Document:

Exhibit 10.1

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT AND CONSENT

 

This AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT AND CONSENT (this “Amendment”) is made as of September 30, 2019 (the "Effective Date"), by and among INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation (“ISA”), 7124 GRADE LANE LLC, a Kentucky limited liability company (“7124 Grade Lane”), and 7200 GRADE LANE LLC, a Kentucky limited liability company (“7200 Grade Lane”; and together with ISA, and 7124 Grade Lane, each individually a “Borrower” and collectively, the “Borrowers”), and BANK OF AMERICA, N.A. (“Lender”).

W I T N E S S E T H :

 

WHEREAS, the parties hereto have entered into a Loan and Security Agreement dated as of November 9, 2018 (as amended or otherwise modified from time to time, the “Loan Agreement”) and various instruments, guaranties, agreements and other documents executed and/or delivered in connection therewith (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, restated, renewed, extended, substituted, modified or supplemented from time to time, collectively, the “Loan Documents”);

WHEREAS, Borrowers and Lender have agreed to amend certain provisions of the Loan Agreement, and Lender is willing to do so, subject to the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the foregoing, and for good and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

SECTION 1.   DEFINITIONS.

1.1               Definitions in Loan Agreement.  Capitalized terms used in this Amendment and not otherwise defined shall have the meanings ascribed to such terms in the Loan Agreement.

SECTION 2.   AMENDMENTS.  Effective as of the Effective Date:

2.1               Section 10.3.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“10.3.1              Minimum EBITDA.  At all times before the FCCR Conversion Date, Borrowers shall maintain a consolidated EBITDA of not less than the following amounts opposite the respective periods set forth below:  

   

	
	
Period

	
Minimum EBITDA

	

	
	
One month ending August 31, 2019

	
($100,000)

	

	
	
Two months ending September 30, 2019

	
$(680,000)

	

	
	
Three months ending October 31, 2019

	
$377,000

	

	
	
Four months ending November 30, 2019

	
$617,000

	

	
	
Five months ending

December 31, 2019 and, if the FCCR Conversion Date has not occurred, the five months ending on the last day of each month thereafter

	
$782,000

	

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Compliance with the foregoing shall be evidenced by delivery of the Compliance Certificate required under Section 10.1.2(c).”

SECTION 3.   AMENDMENT FEE

In consideration of the amendments to the Loan Agreement requested by Borrowers and agreed to by Lender, Borrowers shall pay to Lender an amendment fee in the amount of $2,500 (the “Amendment Fee”).  The Amendment Fee shall be fully earned, due and payable on the date hereof and shall not be subject to refund, rebate or proration for any reason whatsoever.

SECTION 4.   PROVISIONS OF GENERAL APPLICATION

4.1               Representations in Loan Documents.  Each of the representations and warranties made by or on behalf of Borrowers to Lender in any of the Loan Documents was true and correct when made and is true and correct in all material respects on and as of the Effective Date with the same full force and effect as if each of such representations and warranties had been made by or on behalf of Borrowers on the Effective Date and in this Amendment (other than such representations and warranties that relate solely to a specific prior date, which such representation and warranties were true and correct in all material respects only as of that specific prior date).  Borrowers hereby represent and warrant to Lender that (a) no Event of Default exists as of the Effective Date, after giving effect to this Amendment, and (b) no Event of Default will exist immediately after the Effective Date, after giving effect to this Amendment.

4.2               Binding Effect of Documents. This Amendment and the other Loan Documents have been duly executed and delivered to the Lender by Borrowers and are in full force and effect, as modified hereby. 

4.3              Conditions to Effectiveness.  The effectiveness of the terms and provisions of this Amendment shall be subject to: 

(a)                Receipt by Lender of this Amendment, duly authorized, executed and delivered by Borrowers and Lender;  

(b)               Receipt by Lender of the Amendment Fee; and

(c)           Unless otherwise agreed by Lender at its sole option, the Borrowers shall have paid all reasonable and documented out-of-pocket expenses incurred by Lender, including the reasonable fees, charges and disbursements of counsel for Lender, in connection with the preparation, negotiation, execution and delivery of this Agreement.

4.4               Effect of this Amendment.  Except as modified pursuant hereto, no other changes or modifications to the Loan Documents are intended or implied and in all other respects the Loan Documents are hereby specifically ratified, restated and confirmed by all parties hereto as of the Effective Date.  To the extent of conflict between the terms of this Amendment and the other Loan Documents, the terms of this Amendment shall control.  The Loan Agreement and this Amendment shall be read and construed as one agreement.

4.5               Further Assurances.  The parties hereto shall execute and deliver such additional documents and take such additional action as may be reasonably necessary or desirable to effectuate the provisions and purposes of this Amendment.

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4.6               Binding Effect.  This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

4.7               Governing Law.  THIS AMENDMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK; PROVIDED THAT THE PARTIES HERETO SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

4.8               Counterparts.  This Amendment may be executed in one or more counterparts, each of which shall constitute but one and the same Amendment.  In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto.  Delivery of a signature page hereto by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart hereof.

[Signature page follows]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment to Loan and Security Agreement as of the date first written above.

 

	
 

	
Borrowers:

INDUSTRIAL SERVICES OF AMERICA, INC.

 

By:   /s/ Todd L. Phillips                                                       

Todd L. Phillips, Chief Executive Officer, President and Chief Financial Officer 

 

Address:

7100 Grade Lane, Bldg. 1

            Louisville, KY 40213

Attn: Todd Phillips              

 

7124 GRADE LANE LLC 

 

BY: INDUSTRIAL SERVICES OF AMERICA, INC., Manager

 

By:   /s/ Todd L. Phillips                                                      

Todd L. Phillips, Chief Executive Officer, President and Chief Financial Officer 

 

Address:

7100 Grade Lane, Bldg. 1

            Louisville, KY 40213

Attn: Todd Phillips 

 

7200 GRADE LANE LLC 

 

BY: INDUSTRIAL SERVICES OF AMERICA, INC., Manager

 

By:   /s/ Todd L. Phillips                                                      

Todd L. Phillips, Chief Executive Officer, President and Chief Financial Officer 

 

Address:

7100 Grade Lane, Bldg. 1

            Louisville, KY 40213

Attn: Todd Phillips

 

                     

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	Lender:

	
	BANK OF AMERICA, N.A., as Lender

	
	By:   /s/ Douglas Cowan      
		Name:   Douglas Cowan       
		Title:   Senior Vice President 

Amendment No. 3 to Loan and Security AgreementExhibit 10.2

ONE TIME WAIVER OF RIGHT OF FIRST REFUSAL

This One Time Waiver of Right of First Refusal (this “Waiver”) is made and entered into as of the last date signed below (the “Effective Date”), by and between INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation (“Tenant”) and 7100 GRADE LANE LLC, a Kentucky limited liability company (“Landlord”).

1. Recitals.

(a) Landlord and Tenant are parties to an All Net Lease dated October 1, 2017 (the “Lease”) for certain premises known generally as 7100 and 7020 Grade Lane, Louisville, Kentucky 40213, as more particularly set forth in the Lease (the “Premises”). Pursuant to Article XLII of the Lease, Tenant has a right of first refusal to purchase the Premises in accordance with a bona fide contract entered into by Landlord and made subject to Tenant’s right of first refusal.

(b) Landlord has advised Tenant that Landlord is negotiating a sale of the Premises to River Metals Recycling LLC (“RMR”) or an affiliated entity directly or indirectly controlling, controlled by, or under common control with, RMR (collectively with RMR, an “RMR Entity”).

(c) Tenant, ISA Indiana, Inc., ISA Logistics LLC, ISA Real Estate, LLC, ISA Indiana Real Estate LLC, 7021 Grade Lane LLC, 7124 Grade Lane LLC and 7200 Grade Lane LLC (collectively, “Sellers”) and RMR, among others, are parties to that certain Asset Purchase Agreement dated as of August 16, 2019 (as amended, the “APA”), whereby Sellers have agreed to sell substantially all of the assets of the Business (as defined in the APA) to RMR, and RMR has agreed to purchase such assets from Sellers, on the terms and conditions set forth in the APA.

(d) Tenant has advised Landlord that because of its potential sale to RMR Tenant has no current interest in purchasing the Premises and that, accordingly, Tenant is willing to waive its right of first refusal for a period of time to facilitate Landlord’s possible sale of the Premises to an RMR Entity, subject to the terms and conditions set forth herein.

2. Agreement. In consideration of the Recitals, and in consideration of $100.00 to be paid by Landlord to Tenant promptly after execution of this Waiver by Tenant, and with Tenant acknowledging that Landlord is relying on this Waiver in proceeding with a potential sale of the Premises to an RMR Entity, receipt and sufficiency of which are acknowledged by Tenant and Landlord, Tenant agrees as follows, intending to and being legally bound:

(a) Waiver. If Landlord enters into a bona fide contract with an RMR Entity that contemplates the closing of the sale of the Premises to an RMR Entity during the Waiver Period, provided that such sale occurs only in connection with the consummation of the asset sale from ISA to RMR contemplated by the APA, Tenant hereby waives its right of first refusal to purchase the Premises in accordance with the terms and conditions of such bona fide contract between Landlord and an RMR Entity. During the Waiver Period, Tenant irrevocably agrees that Landlord has no obligation to deliver a copy of the purchase agreement between Landlord and an RMR Entity, and that during the Waiver Period Landlord may sell and convey the Premises to an RMR Entity at any price and on any terms acceptable to Landlord (except only that the sale and conveyance shall be subject to the Lease) without any obligation to Tenant under Article XLII of the Lease. Notwithstanding anything set forth herein to the contrary, Tenant does not waive and specifically reserves its right of first refusal with respect to any transfer of the Premises to a person or entity other than an RMR Entity and any transfer of the Premises to an RMR Entity occurring after the end of the Waiver Period.

(b) Period. This Waiver shall be in effect until the earliest to occur of the following three dates (the period of time from the Effective Date until the earliest to occur of the following three dates shall be referred to herein as the “Waiver Period”): (i) the date on which the Premises are sold and conveyed to an RMR Entity; (ii) the date on which the APA is terminated in accordance with Section 8.05 of the APA; and (iii) March 6, 2020. After the Waiver Period, Landlord (and any successor landlord) will have to satisfy all terms and conditions set forth in Article XLII of the Lease before entering into a bona fide contract with an RMR Entity and the right of first refusal set forth in Article XLII of the Lease shall be in full force and effect with respect to any transfer to an RMR Entity.

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(c) Confirmation. Tenant agrees to and shall confirm this Waiver in any estoppel agreement, statement, certificate or letter that is to be provided to an RMR Entity in connection with the purchase of the Premises during the Waiver Period, and the requirement to confirm this Waiver supplements the requirement for such a statement set forth in Article XXIV of the Lease.

(d) Authority. The persons signing this Waiver on behalf of Tenant and Landlord represent and warrant that they are duly authorized to sign this Waiver and to bind Tenant and Landlord, respectively.

3. Ratification; Conflict. Landlord and Tenant ratify and affirm the Lease. Except as provided herein, the terms and conditions of the Lease shall remain unmodified and in full force and effect. In the event of any conflict between the terms of this Waiver and the Lease, the terms of this Waiver will control.

4. Counterparts, Execution and Delivery. Tenant and Landlord agree that (a) this Waiver may be executed in counterparts, (b) this Waiver shall be effective when signed and delivered by both parties, and (c) delivery of this Waiver may be by electronic means such as email/ pdf or by fax with the same effect as if delivered with original signatures.

[SIGNATURES ON FOLLOWING PAGES]

WITNESS the signatures of the parties on the dates set forth below.

	
	TENANT:
	
	

	
	INDUSTRIAL SERVICES OF AMERICA, INC.,
	
	a Florida corporation
	
	

	
	By: /s/ Todd L. Phillips
	
	Print Name: Todd L. Phillips
	
	Title: CEO
	
	Date: 10/30/2019
	
	

	
	

	
	LANDLORD:
	
	

	
	7100 GRADE LANE LLC,
	
	a Kentucky limited liability company
	
	

	
	By: /s/ Ronald Kletter
	
	Print Name: Ronald Kletter
	
	Title: VP
	
	Date: 10/31/19

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