UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 13, 2014

INDUSTRIAL SERVICES OF AMERICA, INC.

(Exact name of registrant as specified in its Charter)

Florida
 (State or other jurisdiction
of incorporation)

0-20979
(Commission
File Number)

59-0712746
(IRS Employer
Identification No.) 

 

7100 Grade Lane, P.O. Box 32428, Louisville, Kentucky
(Address of principal executive offices)

40232
(Zip Code)

 

Company's telephone number, including area code: (502) 366-3452

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

____________________________________________________________________________________________________

Item 1.01 Entry into a Material Definitive Agreement.

Securities Purchase Agreement

On June 13, 2014, Industrial Services of America, Inc. (the " Company ") issued 857,143 shares of the Company's common stock pursuant to a Securities Purchase Agreement (the " Securities Purchase Agreement ") to Recycling Capital Partners, LLC (the " Investor "), an investment entity principally owned by Daniel M. Rifkin, former president of OmniSource Corporation and the founder and CEO of MetalX LLC, a scrap metal recycling company headquartered in Waterloo, Indiana, for an aggregate purchase price of $3,000,000.50. Pursuant to the Securities Purchase Agreement, the Company also issued to the Investor a five-year warrant to purchase 857,143 additional shares of the Company's common stock, exercisable 6 months after the date of the Securities Purchase Agreement for an exercise price of $5.00 per share. The Securities Purchase Agreement provides the Investor with preemptive rights and a right of first refusal with respect to future securities offerings by the Company. The Company expects to use the proceeds from the Securities Purchase Agreement for general corporate purposes including debt reduction, growth initiatives, capital expenditures, and potential acquisitions.

There are no material relationships between the Company or any of its subsidiaries and the Investor other than in respect of the transactions disclosed herein.

The foregoing description of the Securities Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Securities Purchase Agreement, a copy of which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Registration Rights Agreement

On June 13, 2014, in connection with the Securities Purchase Agreement, the Company and the Investor entered into a Registration Rights Agreement (the " Registration Rights Agreement "), under which the Company has agreed to (a) prepare and file a registration statement no later than December 12, 2014 and (b) cause the registration statement to be declared effective by the Securities and Exchange Commission no later than February 1, 2015 for (i) resales of the common stock issued to the Investor under the Securities Purchase Agreement, and (ii) resales of any shares of common stock issuable upon exercise of the warrant.

The Registration Rights Agreement requires the Company to pay the Investor a loss of liquidity fee for certain periods after February 1, 2015 when the registration statement is not effective or its use is suspended. The Registration Rights Agreement contains customary representations, warranties and covenants, and customary provisions regarding rights of indemnification between the parties with respect to certain applicable securities law liabilities.

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, a copy of which is filed as Exhibit 4.2 to this Current Report on Form 8-K and is incorporated herein by reference.

Director Designation Agreement

On June 13, 2014, in connection with the Securities Purchase Agreement, the Company and the Investor entered into a Director Designation Agreement (the " Director Designation Agreement ") pursuant to which the Investor will have the right to designate, and require the Company's Board to appoint, up to two directors (each, a " Designated Director "). As of the date of this report, the Investor had the right to designate one director. A Designated Director will hold office until (i) his or her term expires and such Designated Director's successor designated by the Investor has been appointed or (ii) such Designated Director's earlier death, disability, disqualification, resignation or removal, and the Investor shall have the right to appoint any successor to such Designated Director. The Investor's designation rights terminate at such time that the Investor and its affiliates collectively hold less than 5% of the Company's outstanding common stock. Pursuant to the Director Designation Agreement, the Company and the Investor agreed that the designation and appointment of the Designated Director nominees will not violate applicable law and will not cause the Company to become delisted from any securities exchange or other trading market.

The foregoing description of the Director Designation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Director Designation Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Wells Fargo Credit Facility

On June 13, 2014, the Company entered into a senior, secured credit facility (the " Credit Agreement ") with Wells Fargo Bank, National Association (the " Bank ") pursuant to which the Bank granted the Company a revolving line of credit of up to $15.0 million (the " Revolving Loan "), up to $1.0 million of which is available to the Company as a sub-facility for letters of credit. The Company may borrow up to 85% of the value of its eligible accounts receivable and 65% of the value of eligible inventory under the Revolving Loan.

The Credit Agreement also provided the Company with a secured equipment term loan of $2.8 million (the " Term Loan "). The Company used the proceeds from the Credit Agreement to repay in full its prior credit facility with Fifth Third Bank. The Company expects to use any remaining proceeds for working capital and other business purposes.

The interest rate on the Revolving Loan is equal to daily three month LIBOR plus three percent (3.00%). The interest rate on the Term Loan is equal to daily three month LIBOR plus three and 25/100 percent (3.25%). In the Event of a Default (as defined in the Credit Agreement) under either the Revolving Loan or the Term Loan, the interest rate will increase by two percent (2.0%). Each of the Revolving Loan and the Term Loan has a maturity date of June 13, 2019.

Interest under the Revolving Loan is payable monthly in arrears. Principal and interest under the Term Loan is payable in sixty (60) monthly installments, with the first payment commencing July 1, 2014, and the final unpaid principal amount, together with all accrued and unpaid interest, charges, fees, or other advances, if any, to be paid on the Termination Date (as defined in the Credit Agreement).

The Credit Agreement contains customary covenants, including a minimum EBITDA covenant, a capital expenditure covenant, and a fixed charge coverage ratio covenant, measured monthly on a trailing twelve month basis at the end of each month, beginning with the month ending June 30, 2015 of not less than 1.25 to 1.00.

The Company paid loan origination fees totaling $125.0 thousand in connection with the Credit Agreement.

The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, the Revolving Loan promissory note, and the Term Loan promissory note, copies of which are filed as Exhibits 10.2, 10.3 and 10.4 to this Current Report on Form 8-K and are incorporated herein by reference.

Security Agreement and Continuing Guaranty

As security for the Credit Agreement, the Company and each of its wholly-owned subsidiaries granted the Bank a first priority security interest in all of their assets pursuant to a Security Agreement, and each of the Company's subsidiaries guaranteed the Company's obligations under the Credit Agreement pursuant to a Continuing Guaranty.

The foregoing descriptions of the Security Agreement and the Continuing Guaranty do not purport to be complete and are qualified in their entirety by reference to the full text of the Security Agreement and the Continuing Guaranty, copies of which are filed as Exhibits 10.5 and 10.6 to this Current Report on Form 8-K and are incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation.

The disclosure set forth at Item 1.01 of this Current Report on Form 8-K is hereby incorporated into this Item 2.03.

Item 3.02 Unregistered Sales of Equity Securities.

            The information set forth in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference. The Company has relied upon the exemption from registration for private placements of securities set forth in Section 4(2) of the Securities Act of 1933, as amended.

Item 9.01        Financial Statements and Exhibits.

(d)       Exhibits

Exhibit No.     Description                                                                                                             

4.1                   Securities Purchase Agreement dated as of June 13, 2014 between the Company and Recycling Capital Partners, LLC.

4.2                   Registration Rights Agreement dated as of June 13, 2014 between the Company and Recycling Capital Partners, LLC.

4.3                   Common Stock Purchase Warrant dated as of June 13, 2014 by the Company to Recycling Capital Partners, LLC.

10.1                 Director Designation Agreement dated as of June 13, 2014 between the Company and Recycling Capital Partners, LLC.

10.2                 Credit Agreement dated as of June 13, 2014 between the Company and Wells Fargo Bank, National Association.

10.3                 Revolving Promissory Note dated as of June 13, 2014.

10.4                 Term Promissory Note dated as of June 13, 2014.

10.5                 Security Agreement dated as of June 13, 2014 between the Company, its subsidiaries and Wells Fargo Bank, National Association.

10.6                 Continuing Guaranty dated as of June 13, 2014 issued by the Company's subsidiaries to Wells Fargo Bank, National Association.


SIGNATURES

            Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

INDUSTRIAL SERVICES OF AMERICA, INC.  

  

  

  

  

Date: 

June 18, 2014 

By: 

/s/ Alan Schroering

Alan Schroering 

Vice-President of Finance and Interim Chief Financial Officer 

INDEX TO EXHIBITS

Exhibit No.     Description                                                                                                                

4.1                   Securities Purchase Agreement dated as of June 13, 2014.

4.2                   Registration Rights Agreement dated as of June 13, 2014.

4.3                   Common Stock Purchase Warrant dated as of June 13, 2014.

10.1                 Director Designation Agreement dated as of June 13, 2014.

10.2                 Credit Agreement dated as of June 13, 2014.

10.3                 Revolving Promissory Note dated as of June 13, 2014.

10.4                 Term Promissory Note dated as of June 13, 2014.

10.5                 Security Agreement dated as of June 13, 2014.

10.6                 Continuing Guaranty dated as of June 13, 2014.

Exhibit 4.1

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the "Agreement") is dated as of the 13th day of June, 2014 (the "Effective Date"), by and between INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation (the "Company"), and RECYCLING CAPITAL PARTNERS, LLC, an Indiana limited liability company (the "Investor"). Capitalized terms used herein shall have the meanings set forth in Article II of this Agreement.

RECITALS

WHEREAS, the Company and the Investor are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "Securities Act"), including Regulation D, by the U.S. Securities and Exchange Commission (the "SEC");

WHEREAS, the Investor desires to purchase from the Company, upon the terms and conditions stated in this Agreement, (i) Eight Hundred Fifty-Seven Thousand One Hundred Forty-Three (857,143) newly issued shares (each, a "Common Share" and, collectively, the "Common Shares") of common stock of the Company, par value $0.0033 per share ("Common Stock"), and (ii) a warrant to purchase Eight Hundred Fifty-Seven Thousand One Hundred Forty-Three (857,143) shares of Common Stock, in substantially the form attached hereto as Exhibit A (the "Warrant"), subject to the terms and provisions hereinafter set forth; and

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Exhibit B (the "Registration Rights Agreement"), pursuant to which the Company has agreed to provide certain registration rights to the Investor under the Securities Act, and applicable state securities laws.

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Director Designation Agreement, substantially in the form attached hereto as Exhibit C (the "Director Designation Agreement"), pursuant to which the Company has agreed to provide Investor the right to designate directors.

NOW, THEREFORE, in consideration of the premises and the mutual covenants of the parties hereinafter expressed and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, each intending to be legally bound, agree as follows:

ARTICLE I
RECITALS; EXHIBITS; SCHEDULES

The foregoing recitals, together with the Schedules, Exhibits and disclosure letter referred to hereafter, are hereby incorporated into this Agreement by this reference.

ARTICLE II
DEFINITIONS

For purposes of this Agreement, except as otherwise expressly provided or otherwise defined elsewhere in this Agreement, including the Exhibits hereto, the capitalized terms in this Agreement shall have the meanings assigned to them in this Article as follows:

2.1 "8-K Filing" shall have the meaning set forth in Section 7.7 of this Agreement.

2.2 "Affiliate" means, with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person at any time during the period for which the determination of affiliation is being made. For purposes of this definition, the term "control," "controlling," "controlled" and words of similar import, when used in this context, means, with respect to any Person, the possession, directly or indirectly, of the power to direct, or cause the direction of, management policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

2.3 "Algar Management Agreement" means the management service agreement entered into by and between Algar, Inc. and the Company as of December 2, 2013 as may be amended from time to time.

2.4 "Algar Option Agreement" means the option agreement entered into by and between Algar, Inc. and the Company as of December 2, 2013.

2.5 "Articles of Incorporation" shall have the meaning set forth in Section 6.4 of this Agreement.

2.6 "Assets" means all of the properties and assets of the Company or of the Subsidiaries, whether real, personal or mixed, tangible or intangible, wherever located, whether now owned or hereafter acquired.

2.7 "Bank" means Wells Fargo Bank, National Association.

2.8 "Bylaws" shall have the meaning set forth in Section 6.4 of this Agreement.

2.9 "Claims" means any Proceedings, Judgments, Obligations, threats, losses, damages, deficiencies, settlements, assessments, charges, costs and expenses of any nature or kind.

2.10 "Closing" shall have the meaning set forth in Section 4.2 of this Agreement.

2.11 "Closing Date" means June 13, 2014.

2.12 "Committee" shall have the meaning set forth in Section 9.6 of this Agreement.

2.13 "Common Shares" shall have the meaning set forth in the Recitals of this Agreement.

2.14 "Common Stock" shall have the meaning set forth in the Recitals of this Agreement.

2.15 "Company" shall have the meaning set forth in the introductory paragraph of this Agreement.

2.16 "Company Balance Sheet" shall have the meaning set forth in
Section 6.10 of this Agreement.

2.17 "Company Leases" shall have the meaning set forth in Section 6.12 of this Agreement.

2.18 "Consent" means any consent, approval, order or authorization of, or any declaration, filing or registration with, or any application or report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing) of, by or with, any Person, which is necessary in order to take a specified action or actions, in a specified manner and/or to achieve a specific result.

2.19 "Contract" means any written or oral contract, agreement, order or commitment of any nature whatsoever, including, any sales order, purchase order, lease, sublease, license agreement, services agreement, loan agreement, mortgage, security agreement, guarantee, management contract, employment agreement, consulting agreement, partnership agreement, stockholders agreement, buy-sell agreement, option, warrant, debenture, subscription, call or put.

2.20 "Convertible Securities" means securities (including debt securities) of the Company which are convertible into, exchangeable for or exercisable to acquire, shares of Common Stock without further payment by the holder thereof.

2.21 "Director Designation Agreement" shall have the meaning set forth in the Recitals of this Agreement.

2.22 "DRS" means the Direct Registration System maintained by the transfer agent for the Common Stock.

2.23 "Effective Date" means the date set forth in the introductory paragraph of this Agreement.

2.24 "Encumbrance" means any lien, security interest, pledge, mortgage, easement, leasehold, assessment, tax, covenant, reservation, or any other encumbrance, claim, burden or charge of any nature whatsoever.

2.25 "Environmental Requirements" means all Laws and requirements relating to health, safety or protection of the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, or Hazardous Materials in the environment (including ambient air, surface water, ground water, land surface or subsurface strata), or otherwise relating to the treatment, storage, disposal, transport or handling of any Hazardous Materials.

2.26 "ERISA" shall have the meaning set forth in Section 6.17 of this Agreement.

2.27 "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

2.28 "Financial Statements" shall have the meaning set forth in
Section 6.7 of this Agreement.

2.29 "Fundamental Transaction" shall have the meaning set forth in the Warrant.

2.30 "GAAP" means generally accepted accounting principles, methods and practices as applied in the U.S. to U.S. companies.

2.31 "Governmental Authority" means any foreign, federal, state or local government, or any political subdivision thereof, or any court, agency or other body, stock market or exchange exercising any executive, legislative, judicial, quasi-judicial or regulatory function of government.

2.32 "Hazardous Materials" means: (i) any petroleum or petroleum products, radioactive materials, asbestos in any form that is, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls (PCBs); (ii) any chemicals, materials, substances or wastes which are defined as "hazardous substances," "hazardous wastes," "hazardous materials," "toxic substances," "toxic pollutants" or words of similar import, under any Law; and (iii) any other chemical, material, substance, or waste, exposure to which is prohibited, limited or regulated by any Governmental Authority.

2.33 "Insurance Policies" shall have the meaning set forth in
Section 6.19 of this Agreement.

2.34 "Investor" shall have the meaning set forth in the introductory paragraph of this Agreement.

2.35 "Investor Indemnified Parties" shall have the meaning set forth in Section 10.1 of this Agreement.

2.36 "Issuance" shall have the meaning set forth in Section 11.1 of this Agreement.

2.37 "Judgment" means any order, writ, injunction, fine, citation, award, decree, or any other judgment of any nature whatsoever of any Governmental Authority.

2.38 "Kletter Irrevocable Proxies" means the Irrevocable Proxies issued to Sean Garber and Orson Oliver by Harry Kletter, K&R, LLC and The Harry Kletter Family Limited Partnership on November 19, 2013.

2.39 "Law" means any provision of any law, statute, ordinance, code, constitution, charter, treaty, rule or regulation of any Governmental Authority.

2.40 "Leases" means all leases for real or personal property.

2.41 "Loan Facility" means the credit facility to be made available to the Company and its Subsidiaries by the Bank as contemplated in the Loan Commitment executed and delivered by the Bank as of April 3, 2014 and accepted by the Company.

2.42 "Material Adverse Effect" means with respect to the event, item or question at issue, that such event, item or question would not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of this Agreement or any of the Transaction Documents; (ii) a material adverse effect on the results of operations, Assets, business or condition (financial or otherwise) of the Company and its consolidated Subsidiaries, taken as a whole; or (iii) a material adverse effect on the Company's ability to perform its Obligations under this Agreement or any Transaction Documents; provided, that, if a Material Adverse Effect can be quantified to a dollar amount, such amount shall not be less than $250,000.

2.43 "Material Contract" means, as to any Person, any agreement required to be filed as a "material contract" with the SEC pursuant to applicable securities law.

2.44 "Material Shareholder" shall have the meaning set forth in
Section 6.23 of this Agreement.

2.45 "Notice of Exercise" shall have the meaning set forth in
Section 11.5 of this Agreement

2.46 "Notice of Issuance" shall have the meaning set forth in
Section 11.4 of this Agreement.

2.47 "Obligation" means any debt, liability or obligation whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained, known, unknown or obligations under executory Contracts.

2.48 "Oliver/Garber Agreement" means the Agreement entered into by Sean Garber and Orson Oliver as of December 2, 2013.

2.49 "OFAC" shall have the meaning set forth in Section 12.17 of this Agreement.

2.50 "Ordinary Course of Business" means the ordinary course of business consistent with past custom and practice (including with respect to quantity, quality and frequency).

2.51 "Permit" means any license, permit, approval, waiver, order or authorization granted, issued or approved by any Governmental Authority.

2.52 "Person" means any individual, sole proprietorship, joint venture, partnership, company, corporation, association, cooperation, trust, estate, Governmental Authority, or other entity.

2.53 "Pre-emptive Rights Period" means the period beginning with the Effective Date and ending on the date the Investor owns, legally or beneficially, less than five percent (5%) of the Company's outstanding Common Stock.

2.54 "Press Release" shall have the meaning set forth in Section 7.7 of this Agreement.

2.55 "Proceeding" means any demand, suit, action, litigation, investigation, audit, arbitration, administrative hearing, or any other proceeding.

2.56 "Purchase Price" shall have the meaning set forth in Section 4.1 of this Agreement.

2.57 "Other Securities" shall have the meaning set forth in
Section 11.2 of this Agreement.

2.58 "Real Property" means any real estate, land, building, structure, improvement, fixture or other real property, including, fee and leasehold interests.

2.59 "Refusal Period" means the period beginning on the Effective Date and ending on the date one hundred eighty (180) days after the S-3 Registration Statement referenced in the Registration Rights Agreement is declared effective by the SEC.

2.60 "Registration Rights Agreement" shall have the meaning set forth in the Recitals of this Agreement.

2.61 "Rule 144" shall have the meaning set forth in Section 7.3(e)(A) of this Agreement.

2.62 "Rule 144 Certificate" shall have the meaning set forth in
Section 7.3(e)(C) of this Agreement.

2.63 "SEC" shall have the meaning set forth in the Recitals of this Agreement.

2.64 "SEC Documents" shall have the meaning set forth in Section 6.7 of this Agreement.

2.65 "Securities" means, collectively, the Common Shares, the Warrant and the Warrant Shares.

2.66 "Securities Act" shall have the meaning set forth in the Recitals of this Agreement.

2.67 "Securities Being Sold" shall have the meaning set forth in
Section 7.3(e)(C) of this Agreement.

2.68 "Share Reserve" shall have the meaning set forth in Section 7.5 of this Agreement.

2.69 "Short Sales" shall have the meaning set forth in Section 5.12 of this Agreement.

2.70 "Subsidiaries" means collectively each of the following: ISA Recycling, LLC, ISA Indiana, Inc., ISA Indiana Real Estate, LLC, ISA Logistics LLC, ISA Real Estate, LLC, 7021 Grade Lane LLC, 7124 Grade Lane LLC, 7200 Grade Lane LLC, Computerized Waste Systems, LLC and WESSCO,
LLC.

2.71 "Tax" means (i) any foreign, federal, state or local income, profits, gross receipts, franchise, sales, use, occupancy, general property, real property, personal property, intangible property, transfer, excise, accumulated earnings, unemployment compensation, social security, withholding, payroll, or any other tax, or (ii) any deficiency, interest or penalty imposed with respect to any of the foregoing.

2.72 "Tax Return" means any tax return, filing, declaration, information statement or other form or document required to be filed in connection with or with respect to any Tax.

2.73 "Third Party Purchaser" shall have the meaning set forth in
Section 11.1 of this Agreement.

2.74 "Trading Market" means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

2.75 "Transaction Documents" means any documents or instruments to be executed by the Company in connection with this Agreement, including the Common Shares, the Warrant, the Registration Rights Agreement, and the Director Designation Agreement, together with all modifications, amendments, extensions, future advances, renewals, and substitutions thereof.

2.76 "Warrant" shall have the meaning set forth in the Recitals of this Agreement.

2.77 "Warrant Shares" means the shares of Common Stock issuable upon exercise of the Warrant.

ARTICLE III
INTERPRETATION

In this Agreement, unless the express context otherwise requires:
(i) the words "herein," "hereof' and "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (ii) references to the words "Article" or "Section" refer to the respective Articles and Sections of this Agreement, and references to "Exhibit" or "Schedule" refer to the respective Exhibits and Schedules annexed hereto; (iii) references to a "party" mean a party to this Agreement and include references to such party's permitted successors and permitted assigns; (iv) references to a "third party" mean a Person not a party to this Agreement; (v) the terms "dollars" and "$" means U.S. dollars; (vi) wherever the word "include," "includes" or "including" is used in this Agreement, it will be deemed to be followed by the words "without limitation."

ARTICLE IV
PURCHASE AND SALE OF COMMON SHARES AND THE WARRANT

4.1 Purchase and Sale of Common Shares and the Warrant. Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, Investor agrees to purchase the Common Shares and the Warrant, on the Closing Date, and the Company agrees to sell and issue to the Investor the Common Shares and the Warrant, on the Closing Date for an aggregate amount equal to Three Million Dollars and 50/100 ($3,000,000.50) (the "Purchase Price").

4.2 Closing. The closing of the purchase and sale of the Common Shares and Warrant (the "Closing") shall take place on the Closing Date, subject to satisfaction of the conditions to the Closing set forth in this Agreement.

4.3 Form of Payment. Subject to the satisfaction of the terms and conditions of this Agreement, on the Closing Date: (i) the Investor shall deliver to the Company, in the form of a wire transfer, immediately available funds equal to the Purchase Price, and (ii) the Company shall deliver to Investor the Common Shares and Warrant at the Closing, duly executed on behalf of the Company, together with any other documents required to be delivered pursuant to this Agreement.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor represents and warrants to the Company that:

5.1 Organization. The Investor is duly organized and validly existing under the laws of the jurisdiction of its organization and has all requisite limited liability company power and authority to invest in the Securities pursuant to this Agreement, enter into and execute this Agreement and the Transaction Documents and to carry out the transactions contemplated by this Agreement and the Transaction Documents.

5.2 Investment Purpose. The Investor is acquiring the Securities for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, the Investor reserves the right to dispose of the Securities at any time in accordance with or pursuant to an effective registration statement covering such Securities or an available exemption under the Securities Act.

5.3 Post-Transaction Ownership. The Investor acknowledges that in accordance with Nasdaq Listing Rule 5635(b), that stockholder approval would be required if, as a result of the transactions contemplated hereby, the Investor, together with its Affiliates, acquires more than 19.99% of the total outstanding Common Stock of the Company or of the total voting power of the Company's securities. The Investor acknowledges that the transactions contemplated hereby are intended to be compliant with Nasdaq Listing Rules without the need for Company stockholder approval, and represents and warrants to the Company that the Investor (individually or together with any other Person or Persons with whom the Investor has identified, or will have identified, itself as part of a "group" in a public filing made with the SEC involving the Company's securities) does not own or have the right to acquire any of the Common Stock of the Company other than the right to acquire the Common Shares and Warrant.

5.4 Accredited Investor Status. The Investor is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D, as promulgated under the Securities Act. The Investor acknowledges that it can bear the economic risk and complete loss of its investment in the Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.

5.5 Reliance on Exemptions. The Investor understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities Laws and that the Company is relying upon the truth and accuracy of, and the Investor's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Securities.

5.6 Information. Investor acknowledges that it may retrieve all SEC Documents from the SEC's website (www.sec.gov) and the Investor's access to such SEC Documents through such website shall constitute delivery of the SEC Documents to Investor. The Investor and its advisors, if any, have had adequate opportunity to review the SEC Documents (as defined below) and have been furnished with all other materials relating to the business, finances and operations of the Company and information the Investor deemed material to making an informed investment decision regarding its purchase of the Securities, which have been requested by the Investor. The Investor and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management. Neither such inquiries, nor any other due diligence investigations conducted by the Investor or its advisers, if any, or its representatives, shall modify, amend or affect the Investor's right to rely on the Company's representations and warranties contained in Article VI below. The Investor understands that its investment in the Securities involves a high degree of risk. The Investor is in a position regarding the Company, which, based upon employment, other relationship or economic bargaining power, enabled and enables the Investor to obtain information from the Company in order to evaluate the merits and risks of this investment. The Investor has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

5.7 No Governmental Review. The Investor understands that no Governmental Authority has passed on or made any recommendation or endorsement of the Securities, or the fairness or suitability of the investment in the Securities, nor have any Governmental Authorities passed upon or endorsed the merits of the offering of the Securities.

5.8 Authorization. Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Investor and is a valid and binding agreement of the Investor, enforceable in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies. .

5.9 Restrictions on Transferability. The Investor understands that because the Securities have not have been registered under the Securities Act, the Investor cannot pledge, hypothecate, donate, sell, assign, transfer or otherwise dispose of any or all of the Securities unless they are subsequently registered under the Securities Act or exemptions from registration are available. The Investor acknowledges and understands that, except as provided in the Registration Rights Agreement, it has no registration rights. Although it may be possible in the future to make limited public sales of the Securities without registration under the Securities Act, Rule 144 is not now available. By reason of these restrictions, the Investor understands that it may be required to hold the Securities for an indefinite period of time. The Investor understands that each certificate or other instrument representing the Securities will bear appropriate state "blue sky" legends and a legend substantially as follows:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), AND SHALL NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER EXCEPT BY REGISTRATION OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UPON THE ISSUANCE TO THE COMPANY OF A FAVORABLE OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE 1933 ACT AND THE STATE ACTS";

and appropriate transfer restrictions will be affixed to any notation in the DRS for any Securities.

5.10 No General Solicitation. The Investor did not learn of the investment in the Securities as a result of any general solicitation or general advertising.

5.11 Brokers and Finders. No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company, any Subsidiary or the Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Investor.

5.12 Certain Transactions; Confidentiality. Other than consummating the transactions contemplated hereunder, the Investor has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Investor, executed any purchases or sales, including "short sales" as defined in Rule 200 of Regulation SHO under the Exchange Act ("Short Sales"), of the securities of the Company during the period commencing as of the time that the Investor first submitted a term sheet (written or oral) to the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereby and ending immediately prior to the execution hereof. Other than to other Persons party to this Agreement and its legal and accounting advisers, the Investor has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).

5.13 No Disqualification Events. Neither the Investor nor, to the extent it has them, any of its shareholders, members, managers, general or limited partners, directors, affiliates or executive officers (collectively with the Investor, the ("Investor Covered Persons"), are subject to any of the "bad actor" disqualifications described in Securities Act Rule 506(d) (l)(i) to (viii) (each, a "Disqualification Event"), except for a Disqualification Event covered by Rule 506(d)(2) or
(d)(3). The Investor has exercised reasonable care to determine whether the Investor Covered Person is subject to a Disqualification Event. The purchase of the Securities by the Investor will not subject the Company to any Disqualification Event.

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth and disclosed in the disclosure letter provided to the Investor in connection with this Agreement and made a part hereof or as set forth in the SEC Documents, the Company hereby makes the following representations and warranties to the Investor:

6.1 Subsidiaries. Except for a one hundred percent (100%) ownership in the Subsidiaries, the Company has no subsidiaries and the Company does not own, directly or indirectly, any outstanding voting securities of or other interests in, or have any control over, any other Person. Each representation and warranty contained in this Article VI shall be deemed to mean and be construed to include the Company and each Subsidiary, as applicable, regardless of whether each of such representations and warranties specifically refers to the Company's Subsidiaries or not.

6.2 Organization. Each of the Company and the Subsidiaries is a corporation or similar entity, duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated or formed. The Company has the full corporate power and authority and all necessary certificates, licenses, approvals and Permits to: (i) enter into and execute this Agreement and the Transaction Documents and to perform all of its Obligations hereunder and thereunder; and (ii) own and operate its Assets and properties and to conduct and carry on its business as and to the extent now conducted. The Company is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the character of its business or the ownership or use and operation of its Assets or properties requires such qualification, except to the extent that failure to so qualify will not result in a Material Adverse Effect.

6.3 Authority and Approval of Agreement; Binding Effect. The execution and delivery by the Company of this Agreement and the Transaction Documents, and the performance by the Company of all of its Obligations hereunder and thereunder, including the issuance of the Securities, have been duly and validly authorized and approved by the Company and its board of directors (or a duly authorized committee thereof) pursuant to all applicable Laws and no other corporate action on the part of the Company, its board of directors, stockholders or any other Person is necessary or required by the Company to execute this Agreement and the Transaction Documents, consummate the transactions contemplated herein and therein, perform all of the Company's Obligations hereunder and thereunder, or to issue the Securities. This Agreement and each of the Transaction Documents have been duly and validly executed by the Company (and the officer executing this Agreement and all such other Transaction Documents is duly authorized to act and execute same on behalf of the Company) and constitute the valid and legally binding agreements of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

6.4 Capitalization. The authorized capital stock of the Company consists of: (a) 20,000,000 shares of Common Stock, of which 7,069,267 shares of Common Stock are issued and outstanding as of the end of the day prior to the Effective Date; and (b) 200,000 shares of Non-Voting Preferred Stock, of which no shares are issued and outstanding as of the Effective Date. All outstanding shares of Common Stock have been validly issued and are fully paid and nonassessable. The Common Stock is currently quoted on the principal Trading Market under the trading symbol "IDSA." No shares of Common Stock are subject to preemptive rights or any other similar rights or any Encumbrances suffered or permitted by the Company. Except as contemplated hereby and the Algar Option Agreement, or as set forth on Schedule 6.4, as of the date hereof: (i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or Contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries; (ii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other Contracts or instruments evidencing indebtedness of the Company or any of its Subsidiaries, or by which the Company or any of its Subsidiaries is or may become bound; (iii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the Securities Act (except pursuant to the Registration Rights Agreement); (iv) there are no financing statements securing obligations filed in connection with the Company or any of its Assets; (v) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by this Agreement or any related agreement or the consummation of the transactions described herein or therein; and (vi) there are no outstanding securities or instruments of the Company which contain any redemption or similar provisions, and there are no Contracts by which the Company is or may become bound to redeem a security of the Company, except for any such item as would not reasonably be expected to have a Material Adverse Effect. The Company has furnished or made available to the Investor true, complete and correct copies of: (I) the Company's Articles of Incorporation, as amended and as in effect on the date hereof (the "Articles of Incorporation"); and (II) the Company's Amended and Restated Bylaws, as in effect on the date hereof (the "Bylaws"). Except for the Articles of Incorporation, the Bylaws, the Algar Management Agreement, the Oliver/Garber Agreement and the Kletter Irrevocable Proxies, there are no other stockholders agreements, voting agreements or other Contracts of any nature or kind that restrict, limit or in any manner impose Obligations on the governance of the Company.

6.5 No Conflicts; Consents and Approvals. The execution, delivery and performance of this Agreement and the Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, including the issuance of any of the Securities, will not: (i) constitute a violation of or conflict with the Articles of Incorporation, Bylaws, or any other organizational or governing documents of the Company; (ii) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflict with, or give to any other Person any rights of termination, amendment, acceleration or cancellation of, any provision of any Contract to which the Company is a party or by which any of its Assets or properties may be bound; (iii) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflict with, any Judgment; (iv) constitute a violation of, or conflict with, any Law (including United States federal and state securities Laws and the rules and regulations of the principal Trading Market on which the Common Stock is quoted); or (v) result in the loss or adverse modification of, or the imposition of any fine, penalty or other Encumbrance with respect to, any Permit granted or issued to, or otherwise held by or for the use of, the Company or any of the Company's Assets; except, in the case of clauses (ii) - (v), for such violations, defaults, breaches, conflicts, losses, modifications or impositions that have not had and would not reasonably be expected to have a Material Adverse Effect. The Company is not in violation of its Articles of Incorporation, Bylaws or other organizational or governing documents and the Company is not in default or breach (and to the Company's knowledge no event has occurred which with notice or lapse of time or both could put the Company in default or breach) under, and the Company has not taken any action or failed to take any action that would give to any other Person any rights of termination, amendment, acceleration or cancellation of, any Material Contract to which the Company is a party or by which any property or Assets of the Company are bound or affected. The businesses of the Company are not, to the Company's knowledge, being conducted in violation of any Law, except as would not have or would not reasonably be expected to have a Material Adverse Effect. Except with respect to the SEC and the principal Trading Market and as specifically contemplated by this Agreement or as would not have and would not reasonably be expected to have a Material Adverse Effect, the Company is not required to obtain any Consent of, from, or with any Governmental Authority, or any other Person, in order for it to execute, deliver or perform any of its Obligations under this Agreement or the Transaction Documents in accordance with the terms hereof or thereof, or to issue and sell the Securities in accordance with the terms hereof. All Consents which the Company is required to obtain pursuant to the immediately preceding sentence have been obtained or effected on or prior to the date hereof or will be obtained or effected on or prior to Closing or as otherwise required under the rules and regulations of the applicable Governmental Authority.

6.6 Issuance of Securities. The Securities are duly authorized and, upon issuance in accordance with the terms hereof, (or, where applicable, the Warrant), shall be duly issued, fully paid and non- assessable, and free, except as otherwise contemplated by this Agreement, from all Encumbrances (other than restrictions imposed by federal and state securities Laws) with respect to the issue thereof, and will be issued in compliance with all applicable United States federal and state securities Laws. Assuming the accuracy of the representations and warranties of the Investor set forth in Article V above, the offer and sale to the Investor by the Company of the Securities is exempt from: (i) the registration and prospectus delivery requirements of the Securities Act; and (ii) the registration and/or qualification provisions of all applicable state and provincial securities and "blue sky" laws.

6.7 SEC Documents: Financial Statements. The Common Stock is registered pursuant to Section 12 of the Exchange Act and the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC under the Exchange Act (all of the foregoing filed within the two (2) years preceding the date hereof or amended after the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, being hereinafter referred to as the ("SEC Documents"). The Company is current with its filing obligations under the Exchange Act. The Company represents and warrants that true and complete copies of the SEC Documents are available on the SEC's website (www.sec.gov). If the Investor is unable to obtain any of such SEC Documents from such website at no charge, as result of such website not being available or any other reason beyond the Investor's control, then, upon request from the Investor, the Company shall deliver to the Investor true and complete copies of such SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act, and (except for any statements which were subsequently amended or omitted material facts which were subsequently stated) none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable Law (except as such statements have been amended or updated in subsequent filings before the date hereof, which amendments or updates are also part of the SEC Documents). As of their respective dates, the financial statements of the Company included in the SEC Documents ("Financial Statements") complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. All of the Financial Statements have been prepared in accordance with GAAP, consistently applied, during the periods involved (except: (i) as may be otherwise indicated in such Financial Statements or the notes thereto; or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements), and fairly present in all material respects the consolidated financial position of the Company as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

6.8 Absence of Certain Changes. Since the date the last of the SEC Documents was filed with the SEC there has been no event or circumstance of any nature that has resulted in, or would reasonably be expected to result in, a Material Adverse Effect.

6.9 Absence of Litigation or Adverse Matters. Except as otherwise disclosed to the Investor in the SEC Documents, or as would not have or would not reasonably be expected to have a Material Adverse Effect: (i) there is no Proceeding before or by any Governmental Authority or any other Person, pending, or to the knowledge of the Company, threatened or contemplated, against the Company, its business or its Assets; (ii) there are no outstanding Judgments against the Company, its business or its Assets; and (iii) the Company is not in breach or violation of any Contract.

6.10 Liabilities and Indebtedness of the Company. The Company does not have any known Obligations of any nature, except Obligations (i) set forth or adequately provided for in the Condensed Consolidated Balance Sheets or in the related Notes to the Condensed Consolidated Financial Statements included in Company's Quarterly Report on Form 10-Q for the period ended March 31, 2014 (the "Company Balance Sheet"), (b) those incurred in the Ordinary Course of Business and not required to be set forth in the Company Balance Sheet under GAAP, and (c) those incurred in the Ordinary Course of Business since the date of the Company Balance Sheet and not reasonably likely to have a Material Adverse Effect.

6.11 Title to Assets. Except as set forth on Schedule 6.11, the Company has good and marketable title to, or a valid leasehold interest in, all of its Assets which are material to the business and operations of the Company as presently conducted, free and clear of all Encumbrances, other than liens for the payment of property taxes that are not yet due and the liens and security interests of the Bank and, with respect to assets of WESSCO, LLC, the liens and security interests of The Bank of Kentucky, Inc.

6.12 Real Property Leases. Except for the Leases described in the SEC Documents (the "Company Leases"), the Company does not lease any other Real Property required to be disclosed in the SEC Documents. With respect to each of the Company Leases, except as may be described in the SEC Documents, (i) the Company has been in peaceful possession of the property leased thereunder and neither the Company nor the landlord is in default thereunder; (ii) no waiver, indulgence or postponement of any of the Obligations thereunder has been granted by the Company or landlord thereunder; and (iii) there exists no event, occurrence, condition or act known to the Company which, upon notice or lapse of time or both, would be or could become a default thereunder or which could result in the termination of the Company Leases, or any of them, and which would reasonably be expected to have a Material Adverse Effect. The Company has not received any written notice to the effect that any of the Company Leases will not be renewed at the termination of the term of such Company Leases.

6.13 Material Contracts. Except for Material Contracts that have terminated or have been fully discharged pursuant to their terms as disclosed in such Material Contracts as filed with the SEC, each of the Material Contracts is in full force and effect and is a valid and binding Obligation of the parties thereto in accordance with the terms and conditions thereof. To the knowledge of the Company, except as set forth on Schedule 6.13, all Obligations required to be performed under the terms of each of the Material Contracts by any party thereto have been performed by all parties thereto, and no party to any Material Contracts is in default with respect to any term or condition thereof, nor has any event occurred which, through the passage of time or the giving of notice, or both, would constitute a default thereunder or would cause the acceleration or modification of any Obligation of any party thereto or the creation of any Encumbrance upon any of the Assets of the Company. Further, the Company has received no written notice, nor does the Company have any knowledge, of any pending or contemplated termination of any of the Material Contracts.

6.14 Compliance with Laws. To the knowledge of the Company, the Company is in material compliance with all Laws, except for instances of non-compliance that, individually or in the aggregate, would not reasonably be believed to have a Material Adverse Effect. The Company has not received any written notice that it is in violation of, has violated, or is under investigation with respect to, or has been threatened to be charged with, any violation of any Law.

6.15 Intellectual Property. The Company owns or possesses adequate and legally enforceable rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and all other intellectual property rights necessary to conduct its business as now conducted. The Company does not have any knowledge of any material infringement by the Company of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other intellectual property rights of others, and, to the knowledge of the Company, there is no Claim being made or brought against, or to the Company's knowledge, being threatened against, the Company regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other intellectual property infringement.

6.16 Labor and Employment Matters. The Company is not involved in any labor dispute or, to the knowledge of the Company, is any such dispute threatened. To the knowledge of the Company, none of the Company's employees is a member of a union. To the knowledge of the Company, the Company has complied in all material respects with all Laws relating to employment matters, civil rights and equal employment opportunities.

6.17 Employee Benefit Plans. Schedule 6.17 sets forth all employee benefit plans maintained, established or sponsored by the Company, or in or to which the Company participates or contributes, which is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Company has made all required contributions and has no liability to any such employee benefit plan, other than liability for health plan continuation coverage described in Part 6 of Title 1(B) of ERISA, and has materially complied with all applicable laws for any such employee benefit plan.

6.18 Tax Matters. The Company has filed all United States federal Tax Returns and all other material Tax Returns required by any jurisdiction to which it is subject, and each such Tax Return has been prepared in material compliance with all applicable Laws, and all such Tax Returns are true and accurate in all material respects. Except and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported Taxes, the Company has paid all Taxes shown or determined to be due on such Tax Returns, except those being contested in good faith, and the Company has set aside on its books provisions reasonably adequate for the payment of all Taxes for periods subsequent to the periods to which such Tax Returns apply. There are no unpaid Taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has withheld and paid all Taxes to the appropriate Governmental Authority required to have been withheld and paid in connection with amounts paid or owing to any Person. There is no Proceeding or Claim for refund now in progress, pending or, to the Company's knowledge, threatened against or with respect to the Company regarding Taxes.

6.19 Insurance. The Company is covered by valid, outstanding and enforceable policies of insurance which were issued to it by reputable insurers of recognized financial responsibility, covering its properties, Assets and businesses against losses and risks normally insured against by other corporations or entities in the same or similar lines of businesses as the Company is engaged and in coverage amounts which are typically and reasonably carried by such other corporations or entities (the "Insurance Policies"). Such Insurance Policies are in full force and effect, and all premiums due thereon have been paid. None of the Insurance Policies will lapse or terminate as a result of the transactions contemplated by this Agreement. The Company has complied in all material respects with the provisions of such Insurance Policies. The Company has not received notice, written or oral, that any of its existing insurance coverage has been or will be refused or that its existing Insurance Policies will not be renewed.

6.20 Permits. To the extent that failure to possess a Permit would reasonably result in a Material Adverse Effect, the Company possesses all material Permits necessary to conduct its business, and the Company has not received any notice of, and is not involved in any Proceedings relating to, the revocation or modification of any such Permits. All such Permits are valid and in full force and effect and the Company is in material compliance with the material requirements of all such Permits.

6.21 Environmental Laws. To the extent that non-compliance would reasonably result in a Material Adverse Effect, the Company is and has at all times been in compliance with any and all applicable material Environmental Requirements, and there are no pending Claims against the Company relating to any material Environmental Requirements.

6.22 Illegal Payments. Neither the Company, nor any director, officer, agent, employee or other Person acting on behalf of the Company has, in the course of his actions for, or on behalf of, the Company: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

6.23 Related Party Transactions. Except as disclosed in the SEC Documents or as contemplated by this Agreement, except for arm's length transactions pursuant to which the Company makes payments in the Ordinary Course of Business upon terms no less favorable than the Company could obtain from third parties, none of the officers, directors or employees of the Company, nor any stockholders who own, legally or beneficially, five percent (5%) or more of the issued and outstanding shares of any class of the Company's capital stock (each a "Material Shareholder"), is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including any Contract providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from, any officer, director or such employee or Material Shareholder or, to the best knowledge of the Company, any other Person in which any officer, director, or any such employee or Material Shareholder has a substantial or material interest in or of which any officer, director or employee of the Company or Material Shareholder is an officer, director, trustee or partner. There are no Claims that have been made in writing or material disputes of any nature or kind between the Company and any officer, director or employee of the Company or any Material Shareholder, or between any of them, relating to the Company and its business.

6.24 Internal Accounting Controls. Except as set forth in the SEC Documents, the Company and each of its Subsidiaries maintain a system of internal accounting controls in accordance with the requirements of the SEC pertaining to such controls.

6.25 Acknowledgment Regarding Investor's Purchase of the Securities. The Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm's length purchaser with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by the Investor or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Investor's purchase of the Securities. The Company further represents to the Investor that the Company's decision to enter into this Agreement has been based solely on the independent evaluation by the Company and its representatives.

6.26 Listing and Maintenance Requirements. The Company has taken no action designed to, or which to the best of its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act, nor has the Company received any notification that the SEC is contemplating terminating such registration.

6.27 Advisory Fees. There is no Person acting on behalf of the Company who is entitled to or has any claim for any financial advisory, brokerage or finder's fee or commission in connection with the execution of this Agreement or the consummation of the transactions contemplated hereby. To the extent any Person claims to have acted in such capacity, the Company shall be responsible for the payment of any fees owing to such Person relating to or arising out of the transactions contemplated hereby.

6.28 No Disqualification Events. None of the Company, any of the Company's predecessors, any affiliated issuer of the Company, any director of the Company, executive officer of the Company (as that term is defined in Securities Act Rule 501(f)), other officer of the Company participating in the transactions contemplated hereby, any beneficial owner of 20% or more of the Company's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Securities Act Rule 405) connected with the Company in any capacity at the time of sale of the Securities (each, an "Issuer Covered Person" and, together, "Issuer Covered Persons") is subject to any Disqualification Event, except for a Disqualification Event covered by Securities Act Rule 506 (d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Securities Act Rule 506 (e).

6.29 No Other Representations. The Investor acknowledges and agrees that the Company make no representations or warranties whatsoever, express or implied, except for those specifically set forth in this Article VI.

ARTICLE VII
COVENANTS

7.1 Form D. If required by applicable Law, the Company agrees to file a Form D with respect to the Securities as required under Regulation D of the Securities Act and to make any state notice filings and to pay all fees associated therewith.

7.2 Use of Proceeds. The proceeds from the purchase and sale of the Common Shares and Warrant shall be used by the Company for general corporate purposes including debt reduction, growth initiatives, capital expenditures, and potential acquisitions.

7.3 Affirmative Covenants. So long as the Investor owns, legally or beneficially, at least ten percent (10%) of the Company's outstanding Common Stock, unless otherwise consented to in writing by the Company and the Investor, the Company hereby covenants to use commercially reasonable efforts:

(a) Corporate Existence. To at all times (i) preserve and maintain its existence and good standing in the jurisdiction of its organization and its qualification to do business and good standing in each jurisdiction where the nature of its business makes such qualification necessary, and (ii) continue as a going concern.

(b) Tax Liabilities. To pay and discharge all material Taxes upon, and all material Claims (including claims for labor, materials and supplies) against, the Company and each of its Subsidiaries or any of its or their properties or Assets, before the same shall become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are being maintained.

(c) Maintain Property. To maintain, preserve and keep all of its material Assets in good repair, working order and condition, normal wear and tear excepted, and from time to time, as management deems appropriate in its reasonable judgment, make all needful and proper repairs, renewals, replacements, and additions thereto so that at all times the efficiency thereof shall be fully preserved and maintained.

(d) Reporting Status; Listing. To (i) timely file all reports required to be filed under the Securities Act, the Exchange Act or any securities Laws and regulations thereof applicable to the Company of any state of the United States, or by the rules and regulations of the principal Trading Market; (ii) not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination; (iii) if required by the rules and regulations of the principal Trading Market, promptly secure the listing of any of the Securities consisting of Common Stock upon the principal Trading Market (subject to official notice of issuance) and, take all commercially reasonable action under its control to maintain the continued listing, quotation and trading of its Common Stock on one or more Trading Markets, and the Company shall comply in all material respects with the Company's reporting, filing and other Obligations under the bylaws or rules of the principal Trading Market, the Financial Industry Regulatory Authority, Inc. and such other Governmental Authorities, as applicable.

(e) Rule 144. To:

(A) Use commercially reasonable efforts to make, keep and ensure that adequate current public information with respect to the Company, as required in accordance with Rule 144 under the Securities Act ("Rule 144"), is publicly available;

(B) furnish to the Investor, promptly upon reasonable request, such information as may be reasonably requested by the Investor to permit the Investor to sell any of the Securities pursuant to Rule 144 without limitation or restriction; and

(C) promptly at the request of the Investor, give the Company's transfer agent instructions to the effect that, upon the transfer agent's receipt from the Investor of a certificate (a "Rule 144 Certificate") certifying the eligibility for sale under Rule 144 of any portion of the Securities which the Investor proposes to sell (the "Securities Being Sold"), and receipt by the transfer agent of a "Rule 144 Opinion" from the Company or its counsel (or from the Investor and its counsel), the transfer agent is to effect the transfer of the Securities Being Sold and issue to such transferee(s) thereof one or more stock certificates representing the transferred Securities Being Sold without any restrictive legend and without recording any restrictions on the transferability of such shares on the transfer agent's books and records. If the transfer agent requires any additional documentation in connection with any proposed transfer by the Investor of any Securities Being Sold, the Company shall promptly deliver or cause to be delivered to the transfer agent or to any other Person, all such additional documentation as may be necessary to effectuate the transfer of the Securities Being Sold and the issuance of an unlegended certificate to any transferee thereof, all at the Company's expense.

7.4 Fees and Expenses. Except as set forth in the Transaction Documents, each party shall bear its own expenses in connection with the transactions contemplated by this Agreement and the Transaction Documents; provided, however, that the Company shall pay the reasonable and actual fees and expenses of the Investor, including the reasonable and actual out-of-pocket attorneys' fees and expenses of outside legal counsel to the Investor, incurred in connection with the negotiation, execution and delivery of this Agreement and the other Transaction Documents, not to exceed an aggregate of $50,000.00.

7.5 Reservation of Shares. The Company shall take all action reasonably necessary to at all times have authorized, and reserved for the purpose of issuance, such number of shares of Common Stock as shall be necessary for the issuance of the Common Shares and for the issuance of the Warrant Shares upon exercise of the Warrant (collectively, the "Share Reserve"). If at any time the Share Reserve is insufficient, the Company shall take all required measures to implement an increase of the Share Reserve accordingly. If the Company does not have sufficient authorized and unissued shares of Common Stock available to increase the Share Reserve, the Company shall call and hold a special meeting of the stockholders of the Company within sixty (60) business days of such occurrence, for the sole purpose of increasing the number of shares of Common Stock authorized. The Company's management shall recommend to the stockholders to vote in favor of increasing the number of shares of Common Stock authorized.

7.6 Certain Transactions; Confidentiality. The Investor covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it, will execute any purchases or sales, including Short Sales, of any of the Company's securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced as described in Section 7.7. The Investor covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company, the Investor will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents.

7.7 Disclosure of Transactions and Other Material Information. The Company shall, on or before 5:30 p.m., New York time, on the first
(1st) business day after the date of this Agreement, issue a press release (the "Press Release") disclosing the material terms of the transactions contemplated by the Transaction Documents. On or before 5:30
p.m., New York time, on the fourth (4th) business day after the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form and manner required by the Exchange Act (the "8-K Filing"). Neither the Company, its Subsidiaries nor the Investor shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of the Investor, to make the Press Release and any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and (ii) as is required by applicable Law and regulations. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Investor, or include the name of the Investor in any filing with the SEC or any regulatory agency or Trading Market, without the prior written consent of the Investor, except: (a) as required by federal securities Law in connection with (i) the 8-K Filing,
(ii) any registration statement contemplated by the Registration Rights Agreement and (iii) the filing of final Transaction Documents with the SEC and (b) to the extent such disclosure is required by Law or Trading Market regulations, in which case the Company shall provide the Investor with prior notice of such disclosure permitted under this clause (b). It is understood that, by execution of this Agreement, Investor authorizes the Company to publicly disclose Daniel M. Rifkin's identity as an affiliate of the Investor hereunder.

ARTICLE VIII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS TO SELL

The obligation of the Company hereunder to issue and sell the Securities to the Investor at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion:

8.1 The Investor shall have executed the Transaction Documents that require Investor's execution, and delivered them to the Company.

8.2 The Investor shall have paid the Purchase Price applicable to the Investor to the Company.

8.3 The representations and warranties of the Investor shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), except where the failure of such representations to be so true and correct (without giving effect to any qualifiers as to materiality in Article V above) would not materially and adversely affect (i) the Investor's ability to consummate the Transactions contemplated hereby or (ii) the availability of an exemption from the registration requirements of the Securities Act for the sale of the Securities contemplated hereby.

8.4 The Investor shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to the Closing Date.

ARTICLE IX
CONDITIONS PRECEDENT TO THE INVESTOR'S OBLIGATIONS TO PURCHASE

The obligation of the Investor hereunder to purchase the Common Shares and Warrant at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions (which conditions shall be deemed satisfied upon the occurrence of the Closing), provided that these conditions are for the Investor's sole benefit and may be waived by the Investor at any time in their sole discretion:

9.1 The Company shall have executed and delivered the Transaction Documents and delivered the same to the Investor.

9.2 The Company shall have closed, or shall close simultaneously herewith, the Loan Facility.

9.3 The representations and warranties of the Company shall be true and as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, in which case they shall be true and correct in all material respects as of such specified date), except where the failure of such representations to be so true and correct (without giving effect to any qualifiers as to materiality in Article VI above) would not have a Material Adverse Effect.

9.4 The Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date.

9.5 The Investor shall have received an opinion of counsel from counsel to the Company in a form satisfactory to the Investor and its counsel.

9.6 The Company shall have executed and delivered to Investor a closing certificate in substance and form required by Investor, which closing certificate shall include and attach as exhibits: (i) a true copy of a certificate of good standing evidencing the formation and good standing of the Company and each of its Subsidiaries, as applicable, from the secretary of state (or comparable office) from the jurisdiction in which they are each incorporated, as of a date within ten (10) days of the Closing Date; (ii) the Company's and each of the Subsidiaries' Articles of Incorporation or similar instrument; (iii) the Company's and each of the Subsidiaries' Bylaws or similar document; and (iv) copies of the resolutions of the board of directors of the Company or a duly authorized committee thereof (the "Committee"), consistent with Section 6.3, as adopted by the Company's board of directors or Committee in a form reasonably acceptable to Investor.

9.7 No event shall have occurred between the execution of this Agreement and the Closing that has had or would reasonably be expected to have a Material Adverse Effect.

ARTICLE X
INDEMNIFICATION

10.1 Company's Obligation to Indemnify. In consideration of the Investor's execution and delivery of this Agreement and acquiring the Securities hereunder, and in addition to all of the Company's other obligations under this Agreement, the Company hereby agrees to defend and indemnify the Investor and the Investor's Affiliates and subsidiaries, and their respective directors, officers, employees, agents and representatives, and the successors and assigns of each of them (collectively, the "Investor Indemnified Parties") and the Company does hereby agree to hold the Investor Indemnified Parties harmless, from and against any and all successful Claims made or brought against the Investor Indemnified Parties, or any one of them, and the Company hereby agrees to pay or reimburse the Investor Indemnified Parties for any and all Claims payable by any of the Investor Indemnified Parties to any Person, including reasonable attorneys' and paralegals' fees and expenses, court costs, settlement amounts, costs of investigation, through all negotiations, mediations, arbitrations, trial and appellate levels, as a result of, or arising out of, or relating to: (i) any proven, material misrepresentation or material breach of any representation or warranty made by the Company in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; or (ii) any proven, material breach of any covenant, agreement or Obligation of the Company contained in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Claims covered hereby, which is permissible under applicable Law. If any action shall be brought against the Investor in respect of which indemnity may be sought pursuant to this Agreement, the Investor shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Investor. The Investor shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Investor except to the extent that
(i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of the Investor, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to the Investor under this indemnity: (y) for any settlement by the Investor in connection with any Claim effected without the Company's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; or (z) to the extent, but only to the extent, that a Claim is attributable to the Investor's breach of any of the representations, warranties, covenants or agreements made by the Investor in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby.

10.2 Investor's Obligation to Indemnify. In consideration of the Company's execution and delivery of this Agreement and selling the Securities hereunder, and in addition to all of the Investor's other obligations under this Agreement, the Investor hereby agrees to defend and indemnify the Company and the Company's Affiliates and subsidiaries, and their respective directors, officers, employees, agents and representatives, and the successors and assigns of each of them (collectively, the "Company Indemnified Parties") and the Investor does hereby agree to hold the Company Indemnified Parties harmless, from and against any and all successful Claims made or brought against the Company Indemnified Parties, or any one of them, and the Investor hereby agrees to pay or reimburse the Company Indemnified Parties for any and all Claims payable by any of the Company Indemnified Parties to any Person, including reasonable attorneys' and paralegals' fees and expenses, court costs, settlement amounts, costs of investigation, through all negotiations, mediations, arbitrations, trial and appellate levels, as a result of, or arising out of, or relating to: (i) any proven, material misrepresentation or material breach of any representation or warranty made by the Investor in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; or (ii) any proven, material breach of any covenant, agreement or Obligation of the Investor contained in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby. To the extent that the foregoing undertaking by the Investor may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Claims covered hereby, which is permissible under applicable Law. If any action shall be brought against the Company in respect of which indemnity may be sought pursuant to this Agreement, the Company shall promptly notify the Investor in writing, and the Investor shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Company. The Company shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Company except to the extent that (i) the employment thereof has been specifically authorized by the Investor in writing, (ii) the Investor has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Investor and the position of the Company, in which case the Investor shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Investor will not be liable to the Company under this indemnity: (y) for any settlement by the Company in connection with any Claim effected without the Investor's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; or (z) to the extent, but only to the extent, that a Claim is attributable to the Company's breach of any of the representations, warranties, covenants or agreements made by the Investor in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby.

ARTICLE XI
PRE-EMPTIVE RIGHTS AND RIGHT OF FIRST REFUSAL

11.1 Pre-Emptive Purchase Rights. To the extent permitted by applicable law and subject to the limitations set forth in this Article XI, if at any time during the Pre-emptive Rights Period, the Company proposes to issue (an "Issuance") to a Person other than Investor ("Third Party Purchaser") shares of Common Stock or Convertible Securities, then Investor shall be entitled to and have the right and option (but shall not be required) to concurrently purchase or acquire up to such number of shares of Common Stock or Convertible Securities as would allow Investor, in aggregate to maintain (assuming conversion of all Convertible Securities) beneficial ownership of the same percentage of the outstanding shares of Common Stock, as were owned immediately prior to the closing of the Issuance. The purchase by Investor of any such Common Stock or Convertible Securities shall be on the same terms and at the same price per share of Common Stock or other Convertible Securities at which such Common Stock or other Convertible Securities are issued to Third Party Purchasers.

11.2 Right of First Refusal. Subject to the limitations set forth in this Article XI, if, at any time during the Refusal Period, the Company proposes an Issuance of shares of Common Stock, Convertible Securities or any other common stock, preferred stock, warrants, options or other rights to acquire an ownership interest in the Company ("Other Securities") to a Person other than the Investor (a "Third Party Purchaser"), the Investor shall have the right to purchase all or any portion of the shares of Common Stock, Convertible Securities or Other Securities proposed to be issued at the same price and on the same terms and conditions as those offered to the proposed Third Party Purchaser; provided, however, that if the Investor expresses its intent to purchase less than all of the shares of Common Stock, Convertible Securities or Other Securities, the Company shall then offer the remaining portion of such securities to the Third Party Purchaser. If the Third Party Purchaser declines to then purchase such lesser amount, then the Investor shall, at its option, (i) purchase all of the Common Stock, Convertible Securities or Other Securities originally proposed to be issued or (ii) forego its right to purchase any of the Common Stock, Convertible Securities or Other Securities originally proposed to be issued.

11.3 Exempt Issuances. The Investor shall have no right to purchase Common Stock, Convertible Securities or Other Securities pursuant to Section 11.1 or 11.2 in connection with any issuance (i) for compensatory purposes to directors, officers or employees of the Company and its Affiliates pursuant to compensation agreements, including any Company stock option plan, (ii) pursuant to the exercise of the Algar Option Agreement, (iii) to the public in an offering pursuant to an effective registration statement under the Securities Act, or (iv) in connection with a Fundamental Transaction.

11.4 Pre-Emptive Rights and Right of First Refusal Notices. The Company shall give written notice of any proposed Issuance to Investor at least twenty-five (25) Business Days prior to the proposed date of the Issuance of Common Stock, Convertible Securities or Other Securities ("Notice of Issuance"). The Notice of Issuance shall state, as applicable, that the Company is proposing to issue shares of Common Stock, Convertible Securities and/or Other Securities and shall set out the material terms of the proposed issuance, including the proposed number and terms of the Common Stock, Convertible Securities and/or Other Securities to be issued, the sale or issue price thereof and, if known, the identity of the Third Party Purchaser(s) and the ultimate beneficial owners thereof.

11.5 Investor Notice. The Investor shall have the right to purchase all or some of the shares of Common Stock, Convertible Securities and/or Other Securities which it is entitled to purchase under
Section 11.1 or 11.2and shall provide written notice to the company within fifteen (15) Business Days following receipt of the Notice of Issuance of the number of shares of Common Stock, Convertible Securities and/or Other Securities, if any, it intends to purchase pursuant to the proposed issuance (the "Notice of Exercise"). If the Notice of Exercise delivered relates to the Right of First Refusal and states the Investor's intent to purchase less than all of the Common Stock, Convertible Securities or Other Securities being offered to the Third Party Purchaser, the Company will then have fifteen (15) business days to obtain the Third Party Purchaser's agreement to purchase the lesser amount of securities. If the Third Party Purchaser determines not to purchase such lesser amount, the Company will notify the Investor of such determination, and the Investor must, within five (5) Business days of such notice from the Company, either (i) revise the Notice of Exercise to state its intent to purchase all of the Common Stock, Convertible Securities or Other Securities proposed to be issued; or (ii) withdraw the Notice of Exercise and waive its rights under Section 11.2. If the Investor does not give any Notice of Exercise to the Company within the initial fifteen (15) business day period, the Investor shall be deemed to have waived its rights to acquire the securities under Section 11.1 or 11.2 and the Company shall be entitled within a period of forty-five (45) calendar days following the expiry of the fifteen (15) Business Day period to complete the proposed issuance to the Third Party Purchaser(s) on the terms and conditions contained in the Notice of Issuance. If no such issuance is completed within such forty-five (45) calendar day period, the Company will be required to again comply with the provisions of this Article XI before completing any such Issuance.

11.6 Obligation of Company to Sell and of Investor to Purchase. If the Investor provides a Notice of Exercise, so long as the Investor would then be eligible or allowed to purchase such securities under applicable law, the Company shall be obligated to sell and issue to the Investor, and the Investor shall be obligated to purchase from the Company, that number of shares of Common Stock, Convertible Securities and/or Other Securities specified by the Investor in the Notice of Exercise concurrently with the completion of the Issuance to the Third Party Purchaser(s) or, if the Investor elects to purchase shares of Common Stock, Convertible Securities and/or Other Securities under
Section 11.2 or 11.4, at that time the sale to the Third Party Purchaser was proposed to close.

11.7 Issuance of Fewer Shares than Specified. If fewer shares of Common Stock or Convertible Securities are issued to Third Party Purchaser(s) than were specified in the Notice of Issuance in connection with an Issuance for which the Investor has exercised its right under
Section 11.1, the Company will not be required to send an amended Notice of Issuance to the Investor pursuant to Section 11.4, but (i) the Investor may, at its option, elect to purchase fewer shares of Common Stock or Convertible Securities than it specified in its Notice of Exercise and (ii) the Company may, at its option, elect to reduce the allocation of shares of Common Stock or Convertible Securities to be issued to Investor on closing to that number of shares of Common Stock or Convertible Securities, as the case may be, which will allow the Investor, in aggregate to maintain (on a partially diluted basis as described above) beneficial ownership of the same percentage of the outstanding shares of Common Stock as were owned immediately prior to the closing of the Issuance.

ARTICLE XII
MISCELLANEOUS

12.1 Notices. All notices of request, demand and other communications hereunder shall be addressed to the parties as follows:

If to the Company:              Industrial Services of America, Inc.
                                7100 Grade Lane
                                Louisville, KY 40213
                                Attention: Chief Executive Officer
                                Email: ooliver@ajshotels.com

                                With a copy to (which shall not
                                constitute notice):
                                Frost Brown Todd LLC
                                400 West Market Street
                                Suite 3200
                                Louisville, Kentucky 40202-3363
                                Attention:  James A. Giesel
                                Email:jgiesel@fbtlaw.com

If to the Investor:             Recycling Capital Partners, LLC
                                295 S. Commerce Dr.
                                Waterloo, IN 46793
                                Attention:  Daniel M. Rifkin, Manager
                                Email:drifkin@metalx.net

                                With a copy to (which shall not
                                constitute notice):
                                Barrett & McNagny LLP
                                215 E. Berry St.
                                Fort Wayne, IN 46802
                                Attention:  Ronald J. Ehinger
                                Email: Rje@barrettlaw.com

unless the address is changed by the party by like notice given to the other parties. Notice shall be in writing and shall be deemed delivered:
(i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address above, then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, next business morning delivery, then one (1) business day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or prior to 5:00
p.m., EST, on a business day. Any notice hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following business day. Notwithstanding the foregoing, notices, consents, waivers or other communications referred to in this Agreement may be sent by facsimile, e-mail, or other method of delivery, but shall be deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written confirmation from the receiving party) that the notice has been received by the other party.

12.2 Entire Agreement. This Agreement, including the Exhibits and Schedules attached hereto and the documents delivered pursuant hereto, including the Transaction Documents, set forth all the promises, covenants, agreements, conditions and understandings between the parties hereto with respect to the subject matter hereof and thereof, and supersede all prior and contemporaneous agreements, understandings, inducements or conditions, expressed or implied, oral or written.

12.3 Assignment.

(a) The Company may not sell or assign this Agreement or any of the Transaction Documents, or any portion thereof, either voluntarily or by operation of law, nor delegate any of its duties of obligations hereunder or thereunder, without the prior written consent of the Investor, which consent may be withheld in Investor's sole and absolute discretion.

(b) The Investor may not sell or assign this Agreement or any of the Transaction Documents, or any portion thereof, either voluntarily or by operation of law, nor delegate any of its duties of obligations hereunder or thereunder, without the prior written consent of the Company, which consent may be withheld in Company's sole and absolute discretion.

12.4 Binding Effect. This Agreement shall be binding upon the parties hereto, their respective successors and permitted assigns.

12.5 Amendment. The parties hereby irrevocably agree that no attempted amendment, modification, or change of this Agreement shall be valid and effective, unless the Company and the Investor agree in writing to such amendment, modification or change.

12.6 No Waiver. No waiver of any provision of this Agreement shall be effective, unless it is in writing and signed by the party against whom it is asserted, and any such written waiver shall only be applicable to the specific instance to which it relates and shall not be deemed to be a continuing or future waiver.

12.7 Gender and Use of Singular and Plural. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the party or parties or their personal representatives, successors and assigns may require.

12.8 Execution. This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and the same Agreement, and same shall become effective when counterparts have been signed by each party and each party has delivered its signed counterpart to the other party. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a ".pdf' format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as if such facsimile or ".pdf' signature page was an original thereof.

12.9 Headings. The article and section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of the Agreement.

12.10 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be construed in accordance with the laws of the State of Indiana, without regard to the principles of conflicts of laws. The parties further agree that any action between them shall be heard in and expressly consent to the jurisdiction and venue of the state court sitting in Auburn, Indiana and the federal court sitting in the City of Fort Wayne, Indiana for the adjudication of any civil action asserted pursuant to this Agreement. EACH OF THE PARTIES HERETO, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE INVESTOR AND THE COMPANY ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE INVESTOR TO ENTER INTO THIS AGREEMENT.

12.11 Further Assurances. The parties hereto will execute and deliver such further instruments and do such further acts and things as may be reasonably required to carry out the intent and purposes of this Agreement.

12.12 Survival. The covenants, agreements, representations and warranties made by the Company and the Investor herein shall survive for the duration of their respective statute of limitations. The Investor shall be responsible only for its own covenants, agreements, representations and warranties hereunder.

12.13 Time is of the Essence. The parties hereby agree that time is of the essence with respect to performance of each of the parties' Obligations under this Agreement. The parties agree that in the event that any date on which performance is to occur falls on a Saturday, Sunday or state or national holiday, then the time for such performance shall be extended until the next business day thereafter occurring.

12.14 Joint Preparation. The preparation of this Agreement has been a joint effort of the parties and the resulting documents shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other.

12.15 Severability. If any one of the provisions contained in this Agreement, for any reason, shall be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall remain in full force and effect and be construed as if the invalid, illegal or unenforceable provision had never been contained herein.

12.16 No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

12.17 Compliance with Federal Law. The Company shall: (i) use its best efforts to ensure that no Person who owns a controlling interest in or otherwise controls the Company is or shall at any time be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control ("OFAC'), the Department of the Treasury, included in any Executive Orders or in any other similar lists of any Governmental Authority; and
(ii) not use or permit the use of the proceeds of the purchase of the Securities to violate any of the foreign asset control regulations of OFAC or any enabling statute, Executive Order relating thereto or any other requirements or restrictions imposed by any Governmental Authority.

[SIGNATURES ON THE FOLLOWING PAGE]


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year set forth above.

COMPANY:

INDUSTRIAL SERVICES OF AMERICA, INC.,
a Florida corporation

By:/s/ Orson Oliver
Name: Orson Oliver
Title: Interim Chief Executive Officer

INVESTOR

RECYCLING CAPITAL PARTNERS, LLC,
an Indiana limited liability company

By: /s/ Daniel M. Rifkin
    Daniel M. Rifkin, Manager

[Signature page to Securities Purchase Agreement]


EXHIBIT A FORM OF WARRANT


EXHIBIT B

FORM OF REGISTRATION RIGHTS AGREEMENT


Exhibit 4.2

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (the "Agreement") is made and entered into as of this 13th day of June, 2014 (the "Effective Date") by and between Industrial Services of America, Inc., a Florida corporation (the "Company"), and Recycling Capital Partners, LLC, an Indiana limited liability company (the "Investor"), in connection with that certain Securities Purchase Agreement by and among the Company and the Investor, dated as of even date herewith (the "Securities Purchase Agreement"). Capitalized terms used herein have the respective meanings ascribed thereto in the Securities Purchase Agreement unless otherwise defined herein.

The parties hereby agree as follows:

1. Certain Definitions. As used in this Agreement, the following terms shall have the following meanings:

"Common Stock" means the Company's common stock, par value $0.0033 per share, and any securities into which such shares may hereinafter be reclassified.

"Daily Interest Charge" means (i) the sum of (a) the Prime Rate, as published in the Wall Street Journal's Bonds, Rates & Yields table for the day of determination or if the day of determination is not a Business Day, said rate for the last Business Day prior to the date of determination and (b) four (4) percentage points, (ii) divided by 360.

(a) "Fair Market Value" means, for any date, the price determined by the first of the following clauses that applies: (i) the average of the closing sales prices for the shares of Common Stock on the principal Trading Market as reported by Bloomberg Financial Markets (or a comparable reporting service of national reputation selected by the Company and reasonably acceptable to the Investor if Bloomberg Financial Markets is not then reporting sales prices of such security) (collectively, "Bloomberg") for the ten (10) consecutive trading days immediately preceding such date, or (ii) if the Common Stock is not then quoted for trading on a Trading Market and if prices for the Common Stock are then reported in the "Pink Sheets" published by OTC Markets Group Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (iii) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Investors of Company Warrants representing at least a majority of the Warrant Shares then subject to outstanding Company Warrants and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

"Prospectus" means (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus, and (ii) any "free writing prospectus" as defined in Rule 405 under the 1933 Act (as defined below).

"Register," "registered" and "registration" refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the 1933 Act, and the declaration or ordering of effectiveness of such Registration Statement (as defined below) or document by the SEC. (as defined below)

"Registrable Securities" means (i) the Shares (as defined below) and (ii) any other securities issued or issuable with respect to or in exchange for Registrable Securities, whether by merger, charter amendment or otherwise; provided. that, a security shall cease to be a Registrable Security upon (A) sale pursuant to an effective Registration Statement or Rule 144 under the 1933 Act, or (B) such security becoming eligible for sale without restriction by the Investor pursuant to Rule 144 under the 1933 Act.

"Registration Statement " means any registration statement of the Company filed under the 1933 Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

"SEC" means the U.S. Securities and Exchange Commission.

"Shares" means the Common Shares and the Warrant Shares.

"Value of Investor Shares" means the product of (i) the number of Shares held by the Investor for which no resale Prospectus is available as of the date of determination, and (ii) the Fair Market Value of such Shares for said date.

"1933 Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

"1934 Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

2. Registration.

(a) Registration Statements. On or after December 1, 2014, but in any event no later than December 12, 2014 (the "Filing Deadline"), the Company shall prepare and file with the SEC a Registration Statement on Form S-3 (or if and only if Form S-3 is not then available to the Company, on such form of registration statement as is then available to effect a registration for resale of the Registrable Securities), covering the resale of the Registrable Securities from time to time in accordance with the methods of distribution described in Exhibit A hereto. Subject to any SEC comments, such Registration Statement shall include the plan of distribution attached hereto as Exhibit A. Such Registration Statement also shall cover, to the extent allowable under the 1933 Act, such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities.

(b) Expenses. The Company will pay all expenses incurred in complying with this Agreement, including filing and printing fees, the Company's counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws, listing fees, reasonable fees and expenses of one counsel to the Investor and the Investor's reasonable expenses in connection with the registration, but excluding underwriting discounts, commissions and fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold.

(c) Effectiveness.

(i) The Company shall use reasonable best efforts to have the Registration Statement declared effective as soon as practicable. The Company shall notify the Investor by telephone and e-mail as promptly as practicable, and in any event, within forty-eight (48) hours, after any Registration Statement is declared effective.

(ii) In the event that the Company determines in good faith that the suspension of the use of any Prospectus is necessary to (A) delay the disclosure of material non-public information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company, provided, that any delays pursuant to this clause (A) shall not exceed, in the aggregate, ninety (90) days in any twelve (12) month period, or (B) amend or supplement the affected Registration Statement or the related Prospectus so that such Registration Statement or Prospectus shall comply with applicable 1933 Act requirements or shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading, then the Company may suspend the use of any such Prospectus (an "Allowed Delay"); provided that the Company shall promptly (a) notify the Investor in writing of the suspension of and the reasons for such suspension, but shall not (without the prior written consent of the Investor) disclose to the Investor any material non-public information giving rise to an Allowed Delay, (b) advise the Investor in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use reasonable best efforts to terminate such suspension as promptly as practicable.

(d) Rule 415: Cutback. If at any time the SEC takes the position that the offering of some or all of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the 1933 Act or requires any Investor to be named as an "underwriter", if the Company believes, in its discretion and upon the advice of counsel, that the Registrable Securities are eligible for registration under Rule 415 or that the Investor is not an "underwriter" for the purposes of the 1933 Act and the registration, the Company shall use commercially reasonable efforts to persuade the SEC that the offering contemplated by the Registration Statement is a valid secondary offering and not an offering by or on behalf of the issuer for the purposes of Rule 415 and that the Investor is not an "underwriter." The Investor shall provide to the Company in writing all information requested by the Company to support the Investor's contention that it is not an "underwriter." The Investor shall have the right to participate or have its counsel participate in any meetings or discussions with the SEC regarding the SEC's position and to comment or have its counsel comment on any written submission made to the SEC with respect thereto. No such written submission regarding the foregoing specifying the Investor shall be made to the SEC to which the Investor's counsel reasonably objects. In no event shall Company agree to name the Investor as an "underwriter" in such Registration Statement without the prior written consent of the Investor. In the event that, despite the Company's commercially reasonable efforts and compliance with the terms of this Section 2(d), the SEC refuses to alter its position, the Company shall (i) remove from the Registration Statement the portion of the Registrable Securities required by the SEC as a condition to the use of Rule 415, with the first Registrable Securities to be removed being the Warrant Shares (the "Cut Back Shares") and/or (ii) except for naming Investor as an underwriter, agree to such restrictions and limitations on the registration and resale of the Registrable Securities, in each case as the SEC may request as a condition to the declaration of the effectiveness of the Registration Statement. If one of the conditions to the declaration of the Registration Statement's effectiveness is naming the Investor as an underwriter, the Company shall, at the request of the Investor, withdraw the Registration Statement. Following any such withdrawal, the Company shall, within thirty (30) days after up to two (2) requests by Investor, refile the Registration Statement. In connection with any such refiling, the Company shall, at the request of the Investor, withdraw the Registration Statement if the SEC again requests as a condition to the declaration of the effectiveness of the Registration Statement, that the Investor be named as an underwriter.

3. Company Obligations. The Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as practicable:

(a) use commercially reasonable efforts to cause such Registration Statement to become effective by the sixtieth (60th) day from the Filing Deadline and to remain continuously effective for a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement have been sold pursuant thereto, or (ii) the date on which all Registrable Securities covered by such Registration Statement may be sold without restriction pursuant to Rule 144 (the "Effectiveness Period").

(b) prepare and file with the SEC such amendments and post- effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the 1933 Act with respect to the distribution of all of the Registrable Securities covered thereby;

(c) provide copies to and permit counsel of the Investor to review each Registration Statement no fewer than five (5) days prior to its initial filing with the SEC (two (2) business days in the case of any amendments and supplements thereto) and not file any document to which such counsel reasonably objects;

(d) furnish to the Investor and its legal counsel (for the avoidance of doubt, any filing available to the Investor via the SEC's EDGAR system shall be deemed "furnished to the Investor" hereunder) (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) business days after the filing date, receipt date or sending date, as the case may be) (X) one (1) copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto (other than any portion thereof which contains information for which the Company has sought confidential treatment), and (Y) each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC (in the case of any such letter or correspondence, only to the extent that it relates, and only the portion thereof relating, to the inclusion of any Investor in the Registration Statement and other than any portion thereof which contains information for which the Company has sought confidential treatment or which constitutes material non-public information as to any Investor that is not subject to a confidentiality obligation to the Company with respect thereto), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto as the Investor may reasonably require in order to facilitate the disposition of the Registrable Securities owned by the Investor that are covered by the related Registration Statement or make them electronically available;

(e) use commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and,
(ii) if such order is issued, obtain the withdrawal or lifting of any such order at the earliest practicable time;

(f) prior to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with the Investor and its counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions reasonably requested by the Investor and do any and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(f), or (iii) file a general consent to service of process in any such jurisdiction;

(g) use commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

(h) promptly notify the Investor, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare, file with the SEC and furnish to such Investor a supplement to or an amendment of such Prospectus as may be necessary so that such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

(i) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act, including, without limitation, Rule 172 under the 1933 Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the 1933 Act, promptly inform the Investor in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investor is required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available to its security holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the purpose of this subsection 3(i), "Availability Date" means the 45th day following the end of the fourth fiscal quarter that includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the Company's fiscal year, "Availability Date" means the 90th day after the end of such fourth fiscal quarter). If the Company is required to file a prospectus pursuant to Rule 424 at the time the Registration Statement is declared effective by the SEC, the Company shall file such prospectus by 8:30 a.m., Louisville, Kentucky time, on the next day on which the SEC's Electronic Data Gathering, Analysis and Retrieval System accepts documents for filing; and

(j) With a view to making available to the Investor the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC that may at any time permit the Investor to sell its Shares to the public without registration, the Company covenants and agrees to:
(i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) six months after such date as all of the Registrable Securities may be sold without restriction by the holders thereof pursuant to Rule 144 or any other rule of similar effect or (B) such date as all of the Registrable Securities shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act; and (iii) furnish to the Investor upon request, as long as the Investor owns any Registrable Securities, (A) a written statement by the Company that it has complied in all material respects with the reporting requirements of the 1934 Act, (B) a copy of the Company's most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested in order to avail the Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities without registration.

4. Due Diligence Review: Information. Upon written request, the Company shall make available, during normal business hours, for inspection and review by any underwriters participating in a disposition of Registrable Securities pursuant to a Registration Statement and to any attorney or accountant retained by such underwriter, all financial and other records, all SEC Filings and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees, within a reasonable time period, to supply all such information reasonably requested by the underwriters in connection therewith (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement. As a condition to such inspection and review, the Company may require the Investor to enter into confidentiality agreements.

5. Obligations of the Investor.

(a) The Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least ten (10) Business Days prior to the first anticipated filing date of any Registration Statement, the Company shall notify the Investor of the information the Company requires from the Investor. The Investor shall provide such information to the Company at least five (5) Business Days prior to the first anticipated filing date of such Registration Statement if the Investor elects to have any of the Registrable Securities included in the Registration Statement.

(b) The Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless the Investor has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

(c) The Investor agrees that, upon receipt of any notice from the Company of either (i) the suspension of the use of any Prospectus pursuant to Section 2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h) hereof, the Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor is advised by the Company that such dispositions may again be made.

6. Indemnification.

(a) Indemnification by the Company. The Company agrees to indemnify and hold harmless the Investor and its officers, directors, members, managers, employees and agents and each other person, if any, who controls the Investor within the meaning of the Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement contained in any Registration Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement thereof or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, in light of the circumstances under which they were made) not misleading; (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a "Blue Sky Application"); or
(iii) the omission or alleged omission to state in a Blue Sky Application a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse the Investor, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however,. that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability (or actions in respect thereof) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by the Investor or any such controlling person in writing specifically for use in such Registration Statement or Prospectus or any offers or sales by or on behalf of the Investor after delivery to the Investor by the Company of a notice of suspension described in Section 2(c)(ii) above and before delivery of a notice by the Company to the Investor advising the Investor that dispositions may be made as provided by Section 5(c) above.

(b) Indemnification by the Investor. The Investor agrees to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders, agents and each person who controls the Company within the meaning of the Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any losses, claims, damages, liabilities and expenses (including reasonable attorney and consulting fees) to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement contained in any Registration Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement thereof or any omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, in light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omissions were made in reliance upon information furnished in writing by or on behalf of the Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto, and (ii) any offers or sales by or on behalf of the Investor after delivery to the Investor by the Company of a notice of suspension described in Section 2(c)(ii) above and before delivery of a notice by the Company to the Investor advising the Investor that dispositions may be made as provided by Section 5(c) above. In no event shall the liability of an Investor be greater in amount than the dollar amount of the proceeds (net of all expenses paid by the Investor in connection with any claim relating to this Section 6 and the amount of any damages the Investor has otherwise been required to pay by reason of such untrue statement or alleged untrue statement or omission or alleged omission) received by the Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.

(c) Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed in writing to pay such fees or expenses, or (b) the indemnifying party shall have failed within a reasonable time after notice from the indemnified party to assume the defense of such claim and employ counsel reasonably satisfactory to the indemnified party or (c) the named parties to such action (including any impleaded parties) include both the indemnified party and the indemnifying party and, in the reasonable judgment of any indemnified party, based upon written advice of its counsel, a material conflict of interest exists between the indemnified party and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided further that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions arising out of the same general allegations or circumstances, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the prior written consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent.

(d) Contribution. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than for the exceptions specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable Securities be greater than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

7. Suspension of Use of Prospectus or Failure to Obtain or Maintain Effectiveness of Registration Statement.

(a) Loss of Liquidity Fee. For each day after February 1, 2015 the Registration Statement is not effective or the use of the Prospectus by Investor has been suspended, the Company shall pay Investor a fee equal to the product of (i) the Value of the Investor Shares as of such day and (ii) the Daily Interest Charge for such day ("Loss of Liquidity Fee"); provided, however, no Loss of Liquidity Fee shall be due and payable for (i) the first thirty (30) days after February 1, 2015 if the Company timely filed its Form S-3 Registration Statement and the Company has used commercially reasonable efforts and, during said thirty (30) day period, continues to use commercially reasonable efforts, to have the Form S-3 Registration Statement declared effective; (ii) with respect to a Loss of Liquidity Fee due in connection with the suspension of the use of the Prospectus, up to five (5) days each calendar quarter if the Registration Statement has not been suspended previously in said calendar quarter and the suspension relates to the Company's possession of material non-public information relating to a Fundamental Transaction or an acquisition of the assets or ownership interests of another business entity; (iii) any period a Registration Statement is not effective as a result of the withdrawal of a Registration Statement filed by the Company, but later withdrawn by the Company at the request of the Investor; or (iv) with respect to any Cut Back Shares.

(b) Calculation and Payment of Loss of Liquidity Fee. Any Loss of Liquidity Fee accruing during a calendar month shall be calculated and paid by the Company to the Investor by the tenth (10th) day of the following calendar month. The collection of the Loss of Liquidity Fee shall be in addition to, and not in lieu of, any other available remedies of the Investor arising under applicable law, whether in law or at equity.

(c) Waiver. Investor, at the request of the Company, may waive Investor's right to collect the Loss of Liquidity Fee. Any such waiver must be in a writing signed by the Investor.

8. Miscellaneous.

(a) Amendments and Waivers. This Agreement may be amended only by a writing signed by the Company and the Investor. The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of the Investor.

(b) Notices. All notices and other communications provided for or permitted hereunder shall be made as set forth in the Securities Purchase Agreement.

(c) Assignments and Transfers by Investors. The provisions of this Agreement shall be binding upon and inure to the benefit of the Investor and its respective successors and assigns. An Investor may transfer or assign, in whole or from time to time in part, to one or more persons (each, an "Assignee") its rights hereunder in connection with the transfer of Registrable Securities by the Investor to such Assignee, provided that the Investor and the Assignee comply with all laws applicable thereto and provide written notice of assignment to the Company promptly after such assignment is effected and the Assignee agrees in writing to be bound by the terms hereof.

(d) Assignments and Transfers by the Company. This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Investor; provided, however, that the Company may assign this Agreement in the event that the Company is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is converted into the equity securities of another Person and, from and after the effective time of such transaction, such Person shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, the term "Company" shall be deemed to refer to such Person and the term "Registrable Securities" shall be deemed to include the securities received by the Investor in connection with such transaction unless such securities are otherwise freely tradable by the Investor after giving effect to such transaction.

(e) Benefits of the Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

(f) Counterparts; Faxes; Electronic Signature. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile or electronic signature (including delivery of signatures by PDF or other similar format), which shall be deemed an original.

(g) Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

(h) Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.

(i) Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

(j) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

(k) Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be construed in accordance with the laws of the State of Indiana, without regard to the principles of conflicts of laws. The parties further agree that any action between them shall be heard in and expressly consent to the jurisdiction and venue of the state sitting in Auburn, Indiana and the federal court sitting in the City of Fort Wayne, Indiana for the adjudication of any civil action asserted pursuant to this Agreement. EACH OF THE PARTIES HERETO, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE INVESTOR AND THE COMPANY ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE INVESTOR TO ENTER INTO THIS AGREEMENT.

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

THE INVESTOR:                         THE COMPANY:
RECYCLING CAPITAL PARTNERS, LLC       INDUSTRIAL SERVICES OF AMERICA,
                                        INC.


By: /s/ Daniel M. Rifkin_____         By: /s/ Orson Oliver_________
    Daniel M. Rifkin, Manager   Name: Orson Oliver
                                          Title: Interim Chief Executive
                                                   Officer

[ Signature Page to Registration Rights Agreement ]

Exhibit A

PLAN OF DISTRIBUTION

The selling securityholders, which as used herein includes donees, pledgees, transferees or other successors-in- interest selling shares of common stock, interests in shares of common stock or warrants received after the date of this prospectus from a selling securityholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of such securities on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

The selling securityholders may use any one or more of the following methods when disposing of securities or interests therein:

-- on any national securities exchange or quotation service on which our common stock may be listed at the time of sale, in the case of sales of our common stock;

-- in transactions other than on such exchanges;

-- ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

-- block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;

-- purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

-- an exchange distribution in accordance with the rules of the applicable exchange;

-- privately negotiated transactions;

-- short sales effected after the date the registration statement of which this Prospectus is a part is declared effective by the Securities and Exchange Commission;

-- through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

-- broker-dealers may agree with the selling securityholders to sell a specified number of such shares at a stipulated price per security;

-- ?a combination of any such methods of sale; or

-- any other method permitted by applicable law.

The selling securityholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell such shares from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling securityholders to include the pledgee, transferee or other successors in interest as selling securityholders under this prospectus. The selling securityholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

In connection with the sale of such shares or such interests, the selling securityholders may enter into hedging transactions with broker- dealers or other financial institutions, which may in turn engage in short sales of the common stock, as the case may be, in the course of hedging the positions they assume. The selling securityholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge such stock to broker- dealers that in turn may sell these securities. The selling securityholders may also enter into options or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker- dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The aggregate proceeds to the selling securityholders from the sale of the common stock offered by them will be the purchase price of such stock less discounts or commissions, if any. Each of the selling securityholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from the sale of securities by selling securityholders.

The selling securityholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conform to the requirements of that rule.

The selling securityholders and any underwriters, broker-dealers or agents that participate in the sale of the shares or interests therein may be "underwriters" within the meaning of Section 2(a)(ll) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling securityholders who are "underwriters" within the meaning of Section 2(a)(ll) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.

To the extent required, the shares of our common stock to be sold, the names of the selling securityholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.

In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states such stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

We have advised the selling securityholders that the anti- manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling securityholders and their affiliates. In addition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling securityholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling securityholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

We have agreed to indemnify the selling securityholders against certain liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.

We have agreed with the selling securityholders to keep the registration statement of which this prospectus constitutes a .part effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or (2) the date on which the shares may be sold without restriction pursuant to Rule 144 of the Securities Act.

Exhibit A


Exhibit 4.3

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), AND SHALL NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER EXCEPT BY REGISTRATION OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UPON THE ISSUANCE TO THE COMPANY OF A FAVORABLE OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE 1933 ACT AND THE STATE ACTS.

INDUSTRIAL SERVICES OF AMERICA, INC.
COMMON STOCK PURCHASE WARRANT
To Purchase 857,143 Shares of Common Stock

Date of Issuance: June 13, 2014
Warrant No.: 1

VOID AFTER JUNE 13, 2019

THIS CERTIFIES THAT, for value received, Recycling Capital Partners, LLC, an Indiana limited liability company (the "Investor"), is entitled to subscribe for and purchase at the Exercise Price (defined below) from Industrial Services of America, Inc., a Florida corporation (the "Company"), up to Eight Hundred Fifty-Seven Thousand, One Hundred Forty- Three (857,143) shares of the common stock of the Company, par value $0.0033 per share (the "Common Stock"). This warrant ("Warrant") being issued by the Company pursuant to that certain Securities Purchase Agreement between the Company and the Investor, dated as of the date hereof (the "Securities Purchase Agreement"). The Investor takes this Warrant subject to the terms and restrictions set forth in the Transaction Documents (as defined in the Securities Purchase Agreement) and shall be entitled to certain rights and privileges as set forth in the Transaction Documents.

1. Definitions. Capitalized terms used herein but not otherwise defined herein shall have their respective meanings as set forth in the Securities Purchase Agreement. As used herein, the following terms shall have the following respective meanings:

(a) "Exercise Period" shall mean the period commencing with the date that is six (6) months after the Closing Date and ending on the fifth anniversary of the Closing Date, unless sooner terminated as provided below.

(b) "Exercise Price" shall initially mean $5.00 per share, subject to adjustment pursuant to Section 5 below.

(c) "Fair Market Value" means, for any date, the price determined by the first of the following clauses that applies: (i) the average of the closing sales prices for the shares of Common Stock on the principal Trading Market as reported by Bloomberg Financial Markets (or a comparable reporting service of national reputation selected by the Company and reasonably acceptable to the Investor if Bloomberg Financial Markets is not then reporting sales prices of such security) (collectively, "Bloomberg") for the ten (10) consecutive trading days immediately preceding such date, or (ii) if the Common Stock is not then quoted for trading on a Trading Market and if prices for the Common Stock are then reported in the "Pink Sheets" published by OTC Markets Group Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (iii) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Investors of Company Warrants representing at least a majority of the Warrant Shares then subject to outstanding Company Warrants and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

(d) "Person" means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

(e) "Trading Day" shall mean any day on which the principal Trading Market is open for business.

(f) "Trading Market" shall mean any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

(g) "Warrant Shares" shall mean the shares of Common Stock issuable upon exercise of this Warrant.

2. Exercise of Warrant.

2.1 Exercise Mechanics. The rights represented by this Warrant may, subject to Section 7 below, be exercised in whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth on the signature page hereto (or at such other address as it may designate by notice in writing to the Investor):

(a) A complete and duly executed Notice of Exercise, by or for the benefit of the Investor, in the form attached hereto as Exhibit A ; and

(b) Payment of the Exercise Price either in cash or by check, or pursuant to the "cashless exercise" procedures set forth in Section 4 below.

Execution and delivery of the Notice of Exercise shall have the same effect as cancellation of the portion of the original Warrant so exercised, and this Warrant shall evidence the right to purchase the remaining number of Warrant Shares, if any. If requested by the Company, the Investor agrees to provide this Warrant, or an affidavit of lost security, to the Company within a reasonable period after the delivery of the Notice of Exercise.

Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Investor by crediting the account of the Investor's prime broker with the Depository Trust Company through its Deposits and Withdrawal at Custodian (DWAC) system if the Company is a participant in such system, and otherwise by physical delivery to the address specified by the Investor in the Notice of Exercise within three
(3) business days from the delivery to the Company of the Notice of Exercise, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above. This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and the Investor shall be deemed to have become a holder of record of such shares for all purposes, as of the date this Warrant has been exercised by payment to the Company of the Exercise Price.

The Investor shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Price was made, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.

Unless otherwise prohibited by law, the Company's obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Investor to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or entity or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination.

Nothing herein shall limit the Investor's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing the Warrant Shares upon exercise of this Warrant as required pursuant to the terms hereof.

2.2 Issuance of New Warrants. Upon any partial exercise of this Warrant, the Company, at its expense, will forthwith and, in any event within five (5) business days, issue and deliver to the Investor a new warrant or warrants of like tenor, in the name of the Investor, exercisable, in the aggregate, for the balance of the number of the Warrant Shares remaining available for purchase under this Warrant.

3. Covenants of the Company.

3.1 Due Authorization. The Company covenants and agrees that all Warrant Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof.

3.2 Available Shares. The Company covenants and agrees that the Company will at all times during the Exercise Period, have authorized and reserved, free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. During the Exercise Period, if the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant into the applicable Warrant Shares, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

3.3 Registration Rights. The Investor shall have the registration rights specified in the Registration Rights Agreement.

3.4 No Impairment. Except and to the extent as waived or consented to by the Investor, the Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Investor against impairment.

4. Cashless Exercise. If at any time after March 15, 2015 there is any one (1) or more periods of thirty (30) or more consecutive days that there is no effective Registration Statement registering, or no current Prospectus available for, the resale of the Warrant Shares by the Investor ("Lapse Period"), then this Warrant may also be exercised after the thirty
(30) consecutive days have elapsed in each such Lapse Period by means of a "cashless exercise" in which the Investor shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the Fair Market Value on the Trading Day immediately preceding the date of such election;

(B) = the Exercise Price of this Warrant, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of this Warrant In accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

Investor's right to elect a cashless exercise will expire at 11:59 p.m. on the thirtieth (30th) day after the end of each Lapse Period. For example, if Investor's use of the Prospectus is suspended on March 1, 2016 and the suspension is lifted on May 1, 2016, Investor may elect a cashless exercise any time during the period beginning March 30, 2016 and ending May 31, 2016. Investor will not be entitled to effect a cashless exercise of this Warrant in connection with any Lapse Period arising as a result of the Company's withdrawal of any Registration Statement at the request of Investor.

5. Adjustment of Exercise Price and Shares.

5.1 Stock Dividends, Split-Ups, Recapitalizations, Etc. In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, split-ups, recapitalizations, reclassifications, combinations or exchanges of shares, separations, reorganizations, liquidations, consolidation, acquisition of the Company (whether through merger or acquisition of substantially all the assets or stock of the Company), or the like, the number, class and type of shares available under this Warrant in the aggregate and the Exercise Price shall be correspondingly adjusted to give the Investor of this Warrant, on exercise for the same aggregate Exercise Price, the total number, class, and type of shares or other property as the Investor would have owned had this Warrant been exercised immediately prior to the event and had the Investor continued to hold such shares until the event requiring adjustment.

5.2 Certificate of Adjustment. Upon the occurrence of each adjustment pursuant to this Section 5. the Company at its expense will, at the written request of the Investor, compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable). Upon written request, the Company will promptly deliver a copy of each such certificate to the Investor and to the Company's transfer agent.

6. Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Investor otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then current Fair Market Value of a share of Common stock by the fractional share not to be issued

7. Fundamental Transactions. If, at any time while this Warrant is outstanding, (a) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (b) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (c) any direct or indirect purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of more than 50% of the outstanding shares of Common Stock, (d) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (e) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the Persons making or party to, such stock or share purchase agreement or other business combination) (each, a "Fundamental Transaction"), then, subject to the last sentence of this Section, upon any subsequent exercise of this Warrant, the Investor shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the "Alternate Consideration") receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Investor shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding the foregoing, if at any time while this Warrant is outstanding, the Company engages in any Fundamental Transaction in which the holders of Common Stock receive in exchange for their shares of Common Stock only cash, then the Investor of this Warrant shall be entitled to receive only an amount of cash equal to (i) (A) the amount of cash payable in such Fundamental Transaction to the holders of Common Stock for each share of Common Stock held by the Investor of this Warrant; less (B) the Exercise Price of this Warrant, as adjusted; multiplied by (ii) the number of Warrant Shares issuable upon exercise of this Warrant, at the same time and on the same terms as the holders of Common Stock, and immediately upon the receipt of such payment by the Investor this Warrant shall terminate.

8. No Stockholder Rights. Other than as provided herein, this Warrant in and of itself shall not entitle the Investor to any voting rights or other rights as a stockholder of the Company.

9. Transfer of Warrant. This Warrant and all rights hereunder are not transferable.

10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof for cancellation at the office of the Company), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone.

11. Notices. Etc. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by electronic transmission or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address listed on the signature page hereto to the attention of the Chief Financial Officer (with a copy to Frost Brown Todd LLC, Attn: James
A. Giesel, Email: jgiesel@fbtlaw.com) and to the Investor at the applicable address set forth on the applicable signature page to the Securities Purchase Agreement or at such other address as the Company or the Investor may designate by ten (10) days advance written notice to the other parties hereto.

12. Acceptance. Receipt of this Warrant by the Investor shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

13. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be construed in accordance with the laws of the State of Indiana, without regard to the principles of conflicts of laws. The parties further agree that any action between them shall be heard in and expressly consent to the jurisdiction and venue of the state court sitting in Auburn, Indiana and the federal court sitting in the City of Fort Wayne, Indiana for the adjudication of any civil action asserted pursuant to this Agreement. EACH OF THE PARTIES HERETO, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE INVESTOR AND THE COMPANY ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE INVESTOR TO ENTER INTO THIS AGREEMENT

14. Interpretation. All parties have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by all of the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Warrant.

15. Amendment or Waiver. Any term of this Warrant may be amended or

waived (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the Company and the Investor. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

[ Remainder of Page Intentionally Left Blank ]

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of June 13, 2014.

INDUSTRIAL SERVICES OF AMERICA, INC.

By:______/s/ Orson Oliver_____________
Name: Orson Oliver
Title: Interim Chief Executive Officer

EXHIBIT A

NOTICE OF EXERCISE

TO: INDUSTRIAL SERVICES OF AMERICA, INC.

(1) The undersigned hereby elects to purchase shares of the common stock, par value $0.0033 (the "Common Stock"), of Industrial Services of America, Inc. (the "Company") pursuant to the terms of the attached Warrant, and tenders herewith payment of the applicable exercise price in full, together with all applicable transfer taxes, if any.

(2) Please issue the certificate for shares of Common Stock in the name of, and pay any cash for any fractional share to:

(Print or type name)

(Social Security or other Identifying Number)

(Street Address)

(City, State, Zip Code)

(3) If such number of shares shall not be all the shares purchasable upon the exercise of the Warrants evidenced by this Warrant, a new warrant certificate for the balance of such Warrants remaining unexercised shall be registered in the name of and delivered to:

(4) Please insert Social Security or other identifying number:

(Please print name and address)

Signature:_________________________

Dated:_____________________________

Print Name:________________________

Dated:_____________________________


Exhibit 10.1

DIRECTOR DESIGNATION AGREEMENT

THIS DIRECTOR DESIGNATION AGREEMENT (this "Agreement") is made and entered into as of June 13, 2014, by and between Recycling Capital Partners, LLC, an Indiana limited liability company (the "Investor") and Industrial Services of America, Inc., a Florida corporation (the "Company"). Unless otherwise indicated herein, capitalized terms used herein are defined in
Section 1 hereof.

WHEREAS, as of the date hereof, the Investor has purchased 857,143 shares of the Company's Common Stock, together with the Warrant to purchase an additional 857,143 shares pursuant to the terms of a Securities Purchase Agreement dated as of the date hereof (the "Securities Purchase Agreement"); and

WHEREAS, as a condition to the purchase, the Investor required the right to designate certain directors of the Company; and

WHEREAS, the parties hereto desire to enter into this Agreement to set forth certain rights and obligations of the Investor with respect to the designation of directors for the Company.

NOW, THEREFORE, the parties to this Agreement agree as follows:

1. Definitions. Capitalized terms used herein but not otherwise defined herein shall have their respective meanings as set forth in the Securities Purchase Agreement. As used herein, the following terms shall have the following respective meanings:

"Board" means the board of directors of the Company.

"Business Day" means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

"Investor's Ownership Percentage" means, at any time, the fraction (expressed as a percentage) that results from dividing (i) the number of shares of Common Stock owned by the Investor and its Affiliates at such time by (ii) the number of shares of Common Stock issued and outstanding at such time.

"Securities Laws" means the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended, and the rules promulgated thereunder.

2. Board Nomination Rights.

(a) From and after the date hereof and until the provisions of this
Section 2 cease to be effective and subject to the terms and conditions of this Agreement, the Investor shall have the right to designate persons for appointment and/or election to the Board (each a "Nominee") in accordance with the terms of this Agreement.

(b) The number of Nominees to be designated by the Investor shall be determined by multiplying the total number of Board seats by the Investor's Ownership Percentage and rounding that product up to the next whole number. For example, if the number of Board seats is seven (7) and the Investor's Ownership Percentage is sixteen percent (16%), the Investor would be entitled to designate two (2) Nominees (.16 x 7 = 1.12/rounded up to 2). If the total number of Board seats is nine or less, the maximum number of nominees the Investor is entitled to designate is two (2).

(c) From and after the date hereof and until the provisions of this
Section 2 cease to be effective, the number of directors of the Company shall be no less than five (5). The Investor may request an increase in the number of directors only if (i) the Board has not otherwise designated existing Board seats to be filled by the Investor's allowed Nominees, and (ii) as a result of the requested increase in the number of directors, the Investor is entitled to and does designate an additional Nominee to fill the open seat or seats created at the request of the Investor. The Board shall increase its size in accordance with the request within sixty (60) days of receipt of the Investor's request.

(d) Subject to the limitations set forth herein, the Board shall appoint any Nominee to fill any Board seat created upon the request of the Investor or designated by the Board for filling by the Investor. Any Nominee appointed as a director shall be appointed to a term expiring at the next election of directors.

(e) The Company shall use commercially reasonable efforts to assure that (i) any Nominee for election is included in the Board's slate of nominees to the stockholders for the election of directors, and (ii) the Nominee is included in the proxy statement prepared by management of the Company in connection with soliciting proxies for every meeting of the stockholders of the Company called with respect to the election of members of the Board, and at every adjournment or postponement thereof, and on every action or approval by written consent of the stockholders of the Company or the Board with respect to the election of members of the Board.

(f) At the expiration of the term of a director who is a Nominee designated by the Investor, the Investor shall be entitled to designate that Nominee or an alternative Nominee for election to the Board for the following term.

(g) If a vacancy occurs because of the death, disability, disqualification, resignation or removal of a Nominee (including by virtue of a removal of a Nominee at the discretion of the Investor), the Investor shall be entitled, at any time within sixty (60) days of such vacancy, to nominate such person's successors in accordance with this Agreement, and the Board shall fill the vacancy with such successor Nominee by appointment. The successor Nominee shall be appointed to a term expiring at the next election of directors.

(h) If a Nominee is not nominated or elected to the Board because of the Nominee's death, disability, disqualification, withdrawal as a nominee or for other reason is unavailable or unable to serve on the Board, the Investor shall be entitled to designate another Nominee.

(i) Notwithstanding anything to the contrary contained herein, at such time as the Investor's Ownership Percentage is less than five percent (5%) the rights of the Investor under this Section 2 to nominate any Nominee shall terminate automatically and cease to have any further force or effect.

3. Limitation on Company Obligations. Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be appointed to the Board, nominated for election to the Board or recommend to the stockholders the election of any Nominee (i) who fails to submit to the Company on a timely basis such questionnaires as the Company may reasonably require of its directors generally and such other information as the Company may reasonably request in connection with the preparation of its filings under the Securities Laws, or (ii) the Board or the Nominating Committee (and any successor thereto performing the nominating and governance committee functions of the Board) determines in good faith, after consultation with outside legal counsel, that such action would constitute a breach of applicable law or result in the Common Stock becoming ineligible for listing on any Trading Market; provided, however, that upon the occurrence of either
(i) or (ii) above, the Company shall promptly notify the Investor of the occurrence of such event and use commercially reasonable efforts to permit the Investor to provide an alternate Nominee sufficiently in advance of any Board action, meeting of the stockholders called or written action of stockholders with respect to such election of Nominees, and the Company shall use commercially reasonable efforts to perform its obligations under Section 2(e) with respect to such alternate Nominee (provided that if the Company provides at least thirty (30) days advance notice of the occurrence of any such event such alternative Nominee must be designated by the Investor not less than thirty (30) days in advance of any Board action, notice of meeting of the stockholders or written action of stockholders with respect to such election of Nominees). The Company shall use commercially reasonable efforts to perform its obligations under Section 2(e) with respect to such alternate Nominee, provided that in no event shall the Company be obligated to postpone, reschedule or delay any scheduled meeting of the stockholders with respect to such election of Nominees.

4. Prohibition against Circumvention by the Company. At any time that the Investor shall have any nomination rights under Section 2, the Company shall not take any action, including making or recommending any amendment to the Articles of Incorporation or the Bylaws that could reasonably be expected to adversely affect the Investor's rights under this Agreement, without the prior written consent of the Investor.

5. Amendment and Waiver. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

6. Benefit of Parties. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Except as otherwise expressly provided herein, nothing herein contained shall confer or is intended to confer on any third party or entity that is not a party to this Agreement any rights under this Agreement.

7. Headings. Headings are for ease of reference only and shall not form a part of this Agreement.

8. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be construed in accordance with the laws of State of Indiana, without regard to the principles of conflicts of laws. The parties further agree that any action between them shall be heard in and expressly consent to the jurisdiction and venue of the state court sitting in Auburn, Indiana and the federal court sitting in the City of Fort Wayne, Indiana for the adjudication of any civil action asserted pursuant to this Agreement.
EACH OF THE PARTIES HERETO, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE INVESTOR AND THE COMPANY ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE INVESTOR TO ENTER INTO THIS AGREEMENT.

9. Entire Agreement. This Agreement and any other writing signed by authorized representatives of each of the parties after the date hereof that specifically references this Agreement, constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral between the parties with respect to the subject matter hereof.

10. Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be deemed an original. This Agreement shall become effective when each party shall have received a counterpart hereof signed by each of the other parties. An executed copy or counterpart hereof delivered by email or facsimile shall be deemed an original instrument.

11. Severability. If any provision of this Agreement or the application thereof to any Person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provisions to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

12. Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions, in addition to any other remedy to which they are entitled at law or in equity.

13. Notices. All notices, requests and other communications to any party or to the Company shall be in writing and shall be given via email and overnight delivery service:

If to the Company:

Industrial Services of America, Inc.
7100 Grade Lane
Louisville, KY 40213

Attention: Chief Executive Officer Email: ooliver@ajshotels.com

With a copy to (which shall not constitute notice):


Frost Brown Todd LLC

400 West Market Street
Suite 3200
Louisville, Kentucky 40202-3363 Attention: James A. Giesel Email:jgiesel@fbtlaw.com

If to the Investor:

Recycling Capital Partners, LLC
295 S. Commerce Dr.
Waterloo, IN 46793

Attention: Daniel M. Rifkin, Manager Email:drifkin@metalx.net

With a copy to (which shall not constitute notice):

Barrett & McNagny LLP
215 E. Berry St.

Fort Wayne, IN 46802

Attention: Ronald J. Ehinger Email: Rje@barrettlaw.com

or to such other address and email addresses as such party or the Company may hereafter specify for the purpose by notice to the other parties and the Company. Each such notice, request or other communication shall be effective when delivered at the address specified in this Section 13 during regular business hours.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have executed this Director Designation Agreement on the day and year first above-written.

RECYCLING CAPITAL PARTNERS, LLC

By: /s/ Daniel M. Rifkin

Name:  Daniel M. RifkinTitle:   Manager
INDUSTRIAL SERVICES OF AMERICA, INC.
By:/s/ Orson Oliver

Name:  Orson Oliver

Title: Interim Chief Executive Officer

[Signature Page to Director Designation Agreement]


Exhibit 10.2

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this "Agreement") is entered into as of June 13, 2014 (the "Closing Date"), by and among INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation ("Parent"), ISA INDIANA, INC., an Indiana corporation ("ISA Inc."), ISA LOGISTICS LLC, a Kentucky limited liability company ("ISA Logistics"; and, together with Parent, ISA Inc., and any other Person that becomes party hereto from time to time as a borrower, "Borrowers"), ISA REAL ESTATE, LLC, a Kentucky limited liability company ("ISA Real Estate"), ISA INDIANA REAL ESTATE, LLC, a Kentucky limited liability company ("Indiana Real Estate"), WESSCO, LLC, a Delaware limited liability company ("WESSCO"), 7021 GRADE LANE LLC, a Kentucky limited liability company ("7021 Grade"), 7124 GRADE LANE LLC, a Kentucky limited liability company ("7124 Grade"), 7200 GRADE LANE LLC, a Kentucky limited liability company ("7200 Grade"; and, together with ISA Real Estate, Indiana Real Estate, WESSCO, 7021 Grade, 7124 Grade, and any other Person that becomes party hereto from time to time as a guarantor, "Guarantors"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Lender"). Certain capitalized terms used in this Agreement are defined in Section 7.1. The parties agree as follows:

ARTICLE I
CREDIT TERMS

SECTION 1.1. LINE OF CREDIT.

(a) Line of Credit. Subject to the terms and conditions of this Agreement, Lender agrees to make advances to Borrowers under this
Section 1.1 ("Advances"), from time to time up to and including the Termination Date, in a total amount at any time outstanding not to exceed the lesser of (a) $15,000,000 (the "Maximum Revolver Amount") minus Letter of Credit Usage, and (b) the sum of the following (the "Borrowing Base"):

(i) (85%) of Eligible Accounts, plus

(ii) the lowest of

(A) $7,500,000,

(B) 65% of the Value of Eligible Inventory, and

(C) 85% times the most recently determined Net Liquidation Percentage times the Value of Eligible Inventory consisting of finished goods; less

(iii) the Availability Block, less

(iii) Letter of Credit Usage, less

(iv) all Reserves, less

(v) any other Obligations (other than the Term Loan, amounts under the Line of Credit and Letter of Credit Usage).

The Borrowing Base will be determined by Lender upon receipt and review of all collateral reports required under this Agreement and such other documents and collateral information as Lender may from time to time require. "Line of Credit" means the line of credit established under this Section 1.1. "Account" means an account as that term is defined in the Code. "Account Debtor" means an account debtor as that term is defined the Code. "Inventory" means inventory as that term is defined in the Code. "Dilution" means, with respect to any period of determination selected by Lender, a percentage that is the result of dividing the dollar amount of the aggregate of all bad debt write-downs, discounts, allowances, credits, deductions and other dilutive items for such period as determined by Lender with respect to each Borrower's Accounts for such period, by each Borrower's billings with respect to Accounts for such period. If Dilution at any time exceeds five percent (5%) of any Borrower's gross sales for any such period, or if there at any time exists any other matters, events, conditions or contingencies which Lender reasonably believes may affect payment of any portion of any Borrower's Accounts, Lender may, in its Permitted Discretion, establish, and adjust from time to time, Reserves in the Borrowing Base. "Net Liquidation Percentage" means the percentage of the Value of a Borrower's Inventory that is estimated to be recoverable in an orderly liquidation of such Inventory as set forth in the most recent appraisal received by, and acceptable to, Lender and upon which Lender may rely, net of all operating expenses and associated costs and expenses of such liquidation, such percentage to be as determined by an appraisal company approved by Lender with such appraisal to be in form, scope, methodology and content acceptable to Lender. "Reserves" means, as of any date of determination, an amount or percentage of a specific category or item that Lender establishes in its Permitted Discretion from time to time to reduce availability under the Line of Credit to reflect events, conditions, contingencies, or risks which might affect the assets, business or prospects of any of the Borrowers or any of the Collateral or its value or the enforceability, perfection or priority of Lender's security interest in the Collateral, including without limitation reserves for Dilution and Bank Products. "Value" means, as determined by Lender in good faith, with respect to Inventory, the lower of (a) cost computed on a first-in, first-out basis in accordance with GAAP, or (b) market value, provided that for purposes of the calculation of the Borrowing Base, the Value of Inventory will be computed in the same manner and consistent with the most recent appraisal of Inventory received and accepted by Lender, if any.

(b) "Eligible Accounts" consist solely of Accounts created and invoiced by a Borrower in the ordinary course of such Borrower's business that arise out of the sale of goods or the rendition of services, upon which Borrower's right to receive payment is absolute and not contingent upon the fulfillment of any condition, and in which Lender has a perfected first-priority security interest, but will not include:

(i) any Account which is unpaid more than 90 days from original invoice date or more than 60 days of the original due date;

(ii) Accounts with selling terms of more than 45 days;

(iii) any Account for which there exists any right of setoff, defense, dispute or discount (except regular discounts allowed in the ordinary course of business to promote prompt payment) or for which any defense or counterclaim has been asserted;

(iv) Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, is not solvent, has gone out of business, or as to which such Borrower has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Account Debtor;

(v) any Account which represents an obligation of the United States government, any state or any other political subdivision (except Accounts which represent obligations of the United States government and for which the assignment provisions of the Federal Assignment of Claims Act have been complied with to Lender's satisfaction);

(vi) any Account (other than Accounts owing by Aurubis AG which contribute up to, but not more than, $300,000 to the Borrowing Base, after giving effect to applicable advance rates) which represents an obligation of an Account Debtor located in a foreign country other than an Account Debtor located in a Canadian province or territory (excluding Quebec), except to the extent any such Account, is supported by a letter of credit issued by a party acceptable to Lender or insured under a policy of foreign credit insurance, in each case, in form and substance satisfactory to Lender;

(vii) any Account which arises from the sale or lease to or performance of services for, or represents an obligation of, an employee, Affiliate, partner, member, parent or Subsidiary of any Borrower;

(viii) any Account which represents interim or progress billings or title retention rights on the part of the Account Debtor;

(ix) any Account which represents an obligation of any Account Debtor or its Affiliates if twenty-five percent (25%) or more of Borrowers' Accounts from such Account Debtor or its Affiliates are not eligible under clauses (i), (ii) or (iii) of this definition;

(x) (i) that portion of any Account owing from an Account Debtor (other than North American Stainless, Gallatin Steel, Tube City IMS Corporation or their Affiliates) which represents the amount by which Borrowers' Accounts owing from said Account Debtor and its Affiliates exceeds fifteen percent (15%) of Borrowers' total Eligible Accounts, (ii) that portion of any Account owing from North American Stainless and its Affiliates which represents the amount by which Borrowers' Accounts owing from said Account Debtor and its Affiliates exceeds fifty percent (50%) of Borrowers' total Eligible Accounts, (iii) that portion of any Account owing from Gallatin Steel and its Affiliates which represents the amount by which Borrowers' Accounts owing from said Account Debtor and its Affiliates exceeds thirty-five percent (35%) of Borrowers' total Eligible Accounts or (iv) that portion of any Account owing from Tube City IMS Corporation and its Affiliates which represents the amount by which Borrowers' Accounts owing from said Account Debtor and its Affiliates exceeds twenty-five percent (25%) of Borrowers' total Eligible Accounts;

(xi) Accounts representing credit card or "C.O.D." sales;

(xii) Accounts arising in a transaction where Goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, or any other terms by reason of which the payment by the Account Debtor may be conditional or contingent;

(xiii) that portion of Accounts which has been restructured, extended, amended or otherwise modified;

(xiv) Accounts that are not payable in U.S. Dollars;

(xv) bill and hold invoices;

(xvi) Accounts which have not been invoiced;

(xvii) that portion of any Account which represents finance charges, service charges, sales taxes, or excise taxes;

(xviii) Accounts subject to a security interest or Lien in favor of any third party or otherwise not subject to the Lender's first-priority perfected Lien;

(xiv) Accounts arising from the Borrowers' "Computerized Waste Systems" or "CWS" business, with respect to which a service provider or vendor under the transaction giving rise to the Account may directly seek or receive amounts owing to it from the applicable Account Debtor; or

(xv) any other Account deemed ineligible by Lender in its Permitted Discretion.

(c) "Eligible Inventory" means all finished goods and raw materials Inventory owned by any Borrower and held for sale in the ordinary course of such Borrower's business, in which Lender has a perfected first priority security interest, but will not include:

(i) Inventory that is (A) in-transit, (B) located at any premises leased by a Borrower or any warehouse, unless Lender has received a Collateral Access Agreement from such lessor or warehouseman,
(C) located at job site or other premises not owned by a Borrower other than premises permitted under (B) above, (D) covered by any negotiable or non-negotiable warehouse receipt, bill of lading or other document of title; (E) on consignment from any consignor or (F) on consignment to any consignee or subject to any bailment;

(ii) supplies, parts, packing, packaging or shipping materials, or sample Inventory, tooling Inventory, fabricated parts, customer-supplied Inventory, or customized or customer specific Inventory not supported by a valid purchase order;

(iii) work-in-process Inventory;

(iv) Inventory that is damaged, defective, obsolete, perishable, contaminated, discontinued, slow moving or not currently saleable in the ordinary course of a Borrower's business, or is past its expiration date, has been rejected or the amount of such Inventory that has been reduced by shrinkage;

(v) Inventory that a Borrower has returned, attempted to return, is in the process of returning or intends to return to the vendor of the Inventory, or inventory returned to Borrower;

(vi) Inventory manufactured or held for resale by a Borrower pursuant to a license;

(vii) Inventory consisting of bill and hold goods;

(viii) Inventory stored at locations holding less than $50,000 of the aggregate Value of such Borrower's Inventory;

(ix) Inventory that is subject to a security interest or Lien in favor of any third party or otherwise not subject to the Lender's first-priority perfected Lien; or

(x) Inventory consisting of restricted or controlled, or regulated items;

(xi) Inventory consisting of cardboard and other paper products;

(xii) Inventory consisting of scrap vehicles, except for scrap vehicles which contribute up to, but not more than, $500,000 (after giving effect to applicable advance rates) to the Borrowing Base; or

(xiii) Any other Inventory deemed ineligible by Lender in its Permitted Discretion.

(d) Letter of Credit Subfacility. As a subfacility under the Line of Credit, subject to the terms and conditions of this Agreement, Lender agrees during the term of this Agreement to issue or cause an Affiliate to issue letters of credit for the account of one or more Borrowers for purposes reasonably acceptable to Lender ("Letters of Credit"); provided however, (i) that the aggregate Letter of Credit Usage will not at any time exceed $1,000,000 and (ii) Lender shall have determined that there is Availability for any such Letter of Credit. The form and substance of each Letter of Credit will be subject to approval by Lender, in its reasonable discretion, and Borrowers shall execute and deliver such additional letter of credit agreements, applications and other documents required by Lender as a condition to the issuance of any Letter of Credit. Each Letter of Credit will be issued for a term not to exceed 365 days, as designated by any Borrower; provided that no Letter of Credit will have an expiration date after the Maturity Date. Each Letter of Credit will be issued under, and subject to, the additional terms and conditions of the letter of credit agreements, applications and any related documents required by Lender. Each drawing paid under a Letter of Credit will be deemed an Advance under the Line of Credit and will be repaid by Borrowers in accordance with the terms and conditions of this Agreement applicable to such Advances; provided however, that if Advances under the Line of Credit are not available for any reason at the time any drawing is paid by Lender, then Borrowers will immediately pay to Lender the full amount drawn, together with interest on such amount from the date such drawing is paid to the date such amount is fully repaid by Borrowers, at the rate of interest applicable to Advances under the Line of Credit. In such event Borrowers agree that Lender may debit any account maintained by any of the Borrowers with Lender for the amount of any such drawing. "Letter of Credit Usage" means, as of any date, the sum of (i) the aggregate undrawn amount of all outstanding Letters of Credit, and (ii) the aggregate amount of outstanding reimbursement obligations with respect to Letters of Credit which remain unreimbursed or which have not been paid through a deemed Advance.

(e) Borrowing and Repayment. So long as Lender has not separately agreed that Borrowers may use Lender's Loan Manager service ("Loan Manager"), each of the Borrowers may from time to time during the term of the Line of Credit request Advances, partially or wholly repay amounts outstanding under the Line of Credit, and reborrow the same, subject to all of the limitations, terms and conditions contained in this Agreement. Any request for Advance must be received by Lender no later than 11:00 a.m. (Eastern time) on the Business Day that funding is requested. If at any time the aggregate outstanding Advances under the Line of Credit exceeds the lesser of (i) the Maximum Revolver Amount minus Letter of Credit Usage or (ii) the Borrowing Base, Borrowers will immediately pay Lender such excess. No request for an Advance will be deemed received until Lender acknowledges the request. All Advances requested on behalf of any Borrower by Persons with authorization (as evidenced by the authorizing Resolutions of such Borrower) or by Persons that Lender believes, in good faith, are properly authorized by a Borrower will be repaid by Borrowers.

(f) Advances Through Loan Manager. If Lender has separately agreed that Borrowers may use Loan Manager, Advances (i) will be made solely by Loan Manager, and (ii) will be initiated by Lender and credited to a Borrower's operating account maintained with Lender as Advances as of the end of each Business Day in an amount sufficient to maintain an agreed upon ledger balance in such Borrower's operating account maintained with Lender, subject to Availability. Lender may terminate Borrowers' access to the Loan Manager service at any time in its sole discretion. If Lender terminates Borrowers' access to Loan Manager, each Borrower may continue to request Line of Credit Advances as provided in Section 1.1(e) so long as no Default or Event of Default shall have occurred and be continuing. Lender will have no obligation to make an Advance through Loan Manager during a Default Period, or in an amount in excess of Availability.

(g) Protective Advances: Advances to Pay Obligations Due. Lender may make Advances under the Line of Credit in its Permitted Discretion for any reason at any time without request of any Borrower and without any Borrower's compliance with any of the conditions of this Agreement, and (i) disburse the proceeds directly to third Persons in order to protect Lender's interest in Collateral or to perform any of Borrowers' obligations under this Agreement, or (ii) apply the proceeds to any Obligations then due and payable.

(h) Payments; Lockbox and Collection Account. All payments by Borrowers will be made as directed by Lender or as otherwise specified in the other Loan Documents, without setoff, counterclaim or defense. Loan Parties will instruct all Account Debtors to make payments either directly to the lockbox established with Lender (the "Lockbox") for deposit by Lender directly to a deposit account established with Lender (the "Collection Account"), or instruct them to deliver such payments to Lender by wire transfer, ACH, or other means as Lender may direct for deposit to the Lockbox or Collection Account or for direct application to reduce outstanding Advances or such other Obligations as Lender shall determine; provided, that Loan Parties shall not be required to establish the Lockbox unless requested by Lender after the occurrence of an Event of Default. All payments (including, without limitation, payments under Section 1.9) received by Lender will be applied to reduce outstanding Obligations in such manner as Lender determines in its sole discretion. If any Loan Party receives payment or the proceeds of Collateral directly, such Loan Party will promptly deposit the payment or proceeds into the Collection Account. Until deposited, each Loan Party will hold all such payments and proceeds in trust for Lender without commingling with other funds or property. For purposes of calculating Availability, unless otherwise provided in any cash management or other agreement between any of the Loan Parties and Lender, each payment will be applied to the Obligations as of the first Business Day following the Business Day of deposit to the Collection Account of immediately available funds or other receipt of immediately available funds by Lender, provided such payment is received in accordance with Lender's usual and customary practices as in effect from time to time. Any payment received by Lender that is not a transfer of immediately available funds will be considered provisional until the item or items representing such payment have been finally paid under applicable law. Should any payment item not be honored when presented for payment, then Borrowers will be deemed not to have made such payment, and that portion of Borrowers' outstanding Obligations corresponding to the amount of such dishonored payment item will be deemed to bear interest as if the dishonored payment item had never been received by Lender. Each reduction in outstanding Obligations resulting from the application of such payment to the outstanding Obligations will be accompanied by an equal reduction in the amount of outstanding Accounts.

(i) Charges to Loan Account; Clearance Charge. Lender will maintain an account on its books and records in the name of Borrowers (the "Loan Account") in which will be recorded all Advances made by Lender, the Term Loan, all Letters of Credit issued and all other payment Obligations. Borrowers authorize Lender to collect all principal, interest and fees due under the Line of Credit and Term Loan facility by charging the Loan Account, or any other deposit account maintained by any Borrower with Lender. Should there be insufficient funds in the Loan Account or any such other account to pay all such sums when due, the full amount of such deficiency will be immediately due and payable by Borrowers. All cash, checks, notes, instruments, and other items of payment (including insurance proceeds, cash proceeds of asset sales, rental proceeds, and tax refunds) (collectively, "Collections") received by Lender will be applied as provided in Section 1.1(h). All monthly statements relating to the Loan Account or such account will be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and Lender absent manifest error or unless Borrowers deliver written objection to Lender within 30 days after receipt by Borrowers. Obligations paid with Collections will continue to accrue interest at the rate then applicable to Advances for one Business Day following the Business Day that such Collections were applied to the Obligations. This one Business Day clearance charge on all Collections is acknowledged by the parties to constitute an integral aspect of the pricing of the financing of Borrowers (and will apply whether or not there are any outstanding Obligations). The parties acknowledge and agree that the economic benefit of the these provisions will accrue exclusively to Lender.

(j) Mandatory Payment of Advances. If at any time the sum of the outstanding Advances and Letter of Credit Usage exceeds either the Maximum Revolver Amount or the Borrowing Base (the "Overadvance Amount"), then Borrowers shall immediately upon demand by Lender repay the Obligations in an aggregate amount equal to the Overadvance Amount. If payment in full of outstanding Advances is insufficient to eliminate the Overadvance Amount and Letter of Credit Usage continues to exceed the Borrowing Base, Borrowers shall cash collateralize the Letter of Credit Usage in an amount sufficient to eliminate such Overadvance Amount. Borrowers shall further cause the Obligations to be repaid as described in Section 1.9.

SECTION 1.2. TERM LOAN.

(a) Term Loan. Subject to the terms and conditions of this Agreement, Lender agrees to make a loan (the "Term Loan") to Borrowers through a single disbursement on the Closing Date in an amount equal to $2,800,000. Amounts paid under the Term Loan may not be re-borrowed.

(b) Amortization. Borrower shall repay the unpaid principal amount of the Term Loan in 60 equal monthly installments, each in the amount of $46,666.67, beginning on July 1, 2014, and continuing on the first day of each succeeding month, provided that any remaining unpaid principal balance of the Term Loan and all accrued interest will be due and payable on the Termination Date. Such payments will be collected by Lender by means of an Advance initiated by Lender; provided that (i) Lender shall have no obligation to make any such Advance for such purpose if the conditions precedent in Section 3.2 will not be satisfied on the date of any such Advance or there is not sufficient Availability, and (ii) if Lender elects to not make an Advance, then Borrowers shall be responsible for making the payment of the Term Loan when due.

(c) Optional Prepayment. Borrowers may repay the Term Loan at any time, in whole or in part. All prepayments under this Section will be applied to the principal installments on the Term Loan in the inverse order of maturity.

(d) Interest and Prepayment Fee. Each payment of the principal amount of the Term Loan pursuant to Section 1.2(b) or Section 1.9 shall be accompanied by the payment of accrued interest to the date of such payment on the amount prepaid and the prepayment fee described in the Fee Letter.

SECTION 1.3. INTEREST/FEES.

(a) Interest. Except as provided in Section 1.3(b), the outstanding principal balance of Advances and the Term Loan will bear interest, as follows:

(1) Advances will bear interest on the Daily Balance of such Advances at a variable per annum rate equal to the sum of (i) the Daily Three Month LIBOR, plus (ii) 3.00%, minus (iii) the Rate Reduction.

(2) The Term Loan will bear interest on the Daily Balance of the Term Loan at a variable per annum rate equal to the sum of (i) the Daily Three Month LIBOR, plus (ii) 3.25%, minus (iii) the Rate Reduction.

(b) Default Rate. Upon the occurrence and during the continuation of an Event of Default (a "Default Period") and at any time following the Termination Date, at the sole discretion of Lender, (i) the outstanding principal balance of Advances and the Term Loan will bear interest on the Daily Balance of such Obligations at a per annum rate equal to 2% above the per annum rate otherwise applicable under
Section 1.3(a); and (ii) The Letter of Credit fee provided for in the Fee Letter will be increased by 2% above the per annum rate otherwise applicable under the Fee Letter (such rate, the "Default Rate")

Lender may assess the Default Rate commencing as of the date of the occurrence of an Event of Default or as of any date after the occurrence of an Event of Default regardless of the date of reporting or declaration of such Event of Default.

(c) Payment of Interest. Interest will be payable monthly in arrears on the first day of each month and on the Termination Date.

(d) Payment of Fees. Borrowers will pay to Lender the fees set forth in the Fee Letter.

(e) Computation of Interest and Fees. Interest and fees will be computed on the basis of a three hundred sixty (360)-day year for the actual number of days elapsed.

SECTION 1.4. ADDITIONAL COSTS.

(a) Capital Requirements. Borrowers will pay Lender, on demand, for Lender's costs or losses arising from any Change in Law which are allocated to this Agreement or any credit outstanding under this Agreement. The allocation will be made as determined by Lender, using any reasonable method. The costs include, without limitation, (i) any reserve or deposit requirements (excluding any reserve requirement already reflected in the calculation of the interest rate in this Agreement); and (ii) any capital requirements relating to Lender's assets and commitments for credit. "Change in Law" means the occurrence, after the date of this Agreement, of the adoption or taking effect of any new or changed law, rule, regulation or treaty, or the issuance of any request, rule, guideline or directive (whether or not having the force of law) by any governmental authority; provided that (x) the Dodd- Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives issued in connection with that Act, and
(y) all requests, rules, guidelines or directives promulgated by Lender for International Settlements, the Basel Committee on Banking Supervision (or any successor authority) or the United States regulatory authorities, in each case pursuant to Basel III, will in each case be deemed to be a "Change in Law," regardless of the date enacted, adopted or issued.

(b) Illegality; Impractibility; Increased Costs. In the event that (i) any change in market conditions or any Change in Law make it unlawful or impractical for Lender to fund or maintain extensions of credit with interest based upon Daily Three Month LIBOR or to continue to so fund or maintain, or to determine or charge interest rates based upon Daily Three Month LIBOR, (ii) Lender determines that by reasons affecting the London Interbank Eurodollar market, adequate and reasonable means do not exist for ascertaining Daily Three Month LIBOR, or (iii) Lender determines that the interest rate based on the Daily Three Month LIBOR will not adequately and fairly reflect the cost to Lender of maintaining or funding Advances or the Term Loan at the interest rate based upon Daily Three Month LIBOR, Lender will give notice of such changed circumstances to Borrowers and (a) interest on the principal amount of such extensions of credit will then accrue interest at a rate equal to the sum of (x) the Prime Rate plus (y) 2.00% (or, in the case of the Term Loan, 2.25%) minus (z) the Rate Reduction, and (b) Borrowers will not be entitled to elect Daily Three Month LIBOR until Lender determines that the conditions described in clauses (i) through (iii) no longer exist.

SECTION 1.5. TERM AND TERMINATION.

(a) Termination Date. Lender's obligations under this Agreement will continue for a term ending on the earliest of the following (the "Termination Date"): (i) the Maturity Date or (ii) the date the Line of Credit has been terminated by Borrowers or (iii) the date the Lender's obligation to extend further credit under this Agreement terminates following an Event of Default. On the Termination Date, all obligations of Lender to provide Advances or other extensions of credit under this Agreement will automatically terminate and all of the Obligations (other than Obligations under any Hedge Agreement, which will be terminated pursuant to the applicable Hedge Agreement) will immediately become due and payable without notice or demand, and Borrowers will immediately repay all of the Obligations in full (including providing cash collateral (on terms and conditions and pursuant to agreements required by Lender (the "L/C Collateral Conditions")) to be held by Lender for the benefit of Lender in an amount equal to 110% of the then existing Letter of Credit Usage, provided that upon expiration of the then existing Letters of Credit and satisfaction of all Obligations in respect thereof, Lender will promptly return to Borrowers all unused cash collateral). No termination of the obligations of Lender will relieve or discharge Borrowers of their duties, obligations, or covenants under this Agreement or under any other Loan Document. The relevant Bank Product Provider and Lender may require cash collateralization of Obligations with respect to any then existing Bank Product in an amount acceptable to such Bank Product Provider and Lender.

(b) Termination of Liens. Provided that there are no suits, actions, proceedings or claims pending or threatened against any Person who Borrowers have agreed to indemnify under this Agreement, Lender will, at Borrowers' expense, release or terminate any filings or other agreements that perfect the Lender's Liens in the Collateral upon Lender's receipt of each of the following, in form and content satisfactory to Lender: (i) cash payment in full of all Obligations (including termination of all Obligations under any Hedge Agreement, which will be terminated and paid pursuant to the applicable Hedge Agreement) and completed performance by Borrowers with respect to its other obligations under this Agreement and the other Loan Documents (including providing cash collateral to be held by Lender for the benefit of Lender in an amount equal to 110% of the then existing Letter of Credit Usage and subject to satisfaction of the L/C Collateral Conditions), (ii) evidence that any obligation of Lender to make Advances to Borrowers, issue Letters of Credit or provide any further extensions of credit to or for the benefit of Borrowers has been terminated, (iii) a general release of all claims against Lender and its Affiliates by Borrowers relating to the Line of Credit and Term Loan and Lender's performance and obligations under the Loan Documents, and (iv) an agreement by Borrowers, each Loan Party, and any new lender to Borrowers to indemnify Lender and its Affiliates for any payments received by Lender or its Affiliates that are applied to the Obligations as a final payoff that may later be returned or otherwise not paid for any reason.

(c) Termination by Borrowers. Borrowers may terminate the Line of Credit at any time prior to the Maturity Date, if they (i) deliver a written notice to Lender of their intention at least 30 days prior to the proposed action, (ii) pay to Lender the applicable termination and prepayment fees specified in this Agreement, and (iii) pay the Obligations in full and satisfies the L/C Collateral Conditions (to the extent of any outstanding Letters of Credit). Any such termination will be irrevocable.

SECTION 1.6. SECURITY AGREEMENT. To secure the Obligations, each Loan Party and Lender are entering into one or more Security Agreements, pursuant to which each Loan Party is granting Lender, for the benefit of Lender and Lender's Affiliates, a security interest in the Collateral (as amended from time to time, collectively, the "Security Agreement").

SECTION 1.7 ADMINISTRATIVE BORROWER. Each Borrower hereby irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers (the "Administrative Borrower") which appointment shall remain in full force and effect unless and until Lender shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (a) to provide Lender with all notices with respect to Advances, Letters of Credit and other extensions of credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement, and (b) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Advances, Letters of Credit and other extensions of credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. Each Borrower hereby jointly and severally agrees to indemnify Lender and hold Lender harmless against any and all liability, expense, loss or claim of damage or injury, made against Lender by any Borrower or by any third party whosoever, arising from or incurred by reason of (i) the handling of the Loan Account and Collateral of Borrowers as provided in this Section 1.7, or (ii) Lender's relying on any instructions of the Administrative Borrower, except that Borrowers will have no liability to Lender under this Section 1.7 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of Lender.

SECTION 1.8 PROMISSORY NOTES. At the request of Lender, Borrowers shall deliver and, as applicable from time to time upon Lender's request, amend, modify, restate or reissue, one or more revolver notes and term loan notes to Lender in connection with the Line of Credit and the Term Loan.

SECTION 1.9 OTHER MANDATORY PREPAYMENTS.

(a) Dispositions. Within 1 Business Day after receipt thereof by any Loan Party or any Subsidiary of a Loan Party, Borrowers shall remit to Lender, for application to the Obligations as determined by Lender in its sole discretion, all net proceeds from any voluntary or involuntary sale or other disposition (including casualty losses) of any assets other than sales of Inventory to buyers in the ordinary course of business; provided that, for so long as any portion of the Term Loan remains outstanding, all such proceeds of Equipment (other than proceeds of Equipment not greater than $5,000 in any single transaction or $25,000 in the aggregate during any period of twelve months) shall be applied first to the outstanding balance of the Term Loan, in inverse order of maturities, and then to other Obligations, unless otherwise expressly agreed to in writing by Lender. The provisions of this
Section 1.9(a) shall not be deemed to be implied consent to any sale or disposition otherwise prohibited by the terms and conditions of this Agreement.

(b) Extraordinary Receipts. Within 1 Business Day after receipt by any Loan Party or any Subsidiary thereof of any Extraordinary Receipts, Borrowers shall prepay the outstanding principal amount of the Obligations in an amount equal to 100% of such Extraordinary Receipts, net of any reasonable expenses incurred in collecting such Extraordinary Receipts.

(c) Indebtedness. Within 1 Business Day after the incurrence by any Loan Party or any Subsidiary thereof of any Indebtedness (other than Permitted Indebtedness), Borrowers shall prepay the outstanding principal amount of the Obligations in an amount equal to 100% of the net cash proceeds received by such Person in connection with such incurrence. The provisions of this Section 1.9(c) shall not be deemed to be implied consent to any such incurrence otherwise prohibited by the terms and conditions of this Agreement.

(d) Equity. Within 1 Business Day after the issuance by any Loan Party or any Subsidiary thereof of any shares of its or their Stock, including through the exercise of options (other than the issuance of ordinary course Stock of any Borrower to directors, officers and employees of such Borrower and its Subsidiaries pursuant to employee stock option plans (or other employee incentive plans or other compensation arrangements) approved by the Board of Directors), Borrowers shall prepay the outstanding principal amount of the Obligations in an amount equal to 100% of the net cash proceeds received by such Person in connection with such issuance. The provisions of this
Section 1.9(d) shall not be deemed to be implied consent to any such issuance otherwise prohibited by the terms and conditions of this Agreement.

(e) Term Loan. If Lender obtains an appraisal of the eligible Equipment of Borrowers and such appraisal shows the aggregate unpaid principal amount of the Term Loan to exceed eighty-five (85%) of the Net Orderly Liquidation Value of such Equipment, then Lender may require Borrowers to immediately prepay the unpaid principal of the Term Loan in the amount of such excess.

ARTICLE II
REPRESENTATIONS AND WARRANTIES

Each of the Loan Parties makes the following representations and warranties to Lender, which representations and warranties will survive the execution of this Agreement and will continue in full force and effect until the full and final payment, and satisfaction and discharge of all Obligations:

SECTION 2.1. LEGAL STATUS. Each Loan Party is duly organized, validly existing and in good standing under the laws of the State of its organization and is qualified or licensed to do business and is in good standing in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could reasonably be expected to cause a Material Adverse Change. Each Loan Party possesses, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law, except where the failure to possess such items could not reasonably be expected to cause a Material Adverse Change.

SECTION 2.2. AUTHORIZATION AND VALIDITY. The Loan Documents have been duly authorized and constitute legal, valid and binding agreements and obligations of each Loan Party or the party which executes the same, enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, similar laws affecting creditors' rights generally, or general principles of equity. The execution, delivery and performance by each Loan Party of each of the Loan Documents to which it is a party do not violate any provision of any law or regulation, or contravene any provision of such Loan Party's organizational documents or result in any breach of or default under any contract, obligation, indenture or other instrument to which such Loan Party is a party or by which such Loan Party or its assets may be bound.

SECTION 2.3. LITIGATION. There are no pending, or to the best of each Loan Party's knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which involve more than $100,000 or which could reasonably be expected to cause a Material Adverse Change, other than those disclosed on Schedule B.

SECTION 2.4. FINANCIAL STATEMENTS. The annual financial statements of each Loan Party dated for such Loan Party's most recent fiscal year ended, and all interim financial statements delivered to Lender since such date and prior to the date of this Agreement (a) are complete and correct and present fairly the financial condition of such Loan Party, (b) disclose all liabilities of such Loan Party that are required to be reflected or reserved against under generally accepted accounting principles, without giving effect to any election under Financial Accounting Standards Board Accounting Standards Codification 825-10-25 (or any other accounting rules or standards having a similar result or effect) to value any Indebtedness or other liabilities of any Loan Party or any Subsidiary at "fair value" ("GAAP"), whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with GAAP consistently applied. Since the dates of such financial statements there has been no Material Adverse Change.

SECTION 2.5. TAXES. Each Loan Party has timely filed all tax returns and reports of such Loan Party required to be filed by it, and paid when due all taxes shown on such tax returns to be due and payable and all assessments, fees and other governmental charges upon such Loan Party and its assets, income, businesses and franchises that are due and payable. None of the Loan Parties are aware of any unpaid tax or assessment or proposed tax or assessment against any Loan Party except
(i) as set forth on Schedule B, (ii) taxes owing for current or future periods that are not yet due and payable and (iii) taxes that are being Properly Contested.

SECTION 2.6. ERISA. Each Loan Party is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time ("ERISA"); No Loan Party has violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to by such Loan Party (each, a "Plan"); no Reportable Event as defined in ERISA has occurred and is continuing with respect to any Plan initiated by such Loan Party; each Loan Party has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under GAAP.

SECTION 2.7. OTHER OBLIGATIONS. None of the Loan Parties are in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation.

SECTION 2.8. ENVIRONMENTAL MATTERS. Except as set forth on Schedule B, (i) each of the Loan Parties is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations related to such statutes, which govern or affect any Loan Party's operations and/or properties, except for such failures to comply that could not reasonably be expected to result in a Material Adverse Effect or could not reasonably be expected to subject the Loan Parties to liabilities (including for remediation), individually or in the aggregate, in an amount in excess of $250,000, (ii) no Loan Party has any liabilities under applicable environmental laws, and (iii) no Loan Party knows or has received written notice of a possible claim, investigation, assessment or remedial or response action relating to any environmental laws or hazardous materials. None of the operations of any Loan Party is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment. No Loan Party has any material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment.

SECTION 2.9. COMPLIANCE WITH LAWS, ETC. No Loan Party is an "investment company" or a company "controlled" by an "investment company" under the Investment Company Act. No Loan Party is engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Each Loan Party has complied in all material respects with the Federal Fair Labor Standards Act. No Loan Party has violated any laws, ordinances or rules, the violation of which could reasonably be expected to result in a Material Adverse Change or subject Loan Parties to costs or liability in excess of $100,000.

SECTION 2.10. MATERIAL CONTRACTS. Set forth on Schedule B is a detailed description of the Material Contracts of each Loan Party as of the Closing Date. Except for matters which could not reasonably be expected to result in a Material Adverse Change, each Material Contract
(a) is in full force and effect and is binding upon and enforceable against such Loan Party and, to such Loan Party's knowledge, after due inquiry, each other Person that is a party in accordance with its terms,
(b) has not been otherwise amended or modified, and (c) is not in default due to the action or inaction of such Loan Party.

SECTION 2.11. INFORMATION CERTIFICATE. All of the information, disclosures, representations, and warranties contained in the Information Certificate are true, complete, correct and accurate as of the Closing Date.

SECTION 2.12. NO EVENT OF DEFAULT. No Default or Event of Default has occurred and is continuing under this Agreement.

SECTION 2.13. NO OTHER LIENS. No Loan Party has mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Lender and except for Permitted Liens.

ARTICLE III
CONDITIONS

SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Lender to make the initial Advance or other initial extension of credit under this Agreement is subject to the fulfillment to Lender's satisfaction of each of the following conditions: (i) all Loan Documents (including promissory notes evidencing the Line of Credit and the Term Loan, pursuant to Section 1.9) and all other documents relating to this Agreement will have been executed and delivered, and Lender will have received copies of each Loan Party's organizational documents, satisfactory authorizing resolutions and recent good standing certificates for each Loan Party, as well as opinions of counsel to the Loan Parties, in each case satisfactory to Lender, (ii) Lender will have confirmed to its satisfaction that there has been no Material Adverse Change since the date of the last financial statements provided to Lender, (iii) Uniform Commercial Code and other searches and all Uniform Commercial Code and other filings deemed necessary by Lender will have been completed and will have confirmed Lender's first-priority Liens in the Collateral and the results thereof will be otherwise satisfactory to Lender, (iv) all insurance policies and other documents, agreements and actions required by this Agreement and the other Loan Documents will have been completed and will be in place, (v) no event which would constitute a Default or an Event of Default will have occurred, (vi) Lender will have received all required Collateral Access Agreements,
(vii) Lender shall have received all financial information of each Loan Party required by this Agreement, including, without limitation, all financial projections, and monthly income statements, balance sheets and cash flow projections for a period determined by Lender, (viii) Lender will have completed its business, legal, and Collateral due diligence, including (a) a Collateral examination, appraisals and review of each Loan Party's Inventory, books and records and a verification of each Loan Party's representations and warranties to Lender, together with an appraisal of the Equipment of each Borrower and its Subsidiaries, and an updated collateral examination if the Closing Date shall occur more than 60 days after the initial collateral examination and audit of Borrowers and their Subsidiaries, in each case with results satisfactory to Lender, (b) an inspection of each of the locations where the Inventory of each Loan Party is located, the results of which must be satisfactory to Lender, (c) vendor and customer references (to the extent required by Lender in its discretion) and invoice verifications, (d) review of material contracts, if applicable, and (e) regulatory and related diligence, including credit and or background investigations and other diligence required by law, (ix) Borrowers will have Excess Availability of at least $3,000,000 after giving effect to (A) the initial Advance and other initial extensions of credit under this Agreement, (B) the payment of all fees and Lender Expenses required to be paid by Borrowers on the Closing Date under this Agreement or the other Loan Documents, and (C) the payment of past due accounts payable, (x) Lender will have obtained final credit approval, (xi) a letter, acceptable to Lender, from Fifth Third Bank ("Existing Lender") to Lender confirming the amount necessary to repay in full all of the obligations of the Loan Parties and its Subsidiaries owing to Existing Lender and obtain a release of all of the Liens existing in favor of Existing Lender in and to the assets of the Loan Parties and their Subsidiaries, (xii) each Loan Party will have received all licenses, approvals and certifications required by any governmental authority necessary in connection with the execution of this Agreement and the Loan Documents and the completion of the transactions contemplated by this Agreement and shall have paid all taxes with respect thereto (including Florida documentary stamp taxes or, as applicable, affidavits of out of state execution), and (xiii) all other conditions required by Lender shall have been fulfilled to Lender's satisfaction and all other deliverables required by Lender shall have been delivered to Lender's satisfaction, including without limitation the following:

(a) a Guaranty executed by each Guarantor on Lender's standard form;

(b) one or more certificates required by Lender or its counsel related to the matters described in this Section 3.1, including as to customary incumbency and corporate information, closing matters and Material Contracts;

(c) Control Agreements executed by the applicable Loan Party and each Controlled Account Bank;

(d) establishment of Wells Fargo cash management, operating accounts and collection accounts;

(e) execution and delivery of Letter of Credit applications and agreements;

(f) Lender shall have received evidence of the dissolution of Computerized Waste Systems, LLC, ISA Recycling, LLC, and Waste Equipment Sales & Service Co., LLC;

(g) Lender shall have received a duly executed letter agreement satisfactory to Lender from K & R, LLC as contemplated by
Section 5.3(g)(i) and which, among other things, addresses certain matters in connection with the payment of amounts contemplated by Section 5.9(f);

(h) Lender shall have received a duly executed Certificate Regarding Equipment satisfactory to Lender from a duly authorized office of Administrative Borrower on behalf of itself and the other Borrowers;

(i) Lender shall have received all original certificates of title or similar title documents for all of the Loan Parties' owned vehicles and Equipment which are subject to certificate of title or similar statutes (as contemplated in
Section 9-311 of the Code), together, in each case, with duly executed releases and applications for lien notations to reflect Lender as the sole lienholder on such vehicles and Equipment; and

(j) Borrowers shall have received and remitted to Lender net cash proceeds of a cash equity investment in Parent, on terms satisfactory to Lender in its Permitted Discretion, pursuant to the Equity Investment Documents, in an amount not less than $3,000,000, and Lender shall have received true, correct and completed copies of such documents evidencing such cash equity investment (and any corresponding warrant agreements), including the Equity Investment Subordination Agreement.

SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Lender to make any Advance or any other extension of credit requested by Borrowers at any time will be subject to the fulfillment to Lender's satisfaction of each of the following conditions:

(a) The representations and warranties of the Loan Parties contained in this Agreement and in the other Loan Documents shall be true and correct on and as of the date of such Advance or such extension of credit as though made on and as of such date; and

(b) No Default or Event of Default shall have occurred and be continuing on the date of such Advance or such extension of credit, nor shall either result from the making of such Advance or extension of credit.

Any request for an Advance or for any other extension of credit will be deemed to be a representation by Borrowers that the statements set forth in this Section 3.2 are correct as of the time of such request and if such request is for an Advance or a Letter of Credit, sufficient Availability exists for such Advance to be made or such Letter of Credit to be issued.

ARTICLE IV
AFFIRMATIVE COVENANTS

Each Borrower and each of the other Loan Parties covenants that so long as Lender remains committed to make any Advance or extend any other credit to Borrowers or any Obligations remain outstanding, each Loan Party will and will cause each other Loan Party to:

SECTION 4.1. FINANCIAL STATEMENTS. Provide to Lender the financial information set forth on Schedule C, in form and detail satisfactory to Lender, within the time periods set forth in Schedule C.

SECTION 4.2. COLLATERAL REPORTING. Provide to Lender all of the information set forth on Schedule D, in form and detail satisfactory to Lender, within the time periods set forth in Schedule D, and delivered electronically through Lender's Commercial Electronic Office (or such other delivery method elected by Lender). On and at all times after the Closing Date, Borrowers shall maintain an electronic collateral reporting system satisfactory to Lender in its Permitted Discretion.

SECTION 4.3. FINANCIAL COVENANTS. Comply with each of the following financial covenants:

(a) MINIMUM EBITDA. Parent and its Subsidiaries shall achieve EBITDA, measured on a month-end basis, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:

Applicable Amount                    Applicable Period
   $(271,000)                      For the 1-month period
                                   ending June 30, 2014
   $56,000                         For the 2-month period
                                   ending July 31, 2014
   $383,000                        For the 3-month period
                                   ending August 31, 2014
   $688,000                        For the 4-month period
                                   ending September 30, 2014
   $991,000                        For the 5-month period
                                   ending October 31, 2014
   $1,279,000                      For the 6-month period
                                   ending November 30, 2014
   $1,538,000                      For the 7-month period
                                   ending December 31, 2014
   $1,770,000                      For the 8-month period
                                   ending January 31, 2015
   $2,001,000                      For the 9-month period
                                   ending February 28, 2015
   $2,296,000                      For the 10-month period
                                   ending March 31, 2015
   $2,553,000                      For the 11-month period
                                   ending April 30, 2015
   $2,789,000                      For the 12-month period
                                   ending May 31, 2015

(b) CAPITAL EXPENDITURES. Parent and its Subsidiaries shall not make Capital Expenditures, measured on a month-end basis, in excess of the maximum amount set forth in the following table for the applicable period set forth opposite thereto:

Applicable Amount                    Applicable Period

   $200,000                        For the 1-month period
                                   ending June 30, 2014
   $250,000                        For the 2-month period
                                   ending July 31, 2014
   $300,000                        For the 3-month period
                                   ending August 31, 2014
   $350,000                        For the 4-month period
                                   ending September 30, 2014
   $400,000                        For the 5-month period
                                   ending October 31, 2014
   $450,000                        For the 6-month period
                                   ending November 30, 2014
   $500,000                        For the 7-month period
                                   ending December 31, 2014
   $575,000                        For the 8-month period
                                   ending January 31, 2015
   $650,000                        For the 9-month period
                                   ending February 28, 2015
   $725,000                        For the 10-month period
                                   ending March 31, 2015
   $800,000                        For the 11-month period
                                   ending April 30, 2015
   $875,000                        For the 12-month period
                                   ending May 31, 2015

(c) FIXED CHARGE COVERAGE RATIO. Parent and its Subsidiaries shall maintain a Fixed Charge Coverage Ratio measured monthly on a trailing twelve month basis at the end of each month, beginning with the month ending June 30, 2015 of not less than 1.25 to 1.00.

SECTION 4.4. ACCOUNTING RECORDS; INSPECTIONS. Maintain a system of accounting that enables Loan Parties to produce financial statements in accordance with GAAP. Each Loan Party will permit any representative of Lender, during normal business hours to inspect, audit and examine such books and records, to make copies of the same, and to inspect the Collateral and the other assets and properties of such Loan Party and to do inspections, exams and appraisals of the Collateral and, without limitation, any real property of the Loan Parties. Prior to the occurrence of an Event of Default, Lender will endeavor to establish with Parent mutually agreeable times for inspections, exams and appraisals but shall be under no obligation to do so and Lender's failure to do so shall not limit its rights to conduct such inspections, exams and appraisals at such normal business hours as it shall elect. Loan Parties will also permit Lender, in Lender's name or in the name of a nominee of Lender, to verify the validity, amount or any other matter relating to any Account, by mail, telephone, facsimile transmission or otherwise, and, at the request of Lender after the occurrence of an Event of Default, Loan Parties will send requests for verification of Accounts or send notices of assignment of Accounts to Account Debtors.

SECTION 4.5. COMPLIANCE. Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and comply with the provisions of all documents under which each Loan Party is organized and/or which govern each Loan Party's continued existence, and with the requirements of all laws, rules, regulations and orders of any governmental authority applicable to each Loan Party and/or its business, the failure to maintain or comply with which could reasonably be expected to cause a Material Adverse Change.

SECTION 4.6. MAINTENANCE OF PROPERTIES. Keep all properties useful or necessary to each Loan Party's business in good repair and condition, and from time to time make necessary repairs, renewals and replacements so that such properties will be fully and efficiently preserved and maintained.

SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, unless being Property Contested.

SECTION 4.8. NOTICE TO LENDER. Promptly (but in no event more than five (5) Business Days after the occurrence of each such event or matter) give written notice to Lender in reasonable detail of: (a) the occurrence of any Default or Event of Default; (b) any change in the name or the organizational structure of any Loan Party, and if any Loan Party or any Guarantor is an individual, any change in the name set forth on such Loan Party's driver's license or other special identification card issued by any state; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan; (d) a violation of any law, rule or regulation, the non-compliance with which reasonably could be expected to result in a Material Adverse Change; (e) any termination or cancellation of any insurance policy which any Loan Party is required to maintain, or any loss through liability or property damage, or through fire, theft or any other cause affecting such Loan Party's property in excess of an aggregate of $50,000; (f) any litigation pending or threatened in writing against any Loan Party which, if adversely determined, could reasonably be expected to cause a Material Adverse Change or which involves more than $250,000; (g) (i) any dispute or claims by any of Borrowers' customers exceeding $100,000 individually or in the aggregate during any fiscal year or (ii) any Inventory returned to or recovered by a Loan Party outside of the ordinary course of business with a fair market value exceed $25,000 individually or in the aggregate; or (h) any notice received by a Loan Party regarding violation by a Loan Party of any law (including, without limitation, any notice received from the SEC, PBGC, EPA or any similar state or federal governmental entity) or of any notice from any national securities exchange regarding violation of any listing requirements or stock market rules.

SECTION 4.9. INSURANCE. Maintain insurance customary for the business in which it is engaged and maintain all risk property insurance coverage covering the full replacement cost of the Collateral, together with general liability insurance, in each case, in form, substance, amounts, under agreements and with insurers acceptable to Lender. The insurance policies must be issued by an insurance company acceptable to Lender and contain a lender loss payable endorsement acceptable to Lender naming Lender as first and sole loss payee with regard to property coverage and as additional insured with regard to liability coverage.

SECTION 4.10. DEPOSITORY RELATIONSHIP. Within 30 days following the Closing Date (the "Interim Treasury Period"), establish and, at all times thereafter, maintain all of its cash management, collection, and operating accounts with Lender (other than (i) petty cash accounts with a balance of not more than $10,000 in the aggregate at any time, (ii) the BoK Collateral Account, so long as the balance therein at any time does not exceed two months of regularly scheduled principal and interest payments under the BoK Facility, and so long as WESSCO distributes to Parent all amounts permitted to be distributed to Parent pursuant to the terms of the BoK Facility and the BoK Subordination Agreement from time to time (and with such frequency as Lender may request from time to time), (iii) local operating accounts with Branch Banking and Trust Company with a balance of not more than $250,000 (or such lesser amount as Lender may, in its discretion, set from time to time upon notice to Parent) in the aggregate at any time to be used for payments to vendors, provided that the only source of funds for such accounts shall be the Loan Parties' accounts with Lender, and
(iv) cash controlled by one or more Loan Parties for the use by the Loan Parties of paying vendors in the ordinary course of business, in an aggregate amount not to exceed $750,000 (or such lesser amount as Lender may, in its discretion, set from time to time upon notice to Parent) at any time, so long as such cash is securely stored in a manner consistent with the Loan Parties' historical practices). During the Interim Treasury Period and until such time as such accounts have been established at Lender, Loan Parties will maintain cash management services reasonably acceptable to Lender at another bank (a "Controlled Account Bank"). Loan Parties will ensure that each Loan Party and all Account Debtors will deposit all collections of Accounts and all other items of payment directly to a bank account of Loan Parties at such Controlled Account Bank (a "Controlled Account"). During the Interim Treasury Period, each Loan Party will maintain a deposit account control agreement acceptable to Lender (a "Control Agreement") with each Controlled Account Bank with respect to each Controlled Account at such Controlled Account Bank, other than the BoK Collateral Account and local operating accounts with Branch Banking and Trust Company referred to above (which, in each case, shall be subject to the balance restrictions set forth above). Such Control Agreement will provide that the Controlled Account Bank will forward, by daily standing wire transfer, all amounts in the Controlled Account directly to a deposit account as directed by Lender. The Loan Parties shall further ensure that all of their cash is promptly deposited and maintained at a Controlled Account and that no cash is permitted to be held by the Loan Parties except as described in the foregoing clause (iv) of this Section 4.10.

SECTION 4.11. MATERIAL CONTRACTS. Deliver to Lender a copy of each Material Contract and amendment to Material Contract entered into since the delivery of the previous Compliance Certificate, and at the request of Lender, a "no-offset" letter acceptable to Lender from each customer of a Loan Party which is a party to any Material Contract. Each Loan Party shall maintain all Material Contracts in full force and effect and shall not default in the payment or performance of any obligations under any Material Contract.

SECTION 4.12. COOPERATION. Take such actions and execute and deliver to Lender such instruments and documents as Lender will request (including obtaining agreements from third parties as Lender deems necessary) to create, maintain, preserve and protect Lender's first- priority security interest in the Collateral and Lender's rights in the Collateral and to carry out the intent of this Agreement and the other Loan Documents. Without limiting the foregoing, the Loan Parties shall deliver to Lender all original certificates of title or similar title documents for all of the Loan Parties' vehicles and Equipment acquired after the Closing Date which are subject to certificate of title or similar statutes (as contemplated in Section 9-311 of the Code), together, in each case, with duly executed releases and lien notations to reflect Lender as the sole lienholder on such vehicles and Equipment and, in each case, promptly upon each Loan Parties' acquisition of such vehicles and Equipment.

SECTION 4.13. REAL PROPERTY. Without limiting Section 4.12,
(a) deliver from time to time such Collateral Access Agreements as Lender shall request; (b) if any Loan Party becomes owner of any fee interest in any real property after the Closing Date, deliver a duly executed Mortgage in recordable form to Lender with respect to such real property and enter into amendments, supplements and joinders to the Environmental Indemnity Agreement and the Escrow Agreement (together with one or more Mortgages), as applicable, with respect to such real property, in each case in form and substance satisfactory to Lender; and
(c) deliver upon Lender's request such other documents as Lender may from time to time request in its Permitted Discretion to preserve, protect or evidence Lender's interests in the Mortgages and the real property of Loan Parties, and associated documents (including flood certifications, owner's affidavits, certificates and other customary documents and instruments), in each case in form and substance satisfactory to Lender. On the Closing Date, the Loan Parties will execute the Mortgages, which shall be held by Lender pursuant to the Escrow Agreement. Lender agrees that the Mortgages shall not be deemed delivered and that Lender will not record such Mortgages (or any subsequently executed Mortgage with respect any owned real property acquired after the Closing Date that is subject to the Escrow Agreement) until an Event of Default has occurred or is continuing. Upon the occurrence or during the continuance of an Event of Default, the Mortgages subject to the Escrow Agreement shall at Lender's election be deemed delivered and Lender may record any Mortgages in such recording offices as Lender deems necessary or desirable (and take such other enforcement and other actions contemplated by this Agreement, the Escrow Agreement or applicable law), at the sole cost and expense of Borrowers.

SECTION 4.14. POST-CLOSING MATTERS.

(a) On or before the date that is 45 days after the Closing Date, the Loan Parties shall deliver to Lender the original certificates of title for all of their owned vehicles and Equipment which are subject to certificate of title or similar statutes (as contemplated in Section 9- 311 of the Code), which shall cover all such vehicles and Equipment referenced in the Certificate Regarding Equipment referred to in Section 3.1(h), together with such affidavit's, lien releases, powers of attorney, security agreements or notices of security interest and other instruments and documents as Lender requests for purposes of noting and perfecting Lender's first priority security interest in the Loan Parties' vehicles and Equipment.

(b) The Loan Parties shall cause Parent to be reinstated and qualified as a foreign corporation in good standing in the State of Indiana on or before the date that is 45 days after the Closing Date and shall provide satisfactory evidence of same to Lender on or before such date. The Loan Parties acknowledge and accept that until such time as Parent is reinstated and qualified as a foreign corporation in good standing in the State of Indiana, Lender may deem Accounts and Inventory of Parent, in whole or in part, ineligible for inclusion in the Borrowing Base in Lender's discretion, to the extent such Accounts and Inventory, as applicable, are located in the State of Indiana, owing from Account Debtors in Indiana or otherwise resulting from transactions in the State of Indiana.

(c) On or before the date that is 90 days after the Closing Date, the Loan Parties shall complete, execute and delivery to Lender environmental questionnaires, based on Lender's standard form, with respect to all real property owned by the Loan Parties.

(d) On or before the date that is 120 days after the Closing Date, the Loan Parties shall cause any unpermitted Liens of record on their real property interests to be released and provide Lender with satisfactory evidence of same, including, without limitation, with respect to (i) that certain Mortgage between American Property Investors III and Spector Terminals, Inc. recorded in the Office of the Clerk of Jefferson County, Kentucky at book 1773, page 545, (ii) that certain Notice of State Tax Lien recorded in the Office of the Clerk of Jefferson County, Kentucky at book 0781, page 0878, (iii) the Mortgage referred to in that certain Deed made by Metalcenter, Inc. and recorded in the Office of the Clerk of Jefferson County, Kentucky at book 5775, page 947 and (iv) any other matters of record in connection with the foregoing (including any memoranda of lease).

ARTICLE V
NEGATIVE COVENANTS

Each Borrower and each Loan Party covenants that so long as Lender remains committed to make any Advance or extend any other credit to Borrowers, or any Obligations remain outstanding, no Borrower and no Loan Party will:

SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any Advance, the Term Loan or any other credit extended under this Agreement for purposes other than (i) to repay in full, the outstanding principal, accrued interest, and accrued fees and expenses owing by Borrowers under Borrowers' existing credit facility with, and notes payable to, Existing Lender, (ii) to pay past due accounts payable existing as of the Closing Date, (iii) to pay Lender Expenses incurred in connection with this Agreement and the other Loan Documents, and (iv) thereafter, consistent with the terms of this Agreement, for working capital and other business purposes of Borrowers. The Borrowers will not use the proceeds of any extension of credit to purchase or carry margin stock or for any other purpose that violates the terms of Regulation T, U, or X of the Board of Governors of the Federal Reserve System.

SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any Indebtedness of Borrowers, except (a) the Obligations and (b) Permitted Indebtedness. "Indebtedness" means the following, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several: (i) all obligations for borrowed money (including recourse and other obligations to repurchase accounts or chattel paper under factoring, receivables purchase or similar financing arrangement or for the deferred purchase price of property or services); (ii) all obligations in respect of surety bonds and letters of credit; (iii) all obligations evidenced by notes, bonds, debentures or other similar instruments, (iv) all capital lease obligations; (v) all obligations or liabilities of others secured by a Lien on any asset of any of the Loan Parties, whether or not such obligation or liability is assumed; (vi) all obligations to pay the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices); (vii) all guaranties of the obligations of another Person; and (viii) all obligations owing under Hedge Agreements (which amounts will be calculated based on the amount that would be payable by Borrowers if the Hedge Agreement were terminated on the date of determination). "Permitted Indebtedness" means (a) Indebtedness of Borrowers described on Schedule B; (b) purchase money indebtedness incurred in connection with the financing of the purchase by Borrowers of fixed assets (including capitalized leases), so long as, in each case, (i) no more than an aggregate principal amount of $1,000,000 of such indebtedness is incurred between the Closing Date and December 31, 2014, (ii) no more than an aggregate principal amount of $2,000,000 of such indebtedness is incurred between the Closing Date and December 31, 2015, (iii) the terms of such indebtedness, and the documentation delivered in connection therewith, are in form and substance satisfactory to Lender in its Permitted Discretion, are and (iv) any Liens securing any of such indebtedness shall secure only the fixed assets purchased (or, in the case of capitalized leases, leased) with the proceeds of such indebtedness; (c) Indebtedness of WESSCO under the BoK Facility existing as of the Closing Date (less any principal payments on account of the BoK Facility after the Closing Date); (d) the Hedge Agreement with The Bank of Kentucky as in existence on the Closing Date; (e) the Parent-WESSCO Note as in existence on the Closing Date and fully disclosed to the Lender, so long as the Loan Parties comply with
Section 5.12 with respect thereto; (f) additional unsecured Indebtedness or unsecured liabilities incurred in the ordinary course of business not to exceed $500,000 in the aggregate at any one time outstanding.

SECTION 5.3. MERGER, CONSOLIDATION, TRANSFER OF ASSETS, TRANSACTIONS OUTSIDE THE ORDINARY COURSE OF BUSINESS. Cause, permit, participate in or suffer to occur, any of the following: (a) merge with or consolidate with any other Person; provided, that upon at least 10 Business Days prior written notice to Lender, any Loan Party (other than Parent) may merge into another Loan Party so long as, in connection with any merger of a Borrower and a Guarantor, the Borrower shall be the surviving entity; (b) make any substantial change in the nature of any Loan Party's business as conducted as of the Closing Date; (c) make any material change in the existing executive management personnel of Borrowers, provided that, except in the case of Sean Garber (unless Lender provides prior written consent to the contrary), in the event of the death, disability, resignation, or termination of any existing executive management personnel of Borrowers, Borrowers shall have ninety
(90) days after such death, disability, resignation, or termination to appoint a replacement executive reasonably acceptable to Lender; (d) liquidate or dissolve any Loan Party's business; provided, that any Loan Party (other than Parent) may dissolve so long as the assets of any such Person are distributed to a Loan Party upon dissolution and Lender shall have received at least 10 Business Days prior written notice of such dissolution; (e) become a member or partner in a joint venture, partnership or limited liability company; (f) acquire all or substantially all of the assets of any other Person (or any division, business unit or line of business of any other entity), or acquire any assets outside the ordinary course of any Loan Party's business; (g) sell, lease, transfer or otherwise dispose of any of any Loan Party's assets, except for the sale of Inventory in the ordinary course of its business and except for the sale of the real property located at 1565 East 4th Street, Seymour, Indiana, so long as (i) such sale is consummated pursuant to the purchase documentation delivered to Lender on or prior to the Closing Date, including that certain letter agreement dated the Closing Date by and among Indiana Real Estate, K & R LLC and Lender, and (ii) the full purchase price for such real property, which is expected to be approximately $840,000, is remitted directly to Borrowers at a deposit account maintained with Lender (or, if required by Lender, to a collections account of the Loan Parties maintained by Lender for application to the Obligations); (i) enter into any other transaction outside the ordinary course of business (including any sale and leaseback transaction); or (j) liquidate, wind up, or dissolve itself or suspend or cease operation of a substantial portion of its business.

SECTION 5.4. GUARANTIES. Guarantee or become liable in any way as surety, endorser, accommodation endorser or otherwise for any liabilities or obligations of any other Person, except for unsecured guarantees of the BoK Facility existing as of the Closing Date.

SECTION 5.5. LOANS, ADVANCES, INVESTMENTS. Make any investment in any Person, whether in the form of loans, advances, guarantees, capital contributions, or other investment (except (a) those presently existing and disclosed on Schedule B, and (b) additional other investments in amounts not to exceed an aggregate of $25,000 in any fiscal year, so long as not otherwise restricted or prohibited under any other Section of this Agreement) or acquisition of Stock or Indebtedness of any Person.

SECTION 5.6. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or distribution (either in cash or any other property in respect of any Stock in any Loan Party) or redeem, retire, repurchase or otherwise acquire any Stock of any Loan Party, other than dividends and distributions by Subsidiaries of Parent to Parent.

SECTION 5.7. LIENS. Mortgage, pledge, grant or permit to exist a security interest in, or Lien upon, all or any portion of any Loan Party's assets now owned or subsequently acquired, except (a) Liens in favor of Lender and (b) Permitted Liens. "Lien" means, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such property or its income, including, without limitation, the interest of a vendor or lessor under a conditional sale agreement, capital lease or other title retention agreement, or any agreement to provide any of the above, and the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any jurisdiction. "Permitted Lien" means (a) Liens for unpaid taxes, assessments, or other governmental charges or levies that are not yet delinquent, or the validity or amount of which is being Properly Contested (without giving effect to clause
(e) of the definition thereof) so long as such Lien is unperfected, is not being enforced by the holder thereof and Lender's Lien has priority over such Lien; (b) Liens set forth on Schedule B; (c) the interests of lessors under operating leases and non-exclusive licensors under license agreements; (d) purchase-money Liens or the interests of lessors under capital leases to the extent that such Liens or interests secure Permitted Indebtedness consisting of purchase-money Indebtedness and so long as (i) such Lien attaches only to the asset purchased or acquired and the cash proceeds, and (ii) such Lien only secures the purchase- money Indebtedness that was incurred to acquire the asset purchased or acquired; (e) Liens on assets of WESSCO securing the BoK Facility to the extent such Liens are subject at all times to the BoK Subordination Agreement, and (f) carriers', warehousemen's, mechanics', materialmen's, repairmen's and other like Liens imposed by law and incurred in good faith in the ordinary course of business, which do not arise as a result of delinquent payments or which are being Properly Contested, in each case, so long as such Lien is unperfected, is not being enforced by the holder thereof and Lender's Lien has priority over such Lien.

SECTION 5.8. AGREEMENTS NOT TO ENCUMBER. Agree with any Person other than Lender not to grant or allow to exist a Lien upon any of its property, or covenant to any other Person that such Loan Party in the future will refrain from creating, incurring, assuming or allowing any Lien with respect to any of such Loan Party's property, other than Permitted Liens, and other than as set forth in the BoK Facility as in existence on the Closing Date with respect to the assets of WESSCO.

SECTION 5.9. AFFILIATE TRANSACTIONS. Directly or indirectly enter into, or permit to exist, any material transaction with any Affiliate of any Loan Party, except for (a) transactions that are in the ordinary course of such Loan Party's business, and are on fair and reasonable terms that are no less favorable to such Loan Party than would be obtained in an arm's length transaction with a non-affiliated Person, (b) so long as it has been approved by such Loan Party's board of directors (or comparable governing body) in accordance with applicable law, the payment of reasonable compensation, severance, or employee benefit arrangements to employees, officers, and directors of such Loan Party in the ordinary course of business and consistent with industry practice, (c) the Management Agreement as in existence on the date hereof or as amended in accordance with the Management Fee Subordination Agreement, (d) the lease of certain property at 7020 and 7100 Grade Lane, Louisville, Kentucky from The Harry Kletter Family Limited Partnership (as assignee from K & R Corporation) as in existence on the Closing Date and to the extent fully disclosed to Lender, (e) the lease of certain equipment from K & R, LLC as in existence on the Closing Date and to the extent fully disclosed to Lender, and (f) the receipt of a deposit from K & R, LLC in connection with a purchase of real property located at 1565 East 4th Street, Seymour, Indiana occurring prior to the Closing Date; provided, that the Loan Parties shall not return such deposit unless, concurrently with a sale of the real property located at 1565 East 4th Street, Seymour, Indiana that is permitted by the terms of this Agreement, no Default or Event of Default has occurred, before and immediately after giving effect to such transactions and the return of such deposit, and the purchase price received by the Loan Parties is equal to or greater than the amount of such deposit.

SECTION 5.10. ORGANIZATIONAL CHANGES. Change its name, chief executive office, principal residence, organizational documents, organizational identification number, state of organization, organizational identity or "location" as defined in Section 9-307 of the Code.

SECTION 5.11. CHANGE OF ACCOUNTING METHOD. Modify or change its fiscal year or its method of accounting (other than as may be required to conform to GAAP).

SECTION 5.12. PARENT-WESSCO NOTE. Modify or change the Parent-WESSCO Note as in existence on the Closing Date or make any payment on account of the Parent-WESSCO Note before the maturity date thereof (and, in any case, no earlier than July 31, 2019) or, in the case of WESSCO, accept or retain any payment on account of the Parent- WESSCO Note before the maturity date thereof (and, in any case, no earlier than July 31, 2019)

ARTICLE VI
EVENTS OF DEFAULT

SECTION 6.1. EVENTS OF DEFAULT. The occurrence of any of the following will constitute an "Event of Default" under this Agreement:

(a) Any Borrower fails to pay when due any Obligation.

(b) Any financial statement or certificate furnished to Lender in connection with, or any representation or warranty made or deemed made by any Borrower or any other Loan Party under this Agreement or any other Loan Document proves to be incorrect, false or misleading when furnished or made (or deemed made).

(c) Any default in the performance of or compliance with any obligation, covenant, agreement or other provision contained in this Agreement or in any other Loan Document (other than those specifically described elsewhere in this Section 6.1), or any other obligation of any Loan Party to Lender.

(d) (i) Any default in the payment or performance of any obligation under, or any defined event of default occurs, in each case, after giving effect to any applicable grace or cure periods, under the terms of any contract, instrument or document that constitutes a Material Contract or which involves amounts or liabilities in excess of $100,000 (other than any of the Loan Documents) between Loan Party and any third party or which Loan Party has guaranteed including, without limitation, the BoK Facility, (ii) any demand for payment is made in connection with a Hedge Agreement binding a Loan Party or its assets in an amount, individually or in the aggregate, exceeding $50,000, (iii) any customer of the Loan Parties which contributed 20% or more of the Loan Parties' consolidated revenues over the immediately preceding period of twelve months then ending becomes subject to an Insolvency Proceeding or notifies a Loan Party or announces publicly that such customer will no longer purchase Inventory from the applicable Loan Party, or may purchase materially less Inventory (in each case, whether as a result of a general change in such customer's business, as a result of a change in the relationship of such customer with the Loan Parties or otherwise), or (iv) any payment shall be made on account of the BoK Facility by any Loan Party or any demand for payment is made on account of the BoK Facility against any Loan Party (including, without limitation, against Parent under any guaranty), other than for payments by WESSCO in accordance with the terms of this Agreement, the BoK Facility and the BoK Subordination Agreement.

(e) Any Loan Party becomes insolvent, or becomes the subject of an Insolvency Proceeding.

(f) Any judgment, order or award for the payment of money in an amount in excess of $100,000 is entered or filed against any Loan Party, or with respect to any of their respective assets, and such judgment, order or award is not covered by insurance and remains outstanding for 10 or more days (or, if longer, until the applicable deadline for filing appeals has expired, but in any event not to exceed 30 days after the date such judgment is entered).

(g) There exists or occurs any of the following (each, a "Material Adverse Change"): (i) any event or condition that impairs the ability of the Borrowers to repay or perform any of the Obligations or the ability of the other Loan Parties to perform their obligations, or
(ii) a material adverse change in the business, prospects, operations, results of operations, assets, liabilities or condition (financial or otherwise) of the Loan Parties taken as a whole, or (iii) a material impairment of the ability of any Loan Party to perform its obligations under the Loan Documents or of Lender's ability to enforce the Obligations or realize upon any of the Collateral, or (iv) a material impairment of the enforceability or priority of Lender's Liens with respect to any of the Collateral, or (v) any claim against any Loan Party initiated by appropriate legal proceedings or initiation of litigation which if determined adversely to any Loan Party, would result in the occurrence of any of the above events, or (vi) the equity interests of Parent cease to be listed on the NASDAQ Capital Market or Parent receives from the NASDAQ or any governmental entity notice that such equity interests shall be de-listed.

(h) The dissolution or liquidation of any Loan Party if a corporation, limited liability company, partnership, joint venture or other type of entity; the death or incapacity of any Loan Party if an individual; any Loan Party, or any of its directors, stockholders or members, takes action seeking to affect the dissolution or liquidation of any Loan Party.

(i) Any Loan Party makes any payment on any Indebtedness which is subject to a subordination agreement in favor of Lender, in violation of such subordination agreement.

(j) Any government authority takes action that Lender in good faith believes materially adversely affects any Loan Party's financial condition or ability to repay any of its obligations; any indictment or conviction of any Borrower, any Loan Party or an officer, director or stockholder of any Borrower or any Loan Party for a felony offense under state or federal law or any Borrower or any Loan Party appoints an officer, director or accepts a stockholder who has been convicted of any such felony offense.

(k) Lender fails to have a first-priority security interest in the Collateral, subject to no other Liens except Permitted Liens.

(l) Any Loan Party repudiates or revokes or purports to repudiate or revoke any obligation under its Guaranty or under any other Loan Document to which it is a party.

(m) (i) The Estate of Harry Kletter, The Harry Kletter Family Limited Partnership and K & R, LLC fail to, together, own and (through proxies by both Orson Oliver and Sean Garber) control the Stock of Borrowers as owned by such Persons on the Closing Date, (ii) Parent ceases to directly own and control 100% of the Stock of each of the other Borrowers and Loan Parties, (iii) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof) of Stock representing more than 20% of the aggregate voting power represented by the issued and outstanding Stock of Parent (on a fully diluted basis),
(iv) a Change of Control Transaction (as defined in the Management Agreement) occurs or (v) any merger, acquisition, consolidation or similar arrangement is entered into between any Loan Parties and Algar or its Affiliates.

(n) The Management Agreement shall terminate, expire or otherwise be of no force or effect (including at its stated maturity), for any reason.

(o) (i) Any default or breach shall occur under the Equity Investment Documents or (ii) Borrowers shall become obligated to pay the Loss of Liquidity Fee referenced in the Equity Investment Documents.

SECTION 6.2. REMEDIES. Upon the occurrence and during the continuation of an Event of Default, Lender may (in each case under clause (a) or (b) by written notice to Borrowers; provided that no such notice shall be required with respect to an Event of Default with respect to Borrowers under Section 6.1(e)): (a) declare the Obligations (other than Obligations under any Hedge Agreement, which may be accelerated pursuant to the terms of the applicable Hedge Agreement) immediately due and payable, at which time such Obligations shall be immediately due and payable and each Borrower shall be obligated to immediately repay all of such Obligations in full, without presentment, demand, protest, notice of dishonor, or other notice of any kind or other requirement of any kind, all of which are hereby expressly waived by Borrowers; (b) declare the obligations, if any, of Lender to make further Advances or other extensions of credit under this Agreement and any of the Loan Documents terminated, at which time such obligations will immediately cease and terminate; (c) by written notice to Borrowers, require Borrowers to cash collateralize the Letter of Credit Usage in an amount equal to 110% of such Letter of Credit Usage and (d) exercise any or all rights, powers and remedies available under the Security Agreement and each of the other Loan Documents (including, without limitation, recordation of the Mortgages and any enforcement actions with respect thereto, all at Borrowers' sole cost and expense), or accorded by law or equity. All rights, powers and remedies of Lender may be exercised at any time by Lender and from time to time after the occurrence and during the continuation of an Event of Default, and the same are cumulative and not exclusive, and will be in addition to any other rights, powers or remedies provided by law or equity. Upon the occurrence of any Default or Event of Default described in Section 6.1(e) with respect to Borrowers, any obligation of Lender to make Advances or provide any further extensions of credit hereunder shall automatically terminate and the Obligations (other than Obligations under any Hedge Agreement, which may be accelerated pursuant to the terms of the applicable Hedge Agreement) shall automatically and immediately become due and payable.

ARTICLE VII
MISCELLANEOUS

SECTION 7.1. CERTAIN DEFINITIONS. The following terms will have the following meanings:

"Account" has the meaning set forth in Section 1.1(a).

"Account Debtor" has the meaning set forth in Section 1.1(a).

"Advances" has the meaning set forth in Section 1.1(a).

"Affiliate" means, as applied to any Person, any other Person who controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" means the possession, directly or indirectly through one or more intermediaries, of the power to direct the management and policies of a Person, whether through the ownership of Stock, by contract, or otherwise; provided, however, that, for purposes of the definition of Eligible Accounts and
Section 5.9; (a) any Person which owns directly or indirectly 10% or more of the Stock having ordinary voting power for the election of the board of directors or equivalent governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed an Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each partnership in which a Person is a general partners shall be deemed an Affiliate of such Person. Without limiting the foregoing, each of Algar, Orson Oliver, Sean Garber, K & R, LLC, the estate of Harry Kletter, The Harry Kletter Family Limited Partnership and RCP shall be deemed an Affiliate of the Loan Parties.

"Algar" means Algar, Inc., a Kentucky corporation.

"Availability" means, as of any date of determination, the amount that Borrowers are entitled to borrow as Advances under Section 1.1(a) after giving effect to all then outstanding Obligations.

"Availability Block" means $1,250,000; provided, however, that (a) at such time as Borrowers demonstrate to Lender that no Default or Event of Default shall have occurred or be continuing and the Fixed Charge Coverage Ratio, determined on a trailing twelve-month period, for each of the most recent three (3) consecutive months then ending, is at least 1.25:1.00, the Availability Block shall reduce to $1,000,000 and (b) at such time as Borrowers demonstrate to Lender that no Default or Event of Default shall have occurred or be continuing and the Fixed Charge Coverage Ratio, determined on a trailing twelve-month period, for each of the most recent three (3) consecutive months then ending, is at least 1.50:1.00, the Availability Block shall reduce to $0.

"Bank Product Provider" means Lender or any of its Affiliates that provide Bank Products to any Borrower.

"Bank Products" means any one or more of the following financial products or accommodations extended to any Borrower by "a Bank Product Provider": (a) commercial credit cards, (b) commercial credit card processing services, (c) debit cards, (d) stored value cards, (e) purchase cards (including so-called "procurement cards" or "P-cards"),
(f) cash management and related services (including treasury, depository, return items, overdraft, controlled disbursement, merchant stored value cards, e-payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer and other cash management arrangements), (g) transactions under any Hedge Agreement, or (h) electronic collateral reporting systems and associated products and services.

"Bankruptcy Code" means Title 11 of the United States Code as in effect from time to time.

"BoK Collateral Account" means that certain deposit account (number xxxx040) owned by WESSCO and maintained with The Bank of Kentucky which, pursuant to the BoK Facility, holds certain cash collateral securing the BoK Facility pursuant to the terms thereof as in existence on the Closing Date.

"BoK Facility" means, collectively, (a) the loans extended by The Bank of Kentucky to WESSCO in the aggregate principal amount of $4,000,000, as evidenced by (i) that certain Promissory Note dated as of October 15, 2013 and made by WESSCO in favor of The Bank of Kentucky in the principal amount of $3,000,000 and (ii) that certain Promissory Note dated as of October 15, 2013 and made by WESSCO in favor of The Bank of Kentucky in the principal amount of $1,000,000 and (b) the Hedge Agreement entered into between WESSCO and The Bank of Kentucky as existing on the Closing Date and evidenced by that certain Confirmation dated October 17, 2013 by and between WESSCO and The Bank of Kentucky.

"BoK Subordination Agreement" means that certain Subordination Agreement dated the date of this Agreement among The Bank of Kentucky, Lender and WESSCO.

"Borrowers" has the meaning set forth in the preamble to this Agreement.

"Borrowing Base" has the meaning set forth in Section 1.1(a).

"Business Day" means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close under to the rules and regulations of the Federal Reserve System.

"Capital Expenditures" means, with respect to any Borrower for any period, the aggregate of all expenditures by such Borrower during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed.

"Change in Law" has the meaning set forth in Section 1.4(a).

"Closing Date" has the meaning set forth in the preamble to this Agreement.

"Code" means the Kentucky Uniform Commercial Code, as in effect from time to time. To the extent that defined terms set forth in this Agreement have different meanings under different Articles under the Uniform Commercial Code, the meaning assigned to such defined term under Article 9 of the Uniform Commercial Code will control.

"Collateral" means all real and personal property in which Lender has been granted a security interest or Lien pursuant to the Security Agreement or any other Loan Document, together with any products and proceeds of the foregoing, including, without limitation, the "Collateral" as defined in the Security Agreement.

"Collateral Access Agreement" means a landlord waiver, bailee letter, or acknowledgment agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in the books, Equipment, Accounts or Inventory of any Loan Party in favor of Lender with respect to the Collateral at such premises or otherwise in the custody, control or possession of such lessor, warehouseman, processor, consignee or other Person and in form and substance satisfactory to Lender.

"Collection Account" has the meaning set forth in Section 1.1(h).

"Collections" has the meaning set forth in Section 1.1(i). "Compliance Certificate" means a certificate in the form of Schedule E delivered by the chief financial officer of Borrowers to Lender.

"Control Agreement" has the meaning set forth in Section 4.10.

"Controlled Account" has the meaning set forth in Section 4.10.

"Controlled Account Bank" has the meaning set forth in Section 4.10.

"Daily Balance" means, as of any date of determination and with respect to any Obligation, the amount of such Obligation owed at the end of such day.

"Daily Three Month LIBOR" means, for any day the rate per annum for United States dollar deposits determined by Lender for the purpose of calculating the effective interest rate for loans that reference Daily Three Month LIBOR as the Inter-Bank Market Offered Rate in effect from time to time for the 3 month delivery of funds in amounts approximately equal to the principal amount of such loans. Borrowers understand and agree that Lender may base its quotation of the Inter- Bank Market Offered Rate upon such offers or other market indicators of the Inter-Bank Market as Lender in its sole discretion deems appropriate, including but not limited to the rate offered for U.S. dollar deposits on the London Inter-Bank Market. When interest is determined in relation to Daily Three Month LIBOR, each change in the interest rate will become effective each Business Day that Lender determines that Daily Three Month LIBOR has changed.

"Default" means an event, condition or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.

"Default Period" has the meaning set forth in Section 1.3(b).

"Default Rate" has the meaning set forth in Section 1.3(b).

"Dilution" has the meaning set forth in Section 1.1(a).

"EBITDA" means, with respect to any fiscal period, the net income (or loss), of Parent and its Subsidiaries on a consolidated basis minus extraordinary gains, interest income, non-operating income and income tax benefits and decreases in any change in LIFO reserves, plus non-cash extraordinary losses, interest expense, income taxes, depreciation and amortization and increases in any change in LIFO reserves for such period, in each case, determined in accordance with GAAP.

"Eligible Accounts" has the meaning set forth in Section 1.1(b).

"Eligible Inventory" has the meaning set forth in Section 1.1(c).

"Environmental Indemnity Agreement" means that certain Environmental Indemnity Agreement dated the Closing Date by and among Lender and the Loan Parties in connection with the Mortgages.

"Equipment" means equipment as that term is defined in the Code.

"Equity Investment Documents" means (i) that certain Registration Rights Agreement dated the Closing Date by and by and between RCP and Parent, (ii) that certain Securities Purchase Agreement dated the Closing Date by and between RCP and Parent, (iii) that certain Common Stock Purchase Warrant for the purchase of common stock of Parent dated the Closing Date issued by Parent in favor RCP, together with any other warrants issued pursuant to the terms thereof from time to time, (iv) that certain Director Designation Agreement dated the Closing Date by and between RCP and Parent and (v) the other documents and agreements entered into from time to time in connection with the foregoing.

"Equity Investment Subordination Agreement" means that certain Investor Subordination Agreement dated the date of this Agreement among RCP, Parent and Lender.

"ERISA" has the meaning set forth in Section 2.6.

"Escrow Agreement" means that certain Escrow Agreement dated the Closing Date by and among Lender and the Loan Parties in connection with the Mortgages.

"Event of Default" has the meaning set forth in Section 6.1.

"Excess Availability" means, as of any date of determination, the amount equal to Availability minus the aggregate amount, if any, of all trade payables and other obligations of Borrowers aged in excess of 60 days beyond their terms as of the end of the immediately preceding month, and all book overdrafts and fees of Borrowers, in each case as determined by Lender in its Permitted Discretion.

"Existing Lender" shall have the meaning set forth in Section 3.1.

"Extraordinary Receipts" means any payments received by any Borrower or any of its Subsidiaries not in the ordinary course of business (and not consisting of proceeds described in Section 1.9(a) of this Agreement) consisting of (a) proceeds of judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (b) indemnity payments (other than to the extent such indemnity payments are (i) immediately payable to a Person that is not an Affiliate of any Borrower or any of its Subsidiaries, or (ii) received by any Borrower or any of its Subsidiaries as reimbursement for any payment previously made to such Person), and (c) any purchase price adjustment (other than a working capital adjustment) received in connection with any purchase agreement.

"Fee Letter" means that certain fee letter between Borrowers and Lender dated the Closing Date.

"Fixed Charge Coverage Ratio" means, with respect to Parent and its Subsidiaries on a consolidated basis for any period, the ratio of
(i) EBITDA for such period, minus (a) Non-Financed Capital Expenditures made (to the extent not already incurred in a prior period) or incurred during such period, and (b) cash taxes paid during such period, to the extent greater than zero, to (ii) Fixed Charges for such period.

"Fixed Charges" means, with respect to any fiscal period and with respect to Parent and its Subsidiaries on a consolidated basis determined in accordance with GAAP, the sum, without duplication, of (a) cash interest expense paid during such period (other than interest paid- in-kind, amortization of financing fees, and other non-cash interest expense), which shall include the Loss of Liquidity Fee referenced in the Equity Investment Documents, (b) principal payments paid in cash in respect of Indebtedness paid during such period, including cash payments with respect to capital leases, but excluding principal payments made with respect to the Line of Credit, and (d) all dividends and distributions (other than those paid to Parent by its Subsidiaries) paid during such period.

"GAAP" has the meaning set forth in Section 2.4.

"Guarantor" has the meaning set forth in the preamble to this Agreement.

"Guaranty" means the Guaranty in favor of Lender executed and delivered by the Guarantors.

"Hedge Agreement" means any "swap agreement" as that term is defined in Section 101(53B)(A) of the United States Bankruptcy Code.

"Indebtedness" has the meaning set forth in Section 5.2.

"Information Certificate" means the Information Certificate dated the Closing Date completed and executed by Borrowers and delivered to Lender.

"Insolvency Proceeding" means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, receiverships, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

"Interim Treasury Period" has the meaning set forth in Section 4.10.

"Inventory" has the meaning set forth in Section 1.1(a).

"L/C Collateral Conditions" has the meaning set forth in Section 1.5(a).

"Lender" has the meaning set forth in the preamble to this Agreement.

"Lender Expenses" has the meaning set forth in Section 7.4.

"Letter of Credit" has the meaning set forth in Section 1.1(d).

"Letter of Credit Usage" has the meaning set forth in Section 1.1(d).

"Lien" has the meaning set forth in Section 5.7.

"Line of Credit" has the meaning set forth in Section 1.1(a).

"Loan Account" has the meaning set forth in Section 1.1(i).

"Loan Documents" means this Agreement, the Security Agreement, the Management Fee Subordination Agreement, the Fee Letter, the BoK Subordination Agreement, the Equity Investment Subordination Agreement, the Mortgages, the Escrow Agreement, the Environmental Indemnity Agreement, the Guaranty, each promissory note issued for the benefit of Lender by any Borrower, each letter of credit agreement and each contract, certificate instrument, agreement and other document required by this Agreement or at any time entered into or delivered to Lender in connection with this Agreement, the Line of Credit, the Term Loan and the Collateral (including any disbursement letters provided by Borrowers on the Closing Date to lender, any Compliance Certificates, borrowing base certificates, requests for Advances or other borrowings and letter of credit applications), specifically excluding Hedge Agreements.

"Loan Manager" has the meaning set forth in Section 1.1(e).

"Loan Parties" means collectively, each Borrower and each Guarantor and each of them is a "Loan Party".

"Lockbox" has the meaning set forth in Section 1.1(h).

"Management Agreement" means that certain Management Services Agreement dated December 2, 2013 by and between Parent and Algar.

"Management Fee Subordination Agreement" means that certain Management Fee Subordination Agreement dated the Closing Date by and among Parent, Algar and Lender providing for, among other things, the subordination of amounts payable to Algar pursuant to the Management Agreement to the prior payment of the Obligations, in form and substance satisfactory to Lender.

"Material Adverse Change" has the meaning set forth in Section 6.1(g).

"Material Contract" means (i) each contract or agreement to which any Loan Party is a party involving aggregate consideration payable to or by such Loan Party of $1,000,000 or more (other than purchase orders in the ordinary course of the business of such Loan Party), (ii) the Management Agreement, (iii) BoK Facility, (iv) Equity Investment Documents and (v) all other contracts or agreements, the loss of which could reasonably be expected to result in a Material Adverse Change.

"Maturity Date" means June 13, 2019.

"Maximum Revolver Amount" has the meaning set forth in Section 1.1(a).

"Mortgages" means, collectively, each mortgage, deed to secure debt, deed of trust or similar documents executed on the Closing Date and executed and/or delivered from time to time by each Loan Party that holds a fee interest in real property encumbering such real property, in form and substance satisfactory to Lender.

"Net Liquidation Percentage" has the meaning set forth in Section 1.1(a).

"Non-Financed Capital Expenditures" means Capital Expenditures not financed by the seller of the capital asset, by a third party lender or by means of any extension of credit by Lender other than by means of an Advance under the Line of Credit.

"Obligations" means (a) all loans (including the Advances and the Term Loan), debts, principal, interest (including any interest that accrues after the beginning of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), reimbursement or indemnification obligations with respect to Letters of Credit (irrespective of whether contingent), premiums, liabilities (including all amounts charged to the Loan Account), obligations (including indemnification obligations), fees, Lender Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, and all covenants and duties of any other kind and description owing by Borrowers under or evidenced by this Agreement or any of the other Loan Documents or otherwise owing to Lender under any other present or future document, instrument or agreement, and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, liquidated or unliquidated, determined or undetermined, voluntary or involuntary, due, not due or to become due, sole, joint, several or joint and several, incurred in the past or now existing or hereafter arising, however arising, and including all interest not paid when due, and all other expenses or other amounts that Borrowers are required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents, and (b) all obligations indebtedness, liabilities, reimbursement obligations, fees, or expenses owing by any Borrower to a Bank Product Provider with respect to any Bank Product, whether direct or indirect, absolute or contingent, liquidated or unliquidated, determined or undetermined, voluntary or involuntary, due, not due or to become due, incurred in the past or now existing or hereafter arising, however arising. Any reference in this Agreement or in the Loan Documents to the Obligations will include all or any portion of the Obligations and any extensions, modifications, renewals, or alterations of the Obligations, both prior and subsequent to any Insolvency Proceeding.

"OFAC" means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

"Overadvance Amount" has the meaning set forth in Section 1.1(j).

"Parent" has the meaning set forth in the preamble to this Agreement.

"Parent-WESSCO Note" means that certain Amended and Restated Promissory Note dated on or about the Closing Date made by Parent to the order of WESSCO in the principal amount of $3,000,000.

"Patriot Act" means Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001).

"Permitted Discretion" means a determination made in the exercise of reasonable (from the perspective of a secured, asset-based lender) business judgment.

"Permitted Indebtedness" has the meaning set forth in Section 5.2.

"Permitted Lien" has the meaning set forth in Section 5.7.

"Person" means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and their political subdivisions.

"Plan" has the meaning set forth in Section 2.6.

"Prime Rate" means at any time the rate of interest most recently announced by Lender at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Lender's base rates, and serves as the basis upon which effective rates of interest are calculated for those loans making reference to it, and is evidenced by its recording in such internal publication or publications as Lender may designate. Each change in the rate of interest will become effective on the date each Prime Rate change is announced by Lender.

"Properly Contested" means with respect to any obligation or purported obligation of a Loan Party, (a) the obligation is subject to a bona fide dispute regarding amount or the Loan Party's liability to pay;
(b) the obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently pursued; (c) appropriate reserves have been established by the Loan Parties in accordance with GAAP; (d) non-payment could not reasonably be expected to have a Material Adverse Effect, nor result in forfeiture or sale of any assets of the Loan Party; (e) no Lien is imposed on assets of the Loan Party, unless bonded and stayed to the satisfaction of Lender; (f) if the obligation results from entry of a judgment or other order, such judgment or order is stayed pending appeal or other judicial review; and
(g) if such contest is abandoned, settled, or determined adversely (in whole or in part) to such Loan Party, such Loan Party forthwith pays such obligation, together with all penalties, interest, and other amounts due in connection therewith. Only that portion of the obligation which is in dispute may be Properly Contested.

"Rate Reduction" means (i) upon and after the delivery of audited annual financial statements in accordance with Schedule C for the fiscal year ending December 31, 2014, and solely to the extent Borrowers have demonstrated to Lender that as of December 31, 2014 the Fixed Charge Coverage Ratio for the period of twelve months then ending is greater than 1.50:1.00 and that no Default or Event of Default has then occurred or is continuing, 0.25% and (ii) at all other times and in all other circumstances (including due to the failure of Borrowers to satisfy the conditions in foregoing clause (i)), 0%.

"RCP" means Recycling Capital Partners, LLC, an Indiana limited liability company.

"Reserves" has the meaning set forth in Section 1.1(a)

"SEC" means the United States Securities and Exchange Commission and any successor thereto.

"Security Agreement" has the meaning set forth in Section 1.6.

"Stock" means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other equity security.

"Subsidiary" of a Person means a corporation, partnership, limited liability company or other entity in which that Person directly or indirectly owns or controls the shares of Stock having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company or other entity.

"Taxes" has the meaning set forth in Section 7.5.

"Term Loan" has the meaning set forth in Section 1.2(a).

"Termination Date" has the meaning set forth in Section 1.5(a).

"Value" has the meaning set forth in Section 1.1(a).

"WESSCO" has the meaning set forth in the preamble to this Agreement.

SECTION 7.2. NO WAIVER. No delay, failure or discontinuance of Lender in exercising any right, power or remedy under any of the Loan Documents will affect or operate as a waiver of such right, power or remedy; nor will any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Lender of any breach of or default (including any Default or Event of Default) under any of the Loan Documents must be in writing and will be effective only to the extent set forth in such writing.

SECTION 7.3. NOTICES. All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the address for such party set forth below each party's name on the signature pages of this Agreement or to such other address as any party may designate by written notice to all other parties. Each such notice, request and demand will be deemed given or made as follows:
(a) if sent by hand delivery or overnight courier, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; (c) if sent by telecopy, upon receipt; and (d) if sent by electronic mail, upon sender's receipt of an acknowledgment from the intended recipient (such as by "return receipt requested" function, as available, return email or other written acknowledgment).

SECTION 7.4. COSTS, EXPENSES AND ATTORNEYS' FEES. Each Borrower and each other Loan Party will pay to Lender immediately upon demand the full amount of the following (collectively, "Lender Expenses"): all payments, advances, charges, costs and expenses, including without limitation reasonable attorneys' fees (to include outside counsel, including any local counsel, and, after the occurrence of an Event of Default, fees and all allocated costs of Lender's in- house counsel), recording and search fees and taxes, including documentary, stamp or intangible taxes in connection with the Loan Documents and any Uniform Commercial Code, Mortgage or other Collateral filings or recordations, appraisal fees, consultant fees, audit fees, and exam fees expended or incurred by Lender in connection with (a) the negotiation and preparation of this Agreement and the other Loan Documents, perfection of Lender's Liens in the Collateral, Lender's continued administration of this Agreement and the other Loan Documents, and the preparation of any amendments, waivers or other agreements, instruments or documents relating to this Agreement or the other Loan Documents, or in connection with any "workout" or restructuring, (b) the enforcement of Lender's rights and/or the collection of any amounts which become due to Lender under any of the Loan Documents, and (c) the prosecution or defense of any action in any way related to any of the Loan Parties or any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the above incurred in connection with any Insolvency Proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Lender or any other Person) relating to any of the Loan Parties or any other Person and (d) any of the Collateral and other examinations, appraisals, evaluations, audits and inspections. Each Loan Party's obligations set forth in this Section 7.4 will survive any termination of this Agreement or repayment of the Obligations and will for all purposes continue in full force and effect.

SECTION 7.5. TAXES. All payments made by Borrowers hereunder or under any note or other Loan Document will be made without setoff, counterclaim, or other defense. In addition, all such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or subsequently imposed by any jurisdiction or by any political subdivision or taxing authority and all related interest, penalties or similar liabilities (collectively, "Taxes") and in the event any deduction or withholding of such Taxes is required, each Borrower agrees to pay the full amount of such Taxes.

SECTION 7.6. GENERAL. This Agreement will be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided that no Borrower and no Loan Party may assign or transfer any of its interests, rights or obligations under this Agreement without Lender's prior written consent. Lender reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Lender's rights and benefits under this Agreement and the other Loan Documents. This Agreement and the other Loan Documents constitute the entire agreement between Borrowers and the Loan Parties and Lender with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter of this Agreement. This Agreement may be amended or modified only in writing signed by each party to this Agreement. This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other Person will be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party. Time is of the essence of each and every provision of this Agreement and each other of the Loan Documents. If any provision of this Agreement or any other Loan Document will be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement or the other Loan Documents. This Agreement may be executed in any number of counterparts, each of which when executed and delivered will be deemed to be an original, and all of which when taken together will constitute one and the same Agreement. Delivery of an executed counterpart of this Agreement by facsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement and any party's failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.

SECTION 7.7. MULTIPLE BORROWERS.

(a) Joint and Several Liability. Each Borrower agrees that it is jointly and severally liable for, and absolutely and unconditionally guarantees to Lender the prompt payment and performance of, all Obligations under this Agreement and all agreements under the Loan Documents. Each Borrower agrees that its guaranty obligations hereunder constitute a continuing guaranty of payment and not of collection, that such obligations shall not be discharged until cash payment in full of the Obligations, and that such obligations are absolute and unconditional, irrespective of (i) the genuineness, validity, regularity, enforceability, subordination or any future modification of, or change in, any Obligations or Loan Document, or any other document, instrument or agreement to which any Borrower is or may become a party or be bound; (ii) the absence of any action to enforce this Agreement or any other Loan Document, or any waiver, consent or indulgence of any kind by Lender; (iii) the existence, value or condition of, or failure to perfect any of Lender's Liens or to preserve rights against, any security or guaranty for the Obligations or any action, or the absence of any action, by Lender in respect thereof (including the release of any security or guaranty); (iv) the insolvency of any Borrower; (v) any election by Lender in an Insolvency Proceeding for the application of
Section 1111(b)(2) of the Bankruptcy Code; (vi) any borrowing or grant of a Lien by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (vii) the disallowance of any claims of Lender against any Borrower for the repayment of any Obligations under Section 502 of the Bankruptcy Code or otherwise; or
(viii) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, except cash payment in full of all Obligations.

(b) Contribution. Each Borrower hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to Lender with respect to any of the Obligations or any collateral security until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments to Lender or under any of the Bank Products are hereby expressly made subordinate and junior in right of payment, including, without limitation as to any increases in the Obligations arising under this Agreement or under the Bank Products, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower.

(c) No Limitation on Liability. Nothing contained in this
Section 7.7 shall limit the liability of any Borrower to pay extensions of credit made directly or indirectly to that Borrower (including revolving loans advanced to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such Borrower), Obligations relating to Letters of Credit issued to support such Borrower's business, and all accrued interest, fees, expenses and other related Obligations with respect thereto, for which such Borrower shall be primarily liable for all purposes hereunder. Lender shall have the right, at any time in its discretion, to condition an extension of credit hereunder upon a separate calculation of borrowing availability for each Borrower and to restrict the disbursement and use of such extensions of credit to such Borrower.

SECTION 7.8. INDEMNITY. Each Borrower and each other Loan Party indemnifies Lender and its Affiliates, Subsidiaries, directors, officers, employees, representatives, agents, and attorneys, and holds them harmless from and against any and all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, costs and expenses (including reasonable attorneys' fees), of every kind, which they may sustain or incur based upon or arising out of any of the Obligations, this Agreement, any of the Loan Documents, or the Collateral or any relationship or agreement between Lender and the Loan Parties, or any other matter, relating to any Loan Party, the Obligations or the Collateral; provided that this indemnity will not extend to damages that a court of competent jurisdiction finally determines in a non-appealable judgment to have been caused by the indemnitee's own gross negligence or willful misconduct. Regardless of any provision in this Agreement to the contrary, the indemnity agreement set forth in this Section will survive any termination of this Agreement or repayment of the Obligations and will for all purposes continue in full force and effect.

SECTION 7.9. GOVERNING LAW. The validity of this Agreement and the other Loan Documents (unless otherwise expressly provided in such Loan Document) and the construction, interpretation, and enforcement of this Agreement and the other Loan Documents, and the rights of the parties, as well as all claims, controversies or disputes arising under or related to this Agreement and the other Loan Documents will be determined under, governed by and construed in accordance with the laws of the State of Kentucky without regard conflicts of laws principles.

SECTION 7.10. CONSEQUENTIAL DAMAGES. No claim may be made by any Loan Party against Lender, or any Affiliate, Subsidiary, director, officer, employee, representative, agent, attorney or attorney-in-fact of any of them for any special, indirect, consequential, or punitive damages in respect of any claim for breach of contract or other theory of liability arising out of or related to the transactions contemplated by this Agreement or any other Loan Document or any related act, omission, or event, and each Loan Party waives, releases, and agrees not to sue upon any claim for such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

SECTION 7.11. SAVINGS CLAUSE. If at any time the interest rate set forth in any of the Loan Documents exceeds the maximum interest rate allowable under applicable law, the interest rate will be deemed to be such maximum interest rate allowable under applicable law.

SECTION 7.12. RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the occurrence of an Event of Default and until such time, as any, as Lender may elect in its sole discretion to waive such Event of Default in writing, (a) each Loan Party authorizes Lender, at any time and from time to time, without notice, which is hereby expressly waived by such Loan Party, and whether or not Lender will have declared any extension of credit under this Agreement to be due and payable in accordance with the terms of this Agreement, to set off against, and to appropriate and apply to the payment of, the Obligations (whether matured or unmatured, fixed or contingent, liquidated or unliquidated), any and all amounts owing by Lender to such Loan Party (whether payable in U.S. dollars or any other currency, whether matured or unmatured, and in the case of deposits, whether general or special (except trust and escrow accounts), time or demand and however evidenced), and (b) pending any such action, to the extent necessary, to hold such amounts as collateral to secure such the Obligations and to return as unpaid for insufficient funds any and all checks and other items drawn against any deposits so held as Lender, in its sole discretion, may elect. Each Loan Party grants to Lender a security interest in all deposits and accounts maintained with Lender to secure the payment of all Obligations.

SECTION 7.13. CONFIDENTIALITY. Lender agrees that material, non-public information regarding each Loan Party, its operations, assets, and existing and contemplated business plans will be treated by Lender in a confidential manner, and will not be disclosed by Lender to Persons who are not parties to this Agreement, except (i) to Lender's Affiliates, attorneys, representatives, agents and other advisors and to officers, directors and employees of Lender, (ii) as required by law or by any court, governmental or regulatory authority, (iii) as agreed by any Loan Party, (iv) if such information becomes generally available to the public, (v) in connection with any litigation or adversary proceeding involving claims related to this Agreement, (vi) the assignment, participation or pledge of Lender's interest in this Agreement, (vii) to equity owners of any Loan Party, and (viii) in connection with the exercise by Lender of any right or remedy under this Agreement, any other Loan Document or at law. Lender may use the name, logos, and other insignia of the Borrowers and the maximum amount of the credit facilities provided under this Agreement in any "tombstone" or comparable advertising, on its website or in other marketing materials of Lender.

SECTION 7.14. PATRIOT ACT NOTICE. Lender notifies each Loan Party that pursuant to the requirements of the Patriot Act, Lender is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow Lender to identify each Loan Party in accordance with the Patriot Act. In addition, if Lender is required by law or regulation or internal policies to do so, it shall have the right to periodically conduct (a) Patriot Act searches, OFAC/PEP searches, and customary individual background checks for each Loan Party, and (b) OFAC/PEP searches and customary individual background checks of each Loan Party's senior management and key principals, and each Loan Party agrees to cooperate in respect of the conduct of such searches and further agree that the reasonable costs and charges for such searches shall constitute Lender Expenses.

SECTION 7.15. JURISDICTION. All actions or proceedings arising in connection with this Agreement and the other Loan Documents may be tried and litigated in the State of Georgia and, to the extent permitted by applicable law, federal courts located in the City of Atlanta, State of Georgia; provided that any suit seeking enforcement against any Collateral or other property may be brought, at Lender's option, in the courts of any jurisdiction where Lender elects to bring such action or where such Collateral or other property may be found. Each Loan Party and Lender waive, to the extent permitted under applicable law, any right they may have to assert the doctrine of forum non conveniens or to object to venue to the extent any proceeding is brought in accordance with this Section 7.15.

SECTION 7.16. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH LOAN PARTY AND LENDER WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH, A "CLAIM"). EACH LOAN PARTY AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

[remainder of page intentionally left blank; signature pages follow]

The parties have caused this Agreement to be executed as of the date on page 1.

LENDER:                                 BORROWERS:

WELLS FARGO BANK, NATIONAL              INDUSTRIAL SERVICES OF AMERICA, INC.,
ASSOCIATION                             as a Borrower


By:/s/ John L. Palermo__                By:/s/ Orson Oliver____
Name:   John L. Palermo                 Name:  Orson Oliver
Title:     Vice President               Title:  Interim Chief Executive
                                                Officer

Address:                                Address:
1100 Abernathy Road, NE, Suite 1600     7100 Grade Lane
Atlanta, Georgia 30328                  Louisville, Kentucky 40232
Attention: Joseph L. White              Attention: Alan Schroering
Email: Joseph.L.White@wellsfargo.com    Fax No.: (502) 515-1700
                                        Email: aschroering@isa-inc.com


ISA INDIANA, INC., as a Borrower

                                        By: /s/ Orson Oliver____
                                        Name:  Orson Oliver
                                        Title:  Interim Chief Executive Officer

                                        Address:
                                        7100 Grade Lane
                                        Louisville, Kentucky 40232
                                        Attention: Alan Schroering
                                        Fax No.: (502) 515-1700
                                        Email: aschroering@isa-inc.com


ISA LOGISTICS LLC, as a Borrower

                                           By:  Industrial Services of
                                                America, Inc., its Sole Member

                                             By: /s/ Orson Oliver___
                                             Name:  Orson Oliver
                                             Title:  Interim Chief Executive
                                                        Officer

                                        Address:
                                        7100 Grade Lane
                                        Louisville, Kentucky 40232
                                        Attention: Alan Schroering
                                        Fax No.: (502) 515-1700
                                        Email: aschroering@isa-inc.com

[Signatures continue on the following pages]

GUARANTORS:

ISA REAL ESTATE, LLC, as a Guarantor

By: Algar, Inc., its Manager

By: /s/ Sean Garber____
Name:  Sean Garber
Title:  President

Address:


7100 Grade Lane
Louisville, Kentucky 40232
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

ISA INDIANA REAL ESTATE, LLC, as a

Guarantor

By: Algar, Inc., its Manager

By: /s/ Sean Garber____
Name:  Sean Garber
Title:    President

Address:


7100 Grade Lane
Louisville, Kentucky 40232
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

WESSCO, LLC, as a Guarantor

By: /s/ Orson Oliver______
Name:  Orson Oliver
Title:  Interim Chief Executive
        Officer

Address:


7100 Grade Lane
Louisville, Kentucky 40232
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

[Signatures continue on the following page]

7021 GRADE LANE LLC, as a Guarantor

By: Algar, Inc., its Manager

By: /s/ Sean Garber__
Name:  Sean Garber
Title:    President

Address:


7100 Grade Lane
Louisville, Kentucky 40232
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

7124 GRADE LANE LLC, as a Guarantor

By: Algar, Inc., its Manager

By: /s/ Sean Garber__
Name:  Sean Garber
Title:    President

Address:


7100 Grade Lane
Louisville, Kentucky 40232
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

7200 GRADE LANE LLC, as a Guarantor

By: Algar, Inc., its Manager

By: /s/ Sean Garber_____
Name:  Sean Garber
Title:    President

Address:

7100 Grade Lane
Louisville, Kentucky 40232
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

SCHEDULE B TO CREDIT AGREEMENT

DISCLOSURE SCHEDULE

Section 2.3 Pending Litigation

None

Sections 2.5 Taxes

None

Section 2.8 Environmental Matters

None

Section 2.10 Material Contracts

Name of                         Date of                 Parties to              Date of
Agreement                       Agreement
                Agreement
                Expiration / Termination
Management Services
                December 1, 2013
Algar, Inc. and ISA
The earlier of: (i) December 31,
Agreement                                                                       2016, (ii) the date the Manager
                                                                                and ISA merge, and (iii) the date
                                                                                ISA purchases all of the equity or
                                                                                substantially all of the assets of
                                                                                the Manager


BoK Facility (as the term is    October 15, 2013
        The Bank of Kentucky,
        November 1, 2018 ($3,000,000 Note)
defined in the Credit Agreement)                        Inc. and Wessco, as     October 14, 2019 ($1,000,000 Note)
                                                        borrower, and ISA, as
                                                        guarantor

Lease Agreement
January 1, 1998
7100 Grade Lane LLC
December 31, 2017
                                                        (as landlord, and as
                                                        successor in interest
                                                        to K&R Corporation)
                                                        and ISA (as lessee)


Securities Purchase Agreement
June 13, 2014
                ISA and Recycling       N/A
and Registration Rights                                 Capital Partners, LLC

Section 5.2 Existing Indebtedness

None

Section 5.5 Existing Loans, Advances, and Investments

Name/Address            Obligor                  Principal Balance              Nature of Debt          Term
of Payee                                        as of the date specified


Wessco
ISA
$3,000,000 as of 06/12/14
        Intercompany debt
Demand, but not
                                                                                                        before July 31, 2019

Section 5.7 Existing Liens

Name and Address                Loan Party              Description of Collateral       File No. of Financing
of Secured Party                                                                        Statement/Jurisdiction


Spector Terminals, Inc.         ISA
Real estate located at          Office of Clerk of
1050 Kingery Highway                                    3409 Campground Road,           Jefferson County, Kentucky;
Bensenville, Illinois 60106
Louisville, Kentucky
                Book 1773, page 545

Commonwealth of Kentucky        7124 Grade Lane

Real estate located at
Office of the Clerk of
Revenue Cabinet                                         7124 Grade Lane,                Jefferson County, Kentucky;
100 Fair Oaks, 5th Floor                                Louisville, Kentucky            Book 0781, page 0878
Frankfort, Kentucky 40602


MetalCenter, Inc.
7124 Grade Lane
Real estate located at          Office of the Clerk of
1610 N. Calhoun Street                                  7124 Grade Lane,
Jefferson County, Kentucky;
Fort Wayne, Indiana                                     Louisville, Kentucky            Book 5775, page 947
                                                        * This lien may not be a
                                                        valid lien and thus may not
                                                        encumber the collateral


SCHEDULE C TO CREDIT AGREEMENT

FINANCIAL STATEMENTS

as soon as available    (a)     an unaudited consolidated and consolidating balance sheet, income statement,
but within 25 days              statement of cash flow, and statement of owner's equity with respect to Parent
after the end of                and its Subsidiaries, compared to the prior period and plan, prepared in
each month                      accordance with GAAP, subject to year-end audit adjustments and the absence
                                of footnotes, together with a corresponding discussion and analysis of results
                                from management; and

                        (b)     a Compliance Certificate along with the underlying calculations, including the
                                calculations to establish compliance with the financial covenants set forth in
                                this Agreement and certain other covenants under this Agreement and a
                                certificate of the president or chief financial officer of Borrowers attesting
                                that the financial statements are accurate and that there exists no Default
                                or Event of Default.

as soon as available,   (a)     consolidated and consolidating financial statements of Parent and its Subsidiaries
but within 120 days             for such fiscal year, audited by independent certified public accountants
after the end of each           reasonably acceptable to Lender, prepared in accordance with GAAP, and certified,
fiscal year                     without any qualifications (including any (A) "going concern" or like qualification
                                or exception, (B) qualification or exception as to the scope of such audit, or (C)
                                qualification which relates to the treatment or classification of any item and
                                which, as a condition to the removal of such qualification, would require an
                                adjustment to such item), by such accountants to have been prepared in accordance
                                with GAAP (such audited financial statements to include a balance sheet, income
                                statement, statement of cash flow, and statement of owner's equity and, if
                                prepared, such accountants' letter to management); and

                        (b)     a Compliance Certificate with the underlying calculations, including the
                                calculations to establish compliance with the financial covenants set forth
                                in this Agreement and a certificate of the president or chief financial
                                officer of Borrowers attesting that the financial statements are accurate
                                and that there exists no Default or Event of Default.

as soon as available,   (a)     copies of Parent's and its Subsidiaries' forecasted (a) balance sheets,
but 30 days before the          (b) profit and loss statements, (c) availability projections, and (d)
start of each of                cash flow statements, all prepared on a basis consistent with Borrowers'
Borrowers' fiscal years         historical financial statements, together with appropriate supporting
                                details and a statement of underlying assumptions, in form and substance
                                satisfactory to Lender, in its Permitted Discretion, for the next fiscal
                                year, on a monthly basis, certified by the chief financial officer of
                                Borrowers as being such officer's good faith estimate of the financial
                                performance of the Borrowers and their respective Subsidiaries during
                                the period covered.

if and when filed by    (a)     Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K
any Loan Party,                         current reports;

                        (b)     any other filings made by any Loan Party with the SEC or any national
                                securities exchange or filed pursuant to the Securities Act of 1933
                                or the Securities and Exchange Act of 1934 (in each case, as amended,
                                and together with any regulations promulgated thereunder); and

                        (c)     any other information that is provided by any Loan Party to its
                                shareholders generally.


on request of Lender    such other information as Lender may request in its Permitted Discretion.


SCHEDULE D TO CREDIT AGREEMENT

COLLATERAL REPORTING

On the first            (a)     a borrowing base certificate or daily collateral report in form
Business Day of                 and substance acceptable to Lender;
each week or more
frequently as           (b)     an Account roll-forward with supporting details supplied from
Lender requests                 sales journals, collection journals, credit registers and any
                                other records;

                        (c)     notice of all claims, offsets, or disputes asserted by Account
                                Debtors with respect to any Loan Party's Accounts; and

                        (d)     notice of any return of goods with a Value individually or
                                in the aggregate exceeding $25,000.

On the first            (a)     Inventory system/perpetual reports specifying the cost and market
Business Day of                 value of Loan Parties' Inventory, by location and by category, with
each month or more              additional detail showing additions to and deletions (without
frequently as                   limiting Lender's discretion to request such information more
Lender requests                 frequently, as of the date hereof, Lender anticipates that it
                                will not request such information more frequently than monthly
                                so long as Availability is not less than $2,000,000).

No later than the       (a)     a monthly Account roll-forward, in a format acceptable to Lender
10th day of                     in its sole discretion;
each month
                        (b)     a detailed aging of each Loan Party's Accounts, together with a
                                reconciliation to the monthly Account roll-forward and supporting
                                documentation for any reconciling items noted;

                        (c)     a detailed calculation of those Accounts and Inventory that are
                                not eligible for the Borrowing Base;

                        (d)     a detailed Inventory system/perpetual report, including a report
                                in form satisfactory to Lender in its Permitted Discretion
                                comparing the cost of Inventory to its market value; and

                        (e)     a summary aging, by vendor, of each Loan Party's and its
                                Subsidiaries' accounts payable.

No later than the       (a)     a reconciliation of Accounts aging, trade accounts payable aging,
30th day of                     and Inventory perpetual of Loan Parties to the general ledger
each month                      together with the monthly financial statements of Loan Parties,
                                including any book reserves related to each category.

Within 10 days after    (a)     a detailed list of each Loan Party's customers, with address
the end of each                 and contact information.
fiscal quarter of
Borrowers


Upon request by Lender  (a)     copies of purchase orders and invoices for Inventory and
                                Equipment acquired by Loan Parties;

                        (b)     copies of invoices together with corresponding shipping and
                                delivery documents and credit memos together with corresponding
                                supporting documentation with respect to invoices and credit
                                memos; and

                        (c)     such other reports and information as to the Collateral and as
                                to Loan Parties, as Lender may request in its Permitted Discretion.


SCHEDULE E TO CREDIT AGREEMENT

FORM OF COMPLIANCE CERTIFICATE

[on Parent's Letterhead]

To: Wells Fargo Bank, National Association 1100 Abernathy Road, NE
Suite 1600
Atlanta, Georgia 30328
Attention: Industrial Services of America Loan Administration

Re: Compliance Certificate dated _____________________, 20___

Ladies and Gentlemen:

Reference is made to that certain Credit and Security Agreement (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement" dated as of June 13, 2014 by and between WELLS FARGO BANK, NATIONAL ASSOCIATION ("Lender"), INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation ("Parent") and certain Subsidiaries of Parent as borrowers (collectively, "Borrowers") and the Guarantors named therein. Capitalized terms used in this Compliance Certificate have the meanings set forth in the Credit Agreement unless specifically defined herein.

Pursuant to Schedule C of the Credit Agreement, the undersigned officer of Parent, as Administrative Borrower on behalf of all of the Borrowers, hereby certifies that:

1. Attached is the financial information of Loan Parties which is required to be furnished to Lender pursuant to Section 4.1 of the Credit Agreement for the period ended _________________, 20___ (the "Reporting Date"). Such financial information has been prepared in accordance with GAAP [(except for year-end adjustments and the lack of footnotes)]1 and fairly presents in all material respects the financial condition of Loan Parties.

2. Such officer has reviewed the terms of the Credit Agreement and has made, or caused to be made under his/her supervision, a review in reasonable detail of the transactions and condition of Loan Parties during the accounting period covered by the financial statements delivered pursuant to Schedule C of the Credit Agreement.

3. Such review has not disclosed the existence on and as of the date of this Certificate, and the undersigned does not have knowledge of the existence as of the date of this Certificate, of any event or condition that constitutes a Default or Event of Default.

4. The representations and warranties of each of the Loan Parties set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of this Certificate (except to the extent they relate to a specified date).

5. As of the Reporting Date, each of the Loan Parties is in compliance with the applicable covenants contained in Article IV and Article V of the Credit Agreement as demonstrated on Schedule 1.

6. As of the date hereof, the status of preparation, filing and effectiveness of the registration statement contemplated by the Equity Investment Documents and described in Section 6.1(o) of the Credit Agreement is described, in reasonable detail, on Schedule 2.

7. As of the date hereof, no default or event of default has occurred or is continuing under the BoK Facility. As of the most recent date of testing pursuant to the BoK Facility, the Fixed Charge Coverage Ratio (as defined in and calculated under the terms of the documents evidencing the BoK Facility) is ___:1.00, which [is/is not] in compliance with the requirements of the BoK Facility.

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this ____ day of _____________________, 20___.

INDUSTRIAL SERVICES OF AMERICA, INC.

By:______________________________
Name: ___________________________
Title:_____________________________

1 Exclude bracketed language with annual audits.


Exhibit 10.3

REVOLVING NOTE

$15,000,000.00 June 13, 2014

FOR VALUE RECEIVED, INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation ("Parent"), ISA INDIANA, INC., an Indiana corporation ("ISA Inc."), and ISA LOGISTICS LLC, a Kentucky limited liability company ("ISA Logistics"; Parent, ISA Inc., and ISA Logistics, collectively referred to herein as "Borrowers" and individually as a "Borrower"), each hereby promise to pay, on a joint and several basis, to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (together with its successors and assigns, "Lender"), at the place and times provided in the Credit Agreement referred to below, the principal sum of FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) or the principal amount of all revolving Advances made by Lender from time to time pursuant to that certain Credit Agreement dated the date hereof by and among Borrowers, certain affiliates of Borrowers, and Lender (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"). Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.

The unpaid principal amount of this Revolving Note from time to time outstanding is subject to mandatory repayment from time to time as provided in the Credit Agreement and shall bear interest as provided in the Credit Agreement. All payments of principal and interest on this Revolving Note shall be payable to Lender or other holder of this Revolving Note in lawful currency of the United States of America in immediately available funds in the manner and location indicated in the Credit Agreement or wherever else Lender or such holder may specify.

This Revolving Note is entitled to the benefits of, and evidences Obligations incurred under, the Credit Agreement, to which reference is made for a description of the security for this Revolving Note and for a statement of the terms and conditions on which Borrowers are permitted and required to make prepayments and repayments of principal of the Obligations evidenced by this Revolving Note and on which such Obligations may be declared to be immediately due and payable. Time is of the essence in this Revolving Note.

Each Borrower agrees, in the event that this Note or any portion hereof is collected by law or through an attorney at law, to pay all costs of collection, including, without limitation, attorneys' fees and court costs.

This Revolving Note shall be governed, construed and enforced in accordance with the laws of the Commonwealth of Kentucky, without reference to the conflicts or choice of law principles thereof.

Each Borrower hereby waives all requirements as to diligence, presentment, demand of payment, protest, and (except as required by the Credit Agreement) notice of any kind with respect to this Revolving Note.

IN WITNESS WHEREOF, each of the undersigned have executed this Revolving Note as of the day and year first written above.

INDUSTRIAL SERVICES OF AMERICA, INC.

By: /s/ Orson Oliver
Name: Orson Oliver
Title: Interim Chief Executive Officer

ISA INDIANA, INC.

By: /s/ Orson Oliver
Name: Orson Oliver
Title: Interim Chief Executive Officer

ISA LOGISTICS LLC

By: Industrial Services of America, Inc., its Sole Member

By: /s/ Orson Oliver
Name:  Orson Oliver
Title:    Interim Chief Executive Officer


Exhibit 10.4
TERM NOTE

$2,800,000.00 June 13, 2014

FOR VALUE RECEIVED, INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation ("Parent"), ISA INDIANA, INC., an Indiana corporation ("ISA Inc."), and ISA LOGISTICS LLC, a Kentucky limited liability company ("ISA Logistics"; Parent, ISA Inc., and ISA Logistics, collectively referred to herein as "Borrowers" and individually as a "Borrower"), hereby promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (together with its successors and assigns, "Lender"), at the place and times provided in the Credit Agreement referred to below, the principal sum of TWO MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($2,800,000.00) or the principal amount of the Term Loan made by Lender pursuant to that certain Credit Agreement dated the date hereby by and among Borrowers, certain affiliates of Borrowers, and Lender (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"). Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.

The unpaid principal amount of this Term Note from time to time outstanding is subject to mandatory repayment from time to time as provided in the Credit Agreement and shall bear interest as provided in the Credit Agreement. All payments of principal and interest on this Term Note shall be payable to Lender or other holder of this Term Note in lawful currency of the United States of America in immediately available funds in the manner and location indicated in the Credit Agreement or wherever else Lender or such holder may specify.

This Term Note is entitled to the benefits of, and evidences Obligations incurred under, the Credit Agreement, to which reference is made for a description of the security for this Term Note and for a statement of the terms and conditions on which Borrowers are permitted and required to make prepayments and repayments of principal of the Obligations evidenced by this Term Note and on which such Obligations may be declared to be immediately due and payable. Time is of the essence in this Term Note.

Each Borrower agrees, in the event that this Term Note or any portion hereof is collected by law or through an attorney at law, to pay all costs of collection, including, without limitation, attorneys' fees and court costs.

This Term Note shall be governed, construed and enforced in accordance with the laws of the Commonwealth of Kentucky, without reference to the conflicts or choice of law principles thereof.

Each Borrower hereby waives all requirements as to diligence, presentment, demand of payment, protest, and (except as required by the Credit Agreement) notice of any kind with respect to this Term Note.

IN WITNESS WHEREOF, each of the undersigned have executed this Term Note as of the day and year first written above.

INDUSTRIAL SERVICES OF AMERICA, INC.

By:  /s/ Orson Oliver
Name:  Orson Oliver
Title:  Interim Chief Executive Officer

ISA INDIANA, INC.

By:  /s/ Orson Oliver
Name:  Orson Oliver
Title:  Interim Chief Executive Officer

ISA LOGISTICS LLC

By: Industrial Services of America, Inc., its Sole Member

By:  /s/ Orson Oliver
Name:  Orson Oliver
Title:    Interim Chief Executive Officer


Exhibit 10.5

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this "Agreement") is entered into as of June 13, 2014 by and among INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation ("Parent"), ISA INDIANA, INC., an Indiana corporation ("ISA Inc."), ISA LOGISTICS LLC, a Kentucky limited liability company ("ISA Logistics"), ISA REAL ESTATE, LLC, a Kentucky limited liability company ("ISA Real Estate"), ISA INDIANA REAL ESTATE, LLC, a Kentucky limited liability company ("Indiana Real Estate"), WESSCO, LLC, a Delaware limited liability company ("Wessco"), 7021 GRADE LANE LLC, a Kentucky limited liability company ("7021 Grade"), 7124 GRADE LANE LLC, a Kentucky limited liability company ("7124 Grade"), and 7200 GRADE LANE LLC, a Kentucky limited liability company ("7200 Grade"; Parent, ISA Inc., ISA Logistics, ISA Real Estate, Indiana Real Estate, Wessco, 7021 Grade, 7124 Grade, and 7200 Grade, each a "Grantor" and collectively, "Grantors") and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association ("Lender").

Pursuant to a Credit Agreement of even date herewith between Grantors and Lender (as amended, restated or otherwise modified from time to time, the "Credit Agreement"), Lender has agreed to make certain advances and other extensions of credit to Borrowers. As a condition to making advances and other extensions of credit under the Credit Agreement, Lender has required the execution and delivery of this Agreement by each Grantor.

1. DEFINITIONS.

(a) All capitalized terms not otherwise defined in this Agreement shall have the meanings given them in the Credit Agreement.

(b) The following terms, when used in this Agreement (whether or not capitalized), shall have the meanings given them in the Code, except that (i) for purposes of this Agreement, the meaning of such terms will not be limited by reason of any limitation on the scope of the Code, and (ii) to the extent the definition of any category or type of Collateral is expanded by any amendment, modification or revision to the Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision: "Accession", "Account", "Chattel Paper", "Commercial Tort Claim", "Commodity Account", "Deposit Account", "Document", "Equipment", "Fixture", "General Intangible", "Goods", "Instrument", "Inventory", "Investment Property", "Letter-of- Credit Right", "Letter of Credit", "Money", "Securities Account" and "Supporting Obligations".

2. GRANT OF SECURITY INTEREST. Each Grantor grants and transfers to Lender, for the benefit of Lender and each Bank Product Provider, a continuing security interest (the "Security Interest") in all of the following property of such Grantor or in which such Grantor has rights, whether presently existing or acquired after the date of this Agreement (collectively, together with all Proceeds, the "Collateral")

(a) Accounts;

(b) Chattel Paper;

(c) Commercial Tort Claims;

(d) Deposit Accounts;

(e) Documents;

(f) General Intangibles;

(g) Goods, including Equipment and Fixtures;

(h) Instruments;

(i) Inventory;

(j) Investment Property;

(k) Letters of Credit and Letter-of-Credit Rights;

(l) Money and other assets of Grantor that now or later come into possession, custody, or control of Lender;

(m) all Accessions and Supporting Obligations; and

all books and records relating to the above property and all proceeds (as such term is defined in the Code) and products, whether tangible or intangible of any of the above property, all proceeds of any condemnation award relating to any of the above property, all proceeds of insurance covering or relating to any or all of the above property and all rebates and returns relating to any of the above property (all such proceeds, collectively, "Proceeds").

3. OBLIGATIONS SECURED. The obligations secured by the Security Interest are the payment and performance of:

(a) all present and future Obligations and the guaranty of such Obligations by any Grantor; and

(b) all now existing or subsequently arising obligations of each Grantor and rights of Lender under this Agreement.

4. AUTHORIZATION TO FILE FINANCING STATEMENTS. Each Grantor authorizes Lender to file financing statements describing the Collateral to perfect Lender's Security Interest in the Collateral, and Lender may describe the Collateral as "all personal property" or "all assets" or describe specific items of Collateral including without limitation any Commercial Tort Claims. All financing statements filed before the date of this Agreement to perfect the Security Interest were authorized by each Grantor and are ratified.

5. COLLECTION ACCOUNT. Any money or other cash Proceeds received by Lender in respect of the Collateral will be deposited into a non-interest bearing account over which such Grantor shall have no control, and the same shall, for all purposes, be deemed Collateral, and such money and cash shall be applied to the Obligations as set forth in the Credit Agreement or this Agreement.

6. REPRESENTATIONS AND WARRANTIES OF GRANTOR. Each Grantor represents and warrants to Lender that:

(a) Grantor's legal name is exactly as set forth on the first page of this Agreement, its chief executive office and principal place of business are set forth on Schedule A, and all of Grantor's organizational documents or agreements delivered to Lender are complete and accurate in every respect;

(b) Grantor has legal title to and has possession or control of the Collateral;

(c) Grantor has the exclusive right to grant a security interest in the Collateral;

(d) all Collateral is genuine, free from Liens, adverse claims, setoffs, default, prepayment, defenses and conditions precedent of any kind or character, except the Security Interest created by this Agreement and Permitted Liens;

(e) all statements contained in this Agreement and, where applicable, regarding the Collateral are true and complete in all material respects;

(f) no financing statement covering any of the Collateral, and naming any secured party other than Lender and holders of Permitted Liens, is on file in any public office;

(g) all Persons appearing to be obligated on Collateral have authority and capacity to contract and are bound as they appear to be;

(h) all property subject to Chattel Paper has been properly registered and filed in compliance with law and to perfect the interest of Grantor in such property;

(i) all Accounts and other rights to payment comply with all applicable laws concerning form, content and manner of preparation and execution, including where applicable Federal Reserve Regulation Z and any state consumer credit laws;

(j) Schedule A lists all real property owned or leased by Grantor;

(k) Schedule A provides a complete and correct list of: (i) all registered copyrights and copyright applications owned by Grantor, (ii) all intellectual property licenses entered into by Grantor; (iii) all registered patents and patent applications owned by Grantor; and (iv) all registered trademarks and trademark applications owned by Grantor;

(l) Schedule A contains a listing of all of Deposit Accounts, Securities Accounts and Commodity Accounts of Grantor, including, with respect to each bank, securities intermediary or commodity intermediary:
(a) the name and address of such entity, and (b) the account numbers of the Deposit Accounts, Securities Accounts or Commodity Accounts maintained with such entity;

(m) The Inventory and Equipment of Grantor are not stored with a bailee, warehouseman, processor or similar party and are located only at, or in-transit between or to, the locations identified on Schedule A;

(n) Each Account that is identified as an Eligible Account in a borrowing base certificate or daily collateral report submitted to Lender is (i) a bona fide existing payment obligation of the applicable Account Debtor created by the sale and delivery of Inventory or the rendition of services to such Account Debtor in the ordinary course of Grantor's business, (ii) owed to Grantor, and (iii) not excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition of Eligible Accounts in the Credit Agreement; and

(o) Each item of Inventory that is identified as Eligible Inventory in a borrowing base certificate or daily collateral report submitted to Lender, is (i) of good and merchantable quality, free from known defects, and (ii) not excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition of Eligible Inventory in the Credit Agreement.

(p) Schedule A lists all motor vehicles, Equipment and other Collateral are evidenced by certificates of title.

7. COVENANTS OF GRANTOR.

(a) Each Grantor covenants and agrees:

(i) to permit Lender to exercise its rights, remedies, and powers under the Credit Agreement, this Agreement, the other Loan Documents and under law;

(ii) not to change its name, or, as applicable, its chief executive office, its principal residence or the jurisdiction in which it is organized without giving Lender thirty (30) days prior written notice; and

(iii) not to change the places where Grantor keeps any Collateral or Grantor's records concerning the Collateral (other than transfers of Collateral between locations of the Grantors existing as of the date hereof) without (A) giving Lender 30 days prior written notice of the address to which Grantor is moving same, and (B) delivering to Lender a fully executed Collateral Access Agreement with respect to such location if not owned by Grantor; and

(iv) to cooperate with Lender in perfecting all security interests granted by this Agreement and in obtaining such agreements from third parties as Lender deems necessary, proper or convenient in connection with the preservation, perfection or enforcement of any of its rights with regard to Collateral or access to Collateral.

(b) Each Grantor agrees with regard to the Collateral, unless Lender agrees otherwise in writing:

(i) not to use any Collateral for any unlawful purpose or in any way that would void any insurance required to be carried on such Collateral;

(ii) to insure the Collateral, with Lender named as first lender loss payee and additional insured, in form, substance and amounts, under agreements, against risks and liabilities, and with insurance companies satisfactory to Lender;

(iii) to keep, in accordance with GAAP, complete and accurate records regarding all Collateral, and to permit Lender to inspect the same and make copies thereof at any reasonable time (and with such notice as may be required by the Credit Agreement);

(iv) not to sell, pledge or dispose of, nor permit the transfer by operation of law of, any of the Collateral or any interest in the Collateral, except sales of Inventory to buyers in the ordinary course of Grantor's business;

(v) not to permit any lien on the Collateral, including without limitation, liens arising from the storage of Inventory, except for Liens in favor of Lender and Permitted Liens;

(vi) if requested by Lender, to receive and use reasonable diligence to collect Accounts, in trust and as the property of Lender, and to immediately endorse as appropriate and deliver collections or payments on such Accounts or proceeds thereof to Lender daily in the exact form in which they are received;

(vii) not to commingle Accounts, Proceeds or collections with other property;

(viii) to give only normal allowances and credits consistent with past practices and in the ordinary course of business and to advise Lender thereof immediately in writing if they affect any Accounts in any material respect;

(ix) on Lender's demand, to deliver to Lender returned property resulting from, or payment equal to, such allowances or credits on any Accounts or to execute such documents and do such other things as Lender may reasonably request for the purpose of perfecting, preserving and enforcing its security interest in such returned property;

(x) from time to time, when requested by Lender, to prepare and deliver a schedule of all Collateral subject to this Agreement and to assign in writing and deliver to Lender all Accounts, contracts, leases and other Chattel Paper, Instruments, Documents and other evidences thereof;

(xi) to deliver to Lender (i) notice of any Commercial Tort Claim it may have against any Person, including a detailed description of such Commercial Tort Claim and, upon receipt of such description by Lender the description of Collateral set forth in Section 1 of this Agreement shall be deemed to be amended to include such description of each such Commercial Tort Claim, and (ii) such documents as Lender may require to grant Lender a security interest in Grantor's rights in such Commercial Tort Claim;

(xii) to deliver to Lender any Instrument, Document or Chattel Paper constituting Collateral with a value greater than $25,000, duly endorsed or assigned by Grantor to Lender;

(xiii) to provide any service and do any other acts which may be necessary to maintain, preserve and protect all Collateral and, as appropriate and applicable, to keep all Collateral in good and saleable condition, to deal with the Collateral in accordance with the standards and practices adhered to generally by users and manufacturers of like property, and to keep all Collateral free and clear of all defenses, rights of offset and counterclaims;

(xiv) not to withdraw any funds from any Deposit Account pledged to Lender pursuant to this Agreement, except for Grantor's principal operating account, petty cash accounts expressly excluded from the requirement to deliver a Control Agreement pursuant to the Credit Agreement, and local operating accounts with Branch Banking and Trust Company used for payments to vendors to the extent expressly excluded from the requirement to deliver a Control Agreement pursuant to the Credit Agreement (provided that the only source of funds for such accounts shall be the Loan Parties' accounts with Lender) and any Deposit Accounts which are specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for employees of Grantor ("Excluded Deposit Accounts");

(xv) not to open or establish any Deposit Account, Securities Account, or Commodities Account unless Lender has control of such account as contemplated in the Code (but excluding Excluded Deposit Accounts) and to close such Deposit Accounts as are necessary to cause Grantors to comply with Section 4.10 of the Credit Agreement; and

(xvi) not to consign any of its Inventory or sell any of its Inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale.

8. POWERS OF LENDER. Each Grantor appoints Lender its attorney in fact to perform any of the following powers, which are coupled with an interest, are irrevocable until termination of this Agreement and may be exercised from time to time by Lender's officers and employees, or any of them, whether or not an Event of Default has occurred:

(a) to perform any obligation of Grantor hereunder in Grantor's name or otherwise;

(b) to give notice to Account Debtors or others of Lender's rights in the Collateral, to enforce or forebear from enforcing the same and to make extension or modification agreements;

(c) to release Persons liable on Collateral and to give receipts and compromise disputes;

(d) to release or substitute security;

(e) to resort to security in any order;

(f) to prepare, execute, file, record or deliver notes, assignments, schedules, designation statements, initial financing statements and amendments, continuation statements, termination statements, statements of assignment, applications for registration or like papers to perfect, preserve or release Lender's interest in the Collateral;

(g) to receive, open and read mail addressed to Grantor;

(h) to take cash, instruments for the payment of money and other property to which Lender is entitled;

(i) to verify facts concerning the Collateral by inquiry of obligors thereon, or otherwise, in its own name or a fictitious name;

(j) to endorse, collect, deliver and receive payment under instruments for the payment of money constituting or relating to Collateral;

(k) to prepare, adjust, execute, deliver and receive payment under insurance claims, and to collect and receive payment of and endorse any instrument in payment of loss or returned premiums or any other insurance refund or return, and to apply such amounts received by Lender, at Lender's sole option, toward repayment of the Obligations or replacement of the Collateral;

(l) to exercise all rights, powers and remedies which Grantor would have, but for this Agreement, with respect to all Collateral;

(m) to enter onto Grantor's premises to inspect the Collateral during normal business hours;

(n) to make withdrawals from and to close deposit accounts or other accounts with any financial institution, wherever located, into which Proceeds may have been deposited, and to apply funds so withdrawn to payment of the Obligations;

(o) to preserve or release the interest evidenced by chattel paper to which Lender is entitled hereunder and to endorse and deliver any evidence of title to such interest; and

(p) to do all acts and things and execute all documents in the name of Grantor or otherwise, deemed by Lender as necessary, proper and convenient in connection with the preservation, perfection, priority or enforcement of Lender's rights.

9. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Each Grantor agrees to pay, prior to delinquency, all insurance premiums, taxes, charges, liens and assessments against the Collateral, and upon the failure of such Grantor to do so, Lender at its option may pay any of them and shall be the sole judge of the legality or validity and the amount necessary to discharge the same. Any such payments made by Lender shall be Obligations under the Credit Agreement. Any such payments made by Lender shall be obligations of Grantors to Lender, due and payable immediately upon demand, together with interest at a rate determined in accordance with the provisions of the Credit Agreement, and shall be secured by the Collateral, subject to all terms and conditions of this Agreement.

10. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an "Event of Default" under this Agreement:

(a) any default in the payment or performance of any obligation, or any defined or described event of default, under (i) the Credit Agreement, any other Loan Document, or any other contract or instrument evidencing any Obligation or other Indebtedness to Lender, or
(ii) any other agreement between any Grantor and Lender, including without limitation any loan agreement, relating to or executed in connection with any Obligation or other Indebtedness of a Grantor to Lender;

(b) any representation or warranty made by a Grantor in this Agreement shall prove to be incorrect, false or misleading in any material respect when made; and

(c) a Grantor shall fail to timely observe or perform any covenant or other obligation or agreement set forth in this Agreement.

11. REMEDIES. Upon the occurrence and during the continuation of any Event of Default, Lender shall have the right to declare immediately due and payable all or any Obligations (other than Obligations arising under any Hedge Agreement, which may be accelerated pursuant to the applicable Hedge Agreement) secured by this Agreement and to terminate any commitments to make loans or otherwise extend credit under the Credit Agreement. Lender shall have all other rights, powers, privileges and remedies granted to a secured party upon default under the Code or otherwise provided by law, including without limitation, the right to:

(a) contact all Persons obligated to a Grantor on any Collateral and to instruct such Persons to deliver all Collateral directly to Lender;

(b) sell, lease, license or otherwise dispose of any or all Collateral;

(c) notify the United States Postal Service to change the address for delivery of mail of Grantor to any address designated by Lender;

(d) without notice to or consent by any Grantor, and without the obligation to pay rent or other compensation, to take exclusive possession of all locations where any Grantor conducts its business or has any rights of possession and use the locations to store, process, manufacture, sell, use and liquidate or otherwise dispose of Collateral;

(e) with regard to any Deposit Account, instruct the bank maintaining such Deposit Account to pay the balance of such Deposit Account to Lender or take such other action as Lender shall instruct; and

(f) with regard to any Securities Account or Commodity Account, instruct the securities intermediary maintaining such Securities Account or the commodity intermediary maintaining such Commodity Account, as applicable, to pay the balance of such Securities Account or such Commodity Account, as applicable, to Lender or take such other action as Lender shall instruct; and

(g) without regard to the occurrence of waste or the adequacy of security, apply for the appointment of a receiver for any Grantor or for the assets of any Grantor and each Grantor waives any objection to such appointment or to the right to have a bond or security posted by Lender. Each Grantor hereby waives any objection or defense to the appointment of any such receiver and any right that Grantor has or may have to seek the posting of a bond or other security by Lender.

While an Event of Default exists:

(1) Each Grantor will deliver to Lender from time to time, as requested by Lender, current lists of all Collateral;

(2) No Grantor will dispose of any Collateral except on terms approved by Lender;

(3) at Lender's request, each Grantor will assemble and deliver all Collateral, and books and records pertaining thereto, to Lender at a reasonably convenient place designated by Lender; and

(4) Lender may, without notice to any Grantor, enter onto a Grantor's premises and take possession of the Collateral.

12. CUMULATIVE RIGHTS. All rights, powers, privileges and remedies of Lender shall be cumulative. No delay, failure or discontinuance of Lender in exercising any right, power, privilege or remedy hereunder shall affect or operate as a waiver of such right, power, privilege or remedy; nor shall any single or partial exercise of any such right, power, privilege or remedy preclude, waive or otherwise affect any other or further exercise or the exercise of any other right, power, privilege or remedy.

13. WAIVERS AND CONSENTS OF LENDER. Any waiver, permit, consent or approval of any kind by Lender of any default, or any such waiver of any provisions or conditions, must be in writing and shall be effective only to the extent set forth in writing.

14. DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In disposing of Collateral, Lender may disclaim all warranties of title, possession, quiet enjoyment and the like. Any proceeds of any disposition of any Collateral, may be applied by Lender to the payment of expenses incurred by Lender, including reasonable attorneys' fees, and the balance of such proceeds may be applied by Lender toward the payment of the Obligations in such order of application as Lender may from time to time elect. Upon the transfer of all or any part of the Obligations, Lender may transfer all or any part of the Collateral and shall be fully discharged from all liability and responsibility with respect to such transferred Collateral, and the transferee shall be vested with all rights and powers of Lender hereunder; but with respect to any Collateral not so transferred, Lender shall retain all rights, powers, privileges and remedies. It is agreed that public or private sales or other dispositions, for cash or on credit, to a wholesaler or retailer or investor, or user of property of the types subject to this Agreement, or public auctions, are all commercially reasonable since differences in the prices generally realized in the different kinds of dispositions are ordinarily offset by the differences in the costs and credit risks of such dispositions. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least 10 days' notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification and such notice shall constitute a reasonable "authenticated notification of disposition" within the meaning of Section 9-611 of the Code. Lender shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Lender may adjourn any public or private sale from time to time, and such sale may be made at the time and place to which it was so adjourned. Each Grantor agrees that the internet shall constitute a "place" for purposes of Section 9-610(b) of the Code. Each Grantor agrees that any sale of Collateral to a licensor pursuant to the terms of a license agreement between such licensor and such Grantor is sufficient to constitute a commercially reasonable sale (including as to method, terms, manner, and time) within the meaning of Section 9-610 of the Code. Each Grantor grants to Lender a non-exclusive, worldwide and royalty-free license to use or otherwise exploit all intellectual property rights of such Grantor for the purpose of: (a) completing the manufacture of any in-process materials following any Event of Default so that such materials become saleable Inventory, all in accordance with the same quality standards previously adopted by Grantor for its own manufacturing; and (b) selling, leasing or otherwise disposing of any or all Collateral following any Event of Default.

15. GRANTOR NOT AN OBLIGOR. If any Grantor is not a Borrower or Guarantor (an "Obligor") under some or all of the Obligations:

(a) Grantor authorizes Lender, from time to time, without affecting Grantor's obligations under this Agreement, to enter into an agreement with Obligor to change the interest rate on or renew the Obligations or other Indebtedness to Lender; accelerate, extend, compromise, or otherwise change the repayment terms or any other terms of the Obligations or such Indebtedness; receive and hold, exchange, enforce, waive, fail to perfect, substitute, or release Collateral, including collateral not originally covered by this Agreement; sell or apply any Collateral in any order; or release or substitute any borrower, guarantor or endorser of the Obligations or such Indebtedness, or other person.

(b) Grantor waives any defense by reason of any Obligor's or any other person's defense, disability, or release from liability. Lender can exercise its rights against the Collateral even if any Obligor or any other person no longer is liable on the Obligations because of a statute of limitations or for other reasons.

(c) Grantor agrees that it is solely responsible for keeping itself informed as to the financial condition of the Obligors and of all circumstances which bear upon the risk of nonpayment. Grantor waives any right it may have to require Lender to disclose to Grantor any information which Lender may now or hereafter acquire concerning the financial condition of Obligors.

(d) Grantor waives all rights to notices of default or nonperformance by Obligors. Grantor further waives all rights to notices of the existence or the creation of new Obligations by any Obligor and all rights to any other notices to any party liable on any of the Obligations.

(e) Grantor represents and warrants to Lender that it will derive benefit, directly and indirectly, from the collective administration and availability of credit under the Obligations. Grantor agrees that Lender will not be required to inquire as to the disposition by any Obligor of funds disbursed by Lender.

(f) Until all obligations to Lender under the Obligations have been paid in full and any commitments of Lender or facilities provided by Lender with respect to the Obligations have been terminated, Grantor waives any right of subrogation, reimbursement, indemnification and contribution (contractual, statutory or otherwise), including without limitation, any claim or right of subrogation under the Bankruptcy Code (Title 11, United States Code) or any successor statute, which Grantor may now or hereafter have against any Obligor with respect to the Obligations. Grantor waives any right to enforce any remedy which Lender now has or may hereafter have against any Obligor, and waives any benefit of, and any right to participate in, any security now or hereafter held by Lender.

(g) Grantor waives any right to require Lender to proceed against any Obligor or any other person; proceed against or exhaust any security; or pursue any other remedy. Further, Grantor consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of Grantor under this Agreement or which, but for this provision, might operate as a discharge of Grantor.

(h) In the event any amount paid to Lender on any Obligations or any interest in property transferred to Lender as payment on any Obligations is subsequently recovered from Lender in or as a result of any bankruptcy, insolvency or fraudulent conveyance proceeding, Grantor shall be liable to Lender for the amounts so recovered up to the fair market value of the Collateral whether or not the Collateral has been released or the security interest terminated. In the event the Collateral has been released or the security interest terminated, the fair market value of the Collateral shall be determined, at Lender's option, as of the date the Collateral was released, the security interest terminated, or said amounts were recovered.

16. STATUTE OF LIMITATIONS. Until all Obligations shall have been paid in full and all commitments by Lender to extend credit under the Credit Agreement have been terminated, the power of sale or other disposition and all other rights, powers, privileges and remedies granted to Lender shall continue to exist and may be exercised by Lender at any time and from time to time irrespective of the fact that the Obligations or any part thereof may have become barred by any statute of limitations, or that the personal liability of any Grantor may have ceased, unless such liability shall have ceased due to the payment in full of all Obligations and Indebtedness secured by this Agreement.

17. WAIVERS OF GRANTOR. Each Grantor waives any right to require Lender to (a) proceed against any Grantor or any other Person, (b) marshal assets or proceed against or exhaust any security from any Grantor or any other Person, (c) perform any obligation of any Grantor with respect to any Collateral; and (d) make any presentment or demand, or give any notice of nonpayment or nonperformance, protest, notice of protest or notice of dishonor hereunder or in connection with any Collateral or Proceeds. Each Grantor further waives any right to direct the application of payments or security for any Indebtedness of such Grantor or indebtedness of customers of such Grantor.

18. JOINT AND SEVERAL LIABILITY. When there is more than one Grantor named in this Agreement (a) the word "Grantor" shall mean all or any one or more of them as the context requires, and (b) the obligations of each Grantor hereunder are joint and several.

19. FURTHER ASSURANCES. At any time upon the request of Lender, each Grantor will execute or deliver to Lender any and all financing statements, fixture filings, security agreements, pledges, assignments, endorsements, certificates of title, mortgages, deeds of trust and all other documents (the "Additional Documents") that Lender may request and in form and substance satisfactory to Lender, to create, perfect, and continue perfection or to better perfect Lender's Liens in all of the assets of such Grantor (whether now owned or subsequently arising of acquired, tangible or intangible, real or personal), and in order to fully consummate all of the transactions contemplated under this Agreement and under the other Loan Documents. Without limiting the foregoing, upon Lender's request, Grantors shall deliver to Lender all certificates of title, notation of lien applications and other documents desirable or necessary to give effect to Lender's first priority perfected Lien in any motor vehicles or other titled Equipment. If any Grantor refuses or fails to execute or deliver any requested Additional Documents, such Grantor authorizes Lender to execute such Additional Documents in such Grantor's name, and authorizes Lender to file such executed Additional Documents in any appropriate filing office. Each Grantor acknowledges that no Grantor is authorized to file any financing statement or amendment with respect to any financing statement filed in connection with this Agreement without the prior written consent of Lender, subject to such Grantor's rights under Section 9-509(d)(2) of the Code.

20. SUBROGATION RIGHTS. Until all Obligations shall have been paid in full and all commitments by Lender to extend credit under the Credit Agreement have been terminated, no Grantor shall have any right of subrogation or contribution or similar right, and each Grantor waives any benefit of or right to participate in any of the Collateral or any other security now or subsequently held by Lender.

21. NOTICES. All notices, requests and demands required under this Agreement must be given, and shall be deemed received, as provided in Section 7.3 of the Credit Agreement at the address set forth below each party's name on the signature page of this Agreement or to such other address as any party may designate by written notice to all other parties.

22. COSTS, EXPENSES AND ATTORNEYS' FEES. Each Grantor shall pay to Lender immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and, after the occurrence of an Event of Default, all allocated costs of Lender's in-house counsel), expended or incurred by Lender in connection with or related to this Agreement, including, without limitation, all Lender Expenses, as set forth in Section 7.4 of the Credit Agreement. Further, each Grantor indemnifies Lender against all losses, claims, demands, liabilities and expenses of every kind caused by property subject to this Agreement, all in accordance with Section 7.7 of the Credit Agreement.

23. SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement will be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided that no Grantor may assign or transfer its interests, rights, or obligations under this Agreement without Lender's prior written consent. Lender may sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Lender's rights and benefits under this Agreement and the other Loan Documents. This Agreement may be amended or modified only in writing signed by Lender and each Grantor, except as provided in Section 7(b)(xi) and Section 19 of this Agreement.

24. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or any remaining provisions of this Agreement.

25. GOVERNING LAW. The validity of this Agreement and the construction, interpretation, and enforcement of this Agreement, and the rights of the parties, as well as all claims, controversies or disputes arising under or related to this Agreement will be determined under, governed by and construed in accordance with the laws of the Commonwealth of Kentucky without regard conflicts of laws principles.

26. JURISDICTION. All actions or proceedings arising in connection with this Agreement may be tried and litigated in the State and, to the extent permitted by applicable law, federal courts located in the City of Atlanta and the County of Fulton, State of Georgia; provided that any suit seeking enforcement against any Collateral or other property may be brought, at Lender's option, in the courts of any jurisdiction where Lender elects to bring such action or where such Collateral or other property may be found. Each Grantor and Lender waive, to the extent permitted under applicable law, any right they may have to assert the doctrine of forum non conveniens or to object to venue to the extent any proceeding is brought.

27. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH GRANTOR AND LENDER WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH, A "CLAIM"). EACH GRANTOR AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGES FOLLOW]


This Agreement has been duly executed as of the date set forth on page 1.

GRANTORS:

INDUSTRIAL SERVICES OF AMERICA, INC.

By: /s/ Orson Oliver
Name:  Orson Oliver
Title:    Interim Chief Executive Officer

Address:

7100 Grade Lane
Louisville, Kentucky 40213
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

ISA INDIANA, INC.

By: /s/ Orson Oliver
Name:  Orson Oliver
Title:    Interim Chief Executive Officer

Address:

7100 Grade Lane
Louisville, Kentucky 40213
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

ISA LOGISTICS LLC

By: Industrial Services of America, Inc., its Sole Member

By/s/ Orson Oliver
Name:  Orson Oliver
Title:    Interim Chief Executive Officer

Address:

7100 Grade Lane
Louisville, Kentucky 40213
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

[Signatures continue on the following pages]


ISA REAL ESTATE, LLC

By: Algar, Inc., its Manager

By: /s/ Sean Garber
Name:  Sean Garber
Title:    President

Address:

7100 Grade Lane
Louisville, Kentucky 40213
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

ISA INDIANA REAL ESTATE, LLC

By: Algar, Inc., its Manager

By: /s/ Sean Garber
Name:  Sean Garber
Title:    President

Address:

7100 Grade Lane
Louisville, Kentucky 40213
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

WESSCO, LLC

By: /s/ Orson Oliver
Name:  Orson Oliver
Title:    Interim Chief Executive Officer

Address:

7100 Grade Lane
Louisville, Kentucky 40213
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

[Signatures continue on the following pages]


7021 GRADE LANE LLC

By: Algar, Inc., its Manager

By: /s/ Sean Garber
Name:  Sean Garber
Title:    President

Address:

7100 Grade Lane
Louisville, Kentucky 40213
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

7124 GRADE LANE LLC

By: Algar, Inc., its Manager

By: /s/ Sean Garber
Name:  Sean Garber
Title:    President

Address:

7100 Grade Lane
Louisville, Kentucky 40213
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

7200 GRADE LANE LLC

By: Algar, Inc., its Manager

By: /s/ Sean Garber
Name:  Sean Garber
Title:    President

Address:

7100 Grade Lane
Louisville, Kentucky 40213
Attention: Alan Schroering
Fax No.: (502) 515-1700
Email: aschroering@isa-inc.com

[Signatures continue on the following page]


LENDER:

WELLS FARGO BANK, NATIONAL ASSOCIATION

By: /s/ John L. Palermo
Name:  John L. Palermo
Title:   Vice President

Address:
Wells Fargo Bank, National Association
1100 Abernathy Road, NE
Suite 1600
Atlanta, Georgia 30328
Attention: Joseph L. White
Email: Joseph.L.White@wellsfargo.com


SCHEDULE A

1. Owned Real Property:

2. Copyrights, Trademarks, Patents and Licensing Agreements:

Part 1 - Trademarks Owned

      Trademark     Registration     Registration     Expiration
                       Number            Date            Date




Trademark           Application/Serial          Application
     Application                Number                    Date

Part 2 - Patents Owned

Patent Registration Registration Expiration Description Number Date Date

Patent Application/Serial Application Application Number Date

Part 3 - Copyrights Owned

      Copyright
Registration Number      Registration
                                                          Date

Part 4 - Other License Agreements

 Name of      Date of        Licensor     Term        Licensed
Document      Document                              Intellectual
                                                      Property

3. Motor Vehicle and Certificate of Title Collateral:

Type of Make Model Year VIN or Other Identifier Collateral

4. Deposit Accounts, Securities Accounts, Commodity Accounts and other Investment Accounts:

Part 1 - Deposit Accounts

Name and Address Account No. Purpose of Bank

Part 2 - Securities Accounts, Commodity Accounts and other Investment Accounts

Name and       Account No.     Purpose    Type of      Balance as of
Address of                               Investments      [Date]
Broker or
Other
Institution

5. Locations of Collateral and Books and Records:

Locations of Inventory, Equipment, Books and Records and Other Assets

Address           Owned/Leased/Third Party*       Name/Address
                                                  of Lessor or
                                                  Third Party,
                                                  as Applicable

*Grantors to Indicate in this column next to applicable address whether the locations is owned by the Company, leased by the Company or owned and operated by a third party (e.g., warehouse, processor, consignee, etc.)


Exhibit 10.6

CONTINUING GUARANTY

DATE: June 13, 2014

TO: WELLS FARGO BANK, NATIONAL ASSOCIATION

1. GUARANTY; DEFINITIONS. In consideration of any credit or other financial accommodation heretofore, now or hereafter extended or made to INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation ("Parent"), ISA INDIANA, INC., an Indiana corporation ("ISA Inc."), ISA LOGISTICS LLC, a Kentucky limited liability company ("ISA Logistics"; Parent, ISA Inc., and ISA Logistics, collectively referred to herein as "Borrowers" and individually as a "Borrower"), or any of them by WELLS FARGO BANK, NATIONAL ASSOCIATION and its Affiliates (collectively, "Wells Fargo"), and for other valuable consideration, the undersigned, each of ISA REAL ESTATE, LLC, a Kentucky limited liability company ("ISA Real Estate"), ISA INDIANA REAL ESTATE, LLC, a Kentucky limited liability company ("Indiana Real Estate"), WESSCO, LLC, a Delaware limited liability company ("Wessco"), 7021 GRADE LANE LLC, a Kentucky limited liability company ("7021 Grade"), 7124 GRADE LANE LLC, a Kentucky limited liability company ("7124 Grade"), and 7200 GRADE LANE LLC, a Kentucky limited liability company ("7200 Grade"; ISA Real Estate, Indiana Real Estate, Wessco, 7021 Grade, 7124 Grade, and 7200 Grade, collectively referred to herein as "Guarantors" and individually as a "Guarantor"), each jointly and severally unconditionally guarantee and promise to pay to Wells Fargo, or order, on demand in lawful money of the United States of America and in immediately available funds, any and all Obligations as such term is defined in that certain Credit Agreement among Wells Fargo, Borrowers and Guarantors, dated the date on or about the date hereof (as at any time amended, the "Credit Agreement"; terms used but not defined herein shall have the meanings as set forth in the Credit Agreement) and as further described on Schedule I attached hereto and hereby incorporated by reference. This Guaranty is a guaranty of payment and not collection.

2. MAXIMUM LIABILITY; SUCCESSIVE TRANSACTIONS; NO REVOCATION; OBLIGATION UNDER OTHER GUARANTIES; TERMINATION DATE. This Guaranty is a continuing guaranty and all rights, powers and remedies hereunder shall apply to all past, present and future Obligations, including that arising under successive transactions which shall either continue the Obligations, increase or decrease it, or from time to time create new Obligations after all or any prior Obligations have been satisfied, and notwithstanding the death, incapacity, dissolution, liquidation or bankruptcy of any of the Borrowers or Guarantors or any other event or proceeding affecting any of the Borrowers or Guarantors. To the fullest extent permitted by applicable law, each Guarantor waives any right that each such Guarantor may have to terminate or revoke this Guaranty. If, notwithstanding the foregoing waiver, a Guarantor shall nevertheless have any right under applicable law to terminate or revoke this Guaranty, which right cannot be waived by such Guarantor, such termination or revocation shall not be effective until a written notice of such termination or revocation, specifically referring to this Guaranty and signed by such Guarantor, is actually received by an officer of Wells Fargo who is familiar with Borrowers' account with Wells Fargo and this Guaranty; but any such termination or revocation shall not affect the obligation of any Guarantor or any Guarantor's successors or assigns with respect to any of the Obligations owing to Wells Fargo and existing at the time of the receipt by Wells Fargo of such revocation or to arise out of or in connection with any transactions theretofore entered into by Wells Fargo with or for the account of Borrowers or Guarantors. If Wells Fargo grants loans or other extensions of credit to or for the benefit of Borrower or takes other action after the termination or revocation by Guarantor but prior to Wells Fargo's receipt of such written notice of termination or revocation, then the rights of Wells Fargo hereunder with respect thereto shall be the same as if such termination or revocation had not occurred. Any payment by any Guarantor shall not reduce such Guarantor's maximum obligation hereunder unless written notice to that effect is actually received by Wells Fargo at or prior to the time of such payment. The obligations of each Guarantor under this Guaranty shall be in addition to any obligations of such Guarantor under any other guaranties of any liabilities or obligations of any of the Borrowers or other persons heretofore or hereafter given to Wells Fargo, unless such other guaranties are expressly modified in writing pursuant to the terms thereof; and this Guaranty shall not, unless expressly provided for in this Guaranty, affect or invalidate any such other guaranties. The liability of Guarantors hereunder shall not exceed at any time the sum of (a) $35,600,000, (b) all accrued and unpaid interest on the any Obligation, and (c) all costs and expenses pertaining to the enforcement of this Guaranty and/or the collection of the Obligations. Notwithstanding the foregoing, Wells Fargo may permit the Obligations of Borrowers to exceed Guarantors' liability. This Guaranty shall terminate on June 13, 2021 (the "Termination Date"). Termination of this Guaranty on the Termination Date shall not affect the liability of the Guarantors with respect to Obligations created or incurred prior to the Termination Date or amendments, modifications, substitutions, extensions or renewals of, interest accruing on, or fees, costs or expenses incurred with respect to the Obligations on or after the Termination Date

3. OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations of each Guarantor under this Guaranty are joint and several and independent of the obligations of the Borrowers, and a separate action or actions may be brought and prosecuted against any Guarantor, whether the action is brought against any of the Borrowers or any other person, or whether any of the Borrowers or any other persons are joined in any such action or actions. Each Guarantor acknowledges that this Guaranty is absolute and unconditional, that there are no conditions precedent to the effectiveness of this Guaranty, and that this Guaranty is in full force and effect and binding on such Guarantor as of the date written below, regardless of whether Wells Fargo obtains collateral or any guaranties from others or takes any other action contemplated by such Guarantor. Each Guarantor waives the benefit of any statute of limitations affecting such Guarantor's liability hereunder or the enforcement thereof, and such Guarantor agrees that any payment of any Obligations or other act which shall toll any applicable statute of limitations shall similarly toll the statute of limitations applicable to such Guarantor's liability under this Guaranty. The liability of each Guarantor hereunder shall be reinstated and revived and the rights of Wells Fargo shall continue if and to the extent for any reason any amount at any time paid on account of any Obligations guaranteed hereby is rescinded or must otherwise be restored by Wells Fargo, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid. The determination as to whether any amount so paid must be rescinded or restored shall be made by Wells Fargo in its sole discretion; provided however, that if Wells Fargo chooses to contest any such matter at the request of any Guarantor, such Guarantor agrees to indemnify and hold Wells Fargo harmless from and against all costs and expenses, including reasonable attorneys' fees, expended or incurred by Wells Fargo in connection therewith, including without limitation, in any litigation with respect thereto.

4. AUTHORIZATIONS TO WELLS FARGO. Each Guarantor authorizes Wells Fargo either before or after revocation hereof, without notice to or demand on such Guarantor, and without affecting such Guarantor's liability hereunder, from time to time to: (a) alter, compromise, renew, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of the Obligations or any portion thereof, including increase or decrease of the rate of interest thereon; (b) take and hold security for the payment of this Guaranty or the Obligations or any portion thereof, and exchange, enforce, waive, subordinate or release any such security; (c) apply such security and direct the order or manner of sale thereof, including without limitation, a non-judicial sale permitted by the terms of the controlling security agreement, mortgage or deed of trust, as Wells Fargo in its discretion may determine; (d) release or substitute any one or more of the endorsers or any other guarantors of the Obligations, or any portion thereof, or any other party thereto; and (e) apply payments received by Wells Fargo from any of the Borrowers to any portion of the Obligations, in such order as Wells Fargo shall determine in its sole discretion, whether or not such Obligations are covered by this Guaranty, and such Guarantor hereby waives any provision of law regarding application of payments which specifies otherwise. Wells Fargo may without notice assign this Guaranty in whole or in part. Upon Wells Fargo's request, each Guarantor agrees to provide to Wells Fargo copies of such Guarantor's financial statements.

5. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents and warrants to Wells Fargo that: (a) this Guaranty is executed at Borrowers' request; (b) No Guarantor shall, without Wells Fargo's prior written consent, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or a substantial or material part of such Guarantor's assets other than in the ordinary course of such Guarantor's business; (c) Wells Fargo has made no representation to such Guarantor as to the creditworthiness of any of the Borrowers; and (d) such Guarantor has established adequate means of obtaining from each of the Borrowers on a continuing basis financial and other information pertaining to Borrowers' financial condition. Each Guarantor agrees to keep adequately informed of any facts, events or circumstances which might in any way affect such Guarantor's risks hereunder, and such Guarantor further agrees that Wells Fargo shall have no obligation to disclose to such Guarantor any information or material about any of the Borrowers which is acquired by Wells Fargo in any manner.

6. EACH GUARANTOR'S WAIVERS.

(a) Each Guarantor waives any right to require Wells Fargo to: (i) proceed against any of the Borrowers or any other person; (ii) marshal assets or proceed against or exhaust any security held from any of the Borrowers or any other person; (iii) give notice of the terms, time and place of any public or private sale or other disposition of personal property security held from any of Borrowers or any other person; (iv) take any other action or pursue any other remedy in Wells Fargo's power; or (v) make any presentment or demand for performance, or give any notice of nonperformance, protest, notice of protest or notice of dishonor hereunder or in connection with any obligations or evidences of Obligations held by Wells Fargo as security for or which constitute in whole or in part the Obligations guaranteed hereunder, or in connection with the creation of new or additional Obligations.

(b) Each Guarantor waives any defense to its obligations hereunder based upon or arising by reason of: (i) any disability or other defense of any of the Borrowers or any other person; (ii) the cessation or limitation from any cause whatsoever, other than payment in full, of the Obligations; (iii) any lack of authority of any officer, director, partner, agent or any other person acting or purporting to act on behalf of any of the Borrowers which is a corporation, partnership or other type of entity, or any defect in the formation of any such Borrower;
(iv) the application by any of the Borrowers of the proceeds of any Obligations for purposes other than the purposes represented by the Borrowers to, or intended or understood by, Wells Fargo or such Guarantor; (v) any act or omission by Wells Fargo which directly or indirectly results in or aids the discharge of any of the Borrowers or any portion of the Obligations by operation of law or otherwise, or which in any way impairs or suspends any rights or remedies of Wells Fargo against any of the Borrowers; (vi) any impairment of the value of any interest in any security for the Obligations or any portion thereof, including without limitation, the failure to obtain or maintain perfection or recordation of any interest in any such security, the release of any such security without substitution, and/or the failure to preserve the value of, or to comply with applicable law in disposing of, any such security; (vii) any modification of the Obligations, in any form whatsoever, including any modification made after any purported revocation hereof to any Obligations incurred prior to such revocation, and including without limitation the renewal, extension, acceleration or other change in time for payment of, or other change in the terms of, the Obligations or any portion thereof, including increase or decrease of the rate of interest thereon; or (viii) any requirement that Wells Fargo give any notice of acceptance of this Guaranty. Until all Obligations has been paid in full, no Guarantor shall have right of subrogation, and each Guarantor waives any right to enforce any remedy which Wells Fargo now has or may hereafter have against any of the Borrowers or any other person, and waives any benefit of, or any right to participate in, any security now or hereafter held by Wells Fargo. Each Guarantor further waives all rights and defenses such Guarantor may have arising out of (A) any election of remedies by Wells Fargo, even though that election of remedies, such as a non-judicial foreclosure with respect to any security for any portion of the Obligations, destroys such Guarantor's rights of subrogation or such Guarantor's rights to proceed against any of the Borrowers for reimbursement, or (B) any loss of rights such Guarantor may suffer by reason of any rights, powers or remedies of any of the Borrowers in connection with any anti- deficiency laws or any other laws limiting, qualifying or discharging the Obligations, whether by operation of law or otherwise, including any rights such Guarantor may have to a fair market value hearing to determine the size of a deficiency following any foreclosure sale or other disposition of any real property security for any portion of the Obligations.

7. WELLS FARGO'S RIGHTS WITH RESPECT TO EACH GUARANTOR'S PROPERTY IN ITS POSSESSION. In addition to all liens upon and rights of setoff against the monies, securities or other property of each Guarantor given to Wells Fargo by law, Wells Fargo shall have a lien upon and a right of setoff against all monies, securities and other property of any Guarantor now or hereafter in the possession of or on deposit with Wells Fargo, whether held in a general or special account or deposit or for safekeeping or otherwise, and every such lien and right of setoff may be exercised without demand upon or notice to any Guarantor. No lien or right of setoff shall be deemed to have been waived by any act or conduct on the part of Wells Fargo, or by any neglect to exercise such right of setoff or to enforce such lien, or by any delay in so doing, and every right of setoff and lien shall continue in full force and effect until such right of setoff or lien is specifically waived or released by Wells Fargo in writing.

8. SUBORDINATION. Any indebtedness of any of the Borrowers now or hereafter held by any Guarantor is hereby subordinated to the Obligations. Such indebtedness of Borrowers to any Guarantor is assigned to Wells Fargo as security for this Guaranty and the Obligations and, if Wells Fargo requests, shall be collected and received by such Guarantor as trustee for Wells Fargo and paid over to Wells Fargo on account of the Obligations but without reducing or affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty. Any notes or other instruments now or hereafter evidencing such indebtedness of any Borrower to any Guarantor shall be marked with a legend that indicates that the notes or other instruments are subject to this Guaranty and, if Wells Fargo so requests, such notes and instruments shall be delivered to Wells Fargo. Wells Fargo is hereby authorized in the name of any Guarantor from time to time to file financing statements and continuation statements and execute such other documents and take such other action as Wells Fargo deems necessary or appropriate to perfect, preserve and enforce its rights hereunder.

9. REMEDIES; NO WAIVER. All rights, powers and remedies of Wells Fargo hereunder are cumulative. No delay, failure or discontinuance of Wells Fargo in exercising any right, power or remedy hereunder shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Wells Fargo of any breach of this Guaranty, or any such waiver of any provisions or conditions hereof, must be in writing and shall be effective only to the extent set forth in writing.

10. COSTS, EXPENSES AND ATTORNEYS' FEES. Each Guarantor shall pay to Wells Fargo immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and, after the occurrence of an Event of Default (as defined in the Credit Agreement), all allocated costs of Wells Fargo's in-house counsel), expended or incurred by Wells Fargo in connection with the enforcement of any of Wells Fargo's rights, powers or remedies and/or the collection of any amounts which become due to Wells Fargo under this Guaranty, and the prosecution or defense of any action in any way related to this Guaranty, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Wells Fargo or any other person) relating to any Guarantor or any other person or entity. All of the foregoing shall be paid by Guarantors with interest from the date of demand until paid in full at the highest rate applicable to any Obligations under the Credit Agreement (plus the Default Rate then in effect).

11. SUCCESSORS; ASSIGNMENT. This Guaranty shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that no Guarantor may assign or transfer any of its interests or rights hereunder without Wells Fargo's prior written consent. Each Guarantor acknowledges that Wells Fargo has the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, the Obligations and any obligations with respect thereto, including this Guaranty. In connection therewith, Wells Fargo may disclose all documents and information which Wells Fargo now has or hereafter acquires relating to any Guarantor and/or this Guaranty, whether furnished by Borrowers, Guarantors or otherwise. Each Guarantor further agrees that Wells Fargo may disclose such documents and information to Borrowers.

12. AMENDMENT. This Guaranty may be amended or modified only in writing signed by Wells Fargo and Guarantor.

13. APPLICATION OF SINGULAR AND PLURAL. In all cases where there is but a single Borrower, then all words used herein in the plural shall be deemed to have been used in the singular where the context and construction so require; and when there is more than one Borrower named herein, or when this Guaranty is executed by more than one Guarantor, the word "Borrowers" and the word "Guarantor" respectively shall mean all or any one or more of them as the context requires.

14. UNDERSTANDING WITH RESPECT TO WAIVERS; SEVERABILITY OF PROVISIONS. Each Guarantor warrants and agrees that each of the waivers set forth herein is made with such Guarantor's full knowledge of its significance and consequences, and that under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any waiver or other provision of this Guaranty shall be held to be prohibited by or invalid under applicable public policy or law, such waiver or other provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such waiver or other provision or any remaining provisions of this Guaranty.

15. GOVERNING LAW. The validity of this Guaranty, the construction, interpretation, and enforcement of this Guaranty and the rights of the parties, as well as all claims, controversies or disputes arising under or related to this Guaranty will be determined under, governed by and construed in accordance with the laws of the Commonwealth of Kentucky without regard to conflicts of laws principles.

16. JURISDICTION. All actions or proceedings arising in connection with this Guaranty may be tried and litigated in the State of Georgia and, to the extent permitted by applicable law, federal courts located in the City of Atlanta and the County of Fulton State of Georgia; provided that any suit seeking enforcement against any Collateral or other property may be brought, at Wells Fargo's option, in the courts of any jurisdiction where Wells Fargo elects to bring such action or where such Collateral or other property may be found. Each Guarantor and Wells Fargo waives, to the extent permitted under applicable law, any right they may have to assert the doctrine of forum non conveniens or to object to venue to the extent any proceeding is brought in accordance with this Section 16.

SECTION 17. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH GUARANTOR AND WELLS FARGO WAIVES THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS GUARANTY, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH, A "CLAIM"). EACH GUARANTOR AND WELLS FARGO REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

[Remainder of page intentionally left blank; signatures appear on the following pages]

IN WITNESS WHEREOF, each of the undersigned Guarantors have executed this Guaranty as of the date first written above.

ISA REAL ESTATE, LLC

By: Algar, Inc., its Manager

By: :      /s/ Sean Garber
Name:  Sean Garber
Title:    President

ISA INDIANA REAL ESTATE, LLC

By: Algar, Inc., its Manager

By: :      /s/ Sean Garber
Name:  Sean Garber
Title:    President

WESSCO, LLC

By: :   /s/ Orson Oliver
Name:  Orson Oliver
Title:    Interim Chief Executive Officer

7021 GRADE LANE LLC

By: Algar, Inc., its Manager

By: :      /s/ Sean Garber
Name:  Sean Garber
Title:    President

7124 GRADE LANE LLC

By: Algar, Inc., its Manager

By: :      /s/ Sean Garber
Name:  Sean Garber
Title:    President

7200 GRADE LANE LLC

By: Algar, Inc., its Manager

By: :      /s/ Sean Garber
Name:  Sean Garber
Title:    President

Schedule I
Obligations

The "Obligations" shall mean (a) all loans (including the Advances and the Term Loan), debts, principal, interest (including any interest that accrues after the beginning of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), reimbursement or indemnification obligations with respect to Letters of Credit (irrespective of whether contingent), premiums, liabilities (including all amounts charged to the Loan Account), obligations (including indemnification obligations), fees, Lender Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, and all covenants and duties of any other kind and description owing by Borrowers under or evidenced by this Guaranty, the Credit Agreement or any of the other Loan Documents or otherwise owing to Lender under any other present or future document, instrument or agreement, and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, liquidated or unliquidated, determined or undetermined, voluntary or involuntary, due, not due or to become due, sole, joint, several or joint and several, incurred in the past or now existing or hereafter arising, however arising, and including all interest not paid when due, and all other expenses or other amounts that Borrowers are required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents, (b) all obligations indebtedness, liabilities, reimbursement obligations, fees, or expenses owing by any Borrower to a Bank Product Provider with respect to any Bank Product, whether direct or indirect, absolute or contingent, liquidated or unliquidated, determined or undetermined, voluntary or involuntary, due, not due or to become due, incurred in the past or now existing or hereafter arising, however arising. Any reference in this Guaranty or in the Loan Documents to the Obligations will include all or any portion of the Obligations and any extensions, modifications, renewals, or alterations of the Obligations, both prior and subsequent to any Insolvency Proceeding and
(c) without limitation, all indebtedness evidenced by any promissory notes from time to time made by any Borrower to the order of Lender, including, without limitation, that certain Term Note dated the date hereof and made by Borrowers to the order of Lender in the principal amount of $2,800,000 and that certain Revolving Note dated the date hereof and made by Borrowers to the order of Lender in the principal amount of $15,000,000, in each case together with all amendments, restatements, modifications, substitutions, extensions and renewals thereof. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Credit Agreement.