than
2.00 to 1.00, then the interest rate on the Variable Rate Loans shall be
equal to the Prime Rate minus sixty (60) basis points per annum.
(c) Interest on Eurodollar Rate Loans. From its date, each Eurodollar Rate
Loan shall bear interest during the period from the date thereof until and
including the maturity date thereof at a rate per annum equal to one
hundred twenty-five (125) basis points above the Adjusted Eurodollar Rate.
Borrowers also shall be obligated to pay with respect to each Eurodollar
Rate Loan such additional amounts as shall be determined pursuant to
Section 4.7. The interest rate shall be adjusted downwards or upwards on
the first day of each fiscal quarter based upon the Companies' quarterly
Combined Financial Statements for the most recent fiscal quarter which
have been received by Bank One pursuant to Section 7.2 as follows: (i) if
the ratio of Total Combined Liabilities to Combined Tangible Net Worth is
greater than 0.25 to 1.00 and less than or equal to 1.00 to 1.00, and if
the ratio of Combined Available Income to Combined Fixed Charges is
greater than 1.75 to 1.00, then the interest rate on the Eurodollar Rate
Loans shall be at a rate per annum equal to one hundred (100) basis points
above the Adjusted Eurodollar Rate, or (ii) if the ratio of Total Combined
Liabilities to Combined Tangible Net Worth is less than or equal to 0.25
to 1.00, and if the ratio of Combined Available Income to Combined Fixed
Charges is greater than 2.00 to 1.00, then the interest rate on the
Eurodollar Rate Loans shall be equal at a rate per annum equal to ninety
(90) basis points above the Adjusted Eurodollar Rate.
- 47 -
<PAGE> 48
EXHIBIT 4.2.2
INTEREST ON TERM LOANS
(b) Interest on Variable Rate Loans. From its date, each Term Loan or
portion thereof bearing interest at a Variable Rate shall bear interest on
the unpaid principal balance at a fluctuating rate per annum equal to the
Prime Rate. Any change in the interest rate on a Variable Rate Loan due to
a change in the Prime Rate shall take effect on the date of such change in
the Prime Rate. The interest rate shall be adjusted downwards or upwards
on the first day of each fiscal quarter based upon the Companies'
quarterly Combined Financial Statements for the most recent fiscal quarter
which have been received by Bank One pursuant to Section 7.2 as follows:
(i) if the ratio of Total Combined Liabilities to Combined Tangible Net
Worth is greater than 0.25 to 1.00 and less than or equal to 1.00 to 1.00,
and if the ratio of Combined Available Income to Combined Fixed Charges is
greater than 1.75 to 1.00, then the interest rate on the Variable Rate
Loans shall be equal to the Prime Rate minus twenty-five (25) basis points
per annum, or (ii) if the ratio of Total Combined Liabilities to Combined
Tangible Net Worth is less than or equal to 0.25 to 1.00, and if the ratio
of Combined Available Income to Combined Fixed Charges is greater than
2.00 to 1.00, then the interest rate on the Variable Rate Loans shall be
equal to the Prime Rate minus thirty-five (35) basis points per annum.
(c) Interest on Eurodollar Rate Loans. From its date, each Term Loan or
portion thereof bearing interest at an Adjusted Eurodollar Rate shall bear
interest during the period from the date thereof until and including the
maturity date thereof at a rate per annum equal to one hundred fifty (150)
basis points above the Adjusted Eurodollar Rate. Borrowers also shall be
obligated to pay with respect to each Eurodollar Rate Loan such additional
amounts as shall be determined pursuant to Section 4.7. The interest rate
shall be adjusted downwards or upwards on the first day of each fiscal
quarter based upon the Companies' quarterly Combined Financial Statements
for the most recent fiscal quarter which have been received by Bank One
pursuant to Section 7.2 as follows: (i) if the ratio of Total Combined
Liabilities to Combined Tangible Net Worth is greater than 0.25 to 1.00
and less than or equal to 1.00 to 1.00, and if the ratio of Combined
Available Income to Combined Fixed Charges is greater than 1.75 to 1.00,
then the interest rate on the Eurodollar Rate Loans shall be at a rate per
annum equal to one hundred twenty-five (125) basis points above the
Adjusted Eurodollar Rate, or (ii) if the ratio of Total Combined
Liabilities to Combined Tangible Net Worth is less than or equal to 0.25
to 1.00, and if the ratio of Combined Available Income to Combined Fixed
Charges is greater than 2.00 to 1.00, then the interest rate on the
Eurodollar Rate Loans shall be equal at a rate per annum equal to one
hundred fifteen (115) basis points above the Adjusted Eurodollar Rate.
- 48 -
<PAGE> 49
EXHIBIT 6.17
SELF INSURANCE
POLICY TYPE DEDUCTIBLE
General Liability 250,000
Large Fleet 100,000
Umbrella 10,000
Worker's Compensation 25,000
Pollution 500,000
Auto Pollution 250,000
Property/Contractors Equip. 1,000
Excess Worker's Comp. (Ohio) 350,000
Small Fleet 25,000
Aviation 250,000
Employee Dishonesty 25,000
- 49 -
<PAGE> 50
EXHIBIT 10.1.FS
FORM OF DETAILED EXPENSE SCHEDULES
- 50 -
<PAGE> 1
Exhibit 4(c)
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT ("Amendment") is made as of the
26th day of September, 1997, by and between MPW Industrial Services, Inc. ("MPW
Inc."), MPW Industrial Services, LTD. ("MPW LTD."), MPW Management Services
Corp. ("MPW Corp.") , Weston Engineering, Inc. ("Weston"), Pro Kleen Industrial
Services, Inc. ("Pro Kleen"), and Aquatech Environmental, Inc. ("Aquatech") (MPW
Inc., MPW LTD., MPW Corp., Weston, Pro Kleen and Aquatech jointly and severally
the "Borrowers") ( MPW Inc., MPW LTD., MPW Corp., Weston, and Aquatech jointly
and severally the "Companies") and Bank One, NA, successor by merger to Bank
One, Columbus, NA, 100 East Broad Street, Columbus, Ohio 43271 ("Bank One").
WHEREAS, the Borrowers and Bank One entered into a Loan Agreement dated
as of June 30, 1996 (the "Credit Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement as set
forth below:
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized terms not defined herein shall have the meaning
ascribed in the Credit Agreement.
2. Section 2.1.1 of the Credit Agreement is hereby amended and
restated to read as follows:
2.1.1 AVAILABILITY. At any time, the "Revolving Credit Commitment"
shall be an amount equal to Twelve Million Dollars
($12,000,000.00) less the aggregate stated amounts of any
outstanding Letter(s) of Credit, provided, however, that upon
any draws under any Letter(s) of Credit, Bank One may treat
such draw as a request for a Variable Rate Loan so long as the
Revolving Credit Commitment is not thereby exceeded. The
Revolving Credit Commitment shall be available to the Company,
subject to the limitations herein, in whole or in part and
from time to time until December 31, 1998, and any amounts
borrowed may be repaid in whole or in part and reborrowed
until such date. Each borrowing under the Revolving Credit
Commitment, except as otherwise provided in Section 2.2.1,
shall be in an amount not less than $1,000 or any larger
amount which is an integral multiple of $1,000 (a "Revolving
Credit Loan"); provided, however, any Revolving Credit Loan in
the form of a Eurodollar Rate Loan shall be in an amount not
less than $500,000 or any larger amount which is an integral
multiple of $100,000.
3. Section 2.1.4 of the Credit Agreement is hereby amended and
restated to read as follows:
2.1.4 COMMITMENT FEES. Borrowers shall pay to Bank One a Commitment
Fee (the "Commitment Fee") based on the daily average amount
of the Revolving Credit Commitment not drawn down in Revolving
Credit Loans (the "Unused Commitment") for the period
beginning with the date hereof and ending December 31, 1998 or
on the sooner termination in full of the Revolving Credit
Commitment. The Commitment Fee shall be payable quarterly in
arrears on the last day of each March, June, September and
December and when the Revolving Credit Commitment is fully
terminated, on the date of such termination. The amount of the
Commitment Fee shall be equal to one-quarter percent (1/4%)
per annum of the Unused Commitment (computed on the basis of
the actual number of days elapsed over a Business Year).
4. Section 2.2.1 of the Credit Agreement is hereby amended and
restated to read as follows:
Page 1 of 8
<PAGE> 2
2.2.1 LETTER OF CREDIT COMMITMENT. Any authorized signer of
Borrowers may request that Bank One issue a letter or letters
of credit in an aggregate undrawn amount of the Revolving
Credit Commitment up to a maximum of Three Million Dollars
($3,000,000.00) (including the existing letters of credit set
forth on Exhibit 2.2 prior to their expiration) from time to
time for the benefit of Borrowers (the "Letter of Credit
Commitment"). The Letter of Credit Commitment shall be
available to the Borrowers subject to the limitations herein,
in whole or in part and from time to time until December 31,
1998; provided that the termination date of any such Letter(s)
of Credit shall be no later than December 31, 2003.
5. Section 2.2.2 of the Credit Agreement is hereby amended and
restated to read as follows:
2.2.2 REIMBURSEMENT. Borrowers agree that, at the sole discretion of
Bank One, whenever amounts become due to Bank One from
Borrowers for reimbursement of any draws under any Letter(s)
of Credit, Bank One may (but shall not be obligated to) treat
such event as a request for a Variable Rate Loan under this
Agreement and directly apply the proceeds of such Variable
Rate Loan to the payment of the then outstanding reimbursement
obligations of Borrowers for draws under such Letter(s) of
Credit. Any amounts which are drawn under any Letter(s) of
Credit after December 31, 1998 shall be payable by Borrowers
immediately and shall not become a Variable Rate Loan since
the Revolving Credit Commitment shall have matured.
6. Section 2.3.1 of the Credit Agreement is hereby amended and
restated to read as follows:
2.3.1 CONVERSION. Provided no Default or Event of Default then
exists, Borrowers may, on or before December 31, 1998,
exchange the Revolving Credit Note for a note having a
principal amount equal to the then unpaid principal balance of
the Revolving Credit Loans (the "Conversion Option Loan") and
the Revolving Credit Note will thereafter be cancelled and the
Revolving Credit Commitment terminated.
7. The definition of the term "Interest Period" in Section 10.1
of the Credit Agreement is hereby amended and restated to read as follows:
"Interest Period" with respect to any Eurodollar Rate Loan or Term Loan
bearing interest at an Adjusted Eurodollar Rate, means:
(a) Initially, the period commencing on, as the case may be, the
Borrowing Date or conversion date with respect to a Eurodollar Rate
Loan or the Effective Date with respect to a Term Loan bearing interest
at an Adjusted Eurodollar Rate and ending one month, two months, three
months, six months or one year thereafter as selected by Borrowers in
their notice of borrowing as provided in Sections 4.1.1 and 4.2.1, as
applicable, or its notice of conversion as provided in Section 4.1.1.;
and
(b) Thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Rate Loan or
Term Loan bearing interest at an Adjusted Eurodollar Rate and ending
one month, two months, three months, six months or one year thereafter
as selected by Borrowers by irrevocable notice to Bank One pursuant to
Section 4.1.1 or Section 4.2.1, as applicable, not later than 10:30
a.m. Columbus, Ohio time on the Eurodollar Banking Day immediately
prior to the last day of the then current Interest Period with respect
to such Eurodollar Rate Loan or Term Loan bearing interest at an
Adjusted Eurodollar Rate; provided that the foregoing provisions
relating to Interest Periods are subject to the following:
(i) If any Interest Period would otherwise end on a day which
is not a Eurodollar Banking Day, that Interest Period shall be
extended to the next succeeding Eurodollar
Page 2 of 8
<PAGE> 3
Banking Day, unless the result of such extension would be to
carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately
preceding Eurodollar Banking Day;
(ii) No Interest Period with respect to a Eurodollar Rate Loan
may end after December 31, 1998 and no Interest Period with
respect to a Term Loan bearing interest at an Adjusted
Eurodollar Rate may end after December 31, 2003;
(iii) If Borrowers shall fail to give the applicable notice as
provided above in clause (b), Borrowers shall be deemed to
have selected a conversion of a Eurodollar Rate Loan into a
Variable Rate Loan as provided in Section 4.1.1 hereof or to
have such portion of Term Loan bear interest at the Variable
Rate as provided in Section 4.2.1 hereof;
(iv) Any Interest Period that begins on the last day of a
calendar month (Or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Eurodollar Banking Day
of a calendar month; and
(v) The Company shall select Interest Periods so as not to
require a prepayment (to the extent practicable) or a
scheduled payment of a Eurodollar Rate Loan or a Term Loan
bearing interest at an Adjusted Eurodollar Rate during an
Interest Period for such Eurodollar Rate Loan or Term Loan.
8. Exhibits 2.1.3 and 2.3.2 of the Credit Agreement are hereby
amended and restated to read as set forth in Exhibits 2.1.3A and 2.3.2A
attached to this Amendment. Borrowers shall execute and deliver to Bank One
amended and restated promissory notes in the form of Exhibits 2.1.3A and
2.3.2A attached to this Amendment.
9. The Borrower represents and warrants that (a) the
representations and warranties contained in the Credit Agreement are true and
correct in all material respects as of the date of this Amendment, (b) no
condition, act or event which could constitute an Event of Default under the
Credit Agreement exists, and (c) no condition, event, act or omission has
occurred, which, with the giving of notice or passage of time, would constitute
an Event of Default under the Credit Agreement.
10. The Borrower agrees to pay all fees and out-of-pocket
disbursements incurred by Bank One in connection with this Amendment, including
legal fees incurred by Bank One in the preparation, consummation, administration
and enforcement of this Amendment.
11. This Amendment shall become effective only after it is fully
executed by the Borrower and Bank One. Except as amended by this Amendment, the
Credit Agreement shall remain in full force and effect in accordance with its
terms.
12. This Amendment is a modification only and not a novation.
Except for the above-quoted modification(s), the Credit Agreement, any agreement
or security document, and all the terms and conditions thereof, shall be and
remain in full force and effect with the changes herein deemed to be
incorporated therein. This Amendment is to be considered attached to the Credit
Agreement and made a part thereof. This Amendment shall not release or affect
the liability of any guarantor, surety or endorser of the Credit Agreement or
release any owner of collateral securing the Credit Agreement. The validity,
priority and enforceability of the Credit Agreement shall not be impaired
hereby. To the extent that any provision of this Amendment conflicts with any
term or condition set forth in the Credit Agreement, or any agreement or
security document executed in conjunction therewith, the provisions of this
Amendment shall supersede and control. Borrower acknowledges that as of the date
of this Amendment it has no offsets with respect to all amounts owed by Borrower
to Bank and Borrower waives and releases all claims which it may have against
Bank arising under the Credit Agreement on or prior to the date of this
Amendment.
Page 3 of 8
<PAGE> 4
13. The Borrower acknowledges and agrees that this Amendment is
limited to the terms outlined above, and shall not be construed as an amendment
of any other terms or provisions of the Credit Agreement; The Borrower hereby
specifically ratifies and affirms the terms and provisions of the Credit
Agreement. Borrower releases Bank from any and all claims which may have arisen,
known or unknown, in connection with the Credit Agreement on or prior to the
date hereof. This Amendment shall not establish a course of dealing or be
construed as evidence of any willingness on Bank One's part to grant other or
future amendments, should any be requested.
IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the day and year first above written.
MPW Industrial Services, Inc. Bank One, N.A.
By: /s/ Daniel P. Buettin By: /s/ Thomas E. Redmond
------------------------- -------------------------
Its: Vice President and CFO Its: Vice President
------------------------ ------------------------
Date: September 26, 1997 Date: September 26, 1997
----------------------- -----------------------
MPW Industrial Services, LTD. MPW Management Services Corp.
By: /s/ Daniel P. Buettin By: /s/ Daniel P. Buettin
------------------------- -------------------------
Its: Vice President and CFO Its: Vice President and CFO
------------------------ ------------------------
Date: September 26, 1997 Date: September 26, 1997
----------------------- -----------------------
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: /s/ Daniel P. Buettin By:
------------------------- -------------------------
Its: Vice President and CFO Its:
------------------------ ------------------------
Date: September 26, 1997 Date:
----------------------- -----------------------
Pro Kleen Industrial Services, Inc.
By: /s/ Daniel P. Buettin
-----------------------------
Its: Vice President and Treasurer
----------------------------
Date: September 26, 1997
---------------------------
Page 4 of 8
<PAGE> 5
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$12,000,000 Columbus, Ohio September 26, 1997
On or before December 31, 1998, for value received, the undersigned,
jointly and severally, hereby promises to pay to the order of Bank One, NA (the
"Lender") or its assigns, as further provided herein, the principal amount of
Twelve Million Dollars ($12,000,000) or, if such principal is less, the
aggregate unpaid principal amount of all Revolving Credit Loans made by the
Lender to the Borrowers pursuant to the Loan Agreement referred to in Section 1
hereof, together with interest on the unpaid principal balance from time to time
outstanding hereunder until paid in full at the rates determined in accordance
with the provisions of the Loan Agreement payable quarterly on the last day of
each fiscal quarter commencing September 30, 1996 and thereafter, on each
December 31, March 31, June 30, and September 30. Both principal and interest
are payable in federal funds or other immediately available money of the United
States of America at the Main Office of the Lender, 100 East Broad Street,
Columbus, Ohio.
Section 1. Loan Agreement. This Revolving Credit Note is the Revolving
Credit Note referred to in the Loan Agreement dated as of June 30, 1996 (the
"Agreement") between and among the undersigned and the Lender, as the same may
be amended, modified or supplemented from time to time, which Agreement, as
amended, is incorporated by reference herein. All capitalized terms used herein
shall have the same meanings as are assigned to such terms in the Agreement.
This Revolving Credit Note is entitled to the benefits of and is subject to the
terms, conditions and provisions of the Agreement. The Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events, and also for repayments and reborrowings on
account of the principal hereof prior to maturity upon the terms, conditions and
provisions specified therein.
Section 2. Setoff. Any and all moneys now or at any time hereafter
owing to the undersigned from the holder hereof, are hereby pledged for the
security of this and all other Indebtedness from the undersigned to the holder
hereof, and may, upon the occurrence and during the continuation of any Event of
Default, be paid and applied thereon whether such Indebtedness be then due or is
to become due, except for (a) funds necessary to cover checks for the payment of
taxes or employee contributions in which the undersigned has no beneficial
interest issued to third parties prior to the date any setoff is claimed by the
Lender and (b) accounts maintained, but not substantially overfunded, for the
payment of taxes or employee contributions in which the undersigned has no
beneficial interest.
MPW Industrial Services, Inc.
By: /s/ Daniel P. Buettin
-------------------------
Its: Vice President and CFO
------------------------
Date: September 26, 1997
-----------------------
MPW Industrial Services, LTD. MPW Management Services Corp.
By: /s/ Daniel P. Buettin By: /s/ Daniel P. Buettin
------------------------- -------------------------
Its: Vice President and CFO Its: Vice President and CFO
------------------------ ------------------------
Date: September 26, 1997 Date: September 26, 1997
----------------------- -----------------------
Page 5 of 8
<PAGE> 6
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: /s/ Daniel P. Buettin By:
------------------------- -------------------------
Its: Vice President and CFO Its:
------------------------ ------------------------
Date: September 26, 1997 Date:
----------------------- -----------------------
Pro Kleen Industrial Services, Inc.
By: /s/ Daniel P. Buettin
-----------------------------
Its: Vice President and Treasurer
----------------------------
Date: September 26, 1997
---------------------------
Page 6 of 8
<PAGE> 7
AMENDED AND RESTATED CONVERSION OPTION NOTE
$__________ Columbus, Ohio __________ __, 1997
For value received, the undersigned, jointly and severally, hereby promises to
pay to the order of Bank One, NA (the "Lender") or its assigns, as further
provided herein, the principal amount of ___________________________ in _______
consecutive quarterly installments of principal in the amounts provided for in
Section 3 hereof, the first of such installment to be due and payable on
_____________________, 19___ and the remaining of such installments to be due
and payable quarterly on the last day of each March, June, September and
December until December 31, 2003 when any remaining unpaid principal and
interest shall be paid in full. Interest on the unpaid principal balance
hereunder at the rates of interest determined in accordance with the Loan
Agreement referred to in Section 1 hereof shall be due and payable quarterly on
the last day of each March, June, September, and December commencing on the last
day of the quarter in which this Term Note is executed and delivered by the
undersigned to the Lender. Both principal and interest are payable in federal
funds or other immediately available money of the United States of America at
the Main Office of the Lender, 100 East Broad Street, Columbus, Ohio.
Section 1. Loan Agreement. This Term Note is the Term Note referred to in the
Loan Agreement dated as of June 30, 1996 (the "Agreement") between and among the
undersigned and the Lender, as the amended, modified or supplemented from time
to time, same may be which Agreement, as amended, is incorporated by reference
herein. All capitalized terms used herein shall have the same meanings as are
assigned to such terms in the Agreement. This Term Note is entitled to the
benefits of and is subject to the terms, conditions and provisions of the
Agreement. The Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events,
and also for repayments of principal prior to maturity hereof upon the terms,
conditions and provisions specified therein.
Section 2. Prepayments. Subject to the provisions of the Agreement, the
principal of this Term Note may be prepaid in whole at any time or in part from
time to time in any amount, provided that each partial prepayment shall be
applied to the principal installments in the inverse order of their respective
maturities. Each prepayment shall be accompanied by the payment of accrued
interest on the principal so prepaid to the date of such prepayment and such
additional amounts as may be due pursuant to the Agreement.
Section 3. Principal Payments. The principal hereof shall be payable in
consecutive quarterly installments on the last day of each March, June,
September and December, commencing ______________________, 19____ in the amount
of $_________________________ until December 31, 2003, at which time all
remaining unpaid principal shall be paid in full.
Page 7 of 8
<PAGE> 8
Section 4. Setoff. Any and all moneys now or at any time hereafter owing to the
undersigned from the holder hereof, are hereby pledged for the security of this
and all other Indebtedness from the undersigned to the holder hereof, and may,
upon the occurrence and during the continuation of any Event of Default, be paid
and applied thereon whether such Indebtedness be then due or is to become due,
except for (a) funds necessary to cover checks for the payment of taxes or
employee contributions in which the undersigned has no beneficial interest
issued to third parties prior to the date any setoff is claimed by the Lender
and (b) accounts maintained, but not substantially overfunded, for the payment
of taxes or employee contributions in which the undersigned has no beneficial
interest.
MPW Industrial Services, Inc.
By: /s/ Daniel P. Buettin
-------------------------
Its: Vice President and CFO
------------------------
Date: September 26, 1997
-----------------------
MPW Industrial Services, LTD. MPW Management Services Corp.
By: /s/ Daniel P. Buettin By: /s/ Daniel P. Buettin
------------------------- -------------------------
Its: Vice President and CFO Its: Vice President and CFO
------------------------ ------------------------
Date: September 26, 1997 Date: September 26, 1997
----------------------- -----------------------
Weston Engineering, Inc. Aquatech Environmental Services, Inc.
By: /s/ Daniel P. Buettin By:
------------------------- -------------------------
Its: Vice President and CFO Its:
------------------------ ------------------------
Date: September 26, 1997 Date:
----------------------- -----------------------
Pro Kleen Industrial Services, Inc.
By: /s/ Daniel P. Buettin
-----------------------------
Its: Vice President and Treasurer
----------------------------
Date: September 26, 1997
---------------------------
Page 8 of 8
<PAGE> 1
EXHIBIT 10(b)
MPW INDUSTRIAL SERVICES, INC.
1994 STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to attract and retain
personnel for MPW Industrial Services, Inc. (the "Company") and its
Subsidiaries and to provide to such personnel incentives and rewards for
service to the Company and superior performance.
2. Definitions. As used in this Plan,
(a) The term "Board" means the Board of Directors of the
Company.
(b) The term "Committee" means a committee of disinterested
persons as contemplated by Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act") appointed by resolutions adopted by the
Board in accordance with paragraph 11 hereof; provided, however, that prior to
(i) the registration of a class of the Company's equity securities pursuant to
Section 12 of the Exchange Act or (ii) the appointment of such Committee by the
Board, the Committee shall mean the Board.
(c) The term "Common Stock" means Common Stock, no par value,
of the Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Paragraph 7 hereof.
(d) The term "Date of Grant" means the date specified by the
Committee on which a grant of Stock Options (as hereinafter defined) shall
become effective.
<PAGE> 2
(e) The term "Eligible Participant" means any person who is
selected by the Committee for participation in this Plan and who is at the time
(i) an officer, or (ii) a key employee of the Company or any of its
Subsidiaries. The term "Eligible Participant" shall not, however, include any
person or group of persons designated by a resolution adopted by the Board or
the Committee as being ineligible to participate in this Plan.
(f) The term "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(g) The term "Optionee" means the optionee named in an
agreement evidencing an outstanding Stock Option.
(h) The term "Option Right" means the right to purchase one
share of Common Stock upon exercise of a Stock Option granted pursuant to
Paragraph 4 hereof.
(i) "Subsidiary" shall mean any Entity in an unbroken chain
of Entities beginning with the Company if Monte R. Black, the Company and/or
each of the Entities other than the last Entity in the unbroken chain owns
stock possessing fifty percent or more of the total combined voting power of
all classes of stock in one of the other Entities in such chain and which are,
in accordance with generally accepted accounting principles, reported on a
combined basis and which, as of the date hereof, are identified on Exhibit 1.
For purposes of this Plan, the continuous employ of the Optionee with the
Company or a Subsidiary shall not be deemed interrupted, and the Optionee shall
not be deemed to have ceased to be an employee of the Company or any Subsidiary,
by reason of the transfer of his employment among the Company and its
Subsidiaries.
-2-
<PAGE> 3
3. Shares Available Under Plan. Subject to adjustment as provided
in Paragraph 7 hereof or in any applicable Stock Option Agreement provided for
in Section 4(h) hereof, the shares of Common Stock which may be sold upon the
exercise of Stock Options shall not exceed in the aggregate 250,000 shares. Such
shares may be shares of original issuance or treasury shares or a combination of
the foregoing.
4. Stock Options. The Committee may, from time to time and upon
such terms and conditions as it may determine, authorize the granting to
Eligible Participants of options ("Stock Options") to purchase shares of Common
Stock. Each such grant may utilize any or all of the authorizations, and shall
be subject to all of the limitations, contained in the following provisions:
(a) Each grant shall specify the number of shares of Common
Stock to which it pertains.
(b) Each grant shall specify, in the discretion of the
Committee, an option price per share on the Date of Grant.
(c) Each grant shall specify the method of payment of the
option price, which may be (i) in cash or by check acceptable to the Company,
(ii) by delivery to the Company of Common Stock already owned by the Optionee,
which has been held by the optionee for such minimum period of time, if any, as
the Committee may specify, having a fair market value at the time of exercise
equal to the total option price, or (iii) a combination of such methods of
payments.
(d) Each grant shall specify the period or periods of
continuous employment by the Optionee with the Company or any
-3-
<PAGE> 4
Subsidiary, if any, which is necessary before the Stock Options or installments
thereof will become exercisable.
(e) Successive grants may be made to the same Eligible
Participant whether or not any Stock Option previously granted to such Eligible
Participant remains unexercised.
(f) Stock Options granted under this Plan may be (i) options
which are intended to qualify under particular provisions of the Internal
Revenue Code, as in effect from time to time (the "Code"), (ii) options which
are not intended to so qualify, or (iii) combinations of the foregoing.
(g) No Stock Option may be exercised more than ten years from
the Date of Grant.
(h) Each grant of a Stock Option shall be evidenced by an
agreement (a "Stock Option Agreement") in the forms designated by the Committee
executed on behalf of the Company by any officer and delivered to and accepted
by the Eligible Participant containing such additional terms and provisions, if
any, as may be determined by the Committee.
5. Transferability. No Stock Options shall be transferable by an
Optionee other than by will or the laws of descent and distribution or by
qualified domestic relations order as defined by the Code. Stock Options may be
exercised during the Optionee's lifetime only by him or by his guardian or legal
representatives.
6. Adjustments. The Committee may make or provide for such
adjustments in the maximum number of shares specified in Paragraph 3, in the
number of shares of Common Stock covered by outstanding Stock Options granted
hereunder, and in the prices
-4-
<PAGE> 5
per share applicable to such Stock Options, as such Committee in its sole
discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of Optionees that otherwise would
result from any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company,
merger, consolidation, spin-off, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase securities, or any other
corporate transaction or event having an effect similar to any of the foregoing
or as may be otherwise set forth in a Stock Option Agreement, executed and
delivered on behalf of the Committee pursuant to Section 4(h) hereof.
7. Fractional Shares. The Company shall not be required to issue
any fractional share of Common Stock pursuant to this Plan. The Committee may
provide for the elimination of fractions or for the settlement of fractions in
cash.
8. Payment of Taxes. Upon exercise of any Stock Options, it
shall be a condition to the obligation of the Company to issue shares that the
Optionee pay to the Company such amount as the Company may request for the
purpose of satisfying its liability to withhold Federal, state or local income
or other taxes. The Optionee may elect that all of any part of such withholding
requirement be satisfied by retention by the Company of a portion of the shares
purchased upon exercise of Stock Options granted hereunder. If such election is
made, the shares so retained shall be credited against such withholding
requirement at the fair market value on the date of exercise.
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<PAGE> 6
9. Administration of the Plan. (a) This Plan shall be
administered by a Stock Option Committee (the "Committee") of Directors
appointed by resolution adopted by the Board. After the Common Stock is
registered pursuant to Section 12 of the Exchange Act, each member of the
Committee shall be a "disinterested person" within the meaning of Rule 16b-3 of
the Securities and Exchange Commission (or any successor rule to the same
effect). A majority of the Committee shall constitute a quorum, and the action
of the members of the Committee present at any meeting at which a quorum is
present, or acts unanimously approved in writing, shall be the acts of the
Committee.
(b) The interpretation and construction by the Committee of
any provision of this Plan or of any agreement, notification or document
evidencing the grant of Stock Options and any determination by the Committee
pursuant to any provision of this Plan or of any such agreement, notification or
document shall be final and conclusive. No member of the Committee shall be
liable for any such action or determination made in good faith.
10. Amendments, Etc.
(a) This Plan may be amended from time to time by the Board
but without further approval by the shareholders of the Company no such
amendment shall (i) increase the maximum number of shares specified in Paragraph
3 hereof (except that adjustments authorized by Paragraph 6 hereof shall not be
limited by this provision), (ii) change the definition of "Eligible
Participant," or (iii) after registration of a class of the Company's equity
securities pursuant to Section 12 of the
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<PAGE> 7
Exchange Act, cause Rule 16b-3 of the Securities and Exchange Commission (or any
successor rule to the same effect) to cease to be applicable to this Plan.
(b) Any agreement evidencing an outstanding Stock Option may,
with the concurrence of the affected Optionee, be amended by the Committee,
provided that the terms and conditions of such amendment are not inconsistent
with this Plan.
(c) The Committee may, with the concurrence of the affected
Optionee, cancel any agreement evidencing a Stock Option granted under this
Plan. In the event of such cancellation, the Committee may authorize the
granting of a new Stock Option (which may or may not cover the same number of
shares which had been the subject of the prior agreement) in such manner, at
such option price and subject to the same terms, conditions and discretions, as,
under the Plan, would have been applicable had the cancelled Stock Option not
been granted.
(d) This Plan shall not confer upon any Eligible Participant
any right with respect to continuance of employment with the Company or any
Subsidiary, nor shall it interfere in any way with any right such Eligible
Participant, the Company or any Subsidiary would otherwise have to terminate
such Eligible Participant's employment at any time.
11. Successors. In the event that another corporation shall become
the successor of the Company by reason of the merger, consolidation or
acquisition of substantially all of the assets and business of the Company, it
shall be a condition to the consummation of such merger, consolidation or
acquisition that such successor corporation shall assume and agree to perform
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<PAGE> 8
all options then outstanding under this Stock Option Plan, as such options may
have been adjusted pursuant to Paragraph 6 hereof by reason of such merger,
consolidation or acquisition.
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<PAGE> 1
EXHIBIT 10(c)
THE MPW INDUSTRIAL SERVICES, INC.
1991 STOCK OPTION PLAN
WHEREAS, MPW Industrial Services, Inc. (the "Company") desires to
attract capable executives, key employees, officers and directors and to provide
long range inducements for them to remain in the service of the Company and its
subsidiaries and affiliates, to perform effectively, and to acquire a permanent
stake in the Company with the interest and outlook of owners; and
WHEREAS, the Company has determined that these objectives will be
promoted by granting executives, key employees, officers and directors options
to acquire shares of the Common Stock of the Company;
NOW, THEREFORE, the Company hereby adopts the MPW Industrial Services,
Inc. 1991 Stock Option Plan on the following terms and conditions:
SECTION 1. DEFINITIONS. The following terms have the following meanings
when used in this Plan, in both singular and plural forms:
BOOK VALUE means, as of the date of determination, the sum of (a) the
shareholders' equity of the Company as determined by the audited balance sheet
of the then most recently ended fiscal year, less, if the Company is at the date
of such balance sheet an S corporation, the deferred taxes that would have been
imposed if the Company had revoked its status as an S corporation for that
fiscal year plus, if the following is a positive number (b) the aggregate
shareholders' equity of Convex Systems, Inc., Labor Support Services, Inc., and
MPW Industrial Services Ltd., as determined by the appropriate corporation's
audited balance sheet of the then most recently ended fiscal year, less if any
of such corporations are at the date of such balance sheet an S corporation, the
deferred taxes that would have been imposed if such corporation had revoked its
status as an S corporation for that fiscal year.
"CODE" means the Internal Revenue Code of 1986, as now in effect or
hereafter amended and as now or hereafter interpreted, construed and applied by
regulations, rulings and cases.
"COMMITTEE" means the Committee established under Section 6 to
administer the Plan.
"COMPANY" means MPW Industrial Services, Inc., an Ohio corporation.
"DATE OF GRANT" means the date an Option is granted.
"EFFECTIVE DATE" means September 12, 1991.
"EMPLOYEE" means any key management or highly compensated employee of
an Employer.
"EMPLOYER" means the Company and any corporation which is a subsidiary
corporation, as defined in Section 424(f) of the Code, of the Company.
<PAGE> 2
"FAIR MARKET VALUE" means the per share value of the Shares which is
equal to a fraction, the numerator of which is twice the Book Value as of the
date of determination, and the denominator of which is the number of Shares
issued and outstanding as of the date of determination. If options, warrants or
other rights may be converted into Shares as of the date of determination, to
the extent that the per share conversion price of such instruments is less than
the Fair Market Value as originally calculated, the formula in the preceding
sentence will be adjusted to include (a) the number of Shares that may be
obtained by the conversion of such instruments into Shares in the denominator
and (b) twice the aggregate price of converting such instruments in the Book
Value in the numerator.
"HOLDER" means an Optionee or any other person or entity entitled to
exercise an Option.
"INCENTIVE OPTION" means an Option which is subject to Section 3.4.
"MANAGEMENT DIRECTOR" means each person who is a director of the
Company and is otherwise employed by an Employer.
"NONEMPLOYEE OFFICER" means each person who is an officer of the
Company and not otherwise employed by an Employer.
"NONINCENTIVE OPTION" means any Option which is not an Incentive
Option.
"NONMANAGEMENT DIRECTOR" means each person who is a director of the
Company and not otherwise employed by an Employer.
"NOTICE OF EXERCISE" means a notice of exercise of an Option in a form
determined by the Committee.
"OPTION" means any right to purchase Shares granted under the Plan.
"OPTION AGREEMENT" means a written agreement between the Company and an
Optionee setting forth the terms of an Option.
"OPTION PRICE" means the price per Share at which an Option is
exercisable.
"OPTIONEE" means an Employee, Nonemployee Officer, Management Director
or Nonmanagement Director to whom an Option has been granted under the Plan.
"PLAN" means The MPW Industrial Services, Inc. 1991 Stock Option Plan,
as set forth herein or as hereafter amended from time to time.
"SHARES" means common shares, without par value, of the Company.
"SUBSTANTIAL SHAREHOLDER" means an Employee or Management Director
owning more than 10% of the total combined voting power of all classes of stock
of any Employer, taking into account all stock considered to be owned under
Section 424 of the Code.
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<PAGE> 3
"TAX OFFSET PAYMENT" means a right to receive a payment from the
Company in the amount and under the circumstances described in Section 4.
"TERMINATION" means, (a) in the case of each Employee, termination of
employment with all Employers for any reason; (b) in the case of each
Nonmanagement Director, termination of the Optionee's status as a director of
the Company for any reason, (c) in the case of a Management Director, both (a)
and (b) above, and (d) in the case of a Nonemployee Officer, termination of the
Optionee's status as an officer of the Company for any reason.
"TERMINATION DATE" means September 11, 2001.
SECTION 2. ELIGIBILITY AND GRANTS OF OPTIONS.
2.1. GRANT. The Committee may, at any time prior to the Termination
Date, grant to such Employees, Management Directors, Nonmanagement Directors, or
Nonemployee Officers as the Committee determines, Options and/or Tax Offset
Payments for such Shares as the Committee determines, subject to Sections 3 and
9.
2.2. TERMS OF OPTIONS.
2.2.1. Options shall be granted upon such terms and conditions
as the Committee may determine, at the time of grant or thereafter (subject to
Section 8.2), provided however, that such terms and conditions are not
inconsistent with the Plan or applicable law.
2.2.2. In the absence of any provision in the grant of an
Option to the contrary, any Option shall have the following terms:
(a) The Options shall be Incentive Options with
respect to the number of Shares permitted by Section 3.4 and Nonincentive
Options with respect to all other Shares.
(b) Each Option will have an Option Price equal to
the Fair Market Value of a Share on the Date of Grant.
(c) Subject to Section 3.3, each Option shall become
exercisable as to 25% of the Shares which are the subject of the Option on
completion of each full year of employment of the Optionee after the Date of
Grant.
(d) Where both an Incentive Option and a Nonincentive
Option are granted, the number of Shares as to which exercisability under
Section 2.2.2(c) accrues at any time shall be calculated on the basis of the
total of the Shares subject to both Options and the Options shall become
exercisable as to that number of Shares first under the Incentive Option and
then under the Nonincentive Option to the extent consistent with Section 422A of
the Code.
(e) Each Option shall lapse 30 days after the
Termination of the Optionee, except (1) if the Termination is the result of the
Optionee's gross misconduct or neglect as determined by the Committee, each
Option shall lapse immediately upon Termination, (2) if the Termination is
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<PAGE> 4
the result of the death of the Optionee, the personal representative of the
Optionee's estate shall have the right to exercise all Options during a 60 day
period after the Optionee's death, and (3) as provided in Section 3.3.
2.3. OPTION AGREEMENTS. Each grant of an Option shall be reduced to
writing in an Option Agreement, in such form as the Committee determines, within
a reasonable period after the Date of Grant.
2.4. CORPORATE MERGERS, ACQUISITIONS. The Committee may grant Options
having terms and provisions which vary from those specified in the Plan if such
Options are granted in substitution for, or in connection with the assumption
of, existing options granted by another corporation and assumed or otherwise
agreed to be provided for by the Company pursuant to or by reason of a
transaction involving a corporate merger, consolidation, acquisition of property
or stock, reorganization or liquidation to which any Employer is a party.
2.5. STOCKHOLDER APPROVAL. Options may be granted by the Committee
prior to the approval of the Plan by the stockholders of the Company, but all
such grants shall be subject to approval of the Plan by such stockholders.
SECTION 3. RESTRICTIONS ON ALL OPTIONS. Each Option shall be subject to
the following restrictions:
3.1. PRICE. No Option shall have an Option Price of less than (a) in
the case of an Option issued as replacement for, and contemporaneously with the
surrender of an Option already in existence under this Plan, any other plan or
otherwise, the lower of the price under such Option or 80% of the Fair Market
Value of a Share on the Date of Grant, or (b) in all other cases, 80% of the
Fair Market Value of a Share on the Date of Grant
3.2. SECURITIES REGISTRATION. No Option may be exercised in whole or in
part unless the Shares subject to the Option shall have been registered under
the Securities Act of 1933 and any applicable state securities laws or, if such
registration is not required, unless the Holder shall have furnished the Company
with an opinion of counsel acceptable to the Company confirming that such
registration is not required. The Company may waive the presentation of an
opinion of counsel but may require a written statement signed by the Holder
containing investment representations satisfactory to the Company and an
agreement to accept such restrictions on transfer of the Shares including,
without limitation, the affixing to any certificate representing the Shares of
such appropriate legend as the Company may reasonably impose so long as the
issuance of such Shares by the Company to the Optionee has not been registered
under the Securities Act of 1933 and all applicable state securities laws.
3.3. EXPIRATION. Each Option shall expire no later than the date ten
years after the Date of Grant
3.4. RESTRICTIONS ON INCENTIVE OPTIONS. Each Incentive Option shall be
subject to the following restrictions:
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<PAGE> 5
3.4.1. No grant of an Incentive Option may be made to a
Nonmanagement Director or as Nonemployee Officer.
3.4.2. If the Optionee is a Substantial Shareholder on the
Date of Grant, the Option Price shall be not less than 110% of the Fair Market
Value of a Share on the Date of Grant.
3.4.3. If the Optionee is not a Substantial Shareholder on the
Date of Grant, the Option Price shall be not less than 100% of the Fair Market
Value of a Share on the Date of Grant.
3.4.4. An Incentive Option granted to an Optionee other than a
Substantial Shareholder shall expire no later than the tenth anniversary of the
Date of Grant.
3.4.5. An Incentive Option granted to a Substantial
Shareholder shall expire no later than the fifth anniversary of the Date of
Grant.
3.4.6. The aggregate Fair Market Value, determined at the Date
of Grant, of Shares which may first become exercisable in any calendar year
under all incentive stock options granted under plans of the Employer shall not
exceed $100,000.
SECTION 4. TAX OFFSET PAYMENTS. The Committee shall have authority, at
the Date of Grant or thereafter, to grant and establish the terms of Tax Offset
Payments, accruing on exercise of a Nonincentive Option and/or on certain
dispositions of Shares acquired under Incentive Options. Such Tax Offset
Payments shall be in an amount determined by multiplying a percentage
established by the Committee times the difference between the Fair Market Value
of a Share on the date of exercise and the Option Price (or, if the Tax Offset
Payment is being made on account of the disposition of Shares acquired under an
Incentive Option, the difference between the Fair Market Value of a Share on the
date of disposition, if less, and the Option Price) and times the number of
Shares as to which the Nonincentive Option is being exercised, or the number of
Shares acquired under an Incentive Option of which the Holder is disposing. The
percentage shall be established, from time to time, by the Committee at that
rate which the Committee, in its sole discretion, determines to be appropriate
and in the best interests of the Employer to assist Optionees in the payment of
federal income taxes incurred on exercise of a Nonincentive Option. The
disposition of Shares acquired under Incentive Options for which a Tax Offset
Payment shall accrue shall be determined by the Committee in its sole
discretion. The Employer shall have the right to withhold any pay over to any
governmental entities (federal, state or city) all amounts under a Tax Offset
Payment for payment of any income or other taxes incurred on exercise.
SECTION 5. EXERCISE OF OPTIONS.
5.1. NOTICE OF EXERCISE. Options shall be exercised by delivery to the
Committee of a Notice of Exercise.
5.2. DELIVERIES ON EXERCISE. Notice of Exercise under Section 5.1 shall
be effective only if:
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<PAGE> 6
(a) The Holder pays to the Company the Option Price
for the portion of such Option being exercised in cash, Shares already owned by
the Holder having a Fair Market Value on the date of exercise equal to such
Option Price, or any combination of the foregoing totaling such Option Price;
and
(b) If the Employer is not making cash payments to
the Optionee sufficient to allow for withholding of taxes under Section 5.3 at
the time of exercise of an Option, the Holder exercising such Option pays to the
Company an amount equal to the withholding required to be made less the
withholding made under Section 5.3.
5.3. RIGHT OF EMPLOYER TO WITHHOLD. The Employer shall have the right
to withhold from any payments due under the Plan the amounts of any federal,
state or local withholding taxes not paid by the Holder at the time of full or
partial exercise of an Option or payment under a Tax Offset Payment.
SECTION 6. THE COMMITTEE.
6.1. APPOINTMENT AND TENURE. The Committee shall consist of at least
three or more members of the Board of Directors of the Company, who shall serve
at the pleasure of the Company. The members of the Committee may receive Options
under the Plan only if a majority of the Committee grants such Option (without
the vote of the Committee member who is receiving the Option). Any Committee
member may be dismissed at any time, with or without cause, upon 10 days' notice
from the Company. Any Committee member may resign by delivering a written
resignation to the Company. Vacancies arising by reason of the death,
resignation, incapacity or removal of a Committee member shall be filled by the
Company. If the Company fails to act, and in any event until the Company so
acts, the remaining members of the Committee may appoint an interim Committee
member, who is then a member of the Board of Directors of the Company, to fill
any vacancy occurring on the Committee. If no person has been appointed to the
Committee or if no person remains on the Committee, the Board of Directors of
the Company or a committee thereof shall so designated by the Board of Directors
of the Company act as the Committee.
6.2. POWERS OF COMMITTEE. The Committee shall have the power to do the
following:
6.2.1. To grant Options and Tax Offset Payment to Employees,
Management Directors, Nonmanagement Directors, or Nonemployee Officers on such
terms not inconsistent with the Plan as the Committee determines;
6.2.2. To maintain records relating to Optionees and Holders;
6.2.3. To prepare and furnish to Optionees and Holders all
information required by applicable law or the Plan;
6.2.4. To construe and apply the provisions of the Plan and to
correct defects and omissions therein;
6.2.5. To engage assistants and professional advisers; and
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<PAGE> 7
6.2.6. To provide procedures for determination of claims under
the Plan.
6.3. COMPENSATION. The members of the Committee shall serve without
compensation for their services as such, but all expenses and costs of the
Committee or any member shall be paid or reimbursed by the Company.
6.4. MEETINGS; MAJORITY RULE. Any and all acts of the Committee taken
at a meeting shall be by a majority of all members of the Committee. The
Committee may act by vote taken in a meeting, at which a majority of members
shall constitute a quorum, if all members of the Committee have received at
least 10 days' written notice of such meeting or have waived notice. The
Committee may also act by consent in writing without a meeting.
6.5. DELEGATION. The Committee may delegate to any one or more of its
number authority to sign any documents on its behalf or to perform ministerial
acts, but no person to whom such authority is delegated shall perform any act
involving the exercise of any discretion without first obtaining the concurrence
of a majority of the members of the Committee, even though he or she alone may
sign any document required by third parties. The Committee may elect one of its
number to serve as chairman. The chairman shall preside at all meetings of the
Committee or delegate such responsibility to another Committee member. The
Committee may elect one person to serve as secretary of the Committee. The
secretary may, but need not, be a member of the Committee. All third parties may
rely on any communication signed by the secretary, acting as such, as an
official communication from the Committee.
6.6. INDEMNIFICATION OF THE COMMITTEE. Each member of the Committee
shall be indemnified by the Company against costs, expenses and liabilities
(other than amounts paid in settlements to which the Company does not consent,
which consent shall not be unreasonably withheld) reasonably incurred by such
member in connection with any action to which he may be a party by reason of
service as a member of the Committee, except in relation to matters as to which
he shall be adjudged in such action to be personally guilty of negligence or
willful misconduct in the performance of his duties. The foregoing right to
indemnification shall be in addition to such other rights as the Committee
member may enjoy as a matter of law, by reason of insurance coverage of any
kind, or otherwise.
6.7. BINDING EFFECT FOR ACTIONS. All actions taken by the Committee
under the Plan shall be final and binding on all persons. No member of the
Committee shall be liable for any action taken or determination made relating to
the Plan, except for willful misconduct.
SECTION 7. ACTIONS BY COMMITTEE AFTER GRANT. The Committee shall,
subject to the consent of the Holder under Section 8.2 where the action impairs
or adversely alters the rights of the Holder, have the right at any time and
from time to time after the Date of Grant of any Option, to modify the terms of
any grant or to take any of the actions described in this Section 7.
7.1. ANTIDILUTION PROVISIONS. If, subsequent to the date of adoption of
the Plan, the Shares should, as a result of a stock split, stock dividend,
combination or exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation or other such change, be
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<PAGE> 8
increased or decreased or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or of another
corporation, then:
7.1.1. SUBSTITUTION OF SHARES. There shall automatically be
substituted for each Share subject to an unexercised Option in whole or in part
and each Share available for additional grants of Options the number and kind of
shares of stock or other securities into which each Share subject to such Option
shall be changed or for which each such Share shall be exchanged;
7.1.2. ADJUSTMENT OF OPTION PRICE. The Option Price shall be
increased or decreased proportionately so that the aggregate Option Price for
the securities subject to the Option shall remain the same as immediately prior
to such event; and
7.1.3. OTHER ADJUSTMENTS. The Committee shall make such other
adjustments to Options and the provisions of the Plan and Option Agreements as
may be appropriate and equitable, which adjustments may provide for the
elimination of fractional Shares.
7.2. MERGER OF THE COMPANY. In the event that (a) the Company is a
party to a merger or consolidation agreement, (b) the Company is a party to an
agreement to sell substantially all of its assets, or (c) any person or
corporation has publicly announced an offer to purchase more than 5% of the
outstanding voting securities of the Company, the Committee, in its discretion,
may provide that, for a period of 30 days not extending beyond the periods set
forth in Section 3.3 from the date of execution of any such agreement in final
definitive form or the announcement of such offer, notwithstanding the
provisions of any Option Agreement, all Options granted under the Plan may be
exercised in whole or in part during such 30-day period and/or that upon the
termination of such 30- day period all such Options shall expire and be null and
void.
7.3. AUTHORITY TO ACCELERATE. Notwithstanding anything else in the Plan
to the contrary, the Committee shall have the authority, at the time of grant or
at any time or from time to time (subject to Section 8.2) thereafter, to
accelerate the time at which Options become exercisable and/or to amend or waive
any provisions of the Plan relating to manner of payment or procedures for the
exercise of any Options. Any such acceleration may be made effective (a) with
respect to one or more or all Optionees under the Plan, (b) with respect to some
or all of the Shares subject to an Option of any Optionee and/or (c) for a
period of time ending at or before the expiration date of any Option.
7.4. EXCHANGES. The Committee may permit the voluntary surrender of all
or a portion of any Option granted under the Plan to be conditioned upon the
granting to the Optionee of a new Option for the same or a different number of
Shares as the Option surrendered, or may require such voluntary surrender as a
condition precedent to a grant of a new Option to such Optionee. Subject to the
provisions of the Plan, such new Option shall be exercisable at the same price,
during such period and on such other terms and conditions as are specified by
the Committee at the time the new Option is granted. Upon surrender, the Options
surrendered shall be cancelled and the Shares previously subject thereto shall
be available for the grant of other Options. The Committee may also grant Tax
Offset Payments to the Holder of any Option surrendering such Option for a new
Option.
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SECTION 8. AMENDMENT OF THE PLAN.
8.1. RIGHT TO AMEND. The Company shall have the right to amend, suspend
or terminate the Plan at any time, provided that, unless first approved by the
stockholders of the Company, no amendment shall be made in the Plan which:
8.1.1. Changes the class of person eligible to receive grants
under the Plan;
8.1.2. Materially increases the benefits accruing to
participants under the Plan; or
8.1.3. Increases the number of Shares subject to the Plan.
8.2. IMPAIRMENT OF RIGHTS OF HOLDERS. No amendment to the Plan or the
terms of any grant hereunder shall be made that materially changes the terms of
the Plan so as to impair or adversely alter the rights of any Holder without
such Holder's consent.
SECTION 9. SHARES RESERVED. The maximum number of Shares which may be
issued under the Plan shall be 50,000, subject to adjustment under Section 7,
and such number of Shares shall be reserved for issuance under the Plan. The
Shares issued on exercise of Options may be authorized and unissued Shares or
Shares held by the Company as treasury stock. If any Option shall terminate,
expire, lapse or be cancelled as to any Shares, new Options may thereafter be
granted for the purchase of such Shares.
SECTION 10. RESALE AND PURCHASE OF SHARES. The Optionee acknowledges
that Shares purchased pursuant to the Plan will be subject to the terms and
conditions of the Option Agreement, including those terms limiting the transfer,
resale and/or purchase of such Shares
SECTION 11. MISCELLANEOUS.
11.1. NO RIGHT TO EMPLOYMENT. Nothing in the Plan or in any Option or
Option Agreement shall confer upon any Employee any right to continue in the
employ of any Employer or to be entitled to any remuneration or benefits not set
forth in the Plan or such Option Agreement or interfere with or limit the right
of any Employer to terminate such Employee's employment at any time or confer
upon any director any right to continue as a director for the Company.
11.2. USE OF PROCEEDS. Proceeds from the sale of Shares under Options
shall constitute general funds of the Company.
11.3. ASSUMPTION. The Plan may be assumed by the successors and assigns
of the Company.
11.4. RIGHTS AS STOCKHOLDER. No Holder shall have any of the rights of
a stockholder of the Company with respect to the Shares subject to an Option
until certificates for such Shares shall have been issued upon the exercise of
such Option.
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11.5. EXPENSES. All expenses and costs in connection with
administration of the Plan shall be borne by the Company.
11.6. LIMITATION OF LIABILITY. The liability of the Employer under this
Plan or in connection with any exercise of an Option is limited to the
obligations expressly set forth in the Plan and in any of the Option Agreements
and no term or provision of this Plan or any Option Agreement or the Restricted
Stock Agreement shall be construed to impose any further or additional duties,
obligations or costs on the Employer not expressly set forth in the Plan or the
Option Agreement.
11.7. NO ASSIGNMENTS OF RIGHTS. No Option, Tax Offset Payment or other
right under the Plan may be assigned, pledged, hypothecated, given, or otherwise
transferred by the Holder.
11.8. NOTICES. Notices required or permitted to be made under the Plan
shall be sufficiently made if sent by registered or certified mail addressed (a)
to the Holder at the Holder's address as set forth in the books and records of
the Employer, or (b) to the Company or the Committee at the principal office of
the Company.
11.9. CAPTIONS. The captions and section numbers appearing in this Plan
are inserted only as a matter of convenience. They do not define, limit,
construe or describe the scope or intent of the provisions of the Plan.
11.10. APPLICABLE LAW. The Plan shall be governed by and interpreted,
construed, and applied in accordance with the laws of the State of Ohio except
to the extent that the law of a different jurisdiction is mandatorily
applicable.
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EXHIBIT 10(d)
MPW INDUSTRIAL SERVICES GROUP, INC.
FORM OF EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
as of ____________, 1997, by and between Ira O. Kane, an individual (the
"Executive"), and MPW Industrial Services Group, Inc., an Ohio corporation (the
"Company").
RECITALS:
WHEREAS, the Company wishes to retain Executive's skills, knowledge
and experience in the leadership of the Company; and
WHEREAS, Executive wishes to make such skills, knowledge and
experience available to the Company and is willing to serve in the employ of
the Company on a full-time basis for the employment term, and upon the other
terms and conditions hereinafter provided;
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, and upon the terms and subject to the conditions
contained herein, the Executive and the Company hereby agree as follows:
SECTION 1: EMPLOYMENT
The Company agrees to employ the Executive, and the Executive agrees
to enter into the employ of the Company for the period stated in Section 3 of
this Agreement and upon the other terms and conditions hereinafter provided.
SECTION 2: POSITIONS AND RESPONSIBILITIES
During the period of his employment hereunder, the Executive agrees to
serve as President and Chief Operating Officer of the Company and its
Subsidiaries, and to be responsible for the general management of the affairs
and day-to-day operations of the Company and the general management of its
Subsidiaries. During such period, the Executive shall serve as a member of the
Company's Board of Directors and such of its Subsidiaries as may be requested
by the Chairman and Chief Executive Officer of the Company. For purposes of
this Agreement, "Subsidiary" shall mean any corporation, partnership, joint
venture or other business entity in which the Company, directly or indirectly,
beneficially owns 50% or more of the securities entitled to vote generally in
the election of directors.
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SECTION 3: TERM AND DUTIES
3.1 Employment Term. The period of the Executive's employment
under this Agreement (the "Term") shall commence on _________, 1997, and shall
continue until the close of business on _______________, 1999.
3.2 Duties. During the period of his employment hereunder and
except for illness, reasonable vacation periods, and reasonable leaves of
absence, the Executive shall devote all his business time, attention, skill, and
efforts to the faithful performance of his duties hereunder. However, the
Executive may serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions with or in, companies or organizations,
which will not present any conflict of interest with the Company or any of its
subsidiaries or affiliates, or materially affect the performance of the
Executive's duties pursuant to this Agreement.
SECTION 4: COMPENSATION AND REIMBURSEMENT OF EXPENSES
4.1 Compensation. As compensation for the services to be rendered
during the Executive's term of employment hereunder and as compensation for the
other obligations being undertaken by the Executive hereunder, the Executive
shall be entitled to the compensation hereinafter set forth:
4.2 Base Salary. The Company shall pay to the Executive an annual
base salary (the "Base Salary") of not less than $350,000 per year, or such
greater amount as may be determined by the Board of Directors, upon a review of
the Executive's performance. The Executive's Base Salary shall be reviewed at
least annually, with the first such review to be completed no later than June
30, 1998. During the term of employment, Executive's Base Salary shall be
payable consistent with the Company's normal practice, but not less frequently
than in equal monthly installments on the last business day of each month
throughout the term of this Agreement.
4.3 Incentive Compensation. In addition to his Base Salary, the
Executive shall be entitled, commencing with the fiscal year ended June 30,
1998, to Incentive Compensation, on a percentage of salary basis, not less than
that of other senior executives of the Company, in accordance with the Company's
incentive compensation plan in effect at such time. Executive's incentive
compensation shall be paid at the same time and in the same manner as the
Company pays other executive's their bonuses.
4.4 Reimbursement of Expenses. The Company shall pay or reimburse
Executive for all reasonable travel, entertainment, and other expenses incurred
by the Executive in performing his obligations under this Agreement, such
reimbursement to include, but not be limited to, reimbursement for country club
dues at a country club of the Executive's choice, membership in the Columbus Bar
Association, the Ohio State Bar Association, and the American Bar Association,
continuing legal education requirements necessary for the Executive to maintain
his active status to practice law in the State of Ohio, appropriate
industry-related seminars and conventions, and dues and expenses associated with
the Executive's membership in the World President's Organization and/or any
successor organization, including expenses related to attendance at seminars and
conferences of such organization.
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4.5 Company Car. The Company will provide the Executive with a
company car at least equal in value to the car given to Executive on the date
hereof, and the Company will reimburse the Executive for, and/or assume, all
costs associated with maintaining and operating the Company car. The Executive
agrees to follow normal Company policies with respect to tax reporting for the
Executive's personal, nonbusiness use of the company car.
4.6 Vacations, Holidays, Etc. The Executive shall be entitled in
each year during the term of his employment to a minimum vacation of four weeks
(20 business days), during which time his compensation shall be paid in full,
and such holidays and other nonworking days as are consistent with the policies
of the Company for key executives generally.
4.7 Death Benefits; Life Insurance. In the event of the death of
the Executive during the term of this Agreement, the Company shall pay, or cause
to be paid, to the Executive's designated beneficiary or beneficiaries or legal
representatives a death benefit in an amount equal to three times the sum of (i)
Executive's Base Salary plus (ii) the amount of the highest annual bonus paid to
Executive in the prior three fiscal years. Such death benefit shall be paid in a
lump sum within 90 days of the Executive's death unless the Executive prior to
his death, or his beneficiaries within such 90-day period, shall have executed a
writing directing the Company to pay such death benefit in several installments,
in which case the death benefit shall be paid in such installments. The Company
may purchase one or more term or other life insurance policies in amounts
necessary to provide for its obligations under this section, and upon
termination of Executive's employment hereunder, other than for Cause, if
requested by Executive, the Company shall use its reasonable efforts to assign
to Executive the right to receive, upon Executive's death, under such policies
an amount equal to the death benefit hereunder; provided that Executive agrees
to be solely responsible for any proportionate payments attributable to such
amounts due on such policies after such assignment.
4.8 Other Benefits. The Executive shall be entitled to participate
in all group hospitalization, health, dental care, or sick-leave plan, travel or
accident insurance, or executive contingent compensation plan, 401(k) plan,
retirement income plan, qualified or nonqualified pension or profit-sharing
plan, or other present or future group employee benefit plan or program of the
Company for which key executives are or shall become eligible. Except as
otherwise expressly contemplated hereby, the benefits referred to in this
Section 4.8 are in addition to the Compensation and other benefits referred to
in other provisions of this Section 4.
SECTION 5: TERMINATION OF AGREEMENT
5.1 Right to Terminate.
(a) Death. Except for payment of the death benefit
contemplated by Section 4.7 hereof, this Agreement shall terminate upon
Executive's death.
(b) Disability. In the event that the Executive becomes
disabled, due to any physical or mental illness which renders the Executive
incapable of performing his duties hereunder, the Company shall have the right
to terminate Executive's employment hereunder. For purposes of this Section
5.1(b), Executive shall be deemed to have become disabled in accordance
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with the Company's current disability policy which the Company agrees to
maintain during the term of this Agreement. Upon any termination of employment
under this Section 5.1(b), the Company shall pay Executive in accordance with
the Company's normal payroll procedures an amount equal to Executive's Base
Salary in effect at the date of termination (reduced by the proceeds of any
short or long-term disability payments to which Executive may be entitled
during such period under any short or long-term disability plan or insurance
policy maintained by the Company) for 60 months following the date he last
worked and any other benefits to which Executive may be entitled as provided in
this Agreement.
(c) Cause. The Company shall have the right to terminate
Executive's employment hereunder for "Cause." "Cause" shall mean that, prior to
any termination pursuant to this Section 5.1(c), the Executive shall have
committed:
(i) an intentional act of fraud, embezzlement
or theft in connection with his duties or in the course of
his employment with the Company or its Subsidiaries;
(ii) intentional wrongful damage to property of
the Company or its Subsidiaries;
(iii) intentional wrongful disclosure of secret
processes or confidential information of the Company or its
Subsidiaries; or
(iv) intentional wrongful breach of Section 6
hereof.
and any such act shall have been materially harmful to the Company and its
Subsidiaries on a consolidated basis. For purposes of this Agreement, no act,
or failure to act, on the part of the Executive shall be deemed "intentional"
if it was due primarily to an error in judgment or negligence, but shall be
deemed "intentional" only if done, or omitted to be done, by the Executive not
in good faith and without reasonable belief that his action or omission was in
the best interest of the Company and its Subsidiaries. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for
"Cause" hereunder unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three quarters of the Board then in office at a meeting of the Board
called and held for such purpose, after reasonable notice to the Executive and
an opportunity for the Executive, together with his counsel (if the Executive
chooses to have counsel present at such meeting), to be heard before the Board,
finding that, in the good faith opinion of the Board, the Executive had
committed an act constituting "Cause" as herein defined and specifying the
particulars thereof in detail. Nothing herein will limit the right of the
Executive or his beneficiaries to contest the validity or propriety of any such
determination.
(d) Other. The Company shall have the right to terminate
Executive's employment hereunder for any other reason not specified in this
Section 5.1 upon 30 days' prior written notice to Executive; provided that in
the event of any such termination, the Company shall make a severance payment
to Executive on the date of such termination as determined pursuant to Section
5.2(b).
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5.2 Rights and Obligations of Executive Upon Termination.
(a) Company Obligations at Termination. Except as otherwise
provided by Sections 4.7 and 5.2(b) hereof, upon the termination of Executive's
employment pursuant to Section 5.1(a), (b) or (c) of this Agreement, the
Company shall not have any further obligation to Executive under this Agreement
except (i) to distribute to Executive his Base Salary due pursuant to this
Agreement (plus accrued vacation pay) up to the date of termination, and, (ii)
if Executive is terminated for any reason other than for "cause" as defined in
Section 5.1(c) hereof, to pay to Executive or his estate any incentive
compensation earned up to the date of termination (pro rata, based on the
performance of the Company as of the date of termination and the number of
complete months for which Executive was employed in that year prior to his
termination) in accordance with the terms and conditions of this Agreement.
(b) Severance Pay at Termination. If the Company terminates
the Executive's employment pursuant to Section 5.1(d) hereof, or after the
expiration of the Term (other than for "Cause" as defined herein), then the
Company shall, as severance, pay to the Executive in a lump sum with 90 days of
such termination, an amount equal to the sum of (i) the Executive's Base Salary
in effect at the date of termination for the greater of (A) the remainder of
the Term or (B) one year following the date of termination (the "Severance
Period"), plus (ii) the amount of Executive's bonus paid or payable for the
prior fiscal year.
5.3 Legal Fees and Expenses. The Company agrees to pay promptly as
incurred, to the full extent permitted by law, all legal fees and expenses which
Executive may reasonably incur as a result of any contest by the Company,
Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof
(including any contest by Executive about the amount of any payment pursuant to
this Agreement), plus in each case interest on any delayed payment at the rate
of 1% above the Prime Rate posted from time to time by Bank One of Columbus,
N.A.
5.4 Continuation of Benefits. For any termination for which
severance is payable under Section 5.2(b), the Company shall, during the
Severance Period, (A) arrange to provide the Executive with benefits (other than
salary and incentive compensation) substantially similar to those which the
Executive was receiving or entitled to receive immediately prior to the
termination of employment, except that the level of any such employee benefits
to be provided may be reduced in the event of a corresponding reduction
generally applicable to all recipients of or participants in such employee
benefits, and (B) such Severance Period will be considered service with the
Company for the purpose of determining service credits and benefits due and
payable to the Executive under the retirement income, supplemental executive
retirement and other benefit plans of the Company or its Subsidiaries applicable
to Executive, his dependents or his beneficiaries immediately prior to his
termination. If and to the extent that such benefits shall not or cannot be paid
or provided under policy, plan, program, or arrangement of the Company solely
because the Executive is no longer an officer, director, or employee of the
Company, then the Company shall itself pay or provide for the payment to the
Executive, his dependents and beneficiaries, along with, in the case of any
benefit described in subsection (A) of this Section 5.4 which is subject to tax
because it is not or cannot be paid or provided under such policy, plan, program
or arrangement of the Company or any Subsidiary, an additional amount such that
after
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payment by the Executive, or his dependent or beneficiaries, as the case may
be, of all taxes so imposed, the recipient retains an amount equal to such
taxes. Without limiting the purposes or effect of Section 5.4, employee
benefits otherwise receivable by the Executive pursuant to this Section 5.4
will be reduced to the extent comparable welfare benefits are actually received
by the Executive from another employer following Executive's termination of
employment, and any such benefits actually received by the Executive shall be
reported by the Executive to the Company.
5.5 No Mitigation Obligation. The Company hereby acknowledges that
it will be difficult, and may be impossible, for the Executive to find
reasonably comparable employment following any termination for which severance
benefits are available under Section 5.2(b). In addition, the Company
acknowledges that its severance pay plans applicable in general to its salaried
employees do not provide for mitigation, offset or reduction of any severance
payment received thereunder. Accordingly, the parties hereto expressly agree
that the payment of the severance compensation by the Company to the Executive
in accordance with the terms of this Agreement will be liquidated damages, and
that the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source whatsoever
create any mitigation, offset, reduction or any other obligation on the part of
the Executive hereunder or otherwise.
SECTION 6: NON-COMPETITION; CONFIDENTIAL INFORMATION
6.1 Period and Conduct. During the period commencing on the date
hereof and ending at the end of the Severance Period, Executive shall not:
(a) engage, without the prior written consent of the
Company, in any Competitive Activity; or
(b) solicit any employee of the Company to terminate his
or her employment with the Company.
Except as provided in this Section 6.1, Executive shall not
be subject to any obligation, express or implied, not to compete with the
Company or its affiliates.
6.2 Territory. Executive shall refrain from engaging in the
activities described in this Section 6 during the period specified in Section
6.1 hereof in any state in which the Company conducts business at any time
during the term of this Agreement.
6.3 Definition. "Competitive Activity" means the Executive's
participation, without the written consent of an officer of the Company, in the
management of any business enterprise if such enterprise engages in substantial
and direct competition with the Company and such enterprise's sales of any
product or service competitive with any product or service of the Company
amounted to 10% or more of such enterprise's net sales for its most recently
completed fiscal year and if the Company's net sales of said product or service
amounted to 10% or more of the Company's net sales for its most recently
completed fiscal year. "Competitive Activity" will not include (i) the mere
ownership of securities in any such enterprise and the exercise of rights
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appurtenant thereto or (ii) participation in the management of any such
enterprise other than in connection with the competitive operations of such
enterprise; provided, however, that notwithstanding the foregoing, Executive
may not directly participate in the portion of such enterprise's business which
is in substantial and direct competition with the Company even if such portion
constitutes less than 10% of the net sales for such enterprise.
6.4 Confidentiality. Executive recognizes the interest of the
Company in maintaining the confidential matters relating to its business, and
agrees that he will not willfully, directly or indirectly, disclose or use,
except as required in the course of his employment with the Company, any
confidential information of the Company or any of its Subsidiaries, including,
without limitation, any records, files, data, methods, formulae, products,
apparatuses, customer lists, activity reports, plans, specifications, price
lists, notebooks or similar information received by or prepared for the Company,
which is in fact proprietary to the Company or any of its Subsidiaries. The
parties hereto recognize that it is not the intent of this Section to include
within the subject matter of the preceding sentence any of the following: (i)
information, data or methods of information not proprietary to the Company or
its Subsidiaries, (ii) information, data or methods of operation which are in
the public domain, or (iii) information, data or methods of operations possessed
by Executive and in which the Company has no proprietary interest. All records,
files, data drawings, documents, equipment and the like relating to costs, uses,
applications or purchases of products and services made or sold by the Company
or any of its Subsidiaries or otherwise relating to the Company's business or
the business of any of its Subsidiaries, or compiled by or delivered to
Executive during the course of his performance of his duties hereunder, shall be
and remain at all times the sole property of the Company or its Subsidiaries (as
the case may be).
6.5 Nondisparagement. Each of the Company and the Executive agree
that, following termination of the Executive's employment with the Company, they
shall not engage in activities, or publicly make any statements that disparage,
or otherwise impair the reputation, goodwill or business interests of the other
party in such a manner that might result in injury to the other party.
6.6 Remedies. Each of the Company and its Subsidiaries and the
Executive acknowledges that the covenants made by them in this Section 6 are of
value to the other party only if performed fully by such party, and, therefore,
that it would not be possible to compensate the other party in monetary damages
for such party's failure to perform his or its obligations hereunder. As a
consequence, in the event of any breach by a party hereunder, the other party
shall be entitled to injunctive relief and such other full and complete relief
as a court of equity would then afford, in addition to all other relief and
remedies available to the other party without the necessity of proving damages
or posting a bond.
6.7 Change-in-Control. The Company and the Executive are parties
to a Change-in-Control Severance Agreement, dated the date hereof (as such
agreement may be amended from time to time, the "Change-in-Control Agreement").
Notwithstanding anything contained in this Agreement to the contrary, in the
event the Termination of employment occurs under circumstances in which the
Executive would otherwise be entitled to receive payments and benefits under
both this Agreement and the Change-in-Control Agreement, the Executive shall
have the right to elect to receive payments and benefits under either this
Agreement or the
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Change-in-Control Agreement, but not both. Within five business days following
the Termination of employment under circumstances in which this Section 6.7
would apply, the Company shall provide the Executive, in writing, a reasonably
detailed determination of the payments and other benefits under each of this
Agreement and the Change-in-Control Agreement. The Executive shall make the
election provided for in this Section 6.7 within thirty calendar days after
Executive's receipt of the written determination referred to in the preceding
sentence; provided, however, that if such election is not so made within such
30-day period, the Executive shall be irrevocably deemed to have elected to
receive payments and benefits under the Change-in-Control Agreement. Prior to
the date on which Executive makes or is deemed to have made the election
referred to above, he shall receive all benefits under this Agreement as if the
Executive had made the election to receive benefits and payments under this
Agreement.
SECTION 7: DEFINITIONS AND MISCELLANEOUS PROVISIONS
7.1. Defined Terms. Certain capitalized terms used in this
Agreement are specifically defined in the various sections and subsections of
this Agreement, and shall have the meanings set forth therein. All terms not
specifically defined in this Agreement shall have the meanings set forth in the
laws of the State of Ohio with respect to corporations, and if not defined
therein, all terms shall be read in context and construed according to the rules
of grammar and common usage.
7.2 Notices. For all purposes of this Agreement, all
communications including without limitation notices, consents, requests or
approvals, provided for herein shall be in writing and shall be deemed to have
been duly given when delivered or five business days after having been mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed to the Company (to the attention of the Secretary of the
Company) at its principal executive office and to the Executive at his principal
residence, or to such other address as any party may have furnished to the other
in writing and in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
7.3 Construction of Agreement. The captions at the beginning of
the sections and subsections of this Agreement are for convenience only and
shall be ignored in construing this document. This Agreement, and any exhibit or
amendment to it, may be executed in several counterparts, and each executed
counterpart shall be considered as an original. All questions concerning the
intention, validity, and meaning of this Agreement or relating to the rights and
obligations of the parties hereto with respect to performance under this
Agreement shall be construed and resolved in accordance with the laws of Ohio.
If any court of competent jurisdiction holds any provision of this Agreement to
be invalid, the holding shall not affect the validity of the remainder of this
Agreement. In the event that the provisions of Section 6 should ever be deemed
to exceed the time or geographic limitations permitted by applicable law, then
such provisions shall be deemed reformed to the maximum time or geographic
limitations permitted by applicable law.
7.4 Entire Agreement. This document (including any exhibits or
valid written amendments) contains the entire agreement among the parties and
supersedes any prior understandings or agreements among them respecting its
subject matter. All exhibits are
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expressly made a part of this Agreement. There are no representations,
arrangements, understandings, or agreements, oral or written, among the parties
relating to the subject matter of this Agreement, except as fully expressed in
this document.
7.5 Amendments. No amendments, changes, alterations,
modifications, additions, or qualifications to the terms of this Agreement may
be made or be binding unless they are made in writing and are agreed to by all
of the parties to this Agreement.
7.6 Successors in Interest. Except as otherwise provided in this
Agreement, all provisions of this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by and against the respective heirs, executors,
administrators, personal representatives, successors and assigns of each party.
Each party agrees for himself and his heirs, executors, administrators, personal
representatives, successors and assigns to execute any instruments in writing
which may be necessary or proper in carrying out the purposes of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
MPW INDUSTRIAL SERVICES GROUP, INC.
By:
- ----------------------------- --------------------------------
Ira O. Kane (Name) (Title)
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EXHIBIT 10(E)
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of __________, is
made and entered by and between MPW Industrial Services Group, Inc., an Ohio
corporation (the "Company"), and ____________________ (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a senior executive of the Company and has made
and is expected to continue to make major contributions to the short-term and
long-term profitability, growth and financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most publicly
held companies, the possibility of a Change in Control (as defined below)
exists;
WHEREAS, the Company desires to assure itself of both present and future
continuity of management and desires to establish certain minimum severance
benefits for certain of its senior executives, including the Executive,
applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior executives are not
practically disabled from discharging their duties in respect of a proposed or
actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement for the
Executive to continue to remain in the ongoing employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Certain Defined Terms. In addition to terms defined elsewhere herein,
the following terms have the following meanings when used in this Agreement:
(a) "Base Pay" means the Executive's annual base salary at a rate
not less than the Executive's annual fixed or base compensation as in
effect for Executive immediately prior to the occurrence of a Change in
Control or such higher rate as may be determined thereafter from time to
time by the Board or a committee thereof.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means that, prior to any termination pursuant to Section
3(b), the Executive shall have committed:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with
the Company or any Subsidiary;
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(ii) intentional wrongful damage to property of the Company or
any Subsidiary;
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any Subsidiary; or
(iv) intentional wrongful engagement in any Competitive
Activity;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed "intentional" if it was due primarily to an
error in judgment or negligence, but shall be deemed "intentional" only
if done or omitted to be done by the Executive not in good faith and
without reasonable belief that his action or omission was in the best
interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for "Cause" hereunder unless
and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three
quarters of the Board then in office at a meeting of the Board called and
held for such purpose, after reasonable notice to the Executive and an
opportunity for the Executive, together with his counsel (if the
Executive chooses to have counsel present at such meeting), to be heard
before the Board, finding that, in the good faith opinion of the Board,
the Executive had committed an act constituting "Cause" as herein defined
and specifying the particulars thereof in detail. Nothing herein will
limit the right of the Executive or his beneficiaries to contest the
validity or propriety of any such determination.
(d) "Change in Control" means the occurrence during the Term of any
of the following events:
(i) The Company is merged, consolidated or reorganized into or
with another corporation or other legal person, and as a result of
such merger, consolidation or reorganization less than a majority
of the combined voting power of the then-outstanding Voting Stock
of such corporation or person immediately after such transaction
are held in the aggregate by the holders of Voting Stock of the
Company immediately prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other
legal person, and as a result of such sale or transfer less than a
majority of the combined voting power of the then-outstanding
Voting Stock of such corporation or person immediately after such
sale or transfer is held in the aggregate by the holders of Voting
Stock of the Company immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that any
person (as the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act), other than Monte R. Black or
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members of his immediate family, has become the beneficial owner (as
the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) of
securities representing 20% or more of the combined voting power of
the then-outstanding Voting Stock of the Company;
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of
the Company has occurred or will occur in the future pursuant to any
then-existing contract or transaction; or
(v) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the Directors of
the Company cease for any reason to constitute at least a majority
thereof; provided, however, that for purposes of this clause (v) each
Director who is first elected, or first nominated for election by the
Company's stockholders, by a vote of at least two-thirds of the
Directors of the Company (or a committee thereof) then still in
office who were Directors of the Company at the beginning of any such
period will be deemed to have been a Director of the Company at the
beginning of such period.
Notwithstanding the foregoing provisions of Section 1(d)(iii) or 1(d)(iv),
unless otherwise determined in a specific case by majority vote of the Board, a
"Change in Control" shall not be deemed to have occurred for purposes of
Section 1(d)(iii) or 1(d)(iv) solely because (A) the Company, (B) a Subsidiary,
or (C) any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company or any Subsidiary either files or becomes
obligated to file a report or a proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act disclosing
beneficial ownership by it of shares of Voting Stock, whether in excess of 20%
or otherwise, or because the Company reports that a change in control of the
Company has occurred or will occur in the future by reason of such beneficial
ownership.
(e) "Competitive Activity" means the Executive's participation,
without the written consent of an officer of the Company, in the
management of any business enterprise if such enterprise engages in
substantial and direct competition with the Company and such enterprise's
sales of any product or service competitive with any product or service of
the Company amounted to 10% of such enterprise's net sales for its most
recently completed fiscal year and if the Company's net sales of said
product or service amounted to 10% of the Company's net sales for its most
recently completed fiscal year. "Competitive Activity" will not include
(i) the mere ownership of securities in any such enterprise and the
exercise of rights appurtenant thereto or (ii) participation in the
management of any such enterprise other than in connection with the
competitive operations of such enterprise.
(f) "Employee Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement
income and welfare benefit
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policies, plans, programs or arrangements in which Executive is entitled
to participate, including without limitation any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement, or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group or other life, health,
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company or a Subsidiary), disability, salary
continuation, expense reimbursement and other employee benefit policies,
plans, programs or arrangements that may now exist or any equivalent
successor policies, plans, programs or arrangements that may be adopted
hereafter by the Company or a Subsidiary, providing perquisites, benefits
and service credit for benefits at least as great in the aggregate as are
payable thereunder prior to a Change in Control.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Incentive Pay" means an annual amount equal to not less than the
highest aggregate annual bonus, incentive or other payments of cash
compensation, in addition to Base Pay, made or to be made in regard to
services rendered in any calendar year during the three calendar years
immediately preceding the year in which the Change in Control occurred
pursuant to any bonus, incentive, profit-sharing, performance,
discretionary pay or similar agreement, policy, plan, program or
arrangement (whether or not funded) of the Company or a Subsidiary, or any
successor thereto providing benefits at least as great as the benefits
payable thereunder prior to a Change in Control.
(i) "Severance Period" means the period of time commencing on the
date of the first occurrence of a Change in Control and continuing until
the earlier of (i) the third anniversary of the occurrence of the Change
in Control or (ii) the Executive's death; provided, however, that
commencing on each anniversary of the Change in Control, the Severance
Period will automatically be extended for an additional year unless, not
later than 90 calendar days prior to such anniversary date, either the
Company or the Executive shall have given written notice to the other that
the Severance Period is not to be so extended.
(j) "Subsidiary" means an entity in which the Company directly or
indirectly beneficially owns 50% or more of the outstanding Voting Stock.
(k) "Term" means the period commencing as of the date hereof and
expiring as of the later of (i) the close of business on December 31,
2002, or (ii) the expiration of the Severance Period; provided, however,
that (A) commencing on January 1, 2005 and each January 1 thereafter, the
term of this Agreement will automatically be extended for an additional
year unless, not later than September 30 of the immediately preceding
year, the Company or the Executive shall have given notice that it or the
Executive, as the case may be, does not wish to have the Term extended and
(B) subject to the last sentence of Section 9, if, prior to a Change in
Control, the Executive ceases for any reason to be an employee of the
Company and any Subsidiary, thereupon without further action the Term
shall be deemed to have expired and this Agreement will immediately
terminate and be of no further effect. For purposes of this Section 1(k),
the Executive shall not be deemed to
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have ceased to be an employee of the Company and any Subsidiary by reason
of the transfer of Executive's employment between the Company and any
Subsidiary, or among any Subsidiaries.
(l) "Termination Date" means the date on which the Executive's
employment is terminated (the effective date of which shall be the date of
termination, or such other date that may be specified by the Executive if
the termination is pursuant to Section 3(b).
(m) "Voting Stock" means securities entitled to vote generally in the
election of directors.
2. Operation of Agreement. This Agreement will be effective and binding
immediately upon its execution and the effective registration of a class of the
Company's equity securities pursuant to Section 12 of the Exchange Act, but,
anything in this Agreement to the contrary notwithstanding, this Agreement will
not be operative unless and until a Change in Control occurs. Upon the
occurrence of a Change in Control at any time during the Term, without further
action, this Agreement shall become immediately operative.
3. Termination Following a Change in Control.
(a) In the event of the occurrence of a Change in Control, or in the
event substantial discussions with a third party are occurring that
ultimately result in a Change of Control, the Executive's employment may
be terminated by the Company or a Subsidiary during the Severance Period
and the Executive shall be entitled to the benefits provided by Section 4
unless such termination is the result of the occurrence of one or more of
the following events:
(i) The Executive's death;
(ii) If the Executive becomes permanently disabled within the
meaning of, and begins actually to receive disability benefits
pursuant to, the long-term disability plan in effect for, or
applicable to, Executive immediately prior to the Change in Control
or as otherwise provided in Executive's employment contract; or
(iii) Cause.
If, during the Severance Period, the Executive's employment is terminated
by the Company or any Subsidiary other than pursuant to Section 3(a)(i),
3(a)(ii) or 3(a)(iii), the Executive will be entitled to the benefits
provided by Section 4 hereof.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any Subsidiary
during the Severance Period with the right to severance compensation as
provided in Section 4 upon the occurrence of one or more of the following
events (regardless of whether any other reason, other than
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Cause as hereinabove provided, for such termination exists or has
occurred, including without limitation other employment):
(i) Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a substantially
equivalent office or position, of or with the Company and/or a
Subsidiary, as the case may be, which the Executive held immediately
prior to a Change in Control, or the removal of the Executive as a
Director of the Company and/or a Subsidiary (or any successor
thereto) if the Executive shall have been a Director of the Company
and/or a Subsidiary immediately prior to the Change in Control;
(ii) (A) A significant adverse change in the nature or scope of
the authorities, powers, functions, responsibilities or duties
attached to the position with the Company and any Subsidiary which
the Executive held immediately prior to the Change in Control, (B) a
reduction in the aggregate of the Executive's Base Pay and Incentive
Pay received from the Company and any Subsidiary, or (C) the
termination or denial of the Executive's rights to Employee Benefits
or a reduction in the scope or value thereof, any of which is not
remedied by the Company within 10 calendar days after receipt by the
Company of written notice from the Executive of such change,
reduction or termination, as the case may be;
(iii) A determination by the Executive (which determination will
be conclusive and binding upon the parties hereto provided it has
been made in good faith and in all events will be presumed to have
been made in good faith unless otherwise shown by the Company by
clear and convincing evidence) that a change in circumstances has
occurred following a Change in Control, including, without
limitation, a change in the scope of the business or other activities
for which the Executive was responsible immediately prior to the
Change in Control, which has rendered the Executive substantially
unable to carry out, has substantially hindered Executive's
performance of, or has caused Executive to suffer a substantial
reduction in, any of the authorities, powers, functions,
responsibilities or duties attached to the position held by the
Executive immediately prior to the Change in Control, which situation
is not remedied within 10 calendar days after written notice to the
Company from the Executive of such determination;
(iv) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or substantially all
of its business and/or assets, unless the successor or successors (by
liquidation, merger, consolidation, reorganization, transfer or
otherwise) to which all or substantially all of its business and/or
assets have been transferred (directly or by operation of law)
assumed all duties and obligations of the Company under this
Agreement pursuant to Section 11(a);
(v) The Company relocates its principal executive offices, or
requires the Executive to have his principal location of work
changed, to any location that is in excess of 25 miles from the
location thereof immediately prior to the Change in
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Control, or requires the Executive to travel away from his office in
the course of discharging his responsibilities or duties hereunder at
least 20% more (in terms of aggregate days in any calendar year or in
any calendar quarter when annualized for purposes of comparison to
any prior year) than was required of Executive in any of the three
full years immediately prior to the Change in Control without, in
either case, his prior written consent; or
(vi) Without limiting the generality or effect of the foregoing,
any material breach of this Agreement by the Company or any successor
thereto.
(c) A termination by the Company pursuant to Section 3(a) or by the
Executive pursuant to Section 3(b) will not affect any rights that the
Executive may have pursuant to any agreement, policy, plan, program or
arrangement of the Company or Subsidiary providing Employee Benefits,
which rights shall be governed by the terms thereof.
4. Severance Compensation.
(a) If, following the occurrence of a Change in Control, the Company
or Subsidiary terminates the Executive's employment during the Severance
Period other than pursuant to Section 3(a)(i), 3(a)(ii) or 3(a)(iii), or
if the Executive terminates his employment pursuant to Section 3(b) the
Company will pay to the Executive the following amounts within five
business days after the Termination Date and continue to provide to the
Executive the following benefits:
(i) A lump sum payment in an amount equal to three times the sum
of (A) Base Pay, plus (B) Incentive Pay (determined in accordance
with the standards set forth in Section 1(f)).
(ii) For a period of thirty-six months following the Termination
Date (the "Continuation Period"), the Company will arrange to provide
the Executive with Employee Benefits that are welfare benefits (but
not stock option, stock purchase, stock appreciation or similar
compensatory benefits) substantially similar to those that the
Executive was receiving or entitled to receive immediately prior to
the Termination Date (or, if greater, immediately prior to the
reduction, termination, or denial described in Section 3(b)(ii)),
except that the level of any such Employee Benefits to be provided to
the Executive may be reduced in the event of a corresponding
reduction generally applicable to all recipients of or participants
in such Employee Benefits, and (B) such Continuation Period will be
considered service with the Company for the purpose of determining
service credits and benefits due and payable to the Executive under
the retirement income, supplemental executive retirement and other
benefit plans of the Company or Subsidiary applicable to the
Executive, his dependents or his beneficiaries immediately prior to
the Termination Date (or, if greater, immediately prior to the
reduction, termination or denial described in Section 3(b)(ii)). If
and to the extent that any benefit described in subsection (A) or (B)
of this Section 4(a)(ii) is not or cannot be paid or provided under
any policy, plan, program or arrangement of the Company or any
Subsidiary, as the case may be, then the Company will itself pay or
provide for the payment to the Executive, his dependents and
beneficiaries, of such Employee Benefits along with, in the case of
any benefit described in subsection (A) of this Section 4(a)(ii)
which is subject to tax because it is not or
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cannot be paid or provided under any such policy, plan, program or
arrangement of the Company or any Subsidiary, an additional amount
such that after payment by the Executive, or his dependents or
beneficiaries, as the case may be, of all taxes so imposed, the
recipient retains an amount equal to such taxes. Without otherwise
limiting the purposes or effect of Section 5, Employee Benefits
otherwise receivable by the Executive pursuant to subsection (A) of
this Section 4(a)(ii) will be reduced to the extent comparable
welfare benefits are actually received by the Executive from another
employer during the Continuation Period following the Executive's
Termination Date, and any such benefits actually received by the
Executive shall be reported by the Executive to the Company.
(b) Without limiting the rights of the Executive at law or in equity,
if the Company fails to make any payment or provide any benefit required
to be made or provided hereunder on a timely basis, the Company will pay
interest on the amount or value thereof at an annualized rate of interest
equal to the so-called composite "prime rate" as quoted from time to time
during the relevant period in The Wall Street Journal. Such interest will
be payable as it accrues on demand. Any change in such prime rate will be
effective on and as of the date of such change.
(c) Notwithstanding any provision of this Agreement to the contrary,
the parties' respective rights and obligations under this Section 4 and
under Sections 5 and 7 will survive any termination or expiration of this
Agreement or the termination of the Executive's employment following a
Change in Control for any reason whatsoever.
5. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, but
subject to Section 5(h), in the event that this Agreement shall become
operative and it shall be determined (as hereafter provided) that any
payment (other than the Gross-Up payments provided for in this Section 5)
or distribution by the Company or any of its affiliates to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise
pursuant to or by reason of any other agreement, policy, plan, program or
arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision thereto) by reason of being considered "contingent on
a change in ownership or control" of the Company, within the meaning of
Section 280G of the Code (or any successor provision thereto) or to any
similar tax imposed by state or local law, or any interest or penalties
with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter
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collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment or payments (collectively, a "Gross-Up Payment");
provided, however, that no Gross-up Payment shall be made with respect to
the Excise Tax, if any, attributable to (i) any incentive stock option, as
defined by Section 422 of the Code ("ISO") granted prior to the execution
of this Agreement, or (ii) any stock appreciation or similar right,
whether or not limited, granted in tandem with any ISO described in clause
(i). The Gross-Up Payment shall be in an amount such that, after payment
by the Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 5(f), all determinations
required to be made under this Section 5, including whether an Excise Tax
is payable by the Executive and the amount of such Excise Tax and whether
a Gross-Up Payment is required to be paid by the Company to the Executive
and the amount of such Gross-Up Payment, if any, shall be made by a
nationally recognized accounting firm (the "Accounting Firm") selected by
the Executive in his sole discretion. The Executive shall direct the
Accounting Firm to submit its determination and detailed supporting
calculations to both the Company and the Executive within 30 calendar days
after the Termination Date, if applicable, and any such other time or
times as may be requested by the Company or the Executive. If the
Accounting Firm determines that any Excise Tax is payable by the
Executive, the Company shall pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination
and calculations with respect to any Payment to the Executive. If the
Accounting Firm determines that no Excise Tax is payable by the Executive,
it shall, at the same time as it makes such determination, furnish the
Company and the Executive an opinion that the Executive has substantial
authority not to report any Excise Tax on his federal, state or local
income or other tax return. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision
thereto) and the possibility of similar uncertainty regarding applicable
state or local tax law at the time of any determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the
event that the Company exhausts or fails to pursue its remedies pursuant
to Section 5(f) and the Executive thereafter is required to make a payment
of any Excise Tax, the Executive shall direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to submit
its determination and detailed supporting calculations to both the Company
and the Executive as promptly as possible. Any such Underpayment shall be
promptly paid by the Company to, or for the benefit of, the Executive
within five business days after receipt of such determination and
calculations.
(c) The Company and the Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determinations and calculations contemplated by Section
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5(b). Any determination by the Accounting Firm as to the amount of the
Gross-Up Payment shall be binding upon the Company and the Executive.
(d) The federal, state and local income or other tax returns filed by
the Executive shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax
payable by the Executive. The Executive shall make proper payment of the
amount of any Excise Payment, and at the request of the Company, provide
to the Company true and correct copies (with any amendments) of his
federal income tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents reasonably requested
by the Company, evidencing such payment. If prior to the filing of the
Executive's federal income tax return, or corresponding state or local tax
return, if relevant, the Accounting Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive shall within five
business days pay to the Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by
Section 5(b) shall be borne by the Company. If such fees and expenses are
initially paid by the Executive, the Company shall reimburse the Executive
the full amount of such fees and expenses within five business days after
receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(f) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up
Payment. Such notification shall be given as promptly as practicable but
no later than 10 business days after the Executive actually receives
notice of such claim and the Executive shall further apprise the Company
of the nature of such claim and the date on which such claim is requested
to be paid (in each case, to the extent known by the Executive). The
Executive shall not pay such claim prior to the earlier of (i) the
expiration of the 30-calendar-day period following the date on which he
gives such notice to the Company and (ii) the date that any payment of
amount with respect to such claim is due. If the Company notifies the
Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the
Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
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(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of
this Section 5(f), the Company shall control all proceedings taken in
connection with the contest of any claim contemplated by this Section 5(f) and,
at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim (provided, however, that the Executive may participate therein at
his own cost and expense) and may, at its option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
the tax claimed and sue for a refund, the Company shall advance the amount of
such payment to the Executive on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income or other tax, including interest or penalties with respect thereto,
imposed with respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of any such contested claim shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 5(f), the Executive receives any refund
with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 5(f)) promptly pay to the
Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 5(f), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial or
refund prior to the expiration of 30 calendar days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of any such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid by
the Company to the Executive pursuant to this Section 5.
(h) Notwithstanding any provision of this Agreement to the contrary,
if (i) but for this sentence, the Company would be obligated to make a
Gross-Up Payment to the Executive, (ii) the aggregate "present value" of
the "parachute payments" to be paid or
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provided to the Executive under this Agreement or otherwise does not
exceed 1.15 multiplied by three times the Executive's "base amount," and
(iii) but for this sentence, the net after-tax benefit to the Executive of
the Gross-Up Payment would not exceed $50,000 (taking into account both
income taxes and any Excise Tax) as compared to the maximum net after-tax
benefit to the Executive of parachute payments the present value of which
is not equal to or greater than three times the Executive's base amount],
then the payments and benefits to be paid or provided under this Agreement
will be reduced to the minimum extent necessary (but in no event to less
than zero) so that no portion of any payment or benefit to the Executive,
as so reduced, constitutes an "excess parachute payment." For purposes of
this Section 5(h), the terms "excess parachute payment," "present value,"
"parachute payment," and "base amount" will have the meanings assigned to
them by Section 280G of the Code. The determination of whether any
reduction in such payments or benefits to be provided under this Agreement
is required pursuant to the preceding sentence will be made at the expense
of the Company, if requested by the Executive or the Company, by the
Accounting Firm. The fact that the Executive's right to payments or
benefits may be reduced by reason of the limitations contained in this
Section 5(h) will not of itself limit or otherwise affect any other rights
of the Executive other than pursuant to this Agreement. In the event that
any payment or benefit intended to be provided under this Agreement or
otherwise is required to be reduced pursuant to this Section 5(h), the
Executive will be entitled to designate the payments and/or benefits to be
so reduced in order to give effect to this Section 5(h). The Company will
provide the Executive with all information reasonably requested by the
Executive to permit the Executive to make such designation. In the event
that the Executive fails to make such designation within 10 business days
of the Termination Date, the Company may effect such reduction in any
manner it deems appropriate.
6. No Mitigation Obligation. The Company hereby acknowledges that it will
be difficult and may be impossible for the Executive to find reasonably
comparable employment following the Termination Date and that the
non-competition covenant contained in Section 8 will further limit the
employment opportunities for the Executive. In addition, the Company
acknowledges that its severance pay plans applicable in general to its salaried
employees do not provide for mitigation, offset or reduction of any severance
payment received thereunder. Accordingly, the payment of the severance
compensation by the Company to the Executive in accordance with the terms of
this Agreement is hereby acknowledged by the Company to be reasonable, and the
Executive will not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever create
any mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise, except as expressly provided in the last
sentence of Section 4(a)(ii).
7. Legal Fees and Expenses.
(a) It is the intent of the Company that the Executive not be
required to incur legal fees and the related expenses associated with the
interpretation, enforcement or defense of Executive's rights under this
Agreement by litigation or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be
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extended to the Executive hereunder. Accordingly, if it should appear to
the Executive that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or any
other person takes or threatens to take any action to declare this
Agreement void or unenforceable, or institutes any litigation or other
action or proceeding designed to deny, or to recover from, the Executive
the benefits provided or intended to be provided to the Executive
hereunder, the Company irrevocably authorizes the Executive from time to
time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other
legal action, whether by or against the Company or any Director, officer,
stockholder or other person affiliated with the Company, in any
jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Executive's entering into an attorney-client relationship
with such counsel, and in that connection the Company and the Executive
agree that a confidential relationship shall exist between the Executive
and such counsel. Without respect to whether the Executive prevails, in
whole or in part, in connection with any of the foregoing, the Company
will pay and be solely financially responsible for any and all attorneys'
and related fees and expenses incurred by the Executive in connection with
any of the foregoing.
(b) Without limiting the generality or effect of Section 7(a), in
order to ensure the benefits intended to be provided to the Executive
under Section 7(a), the Company will promptly use its best efforts
following written notice to the Company by the Executive to secure an
irrevocable standby letter of credit (the "Letter of Credit"), issued by
Bank One, N.A. or another bank having combined capital and surplus in
excess of $500 million (the "Bank") for the benefit of the Executive and
providing that the fees and expenses of counsel selected from time to time
by the Executive pursuant to this Section 7 shall be paid, or reimbursed
to the Executive if paid by the Executive, on a regular, periodic basis
upon presentation by the Executive to the Bank of a statement or
statements prepared by such counsel in accordance with its customary
practices. The Company shall pay all amounts and take all action
necessary to maintain the Letter of Credit during the Severance Period and
for two years thereafter and if, notwithstanding the Company's complete
discharge of such obligations, such Letter of Credit shall be terminated
or not renewed, the Company shall obtain a replacement irrevocable clean
letter of credit drawn upon a commercial bank selected by the Company and
reasonably acceptable to the Executive, upon substantially the same terms
and conditions as contained in the Letter of Credit, or any similar
arrangement which, in any case, assures the Executive the benefits of this
Agreement without incurring any cost or expense in connection therewith.
8. Competitive Activity. During a period ending one year following the
Termination Date, if the Executive shall have received or shall be receiving
benefits under Section 4, and, if applicable, Section 5, the Executive shall
not, without the prior written consent of the Company, which consent shall not
be unreasonably withheld, engage in any Competitive Activity.
9. Employment Rights. Nothing expressed or implied in this Agreement will
create any right or duty on the part of the Company or the Executive to have
the Executive remain in the
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employment of the Company or any Subsidiary prior to or following any Change in
Control. Any termination of employment of the Executive or the removal of the
Executive from the office or position in the Company or any Subsidiary
following the commencement of any discussion with a third person that
ultimately results in a Change in Control shall be deemed to be a termination
or removal of the Executive after a Change in Control for purposes of this
Agreement.
10. Withholding of Taxes. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as the
Company is required to withhold pursuant to any law or government regulation or
ruling.
11. Successors and Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise)
to all or substantially all of the business or assets of the Company, by
agreement in form and substance satisfactory to the Executive, expressly
to assume and agree to perform this Agreement in the same manner and to
the same extent the Company would be required to perform if no such
succession had taken place. This Agreement will be binding upon and inure
to the benefit of the Company and any successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but will not otherwise be assignable, transferable or
delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 11(a) and 11(b). Without limiting the
generality or effect of the foregoing, the Executive's right to receive
payments hereunder will not be assignable, transferable or delegable,
whether by pledge, creation of a security interest, or otherwise, other
than by a transfer by Executive's will or by the laws of descent and
distribution and, in the event of any attempted assignment or transfer
contrary to this Section 11(c), the Company shall have no liability to pay
any amount so attempted to be assigned, transferred or delegated.
12. Notices. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to
have been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been
sent by a nationally recognized overnight courier service such as Federal
Express or UPS, addressed to the Company
14
<PAGE> 15
(to the attention of the Secretary of the Company) at its principal executive
office and to the Executive at his principal residence, or to such other
address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
13. Governing Law. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Ohio, without giving effect to the
principles of conflict of laws of such State.
14. Validity. If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
15. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other
party will 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, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. References to Sections are to references to
Sections of this Agreement.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
MPW INDUSTRIAL SERVICES GROUP, INC.
By: __________________________________________
Name: ________________________________________
Title: _______________________________________
[EXECUTIVE]
______________________________________________
15
<PAGE> 1
EXHIBIT 10(f)
FORM OF DIRECTOR INDEMNIFICATION AGREEMENT
This Director Indemnification Agreement, dated as of
___________, 1997 (this "Agreement"), is made by and between MPW Industrial
Services Group, Inc., an Ohio corporation (the "Company"), and
____________________ (the "Indemnitee"), a director of the Company.
RECITALS
A. The Indemnitee is presently serving as a director of the
Company, and the Company desires that the Indemnitee continue serving in such
capacity. The Indemnitee is willing, subject to certain conditions including
the execution and performance of this Agreement by the Company, to continue
serving in such capacity.
B. In addition to the indemnification to which the Indemnitee
is entitled under the Amended Code of Regulations of the Company (the
"Regulations"), the Company has obtained, at its sole expense, insurance
protecting the Company and its officers and directors including the Indemnitee
against certain losses arising out of any threatened, pending or completed
action, suit, or proceeding to which such persons may be made or are threatened
to be made parties.
NOW, THEREFORE, in order to induce the Indemnitee to continue
to serve in his present capacity, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and the Indemnitee agree as follows:
1. CONTINUED SERVICE
The Indemnitee shall continue to serve at the will of the
Company as a director of the Company so long as he is duly elected in
accordance with the Regulations or until he resigns in writing in accordance
with applicable law.
2. INITIAL INDEMNITY
(a) The Company shall indemnify the Indemnitee, if or when he
is a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the Company), by
reason of the fact that he is or was a director of the Company or is or was
serving at the request of the Company as a director, trustee, officer,
employee, or agent of another corporation, domestic or foreign, nonprofit or
for profit, partnership, joint venture, trust, or other enterprise, or by
reason of any action alleged to have been taken or omitted in any such
capacity, against any and all costs, charges, expenses (including fees and
expenses of attorneys and/or others; all such costs, charges and expenses being
herein jointly referred to as "Expenses"), judgments, fines, and amounts paid
in settlement, actually and reasonably incurred by the Indemnitee in connection
therewith including any appeal of or from any judgment or decision, unless it
is proved by clear and convincing
<PAGE> 2
evidence in a court of competent jurisdiction that the Indemnitee's action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the Company or undertaken with reckless disregard for the best
interests of the Company. In addition, with respect to any criminal action or
proceeding, indemnification hereunder shall be made only if the Indemnitee had
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create
a presumption that the Indemnitee did not satisfy the foregoing standard of
conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee, if or when he
is a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that the Indemnitee is
or was a director of the Company or is or was serving at the request of the
Company as a director, trustee, officer, employee, or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust, or other enterprise, against any and all Expenses actually and
reasonably incurred by the Indemnitee in connection with the defense or
settlement thereof or any appeal of or from any judgment or decision, unless it
is proved by clear and convincing evidence in a court of competent jurisdiction
that the Indemnitee's action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the Company or undertaken
with reckless disregard for the best interests of the Company, except that no
indemnification pursuant to this Section 2(b) shall be made in respect of any
action or suit in which the only liability asserted against the Indemnitee is
pursuant to Section 1701.95 of the Ohio Revised Code (the "ORC").
(c) Any indemnification under Section 2(a) or 2(b) (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the Indemnitee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 2(a) or 2(b). Such authorization shall be made (i)
by the Board of Directors of the Company (the "Board") by a majority vote of a
quorum consisting of directors who were not and are not parties to or
threatened with such action, suit, or proceeding, or (ii) if such a quorum of
disinterested directors is not available or if a majority of such quorum so
directs, in a written opinion by independent legal counsel (designated for such
purpose by the Board) which shall not be an attorney, or a firm having
associated with it an attorney, who has been retained by or who has performed
services for the Company, or any person to be indemnified, within the five
years preceding such determination, or (iii) by the shareholders of the Company
(the "Shareholders"), or (iv) by the court of common pleas or other court in
which such action, suit, or proceeding was brought.
(d) To the extent that the Indemnitee has been successful on
the merits or otherwise, including the dismissal of an action without
prejudice, in defense of any action, suit, or proceeding referred to in Section
2(a) or 2(b), or in defense of any claim, issue, or matter therein, he shall be
indemnified against Expenses actually and reasonably incurred by him in
connection therewith. Expenses actually and reasonably incurred by the
Indemnitee in defending any such action, suit, or proceeding shall be paid by
the Company as they are incurred in advance of the final disposition of such
action, suit, or proceeding under the procedure set forth in Section 4(b)
hereof.
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<PAGE> 3
(e) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on the Indemnitee with respect to any
employee benefit plan; references to "serving at the request of the Company"
shall include any service as a director, officer, employee, or agent of the
Company which imposes duties on, or involves services by, the Indemnitee with
respect to an employee benefit plan, its participants or beneficiaries;
references to the masculine shall include the feminine; references to the
singular shall include the plural and vice versa; the word including is used by
way of illustration only and not by way of limitation.
(f) No amendment to the Amended Articles of Incorporation of
the Company (the "Articles") or the Regulations shall deny, diminish, or
encumber the Indemnitee's rights to indemnity pursuant to the Regulations, the
ORC, or any other applicable law as applied to any act or failure to act
occurring in whole or in part prior to the date (the "Effective Date") upon
which the amendment was approved by the Shareholders. In the event that the
Company shall purport to adopt any amendment to its Articles or Regulations or
take any other action the effect of which is to deny, diminish, or encumber the
Indemnitee's rights to indemnity pursuant to the Articles, the Regulations, the
ORC, or any such other law, such amendment shall apply only to acts or failures
to act occurring entirely after the Effective Date thereof.
3. ADDITIONAL INDEMNIFICATION
(a) Pursuant to Section 1701.13(E)(6) of the ORC, without
limiting any right which the Indemnitee may have pursuant to Section 2 hereof
or any other provision of this Agreement or the Articles, the Regulations, the
ORC, any policy of insurance, or otherwise, but subject to any limitation on
the maximum permissible indemnity which may exist under applicable law at the
time of any request for indemnity hereunder and subject to the following
provisions of this Section 3, the Company shall indemnify the Indemnitee
against any amount which he is or becomes obligated to pay relating to or
arising out of any claim made against him because of any act, failure to act,
or neglect or breach of duty, including any actual or alleged error,
misstatement, or misleading statement, that he commits, suffers, permits, or
acquiesces in while acting in his capacity as a director of the Company. The
payments which the Company is obligated to make pursuant to this Section 3
shall include any and all Expenses, judgments, fines, and amounts paid in
settlement, actually and reasonably incurred by the Indemnitee in connection
therewith including any appeal of or from any judgment or decision; provided,
however, that the Company shall not be obligated under this Section 3 to make
any payment in connection with any claim against the Indemnitee:
(i) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law from paying which
results from a final, nonappealable order; or
(ii) to the extent based upon or attributable to the
Indemnitee having actually realized a personal gain or profit to which he was
not legally entitled, including profit from the purchase and sale by the
Indemnitee of equity securities of the Company which are recoverable by the
Company pursuant to Section 16(b) of the Securities Exchange Act of 1934, or
profit arising from transactions in publicly traded securities of the Company
which were effected by the Indemnitee
-3-
<PAGE> 4
in violation of Section 10(b) of the Securities Exchange Act of 1934, or Rule
10b-5 promulgated thereunder.
(b) A determination as to whether the Indemnitee shall be
entitled to indemnification under this Section 3 shall be made in accordance
with Section 4(a) hereof. Expenses incurred by the Indemnitee in defending any
claim to which this Section 3 applies shall be paid by the Company as they are
actually and reasonably incurred in advance of the final disposition of such
claim under the procedure set forth in Section 4(b) hereof.
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION
(a) For purposes of pursuing his rights to indemnification
under Section 3 hereof, the Indemnitee shall (i) submit to the Board a sworn
statement of request for indemnification substantially in the form of EXHIBIT 1
attached hereto and made a part hereof (the "Indemnification Statement")
averring that he is entitled to indemnification hereunder; and (ii) present to
the Company reasonable evidence of all amounts for which indemnification is
requested. Submission of an Indemnification Statement to the Board shall create
a presumption that the Indemnitee is entitled to indemnification hereunder, and
the Company shall, within 60 calendar days after submission of the
Indemnification Statement, make the payments requested in the Indemnification
Statement to or for the benefit of the Indemnitee, unless (A) within such
60-calendar-day period the Board shall resolve by vote of a majority of the
directors at a meeting at which a quorum is present that the Indemnitee is not
entitled to indemnification under Section 3 hereof, (B) such vote shall be
based upon clear and convincing evidence (sufficient to rebut the foregoing
presumption), and (C) the Board shall notify Indemnitee within such period of
such vote, which notice shall disclose with particularity the evidence upon
which the vote is based. The foregoing notice shall be sworn to by all persons
who participated in the vote and voted to deny indemnification. The provisions
of this Section 4(a) are intended to be procedural only and shall not affect
the right of Indemnitee to indemnification under Section 3 of this Agreement so
long as Indemnitee follows the prescribed procedure, and any determination by
the Board that Indemnitee is not entitled to indemnification and any failure to
make the payments requested in the Indemnification Statement shall be subject
to judicial review by any court of competent jurisdiction.
(b) For purposes of obtaining payments of Expenses in advance
of final disposition pursuant to the last sentence of Section 2(d) or the last
sentence of Section 3(b) hereof, the Indemnitee shall submit to the Company a
sworn request for advancement of Expenses substantially in the form of EXHIBIT
2 attached hereto and made a part hereof (the "Undertaking"), averring that he
has reasonably incurred or will reasonably incur actual Expenses in defending
an action, suit or proceeding referred to in Section 2(a) or 2(b) or any claim
referred to in Section 3, or pursuant to Section 8 hereof. Unless at the time
of the Indemnitee's act or omission at issue, the Articles or the Regulations
prohibit such advances by specific reference to ORC Section 1701.13(E)(5)(a) or
unless the only liability asserted against the Indemnitee in the subject
action, suit or proceeding is pursuant to ORC Section 1701.95, the Indemnitee
shall be eligible to execute Part A of the Undertaking by which he undertakes
to: (i) repay such amount if it is proved by clear and convincing evidence in a
court of competent jurisdiction that the Indemnitee's action or failure to act
involved an act or omission undertaken with deliberate intent to cause injury
to the Company or undertaken with
-4-
<PAGE> 5
reckless disregard for the best interests of the Company; and (ii) reasonably
cooperate with the Company concerning the action, suit, proceeding or claim. In
all cases, the Indemnitee shall be eligible to execute Part B of the
Undertaking by which he undertakes to repay such amount if it ultimately is
determined that he is not entitled to be indemnified by the Company under this
Agreement or otherwise. In the event that the Indemnitee is eligible to and
does execute both Part A and Part B of the Undertaking, the Expenses which are
paid by the Company pursuant thereto shall be required to be repaid by the
Indemnitee only if he is required to do so under the terms of both Part A and
Part B of the Undertaking. Upon receipt of the Undertaking, the Company shall
thereafter promptly pay such Expenses of the Indemnitee as are noticed to the
Company in reasonable detail arising out of the matter described in the
Undertaking. No security shall be required in connection with any Undertaking.
5. LIMITATION ON INDEMNITY
Notwithstanding anything contained herein to the contrary,
the Company shall not be required hereby to indemnify the Indemnitee with
respect to any action, suit, or proceeding that was initiated by the Indemnitee
unless (a) such action, suit, or proceeding was initiated by the Indemnitee to
enforce any rights to indemnification arising hereunder and such person shall
have been formally adjudged to be entitled to indemnity by reason hereof, (b)
authorized by another agreement to which the Company is a party whether
heretofore or hereafter entered, or (c) otherwise ordered by the court in which
the suit was brought.
6. SUBROGATION; DUPLICATION OF PAYMENTS
(a) In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
(b) The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against Indemnitee to the
extent Indemnitee has actually received payment (under any insurance policy,
the Regulations or otherwise) of the amounts otherwise payable hereunder.
7. SHAREHOLDER RATIFICATION
The Company may, at its option, propose at any future meeting
of Shareholders that this Agreement be ratified by the Shareholders; provided,
however, that the Indemnitee's rights hereunder shall be fully enforceable in
accordance with the terms hereof whether or not such ratification is sought or
obtained.
-5-
<PAGE> 6
8. FEES AND EXPENSES OF ENFORCEMENT
It is the intent of the Company that the Indemnitee not be
required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Indemnitee hereunder. Accordingly, if it should appear to the
Indemnitee that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other person takes
any action to declare this Agreement void or unenforceable, or institutes any
action, suit or proceeding to deny, or to recover from, the Indemnitee the
benefits intended to be provided to the Indemnitee hereunder, the Company
irrevocably authorizes the Indemnitee from time to time to retain counsel of
his choice, at the expense of the Company as hereafter provided, to represent
the Indemnitee in connection with the initiation or defense of any litigation
or other legal action, whether by or against the Company or any director,
officer, shareholder, or other person affiliated with the Company, in any
jurisdiction. Regardless of the outcome thereof, the Company shall pay and be
solely responsible for any and all costs, charges, and expenses, including fees
and expenses of attorneys and others, reasonably incurred by the Indemnitee
pursuant to this Section 8.
9. MERGER OR CONSOLIDATION
In the event that the Company shall be a constituent
corporation in a consolidation, merger, or other reorganization, the Company,
if it shall not be the surviving, resulting, or acquiring corporation therein,
shall require as a condition thereto that the surviving, resulting, or
acquiring corporation agree to assume all of the obligations of the Company
hereunder and to indemnify the Indemnitee to the full extent provided herein.
Whether or not the Company is the resulting, surviving, or acquiring
corporation in any such transaction, the Indemnitee shall stand in the same
position under this Agreement with respect to the resulting, surviving, or
acquiring corporation as he would have with respect to the Company if its
separate existence had continued.
10. NONEXCLUSIVITY; NO THIRD PARTY BENEFICIARIES; SEVERABILITY
(a) The rights to indemnification provided by this Agreement
shall not be exclusive of any other rights of indemnification to which the
Indemnitee may be entitled under the Articles, the Regulations, the ORC or any
other statute, any insurance policy, agreement, or vote of shareholders or
directors or otherwise, as to any actions or failures to act by the Indemnitee,
and shall continue after he has ceased to be a director, officer, employee, or
agent of the Company or other entity for which his service gives rise to a
right hereunder, and shall inure to the benefit of his heirs, executors and
administrators.
(b) Except as provided in Section 10(a), the rights to
indemnification provided by this Agreement are personal to Indemnitee and are
non-transferable by Indemnitee, and no party other than the Indemnitee is
entitled to indemnification under this Agreement.
(c) If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of
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<PAGE> 7
this Agreement and the application of such provision to other persons or
circumstances shall not be affected, and the provision so held to be invalid,
unenforceable or otherwise illegal shall be reformed to the extent (and only to
the extent) necessary to make it enforceable, valid and legal.
11. SECURITY
To ensure that the Company's obligations pursuant to this
Agreement can be enforced by Indemnitee, the Company may, at its option,
establish a trust pursuant to which the Company's obligations pursuant to this
Agreement and other similar agreements can be funded.
12. NOTICES
All notices and other communications hereunder shall be in
writing and shall be personally delivered or sent by recognized overnight
courier service (a) if to the Company, to the then-current principal executive
offices of the Company (Attention: General Counsel) or (b) if to the
Indemnitee, to the last known address of Indemnitee as reflected in the
Company's records. Either party may change its address for the delivery of
notices or other communications hereunder by providing notice to the other
party as provided in this Section 12. All notices shall be effective upon
actual delivery by the methods specified in this Section 12.
13. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without giving effect to the
principles of conflict of laws thereof.
14. MODIFICATION
This Agreement and the rights and duties of the Indemnitee
and the Company hereunder may be modified only by an instrument in writing
signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
MPW INDUSTRIAL SERVICES GROUP, INC.
By:________________________________
Name:______________________________
Title:_____________________________
[INDEMNITEE]
___________________________________
-7-
<PAGE> 8
EXHIBIT 1
INDEMNIFICATION STATEMENT
STATE OF ___________________________)
) SS
COUNTY OF __________________________)
I, _______________ , being first duly sworn, do depose and say as
follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement, dated _________, 1997, between MPW Industrial
Services Group, Inc., an Ohio corporation (the "Company"), and the undersigned.
2. I am requesting indemnification against costs, charges, expenses
(which may include fees and expenses of attorneys and/or others), judgments,
fines, and amounts paid in settlement (collectively, "Liabilities"), which have
been actually and reasonably incurred by me in connection with a claim referred
to in Section 3 of the aforesaid Indemnification Agreement.
3. With respect to all matters related to any such claim, I am entitled
to be indemnified as herein contemplated pursuant to the aforesaid
Indemnification Agreement.
4. Without limiting any other rights which I have or may have, I am
requesting indemnification against Liabilities which have or may arise out of
_______________________________________________________________________________
_______________________________________________________________________________.
[INDEMNITEE]
_______________________________
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this _____ day of _________, 1997.
_______________________________
[Seal]
My commission expires the _____ day of __________, 19__ .
<PAGE> 9
EXHIBIT 2
UNDERTAKING
STATE OF____________________________)
) SS
COUNTY OF___________________________)
I, _________________________________, being first duly sworn, do
depose and say as follows:
1. This Undertaking is submitted pursuant to the Indemnification
Agreement, dated _________, 1997, between MPW Industrial Services Group, Inc.,
an Ohio corporation (the "Company") and the undersigned.
2. I am requesting payment of costs, charges, and expenses which I
have reasonably incurred or will reasonably incur in defending an action, suit
or proceeding, referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3, or pursuant to Section 8, of the aforesaid Indemnification
Agreement.
3. The costs, charges, and expenses for which payment is requested are,
in general, all expenses related to____________________________________________
_______________________________________________________________________________
_______________________________________________________________________________.
4. Part A1
I hereby undertake to (a) repay all amounts paid pursuant hereto if
it is proved by clear and convincing evidence in a court of competent
jurisdiction that my action or failure to act which is the subject of the matter
described herein involved an act or omission undertaken with deliberate intent
to cause injury to the Company or undertaken with reckless disregard for the
best interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim.
- --------
1 The Indemnitee shall not be eligible to execute Part A of this
Undertaking if, at the time of the Indemnitee's act or omission at issue, the
Amended Articles of Incorporation or the Amended Code of Regulations of the
Company prohibit such advances by specific reference to the Ohio Revised Code
(the "ORC") Section 1701.13(E)(5)(a), or if the only liability asserted against
the Indemnitee is in an action, suit or proceeding on the Company's behalf
pursuant to ORC Section 1701.95. In the event that the Indemnitee is eligible
to and does execute both Part A and Part B hereof, the costs, charges and
expenses which are paid by the Company pursuant hereto shall be required to be
repaid by the Indemnitee only if he is required to do so under the terms of
both Part A and Part B hereof.
<PAGE> 10
[INDEMNITEE]
_______________________________
4. Part B
I hereby undertake to repay all amounts paid pursuant hereto
if it ultimately is determined that I am not entitled to be indemnified by the
Company under the aforesaid Indemnification Agreement or otherwise.
[INDEMNITEE]
_______________________________
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this _____ day of _________ , 1997.
_______________________________
[Seal]
My commission expires the ____ day of ___________ , 19__.
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<PAGE> 1
EXHIBIT 10(g)
FORM OF DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT
This Director and Officer Indemnification Agreement, dated as
of __________, 1997 (this "Agreement"), is made by and between MPW Industrial
Services Group, Inc., an Ohio corporation (the "Company"), and
____________________ (the "Indemnitee"), a director and an officer of the
Company.
RECITALS
A. The Indemnitee is presently serving as a director and an
officer of the Company, and the Company desires that the Indemnitee continue
serving in such capacities. The Indemnitee is willing, subject to certain
conditions including the execution and performance of this Agreement by the
Company, to continue serving in such capacities.
B. In addition to the indemnification to which the Indemnitee
is entitled under the Amended Code of Regulations of the Company (the
"Regulations"), the Company has obtained, at its sole expense, insurance
protecting the Company and its officers and directors including the Indemnitee
against certain losses arising out of any threatened, pending or completed
action, suit, or proceeding to which such persons may be made or are threatened
to be made parties.
NOW, THEREFORE, in order to induce the Indemnitee to continue
to serve in his present capacity, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and the Indemnitee agree as follows:
1. CONTINUED SERVICE
The Indemnitee shall continue to serve, at the will of the
Company or in accordance with a separate contract, to the extent that such a
contract is in effect at the time in question, as a director and an officer of
the Company so long as he is duly elected in accordance with the Regulations or
until he resigns in writing in accordance with applicable law.
2. INITIAL INDEMNITY
(a) The Company shall indemnify the Indemnitee, if or when he
is a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the Company), by
reason of the fact that he is or was a director or an officer of the Company or
is or was serving at the request of the Company as a director, trustee,
officer, employee, or agent of another corporation, domestic or foreign,
nonprofit or for profit, partnership, joint venture, trust, or other
enterprise, or by reason of any action alleged to have been taken or omitted in
any such capacity, against any and all costs, charges, expenses (including fees
and expenses of attorneys and/or others; all such costs, charges and expenses
being herein jointly referred to as "Expenses"), judgments, fines,
<PAGE> 2
and amounts paid in settlement, actually and reasonably incurred by the
Indemnitee in connection therewith including any appeal of or from any judgment
or decision, unless it is proved by clear and convincing evidence in a court of
competent jurisdiction that the Indemnitee's action or failure to act involved
an act or omission undertaken with deliberate intent to cause injury to the
Company or undertaken with reckless disregard for the best interests of the
Company. In addition, with respect to any criminal action or proceeding,
indemnification hereunder shall be made only if the Indemnitee had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create
a presumption that the Indemnitee did not satisfy the foregoing standard of
conduct to the extent applicable thereto.
(b) The Company shall indemnify the Indemnitee, if or when he
is a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that the Indemnitee is
or was a director or an officer of the Company or is or was serving at the
request of the Company as a director, trustee, officer, employee, or agent of
another corporation, domestic or foreign, nonprofit or for profit, partnership,
joint venture, trust, or other enterprise, against any and all Expenses
actually and reasonably incurred by the Indemnitee in connection with the
defense or settlement thereof or any appeal of or from any judgment or
decision, unless it is proved by clear and convincing evidence in a court of
competent jurisdiction that the Indemnitee's action or failure to act involved
an act or omission undertaken with deliberate intent to cause injury to the
Company or undertaken with reckless disregard for the best interests of the
Company, except that no indemnification pursuant to this Section 2(b) shall be
made in respect of any action or suit in which the only liability asserted
against the Indemnitee is pursuant to Section 1701.95 of the Ohio Revised Code
(the "ORC").
(c) Any indemnification under Section 2(a) or 2(b) (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the Indemnitee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 2(a) or 2(b). Such authorization shall be made (i)
by the Board of Directors of the Company (the "Board") by a majority vote of a
quorum consisting of directors who were not and are not parties to or
threatened with such action, suit, or proceeding, or (ii) if such a quorum of
disinterested directors is not available or if a majority of such quorum so
directs, in a written opinion by independent legal counsel (designated for such
purpose by the Board) which shall not be an attorney, or a firm having
associated with it an attorney, who has been retained by or who has performed
services for the Company, or any person to be indemnified, within the five
years preceding such determination, or (iii) by the shareholders of the Company
(the "Shareholders"), or (iv) by the court of common pleas or other court in
which such action, suit, or proceeding was brought.
(d) To the extent that the Indemnitee has been successful on
the merits or otherwise, including the dismissal of an action without
prejudice, in defense of any action, suit, or proceeding referred to in Section
2(a) or 2(b), or in defense of any claim, issue, or matter therein, he shall be
indemnified against Expenses actually and reasonably incurred by him in
connection therewith. Expenses actually and reasonably incurred by the
Indemnitee in defending any such action,
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<PAGE> 3
suit, or proceeding shall be paid by the Company as they are incurred in
advance of the final disposition of such action, suit, or proceeding under the
procedure set forth in Section 4(b) hereof.
(e) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on the Indemnitee with respect to any
employee benefit plan; references to "serving at the request of the Company"
shall include any service as a director, officer, employee, or agent of the
Company which imposes duties on, or involves services by, the Indemnitee with
respect to an employee benefit plan, its participants or beneficiaries;
references to the masculine shall include the feminine; references to the
singular shall include the plural and vice versa; the word including is used by
way of illustration only and not by way of limitation; and with respect to
conduct by Indemnitee in his capacity as a trustee, administrator or other
fiduciary of any employee benefit plan of the Company, if the Indemnitee acted
in good faith and in a manner he reasonably believed to be in the interest of
the participants or beneficiaries of such employee benefit plan, he shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to herein.
(f) No amendment to the Amended Articles of Incorporation of
the Company (the "Articles") or the Regulations shall deny, diminish, or
encumber the Indemnitee's rights to indemnity pursuant to the Regulations, the
ORC, or any other applicable law as applied to any act or failure to act
occurring in whole or in part prior to the date (the "Effective Date") upon
which the amendment was approved by the Shareholders. In the event that the
Company shall purport to adopt any amendment to its Articles or Regulations or
take any other action the effect of which is to deny, diminish, or encumber the
Indemnitee's rights to indemnity pursuant to the Articles, the Regulations, the
ORC, or any such other law, such amendment shall apply only to acts or failures
to act occurring entirely after the Effective Date thereof.
3. ADDITIONAL INDEMNIFICATION
(a) Pursuant to Section 1701.13(E)(6) of the ORC, without
limiting any right which the Indemnitee may have pursuant to Section 2 hereof
or any other provision of this Agreement or the Articles, the Regulations, the
ORC, any policy of insurance, or otherwise, but subject to any limitation on
the maximum permissible indemnity which may exist under applicable law at the
time of any request for indemnity hereunder and subject to the following
provisions of this Section 3, the Company shall indemnify the Indemnitee
against any amount which he is or becomes obligated to pay relating to or
arising out of any claim made against him because of any act, failure to act,
or neglect or breach of duty, including any actual or alleged error,
misstatement, or misleading statement, that he commits, suffers, permits, or
acquiesces in while acting in his capacity as a director or an officer of the
Company. The payments which the Company is obligated to make pursuant to this
Section 3 shall include any and all Expenses, judgments, fines, and amounts
paid in settlement, actually and reasonably incurred by the Indemnitee in
connection therewith including any appeal of or from any judgment or decision;
provided, however, that the Company shall not be obligated under this Section 3
to make any payment in connection with any claim against the Indemnitee:
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<PAGE> 4
(i) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law from paying which
results from a final, nonappealable order; or
(ii) to the extent based upon or attributable to the
Indemnitee having actually realized a personal gain or profit to which he was
not legally entitled, including profit from the purchase and sale by the
Indemnitee of equity securities of the Company which are recoverable by the
Company pursuant to Section 16(b) of the Securities Exchange Act of 1934, or
profit arising from transactions in publicly traded securities of the Company
which were effected by the Indemnitee in violation of Section 10(b) of the
Securities Exchange Act of 1934, or Rule 10b-5 promulgated thereunder.
(b) A determination as to whether the Indemnitee shall be
entitled to indemnification under this Section 3 shall be made in accordance
with Section 4(a) hereof. Expenses incurred by the Indemnitee in defending any
claim to which this Section 3 applies shall be paid by the Company as they are
actually and reasonably incurred in advance of the final disposition of such
claim under the procedure set forth in Section 4(b) hereof.
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION
(a) For purposes of pursuing his rights to indemnification
under Section 3 hereof, the Indemnitee shall (i) submit to the Board a sworn
statement of request for indemnification substantially in the form of EXHIBIT 1
attached hereto and made a part hereof (the "Indemnification Statement")
averring that he is entitled to indemnification hereunder; and (ii) present to
the Company reasonable evidence of all amounts for which indemnification is
requested. Submission of an Indemnification Statement to the Board shall create
a presumption that the Indemnitee is entitled to indemnification hereunder, and
the Company shall, within 60 calendar days after submission of the
Indemnification Statement, make the payments requested in the Indemnification
Statement to or for the benefit of the Indemnitee, unless (A) within such
60-calendar-day period the Board shall resolve by vote of a majority of the
directors at a meeting at which a quorum is present that the Indemnitee is not
entitled to indemnification under Section 3 hereof, (B) such vote shall be
based upon clear and convincing evidence (sufficient to rebut the foregoing
presumption), and (C) the Board shall notify Indemnitee within such period of
such vote, which notice shall disclose with particularity the evidence upon
which the vote is based. The foregoing notice shall be sworn to by all persons
who participated in the vote and voted to deny indemnification. The provisions
of this Section 4(a) are intended to be procedural only and shall not affect
the right of Indemnitee to indemnification under Section 3 of this Agreement so
long as Indemnitee follows the prescribed procedure, and any determination by
the Board that Indemnitee is not entitled to indemnification and any failure to
make the payments requested in the Indemnification Statement shall be subject
to judicial review by any court of competent jurisdiction.
(b) For purposes of obtaining payments of Expenses in advance
of final disposition pursuant to the last sentence of Section 2(d) or the last
sentence of Section 3(b) hereof, the Indemnitee shall submit to the Company a
sworn request for advancement of Expenses substantially in the form of EXHIBIT
2 attached hereto and made a part hereof (the "Undertaking"), averring that
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<PAGE> 5
he has reasonably incurred or will reasonably incur actual Expenses in
defending an action, suit or proceeding referred to in Section 2(a) or 2(b) or
any claim referred to in Section 3, or pursuant to Section 8 hereof. Unless at
the time of the Indemnitee's act or omission at issue, the Articles or the
Regulations prohibit such advances by specific reference to ORC Section
1701.13(E)(5)(a) or unless the only liability asserted against the Indemnitee
in the subject action, suit or proceeding is pursuant to ORC Section 1701.95,
the Indemnitee shall be eligible to execute Part A of the Undertaking by which
he undertakes to: (i) repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that the Indemnitee's action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the Company or undertaken with reckless disregard for the best
interests of the Company; and (ii) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim. In all cases, the Indemnitee
shall be eligible to execute Part B of the Undertaking by which he undertakes
to repay such amount if it ultimately is determined that he is not entitled to
be indemnified by the Company under this Agreement or otherwise. In the event
that the Indemnitee is eligible to and does execute both Part A and Part B of
the Undertaking, the Expenses which are paid by the Company pursuant thereto
shall be required to be repaid by the Indemnitee only if he is required to do
so under the terms of both Part A and Part B of the Undertaking. Upon receipt
of the Undertaking, the Company shall thereafter promptly pay such Expenses of
the Indemnitee as are noticed to the Company in reasonable detail arising out
of the matter described in the Undertaking. No security shall be required in
connection with any Undertaking.
5. LIMITATION ON INDEMNITY
Notwithstanding anything contained herein to the contrary,
the Company shall not be required hereby to indemnify the Indemnitee with
respect to any action, suit, or proceeding that was initiated by the Indemnitee
unless (a) such action, suit, or proceeding was initiated by the Indemnitee to
enforce any rights to indemnification arising hereunder and such person shall
have been formally adjudged to be entitled to indemnity by reason hereof, (b)
authorized by another agreement to which the Company is a party whether
heretofore or hereafter entered, or (c) otherwise ordered by the court in which
the suit was brought.
6. SUBROGATION; DUPLICATION OF PAYMENTS
(a) In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
(b) The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against Indemnitee to the
extent Indemnitee has actually received payment (under any insurance policy,
the Regulations or otherwise) of the amounts otherwise payable hereunder.
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<PAGE> 6
7. SHAREHOLDER RATIFICATION
The Company may, at its option, propose at any future meeting
of Shareholders that this Agreement be ratified by the Shareholders; provided,
however, that the Indemnitee's rights hereunder shall be fully enforceable in
accordance with the terms hereof whether or not such ratification is sought or
obtained.
8. FEES AND EXPENSES OF ENFORCEMENT
It is the intent of the Company that the Indemnitee not be
required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Indemnitee hereunder. Accordingly, if it should appear to the
Indemnitee that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other person takes
any action to declare this Agreement void or unenforceable, or institutes any
action, suit or proceeding to deny, or to recover from, the Indemnitee the
benefits intended to be provided to the Indemnitee hereunder, the Company
irrevocably authorizes the Indemnitee from time to time to retain counsel of
his choice, at the expense of the Company as hereafter provided, to represent
the Indemnitee in connection with the initiation or defense of any litigation
or other legal action, whether by or against the Company or any director,
officer, shareholder, or other person affiliated with the Company, in any
jurisdiction. Regardless of the outcome thereof, the Company shall pay and be
solely responsible for any and all costs, charges, and expenses, including fees
and expenses of attorneys and others, reasonably incurred by the Indemnitee
pursuant to this Section 8.
9. MERGER OR CONSOLIDATION
In the event that the Company shall be a constituent
corporation in a consolidation, merger, or other reorganization, the Company,
if it shall not be the surviving, resulting, or acquiring corporation therein,
shall require as a condition thereto that the surviving, resulting, or
acquiring corporation agree to assume all of the obligations of the Company
hereunder and to indemnify the Indemnitee to the full extent provided herein.
Whether or not the Company is the resulting, surviving, or acquiring
corporation in any such transaction, the Indemnitee shall stand in the same
position under this Agreement with respect to the resulting, surviving, or
acquiring corporation as he would have with respect to the Company if its
separate existence had continued.
10. NONEXCLUSIVITY; NO THIRD PARTY BENEFICIARIES; SEVERABILITY
(a) The rights to indemnification provided by this Agreement
shall not be exclusive of any other rights of indemnification to which the
Indemnitee may be entitled under the Articles, the Regulations, the ORC or any
other statute, any insurance policy, agreement, or vote of shareholders or
directors or otherwise, as to any actions or failures to act by the Indemnitee,
and shall continue after he has ceased to be a director, officer, employee, or
agent of the Company or other entity for which his service gives rise to a
right hereunder, and shall inure to the benefit of his heirs, executors and
administrators.
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<PAGE> 7
(b) Except as provided in Section 10(a), the rights to
indemnification provided by this Agreement are personal to Indemnitee and are
non-transferable by Indemnitee, and no party other than the Indemnitee is
entitled to indemnification under this Agreement.
(c) If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
11. SECURITY
To ensure that the Company's obligations pursuant to this
Agreement can be enforced by Indemnitee, the Company may, at its option,
establish a trust pursuant to which the Company's obligations pursuant to this
Agreement and other similar agreements can be funded.
12. NOTICES
All notices and other communications hereunder shall be in
writing and shall be personally delivered or sent by recognized overnight
courier service (a) if to the Company, to the then-current principal executive
offices of the Company (Attention: General Counsel) or (b) if to the
Indemnitee, to the last known address of Indemnitee as reflected in the
Company's records. Either party may change its address or the delivery of
notices or other communications hereunder by providing notice to the other
party as provided in this Section 12. All notices shall be effective upon
actual delivery by the methods specified in this Section 12.
13. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without giving effect to the
principles of conflict of laws thereof.
14. MODIFICATION
This Agreement and the rights and duties of the Indemnitee
and the Company hereunder may be modified only by an instrument in writing
signed by both parties hereto.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
MPW INDUSTRIAL SERVICES GROUP, INC.
By:________________________________
Name:______________________________
Title:_____________________________
[INDEMNITEE]
___________________________________
-8-
<PAGE> 9
EXHIBIT 1
INDEMNIFICATION STATEMENT
STATE OF____________________________)
) SS
COUNTY OF___________________________)
I, ________________ , being first duly sworn, do depose and say as
follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement, dated __________, 1997, between MPW Industrial
Services Group, Inc., an Ohio corporation (the "Company"), and the undersigned.
2. I am requesting indemnification against costs, charges, expenses
(which may include fees and expenses of attorneys and/or others), judgments,
fines, and amounts paid in settlement (collectively, "Liabilities"), which have
been actually and reasonably incurred by me in connection with a claim referred
to in Section 3 of the aforesaid Indemnification Agreement.
3. With respect to all matters related to any such claim, I am entitled
to be indemnified as herein contemplated pursuant to the aforesaid
Indemnification Agreement.
4. Without limiting any other rights which I have or may have, I am
requesting indemnification against Liabilities which have or may arise out of
_______________________________________________________________________________
_______________________________________________________________________________.
[INDEMNITEE]
___________________________
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this ____ day of ____________, 1997.
___________________________
[Seal]
My commission expires the ____ day of _____________, 19__.
<PAGE> 10
EXHIBIT 2
UNDERTAKING
STATE OF____________________________)
) SS
COUNTY OF___________________________)
I, _____________________ , being first duly sworn, do depose and say
as follows:
1. This Undertaking is submitted pursuant to the Indemnification
Agreement, dated __________, 1997, between MPW Industrial Services Group, Inc.,
an Ohio corporation (the "Company") and the undersigned.
2. I am requesting payment of costs, charges, and expenses which I
have reasonably incurred or will reasonably incur in defending an action, suit
or proceeding, referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3, or pursuant to Section 8, of the aforesaid Indemnification
Agreement.
3. The costs, charges, and expenses for which payment is requested are,
in general, all expenses related to_____________________________________________
_______________________________________________________________________________.
4. Part A(1)
I hereby undertake to (a) repay all amounts paid pursuant hereto if it
is proved by clear and convincing evidence in a court of competent jurisdiction
that my action or failure to act which is the subject of the matter described
herein involved an act or omission undertaken with deliberate intent to cause
injury to the Company or undertaken with reckless disregard for the best
interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim.
[INDEMNITEE]
_______________________________
- --------
1 The Indemnitee shall not be eligible to execute Part A of this
Undertaking if, at the time of the Indemnitee's act or omission at issue, the
Amended Articles of Incorporation or Amended Code of Regulations of the Company
prohibit such advances by specific reference to the Ohio Revised Code (the
"ORC") Section 1701.13(E)(5)(a) or if the only liability asserted against the
Indemnitee is in an action, suit or proceeding on the Company's behalf pursuant
to ORC Section 1701.95. In the event that the Indemnitee is eligible to and
does execute both Part A and Part B hereof, the costs, charges and expenses
which are paid by the Company pursuant hereto shall be required to be repaid by
the Indemnitee only if he is required to do so under the terms of both Part A
and Part B hereof.
<PAGE> 11
4. Part B
I hereby undertake to repay all amounts paid pursuant hereto
if it ultimately is determined that I am not entitled to be indemnified by the
Company under the aforesaid Indemnification Agreement or otherwise.
[INDEMNITEE]
_______________________________
Subscribed and sworn to before me, a Notary Public in and for
said County and State, this ____ day of ___________, 1997.
_______________________________
[Seal]
My commission expires the _____ day of _______________, 19__.
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<PAGE> 1
EXHIBIT 10(h)
FORM OF OFFICER INDEMNIFICATION AGREEMENT
This Officer Indemnification Agreement, dated as of
____________, 1997 (this "Agreement"), is made by and between MPW Industrial
Services Group, Inc., an Ohio corporation (the "Company"), and
____________________ (the "Indemnitee"), an officer of the Company.
RECITALS
A. The Indemnitee is presently serving as an officer of the
Company, and the Company desires that the Indemnitee continue serving in such
capacity. The Indemnitee is willing, subject to certain conditions including
the execution and performance of this Agreement by the Company, to continue
serving in such capacity.
B. In addition to the indemnification to which the Indemnitee
is entitled under the Amended Code of Regulations of the Company (the
"Regulations"), the Company has obtained, at its sole expense, insurance
protecting the Company and its officers and directors including the Indemnitee
against certain losses arising out of any threatened, pending or completed
action, suit, or proceeding to which such persons may be made or are threatened
to be made parties.
NOW, THEREFORE, in order to induce the Indemnitee to continue
to serve in his present capacity, and for other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Indemnitee agree as follows:
1. CONTINUED SERVICE
The Indemnitee shall continue to serve, at the will of the
Company or in accordance with a separate contract, to the extent that such a
contract is in effect at the time in question, as an officer of the Company so
long as he is duly elected and qualified in accordance with the Regulations or
until he resigns in writing in accordance with applicable law.
2. INITIAL INDEMNITY
(a) The Company shall indemnify the Indemnitee, if or when he
is a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the Company), by
reason of the fact that he is or was an officer of the Company or is or was
serving at the request of the Company as a director, trustee, officer,
employee, or agent of another corporation, domestic or foreign, nonprofit or
for profit, partnership, joint venture, trust, or other enterprise, or by
reason of any action alleged to have been taken or omitted in any such
capacity, against any and all costs, charges, expenses (including fees and
expenses of attorneys and/or others; all such costs, charges and expenses being
herein jointly referred to as "Expenses"), judgments, fines, and amounts paid
in settlement, actually and reasonably incurred by the Indemnitee in connection
therewith
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<PAGE> 2
including any appeal of or from any judgment or decision, if the Indemnitee
acted in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, he had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, or conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the
Indemnitee did not satisfy the foregoing standard of conduct to the extent
applicable thereto.
(b) The Company shall indemnify the Indemnitee, if or when he
is a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that the Indemnitee is
or was an officer of the Company or is or was serving at the request of the
Company as a director, trustee, officer, employee, or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust, or other enterprise, against any and all Expenses actually and
reasonably incurred by the Indemnitee in connection with the defense or
settlement thereof or any appeal of or from any judgment or decision, if the
Indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company, except that no
indemnification pursuant to this Section 2(b) shall be made in respect of (i)
any claim, issue, or matter as to which the Indemnitee is adjudged to be liable
for negligence or misconduct in the performance of his duty to the Company
unless, and only to the extent that, the court of common pleas or other court
in which such action, suit, or proceeding was brought determines,
notwithstanding any adjudication of liability, that in view of all the
circumstances of the case the Indemnitee is fairly and reasonably entitled to
indemnity for such expenses as such court of common pleas or other court shall
deem proper, or (ii) any action or suit in which the only liability asserted
against the Indemnitee is pursuant to Section 1701.95 of the Ohio Revised Code
(the "ORC").
(c) Any indemnification under Section 2(a) or 2(b) (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the Indemnitee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 2(a) or 2(b). Such authorization shall be made (i)
by the Board of Directors of the Company (the "Board") by a majority vote of a
quorum consisting of directors who were not and are not parties to or
threatened with such action, suit, or proceeding, or (ii) if such a quorum of
disinterested directors is not available or if a majority of such quorum so
directs, in a written opinion by independent legal counsel (designated for such
purpose by the Board) which shall not be an attorney, or a firm having
associated with it an attorney, who has been retained by or who has performed
services for the Company, or any person to be indemnified, within the five
years preceding such determination, or (iii) by the shareholders of the Company
(the "Shareholders"), or (iv) by the court of common pleas or other court in
which such action, suit, or proceeding was brought.
(d) To the extent that the Indemnitee has been successful on
the merits or otherwise, including the dismissal of an action without
prejudice, in defense of any action, suit, or proceeding referred to in Section
2(a) or 2(b), or in defense of any claim, issue, or matter therein, he shall be
indemnified against Expenses actually and reasonably incurred by him in
connection
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<PAGE> 3
therewith. Expenses actually and reasonably incurred by the Indemnitee in
defending any such action, suit, or proceeding shall be paid by the Company as
they are incurred in advance of the final disposition of such action, suit, or
proceeding under the procedure set forth in Section 4(b) hereof.
(e) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on the Indemnitee with respect to any
employee benefit plan; references to "serving at the request of the Company"
shall include any service as a director, officer, employee, or agent of the
Company which imposes duties on, or involves services by, the Indemnitee with
respect to an employee benefit plan, its participants or beneficiaries;
references to the masculine shall include the feminine; references to the
singular shall include the plural and vice versa; the word including is used by
way of illustration only and not by way of limitation; and with respect to
conduct by Indemnitee in his capacity as a trustee, administrator or other
fiduciary of any employee benefit plan of the Company, if the Indemnitee acted
in good faith and in a manner he reasonably believed to be in the interest of
the participants or beneficiaries of such employee benefit plan, he shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to herein.
(f) No amendment to the Amended Articles of Incorporation of
the Company (the "Articles") or the Regulations shall deny, diminish, or
encumber the Indemnitee's rights to indemnity pursuant to the Regulations, the
ORC, or any other applicable law as applied to any act or failure to act
occurring in whole or in part prior to the date (the "Effective Date") upon
which the amendment was approved by the Shareholders. In the event that the
Company shall purport to adopt any amendment to its Articles or Regulations or
take any other action the effect of which is to deny, diminish, or encumber the
Indemnitee's rights to indemnity pursuant to the Articles, the Regulations, the
ORC, or any such other law, such amendment shall apply only to acts or failures
to act occurring entirely after the Effective Date thereof.
3. ADDITIONAL INDEMNIFICATION
(a) Pursuant to Section 1701.13(E)(6) of the ORC, without
limiting any right which the Indemnitee may have pursuant to Section 2 hereof
or any other provision of this Agreement or the Articles, the Regulations, the
ORC, any policy of insurance, or otherwise, but subject to any limitation on
the maximum permissible indemnity which may exist under applicable law at the
time of any request for indemnity hereunder and subject to the following
provisions of this Section 3, the Company shall indemnify the Indemnitee
against any amount which he is or becomes obligated to pay relating to or
arising out of any claim made against him because of any act, failure to act,
or neglect or breach of duty, including any actual or alleged error,
misstatement, or misleading statement, that he commits, suffers, permits, or
acquiesces in while acting in his capacity as an officer of the Company. The
payments which the Company is obligated to make pursuant to this Section 3
shall include any and all Expenses, judgments, fines, and amounts paid in
settlement, actually and reasonably incurred by the Indemnitee in connection
therewith including any appeal of or from any judgment or decision; provided,
however, that the Company shall not be obligated under this Section 3 to make
any payment in connection with any claim against the Indemnitee:
-3-
<PAGE> 4
(i) to the extent of any fine or similar
governmental imposition which the Company is prohibited by applicable law from
paying which results from a final, nonappealable order; or
(ii) to the extent based upon or attributable to
the Indemnitee having actually realized a personal gain or profit to which he
was not legally entitled, including profit from the purchase and sale by the
Indemnitee of equity securities of the Company which are recoverable by the
Company pursuant to Section 16(b) of the Securities Exchange Act of 1934, or
profit arising from transactions in publicly traded securities of the Company
which were effected by the Indemnitee in violation of Section 10(b) of the
Securities Exchange Act of 1934, or Rule 10b-5 promulgated thereunder.
(b) A determination as to whether the Indemnitee shall be
entitled to indemnification under this Section 3 shall be made in accordance
with Section 4(a) hereof. Expenses incurred by the Indemnitee in defending any
claim to which this Section 3 applies shall be paid by the Company as they are
actually and reasonably incurred in advance of the final disposition of such
claim under the procedure set forth in Section 4(b) hereof.
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION
(a) For purposes of pursuing his rights to indemnification
under Section 3 hereof, the Indemnitee shall (i) submit to the Board a sworn
statement of request for indemnification substantially in the form of EXHIBIT 1
attached hereto and made a part hereof (the "Indemnification Statement")
averring that he is entitled to indemnification hereunder; and (ii) present to
the Company reasonable evidence of all amounts for which indemnification is
requested. Submission of an Indemnification Statement to the Board shall create
a presumption that the Indemnitee is entitled to indemnification hereunder, and
the Company shall, within 60 calendar days after submission of the
Indemnification Statement, make the payments requested in the Indemnification
Statement to or for the benefit of the Indemnitee, unless (A) within such
60-calendar-day period the Board shall resolve by vote of a majority of the
directors at a meeting at which a quorum is present that the Indemnitee is not
entitled to indemnification under Section 3 hereof, (B) such vote shall be
based upon clear and convincing evidence (sufficient to rebut the foregoing
presumption), and (C) the Board shall notify Indemnitee within such period of
such vote, which notice shall disclose with particularity the evidence upon
which the vote is based. The foregoing notice shall be sworn to by all persons
who participated in the vote and voted to deny indemnification. The provisions
of this Section 4(a) are intended to be procedural only and shall not affect
the right of Indemnitee to indemnification under Section 3 of this Agreement so
long as Indemnitee follows the prescribed procedure, and any determination by
the Board that Indemnitee is not entitled to indemnification and any failure to
make the payments requested in the Indemnification Statement shall be subject
to judicial review by any court of competent jurisdiction.
(b) For purposes of obtaining payments of Expenses in advance
of final disposition pursuant to the last sentence of Section 2(d) or the last
sentence of Section 3(b) hereof, the Indemnitee shall submit to the Company a
sworn request for advancement of Expenses substantially in the form of EXHIBIT
2 attached hereto and made a part hereof (the "Undertaking"), averring that
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<PAGE> 5
he has reasonably incurred or will reasonably incur actual Expenses in
defending an action, suit or proceeding referred to in Section 2(a) or 2(b) or
any claim referred to in Section 3, or pursuant to Section 8 hereof. Unless at
the time of the Indemnitee's act or omission at issue, (i) the Articles or the
Regulations prohibit such advances by specific reference to ORC Section
1701.13(E)(5)(a) or (ii) unless the only liability asserted against the
Indemnitee in the subject action, suit or proceeding is pursuant to ORC Section
1701.95, the Indemnitee shall be eligible to execute Part A of the Undertaking
by which he undertakes to: (A) repay such amount if (1) with respect to any
action, suit, proceeding or claim (other than an action by or in the right of
the Company) brought against the Indemnitee by reason of the fact that the
Indemnitee is or was an officer of the Company for which the Indemnitee has
received advancement of Expenses, it is determined that the Indemnitee did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company or (2) with respect to any action,
suit, proceeding or claim brought against the Indemnitee by or in the right of
the Company for which the Indemnitee has received advancement of Expenses, the
Indemnitee is adjudged to be liable for negligence or for misconduct in the
performance of his duty to the Company and the court has not determined that
Indemnitee is entitled to indemnification; and (B) reasonably cooperate with
the Company concerning the action, suit, proceeding or claim. In all cases, the
Indemnitee shall be eligible to execute Part B of the Undertaking by which he
undertakes to repay such amount if it ultimately is determined that he is not
entitled to be indemnified by the Company under this Agreement or otherwise. In
the event that the Indemnitee is eligible to and does execute both Part A and
Part B of the Undertaking, the Expenses which are paid by the Company pursuant
thereto shall be required to be repaid by the Indemnitee only if he is required
to do so under the terms of both Part A and Part B of the Undertaking. Upon
receipt of the Undertaking, the Company shall thereafter promptly pay such
Expenses of the Indemnitee as are noticed to the Company in reasonable detail
arising out of the matter described in the Undertaking. No security shall be
required in connection with any Undertaking.
5. LIMITATION ON INDEMNITY
Notwithstanding anything contained herein to the contrary,
the Company shall not be required hereby to indemnify the Indemnitee with
respect to any action, suit, or proceeding that was initiated by the Indemnitee
unless (a) such action, suit, or proceeding was initiated by the Indemnitee to
enforce any rights to indemnification arising hereunder and such person shall
have been formally adjudged to be entitled to indemnity by reason hereof, (b)
authorized by another agreement to which the Company is a party whether
heretofore or hereafter entered, or (c) otherwise ordered by the court in which
the suit was brought.
6. SUBROGATION; DUPLICATION OF PAYMENTS
(a) In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
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<PAGE> 6
(b) The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against Indemnitee to the
extent Indemnitee has actually received payment (under any insurance policy,
the Regulations or otherwise) of the amounts otherwise payable hereunder.
7. SHAREHOLDER RATIFICATION
The Company may, at its option, propose at any future meeting
of Shareholders that this Agreement be ratified by the Shareholders; provided,
however, that the Indemnitee's rights hereunder shall be fully enforceable in
accordance with the terms hereof whether or not such ratification is sought or
obtained.
8. FEES AND EXPENSES OF ENFORCEMENT
It is the intent of the Company that the Indemnitee not be
required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Indemnitee hereunder. Accordingly, if it should appear to the
Indemnitee that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other person takes
any action to declare this Agreement void or unenforceable, or institutes any
action, suit or proceeding to deny or to recover from, the Indemnitee the
benefits intended to be provided to the Indemnitee hereunder, the Company
irrevocably authorizes the Indemnitee from time to time to retain counsel of
his choice, at the expense of the Company as hereafter provided, to represent
the Indemnitee in connection with the initiation or defense of any litigation
or other legal action, whether by or against the Company or any director,
officer, shareholder, or other person affiliated with the Company, in any
jurisdiction. Regardless of the outcome thereof, the Company shall pay and be
solely responsible for any and all costs, charges, and expenses, including fees
and expenses of attorneys and others, reasonably incurred by the Indemnitee
pursuant to this Section 8.
9. MERGER OR CONSOLIDATION
In the event that the Company shall be a constituent
corporation in a consolidation, merger, or other reorganization, the Company,
if it shall not be the surviving, resulting, or acquiring corporation therein,
shall require as a condition thereto that the surviving, resulting, or
acquiring corporation agree to assume all of the obligations of the Company
hereunder and to indemnify the Indemnitee to the full extent provided herein.
Whether or not the Company is the resulting, surviving, or acquiring
corporation in any such transaction, the Indemnitee shall stand in the same
position under this Agreement with respect to the resulting, surviving, or
acquiring corporation as he would have with respect to the Company if its
separate existence had continued.
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<PAGE> 7
10. NONEXCLUSIVITY; NO THIRD PARTY BENEFICIARIES; SEVERABILITY
(a) The rights to indemnification provided by this Agreement
shall not be exclusive of any other rights of indemnification to which the
Indemnitee may be entitled under the Articles, the Regulations, the ORC or any
other statute, any insurance policy, agreement, or vote of shareholders or
directors or otherwise, as to any actions or failures to act by the Indemnitee,
and shall continue after he has ceased to be a director, officer, employee, or
agent of the Company or other entity for which his service gives rise to a
right hereunder, and shall inure to the benefit of his heirs, executors and
administrators.
(b) Except as provided in Section 10(a), the rights to
indemnification provided by this Agreement are personal to Indemnitee and are
non-transferable by Indemnitee, and no party other than the Indemnitee is
entitled to indemnification under this Agreement.
(c) If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
11. SECURITY
To ensure that the Company's obligations pursuant to this
Agreement can be enforced by Indemnitee, the Company may, at its option,
establish a trust pursuant to which the Company's obligations pursuant to this
Agreement and other similar agreements can be funded.
12. NOTICES
All notices and other communications hereunder shall be in
writing and shall be personally delivered or sent by recognized overnight
courier service (a) if to the Company, to the then-current principal executive
offices of the Company (Attention: General Counsel) or (b) if to the
Indemnitee, to the last known address of Indemnitee as reflected in the
Company's records. Either party may change its address for the delivery of
notices or other communications hereunder by providing notice to the other
party as provided in this Section 12. All notices shall be effective upon
actual delivery by the methods specified in this Section 12.
13. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without giving effect to the
principles of conflict of laws thereof.
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<PAGE> 8
14. MODIFICATION
This Agreement and the rights and duties of the Indemnitee
and the Company hereunder may be modified only by an instrument in writing
signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
MPW INDUSTRIAL SERVICES GROUP, INC.
By:________________________________
Name:______________________________
Title:_____________________________
[INDEMNITEE]
___________________________________
-8-
<PAGE> 9
EXHIBIT 1
INDEMNIFICATION STATEMENT
STATE OF __________________________ )
) SS
COUNTY OF _________________________ )
I, ________________ , being first duly sworn, do depose and say as
follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement, dated ________, 1997, between MPW Industrial
Services Group, Inc., an Ohio corporation (the "Company"), and the undersigned.
2. I am requesting indemnification against costs, charges, expenses
(which may include fees and expenses of attorneys and/or others), judgments,
fines, and amounts paid in settlement (collectively, "Liabilities"), which have
been actually and reasonably incurred by me in connection with a claim referred
to in Section 3 of the aforesaid Indemnification Agreement.
3. With respect to all matters related to any such claim, I am entitled
to be indemnified as herein contemplated pursuant to the aforesaid
Indemnification Agreement.
4. Without limiting any other rights which I have or may have, I am
requesting indemnification against Liabilities which have or may arise out of
_______________________________________________________________________________
_______________________________________________________________________________.
[INDEMNITEE]
_______________________________
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this ____ day of ____________, 1997.
_______________________________
[Seal]
My commission expires the ____ day of _____________, 19__.
<PAGE> 10
EXHIBIT 2
UNDERTAKING
STATE OF __________________________ )
) SS
COUNTY OF _________________________ )
I, _____________________ , being first duly sworn do depose and say as
follows:
1. This Undertaking is submitted pursuant to the Indemnification
Agreement, dated __________, 1997, between MPW Industrial Services Group, Inc.,
an Ohio corporation (the "Company") and the undersigned.
2. I am requesting payment of costs, charges, and expenses which I
have reasonably incurred or will reasonably incur in defending an action, suit
or proceeding, referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3, or pursuant to Section 8, of the aforesaid Indemnification
Agreement.
3. The costs, charges, and expenses for which payment is requested are,
in general, all expenses related to____________________________________________
_______________________________________________________________________________.
4. Part A(1)
I hereby undertake to: (a) repay all amounts paid pursuant hereto if
(i) with respect to any action, suit, proceeding or claim (other than an action
by or in the right of the Company) brought against me by reason of the fact
that I am or was an officer of the Company for which I have received
advancement of Expenses, it is determined that I did not act in good faith or
in a manner which I reasonably believed to be in or not opposed to the best
interests of the Company or (ii) with respect to any action, suit, proceeding
or claim brought against me by or in the right of the Company for which I have
received advancement of Expenses, I am adjudged to be liable for negligence or
misconduct in the performance of my duty to the Company and the court has not
determined that I am entitled to indemnification; and (b) reasonably cooperate
with the Company concerning the action, suit, proceeding or claim.
- --------
1 The Indemnitee shall not be eligible to execute Part A of this
Undertaking if, at the time of the Indemnitee's act or omission at issue, the
Amended Articles of Incorporation] or Amended Code of Regulations of the
Company prohibit such advances by specific reference to the Ohio Revised Code
(the "ORC") Section 1701.13(E)(5)(a), or if the only liability asserted against
the Indemnitee is in an action, suit or proceeding on the Company's behalf
pursuant to ORC Section 1701.95. In the event that the Indemnitee is eligible
to and does execute both Part A and Part B hereof, the costs, charges and
expenses which are paid by the Company pursuant hereto shall be required to be
repaid by the Indemnitee only if he is required to do so under the terms of
both Part A and Part B hereof.
<PAGE> 11
[INDEMNITEE]
4. Part B
I hereby undertake to repay all amounts paid pursuant hereto
if it ultimately is determined that I am not entitled to be indemnified by the
Company under the aforesaid Indemnification Agreement or otherwise.
[INDEMNITEE]
------------------------------
Subscribed and sworn to before me, a Notary Public in and for said
County and State, this ____ day of ___________, 1997.
------------------------------
[Seal]
My commission expires the _____ day of ______________, 19__.
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<PAGE> 1
EXHIBIT 10(i)
FORM OF LEASE
THIS LEASE ("Lease"), is made this ______ day of _______________,
1997, effective as of November 1, 1997, by and between MONTE R. BLACK AND SUSAN
K. BLACK, Ohio residents ("Landlord") and MPW INDUSTRIAL SERVICES, INC., an
Ohio corporation ("Tenant").
WITNESSETH:
1. DEMISED PREMISES: Landlord for and in consideration of the
covenants and agreements hereinafter set forth and the "Rent" (which term
includes both Base Rent and all Additional Rent) does hereby lease to Tenant
not less than 100% of that certain approximately 45.88 acre tract of land (the
legal description of which is set forth on Exhibit "A-1" attached hereto (the
"Land"), together with all improvements and fixtures located thereon including
an approximately __________ square foot office/industrial facility
(collectively, the "Building") (all as more particularly described on the
attached Exhibit "A-2"), commonly known as 9711 Lancaster Road, SE, Village of
Hebron, Licking County, Ohio (the Building and the Land are sometimes
hereinafter referred to collectively as the "Premises").
2. TERM:
(a) Initial Term. This Lease has an initial term of seven (7)
years (or until such term shall sooner terminate as hereinafter provided) (the
"Initial Term") commencing on November 1, 1997 (the "Commencement Date") and
ending on October 31, 2004, unless sooner terminated in accordance herewith.
(b) Renewal Term. Tenant may, at its sole option, choose to
extend the term of this Lease for two (2) additional periods of five (5) years
each (a "Renewal Term") under such terms and conditions as Landlord and Tenant
will negotiate, based upon a fair market appraisal of the Premises. Tenant
shall provide Landlord with written notice of Tenant's intent to exercise this
option not later than one hundred twenty (120) days prior to the expiration of
the Initial Term or first Renewal Term, as applicable. As used in this Lease,
"Term" means both the Initial Term and, if Tenant exercises its option(s), any
Renewal Term. As used in this Lease, "Lease Year" means each consecutive twelve
(12) month period of the Term, starting on the Commencement Date of this Lease.
3. RENT:
(a) Tenant shall pay as "Base Rent" for each Lease Year
during the Initial Term the sum of_______________________________________
________________________________________________ and No/100 Dollars
($__________), payable in advance, in equal monthly installments of
____________________________________________________ and No/100 Dollars
($________). If Tenant exercises its option(s) to extend the Term, Tenant shall
pay as Base Rent during the Renewal Term(s) a rental based upon the "market
rate" for the Premises. The first and last monthly installments are due and
payable on the execution of this Lease and the remaining installments are due
and payable in advance on the first day of each and every month during the
Term, without offset or deduction, to Landlord at the address set forth in
Paragraph 26 or at such other place as Landlord may hereafter designate in
writing. Rent checks are to be made payable to Landlord, or such other person,
firm or corporation as Landlord may designate in writing.
(b) All sums due and payable by Tenant under this Lease other
than Base Rent are "Additional Rent", whether or not so called in the text of
this Lease. Any Additional Rent for which no time for payment is specified in
this Lease shall be due and payable within ten (10) days after demand is made
therefor.
(c) All Rent, whether Base Rent or Additional Rent, is due
and payable in full without demand, deduction or set-off and Tenant's
obligation to pay the same shall survive the expiration or other termination of
this Lease. Tenant's covenant to pay Rent is an independent covenant.
(d) Rent shall be equitably pro rated for any partial Lease
Year or calendar year, as the case may be, during the Term.
(e) For each Renewal Term, Tenant shall notify Landlord that
Tenant desires to exercise its option to extend the Term of this Lease for the
next ensuing five (5) year period, and to obtain an appraisal of the Premises
to determine the market rent for the Premises by delivering written notice to
Landlord not less than one hundred twenty (120) days prior to the beginning of
each Renewal Term. Tenant shall include in such notice the name of an MAI
appraiser selected by Tenant which has an office in Licking County, Ohio.
Landlord shall within thirty (30) days following receipt of such notice from
Tenant give written notice to Tenant setting forth the name of a second MAI
appraiser with an office in Licking County, Ohio. If Landlord fails to notify
Tenant of the name of an appraiser within the thirty (30) day period, then the
appraiser selected by Tenant shall determine the market rent and the decision
of said appraiser shall be binding upon the parties hereto. If Landlord has
selected an appraiser in accordance with the provisions of this Paragraph, then
the appraiser selected by Landlord and the appraiser selected by Tenant shall
meet and select a third MAI appraiser with an office in Licking County, Ohio.
The appraiser selected by Landlord and the appraiser selected by Tenant shall
each appraise the Premises for purposes of obtaining said market rent. The
third appraiser shall determine and notify Landlord and Tenant which of the two
appraisals made by Landlord's and Tenant's appraisers more closely reflects the
market rent of the Premises, and the decision of the third appraiser shall be
binding upon the parties hereto.
4. USE OF PREMISES:
<PAGE> 2
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(a) Permitted Use. Tenant shall use and occupy the Premises
solely for operation of an industrial cleaning facility and related incidental
uses (including office and warehouse), in accordance with the standards of an
industrial facility in Union Township, Ohio, and for no other purpose
whatsoever.
(b) Compliance with Laws; Nuisance. Tenant shall not use or
permit the Premises or any part thereof to be used for any disorderly, unlawful
or extra hazardous purpose nor for any purpose other than hereinbefore
specified. Tenant shall not act in conflict with the statutes, laws,
ordinances, codes, rules and regulations applicable to Tenant, the Premises
and/or the Building, including without limitation the rules, regulations and
requirements of any fire rating organizations or rating bureaus with
jurisdiction over the Premises (collectively, the "Legal Requirements"). Tenant
shall be responsible at its own cost for complying with the provisions of the
Americans With Disabilities Act or any similar federal or Ohio statute, law,
ordinance, or code, as they may be amended from time to time, and the rules and
regulations which may be adopted thereunder from time to time, as the same may
be applicable to Tenant's own use of the Premises or as may be necessary or
appropriate as the result of any Alteration (as defined in Paragraph 8).
Landlord's approval of any Alteration or other act by Tenant is not a
representation by Landlord that said Alteration or act complies with applicable
law, and Tenant shall remain solely responsible for such compliance.
Notwithstanding the expiration or other termination of this Lease, Tenant shall
defend, indemnify and hold Landlord and Landlord's mortgagees harmless from and
against any claim, demand, suit, action, proceeding, damage, liability, loss,
cost or expense (including, without limitation, reasonable attorneys' fees),
foreseen or unforeseen, arising from any violation of this Paragraph 4; the
provisions of this sentence shall survive the expiration or other termination
of this Lease.
(c) Hazardous Substances. Tenant shall not (either with or
without negligence) cause or permit within or on the Premises the escape,
disposal or release of any biologically- or chemically-active or other
hazardous or toxic substances, materials or wastes (collectively, "Hazardous
Substances"). Tenant shall not allow the generation, storage or use of any
Hazardous Substances within the Premises in any manner other than normal
quantities of cleaning solvents controlled and stored in accordance with the
Legal Requirements, unless such Hazardous Substances are generated, stored or
used in accordance with the Legal Requirements and approved in advance in
writing by Landlord. Any use of Hazardous Substances shall only be in the
ordinary course of Tenant's business and in accordance with the highest
standards prevailing in the industry for the generation, storage and use of
such Hazardous Substances. Without limitation, Hazardous Substances shall
include those described in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq., any applicable state or local laws and the regulations adopted under
these acts. If Tenant uses Hazardous Substances within the Premises and if
Landlord or any lender or governmental agency requires testing to ascertain
whether or not there has been any release of Hazardous Substances, then the
reasonable costs thereof shall be reimbursed by Tenant to Landlord upon demand
as Additional Rent. In addition, Tenant shall execute affidavits,
representations and the like from time to time at Landlord's request concerning
Tenant's best knowledge and belief regarding the presence of Hazardous
Substances in the Premises. Further, Tenant shall indemnify and save Landlord
harmless from and against any and all clean-up costs, remedial or restoration
work, claims, judgments, damages, penalties, fines, costs, liabilities or
losses, including, without limitation, attorneys', consultants' and experts'
fees, which arise during or after the Term as a result of any Hazardous
Substances being generated, used or disposed of in or on, or brought to, the
Premises by Tenant or its employees, agents, contractors or invitees, or as the
result of an abatement, treatment or management required as the result of any
acts, negligence, repairs or alterations made by Tenant in the Premises. The
within covenants shall survive the expiration or earlier termination of this
Lease.
5. TAXES, FEES AND CHARGES: Tenant shall pay directly to the
applicable taxing authorities, at its sole cost and expense, and prior to
delinquency, all taxes, fees, assessments, and charges, general and special,
foreseen or unforeseen, affecting the Building, Premises or Tenant's other
property or operations thereon (the "Taxes"), including, without limitation,
the payment for any governmental licenses, permits, approvals, and
authorizations attributable to the Premises, the Building or any improvements
thereto during the Term. Tenant shall also pay any tax (other than Landlord's
income tax) which may be levied at any time on the Rent or other charges
payable hereunder. Tenant shall provide written proof of all such required
payments to Landlord prior to the due date thereof. Tenant may contest any
required payment of any of the Taxes by appropriate proceedings duly instituted
and diligently prosecuted at Tenant's expense, provided that Tenant shall
notify Landlord prior to the commencement of any such contest. Landlord shall
reasonably cooperate with Tenant (at Tenant's expense) in connection with any
such contest, and shall permit any such contest to be prosecuted in Landlord's
name if the same shall be required for the proper resolution of the disputed
matter. So long as any such contest is pending, Tenant shall pay the disputed
Taxes so that the Premises are not subjected to loss or forfeiture as a result
of nonpayment. Tenant shall indemnify, defend, and hold Landlord harmless from
and against any loss or forfeiture of the Premises and any fines, penalties or
other charges arising out of any such contest or the resolution thereof or
arising out of Tenant's failure to pay any amounts required to be paid by
Tenant hereunder.
6. INSURANCE:
(a) Tenant shall not do or permit anything to be done on the
Premises or in the Building or bring or keep anything therein which shall in
any way increase the rate of fire or other insurance on the Building, or on the
property kept therein or conflict with any insurance policy upon the Building
or any part thereof, or with any statutes, rules or regulations enacted or
established by the appropriate governmental authorities.
(b) Tenant shall carry such insurance as Landlord may
reasonably require from time to time, including (without limitation) personal
property, liability, plate glass, builder's risk (during any period when any
construction work is being done in the Premises), business interruption, and
workers' compensation insurance. Tenant shall also provide and maintain public
liability/general comprehensive insurance protecting and indemnifying Landlord
and Tenant against all claims for damages in amounts not less than $2,000,000
per occurrence, $2,000,000 bodily injury, and $1,000,000 property damage. All
insurance must be issued by companies and be in amounts satisfactory to
Landlord in its reasonable discretion, include waivers of subrogation, provide
that it may not be cancelled except upon at least thirty (30) days written
notice to Landlord, and name Landlord, its asset and building manager(s), and
any mortgagee or ground lessor of the Building as an additional named insured
or loss payee, as appropriate. Evidence of such insurance must be delivered to
Landlord before Tenant may enter the Premises and must be provided not less
frequently than the first day of each Lease Year thereafter.
(c) At all times during the Term, Tenant shall, at Tenant's
sole cost and expense, maintain fire and extended coverage insurance covering
the Building to its full replacement value and with such co-insurance and
deductible provisions as may reasonably be deemed appropriate by Landlord.
Subject to the rights of any Landlord's mortgagee under Paragraph 18, below,
all insurance proceeds under such policy shall be payable to Tenant solely for
the purpose of completing the restoration required under Paragraph 12, and
Landlord shall be entitled to receive any proceeds remaining following the
completion of such restoration.
<PAGE> 3
- 3 -
(d) Landlord shall maintain comprehensive general liability
insurance in amounts of at least $1,000,000 per occurrence, $500,000 property
damage, for losses occasioned by Landlord's and its representatives', agents'
and employees' negligence or willful misconduct.
(e) No indemnity shall be paid to the other party under this
Lease where the claim, damage, liability, loss or expense incurred was or was
required to be insured by such other party for whose benefit such indemnity
would run. If reasonably available, all insurance policies obtained by the
parties pursuant to this Lease shall contain provisions or have the effect of
waiving any right of subrogation by the insurer of one party against the other
party or its insurer. Each party hereby releases the other from any claims to
the extent covered by insurance obtained by the parties pursuant to this Lease.
7. UPKEEP OF PREMISES: Tenant shall keep the Premises and the
fixtures therein in good order and condition and will, at the expiration or
other termination of the Term, surrender and deliver up the same in like good
order and condition as the same now is or shall be at the commencement of the
Term, ordinary wear and tear and insured damage excepted. Subject to the
provisions of Paragraphs 8 and 15 below, Landlord is not required to make any
improvements, replacements or repairs of any kind or character on the Premises
during the Term.
8. ALTERATIONS:
(a) Except as set forth in this Paragraph 8 or in Paragraph
12, Tenant shall not make any alterations, installations, changes,
replacements, additions, or improvements (structural or otherwise) (each an
"Alteration") in or to the Premises or any part thereof without the consent of
Landlord; provided, however, that Landlord shall not unreasonably withhold,
condition or delay its consent to any of the same which do not affect the
structural, mechanical, electrical, hydraulic, plumbing, heating, ventilating
or air conditioning systems serving either the Building or the Premises. All
Alterations in the Premises (whether installed with or without Landlord's
consent), shall at the election of Landlord remain in the Premises and be
surrendered with the Premises at the expiration of this Lease without
disturbance, molestation or injury; further provided, however, that any and all
manufacturing items or other items of Tenant's personalty shall remain Tenant's
property and shall be removed by Tenant upon the expiration or earlier
termination of the Term. Should Landlord elect that Alterations made by Tenant
in the Premises be removed upon expiration or termination of this Lease, Tenant
shall cause same to be removed and to repair any damage caused thereby and
restore the Premises at Tenant's sole cost and expense and Tenant shall
reimburse Landlord for the cost of such removal together with any and all
damages which Landlord may suffer and sustain by reason of the failure of
Tenant to remove the same and to repair and restore as set forth above. Tenant
shall similarly restore any damage resulting from its removal of its personal
property.
(b) Landlord is delivering the Premises to Tenant in their
"AS IS" condition, without any representation or warranty of any kind, express
or implied, as to their condition and without any obligation to perform any
work or to pay for any third party or Tenant to perform any work. By its
execution of this Lease, Tenant acknowledges that it has inspected Building and
the Land and that they are in condition satisfactory to Tenant.
(c) All of Tenant's work shall be done by contractors
acceptable to Landlord in its reasonable discretion. Alterations by Tenant,
including any initial build-out, shall be coordinated with any work being
performed by Landlord. As further conditions to Landlord's approval of any
proposed Alterations or additions by Tenant which are to be made by a
contractor, Tenant shall cause the contractor(s) and subcontractor(s) to carry
workmen's compensation insurance in statutory amounts, builder's risk insurance
and comprehensive public liability insurance with limits as approved by
Landlord, and Tenant shall deliver to Landlord certificates of all such
insurance. Tenant's work shall be performed in a first-class and lien-free
manner. Tenant shall not be Landlord's agent for purposes of this work and
Tenant shall be solely responsible for any mechanics' or materialmen's lien
arising therefrom; Tenant shall pay, bond or otherwise release of record any
such lien within ten (10) days after receiving notice of its existence.
(d) Tenant shall promptly pay for any work done or material
furnished in or about the Premises and shall not permit or suffer any lien to
attach to the Premises, and Tenant shall indemnify and save Landlord harmless
from and against any loss, liability, cost, or expense which may be incurred by
Landlord with respect to any such lien or claim of lien. Tenant shall promptly
cause any such liens which have arisen by reason of any work claimed to have
been undertaken by or through Tenant to be released by payment, bond or
otherwise within thirty (30) days after request by Landlord. Tenant shall have
no authority or power, express or implied, to create or cause any lien, charge,
or encumbrance of any kind against the Premises or the Building. Tenant shall
notify all of its contractors and materialmen in writing that any liens
relating to any work ordered by Tenant shall attach to Tenant's leasehold
estate in the Premises and shall not encumber Landlord's interest in the
Premises or the Building.
9. SUBLETTING AND ASSIGNMENT: Tenant shall not sublet the
Premises or any part thereof or transfer possession or occupancy thereof to any
person, firm or corporation, or transfer or assign this Lease, nor will any
assignment or subletting hereof be effected by operation of law or otherwise,
without Landlord's prior consent, such consent not to be unreasonably withheld,
delayed or conditioned. A sale or other conveyance of any sort of all or
substantially all of the assets of Tenant relating to the Premises, or of a
sufficient amount of the stock or other ownership interests in Tenant to
constitute a change in control, or of any general partnership interest in Tenant
if Tenant is a partnership, whether directly or indirectly, constitutes an
assignment under this Paragraph. If Tenant desires to sublet the Premises or if
Tenant desires to transfer or assign this Lease, Tenant shall give Landlord
thirty (30) days written notice of Tenant's intention so to do. In no event
whatsoever, and without limiting Landlord's right to reasonably reject any
proposed sublease or assignment, may this Lease be assigned in part or the
Premises subleased in part, without Landlord's prior written reasonable consent.
10. TENANT'S COVENANTS: Tenant further agrees: that no sign,
advertisement or notice shall be inscribed, painted or affixed on any part of
the outside or inside the Premises or Building except as may be expressly
permitted by this Lease, and then only in such size, color and style as
Landlord may reasonably approve; that Landlord shall have the right to
prescribe the weight and method of installation and position of safes or other
heavy fixtures or equipment and Tenant shall not install in the Premises any
fixtures, equipment or machinery that will place a load upon any floor
exceeding the floor load per square foot area which such floor was designed to
carry; and that all damages done to the Building by taking in or removing a
safe or any other article of Tenant's equipment, or due to Tenant's being in
the Premises, shall be repaired at the expense of Tenant.
11. ACCESS: Tenant further agrees that it will allow Landlord,
its agent or employees, or any mortgagee to enter the Premises at all
reasonable times: to examine, inspect or to protect the same or prevent damage
or injury to the same, or to make such alterations and repairs to the Premises
or other premises as Landlord may deem necessary; to exhibit the same to
prospective tenants during the last nine (9) months of the Term
<PAGE> 4
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or following the commencement of any action to evict Tenant, even if the Term
has not been terminated; and to exhibit the same to prospective and actual
mortgagees, purchasers and brokers at any time during the Term.
12. DAMAGE:
(a) In the event of damage to or destruction of the Premises,
the Building, or Tenant's other Alterations, or any portion thereof, during the
Term by fire, explosion or other casualty ("Damage"), this Lease will not
terminate unless Landlord determines that it will take Landlord more than
ninety (90) days to repair and restore the Premises to the same condition they
are in on the date hereof, in which event Landlord may terminate this Lease by
notice to Tenant.
(b) Unless this Lease is terminated pursuant to Paragraph
12(a), and except as expressly provided to the contrary in this Lease, in the
event of any Damage to the Premises: (i) this Lease shall remain in full force
and effect and to the extent possible, Tenant shall remain in possession of the
Premises, and (ii) whether or not any insurance proceeds are available or
adequate for such purposes and regardless of the dollar amount of such damage
or loss, at Tenant's own sole cost and expense, Tenant shall repair, refixture,
restock and otherwise restore the Premises to the same condition they were in
before such fire or other casualty. Due allowance, however, shall be given for
a reasonable time required for adjustment and settlement of insurance claims
and for such other delays as may result from government restrictions and
controls on construction, if any, and for strikes, national emergencies, and
other conditions beyond the control of the parties.
(c) Any restoration required to be performed by Tenant under
this Paragraph 12 shall be commenced by Tenant promptly after such damage or
destruction, and shall be diligently and continuously pursued to completion and
shall be completed by Tenant in a good and workmanlike manner and in accordance
with all Legal Requirements.
(d) Tenant shall have no right to terminate this Lease or to
have the rent and other charges due hereunder abated despite the occurrence of
Damage to the Premises, the Building or Tenant's other Alterations, even if
such Damage prevents the conduct of Tenant's business on the Premises. No
compensation, claim, or diminution of Rent will be allowed or paid by Landlord
by reason of inconvenience, annoyance, or injury to business arising from any
such Damage or the necessity of repairing the Premises or the Building, however
the necessity may occur.
13. PERSONAL PROPERTY: All personal property of Tenant at the
Premises is at the sole risk of Tenant. Landlord is not liable for any accident
or damages to property of Tenant resulting from the use or operation of
elevators or of the heating, cooling, electrical, mechanical, hydraulic,
plumbing or other Building systems or components. Landlord is not, in any event,
liable for damages to property resulting from water, steam, or other causes.
Tenant hereby expressly releases Landlord from any liability incurred or claimed
by reason of damage to Tenant's property. Landlord is not liable in damages, nor
is this Lease affected, for conditions arising or resulting from construction of
contiguous premises. The foregoing does not exculpate Landlord from its gross
negligence or willful misconduct.
<PAGE> 5
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14. LIABILITY FOR TENANT'S OPERATIONS; INDEMNIFICATION:
(a) Landlord assumes no liability or responsibility
whatsoever with respect to the conduct and operation of the business to be
conducted in the Premises. Landlord shall not be liable for any accident or
injury to any person or persons or property in or about the Premises which are
caused by the conduct and operation of said business or by virtue of equipment
or property of Tenant in the Premises. Tenant agrees to defend, indemnify and
hold Landlord and Landlord's mortgagees harmless from and against all such
claims (including, without limitation, reasonable attorneys' fees). The
foregoing does not exculpate Landlord from its gross negligence or willful
misconduct.
(b) Tenant retains responsibility as operator of the Premises
for payment of all costs of the Premises, and shall defend, indemnify and hold
Landlord harmless therefrom, and from all costs incurred by Landlord in the
defense of any claims relating to the Premises brought against it or any action
relating to the Premises in which it is named as a party, including reasonable
attorneys' fees, costs of investigation, court costs and other such expenses.
This indemnification obligation shall survive termination of this Lease, and is
subject to the waiver of subrogation provisions of Paragraph 6(e); provided,
however, notwithstanding anything contained herein to the contrary, Landlord
shall indemnify Tenant and hold Tenant and its affiliates and their respective
representatives, agents and employees harmless in connection with damage or
loss sustained by reason of the dishonesty, willful misconduct or negligence of
Landlord and its representatives, agents or employees.
15. SERVICES AND UTILITIES:
(a) Landlord shall provide the normal utility service
connections into the Premises. Tenant shall pay the cost of all utility
service, including, without limitation, initial connection charges, all charges
for gas, water and electricity used on the Premises, and for all plumbing,
interior cleaning/janitorial, and for all electric light lamps or tubes. Tenant
shall pay all costs caused by Tenant introducing excess pollutants into the
sanitary sewer system.
(b) Any failure by Landlord to furnish any services or
utilities to be provided by Landlord or otherwise under this Lease as the
result of any act of God, force majeure or any cause beyond the reasonable
control of Landlord will not render Landlord liable in any respect for damages
to either person or property, nor be construed as an eviction of Tenant, nor
work an abatement of Rent, nor relieve Tenant from Tenant's obligations
hereunder.
16. BANKRUPTCY: If Tenant makes an assignment of its assets for
the benefit of creditors, or if Tenant files a voluntary petition in bankruptcy,
or if an involuntary petition in bankruptcy or for receivership is instituted
against Tenant and the same is not dismissed within ninety (90) days of the
filing thereof, or if Tenant is adjudged bankrupt, then and in any of the
foregoing events, to the extent permitted by law, this Lease will immediately
cease and terminate at the option of Landlord with the same force and effect as
though the date of said event was the day herein fixed for expiration of the
Term.
17. DEFAULTS & REMEDIES: If Tenant fails to pay the Rent, or any
installment thereof, within five (5) days after the same becomes due and
payable, or if Tenant violates or fails or neglects to keep and perform any of
the covenants, conditions, and agreements herein contained on the part of Tenant
to be kept and performed within thirty (30) days after receipt of written notice
of such failure or neglect, or if the Premises becomes vacant or deserted, then,
and in each and every such event, at the option of Landlord, Tenant's right of
possession will thereupon cease and terminate, and to the extent permitted by
law Landlord will be entitled to the possession of the Premises and to re-enter
the same without demand of Rent or demand of possession and may forthwith
proceed to recover possession of the Premises by process of law, ANY NOTICE TO
QUIT OR OF INTENTION TO RE-ENTER THE SAME BEING HEREBY EXPRESSLY WAIVED BY
TENANT. In the event of such re-entry by process of law or otherwise, Tenant
nevertheless agrees to remain answerable for any and all damage, deficiency or
loss of Rent which Landlord may sustain by such re-entry, including reasonable
attorneys' fees and court costs; and in such case, Landlord reserves full power,
which is hereby acceded to by Tenant, to relet the Premises for the benefit of
Tenant, in liquidation and discharge, in whole or in part, as the case may be,
of the liability of Tenant under the terms and provision of this Lease. In
addition to the foregoing remedies, Landlord will also have the following
remedies to the extent permitted by law and all other remedies afforded to it at
law or in equity, all of which shall be cumulative: to terminate this Lease; to
declare due and payable all Rent for the unexpired Term as and when the same
becomes due and payable or to defer any suit until after the Term without
thereby prejudicing its rights; to accelerate the Rent for the remainder of the
Term and declare it all immediately due and payable [with a present value
discount two (2) whole percentage points below the prime rate published in The
Wall Street Journal on the date Landlord elects said remedy]; and to bring an
action for specific performance, injunction, or other equitable relief to
prevent any threatened or impending default or to end any existing default. In
addition, Landlord may perform any obligation which Tenant has failed to perform
after the expiration of any applicable notice and/or cure period (except in an
emergency, when no notice or cure period will be necessary or afforded), all at
the cost of Tenant as Additional Rent payable upon demand. Tenant shall also pay
all expenses (including, without limitation, reasonable attorneys' fees)
incurred by Landlord following a default, whether or not suit is instituted; the
same shall be Additional Rent payable upon demand. In determining the Rent due
for the balance of the Term, all Additional Rent shall be determined by
projecting into the future the Additional Rent payable on the date of default
increasing by a compounding five percent (5%) per Lease Year. No waiver of any
breach of any covenant, condition, or agreement herein contained shall operate
as a waiver of the covenant, condition or agreement itself, or of any subsequent
breach thereof. No provision of this Lease shall be deemed to have been waived
by Landlord unless such waiver shall be in writing signed by Landlord. No
payment by Tenant or receipt by Landlord of a lesser amount than the Rent herein
stipulated shall be deemed to be other than on account of the earliest
stipulated Rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such Rent or pursue any other remedy
provided in this Lease. Landlord shall have a lien for the payment of the Rent
upon all of the goods, wares, chattels, fixtures, furniture and other personal
property of Tenant which may be in or upon the Premises, Tenant hereby
specifically waiving any and all exemptions allowed by law; such lien may be
enforced on the nonpayment of any installment of Rent by the taking and selling
of such property in the same manner as in the case of chattel mortgages on
default thereunder; said sale is to made upon ten (10) days notice served upon
Tenant by posting upon the Premises or such lien may be enforced in any other
lawful manner at the option of Landlord.
18. RIGHTS OF LENDERS, GROUND LESSORS AND PURCHASERS: This Lease
is subject and subordinate to all ground or underlying leases (hereinafter
collectively referred to as "ground leases") and to all of the terms and
provisions and liens of all mortgages and/or deeds of trust (hereinafter
collectively referred to as "mortgages") which may now or hereafter affect this
Lease or the Building, and to all renewals, modifications,
<PAGE> 6
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consolidations, replacements, amendments and extensions thereof. This clause is
self-operative, and no lessor or mortgagee (as used in this Lease, "mortgagee"
includes any mortgagee under a mortgage, any beneficiary or trustee under a
deed of trust, and any lender or other secured party under a deed to secure
debt or other instrument similar to any of the foregoing) may require any
instrument of subordination. In confirmation of such subordination, Tenant
shall execute promptly any certificate that Landlord may request. Tenant hereby
constitutes and appoints Landlord Tenant's attorney-in-fact to execute any such
certificate or certificates for and on behalf of Tenant. Notwithstanding the
foregoing, a ground lessor or mortgagee may recognize this Lease and, in the
event of the termination of any ground lease or any foreclosure or similar sale
or deed in lieu thereof under such mortgage, this Lease will continue in full
force and effect at the option of the ground lessor or mortgagee (or the
purchaser at any such foreclosure sale). Tenant will, at the written request of
the ground lessor or mortgagee (or the purchaser at any such foreclosure sale),
execute, acknowledge and deliver any instrument that has for its purpose and
effect the subordination of such ground lease or mortgage to this Lease. In any
case, such ground lessor, mortgagee, landlord or successor shall not be bound
by any prepayment on the part of Tenant of any Rent for more than one month in
advance, so that Rent shall be payable under this Lease in accordance with its
terms as if such prepayment had not been made; nor shall any such ground
lessor, mortgagee, landlord or successor be liable for any default under this
Lease by any predecessor Landlord or subject to any counterclaim, set-off or
defense as a result of any such default; and provided, further, such ground
lessor, mortgagee, landlord or successor shall not be bound by this Lease or
any amendment or modification of this Lease unless Landlord's ground lessor or
mortgagee, as may be applicable, had approved the same in writing. At any time
and from time to time, upon the request and at the sole option of any successor
to Landlord's interest, Tenant shall attorn to any successor to Landlord's
interest, whether such successor acquires its interest by voluntary conveyance,
foreclosure, deed in lieu of foreclosure, termination or expiration of a ground
lease, or any other method, and in that event this Lease shall continue as a
direct lease between Tenant and such landlord or its successor and the prior
Landlord shall be released from all obligations and liability under this Lease
arising after the date of transfer. The terms of this Lease are subject to
approval by the Landlord's ground lessor(s) and lender(s), and such approval is
a condition precedent to Landlord's obligations hereunder. Tenant shall furnish
copies of any default or similar notices delivered by Tenant to Landlord
hereunder at the same time to each ground lessor or mortgagee, now or at
anytime and from time to time hereafter, and no such notice shall be effective
unless and until a copy of it is sent to each such ground lessor or mortgagee,
provided that Tenant has been afforded written notice of the name and address
of such party. Each such ground lessor or mortgagee may cure any default by
Landlord within the same time period afforded Landlord to cure any such
default, plus such additional period of time thereafter as may be reasonably
necessary for such ground lessor or mortgagee to cure such default.
19. CONDEMNATION: If the Premises or any part thereof is taken or
condemned for public or quasi-public use or purpose by any competent authority,
or conveyed in lieu of being taken or condemned, Tenant will have no claim
against Landlord and will not have any claim or right to any portion of the
amount that may be awarded to Landlord as damages or paid as a result thereof.
All right of Tenant to damages therefor, if any, are hereby assigned by Tenant
to Landlord. Upon such condemnation or taking, or conveyance in lieu thereof,
the Term shall terminate from the date of such governmental taking or
condemnation, or conveyance in lieu thereof, and Tenant will have no claim
against Landlord for the value of any unexpired Term. Nothing in this Paragraph
limits or affects Tenant's right to seek any separate award from the condemning
authority as long as Tenant does not thereby reduce, delay or in any other way
affect Landlord's claim or award.
20. SUCCESSORS: All rights, remedies and liabilities herein
given to or imposed upon either of the parties hereto extend to their
respective heirs, executors, administrators, successors and permitted assigns.
21. TENANT HOLDOVER: If Tenant continues to remain in the Premises
after the termination or expiration of the Term, then Tenant will become a
tenant by the month at 125% of the Base Rent per month payable for the last
month before the expiration or termination of the Term plus all Additional Rent
that may be incurred during any such holdover, but in no event less than the
then market rent for the Premises. Holdover Rent will commence with the first
day following the end of the Term. During any holdover, each party must give
the other at least thirty (30) days written notice to quit the Premises, except
in the event of any default by Tenant, in which event Tenant will not be
entitled to any notice to quit, the usual thirty (30) days' notice to quit
being hereby expressly waived; provided, however, that if Tenant holds over
after the expiration of the Term hereby created, and if Landlord desires to
regain possession of the Premises promptly at the expiration of the Term, then
at any time prior to Landlord's acceptance of Rent from Tenant as a monthly
tenant hereunder, Landlord, at its option, may forthwith re-enter and take
possession of the Premises without process, or by any legal process in force.
Tenant shall not use force majeure as an excuse for any holding over.
22. POSSESSION: Landlord shall give possession of the Premises to
Tenant on the Commencement Date. If Landlord is unable to give possession of
the Premises on the Commencement Date because any portion of the Premises are
located in a Building being constructed that has not been sufficiently
completed to make the Premises ready for occupancy, or because a certificate of
occupancy has not been procured, or if Landlord is unable to give possession of
the Premises on the Commencement Date because of the holding over or retention
of possession by any previous tenant, occupant or owner, or if repairs,
improvements or decorations of the Premises or of the Building are not
completed, or for any other reason, Landlord will not be subject to any
liability for the failure to give possession on the Commencement Date. No such
failure to give possession on the Commencement Date will affect in any other
respect the validity of this Lease or the obligations of Tenant hereunder, nor
will the same be construed in any way to extend the Term. If Landlord permits
Tenant to enter into the possession of the Premises or a portion of the
Premises prior to the Commencement Date, such occupancy shall be deemed to be
under all terms, covenants, conditions and provisions of this Lease.
23. JOINT AND SEVERAL LIABILITY: If Tenant consists of more
than one individuals and/or entities, then the liability of each of them for
Tenant's obligations under this Lease shall be joint and several.
24. PRONOUNS: Feminine, masculine or neuter pronouns shall be
substituted for each other, and the plural shall be substituted for the
singular number and vice versa in any place in which the context may require
such substitution.
25. LATE PAYMENT: If Tenant fails to pay any Rent on or before the
fifth (5th) day after such payment becomes due and payable, Tenant shall pay to
Landlord a late charge of five percent (5%) of the amount of such overdue
payment. In addition, any Rent not paid when due will bear interest at the
lesser of eighteen percent (18%) per annum or the maximum rate allowed by law
until paid. Acceptance of the foregoing sums shall not constitute a waiver of
the default. Upon Landlord's receipt of any check from Tenant which is
dishonored for payment, Landlord may require Tenant to make all future payments
due to Landlord hereunder by cash, certified or cashier's check.
<PAGE> 7
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26. NOTICES: All notices required or desired to be given hereunder by
either party to the other shall be given by hand, by overnight courier or by
certified or registered mail. Notices shall be effective upon receipt (refusal
to accept delivery or the inability to make delivery due to an incorrect or
outdated address being provided by the intended recipient shall constitute
receipt). Notices to the respective parties must be addressed as follows:
If to Landlord - Monte R. Black
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
If to Tenant - MPW Industrial Services, Inc.
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
Attn: Daniel P. Buettin
Either party may, by like written notice, designate a new address or addressee
to which notices must be directed. Tenant shall provide a copy of any notice
given to Landlord to any mortgagee or ground lessor of whom Tenant has notice.
Notices may be given by authorized agents or attorneys on behalf of a party.
27. ESTOPPEL CERTIFICATES: Within ten (10) days after request
therefor by Landlord or any ground lessor or mortgagee of the Building, Tenant
shall execute and deliver estoppel certificates certifying, among other things:
the text of this Lease and any amendments thereto; whether this Lease has been
amended and, if so, the date of each such amendment; whether this Lease is in
full force and effect and, if not, the reason therefor; whether any default or
any situation which could be a default after the giving of notice or the
expiration of any cure period (or both) exists under this Lease on the part of
Landlord or Tenant and, if so, specifying the default or potential default;
whether Tenant has taken possession of the Premises; whether the Premises have
been completed in accordance with the terms of this Lease and all bills therefor
paid and, if not, what remains to be done or paid; the Commencement Date and the
expiration date of the Term; whether Tenant has any renewal options, expansion
options, or rights to purchase and, if so, identifying the conditions and
periods when they may be exercised; the date Rent commenced to accrue and the
date to which Rent has been paid; whether any security deposit has been posted;
whether Tenant has any knowledge or any environmental problem affecting the
Premises or the Building; and such other matters as may be reasonably requested.
28. NO PERSONAL LIABILITY: Notwithstanding any provision of this
Lease to the contrary or any general rule of law, in no event whatsoever shall
Landlord or any of its shareholders, partners, directors, officers, employees,
agents or other principals have any personal liability whatsoever with respect
to this Lease, and no such personal liability shall be sought, obtained or
enforced. Any liability of Landlord under this Lease may be enforced solely
against Landlord's equity interest in the Land and Building; no other properties
or assets of Landlord are subject to this Lease or Landlord's liabilities
hereunder.
29. BROKERS: Each party represents and warrants to the other that
it has not engaged or used any broker or finder in connection with this Lease.
Each party shall defend, indemnify and hold the other party harmless from and
against any breach by the indemnifying party of the representation and warranty
set forth in the first sentence of this Paragraph. Tenant shall defend,
indemnify and hold Landlord's ground lessors and mortgagees harmless from and
against any breach by Tenant of the representation and warranty set forth in the
first sentence of this Paragraph. No broker is a third party beneficiary of this
Lease.
30. COMPLETE AGREEMENT; NO ORAL MODIFICATIONS: This Lease
represents the complete and integrated agreement of the parties with respect to
the Premises and, except as set forth herein, there are no other agreements,
covenants, representations or warranties (express or implied) between the
parties. Nothing in this Lease shall be deemed or construed to create a
partnership or joint venture or to create any relationship other than landlord
and tenant. This Lease may not be amended except by a written document signed by
the party to be bound thereby.
31. GOVERNING LAW AND RULES OF INTERPRETATION: This Lease is
governed by the laws of the State of Ohio without regard to conflicts of laws.
Without limiting a party's right to bring any action in any other jurisdiction
or forum, each party submits itself to the jurisdiction of the federal and local
courts sitting in the State of Ohio and to venue therein. It is the intent of
the parties that this Lease will be enforceable to the fullest extent permitted
by law. If any provision of this Lease is capable of two or more interpretations
or can be reformed so as to comply with applicable law while giving effect to
the intent of such provision, then such provision shall be interpreted in the
way most likely to be in compliance with applicable law. Although the printed
provisions of this Lease were drawn by Landlord, this Lease shall not be
construed either for or against Landlord or Tenant.
[the rest of this page is intentionally blank]
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal as of the day and year first above written.
LANDLORD:
WITNESS:
- ------------------------ --------------------------------------------------
Monte R. Black
WITNESS:
- ------------------------
WITNESS:
- ------------------------ --------------------------------------------------
Susan K. Black
WITNESS:
- ------------------------
TENANT:
WITNESS: MPW INDUSTRIAL SERVICES, INC.
- ------------------------ By:
-----------------------------------------------
WITNESS: Name:
---------------------------------------------
- ------------------------
Title:
-------------------------------------------
<PAGE> 9
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ACKNOWLEDGEMENT
STATE OF______________________________)
) SS.
COUNTY OF_____________________________)
Before me, a Notary Public in and for said County, personally
appeared the above-named Monte R. Black and Susan K. Black ("Landlord"), who
acknowledged that they did sign the foregoing instrument on behalf of Landlord,
and that the same is their free act and deed on Landlord's behalf and the free
act and deed of Landlord.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
_________________, __________________ this ___ day of ______________, 1997.
[Notarial Seal]
__________________________________
Notary Public
My commission expires:
ACKNOWLEDGEMENT
STATE OF______________________________)
) SS.
COUNTY OF_____________________________)
Before me, a Notary Public in and for said County, personally
appeared the above-named _______________, ____________ of MPW Industrial
Services, Inc. ("Tenant"), who acknowledged that he did sign the foregoing
instrument on behalf of Tenant as such officer, and that the same is his free
act and deed on Tenant's behalf and the free act and deed of Tenant.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
_________________, __________________ this ___ day of ______________, 1997.
[Notarial Seal]
__________________________________
Notary Public
My commission expires:
<PAGE> 10
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
<PAGE> 1
EXHIBIT 10(j)
FORM OF LEASE
THIS LEASE ("Lease"), is made this ______ day of _______________,
1997, effective as of November 1, 1997, by and between MONTE R. BLACK AND SUSAN
K. BLACK, Ohio residents ("Landlord") and MPW INDUSTRIAL SERVICES, INC., an
Ohio corporation ("Tenant").
WITNESSETH:
1. DEMISED PREMISES: Landlord for and in consideration of the
covenants and agreements hereinafter set forth and the "Rent" (which term
includes both Base Rent and all Additional Rent) does hereby lease to Tenant not
less than 100% of that certain approximately ______ acre tract of land (the
legal description of which is set forth on Exhibit "A-1" attached hereto (the
"Land"), together with all improvements and fixtures located thereon including
an approximately __________ square foot industrial facility (collectively, the
"Building") (all as more particularly described on the attached Exhibit "A-2"),
commonly known as __________________________, Newark, Licking County, Ohio (the
Building and the Land are sometimes hereinafter referred to collectively as the
"Premises").
2. TERM:
(a) Initial Term. This Lease has an initial term of seven (7)
years (or until such term shall sooner terminate as hereinafter provided) (the
"Initial Term") commencing on November 1, 1997 (the "Commencement Date") and
ending on October 31, 2004, unless sooner terminated in accordance herewith.
(b) Renewal Term. Tenant may, at its sole option, choose to
extend the term of this Lease for two (2) additional periods of five (5) years
each (a "Renewal Term") under such terms and conditions as Landlord and Tenant
will negotiate, based upon a fair market appraisal of the Premises. Tenant
shall provide Landlord with written notice of Tenant's intent to exercise this
option not later than one hundred twenty (120) days prior to the expiration of
the Initial Term or first Renewal Term, as applicable. As used in this Lease,
"Term" means both the Initial Term and, if Tenant exercises its option(s), any
Renewal Term. As used in this Lease, "Lease Year" means each consecutive twelve
(12) month period of the Term, starting on the Commencement Date of this Lease.
3. RENT:
(a) Tenant shall pay as "Base Rent" for each Lease Year
during the Initial Term the sum of Sixty-Six Thousand and No/100 Dollars
($66,000.00), payable in advance, in equal monthly installments of Five
Thousand Five Hundred and No/100 Dollars ($5,500.00). If Tenant exercises its
option(s) to extend the Term, Tenant shall pay as Base Rent during the Renewal
Term(s) a rental based upon the "market rate" for the Premises. The first and
last monthly installments are due and payable on the execution of this Lease
and the remaining installments are due and payable in advance on the first day
of each and every month during the Term, without offset or deduction, to
Landlord at the address set forth in Paragraph 26 or at such other place as
Landlord may hereafter designate in writing. Rent checks are to be made payable
to Landlord, or such other person, firm or corporation as Landlord may
designate in writing.
(b) All sums due and payable by Tenant under this Lease other
than Base Rent are "Additional Rent", whether or not so called in the text of
this Lease. Any Additional Rent for which no time for payment is specified in
this Lease shall be due and payable within ten (10) days after demand is made
therefor.
(c) All Rent, whether Base Rent or Additional Rent, is due
and payable in full without demand, deduction or set-off and Tenant's
obligation to pay the same shall survive the expiration or other termination of
this Lease. Tenant's covenant to pay Rent is an independent covenant.
(d) Rent shall be equitably pro rated for any partial Lease
Year or calendar year, as the case may be, during the Term.
(e) For each Renewal Term, Tenant shall notify Landlord that
Tenant desires to exercise its option to extend the Term of this Lease for the
next ensuing five (5) year period, and to obtain an appraisal of the Premises
to determine the market rent for the Premises by delivering written notice to
Landlord not less than one hundred twenty (120) days prior to the beginning of
each Renewal Term. Tenant shall include in such notice the name of an MAI
appraiser selected by Tenant which has an office in Licking County, Ohio.
Landlord shall within thirty (30) days following receipt of such notice from
Tenant give written notice to Tenant setting forth the name of a second MAI
appraiser with an office in Licking County, Ohio. If Landlord fails to notify
Tenant of the name of an appraiser within the thirty (30) day period, then the
appraiser selected by Tenant shall determine the market rent and the decision
of said appraiser shall be binding upon the parties hereto. If Landlord has
selected an appraiser in accordance with the provisions of this Paragraph, then
the appraiser selected by Landlord and the appraiser selected by Tenant shall
meet and select a third MAI appraiser with an office in Licking County, Ohio.
The appraiser selected by Landlord and the appraiser selected by Tenant shall
each appraise the Premises for purposes of obtaining said market rent. The
third appraiser shall determine and notify Landlord and Tenant which of the two
appraisals made by Landlord's and Tenant's appraisers more closely reflects the
market rent of the Premises, and the decision of the third appraiser shall be
binding upon the parties hereto.
4. USE OF PREMISES:
<PAGE> 2
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(a) Permitted Use. Tenant shall use and occupy the Premises
solely for operation of an industrial water facility and related incidental
uses (INCLUDING OFFICE AND WAREHOUSE), in accordance with the standards of an
industrial facility in Union Township, Ohio, and for no other purpose
whatsoever.
(b) Compliance with Laws; Nuisance. Tenant shall not use or
permit the Premises or any part thereof to be used for any disorderly, unlawful
or extra hazardous purpose nor for any purpose other than hereinbefore
specified. Tenant shall not act in conflict with the statutes, laws,
ordinances, codes, rules and regulations applicable to Tenant, the Premises
and/or the Building, including without limitation the rules, regulations and
requirements of any fire rating organizations or rating bureaus with
jurisdiction over the Premises (collectively, the "Legal Requirements"). Tenant
shall be responsible at its own cost for complying with the provisions of the
Americans With Disabilities Act or any similar federal or Ohio statute, law,
ordinance, or code, as they may be amended from time to time, and the rules and
regulations which may be adopted thereunder from time to time, as the same may
be applicable to Tenant's own use of the Premises or as may be necessary or
appropriate as the result of any Alteration (as defined in Paragraph 8).
Landlord's approval of any Alteration or other act by Tenant is not a
representation by Landlord that said Alteration or act complies with applicable
law, and Tenant shall remain solely responsible for such compliance.
Notwithstanding the expiration or other termination of this Lease, Tenant shall
defend, indemnify and hold Landlord and Landlord's mortgagees harmless from and
against any claim, demand, suit, action, proceeding, damage, liability, loss,
cost or expense (including, without limitation, reasonable attorneys' fees),
foreseen or unforeseen, arising from any violation of this Paragraph 4; the
provisions of this sentence shall survive the expiration or other termination
of this Lease.
(c) Hazardous Substances. Tenant shall not (either with or
without negligence) cause or permit within or on the Premises the escape,
disposal or release of any biologically- or chemically-active or other
hazardous or toxic substances, materials or wastes (collectively, "Hazardous
Substances"). Tenant shall not allow the generation, storage or use of any
Hazardous Substances within the Premises in any manner other than normal
quantities of cleaning solvents controlled and stored in accordance with the
Legal Requirements, unless such Hazardous Substances are generated, stored or
used in accordance with the Legal Requirements and approved in advance in
writing by Landlord. Any use of Hazardous Substances shall only be in the
ordinary course of Tenant's business and in accordance with the highest
standards prevailing in the industry for the generation, storage and use of
such Hazardous Substances. Without limitation, Hazardous Substances shall
include those described in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq., any applicable state or local laws and the regulations adopted under
these acts. If Tenant uses Hazardous Substances within the Premises and if
Landlord or any lender or governmental agency requires testing to ascertain
whether or not there has been any release of Hazardous Substances, then the
reasonable costs thereof shall be reimbursed by Tenant to Landlord upon demand
as Additional Rent. In addition, Tenant shall execute affidavits,
representations and the like from time to time at Landlord's request concerning
Tenant's best knowledge and belief regarding the presence of Hazardous
Substances in the Premises. Further, Tenant shall indemnify and save Landlord
harmless from and against any and all clean-up costs, remedial or restoration
work, claims, judgments, damages, penalties, fines, costs, liabilities or
losses, including, without limitation, attorneys', consultants' and experts'
fees, which arise during or after the Term as a result of any Hazardous
Substances being generated, used or disposed of in or on, or brought to, the
Premises by Tenant or its employees, agents, contractors or invitees, or as the
result of an abatement, treatment or management required as the result of any
acts, negligence, repairs or alterations made by Tenant in the Premises. The
within covenants shall survive the expiration or earlier termination of this
Lease.
5. TAXES, FEES AND CHARGES: Tenant shall pay directly to the
applicable taxing authorities, at its sole cost and expense, and prior to
delinquency, all taxes, fees, assessments, and charges, general and special,
foreseen or unforeseen, affecting the Building, Premises or Tenant's other
property or operations thereon (the "Taxes"), including, without limitation,
the payment for any governmental licenses, permits, approvals, and
authorizations attributable to the Premises, the Building or any improvements
thereto during the Term. Tenant shall also pay any tax (other than Landlord's
income tax) which may be levied at any time on the Rent or other charges
payable hereunder. Tenant shall provide written proof of all such required
payments to Landlord prior to the due date thereof. Tenant may contest any
required payment of any of the Taxes by appropriate proceedings duly instituted
and diligently prosecuted at Tenant's expense, provided that Tenant shall
notify Landlord prior to the commencement of any such contest. Landlord shall
reasonably cooperate with Tenant (at Tenant's expense) in connection with any
such contest, and shall permit any such contest to be prosecuted in Landlord's
name if the same shall be required for the proper resolution of the disputed
matter. So long as any such contest is pending, Tenant shall pay the disputed
Taxes so that the Premises are not subjected to loss or forfeiture as a result
of nonpayment. Tenant shall indemnify, defend, and hold Landlord harmless from
and against any loss or forfeiture of the Premises and any fines, penalties or
other charges arising out of any such contest or the resolution thereof or
arising out of Tenant's failure to pay any amounts required to be paid by
Tenant hereunder.
6. INSURANCE:
(a) Tenant shall not do or permit anything to be done on the
Premises or in the Building or bring or keep anything therein which shall in
any way increase the rate of fire or other insurance on the Building, or on the
property kept therein or conflict with any insurance policy upon the Building
or any part thereof, or with any statutes, rules or regulations enacted or
established by the appropriate governmental authorities.
(b) Tenant shall carry such insurance as Landlord may
reasonably require from time to time, including (without limitation) personal
property, liability, plate glass, builder's risk (during any period when any
construction work is being done in the Premises), business interruption, and
workers' compensation insurance. Tenant shall also provide and maintain public
liability/general comprehensive insurance protecting and indemnifying Landlord
and Tenant against all claims for damages in amounts not less than $2,000,000
per occurrence, $2,000,000 bodily injury, and $1,000,000 property damage. All
insurance must be issued by companies and be in amounts satisfactory to
Landlord in its reasonable discretion, include waivers of subrogation, provide
that it may not be cancelled except upon at least thirty (30) days written
notice to Landlord, and name Landlord, its asset and building manager(s), and
any mortgagee or ground lessor of the Building as an additional named insured
or loss payee, as appropriate. Evidence of such insurance must be delivered to
Landlord before Tenant may enter the Premises and must be provided not less
frequently than the first day of each Lease Year thereafter.
(c) At all times during the Term, Tenant shall, at Tenant's
sole cost and expense, maintain fire and extended coverage insurance covering
the Building to its full replacement value and with such co-insurance and
deductible provisions as may reasonably be deemed appropriate by Landlord.
Subject to the rights of any Landlord's mortgagee under Paragraph 18, below,
all insurance proceeds under such policy shall
<PAGE> 3
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be payable to Tenant solely for the purpose of completing the restoration
required under Paragraph 12, and Landlord shall be entitled to receive any
proceeds remaining following the completion of such restoration.
(d) Landlord shall maintain comprehensive general liability
insurance in amounts of at least $1,000,000 per occurrence, $500,000 property
damage, for losses occasioned by Landlord's and its representatives', agents'
and employees' negligence or willful misconduct.
(e) No indemnity shall be paid to the other party under this
Lease where the claim, damage, liability, loss or expense incurred was or was
required to be insured by such other party for whose benefit such indemnity
would run. If reasonably available, all insurance policies obtained by the
parties pursuant to this Lease shall contain provisions or have the effect of
waiving any right of subrogation by the insurer of one party against the other
party or its insurer. Each party hereby releases the other from any claims to
the extent covered by insurance obtained by the parties pursuant to this Lease.
7. UPKEEP OF PREMISES: Tenant shall keep the Premises and the
fixtures therein in good order and condition and will, at the expiration or
other termination of the Term, surrender and deliver up the same in like good
order and condition as the same now is or shall be at the commencement of the
Term, ordinary wear and tear and insured damage excepted. Subject to the
provisions of Paragraphs 8 and 15 below, Landlord is not required to make any
improvements, replacements or repairs of any kind or character on the Premises
during the Term.
8. ALTERATIONS:
(a) Except as set forth in this Paragraph 8 or in Paragraph
12, Tenant shall not make any alterations, installations, changes,
replacements, additions, or improvements (structural or otherwise) (each an
"Alteration") in or to the Premises or any part thereof without the consent of
the Landlord; provided, however, that Landlord shall not unreasonably withhold,
condition or delay its consent to any of the same which do not affect the
structural, mechanical, electrical, hydraulic, plumbing, heating, ventilating
or air conditioning systems serving either the Building or the Premises. All
Alterations in the Premises (whether installed with or without Landlord's
consent), shall at the election of Landlord remain in the Premises and be
surrendered with the Premises at the expiration of this Lease without
disturbance, molestation or injury; further provided, however, that any and all
manufacturing items or other items of Tenant's personalty shall remain Tenant's
property and shall be removed by Tenant upon the expiration or earlier
termination of the Term. Should Landlord elect that Alterations made by Tenant
in the Premises be removed upon expiration or termination of this Lease, Tenant
shall cause same to be removed and to repair any damage caused thereby and
restore the Premises at Tenant's sole cost and expense and Tenant shall
reimburse Landlord for the cost of such removal together with any and all
damages which Landlord may suffer and sustain by reason of the failure of
Tenant to remove the same and to repair and restore as set forth above. Tenant
shall similarly restore any damage resulting from its removal of its personal
property.
(b) Landlord is delivering the Premises to Tenant in their
"AS IS" condition, without any representation or warranty of any kind, express
or implied, as to their condition and without any obligation to perform any
work or to pay for any third party or Tenant to perform any work. By its
execution of this Lease, Tenant acknowledges that it has inspected Building and
the Land and that they are in condition satisfactory to Tenant.
(c) All of Tenant's work shall be done by contractors
acceptable to Landlord in its reasonable discretion. Alterations by Tenant,
including any initial build-out, shall be coordinated with any work being
performed by Landlord. As further conditions to Landlord's approval of any
proposed Alterations or additions by Tenant which are to be made by a
contractor, Tenant shall cause the contractor(s) and subcontractor(s) to carry
workmen's compensation insurance in statutory amounts, builder's risk insurance
and comprehensive public liability insurance with limits as approved by
Landlord, and Tenant shall deliver to Landlord certificates of all such
insurance. Tenant's work shall be performed in a first-class and lien-free
manner. Tenant shall not be Landlord's agent for purposes of this work and
Tenant shall be solely responsible for any mechanics' or materialmen's lien
arising therefrom; Tenant shall pay, bond or otherwise release of record any
such lien within ten (10) days after receiving notice of its existence.
(d) Tenant shall promptly pay for any work done or material
furnished in or about the Premises and shall not permit or suffer any lien to
attach to the Premises, and Tenant shall indemnify and save Landlord harmless
from and against any loss, liability, cost, or expense which may be incurred by
Landlord with respect to any such lien or claim of lien. Tenant shall promptly
cause any such liens which have arisen by reason of any work claimed to have
been undertaken by or through Tenant to be released by payment, bond or
otherwise within thirty (30) days after request by Landlord. Tenant shall have
no authority or power, express or implied, to create or cause any lien, charge,
or encumbrance of any kind against the Premises or the Building. Tenant shall
notify all of its contractors and materialmen in writing that any liens
relating to any work ordered by Tenant shall attach to Tenant's leasehold
estate in the Premises and shall not encumber Landlord's interest in the
Premises or the Building.
9. SUBLETTING AND ASSIGNMENT: Tenant shall not sublet the
Premises or any part thereof or transfer possession or occupancy thereof to any
person, firm or corporation, or transfer or assign this Lease, nor will any
assignment or subletting hereof be effected by operation of law or otherwise,
without Landlord's prior consent, such consent not to be unreasonably withheld,
delayed or conditioned. A sale or other conveyance of any sort of all or
substantially all of the assets of Tenant relating to the Premises, or of a
sufficient amount of the stock or other ownership interests in Tenant to
constitute a change in control, or of any general partnership interest in Tenant
if Tenant is a partnership, whether directly or indirectly, constitutes an
assignment under this Paragraph. If Tenant desires to sublet the Premises or if
Tenant desires to transfer or assign this Lease, Tenant shall give Landlord
thirty (30) days written notice of Tenant's intention so to do. In no event
whatsoever, and without limiting Landlord's right to reasonably reject any
proposed sublease or assignment, may this Lease be assigned in part or the
Premises subleased in part, without Landlord's prior written reasonable consent.
10. TENANT'S COVENANTS: Tenant further agrees: that no sign,
advertisement or notice shall be inscribed, painted or affixed on any part of
the outside or inside the Premises or Building except as may be expressly
permitted by this Lease, and then only in such size, color and style as
Landlord may reasonably approve; that Landlord shall have the right to
prescribe the weight and method of installation and position of safes or other
heavy fixtures or equipment and Tenant shall not install in the Premises any
fixtures, equipment or machinery that will place a load upon any floor
exceeding the floor load per square foot area which such floor was designed to
carry; and that all damages done to the Building by taking in or removing a
safe or any other article of Tenant's equipment, or due to Tenant's being in
the Premises, shall be repaired at the expense of Tenant.
<PAGE> 4
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11. ACCESS: Tenant further agrees that it will allow Landlord, its
agent or employees, or any mortgagee to enter the Premises at all reasonable
times: to examine, inspect or to protect the same or prevent damage or injury
to the same, or to make such alterations and repairs to the Premises or other
premises as Landlord may deem necessary; to exhibit the same to prospective
tenants during the last nine (9) months of the Term or following the
commencement of any action to evict Tenant, even if the Term has not been
terminated; and to exhibit the same to prospective and actual mortgagees,
purchasers and brokers at any time during the Term.
12. DAMAGE:
(a) In the event of damage to or destruction of the Premises,
the Building, or Tenant's other alterations or improvements, or any portion
thereof, during the Term by fire, explosion or other casualty ("Damage"), this
Lease will not terminate unless Landlord determines that it will take Landlord
more than ninety (90) days to repair and restore the Premises to the same
condition they are in on the date hereof, in which event Landlord may terminate
this Lease by notice to Tenant.
(b) Unless this Lease is terminated pursuant to Paragraph
12(a), and except as expressly provided to the contrary in this Lease, in the
event of any Damage to the Premises: (i) this Lease shall remain in full force
and effect and to the extent possible, Tenant shall remain in possession of the
Premises, and (ii) whether or not any insurance proceeds are available or
adequate for such purposes and regardless of the dollar amount of such damage
or loss, at Tenant's own sole cost and expense, Tenant shall repair, refixture,
restock and otherwise restore the Premises to the same condition they were in
before such fire or other casualty. Due allowance, however, shall be given for
a reasonable time required for adjustment and settlement of insurance claims
and for such other delays as may result from government restrictions and
controls on construction, if any, and for strikes, national emergencies, and
other conditions beyond the control of the parties.
(c) Any restoration required to be performed by Tenant under
this Paragraph 12 shall be commenced by Tenant promptly after such damage or
destruction, and shall be diligently and continuously pursued to completion and
shall be completed by Tenant in a good and workmanlike manner and in accordance
with all Legal Requirements.
(d) Tenant shall have no right to terminate this Lease or to
have the rent and other charges due hereunder abated despite the occurrence of
Damage to the Premises, the Building or Tenant's other Alterations or
improvements, even if such Damage prevents the conduct of Tenant's business on
the Premises. No compensation, claim, or diminution of Rent will be allowed or
paid by Landlord by reason of inconvenience, annoyance, or injury to business
arising from any such Damage or the necessity of repairing the Premises or the
Building, however the necessity may occur.
13. PERSONAL PROPERTY: All personal property of Tenant at the
Premises is at the sole risk of Tenant. Landlord is not liable for any accident
or damages to property of Tenant resulting from the use or operation of
elevators or of the heating, cooling, electrical, mechanical, hydraulic,
plumbing or other Building systems or components. Landlord is not, in any event,
liable for damages to property resulting from water, steam, or other causes.
Tenant hereby expressly releases Landlord from any liability incurred or claimed
by reason of damage to Tenant's property. Landlord is not liable in damages, nor
is this Lease affected, for conditions arising or resulting from construction of
contiguous premises. The foregoing does not exculpate Landlord from its gross
negligence or willful misconduct.
14. LIABILITY FOR TENANT'S OPERATIONS; INDEMNIFICATION:
(a) Landlord assumes no liability or responsibility
whatsoever with respect to the conduct and operation of the business to be
conducted in the Premises. Landlord shall not be liable for any accident or
injury to any person or persons or property in or about the Premises which are
caused by the conduct and operation of said business or by virtue of equipment
or property of Tenant in the Premises. Tenant agrees to defend, indemnify and
hold Landlord and Landlord's mortgagees harmless from and against all such
claims (including, without limitation, reasonable attorneys' fees). The
foregoing does not exculpate Landlord from its gross negligence or willful
misconduct.
(b) Tenant retains responsibility as operator of the Premises
for payment of all costs of the Premises, and shall defend, indemnify and hold
Landlord harmless therefrom, and from all costs incurred by Landlord in the
defense of any claims relating to the Premises brought against it or any action
relating to the Premises in which it is named as a party, including reasonable
attorneys' fees, costs of investigation, court costs and other such expenses.
This indemnification obligation shall survive termination of this Lease, and is
subject to the waiver of subrogation provisions of Paragraph 6(e); provided,
however, notwithstanding anything contained herein to the contrary, Landlord
shall indemnify Tenant and hold Tenant and its affiliates and their respective
representatives, agents and employees harmless in connection with damage or
loss sustained by reason of the dishonesty, willful misconduct or negligence of
Landlord and its representatives, agents or employees.
15. SERVICES AND UTILITIES:
(a) Landlord shall provide the normal utility service
connections into the Premises. Tenant shall pay the cost of all utility
service, including, without limitation, initial connection charges, all charges
for gas, water and electricity used on the Premises, and for all plumbing,
interior cleaning/janitorial, and for all electric light lamps or tubes. Tenant
shall pay all costs caused by Tenant introducing excess pollutants into the
sanitary sewer system.
(b) Any failure by Landlord to furnish any services or
utilities to be provided by Landlord or otherwise under this Lease as the
result of any act of God, force majeure or any cause beyond the reasonable
control of Landlord will not render Landlord liable in any respect for damages
to either person or property, nor be construed as an eviction of Tenant, nor
work an abatement of Rent, nor relieve Tenant from Tenant's obligations
hereunder.
16. BANKRUPTCY: If Tenant makes an assignment of its assets for
the benefit of creditors, or if Tenant files a voluntary petition in bankruptcy,
or if an involuntary petition in bankruptcy or for receivership is instituted
against Tenant and the same is not dismissed within ninety (90) days of the
filing thereof, or if Tenant is adjudged bankrupt, then and in any of the
foregoing events, to the extent permitted by law, this Lease will
<PAGE> 5
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immediately cease and terminate at the option of Landlord with the same force
and effect as though the date of said event was the day herein fixed for
expiration of the Term.
17. DEFAULTS & REMEDIES: If Tenant fails to pay the Rent, or any
installment thereof, within five (5) days after the same becomes due and
payable, or if Tenant violates or fails or neglects to keep and perform any of
the covenants, conditions, and agreements herein contained on the part of
Tenant to be kept and performed within thirty (30) days after receipt of
written notice of such failure or neglect, or if the Premises becomes vacant or
deserted, then, and in each and every such event, at the option of Landlord,
Tenant's right of possession will thereupon cease and terminate, and to the
extent permitted by law Landlord will be entitled to the possession of the
Premises and to re-enter the same without demand of Rent or demand of
possession and may forthwith proceed to recover possession of the Premises by
process of law, ANY NOTICE TO QUIT OR OF INTENTION TO RE-ENTER THE SAME BEING
HEREBY EXPRESSLY WAIVED BY TENANT. In the event of such re-entry by process of
law or otherwise, Tenant nevertheless agrees to remain answerable for any and
all damage, deficiency or loss of Rent which Landlord may sustain by such
re-entry, including reasonable attorneys' fees and court costs; and in such
case, Landlord reserves full power, which is hereby acceded to by Tenant, to
relet the Premises for the benefit of Tenant, in liquidation and discharge, in
whole or in part, as the case may be, of the liability of Tenant under the
terms and provision of this Lease. In addition to the foregoing remedies,
Landlord will also have the following remedies to the extent permitted by law
and all other remedies afforded to it at law or in equity, all of which shall
be cumulative: to terminate this Lease; to declare due and payable all Rent for
the unexpired Term as and when the same becomes due and payable or to defer any
suit until after the Term without thereby prejudicing its rights; to accelerate
the Rent for the remainder of the Term and declare it all immediately due and
payable [with a present value discount two (2) whole percentage points below
the prime rate published in The Wall Street Journal on the date Landlord elects
said remedy]; and to bring an action for specific performance, injunction, or
other equitable relief to prevent any threatened or impending default or to end
any existing default. In addition, Landlord may perform any obligation which
Tenant has failed to perform after the expiration of any applicable notice
and/or cure period (except in an emergency, when no notice or cure period will
be necessary or afforded), all at the cost of Tenant as Additional Rent payable
upon demand. Tenant shall also pay all expenses (including, without limitation,
reasonable attorneys' fees) incurred by Landlord following a default, whether
or not suit is instituted; the same shall be Additional Rent payable upon
demand. In determining the Rent due for the balance of the Term, all Additional
Rent shall be determined by projecting into the future the Additional Rent
payable on the date of default increasing by a compounding five percent (5%)
per Lease Year. No waiver of any breach of any covenant, condition, or
agreement herein contained shall operate as a waiver of the covenant, condition
or agreement itself, or of any subsequent breach thereof. No provision of this
Lease shall be deemed to have been waived by Landlord unless such waiver shall
be in writing signed by Landlord. No payment by Tenant or receipt by Landlord
of a lesser amount than the Rent herein stipulated shall be deemed to be other
than on account of the earliest stipulated Rent, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as Rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
Rent or pursue any other remedy provided in this Lease. Landlord shall have a
lien for the payment of the Rent upon all of the goods, wares, chattels,
fixtures, furniture and other personal property of Tenant which may be in or
upon the Premises, Tenant hereby specifically waiving any and all exemptions
allowed by law; such lien may be enforced on the nonpayment of any installment
of Rent by the taking and selling of such property in the same manner as in the
case of chattel mortgages on default thereunder; said sale is to made upon ten
(10) days notice served upon Tenant by posting upon the Premises or such lien
may be enforced in any other lawful manner at the option of Landlord.
18. RIGHTS OF LENDERS, GROUND LESSORS AND PURCHASERS: This Lease
is subject and subordinate to all ground or underlying leases (hereinafter
collectively referred to as "ground leases") and to all of the terms and
provisions and liens of all mortgages and/or deeds of trust (hereinafter
collectively referred to as "mortgages") which may now or hereafter affect this
Lease or the Building, and to all renewals, modifications, consolidations,
replacements, amendments and extensions thereof. This clause is self-operative,
and no lessor or mortgagee (as used in this Lease, "mortgagee" includes any
mortgagee under a mortgage, any beneficiary or trustee under a deed of trust,
and any lender or other secured party under a deed to secure debt or other
instrument similar to any of the foregoing) may require any instrument of
subordination. In confirmation of such subordination, Tenant shall execute
promptly any certificate that Landlord may request. Tenant hereby constitutes
and appoints Landlord Tenant's attorney-in-fact to execute any such certificate
or certificates for and on behalf of Tenant. Notwithstanding the foregoing, a
ground lessor or mortgagee may recognize this Lease and, in the event of the
termination of any ground lease or any foreclosure or similar sale or deed in
lieu thereof under such mortgage, this Lease will continue in full force and
effect at the option of the ground lessor or mortgagee (or the purchaser at any
such foreclosure sale). Tenant will, at the written request of the ground lessor
or mortgagee (or the purchaser at any such foreclosure sale), execute,
acknowledge and deliver any instrument that has for its purpose and effect the
subordination of such ground lease or mortgage to this Lease. In any case, such
ground lessor, mortgagee, landlord or successor shall not be bound by any
prepayment on the part of Tenant of any Rent for more than one month in advance,
so that Rent shall be payable under this Lease in accordance with its terms as
if such prepayment had not been made; nor shall any such ground lessor,
mortgagee, landlord or successor be liable for any default under this Lease by
any predecessor Landlord or subject to any counterclaim, set-off or defense as a
result of any such default; and provided, further, such ground lessor,
mortgagee, landlord or successor shall not be bound by this Lease or any
amendment or modification of this Lease unless Landlord's ground lessor or
mortgagee, as may be applicable, had approved the same in writing. At any time
and from time to time, upon the request and at the sole option of any successor
to Landlord's interest, Tenant shall attorn to any successor to Landlord's
interest, whether such successor acquires its interest by voluntary conveyance,
foreclosure, deed in lieu of foreclosure, termination or expiration of a ground
lease, or any other method, and in that event this Lease shall continue as a
direct lease between Tenant and such landlord or its successor and the prior
Landlord shall be released from all obligations and liability under this Lease
arising after the date of transfer. The terms of this Lease are subject to
approval by the Landlord's ground lessor(s) and lender(s), and such approval is
a condition precedent to Landlord's obligations hereunder. Tenant shall furnish
copies of any default or similar notices delivered by Tenant to Landlord
hereunder at the same time to each ground lessor or mortgagee, now or at anytime
and from time to time hereafter, and no such notice shall be effective unless
and until a copy of it is sent to each such ground lessor or mortgagee, provided
that Tenant has been afforded written notice of the name and address of such
party. Each such ground lessor or mortgagee may cure any default by Landlord
within the same time period afforded Landlord to cure any such default, plus
such additional period of time thereafter as may be reasonably necessary for
such ground lessor or mortgagee to cure such default.
19. CONDEMNATION: If the Premises or any part thereof is taken or
condemned for public or quasi-public use or purpose by any competent authority,
or conveyed in lieu of being taken or condemned, Tenant will have no claim
against Landlord and will not have any claim or right to any portion of the
amount that may be awarded to Landlord as damages or paid as a result thereof.
All right of Tenant to damages therefor, if any, are hereby assigned by Tenant
to Landlord. Upon such condemnation or taking, or conveyance in lieu thereof,
the Term shall terminate from the date of such governmental taking or
condemnation, or conveyance in lieu thereof, and Tenant will have no claim
against Landlord for the value of any unexpired
<PAGE> 6
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Term. Nothing in this Paragraph limits or affects Tenant's right to seek any
separate award from the condemning authority as long as Tenant does not thereby
reduce, delay or in any other way affect Landlord's claim or award.
20. SUCCESSORS: All rights, remedies and liabilities herein
given to or imposed upon either of the parties hereto extend to their
respective heirs, executors, administrators, successors and permitted assigns.
21. TENANT HOLDOVER: If Tenant continues to remain in the Premises
after the termination or expiration of the Term, then and in that event Tenant
will become a tenant by the month at 125% of the Base Rent per month payable
for the last month before the expiration or termination of the Term plus all
Additional Rent that may be incurred during any such holdover, but in no event
less than the then market rent for the Premises. Holdover Rent will commence
with the first day following the end of the Term. During any holdover, each
party must give the other at least thirty (30) days written notice to quit the
Premises, except in the event of any default by Tenant, in which event Tenant
will not be entitled to any notice to quit, the usual thirty (30) days' notice
to quit being hereby expressly waived; provided, however, that if Tenant holds
over after the expiration of the Term hereby created, and if Landlord desires
to regain possession of the Premises promptly at the expiration of the Term,
then at any time prior to Landlord's acceptance of Rent from Tenant as a
monthly tenant hereunder, Landlord, at its option, may forthwith re-enter and
take possession of the Premises without process, or by any legal process in
force. Tenant shall not use force majeure as an excuse for any holding over.
22. POSSESSION: Landlord shall give possession of the Premises to
Tenant on the Commencement Date. If Landlord is unable to give possession of
the Premises on the Commencement Date because any portion of the Premises are
located in a Building being constructed that has not been sufficiently
completed to make the Premises ready for occupancy, or because a certificate of
occupancy has not been procured, or if Landlord is unable to give possession of
the Premises on the Commencement Date because of the holding over or retention
of possession by any previous tenant, occupant or owner, or if repairs,
improvements or decorations of the Premises or of the Building are not
completed, or for any other reason, Landlord will not be subject to any
liability for the failure to give possession on the Commencement Date. No such
failure to give possession on the Commencement Date will affect in any other
respect the validity of this Lease or the obligations of Tenant hereunder, nor
will the same be construed in any way to extend the Term. If Landlord permits
Tenant to enter into the possession of the Premises or a portion of the
Premises prior to the Commencement Date, such occupancy shall be deemed to be
under all terms, covenants, conditions and provisions of this Lease.
23. JOINT AND SEVERAL LIABILITY: If Tenant consists of more than
one individuals and/or entities, then the liability of each of them for Tenant's
obligations under this Lease shall be joint and several.
24. PRONOUNS: Feminine, masculine or neuter pronouns shall be
substituted for each other, and the plural shall be substituted for the singular
number and vice versa in any place in which the context may require such
substitution.
25. LATE PAYMENT: If Tenant fails to pay any Rent on or before the
fifth (5th) day after such payment becomes due and payable, Tenant shall pay to
Landlord a late charge of five percent (5%) of the amount of such overdue
payment. In addition, any Rent not paid when due will bear interest at the
lesser of eighteen percent (18%) per annum or the maximum rate allowed by law
until paid. Acceptance of the foregoing sums shall not constitute a waiver of
the default. Upon Landlord's receipt of any check from Tenant which is
dishonored for payment, Landlord may require Tenant to make all future payments
due to Landlord hereunder by cash, certified or cashier's check.
26. NOTICES: All notices required or desired to be given hereunder
by either party to the other shall be given by hand, by overnight courier or by
certified or registered mail. Notices shall be effective upon receipt (refusal
to accept delivery or the inability to make delivery due to an incorrect or
outdated address being provided by the intended recipient shall constitute
receipt). Notices to the respective parties must be addressed as follows:
If to Landlord - Monte R. Black
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
If to Tenant - MPW Industrial Services, Inc.
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
Attn: Daniel P. Buettin
Either party may, by like written notice, designate a new address or addressee
to which notices must be directed. Tenant shall provide a copy of any notice
given to Landlord to any mortgagee or ground lessor of whom Tenant has notice.
Notices may be given by authorized agents or attorneys on behalf of a party.
27. ESTOPPEL CERTIFICATES: Within ten (10) days after request
therefor by Landlord or any ground lessor or mortgagee of the Building, Tenant
shall execute and deliver estoppel certificates certifying, among other things:
the text of this Lease and any amendments thereto; whether this Lease has been
amended and, if so, the date of each such amendment; whether this Lease is in
full force and effect and, if not, the reason therefor; whether any default or
any situation which could be a default after the giving of notice or the
expiration of any cure period (or both) exists under this Lease on the part of
Landlord or Tenant and, if so, specifying the default or potential default;
whether Tenant has taken possession of the Premises; whether the Premises have
been completed in accordance with the terms of this Lease and all bills therefor
paid and, if not, what remains to be done or paid; the Commencement Date and the
expiration date of the Term; whether Tenant has any renewal options, expansion
options, or rights to purchase and, if so, identifying the conditions and
periods when they may be exercised; the date Rent commenced to accrue and the
date to which Rent has been paid; whether any security deposit has been posted;
whether Tenant has any knowledge or any environmental problem affecting the
Premises or the Building; and such other matters as may be reasonably requested.
<PAGE> 7
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28. NO PERSONAL LIABILITY: Notwithstanding any provision of this
Lease to the contrary or any general rule of law, in no event whatsoever shall
Landlord or any of its shareholders, partners, directors, officers, employees,
agents or other principals have any personal liability whatsoever with respect
to this Lease, and no such personal liability shall be sought, obtained or
enforced. Any liability of Landlord under this Lease may be enforced solely
against Landlord's equity interest in the Land and Building; no other properties
or assets of Landlord are subject to this Lease or Landlord's liabilities
hereunder.
29. BROKERS: Each party represents and warrants to the other that
it has not engaged or used any broker or finder in connection with this Lease.
Each party shall defend, indemnify and hold the other party harmless from and
against any breach by the indemnifying party of the representation and warranty
set forth in the first sentence of this Paragraph. Tenant shall defend,
indemnify and hold Landlord's ground lessors and mortgagees harmless from and
against any breach by Tenant of the representation and warranty set forth in the
first sentence of this Paragraph. No broker is a third party beneficiary of this
Lease.
30. COMPLETE AGREEMENT; NO ORAL MODIFICATIONS: This Lease
represents the complete and integrated agreement of the parties with respect to
the Premises and, except as set forth herein, there are no other agreements,
covenants, representations or warranties (express or implied) between the
parties. Nothing in this Lease shall be deemed or construed to create a
partnership or joint venture or to create any relationship other than landlord
and tenant. This Lease may not be amended except by a written document signed by
the party to be bound thereby.
31. GOVERNING LAW AND RULES OF INTERPRETATION: This Lease is
governed by the laws of the State of Ohio without regard to conflicts of laws.
Without limiting a party's right to bring any action in any other jurisdiction
or forum, each party submits itself to the jurisdiction of the federal and
local courts sitting in the State of Ohio and to venue therein. It is the
intent of the parties that this Lease will be enforceable to the fullest extent
permitted by law. If any provision of this Lease is capable of two or more
interpretations or can be reformed so as to comply with applicable law while
giving effect to the intent of such provision, then such provision shall be
interpreted in the way most likely to be in compliance with applicable law.
Although the printed provisions of this Lease were drawn by Landlord, this
Lease shall not be construed either for or against Landlord or Tenant.
[the rest of this page is intentionally blank]
<PAGE> 8
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal as of the day and year first above written.
LANDLORD:
WITNESS:
- ------------------------ --------------------------------------------------
Monte R. Black
WITNESS:
- ------------------------
WITNESS:
- ------------------------ --------------------------------------------------
Susan K. Black
WITNESS:
- ------------------------
TENANT:
WITNESS: MPW INDUSTRIAL SERVICES, INC.
- ------------------------ By:
-----------------------------------------------
WITNESS: Name:
---------------------------------------------
- ------------------------ Title:
---------------------------------------------
<PAGE> 9
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ACKNOWLEDGEMENT
STATE OF______________________________)
) SS.
COUNTY OF_____________________________)
Before me, a Notary Public in and for said County, personally
appeared the above-named Monte R. Black and Susan K. Black ("Landlord"), who
acknowledged that they did sign the foregoing instrument on behalf of Landlord,
and that the same is their free act and deed on Landlord's behalf and the free
act and deed of Landlord.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
_________________, __________________ this ___ day of ______________, 1997.
[Notarial Seal]
__________________________________
Notary Public
My commission expires:
ACKNOWLEDGEMENT
STATE OF______________________________)
) SS.
COUNTY OF_____________________________)
Before me, a Notary Public in and for said County, personally
appeared the above-named _______________, ____________ of MPW Industrial
Services, Inc. ("Tenant"), who acknowledged that he did sign the foregoing
instrument on behalf of Tenant as such officer, and that the same is his free
act and deed on Tenant's behalf and the free act and deed of Tenant.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
_________________, __________________ this ___ day of ______________, 1997.
[Notarial Seal]
__________________________________
Notary Public
My commission expires:
<PAGE> 10
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
<PAGE> 1
EXHIBIT 10(k)
LEASE
-----
THIS LEASE ("LEASE"), is made this 9th day of August, 1996, by and
between THE BLACK FAMILY LIMITED PARTNERSHIP, an Ohio limited partnership
("LANDLORD") and MPW INDUSTRIAL SERVICES, INC., an Ohio corporation ("TENANT").
WITNESSETH:
-----------
1. DEMISED PREMISES: Landlord for and in consideration of the covenants
and agreements hereinafter set forth and the "RENT" (which term includes both
Base Rent and all Additional Rent) does hereby lease to Tenant not less than
100% of that certain 35,500 square foot industrial facility (the "BUILDING") and
certain other improvements (including a receiving dock and tank farms) located
on approximately 5.99 acres of land commonly known as 50231 East Russell Schmidt
Boulevard, Chesterland Township, Macomb County, Michigan, the legal description
of which is set forth on EXHIBIT A attached hereto (the "LAND") (the Building
and the Land are sometimes hereinafter referred to collectively as the
"PREMISES").
2. TERM:
(a) INITIAL TERM. This Lease has an initial term of five (5)
years (or until such term shall sooner terminate as hereinafter provided) (the
"INITIAL TERM") commencing on May 1, 1996 (the "COMMENCEMENT DATE") and ending
on April 30, 2001, unless sooner terminated in accordance herewith.
(b) RENEWAL TERM. Tenant may, at its sole option, choose to
extend the term of this Lease for one additional five (5) year period (the
"RENEWAL TERM") under such terms and conditions as Landlord and Tenant will
negotiate. Tenant shall provide Landlord with written notice of Tenant's intent
to exercise this option not later than ninety (90) days prior to the expiration
of the Initial Term. As used in this Lease, "TERM" means both the Initial Term
and, if Tenant exercises this option, the Renewal Term. As used in this Lease,
"LEASE YEAR" means each consecutive twelve (12) month period of the Term,
starting on the Commencement Date of this Lease.
3. RENT:
(a) Tenant shall pay as "BASE RENT" for each Lease Year during
the Initial Term the sum of Four Hundred Twenty-One Thousand Two Hundred and
No/100 Dollars ($421,200), payable in advance, in equal monthly installments of
Thirty-Five Thousand One Hundred and No/100 Dollars ($35,100). If Tenant
exercises its option to extend the Term, Tenant shall pay as Base Rent during
the Renewal Term the sum of Four Hundred Ninety Thousand Eight Hundred and
No/100 Dollars ($490,800), payable in advance in equal monthly installments of
Forty Thousand Nine Hundred and No/100 Dollars ($40,900). The first and last
monthly installments are due and payable on the execution of this Lease and the
remaining installments are due and payable in advance on the first day of each
and every month during the Term, without offset or deduction, to Landlord at the
address set forth in PARAGRAPH 26 or at such other place as Landlord may
hereafter designate in writing. Rent checks are to be made payable to Landlord,
or such other person, firm or corporation as Landlord may designate in writing.
(b) All sums due and payable by Tenant under this Lease other
than Base Rent are "ADDITIONAL RENT", whether or not so called in the text of
this Lease. Any Additional Rent for which no time for payment is specified in
this Lease shall be due and payable within ten (10) days after demand is made
therefor.
(c) All Rent, whether Base Rent or Additional Rent, is due and
payable in full without demand, deduction or set-off and Tenant's obligation to
pay the same shall survive the expiration or other termination of this Lease.
Tenant's covenant to pay Rent is an independent covenant.
(d) Rent shall be equitably pro rated for any partial Lease
Year or calendar year, as the case may be, during the Term.
4. USE OF PREMISES:
(a) PERMITTED USE. Tenant shall use and occupy the Premises
solely for operation of an industrial facility for the cleaning and recycling of
totes paint canisters, in accordance with the standards of an industrial
facility in Chesterfield Township, Michigan, and for no other purpose
whatsoever.
(b) COMPLIANCE WITH LAWS; NUISANCE. Tenant shall not use or
permit the Premises or any part thereof to be used for any disorderly, unlawful
or extra hazardous purpose nor for any purpose other than hereinbefore
specified. Tenant shall not act in conflict with the statutes, laws, ordinances,
codes, rules and regulations applicable to Tenant, the Premises and/or the
Building, including without limitation the rules, regulations and requirements
of any fire rating organizations or rating bureaus with jurisdiction over the
Premises (collectively, the "LEGAL REQUIREMENTS"). Tenant shall be responsible
at its own cost for complying with the provisions of the Americans With
Disabilities Act or any similar federal or Michigan statute, law, ordinance, or
code, as they may be amended from time to time, and the rules and regulations
which may be adopted thereunder from time to time, as the same may be applicable
to Tenant's own use of the Premises or as may be necessary or appropriate as the
result of any Alteration (as defined in PARAGRAPH 8). Landlord's approval of any
Alteration or other act by Tenant is not a representation by Landlord that said
Alteration or act complies with applicable law, and Tenant shall remain solely
responsible for such compliance. Notwithstanding the expiration or other
termination of this Lease, Tenant shall defend, indemnify and hold Landlord and
Landlord's mortgagees harmless from and against any claim, demand, suit, action,
proceeding, damage, liability, loss, cost or expense (including, without
limitation, reasonable attorneys' fees), foreseen or unforeseen, arising from
any violation of this PARAGRAPH 4; the provisions of this sentence shall survive
the expiration or other termination of this Lease.
<PAGE> 2
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(c) HAZARDOUS SUBSTANCES. Tenant shall not (either with or
without negligence) cause or permit within or on the Premises the escape,
disposal or release of any biologically- or chemically-active or other hazardous
or toxic substances, materials or wastes (collectively, "HAZARDOUS SUBSTANCES").
Tenant shall not allow the generation, storage or use of any Hazardous
Substances within the Premises in any manner unless in accordance with the Legal
Requirements and approved in advance in writing by Landlord, other than normal
quantities of cleaning solvents controlled and stored in accordance with the
Legal Requirements. Any use of Hazardous Substances shall only be in the
ordinary course of Tenant's business and in accordance with the highest
standards prevailing in the industry for the generation, storage and use of such
Hazardous Substances. Without limitation, Hazardous Substances shall include
those described in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 ET SEQ., any
applicable state or local laws and the regulations adopted under these acts. If
Tenant uses Hazardous Substances within the Premises and Landlord or any lender
or governmental agency ever requires testing to ascertain whether or not there
has been any release of Hazardous Substances, then the reasonable costs thereof
shall be reimbursed by Tenant to Landlord upon demand as Additional Rent. In
addition, Tenant shall execute affidavits, representations and the like from
time to time at Landlord's request concerning Tenant's best knowledge and belief
regarding the presence of Hazardous Substances in the Premises. Further, Tenant
shall indemnify and save Landlord harmless from and against any and all clean-up
costs, remedial or restoration work, claims, judgments, damages, penalties,
fines, costs, liabilities or losses, including, without limitation, attorneys',
consultants' and expert fees, which arise during or after the Term as a result
of any Hazardous Substances being generated, used or disposed of in or on, or
brought to, the Premises by Tenant or its employees, agents, contractors or
invitees, or as the result of an abatement, treatment or management required as
the result of any acts, negligence, repairs or alterations made by Tenant in the
Premises. The within covenants shall survive the expiration or earlier
termination of this Lease.
5. TAXES, FEES AND CHARGES: Tenant shall pay directly to the applicable
taxing authorities, at its sole cost and expense, and prior to delinquency, all
taxes, fees, assessments, and charges, general and special, foreseen or
unforeseen, affecting the Building, Premises or Tenant's other property or
operations thereon (the "TAXES"), including, without limitation, the payment for
any governmental licenses, permits, approvals, and authorizations attributable
to the Premises, the Building or any improvements thereto during the Term.
Tenant shall also pay any tax (other than Landlord's income tax) which may be
levied at any time on the Rent or other charges payable hereunder. Tenant shall
provide written proof of all such required payments to Landlord prior to the due
date thereof. Tenant may contest any required payment of any of the Taxes by
appropriate proceedings duly instituted and diligently prosecuted at Tenant's
expense, provided that Tenant shall notify Landlord prior to the commencement of
any such contest. Landlord shall reasonably cooperate with Tenant (at Tenant's
expense) in connection with any such contest, and shall permit any such contest
to be prosecuted in Landlord's name if the same shall be required for the proper
resolution of the disputed matter. So long as any such contest is pending,
Tenant shall pay the disputed Taxes so that the Premises are not subjected to
loss or forfeiture as a result of nonpayment. Tenant shall indemnify, defend,
and hold Landlord harmless from and against any loss or forfeiture of the
Premises and any fines, penalties or other charges arising out of any such
contest or the resolution thereof or arising out of Tenant's failure to pay any
amounts required to be paid by Tenant hereunder.
6. INSURANCE:
(a) Tenant shall not do or permit anything to be done on the
Premises or in the Building or bring or keep anything therein which shall in any
way increase the rate of fire or other insurance on the Building, or on the
property kept therein or conflict with any insurance policy upon the Building or
any part thereof, or with any statutes, rules or regulations enacted or
established by the appropriate governmental authorities.
(b) Tenant shall carry such insurance as Landlord may
reasonably require from time to time, including (without limitation) personal
property, liability, plate glass, builder's risk (during any period when any
construction work is being done in the Premises), business interruption, and
workers compensation insurance. Tenant shall also provide and maintain public
liability/general comprehensive insurance protecting and indemnifying Landlord
and Tenant against all claims for damages in amounts not less than $2,000,000
per occurrence, $2,000,000 bodily injury, and $1,000,000 property damage. All
insurance must be issued by companies and be in amounts satisfactory to Landlord
in its reasonable discretion, include waivers of subrogation, provide that it
may not be cancelled except upon at least thirty (30) days written notice to
Landlord, and name Landlord, its asset and building manager(s), and any
mortgagee or ground lessor of the Building as an additional named insured or
loss payee, as appropriate. Evidence of such insurance must be delivered to
Landlord before Tenant may enter the Premises and must be provided not less
frequently than the first day of each Lease Year thereafter.
(c) At all times during the Term, Tenant shall, at Tenant's
sole cost and expense, maintain fire and extended coverage insurance covering
the Building to its full replacement value and with such co-insurance and
deductible provisions as may reasonably be deemed appropriate by Landlord.
Subject to the rights of any Landlord's mortgagee under PARAGRAPH 18, below, all
insurance proceeds under such policy shall be payable to Tenant solely for the
purpose of completing the restoration required under PARAGRAPH 12, and Landlord
shall be entitled to receive any proceeds remaining following the completion of
such restoration.
(d) Landlord shall maintain comprehensive general liability
insurance in amounts of at least $1,000,000 per occurrence, $500,000 property
damage, for losses occasioned by Landlord's and its representatives', agents'
and employees' negligence or willful misconduct.
(e) No indemnity shall be paid to the other party under this
Lease where the claim, damage, liability, loss or expense incurred was or was
required to be insured by such other party for whose benefit such indemnity
would run. If reasonably available, all insurance policies obtained by the
parties pursuant to this Lease shall contain provisions or have the effect of
waiving any right of subrogation by the insurer of one party against the other
party or its insurer. Each party hereby releases the other from any claims to
the extent covered by insurance obtained by the parties pursuant to this Lease.
7. UPKEEP OF PREMISES: Tenant shall keep the Premises and the fixtures
therein in good order and condition and will, at the expiration or other
termination of the Term, surrender and deliver up the same in like good order
and condition as the same now is or shall be at the commencement of the Term,
ordinary wear and tear and insured damage excepted. Subject to the provisions of
PARAGRAPHS 8 and 15 below, Landlord is not required to make any improvements,
replacements or repairs of any kind or character on the Premises during the
Term.
<PAGE> 3
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8. ALTERATIONS:
(a) Except as set forth in this PARAGRAPH 8 or in PARAGRAPH
12, Tenant shall not make any alterations, installations, changes, replacements,
additions, or improvements (structural or otherwise) (each an "ALTERATION") in
or to the Premises or any part thereof; PROVIDED, HOWEVER, that Landlord shall
not unreasonably withhold, condition or delay its consent to any of the same
which do not affect the structural, mechanical, electrical, hydraulic, plumbing,
heating, ventilating or air conditioning systems serving either the Building or
the Premises. All Alterations in the Premises (whether installed with or without
Landlord's consent), shall at the election of Landlord remain in the Premises
and be surrendered with the Premises at the expiration of this Lease without
disturbance, molestation or injury; FURTHER PROVIDED, HOWEVER, that any and all
manufacturing items or other of Tenant's personalty shall remain Tenant's
property and shall be removed by Tenant upon the expiration or earlier
termination of the Term. Should Landlord elect that Alterations made by Tenant
in the Premises be removed upon expiration or termination of this Lease, Tenant
shall cause same to be removed and to repair any damage caused thereby and
restore the Premises at Tenant's sole cost and expense and Tenant shall
reimburse Landlord for the cost of such removal together with any and all
damages which Landlord may suffer and sustain by reason of the failure of Tenant
to remove the same and to repair and restore as set forth above. Tenant shall
similarly restore any damage resulting from its removal of its personal
property.
(b) Landlord is delivering the Premises to Tenant in their "AS
IS" condition, without any representation or warranty of any kind, express or
implied, as to their condition and without any obligation to perform any work or
to pay for any third party or Tenant to perform any work. By its execution of
this Lease, Tenant acknowledges that it has inspected Building and the Land and
that they are in condition satisfactory to Tenant.
(c) All of Tenant's work shall be done by contractors
acceptable to Landlord in its reasonable discretion. Alterations by Tenant,
including any initial build-out, shall be coordinated with any work being
performed by Landlord. As further conditions to Landlord's approval of any
proposed Alterations or additions by Tenant which are to be made by a
contractor, Tenant shall cause the contractor(s) and subcontractor(s) to carry
workmen's compensation insurance in statutory amounts, builder's risk insurance
and comprehensive public liability insurance with limits as approved by
Landlord, and Tenant shall deliver to Landlord certificates of all such
insurance. Tenant's work shall be performed in a first-class and lien-free
manner. Tenant shall not be Landlord's agent for purposes of this work and
Tenant shall be solely responsible for any mechanics' or materialmen's lien
arising therefrom; Tenant shall pay, bond or otherwise release of record any
such lien within ten (10) days after receiving notice of its existence.
(d) Tenant shall promptly pay for any work done or material
furnished in or about the Premises and shall not permit or suffer any lien to
attach to the Premises, and Tenant shall indemnify and save Landlord harmless
from and against any loss, liability, cost, or expense which may be incurred by
Landlord with respect to any such lien or claim of lien. Tenant shall promptly
cause any such liens which have arisen by reason of any work claimed to have
been undertaken by or through Tenant to be released by payment, bond or
otherwise within thirty (30) days after request by Landlord. Tenant shall have
no authority or power, express or implied, to create or cause any lien, charge,
or encumbrance of any kind against the Premises or the Building. Tenant shall
notify all of its contractors and materialmen in writing that any liens relating
to any work ordered by Tenant shall attach to Tenant's leasehold estate in the
Premises and shall not encumber Landlord's interest in the Premises or the
Building.
9. SUBLETTING AND ASSIGNMENT: Tenant shall not sublet the Premises or
any part thereof or transfer possession or occupancy thereof to any person, firm
or corporation, or transfer or assign this Lease, nor will any assignment or
subletting hereof be effected by operation of law or otherwise, without
Landlord's prior consent, such consent not to be unreasonably withheld, delayed
or conditioned. A sale or other conveyance of any sort of all or substantially
all of the assets of Tenant relating to the Premises, or of a sufficient amount
of the stock or other ownership interests in Tenant to constitute a change in
control, or of any general partnership interest in Tenant if Tenant is a
partnership, whether directly or indirectly, constitutes an assignment under
this Paragraph. If Tenant desires to sublet the Premises or if Tenant desires to
transfer or assign this Lease, Tenant shall give Landlord thirty (30) days
written notice of Tenant's intention so to do. In no event whatsoever, and
without limiting Landlord's right to reasonably reject any proposed sublease or
assignment, may this Lease be assigned in part or the Premises subleased in
part, without Landlord's prior written reasonable consent.
10. TENANT'S COVENANTS: Tenant further agrees: that no sign,
advertisement or notice shall be inscribed, painted or affixed on any part of
the outside or inside the Premises or Building except as may be expressly
permitted by this Lease, and then only in such size, color and style as Landlord
may reasonably approve; that Landlord shall have the right to prescribe the
weight and method of installation and position of safes or other heavy fixtures
or equipment and Tenant shall not install in the Premises any fixtures,
equipment or machinery that will place a load upon any floor exceeding the floor
load per square foot area which such floor was designed to carry; and that all
damages done to the Building by taking in or removing a safe or any other
article of Tenant's equipment, or due to Tenant's being in the Premises, shall
be repaired at the expense of Tenant.
11. ACCESS: Tenant further agrees that it will allow Landlord, its
agent or employees, or any mortgagee to enter the Premises at all reasonable
times: to examine, inspect or to protect the same or prevent damage or injury to
the same, or to make such alterations and repairs to the Premises or other
premises as Landlord may deem necessary; to exhibit the same to prospective
tenants during the last nine (9) months of the Term or following the
commencement of any action to evict Tenant, even if the Term has not been
terminated; and to exhibit the same to prospective and actual mortgagees,
purchasers and brokers at any time during the Term.
12. DAMAGE:
(a) In the event of damage to or destruction of the Premises,
the Building, or Tenant's other alterations or improvements, or any portion
thereof, during the Term by fire, explosion or other casualty ("Damage"), this
Lease will not terminate unless Landlord determines that it will take it more
than ninety (90) days to repair and restore the Premises to the same condition
they are in on the date hereof, in which event Landlord may terminate this Lease
by notice to Tenant.
(b) Unless this Lease is terminated pursuant to PARAGRAPH
12(a), and except as expressly provided to the contrary in this Lease, in the
event of any Damage to the Premises: (i) this Lease shall remain in full force
and effect and to the extent possible, Tenant shall remain in possession of the
Premises, and (ii) whether or not any insurance proceeds are available or
adequate for such purposes and regardless of the dollar amount of such damage or
loss, at Tenant's own sole cost and expense, Tenant shall repair, refixture,
restock and otherwise restore the Premises to the same condition they were in
before such fire or other casualty. Due allowance, however, shall be given for a
reasonable time required for adjustment
<PAGE> 4
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and settlement of insurance claims and for such other delays as may result from
government restrictions and controls on construction, if any, and for strikes,
national emergencies, and other conditions beyond the control of the parties.
(c) Any restoration required to be performed by Tenant under
this PARAGRAPH 12 shall be commenced by Tenant promptly after such damage or
destruction, and shall be diligently and continuously pursued to completion and
shall be completed by Tenant in a good and workmanlike manner and in accordance
with all Legal Requirements.
(d) Tenant shall have no right to terminate this Lease or to
have the rent and other charges due hereunder abated despite the occurrence of
Damage to the Premises, the Building or Tenant's other alterations or
improvements, even if such Damage prevents the conduct of Tenant's business on
the Premises. No compensation, claim, or diminution of Rent will be allowed or
paid by Landlord by reason of inconvenience, annoyance, or injury to business
arising from any such Damage or the necessity of repairing the Premises or the
Building, however the necessity may occur.
13. PERSONAL PROPERTY: All personal property of Tenant at the Premises
is at the sole risk of Tenant. Landlord is not liable for any accident or
damages to property of Tenant resulting from the use or operation of elevators
or of the heating, cooling, electrical, mechanical, hydraulic, plumbing or other
Building systems or components. Landlord is not, in any event, liable for
damages to property resulting from water, steam, or other causes. Tenant hereby
expressly releases Landlord from any liability incurred or claimed by reason of
damage to Tenant's property. Landlord is not liable in damages, nor is this
Lease affected, for conditions arising or resulting from construction of
contiguous premises. The foregoing does not exculpate Landlord from its gross
negligence or willful misconduct.
14. LIABILITY FOR TENANT'S OPERATIONS; INDEMNIFICATION:
(a) Landlord assumes no liability or responsibility whatsoever
with respect to the conduct and operation of the business to be conducted in the
Premises. Landlord shall not be liable for any accident or injury to any person
or persons or property in or about the Premises which are caused by the conduct
and operation of said business or by virtue of equipment or property of Tenant
in the Premises. Tenant agrees to defend, indemnify and hold Landlord and
Landlord's mortgagees harmless from and against all such claims (including,
without limitation, reasonable attorneys' fees). The foregoing does not
exculpate Landlord from its gross negligence or willful misconduct.
(b) Tenant retains responsibility as operator of the Premises
for payment of all costs of the Premises, and shall defend, indemnify and hold
Landlord harmless therefrom, and from all costs incurred by Landlord in the
defense of any claims relating to the Premises brought against it or any action
relating to the Premises in which it is named as a party, including reasonable
attorneys' fees, costs of investigation, court costs and other such expenses.
This indemnification obligation shall survive termination of this Lease, and is
subject to the waiver of subrogation provisions of PARAGRAPH 6(E); PROVIDED,
HOWEVER, notwithstanding anything contained herein to the contrary, Landlord
shall indemnify Tenant and hold Tenant and its affiliates and their respective
representatives, agents and employees harmless in connection with damage or loss
sustained by reason of the dishonesty, willful misconduct or negligence of
Landlord and its representatives, agents or employees.
15. SERVICES AND UTILITIES:
(a) Landlord shall provide the normal utility service
connections into the Premises. Tenant shall pay the cost of all utility service,
including, without limitation, initial connection charges, all charges for gas,
water and electricity used on the Premises, and for all plumbing, interior
cleaning/janitorial, and for all electric light lamps or tubes. Tenant shall pay
all costs caused by Tenant introducing excess pollutants into the sanitary sewer
system.
(b) Any failure by Landlord to furnish any services or
utilities to be provided by Landlord or otherwise under this Lease as the result
of any act of God, FORCE MAJEURE or any cause beyond the reasonable control of
Landlord will not render Landlord liable in any respect for damages to either
person or property, nor be construed as an eviction of Tenant, nor work an
abatement of Rent, nor relieve Tenant from Tenant's obligations hereunder.
16. BANKRUPTCY: If Tenant makes an assignment of its assets for the
benefit of creditors, or if Tenant files a voluntary petition in bankruptcy, or
if an involuntary petition in bankruptcy or for receivership is instituted
against Tenant and the same is not dismissed within ninety (90) days of the
filing thereof, or if Tenant is adjudged bankrupt, then and in any of the
foregoing events, to the extent permitted by law, this Lease will immediately
cease and terminate at the option of Landlord with the same force and effect as
though the date of said event was the day herein fixed for expiration of the
Term.
17. DEFAULTS & REMEDIES: If Tenant fails to pay the Rent, or any
installment thereof, within five (5) days after the same becomes due and
payable, or if Tenant violates or fails or neglects to keep and perform any of
the covenants, conditions, and agreements herein contained on the part of Tenant
to be kept and performed within thirty (30) days after receipt of written notice
of such failure or neglect, or if the Premises becomes vacant or deserted, then,
and in each and every such event, at the option of Landlord, Tenant's right of
possession will thereupon cease and terminate, and to the extent permitted by
law Landlord will be entitled to the possession of the Premises and to re-enter
the same without demand of Rent or demand of possession and may forthwith
proceed to recover possession of the Premises by process of law, ANY NOTICE TO
QUIT OR OF INTENTION TO RE-ENTER THE SAME BEING HEREBY EXPRESSLY WAIVED BY
TENANT. In the event of such re-entry by process of law or otherwise, Tenant
nevertheless agrees to remain answerable for any and all damage, deficiency or
loss of Rent which Landlord may sustain by such re-entry, including reasonable
attorneys' fees and court costs; and in such case, Landlord reserves full power,
which is hereby acceded to by Tenant, to relet the Premises for the benefit of
Tenant, in liquidation and discharge, in whole or in part, as the case may be,
of the liability of Tenant under the terms and provision of this Lease. In
addition to the foregoing remedies, Landlord will also have the following
remedies to the extent permitted by law and all other remedies afforded to it at
law or in equity, all of which shall be cumulative: to terminate this Lease; to
declare due and payable all Rent for the unexpired Term as and when the same
becomes due and payable or to defer any suit until after the Term without
thereby prejudicing its rights; to accelerate the Rent for the remainder of the
Term and declare it all immediately due and payable [with a present value
discount two (2) whole percentage points below the prime rate published in The
Wall Street Journal on the date Landlord elects said remedy]; and to bring an
action for specific performance, injunction, or other equitable relief to
prevent any threatened or impending default or to end any existing default. In
addition, Landlord may perform any obligation which
<PAGE> 5
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Tenant has failed to perform after the expiration of any applicable notice
and/or cure period (except in an emergency, when no notice or cure period will
be necessary or afforded), all at the cost of Tenant as Additional Rent payable
upon demand. Tenant shall also pay all expenses (including, without limitation,
reasonable attorneys' fees) incurred by Landlord following a default, whether or
not suit is instituted; the same shall be Additional Rent payable upon demand.
In determining the Rent due for the balance of the Term, all Additional Rent
shall be determined by projecting into the future the Additional Rent payable on
the date of default increasing by a compounding five percent (5%) per Lease
Year. No waiver of any breach of any covenant, condition, or agreement herein
contained shall operate as a waiver of the covenant, condition or agreement
itself, or of any subsequent breach thereof. No provision of this Lease shall be
deemed to have been waived by Landlord unless such waiver shall be in writing
signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser
amount than the Rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated Rent, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment as Rent be deemed
an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such Rent or
pursue any other remedy provided in this Lease. Landlord shall have a lien for
the payment of the Rent upon all of the goods, wares, chattels, fixtures,
furniture and other personal property of Tenant which may be in or upon the
Premises, Tenant hereby specifically waiving any and all exemptions allowed by
law; such lien may be enforced on the nonpayment of any installment of Rent by
the taking and selling of such property in the same manner as in the case of
chattel mortgages on default thereunder; said sale is to made upon ten (10) days
notice served upon Tenant by posting upon the Premises or such lien may be
enforced in any other lawful manner at the option of Landlord.
18. RIGHTS OF LENDERS, GROUND LESSORS AND PURCHASERS: This Lease is
subject and subordinate to all ground or underlying leases (hereinafter
collectively referred to as "GROUND LEASES") and to all of the terms and
provisions and liens of all mortgages and/or deeds of trust (hereinafter
collectively referred to as "MORTGAGES") which may now or hereafter affect this
Lease or the Building, and to all renewals, modifications, consolidations,
replacements, amendments and extensions thereof. This clause is self-operative,
and no lessor or mortgagee (as used in this Lease, "MORTGAGEE" includes any
mortgagee under a mortgage, any beneficiary or trustee under a deed of trust,
and any lender or other secured party under a deed to secure debt or other
instrument similar to any of the foregoing) may require any instrument of
subordination. In confirmation of such subordination, Tenant shall execute
promptly any certificate that Landlord may request. Tenant hereby constitutes
and appoints Landlord Tenant's attorney-in-fact to execute any such certificate
or certificates for and on behalf of Tenant. Notwithstanding the foregoing, a
ground lessor or mortgagee may recognize this Lease and, in the event of the
termination of any ground lease or any foreclosure or similar sale or deed in
lieu thereof under such mortgage, this Lease will continue in full force and
effect at the option of the ground lessor or mortgagee (or the purchaser at any
such foreclosure sale). Tenant will, at the written request of the ground lessor
or mortgagee (or the purchaser at any such foreclosure sale), execute,
acknowledge and deliver any instrument that has for its purpose and effect the
subordination of such ground lease or mortgage to this Lease. In any case, such
ground lessor, mortgagee, landlord or successor shall not be bound by any
prepayment on the part of Tenant of any Rent for more than one month in advance,
so that Rent shall be payable under this Lease in accordance with its terms as
if such prepayment had not been made; nor shall any such ground lessor,
mortgagee, landlord or successor be liable for any default under this Lease by
any predecessor Landlord or subject to any counterclaim, set-off or defense as a
result of any such default; and provided, further, such ground lessor,
mortgagee, landlord or successor shall not be bound by this Lease or any
amendment or modification of this Lease unless Landlord's ground lessor or
mortgagee, as may be applicable, had approved the same in writing. At any time
and from time to time, upon the request and at the sole option of any successor
to Landlord's interest, Tenant shall attorn to any successor to Landlord's
interest, whether such successor acquires its interest by voluntary conveyance,
foreclosure, deed in lieu of foreclosure, termination or expiration of a ground
lease, or any other method, and in that event this Lease shall continue as a
direct lease between Tenant and such landlord or its successor and the prior
Landlord shall be released from all obligations and liability under this Lease
arising after the date of transfer. The terms of this Lease are subject to
approval by the Landlord's ground lessor(s) and lender(s), and such approval is
a condition precedent to Landlord's obligations hereunder. Tenant shall furnish
copies of any default or similar notices delivered by Tenant to Landlord
hereunder at the same time to each ground lessor or mortgagee, now or at anytime
and from time to time hereafter, and no such notice shall be effective unless
and until a copy of it is sent to each such ground lessor or mortgagee, provided
that Tenant has been afforded written notice of the name and address of such
party. Each such ground lessor or mortgagee may cure any default by Landlord
within the same time period afforded Landlord to cure any such default, plus
such additional period of time thereafter as may be reasonably necessary for
such ground lessor or mortgagee to cure such default.
19. CONDEMNATION: If the Premises or any part thereof is taken or
condemned for public or quasi-public use or purpose by any competent authority,
or conveyed in lieu of being taken or condemned, Tenant will have no claim
against Landlord and will not have any claim or right to any portion of the
amount that may be awarded to Landlord as damages or paid as a result thereof.
All right of Tenant to damages therefor, if any, are hereby assigned by Tenant
to Landlord. Upon such condemnation or taking, or conveyance in lieu thereof,
the Term shall terminate from the date of such governmental taking or
condemnation, or conveyance in lieu thereof, and Tenant will have no claim
against Landlord for the value of any unexpired Term. Nothing in this Paragraph
limits or affects Tenant's right to seek any separate award from the condemning
authority as long as Tenant does not thereby reduce, delay or in any other way
affect Landlord's claim or award.
20. SUCCESSORS: All rights, remedies and liabilities herein given to or
imposed upon either of the parties hereto extend to their respective heirs,
executors, administrators, successors and permitted assigns.
21. TENANT HOLDOVER: If Tenant continues to remain in the Premises
after the termination or expiration of the Term, then and in that event Tenant
will become a tenant by the month at 125% of the Base Rent per month payable for
the last month before the expiration or termination of the Term plus all
Additional Rent that may be incurred during any such holdover, but in no event
less than the then market rent for the Premises. Holdover Rent will commence
with the first day following the end of the Term. During any holdover, each
party must give the other at least thirty (30) days written notice to quit the
Premises, except in the event of any default by Tenant, in which event Tenant
will not be entitled to any notice to quit, the usual thirty (30) days' notice
to quit being hereby expressly waived; PROVIDED, HOWEVER, that if Tenant holds
over after the expiration of the Term hereby created, and if Landlord desires to
regain possession of the Premises promptly at the expiration of the Term, then
at any time prior to Landlord's acceptance of Rent from Tenant as a monthly
tenant hereunder, Landlord, at its option, may forthwith re-enter and take
possession of the Premises without process, or by any legal process in force.
Tenant shall not use FORCE MAJEURE as an excuse for any holding over.
22. POSSESSION: Landlord shall give possession of the Premises to
Tenant on the Commencement Date. If Landlord is unable to give possession of the
Premises on the Commencement Date because any portion of the Premises are
located in a Building being constructed that has not been sufficiently completed
to make the Premises ready for occupancy, or because a certificate of occupancy
has not been procured, or if Landlord is unable to give possession of the
Premises on the Commencement Date because of the holding over or retention of
possession of any
<PAGE> 6
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previous tenant, occupant or owner, or if repairs, improvements or decorations
of the Premises or of the Building are not completed, or for any other reason,
Landlord will not be subject to any liability for the failure to give possession
on the Commencement Date. No such failure to give possession on the Commencement
Date will affect in any other respect the validity of this Lease or the
obligations of Tenant hereunder, nor will the same be construed in any way to
extend the Term. If Landlord permits Tenant to enter into the possession of the
Premises or a portion of the Premises prior to the Commencement Date, such
occupancy shall be deemed to be under all terms, covenants, conditions and
provisions of this Lease.
23. JOINT AND SEVERAL LIABILITY: If Tenant consists of more than one
individuals and/or entities, then the liability of each of them for Tenant's
obligations under this Lease shall be joint and several.
24. PRONOUNS: Feminine, masculine or neuter pronouns shall be
substituted for each other, and the plural shall be substituted for the singular
number and vice versa in any place in which the context may require such
substitution.
25. LATE PAYMENT: If Tenant fails to pay any Rent on or before the
fifth (5th) day after such payment becomes due and payable, Tenant shall pay to
Landlord a late charge of five percent (5%) of the amount of such overdue
payment. In addition, any Rent not paid when due will bear interest at the
lesser of eighteen percent (18%) per annum or the maximum rate allowed by law
until paid. Acceptance of the foregoing sums shall not constitute a waiver of
the default. Upon Landlord's receipt of any check from Tenant which is
dishonored for payment, Landlord may require Tenant to make all future payments
due to Landlord hereunder by cash, certified or cashier's check.
26. NOTICES: All notices required or desired to be given hereunder by
either party to the other shall be given by hand, by overnight courier or by
certified or registered mail. Notices shall be effective upon receipt (refusal
to accept delivery or the inability to make delivery due to an incorrect or
outdated address being provided by the intended recipient shall constitute
receipt). Notices to the respective parties must be addressed as follows:
If to Landlord - The Black Family Limited Partnership
c/o Monte R. Black
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
If to Tenant - MPW Industrial Services, Inc.
9711 Lancaster Road, S.E.
Hebron, Ohio 43025
Attn: Daniel P. Buettin
Either party may, by like written notice, designate a new address or addressee
to which notices must be directed. Tenant shall provide a copy of any notice
given to Landlord to any mortgagee or ground lessor of whom Tenant has notice.
Notices may be given by authorized agents or attorneys on behalf of a party.
27. ESTOPPEL CERTIFICATES: Within ten (10) days after request therefor
by Landlord or any ground lessor or mortgagee of the Building, Tenant shall
execute and deliver estoppel certificates certifying, among other things: the
text of this Lease and any amendments thereto; whether this Lease has been
amended and, if so, the date of each such amendment; whether this Lease is in
full force and effect and, if not, the reason therefor; whether any default or
any situation which could be a default after the giving of notice or the
expiration of any cure period (or both) exists under this Lease on the part of
Landlord or Tenant and, if so, specifying the default or potential default;
whether Tenant has taken possession of the Premises; whether the Premises have
been completed in accordance with the terms of this Lease and all bills therefor
paid and, if not, what remains to be done or paid; the Commencement Date and the
expiration date of the Term; whether Tenant has any renewal options, expansion
options, or rights to purchase and, if so, identifying the conditions and
periods when they may be exercised; the date Rent commenced to accrue and the
date to which Rent has been paid; whether any security deposit has been posted;
whether Tenant has any knowledge or any environmental problem affecting the
Premises or the Building; and such other matters as may be reasonably requested.
28. NO PERSONAL LIABILITY: Notwithstanding any provision of this Lease
to the contrary or any general rule of law, in no event whatsoever shall
Landlord or any of its shareholders, partners, directors, officers, employees,
agents or other principals have any personal liability whatsoever with respect
to this Lease, and no such personal liability shall be sought, obtained or
enforced. Any liability of Landlord under this Lease may be enforced solely
against Landlord's equity interest in the Land and Building; no other properties
or assets of Landlord are subject to this Lease or Landlord's liabilities
hereunder.
29. BROKERS: Each party represents and warrants to the other that it
has not engaged or used any broker or finder in connection with this Lease. Each
party shall defend, indemnify and hold the other party harmless from and against
any breach by the indemnifying party of the representation and warranty set
forth in the first sentence of this Paragraph. Tenant shall defend, indemnify
and hold Landlord's ground lessors and mortgagees harmless from and against any
breach by Tenant of the representation and warranty set forth in the first
sentence of this Paragraph. No broker is a third party beneficiary of this
Lease.
30. COMPLETE AGREEMENT; NO ORAL MODIFICATIONS: This Lease represents
the complete and integrated agreement of the parties with respect to the
Premises and, except as set forth herein, there are no other agreements,
covenants, representations or warranties (express or implied) between the
parties. Nothing in this Lease shall be deemed or construed to create a
partnership or joint venture or to create any relationship other than landlord
and tenant. This Lease may not be amended except by a written document signed by
the party to be bound thereby.
<PAGE> 7
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31. GOVERNING LAW AND RULES OF INTERPRETATION: This Lease is governed
by the laws of the State of Michigan without regard to conflicts of laws.
Without limiting a party's right to bring any action in any other jurisdiction
or forum, each party submits itself to the jurisdiction of the federal and local
courts sitting in the State of Michigan and to venue therein. It is the intent
of the parties that this Lease be enforceable to the fullest extent permitted by
law. If any provision of this Lease is capable of two or more interpretations or
can be reformed so as to comply with applicable law while giving effect to the
intent of such provision, then such provision shall be interpreted in the way
most likely to be in compliance with applicable law. Although the printed
provisions of this Lease were drawn by Landlord, this Lease shall not be
construed either for or against Landlord or Tenant.
[the rest of this page is intentionally blank]
<PAGE> 8
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal as of the day and year first above written.
WITNESS: THE BLACK FAMILY LIMITED PARTNERSHIP
/s/ Robert J. Gilker
- -----------------------------------
By: /s/ Monte R. Black
-----------------------------------
WITNESS: Name: Monte R. Black
/s/ Annette E. Magill Title: General Partner
- -----------------------------------
TENANT:
WITNESS: MPW INDUSTRIAL SERVICES, INC.
/s/ Robert J. Gilker
- -----------------------------------
By: /s/ Daniel P. Buettin
-----------------------------------
WITNESS: Name: Daniel P. Buettin
/s/ Annette E. Magill Title: Vice President, Chief Financial
- ----------------------------------- Officer and Secretary
ACKNOWLEDGEMENT
---------------
STATE OF OHIO )
) SS.
COUNTY OF LICKING )
Before me, a Notary Public in and for said County, personally
appeared the above-named Monte R. Black, the General Partner of The Black Family
Limited Partnership ("Landlord"), who acknowledged that he did sign the
foregoing instrument on behalf of Landlord, and that the same is his free act
and deed on Landlord's behalf and the free act and deed of Landlord.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
Hebron, Ohio this 9th day of August, 1996.
[Notarial Seal] /s/ Ellen S. Nahs
------------------------------------
Notary Public
My commission expires: 1-31-97
<PAGE> 9
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
-----------------------------
Lot 10 of R.C. Schmidt & Sons Industrial Complex, according to the plat
thereof recorded in Liber 81 of Plats, Pages 30 through 46 inclusive, Macomb
County Records. Commonly known as 50321 East Russell Schmidt Blvd., Chesterfield
Township, Michigan.
Parcel ID # 15-09-19-326-007
<PAGE> 1
EXHIBIT 10(l)
FORM OF FIRST LEASE AMENDMENT
THIS FIRST LEASE AMENDMENT (this "First Amendment"), is made this
______ day of _______________, 1997, by and between THE BLACK FAMILY LIMITED
PARTNERSHIP, an Ohio limited partnership ("Landlord") and MPW INDUSTRIAL
SERVICES, INC., an Ohio corporation ("Tenant").
WITNESSETH:
WHEREAS Landlord and Tenant have heretofore entered into that certain
lease, dated as of __________, 1996 (the "Lease"), for certain premises
containing a 35,500 square foot industrial facility located on approximately
5.99 acres of land in Chesterfield Township, Macomb County, Michigan (the
"Premises");
WHEREAS, the Lease grants to Tenant, inter alia, an option to renew
the Term for one additional five (5) year period, and Tenant and Landlord wish
to modify the extension rights of Tenant; and
WHEREAS, the parties wish to further modify certain terms of the Lease
in accordance with the provisions of this First Amendment.
NOW, THEREFORE, in consideration of the mutual premises contained
herein, the sum of One Dollar ($1.00) in hand paid, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Landlord and Tenant, intending to be legally bound, hereby agree as follows:
1. Defined Terms: All terms used herein but not defined shall
have the meanings ascribed thereto in the Lease.
2. Term: Subparagraph 2(b) of the Lease is hereby deleted, and
the following is inserted in lieu thereof:
(b) Renewal Term. Tenant may, at its sole option, choose
to extend the term of this Lease for two (2)
additional periods of five (5) years each (a
"Renewal Term") under such terms and conditions as
Landlord and Tenant will negotiate, based upon a
fair market appraisal of the Premises. Tenant shall
provide Landlord with written notice of Tenant's
intent to exercise this option not later than one
hundred twenty (120) days prior to the expiration of
the Initial Term or first Renewal Term, as
applicable. As used in this Lease, "Term" means both
the Initial Term and, if Tenant exercises its
option(s), any Renewal Term. As used in this Lease,
"Lease Year" means each consecutive twelve (12)
month period of the Term, starting on the
Commencement Date of this Lease.
3. Rent: Subparagraph 3(a) of the Lease is hereby deleted, and
the following is inserted in lieu thereof:
(a) Tenant shall pay as "Base Rent" for each Lease Year
during the Initial Term the sum of_________________
_____________________________________________ and
No/100 Dollars ($__________), payable in advance, in
equal monthly installments of_____________________
_____________________________________ and __/100
Dollars ($_____________). The first and last
monthly installments are due and payable on the
execution of this Lease and the remaining
installments are due and payable in advance on the
first day of each and every month during the Term,
without offset or deduction, to Landlord at the
address set forth in Paragraph 26 or at such other
place as Landlord may hereafter designate in
writing. Rent checks are to be made payable to
Landlord, or such other person, form or corporation
as Landlord may designate in writing.
A new subparagraph 3(e) is inserted in the lease as follows:
(e) For each Renewal Term, Tenant shall notify Landlord
that Tenant desires to exercise its option to extend
the Term of this Lease for the next ensuing five (5)
year period, and to obtain an appraisal of the
Premises to determine the market rent for the Premises
by delivering written notice to Landlord not less than
one hundred twenty (120) days prior to the beginning
of each renewal Term. Tenant shall include in such
notice the name of an MAI appraiser selected by Tenant
which has an office in Macomb County, Michigan.
Landlord shall within thirty (30) days following
receipt of such notice from Tenant give written notice
to Tenant setting forth the name of a second MAI
appraiser with an office in Macomb County, Michigan.
If Landlord fails to notify Tenant of the name of an
appraiser within the thirty (30) day period, then the
appraiser selected by Tenant shall determine the
market rent and the decision of said appraiser shall
be binding upon the parties hereto. If Landlord has
selected an appraiser in accordance with the
provisions of this Paragraph, then the appraiser
selected by Landlord and the appraiser selected by
Tenant shall meet and select a third MAI appraiser
with an office in Macomb County, Michigan. The
appraiser selected by Landlord and the appraiser
selected by Tenant shall each appraise the Premises
for purposes of obtaining said market rent. The third
appraiser shall determine and notify Landlord and
Tenant which of the two appraisals made by Landlord's
and Tenant's appraisers more closely reflects the
market rent of the Premises, and the decision of the
third appraiser shall be binding upon the parties
hereto.
4. Complete Agreement; No Oral Modification: The Lease, as
modified by this First Amendment, represents the complete and integrated
agreement of the parties with respect to the Premises and, except as set forth
herein, there are no other agreements, covenants,
<PAGE> 2
- 2 -
representations or warranties (express or implied) between the parties. The
Lease, as modified by this First Amendment, may not be amended except by a
written document signed by the party to be bound thereby. The parties hereby
ratify and confirm the Lease, as modified hereby.
5. Governing Law and Rules of Interpretation: This First
Amendment is governed by the laws of the State of Michigan without regard to
conflicts of laws. Without limiting a party's right to bring any action in any
other jurisdiction or forum, each party submits itself to the jurisdiction of
the federal and local courts sitting in the State of Michigan and to venue
therein. It is the intent of the parties that this First Amendment be
enforceable to the fullest extent permitted by law. If any provision of this
First Amendment is capable of two or more interpretations or can be reformed so
as to comply with applicable law while giving effect to the intent of such
provision, then such provision shall be interpreted in the way most likely to be
in compliance with applicable law. Although the printed provisions of this First
Amendment were drawn by Landlord, this instrument shall not be construed either
for or against Landlord or Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment
under seal as of the day and year first above written.
LANDLORD:
WITNESS:
- ------------------------ THE BLACK FAMILY LIMITED PARTNERSHIP
By:
-----------------------------------------------
WITNESS:
- ------------------------ Name: Monte R. Black
-------------------------------------------
Title: General Partner
-------------------------------------------
TENANT:
WITNESS: MPW INDUSTRIAL SERVICES, INC.
- ------------------------ By:
-----------------------------------------------
WITNESS: Name:
---------------------------------------------
- ------------------------
Title:
--------------------------------------------
<PAGE> 3
ACKNOWLEDGEMENT
STATE OF______________________________)
) SS.
COUNTY OF_____________________________)
Before me, a Notary Public in and for said County, personally
appeared the above-named The Black Family Limited Partnership, by Monte R.
Black, General Partner ("Landlord"), who acknowledged that he did sign the
foregoing instrument on behalf of Landlord, and that the same is his free act
and deed on Landlord's behalf and the free act and deed of Landlord.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
_________________, __________________ this ___ day of ______________, 1997.
[Notarial Seal]
__________________________________
Notary Public
My commission expires:
ACKNOWLEDGEMENT
STATE OF______________________________)
) SS.
COUNTY OF_____________________________)
Before me, a Notary Public in and for said County, personally
appeared the above-named _______________, ____________ of MPW Industrial
Services, Inc. ("Tenant"), who acknowledged that he did sign the foregoing
instrument on behalf of Tenant as such officer, and that the same is his free
act and deed on Tenant's behalf and the free act and deed of Tenant.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
_________________, __________________ this ___ day of ______________, 1997.
[Notarial Seal]
__________________________________
Notary Public
My commission expires:
<PAGE> 1
EXHIBIT 21
MPW INDUSTRIAL SERVICES GROUP, INC.
LIST OF SUBSIDIARIES(1)
-----------------------
JURISDICTION OF
NAME ORGANIZATION
---- ------------
ESI International, Inc. Ohio
ESI North, Limited Ohio
MPW Industrial Services, Inc. Ohio
MPW Management Services Corp. Ohio
MPW Industrial Services, Ltd. Canada
MPW Industrial, L.L.C. of V.C. Mexico
Weston Engineering, Inc. Ohio
Aquatech Environmental, Inc. Michigan
- -------------------
1 This Exhibit 21 to the Registration Statement sets forth the names of
all of the entities expected to be subsidiaries of MPW Industrial
Services Group, Inc. at the time such Registration Statement becomes
effective.
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Consolidated Financial Data" and to the use of our report dated
September 30, 1997 (except for Notes 14 and 15 as to which the date is
, 1997) in Amendment No. 1 to the Registration Statement (Form S-1)
and related Prospectus of MPW Industrial Services Group, Inc. for the
registration of 4,312,500 shares of its common stock.
Our audit also included the financial statement schedule of MPW Industrial
Services Group, Inc. listed in Item 16(b). This schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth
herein.
Columbus, Ohio
, 1997
The foregoing consent is in the form that will be signed upon the
completion of the reincorporation of the Company as described in Note 14 to the
financial statements.
ERNST & YOUNG LLP
Columbus, Ohio
October 15, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MPW
INDUSTRIAL SERVICES GROUP, INC. FORM S-1 FOR THE THREE MONTHS ENDED SEPTEMBER
30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 532
<SECURITIES> 0
<RECEIVABLES> 15,789
<ALLOWANCES> 715
<INVENTORY> 3,353
<CURRENT-ASSETS> 20,458
<PP&E> 51,412
<DEPRECIATION> 28,293
<TOTAL-ASSETS> 46,671
<CURRENT-LIABILITIES> 11,224
<BONDS> 12,096
00
0
<COMMON> 62
<OTHER-SE> 17,859
<TOTAL-LIABILITY-AND-EQUITY> 46,671
<SALES> 21,865
<TOTAL-REVENUES> 21,865
<CGS> 14,380
<TOTAL-COSTS> 18,951
<OTHER-EXPENSES> 99
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 335
<INCOME-PRETAX> 2,480
<INCOME-TAX> 149
<INCOME-CONTINUING> 2,331
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,331
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
