Exhibit 10.1

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”) is executed as of June 2, 2016 (the
“Effective Date”), by and between FIFTH THIRD BANK, an Ohio banking corporation
(“Lender”), and CSI ACQUISITION SUB ONE, LLC, a Delaware limited liability
company (“Borrower”).

 

RECITALS:

 

WHEREAS, Borrower has requested that Lender provide: (i) a term loan in the
amount of One Million Sixty-Eight Thousand Nine Hundred Sixty and 30/100 Dollars
($1,068,960.30); and (ii) a revolving line of credit facility in the amount of
Five Hundred Thousand and No/100 Dollars ($500,000.00), such notes being secured
by all of Borrower’s assets, and Lender has agreed to do so, subject to the
terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the above premises, and the mutual covenants
and agreements set forth herein, and for one dollar and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

 

1.           Definitions and Interpretation.

 

1.1           Exhibits Incorporated. All exhibits to this Agreement, as now
existing and as the same may from time to time be modified, are fully
incorporated herein by this reference.

 

1.2           Defined Terms. All capitalized terms used in this Agreement and
not otherwise defined in this Agreement shall have the following meanings:

 

“Act” means the USA PATRIOT Act, Title III of Pub. L. 107-56, signed into law
October 26, 2001 (“Act”).

 

“Affiliate” means, with respect to any Person, (a) any other Person which
directly or indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, (i) such Person or (ii) any
general partner or managing member of such Person; (b) any other Person 50% or
more of the equity interest of which is held beneficially or of record by
(i) such Person or (ii) any general partner or managing member of such Person,
and (c) any general partner, limited partner or member of (i) such Person or
(ii) any general partner or managing member of such Person.

 

“Anti-Terrorism Law” means any statute, treaty, law (including common law),
ordinance, regulation, rule, order, opinion, release, injunction, writ, decree
or award of any Governmental Agency relating to terrorism or money laundering,
including Executive Order No. 13224 and the Act.

 

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“Applicable Laws” means all statutes, laws, ordinances, regulations, orders,
writs, judgments, injunctions, decrees or awards of the United States or any
state, county, municipality or other Governmental Agency applicable to the
Borrower, the Guarantor and/or the Collateral.

 

“Borrower Entity Documents” means the Certificate of Formation and the Operating
Agreement of Borrower.

 

“Business Day” shall have the same meaning as set forth in each Note.

 

“Capitalized Lease Obligations” means, for any period, the aggregate of all
expenditures (including that portion of Capitalized Lease Obligations
attributable to that period) made in respect of the purchase, construction or
rehabilitation of fixed or capital assets, determined in accordance with GAAP.

 

“Certificate of Formation” means that certificate of formation of the Borrower
duly filed with the Office of the Secretary of State of the State of Delaware,
as amended from time to time.

 

“Closing” means execution and delivery of the Loan Documents.

 

“Code” means the Internal Revenue Code of 1986, as amended, or its predecessor
or successor, as applicable, and any United States Treasury regulations, revenue
rulings or technical information releases issued thereunder.

 

“Collateral” means all of Borrower’s right, title and interest, whether now
existing or hereafter acquired, in and to all machinery, equipment and other
personal property described in the Security Instrument.

 

“Commodity Exchange Act”  means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.

 

“Control” and any derivative of such term, including “Controlling” and
“Controlled”, means, when used with respect to any Person, (i) the direct or
indirect beneficial ownership of fifty percent (50%) or more of the outstanding
voting securities or voting equity of such Person or (ii) the power to direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise.

 

“Debt” means, for any Person, without duplication: (a) all indebtedness of such
Person for borrowed money, for amounts drawn under a letter of credit, or for
the deferred purchase price of property or services for which such Person or its
assets is liable, other than accounts payable arising in the ordinary course of
business, (b) all unfunded amounts under a loan agreement, letter of credit, or
other credit facility for which such Person would be liable, if such amounts
were advanced under such loan agreement or credit facility or if such letter of
credit was issued, (c) all amounts required by such Person as a guaranteed
payment to partners or a preferred or special dividend, including any mandatory
redemption of shares or interests, (d) all indebtedness guaranteed by such
Person, directly or indirectly, (e) all obligations under Capital Lease
Obligations for which such Person is liable, and (f) except as otherwise
conditioned herein, all obligations of such Person under interest rate swaps,
caps, floors, collars and other interest hedge agreements, in each case whether
such Person is liable contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations such Person otherwise assures a
creditor against loss.

 

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“Default” means the occurrence of any event, circumstance or condition which
constitutes a breach of or a default under this Agreement or any other Loan
Document and which, after the giving of any required notice and/or the passage
of any applicable cure period, would constitute an Event of Default under this
Agreement or any other Loan Document.

 

“Default Rate” shall have the meaning set forth in each Note.

 

“EBITDA” means, on a consolidated basis, the amount of Borrower’s earnings
before interest, taxes, depreciation and amortization expense for the
measurement period.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder.

 

“ERISA Affiliate” means any corporation or trade or business (whether or not
incorporated) which is treated with Borrower as a single employer within the
meaning of Section 414 of the Code.

 

“Event of Default” means any event so designated in Section 8.1, or any other
section or provision, of this Agreement.

 

“Excluded Swap Obligation(s)” means, with respect to any guarantor of a Swap
Obligation, including the grant of a security interest to secure the guaranty of
such Swap Obligation, any Swap Obligation if, and to the extent that, such Swap
Obligation is or becomes illegal under the Commodity Exchange Act or any rule,
regulation or order of the Commodity Futures Trading Commission (or the
application or official interpretation of any thereof) by virtue of such
guarantor’s failure for any reason to constitute an “eligible contract
participant” as defined in the Commodity Exchange Act and the regulations
thereunder at the time the guaranty or grant of such security interest becomes
effective with respect to such Swap Obligation.  If a Swap Obligation arises
under a master agreement governing more than one swap, such exclusion shall
apply only to the portion of such Swap Obligation that is attributable to swaps
for which such Swap Obligation or security interest is or becomes illegal.

 

“Fiscal Year” means Borrower’s fiscal year, ending on December 31st of each
calendar year.

 

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“Fixed Charge Coverage Ratio” means the ratio of: (a) Borrower’s EBITDA plus
rent and operating lease payments, less distributions, dividends, increases in
loans to Guarantor and capital expenditures (other than capital expenditures:
(x) incurred with respect to the Magic Platform, (y) financed with equity
contributions funded to Borrower by Guarantor, or (z) financed with proceeds of
the purchase money indebtedness or capital leases to the extent permitted under
the Loan Documents) and other extraordinary items during the applicable test
period, divided by (b) the consolidated sum of (i) Borrower’s interest expense,
plus (ii) all scheduled principal payments (but excluding principal that is
payable upon the Maturity Date) with respect to indebtedness paid or due and
payable by the Constituent Entities during the applicable period plus rent and
operating lease expenses incurred in the same such period. The test period shall
be the prior seven (7) month period then ending for the Fixed Charge Coverage
Ratio calculated as of December 31, 2016. The test period shall be the prior
twelve (12) month period then ending for the Fixed Charge Coverage Ratio
calculated as of December 31, 2017 and each December 31st thereafter for so long
as the Loan Documents remain in effect. For purposes of the definition of Fixed
Charge Coverage Ratio, the term “Magic Platform” shall mean capital expenditures
of up to Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) incurred by
Borrower for the creation or implementation of its ‘Magic’ software and
operating platform during the period of June 1, 2016 to December 31, 2016.

 

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

“Governmental Agency” means any governmental or quasi-governmental agency,
board, bureau, commission, department, court, administrative tribunal or other
instrumentality or authority, and any public utility.

 

“Guarantor” means JetPay and any Person who now or hereafter partially or fully
guarantees the payment or performance of any indebtedness or other obligation to
Lender under any Loan Document.

 

“Guaranty” means, collectively, all guaranties required pursuant to this
Agreement and all guaranties pursuant to which any Person now or hereafter
partially or fully guarantees the payment or performance of any indebtedness or
other obligation to Lender under any Loan Document, and initially means the
Continuing Guaranty Agreement dated as of even date herewith given by Guarantor
in favor of Lender.

 

“Hedging Arrangements” means Interest Hedging Instrument or any other interest
rate protection agreement, foreign currency exchange agreement, commodity
purchase or option agreement, or any other interest rate hedging device or swap
agreement (as defined in 11 U.S.C. § 101 et. seq.).

 

“Indebtedness” means any and all obligations, contingent or otherwise, whether
now existing or hereafter arising, of Borrower to Lender or to any of its
Affiliates or successors, arising under or in connection with the Loan, this
Agreement, or any other Loan Document, or arising under or in connection with
any Rate Management Agreement.

 

“Interest Hedging Instrument” means any documentation evidencing any interest
rate swap, interest “cap” or “collar” or any other interest rate hedging device
or swap agreement (as defined in 11 U.S.C. § 101 et. seq.) between any Borrower
and Lender (or any Affiliate of Lender).

 

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“JetPay” means JetPay Corporation, a Delaware corporation, and any of its
successors.

 

“Lender” means Fifth Third Bank, an Ohio banking corporation.

 

“Lien” means any interest of any kind or nature in property securing an
obligation owed to, or a claim of any kind or nature in property by, a Person
other than the owner of the property, whether such interest is based on the
common law, statute, regulation or contract, and including, but not limited to,
a security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt, a lease, consignment or bailment for security
purposes, a trust, or an assignment.

 

“Loan” means the loan made hereunder, as evidenced by the Notes.

 

“Loan Documents” means, collectively, this Agreement, the Notes, the Security
Instrument, and any other document now, heretofore or hereafter executed to
secure the obligations of Borrower or Guarantor to Lender under or in respect of
any Loan Document.

 

“Loan Expenses” means all interest, charges, costs and reasonable, documented,
out-of-pocket expenses incurred by Lender in connection with the Loan,
including, but not limited to: (i) all loan fees, service charges, commitment
fees or other fees due to Lender in connection with the Loan; (ii) all amounts
due under any Rate Management Agreement, if any; (iii) all escrow, filing,
search, recording and registration fees and charges; (iv) all documentary stamp
and other taxes and charges imposed by law on the issuance or recording of any
of the Loan Documents; (vi) all fees and disbursements of legal counsel engaged
by Lender in connection with the Loan, including, without limitation, counsel
engaged in connection with the enforcement or administration of this Agreement
or any of the Loan Documents; and (ix) any amounts required to be paid by
Borrower under this Agreement, the Security Instrument or any Loan Document
after the occurrence of an Event of Default.

 

“Loan Proceeds” means all amounts advanced as part of the Loan, whether advanced
directly to Borrower or otherwise.

 

“Material Adverse Change” means any development, event, condition, obligation,
liability or circumstance or set of events, conditions, obligations, liabilities
or circumstances or any change(s) which, as determined by Lender in good faith:

 

(a)          has prevented, impeded or limited the enforceability or validity of
any Loan Document, the perfection or priority of any lien created under any Loan
Document or the remedies of the Lender under any Loan Document;

 

(b)          has been, or reasonably could be expected to be, material and
adverse to the ownership, use enjoyment or value of any of the Collateral or to
the business, operations, prospects, properties, assets, liabilities or
condition (financial or otherwise) of Borrower;

 

(c)          has materially impaired the ability of Borrower to perform any of
the Obligations, or to consummate the transactions, under the Loan Documents.

 

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“Maturity Date” has the same meaning as set forth in each Note, respectively.

 

“Merger Agreement” means that certain Agreement and Plan of Merger, dated as of
February 22, 2016, entered into by and among Guarantor, Borrower, CSI
Acquisition Sub Two, LLC, a Delaware limited liability company,
CollectorSolutions, Inc., a Florida corporation, and Gene M. Valentino, as
representative of the shareholders of CollectorSolutions, Inc.

 

“Note” means, individually or collectively: (i) that certain Promissory Note in
the stated principal amount of One Million Sixty-Eight Thousand Nine Hundred
Sixty and 30/100 Dollars ($1,068,960.30), dated as of even date herewith, made
by Borrower in favor of Lender; (ii) that certain Revolving Promissory Note in
the stated principal amount of Five Hundred Thousand and No/100 Dollars
($500,000.00), dated as of even date herewith, made by Borrower in favor of
Lender.

 

“Obligations” means all obligations of Borrower or Guarantor under the Note or
any of the Loan Documents or under any Rate Management Agreement including,
without limitation, the obligation to pay the Indebtedness, and specifically
excluding Excluded Swap Obligations.

 

“OFAC” means the U.S. Department of Treasury’s Office of Foreign Asset Control.

 

“Operating Agreement” means, with respect to Borrower, such limited liability
company operating agreement, as amended from time to time, in effect as of the
Effective Date, true and correct copies of which have been delivered to Lender
on or before the Effective Date.

 

“Party” means any Person (other than Lender) who is a party or signatory to any
Loan Document.

 

“Permitted Indebtedness” means: (a) the Indebtedness; (b) indebtedness under
Hedging Agreements entered into for the sole purpose of hedging in the normal
course of business and not for speculative purposes; (c) purchase money
indebtedness (including Capitalized Lease Obligations) hereafter incurred by
Borrower to finance the purchase of fixed assets, provided that such
Indebtedness incurred which shall not exceed in the aggregate One Million and
No/100 Dollars ($1,000,000.00) so long as the Loan Documents remain in effect,
other than as set forth on Schedule 1.2; (d) indebtedness existing on the
Effective Date that is identified and described on Schedule 1.2 attached hereto
and made part hereof, including refinancing, replacement and renewals of such
indebtedness, provided that any refinancing shall not exceed the amount then
outstanding; (e) indebtedness incurred in the ordinary course of business for
surety bonds and performance bonds obtained in connection with workers’
compensation, unemployment insurance and other social security legislation, or
(f) indebtedness representing deferred compensation or reimbursable expenses
owed to officers, directors, employees or agents of the Borrower in the ordinary
course of business.

 

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“Permitted Liens” means (a) Liens securing taxes, assessments or governmental
charges or levies for amounts that are not yet due and payable; (b) Liens of
suppliers, carriers, materialmen, warehousemen, workmen or mechanics and other
similar Liens, in each case imposed by law or arising in the ordinary course of
business and for amounts that are not yet due and payable; (c) Liens incurred or
deposits made in the ordinary course of business in connection with workers’
compensation, unemployment insurance, social security and other like laws
(excluding Liens arising under ERISA); (d) pledges or cash deposits made in the
ordinary course of business (i) to secure the performance of bids, tenders,
leases, sales or other trade contracts (other than for the repayment of borrowed
money or the payment of a deferred purchase price for property or services,) or
(ii) made in lieu of, or to secure the performance of, surety, customs,
reclamation or performance bonds (in each case not related to judgments or
litigation); (e) Liens of landlords and mortgagees of landlords (i) with respect
to any landlord, solely arising by statute or, with respect to any mortgagee
arising by statute or under any contractual obligations entered into in the
ordinary course of business, (ii) on fixtures and movable tangible property
located on the real property leased or subleased from such landlord, (iii) for
amounts not yet due or that are being contested in good faith by appropriate
proceedings diligently conducted and (iv) for which adequate reserves or other
appropriate provisions are maintained on the books of such Person in accordance
with GAAP; (f) non-exclusive intellectual property licenses granted in the
ordinary course of business; (g) Liens in favor of collecting banks arising
under Section 4-210 of the UCC and other banker’s liens arising by operation of
law; (h) Liens on fixed assets securing purchase money indebtedness, provided
that, (i) such Lien attached to such assets concurrently, or with twenty (20)
days of the acquisition thereof, and only to the assets so acquired, and (ii) a
description of the asset is furnished to the Lender; (i) Liens existing on the
Effective Date and shown on Schedule 1.2(c) attached hereto and made part
hereof; (j) other Liens in favor of Lender under the Loan Documents; and (k)
Liens securing appeal bonds and judgments with respect to judgments that do not
otherwise result in or cause an Event of Default.

 

“Person” means any entity, whether an individual, trustee, corporation,
partnership, limited liability company, trust, unincorporated organization,
Governmental Agency or otherwise.

 

“Rate Management Agreement” means any agreement, device or arrangement providing
for payments which are related to fluctuations of interest rates, exchange
rates, forward rates, or equity prices, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants, and any
agreement pertaining to equity derivative transactions (e.g., equity or equity
index swaps, options, caps, floors, collars and forwards), including without
limitation any ISDA Master Agreement between Borrower and Lender or any
affiliate of Fifth Third Bancorp, and any schedules, confirmations and documents
and other confirming evidence between the parties confirming transactions
thereunder, all whether now existing or hereafter arising, and in each case as
amended, modified or supplemented from time to time.

 

“Rate Management Obligations” means any and all obligations of Borrower to
Lender or any affiliate of Fifth Third Bancorp, whether absolute, contingent or
otherwise and howsoever and whensoever (whether now or hereafter) created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefore), under or in connection with
(i) any and all Rate Management Agreements, and (ii) any and all cancellations,
buy-backs, reversals, terminations or assignments of any Rate Management
Agreement.

 

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“Security Instrument” means, individually or collectively, each respective
Security Agreement of even date herewith from Borrower to and for the benefit of
Lender, given as security for Borrower’s obligations under the Notes,
encumbering the Collateral, as the same may be amended, restated, modified or
supplemented and in effect from time to time.

 

“Swap Obligation” means any Rate Management Obligation that constitutes a “swap”
within the meaning of section 1a(47) of the Commodity Exchange Act.

 

“Taxes” means all taxes, assessments, levies and charges imposed by any public
or quasi-public authority having jurisdiction over the Collateral which are or
may affect, or become a lien upon, the Collateral, or interest therein, or
imposed by any Governmental Authority upon Borrower or Lender by reason of their
respective interests in the Collateral or by reason of any payment, or portion
thereof, made to Lender hereunder or pursuant to any Obligation or any of the
other Loan Documents, other than taxes which are measured by and imposed upon
Lender’s general net income.

 

“UCC” means the uniform commercial code as adopted in the State of Delaware, as
in effect from time to time.

 

1.3           Singular and Plural Terms. Any defined term used in the plural in
any Loan Document shall refer to all members of the relevant class and any
defined term used in the singular shall refer to any number of the members of
the relevant class.

 

1.4           Accounting Principles. Any accounting term used and not
specifically defined in any Loan Document shall be construed in conformity with,
and all financial data required to be submitted under any Loan Document shall be
prepared in conformity with, GAAP applied on a consistent basis or in accordance
with such other principles or methods as are reasonably acceptable to Lender.

 

1.5           References and Other Terms. Any reference to any Loan Document or
other document shall include such document both as originally executed and as it
may from time to time be modified. References herein to Sections and Exhibits
shall be construed as references to this Agreement unless a different document
is named. References to subparagraphs shall be construed as references to the
same Section in which the reference appears. The term “document” is used in its
broadest sense and encompasses agreements, certificates, opinions, consents,
instruments and other written material of every kind. The terms “including” and
“include” mean “including (include) without limitation.”

 

2.           The LoanS.

 

2.1           Agreement to Borrow and Lend. Borrower agrees to borrow from
Lender, and Lender agrees to lend to Borrower, in accordance with the terms of
each Note.

 

2.2           Loan Commitment Fee. Borrower shall pay to Lender on or before the
Effective Date, a commitment fee equal to Five Thousand Three Hundred Forty-Four
and 80/100 Dollars ($5,344.80).

 

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2.3           Prepayment. The Loan shall be prepayable at anytime in accordance
with the terms and conditions of each Note.  

 

3.           Conditions to Closing.

 

3.1         Conditions to Closing. As a condition precedent to the Closing,
Borrower shall furnish to Lender the following, all of which must be strictly
satisfactory to Lender and Lender’s counsel in form, content and execution:

 

(a)          Loan Documents. Fully executed original copies of each of the Loan
Documents.

 

(b)          Insurance Policies. Certificates of insurance for all insurance
policies required pursuant to Section 6.14 hereof, or at Lender’s request copies
of the insurance policies.

 

(c)          Searches. A report from a national search company acceptable to
Lender indicating that, other than Permitted Liens, no material judgments, tax
or other liens, security interests, leases of personalty, financing statements
or other encumbrances (other than liens and security interests in favor of
Lender or otherwise approved by Lender in writing) are of record or on file
encumbering any portion of the Collateral, and that there are no material
judgments, tax liens, pending litigation or bankruptcy actions outstanding with
respect to Borrower (or explanations satisfactory to Lender of any judgments or
pending litigation in existence).

 

(d)          Organizational Documents. A certified copy (certified, where
applicable, by the state office in which such documents were filed, and in all
other cases by an appropriate representative of the entity) of:

 

(i)          The organizational documents (for corporations, articles of
incorporation and bylaws; for general partnerships, partnership agreement; for
limited partnerships, partnership agreement and certificate of limited
partnership; for limited liability companies, certificate of formation and
operating agreement) of each entity whose authorization is necessary to
authorize the execution, delivery and performance of the Loan Documents, or
whose authorization is necessary to authorize any other entity whose
authorization is necessary in respect thereto, certified by the appropriate
officer of representative. For purposes hereof, the Borrower and all such other
entities are referred to herein below as the “Constituent Entities”;

 

(ii)         Resolutions by the applicable Constituent Entities authorizing the
execution and delivery of the documents evidencing and securing the Loan,
certified by an appropriate representative of the Constituent Entities;

 

(iii)        An incumbency certificate, including specimen signatures for all
individuals executing any of the Loan Documents, for each Constituent Entity
executing any of the Loan Documents, certified by the secretary or other
appropriate representative of such entity;

 

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(iv)        Certificates of existence for all limited partnerships and
certificates of good standing for all corporations or limited liability
companies that are Constituent Entities from their state of formation,
organization or incorporation, and, if the Borrower was not formed in the State
of Florida, a certificate of status from the State of Florida; and

 

(v)         All other instruments and documents concerning the formation and
existence of the Constituent Entities, and the execution and delivery of the
Loan Documents by the Constituent Entities, as are reasonably required by the
Lender.

 

(e)          Financial Statements. All financial information requested by Lender
with respect to Borrower and Guarantor, including but not limited to financial
statements for the period ending March 31, 2016.

 

(f)          Additional Documents. Such other papers and documents regarding
Borrower or the Collateral as Lender may require.

 

3.2         Termination of Agreement. Borrower agrees that all conditions
precedent to the Closing will be complied with on or prior to the Effective
Date. If all of the conditions precedent to the Closing hereunder shall not have
been performed on or before the Effective Date, Lender, at its option at any
time prior to the Closing, may terminate this Agreement and all of its
obligations hereunder by giving a written notice of termination to Borrower. In
the event of such termination, Borrower shall pay all Loan Expenses which have
accrued or been charged prior to such date.

 

4.           Representations and Warranties. In order to induce the Lender to
enter into this Agreement and to make the Loan provided for herein, Borrower
makes the following representations and warranties, all of which shall survive
the execution and delivery of the Loan Documents:

 

4.1         Formation, Qualification and Compliance.

 

(a)          Title. Borrower has title to the Collateral, subject to no Liens
except for those created by the Security Instrument and Permitted Liens. All
transfer taxes, deed stamps, intangible taxes or other amounts in the nature of
transfer taxes required to be paid by any Person under Applicable Laws in
connection with the transfer of the Collateral to Borrower have been paid.

 

(b)          Good Standing. Borrower is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is authorized to conduct business in the State of Florida. Borrower
has full power and authority to conduct its business as presently conducted, to
acquire the Collateral, to enter into this Agreement, the other Loan Documents
to which it is a party and to perform all of its duties and obligations under
this Agreement, and such other Loan Documents. Such execution and performance
have been duly authorized pursuant to the Borrower’s Certificate of Formation
and/or Operating Agreement.

 

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(c)          Power and Authority. Guarantor has full power and authority to
conduct its business as presently conducted; to enter into any Loan Documents to
which it is a party and to perform all of its duties and obligations under such
Loan Documents.

 

4.2         Execution and Performance of Loan Documents.

 

(a)          Borrower and Guarantor have all requisite authority to execute,
deliver, and perform their obligations under the Loan Documents to which they
are a party.

 

(b)          The execution and delivery by Borrower and Guarantor of, and the
performance by Borrower and Guarantor of their obligations under each Loan
Document to which they are a party, have been authorized by all necessary action
and do not and will not:

 

(i)          require any consent or approval not heretofore obtained of any
Person having any interest in Borrower or Guarantor;

 

(ii)         violate any provision of, or require any consent or approval not
heretofore obtained under, any certificate of formation, certificate of
incorporation, certificate of limited partnership, operating agreement, bylaws,
limited partnership agreement or other governing document applicable to Borrower
or Guarantor;

 

(iii)        result in or require the creation of any lien, claim, charge or
other right of others of any kind (other than under or as provided for in the
Loan Documents) on or with respect to any property now or hereafter owned or
leased by Borrower or Guarantor;

 

(iv)        violate any provision of any Applicable Law presently in effect; or

 

(v)         constitute a breach or default under, or permit the acceleration of
obligations owed under, any contract, loan agreement, lease or other agreement
or document to which Borrower or Guarantor is a party or by which Borrower or
Guarantor or any of their property is bound.

 

(c)          Neither Borrower nor Guarantor is in default, in any respect that
is adverse to Lender’s interests in or under the Loan Documents or that would
result in a Material Adverse Change, under any Applicable Law, contract, lease
or other agreement or document described in subparagraph (ii) or (v) of the
previous subsection.

 

(d)          No approval, license, exemption or other authorization from, or
filing, registration or qualification with, any Governmental Agency is required
in connection with:

 

(i)          the execution by Borrower and Guarantor of, and the performance by
Borrower and Guarantor of their obligations under the Loan Documents; and

 

 11 

 

 

(ii)         the creation of the liens described in the Loan Documents other
than the recording of recordable documents and filing the financing statements.

 

4.3         Financial and Other Information. All financial information furnished
to Lender with respect to Borrower and Guarantor in connection with the Loan
(a) accurately presents the financial condition of Borrower and Guarantor as of
the date or dates indicated (or if no date or dates are indicated, then as of
the date of delivery) and (b) has been prepared in accordance with GAAP or in
accordance with such other principles or methods as are reasonably acceptable to
Lender. All other documents and information furnished to Lender with respect to
Borrower and Guarantor in connection with the Loan are correct in all material
respects as of the date or dates indicated (or if no date or dates are
indicated, then as of the date of delivery) and complete insofar as completeness
is necessary to give Lender an accurate knowledge of their subject matter.
Neither Borrower nor Guarantor has any material liability or contingent
liability not disclosed to Lender in writing and there is no material lien,
claim, charge or other right of others of any kind (including liens or retained
security titles of conditional vendors) on any property of any such Person not
disclosed in such financial statements or otherwise disclosed to Lender in
writing.

 

4.4         Intentionally Deleted.

 

4.5         Enforceability. The Loan Documents, and any other documents and
instruments required to be executed and delivered in connection with the Loan,
to which Borrower or Guarantor is a party have been duly authorized, executed
and delivered by or on behalf of Borrower or Guarantor a party thereto, and when
executed and delivered, will constitute the duly authorized, valid and legally
binding obligations of the party required to execute the same and may be
enforced strictly in accordance with their respective terms (except to the
extent that enforceability may be affected or limited by applicable bankruptcy,
insolvency and other similar debtor relief laws affecting the enforcement of
creditors’ rights generally). No basis presently exists for any claim against
Lender under this Agreement, under the Loan Documents or with respect to the
Loan, and the Loan Documents and enforcement thereof are not subject to, and
neither Borrower nor Guarantor has asserted, any right of rescission, set-off,
counterclaim or defense, including the defense of usury. The Security Instrument
when properly recorded in the appropriate records, together with any UCC
financing statements required to be filed in connection therewith, will create a
valid, perfected first priority lien on the Borrower’s interest in the
Collateral, subject to Permitted Liens. All recording, stamp, intangible or
other similar taxes required to be paid by any Person under Applicable Laws in
connection with the execution, delivery, recordation, filing, registration,
perfection and/or enforcement of any of the Loan Documents have been paid, or
have been paid by Borrower to an escrow agent authorized to make such payment
upon recordation.

 

4.6         Consents. No approval of, or consent from, any Governmental
Authority or any other Person not holding a direct or indirect ownership
interest in Borrower or Guarantor is required in connection with the execution
and delivery by Borrower or Guarantor of this Agreement or any of the other Loan
Documents to which each is a party, or compliance by Borrower with, the Loan
Documents to which each is a party, or the consummation of the transactions
contemplated hereby and thereby, other than those which have been obtained by
Borrower and Guarantor and are in full force and effect. If a third party is
required under any covenants, conditions and restrictions of record or any other
agreement to consent to the use and/or operation of the Collateral, such
approval has been obtained from such party.

 

 12 

 

 

4.7           No Material Adverse Change. Since March 31, 2016, there has been
no Material Adverse Change in the condition, financial or otherwise, or the
properties, assets, liabilities, business or results of operations or prospects
of Borrower since the dates of the latest financial statements furnished to
Lender. Further, there are no existing defaults under any of the Loan Documents,
nor do there exist any circumstances or conditions that with the passage of time
or giving of notice or both would result in a default under any of the Loan
Documents.

 

4.8           Tax Liability. Each of Borrower and Guarantor have filed all
required material federal, state and local tax returns and has paid, prior to
delinquency, all material taxes payable by it (including interest and penalties,
but subject to lawful extensions disclosed to Lender in writing) other than
taxes being contested in good faith and by appropriate proceedings. Each of
Borrower and Guarantor agrees to maintain adequate reserves for tax liabilities
(including contested liabilities) in accordance with GAAP or in accordance with
such other principles or methods as are reasonably acceptable to Lender.

 

4.9           Title to Collateral. At the Closing and at all times thereafter
until the Loan is paid in full, Borrower will have, good and merchantable fee
simple title to the Collateral, except for Permitted Liens. Except for the
current, nondelinquent taxes, there are no taxes, assessments or liens pending
or, to Borrower’s knowledge, threatened against the Collateral for any present
or past due taxes of any kind, except where contested in good faith and by
appropriate proceedings.

 

4.10         Debt. Other than any Debt that is being paid off on the Effective
Date and Permitted Indebtedness, there is no Debt (whether secured or unsecured)
with respect to the Collateral and Borrower has no Debt other than Debt from
Guarantor.

 

4.11         Usury. The Loan, including interest rate, fees and charges as
contemplated hereby, is a business loan. The Loan is an exempted transaction
under the Truth In Lending Act, 12 U.S.C. §1601 et seq.; and the Loan does not,
and when disbursed will not, violate the provisions of the usury laws of the
State of Florida, or any consumer credit laws or usury laws of any state which
may have jurisdiction over this transaction, Borrower or the Collateral. The
Loan is not a consumer loan.

 

4.12         No Bankruptcy Filing. As of the Effective Date, Borrower is not
contemplating either the filing of a petition by it under any state or federal
bankruptcy or insolvency law or the liquidation of all or a major portion of its
property, and Borrower has no knowledge of any Person contemplating the filing
of any such petition against it. In addition, neither Borrower nor Guarantor,
nor any parent, principal or Affiliate of Borrower or Guarantor, nor any of
their respective Constituent Entities, has been a party to, or the subject of,
any a Bankruptcy Proceeding, and neither Borrower nor Guarantor nor any parent,
principal or Affiliate of Borrower or Guarantor, nor any of their respective
Constituent Entities, has ever made an assignment for the benefit of creditors
or taken advantage of any state or federal bankruptcy or insolvency law for the
benefit of debtors.

 

 13 

 

 

4.13         Fraudulent Transfer; Solvency. Neither Borrower nor Guarantor has
entered into the Loan or any Loan Document with the actual intent to hinder,
delay, or defraud any creditor, and Borrower and Guarantor has received
reasonably equivalent value in exchange for its obligations under the Loan
Documents. Giving effect to the Loan and the transactions contemplated by the
Loan Documents, the fair saleable value of Borrower’s assets exceeds and will,
immediately following the making of the Loan, exceed Borrower’s total probable
liabilities, including subordinated, unliquidated, disputed and/or contingent
liabilities, including the maximum amount of its contingent liabilities or its
Debts as such Debts become absolute and matured. Borrower’s assets do not and,
immediately following the making of the Loan will not, constitute unreasonably
small capital to carry out its business as conducted or as proposed to be
conducted. Borrower does not intend to, and does not believe that it will, incur
Debt and liabilities (including contingent liabilities and other commitments)
beyond its ability to pay such Debt and liabilities as they mature (taking into
account the timing and amounts of cash to be received by Borrower and the
amounts to be payable on or in respect of obligations of Borrower).

 

4.14         Rights of Others. Borrower is in compliance with all covenants,
conditions, restrictions, easements, rights of way and other rights of third
parties relating to the Collateral.

 

4.15         Litigation. There are no actions, investigations or proceedings
pending or overtly threatened against or affecting the Collateral, Borrower,
Guarantor or any property of any of them before any Governmental Agency, except
(a) which individually or in the aggregate could not be expected to result in a
Material Adverse Change or (b) as disclosed in Guarantor’s filings with the U.S.
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, as set forth in the attached Schedule 4.15.

 

4.16         Name and Principal Place of Business. As of the date hereof,
Borrower presently uses no trade name other than its actual name, except for the
names set forth on Schedule 4.16. Borrower’s principal place of business is as
set forth in the UCC-1 financing statement to be filed with the Delaware Secured
Transaction Registry.

 

4.17         Intentionally Deleted.

 

4.18         ERISA. Borrower is not and will not become an “employee benefit
plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA.
The assets of Borrower do not and will not constitute “plan assets” of one or
more such plans within the meaning of 29 C.F.R. Sec. 2510.3-101. Borrower is not
and will not become a “governmental plan” within the meaning of Section 3(32) of
ERISA. Transactions by or with Borrower are not and will not be subject to any
state or other statute, regulation or other restriction regulating investments
of, or fiduciary obligations with respect to, governmental plans within the
meaning of Section 3(32) of ERISA which is similar to the provisions of Section
406 of ERISA or Section 4975 of the Code and which prohibit or otherwise
restrict the transactions contemplated by this Agreement, including but not
limited to the exercise by Lender of any of its rights under the Loan Documents.
Neither Borrower, nor any ERISA Affiliate of Borrower maintains, sponsors or
contributes to a “defined benefit plan” (within the meaning of Section 3(35) of
ERISA) or a “multiemployer pension plan” (within the meaning of Section 3(37)(A)
of ERISA).

 

 14 

 

 

4.19       Investment Company Act. Borrower is not (a) an “investment company”
or a company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended; or (b) subject to any other federal
or state law or regulation which purports to restrict or regulate its ability to
borrow money.

 

4.20       Foreign Person. Borrower is not a “foreign person” within the meaning
of Section 1445(f)(3) of the Code.

 

4.21       No Prohibited Persons.

 

(a)          Neither Borrower nor Guarantor, nor any Person Controlling or
Controlled by Borrower, nor any Person having a direct or indirect beneficial
interest in Borrower, nor any Person for whom Borrower is acting as agent or
nominee in connection with this transaction (“Transaction Persons”) (i) is a
Person whose property or interest in property is blocked or subject to blocking
pursuant to any applicable Anti-Terrorism Law, (ii) engages in any dealings or
transactions prohibited by any applicable Anti-Terrorism Law, or is otherwise
associated with any such Person in any manner violative of any Anti-Terrorism
Law, or (iii) is a Person on the list of Specially Designated Nationals and
Blocked Persons or is in violation of the limitations or prohibitions under any
Anti-Terrorism Law.

 

(b)          No part of the proceeds of the Loan will be used, directly or
indirectly, for any payments to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of any Anti-Terrorism
Law and/or the United States Foreign Corrupt Practices Act of 1977, as amended.

 

(c)          Borrower acknowledges by executing this Agreement that Lender has
notified Borrower and Guarantor that, pursuant to the requirements of the Act,
Lender is required to obtain, verify and record such information as may be
necessary to identify Borrower and Guarantor (including the name and address of
Borrower and Guarantor and such Affiliates) in accordance with the Act.

 

(d)          Neither Borrower nor Guarantor has been convicted of a felony and
there are no proceedings or investigations being conducted involving criminal
activities of either Borrower or Guarantor.

 

4.22       Continuing Nature of Representations and Warranties. Borrower
acknowledges, understands, and agrees that the representations and warranties
set forth in this Section 4 as of the Effective Date or other specified date
shall be deemed to be continuing in the form and as of the date made during all
times when any or all of the Indebtedness remains outstanding and such
representations and warranties shall be restated and made effective as of each
date a disbursement is requested and made in accordance herewith.

 

 15 

 

 

5.           Maintenance, Operation, Preservation and Repair of Collateral.
Borrower shall maintain the Collateral in good condition and repair, shall
operate the Collateral in a businesslike manner, shall prudently preserve and
protect both its own and Lender’s interests in connection with the Collateral,
shall not commit or permit any waste or deterioration of the Collateral, shall
not abandon any portion of the Collateral, and shall not otherwise act, or fail
to act, in such a way as to unreasonably increase the risk of any damage to the
Collateral or of any other impairment of Lender’s interests under the Loan
Documents, , except with respect to any of the foregoing, in the ordinary course
of its business. Without limiting the generality of the foregoing, and except as
otherwise agreed by Lender in writing from time to time, Borrower shall promptly
and faithfully perform and observe each of the following provisions:

 

5.1           Alterations and Repair. Borrower shall not remove, demolish or
materially alter any Collateral, except to make non-structural repairs which
preserve or increase the Collateral’s value, and shall promptly restore, in a
good and workmanlike manner, any Collateral (or other aspect or portion of the
Collateral) that is damaged or destroyed from any cause.

 

5.2           Compliance. Borrower shall comply in all material respects with
all laws and requirements of Governmental Agencies (including, without
limitation, all requirements relating to the obtaining of business or operating
licenses and permits), and all rights of third parties, relating to Borrower.

 

5.3           Books and Records. Borrower shall maintain complete books of
account and other records reflecting the use of the Collateral in accordance
with GAAP or in accordance with such other principles or methods as are
reasonably acceptable to Lender.

 

5.4           Right of Inspection; Due Diligence. Lender, its agents,
representatives, consultants and employees, may conduct periodic due diligence
to assess the condition of the Collateral and Borrower.

 

6.           Other Affirmative Covenants. While any obligation of Borrower or
Guarantor under the Loan Documents remains outstanding, the following provisions
shall apply, except to the extent that Lender otherwise consents in writing:

 

6.1           Existence. Borrower shall maintain its existence as a limited
liability company in good standing under the Applicable Laws of the State of
Delaware and authorized to do business in the State of Florida.

 

6.2           Protection of Liens. Borrower shall maintain the lien of the
Security Instrument as a valid first priority lien on the Collateral (subject to
Permitted Liens), and take all actions, and execute and deliver to Lender all
documents, reasonably required by Lender from time to time in connection
therewith; and maintain the lien of the Loan Documents on the collateral
described therein and take all actions, and execute and deliver to Lender all
documents reasonably required by Lender from time to time in connection
therewith, including supplemental security agreements, financing statements and
other documents extending or perfecting Lender’s security interests in such
collateral as they exist from time to time.

 

6.3           Intentionally Deleted.

 

 16 

 

 

6.4         Notice of Certain Matters. Borrower shall give notice to Lender,
within fifteen (15) days after Borrower obtains actual knowledge thereof, of
each of the following:

 

(a)          any litigation or claim affecting or relating to the Collateral and
involving an amount in excess of $100,000.00; and any litigation or claim that
might subject Borrower to liability in excess of $250,000.00, whether covered by
insurance or not;

 

(b)          any dispute between Borrower and any Governmental Agency relating
to the Collateral, the adverse determination of which might materially affect
the Collateral;

 

(c)          any trade name hereafter used by Borrower and any change in
Borrower’s principal place of business;

 

(d)          any Default or Event of Default;

 

(e)          the creation or imposition of any Lien against the Collateral,
other than a Permitted Lien;

 

(f)          any default under any Loan Document; and/or

 

(g)          any Material Adverse Change in the condition of Borrower.

 

6.5         Additional Reports and Information. Borrower shall deliver to
Lender, in form and substance reasonably satisfactory to Lender and within
fifteen (15) days of Lender’s written request therefore, all other information
relating to Borrower, the Collateral, Guarantor or the Loan (or the collateral
and security therefor) reasonably required by Lender from time to time.

 

6.6         Further Assurances. Borrower shall execute and acknowledge (or cause
to be executed and acknowledged) and deliver to Lender all documents, and take
all actions, reasonably required by Lender from time to time to confirm the
rights created or now or hereafter intended to be created under the Loan
Documents, to protect and further the validity, priority and enforceability of
the Loan Documents, to subject to the Loan Documents any property intended by
the terms of any Loan Document to be covered by the Loan Documents, or otherwise
to carry out the purposes of the Loan Documents and the transactions
contemplated thereunder.

 

6.7         Financial Reporting Requirements. During the term of the Loan:

 

(a)          Annual Financial Statements. Borrower shall cause Guarantor to
deliver to Lender, within one hundred twenty (120) days after the end of each
Fiscal Year: (i) an audited financial statement for Guarantor and its
consolidated subsidiaries as of the end of such Fiscal Year, together with all
supporting schedules, and (ii) the opinion of an independent certified public
accountant stating that such materials: (A) were prepared in accordance with
GAAP or in accordance with such other principles or methods as are reasonably
acceptable to Lender, (B) fairly present Guarantor’s financial condition, and
(C)  fairly present the results of Guarantor’s operations in accordance with
GAAP.

 

 17 

 

 

(b)          Quarterly Financial Statements. Borrower shall deliver to Lender,
within forty-five (45) days after the end of each fiscal quarter (commencing
with respect to the quarter ending on June 30, 2016 and each fiscal quarter
thereafter), an internally prepared financial statement for Borrower as of the
end of such fiscal quarter, prepared in accordance with GAAP or in accordance
with such other principles or methods as are reasonably acceptable to Lender and
in reasonable detail to include operating statement, balance sheet, statement of
cash flows, certified to Lender by an authorized officer of Borrower and
acceptable to Lender in its sole but reasonable discretion.

 

(c)          Covenant Compliance Reporting. Borrower shall deliver to Lender,
within one hundred twenty (120) days after the end of each Fiscal Year
(commencing with respect to the Fiscal Year ending on December 31, 2016 and for
each Fiscal Year thereafter), a certificate signed by a duly authorized officer
of Borrower or JetPay to the effect that as of year end, the Borrower, the
Guarantor and the Collateral were in compliance with the respective requirements
applicable thereto set forth in the Loan Documents (except as set forth therein)
and containing a calculation of the Fixed Charge Coverage Ratio (including all
supporting information). Such certificate shall also contain a statement to the
effect that for the immediately preceding Fiscal Year no Default or Event of
Default shall have occurred under any of the Loan Documents (except as set forth
therein) and that as of the end of the immediately preceding Fiscal Year and as
of the date of such certificate, no conditions, circumstances, or occurrences
exist that would result in, or would, with the passage of time or giving of
notice (or both), reasonably be expected to result in, a Default or Event of
Default under any of the Loan Documents. A sample compliance certificate
acceptable to Borrower is attached hereto as Schedule 6.7(c).

 

(d)          Books. Borrower shall maintain proper books of accounts and records
and enter therein complete and accurate entries and records of all of its
transactions in accordance with generally accepted accounting principles and
give representatives of Lender access thereto at all reasonable times, including
permission to: (i) examine, copy and make abstracts from any books and records
and such other information which might be helpful to Lender in evaluation the
status of the Indebtedness as it may reasonably request from time to time, and
(ii) communicate directly with any of the Borrower’s officers, employers,
agents, accountants or other financial advisors with respect to the business,
financial conditions and other affairs of the Borrower.

 

6.8         Fixed Charge Coverage Ratio. Borrower shall maintain a minimum Fixed
Charge Coverage Ratio of 1.20 to 1.00, calculated as of the last day of each
Fiscal Year end for: (i) for the Fixed Charge Coverage Ratio calculated as of
December 31, 2016, the prior seven (7) month period then ending; and (ii) for
the Fixed Charge Coverage Ratio calculated as of December 31, 2017 and each
December 31st thereafter for so long as the Loan Documents remain in effect, the
prior twelve (12) month period then ending.

 

 18 

 

 

6.9         Keeping Guarantor Informed. Borrower must keep Guarantor informed of
Borrower’s financial condition and business operations, the condition and all
uses of the Collateral, including all changes in condition or use, and any and
all other circumstances that might affect Borrower’s ability to pay or perform
its obligations under the Loan Documents.

 

6.10       Single Purpose Entity. Borrower covenants and agrees that it has not
and shall not:

 

(a)          merge into or consolidate with any person or entity or dissolve,
terminate or liquidate in whole or in part, transfer or otherwise dispose of all
or substantially all of its assets or change its legal structure, except as
contemplated by the Merger Agreement;

 

(b)           (i) fail to preserve its existence as an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation, (ii) dissolve or otherwise terminate, or fail to comply with the
provisions of Borrower’s organizational documents, or (iii) amend or modify
Borrower’s Certificate of Formation or Operating Agreement in a manner adverse
to the Lender;

 

(c)          fail to hold its assets in its own name, or commingle its assets
with the assets of any of its partners, affiliates, or of any other person or
entity or transfer any assets to any such person or entity other than
distributions on account of equity interests in the Borrower, to the extent, if
any, permitted hereunder, and properly account for, and any other payments
expressly permitted hereunder;

 

(d)          other than Permitted Indebtedness, incur any Debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than the Loan, except Debt from Guarantor;

 

(e)          fail to maintain its records, books of account and bank accounts
separate and apart from those of the shareholders and any Affiliates of Borrower
or its shareholders, or fail to prepare and maintain its own financial
statements in accordance with GAAP and susceptible to audit;

 

(f)          seek dissolution or winding up, in whole or in part;

 

(g)          guaranty or become obligated for the Debts of any other entity or
person, or hold itself out to be responsible or pledge its assets or credit
worthiness for the Debts of another person or entity, or allow any person or
entity to hold itself out to be responsible or pledge its assets or credit
worthiness for the Debts of the Borrower (except for Guarantor);

 

(h)          fail to use separate contracts, purchase orders, stationery,
invoices and checks;

 

(i)          fail to allocate fairly and reasonably among Borrower and any third
party (excluding JetPay) any overhead for common employees, shared office space
or other overhead and administrative expenses;

 

 19 

 

 

(j)          allow any person or entity (other than JetPay) to pay the salaries
of Borrower’s employees or fail to maintain a sufficient number of employees for
Borrower’s contemplated business operations;

 

(k)          fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations; or

 

(l)          conceal assets from any creditor, or enter into any transaction
with the intent to hinder, delay or defraud creditors of the Borrower or the
creditors of any other Person.

 

Notwithstanding anything to the contrary contained in this Section 6.10, any
action or inaction of Borrower to consummate the transactions contemplated
pursuant to the Merger Agreement, including, but not limited to, the change of
Borrower’s legal name to “CollectorSolutions, LLC”, shall be deemed approved by
Lender and not a violation of the covenants of this Section 6.10.

 

6.11       Additional Banking Laws. The Borrower shall (a) ensure, and cause
each Affiliate to ensure, that no Person who owns a controlling interest in or
otherwise controls the Borrower or any Affiliate is or shall be listed on the
“Specially Designated Nationals and Blocked Person List” or other similar lists
maintained by OFAC, the Department of the Treasury, or included in any Executive
Orders, (b) not use or permit the use of the proceeds of the Loan to violate any
of the foreign asset control regulations of OFAC or any enabling statute or
Executive Order relating thereto, and (c) comply, and cause each Affiliate to
comply, with all applicable bank secrecy act laws and regulations, as amended.

 

6.12       Tax Shelter Disclosure. None of Borrower, Guarantor, or any Affiliate
or subsidiary of any of the foregoing intends to treat the Loan or the
transactions contemplated by this Agreement and the other Loan Documents as
being a "reportable transaction" (within the meaning of Treasury Regulation
Section 1.6011-4). If Borrower, or any other party determines to take any action
inconsistent with such intention, Borrower shall promptly notify Lender thereof
in writing. If Borrower so notifies Lender, Borrower acknowledges that Lender
may treat the Loan as part of a transaction that is subject to Treasury
Regulation Section 301.6112-1, and Lender will maintain the lists and other
records, including the identity of the applicable party to the Loan as required
by such Regulation.

 

6.13       Taxes.

 

(a)          Borrower’s Obligation for Payment of Taxes. Borrower shall pay or
cause to be paid all Taxes when due and payable, except where contested in good
faith and by appropriate proceedings. Borrower’s obligations under this Section
6.13 shall not be affected by any damage to, defects in or destruction of the
Collateral or any other event, including obsolescence of all or any part of the
Collateral.

 

 20 

 

 

(b)          Contest of Taxes. Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and
with due diligence, the amount or validity or application in whole or in part of
any Taxes, provided that (i) such proceeding shall suspend the collection of the
applicable Taxes from Borrower and from the Collateral or Borrower shall have
paid all of the applicable Taxes under protest, (ii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any other
instrument to which Borrower is subject and shall not constitute a default
thereunder, and (iii) neither the Collateral nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, cancelled or
lost so long as the contest is being pursued.

 

(c)          Effect of Change in Law. If at any time any law is enacted which
deducts from the value of real property, for taxation purposes, any lien
thereon, or changes in any way the laws now in force for the taxation of Debts
secured thereby, or the manner of collection of any such taxes so as to affect
any interest of Lender hereunder then Borrower shall pay such tax if it may
lawfully do so. If Borrower is not permitted by Applicable Law to pay such tax,
or if Borrower is not permitted by Applicable Law to immediately reimburse
Lender for any such payment, then the Indebtedness, at the option of Lender,
upon not less than the lesser of (i) ninety (90) days written notice, or (ii)
such shorter period as may be required to ensure compliance by Lender with
Applicable Law, shall become due and payable.

 

6.14       Insurance Coverage. For so long as the Security Instrument is in
effect, Borrower shall continuously maintain insurance in accordance with the
following provisions:

 

(a)          At its own cost, Borrower shall obtain and maintain at all times
during the term of the Loan hazard (property) insurance on the Collateral (each
a “Policy” or “Policies”) and Lender shall be identified in each Policy as a
“Lender Loss Payable” or “Loss Payee” specifically described as follows: “Fifth
Third Bank, its successors and/or assigns as their respective interests may
appear”. Borrower shall provide Lender with evidence of all such insurance
required hereunder.

 

(b)          The Policies to be obtained and maintained by Borrower under the
provisions of this Agreement shall be issued by responsible insurance carriers
with a Best’s rating of no less than A/VII, licensed to do business in the State
of Florida, who are acceptable to Lender and shall be in such form and with such
endorsements, waivers and deductibles as Lender shall designate or approve.
Without limitation on the foregoing:

 

(i)          All Policies shall name Borrower as the insured, and shall name
Lender as a loss payee, in form reasonably satisfactory to Lender, attached to
such Policy or Policies whenever applicable, and providing, among other matters,
that all Insurance Proceeds (as hereinafter defined) shall be paid to Lender).

 

 21 

 

 

(ii)         All Policies shall contain: (1) the agreement of the insurer to
give Lender at least thirty (30) days’ written notice prior to cancellation or
expiration of or change in such Policies, or any of them; (2) a waiver of
subrogation rights against Lender and, if available Borrower; (3) an agreement
that such Policies are primary and non-contributing with any insurance that may
be carried by Lender; (4) a statement that the insurance shall not be
invalidated should any insured waive in writing prior to a loss any or all right
of recovery against any party for loss accruing to the property described in the
Policy; and (5) if obtainable, a provision that no act or omission of Borrower
shall affect or limit the obligation of the insurance carrier to pay the amount
of any loss sustained. As of the date hereof, and subject to any changes in such
requirements which Lender may, in its discretion, make from time to time
pursuant to its rights under this Section 6.14, each Policy of property
insurance hereunder shall contain a lender’s loss payable endorsement, lender
clause, or other non-contributory clause of similar form and substance
acceptable to Lender in favor of Lender.

 

(c)          Concurrently herewith, Borrower shall deliver to Lender original
Policies or certificates evidencing the insurance required hereunder. Borrower
shall procure and pay for renewals of such insurance (or shall cause the
procurement and payment) from time to time before the expiration thereof, and
Borrower shall deliver to Lender such original renewal Policies or certificates
at least thirty (30) days before the expiration of any existing Policy.

 

(d)          Borrower, for itself, and on behalf of its insurers, hereby
releases and waives any right to recover against Lender on any liability for:
damages for injury to or death of persons; any loss or damage to property; any
other direct or indirect loss or damage caused by fire or other risks, which
loss or damage is or would be covered by the insurance required to be carried
hereunder by Borrower, or is otherwise insured; or claims arising by reason of
any of the foregoing, except to the extent caused solely by the gross negligence
or willful misconduct of Lender.

 

(e)          Lender shall not, by reason of accepting, rejecting, obtaining or
failing to obtain insurance, incur any liability for (i) the existence,
non-existence, form, amount or legal sufficiency thereof, (ii) the solvency or
insolvency of any insurer, or (iii) the payment of losses. All insurance
required hereunder or carried by Borrower shall be procured at Borrower’s sole
cost and expense. Borrower shall deliver to Lender receipts satisfactory to
Lender evidencing full prepayment of the Premiums therefor. In the event of
foreclosure on, or other transfer of title in lieu of foreclosure of, the
Collateral, all of Borrower’s interest in and to any and all Policies in force
shall pass to Lender, or the transferee or purchaser as the case may be, and
Lender is hereby irrevocably authorized to assign in Borrower’s name to such
purchaser or transferee all such Policies, which may be amended or rewritten to
show the interest of such purchaser or transferee.

 

(f)          Approval by the Lender of any Policies shall not be deemed a
representation by the Lender as to the adequacy of coverage of such Policies or
the solvency of the insurer.

 

6.15       Casualty Loss; Proceeds of Insurance.

 

(a)          The Borrower will give the Lender prompt written notice of any
material loss or damage to the Collateral, or any part thereof, by fire or other
casualty.

 

 22 

 

 

(b)          In case of loss or damage covered by any one of the Policies in
excess of $500,000.00 (the “Insurance Threshold”), the Lender is hereby
authorized to settle and adjust any claim under such Policies (and after the
entry of a decree of foreclosure, or a sale or transfer pursuant thereto or in
lieu thereof, the decree creditor or such purchaser or transferee, as the case
may be, are hereby authorized to settle and adjust any claim under such
Policies) upon consultation with, but without requiring the consent of, the
Borrower; and the Lender shall, and is hereby authorized to, collect and receipt
for any and all proceeds payable under such Policies in connection with any such
loss (collectively, the “Insurance Proceeds”). Borrower hereby irrevocably
appoints Lender as its attorney-in-fact for the purposes set forth in the
preceding sentence effective if an Event of Default has occurred and is
continuing. Each insurance company is hereby authorized and directed to make
payment (i) of 100% of all such losses (if such loss exceeds the Insurance
Threshold) directly to Lender alone, and (ii) of 100% of all such losses (if
such loss is less than or equal to the Insurance Threshold) directly to Borrower
alone, and in no case to Borrower and Lender jointly. All reasonable costs and
expenses incurred by the Lender in the adjustment and collection of any such
Insurance Proceeds (including without limitation reasonable attorneys’ fees and
expenses) shall be so much additional Indebtedness, and shall be reimbursed to
the Lender upon demand or may be paid and deducted by the Lender from such
Insurance Proceeds prior to any other application thereof. Lender shall not be
responsible for any failure to collect any Insurance Proceeds due under the
terms of any policy regardless of the cause of such failure, other than the
gross negligence or willful misconduct of Lender.

 

(c)          Net Insurance Proceeds received by the Lender under the provisions
of this Agreement or any instrument supplemental hereto or thereto shall be
applied by the Lender at its option as and for a prepayment on each Note,
without a prepayment fee (whether or not the same is then due or otherwise
adequately secured), or shall be disbursed for repair or replacement of such
Collateral (“Restoration”), in which event the Lender shall not be obligated to
supervise Restoration work nor shall the amount so released or used be deemed a
payment of the indebtedness evidenced by both Notes. If Lender elects to permit
the use of Insurance Proceeds to restore such Collateral it may do all necessary
acts to accomplish that purpose, including advancing additional funds and all
such additional funds shall constitute part of the Debt. If Lender elects to
make the Insurance Proceeds available to Borrower for the purpose of effecting
the Restoration, or, following an Event of Default, elects to restore such
Collateral, any excess of Insurance Proceeds above the amount necessary to
complete the Restoration shall be applied as and for a prepayment on the Notes,
without a prepayment fee or premium. No interest shall be payable to Borrower
upon Insurance Proceeds held by Lender.

 

(d)          So long as any Indebtedness shall be outstanding and unpaid, and
whether or not Insurance Proceeds are available or sufficient therefor, the
Borrower shall promptly commence and complete, or cause to be commenced and
completed, with all reasonable diligence, the Restoration of the Collateral as
nearly as possible to the same value, condition and character which existed
immediately prior to such loss or damage in accordance with the Restoration
plans and in compliance with all legal requirements. Any Restoration shall be
effected in accordance with procedures to be first submitted to and approved by
the Lender in accordance with Section 6.17 hereof. The Borrower shall pay all
costs of such Restoration to the extent Insurance Proceeds are not made
available or are insufficient.

 

 23 

 

 

6.16       Depository Relationship. Borrower shall establish its primary
operating and depository accounts with Lender on or before the Effective Date.

 

6.17       Disbursement of Insurance Proceeds and Awards.

 

(a)          All Insurance Proceeds and/or Awards received by the Lender as
provided in Section 6 hereof shall, after payment or reimbursement therefrom of
all reasonable costs and expenses (including without limitation reasonable
attorneys’ fees and expenses) incurred by the Lender in the adjustment and
collection thereof (collectively, the “Net Proceeds”), shall be deposited with
the Lender, or such other depositary as may be designated by the Lender, and
applied as provided in this Section 6.

 

(b)          Subject to Section 6.17(c) hereinbelow, the Lender may elect to
apply the Net Proceeds to prepayment of the Indebtedness, whether then due or
not. If the Debt is not prepaid in full, then the Net Proceeds shall be applied
to the installments of principal and interest in the inverse order of maturity.

 

(c)          All Net Proceeds which are not applied to the payment of the Debt
shall be applied to fund the payment of the costs, fees and expenses incurred
for the Restoration of the Collateral as required in this Agreement.

 

(d)          Any surplus which may remain out of such Net Proceeds after payment
of all costs, fees and expenses of such Restoration shall be applied to
prepayment of the Debt, without the payment of a prepayment fee or prepayment
premium.

 

7.           Other Negative Covenants. While any obligation of Borrower or
Guarantor under the Loan Documents remains outstanding, the following provisions
shall apply, except to the extent that Lender otherwise consents in writing:

 

7.1         Liens on Collateral. Except as otherwise provided in this Agreement,
Borrower shall not cause or suffer to become effective any lien, restriction or
other title limitation affecting any part of the Collateral other than Permitted
Liens.

 

7.2         Installation of Collateral. Borrower shall not install in, or use in
connection with, the Collateral, any personal property which any Person other
than Lender has the right to remove or repossess under any circumstances, or on
which any Person other than Lender has a lien.

 

7.3         Removal of Collateral. Borrower shall not cause or permit the
removal from the Premises (as defined in the Security Instrument) any items of
Collateral, other than sales in the ordinary course of Borrower's business,
unless: (a)  no Event of Default has occurred, and (b) Borrower promptly
substitutes other items of equal or greater value, all of which items shall be
free of liens (other than liens in favor of Lender or such other Person as
Lender shall permit in writing) and shall be subject to the lien of the Security
Instrument, and executes and delivers to Lender all documents required by Lender
in connection with the attachment of such liens to such items. Borrower shall
keep records of each such removal and shall make such records available to
Lender upon written request from time to time.

 

 24 

 

 

7.4         Intentionally Deleted.

 

7.5         Limitations on Additional Indebtedness; Other Prohibited
Transactions.

 

(a)          Except as expressly permitted herein, Borrower shall not, without
the prior written consent of Lender granted in its sole discretion, incur any
indebtedness of any kind other than (i) indebtedness to Guarantor; and (ii)
Permitted Indebtedness.

 

(b)          Borrower shall not, without the prior written consent of Lender,
engage directly or indirectly in any off balance sheet, hedge or derivative
transactions, including without limitation, interest rate swaps and interest
rate caps except with Lender and its affiliates and subsidiaries

 

8.           Defaults and Remedies.

 

8.1         Events of Default. The occurrence of any one or more of the
following shall constitute an “Event of Default” as said term is used herein,
and any Event of Default which may occur hereunder shall constitute an Event of
Default under each of the other Loan Documents:

 

(a)          Borrower fails to pay (i) any installment of principal or interest
payable pursuant to the terms of either Note when due, or (ii) any other amount
payable to Lender under either Note, this Agreement, the Security Instrument or
any of the other Loan Documents within five (5) days after the date when any
such payment is due in accordance with the terms hereof or thereof; or

 

(b)          Borrower fails to perform or cause to be performed any other
obligation or observe any other condition, covenant, term, agreement or
provision required to be performed or observed by Borrower under either Note,
this Agreement, the Security Instrument or any of the other Loan Documents and
not specifically described in this Section 8.1 or in the default section of any
other Loan Document; provided, however, that if such failure by its nature can
be cured, then so long as the continued operation, safety and value of the
Collateral, and the priority, validity and enforceability of the liens created
by the Security Instrument or any of the other Loan Documents, are not impaired,
threatened or jeopardized, then Borrower shall have a period (the “Cure Period”)
of thirty (30) days after Borrower obtains actual knowledge of such failure or
receives written notice of such failure to cure the same and an Event of Default
shall not be deemed to exist during the Cure Period; provided further that if
such failure by its nature can be cured but cannot be cured by the payment of
money and Borrower commences to cure such failure during the Cure Period and is
diligently and in good faith attempting to effect such cure, the Cure Period
shall be extended for thirty (30) additional days, but in no event shall the
Cure Period be longer than sixty (60) days in the aggregate; or

 

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(c)          The existence of any inaccuracy or untruth in any material respect
in any certification, representation or warranty contained in this Agreement or
any of the other Loan Documents or of any statement or certification as to facts
delivered to the Lender by the Borrower or Guarantor when made; provided,
however, that in the case of an inaccuracy or untruth with respect to facts
relating to Guarantor and not the Borrower, no Event of Default shall be deemed
to have occurred unless such facts are reasonably likely to result in a Material
Adverse Change on the Borrower; or

 

(d)          Borrower is dissolved, liquidated or terminated, or all or
substantially all of the assets of Borrower are sold or otherwise transferred
without Lender’s prior written consent; or

 

(e)          Borrower is the subject of an order for relief by a bankruptcy
court, or is unable or admits its inability (whether through repudiation or
otherwise) to pay its Debts as they mature, or makes an assignment for the
benefit of creditors; or Borrower applies for or consents to the appointment of
any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or any part of its property; or any receiver, trustee,
custodian, conservator, liquidator, rehabilitator or similar officer is
appointed without the application or consent of Borrower, and the appointment
continues undischarged or unstayed for sixty (60) days; or Borrower institutes
or consents to any bankruptcy, insolvency, reorganization, arrangement,
readjustment of Debt, dissolution, custodianship, conservatorship, liquidation
or similar proceeding relating to it or any part of its property; or any similar
proceeding is instituted without the consent of Borrower, and continues
undismissed or unstayed for sixty (60) days; or any judgment, writ, warrant of
attachment or execution, or similar process is issued or levied against any
property of Borrower and is not released, vacated or fully bonded within thirty
(30) days after its issue or levy; or

 

(f)          Any Guaranty is repudiated, revoked or terminated in whole or in
part without Lender’s prior written consent; or Guarantor claims that his, her
or its Guaranty is ineffective or unenforceable, in whole or in part and for any
reason, with respect to amounts then outstanding or amounts that might in the
future be outstanding; or

 

(g)          The occurrence of any other Prohibited Transfer (as defined in the
Security Instrument); or

 

(h)          any material provision of this Agreement or the Loan Documents
shall at any time for any reason cease to be valid and binding on the Borrower,
or shall be declared to be null and void, or the validity or enforceability
thereof shall be successfully contested by any Governmental Agency, or Borrower
shall deny that it has any or further liability or obligation under this
Agreement or the Loan Documents; or

 

(i)          any default by the Borrower in any payment of principal or interest
due and owing upon any other material obligations of the Borrower for borrowed
money beyond any period of grace provided with respect thereto or in the
performance of any other agreement, term or condition contained in any agreement
under which such obligation is created, if the effect of such default is to
accelerate the maturity of such indebtedness or to permit the holder thereof to
cause such indebtedness to become due prior to its stated maturity; or

 

 26 

 

 

(j)          Guarantor fails to perform any obligation (following any applicable
notice and cure period) under the Guaranty; provided, however, that no Event of
Default shall be deemed to have occurred unless such failure to perform is
reasonably likely to result in a Material Adverse Change on the Borrower; or

 

(k)          All or any material portion of the Collateral is condemned, seized
or appropriated by a Governmental Agency; or

 

(l)          The Collateral is materially damaged or destroyed by fire or other
casualty unless Borrower establishes within sixty (60) days after such casualty
its qualification under the Security Instrument to use any available insurance
proceeds to restore the Collateral and thereafter diligently restores the
Collateral in accordance with this Agreement and the Security Instrument; or

 

(m)          The existence of any fraud, dishonesty or bad faith by or with the
acquiescence of Borrower or Guarantor which in any way relates to or affects the
Loan or the Collateral; or

 

(n)          The occurrence of any event specifically identified as an Event of
Default in any other Loan Document; or

 

(o)          The occurrence of a Material Adverse Change in the financial
condition of Borrower; or

 

(p)          Either Borrower or Guarantor shall have a judgment entered against
it in excess of $250,000.00 in any civil, administrative or other proceeding,
which judgment is not fully covered by insurance, and such judgment remains
unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period of
thirty (30) days from the date of its entry; or

 

(q)          The occurrence of a default under any Rate Management Agreement; or

 

(r)          Borrower defaults in any loan obligation to Lender other than in
connection with the Loan, subject to any applicable cure period(s); or

 

(s)          The failure to deliver any of the financial statements or
compliance certificates pursuant to Section 6.7 of this Agreement and such
default continues unremedied for ten (10) Business Days;

 

(t)          Borrower fails to maintain the required Fixed Charge Coverage Ratio
pursuant to Section 6.8.

 

 27 

 

 

8.2         Remedies Upon Default. Upon the occurrence of any Event of Default,
Lender shall take such action or actions as Lender may direct, at Lender’s
option and in its absolute discretion, including, but not limited to, any or all
of the following actions:

 

(a)          Terminate any obligation or responsibility on the part of Lender to
make further advances of Loan Proceeds or of any other amounts held by Lender
and constituting security for the Indebtedness pursuant to this Agreement or any
other Loan Document;

 

(b)          Declare the outstanding principal balance of the Loan, together
with all accrued interest thereon and other amounts owing in connection
therewith, to be immediately due and payable in full, regardless of any other
specified due date, and in the event of the occurrence of an Event of Default
under Section 8.1(e) such principal and interest shall become immediately due
automatically;

 

(c)          In its own right or by a court-appointed receiver, take possession
of the Collateral, enter into contracts for and otherwise pay the costs thereof
out of the proceeds of the Loan; and in the event that such costs exceed the
total of such funds, Lender shall have the right but not the obligation to pay
such excess costs by expenditure of their own respective funds; and/or

 

(d)          Exercise any of its rights under the Loan Documents and any rights
provided by Applicable Law, including the right to foreclose on any security and
exercise any other rights with respect to any security, all in such order and
manner as Lender elects in its absolute discretion.

 

8.3         Cumulative Remedies, No Waiver. Lender’s rights and remedies under
the Loan Documents are cumulative and in addition to all rights and remedies
provided by Applicable Law from time to time. The exercise or direction to
exercise by Lender of any right or remedy shall not constitute a cure or waiver
of any default, nor invalidate any notice of default or any act done pursuant to
any such notice, nor prejudice Lender in the exercise of any other right or
remedy. No waiver of any default shall be implied from any omission by Lender to
take action on account of such default if such default persists or is repeated.
No waiver of any default shall affect any default other than the default
expressly waived, and any such waiver shall be operative only for the time and
to the extent stated. No waiver of any provision of any Loan Document shall be
construed as a waiver of any subsequent breach of the same provision. The
consent by Lender to any act by Borrower requiring further consent or approval
shall not be deemed to waive or render unnecessary Lender’s consent to or
approval of any subsequent act. Lender’s acceptance of the late performance of
any obligation shall not constitute a waiver by Lender of the right to require
prompt performance of all further obligations; Lender’s acceptance of any
performance following the sending or filing of any notice of default shall not
constitute a waiver of Lender’s right to proceed with the exercise of remedies
for any unfulfilled obligations; and Lender’s acceptance of any partial
performance shall not constitute a waiver by Lender of any rights relating to
the unfulfilled portion of the applicable obligation.

 

 28 

 

 

9.           Miscellaneous.

 

9.1         Nonliability. Borrower acknowledges and agrees that:

 

(a)          notwithstanding any other provision of any Loan Document: (i) 
Lender is not and shall be deemed a partner, joint venturer, alter-ego, manager,
controlling person or other business associate or participant of any kind of
Borrower and Lender does not intend to ever assume any such status; (ii)  Lender
does not intend to ever assume any responsibility to any Person for the quality
or safety of the Collateral, and (iii)  Lender shall not be deemed responsible
for or a participant in any acts, omissions or decisions of Borrower;

 

(b)          Lender shall not be directly or indirectly liable or responsible in
any way for any loss, cost, damage, penalty, expense, liabilities or injury of
any kind to any Person or property resulting from any development, occupancy,
ownership, management, operation, possession, condition or use of, the
Collateral (except to the extent proximately caused by Lender’s or Lender’s
proven gross negligence or willful misconduct), including without limitation
those resulting or arising directly or indirectly from: (i) any defect in any
building or other onsite or offsite improvement; (ii) any act or omission of
Borrower or any of Borrower’s agents, employees, independent contractors,
licensees or invitees; or (iii) any accident on the Collateral or any fire or
other casualty or hazard thereto; and

 

(c)          By accepting or approving anything required to be performed or
given to Lender under the Loan Documents, including any certificate, financial
statement, appraisal or insurance policy, Lender shall not be deemed to have
warranted or represented the sufficiency or legal effect of the same, and no
such acceptance or approval shall constitute a warranty or representation by
Lender to anyone.

 

9.2         Indemnification of the Lender.

 

(a)          To the fullest extent permitted by law, the Borrower agrees to
indemnify, hold harmless and defend the Lender, and each of its officers,
members, directors, officials, employees, attorneys and agents (collectively,
the “Indemnified Parties”), against any and all losses, damages, claims,
actions, liabilities, costs and expenses of any conceivable nature, kind or
character (including, without limitation, reasonable attorneys’ fees, litigation
and court costs, amounts paid in settlement and amounts paid to discharge
judgments) to which the Indemnified Parties, or any of them, may become subject
under or any statutory law (including federal or state securities laws) or at
common law or otherwise, arising out of or based upon or in any way relating to:

 

(i)          (A) the making of the Loan; (B) a claim, demand or cause of action
that any Person has or asserts against Borrower or Guarantor; (C) the payment of
any commission, charge or brokerage fee incurred in connection with the Loan;
(D) any act or omission of Borrower, any of its agents, employees, licensees
with respect to the Loan or the Collateral; (E) the development, ownership,
occupancy, management, operation, possessing condition or use of the Collateral;
(F) the Loan Documents or the execution or amendment thereof, or in connection
with any of the transactions contemplated thereby, including without limitation,
the making of the Loan; and (G) any lien or charge upon payments by the Borrower
to the Lender hereunder, or any taxes (including, without limitation, ad valorem
taxes and sales taxes), assessments, impositions and other charges imposed in
respect of all or any portion of the Collateral;

 

 29 

 

 

(ii)         any act or omission of the Borrower or any of its agents,
contractors, servants, employees or licensees, with respect to the operation of
the Collateral, or the condition, use, possession, conduct or management of work
done in or about, or from the planning, design, acquisition or any part thereof;
and

 

(iii)        any lien or charge upon payments by the Borrower to the Lender
hereunder, or any taxes (including, without limitation, all ad valorem taxes and
sales taxes), assessments, impositions and other charges imposed on the Lender
in respect of any portion of the Collateral; and

 

except (A) in the case of the foregoing indemnification of the Lender or any its
officers, members, directors, officials, employees, attorneys and agents, to the
extent such damages are caused by the gross negligence or willful misconduct of
such Indemnified Party, or (B) in the case of the foregoing indemnification of
the Lender or any of its officers, members, directors, officials, employees,
attorneys and agents, to the extent such damages are caused by the willful
misconduct of such Indemnified Party; and provided that this Section is not
intended to give rise to a right of the Lender to claim payment of the principal
and accrued interest with respect to the Loan as a result of an Indemnified
Party claim. In the event that any action or proceeding is brought against any
Indemnified Party with respect to which indemnity may be sought hereunder, the
Borrower, upon written notice from the Indemnified Party, shall assume the
investigation and defense thereof, including the employment of counsel selected
by the Indemnified Party, and shall assume the payment of all expenses related
thereto, with full power to litigate, compromise or settle the same in its sole
discretion; provided that the Indemnified Party shall have the right to review
and approve or disapprove any such compromise or settlement. Each Indemnified
Party shall have the right to employ separate counsel in any such action or
proceeding and participate in the investigation and defense thereof, and the
Borrower shall pay the reasonable fees and expenses of such separate counsel;
provided, however, that such Indemnified Party may only employ separate counsel
at the expense of the Borrower if in the reasonable judgment of such Indemnified
Party a conflict of interest exists by reason of common representation or if all
parties commonly represented do not agree as to the action (or inaction) of
counsel.

 

(b)          Notwithstanding any transfer of the Collateral to another owner in
accordance with the provisions of this Agreement, the Borrower shall remain
obligated to indemnify each Indemnified Party pursuant to this Section if such
subsequent owner fails to indemnify any party entitled to be indemnified
hereunder, unless such Indemnified Party has consented to such transfer and to
the assignment of the rights and obligations of the Borrower hereunder.

 

 30 

 

 

(c)          The rights of any persons to indemnity hereunder and rights to
payment of fees and reimbursement of expenses pursuant to this Agreement shall
survive the final repayment of the Loan. The provisions of this Section shall
survive the termination of this Agreement.

 

9.3         Reimbursement of Lender. Borrower shall reimburse Lender for all
reasonable, documented, out-of-pocket Loan Expenses immediately upon written
demand. Such reimbursement obligations shall bear interest following written
demand at the Default Rate, and shall be secured by the Loan Documents. Such
reimbursement obligations shall survive the cancellation of either Note and the
release and reconveyance of the Loan Documents.

 

9.4         Obligations Unconditional and Independent. Notwithstanding the
existence at any time of any obligation or liability of Lender to Borrower, or
any other claim by Borrower against Lender in connection with the Loan or
otherwise, Borrower hereby waives any right it might otherwise have (a) to
offset any such obligation, liability or claim against Borrower’s obligations
under the Loan Documents or (b) to claim that the existence of any such
outstanding obligation, liability or claim excuses the nonperformance by
Borrower of any of its obligations under the Loan Documents.

 

9.5         Notices. Any notices, communications and waivers under this
Agreement shall be in writing and shall be (a) delivered in person, (b) mailed,
postage prepaid, either by registered or certified mail, return receipt
requested, or (c) sent by overnight express carrier, addressed in each case as
follows:

 

To the Lender:  

Fifth Third Bank

201 E. Kennedy Blvd., 18th Floor

Tampa, FL 33602

Attn: Brian J. Holliday 

      With a copy to:  

Foley & Lardner LLP

100 N. Tampa Street, Suite 2700

Tampa, FL 33602

Attn: Walter C. Little, Esq.

     

To the Borrower:

 

 

 

 

With a copy to:

 

1175 Lancaster Ave.

Suite 200

Berwyn, PA 19312

Attn: Gregory M. Krzemien, Chief Financial Officer

 

 

 

Dechert LLP

Cira Centre

2929 Arch Street

Philadelphia, PA 19104

Attn: James A. Lebovitz, Esq.

 

 31 

 

 

or to any other address as to any of the parties hereto, as such party shall
designate in a written notice to the other party hereto. All notices sent
pursuant to the terms of this Section shall be deemed received (i) if personally
delivered, then on the date of delivery, (ii) if sent by overnight, express
carrier, then on the next Business Day immediately following the day sent, or
(iii) if sent by registered or certified mail, then on the earlier of the third
Business Day following the day sent or when actually received.

 

9.6           Survival of Representations and Warranties. All representations
and warranties of Borrower and Guarantor in the Loan Documents shall survive the
making of the Loan and have been or will be relied on by Lender and Lender
notwithstanding any investigation made by Lender or Lender, as the case may be.
All indemnification obligations under this Agreement, including under Section
9.2, shall survive the termination of this Agreement and payment of the
Obligations for a period of two (2) years.

 

9.7           No Third Parties Benefited. This Agreement is made for the purpose
of setting forth rights and obligations of Borrower and Lender, and no other
Person shall have any rights hereunder or by reason hereof.

 

9.8           Binding Effect, Assignment of Obligations. This Agreement shall
bind, and shall inure to the benefit of, Borrower and Lender and their
respective successors and assigns. Borrower shall not assign any of its rights
or obligations under any Loan Document without the prior written consent of
Lender, which consent may be withheld in Lender’s absolute discretion. Any such
assignment without such consent shall be void.

 

9.9           Counterparts. Any Loan Document may be executed in counterparts,
all of which, taken together, shall be deemed to be one and the same document.

 

9.10         Prior Agreements; Amendments; Consents. This Agreement (together
with the other Loan Documents) contains the entire agreement among Lender and
Borrower with respect to the Loan, and all prior negotiations, understandings
and agreements (including, but not limited to, any commitment letter issued by
Lender to Borrower) are superseded by this Agreement and such Loan Documents. No
modification of any Loan Document (including waivers of rights and conditions)
shall be effective unless in writing and signed by the party against whom
enforcement of such modification is sought, and then only in the specific
instance and for the specific purpose given. Notwithstanding the foregoing,
Lender shall have the right to waive or modify, conditionally or
unconditionally, the conditions to its approvals and consents hereunder, without
the consent of any party. Consents and approvals to be obtained from Lender
shall be in writing.

 

9.11         Governing Law. All of the Loan Documents shall be governed by, and
construed and enforced in accordance with, the laws of the State of Florida
without regard to the conflicts of laws principles thereof; provided that if
Lender has greater rights or remedies under federal law, then such right and/or
remedies under federal law shall also be available to Lender.

 

9.12         Severability of Provisions. No provision of any Loan Document that
is held to be unenforceable or invalid shall affect the remaining provisions,
and to this end all provisions of the Loan Documents are hereby declared to be
severable.

 

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9.13         Headings. Section headings are included in the Loan Documents for
convenience of reference only and shall not be used in construing the Loan
Documents.

 

9.14         Conflicts. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, this Agreement shall
prevail; provided however that, with respect to any matter addressed in both
such documents, the fact that one document provides for greater, lesser or
different rights or obligations than the other shall not be deemed a conflict
unless the applicable provisions are inconsistent and could not be
simultaneously enforced or performed.

 

9.15         Time of the Essence. Time is of the essence of all of the Loan
Documents.

 

9.16         Intentionally Deleted.

 

9.17         Rights to Share Information. The Lender shall have the right to
discuss the affairs of the Borrower with any officer or shareholder thereof, any
and/or Guarantor and to discuss the financial condition of the Borrower,
Guarantor and the Collateral, and to disclose any non-confidential information
received by Lender regarding the Borrower, Guarantor, the Collateral or any
officer or shareholder of the Borrower with any other officer or shareholder of
the Borrower, and/or Guarantor , singularly or together, as Lender may choose in
its sole and absolute discretion.

 

9.18         Pledge to Federal Reserve. Anything in this Agreement to the
contrary notwithstanding, without notice to or consent of any party or the need
to comply with any of the formal or procedural requirements of this Agreement,
the Lender and/or any transferee, assignee, purchaser or participant may (to the
fullest extent permitted under Applicable Law) at any time and from time to time
pledge and assign any or all of its right, title and interest in, to and under
all or any of the Loan or the Loan Documents to a Federal Reserve Bank.

 

9.19         Waiver of Right to Trial by Jury. TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN
DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

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9.20         Consent to Jurisdiction. TO INDUCE LENDER TO ENTER INTO THIS
AGREEMENT, BORROWER IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S SOLE AND
ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR
RELATED TO THE LOAN DOCUMENTS WILL BE LITIGATED IN COURTS HAVING SITUS IN
HILLSBOROUGH COUNTY, FLORIDA. BORROWER HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY COURT LOCATED WITHIN HILLSBOROUGH COUNTY, FLORIDA, WAIVES
PERSONAL SERVICE OF PROCESS UPON BORROWER.

 

9.21         Patriot Act. Lender (for itself and not on behalf of any other
party) hereby notifies the Borrower that, pursuant to the requirements of the
Act, it is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow Lender to identify the Borrower in accordance
with the Act.

 

9.22         Right of Setoff. Borrower grants to Lender a contractual security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower’s right, title and interest in and to, Borrower’s accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
Applicable Law, to charge or setoff all Indebtedness against any and all such
accounts.

 

9.23         Guarantor Release and Replacement. Lender, Borrower, and Guarantor
acknowledge and agree that Guarantor shall remain liable under the terms of his
or her respective Guaranty, irrespective of such Guarantor’s divestment of its
ownership interest in any Borrower unless and until Lender has: (i) received a
written request for a full release of his or her respective Guaranty from such
Guarantor who has divested itself of all ownership interest, (ii) received a
fully executed Guaranty from a replacement guarantor, the terms and conditions
of such Guaranty being consistent with the Guarantees delivered to Lender of
even date herewith, and (iii) received, in Lender’s reasonable discretion,
sufficient financial and background information with respect to the proposed
replacement guarantor in order to determine the suitability of such Person as an
Guarantor.

 

[Remainder of page left blank intentionally.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the Effective Date.

 

  BORROWER:       CSI ACQUISITION SUB ONE, LLC, a Delaware limited liability
company        By: JetPay Corporation, its sole member                  By: /s/
Peter B. Davidson       Name: Peter B. Davidson       Title: Vice Chairman and
Corporate Secretary

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.

 

  LENDER:       FIFTH THIRD BANK, an Ohio banking corporation         By:  /s/
Brian J. Holliday     Name: Brian J. Holliday     Title:   Vice President

 

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Guarantor hereby joins in on the execution of this Agreement solely to evidence
its obligations hereunder.

 

  GUARANTOR:       JETPAY CORPORATION, a Delaware corporation         By: /s/
Peter B. Davidson     Name:  Peter B. Davidson     Title:   Vice Chairman and
Corporate Secretary

 

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