As filed with the Securities and Exchange Commission on June 26, 1996
Registration No. 33-
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===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
----------------------
INDUSTRIAL SERVICES OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
Florida 59-0172746
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7100 Grade Lane, P.O. Box 32428, Louisville, Kentucky 40232
(Address of principal executive offices) (Zip Code)
----------------------
INDEPENDENT CONSULTING SERVICES AGREEMENT, CONFIDENTIAL INFORMATION AND
NON-COMPETITION AGREEMENT INDEPENDENT CONTRACTOR, AND STOCK OPTION
AGREEMENT - SULLIVAN
(Full title of the Plan)
----------------------
Harry Kletter, President Copy to:
Industrial Services of America, Inc. Alex P. Herrington, Jr.
7100 Grade Lane, P.O. Box 32428 Stites & Harbison
Louisville, Kentucky 40232 400 W. Market Street, Suite 1800
Louisville, Kentucky 40202-3352
(Name and address of agent for service)
(502) 368-1661
(Telephone number, including
area code, of agent for service)
-----------------------
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement.
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Title of offering aggregate Amount of
Securities to Amount to be price per offering registration
be registered registered share (1) price (1) fee (2)
- ------------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 100,000 $2.00 $200,000 $100.00
- -----------------------------------------------------------------
</TABLE>
(1) Based on the exercise price of the option to purchase the
maximum number of shares offered pursuant to the Stock
Option Agreement - Sullivan, dated as of March 31, 1995 and
executed on June 26, 1996, by and between Industrial
Services of America, Inc. and Neil C. Sullivan and for the
purpose of calculating the registration fee pursuant to Rule
457 under the Securities Act of 1933, as amended.
(2) Based on the greater of $100.00 or 1/29th of one percent of
the maximum aggregate offering price.
<PAGE>
PROSPECTUS
- ----------
INDUSTRIAL SERVICES OF AMERICA, INC.
100,000 SHARES
COMMON STOCK, $.01 PAR VALUE
----------------------
TO BE ISSUED PURSUANT TO THE INDEPENDENT CONSULTING
SERVICES AGREEMENT - SULLIVAN, CONFIDENTIAL INFORMATION AND
NON-COMPETITION AGREEMENT INDEPENDENT CONTRACTOR - SULLIVAN,
AND STOCK OPTION AGREEMENT - SULLIVAN
This Prospectus is part of a Registration Statement which
registers an aggregate 100,000 shares of Common Stock, $.01 par
value ("Common Stock") of Industrial Services of America, Inc.
(the "Company"), a Florida corporation, which may be issued, as
set forth herein, to Neil C. Sullivan ("Optionee"), pursuant to
common stock options ("Options") to purchase up to 100,000 shares
of the Common Stock of the Company. All of the Options were
granted to Optionee pursuant to the Independent Consulting
Services Agreement - Sullivan, dated as of March 31, 1995 and
executed on June 26, 1996, the Confidential Information and Non-
Competition Agreement Independent Contractor - Sullivan, and the
Stock Option Agreement - Sullivan (collectively the "Agreement").
The Company has been advised by Optionee that he may sell all or
a portion of its shares of Common Stock from time to time as
follows: (a) block trades in which the brokers or dealers so
engaged will attempt to sell shares as agent but may position and
resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this
Prospectus; (c) ordinary brokerage transactions and transactions
in which the broker solicits purchasers; and (d) in privately
negotiated transactions not involving a broker or dealer. In
effecting sales, brokers or dealers engaged to sell shares may
arrange for other brokers or dealers to participate. Brokers or
dealers engaged to sell shares will receive compensation in the
form of commissions or discounts in amounts to be negotiated by
Optionee immediately prior to each sale. The Company will
receive no proceeds from any sales of Common Stock by Optionee.
Optionee and the brokers and dealers through whom sales of the
shares are made may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and any profits realized by them on the sale
of the shares may be considered to be underwriting compensation.
No other person is authorized to give any information or make any
representation not contained or incorporated by reference in this
Prospectus in connection with the offer contained in this
Prospectus, and, if given or made, such other information or
representation must not be relied upon as having been authorized
by the Company. 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus does not constitute an offer to sell or the
solicitation of any offer to buy any security other than the
securities covered by this Prospectus, nor does it constitute an
offer or solicitation by anyone in any jurisdiction in which such
offer or solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so, or
to any person to whom it is unlawful to make such offer or
solicitation.
The date of the Prospectus is June 26, 1996.
<PAGE>
TABLE OF CONTENTS
Page
A. Available Information 3
B. Information Incorporated by Reference 3
C. The Company 4
D. Independent Consulting Services Agreement - Sullivan,
Confidential Information and Non-Competition Agreement
Independent Contractor - Sullivan and Stock Option
Agreement - Sullivan 4-7
1. Consulting Agreement Terms and Provisions 4
2. Non-Compete Agreement Terms and Conditions 5
3. Option Terms and Provisions 5-6
4. Federal Income Tax Effects 6
5. Restrictions Under Securities Law 7
E. Use of Proceeds 7
F. Risk Factors 7-8
1. Effect of Issuance of Additional Common Stock 7
2. Business and Economic Factors 7
3. Competition 7-8
4. Absence of Dividends 8
G. Transfer Agent 8
H. Legal Matters 8
I. Experts 8
J. Statement on Indemnification 8
<PAGE>
A. AVAILABLE INFORMATION
Industrial Services of America, Inc. (the "Company") is
subject to the informational requirements of Section 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), and, in
accordance therewith, files reports on Forms 8-K, 10-QSB, and 10-
KSB with the Securities and Exchange Commission (the
"Commission"). Such reports filed by the Company can be
inspected and copied (at prescribed rates) at the public
reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, such reports
can also be inspected and copied at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration
Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), with respect to
an aggregate of 100,000 shares of the Company's Common Stock,
which may be issued to Neil C. Sullivan ("Optionee"), a
consultant of the Company, upon the exercise of common stock
options issued to said consultant, pursuant to a written
consulting agreement. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with
respect to the Company and the shares of the Common Stock offered
by this Prospectus, reference is made to the Registration
Statement, including the exhibits thereto. Statements in this
Prospectus as to any document are not necessarily complete, and
where any such document is an exhibit to the Registration
Statement or is incorporated by reference herein, each such
statement is qualified in all respects by the provisions of such
exhibit or other document, to which reference is hereby made, for
a full statement of the provisions thereof. A copy of the
Registration Statement, with exhibits, may be obtained from the
Commission's office in Washington, D.C. (at the above address)
upon payment of the fees prescribed by the rules and regulations
of the Commission, or examined there without charges.
B. INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission are
incorporated herein by reference:
1. The Company's latest Annual Report on Form 10-KSB for
its fiscal year ended December 31, 1995;
2. The Company's latest Quarterly Report on Form 10-QSB
for its quarter ended March 31, 1996;
3. The Company's report on Form 8-K filed February 23,
1996.
4. All other reports filed pursuant to Section 13 or 15(d)
of the Exchange Act since the end of the fiscal year covered by
the Annual Report on Form 10-KSB referred to in paragraph 1
above.
All reports and other documents subsequently filed by the Company
pursuant to sections 13(a), 13(c), and 15 (d) of the Exchange Act
prior to the termination of the offering shall be deemed to be
incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents.
THE COMPANY HEREBY UNDERTAKES TO FURNISH WITHOUT CHARGE TO EACH
PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL
REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS
DESCRIBED ABOVE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS. REQUESTS
SHOULD BE ADDRESSED TO HARRY KLETTER, PRESIDENT, INDUSTRIAL
SERVICES OF AMERICA, INC., 7100 GRADE LANE, P.O. BOX 32428,
LOUISVILLE, KENTUCKY 40232, THE TELEPHONE NUMBER IS (502) 368-
1661.
3
<PAGE>
C. THE COMPANY
The Company was incorporated under the laws of the State of
Florida on September 30, 1953, as Alson Manufacturing Co., Inc.
The Company is an integrated solid waste management consulting
company engaged in the business of retail and industrial waste
management and waste handling equipment sales and service. The
Company's principal executive offices are located at 7100 Grade
Lane, P.O. Box 32428, Louisville, Kentucky 40232 and its
telephone number is (502) 368-1661.
D. INDEPENDENT CONSULTING SERVICES AGREEMENT - SULLIVAN,
CONFIDENTIAL INFORMATION AND NON-COMPETITION AGREEMENT
INDEPENDENT CONTRACTOR - SULLIVAN, AND STOCK OPTION
AGREEMENT - SULLIVAN
1. Consulting Agreement Terms and Provisions
The Company and Neil C. Sullivan ("Optionee") entered into
the Independent Consulting Services Agreement - Sullivan (the
"Consulting Agreement"), the Confidential Information and Non-
Competition Agreement Independent Contractor - Sullivan (the
"Non-Compete Agreement") and Stock Option Agreement - Sullivan
(the "Stock Option Agreement"), each dated as of March 31, 1995
(the "Effective Date") although executed on June 26, 1996.
Under the terms of the Consulting Agreement, Optionee will stand
ready, willing and able to provide the Company with professional
consulting services, including general business analyses,
management and marketing, business opportunity evaluation and
merger/acquisition "finder" services. Optionee agrees to make
reasonable efforts to (a) assist the Company in evaluating
potential corporate opportunities, including corporate
development, business and asset merger and acquisition "finding"
services; (b) provide the Company with a variety of general
business analyses, marketing and management consulting; and (c)
protect trade secrets and other proprietary information, the
disclosure of which would cause irreparable harm to the Company
and any possible acquisition candidates it may have under
evaluation, from time to time. In connection with the Consulting
Agreement, the Optionee agreed to enter into the Non-Compete
Agreement. The term of the Consulting Agreement will continue
through March 31, 1997 unless sooner terminated as provided
therein. The Consulting Agreement does not prohibit the Company
from engaging other consultants to perform the same or similar
services as those provided by Optionee nor is Optionee prohibited
or limited in any way from providing the same or similar services
to any other individual or business enterprise. In that
connection, the Company has entered into an Independent
Consulting Services Agreement - Maxwell, Confidentiality
Information and Non-Competition Agreement Independent Contractor
- -Maxwell and Stock Option Agreement - Maxwell each dated as of
March 31, 1995 although also executed on June 26, 1996, with
Douglas I. Maxwell, III. As a portion of compensation under
those agreements for services similar to those to be provided by
Optionee, Mr. Maxwell has been granted an option to purchase
100,000 shares of the Company's Common Stock at $.50 per share
for a period ending two (2) years from March 31, 1995.
In consideration for its agreement to provide such services,
pursuant to the Consulting Agreement the Company issued to
Optionee in accordance with the Stock Option Agreement, as a
portion of compensation, an option (the "Option") to purchase an
aggregate of 100,000 shares of the Company's Common Stock at
$2.00 per share. The Option was issued in conjunction with the
Consulting Agreement and is anticipated to expire 24 months from
the Effective Date (the "Expiration Date"). Another portion of
the compensation paid to Optionee included a minimum fee equal to
five percent (5%) of the aggregate price paid for the acquisition
of one or more operating businesses or working assets with regard
to acquisitions or other business opportunities on which Optionee
performed services on behalf of the Company. To date no such fee
has been paid.
4
<PAGE>
2. Non-Compete Agreement Terms and Conditions
As part of the Consulting Agreement, the Company and
Optionee entered into the Non-Compete Agreement. Pursuant to the
terms of the Non-Compete Agreement, the Optionee agrees to keep
all confidential and proprietary information of the Company
confidential and to return all confidential documents to the
Company upon Optionee's termination of his consultant
relationship with the Company. In addition, following Optionee's
termination as a consultant to the Company, the Optionee is
obligated (i) to cease representing himself as a representative
of the Company; (ii) to refrain from soliciting, interfering with
or attempting to entice away from the Company any employee or
sales agent of the Company; (iii) during the term of Optionee's
consulting relationship with the Company and for a period of
three (3) years after the termination of Optionee's consulting
relationship with the Company, to not, directly or indirectly,
engage in any employment or business within the Commonwealth of
Kentucky and states contiguous thereto as an independent
contractor, sales representative, employee, officer or director
competitive with the business of the Company.
3. Option Terms and Provisions
The Option was issued pursuant to the Stock Option Agreement
and was not issued pursuant to any program or plan being
administered by either the Board of Directors of the Company or
any committee of the Board of Directors organized for that
purpose. The specific terms of the Option are as follows:
As a portion of compensation for his professional consulting
services, the Company grants to the Optionee the right, at his
option, to purchase up to an aggregate of 100,000 shares of
common stock ($.01 par value) of the Company at a price of $2.00
per share, all of which Option shall be exercisable, any time
within twenty-four (24) months from the Effective Date of the
Stock Option Agreement. An anti-dilution provision, as set forth
in greater detail below, maintains the portion of the shares
underlying the Option in the event that the Company causes to be
issued additional shares.
The Option may be exercised, in whole or in part, but in
denominations not less than one thousand (1,000) shares, at any
time prior to 3:00 p.m. Louisville, Kentucky time on the
Expiration Date, by giving written notice to the Company to that
effect. If the notice of exercise specifies a number of shares
less than 100,000 shares, and the time for exercise has not
expired, the Company shall provide the Optionee with a new
revised Stock Option Agreement for the balance of the number of
shares subject to the Option and then remaining unexercised.
The number of shares of the Company underlying the Option
will be proportionally increased in the event that the Company
causes to be issued additional shares in the form of a stock
dividend, stock split, option exercise at less than book value
(other than upon exercise of the option granted to Douglas I.
Maxwell, III), or other reclassification. In the alternative,
the number of shares of the Company underlying the Option will
be proportionally decreased in the event of a reverse split or
reclassification. In the event that stockholders of the Company
are granted the right to purchase additional shares from the
proceeds of a cash dividend by the Company, such event shall be
treated as a stock dividend as it relates to the Option. In
addition, Optionee has been granted piggyback registration rights
in connection with the first registration statement of the Company
to be used to offer and sell shares of the Company's $.01 par
value common stock for cash. The piggyback registration rights
provide Optionee with the right to notify the Company and request
that all or a part of the underlying shares subject to the Option
be included in the first registration statement which
5
<PAGE>
the Company prepares and files with the Commission. The number
of shares to be included in any such registration statement shall
be the sole decision of any underwriter selected by the Company
in connection with the sale of shares pursuant to such
registration statement.
The Optionee agrees on behalf of himself and others claiming
benefits by virtue of the Stock Option Agreement that it shall
not be assigned, transferred, pledged or hypothecated in any way.
Any attempted assignment of rights under the Stock Option
Agreement shall be null and void.
4. Federal Income Tax Effects
(a) Tax Rate. Pursuant to the Revenue Reconciliation
--------
Act of 1993, effective for tax years beginning after December 31,
1992, the maximum statutory Federal income tax rate on ordinary
income has been increased to 36%. A 10-percent surtax is imposed
for taxable income in excess of $250,000, thereby increasing the
new top tax rate to 39.6%. The maximum statutory rate on net
capital gains for individuals, estates and trusts is still
limited to 28%.
(b) Effects. Options granted under the Stock Option
-------
Agreement are "nonqualified stock options" for federal income tax
purposes. Generally, an employee receiving such an option does
not recognize taxable income at the time of the grant of the
option but instead recognizes ordinary income upon exercise of
the option in an amount equal to the excess of the fair market
value of the shares acquired on the date of exercise over the
option exercise price.
Although neither the Company nor the holder are currently
subject to liability provisions of Section 16(b) of the Exchange
Act, if upon exercise of the Option, the holder is restricted
from selling the shares because the holder would be subject to
liability under Section 16(b) of the Exchange Act as a corporate
insider of the Company, then the holder will recognize ordinary
income in the taxable year in which he would no longer be subject
to liability under Section 16(b) of the Exchange Act were he to
sell the shares at a profit, in an amount equal to the excess of
the fair market value of the shares on the date he would no
longer be subject to such liability over the option exercise
price. Under Section 16(b) of the Exchange Act, a corporate
insider will generally not be subject to such Section 16(b)
liability once six months have elapsed from the date of grant of
the option and, in any event, for federal income tax purposes no
Section 16(b) liability will be deemed to exist once six months
have elapsed from the date of exercise. However, an option
holder subject to Section 16(b) at the time of exercise may
elect, pursuant to Section 83(b) of the Internal Revenue Code of
1986, as amended, to include in income in the year of exercise an
amount equal to the excess of the fair market value of the shares
on the exercise date over the exercise price. Such election must
be made within 30 days of the date of exercise.
Upon disposition of the shares acquired upon exercise, the
appreciation or depreciation in share value after the date
ordinary income is recognized will be treated as capital gain or
loss. The amount of ordinary income recognized by the option
holder is generally deductible by the Company in the year that
such income is recognized.
THE FOREGOING IS NOT INTENDED TO BE A COMPLETE STATEMENT OF
APPLICABLE LAW. YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR
REGARDING THE SPECIFIC FEDERAL, STATE AND LOCAL TAX TREATMENT OF
THE OPTIONS BECAUSE SUCH TREATMENT WILL VARY DEPENDING UPON YOUR
INDIVIDUAL CIRCUMSTANCES.
6
<PAGE>
5. Restrictions Under Securities Laws
The sale of any shares of Common Stock acquired upon the
exercise of options must be made in compliance with federal and
state securities laws. Officers, directors and 10% or greater
stockholders of the Company, as well as certain other persons or
parties who may be deemed to be "affiliates" of the Company under
the federal securities laws, should be aware that resales by
affiliates can only be made pursuant to an effective Registration
Statement, Rule 144 or any other applicable exemption. The
foregoing is not intended to be a complete statement of
applicable law and Optionee should rely on his own legal counsel
with respect thereto.
E. USE OF PROCEEDS
Any proceeds received by the Company as the result of the
exercise of the Option will be used for general working capital
purposes. However, the Company will receive none of the proceeds
from the sale of any shares issued upon exercise of the Option.
F. RISK FACTORS
1. Effect of Issuance of Additional Common Stock
Pursuant to the Stock Option Agreement - Maxwell (the
"Maxwell Option") dated as of March 31, 1995 and executed on June
26, 1996, with Douglas I. Maxwell, III, the Company will have
outstanding options for the purchase of up to 100,000 newly
issued shares of the Common Stock of the Company at an option
price of $.50 per share. The shares subject to the Maxwell
Option are exercisable contemporaneously with Optionee's shares
subject to the Stock Option Agreement. To the extent Mr. Maxwell
exercises the Maxwell Option and sells Common Stock of the
Company underlying the Maxwell Option, a dilutive effect upon the
value of the Common Stock described in this Prospectus could
occur. In addition, since the closing median of the bid and
asked quotations for the Common Stock of the Company on the Over
The Counter Bulletin Board ("OTCBB") operated by the National
Association of Securities Dealers, Inc. as of June 25, 1996 was
$13.50, and assuming the exercise of the options by Mr.
Maxwell and the Optionee, the quoted prices of the Common Stock
may decrease with the introduction into the OTCBB of shares
subject to these options that may be exercised and the shares
sold considering the relatively small supply of shares presently
being traded on the OTCBB. Additionally, the Company anticipates
that the exercise of the options by Mr. Maxwell and the Optionee
will cause a dilutive effect on earnings per share of not more
than five cents ($.05) per share.
2. Business and Economic Factors
The future of the Company, and of the Company's operations,
will be subject to a number of business and other factors beyond
management's control, such as economic slowdowns and increased
competition. Unfavorable general economic conditions could
adversely affect the operating results of the Company. There can
be no assurance that the Company would be able to sustain its
operations in the event of an economic slowdown for an extended
period of time or if general economic conditions in the U.S.
3. Competition
Each of the Company's current and proposed business segments
is characterized by competition. Many companies offer or are
engaged in the development of products or the provisions of
services which may be or are competitive with the Company's
present or proposed products or services. Many of these entities
have substantially greater financial, technical, manufacturing,
marketing, distribution, and/or other resources than the
7
<PAGE>
Company. There can be no assurance that the Company will be able to
compete successfully with such companies.
4. Absence of Dividends
The Company has not paid and does not anticipate paying any
cash dividends on its Common Stock in the foreseeable future, but
instead intends to retain all working capital and earnings, if
any, for use in the Company's business operations and in the
expansion of its business.
G. Transfer Agent
The Transfer Agent for the shares of Common Stock is
American Securities Transfer, Inc., Lakewood, Colorado, (303)
234-5300.
H. Legal Matters
Certain legal matters in connection with the securities
offered hereby are being passed upon for the Company by Stites &
Harbison, 400 West Market Street, Suite 1800, Louisville,
Kentucky 40202-3352, counsel to the Company.
I. Experts
The audited consolidated financial statements of the Company
incorporated by reference in this Prospectus have been so
incorporated in reliance on the report of Mather, Hamilton & Co.,
independent certified public accountants, given on the authority
of said firm as experts in auditing and accounting.
J. Statement On Indemnification
Under provisions of the Company's Amended and Restated
Articles of Incorporation, any person made a party to any lawsuit
by reason of being a director or officer of the Company, or any
parent or subsidiary thereof, shall be indemnified by the Company
to the full extent authorized by the Florida Business Corporation
Act, other than in situations where such person shall be adjudged
to be liable for negligence or misconduct in the performance of
duty. The right of indemnification shall not extend to or
include indemnification for liabilities arising under the Act.
8
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in (a) through (d) below are incorporated by
reference in the Registration Statement. All documents
subsequently filed by the Registrant pursuant to Section 13(a),
13(c) and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), prior to the filing of a post-
effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining
unsold shall be deemed to be incorporated by reference in the
Registration Statement and to be part thereof from the date of
filing of such documents.
(a) The Registrant's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1995;
(b) The Registrant's latest Quarterly Report on Form 10-QSB for
its quarter ended March 31, 1996;
(c) The Registrant's report on Form 8-K filed February 23, 1996;
and
(d) All other reports filed pursuant to Section 13 or 15(d) of
the Exchange Act since the end of the fiscal year covered by the
Registrant's Form 10-KSB referred to in (a) above.
Item 4. DESCRIPTION OF REGISTRANT'S SECURITIES.
The Registrant is authorized to issue 10,000,000 shares of
Common Stock, par value $.01 per share. The holders of Common
Stock are entitled to cast one vote for each share held at all
stockholder meetings for all purposes, including the election of
directors, and to share equally on a per share basis in such
dividends as may be declared by the Board of Directors out of
funds legally available therefor. Upon liquidation or
dissolution, each outstanding share of Common Stock will be
entitled to share equally in the assets of the Registrant legally
available for distribution to stockholders, after the payment of
all debts and other liabilities and any payments due to holders
of shares of Preferred Stock.
No holder of Common Stock has a preemptive or preferential
right to purchase or subscribe for any unissued or additional
authorized stock or any securities of the Registrant convertible
into shares of its Common Stock.
The Common Stock does not have cumulative voting rights
which means that the holders of more than 50% of the Common Stock
voting for the election of directors can elect 100% of the
directors of the Registrant if they choose to do so. The By-Laws
of the Registrant require that a majority of the issued and
outstanding shares of the Registrant be represented to constitute
a quorum and transact business at a stockholders' meeting.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Article XII of Registrant's Certificate of Amendment of
Certificate of Incorporation provides:
The corporation shall indemnify any and all
of its directors or officers or former
directors or officers or any person who may
have served at its request as a director or
officer of another corporation in which it
II-1
<PAGE>
owns shares of capital stock or of which it
is a creditor against expenses actually and
necessarily incurred by them in connection
with the defense of any action, suit or
proceeding in which they, or any of them, are
made parties, or a party by reason of being
or having been directors or officers or a
director or officer of the corporation, or of
such other corporation, except in relation to
matters as to which any such director or
officer or former director or officer or
person shall be adjudged in such action, suit
or proceeding to be liable for negligence or
misconduct in the performance of duty. Such
indemnification shall not be deemed exclusive
of any other rights to which those
indemnified may be entitled, under any by-
laws, agreement, vote of stockholders, or
otherwise. The right of indemnification
hereinabove stated shall under no
circumstances extend to or include
indemnification for liabilities arising under
the Securities Act of 1933, as amended.
b. Section 607.0850 of the Florida Business Corporation Act
provides that:
(1) A corporation shall have power to
indemnify any person who was or is a party to
any proceeding (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, officer, employee
or agent of another corporation, partnership,
joint venture, trust or other enterprise
against liability incurred in connection with
such proceeding, including any appeal
thereof, 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, had no reasonable cause
to believe his conduct was unlawful. The
termination of any 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 which he reasonably believed to
be in, or not opposed to, the best interests
of the corporation or, with respect to any
criminal action or proceeding, had reasonable
cause to believe that his conduct was
unlawful.
(2) A corporation shall have power to
indemnify any person, who was or is a party
to any proceeding 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,
officer, employee, or agent of another
corporation, partnership, joint venture,
trust, or other enterprise, against expenses
and amounts paid in settlement not exceeding,
in the judgment of the board of directors,
the estimated expense of litigating the
proceeding to conclusion, *actually and
reasonably incurred in connection with the
defense or settlement of such proceeding
including
II-2
<PAGE>
any appeal thereof. Such indemnification
shall be authorized if such person 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 under
this subsection in respect of any claim,
issue or matter as to which such person shall
have been adjudged to be liable unless, and
only to the extent that, the court in which
such proceeding was brought, or any other
court of competent jurisdiction, shall
determine upon application that, despite the
adjudication of liability but in view of all
circumstances of the case, such person is
fairly and reasonably entitled to indemnity
for such expenses which such court shall deem
proper.
(3) To the extent that a director, officer,
employee or agent of a corporation has been
successful on the merits or otherwise in
defense of any proceeding referred to in
subsection (1) or subsection (2), 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.
(4) Any indemnification under subsection (1)
or subsection (2), unless pursuant to a
determination by a court, shall be made by
the corporation only as authorized in the
specific case upon a determination that
indemnification of the director, officer,
employee, or agent is proper in the
circumstances because he has met the
applicable standard of conduct set forth in
subsection (1) or subsection (2). Such
determination shall be made:
(a) by the board of directors by a majority
vote of a quorum consisting of directors who
were not parties to such proceeding;
(b) if such a quorum is not obtainable or,
even if obtainable, by majority vote of a
committee duly designated by the board of
directors (in which directors who are parties
may participate) consisting solely of two or
more directors not at the time parties to the
proceeding;
(c) By independent legal counsel;
1. Selected by the board of directors
prescribed in paragraph (a) or the committee
prescribed in paragraph (b); or
2. If a quorum of the directors cannot be
obtained for paragraph (a) and the committee
cannot be designated under paragraph (b),
selected by majority vote of the full board
of directors (in which directors who are
parties may participate) or
(d) By the shareholders by a majority vote
of a quorum consisting of shareholders who
were not parties to such proceeding or, if no
such quorum is obtainable, by a majority vote
of shareholders who were not parties to such
proceeding.
II-3
<PAGE>
(5) Evaluation of the reasonableness of
expenses and authorization of indemnification
shall be made in the same manner as the
determination that indemnification is
permissible. However, if the determination
of permissibility is made by independent
legal counsel, persons specified by paragraph
(4)(c) shall evaluate the reasonableness of
expenses and may authorize indemnification.
(6) Expenses incurred by an officer or
director in defending a civil or criminal
proceeding may be paid by the corporation in
advance of the final disposition of such
proceeding upon receipt of an undertaking by
or on behalf of such director or officer to
repay such amount if he is ultimately found
not to be entitled to indemnification by the
corporation pursuant to this section.
Expenses incurred by other employees and
agents may be paid in advance upon such terms
or conditions that the board of directors
deems appropriate.
(7) The indemnification and advancement of
expenses provided pursuant to this section
are not exclusive, and a corporation may make
any other further indemnification or
advancement of expense of any of its
directors, officers, employees, or agents,
under any bylaw, agreement, vote of
shareholders or disinterested directors, or
otherwise, both as to action in his official
capacity and as to action in another capacity
while holding such office. However,
indemnification or advancement of expenses
shall not be made to or on behalf of any
director, officer, employee, or agent if a
judgment or other final adjudication
establishes that his actions, or omissions to
act, were material to the cause of action so
adjudicated and constitute:
(a) A violation of the criminal law, unless
the director, officer, employee, or agent had
reasonable cause to believe his conduct was
lawful or had no reasonable cause to believe
his conduct was unlawful;
(b) A transaction from which the director,
officer, employee, or agent derived an
improper personal benefit;
(c) In the case of a director, a circum-
stance under which the liability provisions
of s.607.0834 are applicable; or
(d) Willful misconduct or a conscious
disregard for the best interests of the
corporation in a proceeding by or in the
right of the corporation to procure a
judgment in its favor or in a proceeding by
or in the right of a shareholder.
(8) Indemnification and advancement of
expenses as provided in this section shall
continue as, unless otherwise provided when
authorized or ratified, to a person who has
ceased to be a director, officer, employee,
or agent and shall inure to the benefit of
the heirs, executors, and administrators of
such a
II-4
<PAGE>
person, unless otherwise provided when
authorized or ratified.
(9) Unless the corporation's articles of
incorporation provide otherwise,
notwithstanding the failure of a corporation
to provide indemnification, and despite any
contrary determination of the board or of the
shareholders in the specific case, a
director, officer, employee, or agent of the
corporation who is or was a party to a
proceeding may apply for indemnification or
advancement of expenses, or both, to the
court conducting the proceeding, to the
circuit court, or to another court of
competent jurisdiction. On receipt of an
application, the court, after giving any
notice that it considers necessary, may order
indemnification and advancement of expenses,
including expenses incurred in seeking court-
ordered indemnification or advancement of
expenses, if it determines that:
(a) The director, officer, employees, or
agent is entitled to mandatory indemnifica-
tion under subsection (3), in which case the
court shall also order the corporation to pay
the director reasonable expenses incurred in
obtaining court-ordered indemnification or
advancement of expenses;
(b) The director, officer, employee, or
agent is entitled to indemnification or
advancement of expenses, or both, by virtue
of the exercise by the corporation of its
power pursuant to subsection (7); or
(c) The director, officer, employee, or
agent is fairly and reasonably entitled to
indemnification or advancement of expenses,
or both, in view of all the relevant
circumstances, regardless of whether such
person met the standard of conduct set forth
in subsection (1), subsection (2), or
subsection (7).
(10) For purposes of this section, the term
"corporation" includes, in addition to the
resulting corporation, any constituent
corporation (including any constituent of a
constituent) absorbed in a consolidation or
merger, so that any person who is or was a
director, officer, employee, or agent of a
constituent corporation, or is or was serving
at the request of a constituent corporation
as a director, officer, employee, or agent of
another corporation, partnership, joint
venture, trust, or other enterprise, is in
the same position under this section with
respect to the resulting or surviving
corporation as he would have with respect to
such constituent corporation if its separate
existence had continued.
(11) For purposes of this section: (a) the
term "other enterprises" includes employee
benefit plans; (b) the term "expenses"
includes counsel fees, including those for
appeal; (c) the term "liability" includes
obligations to pay a judgment, settlement,
penalty, fine (including an excise tax
assessed with respect to any employee benefit
plan), and expenses
II-5
<PAGE>
actually and reasonably incurred with respect
to a proceeding; (d) the term "proceeding"
includes any threatened, pending, or
completed action, suit, or other type of
proceeding, whether civil, criminal,
administrative, or investigative and whether
formal or informal; (e) the term "agent"
includes a volunteer; (f) the term "serving
at the request of the corporation" includes
any service as a director, officer, employee,
or agent of the corporation that imposes
duties on such persons, including duties
relating to an employee benefit plan and its
participants or beneficiaries; and (g) the
term "not opposed to the best interest of the
corporation" describes the actions of a
person who acts in good faith and in a manner
he reasonably believes to be in the best
interests of the participants and
beneficiaries of an employee benefit plan.
(12) A corporation shall have power to
purchase and maintain insurance on behalf of
any person who is or was a director, officer,
employee or agent of the corporation or is or
was serving at the request of the corporation
as a director, officer, employee, or agent of
another corporation, 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
the provisions of this section.
Item 8. EXHIBITS.
The following documents are filed as Exhibits to this
Registration Statement:
4(a) --Independent Consulting Services Agreement - Sullivan
(b) --Stock Option Agreement - Sullivan
5.1 --Opinion of Stites & Harbison as to the validity of the
shares being registered, including consent.
10.1 --Confidential Information and Non-Competition Agreement
Independent Contractor - Sullivan
23.1 --Consent of Stites & Harbison (included in Exhibit 5.1
hereto)
23.2 --Consent of Mather, Hamilton & Co., Certified Public
Accountants
Item 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Act")
II-6
<PAGE>
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (i) and (ii) shall not apply
if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 of Section 15(d)
of the Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for the purposes of determining any liability under
the Act, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(5) Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in
Item 6 or otherwise, the Registrant has been advised that in the
opinion of the 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 indemnifi-
cation by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8, and
has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Louisville, Commonwealth of Kentucky on the 26th day of June,
1996.
INDUSTRIAL SERVICES OF AMERICA, INC.
(Registrant)
By: /s/ Harry Kletter
-------------------------------------
Harry Kletter,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Harry Kletter
- ---------------------
Harry Kletter Director, President, June 26, 1996
Chief Executive Officer
and Chief Financial
Officer (Principal
Executive Officer and
Principal Financial
Officer)
/s/ Roberta Kletter
- ---------------------
Roberta Kletter Director and June 26, 1996
Executive Vice-
President
/s/ Matthew L. Kletter
- ----------------------
Matthew L. Kletter Director and June 26, 1996
General Counsel
/s/ Alan Schroering
- ---------------------
Alan Schroering Controller (Principal June 26, 1996
Accounting Officer)
II-8
<PAGE>
EXHIBIT 4(a)
------------
<PAGE>
INDEPENDENT CONSULTING SERVICES AGREEMENT - SULLIVAN
----------------------------------------------------
THIS INDEPENDENT CONSULTING SERVICES AGREEMENT - SULLIVAN (the
"Agreement") is made as of this 31st day of March, 1995 (the
"Effective Date") by and between the following parties:
INDUSTRIAL SERVICES OF AMERICA, INC., hereinafter referred to as
"ISA", incorporated under the laws of the State of Florida, and
maintaining its principal executive offices at 7100 Grade Lane,
Louisville, Kentucky 40213; and
NEIL C. SULLIVAN hereinafter referred to as "CONSULTANT", of 1901
Avenue of the Stars, Suite 2000, Los Angeles, California, 90067.
WITNESSETH:
WHEREAS, the parties being mutually desirous of entering into a
formal business relationship, do agree that the following
accurately reflects their understanding and recognition of the
varied and valuable consulting services to be provided to ISA.
IN CONSIDERATION of the covenants, terms and conditions herein
related, the undersigned parties agree as follows:
1. CONSULTANT'S OBLIGATIONS. At all times for the
duration of this Agreement, the Consultant shall stand ready,
willing and able to provide to ISA, his professional consulting
services, including general business analysis, management and
marketing, business opportunity evaluation and merger/acquisition
"finder" services. Consultant will take whatever reasonable
efforts necessary:
1.1 To assist ISA in evaluating potential corporate
opportunities, including corporate development,
business and asset merger and acquisition
"finding" services.
1.2 To provide ISA with a variety of general business
analysis, marketing and management consulting.
1.3 To protect trade secrets and other proprietary
information, the disclosure of which would cause
irreparable harm to ISA and any possible
acquisition candidates it may have under
evaluation, from time to time. Consultant
acknowledges that he has signed a non-disclosure
and non-competition agreement in the form of
Exhibit A.
2. CONTINUING CONSULTING AGREEMENTS. Consultant will make
available his services as outlined, and as may hereafter be
agreed upon. This Consulting Agreement shall be effective
<PAGE>
through March 31, 1997, unless earlier terminated by mutual
agreement.
3. ISA'S OBLIGATIONS. At all times for the duration of
this Agreement, and in furtherance hereof, ISA agrees to provide
all reasonable support to the Consultant necessary to perform the
services hereunder. ISA shall provide information, documentation
and assistance to Consultant in its performance of its services,
and shall not withhold unreasonably or fail to timely approve,
all documents and information required for Consultant to complete
his tasks hereunder.
4. COMPENSATION. The Consultant shall be compensated for
his services as follows:
4.1 FEES. With regard to acquisitions or other
business opportunities on which the Consultant performs services
on behalf of ISA, he shall be entitled to a minimum fee equal to
five percent (5%) of the aggregate price paid for the acquisition
of one or more operating businesses or working assets. Payment
may be made in cash and/or stock, as may hereafter be mutually
agreed upon by the parties on a deal-by-deal basis.
4.2 EXPENSES. Only with its prior written consent,
ISA shall reimburse Consultant for any reasonable and necessary
travel, entertainment, and related business expenses incurred in
the performance of Consultant's obligations hereunder.
4.3 ADDITIONAL COMPENSATION. ISA shall, as of the
Effective Date, enter into a Stock Option Agreement with
Consultant, a copy of which is annexed hereto as Exhibit B under
which ISA shall grant to Consultant the right to purchase, at any
time within twenty-four (24) months from the Effective Date, up
to an aggregate of One Hundred Thousand (100,000) Shares of ISA's
Common Stock, at the exercise price of $2.00 per share. The
exercise of such options shall be made in one thousand (1,000)
share denominations.
4.4 REGISTRATION OF SHARES. ISA hereby agrees to use
its best efforts to cause a timely filing with the Securities and
Exchange Commission (i.e within thirty (30) business days of the
date of execution hereof) and at its own expense, of an S-8
Registration Statement, to register therein the aforementioned
Stock Option and the underlying Shares.
5. MISCELLANEOUS.
5.1 NON-EXCLUSIVE AGREEMENT. This Agreement shall not
prohibit ISA from engaging other consultants to perform the same
or similar services as to be provided by Consultant nor is
Consultant prohibited or limited in any way from providing the
-2-
<PAGE>
same or similar services to any other individual or business
enterprise.
5.2 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall represent a binding
obligation upon the executing party respectively, and all of
which together shall constitute one and the same instrument.
5.3 CAPTIONS. The paragraph captions are for
descriptive purposes only and shall have no effect with regard to
the content or validity of the content thereof.
5.4 CONTROLLING LAW. This Agreement shall be
construed and interpreted in accordance with the laws of the
Commonwealth of Kentucky.
5.5 EFFECTIVE DATE. This Agreement shall take effect
retroactive to the Effective Date upon the date of execution
hereof.
5.6 BACKGROUND CHECK. The Consultant agrees to ISA's
performing a background check, including a criminal records check
as well as a credit report check, and further warrants that he
has not been convicted of a felony within the last five (5) years
and has not gone bankrupt or facilitated an assignment for the
benefit of creditors within the last five (5) years and has not
been held liable for any act of civil fraud within the last five
(5) years.
5.7 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
This Agreement has been entered into in the Commonwealth of
Kentucky and validity, interpretation and legal effect of this
Agreement will be governed by the laws of the Commonwealth of
Kentucky applicable to contracts entered into within the
Commonwealth of Kentucky. Any dispute under this Agreement shall
be resolved by arbitration conducted in the City of Louisville
and the Commonwealth of Kentucky by the American Arbitration
Association. Any action or other proceeding which involves such
a controversy will be brought only in said jurisdiction, and not
elsewhere, and the parties hereto waive any objections on the
grounds of lack of jurisdiction, lack of venue, or forum non
conveniens or any similar grounds. Any process including,
without limitation, any summons or subpoena in any such action or
proceeding may, among other methods, be served upon you by
delivering it or mailing it, by registered or certified mail,
directed to the address on page one (1) of this Agreement. Any
such delivery or mail service will be deemed to have the same
force and effect as personal service within the Commonwealth of
Kentucky. Notwithstanding the foregoing, if we become a party
in any action or proceeding, including without limitation, any
arbitration instituted by any third party in any court or forum
or in any matter as to which we may be entitled to
-3-
<PAGE>
indemnification by you under this Agreement or otherwise, you
hereby irrevocably consent to the jurisdiction of each such court
or other forum, wherever located, and you agree not to raise the
defenses of lack of jurisdiction, lack of venue or forum non
conveniens or any similar grounds.
5.8 TOTAL AGREEMENT. This Agreement, including the other
agreements referred to herein, is the entire agreement between
the parties hereto relating to the subject matter hereof. This
Agreement rescinds any and all prior agreements and
understandings between the parties with respect to the subject
matter covered in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on
this 26th day of June, 1996.
INDUSTRIAL SERVICES OF AMERICA, INC.
By: /s/ Harry Kletter
-------------------------------------
Harry Kletter
Title: President
Accepted by:
/s/ Neil C. Sullivan
----------------------------------------
Neil C. Sullivan, Consultant
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<PAGE>
EXHIBIT A
---------
CONFIDENTIAL INFORMATION AND NON-COMPETITION AGREEMENT
------------------------------------------------------
INDEPENDENT CONTRACTOR - SULLIVAN
---------------------------------
This CONFIDENTIAL INFORMATION AND NON-COMPETITION AGREEMENT -
SULLIVAN is made by and between INDUSTRIAL SERVICES OF AMERICA,
INC. (the "Corporation") and Neil C. Sullivan, 1901 Avenue of the
Stars, Suite 2000, Los Angeles, California 90067 (the
"Consultant") as of the 31st day of March, 1995.
I. DEFINITIONS
-----------
The following terms, as used in this Agreement, shall have the
following meanings:
1.1 "Agreement" shall mean this Confidential Information
and Non-Competition Agreement - Sullivan.
1.2 "Confidential and Proprietary Information" shall mean
any and all secret, confidential, proprietary, or
private information, including, without limitation, any
trade secrets, patents, patents applied for,
copyrights, customers, suppliers, financial
information, manufacture, fabricating procedures,
specifications, business plans, data records, and other
information, whether considered confidential or not, of
which Contractor shall have obtained knowledge in his
position of employment with Corporation, whether before
or after this Agreement is signed.
1.3 "Consultant" shall mean Neil C. Sullivan a party to
this Agreement, who is located at 1901 Avenue of the
Stars, Suite 2000, Los Angeles, California 90067.
1.4 "Corporation" shall mean Industrial Services of
America, Inc., a Florida corporation, with its
principal office and place of business located at 7100
Grade Lane, Louisville, Kentucky, 40213.
1.5 "Parties" shall mean the Consultant and the
Corporation.
1.6 "Party" shall mean the Consultant or the Corporation.
II. PURPOSE OF THIS AGREEMENT
-------------------------
2.1 Corporation is engaged, among things, in the provision
of waste management consulting and management services,
and the sale of related products. In its business,
<PAGE>
Corporation utilizes sophisticated technology, which
technology includes, but is not limited to,
Confidential and Proprietary Information.
2.2 The Parties acknowledge that Consultant, during his
employment with Corporation, may acquire Confidential
and Proprietary Information which, under no circum-
stances, should be disclosed to others during or after
termination of Consultant's employment relationship
with Corporation. Therefore, Corporation desires to
obligate Consultant in this regard to the terms and
conditions of this Agreement, and Consultant is willing
to be obligated accordingly.
III. CONSIDERATION
-------------
In consideration of entering into this Agreement, Consultant is
providing services for the Corporation.
IV. CONFIDENTIAL INFORMATION
------------------------
4.1 All Confidential and Proprietary Information of
Corporation, possession of which shall have come to
Consultant at any time, are by this Agreement agreed to
be the property of Corporation, and upon Corporation's
request or upon termination of Consultant's employment
with Corporation, Consultant shall deliver to
Corporation immediately any and all documents relating
to same. Upon termination of Consultant's employment
with Corporation, all written information of any kind
whatsoever concerning Corporation's Confidential and
Proprietary information (including, but not limited to,
computer programs) and all copies of any and all of the
foregoing which may be in Consultant's possession, or
over which Consultant may have control, shall be
delivered by Consultant to Corporation immediately,
with no demand therefore being required except that
Consultant may retain copies of his/her own work
product the use of which shall be governed by the terms
hereof. Consultant acknowledges that all such
documents and information are, at all times, the
property of Corporation, and constitute trade secret
and proprietary information and property belonging to
Corporation.
4.2 It is understood and agreed that the various materials
and tools provided by Corporation and/or which are
utilized by Consultant in the performance of his/her
duties and responsibilities are and shall remain the
property of Corporation.
-2-
<PAGE>
V. COVENANT NOT TO COMPETE
-----------------------
5.1 Following the termination of his employment hereunder,
Consultant agrees that he will not, directly or
indirectly, represent that he is, in any way, connected
with or interested in the business of Corporation, or
either for his own account or for the account of any
other person, firm, or corporation, solicit, interfere
with, or endeavor to entice away from Corporation any
employee or sales agent of Corporation.
5.2 During the term of his employment hereunder and for a
period three (3) years after the termination of his
employment hereunder (such period not to include any
period of violation or period of time required for
litigation to enforce the covenant), Consultant shall
not, directly or indirectly, engage in any employment
or business as an independent contractor, sales
representative, employee, officer, or director
competitive with the business of Corporation within the
Commonwealth of Kentucky and states contiguous thereto
(the "Territory").
5.3 It is recognized that Corporation conducts its business,
consulting, marketing, promoting, and selling
Corporation's products and services throughout the
Territory and that the three (3) year restriction
throughout said Territory is absolutely necessary to
give effect to this Agreement, and is a reasonable
restriction by Agreement.
5.4 It is agreed and understood that the purpose of this
limitation is for the protection of Corporation in that
Consultant will have access to Corporation's customers
and information in relation to its business, including
Confidential and Proprietary Information, and
therefore, competition within the Territory in the time
period set forth above would be detrimental to
Corporation and undermine the purpose of this
Agreement. This employment limitation, however, is
limited to employment or business which competes with
Corporation's business activities, and is not meant to
deprive Consultant from being employed by Corporation,
or otherwise in the management or ownership of any
business so long as the nature of said business or
ownership duties do not compete with the business or
Corporation. Consultant recognizes the legitimacy and
reasonableness of this restriction and agrees to be
bound thereby.
-3-
<PAGE>
VI. MISCELLANEOUS
-------------
6.1 This Agreement shall be binding upon the Parties hereto
and their respective successors and assigns of
Corporation.
6.2 Consent to Jurisdiction and Service of Process. This
Agreement has been entered into in the Commonwealth of
Kentucky and the validity, interpretation and legal
effect of this Agreement will be governed by the laws
of the Commonwealth of Kentucky applicable to contracts
entered into within the Commonwealth of Kentucky. Any
dispute under this Agreement shall be resolved by
arbitration conducted in the City of Louisville and the
Commonwealth of Kentucky by the American Arbitration
Association. Any action or other proceeding which
involves such a controversy will be brought only in
said jurisdiction, and not elsewhere, and the parties
hereto waive any objections on the grounds of lack of
jurisdiction, lack of venue, or forum non conveniens or
any similar grounds. Any process including, without
limitation, any summons or subpoena in any such action
or proceeding may, among other methods, be served upon
you by delivering it or mailing it, by registered or
certified mail, directed to the address on page one (1)
of this Agreement. Any such delivery or mail service
will be deemed to have the same force and effect as
personal service within the Commonwealth of Kentucky.
Notwithstanding the foregoing, if we become a party in
any action or proceeding, including without limitation,
any arbitration instituted by any third party in any
court or forum or in any matter as to which we may be
entitled to indemnification by you under this Agreement
or otherwise, you hereby irrevocably consent to the
jurisdiction of each such court or other forum,
wherever located, and you agree not to raise the
defenses of lack of jurisdiction, lack of venue or
forum non conveniens or any similar grounds.
6.3 Any violation by Consultant of his obligations
hereunder, whether during or subsequent to his
employment hereunder, shall, in addition to any other
relief which may be recoverable, entitle Corporation to
an immediate injunction and restraining order to
prevent such violations or continued violation without
having to prove damages. It is agreed that any such
violation will cause Corporation irreparable damage for
which Corporation shall have a remedy by injunction and
restraining order. Such violation by Consultant shall
further subject Consultant to pay any and all
reasonable
-4-
<PAGE>
expenses incurred by Corporation in connection with
the enforcement of Corporation's rights hereunder
including but not limited to reasonable attorney's
fees. Notwithstanding the foregoing, Consultant
shall be entitled to contest the proceedings
contemplated herein.
6.4 If Corporation fails to take action for any violation
of this Agreement, such failure shall not constitute a
waiver or estoppel as to said violation of applicable
provisions, but Corporation shall have the right to
enforce or take such action for any prior violation or
future violation without being subjected to the defense
of waiver or estoppel as to said violation of
applicable provision, but Corporation shall have the
right to enforce or take such action for any prior
violation or future violation without being subjected
to the defense of waiver or estoppel.
6.5 If any provision or clause of this Agreement, or
application thereof, is held to be invalid by act of
any court or legislature, such invalidity shall not
affect the provisions of applications of this Agreement
which may be given effect without the invalid provision
or application, and to this end, the provisions of this
Agreement are to be construed as severable.
6.6 This Agreement may not, on behalf of, or in respect to
either Party be changed, modified, released,
discharged, abandoned, or otherwise terminated, in
whole or in part, except by an instrument in writing
signed by Consultant and an authorized officer of
Corporation.
6.7 This Agreement constitutes the entire agreement between
the Parties hereto with respect to this subject matter
and shall be deemed to wholly cancel, terminate, and
supersede any agreement, written or oral, heretofore
entered into between the Parties pertaining thereto.
-5-
<PAGE>
6.8 This Agreement is the entire agreement between the
parties hereto relating to the subject matter hereof.
This Agreement rescinds any and all prior agreements
and understandings between the parties with respect to
the subject matter covered in this Agreement.
INDUSTRIAL SERVICES OF AMERICA, INC.
/s/ Harry Kletter
----------------------------------------
HARRY KLETTER, PRESIDENT
AGREED TO:
BY: /s/ Neil C. Sullivan
-------------------------------------
NEIL C. SULLIVAN, CONSULTANT
-6-
<PAGE>
EXHIBIT "B"
-----------
100,000 Shares Exercise Price: $2.00
- -------------- ---------------------
STOCK OPTION AGREEMENT - SULLIVAN
THIS STOCK OPTION AGREEMENT - SULLIVAN (the "Option Agreement")
made and effective as of the 31st day of March 1995 (the
"Effective Date"), between INDUSTRIAL SERVICES OF AMERICA, INC.,
herein referred to as the "CORPORATION", being incorporated under
the laws of the State of Florida, maintaining its principal place
of business at 7100 Grade Lane, Louisville, Kentucky 40213; and
Neil C. Sullivan, herein referred to as "CONSULTANT", of 1901
- ----------------
Avenue of the Stars, Suite 2000, Los Angeles, California, 90067.
WITNESSETH:
WHEREAS, the variety of services rendered by Consultant,
including general business, management and business opportunity
evaluation, merger and acquisition "finder" services, represents
an important and valuable aid to the conduct of the Corporation's
business enterprise, and as such Corporation deems it to be in
the best interests of the Corporation to secure the services of
Consultant; and
WHEREAS, the Corporation desires to enter into this Option
Agreement with the Consultant containing the terms and conditions
hereinafter set forth, and to grant to Consultant an option to
purchase shares of the Common Stock of the Corporation.
NOW, THEREFORE, in consideration of the promises and mutual
agreements of the parties herein contained, and for other good
and valuable consideration, the parties agree as follows:
1. GRANT OF OPTION. In consideration of the foregoing,
the Corporation hereby grants and issues to Consultant the right
at his option (hereinafter referred to as the "Option") to
purchase up to an aggregate of 100,000 Shares of Common Stock
-------
($.01 par value) of the Corporation at a price of $2.00 per share
all of which Option shall be exercisable, in whole or in part at
any time within twenty-four (24) months from the Effective Date
hereof (the "Expiration Date").
1.1 ANTI-DILUTION PROVISION. The number of shares
underlying the option shall be proportionately increased in the
event that the Corporation causes to be issued additional Shares
in the form of a stock dividend, stock splits, option exercise at
less than book value (with the exception of the exercise of the
options under the Stock Option Agreement - Maxwell, dated March
31, 1995, by and between the Corporation and Douglas I. Maxwell,
III), or other such reclassification; or conversely, proportionately
decreased in the event of a reverse split or
-1-
<PAGE>
reclassification. In the event that stockholders of the
Corporation are granted the right to purchase additional shares
from the proceeds of a cash dividend by the Corporation, such
event shall be treated as a stock dividend as relates to the
option.
2. METHOD OF EXERCISING OPTION. The Option may be
exercised, in whole, or in part at any time prior to 3:00 p.m.
Louisville, Kentucky Time on the Expiration Date, by giving
written notice to the Corporation to that effect. The Option
evidenced hereby shall be exercisable by the delivery to and
receipt by the Corporation of (a) this original Option Agreement
(b) a written Notice of Election to Exercise (the "Notice of
Election") in the form set forth on the Schedule I to Option
Agreement, to this option, attached hereto and incorporated
herein by reference, specifying the number of Shares to be
purchased in not less than one thousand (1,000) share
denominations (c) payment of the full purchase price, either by
federal funds wire transfer to the bank depository to be
specified by the Corporation or by certified check, U.S. funds,
payable to the order of the Corporation, or on such other terms
as may be acceptable to the Corporation. If the Notice of
Exercise is for less than the total of 100,000 Shares, and the
-------
time for exercise has not expired, the Corporation shall provide
the Consultant with a new or revised Option Agreement for the
balance of the Shares then remaining unexercised, upon the same
terms and conditions as stated herein.
3. CORPORATION'S REPRESENTATION. The Corporation
represents that it will use its best efforts to prepare, file,
and maintain with the appropriate regulatory authorities an
effective Registration Statement on Form S-8, or other applicable
form, for the shares of its Common Stock underlying the Option
granted by this Agreement, such Form S-8 to allow for the
immediate resale of the shares subject to the Option. In
addition in connection with any registration statement of the
Corporation to be used to offer and sell shares of the Common
Stock ($.01 par value) of the Corporation for cash, Consultant is
hereby granted piggyback registration rights in connection with
any registration statements of the Corporation to be used to
offer and sell shares of the Common Stock $.01 par value of the
Corporation for cash. Consultant may serve written notice upon
the Corporation and request that all or part of the underlying
shares of Common Stock be included in the first such registration
statement which the Corporation shall prepare and file with the
Securities and Exchange Commission subsequent to the date hereof
satisfying the prior conditions hereof. The number of shares of
the Common Stock subject to the option that may be included in
any such registration statement shall be the sole decision of any
underwriter selected by the Corporation for the offer and sale of
the shares of the Common Stock of the Corporation included in the
registration statement of the Corporation for which the
-2-
<PAGE>
Consultant has piggyback registration rights. All expenses
associated with the registration of the option and the underlying
shares of Common Stock shall be borne solely by the Corporation.
4. RESTRICTION AGAINST ASSIGNMENT. Except as otherwise
expressly provided above, Consultant agrees on behalf of himself
and of any other person or persons claiming any benefits by
virtue of this option Agreement, that this Option Agreement and
the rights, interests and benefits under it shall not be
assigned, transferred, pledged, or hypothecated in any way by
Consultant or any other person claiming under Consultant by
virtue hereof. Such rights, interests or benefits shall not be
subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, or hypothecation, or
other disposition of this Option Agreement or of such rights,
interests, and benefits contrary to the preceding provisions, or
the levy or any attachment or similar process thereupon, shall be
null and void and without any legal effect.
5. NOTICES. All notices required to be given by either
party shall be in writing and delivered by registered, certified
or overnight express mail, return receipt requested, to the party
being noticed at the address set forth in the first paragraph of
this Agreement. Any notice to the Corporation shall be addressed
to the attention of the President. Any notice to the Corporation
shall be addressed to the attention of the President. Either
party may effect a change in such address by a prior written
notice.
6. BINDING ACCEPTANCE. By acceptance of this signed
Option Agreement, the Consultant does hereby agree to be bound by
all of the terms and conditions set forth herein.
7. GOVERNING LAW. This Option Agreement shall be
construed under the laws of the Commonwealth of Kentucky.
8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. This
Option Agreement has been entered into in the Commonwealth of
Kentucky and validity, interpretation and legal effect of this
Agreement will be governed by the laws of the Commonwealth of
Kentucky applicable to contracts entered into within the
Commonwealth of Kentucky. Any dispute under this Option
Agreement shall be resolved by arbitration conducted in the City
of Louisville and the Commonwealth of Kentucky by the American
Arbitration Association. Any action or other proceeding which
involves such a controversy will be brought only in said
jurisdiction, and not elsewhere, and the parties hereto waive any
objections on the grounds of lack of jurisdiction, lack
of venue, or forum non conveniens or any similar grounds. Any
process including, without limitation, any summons or subpoena in
any such action or proceeding may, among other methods, be served
upon you by delivering it or mailing it, by registered or
-3-
<PAGE>
certified mail, directed to the address on page one (1) of this
Agreement. Any such delivery or mail service will be deemed to
have the same force and effect as personal service within the
Commonwealth of Kentucky. Notwithstanding the foregoing, if we
become a party in any action or proceeding, including without
limitation, any arbitration instituted by any third party in any
court or forum or in any matter as to which we may be entitled to
indemnification by you under this Agreement or otherwise, you
hereby irrevocably consent to the jurisdiction of each such court
or other forum, wherever located, and you agree not to raise the
defenses of lack of jurisdiction, lack of venue or forum non
conveniens or any similar grounds.
9. TOTAL AGREEMENT. This Option Agreement is the entire
agreement between the parties hereto relating to the subject
matter hereof. This Option Agreement rescinds any and all prior
agreements and understandings between the parties with respect to
the subject matter covered in this Option Agreement.
IN WITNESS WHEREOF, the Corporation has executed this Option
Agreement by its duly authorized corporate officer on the 26th
day of June, 1996 to be effective retroactive to the Effective
Date.
INDUSTRIAL SERVICES OF AMERICA, INC.
By: /s/ Harry Kletter
-------------------------------------
Title: President
----------------------------------
Accepted By:
/s/ Neil C. Sullivan
----------------------------------------
Neil C. Sullivan, Consultant
-4-
<PAGE>
SCHEDULE I TO OPTION AGREEMENT
NOTICE OF ELECTION TO EXERCISE
TO: Industrial Services of America, Inc.
7100 Grade Lane
Louisville, KY 40213
The Undersigned Purchaser hereby elects to purchase shares
----
(the "Shares") of the Common Stock ($.01 par value) of Industrial
Services of America, Inc. (the "Corporation") pursuant to the
terms of the Stock Option Agreement - Sullivan (the "Option"),
dated as of March 31, 1995 and executed on June 26, 1996, by and
between the undersigned and the Corporation, (which Option must
be surrendered with this Notice of Election To Exercise).
Payment In Full (U.S. Funds) is hereby tendered in the aggregate
sum of $ , which sum represents Shares (maximum
------------
100,000) times the per Share purchase price of $2.00 by:
( ) Certified Check or ( ) Federal Funds Wire Transfer to the
Corporation's depository bank in accordance with your
prior written instructions.
( ) By Delivery vs Payment at:
--------------------------------
or Account #:
--------------------------------
You are hereby requested to issue a certificate representing the
Shares in the name(s), and to the address(es) as specified below:
Name:
------------------------------------------------------------
Street: Number of Shares:
--------------------------------- ------
City: State: Zip:
---------------------- ----------- -------------
Social Security or Tax I.D. Number:
-------------------------
Purchaser acknowledges that no formal memorandum, prospectus or
offering document of any kind has been delivered by the
Corporation with specific regard to this Option exercise.
However, by virtue of the Purchaser's consulting relationship
with, and activities on behalf of the Corporation, sufficient
business and other information has been made available by the
Corporation to enable Purchaser to fully evaluate the investment
potential of the Shares being acquired. The Corporation's
representatives have provided information and answered all
material questions.
Date: , 199
--------------- -- -----------------------------------
<PAGE>
If no registration statement as to the Option and the Shares is
effective as of the date of exercise, include the following
paragraph:
The purchaser represents and warrants that it is purchasing
the Shares for investment and not with a view to distribution
thereof and understands and acknowledges that the Stock
Certificate(s) representing the Shares shall bear the following
legend:
The shares represented by this certificate
have not been registered or qualified for
sale under the Securities Act of 1933, as
amended (the "Act"), or any state securities
or blue sky laws, and may not be sold,
transferred or otherwise disposed of except
pursuant to an exemption from registration or
qualification thereunder. The Corporation
may require, as a condition to transfer of
this certificate, an opinion of counsel
satisfactory to the Corporation to the effect
that such transfer will not be in violation
of the Act or any such laws.
<PAGE>
EXHIBIT 4(b)
------------
<PAGE>
EXHIBIT "B"
-----------
100,000 Shares Exercise Price: $2.00
- -------------- ---------------------
STOCK OPTION AGREEMENT - SULLIVAN
THIS STOCK OPTION AGREEMENT - SULLIVAN (the "Option Agreement")
made and effective as of the 31st day of March 1995 (the
"Effective Date"), between INDUSTRIAL SERVICES OF AMERICA, INC.,
herein referred to as the "CORPORATION", being incorporated under
the laws of the State of Florida, maintaining its principal place
of business at 7100 Grade Lane, Louisville, Kentucky 40213; and
Neil C. Sullivan, herein referred to as "CONSULTANT", of 1901
- ----------------
Avenue of the Stars, Suite 2000, Los Angeles, California, 90067.
WITNESSETH:
WHEREAS, the variety of services rendered by Consultant,
including general business, management and business opportunity
evaluation, merger and acquisition "finder" services, represents
an important and valuable aid to the conduct of the Corporation's
business enterprise, and as such Corporation deems it to be in
the best interests of the Corporation to secure the services of
Consultant; and
WHEREAS, the Corporation desires to enter into this Option
Agreement with the Consultant containing the terms and conditions
hereinafter set forth, and to grant to Consultant an option to
purchase shares of the Common Stock of the Corporation.
NOW, THEREFORE, in consideration of the promises and mutual
agreements of the parties herein contained, and for other good
and valuable consideration, the parties agree as follows:
1. GRANT OF OPTION. In consideration of the foregoing,
the Corporation hereby grants and issues to Consultant the right
at his option (hereinafter referred to as the "Option") to
purchase up to an aggregate of 100,000 Shares of Common Stock
-------
($.01 par value) of the Corporation at a price of $2.00 per share
all of which Option shall be exercisable, in whole or in part at
any time within twenty-four (24) months from the Effective Date
hereof (the "Expiration Date").
1.1 ANTI-DILUTION PROVISION. The number of shares
underlying the option shall be proportionately increased in the
event that the Corporation causes to be issued additional Shares
in the form of a stock dividend, stock splits, option exercise at
less than book value (with the exception of the exercise of the
options under the Stock Option Agreement - Maxwell, dated March
31, 1995, by and between the Corporation and Douglas I. Maxwell,
III), or other such reclassification; or conversely, proportionately
decreased in the event of a reverse split or
-1-
<PAGE>
reclassification. In the event that stockholders of the
Corporation are granted the right to purchase additional shares
from the proceeds of a cash dividend by the Corporation, such
event shall be treated as a stock dividend as relates to the
option.
2. METHOD OF EXERCISING OPTION. The Option may be
exercised, in whole, or in part at any time prior to 3:00 p.m.
Louisville, Kentucky Time on the Expiration Date, by giving
written notice to the Corporation to that effect. The Option
evidenced hereby shall be exercisable by the delivery to and
receipt by the Corporation of (a) this original Option Agreement
(b) a written Notice of Election to Exercise (the "Notice of
Election") in the form set forth on the Schedule I to Option
Agreement, to this option, attached hereto and incorporated
herein by reference, specifying the number of Shares to be
purchased in not less than one thousand (1,000) share
denominations (c) payment of the full purchase price, either by
federal funds wire transfer to the bank depository to be
specified by the Corporation or by certified check, U.S. funds,
payable to the order of the Corporation, or on such other terms
as may be acceptable to the Corporation. If the Notice of
Exercise is for less than the total of 100,000 Shares, and the
-------
time for exercise has not expired, the Corporation shall provide
the Consultant with a new or revised Option Agreement for the
balance of the Shares then remaining unexercised, upon the same
terms and conditions as stated herein.
3. CORPORATION'S REPRESENTATION. The Corporation
represents that it will use its best efforts to prepare, file,
and maintain with the appropriate regulatory authorities an
effective Registration Statement on Form S-8, or other applicable
form, for the shares of its Common Stock underlying the Option
granted by this Agreement, such Form S-8 to allow for the
immediate resale of the shares subject to the Option. In
addition in connection with any registration statement of the
Corporation to be used to offer and sell shares of the Common
Stock ($.01 par value) of the Corporation for cash, Consultant is
hereby granted piggyback registration rights in connection with
any registration statements of the Corporation to be used to
offer and sell shares of the Common Stock $.01 par value of the
Corporation for cash. Consultant may serve written notice upon
the Corporation and request that all or part of the underlying
shares of Common Stock be included in the first such registration
statement which the Corporation shall prepare and file with the
Securities and Exchange Commission subsequent to the date hereof
satisfying the prior conditions hereof. The number of shares of
the Common Stock subject to the option that may be included in
any such registration statement shall be the sole decision of any
underwriter selected by the Corporation for the offer and sale of
the shares of the Common Stock of the Corporation included in the
registration statement of the Corporation for which the
-2-
<PAGE>
Consultant has piggyback registration rights. All expenses
associated with the registration of the option and the underlying
shares of Common Stock shall be borne solely by the Corporation.
4. RESTRICTION AGAINST ASSIGNMENT. Except as otherwise
expressly provided above, Consultant agrees on behalf of himself
and of any other person or persons claiming any benefits by
virtue of this option Agreement, that this Option Agreement and
the rights, interests and benefits under it shall not be
assigned, transferred, pledged, or hypothecated in any way by
Consultant or any other person claiming under Consultant by
virtue hereof. Such rights, interests or benefits shall not be
subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, or hypothecation, or
other disposition of this Option Agreement or of such rights,
interests, and benefits contrary to the preceding provisions, or
the levy or any attachment or similar process thereupon, shall be
null and void and without any legal effect.
5. NOTICES. All notices required to be given by either
party shall be in writing and delivered by registered, certified
or overnight express mail, return receipt requested, to the party
being noticed at the address set forth in the first paragraph of
this Agreement. Any notice to the Corporation shall be addressed
to the attention of the President. Any notice to the Corporation
shall be addressed to the attention of the President. Either
party may effect a change in such address by a prior written
notice.
6. BINDING ACCEPTANCE. By acceptance of this signed
Option Agreement, the Consultant does hereby agree to be bound by
all of the terms and conditions set forth herein.
7. GOVERNING LAW. This Option Agreement shall be
construed under the laws of the Commonwealth of Kentucky.
8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. This
Option Agreement has been entered into in the Commonwealth of
Kentucky and validity, interpretation and legal effect of this
Agreement will be governed by the laws of the Commonwealth of
Kentucky applicable to contracts entered into within the
Commonwealth of Kentucky. Any dispute under this Option
Agreement shall be resolved by arbitration conducted in the City
of Louisville and the Commonwealth of Kentucky by the American
Arbitration Association. Any action or other proceeding which
involves such a controversy will be brought only in said
jurisdiction, and not elsewhere, and the parties hereto waive any
objections on the grounds of lack of jurisdiction, lack
of venue, or forum non conveniens or any similar grounds. Any
process including, without limitation, any summons or subpoena in
any such action or proceeding may, among other methods, be served
upon you by delivering it or mailing it, by registered or
-3-
<PAGE>
certified mail, directed to the address on page one (1) of this
Agreement. Any such delivery or mail service will be deemed to
have the same force and effect as personal service within the
Commonwealth of Kentucky. Notwithstanding the foregoing, if we
become a party in any action or proceeding, including without
limitation, any arbitration instituted by any third party in any
court or forum or in any matter as to which we may be entitled to
indemnification by you under this Agreement or otherwise, you
hereby irrevocably consent to the jurisdiction of each such court
or other forum, wherever located, and you agree not to raise the
defenses of lack of jurisdiction, lack of venue or forum non
conveniens or any similar grounds.
9. TOTAL AGREEMENT. This Option Agreement is the entire
agreement between the parties hereto relating to the subject
matter hereof. This Option Agreement rescinds any and all prior
agreements and understandings between the parties with respect to
the subject matter covered in this Option Agreement.
IN WITNESS WHEREOF, the Corporation has executed this Option
Agreement by its duly authorized corporate officer on the 26th
day of June, 1996 to be effective retroactive to the Effective
Date.
INDUSTRIAL SERVICES OF AMERICA, INC.
By: /s/ Harry Kletter
-----------------------------------
Title: President
--------------------------------
Accepted By:
/s/ Neil C. Sullivan
----------------------------------------
Neil C. Sullivan, Consultant
-4-
<PAGE>
SCHEDULE I TO OPTION AGREEMENT
NOTICE OF ELECTION TO EXERCISE
TO: Industrial Services of America, Inc.
7100 Grade Lane
Louisville, KY 40213
The Undersigned Purchaser hereby elects to purchase shares
----
(the "Shares") of the Common Stock ($.01 par value) of Industrial
Services of America, Inc. (the "Corporation") pursuant to the
terms of the Stock Option Agreement - Sullivan (the "Option"),
dated as of March 31, 1995 and executed on June 26, 1996, by and
between the undersigned and the Corporation, (which Option must
be surrendered with this Notice of Election To Exercise).
Payment In Full (U.S. Funds) is hereby tendered in the aggregate
sum of $ , which sum represents Shares (maximum
------------
100,000) times the per Share purchase price of $2.00 by:
( ) Certified Check or ( ) Federal Funds Wire Transfer to the
Corporation's depository bank in accordance with your
prior written instructions.
( ) By Delivery vs Payment at:
--------------------------------
or Account #:
--------------------------------
You are hereby requested to issue a certificate representing the
Shares in the name(s), and to the address(es) as specified below:
Name:
------------------------------------------------------------
Street: Number of Shares:
--------------------------------- ------
City: State: Zip:
---------------------- ----------- -------------
Social Security or Tax I.D. Number:
-------------------------
Purchaser acknowledges that no formal memorandum, prospectus or
offering document of any kind has been delivered by the
Corporation with specific regard to this Option exercise.
However, by virtue of the Purchaser's consulting relationship
with, and activities on behalf of the Corporation, sufficient
business and other information has been made available by the
Corporation to enable Purchaser to fully evaluate the investment
potential of the Shares being acquired. The Corporation's
representatives have provided information and answered all
material questions.
Date: , 199
--------------- -- -----------------------------------
<PAGE>
If no registration statement as to the Option and the Shares is
effective as of the date of exercise, include the following
paragraph:
The purchaser represents and warrants that it is purchasing
the Shares for investment and not with a view to distribution
thereof and understands and acknowledges that the Stock
Certificate(s) representing the Shares shall bear the following
legend:
The shares represented by this certificate
have not been registered or qualified for
sale under the Securities Act of 1933, as
amended (the "Act"), or any state securities
or blue sky laws, and may not be sold,
transferred or otherwise disposed of except
pursuant to an exemption from registration or
qualification thereunder. The Corporation
may require, as a condition to transfer of
this certificate, an opinion of counsel
satisfactory to the Corporation to the effect
that such transfer will not be in violation
of the Act or any such laws.
<PAGE>
EXHIBIT 5.1
-----------
<PAGE>
STITES & HARBISON
400 WEST MARKET STREET
SUITE 1800
LOUISVILLE, KENTUCKY 40202-3352
Telephone: (502) 587-3400
Facsimile: (502) 587-6391
June 26, 1996
Industrial Services of America, Inc.
7100 Grade Lane
P.O. Box 32428
Louisville, Kentucky 40232
Re: 100,000 Shares of Industrial Services of America, Inc.,
a Florida corporation, $.01 Par Value Common Stock to
be Issued in Accordance with Independent Consulting
Services Agreement - Sullivan, Confidential Information
and Non-Competition Agreement Independent Contractor -
Sullivan and Stock Option Agreement - Sullivan on Form
S-8 Registration Statement
Ladies and Gentlemen:
We have acted as counsel for Industrial Services of America,
Inc. (the "Company"), a Florida corporation, in connection with
the preparation and filing of a registration statement on Form S-
8 (the "Registration Statement"), relating to the registration by
the Company under the Securities Act of 1933, as amended (the
"Act"), of 100,000 shares of the Company's common stock, $.01 par
value per share (the "Common Stock"), to be issued by the
Company, in accordance with (i) the Independent Consulting
Services Agreement - Sullivan (the "Consulting Agreement"), dated
as of March 31, 1995, by and between the Company and Neil C.
Sullivan (the "Consultant"), (ii) the Confidential Information
and Non-Competition Agreement Independent Contractor - Sullivan
(the "Non-Compete Agreement"), dated as of March 31, 1995, by and
between the Company and the Consultant, and (iii) the Stock
Option Agreement - Sullivan (the "Option Agreement"), dated as of
March 31, 1995, by and between the Company and the Consultant.
Each of the Consulting Agreement, the Non-Compete Agreement and
the Option Agreement, although effective as of March 31, 1995,
has been executed on June 26, 1996.
In connection with this opinion, we have considered such
matters of law and examined the originals or copies, certified or
otherwise identified to our satisfaction, of such documents,
<PAGE>
Industrial Services of America, Inc.
June 26, 1996
Page 2
including, but not limited to, the Consulting Agreement, the Non-
Compete Agreement and the Option Agreement, and corporate and
other records and have obtained such certificates, letters,
representations and information from the officers, directors and
employees of the Company and from others as we have deemed
necessary or appropriate to enable us to render the opinions
expressed herein.
Based upon and in reliance upon the foregoing, and subject
to the qualifications and assumptions set forth below, it is our
opinion that, when (a) the Registration Statement has become
effective in accordance with the Act and the rules and
regulations thereunder and the provisions of such state
securities or "blue sky" laws as may be applicable have been
complied with, and (b) the Common Stock has been duly delivered
against payment therefor, the Common Stock to be issued by the
Company will be legally issued, fully paid and nonassessable.
Our opinion is limited by and subject to the following:
(a) In rendering our opinion we have assumed that, at the
time of the issuance and sale of the Common Stock, the Company
will be a corporation validly existing and in good standing under
the laws of the State of Florida.
(b) In our examination of all documents, certificates and
records, we have assumed without investigation the authenticity
and completeness of all documents submitted to us as originals,
the conformity to the originals of all documents submitted to us
as copies and the authenticity and completeness of the originals
of all documents submitted to us as copies. We have also assumed
the genuineness of all signatures, the legal capacity of natural
persons, the authority of all persons executing documents on
behalf of the parties thereto other than the Company, and the due
authorization, execution and delivery of all documents by the
parties thereto other than the Company.
<PAGE>
Industrial Services of America, Inc.
June 26, 1996
Page 3
(c) Our opinion is based solely on and limited to the Florida
Business Corporation Act and the federal laws of the United
States of America. We express no opinion as to the laws of any
other jurisdiction.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement.
Very truly yours,
STITES & HARBISON
<PAGE>
EXHIBIT 10.1
------------
<PAGE>
EXHIBIT A
---------
CONFIDENTIAL INFORMATION AND NON-COMPETITION AGREEMENT
------------------------------------------------------
INDEPENDENT CONTRACTOR - SULLIVAN
---------------------------------
This CONFIDENTIAL INFORMATION AND NON-COMPETITION AGREEMENT -
SULLIVAN is made by and between INDUSTRIAL SERVICES OF AMERICA,
INC. (the "Corporation") and Neil C. Sullivan, 1901 Avenue of the
Stars, Suite 2000, Los Angeles, California 90067 (the
"Consultant") as of the 31st day of March, 1995.
I. DEFINITIONS
-----------
The following terms, as used in this Agreement, shall have the
following meanings:
1.1 "Agreement" shall mean this Confidential Information
and Non-Competition Agreement - Sullivan.
1.2 "Confidential and Proprietary Information" shall mean
any and all secret, confidential, proprietary, or
private information, including, without limitation, any
trade secrets, patents, patents applied for,
copyrights, customers, suppliers, financial
information, manufacture, fabricating procedures,
specifications, business plans, data records, and other
information, whether considered confidential or not, of
which Contractor shall have obtained knowledge in his
position of employment with Corporation, whether before
or after this Agreement is signed.
1.3 "Consultant" shall mean Neil C. Sullivan a party to
this Agreement, who is located at 1901 Avenue of the
Stars, Suite 2000, Los Angeles, California 90067.
1.4 "Corporation" shall mean Industrial Services of
America, Inc., a Florida corporation, with its
principal office and place of business located at 7100
Grade Lane, Louisville, Kentucky, 40213.
1.5 "Parties" shall mean the Consultant and the
Corporation.
1.6 "Party" shall mean the Consultant or the Corporation.
II. PURPOSE OF THIS AGREEMENT
-------------------------
2.1 Corporation is engaged, among things, in the provision
of waste management consulting and management services,
and the sale of related products. In its business,
<PAGE>
Corporation utilizes sophisticated technology, which
technology includes, but is not limited to,
Confidential and Proprietary Information.
2.2 The Parties acknowledge that Consultant, during his
employment with Corporation, may acquire Confidential
and Proprietary Information which, under no circum-
stances, should be disclosed to others during or after
termination of Consultant's employment relationship
with Corporation. Therefore, Corporation desires to
obligate Consultant in this regard to the terms and
conditions of this Agreement, and Consultant is willing
to be obligated accordingly.
III. CONSIDERATION
-------------
In consideration of entering into this Agreement, Consultant is
providing services for the Corporation.
IV. CONFIDENTIAL INFORMATION
------------------------
4.1 All Confidential and Proprietary Information of
Corporation, possession of which shall have come to
Consultant at any time, are by this Agreement agreed to
be the property of Corporation, and upon Corporation's
request or upon termination of Consultant's employment
with Corporation, Consultant shall deliver to
Corporation immediately any and all documents relating
to same. Upon termination of Consultant's employment
with Corporation, all written information of any kind
whatsoever concerning Corporation's Confidential and
Proprietary information (including, but not limited to,
computer programs) and all copies of any and all of the
foregoing which may be in Consultant's possession, or
over which Consultant may have control, shall be
delivered by Consultant to Corporation immediately,
with no demand therefore being required except that
Consultant may retain copies of his/her own work
product the use of which shall be governed by the terms
hereof. Consultant acknowledges that all such
documents and information are, at all times, the
property of Corporation, and constitute trade secret
and proprietary information and property belonging to
Corporation.
4.2 It is understood and agreed that the various materials
and tools provided by Corporation and/or which are
utilized by Consultant in the performance of his/her
duties and responsibilities are and shall remain the
property of Corporation.
-2-
<PAGE>
V. COVENANT NOT TO COMPETE
-----------------------
5.1 Following the termination of his employment hereunder,
Consultant agrees that he will not, directly or
indirectly, represent that he is, in any way, connected
with or interested in the business of Corporation, or
either for his own account or for the account of any
other person, firm, or corporation, solicit, interfere
with, or endeavor to entice away from Corporation any
employee or sales agent of Corporation.
5.2 During the term of his employment hereunder and for a
period three (3) years after the termination of his
employment hereunder (such period not to include any
period of violation or period of time required for
litigation to enforce the covenant), Consultant shall
not, directly or indirectly, engage in any employment
or business as an independent contractor, sales
representative, employee, officer, or director
competitive with the business of Corporation within the
Commonwealth of Kentucky and states contiguous thereto
(the "Territory").
5.3 It is recognized that Corporation conducts its
business, consulting, marketing, promoting, and selling
Corporation's products and services throughout the
Territory and that the three (3) year restriction
throughout said Territory is absolutely necessary to
give effect to this Agreement, and is a reasonable
restriction by Agreement.
5.4 It is agreed and understood that the purpose of this
limitation is for the protection of Corporation in that
Consultant will have access to Corporation's customers
and information in relation to its business, including
Confidential and Proprietary Information, and
therefore, competition within the Territory in the time
period set forth above would be detrimental to
Corporation and undermine the purpose of this
Agreement. This employment limitation, however, is
limited to employment or business which competes with
Corporation's business activities, and is not meant to
deprive Consultant from being employed by Corporation,
or otherwise in the management or ownership of any
business so long as the nature of said business or
ownership duties do not compete with the business or
Corporation. Consultant recognizes the legitimacy and
reasonableness of this restriction and agrees to be
bound thereby.
-3-
<PAGE>
VI. MISCELLANEOUS
-------------
6.1 This Agreement shall be binding upon the Parties hereto
and their respective successors and assigns of
Corporation.
6.2 Consent to Jurisdiction and Service of Process. This
Agreement has been entered into in the Commonwealth of
Kentucky and the validity, interpretation and legal
effect of this Agreement will be governed by the laws
of the Commonwealth of Kentucky applicable to contracts
entered into within the Commonwealth of Kentucky. Any
dispute under this Agreement shall be resolved by
arbitration conducted in the City of Louisville and the
Commonwealth of Kentucky by the American Arbitration
Association. Any action or other proceeding which
involves such a controversy will be brought only in
said jurisdiction, and not elsewhere, and the parties
hereto waive any objections on the grounds of lack of
jurisdiction, lack of venue, or forum non conveniens or
any similar grounds. Any process including, without
limitation, any summons or subpoena in any such action
or proceeding may, among other methods, be served upon
you by delivering it or mailing it, by registered or
certified mail, directed to the address on page one (1)
of this Agreement. Any such delivery or mail service
will be deemed to have the same force and effect as
personal service within the Commonwealth of Kentucky.
Notwithstanding the foregoing, if we become a party in
any action or proceeding, including without limitation,
any arbitration instituted by any third party in any
court or forum or in any matter as to which we may be
entitled to indemnification by you under this Agreement
or otherwise, you hereby irrevocably consent to the
jurisdiction of each such court or other forum,
wherever located, and you agree not to raise the
defenses of lack of jurisdiction, lack of venue or
forum non conveniens or any similar grounds.
6.3 Any violation by Consultant of his obligations
hereunder, whether during or subsequent to his
employment hereunder, shall, in addition to any other
relief which may be recoverable, entitle Corporation to
an immediate injunction and restraining order to
prevent such violations or continued violation without
having to prove damages. It is agreed that any such
violation will cause Corporation irreparable damage for
which Corporation shall have a remedy by injunction and
restraining order. Such violation by Consultant shall
further subject Consultant to pay any and all
reasonable
-4-
<PAGE>
expenses incurred by Corporation in connection
with the enforcement of Corporation's rights
hereunder including but not limited to reasonable
attorney's fees. Notwithstanding the foregoing,
Consultant shall be entitled to contest the proceedings
contemplated herein.
6.4 If Corporation fails to take action for any violation
of this Agreement, such failure shall not constitute a
waiver or estoppel as to said violation of applicable
provisions, but Corporation shall have the right to
enforce or take such action for any prior violation or
future violation without being subjected to the defense
of waiver or estoppel as to said violation of
applicable provision, but Corporation shall have the
right to enforce or take such action for any prior
violation or future violation without being subjected
to the defense of waiver or estoppel.
6.5 If any provision or clause of this Agreement, or
application thereof, is held to be invalid by act of
any court or legislature, such invalidity shall not
affect the provisions of applications of this Agreement
which may be given effect without the invalid provision
or application, and to this end, the provisions of this
Agreement are to be construed as severable.
6.6 This Agreement may not, on behalf of, or in respect to
either Party be changed, modified, released,
discharged, abandoned, or otherwise terminated, in
whole or in part, except by an instrument in writing
signed by Consultant and an authorized officer of
Corporation.
6.7 This Agreement constitutes the entire agreement between
the Parties hereto with respect to this subject matter
and shall be deemed to wholly cancel, terminate, and
supersede any agreement, written or oral, heretofore
entered into between the Parties pertaining thereto.
-5-
<PAGE>
6.8 This Agreement is the entire agreement between the
parties hereto relating to the subject matter hereof.
This Agreement rescinds any and all prior agreements
and understandings between the parties with respect to
the subject matter covered in this Agreement.
INDUSTRIAL SERVICES OF AMERICA, INC.
/s/ Harry Kletter
----------------------------------------
HARRY KLETTER, PRESIDENT
AGREED TO:
BY: /s/ Neil C. Sullivan
-------------------------------------
NEIL C. SULLIVAN, CONSULTANT
-6-
<PAGE>
EXHIBIT 23.2
------------
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this
Registration Statement (Form S-8) pertaining to the Industrial
Services of America, Inc. Independent Consulting Services
Agreement and Stock Option Agreement of our report dated February
9, 1996, which appears on page F-1 of the annual report on Form
10-KSB of Industrial Services of America, Inc. for the year ended
December 31, 1995.
/s/ Mather, Hamilton & Co.
- ---------------------------
MATHER, HAMILTON & CO.
Louisville, Kentucky
June 26, 1996
