Industrial Services of America
(ISA), a Kentucky-based recycling facility, has ended its management agreement with Blue Equity LLC, which was providing the company with day-to-day senior executive level operating management supervisory services.
The two parties had entered a management services agreement on April 1, 2013. At the time the parties entered into the management agreement, ISA issued 125,000 shares of its common stock to Blue Equity at $4 per share, and granted options to purchase 1.5 million shares of its common stock to Blue Equity at an exercise price per share of $5, subject to shareholder approval.
At the annual meeting of ISA’s shareholders on July 16, 2013, shareholders voted not to approve the options to purchase 1.5 million shares that had been granted to Blue Equity and the options terminated.
Following the failure of the company's shareholders to approve the option grant, Blue Equity delivered a letter to the company stating that it was terminating the management agreement, effective July 31, 2013. Blue Equity has also demanded payment of a monthly management fee of $85,000, along with reimbursement of out-of-pocket expenses, through July 31, 2013.
In addition, Blue Equity has notified ISA of its intention to exercise its right to cause the company to redeem the 125,000 shares of common stock for $4 per share, the price at which Blue Equity purchased those shares, payable on September 30, 2013.
On May 7, 2013, the board of directors appointed Jonathan Blue, chairman and managing director of Blue Equity, to the positions of director and CEO of ISA. However, the board and Blue were unable to negotiate mutually agreeable terms and conditions of his service in those positions, and Blue did not accept either position.