Document:

EXHIBIT 10.2

 

 

Loan and Security Agreement

 

This Loan and Security
Agreement (this “Agreement”) dated as of April 12, 2011 is made by and between FIFTH THIRD BANK, an Ohio banking corporation,
for itself and as agent for any affiliate of Fifth Third Bancorp (together with its successors and assigns, the “Lender”),
and INDUSTRIAL SERVICES OF AMERICA, INC., a corporation organized under the laws of the State of Florida and having a principal
place of business at 7100 Grade Lane, Louisville, KY 40232 (“Borrower”).

RECITALS

WHEREAS, Lender has
determined that it may make one or more loans, advances or other extensions of credit (each an “Advance” and collectively,
the “Loan”), in its sole and absolute discretion, to Borrower;

WHEREAS, Lender and
Borrower desire to set forth the general requirements and conditions for the approval of credit to Borrower applicable to the Loan;
and

WHEREAS, for each additional
extension of credit, Lender may impose additional requirements as it deems necessary for the approval of the credit, terms, the
documentation of the associated Advance, and the perfection of Lender’s security interests;

NOW, THEREFORE, the
parties agree that it is appropriate to enter into this Loan and Security Agreement in order to set forth general terms and conditions
that shall be applicable to each Advance and the Loan and to establish the framework for the making of future Advances and the
documentation thereof.

1.                   
General Terms Applicable to Loans, Advances and Credit Commitments.

(a)                
Each Advance individually, and the Loan generally, shall be subject to the terms and conditions of this Agreement and any
additional terms or conditions which Lender may specify to Borrower in the case of any particular Advance to Borrower.

(b)                
As of the date of this Agreement, Lender has NOT extended to Borrower any credit commitment (“Commitment”) or
made any representation or warranty to Borrower that a Commitment will be extended to Borrower. Any Commitment, if made at all,
shall be made in writing by Lender in either a separate commitment letter, in the written documentation relating to a particular
Advance or evidenced by the promissory note relating to such Advance. The drafting of documents relating to a requested Advanced,
preliminary proposals made to Borrower, or Lender’s furnishing of drafts of documents to Borrower, however, shall not signify
or be interpreted as the making of a Commitment. No credit Commitment may be extended without the completion of Lender’s
internal credit approval processes and any such Commitment at the time of an Advance shall only be made upon and evidenced by the
completion and execution of written documentation satisfactory to Lender in all respects and in its sole discretion.

(c)                
Advances (if any) shall be made on or before any applicable Commitment termination or expiration date specified by Lender
with regard to such Advances or the Loans generally.

(d)                
Borrower shall give Lender notice (which shall be irrevocable) not later than 10:00 am (Eastern time) on the third Business
Day prior to the requested day for the making of any Advance, which notice shall include the contemporaneous delivery to Lender
of the documents described herein. Each such notice shall specify (a) the requested date for the making of such Advance which shall
be a Business Day and (b) the amount of such Advance. As used herein, the term “Business Day” means any day other than
Saturday or Sunday or other days on which banks are authorized or required to close in Cincinnati, Ohio.

2.                   
Principal and Interest.

(a)                
The obligation to repay any Loan hereunder shall be evidenced by one or more promissory notes payable by Borrower to the
order of Lender (as each such promissory note may be amended, amended and restated, supplemented or modified from time to time,
a “Note”). Each Note shall bear interest, be payable and mature as set forth in the Note. Upon the occurrence and during
the continuance of an Event of Default (as hereinafter defined), or if the Note is accelerated in accordance with the terms of
this Loan Agreement, the outstanding principal and all accrued interest, as well as any other charges due Lender hereunder, shall
bear interest from the date on which such amount shall have first become due and payable to Lender to the date on which such amount
shall be paid to Lender (whether before or after judgment), at a default rate, to be determined by Lender in its sole discretion
from time to time, equal to up to six percentage points (6.0%) in excess of the otherwise applicable rate of interest, not to exceed
the maximum rate permitted by applicable law (the “Default Rate”).

(b)                
Time is of the essence with respect to the payment and performance of the Obligations (as defined below) to be paid or otherwise
performed under this Agreement, the Note and all of the other Loan Documents (as defined below).

(c)                
Once repaid no Advance may be reborrowed hereunder.

(d)                
If Borrower fails to pay any amount due hereunder, after the expiration of any applicable grace period, Borrower shall pay
to Lender a late payment fee equal to five percent (5%) of the amount unpaid. Such fee shall be payable on demand and shall constitute
part of the Obligations.

(e)                
All amounts due hereunder and under the Note will be due on the dates or at the times specified hereunder or under the Note
regardless of whether Borrower has received any notice that such amounts are due.

(f)                 
 Principal and interest payments, and any other amounts due hereunder, shall be made to Lender at the address specified
herein or such other address as Lender may designate from time to time, in writing.

3.                   
Security. 

(a)                
As security for the payment as and when due of the indebtedness of Borrower to Lender under this Agreement, each Note, and
any other documents relating thereto (and any renewals, extensions and modifications thereof) and under any other agreement or
instrument (as the same may be renewed, extended or modified and hereinafter collectively referred to as the “Loan Documents”),
both now in existence and hereafter created relating to Borrower’s acquisition of the equipment described on Schedule A hereto
(as supplemented from time to time) or on any similar schedule attached to a Note (collectively, the “Equipment” and,
individually, an “Item of Equipment”), and the performance as and when due of all obligations of Borrower under this
Agreement, each Note and the other Loan Documents (as the same may be renewed, extended or modified; and hereinafter collectively
referred to as the “Obligations”), Borrower hereby grants to Lender a first priority security interest in all of Borrower’s
right, title and interest in the following (whether now existing or hereafter created and whether now owned or hereafter acquired):
(i) the Equipment (including, without limitation, all inventory, equipment, fixtures or other property comprising the same), and
general intangibles relating thereto, (ii) additions, attachments, accessories and accessions thereto whether or not furnished
by the supplier of such Equipment, (iii) all subleases (including the right to receive any payment thereunder and the right to
make any election or determination or give any consent or waiver thereunder), chattel paper, accounts, security deposits and bills
of sale relating thereto, (iv) any and all substitutions, replacements or exchanges for any such Equipment or other collateral,
and (v) any and all products and proceeds of any collateral hereunder (including all insurance and requisition proceeds and all
other payments of any kind with respect to the Equipment and other collateral in and against which a security interest is granted
hereunder) (collectively, the “Collateral”).

(b)                
Borrower agrees that, with respect to the Collateral, Lender shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code as in effect in the applicable jurisdiction from time to time. To the extent that any proceeds
of the Loan are used to acquire equipment which is not described on Schedule A hereto or to a Note, the Lender is authorized to
supplement Schedule A with a description of such equipment. Upon the acquisition of any such equipment, without further action
by Lender or Borrower (i) the equipment described on such supplement to Schedule A shall constitute part of the Equipment and (ii)
Schedule A shall be deemed to have been amended to include such supplement.

4.                   
Conditions Precedent.

(a)                
Concurrently with the execution hereof, or on or prior to the date on which Lender is to make the first Advance hereunder,
Borrower shall cause to be provided to Lender the following:

(i) a certificate
of the secretary or assistant secretary of Borrower dated the date of such hereof (or in any case prior to the first Advance, if
after the date of this Agreement) certifying (A) the incumbency of each of the officers executing the applicable Loan Documents,
(B) a copy of the articles or certificate of incorporation, by-laws or code of regulations, and other applicable organizational
documents of Borrower and (C) copies of any other documents evidencing the authorization of the corporate officers on behalf of
the Borrower to execute, deliver and perform this Agreement, any Notes and each other Loan Document; if requested by Lender, an
opinion of counsel for Borrower in form and substance satisfactory to Lender as to the matters set forth in Section 12 and as to such other matters as Lender may reasonably request.

(b)                
The obligation of Lender to make any Advance hereunder is subject to the satisfaction (or waiver by Lender) of each of the
following conditions prior to the date specified for such Advance: (i) Lender shall have received each of the following documents
in form and substance satisfactory to Lender: (A) a certificate executed by the president or chief financial officer of Borrower
certifying that the representations and warranties of Borrower contained herein and in each of the Loan Documents remain true and
correct as of such date, and no Default or Event of Default (as defined in Section 13  has occurred both with and without giving
effect to the transactions contemplated hereby; (B) copies of
the invoice(s) or other evidence satisfactory to Lender, related to the acquisition cost of the Equipment to which such Advance
relates; (C) a schedule describing the Equipment, in a form approved by Lender and to be attached as Schedule A, a supplement to
Schedule A and/or as a schedule to the Note; and (D) upon delivery of such Equipment, copies of the bills of sale evidencing chain
of title from the manufacturer or supplier to the Borrower with respect to such Equipment; (ii) Lender shall have received, evidence
satisfactory to Lender of the filing of Uniform Commercial Code financing statements or other records relating to the Equipment
in form and substance satisfactory to Lender in the jurisdiction in which Borrower is a registered organization and such other
jurisdictions as Lender may reasonably request by the date of the Advance; (iii) Lender shall have received evidence of insurance
policies covering the Equipment which comply with the requirements of Section 7 hereof; (iv) the representations and warranties of Borrower contained herein and in each of the other Loan
Documents shall be true and correct on and as of the date specified for such Advance both with and without giving effect to the
making of such Advance; (v) no Default or Event of Default shall have occurred and be continuing or result from the transactions
contemplated by the making of such Advance; (vi) Borrower shall have paid the fees and reasonable out-of-pocket expenses of Lender
(including the fees and expenses of counsel to the Lender and any filing or recordation fees) incurred in connection with the negotiation,
execution and delivery of the Loan Documents relating thereto shall have been paid; (vii) no material adverse change, in the sole
judgment of Lender, in the existing or prospective financial condition or results of operations of Borrower or any guarantor of
Borrower’s obligations hereunder (a “Guarantor”) which may affect the ability of Borrower to perform its obligations
under the Loan Documents, or the ability of any Guarantor to perform its obligations under any Guaranty, shall have occurred since
the date of the most recent audited financial statements of Borrower delivered to Lender; (viii) Borrower shall have furnished
proof of payment for the Equipment prior to the date of each applicable Advance and, to the extent that Borrower has not paid for
any Item of Equipment, Lender may remit proceeds of the Advance directly to the vendor of the Equipment in payment thereof; and
(ix) Borrower shall have executed and delivered to Lender a Payment Proceeds letter authorizing Lender to remit funds to the appropriate
parties.

5.                   
Acceptance of Equipment. The execution of each Note relating to any Equipment shall constitute Borrower’s
representation and warranty to Lender that such Equipment (a) was received by Borrower, (b) is satisfactory to Borrower in all
respects, (c) is suitable for Borrower’s purposes, (d) is in good order, repair and condition, (e) has been installed and
operates properly, and (f) is subject to all of the terms and conditions of the Loan Documents. Borrower’s execution and
delivery of each such Note shall be conclusive evidence as between Lender and Borrower that the Items of Equipment described therein
are in all of the foregoing respects satisfactory to Borrower, and Borrower shall not assert any claim of any nature whatsoever
against Lender based on any of the foregoing matters; provided, however, that nothing contained herein shall in any way
bar, reduce or defeat any claim that Borrower may have against any manufacturer or supplier of such Equipment or any other person
(other than Lender). Borrower’s execution of each Note shall be deemed an affirmation and ratification of the terms and conditions
herein.

6.                   
Use and Maintenance; Alterations.

(a)                
Borrower covenants and agrees that: (i) Borrower shall use the Equipment solely in the conduct of its business, for the
purpose, and in the manner, for which the Equipment was designed, (and shall not permanently discontinue use of the Equipment);
(ii) Borrower shall operate, maintain, service and repair the Equipment, and maintain all records and other materials relating
thereto, (A) in accordance and consistent with (1) the supplier’s or manufacturer’s recommendations all maintenance
and operating manuals or service agreements, whenever furnished or entered into, including any subsequent amendments or replacements
thereof, issued by the supplier or manufacturer thereof or other service provider (including requiring all components, fuels and
fluids installed in or used on the Equipment to meet the standards specified by such service provider from time to time), (2) the
requirements of all applicable insurance policies, (3) the supply contract or purchase order, so as to preserve all of Borrower’s
and Lender’s rights thereunder, including all rights to any warranties, indemnities or other rights or remedies, (4) all
applicable laws, and (5) the prudent practice of other similar companies in the same business as Borrower, but in any event, to
no lesser standard than that employed by Borrower for comparable equipment owned or leased by it; and (B) without limiting the
foregoing, so as to cause the Equipment to be in good repair and operating condition and in at least the same condition as when
delivered to Borrower hereunder, except for ordinary wear and tear resulting despite Borrower’s full compliance with the
terms hereof; (iii) shall not discriminate against the Equipment with respect to scheduling of maintenance, parts or service; (iv)
shall not change the location of any Equipment from that specified on Schedule A (or otherwise as Borrower informed Lender at the
time the Loan was made) without the prior written consent of Lender and (v) to the extent requested by Lender, shall cause each
item of Equipment to be continually marked, in a plain and distinct manner, with the following: “Subject to a Security Interest
in favor of “FIFTH THIRD BANK” or such other words designated by Lender on labels furnished by Lender. If the location
for any Equipment comprising collateral for the Loan is a facility leased by Borrower or owned by Borrower subject to one or more
mortgage liens, upon the request of Lender, Borrower will obtain a real property waiver or waivers in form and substance satisfactory
to Lender from the lenders or mortgagees of such facility.

(b)                
Borrower, at its own cost and expense, will promptly replace all parts, appliances, systems, components, instruments and
other equipment incorporated in, or installed on, the Equipment which may from time to time become worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever. In addition, in the
ordinary course of maintenance, service repair, overhaul or testing, Borrower may remove any parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Borrower
shall replace such parts as promptly as practicable. All replacement parts shall be free and clear of all Liens (as defined in
Section 6(c)) and shall be in as good an operating condition as, and shall have a value and utility at least equal to,
the parts replaced, assuming such replaced parts were in the condition and repair required to be maintained by the terms hereof.
Any replacement part installed, or incorporated on, the Equipment shall be considered an accession to such Equipment.

(c)                
Borrower will keep the Equipment and its interest therein free and clear of all liens, claims, mortgages, charges and encumbrances
of any type regardless of how arising (“Liens”) other than the Lien of the Lender hereunder. If any Lien shall attach
to any Equipment, Borrower will provide written notification to Lender within five (5) days after Borrower receives notice of any
such attachment stating the full particulars thereof and the location of such Equipment on the date of such notification.

(d)                
At its sole option, Borrower may make any alteration, modification or attachment to the Equipment deemed appropriate by
Borrower, provided that such alteration, modification, attachment is of a type which is readily removable without damage
to the Equipment, does not decrease the value, condition, utility or useful life of the Equipment or cause such Equipment to become
a fixture (as defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), or real property or affect the
insurability or impair any manufacturer’s warranty with respect to the Equipment. All alterations, modifications and attachments
of whatsoever kind or nature made to any Equipment that cannot be removed without damaging or reducing the functional capability,
economic value or insurability of the Equipment or impairing any manufacturer’s warranty shall only be made with the prior
written consent of the Lender and shall be deemed to be part of the Equipment and subject to the Lien of this Agreement. Under
no circumstance shall any alteration, modification or attachment be subjected by Borrower to any encumbrance other than the Lien
of the Lender hereunder.

7.                   
Insurance.

(a)                
Borrower shall provide, maintain and pay for insurance coverage with respect to the Equipment, insuring against, among other
things, the loss, theft, damage, or destruction of the Equipment, in amounts acceptable to Lender; and public liability and property
damage with respect to the use or operation of the Equipment in amounts acceptable to Lender. All insurance against loss shall
name Lender as the sole loss payee and all liability insurance shall name Lender and its successors and assignees and their subsidiaries
and affiliated companies, and their successors and assigns as additional insureds. All of such insurance shall be in form (including
all endorsements required by Lender), and with companies, reasonably satisfactory to Lender.

(b)                
All policies of insurance required hereunder shall (i) provide that any cancellation, expiration, lapse, or material modification
shall not be effective as to the Lender for a period of thirty (30) days after receipt by Lender of written notice thereof; (ii)
provide that premiums may be paid by the Lender, but without liability on the part of the Lender for such premiums; (iii) be primary
without any right of set-off or right of contribution from any other insurance carried by the Lender; (iv) contain breach of warranty
provisions providing that, in respect of the interests of the Lender, the insurance shall not be invalidated by any action, inaction
or breach of warranty, declaration, or condition by Borrower or any other person or by any fact or information known to Lender;
and (v) waive any right of subrogation against Lender.

(c)                
If Borrower does not obtain, maintain or furnish to Lender acceptable proof of the insurance coverage required by this Agreement,
Lender shall be entitled to procure such insurance, as Lender shall deem appropriate in its discretion, at Borrower’s sole
cost and expense.

8.                   
Risk of Loss; Damage to Equipment.

(a)                
Borrower shall bear the entire risk of loss and damage to any and all Items of Equipment from any cause whatsoever, whether
or not insured against. No loss or damage shall relieve Borrower of the obligation to pay any amounts due under the Note or of
any other Obligations. An “Event of Loss” shall be deemed to have occurred with respect to any Item of Equipment if
such Item of Equipment or any material part thereof has been lost, stolen, requisitioned or condemned by any governmental authority,
damaged beyond repair or damaged in such a manner that results in an insurance settlement on the basis of an actual or arranged
total loss.

(b)                
Upon any loss or damage to any Item of Equipment not constituting an Event of Loss, Borrower will promptly notify Lender
of such loss or damage, and in any event within thirty (30) days of such loss or damage (or such longer period as Lender shall
determine in its sole discretion), place such Item of Equipment in good condition and repair as required by the terms of this Agreement.
If an Event of Loss to any Item of Equipment has occurred, Borrower shall immediately notify Lender of same, and at the option
of Lender, Borrower shall: (i) not more than thirty (30) days following such Event of Loss (or such longer period as Lender shall
determine in its sole discretion) replace such Item of Equipment with replacement equipment (acceptable to Lender) in as good condition
and repair, and with the same value remaining useful economic life and utility, as such replaced Item of Equipment immediately
preceding the Event of Loss (assuming that such replaced Item of Equipment was in the condition required by this Agreement), which
replacement equipment shall immediately, and without further act, be deemed to constitute Equipment and be fully subject to this
Agreement as if it originally constituted part of the Equipment hereunder and shall be free and clear of all Liens; or (ii) prepay
on the next succeeding Payment Date (as defined in each Note relating to the Equipment) (the “Prepayment Date”), together
with all other amounts due and payable on such Payment Date, an amount equal to each installment of principal and interest payable
under such Note on each Payment Date after the Prepayment Date, in each case, discounted from the Payment Date on which such payment
would have been due to the Prepayment Date at a rate per annum equal to the 30 day LIBOR rate as of the date of the Note to be
prepaid or the Prepayment Date, whichever is lower. Upon Lender’s receipt of the payment required under clause (ii) above,
Lender shall release its security interest in the Item of Equipment to which such payment relates.

9.                   
Application of Proceeds. Notwithstanding anything herein to the contrary, all funds received at any time by
Lender, whether as a result of any loss of the Equipment, as a result of the exercise of any remedy or otherwise shall be applied
as follows: (i) if the Loan has not been accelerated pursuant to Section 13, in the following manner: first, to the payment of all fees, charges and other sums (with exception
of principal and interest) due and payable hereunder and under each Note, second, to the payment of all interest (including
default interest) then due and payable on the outstanding principal of the Loan, third, to the payment of all principal
then due and payable on the Loan, fourth, to the payment of the remaining principal on the Loan in inverse order of maturity,
and fifth, to Borrower or such other person as may have an interest in such proceeds, as their interests may appear, and
(ii) if the Loan has been accelerated pursuant to Section 13, or if a Default or an Event of Default hereunder shall have occurred, in the following manner: first,
to the payment or reimbursement of Lender for all costs, expenses and losses incurred or sustained by Lender in or incidental to
the collection of the Obligations, or the exercise, protection or enforcement of all or any of the rights and remedies of Lender
under the Loan Documents, and second, to the payment of all of the Obligations in the manner and order as provided in clause
(i) above. If the Loan is comprised of more than one Note, Lender shall be entitled to apply proceeds to one or more of the Notes
in such order and manner as the Lender may, in its discretion, deem appropriate.

10.                
Financial, Other Information and Notices.

(a)                
Borrower shall maintain a standard and modern system for accounting and shall furnish to Lender:

(i)                  
Within forty-five (45) days after the end of each quarter, a copy of Borrower’s internally prepared consolidated financial
statements for that quarter and for the year to date in a form reasonably acceptable to Lender, prepared and certified as complete
and correct, subject to changes resulting from year-end adjustments, by the chief financial officer of Borrower.

(ii)                 
Within ninety (90) days after the end of each fiscal year, a copy of Borrower’s consolidated year end financial statements
audited by a firm of independent certified public accountants acceptable to Lender (which acceptance shall not be unreasonably
withheld) and accompanied by an audit opinion of such accountants without qualification.

All such financial statements shall
be prepared in accordance with generally accepted accounting principles, consistently applied. So long as Borrower is a reporting
company under the Securities Exchange Act of 1934 and is timely filing the reports required thereunder to the Securities Exchange
Commission, Borrower will have no obligation to furnish its financial statements as provided above.

(b)                
Borrower shall provide prompt written notice to Lender (i) of any Event of Default, (ii) of any loss or damage to any Item
of Equipment or any Event of Loss with respect to any Item of Equipment, and (iii) any existing or threatened investigation, claim
or action by any governmental authority which could adversely affect the Equipment or this Lease.

(c)                
Borrower shall furnish such other information as Lender may reasonably request from time to time relating to the Equipment,
this Loan or the operation or condition of Borrower including, without limitation, such additional financial statements of the
Borrower for such periods as Lender may request.

 

 

11.                
Inspections. Lender may from time to time during Borrower’s normal business hours, inspect the Equipment
and Borrower’s records with respect thereto. Borrower shall cooperate with Lender in scheduling such inspection and in making
the Equipment available for inspection by Lender or its designee at a single location as reasonably specified by Borrower. Borrower
will, upon reasonable request, provide a report on the condition of the Equipment, a record of its maintenance and repair, a summary
of all items suffering any loss or damage, a certificate of no Event of Default, or such other information or evidence of compliance
with Borrower’s obligations under this Agreement as Lender may reasonably request.

12.                
Borrower’s Representations and Warranties. Borrower represents and warrants as of the date of execution
and delivery of this Agreement and as of the date of each Advance as follows: (a) Borrower is a corporation organized under the
laws of the State of Florida, having a principal place of business at 7100 Grade Lane, Louisville, Kentucky, 40232, duly organized,
validly existing under the laws of the jurisdiction of its organization with full power to enter into and to pay and perform its
obligations under this Agreement and the other Loan Documents, and is duly qualified or licensed in all other jurisdictions where
its failure to so qualify would adversely affect the conduct of its business or its ability to perform any of its obligations under
or the enforceability of this Agreement; (b) this Agreement and all other Loan Documents have been duly authorized, executed and
delivered by Borrower, are valid, legal and binding obligations of Borrower, are enforceable against Borrower in accordance with
their terms and do not and will not contravene any provisions of or constitute a default under Borrower’s organization documents,
any agreement to which it is a party or by which it or any of its property is bound, or any applicable law, regulation or order
of any governmental authority; (c) the proceeds of each Advance will be used exclusively to finance the acquisition of the Equipment;
(d) Borrower is (or upon the acquisition thereof will be) the sole owner of, and has good and marketable title to, and all necessary
rights in, and power to transfer pursuant to the terms hereof, all of the Equipment, free and clear of all liens and encumbrances
(excepting only the Lien of the Lender), and upon the filing with the Secretary of State of Florida of a Uniform Commercial Code
financing statement naming Lender, as secured party, Borrower, as debtor, and the Equipment as the collateral, Lender shall have
a valid, perfected, first priority security interest in the Equipment; (e) no approval of, or filing with, any governmental authority
or other person is required in connection with Borrower’s entering into, or the payment or performance of its obligations
under, this Agreement and the other Loan Documents; (f) there are no suits or proceedings pending or, to the knowledge of Borrower,
threatened, before any court or governmental agency against or affecting Borrower which, if decided adversely to Borrower, would
adversely affect the conduct of its business or its ability to perform any of its obligations under or the enforceability of this
Agreement and the other Loan Documents; (g) the financial statements of Borrower which have been delivered or made publicly available
to Lender have been prepared in accordance with generally accepted accounting principles consistently applied, and fairly present
Borrower’s financial condition and the results of its operations as of the date of and for the period covered by such statements
(subject to customary year-end adjustments), and since the date of such statements there has been no adverse change in such financial
condition or operations; (h) Borrower’s full and correct legal name is set forth on the signature page hereof and Borrower
will not change its legal name or the location of its jurisdiction of organization without giving to Lender at least thirty (30)
days prior written notice thereof; (i) the Equipment will always be used for business or commercial, and not personal purposes;
(j) Borrower is not in default under any obligation for borrowed money, for the deferred purchase price of property or any lease
agreement which, either individually or in the aggregate, would have an adverse effect on the condition of its business or its
ability to perform any of its obligations under or the enforceability of this Agreement; (k) under the laws of the jurisdiction(s)
in which the Equipment is to be located, the Equipment consists solely of personal property and not fixtures; and (l) Borrower
is, and will remain, in full compliance with all laws and regulations applicable to it including without limitation, (i) ensuring
that no person who owns a controlling interest in or otherwise controls Borrower is or shall be (A) listed on the Specially Designated
National and Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”), Department of the Treasury
and/or any other similar lists maintained by OFAC pursuant to any authorizing statute, executive order or regulations or (C) a
person designated under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related enabling legislation
or any other similar executive order and (ii) compliance with all applicable Bank Secrecy Act (“BSA”) laws, regulations
and government guidance on BSA compliance and on the prevention and detection of money laundering violations.

Borrower’s representations and
warranties shall survive termination or expiration of this Agreement.

13.                
Events of Default and Remedies.

(a)                
Each of the following events constitutes an “Event of Default” hereunder and any event that, with the passage
of time or the giving of notice, or both, would constitute an Event of Default shall constitute a “Default” hereunder:
(i) Borrower fails to pay any amount of principal and interest when due under any Note and such failure continues for a period
of ten (10) days; (ii) any representation or warranty made by Borrower in this Agreement, any Note or in any other Loan Document
shall at any time prove to have been incorrect in any material respect as and when made; (iii) Borrower (A) fails to obtain
and maintain the insurance coverage required herein; or (B) fails to observe or perform any other covenant, condition or agreement
under this Agreement, any Note or any other Loan Document and, in the case of clause (B), such failure continues unremedied for
a period of fifteen (15) days; (iv) Borrower which is not an individual shall have consolidated with or merged with or into another
entity, or conveyed, sold or otherwise transferred all or substantially all of its assets or shall have failed to maintain its
corporate existence; (v) Borrower that is an individual dies or becomes permanently and totally disabled; (vi) Borrower (A) ceases
doing business as a going concern; (B) makes an assignment for the benefit of creditors or admits in writing its inability to pay
its debts as they mature or generally fails to pay its debts as they become due; (C) initiates any voluntary bankruptcy, reorganization,
insolvency or similar proceeding; (D) fails to obtain the discharge of any bankruptcy, reorganization, insolvency or similar proceeding
initiated against it by others within sixty (60) days of the date such proceedings were initiated; (E) requests or consents to
the appointment of a trustee, custodian or receiver or other officer with similar powers for itself or a substantial part of its
property; or (F) a trustee, custodian or receiver or other officer with similar powers is appointed for itself or for a substantial
part of its property; (vii) a default shall have occurred and be continuing under any contract, agreement or document between Borrower
and Lender or any affiliate of Lender; (viii) a default shall have occurred and be continuing under any contract, agreement or
document between Borrower and any of its other creditors, (ix) if Borrower’s obligations are guaranteed by any other party,
an “Event of Default” (under and as defined in the Guaranty executed by such Guarantor) shall occur; (x) Lender shall
have determined, in its sole discretion, that a material adverse change in Borrower’s existing or prospective financial condition,
management or results of operations since the date hereof which may affect the ability of Borrower to perform its obligations under
the Loan Documents has occurred; or (xi) the owners of the capital stock or other units of ownership on the date of this Agreement
entitled to vote for the election of the board of directors of Borrower or other similar governing body cease to own or do not
have the unencumbered right to vote in the aggregate at least ninety percent (90%) of such capital stock or other ownership interest
of Borrower.

(b)                
Upon the occurrence of an Event of Default, Lender may, (i) at its option, declare all of the Obligations, including the
entire unpaid principal of all Notes, all of the unpaid interest accrued therein, and all of the other sums (if any) payable by
Borrower under this Agreement, any Notes, or any of the other Loan Documents, to be immediately due and payable, plus three percent
(3%) of the unpaid principal of all Notes declared due by Lender (as compensation for reinvestment costs and not as a penalty),
and (ii) proceed to exercise any one or more of the following remedies and any additional rights and remedies permitted by law
(none of which shall be exclusive), all of which are hereby authorized by Borrower:

(i)                  
Borrower shall upon demand assemble or cause to be assembled any or all of the Equipment at a location designated by Lender;
and/or to return promptly, at Borrower’s expense, any or all of the Equipment to Lender at such location;

(ii)                 
Lender may itself or by its agents enter upon the premises of Borrower or any other location where the Equipment is located
and take possession of and render unusable by Borrower any or all of the Equipment, wherever it may be located, without any court
order or other process of law and without liability for any damages occasioned by such taking of possession;

(iii)                
Sell, lease or otherwise dispose of any or all of the Equipment, whether or not in Lender’s possession, at public
or private sale with or without notice to Borrower, with the right of Lender to purchase and apply the net proceeds of such disposition,
after deducting all costs of such disposition (including but not limited to costs of transportation, possession, storage, refurbishing,
advertising and brokers’ fees), to the obligations of Borrower under the Notes and the other Loan Documents, with Borrower
remaining liable for any deficiency, or retain any and all of the Equipment;

(iv)               
Proceed by appropriate court action, either at law or in equity (including an action for specific performance), to enforce
performance by Borrower or to recover damages associated with such Event of Default; or exercise any other right or remedy available
to Lender at law or in equity; and

(v)                
By offset, recoupment or other manner of application, apply any security deposit, monies held in deposit or other sums then
held by Lender or any affiliate of Lender, and with respect to which Borrower has an interest, against any obligations of Borrower
arising under this Agreement, any Notes or any other Loan Document, whether or not Borrower has pledged, assigned or granted a
security interest to Lender in any or all such sums as collateral for said obligations.

(c)                
Borrower shall indemnify, defend and hold Lender harmless for any loss, personal injury (including death), or damage to
property, suffered by Lender, its employees or any of its agents in connection with its entry onto the premises of Borrower or
any third party hereunder. Each of the rights and remedies of Lender hereunder and under the other Loan Documents is in addition
to all of its other rights and remedies hereunder, under the other Loan Documents and under applicable law and nothing in this
Agreement or any other Loan Document shall be construed as limiting any such right or remedy. Lender’s failure to exercise
or delay in exercising any right, power or remedy available to Lender shall not constitute a waiver or otherwise affect or impair
its rights to the future exercise of any such right, power or remedy. Waiver by Lender of any Event of Default shall not be a waiver
by Lender of any other or subsequent Events of Default.

(d)                
Borrower shall notify Lender in writing of the occurrence of an Event of Default pursuant to this Agreement promptly after
such Event of Default has occurred, and in any event within ten (10) days thereafter.

14.                
General Indemnification. Borrower shall pay, and shall indemnify and hold Lender, its directors, officers,
agents, employees, successors and assigns (each an “Indemnitee”) harmless on an after-tax basis from and against, any
and all liabilities, causes of action, claims, suits, penalties, damages, losses, costs or expenses (including attorneys’
fees), obligations, liabilities, demands and judgments, and Liens, of any nature whatsoever (collectively, a “Liability”)
arising out of or in any way related to: (a) the Loan Documents, (b) the manufacture, purchase, ownership, title, selection,
acceptance, rejection, possession, lease, sublease, operation, use, maintenance, documenting, inspection, control, loss, damage,
destruction, removal, storage, surrender, sale, use, condition, delivery, nondelivery, return or other disposition of or any other
matter relating to any Item of Equipment or any part or portion thereof (including, in each case and without limitation, latent
or other defects, whether or not discoverable, any claim for patent, trademark or copyright infringement) and any and all Liabilities
in any way relating to or arising out of injury to persons, properties or the environment or any and all Liabilities based on strict
liability in tort, negligence, breach of warranties or violations of any regulatory law or requirement, (c) a failure to comply
fully with applicable law and (d) Borrower’s failure to perform any covenant, or Borrower’s breach of any representation
or warranty, hereunder; provided, that the foregoing indemnity shall not extend to the Liabilities to the extent resulting
solely from the gross negligence or willful misconduct of an Indemnitee.

15.                
No Reduction. All payments due to the Lender under the Loan Documents, and all other terms, conditions, covenants
and agreements to be observed and performed by Borrower thereunder, shall be made, observed or performed by Borrower without any
reduction or deduction whatsoever, including any reduction or deduction for any set-off, recoupment, counterclaim (whether in tort,
contract or otherwise) or for any tax, levy or impost.

16.                
Power of Attorney and Filing Authority. Borrower hereby authorizes Lender to file financing statements, either
before or after an Advance and, if applicable, amendments and continuation statements, and execute in the name of Borrower any
other documents, including applications for or transfers of title, that Lender may reasonably deem necessary to perfect and maintain
Lender’s interest in the Equipment, to exercise its rights and remedies hereunder and to fully consummate all transactions
contemplated under this Agreement. Borrower hereby irrevocably makes, constitutes and appoints, with an interest, Lender as true
and lawful attorney with power to sign the name of Borrower on any such documents. Borrower agrees promptly to execute and deliver
to Lender such further documents or other assurances, and to take such further action, as Lender may from time to time reasonably
request. Lender shall have the right to receive, endorse, assign and/or deliver in the name of Borrower any and all checks, drafts
and other instruments for the payment of money relating to the Collateral, and Borrower hereby waives notice of presentment, protest
and non-payment of any instrument so endorsed. All acts of said attorney or designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact
or of law, unless done with gross (not mere) negligence or willful misconduct; this power being coupled with an interest is irrevocable
while any of the Obligations remain unpaid.

17.                
Successors and Assigns. This Agreement shall inure to the benefit of Lender, its successors and assigns. Borrower
shall not sublease or otherwise relinquish possession of any Equipment, or assign, transfer or encumber its rights, interest or
obligation hereunder. Lender reserves the right to sell, assign, transfer, negotiate or grant any interest in all or any part of,
or any interest in, Lender’s rights and obligations in, under and to this Agreement, any Note, any one or more of the Loan
Documents, in the Equipment and/or the Obligations, at any time and from time to time. Borrower will fully cooperate with Lender
in connection with any such conveyance and will execute and deliver such consents and acceptances to any such conveyance, amendments
to this Agreement in order to effect any such conveyance (including, without limitation, the appointment of Lender as agent for
itself and all assignees) and new or replacement promissory notes for any Note (in an aggregate principal amount not to exceed
the Lender’s Commitment) in conjunction with any such conveyance.

18.                
Miscellaneous.

(a)                
Borrower shall pay all costs and expenses of Lender, including, without limitation, reasonable attorneys’ and other
professional fees, incurred by Lender in the preparation, negotiation, execution and enforcement of the Loan Documents, perfection
of security interests, payment of any obligations of Borrower required to be performed under this Agreement (including without
limitation, taxes and assessments with respect to any Collateral), enforcement of any terms, conditions or provisions hereof and
protection of Lender’s rights hereunder. If Borrower fails to reimburse Lender for any such costs and expenses within thirty
(30) days of invoice, interest shall accrue at the Default Rate on the unpaid balance thereof.

(b)                
This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio. Any judicial proceeding
arising out of or relating to this Agreement may be brought in any court of competent jurisdiction in Hamilton County, Ohio and
each of the parties hereto (i) accepts the nonexclusive jurisdiction of such courts and any related appellate court and agrees
to be bound by any judgment rendered by any such court in connection with any such proceeding and (ii) waives any objection it
may now or hereafter have as to the venue of any such proceeding brought in such court or that such court is an inconvenient forum.
BORROWER AND LENDER HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING ARISING OUT OF OR IN ANY WAY RELATING
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.

(c)                
All notices delivered hereunder shall be in writing (including facsimile) and shall be delivered to the following addresses:

if to Borrower :

 

Industrial Services of America, Inc.

7100 Grade Lane

Louisville, KY 40232

Attn: Alan Schroering

Facsimile: (____) _____-_______

 

If to Lender:

 

Fifth Third Commercial Leasing Co.

Mail Drop 10904A

38 Fountain Square Plaza

Cincinnati, Ohio 45263

Telephone: (800) 998-3444

Facsimile: (513) 534-6706

 

(d)                
Borrower acknowledges and agrees that time is of the essence with respect to its performance under the Loan Documents. Any
failure of Lender to require strict performance by Borrower or any waiver by Lender of any provision herein shall not be construed
as a consent or waiver of any provision of this Agreement. This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto, their permitted successors and assigns.

(e)                
This Agreement, together with all other Loan Documents, constitutes the entire understanding or agreement between Lender
and Borrower with respect to the Loan, and supercedes all prior agreements, representations and understandings relating to the
subject matter hereof.

(f)                 
Neither this Agreement nor any other Loan Document may be amended except by a written instrument signed by Lender and Borrower.

(g)                
This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

(h)                
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability shall not invalidate or render unenforceable such provision in any other jurisdiction.
Captions are intended for convenience or reference only, and shall not be construed to define, limit or describe the scope or intent
of any provisions hereof.

 

{Remainder of page intentionally left
blank. Signature page follows.}

IN WITNESS WHEREOF,
Lender and Borrower have executed this Agreement as of the day and year first above written.

	 	LENDER:	 	 	BORROWER:
	 	 	 	 	 
	 	FIFTH
    THIRD BANK	 	 	BANK INDUSTRIAL SERVICES OF AMERICA, INC.
	 	 	 	 	 
	 	By:	/s/
    Henry Kelsey	 	 	By:	/s/
    Alan Schroering
	 	Name:	Henry Kelsey	 	 	Name:	Alan
    Schroering
	 	Title:	Vice
    President	 	 	Title:	Chief
    Financial OfficerEXHIBIT 10.3

FIRST AMENDMENT TO CREDIT AGREEMENT 

          THIS FIRST
AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), entered into as of
April 14, 2011 (the “Effective Date”), by and among INDUSTRIAL SERVICES
OF AMERICA, INC., a Florida corporation (“ISA”), ISA INDIANA, INC., an
Indiana corporation (“ISA Indiana”), the Lenders party hereto, and FIFTH
THIRD BANK, an Ohio banking corporation (“Fifth Third”), in its capacity
as Agent for Lenders and LC Issuer under this Agreement (“Agent”) and as
LC Issuer, is as follows:

Preliminary
Statements

                    A. ISA and
ISA Indiana (each a “Borrower” and, collectively, “Borrowers”),
Agent, LC Issuer and the Lenders entered into that certain Credit Agreement
dated as of July 30, 2010 (as modified, extended, amended or restated from time
to time, the “Credit Agreement”). Capitalized terms used, but not
defined, in this Amendment will have the meanings given to them in the Credit
Agreement.

                    B.
Borrowers have requested that Agent, LC Issuer and the Lenders: (i) increase
the Maximum Revolving Commitment and the maximum amount of Eligible Inventory
advances in the calculation of the Borrowing Base as specifically set forth
herein, (ii) change the due date of the first Excess Cash Flow Payment as
specifically set forth herein, and (iii) amend certain other provisions of the
Credit Agreement and certain of the other Loan Documents. 

                    C. Agent,
LC Issuer and the Lenders are willing to so amend the Credit Agreement and
certain of the other Loan Documents, all on the terms, and subject to the
conditions, of this Amendment. 

Statement
of Amendment

          In
consideration of the mutual covenants and agreements set forth in this
Amendment, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Agent, LC Issuer and the Lenders
and Borrowers hereby agree as follows:

          1. Amendments
to Credit Agreement. Subject to the satisfaction of the conditions of this
Amendment, the Credit Agreement is hereby amended as follows:

                    1.1
The following definitions are hereby added to Section 1.2 of the Credit
Agreement in their proper alphabetical order:

	
  

 	
  

 	
  

 
	
  

 	
 “First Amendment” means the First Amendment to Credit
 Agreement among Agent, LC Issuer, the Lenders and Borrowers dated to be
 effective as of April 14, 2011.

 	
  

 

	
  

 	
  

 	
  

 
	
  

 	
 “First Amendment Effective Date” means April 14, 2011.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 “Unbilled Receivables” means Receivables resulting from sales
 to North American Stainless pursuant to which Finished Goods are delivered to
 North American Stainless without the simultaneous issuance of an invoice for
 such Finished Goods; provided, that, Receivables resulting
 from such “non-invoiced” shipments of Finished Goods may only be included as
 Unbilled Receivables for a period of thirty (30) days from the date such
 Finished Goods were delivered to North American Stainless.

 	
  

 

                    1.2
Clauses (a)(i) and (a)(ii) of the definition of “Eligible Receivables” in Section
1.2 of the Credit Agreement are hereby amended in their entirety by
substituting the following in their respective steads:

	
  

 	
  

 	
  

 
	
  

 	
 (i) Receivables (other than Unbilled Receivables) which consist of
 ordinary trade accounts receivable owned solely by such Borrower, evidenced
 by such Borrower’s customary invoice therefor, payable in cash in Dollars and
 which arise out of an outright, bona fide, lawful and final provision of
 services or sale of Finished Goods in each case in the ordinary course of
 such Borrower’s business as presently conducted by it to a Person who is not
 an Affiliate of such Borrower (or who otherwise is controlled by such
 Borrower or by an Affiliate of such Borrower) who has issued a valid and
 binding written purchase order to, or entered into a binding written contract
 therefor with, such Borrower;

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii) Receivables which are Unbilled Receivables or are due and
 payable absolutely and unconditionally within (A) such Borrower’s customary
 payment terms as granted in the ordinary course of business as presently
 conducted by it, or permitted to be conducted by it in accordance with the
 terms of this Agreement, provided that such customary payment
 terms as granted do not, in any event, exceed 60 days from the date of the
 invoice applicable thereto, or (B) such extended terms that Agent, in its
 discretion exercised in good faith, approves after prior notice from such
 Borrower;

 	
  

 

                    1.3
Clause (b)(iv) of the definition of “Eligible Receivables” in Section 1.2
of the Credit Agreement is hereby amended in its entirety by substituting the
following in its stead:

	
  

 	
  

 	
  

 
	
  

 	
 (iv) Receivables owing from any single account debtor, to the extent
 such Receivables exceed, as of any date, 30% of the face amount (less maximum
 discounts, credits and allowances which may be taken by, or granted to, such
 account debtor in connection 

 	
  

 

	
  

 	
  

 	
  

 
	
  

 	
 therewith) of the then aggregate outstanding Eligible Receivables of
 Borrowers; provided, however, that, as of any date of determination,
 for Receivables (which are otherwise eligible) owing from North American
 Stainless, the foregoing percentage is 80%; provided that, the
 aggregate amount of such Eligible Receivables owing from North American
 Stainless shall not exceed in the aggregate at any time the then Receivables
 Advance Rate multiplied by $25,000,000 (after application of the
 Receivables Advance Rate; such that, on the First Amendment Effective Date,
 the maximum amount of Eligible Receivables owing from North American
 Stainless could not exceed $20,000,000).

 	
  

 

                    1.4
Clause (b)(ix) of the definition of “Eligible Receivables” in Section 1.2
of the Credit Agreement is hereby amended in its entirety by substituting the
following in its stead:

	
  

 	
  

 	
  

 
	
  

 	
 (ix) Receivables which are: (A) generated by a sale on approval, a
 bill and hold sale, a sale on consignment, or other type of conditional sale
 or which are subject to progress billing, or (B) Unbilled Receivables, but
 only to the extent the aggregate amount of all such Unbilled Receivables, at
 any time, exceeds $15,000,000;

 	
  

 

                    1.5
The following definitions in Section 1.2 of the Credit Agreement are
hereby amended in their entirety by substituting the following in their
respective steads:

	
  

 	
  

 	
  

 
	
  

 	
 “Borrowing Base” means, as of any time, an amount in Dollars
 equal to:

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
           (a) the Receivables Advance Rate applied to the then Net Amount of
 Eligible Receivables then outstanding;

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 plus    (b) the least of (i) $18,000,000
 (subject to adjustment as provided in Section 2.13), (ii) the
 applicable Inventory Advance Rate applied, with respect to the applicable
 categories of Eligible Inventory, to the then Eligible Inventory and (iii)
 80% of the Net Orderly Liquidation Value Percentage (such product expressed
 as a percentage) applied, with respect to the applicable categories of
 Eligible Inventory, to the then Eligible Inventory; and

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 less    (c) the then Reserve Amount.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 “Dodd-Frank Act” has the meaning set forth in Section
 2.6(a)(iv).

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 “Letter of Credit Availability” means, as at any time, an
 amount equal to the lesser of (a) an amount equal to (i) $2,500,000 less
 (ii) 

 	
  

 

	
  

 	
  

 	
  

 
	
  

 	
 the then
 Letter of Credit Obligations and (b) the then Revolving Loan Availability.

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 “Maximum
 Revolving Commitment” means Forty-Five Million Dollars ($45,000,000).

 	
  

 

                    1.6 The second sentence of Section 2.2(a) of the Credit Agreement is hereby
amended in its entirety by substituting the following in its stead:

	
  

 	
  

 	
  

 
	
  

 	
 The aggregate amount of all of the Revolving Loan Commitments is
 $45,000,000.

 	
  

 

                    1.7
Section 2.2(e) of the Credit Agreement is hereby amended in its entirety
by substituting the following in its stead:

	
  

 	
  

 	
  

 
	
  

 	
 (e) In addition to the scheduled payments of principal on the Term
 Loan set forth in Section 2.3(b), beginning on the earlier of (i)
 April 30, 2012 or (ii) 15 days following the date on which Agent receives
 Borrower’s Financial Statements in accordance with Section 6.1(b) for
 the Fiscal Year ending December 31, 2011 and continuing on the same due date
 (or 15 days following the date on which Lenders receive Borrower’s Financial
 Statements in each subsequent Fiscal Year) thereafter occurring in each
 subsequent Fiscal Year until the payment in full of the Term Loan, Borrowers
 will make a payment to Agent, for the ratable benefit of Lenders (each, an “Excess
 Cash Flow Payment”) in an aggregate amount equal to the Excess Cash Flow
 Percentage of Excess Cash Flow for the immediately preceding Fiscal Year of
 Borrower then ended. Each Excess Cash Flow Payment shall, absent the
 occurrence and continuance of an Event of Default, be applied to the
 remaining installments of principal under the Term Loan Notes in the inverse
 order of maturity, and to accrued but unpaid interest thereon. The receipt by
 Lenders of any such prepayments will not change the due dates or amounts of
 the monthly principal payments otherwise required to be paid pursuant to the
 Term Loan Notes.

 	
  

 
	
  

 	
  

 	
  

 
	
                     1.8
 Section 2.6(a)(iv) of the Credit Agreement is hereby amended in its
 entirety by substituting the following in its stead:

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 (iv) Notwithstanding any other provisions of this Section 2.6(a)
 to the contrary, if Agent determines, at any time, in good faith that (A)
 deposits in Dollars are not available in the London interbank market or (B)
 by reason of: (1) national or international financial, political or economic
 conditions or (2) any applicable law, treaty, 

 	
  

 

	
  

 	
  

 	
  

 
	
  

 	
 rule or regulation, whether domestic or foreign (including, without
 limitation, any request, rule, guideline or directive (1) in connection with
 the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank
 Act”) or (2) enacted, promulgated, adopted, issued or implemented by the
 Bank of International Settlements, the Basel Committee on Banking Regulations
 and Supervisory Practices (or any successor or similar authority), or the
 United States financial regulatory authorities)), now or hereafter in effect
 or the interpretation or administration thereof by any Governmental Authority
 charged with the interpretation or administration thereof or compliance by a
 Lender with any request or directive of such authority (whether or not having
 the force of law), including exchange controls, (I) it is impracticable,
 unlawful or impossible for Lenders to maintain loans at an interest rate
 based on the LIBOR Tranche Rate or the Daily LIBOR Rate, (II) adequate and
 fair means do not exist for ascertaining the interest rate applicable
 hereunder to LIBOR Rate Loans, or (III) the LIBOR Tranche Rate or the Daily
 LIBOR Rate determined by Agent will not adequately and fairly reflect the
 cost to Lenders of making or maintaining any LIBOR Rate Loans (including
 inaccurate or inadequate reflection of actual costs resulting from the
 calculation of rates by reporting sources), then Agent will give Borrowers
 prompt written notice thereof (and will thereafter give Borrowers prompt
 notice of the cessation, if any, of such condition), and, so long as such
 condition remains in effect as determined by Agent, the obligations of
 Lenders to make or to continue to fund or maintain LIBOR Rate Loans will
 terminate, and the Loans will bear interest from and after such date at
 a floating rate equal to the Prime Rate plus the Applicable Prime Rate
 Margin. Notwithstanding anything to the contrary contained herein, for all
 purposes of this Agreement, all requests, rules, guidelines and directives
 (A) in connection with the Dodd-Frank Act or (B) enacted, promulgated,
 adopted, issued or implemented by the Bank of International Settlements, the
 Basel Committee on Banking Regulations and Supervisory Practices (or any
 successor or similar authority), or the United States financial regulatory
 authorities shall, in each case, be deemed to constitute a change under this
 Agreement regardless of the date on which such request, rule, guideline or
 direction was enacted, promulgated, adopted, issued or implemented. Moreover,
 notwithstanding any other provisions of this Section 2.6(a)(iv) to the
 contrary, if any individual Lender determines in good faith that it is
 unlawful under applicable law to make or maintain LIBOR Rate Loans as
 contemplated by this Agreement, the affected Lender (the “Affected Lender”)
 will provide prompt written notice to Borrowers and (x) the Affected
 Lender’s commitment hereunder to 

 	
  

 

	
  

 	
  

 	
  

 
	
  

 	
 make LIBOR Rate Loans and continue LIBOR Rate Loans as such will
 thereupon terminate and (y) the Affected Lender’s Revolving Loans then
 outstanding as LIBOR Rate Loans, if any, will automatically bear interest
 from and after such date at a floating rate equal to the Prime Rate plus the
 Applicable Prime Rate Margin on the respective last days of the then current
 LIBOR Tranche Period (or immediately as to Daily LIBOR Rate Loans) with
 respect to such Revolving Loans. Borrowers, so long as no Event of Default
 then exists, may: (A) request Agent to use commercially reasonable efforts to
 identify a replacement Lender or financial institution satisfactory to
 Borrowers to acquire and assume all or a ratable part of all of such Affected
 Lender’s LIBOR Rate Loans and commitments to make LIBOR Rate Loans (a “LIBOR
 Replacement Lender”), provided that Agent will have no duty to
 undertake a formal syndication or any underwriting obligations of any nature
 with respect to any proposed LIBOR Replacement Lender requested by Borrowers;
 (B) request one or more of the other Lenders to acquire and assume all or
 part of such Affected Lender’s LIBOR Loans and commitment to make LIBOR
 Loans; or (C) designate a LIBOR Replacement Lender. Any such designation of a
 Replacement LIBOR Lender under clause (A) or (C) shall be subject to the
 prior consent of Agent. Borrowers and Lenders further acknowledge that Agent
 assumes no responsibility for ensuring that Agent will be able to locate any
 LIBOR Replacement Lender or that any Person designated as a LIBOR Replacement
 Lender becomes a Lender under this Agreement. If Agent gives notice to such
 Affected Lender that a LIBOR Replacement Lender has been obtained, then such
 Affected Lender must immediately sell all of such Affected Lender’s Pro Rata
 Share of the LIBOR Rate Loans and commitment to make LIBOR Rate Loans for an
 amount equal to the unpaid principal balance of the LIBOR Rate Loans held by
 such Affected Lender plus all accrued interest and fees then due to such
 Affected Lender as set forth in this Agreement.

 	
  

 
	
  

 	
  

 	
  

 
	
                     1.9
 Sections 6.1(c)(i) and 6.1(c)(ii) of the Credit Agreement are
 hereby amended in their entirety by substituting the following in their
 respective steads:

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 (i) a Borrowing Base Certificate by no later than the Tuesday after
 the end of each calendar week (which is based on values as of the immediately
 preceding week; provided, however, that Agent may, in its sole discretion,
 elect to require (as evidenced by a written notice delivered to Borrowers)
 that Borrowers deliver a Borrowing Base Certificate on each Business Day,
 which is based on values as of the immediately preceding Business Day); and

 	
  

 

	
  

 	
  

 	
  

 
	
  

 	
 (ii) reports of each Borrower’s sales, credits to sales or credit
 memoranda applicable to sales, collections and non-cash charges (from
 whatever source, including sales and noncash journals or other credits to
 Receivables and Unbilled Receivables) for the applicable period, and
 acceptable supporting documentation thereto (including, a report indicating
 the Dollar value of each Borrower’s Eligible Receivables, Unbilled
 Receivables, Eligible Inventory and all other information deemed necessary by
 Agent to determine levels of that which is and is not Eligible Receivables,
 Unbilled Receivables, or Eligible Inventory).

 	
  

 
	
  

 	
  

 	
  

 
	
                     1.10
 Section 6.1(d) of the Credit Agreement is hereby amended in its
 entirety by substituting the following in its stead:

 	
  

 
	
  

 	
  

 
	
  

 	
 (d) By no later than the 30th day after the end of each calendar
 month, or sooner if available, Borrowers shall deliver to Agent monthly
 agings, broken down by Borrowers and by due date of Receivables listed by
 invoice date and Unbilled Receivables by the delivery date, in each case
 reconciled to the Borrowing Base Certificate for the end of such month and
 Borrowers’ general ledgers, and setting forth any changes in the reserves
 made for bad accounts or any extensions of the maturity of, any refinancing
 of, or any other material changes in the terms of any Receivables or Unbilled
 Receivables in such format as is specified by Agent from time to time,
 together with such further information with respect thereto in such format as
 Agent may then require in the exercise of its discretion in good faith.

 	
  

 
	
  

 	
  

 	
  

 
	
                     1.11
 The first sentence of Section 11.1(m) of the Credit Agreement is
 hereby amended in its entirety by substituting the following in its stead:

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 The maximum aggregate liability of the Credit Parties under this
 Cross-Guaranty is $52,960,000.

 	
  

 

          2. Amendment
and Restatement of Revolving Loan Note. On the Effective Date, Borrowers
will duly execute and deliver to Agent an Amended and Restated Revolving Loan
Note in the form attached hereto as Exhibit A (the “Amended and
Restated Revolving Loan Note”).

          3. Reaffirmation of Cross-Guaranties.
Each of the Borrowers (collectively, the “Cross-Guarantors”) hereby (i)
confirms, ratifies and reaffirms its respective Cross-Guaranty and (ii)
acknowledges and agrees that no Cross-Guarantor is released from its
obligations under its 

respective
Cross-Guaranty by reason of this Amendment and that the obligations of each
Cross-Guarantor under its respective Cross-Guaranty extend to the Credit
Agreement, the Amendment Documents and the other Loan Documents as amended by,
or in connection with, this Amendment. This reaffirmation of each
Cross-Guarantor’s Cross-Guaranty shall not be construed, by implication or
otherwise, as imposing any requirement that Agent notify or seek the consent of
any Cross-Guarantor relative to any past or future extension of credit, amendment
or modification, extension or other action with respect thereto, in order for
any such extension of credit, amendment or modification, extension or other
action with respect thereto to be subject to a Cross-Guarantor’s
Cross-Guaranty, it being expressly acknowledged and reaffirmed that each
Cross-Guarantor has under its respective Cross-Guaranty consented, among others
things, to modifications, amendments, extensions and other actions with respect
thereto without any notice thereof or any further consent thereto. 

          4. Reaffirmation
and Amendment of Guaranty and Reaffirmation of Security. As a condition of
this Amendment, on the Effective Date, Borrowers will cause each Guarantor to
execute and deliver to Agent the Reaffirmation and Amendment of Guaranty and
Reaffirmation of Security provided after the signatures below and incorporated
by reference herein.

           5. Additional
Conditions; Other Documents. As a condition of this Amendment, Borrowers
will deliver to Agent, on or before the execution of this Amendment, (i) the
Amended and Restated Revolving Loan Note duly executed by Borrowers; (ii) an
amendment to each of the Mortgages, in form and substance acceptable to Agent,
(iii) a copy, certified by the Secretary of each Borrower, of resolutions of
the Board of Directors of Borrowers, authorizing the execution of this
Amendment and all other documents executed in connection herewith, which
certificate and resolutions will be in form and substance acceptable to Agent;
(iv) a copy, certified by the Secretary of each Guarantor of resolutions of the
sole member of each Guarantor authorizing the execution of the Reaffirmation
and Amendment of Guaranty and Reaffirmation of Security and all other documents
executed in connection therewith, which certificate and resolutions will be in
form and substance acceptable to Agent; and (v) such other documents,
instruments, and agreements deemed necessary or desirable by Agent to effect
the amendments to Borrowers’ credit facilities with Agent, LC Issuer and the Lenders
contemplated by this Amendment. 

          6. Reaffirmation
of Security. Borrowers and Agent, LC Issuer and the Lenders hereby
expressly intend that this Amendment shall not in any manner: (a) constitute
the refinancing, refunding, payment or extinguishment of the existing
Obligations as of the Effective Date; (b) be deemed to evidence a novation of
the outstanding balance of the Obligations; or (c) affect, replace, impair, or
extinguish the creation, attachment, perfection or priority of the Liens on the
Loan Collateral granted pursuant to any of the Security Documents. Borrowers
ratify and reaffirm any and all grants of Liens to Agent in the Loan Collateral
as security for the Obligations, and Borrowers acknowledge and confirm that the
grant of the Liens to Agent in the Loan Collateral: (i) represent continuing
Liens on all of the Loan Collateral, (ii) secure all of the Obligations, and
(iii) represent valid, first and best Liens on all of the Loan Collateral
except to the extent, if any, of the Permitted Liens.

          7. Representations.
To induce Agent, LC Issuer and the Lenders to accept this 

Amendment, each Borrower hereby represents and warrants to Agent, LC
Issuer and the Lenders as follows:

                    7.1
Each Borrower has full power and authority to enter into, and to perform its
obligations under, this Amendment, the Amended and Restated Revolving Loan Note
and the other documents executed in connection therewith (collectively, the “Amendment
Documents”), and the execution and delivery of, and the performance of its
obligations under and arising out of, the Amendment Documents have been duly
authorized by all necessary corporate action.

                    7.2
The Amendment Documents constitute the legal, valid and binding obligations of
each Borrower, enforceable in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally.

                    7.3
Each Borrower’s representations and warranties contained in the Credit
Agreement are complete and correct as of the Effective Date with the same
effect as though these representations and warranties had been made again on
and as of the Effective Date, subject to those changes as are not prohibited
by, or do not constitute Events of Default under, the Credit Agreement.

                    7.4
No Event of Default has occurred and is continuing under the Credit Agreement.

          8. Costs
and Expenses; Amendment Fee. As a condition of this Amendment, (i)
Borrowers will pay to Agent an amendment fee of $11,500, payable in full on the
Effective Date; such fee, when paid, will be fully earned and non-refundable
under all circumstances, and (ii) Borrowers will promptly on demand pay or
reimburse Agent for the costs and expenses incurred by Agent in connection with
this Amendment, including, without limitation, attorneys’ fees.

          9.
Release. Borrowers hereby release Agent, LC Issuer and the Lenders from
any and all liabilities, damages and claims arising from or in any way related
to the Obligations or the Loan Documents, other than such liabilities, damages
and claims which arise after the execution of this Amendment. The foregoing
release does not release or discharge, or operate to waive performance by,
Agent, LC Issuer and the Lenders of its express agreements and obligations
stated in the Loan Documents on and after the Effective Date.

          10. Default.
Any default by Borrowers in the performance of Borrowers’ obligations under
this Amendment shall constitute an Event of Default under the Credit Agreement.

          11. Continuing
Effect of the Credit Agreement. Except as expressly amended hereby, all of
the provisions of the Credit Agreement are ratified and confirmed and remain in
full force and effect.

          12. One
Agreement; References; Fax Signature. The Credit Agreement, as amended by
this Amendment, will be construed as one agreement. All references in any of
the Loan Documents to the (i) Credit Agreement will be deemed to be references
to the Credit Agreement 

as amended by
this Amendment and (ii) Revolving Loan Note will be deemed to be references to
the Amended and Restated Revolving Loan Note. This Amendment may be signed by
facsimile signatures or other electronic delivery of an image file reflecting
the execution hereof, and if so signed, (a) may be relied on by each party as
if the document were a manually signed original and (b) will be binding on each
party for all purposes.

          13. Captions. The
headings to the Sections of this Amendment have been inserted for convenience
of reference only and shall in no way modify or restrict any provisions hereof
or be used to construe any such provisions.

          14. Counterparts.
This Amendment may be executed in multiple counterparts, each of which shall be
an original but all of which together shall constitute one and the same
instrument.

          15. Entire
Agreement. This Amendment, together with the other Loan Documents, sets
forth the entire agreement of the parties with respect to the subject matter of
this Amendment and supersedes all previous understandings, written or oral, in
respect of this Amendment.

          16. Governing
Law. This Amendment shall be governed by and construed in accordance with
the internal laws of the State of Ohio (without regard to Ohio conflicts of law
principles).

[Signature Page Follows]

          IN WITNESS
WHEREOF, Borrowers have executed this Amendment to be effective as of the
Effective Date. 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 INDUSTRIAL SERVICES OF AMERICA, INC.

 
	
  

 	
  

 
	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Alan Schroering

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
 Alan Schroering, Chief Financial Officer

 
	
  

 	
  

 
	
  

 	
 ISA INDIANA, INC.

 
	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Alan Schroering

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
  

 	
 Alan Schroering, Chief Financial Officer

 

	
  

 	
  

 	
  

 
	
 Accepted as
 of the Effective Date.

 	
  

 
	
  

 	
  

 
	
 FIFTH THIRD BANK, as Agent

 	
  

 
	
  

 	
  

 
	
 By:

 	
 /s/ Donald K. Mitchell

 	
  

 
	
  

 	

 

 	
  

 
	
  

 	
 Donald K. Mitchell, Vice President

 
	
  

 	
  

 
	
  

 	
  

 
	
 FIFTH THIRD BANK, as Lender

 	
  

 
	
  

 	
  

 
	
 By:

 	
 /s/ Donald K. Mitchell

 	
  

 
	
  

 	

 

 	
  

 
	
  

 	
 Donald K. Mitchell, Vice President

 
	
  

 	
  

 
	
 FIFTH THIRD BANK, as LC Issuer

 	
  

 
	
  

 	
  

 
	
 By:

 	
 /s/ Donald K. Mitchell

 	
  

 
	
  

 	

 

 	
  

 
	
  

 	
 Donald K.
 Mitchell, Vice President

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