EXHIBIT 10.1

 

Fifth Amendment to Employment Agreement

 

This Fifth Amendment (“Fifth Amendment”), to the Employment Agreement (the
“Agreement”) dated February 27, 2007 between Payment Data Systems, Inc. (“PDS”)
and Michael R. Long (“Executive”) is entered into this 3rd day of August, 2016,
and is made part of the Agreement which is hereby amended as follows:

 

1. Definitions. All capitalized terms used herein and not expressly defined
herein shall have the respective meanings given to such terms in the Agreement.

 

2. Entire Agreement. Except as expressly modified by this Fifth Amendment, the
Agreement shall be and remain in full force and effect in accordance with its
terms and shall constitute the legal, valid, binding and enforceable obligations
of PDS and Executive.

 

3. Successors and Assigns. This Fifth Amendment shall be binding upon and inure
to the benefit of the successors and permitted assigns of the parties hereto.

 

4. Section References. Section titles and references used in this Fifth
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto evidenced hereby.

 

5. Now, therefore, in consideration of the mutual covenants set forth herein and
for other good and valuable consideration, the adequacy, receipt and sufficiency
of which are hereby acknowledged:

 

a.Section 1 and Schedule 1 of the Agreement are hereby amended as follows:

 

(i)Beginning August 5, 2016, the Company will solely employ Executive in the
capacity of Chairman of the Board of Directors on the same terms and conditions
as in the Agreement. Executive will retire from his position as Chief Executive
Officer only on the condition that Mr. Louis Hoch is appointed Chief Executive
Officer of PDS by the Board of Directors. For the avoidance of doubt, Executive
shall continue to receive his agreed-upon compensation, benefits and expense
reimbursements as set out in the Agreement.

 

(ii)The change in responsibilities as set forth in Section 5(a)(i) will not
trigger any termination as defined in the Agreement, nor any obligations in the
Agreement to pay the Deferred Compensation, as defined in Section 4(c) of the
Agreement, nor compensation for the non-compete obligation as defined in Section
8(b) of the Agreement during such time that Executive remains employed as
Chairman of the Board. Executive waives his right to receive any Deferred
Compensation or other payments as a result of his change in responsibilities,
however, he retains such rights in his sole capacity as Chairman of the Board of
Directors.

 

b.Section 4(c)(ii) and 4(c)(iii) of the Agreement are hereby amended solely with
respect to Executive’s termination as a result of death as follows:

 

“(ii) Amount. In the event of Executive’s death, the estate of Executive shall
be entitled to Deferred Compensation as follows. The Deferred Compensation shall
be an amount equal to 2.95 times of both Base Salary (as defined in Section 4(a)
of the Agreement) and Bonus Compensation (as defined in Section 4(b) of the
Agreement (“Deferred Compensation”). For the avoidance of doubt, Base Deferred
Compensation shall not include amounts paid or accrued to Executive for benefits
or equity awards. Further Bonus Compensation shall be forfeited.

 

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The Deferred Compensation herein shall be deemed liquidated damages resulting
from the Company’s termination of this Agreement and shall be the estate of the
Executive’s sole and exclusive remedy for any such termination.

 

(iii) Outstanding Equity Awards. All stock options issued to Executive and all
restricted stock granted to Executive shall continue on their vesting schedule.
Upon vesting of such stock options or restricted stock, Company agrees to
execute all documents and provide all legal opinions to the estate of the
Executive as requested by the authorized representative in order for the estate
of the Executive to sell, register, collateralize, or transfer such stock.

 

c.Section 4(c) of the Agreement is hereby amended solely with respect to
Executive’s termination as a result of disability as follows:

 

“(i) When Due. Executive (or his estate as the case may be) shall be entitled to
the Deferred Compensation as calculated in Section 5(b) above, the initial
installment of which is to be paid within 30 days after the event giving rise to
the payout (except as provided below) in the event that Executive’s employment
is terminated for any of the following reasons herein:

(A) death of Executive;

(B) termination by the Company without cause pursuant to Section 3(c);

(C) termination by Executive upon default by the Company pursuant to Section
3(d);

(D) termination by Executive after a Change of Control pursuant to Section 3(e);

(E) termination by the Executive pursuant to Section 3(f);

(F) termination by the Company pursuant to Section 3(h); or

(G) termination by the Company pursuant to Section 7(a), as long as the Company
and/or an insurance continues to pay Executive’s Base Salary for a period of up
to 36 months.

 

d.Section 8(b) of the Agreement shall not apply with respect to any termination
of the Agreement in the case of death or disability of the Executive and the
Company shall not be obligated to pay any compensation for complying with the
covenants of confidentiality or non-competition to Executive or his estate in
the event of death or disability.

 

6. This Fifth Amendment amends the Agreement as set forth herein. All previously
existing obligations under the Agreement are hereby reaffirmed in all respects.

 

 

[Signature Page follows.]

 

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In witness thereof, the parties hereto have caused this Fifth Amendment to the
Employment Agreement to be executed on the day and year first above written.

 

 

Payment Data Systems, Inc.   Executive       By:  /s/ Peter Kirby   By:  /s/
Michael R. Long Name: Peter Kirby   Name: Michael R. Long Title: Chairman of the
    Compensation Committee    

 

 

 

 

 

 

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