UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
US Industrial Services, Inc.
----------------------------
(Name of Issuer)
Common Stock, $.01 par value
----------------------------
(Title of Class of Securities)
90332T 10 6
-----------
(CUSIP Number)
ALBERT V. FURMAN III
Manager
USIS Acquisition, LLC
8111 Preston Road, Suite 715
Dallas, Texas 75225
(214) 891-9698
-----------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
July 24, 1998
----------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box [].
NOTE: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934, as amended (the "Act") or
otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however,
see the Notes).
SCHEDULE 13D
CUSIP NO. 90332T 10 6 PAGE 2 OF 6 PAGES
-------------------------- ------------------------------
1. NAME OF REPORTING PERSON
-- --------------------------------------------------------------
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
USIS Acquisition, LLC
52-2114311
--------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) []
(b) []
-- --------------------------------------------------------------
3. SEC USE ONLY
-- --------------------------------------------------------------
4. SOURCE OF FUNDS*
WC, OO
-- --------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) []
-- --------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-- --------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
5,295,858
SHARES ------------------------------------------------------
8. SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY -- -------------------------------------------------
9. SOLE DISPOSITIVE POWER
EACH 5,295,858
-- -------------------------------------------------
REPORTING
10. SHARED DISPOSITIVE POWER
PERSON WITH
-0-
-- -------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,295,858
--------------------------------------------------------------
--
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* []
-- --------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60.4%
-- --------------------------------------------------------------
14. TYPE OF REPORTING PERSON*
OO
-- --------------------------------------------------------------
ITEM 1. SECURITY AND ISSUER
The securities covered by this Schedule 13D are shares of
common stock, $.01 par value (the "Common Stock"), of US
Industrial Services, Inc., a Delaware corporation (the
Company ). The Company s principal executive offices are
located at 54 Stiles Road, Salem, New Hampshire 03079.
ITEM 2. IDENTITY AND BACKGROUND
(a) and
(b) This statement on Schedule 13D is being filed by USIS
Acquisition, LLC, a Delaware limited liability company
("USIS"). The principal business of USIS is managing its
investment in the Company. The address of USIS is 8111
Preston Road, Suite 715, Dallas, Texas 75225.
(c) The principal occupation of the sole manager of USIS, Albert
V. Furman III, is Director and Chairman of the Investment
Committee of Texas Heritage Bancorp of Round Rock, Texas.
The sole member of USIS is Arctic Circle, Ltd., a BVI
corporation ("Arctic Circle"). Mr. Furman is the sole
officer and sole director of Arctic Circle, and none of
Arctic Circle's shareholders have voting control.
(d) During the past five years, neither USIS nor its sole member
(Arctic Circle) or sole manager (Mr. Furman) has been
convicted in any criminal proceeding (excluding traffic
violations and similar misdemeanors).
(e) During the past five years, neither USIS nor its sole member
(Arctic Circle) or sole manager (Mr. Furman) was a party to
a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of enjoining future
violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) The sole manager of USIS, Mr. Furman, is a U.S. citizen,
while the sole member, Arctic Circle, is a BVI corporation.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The source and the amount of funds or other consideration
used by USIS in making its purchase of the $17,900,000
convertible note of the Company (the "Convertible Note") from
American Eco Corporation ("American Eco") was as follows:
$5,000,000 was paid to American Eco on July 24, 1998 from
the USIS working capital;
$12,900,000 was provided in the form of a note to American
Eco, bearing interest at 10%, payable on January 29, 1999
(the "Promissory Note"). The Promissory Note is secured by
a Stock Pledge Agreement granting American Eco a security
interest in all of the Company's Common Stock held by USIS
(the "Collateral").
ITEM 4. PURPOSE OF TRANSACTION
USIS was formed on July 2, 1998, for the purpose of
acquiring a controlling interest in USIS. USIS acquired the
Convertible Note with the intention of converting it into common
shares of the Company. The conversion price was $3.38 per share,
based upon 85% of the average five days' closing price prior to
the conversion date. Upon the conversion, which occurred on July
27, 1998, USIS acquired 5,295,858 shares of the Company's Common
Stock. Mr. Furman became Chairman and CEO of USIS on August 4,
1998, replacing Frank Fradella, who had resigned on July 21,
1998. Also, Mr. C. Thomas Mulligan was appointed Vice President,
CFO, Secretary and General Counsel on August 4, 1998.
USIS currently has no plans to acquire additional equity in
the Company or to engage in any transactions described in
Paragraphs (b) through (i) of this Item. Any decision by USIS in
the future to acquire or dispose of equity in the Company or to
take any other actions with respect to the Company or its
securities will depend upon several factors, including the
prospects of the Company, general market and economic conditions,
and other factors deemed relevant.
ITEM 5. INTEREST IN SECURITIES
(a) Upon conversion of the Convertible Note, which occurred on
July 27, 1998, USIS acquired 5,295,858 shares of the Company s
Common Stock, which represented 60.4% of the then outstanding
shares of Common Stock.
(b) Number of shares as to which USIS has:
sole power to vote or direct the vote:
5,295,858
shared power to vote or direct the vote:
0
sole power to dispose or direct the disposition:
5,295,858
shared power to dispose or direct the disposition:
0
(c) Other than the acquisition of the Convertible Note on July
24, 1998, and subsequent conversion of the Convertible Note
on July 27, 1998, neither USIS nor its sole manager or sole
member has engaged in any transactions in the Common Stock
within the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER
Pursuant to the Stock Pledge Agreement, USIS pledged the
Collateral to American Eco to secure the due and punctual payment
and other performance of USIS's obligations under the Promissory
Note (the "Obligations"). Upon the occurrence of an event of
default under the Stock Pledge Agreement, American Eco would have
certain rights with respect to the Collateral including the right
to exercise creditor's remedies generally as well as the right to
transfer the Collateral into American Eco's name or that of its
nominee and the right to foreclose upon and sell the Collateral
at a public or private sale at which American Eco may purchase
the Collateral. Upon the occurrence of an Event of Default,
American Eco may, at its option, exercise all voting rights
pertaining to the Collateral, including the right to take
shareholder action by written consent, until the termination of
the Stock Pledge Agreement according to its terms.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Letter Agreement between American Eco and USIS, dated
July 24, 1998.
2. Secured Promissory Note from USIS as Maker to American
Eco as Holder, dated July 24, 1998.
3. Stock Pledge Agreement between American Eco and USIS,
dated July 24, 1998.
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in the statement
is true, complete and correct.
USIS ACQUISITION, LLC
Date: August 5, 1998 By: /s/ Albert V. Furman III
------------------------
Albert V. Furman III
Manager
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
1. Letter Agreement between American Eco and USIS, dated
July 24, 1998.
2. Secured Promissory Note from USIS as Maker to American
Eco as Holder, dated July 24, 1998.
3. Stock Pledge Agreement between American Eco and USIS,
dated July 24, 1998.
USIS ACQUISITION, LLC
July 24, 1998
American Eco Corporation
11011 Jones Road
Houston, Texas 77070
Attn: Michael E. McGinnis, Chairman
Gentlemen:
This letter sets forth the terms and conditions of the
agreement relating to the purchase by the undersigned (the
"Buyer") from you, American Eco Corporation, an Ontario
corporation (the "Seller"), of certain promissory notes (the
"Notes") of U S Industrial Services, Inc., a Delaware corporation
(the "Company"), issued to the Seller consisting of an aggregate
principal and interest in the amount of $17,900,000 as of July
24, 1998. The Notes consist of the total of a Promissory Note,
dated March 1, 1996, from EIF Holdings, Inc., a Hawaii
corporation ("EIF"), as Maker, to the Seller, as Payee, as
amended by a Renewal, Extension and Modification of the Revolving
Line of Credit Note, dated July 31, 1997, a Second Amendment to
the Revolving Line of Credit Note, dated September 30, 1997, and
a Third Amendment to the Revolving Line of Credit Note, dated
February 18, 1998. Effective June 22, 1998, EIF completed a
recapitalization and reincorporation (collectively, the
"Reincorporation"), whereby the surviving company (or successor
registrant) is the Company. Upon the Reincorporation the Company
succeeded to all the business, properties, assets and liabilities
of EIF.
1. Subject to the terms and conditions herein, the
Buyer is purchasing from the Seller, and the Seller is selling
and assigning to the Buyer, the Notes for $17,900,000 (the
"Purchase Price"). Upon execution and delivery of this Letter
Agreement by the Seller to the Buyer, the Buyer shall pay the
Purchase Price by delivering to the Seller (i) $5,000,000 by wire
transfer to an account designated by the Seller and (ii) a
promissory note, in the form attached hereto as Exhibit A (the
---------
"Promissory Note"), in the principal amount of $12,900,000
payable to the order of the Seller. The Promissory Note shall
bear interest at a rate of 10% per annum and all interest shall
accrue and be payable upon maturity which shall be on January 29,
1999 and shall be secured by shares of the Company pursuant to a
Stock Pledge Agreement in the form attached hereto as Exhibit B.
---------
2. The Buyer represents, warrants and covenants to
the Seller that:
2.1 The Buyer has the full corporate power and
authority to enter into this Letter Agreement, to purchase the
Indebtedness, and to issue the Promissory Note and to execute and
deliver the Pledge Agreement, and that the Buyer's execution,
delivery and performance under this Letter Agreement, the
Promissory Note and the Pledge Agreement (collectively, the
"Purchase Documents") has been duly authorized by all necessary
action.
2.2 The Buyer has duly executed and delivered the
Purchase Documents and each constitutes a legal, valid and
binding obligation of the Buyer, enforceable against it in
accordance with their respective terms.
2.3 The Buyer is not, on the date hereof, nor
will be as a result of the transactions contemplated by this
Letter Agreement, insolvent, as such term is defined under Title
11 of the United States Code or any similar state statute.
2.4 The Buyer has provided the unaudited balance
sheet as at July 16, 1998 (the "Balance Sheet"). The Balance
Sheet has been prepared according to generally accepted
accounting principles and accurately sets forth the assets and
liabilities (contingent or otherwise) as of the date thereof. No
event has occurred since the date of the Balance Sheet which
would adversely affect the financial condition of the Buyer.
2.5 The Buyer is fully familiar with and aware of
the current business and affairs of the Company and it has had
the opportunity to discuss the Company's operations and financial
condition and prospects with management of the Company. The
Buyer acknowledges that the Seller has not made any
representations (written or oral) to it regarding the Company.
2.6 The Buyer acknowledges that the sale and
assignment of the Notes to it is without recourse to the Seller,
and that it fully understands the risks entailed in such an
investment and inherent in the transactions contemplated by this
Letter Agreement.
3. The Seller represents and warrants to the Buyer
that:
3.1 The Seller is the sole beneficial and record
owner of the Notes, free and clear of any lien, encumbrance
and/or security interest of any kind or nature whatsoever, except
any restrictions by reason of the Securities Act of 1933, as
amended.
3.2 The Seller has the full corporate power and
authority to enter into this Letter Agreement and to sell the
Notes, and that the Seller's execution, delivery and performance
under this Letter Agreement has been duly authorized by all
necessary action.
4. This Letter Agreement sets forth the entire
agreement between the parties hereto as to the subject matter
herein, and cannot be amended, modified or terminated except by
an agreement in writing executed by the parties hereto. In the
event any provision of this Letter Agreement is invalid, illegal
or unenforceable, the remainder of hereof shall be construed
without taking into effect such invalid, illegal or unenforceable
provision. This letter shall be governed by the laws of the
State of Texas.
Please signify your agreement to the foregoing by
executing and returning the duplicative original of this letter.
You may retain the original for your files.
Very truly yours,
USIS ACQUISITION, LLC
a Delaware limited liability company
By: /s/ Albert V. Furman, III
--------------------------
Albert V. Furman, III
Manager
Agreed to this 24th
day of July, 1998
AMERICAN ECO CORPORATION
By: /s/ Michael E. McGinnis
------------------------------
Michael E. McGinnis
Chairman
Consented to this 24th
day of July, 1998
U S INDUSTRIAL SERVICES, INC.
By: /s/ Michael Chakos
------------------------------
Michael Chakos
President/Chief Operating Officer
SECURED PROMISSORY NOTE
-----------------------
$12,900,000. July 24, 1998
FOR VALUE RECEIVED, USIS ACQUISITION, LLC, a Delaware
limited liability company ("Maker"), with a place of business at
-----
8111 Preston Road, Ste. 715, Dallas, TX 75225, hereby promises to
pay to the order of AMERICAN ECO CORPORATION, an Ontario
corporation ("Holder"), at 11011 Jones Road, Houston, Texas
------
77070, or such other place as Holder may designate in writing
(the "Payment Location"), the principal sum of TWELVE MILLION
----------------
NINE HUNDRED THOUSAND DOLLARS ($12,900,000) on January 29, 1999
(the "Maturity Date"). The outstanding principal amount of this
-------------
Note shall bear interest at a rate of ten (10%) percent per
annum, payable on the Maturity Date, except upon a prepayment as
provided for in Section 2 herein.
This Note is issued in payment of a portion of the
purchase price for the purchase by Maker from American Eco
Corporation of certain promissory notes of U S Industrial
Services, Inc., a Delaware corporation ("US Industrial"),
pursuant to a Letter Agreement, dated July 24, 1998, between
Holder and Maker (the "Letter Agreement").
1. Security. To secure the obligations of Maker
---------
under this Note, Maker is granting to Holder a security interest
in certain shares of Common Stock of US Industrial owned by
Maker, pursuant to a Stock Pledge Agreement, dated the date
hereof (the "Pledge Agreement").
2. Prepayment. Maker may, at its option, upon five
-----------
(5) days' prior written notice to Holder, prepay this Note in
whole at any time or in part from time to time, without penalty
or premium, with any such payment being applied first against any
accrued but unpaid interest and then against the outstanding
principal amount of this Note.
3. Covenants. Maker agrees that until such time as
----------
this Note has been paid in full, Make shall comply with the
following covenants:
3.1 Corporate Existence. Maker shall do or cause
--------------------
to be done all things necessary to preserve and keep in full
force and effect its existence as a limited liability company;
provided however, that Maker may, without the prior written
consent of Holder, merge with, consolidate with, sell
substantially all of its assets to or combine with any other
company, provided that the net worth of the surviving entity is
at least equal to the net worth of Maker immediately prior to
such event, and provided further that the surviving entity is a
corporation or a limited liability company organized under the
laws of a state of the United States of America, and such
surviving entity assumes in writing Maker's obligation under this
Note, which assumption must be acceptable to Holder.
3.2 Obligations. Maker shall pay and discharge
------------
promptly, or cause to be paid and discharged promptly, when due
and payable, all taxes, assessments and governmental charges
imposed upon it, as well as all claims of any kind which are
material to Maker and which, if unpaid, might by law become a
lien or charge upon its assets.
3.3 Financial Reports. Within 30 days after the
------------------
close of each fiscal quarter of Maker commencing with the fiscal
quarter ended June 30, 1998, Maker shall deliver to Holder an
unaudited balance sheet of Maker as of the end of such period and
related statements of cash flow and operations, together with
notes thereto prepared in accordance with generally accepted
accounting principles consistently applied, subject to normal
year-end adjustments.
3.4 Accounting System. Maker shall maintain a
------------------
system of accounting, and keep such books, records and accounts,
as may be required or necessary to permit the preparation of true
and complete financial statements in accordance with generally
accepted accounting principles.
3.5 Access. Maker shall permit representatives
-------
of Holder from time to time, as often as may be reasonably
requested, but only during normal business hours, to visit and
inspect any properties of Maker, to inspect and make copies from
the books and records of Maker, and to discuss with the principal
officers or managers of Maker, and its accountants, the business,
assets, liabilities, results of operations and business prospects
of Maker.
3.6 Other Agreements. Maker shall not enter into
-----------------
any agreement, indenture or other instrument which contains any
provision restricting the payment of principal or interest on
this Note when due, to the full extent required by and in
accordance with the provisions of this Note.
3.7 No Dividends or Distributions. Maker shall
------------------------------
not declare or pay any dividend or distribution to its members or
stockholders nor shall Maker repurchase, retire or redeem any
interest in its capital or capital stock. Maker shall not make
loans to or enter into any transaction with its members or
stockholders, or their affiliates, or pay salaries or other
compensation to any such person except in amounts which would be
paid to an unrelated third party for similar services.
4. Default.
--------
4.1 Events of Default. Unless specifically
------------------
waived in writing by Holder, the existence of any of the
following conditions or the occurrence of any of the following
events, if not cured or waived after notice as provided for in
this Section 4.1, shall entitle Holder to declare this Note in
default, and Maker shall be in default with respect to the unpaid
balance of the principal amount and any accrued interest thereon
if:
(a) the principal amount and all accrued and
unpaid interest is not paid in full on the Maturity
Date or upon prepayment in immediately available funds;
(b) Maker breaches any term of or representation
contained in this Note, the Letter Agreement or the
Pledge Agreement, or Maker fails to observe or perform
any covenant contained in this Note, which breach shall
continue uncured for more than 15 days after notice
thereof is given by Holder;
(c) at any time after the date hereof a case or
proceeding shall have been commenced against Maker in a
court having competent jurisdiction seeking a decree or
order in respect of Maker (i) under Title 11 of the
United States Code, as now constituted or hereafter
amended (the "Bankruptcy Code"), or any other
---------------
applicable Federal, state or foreign bankruptcy or
other similar law or (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator
(or similar official) of any of Maker's assets, and
such case or proceeding shall not be discharged or
dismissed within 30 days of commencement thereof;
(d) at any time after the date hereof, Maker
shall (i) file a petition seeking relief under the
Bankruptcy Code or any other applicable Federal, state
or foreign bankruptcy or other similar law and (ii)
consent to the institution of proceedings thereunder or
to the filing of such petition or to the appointment of
or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or
similar official) of Maker's assets;
(e) the acceleration of the maturity of any other
indebtedness of Maker by reason of a default
thereunder; or
(f) the entry of a judgment or order against
Maker or any of its properties which has not been
bonded or execution stayed within 30 days of entry
thereof.
(each of (a) through (f) above being referred to hereinafter as
an "Event of Default").
----------------
4.2 Acceleration. Upon the occurrence of any
-------------
Event of Default, the outstanding principal amount shall become
immediately due and payable, and Maker shall pay promptly at the
Payment Location (x) the Principal Amount in immediately
available funds and (y) accrued and unpaid interest on the
Principal Amount, which interest shall accrue daily at a rate of
ten percent (10%) per annum, in like money and funds until the
Principal Amount is paid in full.
4.3 Remedies. Upon the occurrence of any Event
---------
of Default which shall be continuing, Holder may proceed to
protect and enforce its rights by suit in equity or by action at
law, whether for specific performance of any covenant or
provision contained in this Note or in the Pledge Agreement, or
proceed to enforce payment of this Note or to enforce any other
legal or equitable right of Holder.
4.4 Collection Costs. Maker shall bear all
-----------------
collection costs (including reasonable attorneys' fees and
disbursements) as may be incurred by Holder in enforcement of its
rights hereunder.
5. Waivers, Etc.
-------------
5.1 By Maker. Maker hereby waives, to the
---------
fullest extent permitted by law, presentment, demand, notice,
protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this
Note, and assents to any extension or postponement of the time of
payment or other indulgence.
5.2 Trial by Jury. MAKER FURTHER WAIVES TRIAL BY
--------------
JURY IN ANY ACTION AND/OR PROCEEDING ARISING ON, OUT OF OR BY
REASON OF THIS NOTE, AND WAIVES ALL RIGHTS OF SETOFF AND RIGHTS
TO INTERPOSE COUNTERCLAIMS OR CROSS-CLAIMS IN CONNECTION
THEREWITH.
5.3 No Implied Waiver. Holder shall not, by any
------------------
act, delay or omission or otherwise, be deemed to have waived any
of its rights or remedies in this Note unless such waiver be in
writing and signed by Holder. A waiver on any occasion shall not
be construed as a bar to or waiver of any such right or remedy on
any future occasion.
5.4 Jurisdiction. Maker hereby irrevocably
-------------
consents that any legal action or proceeding against it arising
out of or in any way connected with this Note may be instituted
in any state court or United States Federal court located in
Harris County, State of Texas, and Maker hereby submits to the
jurisdiction of such courts. Maker further irrevocably consents
to the service of process in any such action or proceeding by the
mailing of copies of such service by registered or certified
mail, postage prepaid, return receipt requested, to the Maker.
The foregoing, however, should not limit the right of Holder to
serve process in any other manner permitted by law or to commence
any legal action or proceeding or to obtain execution of judgment
in any appropriate jurisdiction.
6. Miscellaneous.
--------------
6.1 Amendment. This Note may not be waived,
----------
changed, modified or discharged except by an agreement in writing
signed by Maker and Holder. thereof.
6.2 Binding. This Note and every obligation,
--------
covenant and agreement herein contained or referenced shall be
binding upon Maker, its successors and assigns and inure to the
benefit of Holder and its successors and assigns.
6.3 Entire Agreement. This Note sets forth the
-----------------
entire agreement between Maker and Holder with respect to the
subject matter contained herein. If any term or provision of
this Note shall be held invalid, illegal or unenforceable, the
validity, legality and enforceability of all other terms and
provisions hereof shall in no way be affected thereby.
6.4 Captions. The Section headings have been
---------
inserted for convenience only and shall be deemed to limit or
otherwise affect the construction of any provisions herein.
6.5 Governing Law. This Note shall be governed
--------------
by, and construed in accordance with, the law of the State of
Texas, without regard to choice of law principles.
IN WITNESS WHEREOF, Maker has executed this Note on the
day and year first above written.
USIS ACQUISITION, LLC
By:
-------------------------
STOCK PLEDGE AGREEMENT
----------------------
AGREEMENT dated as of the 24th day of July, 1998, by and
between USIS ACQUISITION, LLC, a Delaware limited liability
company ("Pledgor"), and AMERICAN ECO CORPORATION, an Ontario
corporation ("Pledgee").
R E C I T A L S
- - - - - - - -
A. Pledgor has entered into a Letter Agreement with
Pledgee dated as of the date hereof (the "Letter Agreement") with
respect to the purchase by Pledgor of certain promissory notes
("US Industrial Notes") of U S Industrial Services, Inc., a
Delaware corporation ("US Industrial").
B. Pledgor has executed and delivered a Secured Promissory
Note payable to the order of Pledgee dated as of the date hereof
in the principal amount of $12,900,000 (the "Pledgor Note") in
partial payment for the purchase by Pledgor from Pledgee of US
Industrial Notes.
C. As a material inducement to Pledgee to accept the
Pledgor Note, Pledgor has agreed to pledge to Pledgee, and to
grant Pledgee a security interest in, certain collateral, as
described herein.
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Pledgor and Pledgee hereby agree
as follows:
1. Grant of Security Interest. As collateral security for
--------------------------
Pledgor's due and punctual performance of the Obligations (as
hereinafter defined), Pledgor hereby pledges and delivers to
Pledgee the Collateral (as hereinafter defined), and grants,
assigns, transfers and conveys to Pledgee a continuing security
interest in the Collateral.
2. Obligations. This Agreement, and Pledgor's grant to
-----------
Pledgee of a security interest in the Collateral, is made to
secure the due and punctual payment and other performance of
Pledgor's obligations under the Pledgor Note, including all
amendments, modifications, renewals, extensions or replacements
hereof or thereof (collectively, the "Obligations").
3. Collateral. As used herein, the term "Collateral"
----------
shall mean
3.1. 5,295,858 shares of common stock, $.01 par value
(the "Shares"), of US Industrial owned by Pledgor and
certificates representing the Shares and such additional property
at any time and from time to time receivable by Pledgee hereunder
or otherwise distributed in respect of or in exchange for any or
all of such Shares;
3.2. all additional shares of stock of US Industrial
from time to time acquired by Pledgor in any manner, and the
certificates representing such additional shares, and all
options, warrants, dividends, cash, instruments and other rights
and options from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
shares; and
3.3. the property and interests described in Section 4;
together with any and all products and proceeds of any of the
foregoing in whatever form.
4. Collateral Adjustments. If, during the term of this
----------------------
Agreement,
4.1. any stock dividend, reclassification, readjustment
or other change is declared or made in the capital structure of
US Industrial, or
4.2. any subscription warrant(s) or any other right(s)
or option(s) shall be issued in connection with the Collateral,
then all new, substituted and additional shares, warrants,
rights, options and other securities issued by reason of any of
the foregoing shall be immediately delivered to and held by
Pledgee under the terms of this Agreement and shall constitute
the Collateral hereunder; provided, however, that Pledgor's
failure to so deliver such property to Pledgee shall in no way
affect the security interest granted therein as hereinabove
provided.
5. Subsequent Changes Affecting Collateral. Pledgor
---------------------------------------
represents and warrants that it has made its own arrangements for
keeping itself informed of changes and potential changes
affecting the Collateral (including, but not limited to, rights
to convert, rights to subscribe, payments of dividends,
reorganization and other exchanges, tender offers and voting
rights), and Pledgor agrees that Pledgee shall not have any
obligation to inform Pledgor of any such changes or potential
changes or to take any action or omit to take any action with
respect thereto. Pledgee may, after the occurrence of an Event
of Default, without notice and at its option, transfer or
register the Collateral or any part thereof into its or its
nominee's name with and without any indication that such
Collateral is subject to the security interest hereunder.
6. Delivery of Collateral. Concurrently with the
----------------------
execution and delivery of this Agreement, Pledgor shall deliver
to Pledgee, in form and substance satisfactory to Pledgee
certificates representing the Collateral, together with duly
executed blank stock powers, with a Medallion signature
guarantee, transferring same.
7. Representations and Warranties. Pledgor represents and
------------------------------
warrants to Pledgee as follows:
7.1. Organization. Pledgor is a limited liability
------------
company duly organized, validly existing and in good standing
under the laws of the State of Delaware, with full corporate
power and authority to own or lease its properties, to carry on
its business and to execute, deliver and perform its obligations
under this Agreement.
7.2. Corporate Action. All corporate action
----------------
required to be taken by Pledgor in connection with the execution,
delivery and performance of this Agreement, and the agreements,
instruments and transactions contemplated hereby and thereby, has
been duly taken.
7.3. No Conflicts. Neither the execution and
------------
delivery of this Agreement or any of the agreements or
instruments contemplated hereby, nor the performance of any of
Pledgor's obligations hereunder or thereunder, will: (a) violate
or conflict with Pledgor's Operating Agreement, as amended to
date or any agreement, commitment, indenture, contract or other
obligation or restriction affecting Pledgor; (b) conflict with,
result in a breach of, constitute (with notice, lapse of time or
both) a default under, or result in the creation or imposition of
any lien, charge, security interest or other encumbrance upon any
of Pledgor's property pursuant to the terms of, any agreement or
instrument to which Pledgor is a party, by which it is bound or
to which any of its properties is subject; or (c) violate any
provision of any law, or any rule, regulation, order, judgment or
decree of any court, governmental agency or body or arbitration
panel to which Pledgor or any of its properties is subject.
7.4. Enforceability. This Agreement, and each of
--------------
the agreements and instruments contemplated hereby executed by
Pledgor, is a legal, valid and binding obligation of Pledgor,
enforceable in accordance with its terms, except that such
enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally or to general
principles of equity that may, among other things, limit the
availability of specific performance, injunctive relief or other
equitable remedies. Pledgor's obligations under this Agreement
and each of the agreements and instruments contemplated hereby
are not subject to any defense, counterclaim or offset of any
kind whatsoever.
7.5. Ownership of Collateral. Pledgor is the
-----------------------
record and beneficial owner of the Collateral free and clear of
all liens, claims, encumbrances, security interests or equities,
other than the security interest created hereby and restrictions
on resale imposed under the Securities Act of 1933, as amended.
7.6. Perfection. This Agreement and the delivery
----------
of the Collateral to Pledgee creates in Pledgee a fully perfected
security interest in the Collateral.
8. Covenants and Agreements of Pledgor. Pledgor covenants
-----------------------------------
and agrees with Pledgee that from the date hereof and until
payment and satisfaction in full of each and all of the
Obligations, unless Pledgee shall otherwise consent in writing,
Pledgor will:
8.1. Duly observe and perform each and every term and
condition of the Letter Agreement, the Pledgor Note and any and
all other agreements, instruments and documents relating to the
Collateral, and diligently protect and enforce its rights under
all such agreements;
8.2. Not sell, lease, assign, transfer, convey, pledge,
hypothecate, mortgage or further encumber any of the Collateral,
except in the manner as expressly provided for in the Pledgor
Note;
8.3. Promptly pay or otherwise cause to be discharged
any lien, charge, security interest or other encumbrance that may
attach to the Collateral, or any portion thereof, other than
pursuant to this Agreement;
8.4. Defend the Collateral against all claims, liens,
security interests, demands and other encumbrances of third
parties at any time claiming an interest in the Collateral that
is adverse to Pledgee's interest in the Collateral hereunder; and
8.5. Execute and deliver to Pledgee any and all further
agreements, instruments, or documents and take any and all such
further action as Pledgee, in its sole discretion, may deem
necessary or advisable in order to evidence, effectuate, perfect,
protect, maintain, or realize upon Pledgee's security interest in
the Collateral or the priority thereof.
9. Voting Rights. During the term of this Agreement, and
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except as provided in the following sentence of this Section,
Pledgor shall have the right to vote the Collateral on all
corporate questions in a manner not inconsistent with the terms
of this Agreement, the Letter Agreement, the Pledgor Note and any
other agreement, instrument or document executed pursuant thereto
or in connection therewith. After the occurrence of an Event of
Default, Pledgee may, at Pledgee's option and following written
notice from Pledgee to Pledgor, exercise all voting rights
pertaining to the Collateral, including the right to take
shareholder action by written consent, and Pledgor hereby
irrevocably constitutes and appoints Pledgee as Pledgor's proxy
and attorney-in-fact, with full power of substitution, to do so.
This proxy shall be irrevocable and shall continue until the
termination of this Agreement in accordance with Section 13.
10. Dividends and Other Distributions.
---------------------------------
10.1. Until the occurrence of an Event of Default,
(i) subject to Section 4 hereof, Pledgor shall be entitled to
receive and retain all dividends and interest paid in respect of
the Collateral; and (ii) Pledgee shall execute and deliver (or
cause to be executed and delivered) to Pledgor all such proxies
and other instruments as Pledgor may reasonably request for the
purpose of enabling Pledgor to receive the dividends or interest
payments which it is authorized to receive and retain pursuant to
clause (i) of this Subsection.
10.2. After the occurrence of an Event of Default,
(i) all rights of Pledgor to receive dividends and interest
payments in respect of the Collateral shall cease, and all such
rights shall thereupon become vested in Pledgee, for the benefit
of Pledgee, which shall thereupon have the sole right to receive
and hold as Collateral such dividends and interest payments; and
(ii) all dividends and interest payments which are received by
Pledgor contrary to the provisions of clause (i) of this
Subsection shall be received in trust for Pledgee, shall be
segregated from other funds of Pledgor and shall be paid over
immediately to Pledgee as Collateral in the same form as so
received (with any necessary indorsements).
11. Events of Default. Unless specifically waived in
-----------------
writing by Pledgee, the existence of any of the following
conditions or the occurrence of any of the following events,
shall constitute an "Event of Default" hereunder:
11.1. Failure to make prompt and punctual payment
or performance when due of any of the Obligations;
11.2. Any representation or warranty in this
Agreement, the Letter Agreement, the Pledgor Note, or in any of
the agreements of instruments contemplated hereby, proves
materially false or misleading in any way;
11.3. Failure to observe or perform any covenant in
this Agreement, the Pledgor Note or under any of the agreements
or instruments contemplated hereby, if such breach is not cured
within fifteen (15) days after notice thereof is given by
Pledgee;
11.4. At any time after the date hereof a case or
proceeding shall have been commenced against Pledgor in a court
having competent jurisdiction seeking a decree or order in
respect of Pledgor (i) under Title 11 of the United States Code,
as now constituted or hereafter amended (the "Bankruptcy Code"),
---------------
or any other applicable Federal, state or foreign bankruptcy or
other similar law or (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar
official) of any of Pledgor's assets, and such case or proceeding
shall not be discharged or dismissed within 30 days of
commencement thereof;
11.5. At any time after the date hereof, Pledgor
shall (i) file a petition seeking relief under the Bankruptcy
Code or any other applicable Federal, state or foreign bankruptcy
or other similar law and (ii) consent to the institution of
proceedings thereunder or to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar
official) of Pledgor's assets;
11.6. Acceleration of the maturity of any other
indebtedness of Pledgee by reason of a default thereunder; or
11.7. Entry of a judgment or order against Pledgor
or any of its properties which has not been bonded or execution
stayed within 30 days of entry thereof.
12. Pledgee's Remedies. If an Event of Default occurs
------------------
hereunder, then, Pledgee may, at its option, but is not required
to, do any one or more of the following without demand or notice
to Pledgor:
12.1. Declare all of the Obligations immediately
due and payable in full, notwithstanding the terms of any other
writing or evidence of debt;
12.2. Transfer the Collateral into Pledgee's name
or that of its nominee;
12.3. From time to time, proceed with the
foreclosure of Pledgee's security interest and sale of the
Collateral, or any portion of it, in any manner permitted by law
or provided for herein. With respect to the Collateral or any
part thereof which shall then be in or shall thereafter come into
possession or custody of Pledgee or which Pledgee shall otherwise
have the ability to transfer under applicable law, Pledgee may,
in its sole discretion, without notice, after the occurrence of
an Event of Default, sell or cause the same to be sold at any
exchange, broker's board or at public or private sale, in one or
more sales or lots, at such price as Pledgee may deem best, for
cash or on credit or for future delivery, without assumption of
any credit risk, and the purchaser of any or all of the
Collateral so sold shall thereafter own the same, absolutely free
from any claim, encumbrance or right of any kind whatsoever.
Pledgee may, in its own name or in the name of a designee or
nominee, buy the Collateral at any public sale and, if permitted
by applicable law, buy the Collateral at any private sale.
Pledgor shall remain liable for any deficiency following the sale
of the Collateral or any other realization upon the Collateral;
or
12.4. Exercise any and all of the rights and
remedies available to a secured party under the Uniform
Commercial Code in effect at the time in the State of Texas or as
otherwise provided by law.
13. Term. This Agreement shall remain in full force and
----
effect until the Obligations have been fully and indefeasibly
paid and satisfied. Upon the termination of this Agreement as
provided above (other than as a result of the sale of the
Collateral), Pledgee will release the security interest created
hereunder and will deliver the Collateral to Pledgor.
14. Notices. Any notice, request, demand or other
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communication give pursuant to the terms of this Agreement shall
be deemed given upon delivery, if hand delivered, upon receipt of
telecopy or telex if telecopied or telexed, or two (2) business
days after deposit in the United States mail, postage prepaid,
correctly addressed to the addresses of the parties indicated
below or at such other address as such party, in writing, shall
have advised the other parties hereto:
To Pledgor: USIS Acquisition, LLC
8111 Preston Road
Suite 715
Dallas, TX 75225
Fax No. 214-891-9733
To Pledgee: American Eco Corporation
11011 Jones Road
Houston, Texas 77070
Fax No. 281-774-7001
Attention: Michael E. McGinnis, Chairman
15. Governing Law. This Agreement shall be governed by, and
-------------
construed and enforced in accordance with, the laws of the State
of Texas, without regard to choice of law principles.
16. Modifications and Waivers. No modification, amendment
or
-------------------------
waiver of any provision of this Agreement, nor consent to any
departure of Pledgor herefrom, shall in any event be effective
unless the same shall be in writing and signed by Pledgee, and
then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.
17. Successors and Assigns. This Agreement shall be
binding
----------------------
upon Pledgor, its successors and assigns and inure to the benefit
of Pledgee and its successors and assigns.
18. Integration. This Agreement, together with the Letter
-----------
Agreement, the Pledgor Note and any other security documents
executed in connection herewith, expresses the entire agreement
and understanding of the parties hereto and their respective
affiliates with respect to the matters set forth herein and
supersedes all prior agreements, arrangements and understandings
among the parties hereto and their respective affiliates with
respect to the matters set forth herein. In the event of a
conflict between the terms of this Agreement and the Pledgor
Note, the terms of the Pledgor Note shall govern.
19. Severability. In case any one or more of the
provisions
------------
contained in this Agreement should be determined by a court of
law to be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired
thereby.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
PLEDGOR: USIS ACQUISITION LLC, a Delaware
limited liability company
By: /s/ Albert V. Furman, III
----------------------------------
Albert V. Furman, III
Manager
PLEDGEE: AMERICAN ECO, an Ontario corporation
By: /s/ Michael E. McGinnis
-------------------------------------
Michael E. McGinnis
Chairman
