Exibit 10.1


FOURTH MODIFICATION AGREEMENT


THIS AGREEMENT is made as of the 16th
day of November, 2011, by and between ASSOCIATED BANK, NATIONAL ASSOCIATION, a national banking association (“Bank”),
and IMAGE SENSING SYSTEMS, INC., a Minnesota corporation (“Borrower”).


RECITALS:


i.                    
Borrower and Bank have heretofore entered into a certain Loan Agreement dated as of the 1st
day of May, 2008, as amended by a Modification Agreement dated as of the 28th day of December, 2009, a Second Modification Agreement
dated as of the 3rd day of May, 2010, and a Third Modification Agreement dated as of the 14th day of December, 2010 (the “Loan
Agreement”), pursuant to which the Bank agreed to provide to Borrower a Line of Credit of up to $5,000,000.00 and a Loan
in the amount of $4,000,000.00. All capitalized terms not otherwise defined herein shall have the meanings given them in the Loan
Agreement.


ii.                   
The Line of Credit matures on May 1, 2012, and the Borrower has requested that the Bank agree
to extend the Line Maturity Date to May 1, 2013.


iii.                 
Bank is willing to agree to the foregoing request of Borrower but only upon the terms and
conditions hereinafter set forth and in reliance on the warranties and representations of Borrower contained herein.


AGREEMENTS:


In consideration of the matters stated
in the foregoing Recitals and the covenants hereinafter set forth, the parties hereto agree as follows:


1.                  
To induce Bank to enter into this Agreement, Borrower warrants and represents to Bank as follows:


A.                 
The Recitals set forth above are each true and correct.


B.                 
The Loan Agreement is, and as modified herein shall be, valid, binding and enforceable.


C.                 
Borrower has no defenses, set-offs, claims or rights of recoupment against its obligations
to pay to Bank the outstanding balance of the Line of Credit.


D.                 
All of the representations and warranties set forth in Section 3 of the Loan Agreement are
true and correct as though made on the date of this Agreement and as though applicable to this Agreement in the same manner as
they were applicable to the Loan Agreement.


2.                  
Section 1.C of the Loan Agreement is hereby amended by changing the Line Maturity Date set
forth therein from “May 1, 2012” to “May 1, 2013.”






    	 



    	 



    
 


3.                  
All references to the Loan Agreement in the Master Note, Loan Note and the Security Agreement
executed by the Borrower shall be deemed to mean the Loan Agreement as amended by this Agreement.


4.                  
Borrower shall pay to Bank, upon demand, an extension fee in the amount of $250.00, which
fee shall be fully earned and non-refundable upon execution of this Agreement by the Bank.


5.                  
Except as expressly modified and amended herein, all terms and provisions of the Loan Agreement
shall be and remain in full force and effect.


6.                  
Borrower shall, upon demand by Bank, reimburse Bank for all costs and expenses incurred by
Bank in connection with this Agreement, including, but not limited to, the fees of Bank’s attorneys.


7.                  
This Agreement shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns.


8.                  
WAIVER OF JURY TRIAL:  BORROWER AND BANK HEREBY JOINTLY AND SEVERALLY WAIVE ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND TO ANY OF THE DOCUMENTS RELATING HERETO,
THE OBLIGATIONS HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED
THERETO. BORROWER AND BANK EACH REPRESENTS TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.


IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the day and year first above written.


 


	 	IMAGE SENSING SYSTEMS, INC.
	 	A Minnesota corporation
	 	 	 
	 	By:	 
	 	 	Gregory R. L. Smith, Treasurer and
 Chief Financial Officer
	 	 	 
	 	 	 
	 	ASSOCIATED BANK, NATIONAL
 ASSOCIATION
	 	 	 
	 	By:	 
	 	 	Angela O’Neill, Vice President


 








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