Exhibit 10.4

  

PROMISSORY NOTE

 

$5,000,000.00

 

FOR VALUE RECEIVED, JetPay Corporation (f/k/a Universal Business Payment
Solutions Acquisition Corporation), a Delaware corporation with its principal
place of business at 1175 Lancaster Avenue, Suite 200, Berwyn, PA 19312
(hereinafter the "Maker"), unconditionally promises to pay to the order of
Merrick Bank Corporation, a Utah corporation with offices at 10705 S. Jordan
Gateway Ste. 200, South Jordan, Utah 84095 or its assigns (hereinafter "Holder",
and, together with the Maker, the “Parties”), the principal amount of Five
Million Dollars ($5,000,000.00), together with all accrued Interest thereon, as
provided in this Promissory Note (the “Note”, as the same may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with its terms).

 

This Note is issued to evidence in part the obligations of the Maker to the
Holder pursuant to that certain Settlement Agreement dated the date hereof (the
“Settlement Agreement”) by and among the Maker, the Holder, JetPay Merchant
Services, LLC, JetPay ISO Services, LLC, JetPay, LLC, and WLES, L.P., (“WLES”).
Pursuant to the Settlement Agreement, certain shares of the common stock and
cash of the Maker (the “Escrow Fund”) that had previously been or will be placed
into escrow to secure certain pre-existing obligations of Maker’s affiliates to
Holder, were pledged by WLES to the Holder to secure the Maker’s obligations to
Holder thereunder including, without limitation, the obligations of Maker under
this Note.

 

1. Interest. The outstanding principal amount of this Note shall bear interest
(“Interest”) from [Insert date that is the 91st day after the date hereof] at
the rate of twelve percent (12%) per annum (except that Interest on the
outstanding principal amount of this Note from and after the occurrence of any
Event of Default hereunder shall accrue at the rate of fifteen percent (15 %)
per annum) until the entire principal amount hereof shall have been paid in
full, whether at maturity, upon acceleration, by prepayment or otherwise.
Interest hereunder shall be computed on the basis of a year of 360 days, and the
actual number of days (including the first day but excluding the last day)
elapsed.

 

2. Repayment Provisions. Subject to the provisions of Section 3 below, the
outstanding principal amount of this Note, all unpaid interest accrued thereon,
and all other amounts owed to the Holder hereunder shall be due and payable on
or before [Insert date that is the 180th day after the date hereof] ( the
“Maturity Date”).

 

3. Prepayments.

 

(a) Optional Prepayments. The Maker may prepay this Note in whole or in part at
any time or from time to time prior to the Maturity Date without penalty or
premium by paying the principal amount to be prepaid together with all Interest
accrued thereon (if any) to the date of prepayment.

 

(b) Mandatory Prepayments. Upon the sale of any of the Escrow Shares, pursuant
to the provisions of the Settlement Agreement, all proceeds thereof will be paid
to the Holder as a mandatory pre-payment of this Note until the outstanding
principal amount of this Note, all unpaid interest accrued thereon, and all
other amounts owed to the Holder hereunder shall have been paid in full.

 

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4. Other Payment Provisions. The Maker shall make each payment and pre-payment
hereunder not later than 1:00 P.M. (Eastern time) on the day when due, without
offset, in lawful money of the United States of America to the Holder by wire
transfer of immediately available funds to the Holder’s account in accordance
with wire transfer instructions to be provided by the Holder to the Maker from
time to time. All payments will be applied first to costs and fees owing
hereunder, second to the payment of Interest accrued hereunder through the date
of payment and third to the payment of principal hereof, in such order as Holder
may determine in its sole discretion. If the date for any payment hereunder
falls on a day other than a Business Day, then for all purposes of this Note the
same shall be deemed to have fallen on the next following Business Day, and such
extension of time shall in such case be included in the computation of payments
of interest. As used herein, “Business Day” shall mean a day other than a
Saturday, Sunday or other day on which commercial banks in New York, NY are
authorized or required by law to be closed.

 

5. Events of Default. The occurrence of any of the following shall constitute an
Event of Default hereunder:

 

(a) Failure to Pay. The Maker fails to pay (i) any principal amount of this Note
as and when due; or (ii) accrued Interest or any other amount as and when due
hereunder and fails to cure any unpaid amount within five (5) days of the date
said amount was due.

 

(b) Cross-Defaults. The Maker fails to pay when due any of its indebtedness
(other than indebtedness under this Note) or any interest or premium thereon as
and when due (whether by scheduled maturity, acceleration, demand or otherwise)
and such failure continues after the applicable grace period, if any, specified
in the agreement or instrument relating to such indebtedness.

 

(c) Breach of Settlement Agreement. The Maker is in breach of or otherwise fails
to comply with any of its obligations under the Settlement Agreement or any
other agreements, notes or instruments executed and delivered by it in
connection therewith or otherwise in connection with the Escrow Fund and fails
to cure any such breach or compliance failure within five (5) days of the date
of such breach or failure.

 

(d) Bankruptcy.  

 

(i) the Maker commences any case, proceeding or other action (A) under any
existing or future law relating to bankruptcy, insolvency, reorganization, or
other relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or the Maker
makes a general assignment for the benefit of its creditors;

 

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(ii) there is commenced against the Maker any case, proceeding or other action
of a nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of sixty (60) days;

 

(iii) there is commenced against the Maker any case, proceeding or other action
seeking issuance of a warrant of attachment, execution or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which has not been vacated, discharged, or stayed
or bonded pending appeal within sixty (60) days from the entry thereof;

 

(iv) the Maker takes any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i), (ii)
or (iii) above; or

 

(v) the Maker is generally not, or is unable to, or admits in writing its
inability to, pay its debts as they become due.

 

(e) Judgments. A judgment or decree is entered against the Maker and such
judgment or decree has not been vacated, discharged, stayed or bonded pending
appeal within thirty (30) days from the entry thereof.

 

6. Remedies. Upon the occurrence of an Event of Default and at any time
thereafter during the continuance of such Event of Default, the Holder may at
its option, by written notice to the Maker (a) declare the entire principal
amount of this Note, together with all accrued interest thereon and all other
amounts payable hereunder, immediately due and payable and/or (b) exercise any
or all of its rights, powers or remedies available to it pursuant to the
Settlement Agreement or otherwise under applicable law; provided, however that,
if an Event of Default described in Section 5(d) shall occur, the principal of
and accrued Interest hereunder shall become immediately due and payable without
any notice, declaration or other act on the part of the Holder.

 

7. Miscellaneous.

 

(a) Notices.  All notices, requests or other communications required or
permitted to be delivered hereunder shall be delivered in writing, if to the
Maker, at the address set forth above, or at such other address as may have been
furnished to the Holder by the Maker in writing; or if to the Holder, to it at
the address set forth above, or at such other address as may have been furnished
to the Maker by the Holder in writing. Notices, if (i) mailed by certified or
registered mail or sent by hand or overnight courier service shall be deemed to
have been given when received, (ii) sent by facsimile during the recipient's
normal business hours shall be deemed to have been given when sent (and if sent
after normal business hours shall be deemed to have been given at the opening of
the recipient's business on the next business day) and (iii) sent by e-mail
shall be deemed received upon the sender's receipt of an acknowledgment from the
intended recipient (such as by the "return receipt requested" function, as
available, return e-mail or other written acknowledgment).

 

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(b) Expenses. The Maker shall reimburse the Holder on demand for all reasonable
out-of-pocket costs, expenses and fees (including reasonable expenses and fees
of its counsel) incurred by the Holder in connection with the transactions
contemplated hereby including the negotiation, documentation and execution of
this Note and the enforcement of the Holder's rights hereunder.

 

(c) Governing Law. This Note and any claim, controversy, dispute or cause of
action (whether in contract or tort or otherwise) based upon, arising out of or
relating to this Note and the transactions contemplated hereby shall be governed
by the laws of the State of Utah.

 

(d) Submission to Jurisdiction.  The Maker hereby irrevocably and
unconditionally (i) agrees that any legal action, suit or proceeding arising out
of or relating to this Note may be brought in the Federal District Court in Salt
Lake City, Utah and (ii) submits to the exclusive jurisdiction of such court in
any such action, suit or proceeding. Final judgment against the Maker in any
action, suit or proceeding shall be conclusive and may be enforced in any other
jurisdiction by suit on the judgment. Nothing in this 7(d) shall affect the
right of the Holder to (i) commence legal proceedings or otherwise sue the Maker
in any other court having jurisdiction over the Maker or (ii) serve process upon
the Maker in any manner authorized by the laws of any such jurisdiction.

 

(e) Venue. The Maker irrevocably and unconditionally waives, to the fullest
extent permitted by applicable law, any objection that it may now or hereafter
have to the laying of venue of any action or proceeding arising out of or
relating to this Note in any court referred to in Section (d) and the defense of
an inconvenient forum to the maintenance of such action or proceeding in any
such court.

 

(f) Waiver of Jury Trial. THE MAKER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS NOTE OR THE
TRANSACTIONS CONTEMPLATED HEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY.

 

(g) Counterparts; Integration; Effectiveness. This Note and any amendments,
waivers, consents or supplements hereto may be executed in counterparts, each of
which shall constitute an original, but all taken together shall constitute a
single contract. This Note constitutes the entire contract between the Parties
with respect to the subject matter hereof and supersedes all previous agreements
and understandings, oral or written, with respect thereto. Delivery of an
executed counterpart of a signature page to this Note by facsimile or in
electronic (i.e., "pdf" or "tif") format shall be effective as delivery of a
manually executed counterpart of this Note.

 

(h) Successors and Assigns. This Note may be assigned, transferred or negotiated
by the Holder to any person or entity at any time without notice to or the
consent of the Maker. The Maker may not assign or transfer this Note or any of
its rights hereunder without the prior written consent of the Holder. This Note
shall inure to the benefit of and be binding upon the Parties hereto and their
permitted assigns.

 

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(i) Waiver of Notice, etc. The Maker hereby waives presentment, demand for
payment, protest, notice of dishonor, notice of protest or nonpayment, notice of
acceleration of maturity and diligence in connection with the enforcement of
this Note or the taking of any action to collect sums owing hereunder.

 

(j) Amendments and Waivers. No term of this Note may be waived, modified or
amended except by an instrument in writing signed by both of the Parties hereto.
Any waiver of the terms hereof shall be effective only in the specific instance
and for the specific purpose given.

 

(k) Headings. The headings of the various Sections and subsections herein are
for reference only and shall not define, modify, expand or limit any of the
terms or provisions hereof.

 

(l) No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising on the part of the Holder, of any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

(m) Severability. If any term or provision of this Note is invalid, illegal or
unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Note or
invalidate or render unenforceable such term or provision in any other
jurisdiction.

 

(n) Replacement of Note. Upon receipt of evidence reasonably satisfactory to the
Maker of the loss, theft, destruction or mutilation of this Note and, in the
case of any such loss, theft or destruction of this Note, upon delivery of an
indemnity bond in such reasonable amount as the Maker may determine, or, in the
case of any such mutilation, upon surrender and cancellation of such mutilated
Note, the Maker will execute and deliver, in lieu thereof, a new Note of like
tenor and of the same class, dated the date to which interest has been paid on
such lost, stolen, destroyed or mutilated Note.

 

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IN WITNESS WHEREOF, the Maker has caused this Note to be executed by its officer
thereunto duly authorized as of the 26 day of July, 2016.

 

  JETPAY CORPORATION       By: /s/ Peter B. Davidson   Name: Peter B. Davidson  
Title: Vice Chairman

 

STATE OF PA     )

  )  ss: COUNTY OF Philadelphia     )

 

I, Vincent J. Grandinetti, hereby certify on this 26 day of July, 2016, before
me, the subscriber, a Notary Public of the jurisdiction aforesaid, personally
appeared Peter B. Davidson., known to me (or satisfactorily proven) to be the
person whose name is subscribed to the within instrument as the Vice Chairman of
JetPay Corporation and acknowledged that he executed the same on behalf of
JetPay Corporation, for the purposes therein contained, such instrument having
been executed in my presence.

 

AS WITNESS my hand and notarial seal the day and year above written.

  

  /s/ Vincent J. Grandinetti   Notary Public

 

My Commission Expires: May 28, 2017

 

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