Document:

Exhibit 10.1 - Seventh Amendment to Credit Agreement

EXHIBIT 10.1

SEVENTH AMENDMENT TO CREDIT AGREEMENT 
THIS SEVENTH AMENDMENT TO CREDIT AGREEMENT (this Amendment), entered into as of February 21, 2014 (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 and a Lender, 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 amended by the First Amendment to Credit Agreement dated as of April 14, 2011, the Second Amendment to Credit Agreement dated as of November 16, 2011, the Third Amendment to Credit Agreement dated as of March 2, 2012, the Fourth Amendment to Credit Agreement dated as of August 13, 2012, the Fifth Amendment to Credit Agreement dated as of November 14, 2012, and the Sixth Amendment to Credit Agreement dated as of March 29, 2013 (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) waive certain Events of Default under the Credit Agreement, (ii) extend the maturity date of the loans to July 31, 2015 and (iii) amend certain other provisions of the Credit Agreement. 
C.     Agent, LC Issuer and the Lenders are willing to amend the Credit Agreement and enter into additional 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 for periods on and after the Effective Date: 
1.1     The following definitions are hereby added to Section 1.2 of the Credit Agreement: 
"Seventh Amendment" means the Seventh Amendment to Credit Agreement among Agent, LC Issuer, the Lenders and Borrowers dated effective as of February 21, 2014. 
"Seventh Amendment Effective Date" means February 21, 2014. 
1.2     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: 
"Advance Rate" means a percentage, subject to change by Agent from time to time in accordance with Section 2.13, which is applied to Eligible Receivables (the "Receivables Advance Rate") and to Eligible Inventory (the "Inventory Advance Rate") for purposes of determining the Borrowing Base. 

Except for Receivables owing from North American Stainless as provided herein, the Receivables Advance Rate will never exceed 85%. The Inventory Advance Rate, which shall be revised by the Agent from time to time as new appraisals for Eligible Inventory are made available, shall equal the lesser of (i) 80% of the appraised orderly liquidation value of all Inventory of the Borrowers, net of any costs associated with the liquidation thereof and (ii) 65% of cost; provided, however, the Inventory Advance Rate as of the Seventh Amendment Effective Date shall be 60% and shall remain at 60% until such time as a new appraisal is made available in accordance with Section 3.3. Agent may establish, in its discretion exercised in good faith, from time to time in accordance with Section 2.13 one or more additional Inventory Advance Rates which may be applied severally against specific categories or types of Eligible Inventory. 

"Applicable Daily LIBOR Rate Margin" means: (i) for the period beginning on the Seventh Amendment Effective Date and continuing until June 30, 2014, four percent (4.0%) for Revolving Loans, and four percent (4.0%) for Term Loans; (ii) for the period beginning on July 1, 2014 and continuing until September 30, 2014, six percent (6.0%) for Revolving Loans, and six percent (6.0%) for Term Loans; and (iii) for the period beginning on October 1, 2014 and continuing thereafter, eight percent (8.0%) for Revolving Loans, and eight percent (8.0%) for Term Loans. 
"Applicable LIBOR Tranche Rate Margin" means: (i) for the period beginning on the Seventh Amendment Effective Date and continuing until June 30, 2014, four percent (4.0%) for Revolving Loans, and four percent (4.0%) for Term Loans; (ii) for the period beginning on July 1, 2014 and continuing until September 30, 2014, six percent (6.0%) for Revolving Loans, and six percent (6.0%) for Term Loans; and (iii) for the period beginning on October 1, 2014 and continuing thereafter, eight percent (8.0%) for Revolving Loans, and eight percent (8.0%) for Term Loans. 
"Maximum Revolving Commitment" means (i) as of the Seventh Amendment Effective Date and continuing until September 30, 2014, Fifteen Million and No/100 Dollars ($15,000,000.00), and (ii) as of October 1, 2014 and continuing until the Stated Termination Date, Twelve Million Five Hundred Thousand and No/100 Dollars ($12,500,000.00). 
"Stated Termination Date" means July 31, 2015. 
"Test Period" means, with respect to a particular Computation Date, the period of four (4) consecutive Fiscal Quarters ending on such Computation Date, (i.e. a rolling four (4) consecutive Fiscal Quarters period); provided that for purposes of the determination of: (a) the Fixed Charge Coverage Ratio as of the Computation Date for the Fiscal Quarter ending on September 30, 2014, the measurement period shall be the calendar year to date period and (b) the Minimum Consolidated Adjusted EBITDA as of the Computation Date for the Fiscal Quarter ending on March 31, 2014, June 30, 2014, and September 30, 2014, the measurement period shall be the calendar year to date period. 
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: 

2

(b)(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 (i) eighty percent (80%) for the period beginning on the Seventh Amendment Effective Date and continuing until March 31, 2014, (ii) fifty percent (50%) for the period beginning on April 1, 2014 and continuing until June 30, 2014, and (iii) thirty percent (30%) for the period beginning on July 1, 2014 and continuing until the Stated Termination Date. 
1.4     The following provisions contained in Article 2 of the Credit Agreement are hereby amended as follows: 
(a)     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 the Revolving Loan Commitments shall be (i) as of the Seventh Amendment Effective Date and continuing until September 30, 2014, Fifteen Million and No/100 Dollars ($15,000,000.00), and (ii) as of October 1, 2014 and continuing until the Stated Termination Date, Twelve Million Five Hundred Thousand and No/100 Dollars ($12,500,000.00). 
(b)     Section 2.2(d) of the Credit Agreement is hereby amended in its entirety by substituting the following in its stead: 
Borrowers shall repay the principal balance of the Term Loan as follows: (i) $25,000.00 on each of March 1, 2014, and April 1, 2014; (ii) $50,000.00 beginning on May 1, 2014 and continuing on the first (1st) day of every calendar month thereafter until such time as the Seymour Real Property is sold in accordance with the terms of Section 4 of the Seventh Amendment; and (iii) beginning on the first (1st) day of the month immediately following the sale of the Seymour Real Property, consecutive monthly principal installments equal to the outstanding balance of the Term Loan, as determined following the application of net proceeds paid to the Agent from the sale of the Seymour Real Property, divided by forty-eight (48), with the final payment of the then-unpaid balance of the Term Loan due and payable in full on the Termination Date. 
1.5     The following reporting requirements shall be added to the end of Section 6.1 of the Credit Agreement: 
(o)     No later than April 30, 2014, Borrower shall cause the Consultant to deliver to the Agent (i) an updated business plan for the Borrowers for the twelve month period ending December 31, 2014, and (ii) a defined strategy and timeline for improving Consolidated EBITDA to a minimum threshold of $2,000,000.00 (the "EBITDA Growth Initiative"), each in form and substance satisfactory to the Agent. 

3

(p)     No later than September 30, 2014, Borrower shall cause the Consultant to deliver to the Agent a business plan for the Borrowers for the twelve month period ending December 31, 2015, which plan shall include a progress update regarding the EBITDA Growth Initiative, in form and substance satisfactory to the Agent. 

1.6     The following provisions contained in Article 7 of the Credit Agreement are hereby amended as follows: 
(a)     Section 7.2 of the Credit Agreement is hereby amended in its entirety by substituting the following in its stead: 
Minimum Fixed Charge Coverage. Borrowers shall not permit the Fixed Charge Coverage Ratio for each Test Period ending on each Computation Date occurring on or after September 30, 2014 to be less than 1.0 to 1.0. 
(b)     The following text shall be added to the end of Section 7.3 of the Credit Agreement. 
Notwithstanding the foregoing, for Fiscal Year 2014, unfunded Capital Expenditures shall not exceed $500,000.00. 
(c)     Section 7.4 of the Credit Agreement is hereby amended in its entirety by substituting the following in its stead: 
Minimum Liquidity. Borrowers shall not permit the Minimum Liquidity to fall below (i) $200,000.00 for any month end during the period beginning February 28, 2014 and ending June 30, 2014, (ii) $500,000.00 for any month end during the period beginning on July 31, 2014 and ending on December 31, 2014, and (iii) $1,000,000.00 for any month end on or after January 31, 2015. 
(d)     The following text shall be added to the Credit Agreement as Section 7.5. 
Minimum Consolidated Adjusted EBITDA. Borrowers shall not permit Consolidated Adjusted EBITDA to fall below (i) $250,000.00 for the Test Period ending on the Computation Date occurring on March 31, 2014, (ii) $500,000.00 for the Test Period ending on the Computation Date occurring on June 30, 2014, (iii) $750,000.00 for the Test Period ending on the Computation Date occurring on September 30, 2014, and (iv) $1,000,000.00 for each Test Period ending on each Computation Date occurring on or after December 31, 2014. 
2.     Waiver of Covenant Defaults. Events of Default may and/or have occurred under Section 7.2 of the Credit Agreement in connection with the Fixed Charge Coverage Ratio Financial Covenant for the Fiscal Quarters ending on June 30, 2013, September 30, 2013 and December 31, 2013 (the Existing Default). Borrowers have requested that Agent, LC Issuer and the Lenders waive the Existing Default. Agent, LC Issuer and the Lenders hereby waive the Existing Default. The waiver provided in this Section 2 will not apply to any other Event of Default, whether past, present, or future, including, without limitation, any violations of the above described Financial Covenants as of dates occurring after the dates specifically referenced in this Section 2. The waiver provided in this Section 2, either alone or together with other waivers which Agent, LC Issuer and the Lenders may give from time to time, shall not, by course of dealing, implication or otherwise, obligate Agent, LC Issuer and the Lenders to waive any Event of Default past, present or future, 

4

other than the Events of Default specifically waived by this Amendment, or reduce, restrict or in any way affect the discretion of Agent, LC Issuer and the Lenders in considering any future waiver requested by Borrowers. The foregoing Events of Default will not be deemed to limit or estop Agent, LC Issuer or the Lenders from exercising any rights or remedies with respect to any other Event of Default. 

3.     Renewal of Notes. 
3.1     On the Effective Date, Borrowers will duly execute and deliver to Agent a Second Renewed Revolving Loan Note in the form attached hereto as Exhibit A (the "Renewed Revolving Loan Note"). 
3.2     On the Effective Date, Borrowers will duly execute and deliver to Agent a Second Renewed Term Loan Note in the form attached hereto as Exhibit B (the "Renewed Term Loan Note" and together with the Renewed Revolving Loan Note, the "Notes"). 
4.     Sale of Seymour Real Property; Mortgage Release. ISA shall use its best efforts to sell that certain real property located at 1565 E. 4th Street, Seymour, Indiana (the Seymour Real Property) on or before September 30, 2014 pursuant to an arms-length transaction and on terms reasonable to ISA. The Net Sale Proceeds from the sale of the Seymour Real Property shall be applied as one-time curtailment of the Renewed Term Loan Note; provided, however the Agent shall remit to ISA any Net Sale Proceeds in excess of $800,000.00, which amount shall be used by ISA solely for working capital purposes. For purposes of this Section 4, Net Sale Proceeds is defined as the cash purchase price, less customary and reasonable closing costs, less an $80,000.00 allowance to be used for purposes of transporting equipment retained by ISA to other locations. In connection with the proposed sale of the Seymour Real Property, ISA shall deliver to the Agent the purchase agreement evidencing such and a closing statement, each in form and substance satisfactory to the Agent. Notwithstanding the foregoing, the Agent shall have no obligation to release its lien against the Seymour Real Property unless it is satisfied with the amount of the Net Sale Proceeds in its sole discretion. 
5.     Wind-Down of Alloys Division. No later than June 30, 2014, ISA shall wind-down its existing Alloys Division on terms acceptable to the Agent in its sole discretion. For the period beginning March 31, 2014 and continuing until May 30, 2014, fifty percent (50%) of the gross value of Inventory allocable to the Alloys Division and that otherwise meets the definition of Eligible Inventory shall be excluded from the definition of Eligible Inventory. For the period beginning May 31, 2014 and ending June 29, 2014, seventy-five percent (75%) of the gross value of Inventory allocable to the Alloys Division and that otherwise meets the definition of Eligible Inventory shall be excluded from the definition of Eligible Inventory shall be excluded from the definition of Eligible Inventory. At all times on and after June 30, 2014, one hundred percent (100%) of the gross value of Inventory allocable to the Alloys Division and that otherwise meets the definition of Eligible Inventory shall be excluded from the definition of Eligible Inventory shall be excluded from the definition of Eligible Inventory. 
6.     Refinance Proposals. No later than June 30, 2014, the Borrowers shall provide the Agent with a proposal letter regarding a potential refinancing of the Obligations, each in form and substance satisfactory to the Agent. 
7.     Consultant: Cash Flow Forecast. (a) Borrower has engaged and shall continue to retain Conway MacKenzie, as a consultant, or such other consultant acceptable to Agent ("Consultant") to: (i) review Borrowers' financial statements, (ii) to continue to prepare an independent 13 week cash flow forecast, in form and substance acceptable to Agent (the "Cash Flow Forecast"), (iii) review restructuring initiatives and related performance, including but not limited to refinancing efforts, the wind-down of ISA’s Alloys Division, the sale of the Seymour Real Property, and any efforts regarding the implementation of any management agreements (collectively, the "Restructuring Initiatives"), (iv) at the request of Agent to provide 

5

a monthly status report to the Agent regarding the Restructuring Initiatives, (v) review any material changes in the Borrowers’ business plan, management or operations, and (vi) identify and assist in implementation of potential performance improvements, including but not limited to the EBITDA Growth Initiative. Agent shall have the right to contact Consultant directly without either Borrower's participation in such discussions. The fee for Consultant shall be the sole responsibility of Borrowers. The identity of Consultant will at all times remain acceptable to Agent. Borrowers shall not terminate their engagement with the Consultant or otherwise alter the terms of such engagement identified herein, without the express written consent of the Agent. Without limiting any other rights or remedies of Agent, Agent reserves the right to retain one or more professionals of its own choosing, the fees, costs and expenses of which will be the sole responsibility of Borrowers. 

(b)     Until such time, if any, that Agent advises Borrowers that the Cash Flow Forecast is no longer required, promptly when available and in no event later than Wednesday of each week, Borrowers shall deliver to Agent an updated Cash Flow Forecast (in each case covering the subsequent 13-week period), including, but not limited to, a variance report in the aggregate, of the Cash Flow Forecast opposite actual results (i) of the applicable week (which is based on information through the immediately preceding week) and (ii) on a cumulative basis (for the then cumulative period). The Cash Flow Forecast and variance report shall include, among other things, a narrative analysis of the operations of Borrowers' business for such period, summarizing the variances as evidenced in the variance report. 
8.     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 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. 
9.     Reaffirmation of Guaranty and Security. As a condition of this Amendment, on the Effective Date, Borrowers will cause each Guarantor to execute and deliver to Agent a Reaffirmation of Guaranty and Security. 
10.     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 Second Renewed Revolving Loan Note duly executed by Borrowers; (ii) the Second Renewed Term Loan Note executed by Borrowers, (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 of Guaranty and 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. 
11.     Reaffirmation of Security. Borrowers and Agent, LC Issuer and the Lenders hereby expressly intend that this Amendment shall not in any manner: (i) constitute the refinancing, refunding, 

6

payment or extinguishment of the existing Obligations as of the Effective Date; (ii) be deemed to evidence a novation of the outstanding balance of the Obligations; or (iii) 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: (a) represent continuing Liens on all of the Loan Collateral, (b) secure all of the Obligations, and (c) represent valid, first and best Liens on all of the Loan Collateral except to the extent, if any, of the Permitted Liens. 

12.     Representations. To induce Agent, LC Issuer and the Lenders to accept this Amendment, each Borrower hereby jointly and severally represents and warrants to Agent, LC Issuer and the Lenders as follows: 
12.1     Each Borrower has full power and authority to enter into, and to perform its obligations under, this Amendment, the Notes, 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. 
12.2     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. 
12.3     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 July 30, 2010 (the original date of the Credit Agreement), subject to those changes as are not prohibited by, or do not constitute Events of Default under, the Credit Agreement. 
12.4     No Event of Default has occurred and is continuing under the Credit Agreement, other than the Existing Defaults. 
13.     Costs and Expenses; Modification Fee. As a condition of this Amendment: (i) Borrowers will pay to Agent a modification fee of $200,000.00 (the "Modification Fee"), which fee or any portion thereof, when paid, will be fully earned and is non-refundable under all circumstances. $10,000.00 of the Modification Fee shall be due and payable as of the Effective Date. The remaining $190,000.00 of the Modification Fee shall be due and payable in accordance with the following schedule: (a) no later than March 31, 2014, $15,000.00, provided that there exists an outstanding balance with respect to the Obligations as of such date; (b) no later than June 30, 2014, $25,000.00, provided that there exists an outstanding balance with respect to the Obligations as of such date; (c) no later than September 30, 2014, $50,000.00, provided that there exists an outstanding balance with respect to the Obligations as of such date; and (d) no later than December 31, 2014, $100,000.00, provided that there exists an outstanding balance with respect to the Obligations as of such date; 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. For purposes of clarity, any portion of the Modification Fee that is not yet due and payable shall be waived at such time that the Obligations have been paid in full. 
14.     Release. Each Borrower acknowledges and agrees that: (a) each Borrower has no claim or cause of action against Agent, LC Issuer or Lender (or any of their respective directors, officers, employees, or agents) relating to the Obligations; (b) such Borrower has no offset right, counterclaim, or defense of any kind against enforcement of, or relating to, any of the Obligations; and (c) each of the Agent, LC Issuer and Lenders have heretofore properly performed and satisfied in a timely manner all of their respective obligations 

7

to each Borrower. Agent, LC Issuer and Lenders desire, and each Borrower agrees, to eliminate any possibility that any past conditions, acts, omissions, events, circumstances, or matters would impair or otherwise adversely affect any of Agent’s, LC Issuer’s or the Lenders’ rights, interests, collateral, security, or remedies. Therefore, each Borrower, on behalf of itself and all of its heirs, successors and assigns and any and all other entities and persons claiming rights through such Borrower, unconditionally releases, acquits, and forever discharges Agent, LC Issuer, the Lenders and their respective affiliated entities and parties, and all of their current and former directors, officers, agents, employees, shareholders, and attorneys, and their successors and assigns, (collectively, the "Dischargees") from (i) any and all liabilities, obligations, duties, or indebtedness of any of the Dischargees to any and all Borrower, whether known or unknown, arising prior to the date hereof, and (ii) any and all claims, offsets, causes of action, suits, or defenses, whether known or unknown, which either Borrower might otherwise have against any of the Dischargees on account of any condition, act, omission, event, contract, liability, obligation, indebtedness, claim, cause of action, defense, circumstance, or matter of any kind which existed, arose or occurred at any time prior to the date hereof or in any way relating to the loans evidenced by the Notes, the Credit Agreement and any other agreement whether now existing or hereafter arising by and among the Agent, the LC Issuer, the Lenders and one or more Borrowers. This release shall survive any termination of this Agreement. 

15.     Default. Any default by Borrowers in the performance of Borrowers' obligations under this Amendment shall constitute an Event of Default under the Credit Agreement. 
16.     Continuing Effect of the Credit Agreement. Except as expressly amended hereby, all of the provisions of the Credit Agreement and other Loan Documents are ratified and confirmed and remain in full force and effect. This Amendment is entered into freely and voluntarily by the Borrowers, who have had the opportunity to have this Agreement reviewed by legal counsel of their own choosing and acknowledge that they have reviewed this Agreement, that their understanding of this Agreement is based upon their review and not based upon any statements, representations or actions of Agent and that their execution of this Agreement is not under duress or coercion. Furthermore each Borrower acknowledges and agrees that the Agent has no obligation whatsoever to discuss, negotiate or to agree to any renewals, restructuring or further modification of any of the Obligations and this Amendment shall not establish a course of dealing or be construed as evidence of any willingness on the Agent’s part to grant other or future renewals, restructuring or further modification, should any be requested 
17.     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, (ii) Revolving Loan Note will be deemed to be references to the Second Renewed Revolving Loan Note and (iii) Term Loan Note will be deemed to be references to the Second Renewed Term Loan. 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. 
18.     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. 
19.     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. 
20.     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. 

8

21.     FORUM. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR AGENT, LC ISSUER AND LENDERS TO ENTER INTO THE CREDIT AGREEMENT AND EXTEND CREDIT TO BORROWERS, BORROWERS, AGENT, LC ISSUER AND LENDERS AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE, ITS VALIDITY OR PERFORMANCE, AND WITHOUT LIMITATION ON THE ABILITY OF AGENT, LC ISSUER OR ANY LENDER, OR THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, TO EXERCISE ALL RIGHTS AS TO THE LOAN COLLATERAL AND TO INITIATE AND PROSECUTE IN ANY APPLICABLE JURISDICTION ACTIONS RELATED TO REPAYMENT OF THE OBLIGATIONS, SHALL BE INITIATED AND PROSECUTED AS TO BORROWERS, AGENT, LC ISSUER AND LENDERS AND THEIR SUCCESSORS AND ASSIGNS AT CINCINNATI, OHIO. AGENT, LC ISSUER, LENDERS AND BORROWERS EACH CONSENT TO AND SUBMIT TO THE EXERCISE OF JURISDICTION OVER THEIR RESPECTIVE PERSONS BY ANY COURT SITUATED AT CINCINNATI, OHIO HAVING JURISDICTION OVER THE SUBJECT MATTER, AND EACH CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL DIRECTED TO BORROWERS, AGENT, LC ISSUER AND LENDERS AT THEIR RESPECTIVE ADDRESSES SET FORTH IN SECTION 12.2 OF THE CREDIT AGREEMENT OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE STATE OF OHIO. EACH BORROWER WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

22.     JURY WAIVER. IN RECOGNITION OF THE HIGHER COSTS AND DELAY WHICH MAY RESULT FROM A JURY TRIAL, THE PARTIES HERETO WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING HEREUNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS, OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY FURTHER WAIVES ANY RIGHT TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY HERETO MAY FILE A COPY OF THIS SECTION 21 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. THIS PROVISION SHALL SURVIVE ANY TERMINATION OF THE CREDIT AGREEMENT, AS AMENDED BY THIS AMENDMENT, AND THE REPAYMENT OF THE DEBT EVIDENCED BY THE LOAN DOCUMENTS. 
23.     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]
 

9

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

	 
	 

	 
	INDUSTRIAL SERVICES OF AMERICA, INC.

	 
	 

	 
	By:  /s/ Sean Garber________________________

	 
	       Sean Garber as President

	 
	 

	 
	 

	 
	 

	 
	ISA INDIANA, INC.

	 
	 

	 
	By:  /s/ Sean Garber________________________

	 
	        Sean Garber as President

	
	
	Accepted as of the Effective Date.

	 

	FIFTH THIRD BANK, as Agent

	 

	 

	By:    /s/  Donald K. Mitchell                  

	Name:  Donald K. Mitchell                     

	Its:  Vice-President

	 

	 

	 

	FIFTH THIRD BANK, as Lender 

	 

	 

	By:    /s/  Donald K. Mitchell                  

	Name:  Donald K. Mitchell                     

	Its:  Vice-President

	 

	 

	 

	FIFTH THIRD BANK, as LC Issuer 

	 

	 

	By:    /s/  Donald K. Mitchell                  

	Name:  Donald K. Mitchell                     

	Its:  Vice-President

10

EXHIBIT A 

(Form of Renewed Revolving Loan Note)

11

EXHIBIT B 

(Form of Renewed Term Loan Note)

1Exhibit 10.2 - Second Renewed Revolving Loan Note

EXHIBIT 10.2

SECOND RENEWED REVOLVING LOAN NOTE 

$15,000,000.00                                         July 30, 2010
First Amendment and Restatement April 14, 2011 
Second Amendment and Restatement November 16, 2011
Third Amendment and Restatement August 13, 2012
Fourth Amendment and Restatement November 14, 2012 Renewed March 29, 2013
Renewed February 21, 2014 
("Effective Date")

For value received, the undersigned, INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation ("ISA"), ISA INDIANA, INC., an Indiana corporation ("ISA Indiana"), and each of the other Persons that become a Borrower under the Credit Agreement after the Effective Date (such Persons, together with ISA and ISA Indiana, are each a "Borrower" and, collectively, "Borrowers"), hereby jointly and severally promise to pay to the order of FIFTH THIRD BANK, an Ohio banking corporation ("Lender"), the principal sum of Fifteen Million and No/100 Dollars ($15,000,000.00), or such lesser amount as shall equal the aggregate unpaid and outstanding principal amount of the Revolving Loans made by Lender to Borrowers under the Credit Agreement dated as of July 30, 2010, as amended by the First Amendment to Credit Agreement dated as of April 14, 2011, the Second Amendment to Credit Agreement dated as of November 16, 2011, the Third Amendment to Credit Agreement dated as of March 2, 2012, the Fourth Amendment to Credit Agreement dated as of August 13, 2012, the Fifth Amendment to Credit Agreement dated as of November 14, 2012, the Sixth Amendment to Credit Agreement dated March 29, 2013, and the Seventh Amendment to Credit Agreement dated as of the date hereof (as the same may be hereafter amended, supplemented or restated from time to time, the "Credit Agreement"), by and among Borrowers, the Persons party thereto as "Lenders" (including, without limitation, Lender), and Fifth Third Bank, as Agent and LC Issuer, in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Revolving Loan, in like money and funds, for the period commencing on the date of this Second Renewed Revolving Loan Note (this "Note") until such Indebtedness evidenced by this Note shall be paid in full, at the rates per annum and on the dates and at the offices provided in the Credit Agreement. The entire unpaid principal balance of this Note, together with all accrued but unpaid interest, shall, if not sooner paid or required to be paid pursuant to the Credit Agreement, be due and payable on July 31, 2015. 
This Note is one of the Revolving Loan Notes referred to in the Credit Agreement and is entitled to the benefits and security, and is subject to the terms and conditions, of the Credit Agreement, including, without limitation, acceleration upon the terms provided therein and in the other Loan Documents. All capitalized terms used herein which are defined in the Credit Agreement and not otherwise defined herein shall have the meanings given in the Credit Agreement. 
The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for voluntary and mandatory prepayments of Loans upon the terms and conditions specified therein. This Note is subject to voluntary prepayment, in full or in part, in accordance with, and subject to the terms of, the Credit Agreement. 
If, at any time, the rate of interest contracted for, and computed in the manner provided, in the Credit Agreement ("Applicable Rate"), together with all fees and charges as provided for in the Credit Agreement or in any other Loan Document (collectively, the "Charges"), which are treated as interest under applicable law, exceeds the maximum lawful rate (the "Maximum Rate") allowed under applicable law, it is agreed that such contracting for, charging or receiving of such excess amount was an accidental and bona fide error and the provisions of this paragraph will govern and control. The rate of interest payable under the Credit Agreement and this Note, together 

with all Charges, shall be limited to the Maximum Rate; provided, however, that any subsequent reduction in the Daily LIBOR-Based Rate or the LIBOR Tranche-Based Rate (or in the interest rate equal to the Prime Rate plus the Applicable Prime Rate Margin in the event LIBOR Rate Loans are no longer permitted or available under the Credit Agreement) shall not reduce the Applicable Rate below the Maximum Rate until the total amount of interest earned under the Credit Agreement and this Note, together with all Charges, equals the total amount of interest which would have accrued at the Applicable Rate if the Applicable Rate had at all times been in effect. If any payment hereunder, for any reason, results in Borrowers having paid interest in excess of that permitted by applicable law, then all excess amounts theretofore collected by Lender shall be credited on the principal balance of the Obligations (or, if all sums owing hereunder have been paid in full, refunded to Borrowers), and the amounts thereafter collectible hereunder shall immediately be deemed reduced, without the necessity of the execution of any new document, so as to comply with applicable law and permit the recovery of the fullest amount otherwise called for hereunder. 
Borrowers hereby agree to pay all costs of collection, including, without limitation, Attorneys' Fees, if this Note is not paid when due, whether or not legal proceedings are commenced. 
All of the obligations of Borrowers hereunder are joint, several and primary. No Borrower shall be, or be deemed to be, an accommodation party with respect to this Note. 
Presentment or other demand for payment, notice of dishonor and protest are expressly waived. 
This Note is issued, not as a refinancing or refunding of or payment toward, but as a continuation of the Obligations of Borrowers to Lender pursuant to that certain Renewed Revolving Loan Note dated as of March 29, 2013 in the principal amount of $25,000,000.00 (the "Prior Note"). Accordingly, this Note shall not be construed as a novation or extinguishment of the Obligations arising under the Prior Note, and its issuance shall not affect the priority of any Lien granted in connection with the Prior Note. Interest accrued under the Prior Note prior to the Effective Date remains accrued and unpaid under this Note and does not constitute any part of the principal amount of the Indebtedness evidenced hereby. All Revolving Loans created or existing under, pursuant to, as a result of, or arising out of, the Prior Note shall, together with any and all additional Revolving Loans incurred under this Note, continue in existence under this Note, which Obligations Borrowers acknowledge, reaffirm, and confirm to Lender. The Indebtedness evidenced by this Note will continue to be secured by all of the collateral and other security granted to Lender under the Prior Note and the other Loan Documents. 
THIS NOTE HAS BEEN DELIVERED AND ACCEPTED AT AND SHALL BE DEEMED TO HAVE BEEN MADE AT CINCINNATI, OHIO. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF OHIO (WITHOUT REFERENCE TO OHIO CONFLICTS OF LAW PRINCIPLES). 
AS A SPECIFICALLY BARGAINED INDUCEMENT FOR AGENT, LC ISSUER AND LENDERS TO ENTER INTO THE CREDIT AGREEMENT AND EXTEND CREDIT TO BORROWERS, BORROWERS, AGENT, LC ISSUER AND LENDERS AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE, ITS VALIDITY OR PERFORMANCE, AND WITHOUT LIMITATION ON THE ABILITY OF AGENT, LC ISSUER OR ANY LENDER, OR THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, TO EXERCISE ALL RIGHTS AS TO THE LOAN COLLATERAL AND TO INITIATE AND PROSECUTE IN ANY APPLICABLE JURISDICTION ACTIONS RELATED TO REPAYMENT OF THE OBLIGATIONS, SHALL BE INITIATED AND PROSECUTED AS TO BORROWERS, AGENT, LC ISSUER AND LENDERS AND THEIR SUCCESSORS AND ASSIGNS AT CINCINNATI, OHIO. AGENT, LC ISSUER, LENDERS AND BORROWERS EACH CONSENT TO AND SUBMIT TO THE EXERCISE OF JURISDICTION OVER THEIR RESPECTIVE PERSONS BY ANY COURT SITUATED AT CINCINNATI, OHIO HAVING JURISDICTION OVER THE SUBJECT MATTER, AND EACH CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL DIRECTED TO BORROWERS, AGENT, LC ISSUER AND LENDERS AT THEIR RESPECTIVE ADDRESSES SET FORTH IN SECTION 12.2 OF THE CREDIT AGREEMENT OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE STATE OF OHIO. 

2

EACH BORROWER WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
IN RECOGNITION OF THE HIGHER COSTS AND DELAY WHICH MAY RESULT FROM A JURY TRIAL, THE PARTIES HERETO WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING HEREUNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS, OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY FURTHER WAIVES ANY RIGHT TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY HERETO MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 
Each Borrower hereby acknowledges and agrees as follows: 

a.     Each and every reference to and any and all representations, warranties, covenants and undertakings of, Borrowers herein, including but not limited to the Events of Default shall be deemed to apply to each of the undersigned, jointly and separately. 

b.     The obligations and liabilities of each of the undersigned Borrowers under, and all representations, warranties and covenants in, this Note and the Loan Documents shall be direct and primary and joint and several in all respects whatsoever. 

c.     Lender may deal with any undersigned Borrower as if it were the sole obligor, without impairing in any way the liability of any other obligor. Without limiting the generality of that right, Lender may in particular release, impair, or fail to perfect an interest in any collateral of any undersigned Borrower, waive defaults by any of them, or extend or compromise the liability of any of them without the consent of the other undersigned obligors. 

d.     Each of the undersigned Borrowers represents that it has carefully considered the alternatives to and the legal consequences of incurring joint and several liability under this Note and has determined that by such arrangement it is able to obtain financing on terms more favorable than otherwise, and that under a joint and several facility each will realize substantial interest savings over alternative financing arrangements. 

e.     Lender may bring a separate action or actions under this Note against each or any of the undersigned Borrowers, whether such action is brought against any other Borrower, or any other Borrower is not joined therein. Each of the undersigned Borrowers agrees that any release which may be given to any other Borrower shall not release any other Borrower from its obligations hereunder. Each of the undersigned Borrowers hereby waives any right to assert against Lender any defense (legal or equitable), set off, counterclaim, or claims which any of them individually may now or any time hereafter have against any other Borrower. 

f.     Any and all present and future debt and other obligations of any of the undersigned Borrowers to another Borrower is hereby subordinated to the full payment and performance of all amounts due to Lender, whether under this agreement or otherwise. 

3

g.     Each of the undersigned Borrowers is presently informed as to the financial condition of the other Borrowers and all other circumstances of each other relating to this Note and the other Loan Documents which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the amounts due hereunder. Each of the undersigned Borrowers hereby covenants that it will continue to keep itself informed as to the financial condition of the other Borrowers, the status of the other Borrowers, and all circumstances which bear upon the risk of nonpayment. Absent a written request from any of the undersigned Borrowers to Lender for information, each of the undersigned Borrowers hereby waives any and all rights it may have to require Lender to disclose to such Borrower any information which Lender may now or hereafter acquire concerning the condition or circumstances of the other Borrowers. 

h.     Each of the undersigned Borrowers waives all rights to notices of default, existence, creation, or incurring of new or additional indebtedness, and all other notices of formalities to which each such Borrower, may as joint and several Borrower, hereunder be entitled. 

i.     The liability of any of the undersigned Borrowers hereunder shall survive discharge or compromise of any obligation of any other Borrower in bankruptcy or otherwise. 

j.     Each of the undersigned Borrowers hereby waives all defenses, counterclaims and off-sets of any kind or nature, whether legal or equitable, that may arise: (i) directly or indirectly from the present or future lack of validity, binding effect or enforceability of this Note, any other Loan Documents or any other document or instrument evidencing, securing or otherwise relating to the Obligations, (ii) from Lender’s impairment of any collateral, including the failure to record or perfect the Lender’s interest in any collateral, or (iii) by reason of any claim or defense based upon an election of remedies by Lender in the event such election may, in any manner, impair, affect, reduce, release, destroy or extinguish any right of contribution or reimbursement of any Borrower, or any other rights of any undersigned Borrower to proceed against any other Borrower, guarantor, or against any other person or any collateral. 
	
		
	            In Witness Whereof, Borrowers, intending to be legally bound, have caused this Note to be executed and delivered by its duly authorized officer as of the Effective Date and at the place set forth above.

	 
	 

	 
	INDUSTRIAL SERVICES OF AMERICA, INC.

	 
	a Florida corporation

	 
	 

	 
	By:    /s/  Sean Garber                                                 

	 
	       Sean Garber as President

	 
	 

	 
	 

	 
	 

	 
	ISA INDIANA, INC.

	 
	an Indiana corporation

	 
	 

	 
	By:    /s/  Sean Garber                                                 

	 
	Sean Garber as President

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00226-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00226-of-00352.parquet"}]]