Summary of INDUSTRIAL SERVICES OF AMERICA INC /FL

Item 1.01 Entry Into a Material Definitive Agreement

(1) Exchange agreement parties, related party disclosures and purposes of transactions. On July 16, 2009, Industrial Services of America, Inc. entered into an agreement and plan of share exchange with Harry Kletter Family Limited Partnership and 7124 Grade Lane LLC, and a second agreement and plan of share exchange with Harry Kletter Family Limited Partnership and 7200 Grade Lane LLC for the purpose of acquiring properties at 7124 Grade Lane and 7200 Grade Lane, Louisville, Kentucky owned respectively by 7124 Grade Lane LLC and 7200 Grade Lane LLC. Harry Kletter is the chairman and chief executive officer of ISA and also the general partner of the limited partnership. The limited partnership in turn is the sole member of each of 7124 Grade Lane LLC and 7200 Grade Lane LLC. In addition Mr. Kletter, his spouse and affiliates currently own in the aggregate greater than 41% of the outstanding voting common stock of ISA.

Under one exchange agreement, ISA has offered 367,187 shares of its common stock, currently based on a price of $6.40 per share, for a purchase price of $2,349,996.80 to the limited partnership for its membership interest in 7200 Grade Lane LLC. Under the second exchange agreement, ISA has offered 132,813 shares of its common stock, currently based on a price of $6.40 per share, for a purchase price of $850,003.20 to the limited partnership for its membership interest in 7124 Grade Lane LLC.

ISA has undertaken the transaction due to the strategic location of the properties, which it believes are necessary for the growth of its operations. ISA has invested approximately $10 million in a shredder that commenced operations in June 2009, which is partially located on the 7124 Grade Lane tract. ISA also plans to move its alloys division from 3409 Camp Ground Road, Louisville, Kentucky, to 7200 Grade Lane to create greater synergies with its other recycling operations. Without ownership of the properties, ISA estimates $30,000 in additional monthly rental will be due to the limited liability companies without the completion of the acquisition of the ownership of the real estate. Currently the limited liability companies are not charging ISA rent. ISA has chosen to use, in the aggregate, 500,000 newly issued unregistered shares of its $.005 par value common stock as consideration for the transaction in order to preserve its cash due to its growing business and demands on working capital. No registration rights will be available in connection with the newly issued shares.

(2) Summary of exchange agreements and approvals. Each exchange agreement provides that if the average price of ISA common stock during the 30 days immediately prior to the closing is less than $3.40 or more than $9.40 per share either ISA or the limited partnership has the ability to terminate either exchange agreement by written notice to the other parties. The anticipated closing date is mid-August, 2009.

With the exception of a different limited liability company, a description of the real property owned by that limited liability company and the number of shares that ISA is offering to exchange for the membership interests in that limited liability company, the exchange agreements are the same. Consequently, the discussion of the exchange agreements in this Form 8-K applies to each exchange agreement.

In determining the price of $6.40 per share currently for an aggregate consideration currently of $3,200,000, ISA relied upon two appraisals prepared by Lohan Realty Resources, Inc. in Louisville, Kentucky, a member of the Appraisal Institute, which appraised the real property owned by each of the limited liability companies. As of the date of the appraisals, July 3, 2009, the property at 7124 Grade Lane owned by 7124 Grade Lane LLC had an "as is" estimated market value of $850,000 while the property located at 7200 Grade Lane owned by 7200 Grade Lane LLC had an "as is" estimated market value of $2,350,000 for a combined "as is" estimated market value of $3,200,000.

Under the exchange agreements no environmental studies or indemnifications are being provided by the limited partnership or either limited liability company in connection with the sale of the membership interests to ISA. The appraisal for 7200 Grade Lane indicates that the continuing use of the subject site as a scrap processing facility raises environmental concerns. Each appraisal states that the presence of environmentally hazardous materials may affect the value of that property and further that the value is based upon the property being environmentally unimpaired. ISA, under its inspection rights provided in each exchange agreement, has the ability to undertake an environmental study, which it currently is not planning to pursue.

Under each exchange agreement, ISA has released and discharged the limited partnership and its affiliates, agents and advisors and assigns from claims against any of those parties related to 7200 Grade Lane LLC or 7124 Grade Lane LLC, as applicable, that existed on or prior to the closing date, other than any claim arising under each exchange agreement. In addition to the release and discharge ISA agrees to indemnify and hold the limited partnership harmless from any claims, actions or damages, among other items, arising out of the membership interests except to the extent that ISA is entitled to indemnification under the applicable exchange agreement, which indemnity from the limited partnership is for violation of any representations and warranties made by the limited partnership or the related limited liability company under that exchange agreement.

Under each exchange agreement, the limited partnership and, where applicable, the related limited liability company have made certain representations and warranties, including,

-- good title to the membership interest in the related limited liability company,

-- the power and authority of each limited partnership and the related limited liability company to enter into the exchange agreement,

-- the due formation and valid existence of each limited liability company,

-- the execution, delivery and performance of the applicable exchange agreement by the limited partnership and the related limited liability company not resulting in,

-- any lien upon the real property owned by the applicable limited liability company,

-- any violation of the charter of the limited partnership or the related limited liability company,

-- the requirement for any consent of any third party,

-- any violation of any law applicable to either the limited partnership or the related limited liability company, or

-- assuming consent of lenders, any material violation or breach of or default under any contract to which the limited partnership or related limited liability company is a party.

Additional representations and warranties of the limited partnership, and where applicable, the related limited liability company are as follows:

-- the applicable limited liability company is not engaged in any business activities other than owning real property and leasing it to ISA,

-- there is no litigation against either the limited partnership or the related limited liability company that would impede the consummation of the transactions,

-- neither the limited partnership nor the related limited liability company has received written notice of any existing violations of applicable law, including environmental law,

-- the current use of the respective properties does not violate zoning laws,

-- the related limited liability company holds fee simple title to its real property, and no improvements have been made on such real property in the last 120 days,

-- each limited liability company has filed all required tax returns and has no material liabilities in excess of $50,000,

-- the related limited liability company has not executed any leases for all or part of the real property other than as set forth on schedules,

-- each limited liability company has elected to be treated as a corporation for federal income tax purposes, and

-- the limited partnership is acquiring the shares from ISA for its own account with the present intention of holding them for purposes of investment.

ISA has made certain representations and warranties including,

-- the due authorization, power and legal right of ISA to enter into each exchange agreement,

-- no representations have been made as to the accuracy or completeness of the records by the limited partnership or its representatives except as contained in the applicable exchange agreement,

-- there is no litigation pending or threatened against ISA that impedes or is likely to impede the ability of ISA to consummate the transactions under the applicable exchange agreement, and

-- the shares of ISA common stock that ISA issued pursuant to the applicable exchange agreement will be duly authorized, validly issued, fully paid and non-assessable and free of preemptive rights at the time of issuance.

For a period of one year after the date of closing, each exchange agreement limits the ability of ISA to liquidate the applicable limited liability company or to merge it into ISA or into any third party or to otherwise sell or dispose of the interest of ISA in the applicable limited liability company. Further . . .