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	PROMISSORY NOTE

        
	 
	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: $1,500,000.00	Date of Note: May 31, 2001

        
	 
	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 One Million Five Hundred Thousand & 00/100
        Dollars ($1,500,000.00), together with interest on the
        unpaid principal balance from May 31, 2001, until paid in
        full.
	 
	PAYMENT:
        Subject to any payment changes resulting from changes in
        the Index, Borrower will pay this loan in 59 regular
        payments of $30,000.00 each and one irregular last
        payment estimated at $13,833.48. Borrower's first payment
        is due June 30, 2001, and all subsequent payments are due
        on the last day of each month after that. Borrower's
        final payment will be due on May 31, 2006, and will be
        for all principal and all accrued interest not yet paid.
        Payments including principal and interest. 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.
	 
	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.
	 
	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.
	 
	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.
	 
	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.
	 
	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.
	 	 
	 	Events
        Affecting Guarantor. Any of the preceding events occurs
        with respect to any guarantor, endorser, surety, or
        accommodation party of any of the indebtedness or any
        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.
	 	 
	 	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.
	 	 
	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.
	 
	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.
	 
	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.
	 
	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.
	 
	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.
	 
	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.
	 
	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.
	 
	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.
	 
	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".
	 
	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.
	 
	ADDITIONAL
        PROVISION. Notwithstanding any provisions to the contrary
        in the Section titled "PAYMENT," Borrower
        understands that if the interest rate applicable to this
        Note goes up or down, Lender may recalculate the monthly
        principal and interest payment so as to fully and evenly
        amortize the outstanding principal balance of this Note
        over the remainder of its term.
	 
	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.
	 
	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.
	 
	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.
	 
	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.
	 
	BORROWER
        ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS
        PROMISSORY NOTE.
	 
	BORROWER:
	 
	INDUSTRIAL
        SERVICES OF AMERICA, INC.
	 
	 
	By: /s/
        Timothy W.
        Myers                                              
	       Timothy
        W. Myers, President of Industrial Services
	       of
        America, Inc.