| **PROMISSORY NOTE**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Borrower:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Industrial        Services of America, Inc. | Lender: | Bank of        Louisville |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 7100 Grade        Lane |   | a Kentucky        banking corporation |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Louisville,        KY 40232 |   | 500 West        Broadway |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | P.O. Box 1101 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | Louisville,        KY 40201-1101 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Principal        Amount: $250,000.00                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Date of Note: May 31, 2001 |
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| PROMISE TO        PAY: Industrial Services of America, Inc.        ("Borrower") promises to pay to Bank of        Louisville ("Lender"), or order, in lawful        money of the United States of America, the principal        amount of Two Hundred Fifty Thousand & 00/100 Dollars        ($250,000.00), together with interest on the unpaid        principal balance from May 31, 2001, until paid in full.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| PAYMENT:        Subject to any payment changes resulting from changes in        the Index, Borrower will pay this loan in accordance with        the following payment schedule:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Borrower        will make monthly interest payments beginning May 31,        2001, with interest calculated on the unpaid principal        balance at a rate of 7% per annum until fully disbursed,        at which time the Borrower will pay consecutive monthly        principal and interest payments in an amount sufficient        to fully amortize the Note over five (5) years. |
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| Unless        otherwise agreed or required by applicable law, payments        will be applied first to accrued unpaid Interest, then to        principal, and any remaining amount to any unpaid        collection costs and late charges. The annual interest        rate for this Note is computed on a 365/360 basis; that        is, by applying the ratio of the annual interest rate        over a year of 360 days, multiplied by the outstanding        principal balance, multiplied by the actual number of        days the principal balance is outstanding. Borrower will        pay Lender at Lender's address shown above or at such        other place as Lender may designate in writing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| VARIABLE        INTEREST RATE: The interest rate on this Note is subject        to change from time to time based on changes in an index        which is Lender's Prime Rate (the "Index").        This is the rate Lender charges, or would charge, on        90-day unsecured loans to the most creditworthy corporate        customers. This rate may or may not be the lowest rate        available from Lender at any given time. Lender will tell        Borrower the current Index rate upon Borrower's request.        The interest rate change will not occur more often than        each day. The rate of interest shall be adjusted from        time to time on the same day of which the "prime        rate" is changed by Lender. Borrower understands        that Lender may make loans based on other rates as well.        Prior to adding or subtracting any margin to the Index,        the Index is rounded up to the nearest 0.001 per cent,        resulting in a current rounded Index of 7.000%. The        interest rate to be applied to the unpaid principal        balance of this Note will be at a rate equal to the        Index, rounded up to the nearest 0.001 percent. NOTICE:        Under no circumstances will the interest rate on this        Note be more than the maximum rate allowed by applicable        law. Whenever increases occur in the interest rate,        Lender, at its option, may do one or more of the        following: (A) increase Borrower's payments to ensure        Borrower's loan will pay off by its original final        maturity date, (B) increase Borrower's payments to cover        accruing interest, (C) increase the number of Borrower's        payments, and (D) continue Borrower's payments at the        same amount and increase Borrower's final payment. |
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| PREPAYMENT:        Borrower may pay without penalty all or a portion of the        amount owed earlier than it is due. Early payments will        not, unless agreed to by lender in writing, relieve        Borrower of Borrower's obligation to continue to make        payments under the payment schedule. Rather, early        payments will reduce the principal balance due and may        result in Borrower's making fewer payments. Borrower        agrees not to send Lender payments marked "paid in        full," "without recourse," or similar        language. If Borrower sends such a payment, lender may        accept it without losing any of Lender's rights under        this Note, and Borrower will remain obligated to pay any        further amount owed to Lender. All written communications        concerning disputed amounts, including any check or other        payment instrument that indicates that the payment        constitutes "payment in full" of the amount        owed or that is tendered with other conditions or        limitations or as full satisfaction of a disputed amount        must be mailed or delivered to: Bank of Louisville, a        Kentucky banking corporation, 500 West Broadway, P.O. Box        1101, Louisville, KY 40201-1101.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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| LATE CHARGE.        If a payment is 10 days or more late, Borrower will be        charged 5.000% of the regularly scheduled payment or        $20.00, whichever is greater.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| INTEREST        AFTER DEFAULT. Upon default, including failure to pay        upon final maturity, Lender, at its option, may, if        permitted under applicable law, increase the variable        interest rate on this Note to 6.000 percentage points        over the Index. The interest rate will not exceed the        maximum rate permitted by applicable law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| DEFAULT. Each        of the following shall constitute an event of default        ("Event of Default") under this Note:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Payment        Default. Borrower fails to make any payment when due        under this Note. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Other        Defaults. Borrower fails to comply with or to perform any        other term, obligation, covenant or condition contained        in this Note or in any of the related documents or to        comply with or to perform any term, obligation, covenant        or condition contained in any other agreement between        Lender and Borrower. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | False        Statements. Any warranty, representation or statement        made or furnished to Lender by Borrower or on Borrower's        behalf, or made by Guarantor, or any other guarantor,        endorser, surety, or accommodation party, under this Note        or the related documents in connection with the obtaining        of the loan evidenced by this Note or any security        document directly or indirectly securing repayment of        this Note is false or misleading in any material respect,        either now or at the time made or furnished or becomes        false or misleading at any time thereafter. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Insolvency.        The dissolution or termination of Borrower's existence as        a going business, the insolvency of Borrower, the        appointment of a receiver for any part of Borrower's        property, any assignment for the benefit of creditors,        any type of creditor workout, or the commencement of any        proceeding under any bankruptcy or insolvency laws or        against Borrower. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Creditor        or Forfeiture Proceedings. Commencement of foreclosure or        forfeiture proceedings, whether by judicial proceeding,        self-help, repossession or any other method, by any        creditor of Borrower or by any governmental agency        against any collateral securing the loan. This includes a        garnishment of any of Borrower's accounts, including        deposit accounts, with Lender. However, this Event of        Default shall not apply if there is a good faith dispute        by Borrower as to the validity or reasonableness of the        claim which is the basis of the creditor or forfeiture        proceeding and if Borrower gives Lender written notice of        the creditor or forfeiture proceeding and deposits with        Lender monies or a surety bond for the creditor or        forfeiture proceeding, in an amount determined by Lender,        in its sole discretion, as being an adequate reserve or        bond for this dispute. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Execution;        Attachment. Any execution or attachment is levied against        the Collateral, and such execution or attachment is not        set aside, discharged or stayed within thirty (30) days        after the same is levied. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Change        in Zoning or Public Restriction. Any change in any zoning        ordinance or regulation or any other public restriction        is enabled, adopted or implemented, that limits or        defines the uses which may be made of the Collateral such        that the present or intended use of the Collateral, as        specified in the related documents, would be in violation        of such zoning ordinance or regulation or public        restriction, as changed. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Default        Under Other Lien Documents. A default occurs under any        other mortgage, deed of trust or security agreement        covering all or any portion of the Collateral. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Judgment.        Unless adequately covered by insurance in the opinion of        Lender, the entry of a final judgment for the payment of        money involving more than ten thousand dollars        ($10,000.00) against Borrower and the failure by Borrower        to discharge the same, or cause it to be discharged, or        bonded off to Lender's satisfaction, within thirty (30)        days from the date of the order, decree or process under        which or pursuant to which such judgment was entered. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Events        Affecting Guarantor. Any of the preceding events occurs        with respect to any Guarantor, or any other guarantor,        endorser, surety, or accommodation party of any of the        indebtedness of any Guarantor, or any other guarantor,        endorser, surety, or accommodation party dies or becomes        incompetent, or revokes or disputes the validity of, or        liability under, any guaranty of the indebtedness        evidenced by this Note. In the event of a death, Lender,        at its option, may, but shall not be required to, permit        the Guarantor's estate to assume unconditionally the        obligations arising under the guaranty in a manner        satisfactory to lender, and, in doing so, cure any Event        of Default. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Change        In Ownership. Any change in the ownership of twenty-five        percent (25%) or more of the common stock of Borrower. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Adverse        Change. A material adverse change occurs in Borrower's        financial condition, or Lender believes the prospect of        payment or performance of this Note is impaired. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Insecurity.        Lender in good faith believes itself insecure. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Cure        Provisions. If any default, other than a default in        payment is curable and if Borrower has not been given a        notice of a breach of the same provision of this Note        within the preceding twelve (12) months, it may be cured        (and no event of default will have occurred) if Borrower,        after receiving written notice from Lender demanding cure        of such default: (1) cures the default within fifteen        (15) days; or (2) if the cure requires more than fifteen        (15) days, immediately initiates steps which Lender deems        in Lender's sole discretion to be sufficient to cure the        default and thereafter continues and completes all        reasonable and necessary steps sufficient to produce        compliance as soon as reasonably practical. |
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| LENDER'S        RIGHTS. Upon default, Lender may declare the entire        unpaid principal balance on this Note and all accrued        unpaid interest immediately due, and then Borrower will        pay that amount.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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| ATTORNEYS'        FEES; EXPENSES. Lender may hire or pay someone else to        help collect this Note if Borrower does not pay. Borrower        will pay Lender that amount. This includes, subject to        any limits under applicable law, Lender's reasonable        attorneys' fees and Lender's legal expenses whether or        not there is a lawsuit, including reasonable attorneys'        fees and legal expenses for bankruptcy proceedings        (including efforts to modify or vacate any automatic stay        or injunction), and appeals. If not prohibited by        applicable law, Borrower also will pay any court costs,        in addition to all other sums provided by law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| JURY WAIVER.        Lender and Borrower hereby waive the right to any jury        trial in any action, proceeding, or counterclaim brought        by either Lender or Borrower against the other.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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| GOVERNING        LAW. This note will be governed by, construed and        enforced in accordance with federal law and the laws of        the Commonwealth of Kentucky. This Note has been accepted        by Lender in the Commonwealth of Kentucky.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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| CHOICE OF        VENUE. If there is a lawsuit, Borrower agrees upon        lender's request to submit to the jurisdiction of the        courts of Jefferson County, Commonwealth of Kentucky.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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| DISHONORED        ITEM FEE. Borrower will pay a fee to Lender of $20.00 if        Borrower makes a payment on Borrower's loan and the check        or preauthorized charge with which Borrower pays is later        dishonored.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| RIGHT OF        SETOFF. To the extent permitted by applicable law, Lender        reserves a right of setoff in all Borrower's accounts        with lender (whether checking, savings, or some other        account). This includes all accounts Borrower holds        jointly with someone else and all accounts Borrower may        open in the future. However, this does not include any        IRA or Keogh accounts, or any trust accounts for which        setoff would be prohibited by law. Borrower authorizes        Lender, to the extent permitted by applicable law, to        charge or setoff all sums owing on the indebtedness        against any and all such accounts, and, at Lender's        option, to administratively freeze all such accounts to        allow Lender to protect Lender's charge and setoff rights        provided in this paragraph.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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| FINANCIAL        STATEMENTS. Borrower agrees to provide Lender with such        financial statements and other related information at        such frequencies and in such detail as Lender may        reasonably request.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| FINAL        AGREEMENT. THE UNDERSIGNED REPRESENTS AND AGREES THAT:        (A) THIS AGREEMENT, TOGETHER WITH THE OTHER DOCUMENTS        EXECUTED IN CONNECTION HEREWITH AND/OR REFERRED TO HEREIN        (COLLECTIVELY, THE "LOAN DOCUMENTS") REPRESENT        THE FINAL AGREEMENT BETWEEN THE UNDERSIGNED AND THE        LENDER WITH RESPECT TO THE SUBJECT MATTER HEREOF, (B)        THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE        PARTIES, AND (C) THE LOAN DOCUMENTS MAY NOT BE        CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS,        OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE        PARTIES. THE TERM "PARTIES" MEANS BANK OF        LOUISVILLE AND ANY AND ALL ENTITIES OR INDIVIDUALS WHO        ARE OBLIGATED, DIRECTLY OR INDIRECTLY, TO REPAY THE        INDEBTEDNESS REPRESENTED BY THIS NOTE OR HAVE PLEDGED        PROPERTY AS SECURITY FOR THE INDEBTEDNESS REPRESENTED BY        THIS NOTE.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| FURTHER TO        FINANCIAL STATEMENTS COVENANT. Upon Lender's request,        monthly no later than the 15th of each month, Borrower        will provide Lender with the periodic financial        statements described in the provisions above marked        "Financial Statements".                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| CROSS-COLLATERALIZATION.        The Note and loan documents executed in connection with        the Note shall be consolidated and coordinated such that        the collateral held by the Lender with respect to any        other loans or promissory note shall extend and secure        the repayment in full to the Lender of any and all loans        and promissory notes from Borrower, notwithstanding the        fact that the Lender may hold separate notes, commitment        letter, liens security agreements, guaranties, mortgages,        assignments of rents, or other documents with respect to        any other loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| FINANCIAL        COVENANTS. Borrower agrees to maintain a "Maximum        Leverage" of 5.00: 1.00 as defined by lender in its        sole discretion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| LINE OF        CREDIT. This Note evidences a straight line of credit.        Once the total amount of principal has been advanced,        Borrower is not entitled to further loan advances.        Borrower agrees to be liable to all sums either: (a)        advanced in accordance with the instructions of an        authorized person or (b) credited to any of Borrowers        accounts with lender. The unpaid principal balance owing        on this Note at any time may be evidenced by endorsements        on this Note or by Lender's internal records, including        daily computer print-outs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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| LOAN        DOCUMENTS. This Note is and shall continue to be governed        by the Loan Agreement dated November 20, 2000 and the        Security Agreement dated May 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| SUCCESSOR        INTERESTS. The terms of this Note shall be binding upon        Borrower, and upon Borrower's heirs, personal        representatives, successors and assigns, and shall inure        to the benefit of Lender and its successors and assigns.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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| GENERAL        PROVISIONS. Lender may delay or forgo enforcing any of        its rights or remedies under this Note without losing        them. Borrower and any other person who signs, guarantees        or endorses this Note, to the extent allowed by law,        waive presentment, demand for payment, and notice of        dishonor. Upon any change in the terms of this Note, and        unless otherwise expressly stated in writing, no party        who signs this Note, whether as maker, guarantor,        accommodation maker or endorser, shall be released from        liability. All such parties agree that Lender may renew        or extend (repeatedly and for any length of time) this        loan or release any party or guarantor or collateral; or        impair, fail to realize upon or perfect Lender's security        interest in the collateral; and take any other action        deemed necessary by Lender without the consent of or        notice to anyone. All such parties also agree that Lender        may modify this loan without the consent of or notice to        anyone other than the party with whom the modification is        made. The obligations under this Note are joint and        several.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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| PRIOR TO        SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE        PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST        RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE        NOTE.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| BORROWER        ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS        PROMISSORY NOTE.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| BORROWER:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| INDUSTRIAL        SERVICES OF AMERICA, INC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| By: /s/        Timothy W.        Myers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        Timothy        W. Myers, President of Industrial Services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|        of        America, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |