Document:

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                                                                    EXHIBIT 10.3

                           LOAN AGREEMENT BY AND AMONG

                         INTELLIGENT SYSTEMS CORPORATION

                                       AND

                                  FIDELITY BANK

                                OCTOBER 1 , 2003

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                                    EXHIBITS

EXHIBIT A         BORROWING BASE CERTIFICATE

EXHIBIT B         EXISTING UCC FILINGS

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                                 LOAN AGREEMENT

         THIS AGREEMENT is made and entered into effective the 1st day of
October, 2003, by and among Intelligent Systems Corporation, a Georgia
corporation, with its chief executive offices located at 4355 Shackleford Road,
Norcross, Georgia 30093 ("DEBTOR"); and FIDELITY BANK, chartered under the laws
of the State of Georgia, having a mailing address of 3490 Piedmont Road, Suite
1450, Atlanta, Georgia 30305 (hereafter referred to as "SECURED PARTY").

SECTION 1. DEFINITIONS

         1.1.     In addition to the terms hereinafter defined, the following
terms shall have the meanings set forth in this Section:

         (a)      Accounts. All of Debtor's or Guarantors' (as the case may be)
present or future accounts, accounts receivable, other receivables, contract
rights, issues, profits, rents, chattel paper, instruments and documents,
together with all of the proceeds, cash or non-cash, thereof, however acquired,
or now or hereafter existing.

         (b)      Account Obligor. Any Person who is or may become obligated
under or on account of an Account.

         (c)      Borrowing Base. An amount equal to the sum of: (i) 80% of the
total face value of the Eligible Accounts of ChemFree; (ii) 80% of the total
face value of VISaer's Eligible Accounts; (iii) 80% of the total face value of
the Eligible Accounts of Corecard; (iv) 70% of the total face value of QS Tech's
Eligible Accounts; and (v) 50% of the Eligible Inventory of ChemFree.

         (d)      Borrowing Base Certificate. As defined in Section 3 hereof.

         (e)      Closing Date. The date of execution and delivery of this
Agreement.

         (f)      Collateral. The Collateral as defined in the Security
Agreement.

         (g)      Credit Line. The revolving line of credit described in Section
2 hereof.

         (h)      Eligible Account. An Account arising in the ordinary course of
Debtor's or Guarantors' (as the case may be) business from the sale of goods or
rendition of services which Secured Party, in its sole credit judgment, deems to
be an Eligible Account. Secured Party may, in its sole discretion, determine
that an Account is not an Eligible Account if: (i) it arises out of a sale made
by Debtor or Guarantor to a Subsidiary or an Affiliate of Debtor or Guarantor or
to a Person controlled by a Subsidiary or an Affiliate of Debtor or Guarantor;
or (ii) it is unpaid for more than ninety (90) days after the original invoice
date therefor; or (iii) any covenant, representation or warranty contained in
this Agreement or the applicable Security Agreement with respect to such Account
has been breached in any material respect and such breach is continuing; or (iv)
the Account Obligor is also Debtor's creditor or supplier or the Account Obligor
has disputed liability with respect to such Account, or has made any claim with
respect to any other Account due from such Account Obligor to Debtor, or the
Account otherwise is or may become subject to any right of set-off by the
Account Obligor, in each of the foregoing cases to the extent of any offset,
dispute or claim; or (v) the Account Obligor has commenced a voluntary case
under the federal bankruptcy laws, as now constituted or hereafter amended, or
made an assignment for the benefit of creditors, or a decree or

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order for relief has been entered by a court having jurisdiction in the premises
in respect of the Account Obligor in an involuntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or any other petition
or other application for relief under the federal bankruptcy laws has been filed
against the Account Obligor, or if the Account Obligor has failed, suspended
business, ceased to be Solvent, or consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a significant
portion of its assets or affairs; or (vi) it arises from a sale to an Account
Obligor who is located outside the United States, unless the sale is on letter
of credit, guaranty or acceptance terms, in each case acceptable to Secured
Party in its sole discretion; or (vii) it arises from a sale to the Account
Obligor on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; or (viii) Secured Party
believes, in its sole judgment, that collection of such Account is insecure or
that payment thereof is doubtful or will be delayed by reason of the Account
Obligor's financial condition; or (ix) the Account Obligor is the United States
of America or any department, agency or instrumentality thereof, unless Debtor
assigns its right to payment of such Account to Secured Party, in form and
substance satisfactory to Secured Party, so as to comply with the Assignment of
Claims Act of 1940, as amended (as codified at 31 U.S.C. Section 3727); or (x)
the Account is subject to a Lien; or (xi) the goods giving rise to such Account
have not been delivered to and accepted by the Account Obligor or the services
giving rise to such Account have not been performed by Debtor and accepted by
the Account Obligor or the Account otherwise does not represent a final sale; or
(xii) the Account is evidenced by chattel paper or an instrument of any kind, or
has been reduced to judgment; or (xiii) Debtor has made any agreement with the
Account Obligor for any deduction therefrom, except for discounts or allowances
which are made in the ordinary course of business for prompt payment and which
discounts or allowances are reflected in the calculation of the face value of
each invoice related to such Account; or (xiv) Debtor has made an agreement with
the Account Obligor to extend the time of payment thereof.

         (i)      Eligible Inventory. Any and all of the assets which from time
to time are in the possession of and form a part of the Inventory of Debtor or
any Guarantor (as the case may be) and which Secured Party, in its sole credit
judgment, deems to be Eligible Inventory. The value of Eligible Inventory shall
be determined by the actual purchase price thereof as determined by the
acquisition contract. Without limiting the generality of the foregoing, no
Inventory shall be Eligible Inventory if it arises out of a sale made by Debtor
to a subsidiary or an affiliate of Debtor or to a person controlled by an
affiliate of Debtor.

         (j)      Event of Default. As defined in Section 14 hereof.

         (k)      Guarantors. CHEMFREE CORPORATION ("ChemFree"), QS
TECHNOLOGIES, INC. ("QS Tech"), VISAER, INC. ("VISaer") and CORECARD SOFTWARE,
INC. ("Corecard") (individually and/or collectively referred to herein as the
"Guarantors."

         (l)      Guarantor Security Agreement. The Security Agreements executed
of even date herewith between Guarantors and Secured Party.

         (m)      Guaranty. The guaranties executed by Guarantors in favor of
Secured Party of even date herewith.

         (n)      Indebtedness. All items which, in accordance with generally
accepted accounting principles, would be included on the liability side of a
balance sheet of Debtor or Guarantor as of the date Indebtedness is to be
determined and, in any event, shall include any liability, whether or not such
liability shall have been assumed, guaranties, endorsements (other than for
collection in the ordinary course of business) and other contingent obligations
in respect of the obligations of others.

         (o)      Interest Period. The period from the 1st day of the month
through the 30th day of the

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same month based upon a 360 day year.

         (p)      Inventory. The Inventory as defined in the Security Agreement
or the Guarantor Security Agreements, as the case may be.

         (q)      Line of Credit Note. The commercial promissory note of Debtor
issued pursuant to Section 2 hereof to evidence the Credit Line.

         (r)      Loan Documents. In addition to this Agreement, the Note, the
Guaranty and the Security Agreement, the Guarantor Security Agreements, all
financing statements, pledges, title certificates, documents of title,
documents, instruments, assignments, leases, guarantees or contracts (including
any amendments thereto) now or at any time or times hereafter executed and
delivered by Debtor, Guarantors or any affiliate of Debtor or Guarantor to
Secured Party and relating to the Obligations.

         (s)      Loan. The Credit Line as evidenced by the Commercial
Promissory Note.

         (t)      Note. The Commercial Promissory Note.

         (u)      Obligations. All indebtedness, obligations and liabilities of
any and every kind and nature now and hereafter owing to Secured Party by the
Debtor, however evidenced, created, incurred, acquired or owing, whether
primary, secondary, direct, contingent, fixed, joint or several or otherwise,
and whether arising out of this Agreement, the Note, the Loan Documents or under
any contracts, guarantees or agreements heretofore, now or hereafter executed
and delivered by the Debtor and Guarantors (as the case may be) to the Secured
Party, including without limitation, the Note.

         (v)      Security Agreement. The Security Agreement of even date
herewith between Debtor and Secured Party.

         (w)      Settlement Date. The 1st day of each month during the term of
this Agreement or the last business day immediately preceding such date, if such
date falls on a Saturday, Sunday or legal holiday.

SECTION 2. AGREEMENT TO LEND.

         2.1.     Subject to all the terms and conditions hereinafter contained,
Secured Party grants to Debtor a revolving line of credit in the maximum
principal amount of $1,500,000 or so much thereof as may be advanced or
re-advanced from time to time, which aggregate indebtedness is evidenced by the
Line of Credit Note.

         2.2.     Secured Party's obligation to make the initial advance under
the Loan, and Secured Party's performance of its other obligations hereunder,
are subject to the fulfillment of the following conditions precedent:

                  (a)      All of the Debtor's or Guarantors' (as the case may
be) representations and warranties in this Agreement and the Loan Documents
shall be true and correct on and as of the date of each advance, with the same
effect as if made on and as of such date;

                  (b)      At the time of each advance hereunder, the Debtor or
the Guarantor (as the case may be) shall have observed and performed all of the
terms, conditions and agreements set forth herein or in the other Loan Documents
on their respective parts to be observed and performed, and neither any Event of
Default, as defined herein, nor any event which, with notice or lapse of time or
both, would constitute an

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Event of Default, shall have occurred and be continuing either at the time of
such advance or after giving effect thereto;

                  (c)      The financing statements required by the Security
Agreement shall have been filed for record with the appropriate governmental
authorities;

                  (d)      Debtor shall have performed all obligations and taken
all actions to be performed or taken by it hereunder on or prior to the Closing
Date;

                  (e)      On the Closing Date, Debtor shall deliver to Secured
Party certificates, dated as of the Closing Date and signed by its Vice
President or Chief Executive Officer, certifying compliance with the conditions
of clauses (a),(b) and (d) above;

                  (f)      Debtor shall have furnished to Secured Party a
certificate (or other evidence satisfactory to Secured Party) that the insurance
required herein is in full force and effect and that Secured Party is loss payee
under each such insurance policy, as specified herein;

                  (g)      On the Closing Date, Debtor shall deliver to Secured
Party the following:

                           (i) Certificate of Good Standing for Debtor from the
         Secretary of State of Georgia and from the Secretary of State of each
         additional state where Debtor is qualified to do business, such
         certified articles and good standing certificates to be dated as of a
         date as near to the Closing Date as practicable;

                           (ii) A Certificate from Debtor's Secretary dated as
         of the Closing Date, certifying that attached thereto is a true and
         complete copy of Debtor's Articles of Incorporation and By-laws;

                           (iii) A Certificate from Debtor's Secretary dated as
         of the Closing Date, certifying that attached thereto is a complete
         copy of resolutions adopted by Debtor's Board of Directors authorizing
         the execution, delivery and performance of the Loan Documents to which
         it is a party;

                           (iv) A Certificate from Debtor's Secretary dated as
         of the Closing Date, which shall certify the names of Debtor's officers
         authorized to sign the Loan Documents to be executed by Debtor together
         with the true signatures of such officers. Secured Party may rely
         conclusively on such certificate until Secured Party shall receive a
         further certificate of Debtor's Secretary, canceling or amending any
         prior certificate and submitting the signatures of the officers named
         in the future certificate;

                           (v) Such other documents as Secured Party may
         reasonably request in connection with the corporate proceedings taken
         by Debtor authorizing this Agreement, the other Loan Documents, and the
         transactions contemplated hereby and thereby.

                  (h)      Debtor shall have delivered to Secured Party a
fully-executed original of each Loan Document; and

                           (i)      Secured Party shall have received such other
certificates, opinions, agreements and documents, in form and substance
satisfactory to it, as Secured Party may reasonably request.

         2.3.     Secured Party's obligation to make advances under the Credit
Line after the Closing Date shall be subject to the fulfillment of the following
conditions precedent:

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                  (a)      All of Debtor's representations and warranties in
this Agreement and the other Loan Documents shall be true on and as of the date
of such subsequent advance, with the same effect as if made on and as of such
date;

                  (b)      No Event of Default, nor any event or condition
which, upon notice or lapse of time, or both, would constitute an Event of
Default, shall have occurred and be continuing or would occur upon the making of
such advance;

                  (c)      Debtor shall have performed all obligations and taken
all actions to be performed or taken by it hereunder on or prior to the date of
such subsequent advance; and

                  (d)      Secured Party shall have received such other
certificates, opinions, agreements and documents, in form and substance
satisfactory to it, as Secured Party may reasonably request.

SECTION 3. ADVANCES.

         3.1.     Provided that all of the conditions precedent set forth in
Section 2 hereof have been satisfied, Secured Party will make advances to Debtor
under the Credit Line upon Debtor's request, the outstanding balance of which in
the aggregate at any one time, shall not exceed the lesser of: (i) $1,500,000 or
(ii) the Borrowing Base as shown on the Borrowing Base Certificate (which shall
be in the form attached hereto as EXHIBIT "A" and incorporated herein by
reference). Debtor may request advances in amounts of $10,000 or more each time
and such advances shall be made by transfer to Debtors' account held with
Secured Party; it is also contemplated that advances and repayments may be made
in accordance with operation of Secured Party's cash management system.

         3.2.     Debtor shall deliver to Secured Party monthly, on or before
the twentieth (20th) day of each month for the preceding calendar month, a
Borrowing Base Certificate and an aging of Accounts as of the prior month end.
Debtor may request advances on the basis of a given Borrowing Base Certificate
until the next month or the delivery of a new Borrowing Base Certificate,
whichever is earlier. If upon delivery of a new Borrowing Base Certificate, the
aggregate principal amount of all advances under the Credit Line then
outstanding exceed the Borrowing Base as shown on the new Borrowing Base
Certificate, then Debtor shall immediately pay to Secured Party, in addition to
any interest, the difference between the outstanding principal balance of all
advances and the current Borrowing Base as shown on the new Borrowing Base
Certificate. Debtor shall not request, and Secured Party shall be under no
obligation to make, any advances under the Credit Line which would cause the
aggregate principal amount outstanding of all advances under the Credit Line to
exceed the Borrowing Base.

         3.3.     Notwithstanding the foregoing, Debtor agrees that the
obligation to repay each advance under the Note and this Agreement and to repay
the Obligations, together with interest thereon, shall not be limited to any
specific fund, but shall be a direct and general liability of Debtor. Debtor
waives the right to direct the application of any payment at any time received
by Secured Party on account of the Obligations; and Debtor agrees that Secured
Party shall have the continuing exclusive right to apply and reapply such
payments in any way that Secured Party deems advisable, notwithstanding any
entry by Secured Party upon its books. Until checks and other instruments
delivered to Secured Party in payment or on account of Debtor's Obligations are
actually collected and credited to Secured Party's account, Debtor agrees that
such items shall not constitute payment.

SECTION 4. INTEREST RATE AND PAYMENTS.

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         4.1.     Interest shall be due monthly on the outstanding and unpaid
balance of the sums advanced or re-advanced to Debtor pursuant to the Loan in
accordance with this Agreement and the Note. Overdue principal (and interest to
the extent permitted by law) shall bear interest on demand at the default rate
stated in the Note. Interest shall be the product obtained when multiplying the
rate of interest by the average daily principal balance outstanding, dividing by
360 and then multiplying by the actual number of days interest has accrued.

         4.2.     (a) Debtor hereby agrees that it shall immediately pay to
Secured Party, with respect to the Credit Line:

                           (i)      upon either oral or written demand, the
         amount necessary to reduce the balance of the Credit Line to the
         Borrowing Base;

                           (ii)     On each Settlement Date, interest on the
         average daily balance of the Credit Line for the preceding Interest
         Period.

                  (b) Upon the effective termination of this Agreement as set
forth herein, Debtor shall pay the total amount of the Obligations, including
all accrued and unpaid interest, principal and other charges and any and all
costs of collection, including reasonable attorneys' fees.

         4.3.     Payments under the Note also may be made through any blocked
account or collateral account in accordance with the Security Agreement
delivered herewith. Until checks and other instruments delivered to Secured
Party in payment or on account of the Obligations are actually paid to Secured
Party, Debtor agrees that such items constitute conditional payment only.

         4.4.     Secured Party will account to Debtor monthly with a statement
of the total outstanding balance of the Note and all interest and charges due
and payable. Each such statement shall be deemed final, binding and conclusive
unless Secured Party is notified by Debtor in writing to the contrary. Any such
notice shall only be deemed an objection to those items specifically objected to
therein.

SECTION 5. RIGHT OF SECURED PARTY TO AUDIT DEBTOR.

         5.1.     Debtor hereby authorizes all duly constituted federal, state
and municipal authorities to furnish to Secured Party copies of all tax returns
of Debtor and all reports of examinations or other information of Debtor which
have been made by them.

         5.2      In an Event of Default, Secured Party shall have the right, in
its sole and absolute discretion, to cause an independent audit to be performed
on all books and records of Debtor and Guarantors, and Debtor shall be
responsible for payment of all costs and expenses in connection with any such
audit; provided however, the cost of such audit shall not exceed Five Thousand
Dollars ($5,000).

SECTION 6. WARRANTIES.

         Debtor warrants, represents and covenants that, at the execution hereof
and at all times when any portion of the Obligations are or shall be
outstanding:

         6.1.     Debtor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Georgia and is duly qualified
and licensed to do business and is in good standing in any other state where the
conduct of its business or ownership of its properties requires such
qualification.

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         6.2.     Debtor is and shall remain duly authorized to execute, deliver
and perform all of its respective duties and obligations under the Loan
Documents. The execution, delivery and performance of this Agreement and the
Loan Documents by the Debtor do not and will not: (a) constitute a breach of or
default under any provision contained in the Debtor's organizational documents
or contained in any agreement in which Debtor is or may be a party or by which
Debtor's properties are or may be bound or affected; (b) require any consent,
approval, license or authorization of, or declaration to be filed with any,
court or governmental authority or regulatory body, domestic or foreign, except
as has been obtained or filed; (c) contravene any judgment, decree or order, or
any material law, rule or regulation, presently in effect and having an
applicability to Debtor; or (d) result in or require the creation or imposition
of any deed to secure debt, mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance of any nature upon or with respect to
any properties now owned or hereafter acquired by Debtor. There is no provision
in Debtor's Articles of Incorporation or By-Laws or in the laws of the state of
Debtor's incorporation requiring any consent of shareholders to authorize the
mortgage or pledge of or the creation of a security interest in any of the
Debtor's assets, such power being vested exclusively in the Debtor's boards of
directors.

         6.3.     This Agreement is, and the Loan Documents when duly executed
and delivered will be, legal, valid and binding obligations of Debtor
enforceable in accordance with their respective terms, except as such
enforcement may be limited by Bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the enforcement of creditors' rights generally and by
general principles of equity (regardless of whether considered in a proceeding
in equity or in law).

         6.4.     Debtor is and shall be lawfully possessed and the sole owners
of the Collateral, free of any pledge, lien or encumbrance of any kind or
character, legal or equitable, except for the security interest created by this
Agreement. Debtor has authority to encumber the Collateral in the manner and
form herein provided. There are no restrictions on the Collateral or any
contracts or agreements regarding the Collateral which would prevent or restrict
the Debtor from freely assigning the Collateral to Secured Party as security for
the Loan, and the Collateral is freely assignable and Debtor has the exclusive
right and authority to assign the Collateral to Secured Party as set forth
herein.

         6.5.     There are no proceedings pending or, to the knowledge of the
officers of Debtor, threatened or before any court or administrative agency
which may materially and adversely affect the Debtor's financial conditions or
operations, or which seek to question or set aside any of the transactions
herein contemplated.

         6.6.     Debtor has and will continue to duly file all federal, state,
and other governmental tax returns which it is required by law to file; all
taxes and other sums which may be due by Debtor to the United States or any
state or other governmental authority have been fully paid; Debtor will maintain
reserves adequate in amount to fully pay all such tax liabilities as they
accrue, or have accrued such tax liabilities in accordance with generally
accepted accounting principles; and Debtor has paid and will continue to pay its
withholding and social security taxes relating to its employees.

         6.7.     All financial data and other information furnished by Debtor
or Guarantors to Secured Party, including but not limited to, schedules of
Eligible Inventory, Eligible Accounts, Collateral and accounts payable were and
will be taken from the books and records of Debtor and Guarantors which are kept
in accordance with generally accepted accounting principles consistently
applied, and as of the date thereof shall be true, accurate and correct in all
respects. Any balance sheet so furnished will accurately reflect the financial
condition of Debtor and Guarantors as of the date thereof.

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         6.8.     Debtor is not a party to any contract or agreement or subject
to any charge, corporate restriction, judgment, decree or order that,
individually or collectively, materially adversely affects or may materially
adversely affect its businesses, properties, assets, operations or condition,
financial or otherwise, and Debtor is not a party to any labor dispute; there
are no strikes or walkouts relating to any labor contracts of Debtor; and no
such contract is scheduled to expire during the Term.

         6.9.     Debtor is not in violation of any applicable statute,
regulation, or ordinance of any governmental entity, or of any agency thereof,
in any respect that, individually or collectively, materially and adversely
affects, or may materially and adversely affect, the Collateral or any of the
Debtor's businesses, property, assets, operations, or condition, financial or
otherwise, including without limitation the Fair Labor Standards Act.

         6.10.    The offices or locations where Debtor or Guarantors (as the
case may be) keep the Collateral and books and records, including without
limitation, computer programs, printouts and other computer materials and
records concerning the Collateral, are as set forth on Schedule B hereto. Such
addresses includes and designates Debtor's chief executive offices, principal
places of business, and other offices and places of business and are Debtor's
sole offices and places of business. Debtor shall not establish any other such
office or location without Secured Party's prior written consent, which consent
shall not be unreasonably withheld; provided, however, that in no event shall
any such office or location be outside the United States of America or any
jurisdiction within the United States of America which has not adopted Article 9
of the Uniform Commercial Code.

         6.11.    Debtor has not, during the preceding five years, been known as
or used (directly or through any predecessor or affiliate) any other corporate
or fictitious name.

         6.12.    Debtor has, and is currently in good standing with respect to,
all governmental approvals, permits, certificates, inspections, patents,
copyrights, trademarks, trade names, consents, and franchises necessary to
continue to conduct business as heretofore conducted by it and to own or lease
and operate the properties now owned or leased by it.

         6.13.    Any guarantee, security, property or right received by Debtor
in connection with the Collateral shall be received by Debtor as agent of, and
on behalf of, Secured Party, will be kept separate from other property of
Debtors capable of identification, and will be delivered and paid immediately by
Debtor to Secured Party as additional security.

         6.14.    Debtor's execution and delivery of this Agreement and the Loan
Documents does not directly or indirectly violate or result in a violation of
Regulations G or X of the Board of Governors of the Federal Reserve System and
Debtor owns no, or do not intend to purchase or carry any, "margin security," as
defined in those Regulations.

         6.15.    The current fiscal year end for Debtor is December 31 and
Debtor will not change its fiscal year ends without providing written notice to
Secured Party.

         6.16.    Each request for an advance made by Debtor pursuant to this
Agreement shall constitute: (a) a warranty and representation by Debtor to
Secured Party that there does not then exist an Event of Default or any event or
condition which, with notice, lapse of time or the making of such advance, would
constitute an Event of Default, and (b) a reaffirmation as of the date of such
request of all the representations and warranties of Debtor in this Agreement.
All representations and warranties of Debtor contained in this Agreement and any
other Loan Document shall survive the execution, delivery

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and acceptance thereof by the parties thereto.

SECTION 7. AFFIRMATIVE COVENANTS.

         As long as any of the Obligations remain unpaid or this Agreement is in
effect, Debtor shall:

         7.1.     Keep books of account and prepare financial statements and
cause to be furnished to Secured Party the following (prepared in accordance
with generally accepted accounting principles applied on a basis consistent with
the financial statements heretofore delivered to Secured Party), except to the
extent that Debtor's certified public accountants concur in any changes therein
and such changes are disclosed to Secured Party and are consistent with then
generally accepted accounting principles:

                  (a)      As soon as available, but not later than ninety (90)
days after the close of each fiscal year of Debtor, audited consolidated
financial statements of Debtor (which includes the financial information with
respect to all Guarantors), consisting of a balance sheet, income and expense
statements and statements of cash flow as at the end of such fiscal year and
related statements of income, paid in surplus and retained earnings for such
year, audited by a Certified Public Accountant and satisfactory to Secured
Party, and prepared in accordance with generally accepted accounting principles
and fairly presenting the financial position and results of operations of
Debtors for such fiscal year, and including a copy of Debtor's internal
"Consolidating Statement" prepared from such financial statements;

                  (b)      As soon as available, but not later than forty-five
(45) days after the end of each calendar quarter, a balance sheet, income and
expense statement and statement of cash flow as of the last day of the previous
month and related statements of paid in surplus and retained earnings for that
calendar quarter, certified by an executive officer of Debtor or Guarantor (as
the case may be) and satisfactory to Secured Party, and prepared in accordance
with generally accepted accounting principles and fairly presenting the
financial position and results of operations of Debtor and Guarantors for such
calendar quarter, together with statements regarding any significant change
within the business operation of Debtor and Guarantors;

                  (c)      As soon as available, but not later than twenty (20)
days after the end of each calendar month, a written report setting forth the
Accounts of Debtor and Guarantors which have been aged according to their due
date as of the last day of said month, certified by an executive officer
satisfactory to Secured Party;

                  (d)      Monthly, on or before the twentieth (20th) day of
each month, a Borrowing Base Certificate as required by Section 3 hereof; and

                  (e)      Prior to the commencement of Debtor's and Guarantors'
fiscal year, Debtor and Guarantors shall submit to Secured Party an annual
financial budget indicating a statement of budgeted income and expenses for the
upcoming fiscal year of Debtor and Guarantors which parallels the income and
expense statements required to be delivered by Debtor and Guarantors to Secured
Party under the terms of this Section 7.1;

                  (f)      With reasonable promptness, such other data and
information (financial and otherwise) as Secured Party from time to time, may
reasonably request, bearing upon or related to the Collateral or Debtor's or
Guarantors (as the case may be) financial condition or results of operations.

         7.2.     Concurrently with the delivery of any annual financial
statements described in paragraph 7.1(a) above, if Debtor otherwise secure(s)
the following although not required to by the terms

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hereof, a certificate of Debtor's certified public accountants certifying to
Secured Party that, based upon their examination of the affairs of Debtor and
Guarantors performed in connection with preparation of such financial
statements, they are not aware of the existence of any condition or event which
constitutes or would, upon notice or lapse of time or both, constitute an Event
of Default or, if they are aware of such condition or event, the nature thereof;

         7.3.     Permit Secured Party from time to time during business hours,
to examine, inspect, audit and make extracts from their books and records,
including the corporate records, and Debtor and Guarantors hereby authorizes all
duly constituted federal, state and municipal authorities to furnish to Secured
Party copies of reports of examination of them which have been made by such
authorities;

         7.4.     On request of Secured Party, execute and deliver to Secured
Party any and all additional documents which Secured Party may from time to time
determine necessary or convenient to evidence the advances made hereunder or to
evidence and continue the security interest created hereby;

         7.5.     Comply with all applicable statutes and governmental
regulations and pay or otherwise have discharged, before any penalty attaches
thereto for nonpayment thereof, all taxes, assessments, fees and charges of any
kind levied upon or assessed against it, the Collateral or any income therefrom;
provided, however, that Debtor or Guarantors (as the case may be) shall not be
required to pay any such taxes, assessments, fees or charges so long as they
shall in good faith contest the validity thereof and shall further provide for
the payment of such items in a manner reasonably satisfactory to Secured Party;

         7.6.     Promptly upon, but in no event later than seven (7) business
days after Debtor's or any Guarantor's learning thereof, inform Secured Party,
in writing, of: (i) any facts relating to the Collateral which would render
untrue any representation or warranty made herein; and (ii) any litigation
affecting Debtor or Guarantors whether or not the claim is considered to be
covered by insurance, and the institution of any suit or administrative
proceeding which may materially and adversely affect its operations, financial
condition or business or Secured Party's security interest in the Collateral;

         7.7.     Perform in a timely manner the covenants, obligations and
agreements under each lease or agreement to which Debtor is a party and relating
to any of its assets;

         7.8.     Notify Secured Party immediately of any information which
Debtor or Guarantor (as the case may be) has or may have received with regard to
the Collateral which might in any way materially and adversely affect the value
of same or the rights or remedies of Secured Party in respect thereof;

         7.9.     Pay to Secured Party all reasonable attorneys' fees and all
proper expenses which may be expended or incurred by Secured Party in
perfecting, enforcing or attempting to enforce any of its rights under any Loan
Document, or with respect to any matter growing out of the Loan Documents;

         7.10.    Preserve and maintain its corporate existence in good
standing, and preserve and maintain all rights, franchises and privileges in the
jurisdictions of their incorporation which is material to the conduct of their
operations or financial condition, and qualify and remain qualified as a foreign
corporation in good standing in each jurisdiction in which the failure to
qualify or remain qualified would have a material adverse effect upon the
results of operation or financial condition.

SECTION 8. NEGATIVE COVENANTS

         As long as any portion of the Obligations remain unpaid or this
Agreement is in effect, Debtor shall not, without obtaining Secured Party's
prior written consent (which Secured Party may or may not give in

                                       10
<PAGE>

its sole discretion):

         8.1.     Make any material change in its Chief Executive Officer and/or
its Chief Financial Officer;

         8.2.     Create, incur, assume or suffer to exist any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance (including
the lien of an attachment, judgment or execution), securing a charge or
obligation, on or of any of its property, real or personal, tangible or
intangible, whether now owned or hereafter acquired, except for:

                  (a)      liens in favor of Secured Party;

                  (b)      liens set forth on Schedule I hereto; and

                  (c)      purchase money liens for equipment purchases.

         8.3.     Notwithstanding anything herein to the contrary, sell, lease
or have removed from Debtor's premises any Collateral or other material assets,
except in the ordinary course of business;

         8.4.     Make any material change in its capital structure or in the
type of business now conducted;

         8.5.     Except for loans or contributions to Guarantors or to
companies in which Debtor currently owns a minority equity interest, provided
however, such funding shall be subordinate to the rights of Secured Party under
this Loan Agreement, extend credit to or make any advance, loan, contribution or
payment of money or goods (other than normal compensation for personal services
and travel expenses in the ordinary course of business) to, any individual,
partnership, corporation, joint venture, association or organization, or become
liable, directly or indirectly, as a surety, guarantor, accommodation endorser
or otherwise for the payment or performance of any obligation of any
corporation, individual, partnership, joint venture, association or
organization; provided, however, that this Section shall not be deemed to
prohibit:

                  (a)      the endorsement of negotiable instruments received in
the ordinary course of its business; or

                  (b)      the guarantee of obligations in favor of Secured
Party.

         8.6.     Merge or consolidate with any other corporation, including the
merger of a parent and subsidiary corporation, or purchase or sell any stock or
assets of or from any other person, association, partnership or corporation,
other than purchasing or selling assets in the ordinary course of business;

         8.7.     Declare or pay any dividend upon any class of stock, make any
distribution in respect thereto, or purchase, redeem or otherwise acquire any of
its shares of stock (except distributions for subchapter S tax liability of the
Debtor's shareholders which relate to the income of Debtor); or

         8.8.     Enter into, or be a party to, any transaction with any
affiliates or stockholders, except in the ordinary course of and pursuant to the
reasonable requirements of its business and upon fair and reasonable terms which
are fully disclosed to Secured Party and are no less favorable than would be
obtained in a comparable arm's-length transaction with a person not an affiliate
or stockholder; or

         8.9.     Sell, transfer, lease or otherwise dispose of all or any
substantial part of its assets or the Collateral without the prior written
consent of Secured Party.

                                       11
<PAGE>

         8.10     Debtor or Guarantor(s) (as the case may be) shall not change
its state of incorporation.

SECTION 9. COLLECTION RIGHTS.

         9.1.     Upon an Event of Default, Secured Party may at any time notify
the account debtor on any Account of its security interest therein, and may
demand that monies due or to become due be paid directly to Secured Party.
Debtor hereby irrevocably appoints Secured Party, or any person designated by
Secured Party, its true and lawful attorney-in-fact, to endorse for Debtor and
in its name any check, draft or other order for payment of money payable to
Debtor in payment of any account owing to Debtor assigned pursuant to this
Agreement, and to collect all Accounts.

         9.2.     Upon an Event of Default, Secured Party's costs of collection
and enforcement, including attorneys' fees as set forth herein and out-of-pocket
expenses, shall be borne solely by Debtor. Secured Party shall not be liable for
any negligent act or omission on the part of Secured Party, or its officers,
agents or employees.

         9.3.     After exercising its rights under this Section, Secured Party
may, without notice to Debtor, renew, modify or extend any Account, grant
waivers or indulgences with respect thereto, accept partial payments thereon,
surrender or release any debtors or other party liable thereon in such manner as
Secured Party may, in its sole discretion, deem advisable, without affecting or
diminishing Debtor's continuing obligations upon such Accounts.

SECTION 10. PAYMENTS BY SECURED PARTY.

         10.1.    If Debtor fails to pay when due any insurance premium, tax or
other obligation required to be paid under this Agreement or the Security
Agreement, which relates to the preservation of the Collateral, Secured Party in
its sole discretion may (without waiving or releasing any obligation or
liability of Debtor hereunder or any event of Default), but shall not be
obligated to, make such payment or any part thereof on behalf of Debtor and add
any and all amounts so paid to the principal indebtedness under the Loan.

SECTION 11. EXTENSION; TERMINATION; LINE OF CREDIT CHARGE; ASSUMPTION

         11.1.    The agreement of Secured Party to make advances to Debtors
under the Credit Line and of Debtor to borrow money from Secured Party under the
Credit Line shall continue from the date hereof until September 1, 2004, unless
earlier terminated as provided in this Agreement. The Credit Line or any part
thereof may be extended thereafter, upon the agreement of Debtor, at Secured
Party's sole discretion for any term selected by Secured Party. If either
Secured Party or Debtor does not extend the Credit Line or any part thereof
(Debtor to so notify Secured Party in accordance with Section 13 hereof within
five business days after being advised of renewal by Secured Party), then Debtor
shall, on or before the expiration date of the term, pay to Secured Party in
full the outstanding principal balance under the Credit Line, together with all
accrued but unpaid interest thereon and other charges.

         11.2.    Debtor may terminate the Credit Line at any time during the
term of the Credit Line in accordance with Section 12 hereof and upon payment in
full of the outstanding principal balance, accrued interest and other charges
due under the Line of Credit Note. Termination of the Credit Line shall void
Secured Party's commitment for future advances hereunder.

         11.3.    Except as otherwise expressly provided for in this Agreement
and in the other Loan Documents, no termination by Debtor or Secured Party of
the Credit Line or failure by Secured Party to

                                       12
<PAGE>

renew the Credit Line, shall in any way affect the continuing obligations of
Debtor under the remaining Note, or affect or impair the powers, obligations,
duties and rights of Debtor or Secured Party relating to: (i) any transaction or
event occurring prior to such termination; (ii) the Collateral; or (iii) so long
as any of the Obligations are outstanding, any of the undertakings, agreements,
covenants, warranties and representations of Debtor and Guarantor contained in
this Agreement or any other Loan Document. All such undertakings, agreements,
covenants, warranties and representations shall survive such termination until
fully performed or remedied.

SECTION 12. NOTICE.

         12.1.    All notices to be given hereunder shall be in writing and
shall be effective three business days after being mailed by certified mail,
return receipt requested, to the following addresses or such other addresses as
the parties may from time to time designate in writing (and if not so mailed,
shall be effective upon receipt at such address):

         If to the Debtor:

         Intelligent Systems Corporation
         Attention: Chief Financial Officer
         4355 Shackleford Road
         Norcross, Georgia 30093

         If to Secured Party:

         Fidelity Bank
         3490 Piedmont Road
         Suite 1450
         Atlanta, Georgia  30348
         Attn: Vice President, Commercial Lending

SECTION 13. EVENTS OF DEFAULT; ACCELERATION.

         13.1.    The occurrence of any one or more of the following conditions
or events shall constitute an "Event of Default":

                  (a)      Debtor fails to pay any principal, interest, or
premium on either of the Note or any other obligation to Secured Party under
this Agreement or any Loan Document when due and payable or declared due and
payable;

                  (b)      Debtor or Guarantor fails to perform, keep, or
observe any term, provision, condition, or covenant contained in this Agreement
or any Loan Document which is required to be performed, kept, or observed by
them, and such default shall not be cured within thirty (30) days of written
notice from Secured Party to Debtor;

                  (c)      There is an event of default pursuant to either of
the Note, the Guaranty, any Security Agreement, Guarantor Security Agreements,
or any other Loan Document, after the applicable grace period, if any;

                                       13
<PAGE>

                  (d)      Any representation or warranty of Debtor in this
Agreement or in any other Loan Document proves to have been untrue or misleading
in any material respect when made;

                  (e)      A default shall occur under any agreement, guarantee,
document or instrument, other than the Loan Documents, to which Debtor or
Guarantor is a party or by which the Debtor is bound creating or relating to any
indebtedness of Debtor, the consequences of which could have a materially
adverse effect on Debtor's business or financial condition, the Collateral or
Secured Party's interest therein;

                  (f)      Any statement, report, financial statement or
certification made or delivered by Debtor or any officer, director, shareholder,
employee, or agent of Debtor to Secured Party is not true and correct in any
material respect;

                  (g)      There shall occur any material uninsured damage to or
loss, theft, or destruction of, any of the Collateral;

                  (h)      The Collateral or any other of Debtor's assets are
attached, seized, levied upon, or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian, or assignee for
the benefit of creditors; and the same is not cured within thirty (30) days
thereafter; or an application is made by any person other than Debtor for the
appointment of a receiver, trustee, or custodian for any of their respective
assets and the same is not dismissed within sixty (60) days after the
application therefor;

                  (i)      Debtor or Guarantor applies for the appointment of a
receiver, trustee, or custodian for any of their respective assets; Debtor or
Guarantor file a petition under any section or chapter of the Bankruptcy Code or
any similar law or regulation; Debtor or Guarantor make an assignment for the
benefit of their creditors; or Debtor file any case or proceeding for its
dissolution, liquidation or termination;

                  (j)      Debtor ceases to conduct its business as now
conducted, or is enjoined, restrained, or in any way prevented by court order
from conducting all or any material part of its business affairs, or a petition
under any section or chapter of the Bankruptcy Code, or under any similar law or
regulation, is filed against Debtor or any case or proceeding is filed against
Debtor for its dissolution or liquidation and such injunction, restraint, or
petition is not dismissed within sixty (60) days after the entry or filing
thereof;

                  (k)      A notice of lien, levy, or assessment is filed of
record with respect to all or any of Debtor's assets by the United States, or
any department, agency, or instrumentality thereof, including without
limitation, the Pension Benefit Guaranty Corporation (in the case of Debtor), or
any taxes or debts owing at the time or times hereafter to any one of the
foregoing becomes a lien or encumbrance upon the assets of Debtor and the same
is not released within sixty (60) days after the same becomes a lien or
encumbrance;

                  (l)      Guarantor files a petition under any section or
chapter of the Bankruptcy Code or under any similar law or regulation, or the
same is filed against Guarantor and is not dismissed within sixty (60) days
after the filing thereof;

                  (m)      There is an event of default under the terms of any
other loan from Secured Party to Debtor, or an event of default or other breach
under the terms of any other agreement, other than a Loan Document, between
Secured Party and Debtor; or

                  (n)      Debtor or the Guarantor shall have filed against it a
lawsuit, proceeding, or administrative action which Secured Party deems, in its
sole discretion, to materially and adversely affect

                                       14
<PAGE>

the condition, financial or otherwise, of Debtors or the Guarantor.

         13.2.    Upon the occurrence of an Event of Default, at Secured Party's
option, the Credit Line shall be terminated and all Debtor's Obligations to
Secured Party may, without demand, notice, or legal process of any kind, be
declared, and immediately shall become, due and payable, and Secured Party shall
be entitled to exercise all of its remedies contained in the Note, the Security
Agreement or any of the Loan Documents.

         13.3     Upon the occurrence of an Event of Default, Secured Party will
provide ten (10) days written notice to any Guarantor of said Event of Default
before Secured Party shall pursue collection against the Guarantor(s) (or any of
them) or under the Guarantor Security Agreement(s) for payment of any of the
Indebtedness, whether or not the Secured Party shall have pursued collection
against any property securing any of the Indebtedness or any obligation, or
shall have proceeded against any other of the Guarantor(s) or any other party
primarily or secondarily liable on any of the Indebtedness.

SECTION 14. WAIVER OF BREACH.

         14.1.    No delay or failure on the part of Secured Party to exercise
any right or remedy accruing to Secured Party hereunder or under any Loan
Document, upon any default or breach by Debtor, of any covenant, condition or
provision hereof, shall be held to be a waiver thereof. No delay on the part of
Secured Party in exercising any of its rights or remedies shall preclude Secured
Party from the exercise thereof at any time during the continuance of any
default or breach. No waiver of a single default or breach shall be deemed a
waiver of any subsequent default or breach. All waivers under this Agreement
must be in writing. Secured Party may enforce any one or more remedies hereunder
successively or concurrently, at its option.

SECTION 15. APPLICABLE LAW; JURISDICTION.

         15.1.    This Agreement has been delivered at and shall be deemed to
have been made at Atlanta, Georgia, and shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the laws of
Georgia, applicable to agreements executed, delivered, and performed entirely
within Georgia. As part of the consideration for new value received, and
regardless of any present or future domicile of Debtor or Secured Party, Debtor
hereby consents to the jurisdiction of the state courts of Georgia, and waive
personal service of any and all process upon debtor and consents that all such
service of process be made by registered mail directed to Debtor at the address
described in Section 13 and service so made shall be deemed to be completed upon
actual receipt thereof. Debtor waives trial by jury and waives any objection to
venue of any action instituted hereunder and consents to the granting of such
legal or equitable relief as is deemed appropriate by the appropriate court.

         15.2.    Nothing contained herein shall prevent Secured Party from
bringing any action or exercising any rights against any security and against
Debtors and against any property of Debtor within any other state. Initiating
such proceeding or taking such action in any other state shall in no event
constitute a waiver of the agreement contained herein that the laws of the State
of Georgia shall govern the rights and obligations of Debtor and Secured Party
hereunder or of the submission herein made by Debtor to personal jurisdiction
within the State of Georgia.

SECTION 16. EXPENSES.

         16.1.    Debtor shall reimburse Secured Party on demand for all its
expenses (including, but not limited to, reasonable attorneys' fees), of or
incidental to:

                                       15
<PAGE>

                  (a)      The structuring and preparation of this Agreement and
the transactions it contemplates, all other Loan Documents and the transactions
contemplated thereby, or any amendment to or modification of this Agreement or
any other Loan Documents or any sale or attempted sale of any interest herein to
a participant, including any taxes on any of the foregoing;

                  (b)      Any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Secured Party, Debtor or any other person) in any
way relating to the Collateral, this Agreement, any other Loan Document, or
Debtor's affairs;

                  (c)      Any attempt to enforce any right of Secured Party or
any participant against Debtor or any other person which may be obligated to
Secured Party by virtue of this Agreement or the other Loan Documents;

                  (d)      All costs or expenses required to be paid by Debtor
under this Agreement which are paid or advanced by Secured Party;

                  (e)      Taxes and insurance premiums of every nature and kind
of Debtor paid by Secured Party;

                  (f)      Filing, recording, publication and search fees paid
or incurred by Secured Party in connection with Secured Party's transactions
with Debtor;

                  (g)      Upon an Event of Default hereunder, costs and
expenses incurred by Secured Party in collecting the Accounts and any other
Collateral (with or without suit), in correcting any default or enforcing any
provision of this Agreement, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, appraising, selling, preparing for sale and
advertising to sell the Collateral, whether or not a sale is consummated;

                  (h)      Any other attempt to inspect, verify, protect,
collect, sell, liquidate or otherwise dispose of the Collateral;

                  (i)      The deposit, collection or processing of any check or
other item of payment received by or for Secured Party on account of the
Obligations.

         16.2.    Such expenses shall be additional Obligations hereunder
secured by the Collateral. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include those of an outside
liquidator, paralegals, accountants, duplicating, court reporters, long distance
telephone, air express, telegrams, secretarial over-time, and travel, lodging
and food paid or incurred in connection with the performance of legal services
or with the administration or enforcement of this Agreement or any other Loan
Document.

SECTION 17. SEVERABILITY.

         17.1.    Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
If, however, any provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
Agreement, unless the ineffectiveness of such provision materially adversely
alters the benefits accruing to either party hereunder in which case Secured
Party may, at its option and sole discretion, treat such severance as though it
were a stated Event of Default under Section 13 and proceed in accordance with
the

                                       16
<PAGE>

rights and remedies set forth herein upon and after an Event of Default.

SECTION 18. GENERAL.

         18.1.    This Agreement, the Note, the Security Agreement and the Loan
Documents comprise the entire agreement relating to this financing and supersede
any and all prior written or oral agreements relating thereto between Secured
Party and the parties hereto. No amendment hereto shall be valid unless
contained in a writing duly executed by Secured Party, Debtor and any subsequent
assignee hereof. This Agreement shall benefit and bind the successors and
assigns of the parties, but Debtor may not assign or otherwise transfer this
Agreement. Secured Party may freely sell, assign, or participate out this
Agreement, the Note, and all other instruments and documents executed and
delivered to Secured Party pursuant to this Agreement in whole or in part at any
time. The section titles herein are for convenience only and do not define,
limit or construe the contents of such sections. The pronouns used herein shall
include, when appropriate, either gender or neuter and both singular and plural.
If this Agreement is signed by more than one Debtor, this Agreement is the joint
and several obligation of each Debtor.

         IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the day and year first above written.

                                   DEBTOR:

                                   Intelligent Systems Corporation, a Georgia
                                   corporation

Attest:________________________    By:__________________________________________
                                          Its:__________________________________

                                                       [CORPORATE SEAL]

                                   SECURED PARTY:

                                   FIDELITY BANK

                                   By:__________________________________________
                                          Its:__________________________________

                                                        (BANK SEAL)

                                       17<PAGE>

                                                                    EXHIBIT 10.4

                               SECURITY AGREEMENT
                                   (Borrower)

         THIS SECURITY AGREEMENT (this "AGREEMENT" or "SECURITY AGREEMENT") is
made effective the 1st day of October, 2003, by INTELLIGENT SYSTEMS CORPORATION,
a Georgia corporation, (the "PLEDGOR"), in favor of FIDELITY BANK, chartered
under the laws of the state of Georgia (the "LENDER").

                                   WITNESSETH:

         WHEREAS, the Lender has agreed to make a line of credit loan of up to
$1,500,000 (herein "LOAN") to the Pledgor pursuant to the terms and conditions
of a Loan Agreement of even date herewith (the "LOAN AGREEMENT") between the
Lender and the Pledgor; and

         WHEREAS, the Loan is evidenced by that certain Commercial Promissory
Note of even date herewith from the Pledgor and payable to the order of the
Lender in the face amount of $1,500,000 (the "NOTE"); and

         WHEREAS, the proceeds of the Loan are to be used by the Pledgor for
business purposes;

         WHEREAS, the Lender has required, as a condition to extending such
financial accommodations, the execution and delivery of this Agreement by the
Pledgor;

         NOW, THEREFORE, in order to secure the prompt payment of all past,
present, and future indebtedness, liabilities, and obligations of the Pledgor to
the Lender of any nature whatsoever in connection with the Loan, together with
all obligations of the Pledgor to the Lender hereunder and under any note, any
loan agreement, all contracts of suretyship, guaranty, or accommodation, and all
other obligations of the Pledgor to the Lender, however and wherever created,
arising, or evidenced, whether direct or indirect, absolute, contingent, or
otherwise, now or hereafter existing or due or to become due (collectively, the
"PLEDGOR'S LIABILITIES"), and the performance by the Pledgor of all the terms,
conditions, and provisions of this Agreement, the Loan Agreement and of any
other loan document previously, simultaneously, or hereafter executed and
delivered by the Pledgor and/or any other person, singly or jointly with another
person or persons, evidencing, securing, guarantying, or in connection with any
of the Pledgor's Liabilities (the "LOAN DOCUMENTS"), the Pledgor agrees with the
Lender as follows:

         1.       Collateral. To secure the payment and performance of the
Pledgor's Liabilities and the Pledgor's performance of its obligations under the
Loan Documents, the Pledgor hereby grants to the Lender a security interest in,
and security title to, the following property of the Pledgor:

<PAGE>

                  A.       Inventory. All of the Pledgor's inventory of every
description which is held by the Pledgor for sale of lease or is furnished by
the Pledgor under any contract of service or is held by the Pledgor as raw
materials, work in process, or materials used or consumed in a business, whether
now owned or hereafter acquired, wherever located, and a the same may now and
hereafter from time to time be constituted, together with all cash and non-cash
proceeds and products thereof (the "INVENTORY").

                  B.       Accounts. All of the Pledgor's accounts (including,
without limitation, all notes, notes receivable, drafts, acceptances, and
similar instruments and documents) whether now owned or hereafter acquired,
together with: (i) all cash and non-cash proceeds thereof, and (ii) all
returned, rejected, or repossessed goods, the sale or lease of which shall have
given or shall give rise to an account, and all cash and non-cash proceeds and
products of all such goods (the "ACCOUNTS").

                  C.       General Intangibles. All of the Pledgor's general
intangibles (including, without limitation, any proceeds from insurance policies
after payment of prior interests), patents, unpatented inventions, trade
secrets, copyrights, contract rights, goodwill, literary rights, rights to
performance, rights under licenses, choices-in-action, claims, information
contained in computer media (such as data bases, source and object codes, and
information therein) things in action, trademarks and trademarks applied for
(together with the goodwill associated therewith) and derivatives thereof, trade
names, including the right to make, use, and vend goods utilizing any of the
foregoing, and permits, licenses, certifications, authorizations and approvals,
and the rights of the Debtor thereunder, issued by any governmental, regulatory,
or private authority, agency, or entity whether now owned or hereafter acquired,
together with all cash and non-cash products thereof.

                  D.       Chattel Paper. All of the Pledgor's chattel paper,
whether now owned or hereafter existing, acquired, or created, together with:
(i) all moneys due and to become due thereafter, (ii) all cash and non-cash
proceeds thereof, and (iii) all returned, rejected, or repossessed goods, the
sale or lease of which shall have given or shall give rise to chattel paper, and
all cash and non-cash proceeds and products of all such goods. Additionally, the
Pledgor assigns and grants to the Lender a security interest in all property and
goods both now owned and hereafter acquired by the Pledgor which are sold,
leased, secured, are the subject of, or otherwise covered by, the Pledgor's
chattel paper, together with all rights incident to such property and goods and
all cash and non-cash proceeds thereof (the "CHATTEL PAPER").

                  E.       All Equipment and Fixtures. All of the Pledgor's
equipment, furniture and fixtures, whether now owned or hereafter acquired,
together with: (i) all additions, parts, fittings, accessories, special tools,
attachments, and accessions now and hereafter affixed thereto and/or used in
connection therewith, (ii) all replacements thereof and substitutions therefor,
and (iii) all cash and non-cash proceeds and products thereof (the "EQUIPMENT").

                  F.       Leasehold Improvements. All present and future
improvements made by Pledgor to any real estate leased or owned by Pledgor.

                                       2
<PAGE>

         The term "Collateral" as used herein means each and all of the items of
Collateral described above, and the term "proceeds" as used herein includes,
without limitation, the proceeds of all insurance policies covering all or any
part of such items of Collateral.

         2.       Title to Collateral. The Pledgor warrants and represents that
(i) it is the lawful owner of the Collateral, and has the full right, power, and
authority to convey, transfer, and grant the security title and security
interest in the Collateral granted herein to the Lender; (ii) all licenses
relating to the Collateral are fully paid, and, upon the occurrence of an Event
of Default and foreclosure by the Lender, the Lender shall have all rights of
the Pledgor to any Collateral licensed to the Pledgor or licensed by the
Pledgor; (iii) the Collateral is not, and so long as this Agreement is in effect
will not be, subject to any liens, claims, security interests, encumbrances,
taxes, or assessments, however described or denominated; (iv) no financing
statement, mortgage, notice of lien, deed of trust, deed to secure debt,
security agreement, or any other agreement or instrument creating an
encumbrance, lien, charge against any of the Collateral is in existence or on
file in any public office, other than financing statements (or other appropriate
security documentation) filed on behalf of the Lender; and (v) all information
with respect to the Collateral and the Pledgor's Liabilities, of any of them,
set forth in any written schedule, certificate, or other document at any time
heretofore or hereafter furnished by the Pledgor to the Lender, and all other
written information heretofore or hereafter furnished by the Pledgor to the
Lender, is and will be true and correct in all material respects as of the date
furnished.

         3.       Further Assurances. The Pledgor will defend its title to the
Collateral against all persons and will, upon request of the Lender: (i) furnish
such further assurances of title as may be required by the Lender; (ii) deliver
and execute or cause to be delivered and executed, in form and content
satisfactory to the Lender, any financing statements, notices, certificates of
title, and other documents and pay the cost of filing or recording the same in
all public offices deemed necessary by the Lender, as well as any recordation,
documentary, or transfer tax required by law to be paid in connection with such
filing or recording; and (iii) do such other acts as the Lender may request in
order to perfect, preserve, maintain, or continue the perfection of the Lender's
security interest in the Collateral and/or its priority.

         4.       Accounts, etc. Until such time as the Lender shall notify the
Pledgor in writing of the revocation of such power and authority, the Pledgor,
as agent for the Lender, will, at its own expense, diligently collect, as and
when due, all amounts owing under the Accounts, including the taking of such
action with respect to such collection as the Lender may requests from time to
time, and to hold in trust and segregate for the Lender all funds received from
the Accounts; provided, however, that until an Event of Default shall occur or
would occur but for the passage of time, or giving of notice, or both, the
Pledgor may use or consume in the ordinary course of its business any such
collections on the Accounts in any lawful manner not inconsistent with this
Agreement and the other Loan Documents. Upon an Event of Default hereunder which
has not been cured within any applicable cure period and during the continuance
of such uncured default, the Lender, however, may revoke such power and
authority and notify any parties obligated on any of the Accounts to make
payment to the Lender of any amounts due or to become due thereunder, and
enforce collection of performance under any of the Accounts by suit or
otherwise, and surrender, release, or exchange all or any part thereof, or
compromise or extend or renew for any period

                                       3
<PAGE>

(whether or not longer than the original period) any indebtedness thereunder or
evidenced thereby. After an Event of Default or upon request of the Lender, the
Pledgor will, at its own expense, notify any parties obligated on any of the
Accounts to make payments to the Lender and will hold in trust and immediately
forward to the Lender all payments received by the Pledgor in the form received,
with all necessary endorsements thereon for collection by the Lender.

         5.       Transfer and Other Liens. The Pledgor will not sell, lease,
transfer, exchange, or otherwise dispose of the Collateral, or any part hereof,
without the prior written consent of the Lender and will not permit any lien,
security interest, or other encumbrance to attach to the Collateral, or any part
thereof, other than those in favor of the Lender or those permitted by the
Lender in writing, except that the Pledgor may, in the ordinary course of its
business and in the absence of an Event of Default hereunder or notice by the
Lender to the Pledgor under Section 6 hereof, collect its Accounts and Chattel
Paper and sell its Inventory.

         6.       Financial Statements, Books, and Records. The Pledgor will:
(i) at all times maintain, in accordance with generally accepted accounting
principles consistently applied, accurate and complete books and records
pertaining to the operation, business affairs, and financial condition of the
Pledgor and pertaining to the Collateral and any contracts and collections
relating to the Collateral; (ii) furnish to the Lender promptly upon request,
certified by an officer of the Pledgor and in the form and content and at the
intervals specified by the Lender, such financial statements, reports,
schedules, and other information with respect to the operation, business
affairs, and financial condition of the Pledgor as required pursuant to the Loan
Agreement; (iii) at all reasonable times, and without hindrance or delay, permit
the Lender or any person designated by the Lender to enter any place of business
of the Pledgor or any other premises where any books, records, and other data
concerning the Pledgor and/or the Collateral may be kept and to examine, audit,
inspect, and make extracts from and photocopies of any such books, records, and
other data; (iv) furnish to the Lender promptly upon request, certified by an
officer of the Pledgor and in the form and content specified by the Lender,
lists of purchasers of inventory, aging of accounts, aggregate cost or wholesale
market value of inventory, schedules of equipment, and other data concerning the
Collateral as the Lender may from time to time specify; and (v) mark its books
and records in a manner satisfactory to the Lender so that the Lender's rights
in and to the Collateral will be shown.

         7.       Name of Pledgors, Places of Business, and Location of
Collateral. The Pledgor represents and warrants that its correct legal name is
as specified on the signature lines of this Agreement, and each legal or trade
name of the Pledgor for the previous five (5) years (if different from the
Pledgor's current legal name) is as specified below the signature lines of this
Agreement. Without the prior written consent of the Lender, the Pledgor will not
change its name, dissolve, merge, or consolidate with any other person. The
Pledgor warrants that the address of the Pledgor's chief executive office and
the address of each other place of business of the Pledgor are as specified
below the signature lines of this Agreement. Except for mobile equipment and
motor vehicles, the Collateral and all books and records pertaining to the
Collateral have been, are, and will be located at the Pledgor's chief executive
office specified below or at any other place of business which may be specified
below. The Pledgor will immediately advise the Lender in writing of the opening
of

                                       4
<PAGE>

any new place of business and of any change in the location of the places where
the Collateral or any part thereof, or the books and records concerning the
Collateral or any part thereof, are kept.

         8.       Care of Collateral. The Pledgor will maintain the Collateral
in first-class condition excepting any loss, damage, or destruction which is
fully covered by proceeds of insurance and will not do or permit anything to be
done to the collateral that may impair its value or that may violate the terms
of any insurance covering the Collateral or any part thereof, normal wear and
tear excepted. The Lender shall have no duty to, and the Pledgor hereby releases
the Lender from all claims for loss or damage caused by the failure to, collect
or enforce any Account of Chattel Paper or to preserve rights against prior
parties to the Collateral. The Pledgor will use the Collateral for lawful
purposes only, with all reasonable care and caution and in conformity with all
applicable laws, ordinances, and regulations.

         9.       Insurance. The Pledgor will insure such of the Collateral as
specified by the Lender against such casualties and risks in such form and
amount and with such companies as may from time to time be required by the
Lender. All insurance proceeds shall be payable to the Lender, and such policies
or certificates thereon or duplicates thereof shall immediately be deposited
with the Lender. The Pledgor will pay all premiums due or to become due for such
insurance and hereby assigns to the Lender any returned or unearned premiums
which may be due upon cancellation of insurance coverage. The Lender is hereby
irrevocably: (i) appointed the Pledgor's attorney-in-fact (which appointment is
coupled with an interest and is irrevocable) to endorse any draft or check which
may be payable to the Pledgor in order to collect such returned or unearned
premiums or the proceeds of insurance and (ii) authorized to apply such
insurance premiums for payment of the Pledgor's Liabilities, when due, in such
order of application as the Lender may determine.

         10.      Taxes. The Pledgor will pay as and when due and payable all
taxes, levies, license fees, assessments, and other impositions levied on the
Collateral or any part thereof or for its use and operation.

         11.      Equipment Not Fixtures. The Pledgor warrants that all
Equipment which constitutes a part of the Collateral is personalty and is not
and will not be affixed to real estate in such manner as to become a fixture or
part of such real estate, except with respect to such items of Equipment which
may become fixtures in the normal course of Pledgor's business in constructing
leasehold improvements. The Pledgor will use its best efforts to furnish to the
Lender a written waiver by the record owner of such real estate of all interest
in such equipment and a written subordination to the Lender's security interest
and lien by any person who has a lien on or security interest in such real
estate which is or may be superior to the Lender's security interest hereunder.

         12.      Specific Assignments. Promptly upon request by the Lender, the
Pledgors will execute and deliver to the Lender written assignments,
endorsements, and/or schedules, in form and content satisfactory to the Lender,
of specific Chattel Paper and Accounts or groups of Accounts or Chattel Paper,
but the security interest of the Lender hereunder shall not be limited in any
way by such assignments.

                                       5
<PAGE>

         13.      Delivery of Chattel Paper. The Pledgors will promptly upon
request by the Lender deliver, assign, and endorse to the Lender all Chattel
Paper and all other documents held by the Pledgors in connection herewith.

         14.      Government Contracts. If any Account or Chattel Paper arises
out of a contract or contracts with the United States of America or any
department, agency, or instrumentality thereof, the Pledgor shall immediately
notify the Lender thereof in writing and execute any instruments or take any
steps required by the Lender in order that all moneys due or to become due under
such contract or contracts shall be assigned to the Lender and notice thereof
given under the Federal Assignment of Claims Act or other applicable law.

         15.      Collateral Account. If all or any part of the collateral at
any time consists of Inventory, Accounts, or Chattel Paper, the Pledgor will,
upon the request of the Lender at any time after the occurrence of an Event of
Default hereunder, deposit or cause to be deposited to a bank account designated
by the Lender and from which the Lender alone has power of access and withdrawal
(the "COLLATERAL ACCOUNt") all checks, drafts, cash, and other remittances in
payment or on account of payment of such Inventory, Accounts, or Chattel Paper
and the cash proceeds of any returned goods, the sale or lease of which gave
rise to an Account or Chattel Paper (all of the foregoing herein collectively
referred to as "ITEMS OF PAYMENT"). The Pledgor shall deposit the Items of
Payment for credit to the Collateral Account within two (2) business days of the
receipt thereof, and in precisely the form received, except for the endorsement
of the Pledgor where necessary to permit the collection of the Items of Payment,
which endorsement the Pledgor hereby agrees to make. Pending such deposit, the
Pledgor will not commingle any of the Items of Payment with any of its other
funds or property but will hold them separate and apart. The Lender may at any
from time to time apply the whole or any part of the collected funds credited to
the Collateral Account against the Pledgor's Liabilities or credit such
collected funds to a banking account of the Pledgor with the Lender, the order
and method of such application to be in the discretion of the Lender.

         16.      Rights of Lender and Duties of Pledgors. If all or any part of
the Collateral at any time consists of Inventory, Accounts, or Chattel Paper,
the Lender may at any time and from time to time after the occurrence of an
Event of Default hereunder (a) notify the account debtors obligated on any of
the Collateral to make payments thereon directly to the Lender, and to take
control of the cash and non-cash proceeds of any such Collateral; (b) charge to
any banking account of the Pledgors with the Lender any Item of Payment credited
to the Collateral Account which is dishonored by the drawee or maker thereof;
(c) compromise, extend, or renew any of the Collateral or deal with the same as
it may deem advisable; (d) release, make exchanges or substitutions for, or
surrender all or any part of the Collateral; (e) remove from the Pledgors'
places of business all books, records, ledger sheets, correspondence, invoices,
and documents relating to or evidencing any of the Collateral or, without cost
or expense to the Lender, make such use of the Pledgor's place(s) of business as
may be reasonably necessary to administer, control, and collect the Collateral;
(f) repair, alter, or supply goods, if any, necessary to fulfill in whole or in
part the purchase order of any account debtor; (g) demand, collect, receipt for,
and give renewals, extensions, discharges, and releases of any of the
Collateral; (h) institute and prosecute legal and equitable proceedings to
enforce collection of, or realize upon, any of the Collateral; (i) settle,

                                       6
<PAGE>

renew, extend, compromise, compound, exchange, or adjust claims with respect to
any of the Collateral or any legal proceedings brought with respect thereto; (j)
endorse the name of the Pledgor upon any Items of Payment relating to the
collateral or upon any proof of claim in bankruptcy against an account debtor;
and (k) receive and open all mail addressed to the Pledgor and, if an Event of
Default exists hereunder, notify postal authorities to change the address for
the delivery of mail to the Pledgor to such address as the Lender may designate;
and for purposes of taking the actions described in Subsections (a) through (k)
the Pledgor hereby irrevocably appoints the Lender as its attorney-in-fact
(which appointment being coupled with an interest is irrevocable while any of
Pledgor's Liabilities remain unpaid), with power of substitution, in the name of
the Lender or in the name of the Pledgor or otherwise, for the use and benefit
of the Lender, but at the cost and expense of the Pledgor and without notice to
the Pledgor. The Pledgor will: (i) make no material change to the terms of any
sale or lease of Inventory or of any Account or Chattel Paper without the prior
written permission of the Lender; (ii) on demand, make available in form
acceptable to the Lender shipping documents and delivery receipts evidencing the
shipment of goods which gave rise to the sale or lease of Inventory or of an
Account of Chattel Paper, completion certificate, or other proof of the
satisfactory performance of services which gave rise to the sale or lease of
Inventory or of an Account or Chattel Paper, copies of the invoices arising out
of the sale or lease of Inventory or for an Account, and the Pledgor's copy of
any written contract or order from which the sale or lease of Inventory, an
Account, or Chattel Paper arose; and (iii) when requested, advise the Lender
whenever an account debtor returns or refuses to retain any goods, the sale or
lease of which gave rise to an Account or Chattel Paper, and will comply with
any instructions which the Lender may give regarding the sale or other
disposition of such returns.

         17.      Performance by Lender. After an Event of Default hereunder
which has not been cured within any applicable cure period and during the
continuance of such uncured default, if the Pledgor fails to perform, observe,
or comply with any of the conditions, terms, or covenants contained in this
Agreement, the Lender, without notice to or demand upon the Pledgor and without
waiving or releasing any of the Pledgor's Liabilities or any Event of Default,
may (but shall be under no obligation to) at any time thereafter perform such
conditions, terms, or covenants for the account and at the expense of the
Pledgor, and may enter upon any place of business or other premises of the
Pledgor for that purpose and take all such action thereon as the Lender may
consider necessary or appropriate for such purpose. All sums paid or advanced by
the Lender in connection with the foregoing and all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred in connection therewith (collectively, the "EXPENSE PAYMENTS") together
with interest thereon at a simple per annum rate of interest which is equal to
the then highest rate of interest charged on the principal of any of the
Pledgor's Liabilities, plus one percent (1%) per annum (but in no event higher
than the maximum interest rate permitted by applicable law), from the date of
payment until repaid in full, shall be paid by the Pledgor to the Lender on
demand and shall constitute and become a part of the Pledgor's Liabilities
secured hereby.

         18.      Default. The occurrence of any one or more of the following
events shall constitute an event of default (an "EVENT OF DEFAULT") under this
Agreement: (i) failure of the Pledgor to pay any of the Pledgor's Liabilities as
and when due and payable; (ii) failure of the Pledgor to perform, observe, or
comply with any of the provisions of this Agreement or of any of the other Loan

                                       7
<PAGE>

Documents; (iii) the occurrence of an Event of Default (as defined therein)
under any of the other Loan Documents; (iv) any information contained in any
financial statement, application, schedule, report, or any other document given
by the Pledgor or by any other person in connection with the Pledgor's
Liabilities, with the Collateral, or with any of the Loan Documents is not in
all material respects true and accurate or the Pledgor or such other person
omitted to state any material fact or any fact necessary to make such
information not misleading; (v) the Pledgor is generally not paying debts as
such debts become due; (vi) the filing of any petition for relief under any
provision of the Federal Bankruptcy Code or any similar state law is brought by
or against the Pledgor; (vii) an application for the appointment of a receiver
for, the making of a general assignment for the benefit of creditors by or the
insolvency of, the Pledgor and not dismissed within forty-five (45) days; (viii)
the dissolution, merger, consolidation, or reorganization of the Pledgor; (i)
suspension of the operation of the Pledgor's present business; (j) transfer of a
substantial part (determined by market value) of the Pledgor's property; (k)
sale, transfer, or exchange, either directly or indirectly, of a controlling
stock interest of the Pledgor; (l) termination or withdrawal of any guaranty for
the Pledgor's Liabilities; (m) the Pension Benefit Guaranty Corporation
commences proceedings under Section 4042 of the Employee Retirement Income
Security Act of 1974 (ERISA), as amended, to terminate any employee pension
benefit plan of the Pledgor; (n) the determination in good faith by the Lender
in its reasonable judgement that a material adverse change has occurred in the
financial condition of the Pledgor from the condition set forth in the most
recent financial statement of the Pledgor heretofore furnished to the Lender, or
from the financial condition of the Pledgor as heretofore most recently
disclosed to the Lender in any other manner; or (o) a default occurs or in the
event a default exists under any document or instrument executed by any
Guarantor of the Pledgor's Liabilities, including, without limitation, any
Guaranty Agreement, any Security Agreement or any other similar document or
instrument.

         19.      Rights and Remedies upon Default. Upon the occurrence of an
Event of Default hereunder (and in addition to all of its other rights, powers,
and remedies under this Agreement), the Lender may, at its option, and upon
written notice to the Pledgor, declare the unpaid balance of the Pledgor's
Liabilities to be immediately due and payable. The occurrence or non-occurrence
of an Event of Default shall in no manner impair the ability of the Lender to
demand payment of any portion of the Pledgor's Liabilities which are payable on
demand. The Lender shall have all the rights and remedies of a secured party
under the Uniform Commercial Code and other applicable law in the State of
Georgia. Upon the occurrence of an Event of Default hereunder, the Pledgor, upon
demand by the Lender, shall assemble the Collateral and make it available to the
Lender at a place designated by the Lender which is mutually convenient to both
parties. Upon the occurrence of an Event of Default hereunder, the Lender or its
agents may enter upon the Pledgor's premises to take possession of the
Collateral, to remove it, to render it unusable, or to sell of otherwise dispose
of it, all without judicial process or proceedings.

         Any written notice of the sale, disposition, or other intended action
by the Lender with respect to the Collateral which is required by applicable
laws and is sent by certified mail, postage prepaid, to the Pledgor at the
address of the Pledgor's chief executive office specified below, or such other
address of the Pledgor which may from time to time be shown on the Lender's
records, at least five (5) days prior to such sale, disposition, or other
action, shall constitute reasonable notice to the Pledgor. The Pledgor shall pay
on demand all costs and expenses, including, without

                                       8
<PAGE>

limitation, reasonable attorneys' fees and expenses, incurred by or on behalf of
the Lender: (i) in enforcing the Pledgor's Liabilities; and (ii) in connection
with the taking, holding, preparing for sale or other disposition, selling,
managing, collecting, or otherwise disposing of the Collateral. All of such
costs and expenses (collectively, the "LIQUIDATION COSTS") together with
interest thereon at a simple per annum rate of interest which is equal to the
then highest rate of interest charged on the principal of any of the Pledgor's
Liabilities, plus one percent (1%) per annum (but in no event higher than the
maximum interest rate permitted by law), from the date of payment until repaid
in full, shall be paid by the Pledgor to the Lender on demand and shall
constitute and become a part of the Pledgor's Liabilities secured hereby. Any
proceeds of sale or other disposition of the Collateral will be applied by the
Lender to the payment of Liquidation Costs and Expense Payments, and any balance
of such proceeds will be applied by the Lender to the payment of the remaining
Pledgor's Liabilities in such order and manner of application as the Lender may
from time to time in its sole discretion determine.

         20.      Remedies Cumulative. Each right, power, and remedy of the
Lender as provided for in this Agreement or in the other Loan Documents or now
or hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement or in the other Loan Documents or now
or hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by the Lender or any one or more of such
rights, powers, or remedies shall not preclude the simultaneous or later
exercise by the Lender of any or all such other rights, powers, or remedies.

         21.      Waiver. No failure or delay by the Lender to insist upon the
strict performance of any term, condition, covenant, or agreement or of the
other Loan Documents, or to exercise any right, power, or remedy consequent upon
a breach thereof, shall constitute a waiver of any such term, condition,
covenant, or agreement or of any such breach, or such term, condition, covenant,
or agreement or of any such breach, or preclude the Lender from exercising any
such right, power, or remedy at any later time or times. By accepting payment
which does not fully repay any indebtedness then due and payable with respect to
any of the Pledgor's Liabilities, the Lender shall not be deemed to have waived
the right either to require payment when due of all other Pledgor's Liabilities
or to declare an Event of Default for failure to effect such payment of any such
other Pledgor's Liabilities. The Pledgor waives presentment, notice of dishonor,
and notice of non-payment with respect to Accounts and Chattel Paper.

         THE PLEDGORS HEREBY ACKNOWLEDGE THAT THE LIABILITIES AROSE OUT OF A
"COMMERCIAL TRANSACTION" AS THIS TERM IS DEFINED IN O.C.G.A. SECTION
44-14-260(1) CONCERNING FORECLOSURE OF MORTGAGES ON PERSONALTY, AND AGREES THAT
IN THE EVENT OF ANY DEFAULT, THE LENDER SHALL HAVE THE RIGHT TO AN IMMEDIATE
WRIT OF POSSESSION WITHOUT NOTICE OF HEARING AND KNOWINGLY AND INTELLIGENTLY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO ANY NOTICE AND POSTING OF A BOND BY THE
LENDER PRIOR TO SEIZURE BY THE LENDER, ITS TRANSFEREES, ASSIGNS, OR SUCCESSORS
IN INTEREST, OF THE COLLATERAL OR ANY PORTION THEREOF. THIS IS INTENDED BY THE
PLEDGOR AS A "WAIVER" AS THIS TERM IS DEFINED IN O.C.G.A. SECTION 44-14-260(3)
RELATING TO FORECLOSURE OF MORTGAGES ON PERSONALTY.

                                       9
<PAGE>

         22.      Miscellaneous. Time is of the essence of this Agreement. The
section headings of this Agreement are for convenience only and shall not limit
or otherwise affect any of the terms hereof. Neither this Agreement nor any
term, condition, covenant, or agreement hereof may be changed, waived,
discharged, or terminated orally but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge, or
termination is sought. This Agreement shall be governed by the laws of the State
of Georgia and shall be binding upon the Pledgor and its heirs, executors,
administrators, legal representatives, successors, and assigns, and shall inure
to the benefit of the Lender and its successors and assigns. As used herein, the
singular number shall include the plural, the plural the singular, and the use
of the masculine, feminine, or neuter gender shall include all genders, as the
context may require, and the term "person" shall include an individual, a
corporation, an association, a partnership, a trust, and an organization.
Invalidation of any one or more of the provisions of their Agreement shall in no
way affect any of the other provisions hereof, which shall remain in full force
and effect. All references herein to any document, instrument, or agreement
shall be deemed to refer to such document, instrument, or agreement as the same
may be amended, modified, restated, supplemented, or replaced from time to time.
Unless varied by this Agreement, all terms used herein which are defined by the
Georgia Uniform Commercial Code shall have the same meanings hereunder as
assigned to them by the Georgia Uniform Commercial Code.

         IN WITNESS WHEREOF, the Pledgor has caused its duly authorized officers
to execute this Agreement and to affix its corporate seal hereto, as of the day
and year first written above.

                                   PLEDGOR:

                                   Intelligent Systems Corporation, a Georgia
                                   corporation

                                   By:__________________________________________
                                       Bonnie L. Herron, Chief Financial Officer

                                   Attested:____________________________________
                                            Its Secretary

                                           [CORPORATE SEAL]

                                       10
<PAGE>

                                   LENDER:

                                   FIDELITY BANK

                                   By:__________________________________________
                                          Its:__________________________________

                                                         (BANK SEAL)

Address(es) where Collateral is
is to be located:

4355 Shackleford Road
Norcross, Georgia  30093

Previous legal and/or trade
name(s) of the Pledgor:

None.

                                       11

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