MODIFICATION OF LOAN AGREEMENT
THIS MODIFICATION OF
LOAN AGREEMENT (the "Agreement") is made and entered into this 11
th day of February, 2009, by and between BRANCH BANKING
AND TRUST COMPANY, a North Carolina banking corporation ("Bank"),
and INDUSTRIAL SERVICES OF AMERICA, INC., a Florida corporation
("Borrower");
WITNESSETH
Bank and Borrower
recite and agree as follows, which recitations and agreements
constitute a part of this Agreement:
A. Borrower and Bank
entered into a loan agreement dated December 22, 2006 (the "Loan
Agreement"), setting forth the terms and conditions relative to the
revolving credit facility made available by Bank to Borrower in a
maximum principal amount not to exceed $10,000,000 outstanding at
any time (the "Line of Credit"), indebtedness due Bank from
Borrower relative to the Line of Credit being evidenced by
Borrower's promissory note dated December 22, 2006 in such
principal sum (the "Note").
B. Borrower has requested
that Bank make an additional $12,000,000 credit facility available
to Borrower (the "Venture Line") for the purpose of acquiring
certain assets of Venture Metals, LLC and Luca Investments,
LLC. As a condition to making the Venture Line available to
Borrower, Bank has required that the terms of the Loan Agreement be
modified as set forth in this Agreement.
NOW, THEREFORE, for a
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Borrower and Bank agree as
follows:
1. The parties
hereto agree that the Loan Agreement is hereby amended to provide
that the sole purpose of the Line of Credit as such credit facility
is described on the first (1 st ) page of the Loan
Agreement is to provide financing to Borrower for funding temporary
fluctuations in inventory and accounts and for temporary working
capital.
2. The parties
hereto further agree that the term "Other Credit Relationship" is
hereby amended to include the Venture Line as established pursuant
to the terms of the loan agreement between the Bank and Borrower
dated February 11, 2009, and as evidenced by Borrower's promissory
note payable to Bank in a maximum principal sum not to exceed
$12,000,000 (the "Venture Note").
3. The term
"Availability" as defined in Section 10.01 on page four (4) of the
Loan Agreement is hereby deleted in its entirety and the following
definition is substituted therefore:
"Availability" for
the Line of Credit and the Venture Line collectively shall mean the
lesser of (i) $22,000,000 or (ii) the Collateral Loan Value shown
on the Loan Base Report furnished by Borrower to Bank on or before
the fifteenth (15 th ) day of each month as long as this
Agreement shall remain in force. The percentages of
acceptable collateral, as defined by Bank, which will be used to
determine the Collateral Loan Value, shall be the following (unless
otherwise set forth in Schedule DD and/or DD-IFA hereto):
Eligible Inventory - 35%; Eligible Accounts - 80%; Net Book Value
of Eligible Equipment (less the principal balance of any
outstanding loans secured by the Eligible Equipment) - 100%;
Eligible Real Estate, being the real estate at 3409 Camp Ground
Road, Jefferson County, Kentucky - 80%. The aggregate venture
line advances against Eligible Equipment shall not exceed at any
time $5,000,000.
Accordingly, the Loan Agreement shall be and
is hereby modified.
4. Schedule DD to
the Loan Agreement is hereby deleted in its entirety and Schedule
DD attached hereto is substituted therefore. The Loan
Agreement shall be and is hereby modified accordingly.
5. Borrower and
Bank acknowledge and agree that a default on the Line of Credit or
any Other Credit Relationship as defined in the Loan Agreement and
modified by this Agreement, or any one of them, shall constitute a
default on the Line of Credit and the Other Credit Relationship,
and all of them.
6. Should the terms
and provisions of this Agreement in any way conflict with the terms
and provisions of the Loan Agreement or the Note, then the terms
and provisions of this Agreement shall prevail. As modified
by this Agreement, the Loan Agreement and the Note are hereby
ratified and confirmed by Borrower and by Bank in all respects and
remain in full force and effect.
7. This Agreement
shall be binding upon and shall inure to the benefit of the
successors and assigns of the parties hereto.
8. This Agreement
shall be governed by and construed in accordance with the laws of
the Commonwealth of Kentucky.
IN WITNESS WHEREOF,
the parties hereto have executed this Agreement on the day and year
first above written.
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BORROWER:
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INDUSTRIAL SERVICES OF AMERICA, INC.
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By:
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/s/ Harry Kletter
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Harry Kletter
Chief Executive Officer and President
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BRANCH BANKING AND TRUST COMPANY
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By:
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/s/ Johnny L. Perry
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Johnny L. Perry, Senior Vice President
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COMMONWEALTH OF
KENTUCKY )
)
COUNTY OF
JEFFERSON
)
The foregoing instrument was acknowledged before me this 11
th day of February, 2009 by Harry Kletter, Chief
Executive Officer and President of Industrial Services of America,
Inc., a Florida corporation, on behalf of the corporation.
My Commission Expires: June 1, 2009
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/s/ Sharon Hardy
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Notary Public
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COMMONWEALTH OF
KENTUCKY )
)
COUNTY OF
JEFFERSON
)
The foregoing instrument was acknowledged before me this 11
th day of February, 2009 by Johnny L. Perry, Senior Vice
President of Branch Banking and Trust Company, a North Carolina
banking corporation, on behalf of the corporation.
My Commission Expires: June 1, 2009
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/s/ Sharon Hardy
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Notary Public
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THIS INSTRUMENT PREPARED BY:
SHARON C. HARDY
WEBER & ROSE, P.S.C.
471 West Main Street, Suite 400
Louisville, Kentucky 40202
/s/ Sharon
Hardy
Attorney at Law
BB&T
SCHEDULE "DD" TO BB&T LOAN AGREEMENT
This Schedule "DD" is an attachment to and a part of the Loan
Agreement (the "Loan Agreement") dated December 22, 2006, between
Branch Banking and Trust Company, BB&T Bankcard Corporation
(collectively, "Bank") and Industrial Services of America, Inc.
("Borrower"), as amended pursuant to the modification agreement
dated February 11, 2009 (as son amended, the "Loan
Agreement")..
DD-01. Definitions . In addition to the
words and terms defined elsewhere in this Schedule DD, the Loan
Agreement and the Uniform Commercial Code of Kentucky, as amended
from time to time, (the "UCC") the following terms shall have the
following specified meanings:
(a)
Account Debtor . Any Person obligated to Borrower on
an Account.
(b)
Account(s) . Any right to payment of a monetary
obligation, whether or not earned by performance, including without
limitation any receivable, contract right, note, draft, instrument,
acceptance, chattel paper, lease, or other writing or open account
resulting from the sale, lease, license, assignment or other
disposal of property by Borrower, or from services rendered or to
be rendered by Borrower.
(c)
Advance Rate . The percentage of the total value of
Eligible Accounts, Eligible Inventory, Eligible Equipment, Eligible
Real Estate or Other Collateral Bank will lend to Borrower, as set
forth in Section DD.02.
(d)
Asset Based Lending Credit Line Sweep Service Agreement
Attachment . That agreement between Bank and Borrower
whereby Borrower agrees that all remittances in payment of
Accounts' shall be deposited in its designated Operating Account
and shall be administered and applied in accordance with the ABL
Credit Line Sweep Services Agreement Attachment. This
agreement is to be read in conjunction with, and is a part of, the
Treasury Services Agreement and the Loan Agreement; and this
Schedule DD.
(e)
Asset Based Sweep Services Attachment . That agreement
between Bank and Borrower whereby Borrower agrees that all
remittances in payment of Accounts which are deposited to the
Collateral Reserve Account will be applied to the outstanding, Line
of Credit, as well as other provisions of the Loan Documents.
This agreement is to be read in conjunction with, and is apart of,
the Treasury Services Agreement, the Loan Agreement, and this
Schedule DD.
(f)
Audit . Audit means those examinations on the premises
of Borrower or wherever books, records, or Collateral are located,
however maintained, including but not limited to the inspection of
Inventory, and standard testing of such books and records by Banks
representatives, at any time during normal business hours of
Borrower, with or without prior notice to Borrower from Bank, as
provided in Section DD.06(b).
(g)
Availability . The lesser of the Bank's Line of Credit
or Collateral Loan Value reduced by (i) the principal balance
outstanding under the Line of Credit, (ii) the Letter of Credit
Exposure Reserve, and (iii) the Availability Reserve.
(h)
Availability Reserve . A reserve against Availability
determined by Bank in its sole discretion from time to time to
reflect events, conditions, contingencies or risks or other loans
of Bank which without limitation do or may affect the Collateral
Loan Value, the business prospects of Borrower or any Account
Debtor, or the security interest of Bank, including enforceability,
perfection and the priority thereof.
(i)
Bill and Hold . An Account generated by the sale of
goods for which an invoice has been issued to the buyer, but the,
goods represented by such Account remain undelivered to the buyer
and/or under the control of Borrower or Borrower's
representative.
(j)
Collateral . Collateral shall mean the assets and
property described in the Security Agreement including, without
limitation, Borrower's Accounts, Inventory and Other
Collateral.
(k)
Contra Account . An Account subject to offset, in the
sole discretion of Bank, by an Account Debtor of Borrower.
(l)
Collateral Loan Value . The aggregate value of the
Advance Rate as applied to the Eligible Accounts, the Advance Rate
as applied to the Eligible Inventory, the Advance Rate as applied
to the Eligible Equipment, the Advance Rate as applied to the
Eligible Real Estate and the Advance Rate applied to the value of
Other Collateral, if any.
(m)
Collateral Reserve Account . The demand deposit
account maintained with Bank by Borrower into which all proceeds of
the Collateral shall be deposited' and to which only Bank will have
access. On the date hereof, the Collateral Reserve Account
Number is N/A .
(n)
Cross Aging Rule . Should any Account due Borrower
from an Account Debtor have 50% or more of their total aggregate
Accounts aged in excess of the Eligibility Period, then all
Accounts from such Account Debtor shall be deemed ineligible.
(o)
Eligible Account and/or Eligible Inventory and/or Eligible
Equipment and/or Eligible Real Estate . An Eligible
Account is an Account which is not an Ineligible Account, as
defined in Section DD.03 hereof, Eligible Inventory is Inventory
which is not ineligible Inventory, as defined in Section DD.04
hereof; Eligible Equipment as defined in Section DD.02(d) hereof
and Eligible Real Estate shall mean that real estate owned; by
Borrower at 3409 Camp Ground Road, Jefferson County, Kentucky.
(p)
Eligibility Period . The Eligibility Period for any
Account shall mean not more than 90 days from the original invoice
date.
(q)
Fees . Those fees which Borrower will pay to Bank in
conjunction with Bank's asset based lending services or any other
fees associated with the Line of Credit, whether or not actual loan
obligations exist, while' the Loan Agreement is in force.
(r)
Foreign Accounts . Any Account due from any Person
located outside the fifty states comprising' the United States of
America and the District of Columbia.
(s)
Ineligible Accounts and/or Ineligible Inventory .
Shall have the meanings given in Sections DD.03 and DD.04
hereof.
(t)
Inter-Company Account . Any Account from any Account
Debtor with Borrower in any manner including, without limitation,
as owner, member, partner, shareholder, officer, director,
employee, agent, or which is an affiliate of Borrower.
(u)
Inventory . Goods which are leased or held by Borrower
for sale or lease as lessor or furni
