<PAGE>
Registration No. 333-
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
(State or other jurisdiction of incorporation or organization)
59-0172746
(I.R.S. Employer Identification No.)
7100 GRADE LANE
P.O. BOX 32428
LOUISVILLE, KY 40232
(Address of principal executive offices)
INDEPENDENT CONSULTING SERVICES AGREEMENT, CONFIDENTIAL
INFORMATION AND NON-COMPETITION AGREEMENT, INDEPENDENT
CONTRACTOR AND STOCK OPTION AGREEMENT
(Full Title of the Plan)
COPY TO:
HARRY KLETTER, PRESIDENT ROBERT STEVEN BROWN, ESQ.
INDUSTRIAL SERVICES OF AMERICA, INC. BROCK FENSTERSTOCK SILVERSTEIN
7100 GRAND LANE, P.O. BOX 32428 MCAULIFFE & WADE LLC
LOUISVILLE, KENTUCKY 40232 153 EAST 53RD STREET, 56TH FLOOR
(502) 368-1661 NEW YORK, NY 10022
(212) 371-2000
(Name, Address and Telephone Number of Agent for Service)
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================
PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE PRICE FEE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value
$0.01
per share 320,000 shs. $5.50(1) $1,760,000 $352
- ---------------------------------------------------------------------------------------------------------------
Total 320,000 shs. $5.50(1) $1,760,000 $352
===============================================================================================================
</TABLE>
(1) Calculated pursuant to Rule 457(h)(1) on the basis of the maximum exercise
price at which common stock may be acquired pursuant to various option
agreements.
- -------------------
THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE IMMEDIATELY UPON FILING AS
PROVIDED IN RULE 462 UNDER THE SECURITIES ACT OF 1933.
THE CONTENTS OF TWO EARLIER REGISTRATION STATEMENTS, FILES NO. 333-06909 AND
NO. 333-06915, ARE INCORPORATED HEREIN BY REFERENCE.
<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 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 New York, State of New York, on July
21, 1997.
Industrial Services of America, Inc.
By: /s/ Harry Kletter
----------------------------
Harry Kletter
President and Chief Executive Officer
-------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Harry Kletter, his true and
lawful attorney-in-fact, with power of substitution and resubstitution, to
execute in the name of such person, in his capacity as a director or officer
of Industrial Services of America, Inc., any and all amendments to this
Registration Statement on Form S-8 and all instruments necessary or incidental
in connection therewith, and to file the same with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed on July 21, 1997, by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Harry Kletter
- ---------------------------- Director, President, July 21, 1997
Harry Kletter Chief Executive Officer
and Chief Financial Officer
(Principal Executive Officer and
Principal Financial Officer)
<PAGE>
/s/ Roberta Kletter
- ---------------------------- Director and July 21, 1997
Roberta Kletter Executive Vice
President
/s/Matthew Kletter
- ---------------------------- Director, Vice President July 21, 1997
Matthew Kletter and General Counsel
/s/ Alan Schroering
- ---------------------------- Controller (Principal July 21, 1997
Alan Schroering Accounting Officer)
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 pertaining to the Industrial Services of America, Inc.
(the Company) Independent Consulting Services Agreement, Confidential
Information and Non-competition Agreement, Independent Contractor and Stock
Option Agreement, of our report dated March 10, 1997, relating to the balance
sheets of the Company as of December 31, 1996 and 1995, and the related
statements of operations, stockholders' equity, and cash flows for the three
years ended December 31, 1996, 1995 and 1994, and the related schedule of
valuation and qualifying accounts for the year ended December 31, 1996, which
report appears in the December 31, 1996 annual report on Form 10-K of the
Company.
/s/ MATHER, HAMILTON & CO.
MATHER, HAMILTON & CO.
Louisville, Kentucky
August 6, 1997
<PAGE>
EXHIBIT INDEX
-------------
Consulting Agreement Terms and Provisions, April 21, 1997 -
Bolton ............................................................Exhibit A
Stock Option Agreement, February 14, 1996
Chu ...............................................................Exhibit B
Stock Option Agreement, June 11, 1996
Falkner ...........................................................Exhibit C
Consulting Agreement Terms and Provisions, April 21, 1997 -
Turchyn ...........................................................Exhibit D
<PAGE>
EXHIBIT A
Consulting Agreement Terms and Provisions, April 21, 1997 - Bolton
<PAGE>
April 21, 1997
Mr. Richard Bolton
225 Rector Place
Suite PHG
New York, NY 10280
Dear Mr. Bolton:
This letter will service as an agreement between Industrial Services of
America, Inc. ("ISA" or the "Company") and Richard Bolton with respect to the
retention of Richard Bolton to provide financial advisory and investment
banking services on behalf of ISA in its interest in acquiring specified
companies in the United States (the "target" or the "target company").
1.0 FINANCIAL ADVISORY AND INVESTMENT BANKING SERVICES
1.1 Richard Bolton will represent the Company to each of the proposed
targets, assist in identifying potential targets, and begin a dialogue
with the intent of determining each target's interest in being acquired
by ISA or, alternatively, entering into a joint venture or other
"partnering" agreement with ISA.
1.2 Upon an indication of interest on the part of a target company, Richard
Bolton will perform preliminary due diligence and provide ISA with an
initial valuation determination. Upon an agreement in principle with a
target company, Richard Bolton will undertake with ISA a more intensive
due diligence review.
1.3 Subject to the approval of ISA, Richard Bolton will coordinate final
negotiations and transaction documentation with each target company.
Richard Bolton will assist the Company in selecting local professional
services such as legal counsel, accounting, appraisers, etc. and will
assist in coordinating certain regulatory and governmental compliance
issues.
1.4 Richard Bolton will review each transaction as to structure and
recommend to the Company any modifications which it believes may be
appropriate under the circumstances.
2.0 RETENTION OF RICHARD BOLTON
2.1 ISA hereby retains Richard Bolton on a non-exclusive basis for a minimum
term of twelve (12) months from the date hereof (the "initial term") to
perform the services outlined in Section 1 hereof. Upon its execution of
this Agreement, ISA shall pay to Richard Bolton an initial retainer in
the form of an option to acquire one hundred thousand (100,000) shares
of common stock, to be registered on form S-8 on or before June 30,
1997, as promulgated by the Securities and Exchange Commission, at an
exercise price of $5.50 per share, which shall be exercisable in whole
or in part and from time to time at the sole discretion of Richard
Bolton for a period of three (3) years from the date of this Agreement.
Additionally, Richard Bolton shall be granted an option to acquire
twenty-five thousand shares, under Rule 144, or in such other form as to
make the shares Richard Bolton acquires freely tradable, from Harry
Kletter individually at an exercise price of $5.50 per share, which
shall be exercisable in whole or in part and from time to time at the
sole discretion of Richard Bolton.
<PAGE>
2.2 In addition to the payment of retainer fees, ISA shall reimburse Richard
Bolton for all reasonable, direct, out-of-pocket expense incurred on
behalf of ISA, which shall include all reasonable travel-related,
telephone and facsimile expenses, duplicating, printing, binding and
courier expenses and fees of legal counsel provided, however, that the
engagement of any such counsel shall have been pre-approved by ISA.
Further, any item of expense exceeding two hundred and fifty dollars
(USD $250) shall be pre-approved by ISA prior to occurrence.
3.0 ANNOUNCEMENT BY RICHARD BOLTON
3.1 If any transaction contemplated by this Agreement is completed, Richard
Bolton may at his option and expense, place a conventional announcement
in newspapers and periodicals of its choice stating that Richard Bolton
has acted as financial advisor to ISA given, however, that ISA has the
right to approve any announcement prior to publication.
4.0 NO AGENCY
4.1 Richard Bolton understands and acknowledges that this letter shall not
create or imply any agency agreement between the parties. Richard Bolton
shall not have the right to commit ISA, its officers, directors or
shareholders in any manner except as shall have been specifically
authorized in writing by ISA.
5.0 INDEMNIFICATION
5.1 In connection with the services which Richard Bolton has agreed to
render to ISA herein, the Company shall indemnify Richard Bolton, him
harmless against any losses, claims, damages or liabilities to which
Richard Bolton may become subject in connection with his rendering of
such services except for such loses, claims, damages or liabilities
resulting from or arising out of the gross negligence or willful
misconduct of Richard Bolton. Richard Bolton will promptly notify SIA
upon receipt of any notices of claim or any threat to institute an
action or proceeding for which he or any other person claims entitlement
to indemnification pursuant to this provision and will promptly notify
ISA after any such proceeding is commenced. In the event Richard Bolton
becomes involved in any action or proceeding for which it is indemnified
hereunder, the Company shall reimburse Richard Bolton for any reasonable
legal or other expenses reasonably incurred by it in connection with
investigating, preparing to defend or defending any lawsuits or other
proceedings arising in any manner out of or in connection with the
rendering of such services. ISA agrees that the indemnification and
reimbursement commitment set forth in this Agreement shall apply whether
or not Richard Bolton is a formal party to any such lawsuits or other
proceedings, provided that Richard Bolton has a reasonable basis to
believe that it is likely to be named in a formal action. Richard Bolton
shall be entitled to retain separate counsel of his choice in connection
with any of the matters to which such commitments relate and that such
commitments shall extend upon the terms set forth in this Agreement to
any controlling person, director, officer, employee or other agent of
Richard Bolton.
5.2 In connection with the services which Richard Bolton has agreed to
render to ISA herein, Richard Bolton shall indemnify ISA, its officers,
directors, agents, and hold it harmless against any losses, claims,
damages or liabilities to which ISA may become subject in connection
with Richard Bolton's rendering of such services except for such losses,
claims, damages or liabilities resulting from or out of the gross
negligence or willful misconduct of ISA. ISA will promptly notify
Richard Bolton upon receipt of any notices of claim or any threat to
institute an action or proceeding for which he or any other person
claims entitlement to indemnification pursuant to this provision and
will promptly notify Richard Bolton after any such proceeding is
commenced. In the event ISA becomes involved in any action or proceeding
for which he is indemnified hereunder, Richard Bolton shall reimburse
ISA for any reasonable legal or other expenses reasonably incurred by it
in connection with investigating, preparing to defend or defending any
lawsuits or other proceedings arising in any manner out of or in
connection with rendering
<PAGE>
of such services. Richard Bolton agrees that the indemnification and
reimbursement commitment set forth in this Agreement shall apply whether
or not ISA is a formal party to any such lawsuits or other proceedings,
provided that ISA has a reasonable basis to believe that it is likely to
be named in formal action. ISA shall be entitled to retain separate
counsel of its choice in connection with any of the matters to which
such commitments relate and that such commitments shall extend upon the
terms set forth in this Agreement to any controlling person, director,
officer, employee or other agent of ISA.
5.3 The indemnity agreement contained in this Section 5.0 and the
representations and warranties of ISA and Richard Bolton contained in
this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any
investigation made by Richard Bolton or on behalf of Richard Bolton or
on behalf of ISA, its officers or directors or any other person
controlling the Company or (iii) consummation of the transaction(s)
contemplated by this Agreement.
6.0 MODIFICATION/SEVERABILITY
6.1 The Agreement represents the entire agreement between the parties which
may not be amended or modified except in writing, and shall be binding
upon and inure to the benefit of the parties and their successors and
assigns. If any provision of this Agreement, or part thereof, shall be
held to be invalid or unenforceable, it shall not affect the validity or
enforceability of the remaining part or any other provision of this
Agreement.
7.0 HEADINGS
7.1 Headings are for the convenience only and shall not affect the
interpretation or meaning of the context thereunder.
8.0 REPRESENTATIONS AND WARRANTIES
8.1 By execution of this Agreement, each of the parties hereto represents
and warrants the other party hereto, and each of the parties hereto
shall be entitled to rely fully upon such representations, that (i) it
has full and complete corporate authority to enter into this Agreement,
(ii) that the officer executing on behalf of such party is duly
empowered to so execute and, as of the date of this signing, holds in
good standing the office indicated and (iii) that such party intends to
be legally bound by the terms set forth herein which shall be governed
and interpreted under the laws of the State of Illinois. Moreover,
Richard Bolton represents and warrants to ISA that it will materially
comply with all applicable securities laws; provided, however, that ISA
acknowledges that Richard Bolton is a private advisory firm and not a
broker-dealer for purposes of such laws.
Industrial Services of America,
-----------------
Harry Kletter
ACCEPTED AND AGREED TO:
By: __________________
Mr. Richard Bolton
<PAGE>
EXHIBIT B
Stock Option Agreement, February 14, 1996 - Chu
<PAGE>
50,000 Shares Exercise Price: $5.00
- ------------- ---------------------
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") made this 14th day of February
1996, between INDUSTRIAL SERVICES OF AMERICA, INC., herein referred to as the
"Corporation", being incorpporated under the laws of the State of Forida,
mmaintaining its principal place of business at 7100 Grade Lane, Louisville,
Kentucky 40213, and Ernest D. Chu, herein referred to as "Consultant", of
Corporate Builders, L.P. of Trump Tower, 725 Fifth Avenue, 19th Floor, New
York, NY 10022.
WITNESSETH:
WHEREAS, the variety of services rendered by Consultant, including general
business, management and business opportunity evaluation, represents an
important and valuable aid to the conduct of the Corporation's business
enterprise, and as such Corporation deems it to be in the best interests of
the Corporation to secure the services of Consultant; and
WHEREAS, the Corporation desires to enter into this Option Agreement with the
Consultant containing the terms and conditions hereinafter set forth, and to
grant to Consultant an option to purchase shares of the Common Stock of the
Corporation.
NOW, THEREFORE, in consideration of the promises and mutual agreements of the
parties herein contained, and for other good and valuable consideration, the
parties agree as follows:
1. GRANT OF OPTION. In consideration of the foregoing, the
Corporation hereby grants and issues to Consultant (or his estate) the right
at his option (hereinafter referred to as the "Option") to purchase up to an
aggregate of 50,000 Shares of Common Stock ($.01 par value) of the Corporation
at a price of $5.00 per share all of which Option shall be exercisable, in
whole or in part at any time until December 31, 1997(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, or other such
reclassification; or conversely, proportionately decreased in the event of a
reverse split or 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.
1
<PAGE>
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 specifying the number of Shares to be
purchased in not less than one thousand (1,000) share denominations. If the
Notice of Exercise is for less than the total of 50,000 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 relating to the
securities underlying the options granted herein within twelve months of the
date hereof. 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 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. EXCEPTION TO NON-ASSIGNABILITY. This Agreement shall inure to the
benefit of, and shall be binding upon, the parties hereto and their respective
heirs,
2
<PAGE>
personal representatives, legal representatives, successors and assigns.
6. 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 Option Agreement and shall be effective three
days following the mailing of said notice. 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.
7. 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.
8. GOVERNING LAW. This Option Agreement shall be construed under the
laws of the Commonwealth of Kentucky.
(a) 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 Option 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 process
including, without limitation, any summons or subpoena in any such action or
proceeding may, among other methods, be served upon 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.
(b) In any action or proceeding referred to above each party hereto
waives, tot he extent permitted by the Hague Convention on Service of Process
Abroad, personal services of the summons, complaint, or other process or
translation thereof and agrees that service may be mailed to its address as
set forth on page 1 of this Agreement.
3
<PAGE>
IN WITNESS WHEREOF, the Corporation has executed this Option Agreement by its
duly authorized corporate officers on the day and year first above written.
INDUSTRIAL SERVICES OF AMERICA, INC.
By: /s/ Harry Kletter
---------------------------
Title: CEO
------------------------
Accepted By:
/s/ Ernest D. Chu
------------------------------
Ernest D. Chu
Senior Managing Director
CORPORATE BUILDERS L.P.
4
<PAGE>
EXHIBIT C
Stock Option Agreement, June 11, 1996 - Falkner
<PAGE>
20,000 Shares Exercise Price: $5.50
- ------------- ---------------------
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") made this 11th day of June 1996,
between INDUSTRIAL SERVICES OF AMERICA, INC., herein referred to as the
"Corporation", being incorpporated under the laws of the State of Forida,
mmaintaining its principal place of business at 7100 Grade Lane, Louisville,
Kentucky 40213; and Jerry Falkner, herein referred to as "Consultant", P.O.
Box 1230, 214 Sixth Street, Suite 12, Crested Butte, CO 81224.
WITNESSETH:
WHEREAS, the variety of services rendered by Consultant, including general
business, management and business opportunity evaluation, represents an
important and valuable aid to the conduct of the Corporation's business
enterprise, and as such Corporation deems it to be in the best interests of
the Corporation to secure the services of Consultant; and
WHEREAS, the Corporation desires to enter into this Option Agreement with the
Consultant containing the terms and conditions hereinafter set forth, and to
grant to Consultant an option to purchase shares of the Common Stock of the
Corporation.
NOW, THEREFORE, in consideration of the promises and mutual agreements of the
parties herein contained, and for other good and valuable consideration, the
parties agree as follows:
1. GRANT OF OPTION. In consideration of the foregoing, the
Corporation hereby grants and issues to Consultant (or his estate) the right
at his option (hereinafter referred to as the "Option") to purchase up to an
aggregate of 20,000 Shares of Common Stock ($.01 par value) of the Corporation
at a price of $5.00 per share all of which Option shall be exercisable, in
whole or in part at any time within ten (10) years of the 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, or other such
reclassification; or conversely, proportionately decreased in the event of a
reverse split or 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.
1
<PAGE>
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 specifying the number of Shares to be
purchased; in not less than one thousand (1,000) share denominations (c)
payment in full of the 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 might be acceptable to the Corporation.
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 relating to the
securities underlying the options granted herein within twelve months of the
date hereof. 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 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. EXCEPTION TO NON-ASSIGNABILITY. This Agreement shall inure to the
benefit of, and shall be binding upon, the parties hereto and their respective
heirs,
2
<PAGE>
personal representatives, legal representatives, successors and assigns.
6. 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 Option Agreement and shall be effective three
days following the mailing of said notice. 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.
7. 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.
8. GOVERNING LAW. This Option Agreement shall be construed under the
laws of the Commonwealth of Kentucky.
(a) 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 Option 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 process
including, without limitation, any summons or subpoena in any such action or
proceeding may, among other methods, be served upon 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.
(b) In any action or proceeding referred to above each party hereto
waives, tot he extent permitted by the Hague Convention on Service of Process
Abroad, personal services of the summons, complaint, or other process or
translation thereof and agrees that service may be mailed to its address as
set forth on page 1 of this Agreement.
3
<PAGE>
IN WITNESS WHEREOF, the Corporation has executed this Option Agreement by its
duly authorized corporate officers on the day and year first above written.
INDUSTRIAL SERVICES OF AMERICA, INC.
By: /s/ Harry Kletter
---------------------------
Title: Chairman/CEO
------------------------
Accepted By:
/s/ R. Jerry Falkner
------------------------------
R. Jerry Falkner
4
<PAGE>
EXHIBIT D
Consulting Agreement Terms and Provisions, April 21, 1997 - Turchyn
<PAGE>
April 21, 1997
Joseph Turchyn
225 Rector Place
Suite PHG
New York, NY 10280
Dear Mr. Turchyn:
This letter will service as an agreement between Industrial Services of
America, Inc. ("ISA" or the "Company") and Joseph Turchyn with respect to the
retention of Joseph Turchyn to provide financial advisory and investment
banking services on behalf of ISA in its interest in acquiring specified
companies in the United States (the "target" or the "target company").
1.0 FINANCIAL ADVISORY AND INVESTMENT BANKING SERVICES
1.1 Joseph Turchyn will represent the Company to each of the proposed
targets, assist in identifying potential targets, and begin a dialogue
with the intent of determining each target's interest in being acquired
by ISA or, alternatively, entering into a joint venture or other
"partnering" agreement with ISA.
1.2 Upon an indication of interest on the part of a target company, Joseph
Turchyn will perform preliminary due diligence and provide ISA with an
initial valuation determination. Upon an agreement in principle with a
target company, Joseph Turchyn will undertake with ISA a more intensive
due diligence review.
1.3 Subject to the approval of ISA, Joseph Turchyn will coordinate final
negotiations and transaction documentation with each target company.
Joseph Turchyn will assist the Company in selecting local professional
services such as legal counsel, accounting, appraisers, etc. and will
assist in coordinating certain regulatory and governmental compliance
issues.
1.4 Joseph Turchyn will review each transaction as to structure and
recommend to the Company any modifications which it believes may be
appropriate under the circumstances.
2.0 RETENTION OF JOSEPH TURCHYN
2.1 ISA hereby retains Joseph Turchyn on a non-exclusive basis for a minimum
term of twelve (12) months from the date hereof (the "initial term") to
perform the services outlined in Section 1 hereof. Upon its execution of
this Agreement, ISA shall pay to Joseph Turchyn an initial retainer in
the form of an option to acquire one hundred thousand (100,000) shares
of common stock, to be registered on form S-8 on or before June 30,
1997, as promulgated by the Securities and Exchange Commission, at an
exercise price of $5.50 per share, which shall be exercisable in whole
or in part and from time to time at the sole discretion of Joseph
Turchyn for a period of three (3) years from the date of this Agreement.
Additionally, Joseph Turchyn shall be granted an option to acquire
twenty-five thousand shares, under Rule 144, or in such other form as to
make the shares Joseph Turchyn acquires freely tradable, from Harry
Kletter individually at an exercise price of $5.50 per share, which
shall be exercisable in whole or in part and from time to time at the
sole discretion of Joseph Turchyn.
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2.2 In addition to the payment of retainer fees, ISA shall reimburse Joseph
Turchyn for all reasonable, direct, out-of-pocket expense incurred on
behalf of ISA, which shall include all reasonable travel-related,
telephone and facsimile expenses, duplicating, printing, binding and
courier expenses and fees of legal counsel provided, however, that the
engagement of any such counsel shall have been pre-approved by ISA.
Further, any item of expense exceeding two hundred and fifty dollars
(USD $250) shall be pre-approved by ISA prior to occurrence.
3.0 ANNOUNCEMENT BY JOSEPH TURCHYN
3.1 If any transaction contemplated by this Agreement is completed, Joseph
Turchyn may at his option and expense, place a conventional announcement
in newspapers and periodicals of its choice stating that Joseph Turchyn
has acted as financial advisor to ISA given, however, that ISA has the
right to approve any announcement prior to publication.
4.0 NO AGENCY
4.1 Joseph Turchyn understands and acknowledges that this letter shall not
create or imply any agency agreement between the parties. Joseph Turchyn
shall not have the right to commit ISA, its officers, directors or
shareholders in any manner except as shall have been specifically
authorized in writing by ISA.
5.0 INDEMNIFICATION
5.1 In connection with the services which Joseph Turchyn has agreed to
render to ISA herein, the Company shall indemnify Joseph Turchyn, him
harmless against any losses, claims, damages or liabilities to which
Joseph Turchyn may become subject in connection with his rendering of
such services except for such loses, claims, damages or liabilities
resulting from or arising out of the gross negligence or willful
misconduct of Joseph Turchyn. Joseph Turchyn will promptly notify SIA
upon receipt of any notices of claim or any threat to institute an
action or proceeding for which he or any other person claims entitlement
to indemnification pursuant to this provision and will promptly notify
ISA after any such proceeding is commenced. In the event Joseph Turchyn
becomes involved in any action or proceeding for which it is indemnified
hereunder, the Company shall reimburse Joseph Turchyn for any reasonable
legal or other expenses reasonably incurred by it in connection with
investigating, preparing to defend or defending any lawsuits or other
proceedings arising in any manner out of or in connection with the
rendering of such services. ISA agrees that the indemnification and
reimbursement commitment set forth in this Agreement shall apply whether
or not Joseph Turchyn is a formal party to any such lawsuits or other
proceedings, provided that Joseph Turchyn has a reasonable basis to
believe that it is likely to be named in a formal action. Joseph Turchyn
shall be entitled to retain separate counsel of his choice in connection
with any of the matters to which such commitments relate and that such
commitments shall extend upon the terms set forth in this Agreement to
any controlling person, director, officer, employee or other agent of
Joseph Turchyn.
5.2 In connection with the services which Joseph Turchyn has agreed to
render to ISA herein, Joseph Turchyn shall indemnify ISA, its officers,
directors, agents, and hold it harmless against any losses, claims,
damages or liabilities to which ISA may become subject in connection
with Joseph Turchyn's rendering of such services except for such losses,
claims, damages or liabilities resulting from or out of the gross
negligence or willful misconduct of ISA. ISA will promptly notify Joseph
Turchyn upon receipt of any notices of claim or any threat to institute
an action or proceeding for which he or any other person claims
entitlement to indemnification pursuant to this provision and will
promptly notify Joseph Turchyn after any such proceeding is commenced.
In the event ISA becomes involved in any action or proceeding for which
he is indemnified hereunder, Joseph Turchyn shall reimburse ISA for any
reasonable legal or other expenses reasonably incurred by it in
connection with investigating, preparing to defend or defending any
lawsuits or other proceedings arising in any manner out of or in
connection with rendering
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of such services. Joseph Turchyn agrees that the indemnification and
reimbursement commitment set forth in this Agreement shall apply whether
or not ISA is a formal party to any such lawsuits or other proceedings,
provided that ISA has a reasonable basis to believe that it is likely to
be named in formal action. ISA shall be entitled to retain separate
counsel of its choice in connection with any of the matters to which
such commitments relate and that such commitments shall extend upon the
terms set forth in this Agreement to any controlling person, director,
officer, employee or other agent of ISA.
5.3 The indemnity agreement contained in this Section 5.0 and the
representations and warranties of ISA and Joseph Turchyn contained in
this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any
investigation made by Joseph Turchyn or on behalf of Joseph Turchyn or
on behalf of ISA, its officers or directors or any other person
controlling the Company or (iii) consummation of the transaction(s)
contemplated by this Agreement.
6.0 MODIFICATION/SEVERABILITY
6.1 The Agreement represents the entire agreement between the parties which
may not be amended or modified except in writing, and shall be binding
upon and inure to the benefit of the parties and their successors and
assigns. If any provision of this Agreement, or part thereof, shall be
held to be invalid or unenforceable, it shall not affect the validity or
enforceability of the remaining part or any other provision of this
Agreement.
7.0 HEADINGS
7.1 Headings are for the convenience only and shall not affect the
interpretation or meaning of the context thereunder.
8.0 REPRESENTATIONS AND WARRANTIES
8.1 By execution of this Agreement, each of the parties hereto represents
and warrants the other party hereto, and each of the parties hereto
shall be entitled to rely fully upon such representations, that (i) it
has full and complete corporate authority to enter into this Agreement,
(ii) that the officer executing on behalf of such party is duly
empowered to so execute and, as of the date of this signing, holds in
good standing the office indicated and (iii) that such party intends to
be legally bound by the terms set forth herein which shall be governed
and interpreted under the laws of the State of Illinois. Moreover,
Joseph Turchyn represents and warrants to ISA that it will materially
comply with all applicable securities laws; provided, however, that ISA
acknowledges that Joseph Turchyn is a private advisory firm and not a
broker-dealer for purposes of such laws.
Industrial Services of America, Inc.
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Harry Kletter
ACCEPTED AND AGREED TO:
By: ____________________
Joseph Turchyn
