SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported)
July 1, 1997
INDUSTRIAL SERVICES OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
FLORIDA
(State of other jurisdiction of incorporation)
0-20979 59-0712746
(Commission File Number) (IRS Employer Identification No.)
7100 Grade Lane
PO Box 32428
Louisville, KY 40232
(Address of principal executive offices) (Zip Code)
(502) 368-1661
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 1, 1997, Industrial Services of America, Inc. (the "Company")
acquired certain assets of TMG Enterprises, Inc. ("TMG"), John Fellonneau
and Mark Trakhtenberg pursuant to the terms and conditions set forth in an
Asset Purchase Agreement dated July 1, 1997, among the Company, TMG and
Messrs. Fellonneau and Trakhtenberg, who are hereinafter referred to as
"TMG's Principals." A copy of the Asset Purchase Agreement is attached as
Exhibit 2 and is incorporated herein by reference.
TMG owned and operated a non-ferrous scrap metal recycling facility in
Louisville, Kentucky known as "The Metal Center". The purchased assets
consist primarily of certain industrial equipment used in the processing of
scrap metal, rights to the trade name "The Metal Center," and the goodwill
of TMG's Principals. The Company intends to use the assets to operate a
non-ferrous scrap metal recycling facility under the name "ISA Recycling"
at the same location as "The Metal Center" was formerly operated. ISA has
entered into a seven-month lease for that location. In addition, in
conjunction with the reported transaction, K & R Corporation, a corporation
wholly owned by the principal shareholder of the Company, and which owns
directly approximately 25% of the Company's outstanding common stock,
acquired an option to purchase such real estate.
The Company agreed to pay to TMG and TMG's Principals an aggregate purchase
price of one million six hundred thousand dollars ($1,600,000). The
consideration was arrived at in arms' length negotiations, allocated as
follows:
Equipment $300,000 (payable to TMG)
Non-Compete Agreements $500,000 (payable to TMG's
Principals)
Goodwill $800,000 (payable to TMG's
Principals)
Such amounts will be payable in two payments of $800,000 on or before
January 2, 1998 and July 1, 1998, respectively, which payments are secured
by two (2) letters of credit, each in the sum of $800,000, issued by The
Bank of Louisville and Trust Company. The source of funds for such
payments is expected to be operating funds of the Company.
The Company also agreed to grant to each of TMG's Principals options to
purchase 100,000 shares of the Company's common stock in consideration for
their services as consultants, 50% of which will become exercisable on
January 1, 1998 and July 1, 1996, respectively, for the purchase price of
eight ($8) dollars per share.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired
Pursuant to Regulation Section 210.3-05(b)(2)(i), financial statements are
not required to be filed.
(b) Pro forma financial information
Pro forma financial information is not required to be furnished with
respect to the reported transaction because the transaction is not
considered significant within the meaning of Regulation Section 210.11-
01(b).
(c) Exhibits
The following exhibits are filed as a part of this report:
2 Asset Purchase Agreement dated July 1, 1997 among Industrial
Services of America, Inc., TMG Enterprises, Inc., John Fellonneau
and Mark Trakhtenberg.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: JULY 14, 1997 INDUSTRIAL SERVICES OF AMERICA, INC.
By: /S/ HARRY KLETTER
Harry Kletter
President and Chief
Executive Officer
Exhibit 2
ASSET PURCHASE AGREEMENT
AGREEMENT made as of July 1, 1997 among INDUSTRIAL SERVICES OF AMERICA,
INC. located at 7100 Grade Lane, Building #2, Louisville, Kentucky 40213
("BUYER"), TMG Enterprises, Inc. located at 7100 Grade Lane, Louisville,
Kentucky 40213 ("TMG"), John Fellonneau located at 7100 Grade Lane,
Louisville, Kentucky 40213 ("FELLONNEAU") and Mark Trakhtenberg located at
7100 Grade Lane, Louisville, Kentucky 40213 ("TRAKHTENBERG"). TMG,
Fellonneau and Trakhtenberg are sometimes individually referred to as a
"Seller" and collectively; and on a joint and several basis, as the
"Sellers."
WITNESSETH:
WHEREAS: Sellers desire to sell, convey and assign, and to cause to be
sold, conveyed and assigned, and the Buyer desires to acquire from the
Sellers: (i) the Assets (as defined below); and (ii) the goodwill of the
Sellers.
WHEREAS: Buyer and Sellers executed a Letter of Intent (the "Letter of
Intent") dated April 25, 1997 and modified thereafter on April 29, 1997
with respect to Buyer's purchase of the Assets;
NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, Buyer and Sellers hereby agree as follows:
1. SALE OF ASSETS
1.1 ASSETS TO BE SOLD. Except as otherwise provided in Section 1.2, upon
the execution of this Agreement, the Sellers shall sell, assign, transfer
and deliver to the Buyer, Sellers' assets (all of such assets, properties,
rights and business being hereinafter sometimes collectively called the
"Assets") as follows:
a. All of TMG's Equipment as set forth on SCHEDULE 1 attached hereto;
b. All of the Sellers' rights to use the tradename "The Metal Center"
(the "Tradename"). Simultaneously with the execution of this Agreement,
the Sellers shall sign a Trademark Assignment (the "Trademark Assignment")
substantially in the form attached hereto as EXHIBIT A;
c. All of the books and records of the Sellers relating to the Assets;
and
d. All of the goodwill of the Sellers relating to the Tradename and
Sellers' customers.
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In confirmation of the foregoing sale, assignment and transfer, the
Sellers shall execute and deliver to the Buyer simultaneously herewith a
Bill of Sale (the "Bill of Sale") in the form of EXHIBIT B, for each
applicable asset comprising the Assets, and such other instruments and
assignments as may be necessary to convey to the Buyer good title to the
Assets.
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary contained in
Section 1.1 hereof, there shall be excluded from the assets to be
transferred to Buyer hereunder, cash on hand and in banks, accounts
receivable, and inventory (collectively, the "Excluded Assets").
2. NO ASSUMPTION OF LIABILITIES
The Sellers and Buyer agree that this is an asset purchase and that
the Buyer is not a successor in interest to the Sellers and does not intend
nor by this Agreement assume any liabilities whether contingent or
otherwise of the Sellers which may exist at any time whether past or
present or future relating to any activities which may have taken place
during TMG's ownership of The Metal Center. Buyer does not assume
liability that exists against the Sellers under the Comprehensive
Environmental Response Compensation and Liability Act of 1980 (CERCLA) 42
U.S.C. Section 9607 or any other state or federal law as a result of any
conduct or actions of any type or kind of the Sellers or their agents,
employees or any entity or persons associated with the Sellers and the
Buyer specifically acknowledges that this asset purchase transaction does
not constitute a continuation of the business of the Sellers and does not
create any liability on behalf of the Buyer for any of the acts of the
Sellers. In addition to the foregoing, Buyer shall not assume, or in any
way be liable or responsible for, any liabilities or obligations of the
Sellers, including, without limitation, (1) liabilities relating to
employee benefits or severance pay to Sellers' employees; and (2) tax
liabilities, including, without limitation, income, excise, sales, use,
gross receipts, franchise, employment, payroll or property relating to the
business of the Sellers or the Assets for any period ending on or before
the date hereof or arising out of the transactions contemplated by this
Agreement. Notwithstanding the foregoing sentence, Buyer agrees that for
the period beginning July 1, 1997 and ending December 31, 1997, TMG shall
continue payment of insurance premiums for health insurance for former TMG
employees who become Buyer's employees, and Buyer agrees to and shall
reimburse TMG for those premium costs.
3. CONSIDERATION AND PAYMENT
Buyer agrees to pay to the Seller(s) the total sum of One Million Six
Hundred Thousand Dollars ($1,600,000) (the "Purchase Price") for the
Assets payable Eight Hundred Thousand Dollars ($800,000) on or before
January 2, 1998, and Eight Hundred Thousand Dollars ($800,000) on or
before July 1, 1998 in funds then immediately available
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in Louisville, Kentucky. The Purchase Price for the assets being acquired
hereunder shall be paid by the Buyer to the following Sellers as follows:
SELLER ASSETS VALUE
TMG TMG's Equipment set forth on SCHEDULE 1 $300,000
Fellonneau Non-Compete Agreement $250,000
Trakhtenberg Non-Compete Agreement $250,000
Fellonneau Goodwill $400,000
Trakhtenberg Goodwill $400,000
TOTAL $1,600,000
Buyer herewith provides the Sellers with two (2) Letters of Credit
issued by Bank of Louisville each in the sum of Eight Hundred Thousand
Dollars ($800,000) to secure the payment of the Purchase Price.
The right of Sellers to draft against the Letter (s) of Credit issued
by Bank of Louisville shall be conditioned upon Sellers having provided
Buyer with a minimum of seventy two (72) hours notice of default with
respect to payment of the Purchase Price.
4. REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers jointly and severally, represent and warrant to the Buyer
as follows:
4.1 STANDING AND QUALIFICATION. TMG is a corporation duly organized,
validly existing and is in good standing under the corporate laws of the
Commonwealth of Kentucky and has the corporate power and lawful authority
to own, lease and operate its assets, properties and business and to carry
on its business as now conducted.
4.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Sellers have the full
legal right and power and all authority and approval required to enter into,
execute and deliver this Agreement and to perform fully Sellers'
obligations hereunder. This Agreement has been duly executed and delivered
and is the valid and binding obligation of the Sellers, enforceable in
accordance with its terms, except as may be limited by bankruptcy,
moratorium, reorganization, insolvency or other similar laws now or
hereafter in effect generally affecting the enforcement of creditors'
rights. No approval or consent of any foreign, federal, state, county,
local or other governmental or regulatory body, and (except as otherwise
specified in this Agreement or any Schedule hereto) no approval or consent
of any other person is required in connection with the execution and
delivery by Sellers of
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this Agreement and the consummation and performance by Sellers of the
transactions contemplated herein.
The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not violate,
conflict with or otherwise result in the breach or violation of any of the
terms and conditions of, or constitute (or with notice or lapse of time or
both would constitute) a default under (1) the Articles of Incorporation or
by-laws of TMG; (2) any material instrument, contract or other agreement to
which Sellers are a party or by or to which it or any of its or their
material assets or properties is bound or subject; or (3) any statute or
any regulation, order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against or binding upon or
applicable to Sellers or upon the properties or business of Sellers.
4.3 LITIGATION. Sellers represent and warrant to the Buyer that other than
the litigation with the United States Environmental Protection Agency (the
"EPA"), styled as UNITED STATES OF AMERICA VS. K & R CORPORATION, TMG
ENTERPRISES, INC. (I.E. THE CARLIE MIDDLETON SITE LITIGATION) AND UNITED
STATES OF AMERICA VS. INTERSTATE LEAD COMPANY (ILCO) (I.E. THE SUPERFUND
SITE-LEEDS, ALABAMA) (the "Outstanding Litigations"), there are no other
threatened or actual claims against the Sellers. Sellers shall remain
liable for all prior acts or omissions of the Sellers and any officer,
director, employee, agent or assign of Sellers prior to the date hereof
(i.e. relating to TMG's ownership of The Metal Center), including without
limitation, the Outstanding Litigations.
4.4 INTANGIBLE PROPERTY. SCHEDULE 2, sets forth all copyrights, trademarks,
service marks and trade names relating to the Tradename, if any, all
applications for any of the foregoing, all permits, grants and licenses of
such rights running to or from the Sellers relating to any of the
foregoing. The rights of the Sellers in the property set forth on SCHEDULE
2 are free and clear of any liens or other encumbrances.
4.5 LIENS. The Sellers own outright and have good and marketable title to
the Assets, free and clear of any lien or other encumbrance.
4.6 LIABILITIES. Except as set forth in Section 4.3, and as set forth on
SCHEDULE 3 attached hereto, the Sellers do not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, choate or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise, relating to the Assets and the business of the
Sellers, including, but not limited to, liabilities on account of taxes,
other governmental charges or lawsuits brought, whether or not of a kind
required by generally accepted accounting principles to
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be set forth on a financial statement ("Liabilities"), which have not been
fully disclosed to the Buyer.
4.7 NO MATERIAL ADVERSE CHANGE. Since April 25, 1997, there has been no
material adverse change in the assets (and the respective values thereof),
properties, business, operations, liabilities or condition of the Assets
and the Sellers do not know of any such change which is threatened, nor has
there been any damage, destruction or loss materially affecting the Assets,
whether or not covered by insurance.
4.8 OPERATIONS OF SELLERS. From April 25, 1997 through the date hereof,
Sellers have not:
a. Except in the ordinary course of business, other than for fair
market value, sold, abandoned or made, or agreed to sell, abandon or make,
any other disposition of any of its assets or properties; or granted or
suffered, or agreed to grant or suffer, any lien or other encumbrance on
any of their assets or properties;
b. Suffered or incurred any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting the assets,
properties, business, operations or conditions of the Sellers relating to
the Assets; or
c. Entered into, or agreed to enter into, any other material contract
or other agreement or other material transaction relating to the Assets.
4.9 COMPLIANCE WITH LAWS. The Sellers have complied with all federal,
state, county, local and foreign laws, ordinances, regulations, orders,
judgments, injunctions, awards or decrees applicable to the Assets and has
not received any notice of violation of any of the foregoing.
4.10 TAX MATTERS. The Buyer will not assume or otherwise become liable for
any income, excise, sales, use, gross receipts, franchise, employment,
payroll related, property or any other tax of any sort relating to the
assets, business or property of the Sellers with respect to any period
commenced prior to the date hereof or arising out of the transactions
contemplated hereby (except any use tax, if any, imposed upon Buyer). The
Sellers have filed all income tax, excise tax, sales tax, use tax, gross
receipts tax, franchise tax, employment and payroll related tax, property
tax, and all other tax returns which the Sellers are required to file and
has paid or provided for all taxes shown on such returns, and all
deficiencies or other assessments of tax, interest or penalties owed by
Sellers.
4.11 FULL DISCLOSURE. All documents and other papers delivered by or on
behalf of the Sellers in connection with this Agreement and the
transactions contemplated hereby are true, complete and correct. The
information furnished by or on behalf of the Sellers to the
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Buyer in connection with this Agreement (and the Letter of Intent) and
the transactions contemplated hereby does not contain any untrue statement
of a material fact and does not omit to state any material fact necessary
to make the statements made, in the context in which made, not false
or misleading.
4.12 NO BROKER. No broker, finder, agent or similar intermediary has acted
for or on behalf of the Sellers in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection therewith based on any agreement, arrangement or
understanding with the Sellers or any action taken by the Sellers.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Sellers as follows:
5.1 DUE INCORPORATION. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and
has the corporate power and lawful authority to own its assets and
properties and to carry on its business as now conducted.
5.2 CORPORATE POWER OF BUYER AND AUTHORITY. The Buyer has the full legal
right and power and all authority and approval required to enter into,
execute and deliver this Agreement, and to perform fully its obligations
under this Agreement. This Agreement has been duly executed and delivered
and is the valid and binding obligation of the Buyer enforceable in
accordance with its terms, except as may be limited by bankruptcy,
moratorium, reorganization, insolvency or other similar laws now or
hereafter in effect generally affecting the enforcement of creditors'
rights.
The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not violate,
conflict with or otherwise result in the breach or violation of any of the
terms and conditions of, or constitute (or with notice or lapse of time or
both would constitute) a default under (1) the Articles of Incorporation or
by-laws of Buyer; (2) any material instrument, contract or other agreement
to which Buyer is a party or by or to which it or any of its material
assets or properties is bound or subject; or (3) any statute or any
regulation, order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against or binding upon or
applicable to Buyer or upon the properties or business of Buyer.
5.3 NO BROKER. No broker, finder, agent or similar intermediary has acted
for or on behalf of the Buyer in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or
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similar fee or other commission in connection therewith based on any
agreement, arrangement or understanding with the Buyer or any action taken
by the Buyer.
6. COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
6.1 EXPENSES OF SALE. The parties to this Agreement shall bear their
respective direct and indirect expenses incurred in connection with the
negotiation, preparation, execution and performance of this Agreement and
the transactions contemplated hereby, including, but not limited to, all
fees and expenses of agents, representatives, counsel and accountants. Any
and all taxes resulting from the sale, assignment, transfer and delivery
hereunder of the Assets shall be paid by the Sellers.
6.2 COVENANTS AGAINST COMPETITION. Simultaneously with the execution of
this Agreement, TMG, John Fellonneau and Mark Trakhtenberg, shall each enter
into a five (5) year Non-Compete Agreement(s) with the Buyers which shall
be effective on the date hereof and shall apply with respect to a 150 mile
radius of Louisville. The Non-Compete Agreement shall be in the form of
the Agreement attached hereto as EXHIBIT C.
6.3 FURTHER ASSURANCES. Each of the parties shall execute such documents
and other papers and perform such further acts as may be reasonably required
or desirable to carry out the provisions hereof and the transactions
contemplated hereby, including without limitation, copyright and trademark
assignments.
6.4 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Any and all service
of process and any other notice in any legal action, suit or proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby shall be effective against any party if given by
registered or certified mail, return receipt requested, or by any other
means of mail which requires a signed receipt, postage prepaid, mailed to
such party as herein provided. Nothing herein contained shall be deemed to
affect the right of any party to serve process in any manner permitted by
law. Any legal action, suit or proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby may be instituted in
any state or federal court in the Commonwealth of Kentucky.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF SELLERS
Notwithstanding any right of the Buyer fully to investigate the affairs
of the Sellers and notwithstanding any knowledge of facts determined or
determinable by the Buyer pursuant to such investigation or right of
investigation, the Buyer has the right to rely fully upon the
representations, warranties, covenants and agreements of the Sellers
contained in this
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Agreement in the Letter of Intent, as modified, or in any document
concurrently herewith at the closing delivered to the Buyer by the Sellers
or any of their representatives in connection with the transactions
contemplated by this Agreement. All such representations and warranties
shall survive the execution and delivery hereof.
8. INDEMNIFICATION
8.1 OBLIGATION OF SELLERS TO INDEMNIFY AND GUARANTY. Sellers jointly and
severally shall indemnify, defend and hold harmless the Buyer and its
directors, officers, employees, affiliates and assigns from and against any
losses, liabilities, damages, deficiencies, costs or expenses (including
interest, penalties and reasonable attorneys' fees and disbursements)
("Losses") based upon, arising out of or otherwise due to:
a. Any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of the Sellers contained in this Agreement or in any
document or other writing delivered pursuant hereto; and
b. Any liability or obligation not assumed by the Buyer pursuant to
Section 2;
c. Any prior acts or omissions of Sellers and any officer, director,
employee, agent or assign of the Sellers prior to the date hereof.
Fellonneau and Trakhtenberg herewith personally, jointly and severally,
guarantee the warranties and representations made by TMG, the
indemnifications to be provided by Sellers herein, and the performance by
Sellers provided herein or in any document or other writing delivered
pursuant hereto.
8.2 OBLIGATION OF BUYER TO INDEMNIFY. The Buyer shall indemnify, defend
and hold harmless the Sellers from and against any Losses arising out of or
due to any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of the Buyer contained in this Agreement or in any
document or other writing delivered pursuant hereto;
8.3 NOTICE TO INDEMNIFYING PARTY. If any party (the "Indemnitee") receives
notice of any claim or the commencement of any action or proceeding with
respect to which any other party (or parties) is obligated to provide
indemnification (the "Indemnifying Party") pursuant to Section 8.1 or 8.2,
the Indemnitee shall promptly give the Indemnifying Party notice thereof.
Such notice shall be a condition precedent to any liability of the
Indemnifying Party under the provisions for indemnification contained in
this Agreement and shall describe the claim in reasonable detail and shall
indicate the amount (estimated if necessary) of the Loss that has been or
may be sustained by the Indemnitee. The Indemnifying Party may
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elect to compromise or defend, at such Indemnifying Party's own expense and
by such Indemnifying Party's own counsel, any such matter involving the
asserted liability of the Indemnitee. If the Indemnifying Party elects to
compromise or defend such asserted liability, it shall within ten (10) days
(or sooner, if the nature of the asserted liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at
the expense of the Indemnifying Party, in the compromise of, or defense
against, any such asserted liability. (In such case the Indemnitee may
participate, at its own expense, in such defense.) If the Indemnifying
Party elects not to compromise or defend against the asserted liability, or
fails to notify the Indemnitee of its election as herein provided, the
Indemnitee may at the Indemnifying Party's expense, pay, compromise or
defend such asserted liability. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnitee may settle or compromise any claim
over the objection of the other; provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. If the
Indemnifying Party chooses to defend any claim, the Indemnitee shall make
available to the Indemnifying Party any books, records or other documents
within its control that are necessary or appropriate for such defense.
9. MISCELLANEOUS
9.1 RELEASE. Upon the execution of this Agreement, the parties hereto
shall be deemed to have released and discharged each other from any and all
claims, demands, actions, causes of action, suits, sums of money, accounts,
covenants, agreements, contracts and promises in law or in equity, past or
present which either party may have against the other party or such other
party's successors or assigns, whether or not they have been subject to
dispute by reason of any matter, cause or thing whatsoever from the
beginning of time to the date hereof, with the exception of: (i) the rights
of either party to enforce the terms of this Agreement including, but not
limited to, either party's right to be indemnified pursuant to Section 8
hereof; and (ii) Sellers' liability for the Outstanding Litigations.
9.2 NOTICES. Except as otherwise specifically provided herein, all notices
or other communication required or which may be given hereunder, shall be
in writing and shall be given by registered or certified mail or telegraph
(prepaid), at the address shown above, or such other address or addresses
as may be designated by any of the parties hereto. Notices shall be deemed
given when received by the party to whom such notice is directed. Copies of
each notice sent to Buyer shall be simultaneously sent to Matthew L.
Kletter, Esq., 501 Madison Avenue, 25{th} Floor, New York, New York 10022;
and Joseph H. Cohen, Esq., Morris, Garlove, Waterman & Johnson PLLC, One
Riverfront Plaza, Suite 1000, Louisville, Kentucky 40202. Copies of each
notice to Sellers shall be simultaneously sent to Fox DeMoisey, Esq.,
DeMoisey & Smither, 455 South Fourth Street, Louisville, KY 40202.
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9.3 ENTIRE AGREEMENT. This Agreement (including the Exhibits and Schedules)
hereto and the collateral agreements executed in connection with the
consummation of the transactions contemplated herein contain the entire
agreement among the parties with respect to the purchase of the Assets and
related transactions and supersede all prior agreements, written or oral,
with respect thereto.
9.4 WAIVERS AND AMENDMENTS. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions
hereof may be waived, only by a written instrument signed by the parties
hereto or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the
part of any party of any right, power or privilege hereunder, nor any
single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies
which any party may otherwise have at law or in equity.
9.5 EXHIBITS AND SCHEDULES. The Exhibits and Schedules to this Agreement
are a part of this Agreement as if set forth in full herein.
9.6 HEADINGS. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
9.7 COUNTERPARTS. This Agreement may be executed in one or more counter-
parts, all of which together shall constitute a single document.
9.8 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Kentucky applicable to
agreements made and to be performed within such Commonwealth.
IN WITNESS WHEREOF, the parties have entered into this Agreement the day
and year first above written.
INDUSTRIAL SERVICES OF AMERICA, INC.
By: /S/ HARRY KLETTER
Harry Kletter
President
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TMG ENTERPRISES, INC.
By: /S/ JOHN FELLONNEAU
John Fellonneau
Title:
By: /S/ MARK TRAKHTENBERG
Mark Trakhtenberg
Title: Secretary/Treasurer
/S/ JOHN FELLONNEAU
John Fellonneau
/S/ MARK TRAKHTENBERG
Mark Trakhtenberg
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SCHEDULED ASSETS Schedule 1
T.M.G. ENTERPRISES, INC.
QUANTITY DESCRIPTION
1 Doeler & Kirsten Model B2H24, 1-1/2 Ton Right-
Hand Power Shear, #1226, Jaws Good. Model 1976.
Updated to current specs.
1 1990 Vickers Model B22H Power Shear, 1-1/2 Ton,
#1527, Jaws Good.
1 Lindemann UK Wire Stripper, 1988 Model,
#2600-220VLT, Good Condition.
1 1993 Dayton Battery Charger, Model B,
#D218106.
1 1995 Yale 5,000 lb. Forklift w/Squeeze &
Rotator. Acquisition Cost: $24,600. Ser. #
N856716, Model #GP050RFNVAE086.
1 1991 Yale Forklift, 6,000 lb. Capacity, Model
#GP060RCJUAF080, #N405215, Mast Good Condition,
LP Gas Powered, Hard Tire.
1 1991 Yale Forklift, 5000 lb. Capacity, Model
#GP050RDNVAE086, #G51CO4NAT, Mast Good
Condition, LP Gas Powered, Hard Tire.
1 Citation 1992 Parts Washer, Model NG5674,
#132420.
1 Sachs Dolmer Chop Saw Model 343, #031916,
1991 Model, 12" Cutting Wheel.
1 1990 Homelite Chop Saw Model DM50,
#6C2600004, 12" Cutting Wheel.
1 1989 Thurman 70' Platform Scale, 140,000 lb.
Capacity, w/Flex Weight Corp. Model F5117
Electronic Scale Controller w/Printout,
#SME005. Updated Calibrations.
1 Quincy Model 240-I0 Air Compressor,
#6512991, 1989 Model.
1 1986 Chevrolet C-10 Pickup Truck,
#1GCDC14H86F374491, w/Bedliner,
Fair Condition (for age and use).
<PAGE>
1 1992 Myrmill Grinder, Model 2452,
#445TTD57086AA, w/3 Alba Feed Conveyors,
Pulse-Pak Dust Collector w/10hp Air Compressor,
Kennergy Vibration Table w/2 Screens.
1 1996 MAC Model 5200 Briquetter,
Serial #E13-71895. Acquisition Cost: $218,000.
Also Spare 100hp Motor.
1 1996 Mack DM685 Roll-off Truck w/60,000 lb.
McClain Hoist. Acquired 6/96.
Cost: $86,500. Ser. # 1M2B209C7TM018908.
13 Roll-off Boxes. Acquired 9/95 thru 9/96.
Acquisition Cost: $37,200.
1 Parker Filtration Portable Pump
Ser #10MF40SA10C, Model # 1X853006.
1 Century Powermatic Wire-Feed Welder, Model 70.
1 Large Lot of Hand Tools, Vises,
Cutting Torches, Automative Tools.
1 Large Lot Maintenance Equipment. Located in
Maintenance Building.
1 Melroe Diesel Bobcat, Model 843, (1989),
Ser. #50373086, Hard Tire w/Grapple Bucket.
1 Melroe Diesel Bobcat, Model 843, (1989),
Ser. #5026M15552, Hard Tire w/Grapple Bucket.
1 Melroe Diesel Bobcat, Model 843, (1989),
Ser. #50373050, Hard Tire w/Grapple Bucket.
1 Factory Size Pincor 75kW Diesel Generator,
Deluxe Model w/Electric Start and Automatic
Transmission.
1 Honda EM 5000 SX Gas Powered Generator.
2 Modern Light Metal Aluminum Yard Ramps.
OFFICE EQUIPMENT
4 2-Drawer Metal Filing Cabinets
6 4-Drawer Metal Filing Cabinets
2 4-Drawer Metal Lateral Filing Cabinets
<PAGE>
2 2-Drawer Metal Lateral Filing Cabinets
9 Double Pedestal Executive Wood Desks
5 Double Pedestal Secretary Desks w/"L"
5 Wood Executive Credenzas
9 Highback Upholstered Executive Chairs
4 Upholstered Typing Chairs
19 Guest Chairs
3 Metal Clothing Racks
3 Wood Computer Hutch
2 Printer Stands
2 Metal Computer Report Stands
10 Small Desk Calculators
1 Micro Ferrups Model ME-14kVA,
Back-up Power for Computer System
1 Brother Intellifax 3500 ML Laser
FAX Machine
1 Beautiful Leather Sectional Sofa
1 High Quality Square Coffee Table
1 Sanyo Office Refrigerator
1 Large Custom Built 2 Desk Executive Suite
w/Built in Rear Cabinets
1 Brother Word Processor, Model WP-80
1 Wood Wardrobe
1 PVC Couch w/2 Matching Chairs
1 Round Conference Table
3 Wood Bookcases
1 White Board w/Easel
2 Cork Boards
<PAGE>
1 Toshiba 25" Color TV
4 2-Door Metal Storage Cabinets
1 Toshiba Microwave Oven
1 Hotpoint Office Refrigerator
1 Upholstered 3-Cushion Couch
1 Wood Coffee Table w/2 Matching End Tables
1 Rattan Upholstered Chair
1 Large Lot of Wall Deco
1 6' Metal Storage Cabinet
1 Smith Corona Electric Typewriter
1 Pelouze Postage Scale
1 Large Lot Office Supplies, Staplers, Desk
Calendars, Desk Trays, etc.
1 IBM PC Server Model 320, 90MHz Pentium
Processor, (Upgradable to 2 processors),
32 Meg RAM, 1 Gig Hard Disk, 4 Gig Tape Drive,
Quad Speed CD-ROM Drive, w/Full Communications
Capabilities, 28.8 Modem. Seikosha BP-5780 780
CPS Printer. Acquisition Cost: $18,759.
And 4 Terminals.
1 Custom Software Package, AIX Operating System
Software Informix SQL Database Program for
Purchase of Metal, Accounting, P&L, etc.
<PAGE>
SCHEDULE 2
ASSET PURCHASE AGREEMENT
SCHEDULE OF INTELLECTUAL PROPERTY RIGHTS
OF TMG ENTERPIRSES, INC.
Any and all state and federal rights to the name "Metal Center"
<PAGE>
SCHEDULE 3
SCHEDULE OF TMG ENTERPRISES, INC. ACCOUNTS PAYABLE HAS BEEN OMITTED. THE
REGISTRANT AGREES TO FURNISH SUPPLEMENTALLY A COPY OF OMITTED SCHEDULE 3 TO
THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST.
<PAGE>
Exhibit A
ASSIGNMENT OF TRADEMARK
The undersigned ("Assignor"), for good and valuable consideration, receipt
of which is hereby acknowledged, hereby sells, conveys and assigns to Industrial
Services of America, Inc., its successor and assigns (the "Assignee"), one
hundred percent (100%) of Assignor's entire right, title and interest in the
tradename "The Metal Center" throughout the world and universe.
IN WITNESS WHEREOF, Assignor has executed this instrument on this 1st
day of July, 1997.
ASSIGNOR ASSIGNEE
TMG ENTERPRISES, INC. INDUSTRIAL SERVICES OF
AMERICA, INC.
By:_____________________ By:________________________
Harry Kletter, President
<PAGE>
BILL OF SALE
TMG ENTERPRISES, INC., a Kentucky corporation, of Louisville,
Kentucky ("Seller"), for the purchase price of Three Hundred
Thousand Dollars ($300,000), the receipt of which is hereby
acknowledged, does hereby sell, assign and set over unto INDUSTRIAL
SERVICES OF AMERICA, INC., a Florida corporation with offices
located at 7100 Grade Lane, Louisville, KY 40213 ("Buyer") Seller's
right title and interest in Seller's assets set forth on Schedule
1 attached hereto ("Acquired Assets"). Seller warrants a good and
unencumbered title to the Acquired Assets and that Seller has full
right and power to sell the same.
IN WITNESS WHEREOF, Seller has caused these presents to be
signed by its duly authorized officers effective as of the 1st day
of July, 1997.
TMG ENTERPRISES, INC., a Kentucky
ATTEST: corporation
______________________ By:_________________________________
Mark Trakhtenbeg, John M. Fellonneau, Jr.
Secretary President
COMMONWEALTH OF KENTUCKY )
) S.S.:
COUNTY OF JEFFERSON )
On this 2nd day of July, 1997, before me personally
appeared John M. Fellonneau, Jr., President of TMG ENTERPRISES,
INC., a Kentucky corporation, who executed the foregoing Bill of
Sale as the act and deed of TMG ENTERPRISES, INC.
Sworn to and subscribed before me on the date aforesaid.
My commission expires:
________________________________
Notary Public, State-at-Large,
Kentucky
<PAGE>
NON-COMPETE AGREEMENT
THIS AGREEMENT made this ___day of ______ 1997 between
Industrial Services of America, Inc. ("ISA") located at 7100 Grade
Lane, Bldg.#2, Louisville, Kentucky 40213, and ________________
located at/residing at____________________________ (the "Non-
Competing Party").
WITNESSETH:
WHEREAS, the Non-Competing Party is currently in the business
of: (i) processing brokering, recycling, selling and purchasing
ferrous metals and non-ferrous metals; and (ii) consulting third
parties who are in the business of processing, brokering, recy-
cling, selling and purchasing ferrous and non-ferrous metals;
WHEREAS, ISA and TMG Enterprises, Inc. ("TMG") executed a
Letter of Intent dated April 25, 1997 with respect to ISA's
purchase of certain of the assets of TMG (the "Letter of Intent");
WHEREAS, concurrently with the execution of this Agreement,
ISA and TMG, Fetra Investments, Inc., John Fellonneau and Mark
Trakhtenberg (collectively referred to as the "Sellers") shall
enter into an Asset Purchase Agreement with respect to ISA's
purchase of certain assets of the Sellers (the "Asset Purchase
Agreement");
WHEREAS, it is the mutual desire of ISA and TMG that upon the
sale of the assets of the Sellers to ISA that the principals and
directors of TMG shall not compete with the business of ISA.
NOW THEREFORE, for good and valuable consideration the receipt
of which is hereby acknowledged, ISA and the Non-Competing Party,
hereby agree as follows:
1. DEFINITIONS
The following terms, as used in this Agreement shall have
the following meanings:
(a) "Agreement" shall mean this Non-Competition Agreement.
<PAGE>
(b) "Business Activities" shall mean (i) processing
brokering, recycling, selling and purchasing ferrous metals and
non-ferrous metals; and (ii) consulting third parties who are in
the business of processing, brokering, recycling, selling and
purchasing ferrous and non-ferrous metals.
(c) "Parties" shall mean the Non-Competing Party and ISA.
(d) "Party" shall mean the Non-Competing Party or ISA.
2. COVENANT NOT TO COMPETE
2.1 Upon the execution of this Agreement, the Non-Competing
Party agrees that the Non-Competing Party will not, directly or
indirectly, represent that the Non-Competing Party is, in any way,
connected with or interested in the business of ISA, and for a
period of five (5) years from the date hereof, the Non-Competing Party
will not in any way, either directly or indirectly, solicit,
interfere with, or attempt or actually take away from ISA, or any
of its affiliates, any person, firm or corporation which has been
or is a customer in the Territory (herein defined), employee or
sales agent of ISA.
2.2 For a period five (5) years after the date hereof, Non-
Competing Party shall not, directly or indirectly, engage in any
of the Business Activities within a one hundred fifty (150) mile
radius of Louisville, Kentucky (the "Territory").
2.3 It is recognized that ISA conducts the Business Activi-
ties throughout the Territory and that the five (5) year restric-
tion throughout said Territory is absolutely necessary to give
effect to this Agreement, and is a reasonable restriction by
Agreement.
2.4 It is agreed and understood that the purpose of this
limitation is for the protection of ISA and competition between ISA
and the Non-Competing Party, with regard to the Business Activi-
ties, within the Territory in the time period set forth above would
be detrimental to ISA and undermine the purpose of this Agreement.
This Agreement, however, is solely limited to any employment or
business activity which directly or indirectly competes with the
Business Activities as performed by ISA within the Territory, and
is not meant to deprive the Non-Competing Party from being employed
2
<PAGE>
by any third party, or otherwise conduct business, so long as the
nature of said business and Non- Competing Party's duties do not
compete with the Business Activities. The Non- Competing Party
recognizes the legitimacy and reasonableness of this restriction
and agrees to be bound thereby.
3. CONSIDERATION
As consideration for the Non-Competing Party into this Agreement,
ISA shall enter into the Asset Purchase Agreement and pay to Non-
Competing Party the consideration provided therein.
4. MISCELLANEOUS
4.1 The Non-Competing Party shall not be held jointly and
severally responsible for the acts of any individual third party
(other than an entity in which the Non-Competing Party owns a
controlling interest).
4.2 This Agreement shall be governed and interpreted by and
in accordance with the laws of the Commonwealth of Kentucky.
4.3 Any violation by the Non-Competing Party of his obliga-
tions hereunder, shall, in addition to any other relief which may
be recoverable, entitle ISA to an immediate violation without
having to prove damages. It is agreed that any such violation will
cause ISA irreparable damage for which ISA shall have a remedy by
injunction and restraining order. Such violation by the Non-
Competing Party shall further subject the Non-Competing Party to
pay any and all reasonable expenses incurred by ISA in connection
with the enforcement of ISA's rights hereunder including but not
limited to reasonable attorney's fees. Nothing contained in this
section shall prevent the Non-Competing Party from contesting the
equitable proceeding contemplated herein.
4.4 If ISA fails to take action for any violation of this
Agreement, such failure shall not constitute a waiver or estoppel
as to said violation, but ISA shall have the right to enforce or
take such action for the same subsequent or continuing violation
without being subjected to the defense of waiver or estoppel.
4.5 If any provision or clause of this Agreement, or
application thereof, is held to be invalid by act of any court or
3
<PAGE>
legislature, such invalidity shall not affect the provisions of
application, and to this end, the provisions of this Agreement are
to be construed as severable.
4.6 This Agreement may not, on behalf of, it in respect to
either Party hereto be changed, modified, released, discharged,
abandoned, or otherwise terminated, in whole or in part, except by
an instruction in writing signed by the Non-Competing Party and an
authorized officer of ISA.
4.7 This Agreement constitutes the entire agreement between
the Parties hereto with respect to this subject matter (excluding
the letter of Intent and the Asset Purchase Agreement) and shall be
deemed to wholly cancel, terminate, and supersede any agreement,
written or oral, heretofore entered into between the parties
pertaining thereto.
4.8 This Agreement shall be binding upon and inure to the
benefit of the Parties, their successors and assigns.
IN WITNESS WHEREOF, the parties have set their hands to this
Agreement as of the date and year first above written.
INDUSTRIAL SERVICES OF AMERICA, INC.
By: _______________________________
Harry Kletter, President
NON-COMPETING PARTY
___________________________________
4
