Document:

Exhibit 10.2

 

SECURITY AGREEMENT

 

This Security Agreement
(this “Agreement”) is entered into effective as of March 7, 2017 (the “Effective Date”) by
and between Singular Payments, LLC, a Florida limited liability company (“Debtor”), and Payment Data Systems,
Inc., a Nevada corporation (“Secured Party”).

 

1.       Security
Interest. Subject to the terms and provisions of this Agreement, Debtor grants to Secured Party a continuing first lien on
and security interest (the “Security Interest”) in and to the Collateral (as defined herein), and grants, bargains,
sells, transfers and assigns to Secured Party the Collateral, to secure the payment and performance of the Obligation (as defined
herein).

 

2.       Obligation.
This Agreement and the Security Interest granted hereby secure the following described obligations (collectively, the “Obligation”):

 

(a)       The
payment and performance by Debtor of its indebtedness and obligations under that certain line of credit promissory note of even
date herewith between Debtor (as borrower thereunder) and Secured Party (as lender thereunder) in the original principal amount
of up to a maximum amount of $500,000.00 (such note is hereinafter referred to as the “Note”);

 

(b)       All
costs incurred by Secured Party to obtain, preserve, and enforce this Agreement, to collect and enforce the Obligation, and to
maintain and preserve the Collateral, including specifically, but without limitation, all taxes, assessments, reasonable attorneys’
fees and legal expenses and expenses of sale; and

 

(c)       All
other indebtedness, obligations and liabilities of Debtor to Secured Party of any kind and whenever accrued, whether accrued before
or after the date of this Agreement.

 

3.       Collateral.
The Security Interest granted hereby covers the following collateral (the “Collateral”): (i) all of Borrower’s
personal property, machinery, equipment, furniture and fixtures (as “fixtures” is defined in the Texas Business and
Commerce Code), (ii) all rights of Borrower for payments of goods sold or leased, or to be sold or leased, or for services rendered
or to be rendered, however evidenced or incurred, including without limitation all accounts receivable, instruments, chattel paper
and general intangibles, all returned or repossessed goods and all books, records, computer tapes, programs and ledger books arising
therefrom or relating thereto, whether now owned or hereafter acquired or arising, (iii) all presently owned and hereafter acquired
inventory of Borrower (including, without limitation, all goods now or hereafter held for sale or lease or furnished or to be furnished
under contracts of service or raw materials), work in process and materials used or consumed in business, (iv) all intellectual
property of Debtor, including, without limitation, all patents, copyrights and marks; (v) all rights under any and all contracts
of Debtor with third parties; (vi) all insurance policies relating in whole or in part to any of the foregoing, (vii) all Proceeds
(as defined herein), (viii) all substitutions for and replacements of and all additions and accessions to any of the foregoing,
(ix) all guaranties and security for any of the foregoing, and (x) all the rights, title and interest of Debtor in and to all books
and records relating in whole or in part to any of the foregoing.

 

    
	Security Agreement
	Page 1 of 11

 

     

    

As used
herein, the term “Proceeds” shall have the meaning assigned to it under the Texas Business and Commerce Code
(the “Code”) and, to the extent not otherwise included, shall include, but not be limited to, (i) any and all proceeds
of any insurance, causes and rights of action, settlements thereof, judicial and arbitration judgments and awards, and indemnity,
warranty or guaranty payments payable to Debtor from time to time with respect to any of the Collateral, (ii) any and all payments
(in any form whatsoever) made or due and payable to Debtor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental department, commission, board, bureau,
authority, agency or body (domestic or foreign), (iii) all claims of Debtor for losses or damages arising out of or related to
or for any breach of any agreements, covenants, representations or warranties or any default under any of the foregoing Collateral
(without limiting any direct or independent rights of Secured Party with respect to the Collateral), and (iv) any and all other
amounts from time to time paid or payable under or in connection with any of the Collateral.

 

4.       Debtor’s
Warranties.

 

(a)       Financing
Statements. No financing statement covering the Collateral or any Proceeds thereof is on file in any public office.

 

(b)       Ownership
Free of Encumbrances. Except the Security Interest granted hereby, Debtor now owns the Collateral free from any lien, security
interest, claim or encumbrance.

 

(c)       Books
and Records. All books, records and documents relating to the Collateral are and will be genuine and in all respects what they
purport to be.

 

(d)       First
Lien on Collateral. The Security Interest granted to the Secured Party pursuant to this Agreement constitutes and creates a
valid and continuing first lien on and first security interest in the Collateral in favor of the Secured Party, prior to all other
liens, encumbrances, security interests, chattel mortgages, privileges, statements of assignment and rights of others. The Agreement
is enforceable as such as against any third parties, including, without limitation, any owner of real property in any state where
any of the Collateral is or may hereafter be located and as against any purchaser of such real property and any present or future
creditor obtaining a lien on such real property. All action necessary or desirable to perfect the Security Interest in each item
of the Collateral in each state in which any item of Collateral is or will be located has been or will forthwith be duly taken.

 

(e)       Condition
of Collateral. All inventory constituting part of the Collateral (if applicable) is in all respects good and merchantable inventory
and is not obsolete.

 

(f)       Power
and Authority. Debtor has full power, authority and legal right to pledge all of the Collateral pursuant to this Agreement.

 

    
	Security Agreement
	Page 2 of 11

 

     

    

(g)       Due
Authorization, Execution and Delivery. This Agreement has been duly authorized, executed and delivered by Debtor and constitutes
the legal, valid and binding obligation of Debtor enforceable in accordance with its terms.

 

(h)       Consents.
No consent of any other party (including, without limitation, creditors of Debtor) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority, domestic
or foreign, is required to be obtained by the Debtor in connection with the execution, delivery or performance of this Agreement.

 

(i)       No
Conflict. The execution, delivery and performance of this Agreement will not violate any provision of any applicable law or
regulation or of any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign,
or of the certificate of formation, certificate of limited partnership, certificate of incorporation, certificate of organization,
articles of incorporation, articles of organization, partnership agreement, bylaws, regulations or company agreement of Debtor
or of any securities issued by Debtor, or of any mortgage, indenture, lease, contract, or other agreement, instrument or undertaking
to which Debtor is a party or which purports to be binding upon Debtor or upon any of its assets, and will not result in the creation
or imposition of any lien, charge or encumbrance on or security interest in any of the assets of Debtor except as contemplated
by this Agreement.

 

5.       Debtor’s
Covenants.

 

(a)       Ownership
of Collateral. At the time Debtor pledges, sells, assigns, transfers to Secured Party or grants to Secured Party a Security
Interest in any Collateral or any interest therein, Debtor shall be the absolute owner thereof and shall have the absolute right
to pledge, sell, assign or transfer the same. Debtor shall defend the Collateral against all claims and demands of all persons
at any time claiming the same or any interest therein adverse to Secured Party.

 

(b)       Maintenance.
Debtor shall keep the Collateral free from liens and security interests other than the Security Interest created hereby, and shall
not create or suffer to exist any lien or security interest in Collateral hereafter acquired except for the Security Interest hereby
granted. Debtor shall pay all costs necessary to obtain, preserve, defend and enforce the Security Interest, collect the Obligation,
and preserve, defend, enforce and collect the Collateral, including specifically, but without limitation, the payment of taxes,
assessments, reasonable attorneys’ fees and legal expenses, and expenses of sales. Whether the Collateral is or is not in
Secured Party’s possession, and without any obligation to do so, Secured Party may, at its option, pay any such costs and
expenses, discharge encumbrances on the Collateral, and pay for insuring the Collateral. Debtor each agrees to reimburse Secured
Party on demand for any payments so made and until such reimbursement, the amount of any such payment shall be a part of the Obligation.
Debtor shall, at its sole expense, maintain the Collateral in first class condition and shall comply with industry standards, applicable
laws and regulations, and requirements for enforcing warranty claims.

 

    
	Security Agreement
	Page 3 of 11

 

     

    

(c)       Information
and Inspection. Debtor shall furnish to Secured Party any reports and other information with respect to the Collateral requested
by Secured Party, will allow Secured Party to inspect the Collateral at any time and wherever located, and will allow Secured Party
to inspect and copy, or will furnish Secured Party with copies of, all records relating to the Collateral and the Obligation.

 

(d)        Additional
Documents. Debtor shall furnish Secured Party with financing statements upon request and Debtor shall sign any other documents
or instruments furnished by Secured Party which are necessary in the judgment of Secured Party to obtain, maintain and perfect
the Security Interest in any applicable jurisdiction, and any expense of Secured Party so incurred shall be a part of the Obligation.
In this regard, Debtor agrees to execute any and all other financing statements and security devices as Secured Party may request
to perfect or continue perfection of the Security Interest under the laws of any state in which the Collateral is located.

 

(e)       Books
of Account. Debtor will, at all times, maintain accurate books and records with respect to the Collateral. Secured Party, at
its sole cost and expense, is hereby given the right to audit the books and records of Debtor relating to said Collateral at any
time, and from time to time, as Secured Party deems proper. At Secured Party’s request, Debtor shall cause to be marked conspicuously
all documents constituting the Collateral with a legend in form and substance satisfactory to Secured Party.

 

(f)       Location
of Collateral. Debtor shall give Secured Party written notice of each office of Debtor in which records of Debtor pertaining
to Collateral are kept, or will be kept, in any of said office, offices, location, or locations. Except as such notice is given,
all records of Debtor pertaining to the Collateral are and shall be kept at Debtor’s address as shown herein.

 

(g)       Notice
of Changes. Debtor will notify Secured Party of any material change occurring in or to the Collateral, of a change in Debtor’s
mailing address, or in any material change in any fact or circumstance warranted or represented by Debtor in this Agreement or
furnished to Secured Party, or if any Event of Default occurs, prior to or immediately following the occurrence thereof.

 

(h)       Use
and Disposition of Collateral. Debtor will not use the Collateral illegally or encumber the same without the prior written
consent of Secured Party. Without the prior written consent of Secured Party, Debtor will not sell, lease, otherwise transfer,
hypothecate or anticipate the Collateral, except that Debtor may sell inventory in the ordinary course of business for fair value
(including the giving of trade discounts in arms-length transactions).

 

(i)       Removal
of Collateral. Debtor will not remove any material portion of the Collateral from its present location to another State or
local jurisdiction in which Secured Party determines that the Security Interest granted hereby may not be perfected, unless and
until Debtor: (i) gives the Secured Party prior written notice of such intended move and receives the written consent of the Secured
Party, and (ii) provides the Secured Party with an opinion of counsel for Debtor that the security interest in favor of the Secured
Party created by this Agreement constitutes a valid and perfected first lien on, and a perfected security interest in, such inventory
in the county, jurisdiction and State in which such inventory is to be moved. Notwithstanding the foregoing, it is understood and
agreed that if for any reason any of the Collateral at any time is kept or located at locations other than those above listed or
contained in any aforementioned notice given to Secured Party, Secured Party shall nevertheless have and retain a security interest
therein. Debtor shall furnish to Secured Party a statement respecting any loss or material damage to any of the Collateral. Debtor
shall pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against the Collateral except to the extent that the validity thereof
is being contested in good faith.

 

    
	Security Agreement
	Page 4 of 11

 

     

    

(j)       Insurance.
From and after the date of this Agreement and until the Obligation is paid in full:

 

(i)       Debtor
will, at its expense, maintain at all times “all-risk” insurance on the Collateral against loss or damage (including,
without limitation, against loss or damage by fire, explosion, theft and such other casualties as are usually insured against by
prudent companies engaged in the same or similar businesses) in such amounts, in such form and with such insurance companies as
shall be reasonably satisfactory to Secured Party.

 

(ii)       Debtor
will, at its expense, maintain at all times general public liability insurance against claims for bodily injury or death or property
damage arising out of the use, ownership, possession, operation or condition of the Collateral which Debtor uses in the ordinary
course of business, such insurance to be in such amounts, in such form and with such insurance companies as shall be reasonably
satisfactory to Secured Party.

 

(iii)       Debtor
will, at its own expense, maintain at all times workmen’s compensation or similar insurance as may be required under the
laws of each jurisdiction where Debtor is located or operates.

 

(iv)       Debtor
shall not do any act, nor voluntarily suffer or permit any act to be done, whereby any insurance required hereby shall or may be
suspended, impaired or defeated, or suffer or permit the Collateral to be used in any activity not permitted under the policies
of insurance then in effect without first procuring insurance satisfactory to Secured Party in all respects for such activity.

 

(v)       Debtor
shall deliver to Secured Party true copies of the policies (or certificates thereof), certified to the satisfaction of Secured
Party, evidencing the insurance maintained hereunder.

 

(vi)       Secured
Party shall be named as additional insureds on all insurance policies required hereunder and such policies shall provide that there
shall be no cancellations or modifications of such policies unless Secured Party is notified in writing at least ten (10) days
prior to such cancellations or modifications.

 

    
	Security Agreement
	Page 5 of 11

 

     

    

(vii)       Debtor
will deliver to Secured Party, promptly upon request and in any event within ninety (90) days of any such request, a certificate
signed by the president or other authorized officer of Debtor setting forth the particulars as to all insurance required to be
maintained pursuant to this subparagraph and certifying that such insurance policies comply with the requirements of this subparagraph,
that all premiums then due thereon have been paid and that the same are in full force and effect.

 

(k)       Inventory.
Secured Party’s Security Interest in inventory (if applicable) shall continue through all steps of manufacture and sale and
attach without any further action to raw materials, work in process, finished goods, returned goods and proceeds resulting from
the sale or disposition of such inventory. All inventory is or will be kept at the address of Debtor specified in this Agreement
or at such other addresses as provided in writing to Secured Party. Debtor will notify Secured Party in writing of any changes
in or additions to the address set forth herein. Notwithstanding the foregoing it is understood and agreed that if for any reason
inventory be at any time kept or located at locations other than those above listed or hereafter consented to by Secured Party,
Secured Party shall nevertheless have and retain a security interest therein. No inventory shall be removed from such locations
except for the purposes of sales, leases or other uses in the ordinary course of business; but a sale in the ordinary course of
business shall not include any transfer or sale in satisfaction, partial or complete, of a debt owed by the Debtor.

 

(l)       Security.
Debtor acknowledges and agrees that the Note shall be secured by a first security interest in the Collateral.

 

(m)       Annual
Audited Financial Statements. Debtor shall furnish to Secured Party unaudited (unqualified) financial statements for Debtor
(to include a balance sheet, income statement, statement of changes in equity, statement of cash flows and notes thereto) no later
than March 31st of each year, subject to Secured Party’s reasonable approval of the independent certified public
accounting firm.

 

6.       Rights
and Powers of Secured Party. Secured Party may, in its discretion, upon the occurrence of an Event of Default hereunder which
shall be continuing, do any one or more of the following: (i) require Debtor to give possession or control of the Collateral to
Secured Party; (ii) take physical possession of the Collateral and maintain it on Debtor’s premises, in a public warehouse
or at such other place as to which Secured Party may remove the Collateral or any part thereof; (iii) take control of proceeds
and use cash proceeds to reduce any part of the Obligation; (iv) take any action Debtor is required to take or any other necessary
action to obtain, preserve, and enforce this Agreement, and maintain and preserve the Collateral, without notice to Debtor, and
add costs of same to the Obligation (but Secured Party is under no duty to take any such action); and (v) release Collateral in
its possession to Debtor, temporarily or otherwise. Secured Party may at any time in its discretion transfer any of the Collateral
or evidence thereof into its own name or that of its nominee and receive the proceeds therefrom and hold the same as security for
the Obligation, or, following the occurrence and continuance of an Event of Default, apply the same thereon. Secured Party may,
following the occurrence and continuance of an Event of Default, but shall be under no duty to, demand, collect, receipt for, settle,
compromise, adjust, sue for, foreclose, or realize upon Collateral, in its own name or in the name of Debtor, as the Secured Party
may determine. Secured Party shall not be liable for any act or omission on the part of the Secured Party, its officers, agents,
or employees, except willful misconduct and gross negligence. The foregoing rights and powers of Secured Party shall be in addition
to, and not a limitation upon, any rights and powers of Secured Party given by law, custom, elsewhere by this Agreement or otherwise.

 

    
	Security Agreement
	Page 6 of 11

 

     

    

7.       Default.

 

(a)       Events
of Default. Debtor shall be in default under this Agreement upon the happening of any of the following events or conditions
(“Events of Default”):

 

. (i)Default
in the timely payment or performance of the Obligation or any covenant or liability contained herein or secured hereby; or

 

(ii)       Any
representation or warranty contained herein shall be false or misleading in any material respect when made.

 

(b)       Remedies
of Secured Party Upon Default. When an Event of Default occurs, and at any time thereafter, Secured Party may declare the Obligation
or any part thereof immediately due and payable and may proceed to enforce payment of the same and to exercise any and all of the
rights and remedies provided by Title 1 of the Texas Business and Commerce Code as well as all other rights and remedies possessed
by Secured Party under this Agreement or otherwise. Secured Party may require Debtor to assemble the Collateral and make it available
to Secured Party at any place to be designated by the Secured Party which is reasonably convenient to all parties. Unless the Collateral
threatens to decline rapidly in value or is of a type customarily sold on a recognized market, Secured Party will give Debtor reasonable
notice of the time after which any private sale or any other intended disposition thereof is to be made. Expenses of retaking,
holding, preparing for sale, selling, leasing and the like shall include Secured Party’s reasonable attorneys’ fees
and legal expenses. Secured Party shall be entitled to immediate possession of the Collateral and shall have authority to enter
upon any premises upon which the same may be situated and remove the same therefrom. If Secured Party disposes of the Collateral,
or any portion thereof, following default, the proceeds of such disposition available to satisfy the Obligation shall be applied
by Secured Party to the Obligation in such order and in such manner as Secured Party in its discretion shall decide.

 

8.       General.

 

(a)       Assignment
of Collateral by Secured Party. The Secured Party may assign all or any part of the Obligation, and may assign, transfer, or
deliver to any transferee any or all of the Collateral, and thereafter Secured Party shall be fully discharged from all responsibility
with respect to the Collateral so assigned, transferred or delivered. Such transferee shall be vested with all the powers and rights
of the Secured Party hereunder with respect to such Collateral, but the Secured Party shall retain all rights and powers hereby
given with respect to any of the Collateral not so assigned or transferred.

 

    
	Security Agreement
	Page 7 of 11

 

     

    

(b)       Waiver.
No delay on the part of the Secured Party in exercising any power or right shall operate as a waiver thereof, nor shall any single
or partial exercise of any power or right preclude other or further exercise thereof or the exercise of any other power or right.
No waiver by Secured Party of any right hereunder or of any Event of Default by Debtor shall be binding upon Secured Party unless
in writing, and no failure by Secured Party to exercise any right hereunder or waiver of any Event of Default of Debtor shall operate
as a waiver of any other or further exercise of such right or of any further Event of Default.

 

(c)       Parties
Bound. The rights of Secured Party hereunder shall inure to the benefit of its successors and assigns. The terms of this Agreement
shall be binding upon the successors and assigns of the parties hereto. All representations, warranties and agreements of Debtor
shall bind Debtor’s successors and assigns. This Agreement shall constitute a continuing agreement applying to all future
transactions of a character contemplated at the date of this Agreement.

 

(d)       Definitions.
Unless the context indicates otherwise, definitions in the Texas Business and Commerce Code (the “Code”) apply
to words and phrases in this Agreement; if Code definitions conflict, Title 1 of the Code definitions apply.

 

(e)       Notice.
Any notices or other communications required or permitted hereunder shall be sufficiently given if delivered personally or sent
by registered or certified mail, postage prepaid, to the applicable party at its address below given or at such other address as
shall be furnished in writing by such party to the other, and shall be deemed to have been given as of the date so delivered or
deposited in the United States Mail. Notice mailed in accordance with this section at least five (5) days prior to the related
action (or if the Code elsewhere requires a longer period, such longer period) shall be deemed reasonable.

 

	 	If to Debtor:		Vaden Landers
	 	 	 	5203 Maryland Way, Suite 102
	 	 	 	Brentwood, Tennessee 37027
	 	 	 	 
	 	If to Secured Party:	 	Payment Data Systems, Inc.
	 	 	 	12500 San Pedro, Suite 120
	 	 	 	San Antonio, Texas 78216

 

(f)       Modifications.
No provision hereof shall be modified or limited except by a written agreement expressly referring hereto and to the provision
so modified or limited and signed by all parties to this Agreement, and without limiting the foregoing, no course of conduct, usage
of trade or law merchant shall modify or limit any provision hereof.

 

(g)       Severability.
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

    
	Security Agreement
	Page 8 of 11

 

     

    

(h)       Financing
Statement. Secured Party is authorized on behalf of Debtor as Debtor’s agent and attorney in fact, for such purpose,
to complete and sign one or more financing statements with respect to any Collateral covered by this Agreement and to file the
same in an appropriate office or place. A carbon, photographic or other reproduction of this Agreement or of any financing statement
prepared in conjunction herewith is sufficient as a financing statement.

 

(i)       Applicable
Law. This Agreement shall be construed in accordance with the laws of the State of Texas, except to the extent that the validity
and perfection of the Security Interest, or remedies hereunder, in respect of any particular Collateral are governed by the laws
of a jurisdiction other than the State of Texas.

 

(j)       Jurisdiction
and Venue. Each of the parties agrees that any action or proceeding arising out of or related in any way to this Agreement
shall be brought solely in a Texas state court of competent jurisdiction sitting in San Antonio, Bexar County, Texas. Debtor 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.

 

(k)       Facsimile
or .pdf Signatures. Delivery of a copy of this Agreement bearing an original signature by facsimile transmission (whether directly
from one facsimile device to another by means of a dial-up connection or whether mediated by the worldwide web), by electronic
mail in “portable document format” (.pdf) form, or by any other electronic means intended to preserve the original
graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the
original signature.

 

(l)       No
Presumption Against Drafter. The parties understand and agree that: (a) this Agreement is freely negotiated by all parties;
and (b) in any controversy, dispute or contest over the meaning, interpretation, validity or enforceability of this Agreement or
any of its terms or conditions, there shall be no inference, presumption or conclusion drawn against either party by virtue of
that party having drafted this Agreement or any portion thereof.

 

9.        Limitation
on Agreements. All agreements between Debtor and Secured Party, whether now existing or hereafter arising and whether written
or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of the maturity
of the Obligation or otherwise, shall the amount paid, or agreed to be paid, to Secured Party for the use, forbearance, or detention
of the money to be loaned under the Note or otherwise or for the payment or performance of any covenant or obligation contained
herein, or in any other document evidencing, securing or pertaining to the Obligation or the Collateral, exceed the maximum amount,
if any, permissible under applicable law. If from any circumstances whatsoever interest would otherwise be payable to Secured Party
in excess of the maximum lawful amount, the interest payable to Secured Party shall be reduced to the maximum amount permitted
under applicable law, and if from any such circumstance the Secured Party shall ever receive as interest or otherwise an amount
which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of
the principal amount owing on account of the Obligation or on account of any other principal indebtedness of Debtor to the Secured
Party, and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal of the Obligation
and such other indebtedness, such excess shall be refunded to Debtor. All sums paid or agreed to be paid to the Secured Party for
the use, forbearance or detention of the indebtedness of Debtor to the Secured Party shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full of the principal
(including the period of any renewal or extension thereof) so that the interest on account of such indebtedness shall not exceed
the maximum amount permitted by applicable law. The term “applicable law” as used in this Section 9 shall mean
the laws of the State of Texas or the laws of the United States, whichever laws allow the greater rate of interest, as such laws
now exist or may be changed or amended or come into effect in the future. The terms and provisions of this Section shall control
and supersede every other provision of all agreements between the Debtor and the Secured Party.

 

    
	Security Agreement
	Page 9 of 11

 

     

    

10.       No
Unlawful Liens. In no event may this Agreement secure any debt or create any lien which is prohibited by law.

 

11.       Debtor
Benefitting from Note. Debtor acknowledges and agrees that Debtor is benefitting from the Note.

 

 

[SIGNATURE PAGE FOLLOWS]

 

    
	Security Agreement
	Page 10 of 11

 

     

    

EXECUTED as of the
Effective Date.

 

 

	 	DEBTOR:	 
	 	 		 
	 	 		 
	 	SINGULAR PAYMENTS, LLC,
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Vaden Landers
	 	 	Vaden Landers, President
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	SECURED PARTY:
	 	 	 	 
	 	 		 
	 	PAYMENT DATA SYSTEMS, INC.
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Louis A. Hoch
	 	 		 
	 	 	Name:	Louis A.
    Hoch
	 	 	 	 
	 	 	Title:	President
    & CEO

 

 

 

 

 

	Security Agreement	Page 11 of 11Exhibit 10.3

 

MEMBERSHIP INTEREST PLEDGE AGREEMENT

 

This Membership Interest
Pledge Agreement (this “Agreement”) is executed effective as of March 7, 2017 (the “Effective Date”)
by Vaden Landers (“Pledgor”) to Payment Data Systems, Inc., a Nevada corporation (“Lender”).

 

WHEREAS, Pledgor owns
100% of the membership interests of Singular Payments, LLC, a Florida limited liability company (“Borrower”);
and

 

WHEREAS, Lender has
agreed to make a loan (the “Loan”) to Borrower evidenced by a line of credit promissory note of even date herewith,
executed by Borrower payable to the order of Lender, in a principal amount up to a maximum amount of $500,000.00 (the Note”);
and

 

WHEREAS, Pledgor has
agreed, on the terms set forth herein, to secure the payment and performance of the Note and the other obligations set forth in
Section 2 by pledging to Lender a security interest in and to Pledgor’s 100% membership interest in Borrower (the “Pledged
Interest”);

 

NOW, THEREFORE, in
consideration of the premises, Pledgor hereby agrees as follows:

 

1.                 
Pledged Interest. Pledgor hereby pledges to Lender, and grants to Lender, a security interest in the Pledged Interest
and the certificate (if any) representing the Pledged Interest, and all dividends, distributions, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Interest.

 

2.        Security
for Obligations. This Agreement is given to secure the following (collectively, the “Obligations”):

 

(a)       The
full and timely payment of the principal of, interest on, and all other amounts and payments due under or secured by: (i) the Note
(and all extensions, modifications, increases and renewals thereof and all substitutes therefor made or given from time to time);
and (ii) any other document evidencing, securing or pertaining to the Note as shall, from time to time, be executed and delivered
by Pledgor or any other party to Lender (collectively, the “Loan Documents”); and

 

(b)       The
full and timely performance and discharge of any covenant, warranty, representation and other obligations made or undertaken by
Pledgor or others to Lender as set forth in the Loan Documents.

 

3.       Delivery
of Pledged Interest. All certificates or instruments evidencing the Pledged Interest (if any) shall be delivered to and held
by or on behalf of Lender pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Lender.

 

    
	Membership Interest Pledge Agreement
	Page 1 of 7

 

     

    

4.       Representations
and Warranties. Pledgor represents and warrants to Lender the following:

 

(a)       The
Pledged Interest has been duly authorized and validly issued and is fully paid and non-assessable;

 

(b)       Pledgor
is the legal and beneficial owner of the Pledged Interest free and clear of any restriction, claim, lien, security interest, option
or other charge or encumbrance, except for the security interest created by this Agreement; and

 

(c)       The
pledge made pursuant to this Agreement creates, as security for payment of the Obligations, a valid and perfected first priority
security interest in the Pledged Interest; and

 

(d)       No
authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is
required either: (i) for the pledge made pursuant to this Agreement or for the execution, delivery or performance of this Agreement
by Pledgor; or (ii) for the exercise by Lender of the voting or other rights provided for in the Agreement or the remedies in respect
of the Pledged Interest pursuant to this Agreement (except as may be required in connection with such disposition by laws affecting
the offering and sale of securities generally).

 

5.       Further
Assurances. Pledgor agrees that at any time and from time to time, at the expense of Pledgor, Pledgor will promptly execute
and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Lender
may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable
Lender to exercise and enforce its rights and remedies hereunder with respect to any Pledged Interest.

 

6.        Voting
Rights; Distributions; Etc.

 

(a)       So
long as no Event of Default (as hereinafter defined) has occurred and is continuing:

 

(i)       Pledgor
shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Interest or any part thereof
for any purpose not inconsistent with the terms of the Loan Documents or this Agreement; provided, however, that Pledgor shall
not exercise or refrain from exercising any such right if such action would have a material adverse affect on the value of the
Pledged Interest or any part thereof; and provided, further, that Pledgor shall give Lender at least five (5) business days’
prior written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right,
if such exercise or non-exercise would have a material adverse affect on the value of the Pledged Interest or any part thereof.

 

(ii)       Pledgor
shall be entitled to receive and retain any and all dividends and distributions paid in respect of Pledgor’s Pledged Interest.

 

    
	Membership Interest Pledge Agreement
	Page 2 of 7

 

     

    

(iii)       Lender
shall execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies and other instruments as Pledgor
may reasonably request for the purpose of enabling Pledgor to exercise the voting and other rights which it is entitled to exercise
pursuant to paragraph (i) above and to receive the amounts which it is authorized to receive and retain pursuant to paragraph (ii)
above.

 

(b)       Upon
the occurrence and during the continuance of an Event of Default:

 

(i)       All
rights of Pledgor to exercise the voting and other consensual rights which he or she would otherwise be entitled to exercise pursuant
to Section 6(a)(i) and to receive the amounts which it would otherwise be authorized to receive and retain pursuant to Section
6(a)(ii) shall cease, and all such rights shall thereupon become vested in Lender who shall thereupon have the sole right to exercise
such voting and other consensual rights and to receive and hold as Pledged Interest such amounts.

 

(ii)       All
amounts which are received by Pledgor contrary to the provisions of paragraph (i) of this Section 6(b) shall be received in trust
for the benefit of Lender, shall be segregated from other funds of Pledgor and shall be forthwith paid over to Lender as Pledged
Interest in the same form as so received (with any necessary endorsement).

 

7.       Lender
Appointed Attorney-in-Fact. Pledgor hereby appoints Lender as Pledgor’s attorney-in-fact, with full authority in the
place and stead of Pledgor and in the name of Pledgor or otherwise, from time to time in Lender’s discretion to take any
action and to execute any instrument which Lender may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments made payable to Pledgor representing any payment
or other distribution in respect of the Pledged Interest and to give full discharge for the same; provided, however, that such
appointment and the rights granted to Lender pursuant to this Section 7 shall only be deemed effective upon the occurrence and
during the continuance of an Event of Default (as hereinafter defined).

 

8.       Lender
May Perform. If Pledgor defaults (as hereinafter defined) in performance of any term, condition or provision contained herein,
Lender may itself perform, or cause performance of, such term, condition or provision.

 

9.       Reasonable
Care. Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Interest in its
possession if the Pledged Interest is accorded treatment substantially equal to that which Lender accords its own property, it
being understood that Lender shall not have any responsibility for (a) ascertaining or taking action with respect for calls, conversions,
exchanges, tenders or other matters relative to any Pledged Interest, whether or not Lender has or is deemed to have knowledge
of such matters (but Lender agrees to act upon written instructions of Pledgor with respect to such matters if such instructions
are received a reasonable period of time prior to any requested action), or (b) taking any necessary steps to preserve rights against
any parties with respect to any Pledged Interest.

 

    
	Membership Interest Pledge Agreement
	Page 3 of 7

 

     

    

10.       Remedies
Upon Default. If a default occurs under the any of the Loan Documents, or of any of the Obligations, and the default continues
after Lender gives Pledgor written notice of the default and Pledgor has not cured such default within ten (10) calendar days for
a monetary default or within thirty (30) calendar days for a non-monetary default, in each case from the date of such notice as
set forth herein (an “Event of Default”):

 

(a)       Lender
may exercise in respect of the Pledged Interest, in addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code (the “Code”)
in effect in the State of Texas at that time, and Lender may also, without notice except as specified below, sell the Pledged Interest
or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at Lender’s
office or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Lender may deem commercially
reasonable. Pledgor recognizes that Lender may be unable to effect a public sale of any Pledged Interest by reason of certain prohibitions
contained in the Securities Act (as defined herein) and applicable state securities laws or otherwise or may determine that a public
sale is impracticable, not desirable or not commercially reasonable and, accordingly, may resort to one or more private sales thereof
to a restricted group of purchasers that shall be obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges and agrees that any such
private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. Pledgor
agrees that, to the extent notice of sale shall be required by law, at least thirty (30) days’ notice to Pledgor of the time
and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Lender
shall not be obligated to make any sale of Pledged Interest regardless of notice of sale having been given. Lender may adjourn
any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was adjourned.

 

(b)       Any
cash held by Lender as Pledged Interest and all cash proceeds received by Lender in respect of any sale of, collection from, or
other realization upon all or any part of the Pledged Interest shall be applied (after payment of any amounts payable to Lender
pursuant to Section 12) in whole by Lender against, all or any part of the Obligations in such order as Lender shall elect. Any
surplus of such cash or cash proceeds held by Lender and remaining after payment in full of all the Obligations shall be paid over
to Pledgor or to whomsoever may be lawfully entitled to receive such surplus.

 

11.       Expenses.
Pledgor will upon demand pay to Lender the amount of any and all reasonable expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, which Lender may incur in connection with (a) the exercise or enforcement of any
of the rights of Lender hereunder, or (b) the failure by Pledgor to perform or observe any of the provisions hereof.

 

12.       Continuing
Security Interest. This Agreement shall create a continuing security interest in the Pledged Interest and shall (a) remain
in full force and effect until payment in full of the Obligations, (b) be binding upon Pledgor and their respective successors
and assigns, and (c) inure to the benefit of Lender and its successors, transferees and assigns. Upon the payment in full of the
Obligations, Pledgor shall be entitled to the return, upon its request and at its expense, of such of the Pledged Interest as shall
not have been sold or otherwise applied pursuant to the terms thereof, and this Agreement shall terminate.

 

    
	Membership Interest Pledge Agreement
	Page 4 of 7

 

     

    

13.       Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. Unless otherwise
defined herein, terms defined in Title 1, Chapter 9 of the Texas Business and Commerce Code entitled “Uniform Commercial
Code” in the State of Texas are used herein as therein defined.

 

14.       Jurisdiction
and Venue. Each of the parties agrees that any action or proceeding arising out of or related in any way to this Agreement,
the Note and the other Loan Documents shall be brought solely in a Texas state court of competent jurisdiction sitting in San Antonio,
Bexar County, Texas. Pledgor 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.

 

15.       Notices.
Any notice or other communications which are required or permitted hereunder shall be in writing and shall be delivered either
personally, by registered or certified mail (postage prepaid and return receipt requested), or by express courier or delivery service,
addressed as follows:

 

	 	If to Pledgor:	 	Vaden Landers
	 	 	 	5203 Maryland Way,
Suite 102
	 	 	 	Brentwood, Tennessee
37027
	 	 	 	 
	 	If to Lender:	 	Payment Data Systems,
Inc.
	 	 	 	12500 San Pedro, Suite
120
	 	 	 	San Antonio, Texas
78216

 

or at such other address and number as
any party shall have previously designated by written notice given to the other parties in the manner hereinabove set forth. Notices
shall be deemed given when delivered and receipted for (or upon the date of attempted delivery where delivery is refused) if hand-delivered,
sent by express courier or delivery service, or three business days after mailing if sent by certified or registered mail, return
receipt requested.

 

16.       Pledgor
Benefit From Obligations. Pledgor acknowledges and agrees that he owns the Pledged Interest, and that Pledgor will benefit
from the Obligations.

 

    
	Membership Interest Pledge Agreement
	Page 5 of 7

 

     

    

17.       Authorization
to File Financing Statements. Pledgor authorizes Lender, at any time and from time to time, to file or record financing statements,
amendments thereto, and other filing or recording documents or instruments with respect to the Pledged Interest in such form and
in such offices as Lender reasonably determines appropriate to perfect the security interests of Lender under this Agreement. A
photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording
document or instrument for filing or recording in any jurisdiction.

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

    
	Membership Interest Pledge Agreement
	Page 6 of 7

 

     

    

IN WITNESS WHEREOF,
Pledgor and Lender have executed this Agreement as of the Effective Date.

 

 

	 	PLEDGOR:
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	/s/ Vaden Landers
	 	VADEN LANDERS
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	LENDER:
	 	 	 	 
	 	 	 	 
	 	PAYMENT DATA SYSTEMS, INC.
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Louis A. Hoch
	 	 	 	 
	 	 	Name:	Louis A. Hoch
	 	 	 	 
	 	 	Title:	President & CEO

 

 

 

 

 

 

	Membership Interest Pledge Agreement

	Page 7 of 7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00268-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00268-of-00352.parquet"}]]