**EXHIBIT 10.36**
| Borrower:       | INDUSTRIAL SERVICES OF AMERICA, INC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     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| Account Number: | 9580514992                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Note Number: | 00011 |
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BB&T  Address:7100 GRADE LN BLDG 1 LOUISVILLE, Kentucky LOUISVILLE, KY  40213-3424Date:December 22, 2006     
 

PROMISSORY NOTE THE UNDERSIGNED REPRESENTS THAT THE LOAN			EVIDENCED HEREBY IS BEING OBTAINED FOR BUSINESS/COMMERCIAL OR			AGRICULTURAL PURPOSES.  For value received, the undersigned, jointly			and severally, if more than one, promises to pay to BRANCH BANKING			AND TRUST COMPANY, a North Carolina banking corporation (the			"Bank"), or order, at any of Bank's offices in the above referenced			city for such other place or places that may be hereafter designated			by Bank, the sum of TEN MILLION DOLLARS & 00/100Dollars ($10,000,000), in immediately			available coin or currency of the United States of America. 
 
[ ]Borrower shall pay a prepayment penalty as set			forth in the Prepayment Penalty Addendum attached hereto.			 Interest shall accrue from the date hereof on the			unpaid principal balance outstanding from time to time at the:[ ]Fixed rate of ______________ % per annum.[ ]Variable rate of the Bank's Prime Rate plus			__________ % per annum to be adjusted ____________________ as the			Bank's Prime Rate changes.  If checked here [ ], the interest rate			will not exceed a(n) [ ] fixed [ ] average maximum rate of _________			% or a [ ] floating maximum rate of the greater of __________ % or			the Bank's Prime Rate; and the interest rate will not decrease below			a fixed minimum rate of __________ %.  If an average maximum rate is			specified, a determination of any required reimbursement of interest			by Bank will be made:  [ ] when Note is repaid in full by Borrower			[ ] annually beginning on ___________________.[ ]Fixed rate of __________ % per annum through			____________________ which automatically converts on			___________________ to a variable rate equal to the Bank's Prime			Rate plus __________ % per annum which shall be adjusted			____________________ as such Prime Rate changes.[X]The Adjusted LIBOR Rate, as Defined in the			Attached Addendum to Promissory Note.			 Principal and Interest is payable as follows:[X]
Principal (plus any accrued			interest not otherwise schedule herein) is due in full at maturity			on 12/22/2009[ ]Principal plus accrued interest) [ ]
Payable in consecutive _______			installments of [ ] Principal                  ) commencing on _____			 			                                                                            [ ]			Principal and Interest)			 and continued on the same day of each calendar			period thereafter, in __________ equal payments of $__________, with			one final payment of all remaining principal and accrued interest			due on ___________________.[ ]ChoiceLine Payment Option:  2% of outstanding			balance is payable monthly commencing on ____________________ and			continuing on the same day of each calendar period thereafter, with			one final payment of all remaining principal and accrued interest			due on ____________________.[X]Accrued Interest is payable Monthly			commencing on January 22, 2007 and continuing on the same day			of each calendar period thereafter, with one final payment of all			remaining interest due on December 22, 2009.[ ]Bank reserves the right in its sole discretion to			adjust the fixed payment due hereunder ____________________ on			____________________ and continuing on the same day of each calendar			period thereafter, in order to maintain an amortization period of no			more than _____ months from the date of the Note.  Borrower			understands the payment may increase if interest rates increase.[X]Prior to an event of default, Borrower may			borrow, repay, and reborrow hereunder pursuant to the terms of the			Loan Agreement, hereinafter defined.[ ]			 [ ]Borrower hereby authorizes Bank to automatically			draft from its demand deposit or savings account with Bank or other			bank, any payment due under this Note on the date(s) due.  Borrower			shall provide appropriate account number(s) for account(s) at Bank			or other bank.
 
      The undersigned shall pay to Bank a late			fee in the amount of five percent (5%) of any installment past due			for ten (10) or more days.  When any installment payment is past due			for ten (10) or more days, subsequent payments shall first be			applied to the past due balance.  In addition, the undersigned shall			pay to Bank a returned payment fee if the undersigned or any other			obligor hereon makes any payment at any time by check or other			instrument, or by any electronic means, which is returned to Bank			because of nonpayment due to nonsufficient funds.      All interest shall be computed and charged			for the actual number of days elapsed on the basis of a year			consisting of three hundred sixty (360) days.  In the event periodic			accruals of interest shall exceed any periodic fixed payment amount			described above, the fixed payment amount shall be immediately			increased, or additional supplemental interest payments required on			the same periodic basis as specified above (increased fixed payments			or supplemental payments to be determined in the Bank's sole			discretion), in such amounts and at such time as shall be necessary			to pay all accruals of interest for the period and all accruals of			unpaid interest from previous periods.  Such adjustments to the			fixed payment amount or supplemental payments shall remain in effect			for so long as the interest accruals shall exceed the original fixed			payment amount and shall be further adjusted upward or downward to			reflect changes in the variable interest rate; provided that unless			elected otherwise above, the fixed payment amount shall not be			reduced below the original fixed payment amount.  However, Bank			shall have the right, in its sole discretion, to lower the fixed			payment amount below the original payment amount.			       This note ("NOTE") is given by the			undersigned in connection with the following agreements (if any)			between the undersigned and the Bank:			       Deed(s) of Trust/Mortgage(s) granted in			favor of Bank as beneficiary/mortgagee:
 
[ ]
dated _________________________			in the maximum principal amount of $_________________________			 
  
granted by			_____________________________________________________________________________			 
 [ ]
dated _________________________			in the maximum principal amount of $_________________________			 
 			 
granted by			_____________________________________________________________________________			 
 			 
Security Agreement(s) granting a			security interest to Bank:[X]
dated  12/22/2006  given			by INDUSTRIAL SERVICES OF AMERICA, INC.			 
 			 
Pledge and Security Agreement			dated[X]
dated 12/22/2006 given by			Industrial Services of America, Inc.			 
 			 
 [ ]
Securities Account Pledge and			Security Agreement dated ______________________________________,						 
 			 
executed by			___________________________________________________________________________			 
 [ ]
Control Agreement(s) dated			_________, covering
[ ] Deposit Account(s)
[ ] Investment Property			 
 
[ ] Letter of Credit Rights
[ ] Electronic Chattel Paper			 
 [ ]
Assignment of Certificate of			Deposit, Security Agreement, and Power of Attorney (for Certificated						 
 			 
Certificates of Deposits dated			_________, executed by _________________________________________ 
 			 
 [ ]  
Pledge and Security Agreement for			Publicly Traded Certificated Securities dated _____________________			 
 			 
executed by			__________________________________________________________________________			 
 [ ]
Assignment of Life Insurance			Policy as Collateral dated ______________, executed by			_______________			 
 			 
 [X]
Loan Agreement dated 			12/22/2006, executed by Borrower and [ ] Guarantor(s).			 
 [ ]
 			 
 [ ]
 			 
 
 
      All of the terms, conditions and covenants			of the above described agreements (the "Agreements") are expressly			made a part of this Note by reference in the same manner and with			the same effect as if set forth herein at length and any holder of			this Note is entitled to the benefits of and remedies provided in			the Agreements and any other agreements by and between the			undersigned and the Bank.       Borrower agrees that the only interest			charge is the interest actually stated in this Note, and that any			loan or origination fee shall be deemed charges rather than			interest, which charges are fully earned and non-refundable.  It is			further agreed that any late charges are not a charge for the use of			money but are imposed to compensate Bank for some of the			administrative services, costs and losses associated with any			delinquency or default under this Instrument, and said charges shall			be fully earned and nonrefundable when accrued.  All other charges			imposed by Bank upon Borrower in connection with this instrument and			the loan including, without limitation, any commitment fees, loan			fees, facility fees, origination fees, discount points, default and			late charges, prepayment fees, reasonable attorneys' fees and			reimbursements for costs and expenses paid by Bank to third parties			or for damages incurred by Bank are and shall be deemed to be			charges made to compensate Bank for underwriting and administrative			services and costs, other services, and costs or losses incurred and			to be incurred by Bank in connection with this Instrument and the			Loan and shall under no circumstances be deemed to be charges for			the use of money.  All such charges shall be fully earned and			non-refundable when due.       No delay or omission on the part of the			holder in exercising any right hereunder shall operate as a waiver			of such right or of any other right of such holder, nor shall any			delay, omission or waiver on any one occasion be deemed a bar to or			waiver of the same or of any other right on any future occasion. 			Every one of the undersigned and every endorser or guarantor of this			note regardless of the time, order or place of signing waives			presentment, demand, protest and notices of every kind and assents			to any one or more extensions or postponements of the time of			payment or any other indulgences, to any substitutions, exchanges or			releases of collateral if at any time there be available to the			holder collateral for this note, and to the additions or releases of			any other parties or persons primarily or secondarily liable.       The failure to pay any part of the			principal or interest when due on this Note or to fully perform any			covenant, obligation or warranty on this or on any other liability			to the Bank by any one or more of the undersigned, by any affiliate			of the undersigned (as defined in 11 USC Section (101)(2)), or by			any guarantor or surety of this Note (said affiliate, guarantor and			surety are herein called Obligor); or if any financial statement or			other representation made to the Bank by any of the undersigned or			any Obligor shall be found to be materially incorrect or incomplete;			or if any of the undersigned shall fail to furnish information to			the Bank sufficient to verify the identity of the undersigned as			required under the USA Patriot Act; or in the event of a default			pursuant to any of the Agreements or any other obligation of any of			the undersigned or any Obligor in favor of the Bank; or in the event			the Bank demands that the undersigned secure or provide additional			security for its obligations under this Note and security deemed			adequate and sufficient by the Bank is not given when demanded; or			in the event one or more of the undersigned or any Obligor shall			die, terminate its existence, allow the appointment of a receiver			for any part of its property, make an assignment for the benefit of			creditors, or where a proceeding under bankruptcy or insolvency laws			is initiated by or against any of the undersigned or the Obligor; or			in the event the Bank should otherwise deem itself, its security			interest, or any collateral unsafe or insecure; or should the Bank			in good faith believe that the prospect of payment or other			performance is impaired; or if there is an attachment, execution, or			other judicial seizure of all or any portion of the Borrower's or			any Obligor's assets, including an action or proceeding to seize any			funds on deposit with the Bank, and such seizure is not discharged			within 20 days; or if final judgment for the payment of money shall			be rendered against the Borrower or any Obligor which is not covered			by insurance or debt cancellation and shall remain undischarged for			a period of 30 days unless such judgment or execution thereon is			effectively stayed; or the termination of any guaranty agreement			given in connection with this Note, then any one of the same shall			be a material default hereunder and this Note and other debts due			the Bank by any one or more of undersigned shall immediately become			due and payable without notice, at the option of the Bank.  From and			after any event of default hereunder, interest shall accrue on the			sum of the principal balance and accrued interest then outstanding			at the variable rate equal to the Bank's Prime Rate plus 5% per			annum ("Default Rate"), provided that such rate shall not exceed at			any time the highest rate of interest permitted by the laws of the			State of Kentucky; and further provided that such rate shall apply			after judgment.  In the event of any default, the then remaining			unpaid principal amount and accrue but unpaid interest then			outstanding shall bear interest at the Default Rate called for			hereunder until such principal and interest have been paid in full. 			In addition, upon default, the Bank may pursue its full legal			remedies at law or equity, and the balance due hereunder may be			charged against any obligation of the Bank to any party including			any Obligor.  Bank shall not be obligated to accept any check, money			order or other payment instrument marked "payment in full" on any			disputed amount due hereunder, and Bank expressly reserves the right			to reject all such payment instruments.  Borrower agrees that tender			of its check or other payment instrument so marked will not satisfy			or discharge its obligation under this Note, disputed or otherwise,			even if such check or payment instrument is inadvertently processed			by Bank unless in fact such payment is in fact sufficient to pay the			amount due hereunder.       WAIVER OF TRIAL BY JURY.  UNLESS			EXPRESSLY PROHIBITED BY APPLICABLE LAW, THE UNDERSIGNED HEREBY WAIVE			THE RIGHT TO TRIAL BY JURY OF ANY MATTERS OR CLAIMS ARISING OUT OF			THIS NOTE OR ANY LOAN DOCUMENT EXECUTED IN CONNECTION HEREWITH OR			OUT OF THE CONDUCT OF THE RELATIONSHIP BETWEEN THE UNDERSIGNED AND			BANK.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK TO MAKE THE			LOAN EVIDENCED BY THIS NOTE.  FURTHER, THE UNDERSIGNED HEREBY			CERTIFY THAT NO REPRESENTATIVE OR AGENT OF BANK, NOR BANK'S COUNSEL,			HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT SEEK TO			ENFORCE THIS WAIVER OR RIGHT TO JURY TRIAL PROVISION IN THE EVENT OF			LITIGATION.  NO REPRESENTATIVE OR AGENT OF BANK, NOR BANK'S COUNSEL,			HAS THE AUTHORITY TO WAIVE, CONDITION OR MODIFY THIS PROVISION.       Unless otherwise required under a Loan			Agreement, if applicable, and as long as any indebtedness evidenced			by this Note remains outstanding or as long as Bank remains			obligated to make advances, the undersigned shall furnish annually			an updated financial statement in a form satisfactory to Bank which,			when delivered shall be the property of the Bank.       The term "Prime Rate," if used herein,			means the rate of interest per annum announced by the Bank from time			to time and adopted as its Prime Rate.  The Prime Rate is one of			several rates indexes employed by the Bank when extending credit. 			Any change in the interest rate resulting from a change in the			Bank's Prime Rate shall become effective as of the opening of			business on the effective date of the change.  If this Note is			placed with an attorney for collection, the undersigned agrees to			pay, in addition to principal and interest, all costs of collection,			including but not limited to reasonable attorneys' fees.  All			obligations of the undersigned and of any Obligor shall bind his			heirs, executors, administrators, successors, and/or assigns.  Use			of the masculine pronoun herein shall include the feminine and the			neuter, and also the plural.  If more than one party shall execute			this Note, the term "undersigned" as used herein shall mean all the			parties signing this Note and each of them, and all such parties			shall be jointly and severally obligated hereunder.  Whenever			possible, each provision of this Note shall be interpreted in such a			manner to be effective and valid under applicable law, but if any			provision of this Note shall be prohibited by or invalid under such			law, such provision shall be ineffective but only to the extent of			such prohibition or invalidity, without invalidating the remainder			of such provision or the remaining provisions of this Note.  All of			the undersigned hereby waive all exemptions and homestead laws.  The			proceeds of the loan evidenced by this Note may be paid to any one			or more of the undersigned.       From time to time the maturity date of this			Note may be extended, or this Note may be renewed in whole or in			part, or a new note of different form may be substituted for this			Note, or the rate of interest may be modified, or changes may be			made in consideration of loan extensions, and the holder hereof,			from time to time may waive or surrender, either in whole or in part			any rights, guaranties, secured interest or liens, given for the			benefit of the holder in connection with the payment and the			securing the payment of this Note; but no such occurrence shall in			any manner affect, limit, modify, or otherwise impair any rights,			guaranties or security of the holder not specifically waived,			released, or surrendered in writing, nor shall the undersigned			makers, or any guarantor, endorser, or any person who is or might be			liable hereon, either primarily or contingently, be released from			such event.  The holder hereof, from time to time, shall have the			unlimited right to release any person who might be liable hereon,			and such release shall not affect or discharge the liability of any			other person who is or might be liable hereon.  No waivers and			modifications shall be valid unless in writing and signed by the			Bank.  The Bank may, at its option, charge any fees for the			modification, renewal, extension or amendment of any of the terms of			the Note not prohibited by Kentucky law.  In case of a conflict			between the terms of this Note and the Loan Agreement executed in			connection herewith, the priority of controlling terms shall be			first this Note, then the Loan Agreement.  This Note shall be			governed by and construed in accordance with the laws of Kentucky. 
(SIGNATURES ON			FOLLOWING PAGE) 
 

BB&T
PROMISSORY NOTE SIGNATURE PAGE  Borrower:INDUSTRIAL SERVICES OF AMERICA, INC  Account Number:9580514992 Note Number:00011 
 
   Note Amount:10,000,000.00Date:December 22, 2006
 
Notice of Right to Copy of Appraisal:  If a 1-4			family residential dwelling is pledged as collateral for this Note,			you, the undersigned, have a right to a copy of the real estate			appraisal report used in connection with your application for			credit.  If you wish to receive a copy, please notify in writing the			branch office where you applied for credit.  You must forward your			request to the Bank no later than 90 days after the date of this			Note.  In your request letter, please provide your name, mailing			address, appraised property address, the date of this Note, and the			Account and Note Numbers shown on the front of this Note. IN WITNESS WHEREOF, the undersigned, on the day			and year first written above, has caused this note to be executed. 
 

If Borrower is a Corporation:
 
WITNESS:
INDUSTRIAL SERVICES OF AMERICA,			INC.
 
Name of Corporation
 
 
/s/ Alan Schroering
By:  /s/ Harry Kletter
 
 
Alan Schroering
Title:  Harry Kletter, Chief			Executive Officer
 
 
 
By:			________________________________________
 
 
 
Title:			_______________________________________
 
 
If Borrower is a Partnership,			Limited Liability Company, Limited Liability			Partnership or Limited Liability Limited Partnership:
 
WITNESS:
 
 
Name of Partnership, LLC, LLP			or LLLP
 
 
			______________________________________
By:			_________________________________________			General Partner or Manager
 
 
			______________________________________
By:			_________________________________________			General Partner or Manager
 
 
			______________________________________
By:			_________________________________________			General Partner or Manager
 
 
 
If Borrower is an Individual:
 
WITNESS:
 
 
 
			______________________________________
			____________________________________________
 
 
 
Additional Co-makers:
 
WITNESS:
 
 
 
			______________________________________
			____________________________________________
 
 
			______________________________________
			____________________________________________
 
 
			______________________________________
			____________________________________________
 
 
			______________________________________
			____________________________________________
 
 
 

 

 

**ADDENDUM TO PROMISSORY NOTE**
                 THIS ADDENDUM TO PROMISSORY NOTE			("Addendum") is hereby made a part of the Promissory Note dated 			December 22, 2006 from INDUSTRIAL SERVICES OF AMERICA, INC.			("Borrower"), payable to the order of Branch Banking and Trust			Company ("Bank") in the principal amount of $10,000,000.00			(including all renewals, extensions, modifications and substitutions			therefore, the "Note").
 
I.              DEFINITIONS
 1.1          Adjusted LIBOR Rate means a rate of			interest per annum equal to the sum obtained (rounded upwards, if			necessary, to the next higher 1/100th of 1.0%) by adding (i) the One			Month LIBOR plus (ii) two point two five zero percent (2.250) % per			annum, which shall be adjusted monthly on the first day of each			month for each LIBOR Interest Period.  If the first day of any month			falls on date when the Bank is closed, the Adjusted LIBOR Rate shall			be determined as of the last preceding business day.  The Adjusted			LIBRO Rate shall be adjusted for any change in the LIBOR Reserve			Percentage so that Bank shall receive the same yield.  If checked			here [ ] the interest rate will not exceed a(n) [ ] fixed [ ]			average maximum rate of ______% and will not decrease below a			minimum rate of _____%.  If an average maximum rate is specified, a			determination of the average interest rate assessed and a			reimbursement by Bank of interest paid in excess of the maximum			rate, if any, will be made on ______________.  If the loan has been			repaid prior to this date, no reimbursement will be made. 1.2        One Month LIBOR means the average rate			(rounded upwards, if necessary, to the next higher 1/100th of 1.0%)			quoted on Bloomberg Screen MMR2 or page 3750 (or such replacement			page) of the Telerate Service on the determination date for deposits			in U.S. Dollars offered in the London interbank market for one			month, or if the above method for determining LIBOR shall not be			available, the rate quoted in The Wall Street Journal, a rate			determined by a substitute method of determination agreed on by			Borrower and Bank; provided, if such agreement is not reached within			a reasonable period of time (in Bank's judgment), a rate reasonably			determined by Bank in its sole discretion as a rate being paid, as			of the determination date, by first class banking organizations (as			determined by Bank) in the London interbank market for U.S. Dollar			deposits. 1.3        LIBOR Advance means the term loan			advances made by Bank to Borrower evidenced by this Note upon which			the Adjusted LIBOR Rate of Interest shall apply. 1.4        LIBOR Interest Period means a period			of one calendar month as may be elected by the Borrower applicable			to any LIBOR Advance which shall begin on first day of any month			notwithstanding the maturity date of this Note; provided, however,			that a LIBOR Interest Period may be less than one calendar month in			and only in the calendar month in which the Note originates or			matures. 1.5        LIBOR Reserve Percentage means the			maximum aggregate rate at which reserves (including, without			limitation, any marginal supplemental or emergency reserves) are			required to be maintained under Regulation D by member banks of the			Federal Reserve System with respect to dollar funding in the London			Interbank market.  Without limiting the effect of the foregoing, the			LIBOR Reserve Percentage shall reflect any other reserves required			to be maintained by such member banks by reason of any applicable			regulatory change against (i) any category of liability which			includes deposits by reference to which the Adjusted LIBOR Rate is			to be determined or (ii) any category of extensions of credit or			other assets related to LIBOR. 1.6        Standard Rate means, for any day, a			rate per annum (rounded upwards, if necessary, to the next higher			1/100th of 1.0%) equal to the Bank's announced Prime Rate minus			0.50% per annum, and each change in the Standard Rate shall be			effective on the date any change in the Prime Rate is publicly			announced as being effective. II.         LOANS BEARING ADJUSTED LIBOR RATE 2.1        Application of Adjusted LIBOR Rate. 			The Adjusted LIBOR Rate shall apply to the entire principal balance			outstanding of a term loan for any LIBOR Interest Period. 2.2          Adjusted LIBOR Based Rate			Protections.                 (a)           Inability to			Determine Rate.  In the event that Bank shall have determined,			which determination shall be final, conclusive and binding, that by			reason of circumstances occurring after the date of this Note			affecting the London interbank market, adequate and fair means do			not exist for ascertaining the LIBOR on the basis provided for in			this Note, Bank shall give notice (by telephone, confirmed in			writing or by telecopy) to Borrower of such determination, whereupon			(i) no LIBOR Advance shall be made until Bank notifies Borrowers			that the circumstances giving ruse to such notice no longer exist,			and (ii) any request by Borrower for a LIBOR Advance shall be deemed			to be a request for an advance at the Standard Rate.                 (b)           Illegality;			Impracticability.  In the event that Bank shall determine, which			determination shall be final, conclusive and binding, that the			making, maintaining or continuance of any portion of a LIBOR Advance			(i) has become unlawful as a result of compliance by Bank with any			law, treaty, governmental rule, regulation, guideline or order (or			would conflict with any of the same not having the force of law even			though the failure to comply therewith would not be unlawful) or			(ii) has become impracticable, or would cause Bank material			hardship, as a result of contingencies occurring after the date of			this Note materially and adversely affect the London interbank			market or Bank's ability to make LIBOR Advances generally, then, and			in any such event, Bank shall give notice (by telephone, confirmed			in writing or by telecopy) to Borrower of such determination. 			Thereafter, (x) the obligation of Bank to make any LIBOR Advances or			to convert any portion of the loan to a LIBOR Advance shall be			suspended until such notice shall be withdrawn by Bank, and (y) any			request by Borrower for a LIBOR Advance shall be deemed to be a			request for an advance at the Standard Rate.
 

If Borrower is a Corporation:
 
WITNESS:
INDUSTRIAL SERVICES OF AMERICA,			INC.
 
NAME OF CORPORATION
 
 
/s/ Alan Schroering
By:  /s/ Harry Kletter
 
 
Alan Schroering
Title:  Harry Kletter, Chief			Executive Officer
 
 
 
By:			________________________________________
 
 
 
Title:			_______________________________________
 
 
If Borrower is a Partnership,			Limited Liability Company, Limited Liability			Partnership or Limited Liability Limited Partnership:
 
WITNESS:
 
 
Name of Partnership, LLC, LLP			or LLLP
 
 
			______________________________________
By:			_________________________________________			General Partner or Manager
 
 
			______________________________________
By:			_________________________________________			General Partner or Manager
 
 
			______________________________________
By:			_________________________________________			General Partner or Manager
 
 
 
If Borrower is an Individual:
 
WITNESS:
 
 
 
			______________________________________
			____________________________________________
 
 
 
Additional Co-makers:
 
WITNESS:
 
 
 
			______________________________________
			____________________________________________
 
 
			______________________________________
			____________________________________________
 
 
			______________________________________
			____________________________________________
 
 
			______________________________________
			____________________________________________
 
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