Exhibit 10.1
NINTH MODIFICATION TO LOAN DOCUMENTS
THIS NINTH MODIFICATION TO LOAN DOCUMENTS (herein the “Modification”) is made
and entered into as of this 28th day of June, 2010, by and between Intelligent
Systems Corporation, a Georgia corporation (herein the “Borrower”), QS
Technologies, Inc., a Georgia corporation, Newvisco, Inc., a Delaware
corporation (formerly known as Visaer, Inc.), Corecard Software, Inc., a
Delaware corporation, and Chemfree Corporation, a Georgia corporation (the
aforesaid four corporations being individually and collectively referred to
herein as the “Guarantors”), and Fidelity Bank, a Georgia state chartered bank
(f/k/a Fidelity National Bank ) (herein the “Lender”).
RECITALS:
WHEREAS, on October 1, 2003, Lender made a loan to Borrower in the original
principal amount of One Million Five Hundred Thousand and No/100 Dollars
($1,500,000.00) (the “Loan”) evidenced by that certain Commercial Promissory
Note dated October 1, 2003 executed by Borrower in favor of Lender (herein the
“Note”).
WHEREAS, the Loan and the Note are secured and evidenced by, among other
instruments, the following:

  (a)  
Security Agreement from Borrower in favor of Lender dated of even date with the
Note (herein the “Security Agreement”);
    (b)  
Loan Agreement by and between Borrower and Lender dated of even date with the
Note (herein the “Loan Agreement”);
    (c)  
Financing Statement filed in Gwinnett County, Georgia records, File no.
067-2003-010805 (herein the “Borrower Financing Statement”).
    (d)  
Negative Pledge Agreement by and between Borrower and Lender dated of even date
with the Note (herein the “Negative Pledge Agreement”);
    (e)  
Assignment of Policy as Collateral Security from Borrower in favor of Lender
dated of even date with the Note (herein the “Life Insurance Assignment”); and
    (f)  
Subordination Agreements from Borrower and certain of the Guarantors in favor of
Lender dated of even date with the Note (herein “Subordination Agreements”).

The Security Agreement, the Loan Agreement, the Financing Statement, the
Negative Pledge Agreement, the Life Insurance Assignment and the Subordination
Agreements are collectively referred to herein as the “Loan Documents”.
WHEREAS, on October 1, 2003, each of the Guarantors executed a Guaranty in favor
of Lender whereby each of the Guarantors guaranteed all of the obligations of
Borrower to Lender contained under the Loan, Note and Loan Documents (herein
collectively the “Guaranties”);
WHEREAS, in order to secure their obligations under the terms of the Guaranties,
each of the Guarantors executed in favor of Lender certain Security Agreements
dated October 1, 2003 (herein the “Guarantor Security Agreements”), which
Guarantor Security Agreements are further evidenced by a Financing Statement
filed in Gwinnett County, Georgia Records File No. 067-2003-010805 and that
certain Financing Statement filed with the Delaware Department of State under
Filing No. 20032749870 (herein collectively the “Guarantor Financing
Statements”) (the Guaranties, the Guarantor Security Agreements and the
Guarantor Financing Statements are herein collectively referred to herein as the
“Guaranty Documents”);

 

 

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WHEREAS, Lender, Borrower and the Guarantors entered into that certain First
Modification of Loan Documents dated as of September 1, 2004 for the purpose of
extending the Maturity Date of the Loan on the Note from September 1, 2004 to
September 1, 2005 (all references to the Loan, Note, Loan Documents and Guaranty
shall be as amended by the aforesaid First Modification of Loan Documents);
WHEREAS, Lender, Borrower and the Guarantors entered into that certain Second
Modification of Loan Documents dated as of September 1, 2005 for the purpose of
extending the Maturity Date of the Loan on the Note from September 1, 2005 to
September 1, 2006 and to increase the maximum availability under the Loan and
the Note from $1,500,000 to $2,000,000 (all references to the Loan, Note, Loan
Documents and Guaranty shall be as amended by the aforesaid Second Modification
of Loan Documents);
WHEREAS, Borrower requested and Lender agreed to increase the maximum
availability under the Loan and the Note from $2,000,000 to $2,500,000 and
Borrower, Guarantors and Lender entered into that certain Third Modification of
Loan Documents dated as of June 16, 2006 in order to modify and ratify certain
terms and provisions of the Note, the Loan Documents and the Guaranty Documents
as more particularly set forth therein (all references to the Loan, Note, Loan
Documents and Guaranty shall be as amended by the aforesaid Third Modification
of Loan Documents);
WHEREAS, Borrower requested and Lender agreed to decrease the maximum
availability under the Loan and the Note from $2,500,000 to $2,000,000 and to
further extend the Maturity Date of the Loan and Note from September 1, 2006 to
December 1, 2006, and Borrower, Guarantors and Lender entered into that certain
Fourth Modification of Loan Documents dated on or about August 9, 2006 in order
to modify and ratify certain terms and provisions of the Note, the Loan
Documents and the Guaranty Documents as more particularly set forth therein (all
references to the Loan, Note, Loan Documents and Guaranty shall be as amended by
the aforesaid Fourth Modification of Loan Documents);
WHEREAS, Lender, Borrower and the Guarantors entered into that certain Fifth
Modification of Loan Documents dated as of December 1, 2006 for the purpose of
extending the Maturity Date of the Loan on the Note from December 1, 2006 to
December 1, 2007 (all references to the Loan, Note, Loan Documents and Guaranty
shall be as amended by the aforesaid Fifth Modification of Loan Documents);
WHEREAS, Lender, Borrower and the Guarantors entered into that certain Sixth
Modification of Loan Documents dated as of December 1, 2007 for the purpose of
extending the Maturity Date of the Loan on the Note from December 1, 2007 to
December 1, 2008 (all references to the Loan, Note, Loan Documents and Guaranty
shall be as amended by the aforesaid Sixth Modification of Loan Documents);
WHEREAS, Lender filed (i) a continuation statement in the UCC Records of
Gwinnett County, Georgia under File No. 067-2008-003877 on April 15, 2008, which
continuation statement continued in full force and effect both the Financing
Statement and the Guarantor Financing Statement of record naming Borrower, QS
Technologies, Inc. and Chemfree Corporation as debtors, and (ii) a continuation
statement in the UCC Records of the Secretary of State of Delaware under File
No. 20081731866 on May 20, 2008, which continuation statement continued in full
force and effect both the Guarantor Financing Statement of record Visaer, Inc.
and Corecard Software, Inc. as debtors.
WHEREAS, Lender, Borrower and the Guarantors entered into that certain Seventh
Modification of Loan Documents dated as of December 1, 2008 for the purpose of
extending the Maturity Date of the Loan on the Note from December 1, 2008 to
June 30, 2009 (all references to the Loan, Note, Loan Documents and Guaranty
shall be as amended by the aforesaid Seventh Modification of Loan Documents);
WHEREAS, Lender, Borrower and the Guarantors entered into that certain Eight
Modification of Loan Documents dated as of June 26, 2009 for the purpose of
extending the Maturity Date of the Loan on the Note from June 30, 2009 to
June 30, 2010 and to provide for certain other modifications with respect to the
Loan (all references to the Loan, Note, Loan Documents and Guaranty shall be as
amended by the aforesaid Eight Modification of Loan Documents);

 

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WHEREAS, Borrower has requested and Lender has agreed to further extend the
maturity date of the Loan and Note from June 30, 2010 to June 30, 2011, and
Borrower, Guarantors and Lender desire to enter into this Amendment in order to
modify and ratify certain terms and provisions of the Note, the Loan Documents
and the Guaranty Documents as more particularly set forth herein.
NOW, THEREFORE, for and in consideration of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, the receipt, adequacy and sufficiency of
which are hereby acknowledged, Lender, Borrower and Guarantors hereby agree as
follows:
1. Recitals. The foregoing recitals are true and correct and are incorporated
herein by this reference.
2. Capitalized Terms. All capitalized terms contained in this Modification shall
have the same meaning afforded to them in the Note, Loan Documents and Guaranty
Documents.
3. Specific Modifications to Documents.

  a.  
The Note, each of the Loan Documents and each of the Guaranty Documents are
hereby modified to reflect that the maximum availability under the terms of the
Loan shall be equal to $1,250,000.
    b.  
The Maturity Date of the Loan and the Note is hereby extended from June 30, 2010
to June 30, 2011, and Section 11.1 of the Loan Agreement is hereby modified to
provide that the date set forth in the third line of such Section 11.1 shall
hereafter read “June 29, 2011”.
    c.  
The Note is hereby modified to provide that interest shall continue to accrue
thereunder at the greater of (i) the “prime rate” of Lender (as defined on the
face of the Note) plus one and one half percent (1.5%) per annum, or (ii) six
and one half percent (6.5%), and shall be adjusted daily with changes in the
prime rate during the term of the Note in the event the prime rate of Lender
shall be greater than five percent (5.0%).
    d.  
In connection with the execution of this Modification, Borrower shall pay to
Lender a loan extension fee in the amount of $6,250.00.
    e.  
Section 7.11 of the Loan Agreement (which was added to the Loan Agreement
pursuant to the Eighth Modification of Loan Documents referenced in the recitals
hereinabove) is hereby modified to provide that the Borrower shall maintain a
minimum Tangible Net Worth of $4,800,000 as of the end of each calendar quarter
during the remaining term of the Loan. (i.e. June 30, 2010, September 30, 2010,
December 31, 2010 and March 31, 2011).

4. No Impairment. Borrower and Guarantors agree that the terms and provisions
hereof shall in no manner impair, limit, restrict or otherwise affect the
obligations of Borrower and Guarantors to Lender or the priority of any lien
evidenced by the Note, the Loan Documents or the Guaranty Documents, except as
modified hereby.
5. No Defenses. Borrower and Guarantors acknowledge that they have no offsets,
claims, counterclaims or defenses against Lender or under any of their
obligations contained in the Note, the Loan Documents or the Guaranty Documents
and to the extent any such offsets, claims, counterclaims, or defenses exist,
the same are hereby waived by the Borrower and Guarantors.

 

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6. Ratification. Except as amended hereby, each and every term and provision of
the Note, the Loan Documents and the Guaranty Documents are hereby ratified and
affirmed by Borrower and Guarantors and shall remain in full force and effect.
The Guarantors hereby specifically acknowledge and consent to the extension of
the Maturity Date from June 30, 2010 to June 30, 2011, as well as the prior
release by Lender of (i) all of Lender’s collateral interest with respect to
Borrower’s interest in Horizon Software International, LLC, (ii) all of Lender’s
collateral interest in certain of the primary assets of QS Technologies, Inc.
and (iii) all of Lender’s collateral interest and certain of the primary assets
of Visaer, Inc.
7. No Novation. It is the intention of the parties hereto that the execution and
delivery of this Modification shall in no way constitute a novation or
extinguishment of the debt evidenced by the Note, Loan Documents or the Guaranty
Documents.
8. Effect of Modification. In signing this Modification, the parties hereto
expressly certify and covenant that they have carefully read all provisions
contained herein, have had an opportunity to consult with legal counsel of their
choosing and to consider the ramifications and terms of this Modification, and
they have voluntarily signed this Modification with the understanding that it
will be final and binding as to their interests and they have had a sufficient
opportunity to review the Modification and consult with counsel of their choice
prior to making such decision to execute this Modification. The parties hereby
represent and warrant that this Modification is executed without reliance on any
statement or representation of the other, except as expressly set forth in the
within and foregoing Modification, and this Modification constitutes the entire
Modification between the parties hereto and that no promise or inducement or
consideration, other than that expressed in the within and foregoing
Modification, has been offered or accepted and all such prior inducements or
considerations are deemed merged herein.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
(SIGNATURE PAGE TO NINTH MODIFICATION TO LOAN DOCUMENTS TO FOLLOW)

 

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IN WITNESS WHEREOF, Borrower, Guarantors and Lender have set their hands and
seals to this Ninth Modification as of the day and year first above-written.

            BORROWER:
INTELLIGENT SYSTEMS CORPORATION,
a Georgia corporation
      By:   /s/ J. Leland Strange       Title:  
Attest: President 
/s/ Bonnie L. Herron

    Title:   Secretary

[CORPORATE SEAL] 
      GUARANTORS:
QS TECHNOLOGIES, INC., a Georgia corporation
      By:   /s/ J. Leland Strang       Title:  
Attest:  President 
/s/ Bonnie L Herron

    Title:   Secretary

[CORPORATE SEAL] 
      NEWVISCO, INC., a Delaware corporation
(formerly known as Visaer, Inc.)
      By:   /s/ J. Leland Strange       Title:  
Attest: President 
/s/ Bonnie L. Herron

    Title:   Asst. Secretary

[CORPORATE SEAL] 
      CORECARD SOFTWARE, INC.,
a Delaware corporation
      By:   /s/ Leland Strange       Title:  
Attest: President 
/s/ Bonnie L. Herron

    Title:   Secretary

[CORPORATE SEAL] 
      CHEMFREE CORPORATION,
a Georgia corporation
      By:   /s/ Francis A. Marks       Title:  
Attest: President 
/s/ Bonnie L. Herron

    Title:   Secretary

[CORPORATE SEAL] 
 

 

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(SIGNATURE PAGE TO NINTH MODIFICATION TO LOAN DOCUMENTS)

            LENDER:

FIDELITY BANK,
a Georgia state chartered bank
(f/k/a Fidelity National Bank)
      By:   /s/ Raymond H. Zavacki       Title:  Vice President       
(BANK SEAL)   

 

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