IDSA Industrial Services of America Inc

Item 1.01  Entry into a Material Definitive Agreement .

On August 16, 2019 , Industrial Services of America, Inc. (the “ Company ”) and its subsidiaries (collectively, “ Sellers ”) entered into that certain Asset Purchase Agreement (the “ Purchase Agreement ”) with River Metals Recycling LLC (“ Buyer ”) and The David J. Joseph Company (“ Parent ”). Pursuant to the Purchase Agreement, Buyer would acquire substantially all of the assets of the Sellers (the “ Assets ”) on the satisfaction or waiver of the closing conditions set forth in the Purchase Agreement, which include approval by the Company’s shareholders of the transactions contemplated by the Purchase Agreement. The Company expects to call and hold a shareholders’ meeting seeking to obtain this approval and separate approval of a plan of dissolution, which is described below. The closing conditions also include the issuance by the Kentucky Energy and Environmental Cabinet (the “ Cabinet ”) of a Kentucky Pollutant Discharge Elimination System permit and storm water compliance agreed order (collectively, the “ Permit and Order ”) on terms not materially different from those currently being discussed with the Cabinet in connection with the Company’s efforts to ensure future compliance with the stormwater permit at one of its facilities.

The Company’s Board of Directors (the “ Board ”), by unanimous vote, approved the Purchase Agreement, the sale of the Assets and the other transactions contemplated by the Purchase Agreement.

Pursuant to the Purchase Agreement, the Assets would be sold to the Buyer for a purchase price of $23,300,000, less certain payoff amounts relating to taxes, encumbrances, and assumed capital leases, subject to an adjustment up or down based on the net working capital estimated at closing and finally determined following closing. The amount of $600,000 of the purchase price would be held in escrow to satisfy the potential net working capital purchase price adjustment, and the amount of $100,000 of the purchase price would be held in escrow to satisfy any liabilities of the Sellers relating to the Chemetco Superfund site in Hartford, Illinois. The Purchase Agreement contains negotiated representations, covenants and indemnification provisions by the parties, which are believed to be customary for transactions of this type and size. The indemnification obligations of the Sellers are subject to a specified deductible and indemnity cap. The deductible and cap on indemnification do not apply to damages relating to taxes, environmental matters, breaches of fundamental representations, breaches of covenants, and certain other matters (all of which are subject to an overall cap equal to the purchase price). The representations in the Purchase Agreement generally survive for one year after closing, with longer survival periods for the fundamental representations and representations regarding taxes and environmental matters.

Representations in the Purchase Agreement were made to allocate contractual risk between the parties as of the specified dates noted in the agreement, and are qualified by certain disclosures between the parties and a contractual standard of materiality different from those generally applicable to shareholders, among other limitations. The Company’s shareholders are not third-party beneficiaries under the Purchase Agreement and should not rely on the representations and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Sellers or Buyer.

The Purchase Agreement contains specified termination rights for the parties. Prior to closing, the parties can mutually agree to terminate the Purchase Agreement, and either party has the right to terminate the Purchase Agreement if the other party fails to cure a material breach, or if the transaction does not close within 150 days, which period may be extended by an additional 30 days if all conditions other than those relating to the Permit and Order have been satisfied. The Board also has the right to terminate the Purchase Agreement (and cancel the shareholder meeting or withdraw its recommendation that shareholders vote to approve the Purchase Agreement) if it determines that failure to do so would reasonably be expected to be inconsistent with its fiduciary duties. Termination costs of up to $300,000 would be payable by Sellers in connection with such termination as reimbursement of Buyer’s transaction-related expenses, and a termination fee of $850,000 (with all previously paid termination costs credited against such amount) would be payable by the Sellers in connection with such termination if the Sellers also reach an agreement within 180 days following such termination to sell a controlling interest in the Company or all or substantially all of the Assets to a third party.

The foregoing descriptions of the Purchase Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Purchase Agreement, which has been filed with this Current Report on Form 8-K as Exhibit 2.1.

  Item 8.01      OTHER EVENTS.

On August 16, 2019 , the Company’s board of directors approved the dissolution and liquidation of the Company pursuant to a Plan of Dissolution (the “ Plan of Dissolution ”), subject to shareholder approval. The Company intends to call a meeting of the shareholders to seek approval of the Plan of Dissolution and will file proxy materials with the Securities and Exchange Commission as soon as practicable. The Plan of Dissolution provides for dissolution and liquidation of the Company only upon consummation of the transactions contemplated by the Purchase Agreement .

On August 19, 2019 , the Company issued a press release announcing the above transactions, a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K .