EXHIBIT 10.3

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST
AMENDMENT TO CREDIT AGREEMENT (this Amendment), entered into as of
April 14, 2011 (the Effective Date), by and among INDUSTRIAL SERVICES
OF AMERICA, INC., a Florida corporation (ISA), ISA INDIANA, INC., an
Indiana corporation (ISA Indiana), the Lenders party hereto, and FIFTH
THIRD BANK, an Ohio banking corporation (Fifth Third), in its capacity
as Agent for Lenders and LC Issuer under this Agreement (Agent) and as
LC Issuer, is as follows:

Preliminary
Statements

A. ISA and
ISA Indiana (each a Borrower and, collectively, Borrowers),
Agent, LC Issuer and the Lenders entered into that certain Credit Agreement
dated as of July 30, 2010 (as modified, extended, amended or restated from time
to time, the Credit Agreement). Capitalized terms used, but not
defined, in this Amendment will have the meanings given to them in the Credit
Agreement.

B.
Borrowers have requested that Agent, LC Issuer and the Lenders: (i) increase
the Maximum Revolving Commitment and the maximum amount of Eligible Inventory
advances in the calculation of the Borrowing Base as specifically set forth
herein, (ii) change the due date of the first Excess Cash Flow Payment as
specifically set forth herein, and (iii) amend certain other provisions of the
Credit Agreement and certain of the other Loan Documents.

C. Agent,
LC Issuer and the Lenders are willing to so amend the Credit Agreement and
certain of the other Loan Documents, all on the terms, and subject to the
conditions, of this Amendment.

Statement
of Amendment

In
consideration of the mutual covenants and agreements set forth in this
Amendment, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Agent, LC Issuer and the Lenders
and Borrowers hereby agree as follows:

1. Amendments
to Credit Agreement. Subject to the satisfaction of the conditions of this
Amendment, the Credit Agreement is hereby amended as follows:

1.1
The following definitions are hereby added to Section 1.2 of the Credit
Agreement in their proper alphabetical order:

| |                                                                                                                                                                 | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | First Amendment means the First Amendment to Credit
 Agreement among Agent, LC Issuer, the Lenders and Borrowers dated to be
 effective as of April 14, 2011. | 

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | First Amendment Effective Date means April 14, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
| | Unbilled Receivables means Receivables resulting from sales
 to North American Stainless pursuant to which Finished Goods are delivered to
 North American Stainless without the simultaneous issuance of an invoice for
 such Finished Goods; provided, that, Receivables resulting
 from such non-invoiced shipments of Finished Goods may only be included as
 Unbilled Receivables for a period of thirty (30) days from the date such
 Finished Goods were delivered to North American Stainless. | 

1.2
Clauses (a)(i) and (a)(ii) of the definition of Eligible Receivables in Section
1.2 of the Credit Agreement are hereby amended in their entirety by
substituting the following in their respective steads:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | (i) Receivables (other than Unbilled Receivables) which consist of
 ordinary trade accounts receivable owned solely by such Borrower, evidenced
 by such Borrowers customary invoice therefor, payable in cash in Dollars and
 which arise out of an outright, bona fide, lawful and final provision of
 services or sale of Finished Goods in each case in the ordinary course of
 such Borrowers business as presently conducted by it to a Person who is not
 an Affiliate of such Borrower (or who otherwise is controlled by such
 Borrower or by an Affiliate of such Borrower) who has issued a valid and
 binding written purchase order to, or entered into a binding written contract
 therefor with, such Borrower; | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
| | (ii) Receivables which are Unbilled Receivables or are due and
 payable absolutely and unconditionally within (A) such Borrowers customary
 payment terms as granted in the ordinary course of business as presently
 conducted by it, or permitted to be conducted by it in accordance with the
 terms of this Agreement, provided that such customary payment
 terms as granted do not, in any event, exceed 60 days from the date of the
 invoice applicable thereto, or (B) such extended terms that Agent, in its
 discretion exercised in good faith, approves after prior notice from such
 Borrower;                                                                                                                    | 

1.3
Clause (b)(iv) of the definition of Eligible Receivables in Section 1.2
of the Credit Agreement is hereby amended in its entirety by substituting the
following in its stead:

| |                                                                                                                                                                                                                                                                 | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | (iv) Receivables owing from any single account debtor, to the extent
 such Receivables exceed, as of any date, 30% of the face amount (less maximum
 discounts, credits and allowances which may be taken by, or granted to, such
 account debtor in connection | 

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | therewith) of the then aggregate outstanding Eligible Receivables of
 Borrowers; provided, however, that, as of any date of determination,
 for Receivables (which are otherwise eligible) owing from North American
 Stainless, the foregoing percentage is 80%; provided that, the
 aggregate amount of such Eligible Receivables owing from North American
 Stainless shall not exceed in the aggregate at any time the then Receivables
 Advance Rate multiplied by $25,000,000 (after application of the
 Receivables Advance Rate; such that, on the First Amendment Effective Date,
 the maximum amount of Eligible Receivables owing from North American
 Stainless could not exceed $20,000,000). | 

1.4
Clause (b)(ix) of the definition of Eligible Receivables in Section 1.2
of the Credit Agreement is hereby amended in its entirety by substituting the
following in its stead:

| |                                                                                                                                                                                                                                                                                                                                            | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
| | (ix) Receivables which are: (A) generated by a sale on approval, a
 bill and hold sale, a sale on consignment, or other type of conditional sale
 or which are subject to progress billing, or (B) Unbilled Receivables, but
 only to the extent the aggregate amount of all such Unbilled Receivables, at
 any time, exceeds $15,000,000; | 

1.5
The following definitions in Section 1.2 of the Credit Agreement are
hereby amended in their entirety by substituting the following in their
respective steads:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | Borrowing Base means, as of any time, an amount in Dollars
 equal to:                                                                                                                                                                                                                                                                                                                                                                                                      | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| | (a) the Receivables Advance Rate applied to the then Net Amount of
 Eligible Receivables then outstanding;                                                                                                                                                                                                                                                                                                                                                                   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| | plus    (b) the least of (i) $18,000,000
 (subject to adjustment as provided in Section 2.13), (ii) the
 applicable Inventory Advance Rate applied, with respect to the applicable
 categories of Eligible Inventory, to the then Eligible Inventory and (iii)
 80% of the Net Orderly Liquidation Value Percentage (such product expressed
 as a percentage) applied, with respect to the applicable categories of
 Eligible Inventory, to the then Eligible Inventory; and | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| | less    (c) the then Reserve Amount.                                                                                                                                                                                                                                                                                                                                                                                                                                         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| | Dodd-Frank Act has the meaning set forth in Section
 2.6(a)(iv).                                                                                                                                                                                                                                                                                                                                                                                                           | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 
| | Letter of Credit Availability means, as at any time, an
 amount equal to the lesser of (a) an amount equal to (i) $2,500,000 less
 (ii)                                                                                                                                                                                                                                                                                                                                    | 

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| |                                                                                      | 
| | ------------------------------------------------------------------------------------ | 
| | the then
 Letter of Credit Obligations and (b) the then Revolving Loan Availability. | 
| |                                                                                      | 
| | Maximum
 Revolving Commitment means Forty-Five Million Dollars ($45,000,000).      | 

1.6 The second sentence of Section 2.2(a) of the Credit Agreement is hereby
amended in its entirety by substituting the following in its stead:

| |                                                                                | 
| | ------------------------------------------------------------------------------ | 
| | The aggregate amount of all of the Revolving Loan Commitments is
 $45,000,000. | 

1.7
Section 2.2(e) of the Credit Agreement is hereby amended in its entirety
by substituting the following in its stead:

|                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                                                                               | (e) In addition to the scheduled payments of principal on the Term
 Loan set forth in Section 2.3(b), beginning on the earlier of (i)
 April 30, 2012 or (ii) 15 days following the date on which Agent receives
 Borrowers Financial Statements in accordance with Section 6.1(b) for
 the Fiscal Year ending December 31, 2011 and continuing on the same due date
 (or 15 days following the date on which Lenders receive Borrowers Financial
 Statements in each subsequent Fiscal Year) thereafter occurring in each
 subsequent Fiscal Year until the payment in full of the Term Loan, Borrowers
 will make a payment to Agent, for the ratable benefit of Lenders (each, an Excess
 Cash Flow Payment) in an aggregate amount equal to the Excess Cash Flow
 Percentage of Excess Cash Flow for the immediately preceding Fiscal Year of
 Borrower then ended. Each Excess Cash Flow Payment shall, absent the
 occurrence and continuance of an Event of Default, be applied to the
 remaining installments of principal under the Term Loan Notes in the inverse
 order of maturity, and to accrued but unpaid interest thereon. The receipt by
 Lenders of any such prepayments will not change the due dates or amounts of
 the monthly principal payments otherwise required to be paid pursuant to the
 Term Loan Notes. | 
|                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|1.8
 Section 2.6(a)(iv) of the Credit Agreement is hereby amended in its
 entirety by substituting the following in its stead: |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
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|                                                                                                                               | (iv) Notwithstanding any other provisions of this Section 2.6(a)
 to the contrary, if Agent determines, at any time, in good faith that (A)
 deposits in Dollars are not available in the London interbank market or (B)
 by reason of: (1) national or international financial, political or economic
 conditions or (2) any applicable law, treaty,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 

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| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | rule or regulation, whether domestic or foreign (including, without
 limitation, any request, rule, guideline or directive (1) in connection with
 the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank
 Act) or (2) enacted, promulgated, adopted, issued or implemented by the
 Bank of International Settlements, the Basel Committee on Banking Regulations
 and Supervisory Practices (or any successor or similar authority), or the
 United States financial regulatory authorities)), now or hereafter in effect
 or the interpretation or administration thereof by any Governmental Authority
 charged with the interpretation or administration thereof or compliance by a
 Lender with any request or directive of such authority (whether or not having
 the force of law), including exchange controls, (I) it is impracticable,
 unlawful or impossible for Lenders to maintain loans at an interest rate
 based on the LIBOR Tranche Rate or the Daily LIBOR Rate, (II) adequate and
 fair means do not exist for ascertaining the interest rate applicable
 hereunder to LIBOR Rate Loans, or (III) the LIBOR Tranche Rate or the Daily
 LIBOR Rate determined by Agent will not adequately and fairly reflect the
 cost to Lenders of making or maintaining any LIBOR Rate Loans (including
 inaccurate or inadequate reflection of actual costs resulting from the
 calculation of rates by reporting sources), then Agent will give Borrowers
 prompt written notice thereof (and will thereafter give Borrowers prompt
 notice of the cessation, if any, of such condition), and, so long as such
 condition remains in effect as determined by Agent, the obligations of
 Lenders to make or to continue to fund or maintain LIBOR Rate Loans will
 terminate, and the Loans will bear interest from and after such date at
 a floating rate equal to the Prime Rate plus the Applicable Prime Rate
 Margin. Notwithstanding anything to the contrary contained herein, for all
 purposes of this Agreement, all requests, rules, guidelines and directives
 (A) in connection with the Dodd-Frank Act or (B) enacted, promulgated,
 adopted, issued or implemented by the Bank of International Settlements, the
 Basel Committee on Banking Regulations and Supervisory Practices (or any
 successor or similar authority), or the United States financial regulatory
 authorities shall, in each case, be deemed to constitute a change under this
 Agreement regardless of the date on which such request, rule, guideline or
 direction was enacted, promulgated, adopted, issued or implemented. Moreover,
 notwithstanding any other provisions of this Section 2.6(a)(iv) to the
 contrary, if any individual Lender determines in good faith that it is
 unlawful under applicable law to make or maintain LIBOR Rate Loans as
 contemplated by this Agreement, the affected Lender (the Affected Lender)
 will provide prompt written notice to Borrowers and (x) the Affected
 Lenders commitment hereunder to | 

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|                                                                                                                                                                | make LIBOR Rate Loans and continue LIBOR Rate Loans as such will
 thereupon terminate and (y) the Affected Lenders Revolving Loans then
 outstanding as LIBOR Rate Loans, if any, will automatically bear interest
 from and after such date at a floating rate equal to the Prime Rate plus the
 Applicable Prime Rate Margin on the respective last days of the then current
 LIBOR Tranche Period (or immediately as to Daily LIBOR Rate Loans) with
 respect to such Revolving Loans. Borrowers, so long as no Event of Default
 then exists, may: (A) request Agent to use commercially reasonable efforts to
 identify a replacement Lender or financial institution satisfactory to
 Borrowers to acquire and assume all or a ratable part of all of such Affected
 Lenders LIBOR Rate Loans and commitments to make LIBOR Rate Loans (a LIBOR
 Replacement Lender), provided that Agent will have no duty to
 undertake a formal syndication or any underwriting obligations of any nature
 with respect to any proposed LIBOR Replacement Lender requested by Borrowers;
 (B) request one or more of the other Lenders to acquire and assume all or
 part of such Affected Lenders LIBOR Loans and commitment to make LIBOR
 Loans; or (C) designate a LIBOR Replacement Lender. Any such designation of a
 Replacement LIBOR Lender under clause (A) or (C) shall be subject to the
 prior consent of Agent. Borrowers and Lenders further acknowledge that Agent
 assumes no responsibility for ensuring that Agent will be able to locate any
 LIBOR Replacement Lender or that any Person designated as a LIBOR Replacement
 Lender becomes a Lender under this Agreement. If Agent gives notice to such
 Affected Lender that a LIBOR Replacement Lender has been obtained, then such
 Affected Lender must immediately sell all of such Affected Lenders Pro Rata
 Share of the LIBOR Rate Loans and commitment to make LIBOR Rate Loans for an
 amount equal to the unpaid principal balance of the LIBOR Rate Loans held by
 such Affected Lender plus all accrued interest and fees then due to such
 Affected Lender as set forth in this Agreement. | 
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|1.9
 Sections 6.1(c)(i) and 6.1(c)(ii) of the Credit Agreement are
 hereby amended in their entirety by substituting the following in their
 respective steads: |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
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|                                                                                                                                                                | (i) a Borrowing Base Certificate by no later than the Tuesday after
 the end of each calendar week (which is based on values as of the immediately
 preceding week; provided, however, that Agent may, in its sole discretion,
 elect to require (as evidenced by a written notice delivered to Borrowers)
 that Borrowers deliver a Borrowing Base Certificate on each Business Day,
 which is based on values as of the immediately preceding Business Day); and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 

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|                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
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|                                                                                                                                                   | (ii) reports of each Borrowers sales, credits to sales or credit
 memoranda applicable to sales, collections and non-cash charges (from
 whatever source, including sales and noncash journals or other credits to
 Receivables and Unbilled Receivables) for the applicable period, and
 acceptable supporting documentation thereto (including, a report indicating
 the Dollar value of each Borrowers Eligible Receivables, Unbilled
 Receivables, Eligible Inventory and all other information deemed necessary by
 Agent to determine levels of that which is and is not Eligible Receivables,
 Unbilled Receivables, or Eligible Inventory).                                                                                                                                                                                             | 
|                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
|1.10
 Section 6.1(d) of the Credit Agreement is hereby amended in its
 entirety by substituting the following in its stead:                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                   | (d) By no later than the 30th day after the end of each calendar
 month, or sooner if available, Borrowers shall deliver to Agent monthly
 agings, broken down by Borrowers and by due date of Receivables listed by
 invoice date and Unbilled Receivables by the delivery date, in each case
 reconciled to the Borrowing Base Certificate for the end of such month and
 Borrowers general ledgers, and setting forth any changes in the reserves
 made for bad accounts or any extensions of the maturity of, any refinancing
 of, or any other material changes in the terms of any Receivables or Unbilled
 Receivables in such format as is specified by Agent from time to time,
 together with such further information with respect thereto in such format as
 Agent may then require in the exercise of its discretion in good faith. | 
|                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
|1.11
 The first sentence of Section 11.1(m) of the Credit Agreement is
 hereby amended in its entirety by substituting the following in its stead: |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
|                                                                                                                                                   | The maximum aggregate liability of the Credit Parties under this
 Cross-Guaranty is $52,960,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 

2. Amendment
and Restatement of Revolving Loan Note. On the Effective Date, Borrowers
will duly execute and deliver to Agent an Amended and Restated Revolving Loan
Note in the form attached hereto as Exhibit A (the Amended and
Restated Revolving Loan Note).

3. Reaffirmation of Cross-Guaranties.
Each of the Borrowers (collectively, the Cross-Guarantors) hereby (i)
confirms, ratifies and reaffirms its respective Cross-Guaranty and (ii)
acknowledges and agrees that no Cross-Guarantor is released from its
obligations under its

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respective
Cross-Guaranty by reason of this Amendment and that the obligations of each
Cross-Guarantor under its respective Cross-Guaranty extend to the Credit
Agreement, the Amendment Documents and the other Loan Documents as amended by,
or in connection with, this Amendment. This reaffirmation of each
Cross-Guarantors Cross-Guaranty shall not be construed, by implication or
otherwise, as imposing any requirement that Agent notify or seek the consent of
any Cross-Guarantor relative to any past or future extension of credit, amendment
or modification, extension or other action with respect thereto, in order for
any such extension of credit, amendment or modification, extension or other
action with respect thereto to be subject to a Cross-Guarantors
Cross-Guaranty, it being expressly acknowledged and reaffirmed that each
Cross-Guarantor has under its respective Cross-Guaranty consented, among others
things, to modifications, amendments, extensions and other actions with respect
thereto without any notice thereof or any further consent thereto.

4. Reaffirmation
and Amendment of Guaranty and Reaffirmation of Security. As a condition of
this Amendment, on the Effective Date, Borrowers will cause each Guarantor to
execute and deliver to Agent the Reaffirmation and Amendment of Guaranty and
Reaffirmation of Security provided after the signatures below and incorporated
by reference herein.

5. Additional
Conditions; Other Documents. As a condition of this Amendment, Borrowers
will deliver to Agent, on or before the execution of this Amendment, (i) the
Amended and Restated Revolving Loan Note duly executed by Borrowers; (ii) an
amendment to each of the Mortgages, in form and substance acceptable to Agent,
(iii) a copy, certified by the Secretary of each Borrower, of resolutions of
the Board of Directors of Borrowers, authorizing the execution of this
Amendment and all other documents executed in connection herewith, which
certificate and resolutions will be in form and substance acceptable to Agent;
(iv) a copy, certified by the Secretary of each Guarantor of resolutions of the
sole member of each Guarantor authorizing the execution of the Reaffirmation
and Amendment of Guaranty and Reaffirmation of Security and all other documents
executed in connection therewith, which certificate and resolutions will be in
form and substance acceptable to Agent; and (v) such other documents,
instruments, and agreements deemed necessary or desirable by Agent to effect
the amendments to Borrowers credit facilities with Agent, LC Issuer and the Lenders
contemplated by this Amendment.

6. Reaffirmation
of Security. Borrowers and Agent, LC Issuer and the Lenders hereby
expressly intend that this Amendment shall not in any manner: (a) constitute
the refinancing, refunding, payment or extinguishment of the existing
Obligations as of the Effective Date; (b) be deemed to evidence a novation of
the outstanding balance of the Obligations; or (c) affect, replace, impair, or
extinguish the creation, attachment, perfection or priority of the Liens on the
Loan Collateral granted pursuant to any of the Security Documents. Borrowers
ratify and reaffirm any and all grants of Liens to Agent in the Loan Collateral
as security for the Obligations, and Borrowers acknowledge and confirm that the
grant of the Liens to Agent in the Loan Collateral: (i) represent continuing
Liens on all of the Loan Collateral, (ii) secure all of the Obligations, and
(iii) represent valid, first and best Liens on all of the Loan Collateral
except to the extent, if any, of the Permitted Liens.

7. Representations.
To induce Agent, LC Issuer and the Lenders to accept this

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Amendment, each Borrower hereby represents and warrants to Agent, LC
Issuer and the Lenders as follows:

7.1
Each Borrower has full power and authority to enter into, and to perform its
obligations under, this Amendment, the Amended and Restated Revolving Loan Note
and the other documents executed in connection therewith (collectively, the Amendment
Documents), and the execution and delivery of, and the performance of its
obligations under and arising out of, the Amendment Documents have been duly
authorized by all necessary corporate action.

7.2
The Amendment Documents constitute the legal, valid and binding obligations of
each Borrower, enforceable in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors rights generally.

7.3
Each Borrowers representations and warranties contained in the Credit
Agreement are complete and correct as of the Effective Date with the same
effect as though these representations and warranties had been made again on
and as of the Effective Date, subject to those changes as are not prohibited
by, or do not constitute Events of Default under, the Credit Agreement.

7.4
No Event of Default has occurred and is continuing under the Credit Agreement.

8. Costs
and Expenses; Amendment Fee. As a condition of this Amendment, (i)
Borrowers will pay to Agent an amendment fee of $11,500, payable in full on the
Effective Date; such fee, when paid, will be fully earned and non-refundable
under all circumstances, and (ii) Borrowers will promptly on demand pay or
reimburse Agent for the costs and expenses incurred by Agent in connection with
this Amendment, including, without limitation, attorneys fees.

9.
Release. Borrowers hereby release Agent, LC Issuer and the Lenders from
any and all liabilities, damages and claims arising from or in any way related
to the Obligations or the Loan Documents, other than such liabilities, damages
and claims which arise after the execution of this Amendment. The foregoing
release does not release or discharge, or operate to waive performance by,
Agent, LC Issuer and the Lenders of its express agreements and obligations
stated in the Loan Documents on and after the Effective Date.

10. Default.
Any default by Borrowers in the performance of Borrowers obligations under
this Amendment shall constitute an Event of Default under the Credit Agreement.

11. Continuing
Effect of the Credit Agreement. Except as expressly amended hereby, all of
the provisions of the Credit Agreement are ratified and confirmed and remain in
full force and effect.

12. One
Agreement; References; Fax Signature. The Credit Agreement, as amended by
this Amendment, will be construed as one agreement. All references in any of
the Loan Documents to the (i) Credit Agreement will be deemed to be references
to the Credit Agreement

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as amended by
this Amendment and (ii) Revolving Loan Note will be deemed to be references to
the Amended and Restated Revolving Loan Note. This Amendment may be signed by
facsimile signatures or other electronic delivery of an image file reflecting
the execution hereof, and if so signed, (a) may be relied on by each party as
if the document were a manually signed original and (b) will be binding on each
party for all purposes.

13. Captions. The
headings to the Sections of this Amendment have been inserted for convenience
of reference only and shall in no way modify or restrict any provisions hereof
or be used to construe any such provisions.

14. Counterparts.
This Amendment may be executed in multiple counterparts, each of which shall be
an original but all of which together shall constitute one and the same
instrument.

15. Entire
Agreement. This Amendment, together with the other Loan Documents, sets
forth the entire agreement of the parties with respect to the subject matter of
this Amendment and supersedes all previous understandings, written or oral, in
respect of this Amendment.

16. Governing
Law. This Amendment shall be governed by and construed in accordance with
the internal laws of the State of Ohio (without regard to Ohio conflicts of law
principles).

[Signature Page Follows]

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IN WITNESS
WHEREOF, Borrowers have executed this Amendment to be effective as of the
Effective Date.

| |                                      |                                          | 
| | ------------------------------------ | ---------------------------------------- | 
| | INDUSTRIAL SERVICES OF AMERICA, INC.
| |                                     
| |                                     
| | By:                                  | /s/ Alan Schroering                      | 
| |                                      |                                          | 
| |                                      | Alan Schroering, Chief Financial Officer
| |                                     
| | ISA INDIANA, INC.                   
| |                                     
| | By:                                  | /s/ Alan Schroering                      | 
| |                                      |                                          | 
| |                                      | Alan Schroering, Chief Financial Officer

|                                    |                                     | 
|----------------------------------- | ----------------------------------- | 
|Accepted as
 of the Effective Date. |                                    
|                                    |                                    
|FIFTH THIRD BANK, as Agent          |                                    
|                                    |                                    
|By:                                 | /s/ Donald K. Mitchell              | 
|                                    |                                     | 
|                                    | Donald K. Mitchell, Vice President 
|                                    |                                    
|                                    |                                    
|FIFTH THIRD BANK, as Lender         |                                    
|                                    |                                    
|By:                                 | /s/ Donald K. Mitchell              | 
|                                    |                                     | 
|                                    | Donald K. Mitchell, Vice President 
|                                    |                                    
|FIFTH THIRD BANK, as LC Issuer      |                                    
|                                    |                                    
|By:                                 | /s/ Donald K. Mitchell              | 
|                                    |                                     | 
|                                    | Donald K.
 Mitchell, Vice President

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