SECURED PROMISSORY NOTE
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$12,900,000. July 24, 1998
FOR VALUE RECEIVED, USIS ACQUISITION, LLC, a Delaware
limited liability company ("Maker"), with a place of business at
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0000 Xxxxxxx Xxxx, Xxx. 000, Xxxxxx, XX 00000, hereby promises to
pay to the order of AMERICAN ECO CORPORATION, an Ontario
corporation ("Holder"), at 00000 Xxxxx Xxxx, Xxxxxxx, Xxxxx
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77070, or such other place as Holder may designate in writing
(the "Payment Location"), the principal sum of TWELVE MILLION
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NINE HUNDRED THOUSAND DOLLARS ($12,900,000) on January 29, 1999
(the "Maturity Date"). The outstanding principal amount of this
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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
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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
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(5) days' prior written notice to Xxxxxx, 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
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this Note has been paid in full, Make shall comply with the
following covenants:
3.1 Corporate Existence. Maker shall do or cause
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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
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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
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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
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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
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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
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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
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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.
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4.1 Events of Default. Unless specifically
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waived in writing by Xxxxxx, 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
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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").
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4.2 Acceleration. Upon the occurrence of any
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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
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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
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collection costs (including reasonable attorneys' fees and
disbursements) as may be incurred by Holder in enforcement of its
rights hereunder.
5. Waivers, Etc.
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5.1 By Maker. Maker hereby waives, to the
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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
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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
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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 Xxxxxx. 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
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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
Xxxxxx 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.
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6.1 Amendment. This Note may not be waived,
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changed, modified or discharged except by an agreement in writing
signed by Maker and Holder. thereof.
6.2 Binding. This Note and every obligation,
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covenant and agreement herein contained or referenced shall be
binding upon Maker, its successors and assigns and inure to the
benefit of Xxxxxx and its successors and assigns.
6.3 Entire Agreement. This Note sets forth the
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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
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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
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by, and construed in accordance with, the law of the State of
Texas, without regard to choice of law principles.
IN WITNESS WHEREOF, Xxxxx has executed this Note on the
day and year first above written.
USIS ACQUISITION, LLC
By:
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