Exhibit 10.1

 

LINE OF CREDIT PROMISSORY NOTE

(Secured by Membership Interest Pledge Agreement and Security Agreement)

 

 

Date:   March 7, 2017       Borrower:   Singular Payments, LLC, a Florida
limited liability company       Borrower’s Mailing Address:   5203 Maryland Way,
Suite 102     Brentwood, Tennessee  37027       Lender:   Payment Data Systems,
Inc., a Nevada corporation       Place for Payment:   12500 San Pedro, Suite 120
    San Antonio, Texas  78216

 

Principal Amount: A maximum of Five Hundred Thousand and No/100 Dollars
($500,000.00) (the “Maximum Amount”) funded in one or more tranches at the
discretion of Borrower, subject to the terms and provisions of this Note and the
other Loan Documents (as defined below). Prior to the Maturity Date (as defined
below), provided there exists no Event of Default (as defined below) and subject
to the terms and provisions hereof, Borrower may borrow, repay and re-borrow
principal amounts, up to the Maximum Amount, but never in excess of the Maximum
Amount.

 

Annual Interest Rate on Unpaid Principal Balance from Date of Funding to
Maturity Date or Event of Default: From the Date this Note to the earlier of May
31, 2017, the date of the closing and funding of the Proposed Transaction (as
defined below), or the termination of the Letter of Intent (as defined below)
(the earlier of such three events shall be referred to hereinafter as the
“Interest Start Date”), or such extended date if Lender and Borrower mutually
agree in writing upon an extension of the Initial Start Date, in their sole
discretion with no duty or obligation to so extend (if any, the “Extended
Interest Start Date”), the unpaid Principal Amount shall not bear interest.
Beginning on the Interest Start Date or Extended Interest Start Date, if any,
and continuing thereafter until the earlier of the Maturity Date or an Event of
Default,, the unpaid Principal Amount and all other amounts payable under this
Note shall bear interest at ten percent (10.0%) per annum.

 

Annual Interest Rate After Maturity Date or Event of Default: At Lender’s
option, after the Maturity Date or upon an Event of Default, the unpaid
Principal Amount and all other amounts payable under this Note shall bear
interest at: (a) the Maximum Lawful Rate (as defined below); or (b) fifteen
percent (15.0%) per annum.

 

Terms of Payment: From the Date of this Note through the Interest Start Date or
such Extended Start Date, if any, no payments of the unpaid Principal Amount
shall be due or payable. In the event the Proposed Transaction closes and funds
on or before the Interest Start Date or Extended Start Date, if any, the unpaid
Principal Amount shall be offset against the cash portion of the purchase price
of the Proposed Transaction payable by Lender to Borrower at the date of the
closing and funding of the Proposed Transaction. In the event the Proposed
Transaction does not close and fund on or before the Interest Start Date or
Extended Interest Start Date, if any, the unpaid Principal Amount shall be paid
in thirty (30) equal monthly installments of principal plus accrued interest,
with the first such installment due and payable on the first day of the month
following the month in which the Interest Start Date or Extended Interest Start
Date, if any, occurs, and the remaining twenty-nine (29) monthly installments
continuing on the first day of each month thereafter until the Maturity Date,
when all remaining unpaid Principal Amount and accrued interest shall be due and
payable. From any payments on this Line of Credit Promissory Note (this “Note”),
the accrued interest on the unpaid Principal Amount will be deducted first, and
the remainder will be applied to payment of the Principal Amount. Interest shall
be calculated on the basis of the actual number of days elapsed over a year
composed of 365 days.

 

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Prepayments: This Note may be prepaid in whole or in part at any time without
the consent of Lender and without penalty. Any prepayments shall be applied
first to the discharge of accrued interest and then to the reduction of the
unpaid Principal Amount.

 

Security for Payment: This Note is secured by (a) a membership interest pledge
agreement dated the date hereof between Borrower and Lender (the “Pledge
Agreement”) and (ii) a security agreement dated the date hereof between Borrower
and Lender (the “Security Agreement”). The Pledge Agreement, the Security
Agreement and any other documents, certificates or instruments executed and
delivered by Borrower to Lender in connection with this Note and the loan
described in this Note shall be collectively referred to herein as the “Loan
Documents”.

 

Maturity Date: November 1, 2019

 

Promise to Pay: FOR VALUE RECEIVED, Borrower promises to pay to the order of
Lender at the Place for Payment and according to the Terms of Payment the
Principal Amount plus interest at the rates stated above, and in accordance with
all other terms, conditions and covenants of this Note and the Loan Documents.
All sums due under this Note shall be payable in lawful money of the United
States.

 

Events of Default and Acceleration of Maturity:

 

(a)Default. Lender may, without notice or demand (except as otherwise required
by statute or otherwise specifically provided in this Note), accelerate the
maturity of this Note and declare the entire unpaid Principal Amount and accrued
interest due and payable immediately if: (i) there is a default in the payment
when due of any installment of the Principal Amount, accrued interest or any
other sum required to be paid under the terms of this Note or any of the Loan
Documents without cure within the Applicable Cure Period (as defined below)
occurs; or (ii) there is a default in the performance of any covenant,
condition, or agreement contained in this Note or any of the Loan Documents or
any loan agreement relating to the advance of loan proceeds and without cure
within the Applicable Cure Period (in either case, an “Event of Default”).
Lender may, at its election, refuse to accept a tender in partial cure of an
Event of Default.

 

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(b)Notice of Default. Notwithstanding anything in this Note to the contrary,
Lender agrees to give notice (the “Notice of Default”) to Borrower in writing of
any default, and if the same is not cured within thirty (30) calendar days for
any monetary or non-monetary default from the date of such Notice of Default
(the “Applicable Cure Period”), then without further notice, presentment, demand
of any kind, either: (a) acceleration of maturity hereof may be imposed if the
maturity of this Note has not been accelerated; or (b) if the maturity of this
Note has been accelerated and the default is cured as required by the Notice of
Default within the Applicable Cure Period, then the acceleration will be
rescinded and the installment provisions of the Note will be reinstated. The
Notice of Default will be deemed to be delivered, whether actually received or
not, when deposited in the United States mail, postage fully prepaid, certified
mail, and addressed to the intended recipient at the last known address
according to the records of the holder delivering the Notice of Default. Notice
given in any other manner will be effective only if and when received by the
addressee. Notwithstanding the foregoing, in the event of two (2) monetary
defaults during the term of this Note, the Applicable Cure Period for any future
monetary default or defaults following such second monetary default shall be ten
(10) calendar days instead of thirty (30) calendar days.

 

Waiver by Borrower: Borrower and all other parties liable for this Note waive
demand, notice of intent to demand, presentment for payment, notice of
nonpayment, protest, notice of protest, grace, notice of dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, and diligence
in collection. Each Borrower, surety, endorser, and guarantor of this Note
agrees to one or more extensions for any period of time, and any partial
payments, before or after maturity, without prejudice to the holder of this
Note. Each Borrower, surety, endorser, and guarantor waives notice of any and
all renewals, extensions, and modifications of this Note.

 

No Waiver by Lender: Neither a delay on the part of Lender in the exercise of
any power or right under this Note, nor a single or partial exercise of any such
power or right, shall operate as a waiver thereof. Enforcement by Lender of any
of its rights hereunder shall not constitute an election by it of remedies so as
to preclude the exercise of any other remedy available to it.

 

Collection Costs: If this Note or any of the Loan Documents are given to any
attorney for collection, or if suit is brought for collection or enforcement, or
if it is collected through probate, bankruptcy or other judicial proceeding,
then Borrower shall pay Lender all costs of collection and enforcement,
including reasonable attorneys’ fees and court costs, in addition to other
amounts due.

 

Maximum Lawful Interest: Regardless of any provision contained herein or in any
of the Loan Documents, interest on such debt shall not exceed the maximum amount
of non-usurious interest that may be contracted for, taken, reserved, charged or
received under applicable law (the “Maximum Lawful Rate”); any amount of
interest in excess of the Maximum Lawful Rate shall be credited on the principal
of the debt or, if that has been paid, refunded. On any acceleration or required
or permitted prepayment, any such excess shall be canceled automatically as of
the acceleration or prepayment or, if already paid, credited on the principal of
the debt or, if the principal of the debt has been paid, refunded. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Maximum Lawful Rate, Borrower and Lender shall, to the
maximum extent permitted under applicable law, (a) characterize any
non-principal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof, and (c) spread the total
amount of interest throughout the entire contemplated term hereof.

 

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Construction: When the context requires, singular nouns and pronouns include the
plural.

 

Assignment by Lender: Lender shall have the right to sell, transfer or assign
this Note at any time.

 

Letter of Intent: Borrower and Lender have executed and delivered to each other
a non-binding letter of intent dated the date hereof (the “Letter of Intent”)
which contemplates Lender acquiring substantially all of the membership
interests of Borrower (the “Proposed Transaction”). The obligations of Borrower
under this Note and the Loan Documents are in no way conditional upon the
Proposed Transaction, and the terms, provisions and conditions if this Note and
the Loan Documents shall be applicable and enforceable against Borrower
regardless of the negotiation, execution and delivery of a mutually agreeable
definitive agreement for the Proposed Transaction or the closing and funding of
the Proposed Transaction.

 

APPLICABLE LAW: THIS NOTE IS DELIVERED AND IS INTENDED TO BE PAID AND PERFORMED
IN THE STATE OF TEXAS, AND THE LAWS OF SUCH STATE SHALL GOVERN THE CONSTRUCTION,
VALIDITY, ENFORCEMENT, AND INTERPRETATION HEREOF.

 

JURISDICTION AND VENUE: BORROWER AND LENDER AGREE THAT ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATED IN ANY WAY TO THIS NOTE SHALL BE BROUGHT SOLELY IN A
TEXAS STATE COURT OF COMPETENT JURISDICTION SITTING IN SAN ANTONIO, BEXAR
COUNTY, TEXAS. BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE
JURISDICTION OF ANY SUCH COURT AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR
PROCEEDING IN ANY SUCH COURT, ANY OBJECTION TO VENUE WITH RESPECT TO ANY SUCH
ACTION OR PROCEEDING AND ANY RIGHT OF JURISDICTION ON ACCOUNT OF THE PLACE OF
RESIDENCE OR DOMICILE OF ANY PARTY THERETO.

 

PAYABLE IN FULL AT MATURITY DATE: THIS LOAN IS PAYABLE IN FULL AT THE MATURITY
DATE. AT THE MATURITY DATE, BORROWER MUST REPAY THE ENTIRE UNPAID PRINCIPAL
AMOUNT AND UNPAID INTEREST THEN DUE. LENDER IS UNDER NO OBLIGATION TO REFINANCE
THE NOTE AT THAT TIME. BORROWER WILL, THEREFORE, BE REQUIRED TO MAKE PAYMENT OUT
OF OTHER ASSETS THAT BORROWER MAY OWN, OR BORROWER WILL HAVE TO FIND A LENDER,
WHICH MAY BE THE LENDER YOU HAVE THIS LOAN WITH, WILLING TO LEND BORROWER THE
MONEY. IF BORROWER REFINANCES THIS NOTE AT THE MATURITY DATE, BORROWER MAY HAVE
TO PAY SOME OR ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED WITH A NEW LOAN EVEN
IF BORROWER OBTAINS REFINANCING FROM THE SAME LENDER.

 

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FINAL AGREEMENT: THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

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  BORROWER:               SINGULAR PAYMENTS, LLC,   a Florida limited liability
company               By: /s/Vaden Landers     Vaden Landers, President

 

 

 

 

 

 

 

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