Document:

Exhibit 10.1

 

PROMISSORY NOTE

 

	
 
    	
Loan No.                                     
    
	
$1,000,000.00
    	
Date: January 15, 2015
    
	
Crestview   Hills, Kentucky
    	
Maturity Date: January 14, 2021
    

 

1.                                 AGREEMENT TO PAY. For value received, WESSCO, LLC, a Delaware limited liability company (“Borrower”) hereby promises to pay to the order of THE BANK OF KENTUCKY, INC., a Kentucky banking corporation, its successors and assigns (“Lender”), the lesser of (i) the principal sum of One Million and 00/100 Dollars ($1,000,000.00) (the “Maximum Commitment”), or (ii) the aggregate principal amount of all direct advances of the proceeds of this Note (each, an “Advance”) made by Lender to Borrower hereunder and outstanding as of such date, on or before January 14, 2021 (the “Maturity Date”), at the place and in the manner hereinafter provided, together with interest thereon at the rate or rates described below, and any and all other amounts which may be due and payable hereunder from time to time.

 

2.                                 LIMITED REVOLVING LINE OF CREDIT. Subject to the terms and conditions of this Note and the other “Loan Documents” (as hereinafter defined), Lender agrees to make such direct Advances to and for the benefit of Borrower, at such times as Borrower may from time to time request during the twelve (12) month period following the effective date of this Note (the “Draw Period”) and in such amounts as Borrower may from time to time request, provided, however, that the total of the aggregate principal balance of all Advances (being collectively referred to herein as the “Loan”) outstanding at any time shall not exceed the Maximum Commitment. This Note evidences a revolving line of credit during the Draw Period and a non-revolving line of credit from the end of the Draw Period until the Maturity Date under which Borrower is indebted to Lender and evidences the aggregate unpaid principal amount of all Advances made or to be made by Lender to Borrower under this Note. Advances made by Lender to Borrower hereunder which have been repaid may be borrowed again during, but not after, the Draw Period. All Advances and repayments hereunder shall be evidenced by entries on the books and records of Lender which shall be presumptive evidence absent manifest error of the principal amount and interest owing and unpaid on this Note, or any renewal or extension hereof. The failure to so record any such amount or any error so recording any such amount shall not, however, limit or otherwise affect the obligations of Borrower hereunder or under any note to repay the principal amount of such liabilities, together with all interest accruing thereon.

 

The proceeds of this Note shall be made in the form of direct Advances. Each Advance shall be made available to Borrower by Lender upon any written, electronic, telecopy or verbal loan request (provided that any verbal loan request is promptly confirmed in writing), which Lender in good faith believes to emanate from a properly authorized representative of Borrower, whether or not that is in fact the case. All Advances made hereunder shall be conclusively presumed to have been made by Lender to or for the benefit of Borrower. The proceeds of each Advance shall be made available at the office of Lender by credit to the account of Borrower or by other means requested by Borrower and reasonably acceptable to Lender. Borrower does hereby irrevocably confirm, ratify and approve all such Advances by Lender and does hereby indemnify Lender against all reasonable losses and expenses (including court costs, reasonable

 

 

attorneys’ and paralegals’ fees) in connection with all such loan requests and Advances, and shall hold Lender harmless with respect thereto.

 

3.                                      INTEREST RATE.

 

3.1                               Interest Prior to Default. The principal sum outstanding hereunder shall bear interest at a floating rate per annum equal to three and fifty one hundredths percent (3.50%) in excess of the “One Month LIBOR Rate”, being the rate of interest relating to quotations for the one month London InterBank Offered Rates on U.S. Dollar deposits as published on Bloomberg LP, or, if no longer provided by Bloomberg LP, such rate as shall be determined in good faith by Lender from such sources as it shall determine to be comparable to Bloomberg LP (or any successor) on each relevant date of determination (the “Interest Rate”). The Interest Rate shall be adjusted automatically on the first (1st) day of each month during the term of this Note. Lender shall not be required to notify Borrower of any adjustment in the Interest Rate. Borrower may, however, request a quote of prevailing One Month LIBOR Rate on any Banking Day. The term “Banking Day” means any day other than a Saturday, Sunday, public holiday or other day on which banking institutions are generally closed and do not conduct banking business.

 

3.2                               Interest After Default. From and after the Maturity Date or upon the occurrence and during the continuance of an Event of Default (as hereinafter defined), interest shall accrue on the unpaid principal balance during any such period at an annual rate (the “Default Rate”) equal to five percent (5.00%) plus the Interest Rate; provided, however, in no event shall the Default Rate exceed the maximum rate permitted by law. The interest accruing under this section shall be immediately due and payable by the Borrower to the holder of this Note upon demand and shall be additional indebtedness evidenced by this Note.

 

3.3                               Interest Calculation. Interest on this Note shall be calculated on the basis of a 360 day year and the actual number of days elapsed in any portion of a month in which interest is due. If any payment to be made by the Borrower hereunder shall become due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing any interest in respect of such payment.

 

4.                                      PAYMENT TERMS.

 

4.1                               Principal and Interest. After the end of the Draw Period, no additional disbursements shall be made by Lender under this Note. The principal balance of this Note as of the end of the Draw Period shall be fully amortized as set forth below in Subsection 4.1. Payments of principal and interest due under this Note, if not sooner declared to be due in accordance with the provisions hereof, shall be made as follows:

 

(a)                                 Commencing on February 1, 2015, and continuing on the first day of each month thereafter through and including the first day of the last full month of the Draw Period, interest-only payments in the amount of all accrued and unpaid interest on the principal balance of this Note outstanding from time to time shall be due and payable.

 

(b)                                 Commencing on the first day of the month immediately following the end of the Draw Period and continuing on the first day of each month thereafter through and

 

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including the month in which the Maturity Date occurs, Borrower shall make principal and interest payments in amounts calculated to fully amortize the Loan in sixty (60) payments.

 

(c)                                  The unpaid principal balance of this Note, if not sooner paid or declared to be due in accordance with the terms hereof, together with all accrued and unpaid interest thereon and any other amounts due and payable hereunder or under any of the other “Loan Documents” (as hereinafter defined), shall be due and payable in full on the Maturity Date.

 

(d)                                 Provided no Event of Default exists, any portion of the principal balance of this Note which is repaid may be borrowed again by Borrower during the Draw Period provided that in no event shall the outstanding principal balance of this Note at any time exceed the Maximum Commitment.

 

4.2                               Application of Payments. Prior to the occurrence of an Event of Default, all payments and prepayments on account of the indebtedness evidenced by this Note shall be applied as follows: (a) first, to fees, expenses, costs and other similar amounts then due and payable to Lender, including, without limitation any prepayment premium, exit fee or late charges due hereunder, (b) second, to accrued and unpaid interest on the principal balance of this Note, (c) third, to the payment of principal due in the month in which the payment or prepayment is made, (d) fourth, to any escrows, impounds or other amounts which may then be due and payable under the Loan Documents, (e) fifth, to any other amounts then due Lender hereunder or under any of the Loan Documents, and (f) last, to the unpaid principal balance of this Note in the inverse order of maturity. Any prepayment on account of the indebtedness evidenced by this Note shall not extend or postpone the due date or reduce the amount of any subsequent monthly payment of principal and interest due hereunder. After an Event of Default has occurred and is continuing, payments may be applied by Lender to amounts owed hereunder and under the Loan Documents in such order as Lender shall determine, in its sole discretion.

 

4.3                               Method of Payments. All payments of principal and interest hereunder shall be paid by automatic debit, wire transfer, check or in coin or currency which, at the time or times of payment, is the legal tender for public and private debts in the United States of America and shall be made at such place as Lender or the legal holder or holders of this Note may from time to time appoint in the payment invoice or otherwise in writing, and in the absence of such appointment, then at the offices of Lender at 111 Lookout Farm Drive, Crestview Hills, Kentucky 41017. Payment made by check shall be deemed paid on the date Lender receives such check; provided, however, that if such check is subsequently returned to Lender unpaid due to insufficient funds or otherwise, the payment shall not be deemed to have been made and shall continue to bear interest until collected. Notwithstanding the foregoing, the final payment due under this Note must be made by wire transfer or other immediately available funds. Interest, principal payments and any fees and expenses owed Lender from time to time will be deducted by Lender automatically on the due date from Borrower’s account with Lender, as designated in writing by Borrower. Borrower will maintain sufficient funds in the account on the dates Lender enters debits authorized by this Note. If there are insufficient funds in the account on the date Lender enters any debit authorized by this Note, the debit will be reversed. Borrower may terminate this direct debt arrangement at any time by sending written notice to Lender at the address specified above.

 

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4.4                               Late Charge. If any payment of interest or principal due hereunder is not made within five days after such payment is due in accordance with the terms hereof, then, in addition to the payment of the amount so due, Borrower shall pay to Lender a “late charge” of five cents for each whole dollar so overdue to defray part of the cost of collection and handling such late payment. Borrower agrees that the damages to be sustained by the holder hereof for the detriment caused by any late payment are extremely difficult and impractical to ascertain, and that the amount of five cents for each one dollar due is a reasonable estimate of such damages, does not constitute interest, and is not a penalty.

 

4.5                               Principal Prepayments. Principal of this Note may be repaid in whole or in part without penalty or premium at any time prior to the Maturity Date; provided, however, that the Lender shall have no obligation to advance, and Borrower shall have no right to re-borrow, any amounts so repaid except pursuant to the express terms of this Note and the other Loan Documents. All payments of principal and interest and any other sums due under this Note shall be made to the Bank at 111 Lookout Farm Drive, Crestview Hills, Kentucky 41017, or to such other person or at such other address as may be designated in writing by the holder of this Note.

 

4.6                               Loan Fees. In consideration of Lender’s agreement to make the Loan, Borrower shall pay to Lender a non-refundable fee in the amount of Five Thousand and 00/100 Dollars ($5,000.00), which shall be due and payable in full as a condition precedent to the first disbursement of proceeds under this Note.

 

5.                            SECURITY This Note is secured by that certain: (a) Guaranty of Payment dated as of even date herewith, executed by Industrial Services of America, Inc., a Florida corporation (the “Guarantor”) to and for the benefit of the Lender (the “Guaranty”); (b) Security Agreement dated as of even date herewith, executed by the Borrower to and for the benefit of the Lender (the “Security Agreement”); and (c) Uniform Commercial Code Financing Statements authorized by Borrower to and for the benefit of Lender (“UCC’s”); the Guaranty, the Security Agreement, the UCC’s, the Subordination Agreement (defined below), and any and all other document now or hereafter given to evidence or secure payment of this Note or delivered to induce the Lender to disburse the proceeds of the Loan, as such documents may hereafter be amended, restated or replaced from time to time, are hereinafter collectively referred to as the “Loan Documents”. Reference is hereby made to the Loan Documents (which are incorporated herein by reference as fully and with the same effect as if set forth herein at length) for a statement of the covenants and agreements contained therein, a statement of the rights, remedies, and security afforded thereby, and all matters therein contained.

 

6.                            EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an “Event of Default” under this Note:

 

(a)                                 the failure by the Borrower to pay any installment of principal or interest payable pursuant to this Note or any other amount payable to the Lender under this Note, the Security Agreement or any of the other Loan Documents within five (5) days after the date when any such payment is due in accordance with the terms hereof or thereof;

 

(b)                                 the occurrence of a default resulting from the actions or omissions of Borrower under the terms of that certain Credit Agreement, dated as of June 13, 2014 (as

 

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amended, the “ISA Credit Agreement”), among Borrower, Guarantor (and affiliates of Guarantor), and Wells Fargo Bank, National Association (“Wells Fargo”) and which is not waived in writing by Wells Fargo in its sole discretion;

 

(c)                                  the occurrence of any default under the ISA Credit Agreement, other than as described above in Subsections 6(b), that continues (and is not waived in writing by Wells Fargo in its sole discretion) for a period of at least sixty (60) days; provided, however, that if, within said sixty (60) day period, Wells Fargo enters into an agreement with Borrower and Guarantor (and any applicable affiliates of Guarantor) pursuant to which Wells Fargo agrees to forebear from exercising default remedies under the ISA Credit Agreement as a result of such default, no Event of Default for purposes of this Note shall be deemed to exist as long as said forbearance remains in effect;

 

(d)                                 the occurrence of any default under that certain Amended and Restated Subordination Agreement of even date herewith among Borrower, Wells Fargo and Lender;

 

(e)                                  the occurrence of any other “Event of Default” under the Security Agreement or any of the other Loan Documents; or

 

(f)                                   the occurrence of any default or “Event of Default” under, or as defined in, the documents evidencing or securing those certain loans from Lender to Borrower, dated as of October 15, 2013, in the face or original principal amounts of $1,000,000.00 and $3,000,000.00.

 

7.                            REMEDIES. At the election of the holder hereof, and without notice, the principal balance remaining unpaid under this Note, and all unpaid interest accrued thereon and any other amounts due hereunder, shall be and become immediately due and payable in full upon the occurrence of any Event of Default. Failure to exercise this option shall not constitute a waiver of the right to exercise same in the event of any subsequent Event of Default. No holder hereof shall, by any act of omission or commission, be deemed to waive any of its rights, remedies or powers hereunder or otherwise unless such waiver is in writing and signed by the holder hereof, and then only to the extent specifically set forth therein. The rights, remedies and powers of the holder hereof, as provided in this Note, the Security Agreement and in all of the other Loan Documents are cumulative and concurrent, and may be pursued singly, successively or together against the Borrower, any Guarantor hereof, the Collateral and any other security given at any time to secure the repayment hereof, all at the sole discretion of the holder hereof. If any suit or action is instituted or attorneys are employed to collect this Note or any part hereof, the Borrower promises and agrees to pay all costs of collection, including reasonable attorneys’ fees and court costs.

 

8.                            COVENANTS AND WAIVERS. The Borrower and all others who now or may at any time become liable for all or any part of the obligations evidenced hereby, expressly agree hereby to be jointly and severally bound, and jointly and severally: (i) waive and renounce any and all homestead, redemption and exemption rights and the benefit of all valuation and appraisement privileges against the indebtedness evidenced by this Note or by any extension or renewal hereof; (ii) waive presentment and demand for payment, notices of nonpayment and of dishonor, protest of dishonor, and notice of protest; (iii) except as expressly provided in the Loan

 

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Documents, waive any and all notices in connection with the delivery and acceptance hereof and all other notices in connection with the performance, default, or enforcement of the payment hereof or hereunder; (iv) waive any and all lack of diligence and delays in the enforcement of the payment hereof; (v) agree that the liability of the Borrower and each guarantor, endorser or obligor shall be unconditional and without regard to the liability of any other person or entity for the payment hereof, and shall not in any manner be affected by any indulgence or forbearance granted or consented to by the Lender to any of them with respect hereto; (vi) consent to any and all extensions of time, renewals, waivers, or modifications that may be granted by the Lender with respect to the payment or other provisions hereof, and to the release of any security at any time given for the payment hereof, or any part thereof, with or without substitution, and to the release of any person or entity liable for the payment hereof; and (vii) consent to the addition of any and all other makers, endorsers, guarantors, and other obligors for the payment hereof, and to the acceptance of any and all other security for the payment hereof, and agree that the addition of any such makers, endorsers, guarantors or other obligors, or security shall not affect the liability of the Borrower, any guarantor and all others now liable for all or any part of the obligations evidenced hereby. This provision is a material inducement for the Lender making the Loan to the Borrower.

 

9.                                      GENERAL AGREEMENTS.

 

9.1.                  Business Purpose Loan. The Borrower agrees that the Loan evidenced by this Note is an exempted transaction under the Truth In Lending Act, 15 U.S.C., §1601, et seq.

 

9.2.                  Time. Time is of the essence hereof.

 

9.3.                  Governing Law.  This Note is governed and controlled as to validity, enforcement, interpretation, construction, effect and in all other respects by the statutes, laws and decisions of the State of Kentucky, without regard to its conflict of laws provisions.

 

9.4.                  Amendments. This Note may not be changed or amended orally but only by an instrument in writing signed by the party against whom enforcement of the change or amendment is sought.

 

9.5.                  No Joint Venture. The Lender shall not be construed for any purpose to be a partner, joint venturer, agent or associate of the Borrower or of any lessee, operator, concessionaire or licensee of the Borrower in the conduct of its business, and by the execution of this Note, the Borrower agrees to indemnify, defend, and hold the Lender harmless from and against any and all damages, costs, expenses and liability that may be incurred by the Lender as a result of a claim that the Lender is such partner, joint venturer, agent or associate.

 

9.6.                  Disbursement. This Note has been made and delivered at Crestview Hills, Kentucky and all funds disbursed to or for the benefit of the Borrower will be disbursed in Crestview Hills, Kentucky.

 

9.7.                  Joint and Several Obligations. If this Note is executed by more than one party, the obligations and liabilities of each Borrower under this Note shall be joint and several and shall be binding upon and enforceable against each Borrower and their respective successors and

 

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assigns. This Note shall inure to the benefit of and may be enforced by the Lender and its successors and assigns.

 

9.8.                            Severable Loan Provisions. If any provision of this Note is deemed to be invalid by reason of the operation of law, or by reason of the interpretation placed thereon by any administrative agency or any court, the Borrower and the Lender shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent pen witted by law, the purpose of this and the validity and enforceability of the remaining provisions, or portions or applications thereof, shall not be affected thereby and shall remain in full force and effect.

 

9.9.                            Interest Limitation. If the interest provisions herein or in any of the Loan Documents shall result, at any time during the Loan, in an effective rate of interest which, for any month, exceeds the limit of usury or other laws applicable to the Loan, all sums in excess of those lawfully collectible as interest of the period in question shall, without further agreement or notice between or by any party hereto, be applied upon principal immediately upon receipt of such monies by the Lender, with the same force and effect as though the payer has specifically designated such extra sums to be so applied to principal and the Lender had agreed to accept such extra payment(s) as a premium-free prepayment. Notwithstanding the foregoing, however, the Lender may at any time and from time to time elect by notice in writing to the Borrower to reduce or limit the collection to such sums which, when added to the said first-stated interest, shall not result in any payments toward principal in accordance with the requirements of the preceding sentence. In no event shall any agreed to or actual exaction as consideration for this Loan transcend the limits imposed or provided by the law applicable to this transaction or the makers hereof in any state, county, or other political area having jurisdiction of the Loan Documents or the Loan for the use or detention of money or for forbearance in seeking its collection.

 

9.10.                     Assignability. The Lender may at any time assign its rights in this Note and the Loan Documents, or any part thereof and transfer its rights in any or all of the collateral, and the Lender thereafter shall be relieved from all liability with respect to such collateral. In addition, the Lender may at any time sell one or more participations in the Note. The Borrower may not assign its interest in this Note, or any other agreement with the Lender or any portion thereof, either voluntarily or by operation of law, without the prior written consent of the Lender

 

10.                     NOTICES. All notices required under this Note will be in writing and will be transmitted in the manner and to the addresses required by the Security Agreement or to such other addresses as the Lender and the Borrower may specify from time to time in writing.

 

11.                     CONSENT TO JURISDICTION. TO INDUCE THE LENDER TO ACCEPT THIS NOTE, THE BORROWER IRREVOCABLY AGREES THAT, SUBJECT TO THE LENDER’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE WILL BE LITIGATED IN COURTS HAVING SITUS IN KENTON COUNTY, KENTUCKY. THE BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY COURT LOCATED WITHIN KENTON COUNTY, KENTUCKY, WAIVES PERSONAL SERVICE

 

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OF PROCESS UPON THE BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO THE BORROWER AT THE ADDRESS STATED IN ANY OF THE LOAN DOCUMENTS AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.

 

12.                     WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER (BY ACCEPTANCE OF THIS NOTE), HAVING BEEN REPRESENTED BY COUNSEL, EACH KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (A) UNDER THIS NOTE OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS NOTE OR (B) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS NOTE, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST THE LENDER ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

 

13.                     WAIVER OF DEFENSES. OTHER THAN CLAIMS BASED UPON THE FAILURE OF THE LENDER TO ACT IN A COMMERCIALLY REASONABLE MANNER, THE BORROWER WAIVES EVERY PRESENT AND FUTURE DEFENSE (OTHER THAN THE DEFENSE OF PAYMENT IN FULL) OR SETOFF WHICH THE BORROWER MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY THE LENDER IN ENFORCING THIS NOTE OR ANY OF THE LOAN DOCUMENTS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO THE BORROWER

 

14.                     Customer Identification - USA Patriot Act Notice; OFAC and Bank Secrecy Act. Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”), and Lender’s policies and practices, Lender is required to obtain, verify and record certain information and documentation that identifies Borrower, which information includes the name and address of Borrower and such other information that will allow Lender to identify Borrower in accordance with the Act. In addition, Borrower shall (a) ensure that no person who owns a controlling interest in or otherwise controls Borrower or any subsidiary of Borrower is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders, (b) not use or permit the use of the proceeds of the Loan to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, and (c) comply, and cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act (“BSA”) laws and regulations, as amended.

 

15.                     EXPENSES AND INDEMNIFICATION. The Borrower shall pay all costs and expenses incurred by the Lender in connection with the preparation of this Note and the Loan Documents, including, without limitation, reasonable attorneys’ fees and time charges of attorneys who may be employees of the Lender or any affiliate or parent corporation of the Lender. The Borrower shall pay any and all stamp and other taxes, UCC search fees, filing fees and other costs and

 

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expenses in connection with the execution and delivery of this Note and the other instruments and documents to be delivered hereunder, and agrees to save the Lender harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such costs and expenses. The Borrower hereby authorizes the Bank to charge any account of the Borrower with the Bank for all sums due under this section. The Borrower also agrees to defend (with counsel satisfactory to the Lender), protect, indemnify and hold harmless the Lender, any parent corporation, affiliated corporation or subsidiary of the Lender, and each of their respective officers, directors, employees, attorneys and agents (each, an “Indemnified Party”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and distributions of any kind or nature (including, without limitation, the disbursements and the reasonable fees of counsel for each Indemnified Party thereto, which shall also include, without limitation, reasonable attorneys’ fees and time charges of attorneys who may be employees of the Lender or any parent or affiliated corporation of the Lender), which may be imposed on, incurred by, or asserted against, any Indemnified Party (whether direct, indirect or consequential and whether based on any federal, state or local laws or regulations, including, without limitation, securities, environmental laws and commercial laws and regulations, under common law or in equity, or based on contract or otherwise) in any manner relating to or arising out of this Note or any of the Loan Documents, or any act, event or transaction related or attendant thereto, the preparation, execution and delivery of this Note and the Loan Documents, the making or issuance and management of the Loan, the use or intended use of the proceeds of the Loan and the enforcement of the Lender’s rights and remedies under this Note, the Loan Documents, any other instruments and documents delivered hereunder or thereunder, or under any other agreement between the Borrower and the Lender; provided, however, that the Borrower shall not have any obligation hereunder to any Indemnified Party with respect to matters caused by or resulting from the willful misconduct or gross negligence of such Indemnified Party. To the extent that the undertaking to indemnify set forth in the preceding sentence may be unenforceable because it violates any law or public policy, the Borrower shall satisfy such undertaking to the maximum extent permitted by applicable law. Any liability, obligation, loss, damage, penalty, cost or expense covered by this indemnity shall be paid to such Indemnified Party on demand, and failing prompt payment, together with interest thereon at the Default Rate from the date incurred by such Indemnified Party until paid by the Borrower, shall be added to the obligations of the Borrower evidenced by this Note and secured by the collateral securing this Note. This indemnity is not intended to excuse the Lender from performing hereunder. The provisions of this section shall survive the closing of the Loan, the satisfaction and payment of this Note and any cancellation of the Loan Documents. The Borrower shall also pay, and hold the Lender harmless from, any and all claims of any brokers, finders or agents claiming a right to any fees in connection with arranging the Loan. The Lender hereby represents that it has not employed a broker or other finder in connection with the Loan. The Borrower represents and warrants that no brokerage commissions or finder’s fees are to be paid in connection with the Loan.

 

16                                  ADDITIONAL PROVISIONS.

 

16.1 Conditions to Making the Loan. In addition to any other requirement or condition precedent set forth in this Note or in any other Loan Document to Lender’s obligation to make the Loan, Borrower shall: (a) provide to Lender the following items, each of which shall be acceptable in form and substance to Lender and its legal counsel, in Lender’s sole discretion: (i)

 

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fully executed originals of all Loan Documents, (ii) evidence of Borrower’s casualty, liability, and other insurance policies; and (iii) such other financial information, reports and documentation relating to Borrower and/or as Lender may request; and (b) set up and maintain with Lender throughout the term of the Loan an operating account.

 

16.2 Financial Statements. Borrower represents and warrants that the financial statements for Borrower previously submitted to the Lender are true, complete and correct in all material respects, disclose all actual and contingent liabilities of the Borrower and do not contain any untrue statement of a material fact or omit to state a fact material to such financial statements. No material adverse change has occurred in the financial condition of the Borrower from the dates of said financial statements until the date hereof. The Borrower shall furnish to the Lender such financial information regarding the Borrower, its constituent partners or members, as the case may be, as the Lender may from time to time reasonably request, which shall include, without any further request therefor: (a) annual audited financial statements for Guarantor no later than thirty (30) days after the end of each fiscal year; (b) annual financial statements for the Borrower no later than thirty (30) days after the end of each fiscal year, all in form, scope and detail satisfactory to the Lender and certified by the chief financial officer or other appropriate officer, manager or member of the Borrower, (c) within thirty (30) days after their filing, copies of the federal income tax returns of the Borrower; and (d) quarterly operating statements for Borrower and Guarantor.

 

16.3 Required Fixed Charge Ratio. Borrower shall at all times be required to maintain a Fixed Charge Coverage Ratio (as defined below) of at least 1.15:1.0. Borrower agrees to cooperate with Lender to facilitate Lender’s testing of Borrower’s Fixed Charge Coverage Ratio. Such cooperation shall include, without limitation, promptly furnishing such information as is requested by Lender to allow Lender to facilitate such tests. Lender shall test such Fixed Charge Coverage Ratio annually. For purposes of this Section, the term “Fixed Charge Coverage Ratio” shall mean: the sum of Borrower’s earnings before interest, taxes, depreciation, rent, and interest expense, less distributions and unfunded capital expenditures, divided by the sum of the current portion of long term debt due for the period, interest expense and rent expense. In the event that, based upon Lender’s analysis, the Fixed Charge Coverage Ratio fails to meet the minimum requirement above, Lender shall so notify Borrower and, in order to avoid said failure being deemed an Event of Default hereunder, Borrower shall propose a cure to Lender, including the time frame for effecting the same, and Borrower shall cure the failure pursuant to said plan, but in any event within thirty (30) days after Lender’s first notice of such failure.

 

16.4 Draw Requirements. Borrower shall have the right to request draws on this Loan during the Draw Period subject to satisfaction of the following requirements:

 

(a)                                      Borrower shall send a written draw request (the “Draw Request”) to Lender stating the amount of the Loan to be disbursed, which amount shall not exceed eighty percent (80%) of the total cost of the subject equipment (such equipment, individually and collectively, is sometimes referred to in the Loan Documents as the “Equipment”);

 

(b)                                      The Draw Request shall include:

 

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(i)                                A description of the specific Equipment that Borrower has, or will, cause to be purchased, including its serial number and any other identification or descriptive information required by Lender;

 

(ii)                             If Borrower requests that Lender pay the full purchase price for the Equipment directly to the supplier, then Borrower shall pay to Lender twenty percent (20%) of said purchase price (or such greater percentage if the Draw Request is for less than 80% of the purchase price) and Lender shall combine said payment with the Loan draw amount and pay the purchase price directly to the supplier pursuant to information in the invoice and as requested in the Draw Request; provided, however, if Borrower prefers to pay the Equipment supplier, then Borrower shall provide to Lender evidence satisfactory to Lender that Borrower has paid at least twenty percent (20%) of the purchase price to the supplier and Lender shall pay to Borrower or, in Lender’s discretion, directly to the supplier, the balance of the purchase price from the Loan draw amount; and

 

(iii)                          a copy of the lease and/or service agreement covering Borrower’s agreements with any third party relative to the disposition of the subject Equipment for Lender’s review, the terms, conditions, and lessee under which shall be satisfactory to Lender in its sole discretion (such lease or other agreement, as reviewed and approved by Lender, is sometimes referred to in the Loan Documents as the “Third Party Agreement”); and

 

(c)                                  No Event of Default (defined in this Note) shall exist.

 

IN WITNESS WHEREOF, Borrower has executed and delivered this Promissory Note as of the day and year first above written.

 

	
 
    	
WESSCO,   LLC, a Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By
    	
Industrial   Services of America, Inc., a
    
	
 
    	
 
    	
Florida   corporation, its Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Sean Garber
    
	
 
    	
 
    	
Name:
    	
Sean   Garber
    
	
 
    	
 
    	
Title:
    	
President
    

 

11Exhibit 10.2

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made and entered into this 15th day of January, 2015, by and among INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation (“Parent”), ISA INDIANA, INC., an Indiana corporation (“ISA Inc.”), ISA LOGISTICS LLC, a Kentucky limited liability company (“ISA Logistics”; and, together with Parent and ISA Inc., “Borrowers”), ISA REAL ESTATE, LLC, a Kentucky limited liability company (“ISA Real Estate”), ISA INDIANA REAL ESTATE, LLC, a Kentucky limited liability company (“Indiana Real Estate”), WESSCO, LLC, a Delaware limited liability company (“WESSCO”), 7021 GRADE LANE LLC, a Kentucky limited liability company (“7021 Grade”), 7124 GRADE LANE LLC, a Kentucky limited liability company (“7124 Grade”), 7200 GRADE LANE LLC, a Kentucky limited liability company (“7200 Grade”; and, together with ISA Real Estate, Indiana Real Estate, WESSCO, 7021 Grade, and 7124 Grade, “Guarantors”; and, together with Borrowers, “Loan Parties”), each with their chief executive office and principal place of business at 7100 Grade Lane, Louisville, Kentucky 40213, and WELLS FARGO BANK, NATIONAL ASSOCIATION (hereinafter referred to as “Lender”) with an office at 1100 Abernathy Road NE, Suite 1600, Atlanta, Georgia 30328.

 

Recitals:

 

Lender, Borrowers and Guarantors are parties to a certain Credit Agreement dated as of June 13, 2014 (as at any time amended, restated, modified or supplemented, the “Credit Agreement”) pursuant to which Lender has made certain revolving credit loans and other financial accommodations to Borrowers.

 

The parties desire to amend the Credit Agreement as hereinafter set forth.

 

NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which are hereby severally acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

 

1.                                      Definitions.  Capitalized terms used in this Amendment, unless otherwise defined herein, shall have the meaning ascribed to such terms in the Credit Agreement.

 

2.                                      Amendments to Credit Agreement.  The Credit Agreement is hereby amended as follows:

 

(a)                                 By deleting Section 5.2(c) of the Credit Agreement in its entirety and by substituting in lieu thereof the following:

 

(c) Indebtedness of WESSCO under the BoK Facility existing as of the First Amendment Date (less any principal payments on account of the BoK Facility after the First Amendment Date);

 

(b)                                 By deleting Section 5.3(g) of the Credit Agreement in its entirety and by substituting in lieu thereof the following:

 

 

(g) sell, lease, transfer or otherwise dispose of any of any Loan Party’s assets (including, without limitation, any transfer of asset by any Loan Party to, or for the benefit of, WESSCO), except for the sale of Inventory in the ordinary course of its business and except for the sale of the real property located at 1565 East 4th Street, Seymour, Indiana, so long as (i) such sale is consummated pursuant to the purchase documentation delivered to Lender on or prior to the Closing Date, including that certain letter agreement dated the Closing Date by and among Indiana Real Estate, K & R LLC and Lender, and (ii) the full purchase price for such real property, which is expected to be approximately $840,000, is remitted directly to Borrowers at a deposit account maintained with Lender (or, if required by Lender, to a collections account of the Loan Parties maintained by Lender for application to the Obligations);

 

(c)                                  By deleting Section 5.4 of the Credit Agreement in its entirety and by substituting in lieu thereof the following:

 

SECTION 5.4    GUARANTIES.  Guarantee or become liable in any way as surety, endorser, accommodation endorser or otherwise for any liabilities or obligations of any other Person, except for guarantees by Parent of the BoK Facility existing as of the First Amendment Date that are secured only by the assignment of the Parent-WESSCO Note by WESSCO to The Bank of Kentucky.

 

(d)                                 By deleting from Section 7.1 of the Credit Agreement in their entireties the definitions of “BoK Collateral Account”, “BoK Facility” and “BoK Subordination Agreement” and by substituting in lieu thereof the following new definitions, respectively:

 

“BoK Collateral Account” means that certain deposit account (number xxxx040) owned by WESSCO and maintained with The Bank of Kentucky which, pursuant to the BoK Facility, holds certain cash collateral securing the BoK Facility pursuant to the terms thereof as in existence on the First Amendment Date.

 

“BoK Facility” means, collectively, (a) the loans extended by The Bank of Kentucky to WESSCO in the aggregate principal amount of $5,000,000, as evidenced by (i) that certain Promissory Note dated as of October 15, 2013 and made by WESSCO in favor of The Bank of Kentucky in the principal amount of $3,000,000, (ii) that certain Promissory Note dated as of October 15, 2013 and made by WESSCO in favor of The Bank of Kentucky in the principal amount of $1,000,000 and (iii) that certain Promissory Note dated the First Amendment Date and made by WESSCO in favor of The Bank of Kentucky in the principal amount of $1,000,000 and (b) the Hedge Agreement entered into between WESSCO and The Bank of Kentucky as existing on the Closing Date and evidenced by that certain Confirmation dated October 17, 2013 by and between WESSCO and The Bank of Kentucky.

 

2

 

“BoK Subordination Agreement” means that certain Amended and Restated Subordination Agreement dated the First Amendment Date among The Bank of Kentucky, Lender and WESSCO.

 

(e)                                  By adding to Section 7.1 of the Credit Agreement, in appropriate alphabetical sequence, the following new definition:

 

“First Amendment Date” means January 15, 2015.

 

3.                                      Ratification and Reaffirmation.  Each Loan Party hereby ratifies and reaffirms the Obligations, all liens and security interested heretofor granted to Lender, each of the Loan Documents, and all of such Loan Party’s covenants, duties, indebtedness and liabilities under the Loan Documents.  Without limiting the generality of the foregoing, the Guarantors consent to, accept and agree to be bound by the terms of this Amendment, consent to Borrowers’ execution and delivery hereof and of the other documents, instruments or agreements to be executed and delivered pursuant hereto, and affirm that nothing contained therein shall modify in any respect whatsoever any Guarantor’s respective guaranty of the Obligations and reaffirm that such guaranty is and shall remain in full force and effect.

 

4.                                      Acknowledgments and Stipulations.  Each Loan Party acknowledges and stipulates that each of the Loan Documents executed by the Loan Parties creates legal, valid and binding obligations of each Loan Party that are enforceable against them in accordance with the terms thereof; all of the Obligations are owing and payable without defense, offset or counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date hereof, the same is hereby knowingly and voluntarily waived by each Loan Party); the security interests and liens granted by Loan Parties in favor of Lender are duly perfected, first priority security interests and liens (other than Liens on assets of WESSCO securing the BoK Facility); and, as of the close of business on January 15, 2015, the unpaid principal amount of the Advances totaled $10,316,594, and the unpaid principal amount of the Term Loan totaled $2,520,000.

 

5.                                      Representations and Warranties.  Each Loan Party represents and warrants to Lender, to induce Lender to enter into this Amendment, that no Default or Event of Default exists on the date hereof; the execution, delivery and performance of this Amendment have been duly authorized by all requisite corporate action on the part of the Loan Parties and this Amendment has been duly executed and delivered by the Loan Parties; and all of the representations and warranties made by the Loan Parties in the Loan Documents are true and correct on and as of the date hereof.

 

6.                                      Reference to Credit Agreement.  Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement,” “hereunder,” or words of like import shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

 

7.                                      Breach of Amendment.  This Amendment shall be part of the Credit Agreement and a breach of any representation, warranty or covenant herein shall constitute an Event of Default.

 

8.                                      Conditions Precedent.  The effectiveness of the amendments contained in Section 2 hereof is subject to the satisfaction of each of the following conditions precedent, in form and substance satisfactory to Lender, unless satisfaction thereof is specifically waived in writing by Lender:

 

3

 

(a)                                 Lender shall have received an officer’s certificate in the form attached to this Amendment, certifying as to the effectiveness and form of certain documents entered into in connection with the BoK Facility on or about the date hereof;

 

(b)                                 Lender shall have entered into a duly executed amended and restated subordination agreement with The Bank of Kentucky;

 

(c)                                  Lender shall have received duly executed certificates of authority from the Loan Parties and a supplemental incumbency certificate in the forms attached to this Amendment; and

 

(d)                                 Lender shall have received duly executed out-of-state affidavits with respect to the execution and delivery of documents in connection with this Amendment.

 

9.                                      Expenses of Lender.  Borrowers agree to pay, on demand, all costs and expenses incurred by Lender in connection with the preparation, negotiation and execution of this Amendment and any other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including, without limitation, the costs and fees of Lender’s legal counsel and any taxes (including, without limitation, Florida documentary stamp taxes), filing fees and other expenses associated with or incurred in connection with the execution, delivery or filing of any instrument or agreement referred to herein or contemplated hereby.

 

10.                               Release of Claims.  To induce Lender to enter into this Amendment, each Loan Party hereby RELEASES, ACQUITS AND FOREVER DISCHARGES Lender, and all officers, directors, agents, employees, successors and assigns of Lender, from any and all liabilities, claims, demands, actions or causes of action of any kind or nature (if there be any), whether absolute or contingent, disputed or undisputed, at law or in equity, or known or unknown, that such Loan Party now has or ever had against Lender arising under or in connection with any of the Loan Documents or otherwise. Such Loan Party represents and warrants to Lender that such Loan Party has not transferred or assigned to any Person any claim that such  Loan Party ever had or claimed to have against Lender.

 

11.                               Effectiveness; Governing Law.  This Amendment shall be effective upon acceptance by Lender (notice of which acceptance is hereby waived), whereupon the same shall be governed by and construed in accordance with the internal laws of the Commonwealth of Kentucky.

 

12.                               No Novation, etc.  Except as otherwise expressly provided in this Amendment, nothing herein shall be deemed to amend or modify any provision of the Credit Agreement or any of the other Loan Documents, each of which shall remain in full force and effect.  This Amendment is not intended to be, nor shall it be construed to create, a novation or accord and satisfaction, and the Credit Agreement as herein modified shall continue in full force and effect.

 

13.                               Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

14.                               Further Assurances. The Loan Parties agree to take such further actions as Lender shall reasonably request from time to time in connection herewith to evidence or give effect to the amendments set forth herein or any of the transactions contemplated hereby.

 

4

 

15.                               Miscellaneous.  This Amendment may be executed in any number of counterparts and by different parties to this Amendment on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any manually executed signature page to this Amendment delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature hereto. Section titles and references used in this Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto. This Amendment expresses the entire understanding of the parties with respect to the subject matter hereof and may not be amended except in a writing signed by the parties.

 

16.                               Waiver of Jury Trial.  To the fullest extent permitted by applicable law, each party hereby waives the right to trial by jury in any action, suit, counterclaim or proceeding arising out of or related to this Amendment.

 

[Remainder of page intentionally left blank;

signatures appear on the following pages]

 

5

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers on the date first written above.

 

	
 
    	
BORROWERS:
    
	
 
    	
 
    
	
 
    	
INDUSTRIAL SERVICES OF AMERICA, INC.
    
	
 
    	
ISA INDIANA, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Todd Phillips
    
	
 
    	
Name:
    	
Todd Phillips
    
	
 
    	
Title:
    	
Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ISA LOGISTICS LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
Industrial Services of America, Inc.,   its Sole
    
	
 
    	
 
    	
Member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Todd Phillips
    
	
 
    	
Name:
    	
Todd Phillips
    
	
 
    	
Title:
    	
Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
WESSCO, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Todd Phillips
    
	
 
    	
Name:
    	
Todd Phillips
    
	
 
    	
Title:
    	
Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ISA REAL ESTATE, LLC
    
	
 
    	
ISA INDIANA REAL ESTATE, LLC
    
	
 
    	
7021   GRADE LANE LLC
    
	
 
    	
7124   GRADE LANE LLC
    
	
 
    	
7200   GRADE LANE LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
Algar, Inc., their Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Sean Garber
    
	
 
    	
Name:
    	
Sean Garber
    
	
 
    	
Title:
    	
President
    
				

 

 

	
 
    	
Accepted   as of the date first written above:
    
	
 
    	
 
    
	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Joseph L. White
    
	
 
    	
Name:
    	
Joseph   L. White
    
	
 
    	
Title:
    	
Vice   President
    

 

 

CERTIFICATE OF AUTHORITY

(BORROWERS AND WESSCO)

 

I, Todd Phillips, DO HEREBY CERTIFY, that I am the Chief Financial Officer of INDUSTRIAL SERVICES OF AMERICA, INC., a corporation duly organized and existing under and by virtue of the laws of the State of Florida (“Parent”), and of ISA INDIANA, INC., a corporation duly organized and existing under and by virtue of the laws of the State of Indiana (“ISA Inc.”), and am keeper of the records and seal thereof; that Parent is the sole member of ISA LOGISTICS LLC, a limited liability company duly organized and existing under and by virtue of the laws of the Commonwealth of Kentucky (“ISA Logistics”); that Parent is the manager of WESSCO, LLC, a Delaware limited liability company (“WESSCO”; and, together with Parent, ISA Inc. and ISA Logistics, the “Companies”); that the following is a true, correct and compared copy of the resolutions duly adopted by the unanimous written action of the Boards of Directors of Parent and ISA Inc. effective as of date of the Amendment referred to below; and that said resolutions are still in full force and effect:

 

RESOLVED, that the Chief Financial Officer and the President of Parent,  ISA Inc. and WESSCO each be, and each hereby is, authorized and empowered (either alone or in conjunction with any one or more of the other officers) to take, from time to time, all or any part of the following actions on or in behalf of the Companies, including as officers of Parent as sole member of ISA Logistics on behalf of ISA Logistics: (i) to make, execute and deliver to Wells Fargo Bank, National Association (“Lender”) (a) a First Amendment to Credit Agreement (the “Amendment”) providing for the amendment of certain terms of that certain Credit Agreement dated as of June 13, 2014 among the Companies, the other parties thereto and Lender (as at any time amended, restated, modified or supplemented, the “Credit Agreement”), and (b) all other agreements, documents and instruments contemplated by or referred to in the Amendment or executed by the Companies in connection therewith; said Amendment and other agreements, documents and instruments to be substantially in the form presented by Lender with such additional, modified or revised terms as may be acceptable to any officer or director of the Companies, as conclusively evidenced by his or her execution thereof; and (ii) to carry out, modify, amend or terminate any arrangements or agreements at any time existing among the Companies and Lender.

 

RESOLVED, that any arrangements, agreements, security agreements, or other instruments or documents referred to or executed pursuant to the Amendment by Sean Garber, Todd Phillips, any other officer or director of the Companies (including of Parent as sole member of ISA Logistics), or by an employee of the Companies acting pursuant to delegation of authority, may be attested by such person and may contain such terms and provisions as such person shall, in his or her sole discretion, determine.

 

RESOLVED, that the Credit Agreement and each amendment to the Credit Agreement heretofore executed by any officer or director of the Companies (including of Parent as sole member of ISA Logistics) and any actions taken under the Credit Agreement as thereby amended are hereby ratified and approved.

 

 

I DO FURTHER CERTIFY that there have been no changes to the organizational documents of the Companies since last certified to Lender on June 13, 2014.

 

IN WITNESS WHEREOF, I have hereunto set my hand on behalf of the Companies.

 

	
 
    	
/s/   Todd Phillips
    
	
 
    	
Todd Phillips, Chief Financial Officer
    

 

I, Sean Garber, President of Parent, ISA Inc. and WESSCO, do hereby certify that the foregoing is a correct copy of the resolutions passed by the Boards of Directors of the Parent (for itself and as sole member of ISA Logistics) and ISA Inc. or equivalent governing body of WESSCO and that Todd Phillips is the Chief Financial Officer of Parent, ISA Inc.  and WESSCO and is duly authorized to attest to the passage of said resolutions.

 

	
 
    	
/s/   Sean Garber
    
	
 
    	
Sean Garber, President
    

 

 

CERTIFICATE OF AUTHORITY

(OTHER GUARANTORS)

 

I, Sean Garber, DO HEREBY CERTIFY, that I am the President of Algar, Inc., the manager of each of the following limited liability companies duly organized and existing under and by virtue of the laws of the Commonwealth of Kentucky (the “Companies”): ISA REAL ESTATE, LLC, ISA INDIANA REAL ESTATE, LLC, 7021 GRADE LANE LLC, 7124 GRADE LANE LLC and 7200 GRADE LANE LLC; and am keeper of the records and seal thereof; that the following is a true, correct and compared copy of the resolutions duly adopted by the unanimous written action of the manager of the Companies effective as of the date of the Amendment referred to below; and that said resolutions are still in full force and effect:

 

RESOLVED, that the President of Algar, Inc., as manager of each Company, and the Chief Financial Officer of INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation (“Parent”), each be, and each hereby is, authorized and empowered (either alone or in conjunction with any one or more of the other officers of the Companies) to take, from time to time, all or any part of the following actions on or in behalf of the Companies: (i) to make, execute and deliver to Wells Fargo Bank, National Association (“Lender”) (a) a First Amendment to Credit Agreement (the “Amendment”) providing for the amendment of certain terms of that certain Credit  Agreement dated as of June 13, 2014 among the Companies, the other parties thereto and Lender (as at any time amended, restated, modified or supplemented, the “Credit Agreement”), and (b) all other agreements, documents and instruments contemplated by or referred to in the Amendment or executed by the Companies in connection therewith; said Amendment and other agreements, documents and instruments to be substantially in the form presented by Lender with such additional, modified or revised terms as may be acceptable to any officer or manager of the Companies, as conclusively evidenced by his or her execution thereof; and (ii) to carry out, modify, amend or terminate any arrangements or agreements at any time existing between the Companies and Lender.

 

RESOLVED, that any arrangements, agreements, security agreements, or other instruments or documents referred to or executed pursuant to the Amendment by Sean Garber, Todd Phillips, any other officer or manager of the Companies, or by an employee of the Companies acting pursuant to delegation of authority, may be attested by such person and may contain such terms and provisions as such person shall, in his or her sole discretion, determine.

 

RESOLVED, that the Credit Agreement and each amendment to the Credit Agreement heretofore executed by any officer or director of the Company and any actions taken under the Credit Agreement as thereby amended are hereby ratified and approved.

 

I DO FURTHER CERTIFY that there have been no changes to the organizational documents of the Companies since last certified to Lender on June 13, 2014.

 

 

IN WITNESS WHEREOF, I have hereunto set my hand on behalf of the Companies.

 

	
 
    	
/s/   Sean Garber
    
	
 
    	
Sean   Garber, President of Algar, Inc.,
    
	
 
    	
the   manager of the Companies
    

 

I, Todd Phillips, am Chief Financial Officer of Parent and am a duly authorized agent of the Companies, and do hereby certify that the foregoing is a correct copy of the resolutions passed by the manager of the Companies and that Sean Garber is the President of the manager of the Companies and is duly authorized to attest to the passage of said resolutions.

 

	
 
    	
/s/   Todd Phillips
    
	
 
    	
Todd   Phillips, Chief Financial Officer
    

 

 

SUPPLEMENTAL INCUMBENCY CERTIFICATE

 

January 15, 2015

 

Reference is made to that certain Credit Agreement dated as of June 13, 2014 (as at any time amended, restated, modified or supplemented, the “Credit Agreement”) by and among INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation (“Parent”), ISA INDIANA, INC., an Indiana corporation (“ISA Inc.”), ISA LOGISTICS LLC, a Kentucky limited liability company (“ISA Logistics”; and, together with Parent and ISA Inc., “Borrowers”), ISA REAL ESTATE, LLC, a Kentucky limited liability company (“ISA Real Estate”), ISA INDIANA REAL ESTATE, LLC, a Kentucky limited liability company (“Indiana Real Estate”), WESSCO, LLC, a Delaware limited liability company (“WESSCO”), 7021 GRADE LANE LLC, a Kentucky limited liability company (“7021 Grade”), 7124 GRADE LANE LLC, a Kentucky limited liability company (“7124 Grade”), 7200 GRADE LANE LLC, a Kentucky limited liability company (“7200 Grade”; and, together with ISA Real Estate, Indiana Real Estate, WESSCO, 7021 Grade, and 7124 Grade, “Guarantors”; and, together with Borrowers, “Loan Parties”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (together with its successors and assigns, “Lender”).

 

The undersigned, being an officer and authorized representative of Parent, ISA Inc. and WESSCO, does hereby certify to Lender, as follows:

 

1.                                      That the undersigned holds the office with respect to one or more of the Loan Parties as set forth on the signature page below.

 

2.                                      That set forth below are the names and true signatures of (a) Sean Garber, the President of each of Parent, ISA Inc. and WESSCO and (b) Todd Phillips, Chief Financial Officer of each of Parent, ISA Inc. and WESSCO:

 

	
Name
    	
 
    	
Title
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sean Garber
    	
 
    	
President   of each of Parent, ISA Inc. and WESSCO
    	
 
    	
/s/ Sean Garber
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Todd Phillips
    	
 
    	
Chief   Financial Officer of each of Parent, ISA Inc. and WESSCO
    	
 
    	
/s/ Todd Phillips
    

 

3.                                      That Sean Garber and Todd Phillips are duly authorized and qualified by and on behalf of Parent, ISA Inc. and WESSCO (including on behalf of Parent as sole member of ISA Logistics) to (a) execute and deliver to Lender any Loan Documents (and amendments, supplements, restatements or other modifications to same), borrowing base certificates, compliance and other certificates, notices, financial reports, and other financial and other documents required or permitted to be delivered by Loan Parties under the Credit Agreement, and (b) request Advances and authorize any other actions required or permitted to be taken by the Loan Parties.

 

 

4.                                      The undersigned, on behalf of each Borrower, hereby ratify any Advance requests, Loan Documents, borrowing base certificates, compliance and other certificates, notices, financial reports, and other financial and other documents required or permitted to be delivered by Loan Parties under the Credit Agreement, to the extent any of the same were executed or delivered by Sean Garber or Todd Phillips on behalf of any Loan Party prior to the date hereof.

 

5.                                      Capitalized terms not otherwise defined in this Certificate shall have the meanings ascribed to such terms under the Credit Agreement.

 

IN WITNESS WHEREOF, we have hereunto set our hands on the date first written above.

 

	
 
    	
/s/   Alan Schroering
    
	
 
    	
Alan   Schroering, Vice President of Finance of each of   Parent, ISA Inc. and WESSCO
    

 

 

OFFICER’S CERTIFICATE

(FIRST AMENDMENT TO CREDIT AGREEMENT)

 

January 15, 2015

 

Reference is made to the First Amendment to Credit Agreement dated the date hereof (the “Amendment”) among INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation (“Parent”), ISA INDIANA, INC., an Indiana corporation (“ISA Inc.”), ISA LOGISTICS LLC, a Kentucky limited liability company (“ISA Logistics”; and, together with Parent and ISA Inc., “Borrowers”), ISA REAL ESTATE, LLC, a Kentucky limited liability company (“ISA Real Estate”), ISA INDIANA REAL ESTATE, LLC, a Kentucky limited liability company (“Indiana Real Estate”), WESSCO, LLC, a Delaware limited liability company (“WESSCO”), 7021 GRADE LANE LLC, a Kentucky limited liability company (“7021 Grade”), 7124 GRADE LANE LLC, a Kentucky limited liability company (“7124 Grade”), 7200 GRADE LANE LLC, a Kentucky limited liability company (“7200 Grade”; and, together with ISA Real Estate, Indiana Real Estate, WESSCO, 7021 Grade, and 7124 Grade, “Guarantors”; and, together with Borrowers, “Loan Parties”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).

 

The undersigned, being the President of Parent hereby gives this Officer’s Certificate on behalf of all of the Loan Parties to Lender in order to induce Lender to enter into the Amendment.

 

The undersigned hereby certifies to Lender that:

 

1.              Attached hereto as Exhibit A are true, correct and complete copies of all of the BoK Facility documents being entered into on or about the date hereof, together with all amendments or other modifications thereto (the “New BoK Documents”), and nothing contained therein conflicts with or violates the terms in any of the Loan Documents, as amended by the Amendment;

 

2.              Except for those documents previously certified to Lender on June 13, 2014 and those documents attached hereto as Exhibit A, there are no other documents evidencing or modifying the terms of the BoK Facility as of the date hereof;

 

3.              Upon the effectiveness of the Amendment, the New BoK Documents will be effective in accordance with their terms, as disclosed to Lender;

 

4.              Nothing contained in the New BoK Documents or the other documents evidencing the BoK Facility conflicts with or violates any applicable law or the terms of any Material Contract binding upon any Loan Party or its assets; and

 

5.              The New BoK Documents have been authorized and approved by all necessary company or corporate action of the Loan Parties and have been duly executed and delivered.

 

Capitalized terms used but not defined herein shall have the meanings attributable to such terms under in the Amendment.

 

 

IN WITNESS WHEREOF, the undersigned has executed and delivered this Officer’s Certificate as of the date first written above.

 

	
 
    	
/s/ Sean Garber
    
	
 
    	
Sean Garber, President
    

 

 

Exhibit A

New BoK Documents

 

(attached)

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