Item 1.01. Entry into a Material Definitive Agreement
On June 22, 2017, JetPay Payment Services,
FL, LLC (“JetPay Payments, FL” or “Borrower”), a Delaware limited liability company and a direct subsidiary
of JetPay Corporation (“the Company”), entered into a credit agreement (the “Credit Agreement”) with Fifth
Third Bank, an Ohio banking corporation (“Lender”), pursuant to which Lender extended to JetPay Payments, FL a $1,600,000
Draw/Term Note to finance software integration costs related to a contract with the State of Illinois. In connection with its entry
into the Credit Agreement, JetPay Payments, FL entered into a Promissory Note, dated June 22, 2017, an Amended and Restated Revolving
Promissory Note for $1,000,000 (increased from a previous revolving promissory note for $500,000), and a Second Modification of
Credit Agreement and Other Loan Documents (the “Second Modification”), all in favor of Lender.
The Draw/Term Note provides for a 12 month
draw period through June 22, 2018 (“the Conversion Date”), at which time the loan converts to a 36 month amortizing
term loan which matures on June 22, 2021. The Draw/Term Note bears interest at the applicable LIBOR Rate plus 3%. The Draw/Term
Note is payable in monthly installments beginning on the Conversion Date and can be prepaid without penalty or premium at any time.
The $1,000,000 Amended and
Restated Revolving Promissory Note renews, amends, replaces and supersedes the original $500,000 Revolving Promissory Note,
extending maturity to June 1, 2018 and bears interest at a rate of 2.00% plus the LIBOR Rate for the Interest Period (as such
terms are defined in the Amended and Restated Revolving Promissory Note). The Amended and Restated Revolving Promissory Note
is used to extend temporary credit to cover JetPay Payments, FL’s customers’ processing return items.
The Second Modification amends
and restates an original term loan from Lender to JetPay Payments, FL dated June 2, 2016 in the original amount of
$1,068,960.30 to incorporate certain terms in the new Credit Agreement, including incorporating revised debt covenants,
financial reporting requirements, collateral requirements, modifications to parent guarantees, and representations and
warranties of Borrower.
Additionally,
JetPay Payments, FL entered into a Master Equipment Lease Agreement and related Interim Funding Schedule with the Lender to
provide up to $1.5 million of lease financing for certain point-of-sale equipment related to the Borrowers, contracts with
the State of Illinois and the State of Missouri and other computer equipment. The Master Equipment Lease Agreement is secured
by the equipment financed thereunder. The Interim Funding Schedule provides the details of the allowable equipment to
finance and provides for interim draw periods through June 30, 2018. Upon completion of an interim draw, the leases under
Master Lease Agreement will bear an interest rate of the applicable LIBOR Rate plus 3% until termed out on a schedule, at
which time such leases will amortize and bear interest at a fixed rate set forth in the applicable schedule.
The Draw/Term Note and the Master Lease Agreement are guaranteed
by JetPay Corporation pursuant to the guaranty, dated June 22, 2017 (the “Guaranty Agreement”), by and between JetPay
Corporation and Lender. The Amended and Restated Revolving Promissory Note is guaranteed by JetPay Corporation pursuant to th
e
guaranty, dated June 1, 2016, by and between JetPay Corporation and Lender, as amended by the Second Modification.
Under the Credit Agreement and
Master Equipment Lease Agreement, JetPay Payments, FL agreed to comply with certain customary covenants, including a
financial covenant related to its fixed charge coverage ratio and debt coverage ratio, during the term of the Credit
Agreement, and the Notes may be subject to prepayment upon certain Events of Default as set forth in the Credit Agreement,
the Notes and the other Loan Documents (as defined in the Credit Agreement). Additionally, the Guaranty Agreement requires
that the Company maintain a $2,000,000 minimum liquidity level while there outstanding amounts owed under the various credit
arrangements. In connection with its entry into the Credit Agreement, JetPay Payments, FL entered into a security agreement
with Lender pursuant to which JetPay Payment, FL granted Lender a security interest in substantially all of its assets as
collateral.
The foregoing descriptions of the Credit Agreement
filed herewith as Exhibit 10.1, the Promissory Note filed herewith as Exhibit 10.2, the Second Modification of Credit Agreement
and Other Documents filed herewith as Exhibit 10.3, the Security Agreement filed herewith as Exhibit 10.4, the Guaranty Agreement
filed herewith as Exhibit 10.5, the Amended and Restated Revolving Promissory Note filed herewith as Exhibit 10.6, and the Master
Equipment Lease Agreement filed herewith as Exhibit 10.7 do not purport to be complete and are qualified in their entireties by
reference to the documents filed herewith as Exhibit 10.1 through Exhibit 10.7, as applicable.