Exhibit 10.2

 

$1,600,000.00

 

promissory NOTE

 

THIS PROMISSORY NOTE (this “Note”) is made as of June 22, 2017 (the “Effective
Date”) in the principal amount of ONE MILLION SIX HUNDRED THOUSAND and NO/100
Dollars ($1,600,000.00).

 

Recitals

 

A.           This Note is made by JETPAY PAYMENT SERVICES, FL, LLC, a Delaware
limited liability company (“Borrower”), and is payable to the order of FIFTH
THIRD BANK, an Ohio banking corporation, its successors and assigns (“Lender”)
pursuant to the terms and conditions set forth in that certain Credit Agreement
dated of even date herewith by and between Borrower and Lender (the “Credit
Agreement”). The amount disbursed by Lender to Borrower, repayment of which is
evidenced by this Note, is referred to as the “Loan”.

 

B.           This Note is secured by, among other items, (i) that certain
Security Agreement dated of even date herewith by and between Borrower and
Lender (the “Security Agreement”) encumbering the Collateral (as defined
therein); and (ii) certain other documents securing repayment of this Note,
including, without limitation, the Credit Agreement (this Note, the Credit
Agreement, the Security Agreement and all other documents evidencing or securing
the Loan are hereinafter collectively referred to herein as the “Loan
Documents”). All of the agreements, conditions, covenants, provisions and
stipulations contained in the Security Agreement and other Loan Documents are
hereby made a part of this Note to the same extent and with the same force and
effect as if they were fully set forth herein and Borrower covenants and agrees
to keep and perform them, or cause them to be kept and performed, strictly in
accordance with their terms.

 

1.           Agreement to Pay. Borrower hereby promises to pay to the order of
Lender the principal sum of ONE MILLION SIX HUNDRED THOUSAND and NO/100 Dollars
($1,600,000.00), or so much thereof as may be outstanding hereunder, in lawful
money of the United States of America on or before the earlier of June 22, 2021
(the “Maturity Date”) or upon acceleration of the Note, together with interest
thereon at the rate or rates herein below set forth.

 

2.           Defined Terms. In addition to the terms defined elsewhere in this
Note, the following terms shall have the following meanings when used in this
Note. All capitalized terms used in this Note and not otherwise defined shall
have the meanings ascribed thereto in the Credit Agreement.

 

A.           “Conversion Date” shall mean June 22, 2018.

 

 

NOTE TO TAX EXAMINER: THIS NOTE HAS BEEN MADE, EXECUTED AND DELIVERED OUTSIDE
THE STATE OF FLORIDA AND IS NOT SECURED BY A MORTGAGE ON FLORIDA REAL PROPERTY.
NO DOCUMENTARY STAMP TAXES ARE DUE ON THIS NOTE.

 

 

 

 

B.           “Default” shall mean when used in reference to this Note or any
other document, or in reference to any provision or obligation under this Note
or any other document, the occurrence of an event or the existence of a
condition which, with the passage of time or the giving of notice, or both,
would constitute an Event of Default under this Note or such other document, as
the case may be.

 

C.           “Default Rate” shall be as defined in Section 6 hereof.

 

D.           “Draw Period” shall mean the twelve (12) month period commencing on
the Effective Date through the day prior to the Conversion Date.

 

E.           “Event of Default” shall mean (i) when used in reference to this
Note, one or more of the events or occurrences referred to in Section 10.A. of
this Note; and (ii) when used in reference to any other document, a default or
event of default under such document that has continued after the giving of any
applicable notice and the expiration of any applicable grace or cure periods.

 

3.           Computation of Interest. Moneys deposited by Lender in an escrow
shall be deemed to have been disbursed as of, and shall bear interest from, the
date of deposit in escrow. Interest on amounts disbursed under this Note shall
accrue commencing on the day on which the disbursement of proceeds of the Loan
or applicable portion thereof is made. Payments of interest that are
periodically required pursuant to the terms of this Note shall include interest
accrued to but not including the day on which the payment is made. Payments of
principal on this Note shall include interest on the amount paid to but not
including the date of payment if payment is received prior to 2:00 P.M. Eastern
Time, and if payment is received after such time, payment of principal on this
Note shall include interest to and including the day of payment.

 

4.           Interest Rate Terms.

 

A.           Additional Defined Terms. In addition to the terms defined
elsewhere in this Note, the following terms shall have the following meanings
when used in this Note:

 

“Adjusted LIBOR Rate” shall mean a floating rate equal to (i) the then
applicable LIBOR Rate plus (ii) the LIBOR Rate Margin per annum.

 

“Adjusted Prime Rate” shall mean, for any day, the rate equal to (i) the
floating rate of interest established from time to time by Fifth Third Bank at
its principal office as its “Prime Rate”, whether or not Fifth Third Bank shall
at times lend to borrowers at lower rates of interest or, if there is no such
Prime Rate, then such other rate as may be substituted by Fifth Third Bank for
such Prime Rate plus (ii) 100 basis points.

 

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“Business Day” shall mean any day other than a Saturday, Sunday, federal holiday
or other day on which the New York Stock Exchange is regularly closed. (i) with
respect to all notices and determinations in connection with the LIBOR Rate, any
day (other than a Saturday or Sunday) on which commercial banks are open in
London, England, New York, New York, and Cincinnati, Ohio for dealings in
deposits in the London Interbank Market; and (ii) in all other cases, any day on
which commercial banks in Cincinnati, Ohio are required by law to be open for
business; provided that, notwithstanding anything to the contrary in this
definition of “Business Day”, at any time during which a Rate Management
Agreement (as defined in the Credit Agreement) with Lender is then in effect
with respect to all or a portion of this Note, then the definitions of “Business
Day” and “Banking Day”, as applicable, pursuant to such Rate Management
Agreement shall govern with respect to all applicable notices and determinations
in connection with such portion of this Note subject to such Rate Management
Agreement.

 

“Interest Rate” shall mean the Adjusted LIBOR Rate; provided that, the reference
to “Adjusted LIBOR Rate” shall be deemed to be a reference to “Adjusted Prime
Rate” at all times during which the LIBOR Rate is unavailable pursuant to, and
in accordance with, Section 4(F).

 

“LIBOR Rate” shall mean, as of any date of determination in accordance with this
Note, the rate of interest rounded upwards, if necessary, to the next 1/8th of
one percent (1%) and adjusted for reserves if Lender is required to maintain
reserves with respect to relevant advances fixed by ICE Benchmark Administration
Limited (or any successor thereto, or replacement thereof, approved by Lender,
each an “Alternate LIBOR Source”) at approximately 11:00 a.m., London, England
time (or the relevant time established by ICE Benchmark Administration Limited,
an Alternate LIBOR Source, or Lender, as applicable), two Business Days prior to
such date of determination, relating to quotations for the one month London
InterBank Offered Rates on U.S. Dollar deposits, displayed by Bloomberg LP (or
any successor thereto, or replacement thereof, as approved by Lender, each an
“Approved Bloomberg Successor”), or if no longer displayed by Bloomberg LP (or
any Approved Bloomberg Successor), such rate as shall be determined in good
faith by Lender from such sources as it shall determine to be comparable to
Bloomberg LP (or any Approved Bloomberg Successor), all as determined by Lender
in accordance with this Note and Lender’s loan systems and procedures
periodically in effect. Notwithstanding anything to the contrary contained
herein, in no event shall the LIBOR Rate be less than 0% as of any date (the
“LIBOR Rate Minimum”); provided that, at any time during which a Rate Management
Agreement with Lender is then in effect with respect to all or a portion of the
Obligations, the LIBOR Rate Minimum shall be disregarded and no longer of any
force and effect with respect to such portion of the Obligations subject to such
Rate Management Agreement. Each determination by Lender of the LIBOR Rate shall
be binding and conclusive in the absence of manifest error.

 

Notwithstanding anything herein contained to the contrary, if Lender, by written
or telephonic notice, notifies Borrower that:

 

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(a)          any change in any law, regulation or official directive, or in the
interpretation thereof, by any governmental body charged with the administration
thereof, has made it unlawful for Lender to fund or maintain its funding in
Eurodollars of any portion of any advance subject to the LIBOR Rate or otherwise
give effect to Lender’s obligations as contemplated hereby; or

 

(b)          (i) LIBOR deposits for periods of one month are not readily
available in the London Offered Rate Market, (ii) by reason of circumstances
affecting such market or other economic conditions, adequate and reasonable
methods do not exist for ascertaining the rate of interest applicable to such
deposits, or (iii) the LIBOR Rate as determined by Lender will not adequately
and fairly reflect the cost to Lender of making or maintaining advances under
this Note bearing interest with reference to the LIBOR Rate (including
inaccurate or inadequate reflection of actual costs resulting from the
calculation of rates by reporting sources)

 

then, in any of such events: (A) Lender’s obligations in respect of the LIBOR
Rate shall terminate forthwith, (B) the LIBOR Rate with respect to Lender shall
forthwith cease to be in effect, (C) Borrower’s right to utilize LIBOR Rate
index pricing as set forth in this Note shall be terminated forthwith, and (D)
amounts outstanding hereunder shall, on and after such date, bear interest at a
rate per annum equal to the Adjusted Prime Rate. Each determination by Lender of
the Prime Rate shall be binding and conclusive in the absence of manifest error.
In the event of a change in the Prime Rate, the interest rate accruing hereunder
based upon the Prime Rate shall be changed immediately with such change to be
based upon such new Prime Rate.

 

“LIBOR Rate Loan” shall mean each portion of the outstanding principal balance
of the Loan that is bearing interest at the Adjusted LIBOR Rate.

 

“LIBOR Rate Margin” shall mean three percent (3.00%) per annum.

 

“Prime Rate” shall mean, for any day, the floating rate of interest established
from time to time by Lender at its principal office as its “Prime Rate”, whether
or not Lender shall at times lend to borrowers at lower rates of interest or, if
there is no such prime rate, then such other rate as may be substituted by
Lender for the prime rate. Each determination by Lender of the Prime Rate shall
be binding and conclusive in the absence of manifest error.

 

“Prime Rate Loan” shall mean any portion of the outstanding principal amount of
the Loan that is bearing interest at the Adjusted Prime Rate.

 

B.           Interest Accrual.

 

(i)          Interest on the Loan shall accrue on the outstanding principal
balance of this Note commencing on the date of the initial disbursement of the
Loan until the Loan has been fully paid and satisfied in cash.

 

(ii)         Interest on any LIBOR Rate Loan or Prime Rate Loan shall be
calculated based on a 360-day year and charged for the actual number of days
elapsed.

 

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C.           Interest Rate Determinations.

 

(i)          Subject to the terms hereof, the outstanding principal balance of
this Note shall bear interest at the Adjusted LIBOR Rate during the Draw Period.

 

(ii)         Borrower shall have the right on any Business Day to request Lender
to provide a good faith estimate of the then current LIBOR Rate quotation and
Lender shall promptly provide such estimate.

 

(iii)        The Adjusted LIBOR Rate: (a) shall initially be determined as of
the date of this Note and (b) shall adjust automatically on the first calendar
day of each calendar month thereafter (each of the foregoing being a “LIBOR
Adjustment Date”). Any change in the Adjusted LIBOR Rate resulting from a change
in the LIBOR Rate shall become effective as of each such LIBOR Adjustment Date
in accordance with this Note and Lender’s loan systems and procedures
periodically in effect. Lender shall not be required to notify Borrower of any
adjustment in the LIBOR Rate; however, Borrower may request a quote of the
prevailing LIBOR Rate on any Business Day.

 

(iv)        The Adjusted Prime Rate: (a) shall initially be determined as of the
date of this Note and (b) shall adjust automatically with each change in the
Prime Rate occurring thereafter. Any change in the Adjusted Prime Rate resulting
from a change in the Prime Rate shall become effective as of the date of each
change in the Prime Rate in accordance with Lender’s loan systems and procedures
periodically in effect. Lender shall not be required to notify Borrower of any
adjustment in the Prime Rate; however, Borrower may request a quote of the
prevailing Prime Rate on any Business Day.

 

D.           Prepayments. The outstanding principal balance of this Note may be
prepaid, either in whole or in part, without penalty or premium, at any time and
from time to time upon two (2) Business Days prior written notice to Lender.

 

E.           Additional Costs. Borrower hereby irrevocably agrees to reimburse
and indemnify Lender from all increased costs and fees incurred by Lender in
connection with this Note subsequent to the date of the initial advance of funds
to Borrower under this Note and relating to or arising from (x) the offering of
rates of interest based upon the LIBOR Rate or (y) a change in government
regulation. Without limiting the generality of the foregoing, if (any of the
following being a “Change”): (i) any law, rule, regulation, guideline, or
directive (in each case whether or not having the force of law) is passed,
enacted, promulgated, ordered, issued or adopted after the date of the initial
advance of funds to Borrower under this Note, (ii) there is any change after the
date of the initial advance of funds to Borrower under this Note in any law,
rule, regulation, guideline, or directive (in each case whether or not having
the force of law and including, without limitation, any request, rule, guideline
or directive (A) in connection with the Dodd-Frank Wall Street Reform and
Consumer Protection Act (as amended, the “Dodd-Frank Act”) or (B) enacted,
promulgated, adopted, issued or implemented by the Bank of International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority), or the United States or foreign financial regulatory
authorities), or in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation, application or administration of any of the foregoing, or (iii)
Lender complies with any request or directive made after the date of the initial
advance of funds to Borrower under this Note regarding capital adequacy (whether
or not having the force of law) from any such authority, central bank or
comparable agency, and such Change shall:

 

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(x)          increase the cost to Lender, by an amount which Lender deems to be
material, of making, converting into, continuing or maintaining any portion of
any advance subject to the LIBOR Rate, or reduce any amount receivable hereunder
in respect thereof, or

 

(y)          have the effect of reducing the rate of return on Lender’s capital
as a consequence of its obligations hereunder, with respect to any LIBOR Rate
Loan or Prime Rate Loan, to a level below that which Lender could have achieved
but for such Change by an amount deemed by Lender to be material,

 

then, in any and each such case, after submission by Lender to Borrower of a
written request therefor, Borrower shall pay Lender any additional amounts
necessary to compensate Lender for such increased cost or reduction. Lender’s
reasonable determination of the amount of such reimbursement shall be conclusive
in the absence of manifest error. Notwithstanding anything to the contrary
contained herein, for all purposes of this Note, all requests, rules, guidelines
and directives (I) in connection with the Dodd-Frank Act or (II) enacted,
promulgated, adopted, issued or implemented by the Bank of International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority), or the United States or foreign financial regulatory
authorities shall, in each case, be deemed to constitute a Change whether or not
such request, rule, guideline or directive has the force of law and regardless
of the date on which such request, rule, guideline or directive was enacted,
promulgated, adopted, issued or implemented. Notwithstanding the foregoing,
Borrower shall not be required to compensate Lender pursuant to this Section for
any increased costs incurred more than 180 days prior to the date that Lender
notifies Borrower, in writing, of the increased costs and of Lender’s intention
to claim compensation thereof; provided, further, that if the circumstance
giving rise to such increased costs is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof.

 

F.           Unavailability of LIBOR. Notwithstanding anything herein contained
to the contrary, if Lender, by written or telephonic notice, notifies Borrower
that:

 

(i)          any change in any law, regulation or official directive, or in the
interpretation thereof, by any governmental body charged with the administration
thereof, has made it unlawful for Lender to fund or maintain its funding in
Eurodollars of any portion of any advance subject to the LIBOR Rate or otherwise
give effect to Lender’s obligations as contemplated hereby, or

 

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(ii)         (a) LIBOR deposits for periods of one month are not readily
available in the London Interbank Offered Rate Market, (b) by reason of
circumstances affecting such market or other economic conditions, adequate and
reasonable methods do not exist for ascertaining the rate of interest applicable
to such deposits, or (c) the LIBOR Rate as determined by Lender will not
adequately and fairly reflect the cost to Lender of making or maintaining
advances under this Note bearing interest with reference to the LIBOR Rate
(including inaccurate or inadequate reflection of actual costs resulting from
the calculation of rates by reporting sources),

 

then, in any of such events: (I) Lender’s obligations in respect of the LIBOR
Rate shall terminate forthwith, (II) the LIBOR Rate with respect to Lender shall
forthwith cease to be in effect, (III) Borrower’s right to utilize LIBOR Rate
index pricing as set forth in this Note shall be terminated forthwith, and (IV)
amounts outstanding hereunder shall, on and after such date, bear interest at
the Adjusted Prime Rate in accordance with the terms and provisions of this
Note.

 

G.           Rounding and Rate Management Agreement. At any time during which a
Rate Management Agreement is then in effect with respect to this Note, the
provisions contained in this Note which round up the LIBOR Rate to the nearest
1/8th shall be disregarded and no longer of any force and effect,
notwithstanding anything to the contrary contained in this Note.

 

5.           Payment Terms.

 

A.           Commencing on the first (1st) day of August, 2017 and on the first
(1st) day of each successive month thereafter (subject to earlier prepayment as
provided in Section 10 hereof or as otherwise provided herein or in any other
Loan Document), until the Loan has been fully paid and satisfied in cash,
Borrower shall make payments to Lender of interest on the outstanding principal
balance of the indebtedness evidenced by this Note.

 

B.           Commencing on the Conversion Date and continuing on the same day of
each succeeding calendar month through and including the Maturity Date, fixed
principal payments plus all accrued interest along with any other sums due
thereon shall be due and payable in monthly installments in an amount necessary
to fully amortize the total amount outstanding under this Note based upon a
three (3) year amortization, as calculated by Lender in its reasonable
discretion.

 

C.           The Loan shall be due and payable, and Borrower hereby promises to
pay the outstanding principal amount of the Loan to Lender, together with all
accrued interest thereon then remaining unpaid and all other unpaid amounts,
charges, fees and expenses outstanding under this Note or under any of the other
Loan Documents, on the Maturity Date, subject to earlier prepayment as provided
in Section 10 hereof or as otherwise provided herein or in any other Loan
Document.

 

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6.           Late Payments; Default Rate; Fees. If any payment is not paid when
due (whether by acceleration or otherwise) or within ten (10) days thereafter
due under this Note or any of the other Loan Documents, Borrower agrees to pay
to Lender a late payment fee of five percent (5%) of the payment amount, with a
minimum fee of $20.00. After an Event of Default, Borrower agrees to pay to
Lender a fixed charge of $25.00, or Borrower agrees that Lender may, without
notice, increase the Interest Rate by three percentage points (3%) (the “Default
Rate”), whichever is greater. Lender may impose a non-sufficient funds fee for
any check that is presented for payment that is returned for any reason. In
addition, Lender may charge loan documentation fees as may be reasonably
determined by the Lender.

 

7.           Maximum Interest Rate. Notwithstanding any provisions of this Note
or any instrument securing payment of the indebtedness evidenced by this Note to
the contrary, it is the intent of Borrower and Lender that Lender shall never be
entitled to receive, collect or apply, as interest on principal of the
indebtedness, any amount in excess of the maximum rate of interest permitted to
be charged by applicable law; and if under any circumstance whatsoever,
fulfillment of any provision of this Note, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by applicable law, then, ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity; and in the event Lender ever
receives, collects or applies as interest any such excess, such amount which
would be excess interest shall be deemed a permitted partial prepayment of
principal without penalty or premium and treated hereunder as such; and if the
principal of the indebtedness evidenced hereby is paid in full, any remaining
excess funds shall forthwith be paid to Borrower. In determining whether or not
interest of any kind payable hereunder exceeds the highest lawful rate, Borrower
and Lender shall, to the maximum extent permitted under applicable law, (a)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, and (b) amortize, prorate, allocate and spread such payment so that
the interest on account of such indebtedness does not exceed the maximum amount
permitted by applicable law; provided that if the amount of interest received
for the actual period of existence thereof exceeds the maximum lawful rate,
Lender shall refund to Borrower the amount of such excess. Lender shall not be
subject to any penalties provided by any laws for contracting for, charging or
receiving interest in excess of the maximum lawful rate.

 

8.           Non-Revolving Loan; Advances. No amount repaid or prepaid on this
Note may be borrowed again. Notwithstanding the foregoing, during the Draw
Period only, Lender agrees to make direct advances of the proceeds of this Note
(each, an “Advance”) to Borrower for the sole purpose of financing the software
integration costs related specifically to a contract with the State of Illinois,
subject to the terms and conditions of this Note and the other Loan Documents,
at such times as Borrower may from time to time request and in such amounts as
Borrower may from time to time request. This Note evidences a non-revolving line
of credit during the Draw Period and a term loan commencing on the Conversion
Date until the Maturity Date and evidences the aggregate unpaid principal amount
of all Advances made or to be made by Lender to Borrower under this Note.
Notwithstanding anything herein to the contrary, in no event shall (a) the
outstanding principal balance of this Note at any time exceed $1,600,000.00, or
(b) the aggregate amount of all Advances made from time to time hereunder exceed
$1,600,000.00.

 

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9.           Advance Requirements. During the Draw Period, the proceeds of this
Note shall be made in the form of direct Advances. The proceeds of each Advance
shall be made available at the office of Lender by credit to the account of
Borrower or by other means requested by Borrower and reasonably acceptable to
Lender. Each Advance shall be made available to Borrower subject to satisfaction
of the following requirements:

 

A.          Borrower shall send a written draw request (the “Draw Request”) to
Lender (i) stating the amount of the Advance to be disbursed, which amount shall
not exceed one hundred percent (100%) of the software integration costs to be
paid, (ii) certifying that no Default or Event of Default exists under the Loan
Documents as of the date of the Draw Request and that the amount of the Advance
does not exceed one hundred percent (100%) of the software integration costs to
be paid, and (iii) certifying that no Default or Event of Default will result
from Lender’s funding of the Draw Request; and

 

B.           No Default or Event of Default under this Note or any of the other
Loan Documents exists.

 

10.         Default and Remedies.

 

A.          An “Event of Default” shall occur under this Note upon the
occurrence of (a) the failure of Borrower to make any principal or interest
payment owing hereunder on the date which is ten (10) days after the date when
due, (b) the failure by Borrower to pay any other amount payable to Lender under
this Note within ten (10) days after the date when any such payment is due in
accordance with the terms hereof, (c) a breach by Borrower of any of the
covenants, agreements, representations, warranties or other provisions hereof,
which is not cured within the grace or cure period, if any, applicable thereto,
or (d)  the occurrence of any Event of Default under any of the other Loan
Documents. An Event of Default under this Note shall also be deemed an Event of
Default under the other Loan Documents.

 

B.           If an Event of Default has occurred and is continuing, Lender shall
have the option, without demand or notice, other than specified herein or in the
other Loan Documents, to declare the unpaid principal of this Note, together
with all accrued interest, prepayment premium, if any, and other sums secured by
the Security Agreement, or other Loan Documents, at once due and payable to the
extent permitted by law, to foreclose the Security Agreement and the other liens
or security interests securing the payment of this Note, and to exercise any and
all other rights and remedies available at law or in equity under the Security
Agreement or the other Loan Documents.

 

C.           The remedies of Lender, as provided herein or in the Security
Agreement or any of the other Loan Documents shall be cumulative and concurrent,
and may be pursued singularly, successively or together, at the sole discretion
of Lender, and may be exercised as often as occasion therefor shall arise. No
act of omission or commission of Lender, including specifically any failure to
exercise any right, remedy or recourse, shall be deemed to be a waiver or
release of the same, such waiver or release to be effected only through a
written document executed by Lender and then only to the extent specifically
recited therein. A waiver or release with reference to any one event shall not
be construed as continuing, as a bar to, or as a waiver or release of, any
subsequent right, remedy or recourse as to a subsequent event.

 

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11.         Costs and Attorneys’ Fees. If any Event of Default under this Note
shall occur, or if Lender incurs any expenses or costs in connection with the
protection or realization of any collateral, whether or not suit is filed
thereon or on any instrument granting a security interest in said collateral,
Borrower promises to pay all costs of collection of every kind, including but
not limited to all appraisal costs, reasonable attorneys’ fees, court costs, and
expenses of every kind, incurred by Lender in connection with such collection or
the protection or enforcement of any or all of the security for this Note,
whether or not any lawsuit is filed with respect thereto.

 

12.         Waiver. Borrower, and each guarantor and endorser hereon waives
grace, notice, notice of intent to accelerate, notice of default, protest,
demand, presentment for payment and diligence in the collection of this Note,
and in the filing of suit hereon, and agrees that his or its liability and the
liability of his or its heirs, beneficiaries, successors and assigns for the
payment hereof shall not be affected or impaired by any release or change in the
security or by any increase, modification, renewal or extension of the
indebtedness or its mode and time of payment. It is specifically agreed by the
undersigned that the Lender shall have the right at all times to decline to make
any such release or change in any security given to secure the payment hereof
and to decline to make any such increase, modification, renewal or extension of
the indebtedness or its mode and time of payment.

 

13.         Notices. All notices or other communications required or permitted
hereunder shall be delivered in the manner set forth in the Credit Agreement.

 

14.         Application of Payments. All payments on account of the indebtedness
evidencing the Note shall first be applied to late charges and costs and fees
incurred by Lender in enforcing its rights hereunder or under the Security
Agreement and the other Loan Documents, second to accrued interest on the unpaid
principal balance, and third to reduce unpaid principal in inverse chronological
order of maturity. All payments shall be applied in the manner set forth in this
Section 14.

 

15.         BillPayer Service; Late Payments; Fees. Any payments and other
amounts owing under this Note shall be initiated by Lender in accordance with
the terms of this Note from Borrower’s account through Auto BillPayer (or
Lender’s then current automated billing paying service) (“BillPayer Service”).
Borrower hereby authorizes Lender to initiate such payments from Borrower’s
primary depository account with Lender. Borrower acknowledges and agrees that
use of the BillPayer Service shall be governed by the then current standard
terms and conditions thereof, and Borrower hereby acknowledges receipt of such
Terms and Conditions as in effect on the date hereof. Borrower further
acknowledges and agrees to maintain payments hereunder through the BillPayer
Service throughout the term of this Note (to the extent Lender and its
affiliates continue to provide such service). If the BillPayer Service is
cancelled at any time, Borrower may be required to pay Lender the then current
amount of the difference between Lender’s customary Note processing fee and the
discounted Note processing fee received by Borrower in consideration of its use
of the BillPayer Service.

 

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16.         Miscellaneous.

 

A.          The headings of the paragraphs of this Note are inserted for
convenience only and shall not be deemed to constitute a part hereof.

 

B.           All payments under this Note shall be payable in lawful money of
the United States which shall be legal tender for public and private debts at
the time of payment; provided that a check will be deemed sufficient payment so
long as it clears when presented for payment. Each payment of principal or
interest under this Note shall be paid not later than 2:00 P.M. Eastern Time on
the date due therefor and funds received after that hour shall be deemed to have
been received by Lender on the following Business Day. If any payment of
principal, interest or any other amount due under this Note shall become due on
a day which is not a Business Day, the due date for such payment shall be
automatically extended to the next succeeding Business Day, and, in the case of
a principal payment, such extension of time shall be included in computing
interest on such principal. If an Event of Default has occurred and remains
uncured, Lender is hereby authorized to charge any account of Borrower
maintained with Lender for each payment of principal, interest and other amounts
due under this Note, when each such payment becomes due. All amounts payable
under this Note and the other Loan Documents shall be paid by Borrower without
offset or other reduction.

 

C.           The obligations and liabilities under this Note of Borrower shall
be binding upon and enforceable against Borrower and its heirs, legatees, legal
representatives, successors and assigns. This Note shall inure to the benefit of
and may be enforced by Lender, its successors and assigns.

 

D.           If any provision of this Note or any payments pursuant to the terms
hereof shall be invalid or unenforceable to any extent, the remainder of this
Note and any other payments hereunder shall not be affected thereby and shall be
enforceable to the greatest extent permitted by law.

 

E.           If this Note is executed by more than one party, the obligations
and liabilities of each Borrower under this Note shall be joint and several and
shall be binding upon and enforceable against each Borrower and their respective
successors and assigns.

 

F.           Lender may at any time assign its rights in this Note and the Loan
Documents, or any part thereof and transfer its rights in any or all of the
collateral, and Lender thereafter shall be relieved from all liability with
respect to such collateral. In addition, the Lender may at any time sell one or
more participations in the Note. Borrower may not assign its interest in this
Note, or any other agreement with Lender or any portion thereof, either
voluntarily or by operation of law, without the prior written consent of Lender.

 

G.           Time is of the essence of this Note and of each and every provision
hereof.

 

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H.           This Note, together with the other Loan Documents, sets forth all
of the covenants, promises, agreements, conditions and understandings of the
parties relating to the subject matter of this Note, and there are no covenants,
promises, agreements, conditions or understandings, either oral or written
between them relating to the subject matter of this Note or other than as are
set forth herein and in the other Loan Documents. This Note and the other Loan
Documents supersede all prior written and oral commitments and agreements
relating to the Loan. Borrower acknowledges that it is executing this Note
without relying on any statements, representations or warranties, either oral or
written, that are not expressly set forth herein or in the other Loan Documents.

 

I.            This Note and each provision hereof may be modified, amended,
changed, altered, waived, terminated or discharged only by a written instrument
signed by the party sought to be bound by such modification, amendment, change,
alteration, waiver, termination or discharge.

 

J.            Each party to this Note and the legal counsel to each party have
participated in the drafting of this Note, and accordingly the general rule of
construction to the effect that any ambiguities in a contract are to be resolved
against the party drafting the contract shall not be employed in the
construction and interpretation of this Note.

 

K.          Borrower certifies that the proceeds of this Loan are to be used for
business purposes.

 

L.           Borrower does hereby irrevocably confirm, ratify and approve all
Advances by Lender and does hereby indemnify Lender against all reasonable
losses and expenses (including court costs, reasonable attorneys' and
paralegals' fees) in connection with all such Advances, and shall hold Lender
harmless with respect thereto, in each case subject to the limitations set forth
in Section 9.2 of the Credit Agreement.

 

17.         Choice of Laws. This Note shall be governed by and construed in
accordance with the laws of the State of New York.

 

18.         JURY WAIVER. BORROWER AND LENDER, BY ITS ACCEPTANCE HEREOF, HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT
OR OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER ARISING OUT OF OR IN ANY WAY
RELATED TO THIS NOTE, ANY OTHER LOAN DOCUMENT, OR ANY RELATIONSHIP BETWEEN
BORROWER AND LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO
PROVIDE THE LOAN DESCRIBED HEREIN AND IN THE OTHER LOAN DOCUMENTS.

 

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19.         JURISDICTION AND VENUE. BORROWER HEREBY AGREES THAT ALL ACTIONS OR
PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR INDIRECTLY OUT OF THIS
NOTE MAY BE LITIGATED IN COURTS HAVING SITUS IN HILLSBOROUGH COUNTY, FLORIDA,
HAMILTON COUNTY, OHIO, OR THE UNITED STATES DISTRICT COURT FOR THE MIDDLE
DISTRICT OF FLORIDA OR, IF LENDER INITIATES SUCH ACTION, ANY COURT IN WHICH
LENDER SHALL INITIATE SUCH ACTION AND WHICH HAS JURISDICTION. BORROWER HEREBY
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED BY LENDER IN ANY OF SUCH COURTS, AND HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN,
AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS
TO WHICH NOTICES ARE TO BE SENT PURSUANT TO THE SECURITY INSTRUMENT. BORROWER
WAIVES ANY CLAIM THAT HILLSBOROUGH COUNTY, FLORIDA, HAMILTON COUNTY, OHIO OR THE
MIDDLE DISTRICT OF FLORIDA IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED
ON LACK OF VENUE. SHOULD BORROWER, AFTER BEING SO SERVED, FAIL TO APPEAR OR
ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER
OF DAYS PRESCRIBED BY LAW AFTER THE MAILING THEREOF, BORROWER SHALL BE DEEMED IN
DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED BY LENDER AGAINST BORROWER
AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE
EXCLUSIVE CHOICE OF FORUM FOR BORROWER SET FORTH IN THIS SECTION SHALL NOT BE
DEEMED TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN ANY
OTHER FORUM OR THE TAKING BY LENDER OF ANY ACTION TO ENFORCE THE SAME IN ANY
OTHER APPROPRIATE JURISDICTION, AND BORROWER HEREBY WAIVES THE RIGHT, IF ANY, TO
COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.

 

20.         Loan Fee. In consideration of Lender’s agreement to make the Loan,
Borrower shall pay to Lender a non-refundable fee in the amount of Eight
Thousand and 00/100 Dollars ($8,000.00), which shall be due and payable in full
as a condition precedent to the first disbursement of proceeds under this Note.

 

21.         Patriot Act. Lender hereby notifies Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”), it is required to obtain, verify and record
information that identifies Borrower, which information includes the name and
address of Borrower and other information that will allow Lender to identify
Borrower in accordance with the Act.

 

[SIGNATURE APPEARS ON FOLLOWING PAGE]

 

 13 

 

 

IN WITNESS WHEREOF, Borrower has executed, sealed and delivered this Note as of
the Effective Date.

 

  BORROWER:       JETPAY PAYMENT SERVICES, FL, LLC,   a Delaware limited
liability company               By: JetPay Corporation, its sole member        
        By: /s/ Gregory M. Krzemien       Name: Gregory M. Krzemien       Its:
Chief Financial Officer

 

Signature Page to $1,600,000.00 Promissory Note