Document:

Exhibit 10.1

BB&T 
LOAN AGREEMENT 

	
  

 
	

 

 
	
 Account Number

 

This Loan
Agreement (the “Agreement”) is made this 13th day of April, 2010 by and among BRANCH
BANKING AND TRUST COMPANY, a North Carolina banking corporation
(“Bank”), INDUSTRIAL
SERVICES OF AMERICA, INC., a Florida corporation (“Borrower”),
having its chief executive office at 7100 Grade Lane in Louisville, Kentucky
and BB&T
BANKCARD CORPORATION, a corporation (“BB&T BankCard”).

The Borrower
has applied to Bank for and the Bank has agreed to make, subject to the terms
of this Agreement, the following loan (hereinafter referred to as “Loan” and
“Line of Credit”):

Line of Credit
in the maximum principal amount not to exceed $20,000,000 for the purpose of
financing temporary fluctuations in Borrower’s inventory and accounts. The
initial advance on the Line of Credit shall be applied to repay Borrower’s
existing working capital line (Account Number 9580514992/00011) and Borrower’s
existing short-term loan (Account Number 9580514992/00016). The Line of Credit
shall be evidenced by the Borrower’s Promissory Note dated on the date hereof
which shall mature April 13, 2013, when the entire unpaid principal balance
then outstanding plus accrued interest thereon shall be paid in full. Prior to
maturity or the occurrence of any Event of Default hereunder and subject to any
Loan Base Report limitations, as applicable, the Borrower may borrow, repay and
reborrow under the Line of Credit through maturity. The Line of Credit shall
bear interest at the rate set forth in any such Note evidencing all or any
portion of the Line of Credit, the terms of which are incorporated herein by
reference.

Other Credit
Relationship (collectively, “Other Credit
Relationship”): (a) in the original principal amount $6,000,000, pursuant to the
terms and conditions of a loan agreement between Bank and Borrower dated May 7,
2008 (the “Shredder Loan”); (b) in the original principal amount of $3,000,000,
pursuant to the terms of a loan agreement between Bank and Borrower dated May
7, 2008 (the “Rental Fleet Loan”); (c) in the original principal amount of
$609,900, pursuant to the terms and conditions of a loan agreement between Bank
and Borrower dated October 22, 2008 (the “Crane Loan”); (d) in the original
principal amount of $5,000,000, pursuant to the terms and conditions of a loan
agreement dated June 30, 2009 among Bank, Borrower, ISA Real Estate, LLC (“ISA
Real”), ISA Indiana Real Estate, LLC (“ISA Indiana”) and 7021 Grade Lane LLC
(“7021 Grade”) (the “Term Loan”); and (e) in the maximum principal amount not
to exceed $2,500,000 outstanding at any time, pursuant to the terms and
conditions of the BB&T Bankcard Corporation Commercial Card Plan Agreement
for the purpose described in such agreement, dated December 8, 2003, by and
between Borrower and BB&T Bankcard, such credit card facility having been
reduced to a principal sum not to exceed $500,000 so long as the Term Loan
shall be outstanding (the “Credit Card Facility”). Hereinafter ISA Real, ISA
Indiana and 7021 Grade shall sometimes be referred to collectively as
“Mortgagors”.

The promissory
notes evidencing the Loan and/or the Other Credit Relationship are referred to

herein as the
“Notes” and shall include all extensions, renewals, modifications and
substitutions thereof. The Loan and/or the Other Credit Relationship shall be
secured by all of the collateral described below.

Additional
terms, conditions and covenants of this Agreement are described in Schedule DD,
or other schedule attached hereto, the terms of which are incorporated herein
by reference.

Conditions
Precedent

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

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

Note:
The Note evidencing the Loan duly executed by the Borrower.

Mortgages:
The Mortgages of Real Estate in which Borrower or the other owners thereof
(“Mortgagors”) shall grant Bank mortgage liens on the Borrower’s or the Mortgagors’
real property and improvements thereon (“Mortgaged Property”).

Assignments of Leases
and Rents: The Assignments of Leases and Rents in
which the Borrower or Mortgagors shall assign to Bank all existing and
thereafter arising leases on the Mortgaged Property and the rents and profits
therefrom.

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

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

Modification
Agreement: Modification Agreement executed by
Borrower, Mortgagors and Bank relative to the mortgages and related security
instruments heretofore granted by Mortgagors to Bank, duly recorded with the
recording offices of the counties in which the mortgage and related security
instruments have been recorded, modifying such mortgages and security
instruments to secure the Line of Credit and Other Credit Relationship. 

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

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

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

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

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

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

Members’
Certifications and Consents: A Members’ Certification
and Consent for each Mortgagor, duly authorized and executed by each
Mortgagor’s members authorizing the execution, delivery and performance of the
Modification Agreements on or in a form provided by or acceptable to Bank.

Articles of
Organization: A copy of the Articles of Organization
and all other charter documents of each Mortgagor, all filed with and certified
by the respective Secretaries of State of the State of each Mortgagor’s
organization. 

Certificate of
Existence: A certification of the Secretary of State
(or other government authority) of the State of each Mortgagor’s organization
as to the existence or good standing of each Mortgagor. 

Operating Agreements:
A copy of the Operating Agreement of each Mortgagor, if any, certified by the
manager or other appropriate officer of the Mortgagor as to their completeness
and accuracy. 

Certificate of
Existence: A certification of the Secretary of State
(or other government authority) of the State of each Mortgagor as to the
existence or good standing of such Mortgagor.

Opinion of Counsel:
An opinion of counsel for the Borrower, Debtor and Mortgagors satisfactory to
the Bank and the Bank’s counsel. \

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

Representations
and Warranties

The Borrower
represents and warrants to Bank that:

	
  

 	
  

 
	
  

 	
 Financial Statements.
 The balance sheet of the Borrower and its subsidiaries (collectively the
 “Subsidiaries”) and the related Statements of Income and Retained Earnings of
 the Borrower and Subsidiaries, the accompanying footnotes together with the
 accountant’s opinion thereon, and all other financial information previously
 furnished to the Bank, are true and correct and fairly reflect the financial
 condition of the Borrower and Subsidiaries as of the dates thereof, including
 all contingent liabilities of every type, and the financial condition of the
 Borrower and Subsidiaries as stated therein has not changed materially and
 adversely since the date thereof. Borrower represents that all subsidiaries
 of Borrower are listed on Exhibit A to this Agreement.

 
	
  

 	
  

 
	
  

 	
 Name Capacity and Standing.
 The Borrower’s exact legal name is correctly stated in the initial paragraph
 of the Agreement. Borrower is a corporation, and warrants and represents that
 it is duly organized and validly existing under the laws of its state of
 incorporation or organization; that Borrower is duly qualified and in good
 standing in every other state in which the nature of its business shall
 require such qualification, and is duly authorized by its board of directors
 to enter into and perform the obligations under the Loan Documents.

 
	
  

 	
  

 
	
  

 	
 No Violation of Other Agreements.
 The execution of the Loan Documents, and the performance by the Borrower,
 Mortgagors and Debtor will not violate any provision, as applicable, of its
 articles of incorporation, by-laws, articles of organization, operating
 agreement, agreement of partnership, limited partnership or limited liability
 partnership, or, of any law, other agreement, indenture, note, or other
 instrument binding upon the Borrower, Mortgagors and Debtor, or give cause
 for the acceleration of any of the respective obligations of the Borrower,
 Mortgagors and Debtor.

 

	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Litigation. There
 is no claim, action, suit or proceeding pending, threatened or reasonably
 anticipated before any court, commission, administrative agency, whether
 State or Federal, or arbitration which will materially adversely affect the
 financial condition, operations, properties, or business of the Borrower or
 Subsidiaries or the ability of the Borrower, Subsidiaries, Mortgagor or
 Debtor to perform their obligations under the Loan Documents, except as set
 forth on Exhibit B attached hereto and incorporated herein by reference.

 
	
  

 	
  

 
	
  

 	
 Other Agreements.
 The respective representations and warranties made by Borrower, Mortgagor or
 Debtor to Bank in the other Loan Documents arc true and correct in all
 respects on the date hereof.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Commercial Purpose.
 The Loan and Other Credit Relationship are not “consumer transactions”, as
 defined in the Kentucky Uniform Commercial Code, and none of the collateral
 was or will be purchased or held primarily for personal, family or household
 purposes.

 

Affirmative
Covenants

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

	
  

 	
  

 
	
  

 	
 Maintain Existence and Current Legal Form
 of Business. (a) Maintain its existence and good
 standing in the state of its incorporation or organization, (b) maintain its
 current legal form of business indicated above, (c) as applicable, qualify
 and remain qualified as a foreign corporation, general partnership, limited
 partnership, limited liability partnership or limited liability company in
 each jurisdiction in which such qualification is required; (d) maintain its
 current management and ownership (except for sales of its stock which do not
 in the aggregate result in a change of control); and (e) in the event of its
 merger with any other entity, be the surviving entity.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Reporting Requirements. Furnish
 to the Bank:

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Loan Base Report:
 On or before the fifteenth (15th) day of each month, a Loan Base
 Report in a form acceptable to Bank signed by the president, chief financial
 officer, general partner or manager (or member(s)) of the Borrower, as
 appropriate, and a weekly Loan Base Report as described in Schedule DD
 hereto.

 
	
  

 	
  

 
	
  

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

 

	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Other Information:
 Such other information as the Bank may from lime to time reasonably request
 including, but not limited to, the following information: annual income tax
 returns (including all schedules) for K&R, LLC, K&R Resources, LLC
 and The Harry Kletter Family Limited Partnership.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Affirmative Covenants from other Loan
 Documents. All affirmative covenants contained in
 any Mortgage, Security Agreement, Assignment of Leases and Rents, or other
 security document executed by the Borrower, Mortgagors and Debtor which are
 described in the Modification Agreements described in this Agreement are incorporated
 herein by reference.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 

Guarantor(s)
Covenants

          N/A

Financial
Covenants

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

	
  

 	
  

 
	
  

 	
 Minimum Tangible Net Worth.
 A minimum tangible net worth of not less than $16,000,000 as of December 31,
 2009, and increasing annually by 40% of all after tax net income for the
 immediately preceding fiscal year, plus 100% of all new equity issued by the
 Borrower during the immediately preceding fiscal year, minus $0 for net
 losses for the immediately preceding fiscal year. Tangible Net Worth is
 defined as net worth plus obligations contractually subordinated to debts
 owed to Bank, minus goodwill, contract rights, and assets representing claims
 on stockholders or affiliated entities for the immediately preceding twelve
 (12) months.

 
	
  

 	
  

 
	
  

 	
 EBITDA Ratio.
 Ratio of EBITDA to the preceding twelve (12) months interest expense plus the
 projected required principal payments on all long-term debt for the next
 succeeding twelve months on a rolling basis, of not less than 1.25:1.00, to
 be measured quarterly on a rolling four (4) quarter basis.

 

	
  

 	
  

 
	
  

 	
 Debt/Tangible Net Worth.
 Ratio of Debt to Tangible Net Worth of not more than 3.50:1.00, to be
 measured quarterly on a rolling four (4) quarter basis. Tangible Net Worth is
 defined in Section 5.01 above. Debt is defined as all Borrower’s liabilities
 minus obligations contractually subordinated to debts owed to Bank.

 

Negative
Covenants

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

	
  

 	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
  

 	
 Liens and security interests in favor of
 the Bank;

 
	
  

 	
  

 	
  

 
	
  

 	
  

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Purchase money security interests on any
 property hereafter acquired, provided that such lien shall attach only to the
 property acquired.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 The Permitted Liens, as set forth on
 Exhibit C attached hereto and incorporated herein by reference.

 
	
  

 	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
  

 	
 Debt to the Bank;

 
	
  

 	
  

 	
  

 
	
  

 	
  

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Accounts payable to trade creditors
 incurred in the ordinary course of business, not to exceed $6,000,000.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Debt secured by purchase money security
 interests secured only by the asset purchased, not to exceed $1,000,000.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Debt to any creditor other than Bank not to
 exceed $1,000,000 per year.

 
	
  

 	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
  

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

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Operating
 Leases for machinery and equipment which do not in the aggregate require
 payments in excess of $1,000,000 in any fiscal year of the Borrower.

 
	
  

 	
  

 	
  

 
	
  

 	
 Dividends or Distributions; Acquisition of
 Capital Stock or Other Ownership Interests. Declare
 or pay any dividends or distributions of any kind, or purchase or redeem,
 retire, or

 

	
  

 	
  

 
	
  

 	
 otherwise
 acquire any of Borrower’s capital stock or other ownership interests, now or
 hereafter outstanding, in excess of $N/A in any fiscal year of the Borrower.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Disposition of Assets.
 Sell, lease, or otherwise dispose of any of its assets or properties except
 (i) in the ordinary and usual course of its business and (ii) sales of
 receivables of North American Stainless to Santander Factoring Y Confirming
 S.A. EFC.

 
	
  

 	
  

 
	
  

 	
 Transfer of Ownership.
 If Borrower is a corporation, (a) issue, transfer or sell any new class of
 stock, or(b) issue, transfer or sell, in the aggregate, from its treasury
 stock and/or currently authorized but unissued shares of any class of stock,
 more than 51% of the total number of all such issued and outstanding shares
 as of the date of this Agreement, If Borrower is a general partnership,
 limited partnership, limited liability partnership or limited liability
 company, issue, transfer or sell any interest in Borrower.

 
	
  

 	
  

 
	
  

 	
 Negative Covenants from other Loan
 Documents. All negative covenants contained in any
 Mortgage, Security Agreement, Assignment of Leases or Rents, or other
 security document executed by the Borrower, Mortgagors or Debtor which arc
 described in the Modification Agreements described in this Agreement are
 incorporated herein by reference.

 

Section 7
Hazardous Materials and Compliance with Environmental Laws

	
  

 	
  

 
	
  

 	
 Investigation.
 Borrower hereby certifies that Mortgagors and Borrower have exercised due
 diligence to ascertain whether their respective real property are or have
 been affected by the presence of asbestos, oil, petroleum or other
 hydrocarbons, urea formaldehyde, PCBs, hazardous or nuclear waste, toxic
 chemicals and substances, or other hazardous materials (collectively,
 “Hazardous Materials”), as defined in applicable Environmental Laws. Borrower
 represents and warrants that, to Borrower’s knowledge, except as disclosed in
 those environmental reports delivered to Bank more particularly described on
 Exhibit C attached hereto and incorporated herein by reference, there are no
 such Hazardous Materials contaminating the respective real property of
 Borrower and Mortgagors, nor, to Borrower’s knowledge, except as disclosed in
 the aforesaid environmental reports have any such materials been released on
 or stored on or improperly disposed of on the respective real property of
 Borrower and Mortgagors during their respective ownership, occupancy or
 operation thereof. Borrower hereby agrees that, except in strict compliance
 with applicable Environmental Laws, Borrower shall not and Borrower shall
 cause Mortgagors to not knowingly permit any release, storage or
 contamination as long as any indebtedness or obligations to Bank under the
 Loan Documents remains unpaid or unfulfilled. In addition, except as
 disclosed in the aforesaid environmental reports Borrower and, to Borrower’s
 knowledge, Mortgagors do not have or use any underground storage tanks on any
 of their respective real property which are not registered with the
 appropriate Federal and/or State

 

	
  

 	
  

 
	
  

 	
 agencies and
 which arc not properly equipped and maintained in accordance with all
 Environmental Laws. If requested by Bank, Borrower shall provide and shall
 cause Mortgagors to provide Bank with all necessary and reasonable assistance
 required for purposes of determining the existence of Hazardous Materials on
 the Mortgaged Property including allowing Bank access to the Mortgaged
 Property and access to Borrower’s and Mortgagors’ employees having knowledge
 of, and to files and records within their control relating to the existence,
 storage or release of Hazardous Materials on the Mortgaged Property.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Remedial Action.
 Bank shall have the right, but not the obligation, to undertake all or any
 part of such remedial action in the event of a release of Hazardous Materials
 on the Mortgaged Property and to add any expenditures so made to the
 principal indebtedness secured by the Mortgages. Borrower agrees to indemnify
 and hold Bank harmless from any and all loss or liability arising out of any
 violation of the representations, covenants and obligations contained in this
 Section 7, or resulting from the recording of the Mortgages.

 

Events of
Default

The following
shall be “Events of Default” by Borrower or Mortgagors:

	
  

 	
  

 
	
  

 	
 The failure
 to make prompt payment of any installment of principal or interest on any of
 the Notes when due or payable.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 

	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Upon the
 death of, or termination of existence of, or dissolution of Borrower or any
 Mortgagor or Debtor unless the dissolution of any Mortgagor or Debtor results
 from its merger into Borrower.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 

Remedies Upon
Default

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

	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Require the
 Borrower to pledge additional collateral to the Bank from the Borrower’s
 assets and properties, the acceptability and sufficiency of such collateral
 to be determined in the Bank’s sole discretion;

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 

Miscellaneous
Provisions

	
  

 	
  

 
	
  

 	
 Definitions.

 
	
  

 	
  

 
	
  

 	
           “Availability”
 for the Line of Credit shall mean the lesser of (i) $20,000,000 or (ii) the
 Collateral Loan Value shown on the Loan Base Report furnished by Borrower to
 Bank on or before the fifteenth (15th) day of each month as long
 as this Agreement shall remain in force. The percentages of acceptable
 collateral, as defined by Bank, which will be used to determine the
 Collateral Loan Value, shall be the following (unless otherwise set forth in
 Schedule DD and/or DD-IFA hereto): Eligible Inventory - 55%; Eligible
 Accounts - 80%.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           “EBITDA”
 shall mean earnings before interest, taxes, depreciation and amortization.

 
	
  

 	
  

 
	
  

 	
           “Environmental
 Laws” shall mean all applicable federal and state laws and
 regulations which affect or may affect the Borrower’s and Mortgagor’s real
 property, including without limitation the Comprehensive Environmental
 Response, Compensation, and Liability Act (42 U.S.C. Sections 9601 et seq.),
 the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.),
 the Federal Water Pollution Control Act (33 U.S.C. Sections 1251 et seq.),
 the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
 Control Act (15 U.S.C. Section 2601 et seq.), all such applicable

 

	
  

 	
  

 
	
  

 	
 environmental
 laws and regulations of the Commonwealth of Kentucky and the State of
 Indiana, as such laws and regulations may be amended from time to time.

 
	
  

 	
  

 
	
  

 	
           “Loan
 Documents” shall mean this Agreement including any exhibit and
 schedule attached hereto, the Notes, the Mortgages, the Security Agreement,
 all UCC Financing Statements, any Hedge Agreement relative to the Loan or any
 Other Credit Relationship and all other documents, certificates, and
 instruments executed in connection therewith, and all renewals, extensions,
 modifications, substitutions, and replacements thereto and therefor.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           “Hedge
 Agreement” means any agreement between Borrower and Bank or any
 affiliate of Bank now existing or hereafter entered into, which provides for
 an interest rate, credit, commodity or equity swap, cap, floor, collar, spot
 or forward foreign exchange transaction, currency swap, cross-currency rate
 swap, currency option or any similar transaction or any combination of, or
 option with respect to, these or similar transactions, for the purpose of
 hedging Borrower’s exposure to fluctuations in interest or exchange rates,
 loan, credit, exchange, security or currency valuations or commodity prices.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Applicable Law.
 The Loan Documents shall be construed in accordance with and governed by the
 laws of the Commonwealth of Kentucky and the State of Indiana, as applicable.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 

	
  

 	
  

 
	
  

 	
 Bank Making Required Payments.
 In the event Borrower shall fail to maintain insurance, pay taxes or
 assessments, costs and expenses which Borrower is, under any of the terms
 hereof or of any Loan Documents, required to pay, or fail to keep any of the
 properties and assets constituting collateral free from new security
 interests, liens, or encumbrances, except as permitted herein, Bank may at
 its election make expenditures for any or all such purposes and the amounts
 expended together with interest thereon at the Default Rate, shall become
 immediately due and payable to Bank, and shall have benefit of and be secured
 by the collateral; provided, however, the Bank shall be under no duty or
 obligation to make any such payments or expenditures.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 Conflicting Provisions.
 If provisions of this Agreement shall conflict with any terms or provisions
 of any of the Notes or Security Agreement or any schedule attached thereto,
 the provisions of such Notes or Security Agreement or any schedule attached
 thereto, as appropriate, shall take priority over any provisions in this
 Agreement.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
 WAIVER OF JURY TRIAL. UNLESS EXPRESSLY
 PROHIBITED BY APPLICABLE LAW, THE UNDERSIGNED HEREBY WAIVE THE RIGHT TO TRIAL
 BY JURY OF ANY MATTERS OR CLAIMS ARISING OUT OF THIS AGREEMENT OR ANY OF THE
 LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR OUT OF THE CONDUCT OF THE
 RELATIONSHIP BETWEEN THE UNDERSIGNED AND BANK. THIS PROVISION IS A MATERIAL
 INDUCEMENT FOR BANK TO MAKE THE LOAN AND ENTER INTO THIS AGREEMENT. FURTHER,
 THE UNDERSIGNED HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF BANK, NOR
 BANK’S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT

 

	
  

 	
  

 
	
  

 	
 BANK WOULD NOT SEEK TO ENFORCE THIS WAIVER
 OR RIGHT TO JURY TRIAL PROVISION. NO REPRESENTATIVE OR AGENT OF BANK, NOR
 BANK’S COUNSEL, HAS THE AUTHORITY TO WAIVE, CONDITION OR MODIFY THIS
 PROVISION.

 
	
  

 	
  

 
	
  

 	
 Indemnification.
 The Borrower, for itself and for the Mortgagors, hereby jointly and severally
 agree to and do hereby indemnify and defend the Bank, its affiliates, their
 successors and assigns and their respective directors, officers, employees
 and shareholders, and do hereby hold each of them harmless from and against,
 any loss, liability, lawsuit, proceeding, cost, expense or damage (including
 reasonable in-house and outside counsel fees, whether suit is brought or not)
 arising from or otherwise relating to the closing, disbursement,
 administration, or repayment of the Loans, including without limitation: (i)
 the failure to make any payment to the Bank promptly when due, whether under
 the Notes evidencing the Loans or otherwise; (ii) the breach of any
 representations or warranties to the Bank contained in this Agreement or in
 any other Loan Documents now or hereafter executed in connection with the
 Loans; or (iii) the violation of any covenants or agreements made for the
 benefit of the Bank and contained in any of the Loan Documents; provided,
 however, that the foregoing indemnification shall not be deemed to cover any
 loss which is finally determined by a court of competent jurisdiction to
 result solely from the Bank’s gross negligence or willful misconduct.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 

 [SIGNATURES
ON FOLLOWING PAGE]

Signature Page

IN WITNESS
WHEREOF, Bank, Borrower and BB&T Bankcard have caused this Agreement to be
duly executed under seal all on the date first above written.

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 BORROWER:

 
	
  

 	
  

 	
 INDUSTRIAL
 SERVICES AMERICA, INC.

 
	
  

 	
  

 	
  

 	
  

 
	
           /s/
 David Saffer

 	
  

 	
 By:

 	
           /s/
 Harry Kletter

 
	

 

 	
  

 	
  

 	

 

 
	
 WITNESS

 	
  

 	
  

 	
           Harry
 Kletter, Chief Executive Officer

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 BANK:

 
	
  

 	
  

 	
 BRANCH
 BANKING AND TRUST COMPANY

 
	
  

 	
  

 	
  

 
	
           /s/
 David Saffer

 	
  

 	
 By:

 	
           /s/
 Johnny L. Perry

 
	

 

 	
  

 	
  

 	

 

 
	
 WITNESS

 	
  

 	
  

 	
           Johnny
 L. Perry, Senior Vice President

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 BB&T BANKCARD:

 
	
  

 	
  

 	
 BB&T
 BANKCARD CORPORATION

 
	
  

 	
  

 	
  

 	
  

 
	
           /s/
 David Saffer

 	
  

 	
 By:

 	
           /s/
 Johnny L. Perry

 
	

 

 	
  

 	
  

 	

 

 
	
 WITNESS

 	
  

 	
  

 	
           Johnny
 L. Perry, Senior Vice President

 

EXHIBIT A

SUBSIDIARIES

	
  

 	
  

 
	
 1.

 	
 Computerized
 Waste Systems, LLC, a Kentucky limited liability company

 
	
  

 	
  

 
	
 2.

 	
 ISA Indiana,
 Inc., an Indiana corporation

 
	
  

 	
  

 
	
 3.

 	
 ISA Indiana

 
	
  

 	
  

 
	
 4.

 	
 ISA
 Logistics LLC, a Kentucky limited liability company

 
	
  

 	
  

 
	
 5.

 	
 ISA Real

 
	
  

 	
  

 
	
 6.

 	
 ISA
 Recycling, LLC, a Kentucky limited liability company

 
	
  

 	
  

 
	
 7.

 	
 Waste
 Equipment Sales & Service Co., LLC, a Kentucky limited liability company

 
	
  

 	
  

 
	
 8.

 	
 7021 Grade

 
	
  

 	
  

 
	
 9.

 	
 7124 Grade
 Lane LLC, a Kentucky limited liability company

 
	
  

 	
  

 
	
 10.

 	
 7200 Grade
 Lane LLC, a Kentucky limited liability company

 

EXHIBIT B LITIGATION

All American Recycling, Inc. and R. D. Burton and Donna Burton v.
Industrial Services of America, Inc., et al.,
Jefferson Circuit Court, Case No. 06-C-04701.

EXHIBIT C

PERMITTED LIENS

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Debtor

 	
  

 	
 Secured
 Party

 	
  

 	
 Collateral

 	
  

 	
 File Number

 	
  

 	
 Filing
 Location

 
	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Industrial Services of
 America, Inc.

 	
  

 	
 Inter-Tel Leasing, Inc.

 	
  

 	
 Axxess Telephone System
 (Lease)

 	
  

 	
 200407556840

 	
  

 	
 Florida Secretary of State

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Industrial Services of
 America, Inc.

 	
  

 	
 VFS US LLC

 	
  

 	
 2006 Volvo L70E, Serial
 Number ending in last four numbers of 1255

 	
  

 	
 200602820179

 	
  

 	
 Florida Secretary of State

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Industrial Services of
 America, Inc.

 	
  

 	
 VFS US LLC

 	
  

 	
 2006 Volvo MC80 Skid Steer,
 Serial Number ending in last four numbers of 1006

 	
  

 	
 200604375059

 	
  

 	
 Florida Secretary of State

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Industrial Services of
 America, Inc.

 	
  

 	
 BB&T Bankcard
 Corporation

 	
  

 	
 Accounts, Inventory,
 Equipment (except Rental Fleet), Deposit Accounts, General Intangibles and
 Proceeds

 	
  

 	
 200604449508

 	
  

 	
 Florida Secretary of State

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Industrial Services of America,
 Inc.

 	
  

 	
 Branch Banking and Trust
 Company

 	
  

 	
 Accounts, Inventory,
 Equipment (except Rental Fleet), Deposit Accounts, General Intangibles and
 Proceeds

 	
  

 	
 200604449516

 	
  

 	
 Florida Secretary of State

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Industrial Services of
 America, Inc.

 	
  

 	
 VFS US LLC

 	
  

 	
 2007 Volvo MC80B Skid Steer,
 Serial Number ending in last four numbers of 1160

 	
  

 	
 200706132015

 	
  

 	
 Florida Secretary of State

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Industrial Services of
 America, Inc.

 	
  

 	
 Branch Banking and Trust
 Company

 	
  

 	
 Rental Fleet Equipment

 	
  

 	
 200808294715

 	
  

 	
 Florida Secretary of State

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Industrial Services of
 America, Inc.

 	
  

 	
 Branch Banking and Trust
 Company

 	
  

 	
 Shredder

 	
  

 	
 200808437605

 	
  

 	
 Florida Secretary of State

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Industrial Services of
 America, Inc.

 	
  

 	
 Branch Banking and Trust
 Company

 	
  

 	
 Crane, Serial #194-43981

 	
  

 	
 200809428693

 	
  

 	
 Florida Secretary of State

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Industrial Services of
 America, Inc.

 	
  

 	
 Komatsu Financial and
 Brandeis Machinery and Supply Company

 	
  

 	
 One Komatsu Excavator, PC
 220LC-8, S/N 70100

 	
  

 	
 2007223395114

 	
  

 	
 Kentucky Secretary of State

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Industrial Services of
 America, Inc.

 	
  

 	
 Apollo Oil LLC

 	
  

 	
 Specific Equipment as
 described therein

 	
  

 	
 2008236011508

 	
  

 	
 Kentucky Secretary of StateExhibit 10.2  

SCHEDULE “DD” TO BB&T LOAN AGREEMENT

This Schedule “DD” is an
attachment to and a part of the Loan Agreement (the “Loan Agreement”) dated
April 13, 2010 between Branch Banking and Trust Company (“Bank”) and Industrial
Services of America, Inc. (“Borrower”). 

Definitions. In addition to the words and
terms defined elsewhere in this Schedule DD, the Loan Agreement and the Uniform
Commercial Code of Kentucky, as amended from time to time, (the “UCC”)
the following terms shall have the following specified meanings: 

Account Debtor. Any Person obligated to
Borrower on an Account. 

Account(s). Any right to payment of a monetary
obligation, whether or not earned by performance, including without limitation
any receivable, contract right, note, draft, instrument, acceptance, chattel
paper, lease, or other writing or open account resulting from the sale, lease,
license, assignment or other disposal of property by Borrower, or from services
rendered or to be rendered by Borrower. 

Advance Rate. The percentage of the total
value of Eligible Accounts, Eligible Inventory, Eligible Export-Related
Accounts, Eligible Export-Related Inventory, or Other Collateral Bank will lend
to Borrower, as set forth in Section DD.02. 

Asset Based Lending Credit Line Sweep Services Agreement.
If applicable, that agreement between Bank and Borrower whereby Borrower agrees
that all remittances in payment of Accounts shall be deposited in its
designated Collateral Reserve Account or Operating Account, as applicable, and
shall be administered and applied in accordance with the ABL Credit Line Sweep
Services Agreement. This agreement is to be read in conjunction with, and is a
part of, the Treasury Management Agreement, the Loan Agreement and this
Schedule DD. 

Asset Based Sweep Services Attachment. If
applicable, that agreement between Bank and Borrower whereby Borrower agrees
that all remittances in payment of Accounts which are deposited to the
Collateral Reserve Account will be applied to the outstanding Line of Credit,
as well as other provisions of the Loan Documents. This agreement is to be read
in conjunction with, and is a part of, the Treasury Management Agreement, the
Loan Agreement, and this Schedule DD. 

Availability. The lesser of the Bank’s Line of
Credit or Collateral Loan Value reduced by (i) the principal balance
outstanding under the Line of Credit, (ii) the Letter of Credit Exposure
Reserve, and (iii) the Availability Reserve as determined by Bank from the most
recent Loan Base Report and otherwise in the sole discretion of the Bank after
consideration of Collections. 

Availability Reserve. A reserve against
Availability determined by Bank in its sole discretion from time to time to
reflect events, conditions, contingencies or risks or other loans of Bank which
without limitation do or may affect the Collateral Loan Value, the business
prospects of Borrower or any Account Debtor, or the security interest of Bank,
including enforceability, perfection and the priority thereof. 

Bill and Hold. An Account generated by the sale
of goods for which an invoice has been issued to the buyer, but the goods
represented by such Account remain undelivered to the buyer and/or under the
control of Borrower or Borrower’s representative. 

Collateral. Collateral shall mean the assets
and property described in the Security Agreement including, without limitation,
Borrower’s Accounts, Inventory and Other Collateral. 

Collections. Collections shall be deemed to
include Proceeds of Collateral, in any form received by Bank pursuant to a
Lockbox Agreement, or deposited in a Collateral Reserve Account or an 

Operating
Account or other account maintained with Bank, or any other account maintained
for the benefit of the Bank, such as a blocked account, which Collections shall
be the exclusive and sole property of Bank to the extent applied to the
outstanding balance of the Line of Credit. 

Collateral Loan Value. The aggregate value of
the Advance Rate as applied to the Eligible Accounts, and/or Eligible
Export-Related Accounts, the Advance Rate as applied to the Eligible Inventory
and/or Eligible Export-Related Inventory and the Advance Rate applied to the
value of Other Collateral, if any. 

Collateral Reserve Account. The demand deposit
account maintained with Bank by Borrower into which all proceeds of the
Collateral shall be deposited and to which only Bank will have access. On the
date hereof, the Collateral Reserve Account number with respect to the Line of
Credit (domestic and/or foreign) is 5184608415 (domestic) and (foreign)
and shall be deemed to include any substitute or replacement account at Bank. 

Contra Account. An Account subject to offset,
in the sole discretion of Bank, by an Account Debtor of Borrower. 

Credit Insurance. A policy of credit
insurance, satisfactory to Bank, insuring Accounts collaterally assigned to
Bank naming Bank as a “loss payee.” 

Cross Aging Rule. Should any Account due
Borrower from an Account Debtor have 50% (upon notice, such other percentage as
Bank in its discretion shall determine) or more of their total aggregate
Accounts aged in excess of the Eligibility Period, then all Accounts from such
Account Debtor shall be deemed ineligible. 

Eligible Account and/or Eligible Inventory. An
Eligible Account is an Account which is not an Ineligible Account, as defined in
Section DD.03 hereof; and Eligible Inventory is Inventory which is not
Ineligible Inventory, as defined in Section DD.04 hereof. 

Eligible Export-Related Account and/or Eligible Export-Related
Inventory. An Eligible Export-Related Account is a
foreign account which is not an Ineligible Foreign Account, as defined in
Section DD.03 hereof; and Eligible Export-Related Inventory is Inventory which
is not Ineligible Export-Related Inventory as defined in Section DD.04 hereof. 

Eligibility Period. The Eligibility Period for
any Account shall mean not more than 90 days from the original invoice date. 

Exam. Exam means those examinations on the
premises of Borrower or wherever books, records, or Collateral are located,
however maintained, including but not limited to the inspection of Inventory,
and standard testing of such books and records by Bank’s representatives, at
any time during normal business hours of Borrower, with or without prior notice
to Borrower from Bank, as provided in Section DD.06(b). 

Excess Inventory. That level of Inventory on
hand determined by Bank to be in excess of a twelve (12) month supply of
Borrower’s requirements therefor unless, upon written notice by Bank, Bank in
its discretion shall determine a greater or lesser level of Inventory. 

Fees. Those fees which Borrower will pay to
Bank in conjunction with Bank’s asset based lending services as set forth in
Section DD-07 hereof, whether or not actual loan obligations exist, while the
Loan Agreement is in force.

Foreign Accounts. Any Account due from any Person
located outside the fifty states comprising the United States of America and
the District of Columbia unless the Account is due from a Person located in a
country, commonwealth and/or possession identified in Section DD.02(f) hereof.  

Government Account. Any Account owed by the
United States of America or any slate or political subdivision thereof, or any
department, agency, authority, board or instrumentality 

thereof. 

Ineligible Accounts and/or Ineligible Inventory.
Shall have the meanings given in Sections DD.03 and DD.04 hereof. 

Ineligible Export-Related Accounts and/or Ineligible Export-Related
Inventory. Shall have the meaning given in Sections
DD.03 and DD.04 hereof. 

Intellectual Property. Property of any Person
constituting under any applicable federal or state law a patent, copyright,
trademark, service mark, trade name, trade secret, or license or other right to
use any of the foregoing. 

Inter-Company Account. Any Account from any
Account Debtor with Borrower in any manner including, without limitation, as
owner, member, partner, shareholder, officer, director, employee, agent, or
which is an affiliate of Borrower. 

Inventory. Goods which are leased or held by
Borrower for sale or lease as lessor or furnished under a contract of service,
and shall include goods, finished goods, raw materials, work-in-process, and
materials to be used and/or consumed in a business and proceeds thereof
including Accounts and Chattel Paper. 

Inventory Caps. The maximum loan amount Bank
may lend against the Eligible Inventory and/or Eligible Export-Related
Inventory, as set forth in Section DD.02(c) and (d). 

Letter of Credit. Any Letter of Credit issued
by Bank on behalf of Borrower, as Applicant; provided, however, inclusion of
this definition shall not imply, or be construed as, a commitment by Bank to
issue any Letters of Credit. 

Letter of Credit Exposure Reserve. At any
given date, the aggregate face amount of outstanding Letters of Credit on such
date plus the aggregate amount of drafts drawn under or purporting to be drawn
under Letters of Credit that have been paid by Bank and for which Bank has not
been reimbursed. 

License Agreement. An agreement between
Borrower and Licensor pursuant to which Borrower is authorized to use such
Licensor’s Intellectual Property in connection with the manufacturing, sale or
other transfer or distribution of Inventory. 

Licensor. Any Person from whom Borrower
obtains a License Agreement. 

Licensor/Bank Agreement. An agreement
satisfactory to Bank among Borrower, Bank and Licensor pursuant to which
Licensor consents and authorizes Bank to enforce its security interests and
liens against Inventory with the benefit of the Intellectual Property
regardless of whether Borrower has defaulted under a License Agreement
therefor. 

Line of Credit. The amount of each Line of
Credit (domestic and/or foreign) approved by Bank and set forth in the Loan
Agreement. 

Loan Base Report. That report on Bank’s
standard form, or in a form otherwise acceptable to Bank, to be prepared,
signed, dated and delivered by Borrower in accordance with Bank’s instructions,
and submitted to Bank by Borrower at specified intervals and/or occasions, and
detailing pertinent information as regards Accounts and/or Inventory and/or
Other Collateral, Reserves, Collateral Loan Value, outstanding Line of Credit
balance, and Availability. 

Lockbox Agreement. That agreement on Bank’s
standard form, or in a form otherwise acceptable to Bank, to be executed by
Borrower relating to the provision for lockbox services and requirements. 

Operating Account. Operating Account shall
mean the Borrower’s demand deposit account at any time with Bank, currently
account number 5280498205 or any substitute or replacement account at
Bank. 

Other Collateral. Collateral that shall be
included in Collateral Loan Value, other than Accounts 

or Inventory,
as specifically approved and determined by Bank in its sole discretion. 

Person. Any individual, corporation, general
or limited partnership, limited liability company or partnership, limited
liability limited partnership, trust, unincorporated organization, association,
joint venture, or a state or federal government agency or political subdivision
thereof. 

Proceeds. Proceeds shall have the meaning
given to it under the UCC and shall include without limitation the collections
and distributions of Collateral, cash or non-cash. 

Reserves. Aggregate deductions from the
Collateral Loan Value and/or Availability as determined by Bank from time to
time, including, but not limited to, Letter of Credit Exposure Reserve and the
Availability Reserve. 

Advance Rates/Advances/ Prepayment and Other Provisions.

          Bank
agrees that the Advance Rates to be used to calculate the Collateral Loan Value
shall be: 

80% against the Eligible Accounts. 

0% against the Eligible Export-Related
Accounts 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Against
the Eligible Inventory as follows: 

 	
  

 	
  

 	
  

 	
 Inventory Sublimits: 

 
	
  

 
	
      0%

 	
  

 	
 Finished
 Inventory

 	
  

 	
 $

 	
  

 
	

 

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
     55%

 	
  

 	
 Raw
 Materials Inventory

 	
  

 	
 $

 	
 10,000,000.00

 
	

 

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
      0%

 	
  

 	
 Work in
 Process Inventory

 	
  

 	
 $

 	
  

 
	

 

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
      0%

 	
  

 	
 In Transit
 Inventory

 	
  

 	
 $

 	
  

 
	

 

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
      0%

 	
  

 	
 Other
 Eligible Inventory {Describe}

 	
  

 	
 $

 	
  

 
	

 

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Subtotal:

 	
  

 	
 $

 	
 10,000,000.00

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 

 

Against Eligible Export-Related
Inventory as follows:  

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
      0%

 	
  

 	
 Finished
 Inventory

 	
  

 	
 $

 	
  

 
	

 

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
      0%

 	
  

 	
 Raw
 Materials Inventory

 	
  

 	
 $

 	
  

 
	

 

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
      0%

 	
  

 	
 Work in
 Process Inventory

 	
  

 	
 $

 	
  

 
	

 

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
      0%

 	
  

 	
 Other
 Eligible Inventory {Describe}

 	
  

 	
 $

 	
  

 
	

 

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Subtotal:

 	
  

 	
 $

 	
  

 

Inventory
values will not exceed the lower of cost or market and, if required by Bank,
will be reduced by the LIFO reserve. The aggregate loan advances against
Eligible Inventory shall not exceed at any time the foregoing Inventory
Sublimits or Subtotals or an Aggregate Inventory Sublimit of $10,000,000.00
(the “Inventory Caps”); provided however, notwithstanding the foregoing, the
aggregate advances against Eligible Inventory shall not exceed in amount at any
time the aggregate advances against Eligible Accounts. The aggregate loan
advances against Eligible Accounts from North American Stainless shall not
exceed at any time the amount of any current trade credit insurance provided to
Borrower, less any reserves for loss sharing responsibility, required by the
insurer, from an insurer and upon terms satisfactory to Bank including naming
Bank as an additional insured and providing a certificate of such to Bank. 

Other
Collateral shall be included in the Collateral Loan Value as approved by Bank
from time to time, together with an Advance Rate determined by Bank from time
to time.

Any Account due from a Person located in the following identified
countries, commonwealths, and/or possessions shall not be deemed a Foreign
Account: (list). 

Notwithstanding
that the following Account Debtor(s) shall be ineligible pursuant to the terms
hereof, such Account Debtor(s) shall nonetheless be deemed eligible by Bank,
subject to any limitations and/or advance provisions set forth below, until
Bank, upon written notice, in its sole discretion, shall provide otherwise: 

	
  

 	
  

 
	
 Account Debtor/Address

 	
 Limitations/Advance Provisions

 

Bank reserves
the right, upon notice, in its sole discretion, to amend the Eligibility Period,
Inventory Caps, Reserves, or the provisions of Section DD.02(f) and (g) at any
time; and, the Loan Base Report, upon receipt by Bank, shall be subject to
Bank’s satisfactory review, acceptance or correction. 

	
  

 	
  

 
	
  

 	
 Bank agrees to (i) make
 advances under the Line of Credit automatically, without any request by
 Borrower upon the presentment of items drawn against Borrower’s Operating
 Account, provided the Availability, as shown upon a current acceptable Loan
 Base Report as required herein, and otherwise determined by Bank in its sole
 discretion after consideration of Collections, is sufficient to cover such
 advances, or (ii) fund the Operating Account based on request(s) for advances
 from Borrower orally or in writing provided the Availability is sufficient to
 cover such advances. Borrower shall submit a completed Loan Base Report to
 Bank as required, so long as the Line of Credit shall exist, regardless of
 the outstanding balance thereof. It is further provided that Borrower
 releases Bank from any liability or obligation for and agrees to indemnify
 and hold Bank harmless from and against any loss, cost, damage or expense
 (including Bank’s reasonable attorneys’ fees) incurred or suffered as a
 result of the payment by Bank of any item drawn against Borrower’s checking
 account that is subsequently determined to have been improperly paid for any
 reason, except for the gross negligence or willful misconduct of Bank. Bank
 also reserves the right, upon notice, in its sole discretion, to discontinue
 the automatic payment of items presented to Bank, and to require written or
 oral advance requests to be made by Borrower. 

 

Bank is
authorized (without any further request from Borrower) to advance on behalf of
Borrower as a Loan all sums required to be paid by Borrower to Bank in respect
of any Letter of Credit pursuant to the terms of the Application for Letter of
Credit (including all fees associated therewith), but Bank shall have no
obligation to make such a Loan. 

Bank may debit
the amount of any payment due under the Loan Agreement and this Schedule DD
from the Operating Account, any deposit account or loan account of Borrower
maintained with Bank, but Bank shall have no obligation to do so. 

If the
principal balance outstanding at any time under the Line of Credit exceeds the
lesser of the approved maximum amount of the Line of Credit or the Collateral
Loan Value reduced by the Reserves (herein an “Overadvance”), Borrower shall
immediately prepay the Line of Credit to the extent necessary to eliminate such
excess. For so long as the Overadvance shall exist and be continuing, and
without prejudice to any other rights Bank may have hereunder, Bank shall be
authorized upon written notice to Borrower to assess an overadvance fee as
determined by Bank in its discretion in an amount up to 1% of the Overadvance
but not less than $1,000.00, subject to such other minimum amount as
Bank in its discretion upon notice to Borrower shall determine. 

Ineligible Accounts. 

          Ineligible
Accounts shall include the following: 

The amount of
any Account outside of the Eligibility Period. 

Any Account
which is a Contra Account. 

Any Account
subject to the Cross Aging Rule. 

Any Account
which has been bonded or become subject to a suretyship or other similar
arrangement. 

Any Inter-Company
Account. 

Any Foreign
Account, including any Export-Related Account, unless such Account shall be
insured by Credit Insurance, or such Account shall be supported by a letter of
credit for the benefit of and acceptable to Bank, or such Account shall be
eligible pursuant to a duly executed Loan Authorization Agreement issued by the
Small Business Administration of the United States Government in favor of Bank,
or such Account is eligible pursuant to a duly executed Borrower Agreement
issued by the Export-Import Bank of the United States in favor of Bank, or such
Account is otherwise expressly approved in writing by the Bank. 

Any Account
representing a Bill and Hold or similar arrangement. 

Any Government
Account due from any branch, agency, or political subdivision of the State or
Federal Government, including without limitation, any municipality, county, or
board for which the proper Assignment of Claims form, governmental consents,
approvals, or Notice of Assignment form have not been fully executed or warrant
issued for payment thereof by the state if such assignments, consents,
approvals or warrants for payment shall be required by Bank in writing. 

Any Account
due from any government agency which, by contract, precludes and/or prohibits
the collateral assignment of such Account, unless otherwise expressly approved
by Bank in writing.

Any Account which, at the discretion of Bank, is deemed
doubtful for collection for any reason, including but not limited to, those
involving disputes, returns, credit worthiness, legal proceedings, whether in
process, pending or threatened, conditional payments, is not free of all liens,
encumbrances, charges, rights and interest except those in favor of Bank; or
represent deposits, retainages, or progress billings, or are not payable in
U.S. Dollars. 

That portion
of Accounts due from an Account Debtor (other than North American Stainless)
which is in excess of a concentration limit of twenty five percent (25%) of
Borrower’s aggregate dollar amount of all outstanding Accounts. 

That portion
of Accounts which represent a credit balance on any Account outside of the
Eligibility Period. 

Any Chattel
Paper unless expressly made an Eligible Account in writing by Bank. 

Any Account
otherwise deemed ineligible by Bank in its sole discretion. 

Any Account or
portion of an Account of an Account Debtor subject to a factoring, reverse
factoring or other similar agreement including Confirmed Invoices of North
American Stainless discounted per agreement of Borrower and Santander Factoring
y Confirming S.A. EFC (“Santander”). 

Bank reserves
the right, upon notice, in its sole discretion, to amend the terms of the
Ineligible Accounts at any time. 

Ineligible Inventory. 

Ineligible
Inventory shall include the following: 

Inventory not
legally owned by Borrower, including but not be limited to, goods on
consignment from any supplier, vendor, and/or individual, or goods on
demonstration and/or for trial, and not subject to the first lien priority
security interest in favor of Bank. 

Inventory not
in new and/or salable condition, including but not limited to, damaged goods,
goods used by Borrower and/or potential buyers, goods with missing
components/parts and not in a whole condition. 

Inventory
which has been held by Borrower more than 12 months without being sold and/or
leased. 

Inventory
representing work-in-process unless authorized by Bank pursuant to DD.02(c)
and/or (d). 

Inventory
deemed by Bank, at its sole discretion, to cause and/or represent unusual
danger to the health and/or safety of individual(s) and/or the environment. 

Inventory
which violates any federal law and/or laws of the city, county, or state where
the goods are stored. 

Inventory of
which Borrower is the legal owner but which is being stored and/or housed at a
location other than the place of business of Borrower or in transit (unless
otherwise approved by 

Bank in
writing including conditions thereof) or is otherwise authorized as set forth
hereinabove in Section DD.02(c) and/or (d). 

Inventory
deemed otherwise ineligible by Bank in its sole discretion. 

Inventory
subject to a security interest, lien or other encumbrance in favor of any other
Person.

Inventory, if Export-Related Inventory, unless such Inventory is
eligible pursuant to a duly executed Loan Authorization Agreement issued by the
Small Business Administration of the United States Government in favor of Bank,
or such Inventory is eligible pursuant to a duly executed Borrower Agreement
issued by the Export-Import Bank of the United States in favor of Bank, or such
Inventory is otherwise expressly approved in writing by Bank. 

Inventory
determined by Bank to be Excess Inventory. 

Inventory
subject to a License Agreement for which Bank shall have required in writing a
Licensor/Bank Agreement and such agreement shall not have been obtained. 

Bank reserves
the right, upon notice, in its sole discretion, to amend the terms of the
Ineligible Inventory at any time. 

Proceeds of Collateral and Application of Proceeds.
(Check either (b) or (c); and (a) if applicable.) 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 o

 	
  (a)

 	
 Borrower
 shall execute a Lockbox Agreement with Bank and shall notify, or cause to be
 notified, all Account Debtors to forward all remittances to the lockbox in
 accordance with such Lockbox Agreement. Customer shall pay all costs of such
 lockbox, including set up and administration thereof. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 x

 	
  (b)

 	
 Borrower
 agrees to deposit all Proceeds of the Collateral in a Collateral Reserve
 Account at Bank. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 o

 	
  (c)

 	
 Borrower
 agrees to deposit all Proceeds of the Collateral in an Operating Account. 

 

Borrower
agrees that all Proceeds shall be applied as described in the Loan Documents
(including the Asset-Based Sweep Services Attachment or the ABL Credit Line
Sweep Services Agreement, if applicable). Bank reserves the right, in its sole
discretion, to require Borrower to implement DD.05 (b) and/or DD.05 (a)
immediately upon written notification from Bank. 

Reporting / Exam. 

Reporting. (Check all that apply) 

Borrower shall
provide the following reports, financial statements, list of Account Debtors
and addresses and other reports to Bank upon execution hereof and thereafter as
indicated below (herein the “Required Information”). Unless and until the Bank
shall agree otherwise, such Required Information shall be submitted to Bank
electronically in non-scanned PDF format acceptable to Bank via the internet as
an electronic record thereof or in such other format acceptable to Bank. 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Weekly 

 	
 Quarterly 

 	
 Annually 

 	
 Month-End 

 	
  

 
	
  

 	
  

 	
 o

 	
  

 	
  x

 	
 Quarterly/Monthly
 Loan Base Reports.

Quarterly/Monthly Loan Base Reports, prepared as of the
 end of each reporting period. Except as set forth below, Loan Base Reports
 are required for all loans covered by this Agreement no later than 15 days
 following each reporting period end.

 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Additionally,
 all other required reports indicated below will also be due on the fifteenth
 (15th) day of each repotting period.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 x

 	
  

 	
  

 	
  

 	
 Weekly Loan
 Base Reports. Weekly Loan Base Reports, based on information with an “as of
 date no more than three (3) business days old when received by Bank. Sales
 and cash receipts journals shall accompany each report. The last Weekly Loan
 Base Report provided each month shall be a full or partial week with an “as
 of date consistent with Borrower’s fiscal month end, subject to reconciling
 adjustments, if any, in the monthly reports hereinafter required.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 o

 	
  

 	
 x

 	
 Accounts
 Aging based upon invoice date by the fifteenth (15th) day of each reporting
 period. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 o

 	
  

 	
 x

 	
 Inventory
 Report by the fifteenth (15th) day of each reporting period.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 o

 	
  

 	
 x

 	
 Accounts
 Payable Aging by the fifteenth (15th) day of each reporting period.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 o

 	
  

 	
 x

 	
 Financial
 Statements, which shall be due on the day of each month/quarter as indicated.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 x

 	
  

 	
 A list of
 Account Debtors with current addresses.

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 x

 	
 o

 	
 o

 	
 x

 	
 All
 Santander documentation shall be provided to Bank upon receipt, including a
 weekly North American Stainless accounts receivables schedule of both
 Confirmed and non Confirmed Invoices.

 

Borrower shall
forward to Bank any of these reports at such other times as Bank may require
them, upon notice to Borrower, and/or any other reports deemed necessary by
Bank in its discretion to monitor the Collateral for the Line of Credit.
Further. Borrower shall provide written monthly statements of account in
conjunction with its agreement with Santander, or alternatively, if requested
by Bank, to extent same may be available to Borrower, electronic access thereto
including password or other required access information. Notwithstanding any
provision to the contrary, if any, in the Loan Agreement, the foregoing reporting
requirements shall not be subject to notice of default by Bank, or right to
cure by Borrower, it being expressly understood and agreed that timely receipt
of same are material and fundamental to the Bank’s administration and funding
of the Line of Credit. Upon written notice, Bank shall be authorized to impose
a late reporting fee as determined by Bank for failure of Borrower to timely
comply with the reporting requirements of this section. 

Exam. From time to time, as deemed necessary
by Bank in its sole discretion to monitor Collateral, Borrower hereby
authorizes Bank or any agent or representative thereof to inspect, examine and
verify the Accounts, Inventory, and Other Collateral, make copies of and make
abstracts from all the records and books of account of, and visit the
properties of, Borrower, and to discuss the affairs, finances, and Collateral
generally of Borrower with any of its respective owners, officers, directors,
shareholders, members, or partners and Borrower’s independent accountants and consultants.
Without expense to Bank, Bank may use any of Borrower’s personnel, equipment,
including computer equipment, programs and computer readable media as 

deemed
necessary by Bank to conduct such Exam. 

Fees. 

Borrower shall
pay to Bank the sum of $600.00 per month as a fee for the use of Bank’s asset
based lending services which shall be in addition to any fees or other charges
for the treasury services of Bank. This fee may be changed by written notice to
Borrower.  

Borrower shall
pay to Bank for each Exam of Borrower, an examination fee of $750.00 per diem
per examiner plus expenses such as, but not limited to, travel expense(s),
specialized equipment needed to count and/or value goods pledged as Collateral
to Bank, the use of outside firms to perform any Exam as deemed necessary by
Bank in its sole discretion to monitor Collateral, with said reimbursement
being represented by receipts and/or listing of expense(s) submitted to
Borrower by Bank along with Bank’s invoice for reimbursement. Bank reserves the
right to change the examination fee upon notice to Borrower. 

Borrower shall
pay to Bank the actual cost of any appraisal of Inventory and/or Other
Collateral performed by an independent appraiser as required by Bank. 

Bank in its
discretion may charge a late reporting fee for Borrower’s failure to provide
timely reports required under Section DD.06. 

Bank reserves
the right to debit all Fees from the Operating Account of Borrower. 

Events of Default. In addition to those Events
of Default appearing elsewhere in the Loan Agreement, each of the following
shall constitute an additional Event of Default under the Loan Agreement: 

The refusal by
Borrower to permit Bank to inspect, examine or verify the books and records in
accordance with the Exam provisions of this Loan Agreement. 

Failure to
execute a Lockbox Agreement and notify Account Debtors to remit payments to the
Lockbox, if required by Bank, due to less than 70% of Borrower’s Collections
being non wire transfers.

Failure to deposit checks or other remittances
received in payment of Accounts into the Collateral Reserve Account or
Operating Account, as required pursuant to Section DD.05.

If the outstanding
principal balance under the Line of Credit plus the Reserves exceeds the
Collateral Loan Value or the amount of the Line of Credit and Borrower fails
immediately to prepay the Line of Credit by an amount sufficient to bring
Borrower in compliance with this Schedule DD. 

If Borrower
fails to comply with the Reporting requirements of DD.06(a). 

If Borrower
fails to otherwise comply with any of the provisions of this Schedule “DD” or
the Loan Agreement. 

If Borrower
shall modify, amend or terminate the agreement with Santander without the prior
written approval of Bank. 

Should
Borrower fail to provide to Bank the Santander monthly statements, or, if
requested by Bank, refuse to provide to Bank electronic access to the Santander
account, to the extent same may be available to Borrower. 

Other Provisions. 

Notice. Any notice required to be given herein
shall be effective when made and, notwithstanding any provisions in the Loan
Agreement to the contrary, may be made by hand delivery, confirmed facsimile
transmission, overnight courier, first class or certified mail return receipt
requested. 

Operating Account. Notwithstanding any
provision in the Loan Agreement to the contrary, Borrower shall establish and
maintain its Operating Account with Bank during the term hereof. 

Certain Events. Upon execution hereof and with
each borrowing made hereunder pursuant to the Loan Base Report, Borrower shall
be deemed to certify to Bank that (i) no Event of Default shall have occurred
and be continuing, and no event shall have occurred and be continuing that,
with the giving of notice or passage of lime or both, would be an Event of
Default; (ii) no material adverse change shall have occurred in the financial
or operating condition or prospects of Borrower since the date of the Loan
Agreement; (iii) all Loan Documents shall have remained in full force and
effect; and (iv) the representations and warranties contained in the Loan
Agreement shall be true and correct as of such date. 

Electronic Transactions. Borrower and Bank
agree that the electronic reporting of Required Information authorized herein
shall constitute an agreement under the Uniform Electronic Transfer Act (the
“Act”), in effect in the State of North Carolina; and any dispute or
controversy relating to such reporting shall be interpreted in accordance with
the provisions of the Act. With respect to such reporting, Borrower
acknowledges that Bank shall not be responsible (i) for any failure,
interruption, or delay in the performance of the internet; (ii) for any
unauthorized, inadvertent, or fraudulent access, use or disclosure to third
parties of the Required Information should it occur by error of transmission of
Borrower or reply thereto by Bank or otherwise; (iii) for Bank’s failure to
maintain security measures at the time of transmission or reply thereto to
prevent unauthorized access, misappropriation and use of Required Information
by third parties. Borrower expressly assumes the risk of unauthorized access,
use or misappropriation by third parties of the Required Information
transmitted to Bank via the internet and will hold harmless and indemnify Bank
from any claim or expense, including reasonable attorneys fees associated
therewith. Until Bank shall receive written notice otherwise from Borrower, the
following persons may be contacted by Bank with any questions or issues about
the Required Information: 

	
  

 	
  

 	
  

 
	
 Primary Contact Person

 	
  

 	
 Secondary Contact Person

 
	

 

 	
  

 	

 

 
	
  

 	
  

 	
  

 
	
 Steve Jones

 	
  

 	
  

 
	

 

 	
  

 	

 

 
	
 Name

 	
  

 	
 Name

 
	
  

 	
  

 	
  

 
	
 Operations Manager for Alloys

 	
  

 	
  

 
	

 

 	
  

 	

 

 
	
 Title

 	
  

 	
 Title

 
	
  

 	
  

 	
  

 
	
 502-415-7823

 	
  

 	
  

 
	

 

 	
  

 	

 

 
	
 Telephone
 Number

 	
  

 	
 Telephone
 Number

 
	
  

 	
  

 	
  

 
	
 sjones@isa-inc.com

 	
  

 	
  

 
	

 

 	
  

 	

 

 
	
 E-mail
 Address

 	
  

 	
 E-mail
 Address

 

Describe Any
Other Provisions, or Delete. 

This Agreement
is made and entered into for the sole protection and benefit of Bank and
Borrower, their successors and assigns, and no third person or persons shall
have any right(s) to action hereon. 

IN WITNESS
WHEREOF, Borrower and Bank have executed this Schedule “DD” as of this date and
have adopted as their respective seal the “seal” appearing beside or near their
signatures below. 

Borrower is a Corporation:

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 WITNESS:

 	
  

 	
 Industrial
 Services of America, Inc.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 /s/ David
 Saffer

 	
  

 	
 By:

 	
        /s/
 Harry Kletter

 
	
  

 	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
        Harry
 Kletter

 
	
  

 	
  

 	
  

 	
 Title:
    Chief Executive Officer

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 WITNESS:

 	
  

 	
 Branch
 Banking and Trust Company

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 /s/ David
 Saffer

 	
  

 	
 By:

 	
        /s/
 Johnny L. Perry

 
	
  

 	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
        Johnny
 L. Perry

 
	
  

 	
  

 	
  

 	
 Title:
    Senior Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00173-of-00352.parquet"}]]