Exhibit 10.4

 

FIRST AMENDMENT

 

FIRST AMENDMENT (this “Amendment”), dated as of May 6, 2015, by and among ACI
Merchant Systems, LLC, a Pennsylvania limited liability company (“ACI” and
together with each other Person joined from time to time to the Loan Agreement
(as defined below) as a borrower, “Borrowers”), JetPay Corporation, a Delaware
corporation (“Parent”), AD Computer Corporation, a Pennsylvania corporation (“AD
Computer”), and Metro Bank (“Lender”).

 

BACKGROUND

 

A.        Borrowers, Parent and Lender are parties to a Loan and Security
Agreement dated as of November 7, 2014 (as amended, modified, replaced,
substituted for, superseded or restated from time to time, the “Loan
Agreement”); and

 

B.         Borrowers have requested that Lender modify the minimum EBITDA
financial covenant in the Loan Agreement, and based on information provided by
Borrowers, Lender has agreed to such request, all on the terms and subject to
the conditions set forth herein.

 

NOW, THEREFORE, with the foregoing Background incorporated by reference and for
other consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:

 

1.          Defined Terms. Unless otherwise defined herein (including in the
Background), terms defined in the Loan Agreement and the Loan Documents are used
herein as therein defined.

 

2.          Amendment to Loan Agreement. Section 6.8(d) of the Loan Agreement is
amended and restated to read in full as follows:

 

“d. Minimum EBITDA –Borrowers shall maintain Consolidated EBITDA as of each
fiscal quarter end of not less than the amount set forth below opposite the
applicable fiscal quarter end, measured for the measurement period set forth
below:

 

Fiscal Quarter Ending  Consolidated EBITDA   Measurement Period          March
31, 2015  $235,000   Three months ending March 31, 2015           June 30, 2015 
$710,000   Six months ending June 30, 2015           September 30, 2015 
$1,460,000   Nine months ending September 30, 2015

 

 

 

 

3.             Representations and Warranties. Each Loan Party hereby represents
and warrants to Lender that:

 

(a)          There exists no Default or Event of Default under the Loan
Agreement as amended hereby;

 

(b)          The representations and warranties made by Loan Parties in the Loan
Documents are true and correct in all material respects on and as of the date
hereof as if made on and as of the date hereof except to the extent such
representations and warranties are made only as of a specific earlier date;

 

(c)          The execution and delivery of this Amendment, by and on behalf of
each Loan Party have been duly authorized by all requisite action on behalf of
each Loan Party, and this Amendment constitutes the legal, valid and binding
obligations of each Loan Party, enforceable against such Loan Party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law);

 

(d)          The execution, delivery and performance of this Amendment will not
violate any applicable provision of law or judgment, order or regulation of any
court or of any public or governmental agency or authority nor conflict with or
constitute a breach of or a default under any material instrument to which any
Loan Party is a party or by which any Loan Party or any of its properties is
bound; and

 

(e)          No approval, consent or authorization of, or registration,
declaration or filing with, any governmental or public body or authority, or any
trustee or holder of any indebtedness, is required in connection with the valid
execution, delivery and performance by any Loan Party of this Amendment.

 

4.            Conditions Precedent. The effectiveness of the amendments set
forth herein is subject to the fulfillment, to the satisfaction of Lender and
its counsel, of the following conditions precedent:

 

(a)          Loan Parties shall have delivered to Lender this Amendment, duly
completed and executed by the Loan Parties

 

(b)          Payment by Borrowers of all of Lender’s Expenses, including without
limitation, the fees and expenses of Ballard Spahr LLP, in accordance with
Section 9.6 of the Loan Agreement.

 

-2-

 

 

 

(c)          The representations and warranties set forth in the Loan Agreement
shall be true and correct in all material respects on and as of the date hereof,
except to the extent such representations and warranties are made as of a
specific earlier date.

 

(d)          No Default or Event of Default shall have occurred and be
continuing under the Loan Agreement as amended hereby.

 

5.            Ratification; References; No Waiver. Except as expressly amended
by this Amendment, the Loan Agreement shall continue to be, and shall remain,
unaltered and in full force and effect in accordance with its terms. All
references in the Loan Agreement to “this Agreement,” “hereof,” “hereto” and
“hereunder” shall be deemed to be references to the Loan Agreement as amended
hereby, and all references in any of the Loan Documents to the Loan Agreement
shall be deemed to be to Loan Agreement as amended hereby. This Amendment does
not and shall not be deemed to constitute a waiver by Lender of any Default,
breach, Event of Default, or of any of Lender’s other rights or remedies. Each
Loan Party hereby agrees that its obligations under the Loan Agreement and Loan
Documents are ratified and confirmed and shall continue in full force and effect
and shall continue to cover all Obligations. As security for the payment of the
Obligations, and satisfaction by Borrowers of all covenants and undertakings
contained in Loan Agreement and Loan Documents, each Borrower hereby confirms
its prior grant to Lender of a continuing first lien on and security interest
in, upon and to all of such Borrower’s now owned or hereafter acquired, created
or arising Collateral, and Parent hereby confirms its prior grant to Lender of a
continuing first lien on and security interest in, upon and to the Pledged
Collateral (as defined in the Pledge Agreement).

 

6.            Affirmation of Guaranty. Parent and AD Computer each hereby
acknowledges and agrees that its Surety and Guaranty Agreement continues
unimpaired and in full force and effect, covers the Obligations as amended
hereby and runs to the benefit of Lender and constitutes the valid, binding and
enforceable obligation of such Guarantor, subject to no defense, setoff,
counterclaim or deduction of any nature.

 

7.            Release. In consideration of the execution of this Amendment by
Lender, each Loan Party hereby releases Lender and its officers, attorneys,
agents and employees from any liability, suit, damage, claim, loss or expense of
any kind or nature whatsoever and howsoever arising that any Loan Party ever
had, now has, or may have against Lender arising out of or relating to the Loan
Documents or Lender’s acts or omissions with respect thereto occurring prior to
the date hereof. Each Loan Party further states that it has carefully read the
foregoing release, knows the contents thereof and grants the same as its own
free act and deed.

 

8.            Miscellaneous.

 

(a)          Expenses. Loan Parties agree to pay all of Lender’s reasonable
out-of-pocket expenses incurred in connection with the preparation, negotiation
and execution of this Amendment, including, without limitation, the reasonable
fees and expenses of Ballard Spahr LLP.

 

-3-

 

 

(b)          Governing Law. THIS AMENDMENT, AND ALL RELATED AGREEMENTS AND
DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. THE PROVISIONS OF THIS AMENDMENT AND
ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN ARE TO BE DEEMED
SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION SHALL NOT
AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL FORCE AND
EFFECT.

 

(c)          Successors and Assigns. The terms and provisions of this Amendment
shall be binding upon and shall inure to the benefit of Loan Parties and Lender
and their respective successors and assigns.

 

(d)          Counterparts. Two or more duplicate originals of this Amendment may
be signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page of this Amendment by telecopy or e-mail shall be
effective as delivery of a manually executed counterpart of this Amendment.

 

(e)          Headings. The headings of any paragraph of this Amendment are for
convenience only and shall not be used to interpret any provision hereof.

 

(f)          Modifications. No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed by Borrowers
and Lender.

 

(g)         Waiver of Jury Trial. EACH LOAN PARTY AND LENDER EACH HEREBY WAIVE
ANY AND ALL RIGHTS EACH MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY
LITIGATION, PROCEEDING OR COUNTERCLAIM ARISING WITH RESPECT TO RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO OR UNDER THE LOAN DOCUMENTS OR WITH RESPECT TO
ANY CLAIMS ARISING OUT OF ANY DISCUSSIONS, NEGOTIATIONS OR COMMUNICATIONS
INVOLVING OR RELATED TO ANY PROPOSED RENEWAL, EXTENSION, AMENDMENT,
MODIFICATION, RESTRUCTURE, FORBEARANCE, WORKOUT, OR ENFORCEMENT OF THE
TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS.

 

[signature page follows]

 

-4-

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

 

  ACI MERCHANT SYSTEMS, LLC         By: /s/ Peter Davidson   Name:  Peter
Davidson   Title: Secretary       JETPAY CORPORATION         By: /s/ Peter
Davidson   Name:  Peter Davidson   Title: Secretary       AD COMPUTER
CORPORATION         By: /s/ Gregory M. Krzemien   Name: Gregory M. Krzemien  
Title: Treasurer       METRO BANK         By: /s/ Harry G. Hayman, III   Name:
Harry G. Hayman, III   Title:   Senior Vice President

 

[Signature Page to First Amendment to ACI Merchant Loan Documents]