**Exhibit 10.5**

 

**BB&T                                                                                    Branch Banking & Trust Co.**

                                                                                                                                                           

 

                                                                                                         **Funds Management Group**

                                                                                                         Mailcode:  011-16-17-10

                                                                                                         200 West Second Street

                                                                                                         Winston-Salem, NC  27101

 

October20, 2008

 

 

 

Industrial Services of America, Inc.

Attention: Mr. Alan Schroering

Fax:  (502) 515-1700  Phone: (502) 214-3710

From:   R. Kevin Randal, Vice President

            Branch Banking & Trust Company (BB&T)

            200 West Second Street, 17th Floor

            Winston-Salem, NC 27101

            Telephone: (336) 733-2853

            Fax #: (336) 733-2883

 

Re: Confirmation of USD 6,000,000.00 amortizing swap commencing April 7, 2009

 

Mr.Schroering:

 

Thepurpose of this letter agreement is to confirm the terms and conditions of theTransaction entered into between Branch Banking and Trust Company ("BB&T) andIndustrial Services of America, Inc. ("Counterparty") on the Trade Datespecified below (the "Swap Transaction").  This letter agreement constitutes a"Confirmation" under the ISDA Agreement defined below.

Thedefinitions and provisions contained in the 2006 ISDA Definitions as publishedby the International Swaps and Derivatives Association, Inc. ("ISDA") areincorporated into this Confirmation.  In the event of any inconsistency betweenthose definitions and provisions and this Confirmation, this Confirmation willgovern.

 

| 1.
			This confirmation supplements, forms part of, and is subject to, the			ISDA Master Agreement dated as of December 22, 2006 (as amended and			supplemented, the "Agreement"), between us.  All provisions			contained in the Agreement govern this Confirmation except as			expressly modified below.  Pursuant to ISDA guidelines, the mutual			agreement of terms commenced the transaction being confirmed.  This			facsimile transmission serves as additional evidence of a binding			supplement to the Agreement.  We request that you sign this			Confirmation and return it to us by facsimile.
			 
			 
			 
			2.
			The terms of the particular Swap Transaction to which this			Confirmation relates are as follows:
			 
			 
			 
			 
			Notional Amount:
			(i) USD 6,000,000.00 for the initial Calculation Period, and			thereafter 			(ii) the amounts as detailed in the Schedule of Notional Amounts			attached hereto.
			 
			 
			 
			 
			Trade Date:
			October 15, 2008
			 
			 
			 
			 
			Effective Date:
			April 7, 2009
			 
			 
			 
			 
			Termination Date:
			April 7, 2014, subject to adjustment in accordance with the Modified			Following Business Day Convention.
** **
			 
			 
			Fixed Amounts:
			 
			 
			 
			 
			 
			Fixed Rate Payer:
			Counterparty
			 
			 
			 
			 
			Fixed Rate Payer Payment Dates:
			The 7th calendar day of each month during the Term of this			Transaction, commencing May 7, 2009 and ending on the Termination			Date, subject to adjustment in accordance with the Modified			Following Business Day Convention.
			 
			 
			 
			 
			Fixed Rate:
			5.89000 percent per annum
			 
			 
			 
			 
			Fixed Rate Day Count Fraction:
			Actual / 360
** **
** **
			 
			Floating Amounts:
			 
			 
			 
			 
			 
			Floating Rate Payer:
			BB&T
			 
			 
			 
			 
			Floating Rate Payer Payment Dates:
			The 7th calendar day of each month during the Term of this			Transaction, commencing May 7, 2009 and ending on the Termination			Date, subject to adjustment in accordance with the Modified			Following Business Day Convention.
			 
			 
			 
			 
			Floating Rate for initial Calculation Period:
			to be determined
			 
			 
			 
			 
			Floating Rate Option:
			USD-LIBOR-BBA to include spread
			 
			 
			 
			 
			 
			For purposes of this Confirmation, the definitions of (i) "USD-LIBOR-BBA"			and (ii) USD-LIBOR Reference Banks" in Section 7.1 (ab) (xxii) and			Section 7.1 (ab) (xxv), respectively, of the Definitions are hereby			amended by deleting all references in such definitions to "two			London Banking Days" and inserting "0 London Business Days" in lieu			thereof.
			 
			 
			 
			 
			Designated Maturity:
			Monthly
			 
			 
			 
			 
			Spread:
			162.5 basis points
			 
			 
			 
			 
			Floating Rate Day Count Fraction:
			Actual / 360
			 
			 
			 
			 
			Business Days:
			New York, London
			 
			 
			 
			 
			Business Day Convention:
			Modified Following
			 
			 
			 
			 
			Reset Dates:
			The 1st calendar day of each month, subject to adjustment in			accordance with the Preceding Business Day Convention.
			 
			 
			 
			 
			Compounding:
			Inapplicable
			 
			 
			 
			 
			Calculation Agent:
			BB&T, unless otherwise specified in Agreement
** **
** **
			 
			3.
			Account Details:
			 
			 
			 
			 
			 
			Payments to BB&T:
			Fed Funds to BB&T - ABA NO. 053101121 			Acct. No. 9116001188867 			Attn: Funds Management - Derivative Operations
			 
			 
			 
			 
			Payments to Counterparty:
			Please provide to expedite payment 

			_____________________________________			_____________________________________			_____________________________________
** **
** **
			 
			4.
			Offices:
			 
			 
			 
			 
			 
			Office of BB&T:
			Winston-Salem, NC
			 
			 
			 
			 
			Office of Counterparty:
			Louisville, KY
			 
			 
			 
			 
			Non-Reliance:
			Each party represents to the other party that it is acting for its			own account, and has made its own independent decisions to enter			into this Transaction and as to whether this Transaction is			appropriate or proper for it based on its own judgment and upon			advice from such advisors as it has deemed necessary.  It is not			relying on any communication (written or oral) of the other party as			investment advice or as a recommendation to enter into this			Transaction, it being understood that information and explanations			related to the terms and conditions of this Transaction shall not he			considered investment advice or a recommendation to enter into this			Transaction.  No communication (written or oral) received from the			other party shall be deemed to be an assurance or guarantee as to			the expected results of this Transaction.    
 

Pleaseconfirm your agreement to be bound by the terms stated herein by executing thecopy of this Confirmation enclosed for that purpose and returning it to uswithin 5 business days, signed by a vice president or above who is authorizedto sign financial instrument contracts on behalf of the Counterparty to:

                                                            BB&T Funds Management

                                                            Attn: R. Kevin Randal

                                                            Fax#: (336) 733-2883

 

ThisConfirmation shall be conclusively deemed accurate and complete by Counterpartyif not executed and returned to us within the timeframe established above.

 

			 
			Yours sincerely,
			 
			Branch Banking & Trust Company
			 
			 
			 
			By:
			/s/ R. Kevin Randal
			 
			 
			 
			 
			Name:
			R. Kevin Randal
			 
			 
			 
			 
			Title:
			Vice President
 

Confirm as of the

Date first above written:

Industrial Services of America, Inc.

 

			 
			 
			By:
			/s/ Harry Kletter
			By:
			 
			 
			 
			 
			 
			Name:
			Harry Kletter
			Name:
			 
			 
			 
			 
			 
			Title:
			CEO
			Title:
			 
 

 

Trade ID. 16588NC

Confirmation of USD 6,000,000.00 amortizing swap commencingApril 7, 2009Termination Date April 7, 2014

 

 

**Industrial Services of America, Inc.**

Schedule of Notional Amounts

(In accordance with the Modified Following Business Day Convention)

 

**From and 			Including**
**To but 			Excluding**
**Notional 			Amount**
			Effective Date
			5/7/2009
			6,000,000.00
			5/7/2009
			6/7/2009
			5,962,363.89
			6/7/2009
			7/7/2009
			5,924,727.78
			7/7/2009
			8/7/2009
			5,887,091.67
			8/7/2009
			9/7/2009
			5,849,455.56
			9/7/2009
			10/7/2009
			5,811,819.45
			10/7/2009
			11/7/2009
			5,774,183.34
			11/7/2009
			12/7/2009
			5,736,547.23
			12/7/2009
			1/7/2010
			5,698,911.12
			1/7/2010
			2/7/2010
			5,661,275.01
			2/7/2010
			3/7/2010
			5,623,638.90
			3/7/2010
			4/7/2010
			5,586,002.79
			4/7/2010
			5/7/2010
			5,548,366.68
			5/7/2010
			6/7/2010
			5,508,409.26
			6/7/2010
			7/7/2010
			5,468,451.84
			7/7/2010
			8/7/2010
			5,428,494 42
			8/7/2010
			9/7/2010
			5,388,537.00
			9/7/2010
			10/7/2010
			5,348,579.58
			10/7/2010
			11/7/2010
			5,308,622.16
			11/7/2010
			12/7/2010
			5,268,664.74
			12/7/2010
			1/7/2011
			5,228,707.32
			1/7/2011
			2/7/2011
			5,188,749.90
			2/7/2011
			3/7/2011
			5,148,792.48
			3/7/2011
			4/7/2011
			5,108,835.06
			4/7/2011
			5/7/2011
			5,068,877.64
			5/7/2011
			6/7/2011
			5,026,455.73
			6/7/2011
			7/7/2011
			4,984,033.82
			7/7/2011
			8/7/2011
			4,941,611.91
			8/7/2011
			9/7/2011
			4,899,190.00
			9/7/2011
			10/7/2011
			4,856,768.09
			10/7/2011
			11/7/2011
			4,814,346.18
			11/7/2011
			12/7/2011
			4,771,924.27
			12/7/2011
			1/7/2012
			4,729,502.36
			1/7/2012
			2/7/2012
			4,687,080.45
			2/7/2012
			3/7/2012
			4,644,658.54
			3/7/2012
			4/7/2012
			4,602,236.63
			4/7/2012
			5/7/2012
			4,559,814.72
			5/7/2012
			6/7/2012
			4,514,776.32
			6/7/2012
			7/7/2012
			4,469,737.92
			7/7/2012
			8/7/2012
			4,424,699.52
			8/7/2012
			9/7/2012
			4,379,661.12
			9/7/2012
			10/7/2012
			4,334,622.72
			10/7/2012
			11/7/2012
			4,289,584.32
			11/7/2012
			12/7/2012
			4,244,545.92
			12/7/2012
			1/7/2013
			4,199,507.52
			1/7/2013
			2/7/2013
			4,154,469.12
			2/7/2013
			3/7/2013
			4,109,430.72
			3/7/2013
			4/7/2013
			4,064,392.32
			4/7/2013
			5/7/2013
			4,019,353.92
			5/7/2013
			6/7/2013
			3,971,537.65
			6/7/2013
			7/7/2013
			3,923,721.38
			7/7/2013
			8/7/2013
			3,875,905.11
			8/7/2013
			9/7/2013
			3,828,088.84
			9/7/2013
			10/7/2013
			3,780,272.57
			10/7/2013
			11/7/2013
			3,732,456.30
			11/7/2013
			12/7/2013
			3,684,640.03
			12/7/2013
			1/7/2014
			3,636,823.76
			1/7/2014
			2/7/2014
			3,589,007.49
			2/7/2014
			3/7/2014
			3,541,191.22
			3/7/2014
			Termination Date
			3,493,374.95
 

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