Document:

Exhibit 10.5 

MODIFICATION AND CROSS-COLLATERALIZATION AGREEMENT

THIS
MODIFICATION AND CROSS-COLLATERALIZATION AGREEMENT (the “Agreement”) made and
entered into this 13th day of April, 2010, by and among INDUSTRIAL SERVICES OF
AMERICA, INC., a Florida corporation with offices at 7100 Grade Lane,
Louisville, Kentucky 40213 (“Borrower”), ISA REAL ESTATE, LLC, a Kentucky
limited liability company with offices at 7100 Grade Lane, Louisville, Kentucky
40213 (“ISA Real Estate”), ISA INDIANA REAL ESTATE, LLC, a Kentucky limited
liability company with offices at 7100 Grade Lane, Louisville, Kentucky 40213
(“Indiana Real Estate”), 7021 GRADE LANE LLC, a Kentucky limited liability
company with offices at 7100 Grade Lane, Louisville, Kentucky (“Grade Lane”);
(hereinafter Borrower, ISA Real Estate, Indiana Real Estate and Grade Lane
shall sometimes be collectively referred to as “Mortgagors”), and BRANCH
BANKING AND TRUST COMPANY, a North Carolina banking corporation with offices at
401 West Main Street, Louisville, Jefferson County, Kentucky 40202 (“Bank”);

WITNESSETH:

The parties
hereto recite and agree as follows, which recitations and agreements constitute
a part of this Agreement:

A. Bank is the
holder of a promissory note dated May 7, 2008, payable by Borrower to Bank, in
the original principal sum of $6,000,000 (the “Shredder Note”). The Shredder
Note evidences a loan (the “Shredder Loan”), in such principal sum. The
Shredder Loan is subject to the terms and conditions of the loan agreement
dated May 7, 2008, between Borrower and Bank (the “Shredder Loan Agreement”).
The stated maturity of the Shredder Loan and the Shredder Note is April 7,
2014.

B. Bank is the
holder of a promissory note dated May 7, 2008, payable by Borrower to Bank, in
the original principal sum of $3,000,000 (the “Rental Fleet Note”). The Rental
Fleet Note evidences a loan (the “Rental Fleet Loan”), in such principal sum.
The Rental Fleet Loan is subject to the terms and conditions of the loan
agreement dated May 7, 2008, between Borrower and Bank (the “Rental Fleet Loan
Agreement”). The stated maturity of the Rental Fleet Loan and the Rental Fleet
Note is May 7, 2013.

C. Bank and
Borrower entered into a BB&T Bankcard Corporation Commercial Card Plan
Agreement dated December 8, 2003 (the “Bankcard Agreement”), pursuant to which
Borrower and BB&T Bankcard Corporation (“Bankcard Corporation”) made a
$2,500,000 credit card facility available to Borrower, with availability
thereunder limited to a principal sum not to exceed $500,000, so long as the
Term Loan (hereafter defined) shall be outstanding (the “Credit Card
Facility”).

D. Bank is the
holder of a promissory note dated October 22, 2008, payable by Borrower to
Bank, in the original principal sum of $609,900 (the “Crane Note”). The Crane
Note evidences a loan (the “Crane Loan”) in such principal sum. The Crane Loan
is subject to the terms and conditions set forth in the loan agreement dated
October 22, 2008 between Bank and Borrower (the “Crane Loan Agreement”). The
stated maturity of the Crane Loan and the Crane Note is October 22, 2013.

E. Bank is the
holder of a promissory note dated June 30, 2009, payable by Borrower to Bank,
in the original principal sum of $5,000,000 (the “Term Note”). The Term Note
evidences a loan (the “Term Loan”) in such principal sum. The Term Loan is
subject to the terms and conditions set forth in the loan agreement dated June
30, 2009, among Borrower, Mortgagors and Bank (the “Term Loan Agreement”). The
original stated maturity of the Term Loan and the Term Note was September 28,
2009, same being thereafter extended by mutual agreement of Bank, Borrower and
Mortgagors.

F. Hereinafter
the Shredder Loan, the Rental Fleet Loan, the Bankcard Facility, the Crane Loan
and the Term Loan shall be referred to as the “Loans”; the Shredder Note, the
Rental Fleet Note, the Bankcard Agreement, the Crane Note and the Term Note
shall be collectively referred to as the “Notes”; the Shredder Loan Agreement,
the Rental Fleet Loan Agreement, the Bankcard Agreement, the Crane Loan
Agreement and the Term Loan Agreement shall be referred to as the “Loan
Agreements”.

G. Repayment
of the Loans, the Notes and all other obligations of Borrower and Mortgagors to
Bank set forth in the Loan Agreements is secured by security instruments
granted to Bank as follows:

	
  

 	
  

 
	
  

 	
 a. Mortgage
 dated June 30, 2009, granted by Indiana Real Estate to Bank of record as
 Instrument #200905961 in the office of the Jackson County Recorder, Jackson
 County, Indiana, and related assignment of leases and rents dated June 30,
 2009, granted by Indiana Real Estate to Bank of record as Instrument
 #200905962, in the office aforesaid (hereinafter collectively the “Indiana
 Real Estate Mortgage”). The real estate subject to the Indiana Real Estate
 Mortgage is more particularly described therein and on Exhibit A attached
 hereto and incorporated herein by reference (the “Indiana Real Estate
 Property”).

 
	
  

 	
  

 
	
  

 	
 b. Mortgage
 dated June 30, 2009, granted by ISA Real Estate to Bank of record as
 Instrument #200907685 in the office of the Floyd County Recorder, Floyd
 County, Indiana, and related assignment of leases and rents dated June 30,
 2009, granted by ISA Real Estate to Bank of record as Instrument #200907686,
 in the office aforesaid (hereinafter collectively the “ISA Real Estate-IN
 Mortgage”). The real estate subject to the ISA Real Estate-IN Mortgage is
 more particularly described therein and on Exhibit B attached hereto and
 incorporated herein by reference (the “ISA Real Estate-IN Property”).

 
	
  

 	
  

 
	
  

 	
 c. Mortgage
 dated June 30, 2009, granted by Grade Lane to Bank of record in Mortgage Book
 11663 at Page 511, in the office of the Jefferson County Clerk, Jefferson
 County, Kentucky, and related assignment of leases and rents dated June 30,
 2009, granted by Grade Lane to Bank of record in Deed Book 9418 at Page 289,
 in the office aforesaid (hereinafter collectively the “Grade Lane Mortgage”).
 The real estate subject to the Grade Lane Mortgage is more particularly
 described therein and on Exhibit C attached hereto and incorporated herein by
 reference (the “Grade Lane Property”).

 
	
  

 	
  

 
	
  

 	
 d. Mortgage
 dated June 30, 2009, granted by Borrower to Bank of record in Mortgage Book
 11663 at Page 499, in the office of the Jefferson County Clerk, Jefferson
 County, Kentucky, and related assignment of leases and rents dated June 30,
 2009, granted by Borrower to Bank of record in Deed Book 9418 at Page 269, in
 the office aforesaid (hereinafter collectively the “ISA Mortgage”). The real
 estate subject to the ISA Mortgage is more particularly described therein and
 on Exhibit D attached hereto and incorporated herein by reference (the “ISA
 Property”).

 
	
  

 	
  

 
	
  

 	
 e. Mortgage
 dated June 30, 2009, granted by ISA Real Estate to Bank of record in Mortgage
 Book 11663 at Page 505, in the office of the Jefferson County Clerk,
 Jefferson County, Kentucky, and related assignment of leases and rents dated
 June 30, 2009, granted by ISA Real Estate to Bank of record in Deed Book 9418
 at Page 276, in the office aforesaid (hereinafter collectively the “ISA Real
 Estate-KY Mortgage”). The real estate subject to the ISA Real Estate-KY
 Mortgage is more particularly described therein and on Exhibit E attached
 hereto and incorporated herein by reference (the “ISA Real Estate-KY
 Property”).

 
	
  

 	
  

 
	
  

 	
 f.
 Commercial security agreement dated May 31, 2001 between Borrower and Bank of
 Louisville, a banking corporation to which Bank is the successor (the “2001
 Security Agreement”). The 2001 Security Agreement has been modified and
 amended pursuant to agreements between Bank and Borrower.

 
	
  

 	
  

 
	
  

 	
 g. BB&T
 security agreement dated December 22, 2006 between Borrower and Bank (the
 “2006 Security Agreement”). The 2006 Security Agreement has been modified and
 amended pursuant to agreements between Bank and Borrower.

 
	
  

 	
  

 
	
  

 	
 h. Two
 BB&T security agreements dated May 7, 2008 between Borrower and Bank (the
 “2008 Security Agreements”). The 2008 Security Agreements have been amended
 pursuant to mutual agreement of Borrower and Bank.

 

G. Hereinafter
the Indiana Real Estate Property, the ISA Real Estate-IN Property, the Grade
Lane Property, the ISA Property and the ISA Real Estate-KY Property shall be
collectively referred to as the “Properties”; the Indiana Real Estate Mortgage,
the ISA Real Estate-IN Mortgage, the Grade Lane Mortgage, the ISA Mortgage, the
ISA Real Estate-KY Mortgage, the 

2001 Security
Agreement, the 2006 Security Agreement and the 2008 Security Agreements shall
be collectively referred to as the “Security Instruments”; the Notes, the Loan
Agreements and the Security Instruments shall be collectively referred to as
the “Loan Documents”.

H. Borrower
has requested (i) that Bank make a $20,000,000 revolving credit facility
available to Borrower (the “Revolver”), and (ii) that Bank modify the terms of
the Term Loan, and Bank has agreed to do so upon the terms set forth in Bank’s
commitment letter to Borrower dated March 10, 2010.

I. As a
condition to making the Revolver available to Borrower and modifying the Term
Loan, Bank has required that Borrower and Mortgagors enter into this Agreement.

NOW,
THEREFORE, for a good and valuable consideration, the receipt and sufficiency
of which is acknowledged by the parties hereto and each of them, the parties
hereto agree as follows:

Mortgagors:
represent and warrant that Mortgagors were and are the respective owners and
holders of the Properties, subject to the liens and security interests of the
Security Instruments; acknowledge that there are no defenses or offsets to the
respective Security Instruments securing the Loans; represent and warrant that
Mortgagors are not in default under their respective Security Instruments, nor
does any circumstance exist that with the giving of notice, the passage of time
or both would constitute such a default.

Borrower
hereby ratifies and reaffirms its liability for payment of the Loans and its
obligation to pay and to perform all sums and obligations owing Bank under the
Loan Documents to which Borrower is a party.

Simultaneously
herewith, Borrower has executed and delivered to Bank Borrower’s promissory
note dated April 13, 2010 (the “Revolver Note”), payable by Borrower to Bank,
evidencing the Revolver. The stated maturity of the Revolver and the Revolver
Note is April 13, 2013. Repayment of the Revolver and the Revolver Note is
secured by a BB&T security agreement of even date herewith between Bank and
Borrower (the “2010 Security Agreement”). The 2010 Security Agreement provides
that the liens and security interests granted by Borrower in the 2010 Security
Agreement secure payment and performance by Borrower of the Loans and each of
them heretofore described in the recitals to this Agreement as well as payment
of the Revolver and the Revolver Note.

The parties
hereto agree that repayment of the Revolver and the Revolver Note is secured by
the Security Instruments and that the Security Instruments and each of them
secure payment and performance of the Revolver and the Revolver Note.
Accordingly, the Security Instruments and each of them shall be and hereby are
modified to secure payment and performance of the Revolver and the Revolver
Note.

The Revolver
is subject to the terms and conditions of the loan agreement of even date among
Borrower, Bank and Bankcard Corporation (the “Revolver Loan Agreement”).
Hereinafter all references to the Loans shall include the Revolver, all
references to the Notes shall include the Revolver Note, all references to the
Loan Agreements shall include the Revolver Loan Agreement.

The parties
consent and agree that the Security Instruments (which term shall hereafter
include the 2010 Security Agreement) executed in connection with any one of the
Loans shall secure payment and performance of all the Loans. The parties
further consent and agree that a default by Borrower on any one of the Loans
will constitute a default by Borrower on all of the Loans. Accordingly, the
Security Instruments and each of them shall be and hereby are modified to 

secure payment
and performance of all the Loans and to provide that a default by Borrower on
any one of the Loans will constitute a default by Borrower on all the Loans.

Effective this
date Borrower and Bank agree that the maturity date of the Term Loan is
extended to April 7, 2014. Accordingly, the maturity of the Term Loan shall be
and is hereby extended to April 7, 2014. All references to the maturity of the
Term Loan as same appears in the Term Note, the Term Loan Agreement and the
other Loan Documents shall refer to such maturity as hereby extended.

Borrower
acknowledges that as a condition to Bank’s extension of the Term Loan’s stated
maturity as aforesaid, Borrower has agreed to make monthly payments of
principal plus interest to Bank on the thirteenth (13th) day of each month.
Said payments shall be in accordance with the amortization schedule prepared by
Bank and accepted by Borrower this date, with the first such payment of principal
plus interest to be made on or before May 13, 2010.

Borrower and
Bank hereby agree that the addendum to the Term Note (the “Addendum”) executed
by Borrower and delivered to Bank this date is given to Bank in substitution
and replacement for the addendum dated June 30, 2009 to the Term Note.
Hereinafter all references to the Term Note shall include the Addendum.

Mortgagors
acknowledge that the Security Instruments securing payment and performance of
the Term Loan secure, among other obligations, all indebtedness and obligations
of Borrower to Bank (or an affiliate of Bank) under any interest rate swap
transactions, interest rate cap and/or floor transactions, interest rate collar
transactions, swap agreements (as defined in 11 U.S.C. §3101) or other similar transactions
or agreements, including without limitation any ISDA Master Agreement executed
by Borrower and all Schedules and Confirmations entered into in connection
therewith (collectively referred to as a “Hedge Agreement”). Mortgagors further
acknowledge that Borrower and Bank anticipate entering into a Hedge Agreement
and hereby confirm and agree that the Security Instruments and each of them do
now secure and will continue to secure payment and performance of all sums and
obligations due Bank from or on behalf of Borrower by reason of any Hedge
Agreement now or hereafter entered into by Borrower and Bank.

THE AGGREGATE
PRINCIPAL SUM SECURED BY EACH OF THE SECURITY INSTRUMENTS IS A PRINCIPAL SUM
NOT TO EXCEED THIRTY-SEVEN MILLION ONE HUNDRED NINE THOUSAND NINE HUNDRED AND
NO/100 DOLLARS ($37,109,900) OUTSTANDING AT ANY TIME. THE FINAL MATURITY DATE
OF THE LAST TO MATURE OF THE NOTES SECURED BY THE SECURITY INSTRUMENTS IS APRIL
7, 2014.

Bank
acknowledges payment in full and satisfaction of all obligations due Bank from
Borrower this date relative to the following loans secured by the Security
Instruments: (i) the $10,000,000 revolving credit facility made available by
Bank to Borrower on December 22, 2006, evidenced by Borrower’s promissory note
dated December 22, 2006, payable to Bank in such principal sum; and (ii) the
$12,000,000 credit facility made available by Bank to Borrower on February 11,
2009, evidenced by Borrower’s promissory note dated February 11, 2009, payable
to Bank in such principal sum. Effective this date the parties hereto agree
that such credit facilities and the notes evidencing same are paid and
performed in full and accordingly are no longer secured by the Security
Instruments. All references to such credit facilities as same appear in the
Loan Documents are void and of no further force or effect.

Mortgagor and
Bank intend, recognize and agree that the Security Instruments secure the
Revolver which is a revolving line of credit facility to Borrower in a
principal amount not to 

exceed
$20,000,000 outstanding at any time. The Revolver evidenced by the Revolver
Note may increase or decrease from time to time and the total amount advanced
pursuant to the Revolver Note may exceed the face amount thereof; provided,
however, that the aggregate principal amount outstanding under the Revolver
Note shall not exceed the face amount of the Revolver Note and the amount of
the Revolver Note secured by this Mortgage at any time.

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
LOAN DOCUMENT 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 REVOLVER SECURED BY THE SECURITY INSTRUMENTS.
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 IN THE
EVENT OF LITIGATION. NO REPRESENTATIVE OR AGENT OF BANK, NOR BANK’S COUNSEL,
HAS THE AUTHORITY TO WAIVE, CONDITION OR MODIFY THIS PROVISION.

To the extent
the terms and provisions of the Loan Documents evidencing, securing and
otherwise executed in connection with the Loans conflict with the terms and
provisions of this Agreement, the terms and provisions of this Agreement shall
govern.

This Agreement
shall be governed by and shall be construed in accordance with the laws of the
Commonwealth of Kentucky. Provided, however, as to the rights and
remedies of Bank under the Indiana Real Estate Mortgage and the ISA Real
Estate-IN Mortgage, the laws of the State of Indiana shall govern.

This Agreement
shall be binding upon and inure to the benefit of the respective successors and
assigns of the parties hereto. The invalidity or unenforceability of any
portion of this Agreement shall not affect the validity or enforceability of
the remaining portions of this Agreement.

Time is of the
essence of this Agreement.

IN WITNESS
WHEREOF, this Agreement has been executed by the parties in multiple original
counterparts on the date first above written.

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 BORROWER:

 
	
  

 	
 INDUSTRIAL
 SERVICES OF AMERICA, INC.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

 	
 /s/ Harry
 Kletter

 
	
  

 	
  

 	

 

 	

 

 
	
  

 	
  

 	
  

 	
 Harry
 Kletter, Chief Executive Officer

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ISA REAL
 ESTATE:

 
	
  

 	
 ISA REAL
 ESTATE, LLC

 
	
  

 	
 (a Kentucky
 limited liability company)

 
	
  

 	
 By:
 INDUSTRIAL SERVICES OF AMERICA, INC.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By: 

 	
      /s/ Harry
 Kletter

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
      Harry
 Kletter Chief Executive Officer

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 INDIANA REAL
 ESTATE:

 
	
  

 	
 ISA INDIANA
 REAL ESTATE, LLC

 
	
  

 	
 (a Kentucky
 limited liability company)

 
	
  

 	
 By:
 INDUSTRIAL SERVICES OF AMERICA, INC.

 
	
  

 	
 (a Florida
 corporation), Manager and Sole Member

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
      /s/ Harry
 Kletter

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
      Harry
 Kletter, Chief Executive Officer

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 GRADE LANE:

 
	
  

 	
 7021 GRADE
 LANE LLC

 
	
  

 	
 (a Kentucky
 limited liability company)

 
	
  

 	
 By:
 INDUSTRIAL SERVICES OF AMERICA, INC.

 
	
  

 	
 (a Florida
 corporation), Manager and Sole Member

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By: 

 	
      /s/ Harry
 Kletter

 
	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
      Harry
 Kletter, Chief Executive Officer

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 BANK:

 
	
  

 	
 BRANCH
 BANKING AND TRUST COMPANY

 
	
  

 	
  

 
	
  

 	
 By: 

 	
      /s/ Johnny
 L. Perry

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
      Johnny L.
 Perry, Senior Vice President

 

	
  

 	
  

 
	
 COMMONWEALTH
 OF KENTUCKY

 	
 )

 
	
  

 	
 )

 
	
 COUNTY OF
 JEFFERSON

 	
 )

 

The foregoing
instrument was acknowledged before me this 13th day of April, 2010 by Harry
Kletter, Chief Executive Officer of Industrial Services of America, Inc., a
Florida corporation, on behalf of Industrial Services of America, Inc.

My Commission
Expires: June 1, 2013

-seal-

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 /s/ Sharon C. Hardy

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Notary
 Public

 

	
  

 	
  

 
	
 COMMONWEALTH
 OF KENTUCKY

 	
 )

 
	
  

 	
 )

 
	
 COUNTY OF
 JEFFERSON

 	
 )

 

The foregoing
instrument was acknowledged before me this 13th day of April, 2010 by Harry
Kletter, Chief Executive Officer of Industrial Services of America, Inc., a
Florida corporation and the Manager and Sole Member of ISA Real Estate, LLC, a
Kentucky limited liability company, on behalf of Industrial Services of
America, Inc. and ISA Real Estate, LLC.

My Commission
Expires: June 1, 2013 

-seal-

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 /s/ Sharon C. Hardy

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Notary
 Public

 

	
  

 	
  

 
	
 COMMONWEALTH
 OF KENTUCKY

 	
 )

 
	
  

 	
 )

 
	
 COUNTY OF
 JEFFERSON

 	
 )

 

The foregoing
instrument was acknowledged before me this 13th day of April, 2010 by Harry
Kletter, Chief Executive Officer of Industrial Services of America, Inc., a
Florida corporation and the Manager and Sole Member of ISA Indiana Real Estate,
LLC, a Kentucky limited liability company, on behalf of Industrial Services of
America, Inc. and ISA Indiana Real Estate, LLC.

My Commission
Expires: June 1, 2013

-seal-

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 /s/ Sharon C. Hardy

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Notary
 Public

 

	
  

 	
  

 
	
 COMMONWEALTH
 OF KENTUCKY

 	
 )

 
	
  

 	
 )

 
	
 COUNTY OF
 JEFFERSON

 	
 )

 

The foregoing
instrument was acknowledged before me this 13th day of April, 2010 by Harry
Kletter, Chief Executive Officer of Industrial Services of America, Inc., a
Florida corporation and the Manager and Sole Member of 7021 Grade Lane LLC, a
Kentucky limited liability company, on behalf of Industrial Services of
America, Inc. and 7021 Grade Lane LLC.

My Commission
Expires: June 1, 2013

-seal-

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 /s/ Sharon C. Hardy

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Notary
 Public

 

	
  

 	
  

 
	
 COMMONWEALTH
 OF KENTUCKY

 	
 )

 
	
  

 	
 )

 
	
 COUNTY OF
 JEFFERSON

 	
 )

 

The foregoing
instrument was acknowledged before me this 13th day of April, 2010 by Johnny L.
Perry, Senior Vice President of Branch Banking and Trust Company, a North Carolina
banking corporation, on behalf of said banking corporation.

My Commission
Expires: June 1, 2013

-seal-

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 /s/ Sharon C. Hardy

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Notary
 Public

 

	
  

 
	
 THIS
 INSTRUMENT PREPARED BY:

 
	
 SHARON C.
 HARDY

 
	
 WEBER &
 ROSE, P.S.C.

 
	
 471 WEST
 MAIN STREET, SUITE 400

 
	
 LOUISVILLE,
 KENTUCKY 40202

 

	
  

 	
  

 
	
 /s/ Sharon C. Hardy

 	
  

 
	

 

 	
  

 
	
 Attorney at Law

 	
  

 

EXHIBIT A

A part of the
Northeast quarter of the Northwest quarter of Section Sixteen (1.6), Township
Six (6) North, Range Six (6) East, Seymour, Jackson County, Indiana, more
particularly described as follows: Commencing at a found iron pin at the
Northwest corner of said quarter quarter section; thence along the West line of
said quarter quarter section, South 00 degrees 04 minutes 14 seconds East (an
assumed bearing) 359.98 feet to a set iron pin at the point of beginning;
thence North 89 degrees 55 minutes 46 seconds East 350.00 feet to a set iron
pin; thence South 00 degrees 04 minutes 14 seconds East 571.14 feet to a set
iron pin on the Northerly right-of-way of East 41” Street Road; thence along
said right-of-way South 73 degrees 29 minutes 11 seconds West 364.92 feet to a
found iron pin on the West line of said quarter quarter section; thence along
said West line, North 00 degrees 04 minutes 14 seconds West 674.56 feet to the
point of beginning, containing 5.003 acres, more or less.

Being the same
property acquired by ISA Indiana Real Estate, LLC, by deed dated June 29, 2005
of record in Deed Document #200505256 of the Jackson County, Indiana Records.

EXHIBIT B

TRACT I

22-05-01-000-033.000-008
for 1617 State Road 111, Lot 3 and Part of Lot 5 and Lot 6.

22-05-01-000-034.000-008 for 1617 Stale Road 111, Lot 7 and Lot 8.

22-05-01-000-037.000-008 for 3 Lots of Jackson Street, Lot 14, Lot 15 and Lot
16.

22-05-01-000-038.000-008 for 1629 State Road 111, Lot 1 and Lot 2.

Lots No. Seven
(7) and Eight (8) on Scott Street, Lower Albany, Plat No. Eighteen (18) of the
Floyd County, Indiana Records.

Also Lot No.
Three (3) on Fourth Street in Plat No. Eighteen (18) of the Floyd County.
Indiana Records.

Also, the
South 60 feet to Lot 5 and Lot 6 in Plat 18 and more particularly described as
follows: Beginning at the South comer of Lot 2 thence Northeasterly 60 feet to
the East corner of Lot 2 thence Southeasterly 100 feet and passing through Lots
5 and 6 to a point in the line dividing Lots 6 and 7 thence Southwesterly 60
feet to the South comer of Lot 6 thence Northwesterly 100 feet along an alley
on the Southwestern lines of Lots 5 and 6 to the place of beginning.

Also, Lots
Nos. 14, 15 and 16 on Jackson Street in Plat. No. 18 of the Floyd County
Records. Also Lots Nos. 1 and 2 on Fourth Street in Plat No. 18 of the Floyd
County Records.

Being the same
property acquired by ISA Real Estate, LLC, a Kentucky limited liability
company, by deed dated May 21,2007 of record in Deed Document #200706677 in the
office aforesaid.

TRACT 2

22-05-01-000-039.000-008

Lot Nos. Five
(S) and Six (6) on Scott Street in Plat No. 18 of the Floyd County, Indiana
Records.

Also, Lot No.
Four (4) on Fourth Street in Plat No. 18 West of and adjoining the City of New
Albany, Floyd County, Indiana.

Excepting
therefrom, the South 60 feet of Lot Nos. 5 and 6 in Plat No. 18 and more
particularly described as follows: Beginning at the South corner of Lot No. 2;
thence Northeasterly 60 feet to the East corner of Lot No. 2; thence
Southeasterly 100 feet and passing through Lot Nos. 5 and 6 to a point in the
line dividing Lot Nos. 6 and 7; thence Southwesterly 60 feet to the South
corner of Lot No. 6; thence Northwesterly 100 feet along an alley on the
Southwestern lines of Lot Nos. 5 and 6 to the place beginning.

Being the same
property acquired by ISA Real Estate, LLC, a Kentucky limited liability 

company, by
deed dated December 4, 2007 of record in Deed Document #200716236 in the office
aforesaid.

EXHIBIT C

PARCEL I

BEING the
Northern 1⁄2 of Lot 4 and all of Lot 5 as shown on Plat of R.H. Knopp
Subdivision, recorded in Plat and Subdivision Book 7 at Page 121, in the office
of the Jefferson County Clerk.

PARCEL 2

Tract I

BEING the
Northern one-half in width of Lot 6, R.H. Knopp Subdivision plat of which is of
record in Plat and Subdivision Book 7 at Page 121, on the office aforesaid.

Tract II

BEING the
Southern one-half in width of Lot 6, R.H. Knopp Subdivision plat of which is of
record in Plat and Subdivision Book 7 at Page 121, on the office aforesaid.

Parcel 1 and
Parcel 2 being the same property conveyed to 7021 Grade Lane, LLC, a Kentucky
limited liability company, by deed dated January 7, 2005, of record in Deed
Book 8553 at Page 632, in the office aforesaid.

EXHIBIT D

BEGINNING at
the intersection of the northerly line of Camp Ground Road, as established in
instrument of record in Deed Book 1812 at Page 556, in the office of the
Jefferson County Clerk, with the easterly line of the Chicago, St. Louis and
New Orleans Railroad right-of-way recorded in Deed Book 1005 at Page 461. in
the office aforesaid; thence with the northerly line of Camp Ground Road and
with a curve to the right, the following courses and distances, as measured
along the chords of said curve; North 74 degrees 22 minutes East 80.37 feet,
North 76 degrees 18 minutes East 80 feet, and North 77 degrees 27 minutes East
80 feet to a pipe in the westerly line of I-264 as established in deed to the Commonwealth
of Kentucky, recorded in Deed Book 4179 at Page 58, in the office aforesaid;
thence with the westerly line of I-264, North 3 degrees 54 minutes East 416
feet, and North 1 degree 09 minutes East 743.12 feet to the northerly line of
Tract 2 conveyed to Edward J. Huber by deed of record in Deed Book 900 at Page
430, in the office aforesaid; thence with said last mentioned line, South 80
degrees 10 minutes West 6.23 feet to the northwesterly corner of said last
mentioned tract; thence with the westerly line of same, South 3 degrees 10
minutes West 481.80 feet to the northerly line of Tract 1 conveyed to Edward J.
Huber by deed of record in Deed Book 900 at Page 430, in the office aforesaid;
thence with said last mentioned line, North 86 degrees 15 minutes West 298.71
feet to the easterly line of the Chicago, St. Louis and New Orleans Railroad
right-of-way aforesaid; thence with the easterly line of said railroad, South 3
degrees 11 minutes West 341.71 feet; thence continuing with same and with a
curve to the left, the following courses and distances, as measured along the
chords of said curve; South 1 degree 55 minutes West 100 feet, South 1 degree
54 minutes East 100 feet, South 11 degrees 11 minutes East 80 feet, South 19
degrees 43 minutes East 80 feet, and South 27 degrees 41 minutes East 65.77
feet, to the point of beginning.

BEING the same
property conveyed to Industrial Services of America, Inc. by deed dated as of
April 2, 2009, of record in Deed Book 9372 at Page 531, in the office of the
Jefferson County Clerk.

EXHIBIT E

TRACT 1

Beginning at a
roofing nail in the center line of Grade Road, also known as Grade Lane, at its
intersection with the Southerly line Aircraft and Agricultural Implement
Workers of America, U.A.W., by deed dated October 22, 1957, of record in Deed
Book 3475 at Page 77, in the office of the Jefferson County Clerk; thence with
the center line of Grade Road, South 20 degrees 03 minutes West 311.94 feel and
extending back between parallel lines South 85 degrees 54 minutes East to the
Easterly line of the tract conveyed lo George Shulthise, by deed of record in
Deed Book 896, Page 642, in the office aforesaid, the Northerly line being
coincident with the Southerly line of the tract conveyed to Trustees of Local
862, United Automobile, Aircraft and Agriculture Implement Workers of America,
U.A.W., by deed aforesaid, and measuring 977.73 feet, the Southerly line
measuring 1069.99 feet,

Being the same
property acquired by ISA Real Estate, LLC, a Kentucky limited liability
company, by deed dated September 5, 2008, of record in Deed Book 9283 at Page
932, in the office aforesaid.

TRACT 2

BEGINNING at a
pin and cap at the Southwest comer of the tract conveyed to Cooperative Seed
& Farm Supply Service, Inc. by Deed Book 2889 at Page 277 and Deed Book
3559 at Page 253, said pin and cap also being in the Westerly right of way line
of Grade Lane (a 60’ Public Roadway): running with the Southerly line of the
aforementioned Cooperative Seed & Farm Supply Service, Inc. North 65
degrees 42 minutes 00 seconds West a distance of 502.65 feet to a pin and cap
being at the Southeasterly corner of a tract conveyed to K & R Corporation
by Deed Book 6841 at Page 161; thence with the East line of last mentioned
tract North 24 degrees 18 minutes 00 seconds East a distance of 200.00 feet lo
a pin and cap; thence with the Northerly line of said tract North 65 degrees 42
minutes 00 seconds West a distance of 843.89 feel to a pin and cap; thence
North 07 degrees 18 minutes 00 seconds West a distance of 305.81 feet to a pin
and cap in the Southerly line of another tract conveyed to K & R
Corporation by Deed Book 4935 at Page 731; thence with the Southerly line of
said tract South 65 degrees 42 minutes 00 seconds East a distance of 1484.94
feet to a pin and cap in the Westerly right of way line of Grade Lane
aforesaid; thence with said right of way line South 21 degrees 35 minutes 04
seconds West a distance of 460.98 feet to the point of beginning. Being the
remainder of the property as shown on plat attached to and made a part of deed
dated February 23, 1981, of record in Deed Book 5215 at Page 427, in the office
of the Jefferson County Clerk.

BEING the same
property conveyed to ISA Real Estate, LLC, a Kentucky limited liability
company, by deed dated May 1,2003, of record in Deed Book 8130 at Page 934, in
the office aforesaid.Exhibit 10.6

ASSET PURCHASE AGREEMENT

          This
ASSET PURCHASE AGREEMENT (this “Agreement) is entered into this 1st
day of July, 2010, by and between INDUSTRIAL SERVICES OF AMERICA, INC., a
Florida corporation (the “Buyer”) and VENTURE METALS, LLC, a Florida limited
liability company (the “Seller”).

PRELIMINARY
STATEMENTS

          The
Seller desires to sell or otherwise transfer certain of its assets and enter
into a related Non-Compete Agreement (as hereafter defined); and

          The
Buyer desires to purchase such assets.

          In
consideration of these preliminary statements and the mutual covenants,
representations, warranties and agreements hereinafter set forth, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

ARTICLE I  PURCHASE AND
SALE OF ASSETS

          SECTION
1.1 Transfer of Assets.

                                        (i)
Upon the terms and subject to the conditions set forth in this Agreement, at
the Effective Time (as hereinafter defined) the Seller shall transfer to the
Buyer, free and clear of all claims, charges, liens, contracts, rights,
options, security interests, mortgages, encumbrances and restrictions
whatsoever (collectively, “Claims”), the assets listed on Schedule 1.1(a)(i)
(“Transferred Assets”) in addition to executing a Non-Compete Agreement in the
form of Exhibit A, attached hereto and incorporated herein by reference
(the “Non-Compete Agreement”).

                    (b)
The Seller shall transfer the Transferred Assets to the Buyer pursuant to one
or more Bills of Sale, including an amendment to the articles of organization
reflecting the change in name, if any, (the “Bill of Sale”) in a form
reasonably acceptable to Buyer, and such other documents and instruments as the
Buyer or its counsel may reasonably request.

                    (c)
At any time and from time to time after the Closing Date, as defined below, at
the request of the Buyer and at Buyer’s sole cost and expense, the Seller shall
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation as may be reasonably requested in order to more
effectively transfer, convey and assign to the Buyer and to confirm the Buyer’s
title to the Transferred Assets and to assure satisfaction of the purposes for
which Seller and Buyer are entering into the Non-Compete Agreement.

          SECTION
1.2 Consideration for the Transferred Assets. 

                    (a)
In consideration for the transfer of the Transferred Assets and entry into the
Non-Compete Agreement, upon the terms and subject to the conditions set forth
in this Agreement, the Buyer shall deliver to Seller for the Transferred Assets
and the Non-Compete Agreement 200,000 shares of Buyer Common Stock based on a
price of $11.30 per share (the “Purchase Price”) based on the stock price March
5, 2010 (see attached for pricing). The buyer will pay $1,348,942.41 cash to
Venture Metals as additional consideration for the asset transfer and
non-compete agreement.

          SECTION
1.3 Exchange. Subject to the terms and conditions of this Agreement, at
the Closing, Buyer shall direct its transfer agent, Registrar & Transfer
Company, to issue a certificate of Buyer Common Stock to be issued to satisfy
Section 1.2. A certificate of Buyer Common Stock shall be issued and registered
to Seller, and shall thereafter be transferable in the same manner as otherwise
provided for Buyer Common Stock, subject to applicable federal and state
securities laws. Buyer will not be paid dividend payments, if any, paid by
Buyer until such time as it receives the Transferred Assets and Re Non-Compete
Agreement.

ARTICLE II  REPRESENTATIONS AND WARRANTIES OF THE SELLER

          As
an inducement to the Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, the Seller represents and warrants to the
Buyer as follows:

          SECTION
2.1 Organization and Qualification. The Seller is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Florida and duly qualified to do business as a foreign
limited liability company in the Commonwealth of Kentucky.

          SECTION
2.2 Power and Authority. Seller (a) has the power
and authority to execute, deliver and perform this Agreement and the other
agreements, schedules, documents and instruments contemplated hereby to be
executed and delivered by it including the Non-Compete Agreement (collectively,
the agreements, schedules, documents and instruments contemplated by this
Agreement shall constitute the “Documents”) and to consummate the transactions
contemplated hereby and thereby, and (b) has taken all necessary company action
to authorize and approve the execution, delivery and performance of this
Agreement and the Documents to be executed and delivered by it and the
consummation of the transactions contemplated hereby and thereby. This
Agreement has been duly and validly executed and delivered by Seller, and the
Documents to be executed and delivered by it, when executed, will be duly and
validly executed and delivered by Seller and, subject to due execution and
delivery by Buyer, do and will and constitute valid and binding obligations of
Seller, enforceable against Seller in accordance with their terms.

          SECTION
2.3 Validity, Etc. Neither the execution and delivery of this Agreement or the
Documents, the consummation of the transactions contemplated hereby or thereby,
nor the performance of this Agreement or the other Documents and such other
agreements in compliance with the terms and conditions hereof and thereof by
the Seller will (i) violate, conflict with or result in any breach of any trust
agreement, articles of organization, operating agreement, judgment, decree,
order, statute or regulation applicable to the Seller, or (ii) result in the
creation of any Claim upon the Transferred Assets. No registration or filing
with, or consent or approval of or other action by any federal, state or other
governmental agency or instrumentality is or will be necessary for the valid
execution, delivery and performance by Seller of this Agreement.

          SECTION
2.4 Compliance with Law; Licenses and Permits. Seller is in full
compliance with all laws, ordinances, legal requirements, rules, regulations
and orders (collectively, “Legal 

Requirements”)
applicable to it, its operations, properties, assets, products and services.
Seller has not received any notice or other communication (whether oral or
written) from any governmental body or any other Person regarding (i) any
actual, alleged, possible or potential violation of, or failure to comply with
any Legal Requirement, or (ii) any actual, alleged, possible or potential
obligation on the part of Seller to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature. Seller possesses all
franchises, permits, licenses, certificates and consents required from any
governmental or regulatory authority in order for Seller to carry on its
business as currently conducted and to own and operate its properties and
assets as now owned and operated.

          SECTION
2.5 Absence of Undisclosed Liabilities. 

          Seller
has no liabilities or obligations of any nature whether absolute, accrued,
contingent or otherwise in relation to the Transferred Assets or the
Non-Compete Agreement and there is no basis for the assertion against Buyer of
any liability or obligation of Seller.

          SECTION
2.6 Assets. Seller has good and
marketable title to all of the Transferred Assets, free and clear of all
Claims. All Transferred Assets are adequate and usable for the purposes for
which they are currently used, are in good operating condition and repair and
have been properly maintained. 

          SECTION
2.7 Intentionally Omitted. 

          SECTION
2.8 Taxes. All state and local
property tax returns and tax reports required to be filed by the Seller on or
before the Closing have been or will be timely filed with the appropriate
governmental agencies in all jurisdictions in which such returns and reports
are required to be filed and all amounts shown as owing thereon have been paid.
There are no Claims on any of the Transferred Assets that arose in connection
with any failure (or alleged failure) to pay any tax, and there is no basis for
assertion of any claims attributable to taxes, which, if adversely determined,
would result in any such Claim.

          SECTION
2.9 Litigation. There is no (i) action,
suit, claim, proceeding or investigation pending or threatened against or
affecting the Seller (whether or not such Seller is a party or prospective
party thereto), at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, (ii) arbitration proceeding pending
relating to the Seller or (iii) governmental inquiry pending or threatened
against or involving Seller’s business.

          SECTION
2.10 Broker’s or Finder’s Fee. No agent, broker, person
or firm acting on behalf of Seller is, or will be, entitled to any commission
or broker’s or finder’s fees from Seller, or from any person controlling,
controlled by or under common control with Seller, in connection with any of
the transactions contemplated herein.

          SECTION
2.11 Disclosure. No representation or
warranty or other statement made by Seller in this Agreement (including the
schedules hereto) contains any untrue statement of material fact or omits to
state a material fact required to be stated herein or therein or necessary to
make the statements contained herein or therein not misleading. No notice given
by Seller in this Agreement (including the schedules hereto) will contain any
untrue statement or omit to state a material fact necessary to make the
statements in such notice not misleading.

          SECTION
2.12 Seller Not Acting as Underwriter. Seller is acquiring the shares of
Buyer Common Stock for its own account, not as nominee or agent, with the
present intention of holding such 

securities for
purposes of investment and has no intention of selling such securities in a
public distribution in violation of the federal securities laws or any
applicable state securities laws.

          SECTION
2.13 Unregistered Shares of Buyer Common Stock. Seller understands that
the shares of Buyer Common Stock being issued pursuant to this Agreement will
not be registered under the federal securities laws and will be “restricted
securities” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

ARTICLE
III  REPRESENTATIONS AND WARRANTIES OF THE BUYER

          As
an inducement to the Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, the Buyer represents and warrants to the
Seller as follows:

          SECTION
3.1 Organization. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of Florida and is duly qualified to transact business as a foreign
corporation in each jurisdiction where the nature of Buyer’s business would
require it to so qualify.

          SECTION
3.2 Power and Authority. The Buyer has the power
and authority to execute, deliver and perform this Agreement and the other
Documents. The execution, delivery and performance of the Documents
contemplated hereby and the consummation of the transactions contemplated
hereby and thereby have been duly authorized and approved by all necessary
corporate action of the Buyer. The Audit Committee of the Board of Directors,
comprised of independent directors, has voted in favor of, and recommended to
the Board of Directors, and the Board of Directors has approved the transaction
contemplated by this Agreement. The Documents to be executed and delivered by
the Buyer have been duly executed and delivered by, and constitute the legal,
valid and binding obligation of the Buyer enforceable against the Buyer in
accordance with their terms.

          SECTION
3.3 Validity, Etc. Neither the execution and delivery by the Buyer of this Agreement
and the other Documents, the consummation by the Buyer of the transactions
contemplated hereby or thereby, nor the performance by the Buyer of this Agreement
and such other agreements in compliance with the terms and conditions hereof
and thereof will (i) violate, conflict with or result in any breach of any
trust agreement, articles of incorporation, bylaws, judgment, decree, order,
statute or regulation applicable to the Buyer, (ii) violate, conflict with or
result in a breach of or default (or give rise to any right of termination,
cancellation or acceleration) under any law, rule or regulation or any
judgment, decree, order, governmental permit, license or order or any of the terms,
conditions or provisions of any mortgage, indenture, note, license, agreement
or other instrument to which the Buyer is a party, or (iii) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Buyer,
except for any such conflict, violations, breaches, defaults, terminations,
cancellations or encumbrances which would not, individually or in the
aggregate, have a material adverse effect on the Buyer’s ability to pay the
Purchase Price.

          SECTION
3.4 Broker’s or Finder’s Fee. No agent, broker, person
or firm acting on behalf of Buyer is, or will be, entitled to any commission or
broker’s or finder’s fees from Buyer, or from any person controlling,
controlled by or under common control with Buyer, in connection with any of the
transactions contemplated herein.

          SECTION
3.5 Fully Paid and Nonassessable Shares. The shares of Buyer Common
Stock to be issued to Seller pursuant to this Agreement will, on the date of
issuance and delivery to Seller pursuant to this Agreement, be duly authorized,
validly issued, fully paid and nonassessable and free of any preemptive rights.

ARTICLE
IV  THE CLOSING

          SECTION
4.1 Time and Place of Closing. Upon the terms and
subject to the satisfaction or waiver of the conditions contained in this
Agreement, the closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Buyer, main conference room,
Building #1, 7100 Grade Lane, Louisville, Kentucky 40213 on the second business
day after all of the conditions to the Closing have been satisfied (excluding
conditions to be satisfied at the Closing), or at such other date as the
Parties may mutually agree upon (the “Closing Date”). The transactions contemplated
by this Agreement shall be effective as of the close of business (the
“Effective Time”) on Closing Date.

          SECTION
4.2 Conditions Precedent in Favor of Seller. Seller’s obligations under
this Agreement are expressly subject to the timely fulfillment of the
conditions set forth in this Section 4.2 on or before the Closing Date, or
such earlier date as is set forth below. Each condition may be waived in whole
or in part only by written notice of such waiver from Seller to Buyer.

                    (a)
Buyer shall have performed and complied in all material respects with all of
the terms of this Agreement to be performed and complied with by Buyer prior to
or at the Closing.

                    (b)
On the Closing Date, the representations of Buyer set forth in this Agreement
shall be true and accurate in all material respects, subject to changes that
are a result of the operation of Buyer in the normal course of business.

                    (c)
Seller shall not have terminated this Agreement pursuant to Section 1.2.

          SECTION
4.3 Conditions Precedent in Favor of Buyer. Buyer’s obligations under
this Agreement are subject to the timely fulfillment of the conditions set
forth in this Section 4.3 on or before the Closing Date, or such earlier
date as is set forth below. Each condition may be waived in whole or in part
only by written notice of such waiver from Buyer to Seller.

                    (a)
Seller shall have performed and complied in all material respects with all of
the terms of this Agreement to be performed and complied with by Seller prior
to or at the Closing.

                    (b)
Buyer shall have delivered and/or otherwise made available a proxy statement to
Buyer shareholders with respect to the transactions contemplated by this
Agreement, all in accordance with Section 14(a) of the Securities Exchange
Act of 1934, as amended.

                    (c)
On the Closing Date, the representations of Seller set forth in this Agreement
shall be true and accurate in all material respects, subject to changes that
are a result of the operation of the Seller in the normal course of business.

                    (d)
Buyer shall not have terminated this Agreement pursuant to Section 1.2. 

          SECTION
4.4 Deliveries by Seller . At or prior to the Closing, Seller will
deliver or cause to be delivered to Buyer the following: 

                    (a)
The Bill of Sale required by Section 1.1;

                    (b)
A certificate of Seller’s Secretary or other equivalent officer, attaching and
certifying as true, correct and complete, the following: (i) Articles of
Organization of Seller and all amendments thereto; (ii) operating agreement of
Seller and all amendments thereto; (iii) authorizing 

resolutions by
the Seller’s members and managers adopting and approving this Agreement and the
transactions contemplated hereby.

                    (c)
The executed Non-Compete Agreement;

                    (d)
The amendment to the Articles of Organization reflecting a change of name from
Venture Metals, LLC.

          SECTION
4.5 Deliveries by Buyer . At Closing, Buyer shall deliver to Seller
the Purchase as provided for in Section 1.2.

ARTICLE
V  INDEMNIFICATION

          SECTION
5.1 Survival. All representations and
warranties in this Agreement and the other Documents shall survive the Closing
of the purchase of the Transferred Assets contemplated hereby and any
investigation at any time made by or on behalf of any party.

          SECTION
5.2 Indemnification by the Seller. Subject to the terms
herein, the Seller shall indemnify, defend, and hold the Buyer and the
respective officers, directors, and employees of the Buyer, and their
successors and assigns (the “Buyer’s Indemnitees”) harmless from, against and
with respect to any claim, liability, obligation, loss, damage, assessment,
judgment, cost or expense of any kind or character, including reasonable
attorneys’ fees (the “Damages”), arising out of or in any manner incident,
relating or attributable to:

                    (a)
Any inaccuracy in any representation or breach of any warranty of the Seller
contained in this Agreement or the Documents; 

                    (b)
Any and all liabilities or obligations of Seller arising out of or incidental
to the ownership or operation of the Transferred Assets prior to the Effective
Time.

                    (c)
Any failure by the Seller to perform or observe, or to have performed or
observed, in full, any covenant, agreement or condition to be performed or
observed by it under this Agreement or the Documents; 

                    (d)
Any brokerage or finder’s fees or commissions or similar payments based upon
any agreement or understanding made, or alleged to have been made, by any
person with Seller in connection with any of the transactions contemplated by
this Agreement; and

                    (e)
Any liabilities of Seller relating to, or arising out of, the Transferred
Assets before the Effective Time.

          SECTION
5.3 Notice to the Seller, Etc. If any of the matters as to which the Buyer’s Indemnitees are
entitled to receive indemnification under Section 5.2 should entail litigation
with or claims asserted by parties other than the Seller, the Seller shall be
given prompt notice thereof and shall have the right, at its expense, to
control such claim or litigation upon prompt notice to the Buyer of its
election to do so. To the extent requested by the Seller, the Buyer, at its
expense, shall cooperate with and assist the Seller, in connection with such
claim or litigation. The Buyer shall have the right to appoint, at its expense,
single counsel to consult with and remain advised by the Seller in connection
with such claim or litigation. The Seller shall have final authority to
determine all matters in connection with such claim or litigation; provided,
however, that the Seller shall not settle any third party claim without
the consent of the Buyer, which shall not be unreasonably denied or delayed.

          SECTION
5.4 Indemnification by the Buyer. The Buyer shall
indemnify, defend, and hold the Seller and its successors and assigns (the
“Seller’s Indemnitees”) harmless from, against and with respect to any claim,
liability, obligation, loss, damage, assessment, judgment, cost or expense of
any kind or character, including reasonable attorneys’ fees arising out of or
in any manner incident, relating or attributable to:

                    (a)
Any inaccuracy in any representation or breach of warranty of the Buyer
contained in this Agreement;

                    (b)
Any failure by the Buyer to perform or observe, or to have performed or
observed, in full, any covenant, agreement or condition to be performed or
observed by it under any of the Documents;

                    (c)
Any brokerage or finder’s fees or commissions or similar payments based upon
any agreement or understanding made, or alleged to have been made, by any
person with Buyer in connection with any of the transactions contemplated by
this Agreement; and

                    (d)
Liabilities or obligations of, or claims against, the Seller (whether absolute,
accrued, contingent or otherwise) relating to, or arising out of, the
Transferred Assets after the Effective Time.

          SECTION
5.5 Notice to the Buyer, Etc. If any of the matters as to which the Seller’s Indemnitees are
entitled to receive indemnification under Section 5.4 should entail litigation
with or claims asserted by parties other than the Buyer, the Buyer shall be
given prompt notice thereof and shall have the right, at its expense, to
control such claim or litigation upon prompt notice to the Seller of its
election to do so. To the extent requested by the Buyer, the Seller, at its
expense, shall cooperate with and assist the Buyer, in connection with such
claim or litigation. The Seller shall have the right to appoint, at its
expense, single counsel to consult with and remain advised by the Buyer in
connection with such claim or litigation. The Buyer shall have final authority
to determine all matters in connection with such claim or litigation; provided,
however, that the Buyer shall not settle any third party claim without
the consent of the Seller, which shall not be unreasonably denied or delayed.

          SECTION
5.6 Offset. Seller acknowledges and
agrees that Buyer shall be entitled to offset any indemnity claim under this
Agreement against any delivery of shares of Buyer Common Stock due to Seller
under this Agreement at Buyer’s sole option.

          SECTION
5.7 Survival of Indemnification. The obligations to indemnify
and hold harmless pursuant to this Article V shall survive the Closing of the
purchase of the Transferred Assets contemplated hereby, notwithstanding any
investigation at any time made by or on behalf of any party. 

ARTICLE
VI  COVENANTS & AGREEMENTS

          SECTION
6.1 Further Assurances. Buyer and Seller shall
cooperate reasonably with each other and with their respective representatives
in connection with any steps required to be taken as part of their respective
obligations under this Agreement, and shall (a) furnish upon request to each
other such further information; (b) execute and deliver to each other such
other documents; (c) provide Buyer with any information and access to its books
and records as reasonably requested by Buyer in connection with Buyer
compliance with its reporting requirements under the Securities Exchange Act of
1934, as amended, and (d) do such other acts and things, all as the other party
may reasonably request for the purpose of carrying out the intent of this
Agreement, the other Documents and the transactions contemplated hereby and
thereby.

ARTICLE
VII  MISCELLANEOUS

          SECTION
7.1 Notices. All notices, requests,
consents and other communications hereunder shall be in writing, shall be
addressed to the receiving party’s address set forth below or to such other
address as a party may designate by notice hereunder, and shall be either (i)
delivered by hand, (ii) sent by recognized overnight courier, (iii) made by
telecopy, electronic communication or facsimile transmission, or (iv) sent by
registered or certified mail, return receipt requested, postage prepaid.

	
  

 	
  

 	
  

 
	
  

 	
 If to the
 Buyer:

 
	
  

 	
  

 
	
  

 	
  

 	
 Industrial
 Services of America, Inc.

 
	
  

 	
  

 	
 7100 Grade
 Lane

 
	
  

 	
  

 	
 Louisville,
 Kentucky 40232

 
	
  

 	
  

 	
 Fax No.: (502)
 515-1700

 
	
  

 	
  

 	
 Attention:
 Chief Financial Officer

 
	
  

 	
  

 	
  

 
	
  

 	
 If to the
 Seller:

 
	
  

 	
  

 
	
  

 	
  

 	
 Venture
 Metals, LLC

 
	
  

 	
  

 	
 3409
 Campground Road

 
	
  

 	
  

 	
 Louisville,
 Kentucky 40211

 
	
  

 	
  

 	
 Fax No.:
 (502) 776-0851

 
	
  

 	
  

 	
 Attention:
 Steve Jones

 

All notices,
requests, consents and other communications hereunder shall be deemed to have
been given (i) if by hand, at the time of the delivery thereof to the receiving
party at the address of such party set forth above, (ii) if sent by overnight
courier, on the next business day following the day such notice is delivered to
the courier service, (iii) if made by telecopy, electronic communication or
facsimile transmission, at the time that receipt thereof has been acknowledged
by electronic confirmation or otherwise, or (iv) if sent by registered or certified
mail, on the fifth business day following the day such mailing is sent. The
address of any party herein may be changed at any time by written notice to the
parties as provided herein.

          SECTION
7.2 Entire Agreement. This Agreement and the
Documents embody the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior oral
or written agreements and understandings relating to the subject matter hereof.
No statement, representation, warranty, covenant or agreement of any kind not
expressly set forth in the other Documents shall affect, or be used to
interpret, change or restrict, the express terms and provisions of this
Agreement.

          SECTION
7.3 Modifications and Amendments. The terms and provisions of
this Agreement may be modified or amended only by written agreement executed by
all parties hereto.

          SECTION
7.4 Assignment/Binding Effect. Neither this Agreement, nor
any right hereunder, may be assigned by any of the parties hereto without the
prior written consent of the other parties. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns.

          SECTION
7.5 Parties in Interest. Nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement. Nothing
in this Agreement shall be construed to create any rights or obligations except

among the
parties hereto, and no person or entity shall be regarded as a third-party
beneficiary of this Agreement.

          SECTION
7.6 Governing Law. This Agreement and the rights
and obligations of the parties hereunder shall be construed in accordance with
and governed by the internal laws of the Commonwealth of Kentucky, without
giving effect to the conflict of law principles thereof.

          SECTION
7.7 Severability. In the event that any court
of competent jurisdiction shall finally determine that any provision, or any
portion thereof, contained in this Agreement shall be void or unenforceable in
any respect, then such provision shall be deemed limited to the extent that
such court determines it enforceable, and as so limited shall remain in full
force and effect. In the event that such court shall determine any such
provision, or portion thereof, wholly unenforceable, the remaining provisions
of this Agreement shall nevertheless remain in full force and effect.

          SECTION
7.8 Interpretation. The parties hereto
acknowledge and agree that: (i) the rule of construction to the effect that any
ambiguities are resolved against the drafting party shall not be employed in
the interpretation of this Agreement, and (ii) the terms and provisions of this
Agreement shall be construed fairly as to all parties hereto and not in favor
of or against any party, regardless of which party was generally responsible
for the preparation of this Agreement.

          SECTION
7.9 Headings and Captions. The headings and
captions of the various subdivisions of this Agreement are for convenience of
reference only and shall in no way modify, or affect, or be considered in construing
or interpreting the meaning or construction of any of the terms or provisions
hereof.

          SECTION
7.10 Reliance. The parties hereto agree
that, notwithstanding any right of any party to this Agreement to investigate
the affairs of any other party to this Agreement, the party having such right
to investigate shall have the right to rely fully upon the representations and
warranties of the other party expressly contained herein.

          SECTION
7.11 Expenses. Each party shall pay its own
fees and expenses (including the fees of any attorneys, accountants, appraisers
or others engaged by such party) incurred in connection with this Agreement and
the transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated.

          SECTION
7.12 Gender. All pronouns and any
variation thereof shall be deemed to refer to the masculine, feminine, neuter,
signal, or plural as the identity of the person or entity or the context may
require.

          SECTION
7.13 Publicity. Except by the mutual
agreement between the Seller and the Buyer, no party shall issue any press
releases or otherwise make any public statement with respect to the execution
of, or the transactions contemplated by, this Agreement except as may be
required by law.

          SECTION
7.14 Counterparts. This Agreement may be
executed in one or more counterparts, and by different parties hereto on
separate counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

[remainder of page intentionally blank,
signature page follows]

          The
Buyer and the Seller have each caused this Agreement to be executed by its duly
authorized officer all as of the day and year first above written.

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Buyer”

 
	
  

 	
  

 	
  

 
	
  

 	
 INDUSTRIAL
 SERVICES OF AMERICA, INC.

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
    /s/
 Harry Kletter

 
	
  

 	
  

 	

 

 
	
  

 	
 Title:

 	
    Chief
 Executive Officer

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “Seller”

 
	
  

 	
  

 	
  

 
	
  

 	
 VENTURE
 METALS, LLC

 
	
  

 	
  

 
	
  

 	
 By:

 	
    /s/
 Steve Jones

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Steve Jones,
 Manager

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
    /s/
 Jeff Valentine

 
	
  

 	
  

 	

 

 
	
  

 	
  

 	
 Jeff
 Valentine, Manager

 

SCHEDULE 1.1(a)

LIST OF ASSETS

Name of Company – Venture Metals, LLC

EXHIBIT A

FORM OF NON-COMPETE AGREEMENT

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