BB&T LOAN AGREEMENT Account Number

Exhibit 10.2

BB&T

Account Number

This Loan Agreement (the "Agreement") is made this 11^th day of February, 2009, by and between BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation ("Bank"), and:

Industrial Services of America, Inc., a Florida corporation ("Borrower"), having its chief executive office at 0000 Xxxxx Xxxx in Louisville, Kentucky.

The Borrower has applied to Bank for and the Bank has agreed to make, subject to the terms of this Agreement, the following loan(s) (hereinafter referred to, singularly or collectively, if more than one, as "Loan");

Line of Credit ("Line of Credit") in the maximum principal amount not to exceed $12,000,000 for the purpose of financing Borrower's acquisition of inventory and equipment from Venture Metals, LLC and real estate at 0000 Xxxx Xxxxxx Xxxx, Xxxxxxxxx Xxxxxx, Xxxxxxxx from Luca Investments, LLC, which shall be evidenced by the Borrower's Promissory Note dated on or after the date hereof which shall mature February 11, 2010, when the entire unpaid principal balance then outstanding plus accrued interest thereon shall e 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 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 maximum principal amount not to exceed $10,000,000 outstanding at any time pursuant to the terms and conditions of a loan agreement between Bank and Borrower dated December 22, 2006 (the "2006 Revolver"), and (b) 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 that agreement, dated December 8, 2003, as the same has been amended from time to time, by and between Borrower and BB&T Bankcard Corporation.

The promissory notes evidencing the Loan and/or the Other Credit Relationship are referred to as the "Note(s)" and shall include all extensions, renewals, modifications and substitutions thereof. The Loan and/or the Other Credit Relationship shall be secured by the some or all of the collateral described in the security documents 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.

Section 1 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 force 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.

Note(s): The Note(s) evidencing the Loan(s) duly executed by the Borrower.

Security Agreement(s): Security Agreement(s) in which Borrower and any other owner (a "Debtor") of personal property collateral 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: Acknowledged copies of UCC Financing Statements duly filed in Borrower's or other owner'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(s), and certified copies of Information Requests identifying all previous financing statements on record for the Borrower or other owner, as appropriate from all jurisdictions indicating that no security interest has previously been granted in any of the collateral described in the Security Agreement(s), unless prior approval has been given by the Bank.

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

Opinion of Counsel: An opinion of counsel for the Borrower 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.

Section 2 Representations and Warranties

The Borrower and Guarantor(s) represent and warrant to Bank that:

2.01. Financial Statements. The balance sheet of the Borrower and its subsidiaries, if any, and the related Statements of Income and Retained Earnings of the Borrower and its 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 its subsidiaries as stated therein has not changed materially and adversely since the date thereof. Each Guarantor further represents and warrants that all financial statements provided by such Guarantor to Bank concerning such Guarantor's financial condition are true and correct and fairly represent such Guarantor's financial condition as of the dates thereof.

2.02. Name, Capacity and Standing. The Borrower's exact legal name is correctly stated in the initial paragraph of the Agreement. If the Borrower and/or any Guarantor is a corporation, general partners, limited partnership, limited liability partnership, or limited liability company, each warrants and represents that it is duly organized and validly existing under the laws of its respective state of incorporation or organization; that it and/or its subsidiaries, if any, are qualified and in good standing in every other state in which the nature of their business shall require such qualification, and are each duly authorized by their board of directors, general partners or member/manager(s), respectively, to enter into and perform the obligations under the Loan Documents.

2.03. No Violation of Other Agreements. The execution of the Loan Documents, and the performance by the Borrower, by any and all pledgors (whether the Borrower or other owners of collateral property securing payment of the Loan (hereinafter sometimes referred to as the "Pledgor")) or by the Guarantor(s) thereunder 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, Pledgor or Guarantor(s), or give cause for the acceleration of any of the respective obligations of the Borrower or Guarantor(s).

2.04. 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.

2.05. Asset Ownership. The Borrower and each Guarantor 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 other owner of collateral has good and marketable title to such collateral, free and clear of any liens, security interests and encumbrances, except as otherwise disclosed to Bank.

2.06. Discharge of Liens and Taxes. The Borrower and its subsidiaries, if any, and each Guarantor 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.

2.07. Regulation U. 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 of the Board of Governors of the Federal Reserve System.

2.08. 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 of the Borrower or Guarantor(s) meets, as of the date hereof, the minimum funding standards of Section 302 of ERISA, all application 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.

2.09. 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 its subsidiaries, if any, or the Guarantor(s), or the ability of the Borrower or the Guarantor(s) to perform their obligations under the Loan Documents, except as set forth on Exhibit A attached hereto and incorporated herein by reference.

2.10. Other Agreements. The representations and Warranties made by Borrower to Bank in the other Loan Documents are true and correct in all respects on the date hereof.

2.11. Binding and Enforceable. The Loan Documents, when executed, shall constitute valid and binding obligations of the Borrower and Guarantors 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.

2.12. Commercial Purpose. The Loan(s) 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.

Section 3 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:

3.01. 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; and (e) in the event of its merger with any other entity, be the surviving entity.

3.02. 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.

3.03. 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.

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

3.05. 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.

3.06. 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.

3.07. 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 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.
3.08. Reporting Requirements. Furnish to the Bank.

Quarterly Financial Statements: 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.

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 better: Audited.

Loan Base Report: On or before the fifteenth (15^th) 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.

Notice of Litigation: Promptly after the receipt by the Borrower, or by any Guarantor of which Borrower has knowledge, of notice or complaint of any action, suit, and proceedings 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 Guarantor, as appropriate.

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 time to time reasonably request including, but not limited to, the following information: annual corporate income tax returns (including all schedules) for K&R, LLC and K&R Resources, LLC.

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

3.10 Affirmative Covenants from other Loan Documents. All affirmative covenants contained in any Deed of Trust, Security Agreement, Assignment of Leases and Rents, or other security document executed by the Borrower which are described in paragraph 2 hereof are hereby incorporated by reference herein.

3.11 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.

3.12 Filings. Borrower represents and warrants that its standard practice, with regard to equipment owned by Borrower and leased to its customers, is to provide public notice of the ownership of the equipment and existence of said leases by filing UCC Financing Statements for items so leased. Borrower agrees 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 indebtedness owing Bank by Borrower.

Section 4 Guarantor(s) Covenants

N/A

Section 5 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 $6,000,000.00 as of December 31, 2005, and increasing annually by 50% of all net income, plus 100% of all new equity, minus $0 for net losses. 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.

EBITDA Ratio. Ratio of EBITDA to the preceding twelve (12) months interest expense plus the projected maturities of long-term debt for the next succeeding twelve months on a rolling basis, of not less than 1.25:1.00, to be measured annually.

Debt/Tangible Net Worth. Maximum of 4.00:1.00, to be measured annually.

Limitation on Loans and Advances to Owners. Not to exceed $500,000 per calendar year.

Section 6 Negative Covenants

The Borrower covenants and agrees that from the date 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:

6.01. 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 Pledgor securing payment of the Loan, now owned or hereafter acquired, except:

(a) Liens and security interests in favor of the Bank;

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

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

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

(e) purchase money security interests on any property hereafter acquired, provided that such lien shall attach only to the property acquired.

(f) The Permitted Liens, as set forth on Exhibit B attached hereto and incorporated herein by reference.

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

(a) Debt to the Bank;

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

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

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

6.03. 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.

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

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

(b) Operating Leases for machinery and equipment which do not in the aggregate require payments in excess of $N/A in any fiscal year of the Borrower.

6.05. 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.

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

6.07. 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.

6.08 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 force and substance satisfactory to Bank.

6.09. Disposition of Assets. Sell, lease, or otherwise dispose of any of its assets or properties except in the ordinary and usual course of its business.

6.10. Transfer of Ownership. If Borrower is a corporation, 9a) 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 10% 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.

6.11. Negative Covenants from other Loan Documents. All negative covenants contained in any Mortgage, Deed of Trust, Security Agreement, Assignment of Leases or Rents, or other security document executed by the Borrower which are described in paragraph 2 hereof are hereby incorporated by reference herein.

Section 7 Hazardous Materials and Compliance with Environmental Laws

7.01. Investigation. Borrower hereby certifies that it has exercised due diligence to ascertain whether its real property is or has 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. Provided, however, the foregoing certification shall not apply to the real estate to be acquired by Borrower from Luca Investments, LLC at 0000 Xxxx Xxxxxx Xxxx, Xxxxxxxxx Xxxxxx, Xxxxxxxx. Borrower represents and warrants that, to Borrower's knowledge, there are no such Hazardous Materials contaminating its real property, nor, to Borrower's knowledge, have any such materials been released on or stored on or improperly disposed of on its real property during its ownership, occupancy or operation thereof. Borrower hereby agrees that, except in strict compliance with applicable Environmental Laws, it shall 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, Borrower does not have or use any undergrounds storage tanks on any of its real property which are not registered with the appropriate Federal and/or State agencies and which are not properly equipped and maintained in accordance with all Environmental Laws. Provided, however, the foregoing representation relative to storage tanks shall not apply to 0000 Xxxx Xxxxxx Xxxx, Xxxxxxxxx Xxxxxx, Xxxxxxxx. If requested by Bank, Borrower shall provide Bank with all necessary and reasonable assistance required for purposes of determining the existence of Hazardous Materials on Borrower's real property.

7.02. Compliance. Borrower agrees 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 State authorities, with immediate notice in writing of any release of Hazardous Materials on any of its real property and to pursue diligently to completion all appropriate and/or required remedial action in the event of such release.

Section 8 Events of Default

The following shall be "Events of Default" by Borrower or any Guarantor:

8.01. The failure to make prompt payment of any installment of principal or interest on any of the Note(s) when due or payable.

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

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

8.04. Should the Borrower or any Guarantor 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.

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

8.06. Should a custodian be appointed for or take possession of any or all of the assets of the Borrower or any Guarantor, or should the Borrower or any Guarantor 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 Guarantor, any proceeding to have a receiver appointed, or should the Borrower or any Guarantor 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 Guarantor'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.

8.07. Should final judgment for the payment of money be rendered against the Borrower or any Guarantor which is nto covered by insurance and shall remain undischarged for a period of 30 days unless such judgment or execution thereon be effectively stayed.

8.08. Upon the death of, or termination of existence of, or dissolution of, any Borrower, Pledgor or Guarantor.

8.09. Should the Bank in good xxxxx xxxx 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 Guarantor is impaired.

8.10. Should any lien or security interest granted to Bank to secure payment of the Note(s) 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.

Section 9 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:

9.01. Declare the balance(s) of the Note(s) 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 each Guarantor, and such balance(s) shall accrue interest at the Default Rate as provided herein until paid in full;

9.02. Require the Borrower or Guarantor(s) to pledge additional collateral to the Bank from the Borrower's or any Guarantor's assets and properties, the acceptability and sufficiency of such collateral to be determined in the Bank's sole discretion;

9.03. 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 or any Guarantor under the Loan Documents;

9.04. 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;

9.05. Any obligation of the Bank to advance funds to the Borrower or any other Person under the terms of under the Note(s) 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.

Section 10 Miscellaneous Provisions

10.01. Definitions.

"Availability" for the Line of Credit and the 2006 Revolver collectively shall mean the lesser of (i) $22,000,000 or (ii) the Collateral Loan Value shown on the Loan Base Report furnished by Borrower to Bank on or before the fifteenth (15^th) 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 - 35%; Eligible Accounts - 80%; Net Book Value of Eligible Equipment (less the principal balance of any outstanding loans secured by the Eligible Equipment) - 100%; Eligible Real Estate, being the real estate at 0000 Xxxx Xxxxxx Xxxx, Xxxxxxxxx Xxxxxx, Xxxxxxxx - 80%. The aggregate Line of Credit advances against Eligible Equipment shall not exceed at any time $5,000,000.

"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.

"Environmental Laws" shall mean all federal and state laws and regulations which affect or may affect the Borrower'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 Cealn Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 260.1, et seq.), all such applicable environmental laws and regulations of the State of Kentucky, as such laws and regulations may be amended from time to time.

"Loan Documents" shall mean this Agreement including any schedule attached hereto, the "Note(s), the Security Agreement(s), all UCC Financing Statements, and all other documents, certificates, and instruments executed in connection therewith, and all renewals, extensions, modifications, substitutions and replacements thereto and therefore.

"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 Account Standards Board or the American Institute of Certified Public Accountants, as amended and supplemented from time to time.

"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.

10.02. 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.

10.03. Applicable Law. The Loan Documents shall be construed in accordance with and governed by the laws of the Commonwealth of Kentucky.

10.04. Waiver. Neither the failure or any default 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.

10.05. 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.

10.06. Payment Amount Adjustment. In the event that any Loan(s) 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(s) to be repaid within the same period of time as originally agreed upon.

10.07. 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 and Guarantor agree to indemnify and hold harmless the Bank against any and all liability in respect thereof.

10.08. Attorneys' Fees. In the event the Borrower or any Pledgor or Guarantor 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 and Guarantors agree 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 and Guarantor shall be liable for such attorneys' fees and costs whether or not any suit or proceeding is actually commenced.

10.09. 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.

10.10. 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.

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

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

10.13. Conflicting Provisions. If provisions of this Agreement shall conflict with any terms or provisions of any of the Note(s) or Security Agreement(s), the provisions of such Note(s) or Security Agreement(s), as appropriate, shall take priority over any provisions in this Agreement.

10.14. 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.

10.15. 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 state 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.

10.16. 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.

10.17. 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 on and the same instrument.

10.18. Entire Agreement. The Loan Documents embody the entire agreement between Borrower 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, the Bank, Borrower and Guarantor(s) have caused this Agreement to be duly executed under seal all on the date first above written.

Borrower is a Corporation:

WITNESS:		Industrial Services of America, Inc.

/s/ Xxxxxx Xxxxx	By:	/s/ Xxxxx Xxxxxxx
		Xxxxx Xxxxxxx
	Title:	Chief Executive Officer and President

Additional Co-Borrowers or Guarantors:

WITNESS
			(SEAL)
			(SEAL)
			(SEAL)
			(SEAL)

WITNESS:		BRANCH BANKING AND TRUST COMPANY

/s/ Xxxxxx Xxxxx	By:	/s/ Xxxxxx X. Xxxxx
		Xxxxxx X. Xxxxx
	Title:	Senior Vice President

WITNESS:		BB&T BANKCARD CORPORATION

/s/ Xxxxxx Xxxxx	By:	/s/ Xxxxxx X. Xxxxx

	Title:	Senior Vice President

BB&T
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 February 11, 2009, between Branch Banking and Trust Company, BB&T Bankcard Corporation (collectively, "Bank") and Industrial Services of America, Inc. ("Borrower").

DD-01. 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:

(a) Account Debtor. Any Person obligated to Borrower on an Account.

(b) 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.

(c) Advance Rate. The percentage of the total value of Eligible Accounts, Eligible Inventory, Eligible Equipment, Eligible Real Estate or Other Collateral Bank will lend to Borrower, as set forth in Section DD.02.

(d) Asset Based Lending Credit Line Sweep Service Agreement Attachment. That agreement between Bank and Borrower whereby Borrower agrees that all remittances in payment of Accounts' shall be deposited in its designated Operating Account and shall be administered and applied in accordance with the ABL Credit Line Sweep Services Agreement Attachment. This agreement is to be read in conjunction with, and is a part of, the Treasury Services Agreement and the Loan Agreement; and this Schedule DD.

(e) Asset Based Sweep Services Attachment. 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 apart of, the Treasury Services Agreement, the Loan Agreement, and this Schedule DD.

(f) Audit. Audit 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 Banks 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).

(g) 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.

(h) 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.

(i) Xxxx 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.

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

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

(l) Collateral Loan Value. The aggregate value of the Advance Rate as applied to the Eligible Accounts, the Advance Rate as applied to the Eligible Inventory, the Advance Rate as applied to the Eligible Equipment, the Advance Rate as applied to the Eligible Real Estate and the Advance Rate applied to the value of Other Collateral, if any.

(m) 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 is N/A.

(n) Cross Aging Rule. Should any Account due Borrower from an Account Debtor have 50% 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.

(o) Eligible Account and/or Eligible Inventory and/or Eligible Equipment and/or Eligible Real Estate. An Eligible Account is an Account which is not an Ineligible Account, as defined in Section DD.03 hereof, Eligible Inventory is Inventory which is not ineligible Inventory, as defined in Section DD.04 hereof; Eligible Equipment as defined in Section DD.02(d) hereof and Eligible Real Estate shall mean that real estate owned; by Borrower at 0000 Xxxx Xxxxxx Xxxx, Xxxxxxxxx Xxxxxx, Xxxxxxxx.

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

(q) Fees. Those fees which Borrower will pay to Bank in conjunction with Bank's asset based lending services or any other fees associated with the Line of Credit, whether or not actual loan obligations exist, while' the Loan Agreement is in force.

(r) Foreign Accounts. Any Account due from any Person located outside the fifty states comprising' the United States of America and the District of Columbia.

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

(t) 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.

(u) 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.

(v) Inventory Cap. The maximum loan amount Bank may lend against the Eligible Inventory, as set forth in Section DD.02(d).

(w) 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.

(x) 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.

(y) Line of Credit. The amount of the Line of Credit approved by Bank and set forth in the Loan Agreement.

(z) 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 Equipment and/or Real Estate and/or Other Collateral, Reserves, Collateral Loan Value, outstanding Line of Credit balance, and Availability.

(aa) 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.

(bb) Operating Account. Operating Account shall mean the Borrower's demand deposit account at any time with Bank, currently account number 5280498205.

(cc) Other Collateral. Collateral that shall be included in Collateral Loan Value, other than Accounts, Inventory, Equipment and Real Estate as specifically approved and determined by Bank in its sole discretion.

(dd) 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.

(ee) 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.

(ff) 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.

DD-02. Advance Rates/Advances/Prepayment.

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

(a) 80% against the Eligible Accounts.

(b) 80% against Eligible Real Estate.

0% Finished Inventory

35% Raw Materials Inventory

0% Work in Process Inventory

0% Other Inventory

(d) 100% against the net book value (updated at least annually as of Borrower's fiscal year end) of Eligible Equipment, less the principal balance of any loans other than those evidenced by the Note(s) and secured by the Equipment. The aggregate Line advances against Eligible Equipment shall not exceed at any time $5,000,000. Eligible Equipment is defined as all recycling equipment' and all other equipment of Borrower (except Borrower's Rental Fleet Equipment), which has not teen fully depreciated and which is in service as of the date on which the relevant Loan Base Report is submitted. Rental Fleet Equipment is defined as all Equipment held by Borrower in its rental fleet, and consisting of Equipment which is currently leased by Borrower to third party lessees, or held by Borrower for lease to third xxxxx lessees.

Inventory values will not exceed the lower of cost or market and, if applicable, will be reduced by the LIFO reserve. The aggregate loan advances against Eligible Inventory shall not exceed at any time $N/A (the "Inventory Cap").

Bank reserves the right, upon notice, in its sole discretion, to amend the Eligibility Period or Reserves 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, 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 of the, Line of Credit exceeds the lesser of the Line of Credit or the Collateral Loan Value reduced by the Reserves, Borrower shall immediately prepay the Line of Credit to the extent necessary to reduce such excess; and, should at any time the principal balance of the Line of Credit exceed the approved amount of the Line of Credit, Borrower shall immediately pay such excess to Bank.

DD-03. Ineligible Accounts.

Ineligible Accounts shall include the following:

(a) The amount of any Account outside of the Eligibility Period.

(b) Any Account which is a Contra Account.

(d) Any Inter-Company Account.

(e) Any Foreign Account.

(f) Any Account representing a Xxxx and Hold or similar arrangement.

(g) Any 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, unless otherwise expressly approved by Bank in writing.

(h) Any Account due from any government agency which, by contract, precludes and/or prohibits the assignment of such Account.

(i) 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 or progress billings, or are not payable in U.S. Dollars.

(j) That portion of Accounts due from an Account Debtor which is in excess of N/A percent (N/A%) of Borrower's aggregate dollar amount of all outstanding Accounts.

(k) That portion of Accounts which represent a net credit balance after excluding Account amounts within the Eligibility Period.

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

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

DD-04. Ineligible Inventory.

Ineligible Inventory shall include the following:

(a) 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.

(b) 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.

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

(e) 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.

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

(g) 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.

(h) Inventory deemed otherwise ineligible by Bank in its sole discretion.

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

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

DD-05. Proceeds of Collateral and Application or Proceeds. (Check either (b) or (c); and (a) if applicable.)

[ ] (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.

[ ] (b) Borrower agrees to deposit all Proceeds of the Collateral in a Collateral Reserve Account at Bank.

[X] (c) Borrower Agrees to deposit all Proceeds of the Collateral in an, Operating Account at Bank.

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 Attachment, 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.

DD-06. Reporting / Audit.

(a) Reporting. (Check all that apply)

Borrower shall provide the following reports, financial statements,; list of Account Debtors and addresses and other report to Bank upon execution hereof and thereafter as indicated below:

Weekly	Annually	Month-End
[ ]		[X]	Loan Base Reports. Loan Base Reports, prepared as of the end of each reporting period. Unless otherwise agreed: in writing by Bank, monthly Loan Base Reports are required for all loans covered by this Agreement no later than 15 days following each month-end. If weekly Loan Base Reports are also required, sales & cash receipts jot mats shall accompany each report. The information on which the weekly Loan Base, Report is based (the "as or' date on the Loan Base Report form) shall be no more than three business days old when received by Bank.
		[X]	Accounts Aging based upon invoice date by the fifteenth (15th) day of each month.
		[X]	Inventory Report by the Fifteenth (15th) day of each month.
		[X]	Accounts Payable Aging by the fifteenth (15th) day of each month.
		[X]	Financial Statements, which shall be due within 20 days of each quarter end.
	[X]		A list of Account Debtors with current addresses.
[ ]	[ ]	[ ]	Other: _______

Borrower shall forward to Bank any of these reports at such other times as Bank may require them and/or any other reports deemed necessary by Bank in its discretion to monitor the Collateral for the Line of Credit. 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.

(b) Audit. From time to time, as deemed necessary by Bank in its soles discretion to monitor Collateral, but in no event less frequently than semiannually, Borrower hereby authorizes Bank or any agent or representative thereof' to, inspect, audit and verify the Accounts, Inventory, and Other Collateral, examine and 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 Audit.

DD-07. Fees.

(a) Borrower shall pay to Bank the sum of $N/A per N/A as a fee for the use of Bank's asset based lending services. This fee may be changed by written notice to Borrower.

(b) Borrower shall pay to Bank for each Audit of Borrower, an audit fee of $750.00 per day plus expense(s) 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 Audit 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 die audit fee upon notice to Borrower.

DD-08. 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:

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

(b) Failure to execute a Lockbox Agreement and notify Account Debtors to remit payments to the Lockbox, if required by Bank.

(c) Failure to deposit checks or other remittances received in payment of Accounts into a Collateral Reserve Account at Bank, if required by Bank.

(d) 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.

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

(f) If Borrower fails to otherwise comply with any of the provisions of this Schedule "DD" or the Loan Agreement.

DD-09. Other Provisions.

(a) 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.

(b) 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.

(c) 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 time 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.

(d) Electronic Transactions. By separate written agreement, Borrower and Bank may agree to conduct transactions contemplated herein, including reporting, by electronic means.

(e) 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/ Xxxxxx Xxxxx	By:	/s/ Xxxxx Xxxxxxx
		Xxxxx Xxxxxxx
	Title:	Chief Executive Officer and President

Additional Co-Borrowers or Guarantors:

WITNESS
			(SEAL)
			(SEAL)
			(SEAL)
			(SEAL)

WITNESS:		BRANCH BANKING AND TRUST COMPANY

/s/ Xxxxxx Xxxxx	By:	/s/ Xxxxxx X. Xxxxx
		Xxxxxx X. Xxxxx
	Title:	Senior Vice President

WITNESS:		BB&T BANKCARD CORPORATION

/s/ Xxxxxx Xxxxx	By:	/s/ Xxxxxx X. Xxxxx

	Title:	Senior Vice President

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