Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.9

SIXTH MODIFICATION TO LOAN DOCUMENTS

THIS SIXTH MODIFICATION TO LOAN DOCUMENTS (herein the “Modification”) is made and entered into
as of this 1st day of December, 2007, by and between Intelligent Systems Corporation, a
Georgia corporation (herein the “Borrower”), QS Technologies, Inc., a Georgia corporation, Visaer,
Inc., a Delaware corporation, 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 “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. 3274987
(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”);

 

 

 

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 as of August 11, 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, Borrower has requested and Lender has agreed to further extend the Maturity Date of
the Loan and Note from December 1, 2007 to December 1, 2008 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 maximum availability under the terms of the Loan
shall continue to be $2,000,000 during the remaining term of the Loan.

	 
	 	b.	 	The Maturity Date of the Loan and the Note is hereby
extended from December 1, 2007 to December 1, 2008.

 

2

 

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.

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 December 1, 2007 to December 1,
2008, 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 and (ii) all of Lender’s
collateral interest in certain of the primary assets of QS Technologies, 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]

[SIGNATURES COMMENCE ON FOLLOWING PAGE]

 

3

 

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

	 	 	 	 	 	 	 
	 	 	BORROWER:

	 	 
	 
	 	 	
INTELLIGENT SYSTEMS CORPORATION,

a Georgia corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. Leland Strange
 

Title:  President / CEO

Attest: /s/ Bonnie Herron

 

Title:  Secretary
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	[CORPORATE SEAL]	 	 
	 
	 	 	 	 	 	 
	 	 	GUARANTORS:
	 	 
	 
	 	 	QS TECHNOLOGIES, INC., a Georgia corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. Leland Strange	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title: President

Attest: /s/ Bonnie Herron

 

Title: Secretary	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	[CORPORATE SEAL]	 	 
	 
	 	 	 	 	 	 
	 	 	VISAER, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David Spellman	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title: President and CEO

Attest: /s/ Martin Crockett

 

Title: Controller	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	[CORPORATE SEAL]	 	 
	 
	 	 	 	 	 	 
	 	 	CORECARD SOFTWARE, INC.,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. Leland Strange	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title: President / CEO

Attest: /s/ Bonnie Herron

 

Title: Secretary	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	[CORPORATE SEAL]	 	 
	 
	 	 	 	 	 	 
	 	 	CHEMFREE CORPORATION,

a Georgia corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Francis A. Marks	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title: President

Attest: /s/ Bonnie Herron

 

Title: Secretary	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	[CORPORATE SEAL]	 	 

(SIGNATURES CONTINUED ON FOLLOWING PAGE)

 

4

 

(SIGNATURE PAGE TO SIXTH 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)

5Filed by Bowne Pure Compliance

 

Exhibit 10.34

SUBSCRIPTION AGREEMENT

The undersigned, James Bole (the “Investor”), hereby agrees with DPAC Technologies
Corp., a California corporation (the “Company”), as follows:

	1.	 	Investor hereby purchases five hundred (500) shares of Series A Convertible Preferred Stock
(“Series A Preferred Stock”), without par value (the “Preferred Stock”) of the
Company at a price per share of $100.00, and agrees to pay to the Company on the date hereof a
total purchase price of $50,000 (the “Purchase Price”), by wire transfer.
	 
	2.	 	Investor acknowledges, represents and warrants to the Company as follows:

(a) Investor understands that neither the Preferred Stock nor the common stock,
without par value (the “Common Stock”) of the Company into which the Series
A Preferred Stock may convert into has been registered under the Securities Act of
1933, as amended (the “Federal Act”) or any state’s securities laws by
reason of specific exemptions under the provisions thereof which depend in part upon
the representations made by Investor in this Agreement. Investor understands that
the Company is relying upon Investor’s representations and agreements contained in
this Agreement (and any supplemental information furnished by Investor, if any) for
the purpose of determining whether this transaction meets the requirements for such
exemptions.

(b) Investor has such knowledge, skill and experience in business, financial and
investment matters so that Investor is capable of evaluating the merits and risks of
an investment in the Preferred Stock.

(c) Investor has made such independent investigation of the Company, its management,
and related matters as the Investor deems to be necessary or advisable in connection
with an investment in the Preferred Stock; and Investor has received all information
and data which the Investor believes to be necessary in order to reach an informed
decision as to the advisability of an investment in the Preferred Stock.

(d) Investor is an accredited investor within the meaning of Rule 501(a) of
Regulation D promulgated under the Federal Act.

(e) Investor understands that the Preferred Stock and the shares of Common Stock
issuable upon conversion of the Preferred Stock are “restricted securities” under
applicable Federal securities laws and that the Federal Act and the rules of the
Securities and Exchange Commission provide in substance that Investor may dispose of
the Preferred Stock or Common Stock issuable upon conversion of the Preferred Stock
only pursuant to an effective registration statement under the Federal Act or an
exemption from such registration, if available.

 

 

 

(f) Investor hereby confirms that Investor is acquiring the Preferred Stock for
investment only and not with a view to or in connection with any resale or
distribution of the Preferred Stock.

(g) Investor hereby confirms that its residence or principal place of business is
within the State of California.

	3.	 	The Company acknowledges, represents and warrants to the Investor as follows:

(a) All of the outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and nonassessable, and free and clear of all
preemptive rights, rights of first refusal, liens, charges, restrictions, claims and
any other encumbrances imposed by or through the Company other than the securities
laws. The Preferred Stock has been offered, issued, sold and delivered in
compliance with applicable federal and state securities laws, and none of such
securities are or were at the time of issuance of any preemptive rights. The
Preferred Stock and the Common Stock issuable upon conversion of the Preferred
Stock, will be, duly and validly issued, fully paid and nonassessable and free and
clear of all preemptive rights, rights of first refusal, liens, charges,
restrictions, claims and any other encumbrances imposed by or through the Company.
The aggregate authorized capital stock of the Company immediately prior to the
issuance of the Preferred Stock consists of one hundred twenty million (120,000,000)
 shares of Common Stock, of which, as of February 20, 2008, 92,890,834 are currently
issued and outstanding, and eight million (8,000,000) shares of preferred stock, of
which 20,000 are issued and outstanding. The Certificate of Incorporation of the
Company (including the rights, preferences and other terms of the Preferred Stock)
and Bylaws of the Company are as set forth as Exhibits A and B
hereto. There are no outstanding options or warrants to purchase any capital stock
or any other security convertible into equity securities of the Company, except for
the following:

(i) Under the 1996 Stock Option Plan, as amended (the “Plan”), fifteen
million (15,000,000) shares of Common Stock are available to be purchased.
As of January 29, 2008, the total number of options outstanding was
11,922,000.

(ii) There are currently outstanding warrants to purchase six million nine
hundred twenty-three thousand seven hundred forty-nine (6,923,749) shares of
Common Stock. Additionally, the Company has issued a common stock purchase
warrant to Canal Mezzanine Partners, L.P. exercisable from time to time with
respect to three percent (3%) of the issued and outstanding capital stock of
the Company, calculated on a fully diluted basis.

 

 

 

(b) The Company is not an “investment company” nor a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940, as
amended.

(c) The Company is not a “dealer” as defined in the Securities Act nor a
broker-dealer (or broker, dealer) as defined under any applicable state securities
laws.

(d) The Company shall use the proceeds related to the sale of the Preferred Stock to
Investor to retire certain debt obligations of the Company and for general corporate
purposes.

	4.	 	Limitation on Representations and Warranties. The representations and warranties made
pursuant to Section 3 hereof are the sole representations and warranties of the Company.

	5.	 	Survival of Representations and Warranties. The representations and warranties of
the Company made pursuant to Section 3 hereof shall survive for a period of twenty-four (24)
months from the date hereof when they shall terminate, unless notice in writing of breach
thereof was given prior to termination, except that the representations and warranties in
Sections 3(a) hereof shall survive indefinitely.

	6.	 	Indemnification by Company. The Company agrees to indemnify, defend and hold the
Investor harmless from and against any and all claims, demands, losses, expenses, costs,
obligations, damages, liabilities and expense (including all costs, interest, penalties and
reasonable attorneys fees) (collectively, “Losses”) which Investor may incur, suffer or
sustain, which arise, result from or relate to any breach of or failure by Sellers to perform
any of their representations, warranties, covenants or agreements under this Agreement
(including such representations and warranties incorporated herein) or in any exhibit to this
Agreement, as if any and all materiality and knowledge qualification provisions were not
contained therein.

	7.	 	Legend. Investor acknowledges and agrees that the certificate(s) evidencing the
Preferred Stock will bear the a legend substantially similar to the following, until otherwise
registered for re-sale:

THE SHARES OF PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE SECURITIES
LAWS (THE “ACTS”) AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE ACTS OR AN OPINION
OF COUNSEL SATISFACTORY TO THE MAKER THAT THE TRANSFER OF THESE SHARES ARE
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACTS.

 

 

 

	8.	 	Amendment Investor and the Company acknowledge that the Company currently may not
have sufficient shares of authorized Common Stock if the Preferred Stock were to be
immediately converted. The Company covenants to take all reasonable efforts to amend its
articles of incorporation to provide for adequate shares of Common Stock issuable upon
conversion of the Preferred Stock. Investor agreed to vote for or consent to such amendment
with respect to all shares of Common Stock and Preferred Stock owned by it.

	9.	 	Registration Rights Investor is as of the date hereof entering into an amendment and
joinder to that certain Shareholder and Registration Rights Agreement dated as of May 11,
2005.

	10.	 	Investor acknowledges that neither the Company nor any person acting on its behalf has
offered or sold the Preferred Stock to Investor by any form of general solicitation, general
or public media advertising or mass mailing.

	11.	 	This Subscription Agreement shall be deemed to be a contract under the Laws of the State of
Ohio and shall for all purposes be governed by and construed and enforced in accordance with
the laws of the State of Ohio.

	12.	 	Neither this Subscription Agreement nor any provisions hereof shall be modified, changed,
discharged or terminated except by an instrument in writing signed by the party against whom
any waiver, change, discharge or termination is sought.
	 
	13.	 	This Subscription Agreement is not transferable or assignable by Investor or the Company.

	14.	 	This Subscription Agreement, and the Preferred Stock constitute the entire understanding of
the parties with respect to the subject matter hereof and supersedes any and all prior
understandings and agreements, whether written or oral, with respect to such subject matter.

	15.	 	This Subscription Agreement and the Preferred Stock shall only be binding upon a party (that
is a signatory thereto) when executed by the parties thereto.

	16.	 	This Subscription Agreement may be executed in counterparts, all of which shall constitute
the same instrument.

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

 

 

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, do hereby execute this
Subscription Agreement as of this 22nd day of February 2008.

	 	 	 	 	 
	 	 	DPAC Technologies Corp.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Steven Runkel
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:
	 	Steven Runkel
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:
	 	CEO
	 

	 	 	 	 

 

	 	 	 	 	 
	 	 	INVESTOR
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	Signature:
	 	/s/ James Bole
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:
	 	James Bole
	 

	 	 	 	 

 

 

 

Exhibit A

Certificate of Incorporation

 

 

 

Exhibit B

Bylaws

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