Document:

Industrial Services of America, Inc. - Exhibit 10.2 to Form 8-K

Exhibit 10.2

 

		
			Borrower:
	
			INDUSTRIAL
			SERVICES OF AMERICA, INC

	
			Account Number:
	
			9580514992
	
			BB&T
	
			Note Number:
	
			00013

	
			Address:
	
			7100 GRADE LN BLDG
			1
	
			LOUISVILLE ,
	
			Kentucky

	 	
			LOUISVILLE. KY
			40213-3424
	
			Date:
	
			May 7, 2008

 

 

PROMISSORY NOTE

 

THE UNDERSIGNED REPRESENTS
THAT THE LOAN EVIDENCED HEREBY IS BEING OBTAINED FOR BUSINESS/COMMERClAL 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 (or such other place or places
that may be hereafter designated by Bank), the sum of SIX MILLION DOLLARS &
00/100 Dollars ($6,000,000.00), in immediately available coin or currency of
the United States of America.

 

[   ] Borrower shall pay a
prepayment penalty as set forth in the Prepayment Penalw 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

		
			[   ] Principal
			(plus any accrued interest not otherwise scheduled herein)
	
			)
	 
	
			[   ] Principal
			plus accrued interest 
	
			)
	
			Is due in full at
			maturity on _____________________

	
			[X] Payable in
			consecutive Monthly installments of 
	
			[   ] Principal
	
			)
	
			)

	 	
			[X] Principal and
			Interest 
	 	
			)   commencing on
			12/07/2008

and continued on the same day
of each calendar period thereafter, in 59 equal payments of $61,923.07, with one
final payment of all remaining principal and accrued interest due on 11/07/2013.

[   ] 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 June 7, 2008 and continuing on the same day of each
calendar period thereafter, with one final payment of all remaining Interest due
on November 7, 2008.

[   ] 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 Initial principal payment due
hereunder. Borrower understands the payment may increase if interest rates
increase.

[   ] 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(s) with Bank or other bank, any payment(s) 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 lime 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 times 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 5/7/2008
given by INDUSTRIAL SERVICES OF AMERICA, INC.

[   ] dated _________________
given by ____________________________________________

[   ] 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 Deposit) 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 
5/7/2008 executed by Borrower and [   ] Guarantor(s).

[X] Commitment Letter dated
03/24/2008, executed by Borrower.

 

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 Note, and said
charges shall be fully earned and non-refundable when accrued. All other charges
imposed by Bank upon Borrower in connection with this Note 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 Note 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 any 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 wit hthe 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 rprovided that such
rate shall apply after judgement.  In the event of any default, the then
remaining unpaid principal amount and accrued 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 rate 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. Wherever 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 or Commitment
Letter executed in connection herewith, the priority of controlling terms shall
be first this Note, then the Loan Agreement, and then the Commitment Letter.
This Note shall be governed by and construed in accordance with the laws of
Kentucky.

 

 

(SIGNATURES ON FOLLOWING PAGE)

 

 

 

PROMISSORY NOTE SIGNATURE PAGE

 

		
			Borrower:
	
			INDUSTRIAL
			SERVICES OF AMERICA, INC

	
			Account Number:
	
			9580514992
	 	
			Note Number:
	
			00013

	
			Note Amount:
	
			$6,000,000.00
	
			Date:
	
			May 7,2008

 

Notice of Right to
Company 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.

	 	 	 
	
			/s/ John L. Perry
	
			By:
	
			/s/ Harry Kletter

	 	 	
			Harry Kletter

	 	
			Title:
	
			Chief Executive Officer and President

	 	 	 
	 	
			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:
	 
	 	 	 
	 	
			Title:
	 
	 	 	 
	 	
			By:
	 
	 	 	 
	 	
			Title:
	 
	 	 	 
	 	
			By:
	 
	 	 	 
	 	
			Title:
	 
	 	 	 
	 	 	 
	
			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 May 7, 2008 from INDUSTRIAL SERVICES OF AMERICA, INC. ("Borrower")
payable to the order of Branch Banking and Trust Company ("Bank") in the
principal amount of $ 6,000,000.00 (including all renewals, extensions,
modifications and substitutions therefore, the "Note").

 

I.              DEFINITIONS

 

1.1           Adjusted
LlBOR 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 LlBOR plus (ii) 1.625% per annum, which shall be adjusted
monthly on the first day of each month for each LlBOR lnterest Period. If the
first day of any month falls on a date when the Bank is closed, the Adjusted
LlBOR Rate shall be determined as of the last preceding business day. The
Adjusted LlBOR 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
LlBOR means the average rate (rounded upwards, if necessary, to the next
higher 1/100th of 1.0%) quoted on Bloomberg Screen BBAM1 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 the One Month LIBOR shall not be available, the
rate quoted in The Wall Street Journal, or 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 sole
judgement), 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           LlBOR Advance
means the advances made by Bank to Borrower evidenced by this Note upon which
the Adjusted LlBOR Rate of interest shall apply.

 

1.4           LlBOR
lnterest Period means a period of one calendar month as may be elected by
the Borrower applicable to any LlBOR Advance which shall begin on first day of
any month notwithstanding the maturity date of this Note; provided, however,
that a LlBOR lnterest Period may be less than one calendar month in and only in
the calendar month in which the Note originates or matures.

 

1.5           LlBOR 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 1.125%
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.             LOAN
BEARING ADJUSTED LlBOR RATE

 

2.1           Application
Of Adjusted LIBOR Rate.  The Adjusted LlBOR Rate shall apply to the entire
principal balance outstanding of a LIBOR Advance for any LlBOR 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 One Month LlBOR 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
Borrower that the circumstances giving rise 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 LlBOR 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 LlBOR 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 LlBOR Advances
or to convert any portion of the loan to a LlBOR 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.

	 	 	 
	
			/s/ John L. Perry
	
			By:
	
			/s/ Harry Kletter

	 	 	
			Harry Kletter

	 	
			Title:
	
			Chief Executive Officer and President

	 	 	 
	 	
			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:
	 
	 	 	 
	 	
			Title:
	 
	 	 	 
	 	
			By:
	 
	 	 	 
	 	
			Title:
	 
	 	 	 
	 	
			By:
	 
	 	 	 
	 	
			Title:
	 
	 	 	 
	 	 	 
	
			IF
			Borrower is an Individual:

	 	 	 
	
			WITNESS:
	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	
			
			Additional Co-makers:

	
			WITNESS:Industrial Services of America, Inc. - Exhibit 31.1 to Form 8-K

Exhibit 10.3

 

BB&T

 

LOAN AGREEMENT

 

		
			958-0514992

	
			Account Number

 

 

This Loan Agreement (the
"Agreement") is made this 7th day of May, 2008 by and between BRANCH
BANKING AND TRUST COMPANY, a North Carolina banking corporation ("Bank"), and:

 

Industrial Services of
America, Inc., a Florida corporation ("Borrower"), having its chief executive
office at Louisville, Kentucky.

 

The Borrower has applied to
Bank for and the Bank has agreed to make, subject to the terms of this
Agreement, the following loan(s) (hereinafter referred to, singularly or
collectively, if more than one, as "Loan"):

 

Term Loan: Loan in the
principal amount of $3,000,000 to refinance Borrower's rental fleet equipment
and purchase additional rental fleet equipment. The Loan shall be evidenced by
the Borrower's Promissory Note dated on or after the date hereof which shall
mature May 7, 2013, when the entire unpaid principal balance then outstanding
plus accrued interest thereon shall be paid in full. The Loan shall bear
interest at the rate set forth in any such Note evidencing all or any portion of
the Loan, the terms of which are incorporated herein by reference.

 

Other Credit Relationship
("Other Credit Relationship"): in the principal amount of $6,000,000 pursuant
to the terms and conditions of a loan agreement between Bank and Borrower dated
of even date herewith.

 

The promissory notes
evidencing the Loan and/or the Other Credit Relationship are referred to herein
as the "Note(s)" and shall include all extensions, renewals, modifications and
substitutions thereof. The Loan and/or the Other Credit Relationship shall be
secured by the some or all of the collateral described in the security documents
described below.

 

Section 1 Conditions
Precedent

 

The Bank shall not be
obligated to make any disbursement of Loan proceeds until all of the following
conditions have been satisfied by proper evidence, execution, and/or delivery to
the Bank of the following items in addition to this Agreement, all in form and
substance satisfactory to the Bank and the Bank's counsel in their sole
discretion:

USA Patriot Act
Verification Information: Information or documentation, including but not
limited to the legal name, address, tax identification number, driver's license,
and date of birth (if the Borrower is an individual) of the Borrower sufficient
for the Bank to verify the identity of the Borrower in accordance with the USA
Patriot Act.

Note(s): The Note(s)
evidencing the Loans(s) duly executed by the Borrower.

Security Agreement(s): Security Agreement(s) in which Borrower and any
other owner (a "Debtor") of personal property collateral shall grant to Bank a
first priority security interest in the personal property specified therein. (If
Bank has or will have a security interest in any collateral which is inferior to
the security interest of another creditor, Borrower must fully disclose to Bank
any and all prior security interests, and Bank must specifically approve any
such security interest which will continue during the Loan.)

UCC Financing Statements: Acknowledged copies of UCC Financing Statements
duly filed in Borrower's or other owner's state of incorporation, organization
or residence, and in all jurisdictions necessary, or in the opinion of the Bank
desirable, to perfect the security interests granted in the Security Agreement(s),
and certified copies of Information Requests identifying all previous financing
statements on record for the Borrower or other owner, as appropriate from all
jurisdictions indicating that no security interest has previously been granted
in any of the collateral described in the Security Agreement(s), unless prior
approval has been given by the Bank.

Authorization and Certificate: An Authorization and Certificate executed
by each Debtor under which such Debtor authorizes Bank to file a UCC Financing
Statement describing collateral owned by such Debtor.

Corporate Resolution: A Corporate Resolution duly adopted by the Board of
Directors of the Borrower authorizing the execution, delivery, and performance
of the Loan Documents on or in a form provided by or acceptable to Bank.

Articles of Incorporation: A copy of the Articles of Incorporation and
all other charter documents of the Borrower, all filed with and certified by the
Secretary of State of the State of the Borrower's incorporation.

By-Laws: A copy of the By-Laws of the Borrower, certified by the
Secretary of the Borrower as to their completeness and accuracy. 

Certificate of Incumbency: A certificate of the Secretary of the Borrower
certifying the names and true signatures of the officers of the Borrower
authorized to sign the Loan Documents.

Certificate of Existence: A certification of the Secretary of State (or
other government authority) of the State of the Borrower's Incorporation or
Organization as to the existence or good standing of the Borrower and its
charter documents on file.

Opinion of Counsel: An opinion of counsel for the Borrower satisfactory
to the Bank and the Bank's counsel.

 

Additional Documents: 
Receipt by the Bank of other approvals, opinions, or documents as the Bank may
reasonably request.

 

Section 2 Representations
and Warranties

 

The Borrower and Guarantor(s)
represent and warrant to Bank that:

2.01. 
Financial Statements. The balance sheet of the Borrower and its
subsidiaries, if any, and the related Statements of Income and Retained Earnings
of the Borrower and its subsidiaries, the accompanying footnotes together with
the accountant's opinion thereon, and all other financial information previously
furnished to the Bank, are true and correct and fairly reflect the financial
condition of the Borrower and its subsidiaries as of the dates thereof,
including all contingent liabilities of every type, and the financial condition
of the Borrower and its subsidiaries as stated therein has not changed
materially and adversely since the date thereof. Each Guarantor further
represents and warrants that all financial statements provided by such Guarantor
to Bank concerning such Guarantor's financial condition are true and correct and
fairly represent such Guarantor's financial condition as of the dates thereof.

2.02. 
Name, Capacity and Standing. The Borrower's exact legal name is correctly
stated in the initial paragraph of the Agreement. If the Borrower and/or any
Guarantor is a corporation, general partnership, limited partnership, limited
liability partnership, or limited liability company, each warrants and
represents that it is duly organized and validly existing under the laws of its
respective state of incorporation or organization; that it and/or its
subsidiaries, if any, are duly qualified and in good standing in every other
state in which the nature of their business shall require such qualification,
and are each duly authorized by their board of directors, general partners or
member/manager(s), respectively, to enter into and perform the obligations under
the Loan Documents.

2.03. No
Violation of Other Agreements. The execution of the Loan Documents, and the
performance by the Borrower, by any and all pledgors (whether the Borrower or
other owners of collateral property securing payment of the Loan (hereinafter
sometimes referred to as the "Pledgor")) or by the Guarantor(s) thereunder will
not violate any provision, as applicable, of its articles of incorporation,
by-laws, articles of organization, operating agreement, agreement of
partnership, limited partnership or limited liability partnership, or, of any
law, other agreement, indenture, note, or other instrument binding upon the
Borrower, Pledgor or Guarantor(s), or give cause for the acceleration of any of
the respective obligations of the Borrower or Guarantor(s).

2.04. 
Authority. All authority from and approval by any federal, state, or local
governmental body, commission or agency necessary to the making, validity, or
enforceability of this Agreement and the other Loan Documents has been obtained.

2.05. 
Asset Ownership. The Borrower and each Guarantor have good and marketable
title to all of the properties and assets reflected on the balance sheets and
financial statements furnished to the Bank, and all such properties and assets
are free and clear of mortgages, deeds of trust, pledges, liens, and all other
encumbrances except as otherwise disclosed by such financial statements. In
addition, each other Owner of collateral has good and marketable title to such
collateral, free and clear of any liens, security interests and encumbrances,
except as otherwise disclosed to Bank.

2.06. 
Discharge of Liens and Taxes. The Borrower and its subsidiaries, if any, and
each Guarantor have filed, paid, and/or discharged all taxes or other claims
which may become a lien on any of their respective properties or assets,
excepting to the extent that such items are being appropriately contested in
good faith and for which an adequate reserve (in an amount acceptable to Bank)
for the payment thereof is being maintained.

2.07. 
Regulation U. None of the Loan proceeds shall be used directly or indirectly
for the purpose of purchasing or carrying any margin stock in violation of the
provisions of Regulation U of the Board of Governors of the Federal Reserve
System.

2.08. 
ERISA. Each employee benefit plan, as defined by the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained by the Borrower or
by any subsidiary of the Borrower or Guarantor(s) meets, as of the date hereof,
the minimum funding standards of Section 302 of ERISA, all applicable
requirements of ERISA and of the Internal Revenue Code of 1986, as amended, and
no "Reportable Event" nor "Prohibited Transaction" (as defined by ERISA) has
occurred with respect to any such plan.

2.09. 
Litigation. There is no claim, action, suit or proceeding pending,
threatened or reasonably anticipated before any court, commission,
administrative agency, whether State or Federal, or arbitration which will
materially adversely affect the financial condition, operations, properties, or
business of the Borrower or its subsidiaries, if any, or the Guarantor(s), or
the ability of the Borrower or the Guarantor(s) to perform their obligations
under the Loan Documents.

2.10. 
Other Agreements. The representations and warranties made by Borrower to
Bank in the other Loan Documents are true and correct in all respects on the
date hereof.

2.11.  Binding
and Enforceable. The Loan Documents, when executed, shall constitute valid
and binding obligations of the Borrower and Guarantors respectively, the
execution of such Loan Documents has been duly authorized by the parties
thereto, and are enforceable in accordance with their terms, except as may be
limited by bankruptcy, insolvency, moratorium, or similar laws affecting
creditors' rights generally.

2.12. 
Commercial Purpose. The Loan(s) are not "consumer transactions", as defined
in the Kentucky Uniform Commercial Code, and none of the collateral was or will
be purchased or held primarily for personal, family or household purposes.

 

Section 3 Affirmative
Covenants

 

The Borrower covenants and
agrees that from the date hereof and until payment in full of all indebtedness
and performance of all obligations owed under the Loan Documents, Borrower
shall:

3.01. 
Maintain Existence and Current Legal Form of Business. (a) Maintain its
existence and good standing in the state of its incorporation or organization,
(b) maintain its current legal form of business indicated above, (c) as
applicable, qualify and remain qualified as a foreign corporation, general
partnership, limited partnership, limited liability partnership or limited
liability company in each jurisdiction in which such qualification is required;
(d) maintain its current management and ownership; and (e) in the event of its
merger with any other entity, be the surviving entity.

3.02. 
Maintain Records. Keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied,
reflecting all financial transactions of the Borrower.

3.03. 
Maintain Properties. Maintain, keep, and preserve all of its properties
(tangible and intangible) including the collateral necessary or useful in the
conduct of its business in good working order and condition, ordinary wear and
tear excepted.

3.04. 
Conduct of Business. Continue to engage in an efficient, prudent, and
economical manner in a business of the same general type as now conducted.

3.05. 
Maintain Insurance. Maintain insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business, and
business interruption insurance if required by Bank, which insurance may provide
for reasonable deductible(s). The Bank shall be named as loss payee (Long Form)
on all policies which apply to the Bank's collateral, and the Borrower shall
deliver certificates of insurance at closing evidencing same. All such insurance
policies shall provide, and the certificates shall state, that no policy will be
terminated without 20 days prior written notice to Bank.

3.06. 
Comply With Laws. Comply in all respects with all applicable laws, rules,
regulations, and orders including, without limitation, paying before the
delinquency of all taxes, assessments, and governmental charges imposed upon it
or upon its property, and all Environmental Laws.

3.07. 
Right of Inspection. Permit the officers and authorized agents of the Rank,
at any reasonable time or times in the Bank's sole discretion, to examine and
make copies of the records and books of account of, to visit the properties of
the Borrower, and to discuss such matters with any officers, directors,
managers, members or partners, limited or general of the Borrower, and the
Borrower's independent accountant as the Bank deems necessary and proper.

3.08. 
Reporting Requirements. Furnish to the Bank:

Quarterly Financial Statements: As soon as available and not more than
twenty (20) days after the end of each quarter, balance sheets, statements of
income, cash flow, and retained earnings for the period ended and a statement of
changes in the financial position, all in reasonable detail, and all prepared in
accordance with GAAP consistently applied and certified as true and correct by
an officer, general partner or manager (or member(s)) of the Borrower, as
appropriate.

Annual
Financial Statements: As soon as available and not more than one hundred
twenty (120) days after the end of each fiscal year, balance sheets, statements
of income, and retained earnings for the period ended and a statement of changes
in the financial position, all in reasonable detail, and all prepared in
accordance with GAAP consistently applied. The financial statements must be of
the following quality or better: Audited.

Notice
of Litigation: Promptly after the receipt by the Borrower, or by any
Guarantor of which Borrower has knowledge, of notice or complaint of any action,
suit, and proceeding before any court or administrative agency of any type
which, if determined adversely, could have a material adverse effect on the
financial condition, properties, or operations of the Borrower or Guarantor, as
appropriate.

Tax
Returns: As soon as available each year, complete copies (including all
schedules) of all state and federal tax returns filed by Borrower.

Notice
of Default: Promptly upon discovery or knowledge thereof, notice of the
existence of any event of default under this Agreement or any other Loan
Documents.

USA
Patriot Act Verification Information: Information or documentation,
including but not limited to the legal name, address, tax identification number,
driver's license, and date of birth (if the Borrower is an individual) of the
Borrower sufficient for the Bank to verify the identity of the Borrower in
accordance with the USA Patriot Act. Borrower shall notify Bank promptly of any
change in such information.

Other
Information: Such other information as the Bank may from time to time
reasonably request including, but not limited to, the following information: (a)
annual corporate income tax returns (including all schedules) for K&R, LLC and
K&R Resources, LLC; and

(b) copies
of all financial reports and other information to which Borrower may be entitled
to receive under the Factoring Agreement. Borrower shall be responsible for
obtaining the necessary consents from Venture Metals, LLC and North American
Stainless LP authorizing Borrower to disclose such financial reports and other
information to Bank.

3.09. 
Deposit Accounts. Maintain substantially all of its demand deposit/operating
accounts with the Bank.

3.10. 
Affirmative Covenants from other Loan Documents. All affirmative covenants
contained in any Deed of Trust, Security Agreement, Assignment of Leases and
Rents, or other security document executed by the Borrower which are described
in paragraph 2 hereof are hereby incorporated by reference herein.

3.11 
Indemnification. Borrower agrees to indemnify and hold harmless Bank from
and against any and all claims, costs, damages, liabilities and expenses which
may be incurred by or asserted against Bank in connection with any proceeding
arising out of or related to this Loan or the Other Credit Relationship.

3.12 
Filings. Borrower represents and warrants that its standard practice, with
regard to equipment owned by Borrower and leased to its customers, is to provide
public notice of the ownership of the equipment and existence of said leases by
filing UCC Financing Statements for items of equipment so leased. Borrower
agrees to follow said practice for the term of this Agreement as to all its
equipment so leased, regardless of whether said equipment is collateral for the
Loan or any other indebtedness owing Bank by Borrower.

 

Section 4 Guarantor(s)
Covenants

N/A

 

Section 5 Financial
Covenants

 

The Borrower covenants and
agrees that from the date hereof until payment in full of all indebtedness and
the performance of all obligations under the Loan Documents, the Borrower shall
at all times maintain the following financial covenants and ratios all in
accordance with GAAP unless otherwise specified:

Minimum
Tangible Net Worth. A minimum tangible net worth of not less than
$6,000,000.00 as of December 31, 2005, and increasing annually by 50% of all net
income, plus 100% of all new equity, minus $0 for net losses. Tangible Net Worth
is defined as net worth, plus obligations contractually subordinated to debts
owed to Bank, minus goodwill, contract rights, and assets representing claims on
stockholders or affiliated entities.

EBITDA
Ratio. Ratio of EBITDA to the preceding twelve months interest expense plus
the projected maturities of long-term debt for the next succeeding twelve months
on a rolling basis, of not less than 1.25:1.00, to be measured annually.

Debt/Tangible Net Worth. Maximum of 4.00:1.00, to be measured annually.

Limitation on Loans and Advances to Owners. Not to exceed $500,000 per
calendar year.

 

Section 6 Negative
Covenants

 

The Borrower covenants and
agrees that from the date hereof and until payment in full of all indebtedness
and performance of all obligations under the Loan Documents, the Borrower shall
not, without the prior written consent of the Bank:

6.01. 
Liens. Create, incur, assume, or suffer to exist any lien upon or with
respect to any of Borrower's properties, or the properties of any Pledgor
securing payment of the Loan, now owned or hereafter acquired, except:

(a)    Liens and security interests in favor of the Bank;

(b)    Liens for taxes not yet due and payable or otherwise being contested in
good faith and for which appropriate reserves are maintained;

(c)     Other liens imposed by law not yet due and payable, or otherwise being
contested in good faith and for which appropriate reserves are maintained;

(d)    Liens securing obligations to any creditor other than Bank not to exceed
$1,000,000 per year;

(e)     purchase money security interests on any property hereafter acquired,
provided that such lien shall attach only to the property acquired.

6.02. 
Debt. Create, incur, assume, or suffer to exist additional funded debt,
except:

(a)    Debt to the Bank;

(b)    Debt outstanding on the date hereof and shown on the most recent
financial statements submitted to the Bank;

(c)     Accounts payable to trade creditors incurred in the ordinary course of
business;

(d)    Debt secured by purchase money security interests secured only by the
asset purchased, not to exceed $1,000,000 per year.

6.03. 
Change of Legal Form of Business or Management; Purchase of Assets. Change
Borrower's name or the legal form of Borrower's business as shown above, whether
by merger, consolidation, conversion or otherwise, or change its current
management, and Borrower shall not purchase all or substantially all of the
assets or business of any Person.

6.04. 
Leases. Create, incur, assume, or suffer to exist any leases, except:

(a) Leases
outstanding on the date hereof and showing on the most recent financial
statement submitted to the Bank;

(b)
Operating Leases for machinery and equipment which do not in the aggregate
require payments in excess of $N/A in any fiscal year of the Borrower.

6.05. 
Dividends or Distributions; Acquisition of Capital Stock or Other Ownership
Interests. Declare or pay any dividends or distributions of any kind, or
purchase or redeem, retire, or otherwise acquire any of Borrower's capital stock
or other ownership interests, now or hereafter outstanding, in excess of $N/A in
any fiscal year of the Borrower.

6.06. 
Salaries. Salaries and any other cash compensation to
owners/officers/partners/managers shall be limited as follows: N/A.

6.07. 
Guaranties. Assume, guarantee, endorse, or otherwise be or become directly
or contingently liable for obligations of any Person, except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.

6.08. 
Loans. Loans to directors, officers, partners, members, shareholders,
subsidiaries and affiliates shall be limited as follows: Limited to $500,000 in
the aggregate per year. All such loans to directors, officers, partners,
members, shareholders, subsidiaries and affiliates shall be subordinated to the
Loan pursuant to Subordination Agreements in form and substance satisfactory to
Bank.

6.09. 
Disposition of Assets. Sell, lease, or otherwise dispose of any of its
assets or properties except in the ordinary and usual course of its business.

6.10. 
Transfer of Ownership. If Borrower is a corporation, (a) issue, transfer or
sell any new class of stock, or (b) issue, transfer or sell, in the aggregate,
from its treasury stock and/or currently authorized but unissued shares of any
class of stock, more than 10% of the total number of all such issued and
outstanding shares as of the date of this Agreement. If Borrower is a general
partnership, limited partnership, limited liability partnership or limited
liability company, issue, transfer or sell any interest in Borrower.

6.11. 
Negative Covenants from other Loan Documents. All negative covenants
contained in any Deed of Trust, Security Agreement, Assignment of Leases or
Rents, or other security document executed by the Borrower which are described
in paragraph 2 hereof are hereby incorporated by reference herein.

 

Section 7 Hazardous
Materials and Compliance with Environmental Laws

 

7.01. 
Investigation. Borrower hereby certifies that it has exercised due diligence
to ascertain whether its real property is or has been affected by the presence
of asbestos, oil, petroleum or other hydrocarbons, urea formaldehyde, PCBs,
hazardous or nuclear waste, toxic chemicals and substances, or other hazardous
materials (collectively, "Hazardous Materials"), as defined in applicable
Environmental Laws. Borrower represents and warrants that there are no such
Hazardous Materials contaminating its real property, nor have any such materials
been released on or stored on or improperly disposed of on its real property
during its ownership, occupancy or operation thereof. Borrower hereby agrees
that, except in strict compliance with applicable Environmental Laws, it shall
not knowingly permit any release, storage or contamination as long as any
indebtedness or obligations to Bank under the Loan Documents remains unpaid or
unfulfilled. In addition, Borrower does not have or use any underground storage
tanks on any of its real property which are not registered with the appropriate
Federal and/or State agencies and which are not properly equipped and maintained
in accordance with all Environmental Laws. If requested by Bank, Borrower shall
provide Bank with all necessary and reasonable assistance required for purposes
of determining the existence of Hazardous Materials on Borrower's real property.

7.02. 
Compliance. Borrower agrees to comply with all applicable Environmental
Laws, including, without limitation, all those relating to Hazardous Materials.
Borrower further agrees to provide Bank, and all appropriate Federal and State
authorities, with immediate notice in writing of any release of Hazardous
Materials on any of its real property and to pursue diligently to completion all
appropriate and/or required remedial action in the event of such release.

 

Section 8 Events of Default

 

The following shall be "Events
of Default" by Borrower or any Guarantor:

8.01. The
failure to make prompt payment of any installment of principal or interest on
any of the Note(s) when due or payable.

8.02.
Should any representation or warranty made in the Loan Documents prove to be
false or misleading in any material respect.

8.03 Should
any report, certificate, financial statement, or other document furnished prior
to the execution of or pursuant to the terms of this Agreement prove to be false
or misleading in any material respect.

8.04.
Should the Borrower or any Guarantor default on the performance of any other
obligation of indebtedness when due or in the performance of any obligation
incurred in connection with money borrowed.

8.05.
Should the Borrower, any Guarantor or any Pledgor breach any covenant,
condition, or agreement made under any of the Loan Documents.

8.06.
Should a custodian be appointed for or take possession of any or all Of the
assets of the Borrower or any Guarantor, or should the Borrower or any Guarantor
either voluntarily or involuntarily become subject to any insolvency proceeding,
including becoming a debtor under the United States Bankruptcy Code, any
proceeding to dissolve the Borrower or any Guarantor, any proceeding to have a
receiver appointed, or should the Borrower or any Guarantor make an assignment
for the benefit of creditors, or should there be an attachment, execution, or
other judicial seizure of all or any portion of the Borrower's or any
Guarantor's assets, including an action or proceeding to seize any funds on
deposit with the Bank, and such seizure is not discharged within 30 days.

8.07.
Should final judgment for the payment of money be rendered against the Borrower
or any Guarantor which is not covered by insurance and shall remain undischarged
for a period of 30 days unless such judgment or execution thereon be effectively
stayed.

8.08. Upon
the death of, or termination of existence of, or dissolution of, any Borrower,
Pledgor or Guarantor.

8.09.
Should the Bank in good faith deem itself, its liens and security interests, if
any, or any debt thereunder unsafe or insecure, or should the Bank believe in
good faith that the prospect of payment of any debt or other performance by the
Borrower or any Guarantor is impaired.

8.10.
Should any lien or security interest granted to Bank to secure payment of the
Note(s) terminate, fail for any reason to have the priority agreed to by Bank on
the date granted, or become unperfected or invalid for any reason.

 

Section 9 Remedies Upon
Default

 

Upon the occurrence of any of
the above listed Events of Default, the Bank may at any time thereafter, at its
option, take any or all of the following actions, at the same or at different
times:

9.01.
Declare the balance(s) of the Note(s) to be immediately due and payable, both as
to principal and interest, without presentment, demand, protest, or notice of
any kind, all of which are hereby expressly waived by Borrower and each
Guarantor, and such balance(s) shall accrue interest at the Default Rate as
provided herein until paid in full;

9.02.
Require the Borrower or Guarantor(s) to pledge additional collateral to the Bank
from the Borrower's or any Guarantor's assets and properties, the acceptability
and sufficiency of such collateral to be determined in the Bank's sole
discretion;

9.03. Take
immediate possession of and foreclose upon any or all collateral which may be
granted to the Bank as security for the indebtedness and obligations of Borrower
or any Guarantor under the Loan Documents;

9.04.
Exercise any and all other rights and remedies available to the Bank under the
terms of the Loan Documents and applicable law, including the Kentucky Uniform
Commercial Code;

9.05. Any
obligation of the Bank to advance funds to the Borrower or any other Person
under the terms of under the Note(s) and all other obligations, if any, of the
Bank under the Loan Documents shall immediately cease and terminate unless and
until Bank shall reinstate such obligation in writing.

 

Section 10 Miscellaneous
Provisions

 

10.01. 
Definitions.

     
"Default Rate" shall mean a rate of interest equal to Bank's Prime Rate plus
five percent (5%) per annum (not to exceed the legal maximum rate) from and
after the date of an Event of Default hereunder which shall apply, in the Bank's
sole discretion, to all sums owing, including principal and interest, on such
date.

     
"Environmental Laws" shall mean all federal and state laws and regulations which
affect or may affect the Borrower's real property, including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. Sections 9601 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Sections 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
Sections 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the
Toxic Substances Control Act (IS U.S.C. Section 2601 et seq.), all such
applicable environmental laws and regulations of the State of Kentucky, as such
laws and regulations may be amended from time to time.

      "Loan
Documents" shall mean this Agreement including any schedule attached hereto, the
Note(s), the Security Agreement(s), all UCC Financing Statements, and all other
documents, certificates, and instruments executed in connection therewith, and
all renewals, extensions, modifications, substitutions, and replacements thereto
and therefore.

     
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated organization, limited liability company, limited liability
partnership, association, joint venture, or a government agency or political
subdivision thereof.

      "GAAP"
shall mean generally accepted accounting principles as established by the
Financial Accounting Standards Board or the American Institute of certified
Public Accountants, as amended and supplemented from time to time.

     
"Prime Rate" shall mean the rate of interest per annum announced by the Bank
from time to time and adopted as its Prime Rate, which is one of several rate
indexes employed by the Bank when extending credit, and may not necessarily be
the Bank's lowest lending rate.

10.02. 
Non-impairment. If any one or more provisions contained in the Loan
Documents shall be held invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
therein shall not in any way be affected or impaired thereby and shall otherwise
remain in full force and effect.

10.03. 
Applicable Law. The Loan Documents shall be construed in accordance with and
governed by the laws of the Commonwealth of Kentucky.

10.04. 
Waiver. Neither the failure or any delay on the part of the Bank in
exercising any right, power or privilege granted in the Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise of any other right, power, or privilege
which may be provided by law.

10.05. 
Modification. No modification, amendment, or waiver of any provision of any
of the Loan Documents shall be effective unless in writing and signed by the
Borrower and Bank.

10.06. 
Payment Amount Adjustment. In the event that any Loan($ referenced herein
has a variable (floating) interest rate and the interest rate increases, Bank,
at its sole discretion, may at any time ad.just the Borrower's payment amount(s)
to prevent the amount of interest accrued in a given period to exceed the
periodic payment amount or to cause the Loan(s) to be repaid within the same
period of time as originally agreed upon.

10.07 
Stamps and Fees. The Borrower shall pay all federal or state stamps, taxes,
or other fees or charges, if any are payable or are determined to be payable by
reason of the execution, delivery, or issuance of the Loan Documents or any
security granted to the Bank; and the Borrower and Guarantor agree to indemnify
and hold harmless the Bank against any and all liability in respect thereof.

10.08. 
Attorneys' Fees. In the event the Borrower or any Pledgor or Guarantor shall
default in any of its obligations hereunder and the Bank believes it necessary
to employ an attorney to assist in the enforcement or collection of the
indebtedness of the Borrower to the Bank, to enforce the terms and provisions of
the Loan Documents, to modify the Loan Documents, or in the event the Bank
voluntarily Or otherwise should become a party to any suit or legal proceeding
(including a proceeding conducted under the Bankruptcy Code), the Borrower and
Guarantors agree to pay the reasonable attorneys' fees of the Bank and all
related costs of collection or enforcement that may be incurred by the Bank. The
Borrower and Guarantor shall be liable for such attorneys' fees and costs
whether or not any suit or proceeding is actually commenced.

10.09. 
Bank Making Required Payments. In the event Borrower shall fail to maintain
insurance, pay taxes or assessments, costs and expenses which Borrower is, under
any of the terms hereof or of any Loan Documents, required to pay, or fail to
keep any of the properties and assets constituting collateral free from new
security interests, liens, or encumbrances, except as permitted herein, Bank may
at its election make expenditures for any or all such purposes and the amounts
expended together with interest thereon at the Default Rate, shall become
immediately due and payable to Bank, and shall have benefit of and be secured by
the collateral; provided, however, the Bank shall be under do duty or obligation
to make any such payments or expenditures.

10.10. 
Right of Offset. Any indebtedness owing from Bank to Borrower may be set off
and applied by Bank on any indebtedness or liability of Borrower to Bank, at any
time and from time to time after maturity, whether by acceleration or otherwise,
and without demand or notice to Borrower. Bank may sell participations in or
make assignments of any Loan made under this Agreement, and Borrower agrees that
any such participant or assignee shall have the same right of setoff as is
granted to the Bank herein.

10.11. 
UCC Authorization. Borrower authorizes Bank to file such UCC Financing
Statements describing the collateral in any location deemed necessary and
appropriate by Bank.

10.12. 
Modification and Renewal Fees. Bank may, at its option, charge any fees for
modification, renewal, extension, or amendment of any terms of the Note(s) not
prohibited by Kentucky law, and as otherwise permitted by law if Borrower is
located in another state.

10.13. 
Conflicting Provisions. If provisions of this Agreement shall conflict with
any terms or provisions of any of the Note(s) or Security Agreement(s), the
provisions of such Note(s) or Security Agreement(s), as appropriate, shall take
priority over any provisions in this Agreement.

10.14. 
Notices. Any notice permitted or required by the provisions of this
Agreement shall be deemed to have been given when delivered in writing to the
City Executive or any Vice President of the Bank at its offices in Louisville,
Kentucky, and to the President of the Borrower at its offices in Louisville,
Kentucky, when sent by certified mail and return receipt requested.

10.15. 
Consent to Jurisdiction. Borrower hereby irrevocably agrees that any legal
action or proceeding arising out of or relating to this Agreement may be
instituted in any Kentucky state court or federal court sitting in the state of
Kentucky, or in such other appropriate court and venue as Bank may choose in its
sole discretion. Borrower consents to the jurisdiction of such courts and waives
any objection relating to the basis for personal or in rem jurisdiction or to
venue which Borrower may now or hereafter have in any such legal action or
proceedings.

10.16. 
WAIVER OF JURY TRIAL. 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 AGREEMENT OR ANY OF THE LOAN DOCUMENTS EXECUTED IN
CONNECTION HEREWITH OR OUT OF THE CONDUCT OF THE RELATIONSHIPS BETWEEN THE
UNDERSIGNED AND BANK. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK TO MAKE
THE LOAN AND ENTER INTO THIS AGREEMENT. FURTHER, THE UNDERSIGNED HEREBY CERTIFY
THAT NO REPRESENTATIVE OR AGENT OF BANK, NOR BANK'S COUNSEL, HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SANK WOULD NOT SEEK TO ENFORCE THIS WAIVER OR RIGHT
TO JURY TRIAL PROVISION. NO REPRESENTATIVE OR AGENT OF BANK, NOR BANK'S COUNSEL,
HAS THE AUTHORITY TO WAIVE, CONDITION OR MODIFY THIS PROVISION.

10.17. 
Counterparts. This Agreement may be executed by one or more parties on any
number of separate counterparts and all of such counterparts taken together
shall be deemed to constitute one and the same instrument.

10.18. 
Entire Agreement. The Loan Documents embody the entire agreement between
Borrower and Bank with respect to the Loans, and there are no oral or parol
agreements existing between Bank and Borrower with respect to the Loans which
are not expressly set forth in the Loan Documents.

 

 

[SIGNATURES ON FOLLOWING PAGE]

 

 

SIGNATURE PAGE

 

IN WITNESS WHEREOF, the Bank, Borrower and Guarantor(s)
have caused this Agreement to be duly executed under seal all as of the date
first above written.

 

Borrower is a
Corporation:

 

		
			WITNESS:
	 	
			Industrial Services of America, Inc.

	 	 	 
	
			/s/ Sharon Hardy
	
			By:
	
			/s/ Harry Kletter

	 	 	
			Harry Kletter

	 	
			Title:
	
			Chief Executive Officer and President

 

Additional
Co-Borrowers or Guarantors:

 

		
			WITNESS
	 	 	 
	 	 	 	
			(SEAL)

	 	 	 	
			(SEAL)

	 	 	 	
			(SEAL)

	 	 	 	
			(SEAL)

 

 

 

		
			WITNESS:
	 	
			BRANCH BANKING AND TRUST COMPANY

	 	 	 
	
			/s/ Sharon Hardy
	
			By:
	
			/s/ Johnny L. Perry

	 	 	
			Johnny L. Perry

	 	
			Title:
	
			Senior Vice President

	 	 	 
	
			WITNESS:
	 	
			BB&T BANKCARD CORPORATION

	 	 	 
	 	
			By:
	 
	 	 	 
	 	
			Title:

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