EX-4.2



 







Exhibit 4.2




Execution Copy




iPayment, Inc.




iPayment of California, LLC

1st National Processing, Inc.

E-Commerce Exchange, Inc.

Online Data Corp.

iPayment of Maine, Inc.

Cardsync Processing, Inc.

Quad City Acquisition Sub, Inc.

Cardpayment Solutions, L.L.C.

iPayment Acquisition Sub LLC

TS Acquisition Sub, LLC

iPayment ICE Holdings, Inc.

PCS Acquisition Sub, LLC

NPMG Acquisition Sub, LLC

iPayment Central Holdings, Inc.




$205,000,000




93/4% Senior Subordinated Notes due 2014




PURCHASE AGREEMENT




dated May 3, 2006




Banc of America Securities LLC



J.P. Morgan Securities Inc.





 









 








PURCHASE AGREEMENT




May 3, 2006




BANC OF AMERICA SECURITIES LLC

J.P. MORGAN SECURITIES INC.

     As Initial Purchasers

c/o Banc of America Securities LLC

9 West 57th Street

New York, New York 10019




Ladies and Gentlemen:




     Introductory. iPayment, Inc., a Delaware corporation (the “Company”), proposes to issue and
sell to the several Initial Purchasers named in Schedule A (the “Initial Purchasers”), acting
severally and not jointly, the respective amounts set forth in such Schedule A of $205,000,000
aggregate principal amount of the Company’s 93/4% Senior Subordinated Notes due 2014 (the “Notes”).
Banc of America Securities LLC and J.P. Morgan Securities Inc. have agreed to act as the several
Initial Purchasers in connection with the offering and sale of the Notes.



     The Securities (as defined below) will be issued pursuant to an indenture, to be dated as of
the Closing Date (as defined in Section 2 hereof) (the “Indenture”), among the Company, the
Guarantors (as defined below) and Wells Fargo Bank, National Association, as trustee (the
“Trustee”). The Notes and the Exchange Notes will be issued only in book-entry form in the name of
Cede & Co., as nominee of The Depository Trust Company (the “Depositary”), pursuant to a letter of
representations, to be dated on or before the Closing Date (the “DTC Agreement”), between the
Company and the Depositary.



     The holders of the Securities will be entitled to the benefits of a registration rights
agreement, to be dated as of the Closing Date (the “Registration Rights Agreement”), among the
Company, the Guarantors and the Initial Purchasers, pursuant to which the Company and the
Guarantors will agree to use their commercially reasonable efforts to file with the Commission (as
defined below), under the circumstances set forth therein, (i) a registration statement under the
Securities Act (as defined below) relating to another series of debt securities of the Company with
terms substantially identical to the Notes (the “Exchange Notes”) to be offered in exchange for the
Notes (the “Exchange Offer”) and (ii) to the extent required by the Registration Rights Agreement,
a shelf registration statement pursuant to Rule 415 of the Securities Act relating to the resale by
certain holders of the Notes, and, in each case, to use their commercially reasonable efforts to
cause such registration statements to be declared effective.



1









 





     The payment of principal of, premium and Additional Interest (as defined in the Final Offering
Memorandum under “Description of Notes – Certain Definitions”), if any, and interest on the Notes
and the Exchange Notes will be fully and unconditionally guaranteed on an unsecured senior
subordinated basis, jointly and severally, by the guarantors named in Schedule B hereto
(collectively, the “Guarantors”), pursuant to their guarantees (the “Guarantees”). The Notes and
the Guarantees thereof are herein collectively referred to as the “Securities”; and the Exchange
Notes and the Guarantees thereof are herein collectively referred to as the “Exchange Securities.”
For purposes of this Agreement, “Subsidiary” shall have the meaning given to such term in the
Preliminary Offering Memorandum under the caption “Description of Notes—Certain Definitions”.



     As more fully described in the Pricing Disclosure Package (as defined below), the offering of
the Securities is being undertaken in connection with the merger (the “Merger”) of iPayment
MergerCo, Inc. (“MergerCo”), a Delaware corporation and a wholly owned subsidiary of iPayment
Holdings, Inc. (“Holdings”), with and into the Company, pursuant to an Agreement and Plan of
Merger, dated as of December 27, 2005 (the “Merger Agreement”), by and among the Company, MergerCo
and Holdings. Holdings is a corporation newly formed by Gregory S. Daily, the Chairman and Chief
Executive Officer of the Company, and Carl A. Grimstad, the President of the Company, and certain
parties related to them. Subject to certain adjustments, Holdings will pay $43.50, without
interest, for each issued and outstanding share of the Company’s common stock (the “Common Stock”)
(other than shares of the Company’s common stock held by Holdings or any of its subsidiaries
immediately prior to the effective time of the Merger, shares of the Company’s common stock held by
the Company or any of its wholly-owned subsidiaries and shares of the Company’s common stock held
by the Company’s stockholders who perfect and do not withdraw their appraisal rights under Delaware
law).



     Concurrently with the closing of the offering of the Securities, the Company will (1) enter
into senior secured credit facilities in an initial aggregate principal amount of $575,000,000 (the
“New Credit Facility”), by and among the Company, the lenders party thereto, the guarantors party
thereto and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer and
(2) repay all indebtedness outstanding and terminate all commitments under the Company’s existing
senior secured credit facilities (the “Existing Credit Facility”).



     The Company understands that the Initial Purchasers propose to make an offering of the
Securities on the terms and in the manner set forth herein and in the Pricing Disclosure Package
(as defined below) and agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein and the agreements of the Initial Purchasers in Section 7, all or a portion of the
Securities to purchasers (the “Subsequent Purchasers”) at any time after the time this Agreement is
executed by the parties hereto (the “Time of Execution”). The Securities are to be offered and
sold to or through the Initial Purchasers without being registered with the Securities and Exchange
Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act,”
which term, as used herein, includes the rules and regulations of the Commission promulgated
thereunder), in reliance upon exemptions therefrom. Pursuant to the terms of the Securities and
the Indenture, investors who acquire Securities shall be deemed to have agreed that Securities may
only be resold or otherwise transferred, after the date hereof, if such Securities are registered
for sale under the Securities Act or if an exemption from the registration requirements of the
Securities Act is available (including the exemptions afforded by



2









 




Rule 144A under the Securities Act (“Rule 144A”) or Regulation S under the Securities Act
(“Regulation S”)).




     The Company has prepared and delivered to each Initial Purchaser copies of a Preliminary
Offering Memorandum, dated April 21, 2006 (the “Preliminary Offering Memorandum”), and has prepared
and delivered to each Initial Purchaser copies of a Pricing Supplement, dated May 3, 2006 attached
hereto as Schedule C (the “Pricing Supplement”), describing the terms of the Securities, for use by
such Initial Purchaser in connection with its solicitation of offers to purchase the Securities.
The Preliminary Offering Memorandum and the Pricing Supplement are herein referred to as the
“Pricing Disclosure Package.” Promptly after the Time of Execution, the Company will prepare and
deliver to each Initial Purchaser a final offering memorandum dated the date hereof (the “Final
Offering Memorandum”).



     The Company hereby confirms its agreements with the Initial Purchasers as follows:



     Section 1. Representations and Warranties of the Company and the Guarantors. Each of the
Company and the Guarantors, jointly and severally, hereby represents, warrants and covenants to
each Initial Purchaser that, as of the date hereof and as of the Closing Date (references in this
Section 1 to the “Offering Memorandum” are to (x) the Pricing Disclosure Package in the case of
representations and warranties made as of the date hereof and (y) the Final Offering Memorandum in
the case of the representations and warranties made as of the Closing Date):



     (a) No Registration Required. Subject to compliance by the Initial Purchasers with the
representations and warranties set forth in Section 2 hereof and with the procedures set forth in
Section 7 hereof, it is not necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchasers and to each Subsequent Purchaser in the manner contemplated by
this Agreement and the Offering Memorandum to register the Securities under the Securities Act or,
until such time as the Exchange Securities are issued pursuant to an effective registration
statement, to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act,” which term, as used herein, includes the rules and regulations of the Commission
promulgated thereunder).



     (b) No Integration of Offerings or General Solicitation. None of the Company, its affiliates
(as such term is defined in Rule 501 under the Securities Act) (each, an “Affiliate”) or any person
acting on its or any of their behalf (other than the Initial Purchasers, as to whom the Company and
the Guarantors make no representation or warranty) has, directly or indirectly, solicited any offer
to buy or offered to sell, or will, directly or indirectly, solicit any offer to buy or offer to
sell, in the United States or to any United States citizen or resident, any security which is or
would be integrated with the sale of the Securities in a manner that would require the Securities
to be registered under the Securities Act. None of the Company, its Affiliates or any person
acting on its or any of their behalf (other than the Initial Purchasers, as to whom the Company and
the Guarantors make no representation or warranty) has engaged or will engage, in connection with
the offering of the Securities, in any form of general solicitation or general advertising within
the meaning of Rule 502 under the Securities Act. With respect to those Securities sold in
reliance upon Regulation S, (i) none of the Company, its Affiliates or any person acting on its or
their behalf (other than the Initial Purchasers, as to whom the Company



3









 




and the Guarantors make no representation or warranty) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S and (ii) each of the Company, its
Affiliates and any person acting on its or their behalf (other than the Initial Purchasers, as to
whom the Company and the Guarantors make no representation or warranty) has complied and will
comply with the offering restrictions set forth in Regulation S.




     (c) Eligibility for Resale under Rule 144A. The Securities are eligible for resale pursuant
to Rule 144A and will not be, at the Closing Date, of the same class as securities of the Company
listed on a national securities exchange registered under Section 6 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act,” which term, as used herein, includes the rules and
regulations of the Commission promulgated thereunder), or quoted in a U.S. automated interdealer
quotation system.



     (d) The Offering Memorandum. Neither the Pricing Disclosure Package, as of the Time of
Execution, nor the Final Offering Memorandum, as of its date or (as amended or supplemented in
accordance with Section 3(a), as applicable) as of the Closing Date, contains an untrue statement
of a material fact or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading; provided
that this representation, warranty and agreement shall not apply to statements in or omissions from
the Pricing Disclosure Package, the Final Offering Memorandum or any amendment or supplement
thereto made in reliance upon and in conformity with information furnished to the Company in
writing by any Initial Purchaser through Banc of America Securities LLC expressly for use in the
Pricing Disclosure Package, the Final Offering Memorandum or amendment or supplement thereto, as
the case may be. The Pricing Disclosure Package contains, and the Final Offering Memorandum will
contain, all the information specified in, and meeting the requirements of, Rule 144A. The Company
has not distributed and will not distribute, prior to the later of (x) the Closing Date and (y) the
completion of the Initial Purchasers’ distribution of the Securities (notice of which shall be
given to the Company by the Initial Purchasers if occurring after the Closing Date), any offering
material in connection with the offering and sale of the Securities other than the Pricing
Disclosure Package, the Final Offering Memorandum or any amendment or supplement to or of the Final
Offering Memorandum made in accordance with Section 3(b).



     (e) The Purchase Agreement. This Agreement has been duly authorized, executed and delivered
by, and is a valid and binding agreement of, the Company and the Guarantors, enforceable in
accordance with its terms, except as rights to indemnification, contribution or exculpation
hereunder may be limited by applicable law (including court decisions) or public policy and except
as the enforcement hereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles (whether considered in a
proceeding in equity or at law).



     (f) The Registration Rights Agreement and the DTC Agreement. Each of the Registration Rights
Agreement and the DTC Agreement has been duly authorized, and, on the Closing Date, will have been
duly executed and delivered by, and (assuming the due execution by the Initial Purchasers or the
Depositary, as the case may be) will constitute a valid and binding agreement of, the Company and,
in the case of the Registration Rights Agreement, the



4









 




Guarantors, enforceable in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization,
moratorium or other similar laws relating to or affecting the rights and remedies of creditors or
by general equitable principles (whether considered in a proceeding in equity or at law) and except
as rights to indemnification, contribution or exculpation under the Registration Rights Agreement
may be limited by applicable law (including court decisions) or public policy.




     (g) Authorization of the Notes and the Exchange Notes. The Notes to be purchased by the
Initial Purchasers from the Company are in the form contemplated by the Indenture, have been duly
authorized for issuance and sale pursuant to this Agreement and the Indenture and, at the Closing
Date, will have been duly executed by the Company and, assuming the due authorization, execution
and delivery of the Indenture by the Trustee, when authenticated in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor in accordance with the terms
of this Agreement, will constitute valid and binding agreements of the Company, enforceable in
accordance with their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or by general equitable
principles (whether considered in a proceeding in equity or at law) and will be entitled to the
benefits of the Indenture. The Exchange Notes have been duly and validly authorized for issuance
by the Company and, assuming the due authorization, execution and delivery of the Indenture by the
Trustee, when issued and authenticated in accordance with the terms of the Indenture, the
Registration Rights Agreement and the Exchange Offer, will constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent
transfer, reorganization, moratorium or similar laws relating to or affecting enforcement of the
rights and remedies of creditors or by general principles of equity and will be entitled to the
benefits of the Indenture and the Guarantees provided for therein.



     (h) Authorization of the Indenture. The Indenture has been duly authorized by the Company and
each of the Guarantors and, at the Closing Date, will have been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery thereof by the Trustee, will
constitute a valid and binding agreement of the Company and each of the Guarantors, enforceable
against the Company and each of the Guarantors in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent
transfer, reorganization, moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles (whether considered in a proceeding in
equity or at law).



     (i) Description of the Securities, the Indenture, the Registration Rights Agreement and the
New Credit Facility. The Notes, the Indenture and the Registration Rights Agreement will conform
in all material respects to the respective statements relating thereto contained in the Offering
Memorandum under the caption “Description of Notes”. The New Credit Facility will conform in all
material respects to the statements relating thereto contained in the Offering Memorandum under the
caption “Description of Certain Indebtedness”. The Exchange Notes and the Guarantees of the
Exchange Notes will conform in all material respects to the respective



5









 




statements relating thereto contained in the Offering Memorandum and the registration
statement relating to the Exchange Securities at the time such registration statement becomes
effective.




     (j) No Material Adverse Change. Except as otherwise disclosed in the Offering Memorandum,
subsequent to the respective dates as of which information is given in the Offering Memorandum:
(i) there has been no material adverse change, or any development that could reasonably be expected
to result in a material adverse change, in the condition, financial or otherwise, or in the
earnings, business or operations, whether or not arising from transactions in the ordinary course
of business, of the Company and its Subsidiaries, considered as one entity (any such change, a
“Material Adverse Change”); (ii) the Company and its Subsidiaries, considered as one entity, have
not incurred any material liability or obligation, indirect, direct or contingent, not in the
ordinary course of business nor entered into any material transaction or agreement not in the
ordinary course of business; and (iii) there has been no dividend or distribution of any kind
declared, paid or made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its Subsidiaries on any class of capital stock or repurchase or redemption by
the Company or any of its Subsidiaries of any class of capital stock.



     (k) Independent Accountants. Ernst & Young LLP, which expressed its opinion with respect to
the financial statements (which term as used in this Agreement includes the related notes thereto)
and supporting schedules included in the Offering Memorandum, is a firm of independent public or
certified public accountants within the meaning of Regulation S-X under the Securities Act and the
Exchange Act (“Regulation S-X”), and any non-audit services provided by Ernst & Young LLP to the
Company or any of the Guarantors have been approved by the Audit Committee of the Board of
Directors of the Company (including pursuant to any pre-approval policy or procedure) to the extent
required under Regulation S-X.



     (l) Preparation of the Financial Statements. The financial statements, together with the
related schedules and notes, included in the Offering Memorandum present fairly in all material
respects the consolidated financial position of the entities to which they relate as of and at the
dates indicated and the results of their operations and cash flows for the periods specified. Such
financial statements have been prepared in conformity with generally accepted accounting principles
in the United States applied on a consistent basis throughout the periods involved, except as may
be expressly stated in the related notes thereto. The historical financial data set forth in the
Offering Memorandum under the captions “Summary Historical Consolidated Financial and Unaudited Pro
Forma Financial Data” and “Selected Consolidated Historical Financial Data” fairly present in all
material respects the information set forth therein on a basis consistent with that of the audited
financial statements contained in the Offering Memorandum. The pro forma condensed consolidated
financial statements of the Company and its subsidiaries and the related notes thereto included
under the caption “Unaudited Pro Forma Condensed Consolidated Financial Statements” and elsewhere
in the Offering Memorandum present fairly in all material respects the information contained
therein, have been prepared in accordance with the Commission’s rules and guidelines with respect
to pro forma financial statements and have been properly presented on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances referred to therein.
“Adjusted EBITDA” and the line items set forth in the reconciliation of “Adjusted EBITDA” to
“EBITDA” as set forth in the Offering



6









 




Memorandum were calculated on the basis of assumptions that were believed to be reasonable at
the time of the preparation thereof and are believed to be reasonable on the date hereof.




     (m) Organization and Good Standing of the Company and its Subsidiaries. Each of the Company
and its Subsidiaries (i) has been duly organized and is validly existing in good standing under the
laws of its jurisdiction of organization, (ii) has the power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering Memorandum and
(iii) in the case of the Company and the Guarantors, has the power and authority to enter into and
perform its obligations under each of this Agreement, the Registration Rights Agreement, the DTC
Agreement, the Securities, the Exchange Securities, the Indenture, and the New Credit Facility
(each to the extent a party thereto). Each of the Company and its Subsidiaries is duly qualified
as a foreign entity to transact business and is in good standing or equivalent status in each
jurisdiction in which such qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except for such jurisdictions where the failure to so
qualify or to be in good standing would not, individually or in the aggregate, result in a Material
Adverse Change. All of the issued and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable and is owned by the Company,
directly or through Subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim. The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than Central Payment Co., LLC, iPayment Central
Holdings, Inc. and the subsidiaries listed in Exhibit 21.1 to the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2005.



     (n) Capitalization and Other Capital Stock Matters. At December 31, 2005, on a consolidated
basis, after giving pro forma effect to the issuance and sale of the Securities pursuant hereto and
the consummation of the Merger and the related matters described in the Offering Memorandum, the
Company would have an authorized and outstanding capitalization as set forth in the Offering
Memorandum under the caption “Capitalization” (without giving pro forma effect to subsequent
issuances of capital stock, if any, pursuant to employee benefit plans described in the Offering
Memorandum or upon exercise of outstanding options described in the Offering Memorandum). All of
the outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid
and nonassessable and have been issued in compliance with federal and state securities laws. None
of the outstanding shares of Common Stock were issued in violation of any preemptive rights, rights
of first refusal or other similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable
or exercisable for, any capital stock of the Company or any of its subsidiaries, other than
iPayment ICE of Utah, LLC, other than those accurately described in the Offering Memorandum.



     (o) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
Required. Neither the Company nor any of its Subsidiaries is in violation of its charter, bylaws
or limited liability company agreement or is in default (or, with the giving of notice or lapse of
time, would be in default) (a “Default”) under any indenture, mortgage, loan or credit agreement,
note, contract, franchise, lease or other instrument to which the Company or any of its
Subsidiaries is a party or by which it or any of them may be bound (including, without limitation,
as of the Time of Execution, the Existing Credit Facility, and as of the Closing Date,



7









 




the New Credit Facility), or to which any of the property or assets of the Company or any of
its Subsidiaries is subject (each, an “Existing Instrument”), except for such Defaults as would
not, individually or in the aggregate, result in a Material Adverse Change. The execution,
delivery and performance of this Agreement, the Registration Rights Agreement, the DTC Agreement,
the Indenture, the Merger Agreement and the New Credit Facility by the Company and the Guarantors
(each to the extent a party thereto), the issuance and delivery of the Securities or the Exchange
Securities, and the consummation of the Merger and the transactions contemplated hereby and thereby
and by the Offering Memorandum (i) will not result in any violation of the provisions of the
charter, bylaws or limited liability company agreement of the Company or any Subsidiary, (ii) will
not conflict with or constitute a breach of, or a Default or a Debt Repayment Triggering Event (as
defined below) under, or result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its Subsidiaries pursuant to, or require the
consent of any other party to, any Existing Instrument, except for (1) any Debt Repayment
Triggering Event under the Existing Credit Facility, (2) any consent of any other party to any
Existing Instrument obtained prior to or on the Closing Date and either (i) listed on Schedule
6.1(d) of the Company Disclosure Letter (as defined in the Merger Agreement) or (ii) required under
the Existing Credit Agreement, (3) liens, charges or encumbrances securing obligations under the
New Credit Facility and (4) such conflicts, breaches, Defaults, liens, charges or encumbrances as
would not, individually or in the aggregate, result in a Material Adverse Change and (iii) will not
result in any violation of any law, administrative regulation or administrative or court decree
applicable to the Company or any Subsidiary, except for any violation that would not, individually
or in the aggregate, result in a Material Adverse Change. No consent, approval, authorization or
other order of, or registration or filing with, any court or other governmental or regulatory
authority or agency is required for the execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the DTC Agreement, the Indenture, the Merger Agreement or the New
Credit Facility by the Company or the Guarantors (each to the extent a party thereto), the issuance
and delivery of the Securities or the Exchange Securities, or the consummation of the Merger and
the transactions contemplated hereby and thereby and by the Offering Memorandum, except such as
have been obtained or made by the Company or the Guarantors and are in full force and effect under
the Securities Act, applicable securities laws of the several states of the United States or
provinces of Canada (or, in the case of any consent, approval, authorization or other order, or
registration or filing required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
to which any applicable waiting period (or extension thereof) shall have expired or been
terminated) and except such as may be required by the securities laws of the United States and the
several states thereof or provinces of Canada with respect to the Company’s obligations under the
Registration Rights Agreement. As used herein, a “Debt Repayment Triggering Event” means any event
or condition which gives, or with the giving of notice or lapse of time would give, the holder of
any note, debenture or other evidence of indebtedness (or any person acting on such holder’s
behalf) the right to require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its Subsidiaries.




     (p) No Material Actions or Proceedings. Except as otherwise disclosed in the Offering
Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the
best of the Company’s knowledge, threatened (i) against or affecting the Company or any of its
Subsidiaries or (ii) which has as the subject thereof any property owned or leased by the Company
or any of its Subsidiaries, and any such action, suit or proceeding, if determined



8









 




adversely to the Company or such Subsidiary, would result in a Material Adverse Change or
materially adversely affect the consummation of the transactions contemplated by this Agreement.




     (q) Intellectual Property Rights. Except as otherwise disclosed in the Offering Memorandum,
the Company and its Subsidiaries own or have the legal right to use sufficient trademarks, trade
names, patent rights, copyrights, licenses, approvals, trade secrets and other similar intellectual
property rights (collectively, “Intellectual Property Rights”) reasonably necessary to conduct
their businesses as now conducted, except where the failure to own or have the legal right to use
any Intellectual Property Rights would not result in a Material Adverse Change. Except as
disclosed in the Offering Memorandum, neither the Company nor any of its Subsidiaries has received
any notice of infringement or conflict with asserted Intellectual Property Rights of others, which
infringement or conflict, if the subject of an unfavorable decision, would result in a Material
Adverse Change.



     (r) All Necessary Permits, etc. The Company and each of its Subsidiaries possess such valid
and current certificates, authorizations or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct their respective businesses except where
the failure to possess any such certificate, authorization or permit would not result in a Material
Adverse Change, and neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of, or noncompliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse Change.



     (s) Title to Properties. The Company and each of its Subsidiaries have good and marketable
title to all the real property and good title to all material personal property and assets
reflected as owned in the financial statements referred to in Section 1(l) hereof (or elsewhere in
the Offering Memorandum), in each case free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except such as (1) arise under (x) as of the Time
of Execution, the Existing Credit Facility and (y) as of the Closing Date, the New Credit Facility,
(2) are disclosed in the Offering Memorandum or (3) do not materially and adversely affect the
value of such property and do not materially interfere with the use made or proposed to be made of
such property by the Company or such Subsidiary. The real property, improvements and material
equipment held under lease by the Company or any Subsidiary are held under valid and enforceable
leases, with such exceptions as are not material and do not materially interfere with the use made
of such real property, improvements and material equipment by the Company or such Subsidiary.



     (t) Tax Law Compliance. The Company and its consolidated Subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns in respect of material taxes
or have properly requested extensions thereof and have paid all taxes required to be paid by any of
them and, if due and payable, any related or similar material assessment, fine or penalty levied
against any of them except as may be contested in good faith and by appropriate proceedings. The
Company has made adequate charges, accruals and reserves in the applicable financial statements
referred to in Section 1(l) hereof in respect of all material federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company or any of its
consolidated Subsidiaries has not been finally determined.



9









 





     (u) Company Not an “Investment Company.” The Company is not, and after receipt of payment for
the Notes and the consummation of the Merger and the related matters described in the Offering
Memorandum will not be, an “investment company” within the meaning of the Investment Company Act of
1940, as amended (the “Investment Company Act,” which term, as used herein, includes the rules and
regulations of the Commission promulgated thereunder). As of the Closing Date, each Guarantor is
not, and after the consummation of the Merger and the related matters described in the Offering
Memorandum will not be, an “investment company” within the meaning of the Investment Company Act.



     (v) Insurance. The Company and its Subsidiaries, taken as a whole, are insured by recognized,
financially sound institutions with policies in such amounts and with such deductibles and covering
such risks as are generally deemed adequate and customary for their businesses, including, without
limitation, casualty insurance. The Company has no reason to believe that it or any Subsidiary
will not be able (i) to renew its existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from other recognized, financially sound institutions or to
self-insure at a cost that would not result in a Material Adverse Change. Neither the Company nor
any Subsidiary has been denied any insurance coverage which it has sought or for which it has
applied with respect to any existing liability, except as would not result in a Material Adverse
Change.



     (w) No Price Stabilization or Manipulation. None of the Company or any of the Guarantors has
taken or will take, directly or indirectly, any action prohibited by Regulation M under the
Securities Act and the Exchange Act in connection with the sale or resale of the Notes.



     (x) Solvency. Each of the Company and the Guarantors is, and immediately after the Closing
Date and the consummation of the Merger and the related matters described in the Offering
Memorandum will be, Solvent. As used herein, the term “Solvent” means, with respect to any person
on a particular date, that on such date (i) the fair market value of the assets of such person is
greater than the total amount of liabilities (including contingent liabilities) of such person,
(ii) the present fair salable value of the assets of such person is greater than the amount that
will be required to pay the probable liabilities of such person on its debts as they become
absolute and matured, (iii) such person is able to realize upon its assets and pay its debts and
other liabilities, including contingent obligations, as they mature and (iv) such person does not
have unreasonably small capital with which to conduct its business as it is proposed to be
conducted on such date; and, for purposes of such definition, the amount of contingent liabilities
at any time shall be computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to become an actual or
matured liability (as determined by the Company in good faith).



     (y) Compliance with Sarbanes-Oxley. The Company and its subsidiaries and their respective
officers and directors are in compliance in all material respects with the applicable provisions of
the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act,” which term, as used herein, includes the
rules and regulations of the Commission promulgated thereunder).



     (z) Company’s Accounting System. The Company and its Subsidiaries maintain a system of
internal accounting controls that is sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management’s general or specific authorization; (ii)



10









 




transactions are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles as applied in the United States and to
maintain accountability for assets; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is taken with respect
to any differences.




     (aa) Disclosure Controls and Procedures. The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act); such disclosure controls and procedures are designed to ensure that material
information relating to the Company and its consolidated subsidiaries is made known to the chief
executive officer and chief financial officer of the Company by others within the Company or any of
its consolidated subsidiaries, and such disclosure controls and procedures are reasonably effective
to perform the functions for which they were established subject to the limitations of any such
control system; the Company’s auditors and the Audit Committee of the Board of Directors of the
Company have been advised of: (i) any significant deficiencies or material weaknesses in the
design or operation of internal controls over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) which are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial data; and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant role in the Company’s
internal controls over financial reporting; and no change in the Company’s internal controls over
financial reporting occurred during the fiscal quarter ending March 31, 2005 that has materially
affected, or is reasonably likely to materially affect, the Company’s internal control over
financial reporting.



     (bb) Compliance with Environmental Laws. Except as would not, individually or in the
aggregate, result in a Material Adverse Change: (i) neither the Company nor any of its
Subsidiaries is in violation of any federal, state, local or foreign law or regulation relating to
pollution or protection of human health (as it relates to exposure to materials of Environmental
Concern) or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum
products (collectively, “Materials of Environmental Concern”), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern (collectively, “Environmental Laws”), which violation includes,
without limitation, noncompliance with any permits or other governmental authorizations required
for the operation of the business of the Company or its Subsidiaries under applicable Environmental
Laws, or noncompliance with the terms and conditions thereof, nor has the Company or any of its
Subsidiaries received any written communication, whether from a governmental authority, citizens
group, employee or otherwise, that alleges that the Company or any of its Subsidiaries is in
violation of any Environmental Law; (ii) there is no claim, action or cause of action filed with a
court or governmental authority, no investigation with respect to which the Company has received
written notice and no written notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys’ fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of any



11









 




Material of Environmental Concern at any location owned, leased or operated by the Company or
any of its Subsidiaries, now or in the past (collectively, “Environmental Claims”), pending or, to
the best of the Company’s knowledge, threatened against the Company or any of its Subsidiaries or
any person or entity whose liability for any Environmental Claim the Company or any of its
Subsidiaries has retained or assumed either contractually or by operation of law; and (iii) to the
best of the Company’s knowledge, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that would result in a violation of
any Environmental Law or form the basis of a potential Environmental Claim against the Company or
any of its Subsidiaries or against any person or entity whose liability for any Environmental Claim
the Company or any of its Subsidiaries has retained or assumed either contractually or by operation
of law.




     (cc) ERISA Compliance. The Company and its Subsidiaries and any “employee benefit plan” (as
defined under the Employee Retirement Income Security Act of 1974, as amended (“ERISA,” which term,
as used herein, includes the regulations and published interpretations thereunder)) established or
maintained by the Company, its Subsidiaries or their ERISA Affiliates (as defined below) are in
compliance in all material respects with ERISA. “ERISA Affiliate” means, with respect to the
Company or a Subsidiary, any member of any group of organizations described in Section 414 of the
Internal Revenue Code of 1986, as amended (the “Code,” which term, as used herein, includes the
regulations and published interpretations thereunder), of which the Company or such Subsidiary is a
member. No “reportable event” (as defined under ERISA) has occurred or is reasonably expected to
occur with respect to any “employee benefit plan” established or maintained by the Company, its
Subsidiaries or any of their ERISA Affiliates. No “employee benefit plan” established or
maintained by the Company, its Subsidiaries or any of their ERISA Affiliates, if such “employee
benefit plan” were terminated, would have any “amount of unfunded benefit liabilities” (as defined
under ERISA). Neither the Company, its Subsidiaries nor any of their ERISA Affiliates has incurred
or reasonably expects to incur any liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “employee benefit plan” or (ii) Section 412, 4971, 4975 or
4980B of the Code, which would result in a Material Adverse Change. Each “employee benefit plan”
established or maintained by the Company, its Subsidiaries or any of their ERISA Affiliates that is
intended to be qualified under Section 401 of the Code has received a favorable determination
letter from the Internal Revenue Service and nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualification.



     (dd) Compliance with Labor Laws. Except as would not, individually or in the aggregate,
result in a Material Adverse Change, (i) there is (A) no unfair labor practice complaint pending
or, to the best of the Company’s knowledge, threatened against the Company or any of its
Subsidiaries before the National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements pending, or to the best of the Company’s
knowledge, threatened, against the Company or any of its Subsidiaries, (B) no strike, labor
dispute, slowdown or stoppage pending or, to the best of the Company’s knowledge, threatened
against the Company or any of its Subsidiaries and (ii) there has been no violation of any federal,
state or local law relating to discrimination in hiring, promotion or pay of employees or of any
applicable wage or hour laws.



12









 





     (ee) Related Party Transactions. No relationship, direct or indirect, exists between or among
any of the Company or any affiliate(s) of the Company, on the one hand, and any director, officer,
member, stockholder, customer or supplier of the Company or any affiliate of the Company, on the
other hand, which is required by the Securities Act to be disclosed in a registration statement on
Form S-1 which is not so disclosed in the Offering Memorandum. There are no outstanding loans,
advances (except advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company or any affiliate of the Company to or for the benefit of any of the
officers or directors of the Company or any affiliate of the Company or any of their respective
family members.



     (ff) No Unlawful Contributions or Other Payments. Neither the Company nor any of its
Subsidiaries, nor, to the best of the Company’s knowledge, any employee or agent of the Company or
any Subsidiary, has used any corporate funds to make any contribution or other payment to any
official of, or candidate for, any federal, state or foreign office in violation of any law.



     (gg) No Default in Senior Indebtedness. As of the Closing Date, no event of default exists
under any contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument constituting Senior Indebtedness (as defined in the Indenture).



     (hh) New Credit Facility. The New Credit Facility has been duly and validly authorized by the
Company and the Guarantors and, when duly executed and delivered by the Company, the Guarantors and
the other parties thereto, will be a valid and legally binding obligation of the Company and the
Guarantors, enforceable in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization,
moratorium or other similar laws relating to or affecting the rights and remedies of creditors or
by general equitable principles (whether considered in a proceeding in equity or at law).



     (ii) Regulation S. Each of the Company and the Guarantors is a “reporting issuer”, as defined
in Rule 902 under the Securities Act.



     Any certificate signed by an officer of the Company or any Guarantor and delivered to the
Initial Purchasers or to counsel for the Initial Purchasers shall be deemed to be a representation
and warranty by the Company or such Guarantor to each Initial Purchaser as to the matters set forth
therein.



     Section 2. Purchase, Sale and Delivery of the Securities.



     (a) The Securities. The Company agrees to issue and sell to the Initial Purchasers, severally
and not jointly, all of the Notes, and the Initial Purchasers agree, severally and not jointly, to
purchase from the Company the aggregate principal amount of Notes set forth opposite their names on
Schedule A at a purchase price of 96.39% of the principal amount thereof payable on the Closing
Date, in each case, on the basis of the representations, warranties and agreements herein
contained, and upon the terms, subject to the conditions thereto, herein set forth.



13









 





     (b) The Closing Date. Delivery of certificates for the Notes in definitive form to be
purchased by the Initial Purchasers and payment therefor shall be made at the offices of Debevoise
& Plimpton LLP, 919 Third Avenue, New York, NY 10022 (the “Closing Location”) at 9:00 a.m., New
York City time, on May 10, 2006 (or such other place or on such other date and at such other time
as may be agreed to by the Company and Banc of America Securities LLC) (together, the time and date
of such closing are called the “Closing Date”).



     (c) Delivery of the Securities. The Company shall deliver, or cause to be delivered, to Banc
of America Securities LLC for the accounts of the several Initial Purchasers certificates for the
Notes at the Closing Date against receipt by the Company of a wire transfer of immediately
available funds for the amount of the purchase price therefore set forth in Section 2(a) hereof.
The certificates for the Notes shall be in such denominations and registered in the name of Cede &
Co. or any other nominee of the Depositary pursuant to the DTC Agreement, and shall be made
available for inspection on the business day preceding the Closing Date at the Closing Location or
such other location as Banc of America Securities LLC and the Company shall agree.



     (d) The Initial Purchasers as Qualified Institutional Buyers. Each Initial Purchaser,
severally and not jointly, represents and warrants to, and agrees with, the Company that it is a
“qualified institutional buyer” within the meaning of Rule 144A (a “Qualified Institutional
Buyer”).



     Section 3. Additional Covenants. Each of the Company and the Guarantors, jointly and
severally, further covenants and agrees with each Initial Purchaser as follows:



     (a) Preparation of Final Offering Memorandum: Initial Purchasers’ Review of Proposed
Amendments and Supplements. As promptly as practicable following the Time of Execution and in any
event not later than the second business day following the date hereof, the Company will prepare
and deliver to the Initial Purchasers the Final Offering Memorandum, which shall consist of the
Preliminary Offering Memorandum as modified only by the information contained in the Pricing
Supplement and shall include certain immaterial changes as approved by Banc of America Securities
LLC. The Company will not amend or supplement the Preliminary Offering Memorandum or the Pricing
Supplement. The Company will not amend or supplement the Final Offering Memorandum prior to the
Closing Date unless the Initial Purchasers shall previously have been furnished a copy of the
proposed amendment or supplement at least two business days prior to the proposed use, and shall
not have reasonably objected to such amendment or supplement.



     (b) Amendments and Supplements to the Final Offering Memorandum and Other Securities Act
Matters. If, prior to the later of (x) the Closing Date and (y) the completion of the placement of
the Securities by the Initial Purchasers with the Subsequent Purchasers, notice of which shall be
given to the Company by the Initial Purchasers if occurring after the Closing Date, any event shall
occur or condition exist as a result of which it is necessary to amend or supplement the Final
Offering Memorandum, as then amended or supplemented, so that the Final Offering Memorandum shall
not contain an untrue statement of material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under which they were made,
not misleading, or if in the reasonable judgment of the Initial



14









 




Purchasers or counsel for the Initial Purchasers it is otherwise necessary to amend or
supplement the Final Offering Memorandum to comply with applicable law, the Company agrees to
promptly prepare (subject to Section 3(a)) and furnish at its own expense to the Initial Purchasers
amendments or supplements to the Final Offering Memorandum so that the Final Offering Memorandum as
so amended or supplemented (i) will not contain an untrue statement of material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances at the Closing Date and at the time of sale of the Securities not misleading or (ii)
the Final Offering Memorandum, as amended or supplemented, will comply with all applicable law, as
the case may be.




     The Company hereby expressly acknowledges that the indemnification and contribution provisions
of Sections 8 and 9 hereof are specifically applicable and relate to each offering memorandum,
amendment or supplement referred to in this Section 3.



     (c) Copies of the Offering Memorandum. The Company agrees to furnish the Initial Purchasers,
without charge, as many copies of the Pricing Disclosure Package and the Final Offering Memorandum
and any amendments and supplements thereto as they shall have reasonably requested.



     (d) Blue Sky Compliance. Each of the Company and the Guarantors shall cooperate with the
Initial Purchasers and counsel for the Initial Purchasers to qualify or register (or to obtain
exemptions from qualifying or registering) all or any part of the Securities for offer and sale
under the securities laws of the several states of the United States, the provinces of Canada or
any other jurisdictions reasonably requested by the Initial Purchasers, to the extent necessary to
comply with such laws and shall continue such qualifications, registrations and exemptions in
effect so long as required for the distribution of the Securities. None of the Company or any of
the Guarantors shall be required to qualify as a foreign corporation or to take any action that
would subject it to general service of process in any such jurisdiction where it is not presently
qualified or where it would be subject to taxation as a foreign corporation, or to make any changes
to its certificate of incorporation, by laws or other organizational document, or any agreement
between it and any of its equityholders. The Company will advise the Initial Purchasers of the
suspension of the qualification or registration of (or any such exemption relating to) the
Securities for offering, sale or trading in any such jurisdiction or any initiation or threat made
to the Company in writing of any proceeding for any such purpose, in each case promptly following
the Company’s knowledge thereof, and, in the event of the issuance of any order suspending such
qualification, registration or exemption, each of the Company and the Guarantors shall use its
reasonable best efforts to promptly obtain the withdrawal thereof.



     (e) Use of Proceeds. The Company shall apply the net proceeds from the sale of the Notes sold
by it in the manner described under the caption “Use of Proceeds” in the Pricing Disclosure
Package.



     (f) The Depositary. The Company will cooperate with the Initial Purchasers and use its best
efforts to permit the Notes to be eligible for clearance and settlement through the facilities of
the Depositary.



15









 





     (g) Additional Issuer Information. The Company shall use its reasonable best efforts to
comply with Section 4.03 (Reports) of the Indenture.



     (h) Agreement Not To Offer or Sell Additional Securities. During the period of 90 days
following the date hereof, the Company will not, without the prior written consent of Banc of
America Securities LLC (which consent may be withheld at the sole discretion of Banc of America
Securities LLC), directly or indirectly, sell, offer, contract or grant any option to sell, pledge,
transfer or establish an open “put equivalent position” within the meaning of Rule 16a-1 under the
Exchange Act, or otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any debt securities of the Company
similar to the Notes or securities exchangeable for or convertible into debt securities of the
Company similar to the Notes (other than as contemplated by this Agreement, to register the
Exchange Securities or the issuance of additional Notes in order to refinance amounts outstanding
under any interim loans funded pursuant to the commitment letter, dated as of December 27, 2005
(the “Commitment Letter”), among Banc of America Securities LLC, Banc of America Bridge LLC, Bank
of America, N.A. and Holdings).



     (i) Future Reports to the Initial Purchasers. At any time when the Company is not subject to
Section 13 or 15 of the Exchange Act and any Securities or Exchange Securities remain outstanding,
the Company will furnish to Banc of America Securities LLC: (i) as soon as practicable after the
end of each fiscal year, copies of the Annual Report of the Company containing the balance sheet of
the Company as of the close of such fiscal year and statements of income, stockholders’ equity and
cash flows for the year then ended and the opinion thereon of the Company’s independent public or
certified public accountants; (ii) as soon as practicable after the filing thereof, copies of each
proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form
8-K or other report filed by the Company with the Commission, the NASD, Inc. (“NASD”) or any
securities exchange; and (iii) as soon as available, copies of any report or communication of the
Company mailed generally to holders of its debt securities (including the holders of the
Securities), if, in each case such documents are not filed with the Commission or posted on the
Company’s website within the time periods specified by the Commission’s rules and regulations under
Section 13 or 15 of the Exchange Act.



     (j) No Integration. The Company agrees that it will not and will cause its affiliates not to
make any offer or sale of securities of the Company of any class if, as a result of the doctrine of
“integration” referred to in Rule 502 under the Securities Act, such offer or sale would render
invalid (for the purpose of (i) the sale of the Securities by the Company to the Initial
Purchasers, (ii) the resale of the Securities by the Initial Purchasers to Subsequent Purchasers or
(iii) the resale of the Securities by such Subsequent Purchasers to others) the exemption from the
registration requirements of the Securities Act provided by Section 4(2) thereof or by Rule 144A or
by Regulation S thereunder or otherwise.



     (k) No Restricted Resales. During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities
Act) to, resell any of the Notes which constitute “restricted securities” under Rule 144 that have
been reacquired by any of them.



16









 





     (l) Legended Securities. Each certificate for a Security will bear the legend contained in
“Notice to Investors” in the Preliminary Offering Memorandum for the time period and upon the other
terms stated in the Preliminary Offering Memorandum.



     (m) PORTAL. The Company will use its reasonable best efforts to cause such Securities to be
eligible for The PORTAL Market (it being understood that the Initial Purchasers shall be
responsible for submitting the application for such inclusion to The PORTAL Market).



     Banc of America Securities LLC, on behalf of the several Initial Purchasers, may, in its sole
discretion, waive in writing the performance by the Company or any Guarantor of any one or more of
the foregoing covenants or extend the time for their performance.



     Section 4. Payment of Expenses. Each of the Company and the Guarantors agrees to pay all
costs, fees and expenses incurred in connection with the performance of its obligations hereunder
and in connection with the transactions contemplated hereby, including, without limitation, (i) all
necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the
Securities to the Initial Purchasers, (ii) all fees and expenses of the Company’s and the
Guarantors’ counsel, independent public or certified public accountants and other advisors, (iii)
all costs and expenses incurred in connection with the preparation, printing, filing, shipping and
distribution of the Pricing Disclosure Package and the Final Offering Memorandum (including
financial statements and exhibits), and all amendments and supplements thereto, this Agreement, the
Registration Rights Agreement, the Indenture, the DTC Agreement and the Notes other than the fees
and disbursements of counsel to the Initial Purchasers in connection with the drafting and
negotiation of any of the foregoing documents, (iv) all filing fees, attorneys’ fees and expenses
incurred by the Company, the Guarantors or the Initial Purchasers in connection with qualifying or
registering (or obtaining exemptions from the qualification or registration of) all or any part of
the Securities as may be required pursuant to Section 3(d), including without limitation, the cost
of preparing, printing and mailing preliminary and final blue sky or legal investment memoranda and
any related supplements to the Pricing Disclosure Package or the Final Offering Memorandum, (v) the
fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee
in connection with the Indenture, the Securities and the Exchange Securities, (vi) any fees payable
in connection with the rating of the Securities or the Exchange Securities with the ratings
agencies and the listing of the Securities with The PORTAL Market, (vii) all fees and expenses
(including reasonable fees and expenses of counsel) of the Company and the Guarantors in connection
with approval of the Securities by the Depositary for “book-entry” transfer, and the performance by
the Company and the Guarantors of their respective other obligations under this Agreement and
(viii) one-half of all expenses incident to the “road show” for the offering of the Securities,
including the cost of any chartered airplane or other transportation. Except as provided in this
Section 4 and Sections 6, 8 and 9 hereof, the Initial Purchasers shall pay their own expenses,
including the fees and disbursements of their counsel.



     Section 5. Conditions of the Obligations of the Initial Purchasers. The obligations of the
several Initial Purchasers to purchase and pay for the Securities as provided herein on the Closing
Date shall be subject to the accuracy of the representations and warranties on the part of (i) the
Company and the Guarantors set forth in Section 1 hereof of the date hereof and as of the



17









 




Closing Date as though then made and to the timely performance by the Company of its covenants
and other obligations hereunder, and to each of the following additional conditions:




     (a) Accountants’ Comfort Letter. On the date hereof, the Initial Purchasers shall have
received from Ernst & Young LLP, independent public or certified public accountants for the
Company, a “comfort letter” dated the date hereof addressed to the Initial Purchasers, in form and
substance satisfactory to the Initial Purchasers, covering the financial information in the
Preliminary Offering Memorandum and the Pricing Supplement of the type customarily covered by
accountants’ “comfort letters” to initial purchasers and other customary matters. In addition, on
the Closing Date, the Initial Purchasers shall have received from such accountants, a “bring-down
comfort letter” dated the Closing Date addressed to the Initial Purchasers, in form and substance
satisfactory to the Initial Purchasers, in the form of the “comfort letter” delivered on the date
hereof, except that (i) it shall cover the financial information in the Final Offering Memorandum
and any amendment or supplement thereto and (ii) procedures shall be brought down to a date no more
than 5 days prior to the Closing Date.



     (b) No Material Adverse Change or Ratings Agency Change. For the period from and after the
date of this Agreement and prior to the Closing Date:




     (i) in the judgment of the Initial Purchasers, there shall not have occurred any
Material Adverse Change; and




     (ii) there shall not have occurred any downgrading, nor shall any notice have been
given of any intended or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating accorded any
securities or indebtedness of the Company or any of its Subsidiaries by any “nationally
recognized statistical rating organization,” as such term is defined for purposes of Rule
436 under the Securities Act.



     (c) Opinions of Counsel for the Company. On the Closing Date, the Initial Purchasers shall
have received (1) the opinion of White & Case LLP, counsel for the Company, dated as of such
Closing Date, substantially in the form attached as Exhibit A-1 or otherwise reasonably
satisfactory to the Initial Purchasers, (2) the opinion of Debevoise & Plimpton LLP, counsel for
the Company, dated as of such Closing Date, substantially in the form attached as Exhibit A-2 or
otherwise reasonably satisfactory to the Initial Purchasers and (3) the opinion of Afshin Yazdian,
General Counsel of the Company, dated as of such Closing Date, substantially in the form attached
as Exhibit A-3 or otherwise reasonably satisfactory to the Initial Purchasers.



     (d) Opinion of Counsel for the Initial Purchasers. On the Closing Date, the Initial
Purchasers shall have received the favorable opinion of Shearman & Sterling LLP, counsel for the
Initial Purchasers, dated as of such Closing Date, with respect to such matters as may be
reasonably requested by the Initial Purchasers.



     (e) Officers’ Certificate. On the Closing Date, the Initial Purchasers shall have received a
written certificate executed by the Chief Executive Officer or President of the Company and each
Guarantor and the Chief Financial Officer or Vice President – Finance of the



18









 




Company and each Guarantor, dated as of the Closing Date, to the effect set forth in Section
5(b)(ii) hereof, and further to the effect that:





     (i) for the period from and after the date of this Agreement and prior to the Closing
Date, there has not occurred any Material Adverse Change;




     (ii) the representations, warranties and covenants of the Company and the Guarantors
set forth in Section 1 hereof were true and correct, in the case of representations and
warranties which are qualified as to materiality, and true and correct in all material
respects, in the case of representations and warranties that are not so qualified as of the
Time of Execution and shall be true and correct, in the case of representations and
warranties which are qualified as to materiality, and true and correct in all material
respects, in the case of representations and warranties that are not so qualified as of the
Closing Date with the same force and effect as though expressly made on and as of the
Closing Date; and




     (iii) the Company has complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to the Closing Date.



     (f) PORTAL Listing. At the Closing Date, the Notes shall have been designated for trading on
The PORTAL Market.



     (g) Registration Rights Agreement. The Company shall have entered into the Registration
Rights Agreement and the Initial Purchasers shall have received executed counterparts thereof.



     (h) Consummation of the Merger. Immediately prior to the funding of the purchase price for
the Securities to be paid by the Initial Purchasers pursuant to Section 2 hereof, the parties to
the Merger Agreement shall be prepared to consummate the Merger as described in the Pricing
Disclosure Package immediately after the receipt by the Company of the purchase price for the
Securities and the funding of the New Credit Facility.



     (i) Consummation of the New Credit Facility. Immediately prior to the funding of the purchase
price for the Securities to be paid by the Initial Purchasers pursuant to Section 2 hereof, either
(i) the funding of the New Credit Facility shall have been consummated as described in the Offering
Memorandum or (ii) the parties to the New Credit Facility shall be prepared to consummate the
funding of the New Credit Facility as described in the Pricing Disclosure Package immediately after
the receipt by the Company of the purchase price for the Securities.



     (j) Additional Documents. On or before the Closing Date, the Initial Purchasers and counsel
for the Initial Purchasers shall have received such information, documents and opinions as they may
reasonably require for the purposes of enabling them to pass upon the issuance and sale of the
Securities as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or agreements, herein
contained.



19









 





     If any condition specified in this Section 5 is not satisfied (or waived by the Initial
Purchasers) when and as required to be satisfied, this Agreement may be terminated by the Initial
Purchasers by notice to the Company at any time on the Closing Date, which termination shall be
without liability on the part of any party to any other party, except that Sections 4, 6, 8 and 9
hereof shall at all times be effective and shall survive such termination; provided however, that
the condition contained in Section 5(h) hereof may not be waived by any party to this Agreement.



     Section 6. Reimbursement of Initial Purchasers’ Expenses. If this Agreement is terminated by
the Initial Purchasers pursuant to Section 5 or 10 hereof, including if the sale to the Initial
Purchasers of the Notes on the Closing Date is not consummated because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse the Initial Purchasers (or such Initial Purchasers as have
terminated this Agreement with respect to themselves), severally, upon demand for all out-of-pocket
expenses that shall have been reasonably incurred by the Initial Purchasers in connection with the
proposed purchase and the offering and sale of the Notes, including, without limitation, reasonable
fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and
telephone charges.



     Section 7. Offer, Sale and Resale Procedures. Each of the Initial Purchasers, on the one
hand, and the Company and each of the Guarantors, on the other hand, hereby agree to observe the
following procedures in connection with the offer and sale of the Securities:



     (a) Offers and sales of the Notes will be made only by the Initial Purchasers or Affiliates
thereof qualified to do so in the jurisdictions in which such offers or sales are made. Each such
offer or sale shall only be made to persons whom the offeror or seller reasonably believes to be
Qualified Institutional Buyers or non-U.S. persons outside the United States to whom the offeror or
seller reasonably believes offers and sales of the Securities may be made in reliance upon
Regulation S upon the terms and conditions set forth in Annex I hereto, which Annex I is hereby
expressly made a part hereof.



     (b) The Securities will be offered by approaching prospective Subsequent Purchasers on an
individual basis. No general solicitation or general advertising (within the meaning of Rule 502
under the Securities Act) will be used in the United States in connection with the offering of the
Securities.



     (c) Each certificate for a Note will bear the legend set forth in the Offering Memorandum
under the caption “Notice to Investors” for the time period and upon the other terms stated in the
Offering Memorandum:



     (d) In relation to each Member State of the European Economic Area which has implemented the
Prospectus Directive (each, a “Relevant Member State”), each Initial Purchaser severally
represents, warrants and agrees that, with effect from and including the date on which the
Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation
Date”), it has not made and will not make an offer of Securities to the public in that Relevant
Member State except that it may, with effect from and including the Relevant Implementation Date,
make an offer of Securities to the public in that Relevant Member State:



20









 






     (i) in the period beginning on the date of publication of a prospectus in relation to
those Securities which has been approved by the competent authority in that Relevant Member
State or, where appropriate, approved in another Relevant Member State and notified to the
competent authority in that Relevant Member State, all in accordance with the Prospectus
Directive and ending on the date which is 12 months after the date of such publication;




     (ii) at any time to legal entities which are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose corporate purpose is solely
to invest in securities;




     (iii) at any time to any legal entity which has two or more of (1) an average of at
least 250 employees during the last financial year; (2) a total balance sheet of more than
€43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last
annual or consolidated accounts; or




     (iv) at any time in any other circumstances which do not require the publication by the
Company of a prospectus pursuant to Article 3 of the Prospectus Directive.



     For the purposes of this provision, the expression an “offer of Securities to the public” in
relation to any Securities in any Relevant Member State means the communication in any form and by
any means of sufficient information on the terms of the offer and the Securities to be offered so
as to enable an investor to decide to purchase or subscribe the Securities, as the same may be
varied in that Member State by any measure implementing the Prospectus Directive in that Member
State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant
implementing measure in each Relevant Member State.



     Section 8. Indemnification.



     (a) Indemnification of the Initial Purchasers. Each of the Company and the Guarantors,
jointly and severally, agrees to indemnify and hold harmless each Initial Purchaser, its members,
directors, officers and employees, and each person, if any, who controls any Initial Purchaser
within the meaning of the Securities Act and the Exchange Act, against any loss, claim, damage,
liability or expense, as incurred, to which such Initial Purchaser, member, director, officer,
employee or controlling person may become subject, under the Securities Act, the Exchange Act or
other federal or state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written consent of the
Company), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof
as contemplated below) arises out of or is based: upon any untrue statement or alleged untrue
statement of a material fact contained in the Pricing Disclosure Package or the Final Offering
Memorandum (or any amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and to reimburse each Initial Purchaser
and each such director, officer, employee or controlling person for any and all expenses (including
the reasonable fees and disbursements of one firm of counsel chosen by Banc of America Securities
LLC) as such expenses are reasonably incurred by such Initial




21









 






Purchaser or such director, officer, employee or controlling person in connection with
investigating, defending, settling (if such settlement is effected with the written consent of the
indemnifying party in accordance with Section 8(d)), compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing indemnity agreement
shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the
extent, arising out of or based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written information furnished to
the Company by the Initial Purchasers expressly for use in the Pricing Disclosure Package or the
Final Offering Memorandum (or any amendment or supplement thereto). The indemnity agreement set
forth in this Section 8(a) shall be in addition to any liabilities that the Company may otherwise
have.




     (b) Indemnification of the Company and the Guarantors. Each Initial Purchaser agrees,
severally and not jointly, to indemnify and hold harmless the Company, each Guarantor, each of
their respective directors, and each person, if any, who controls the Company or any Guarantor
within the meaning of the Securities Act or the Exchange Act, against any loss, claim, damage,
liability or expense, as incurred, to which the Company, any Guarantor or any such director or
controlling person may become subject, under the Securities Act, the Exchange Act, or other federal
or state statutory law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such Initial Purchaser),
insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in the Pricing Disclosure Package or the Final Offering Memorandum (or
any amendment or supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was made in the
Pricing Disclosure Package or the Final Offering Memorandum (or any amendment or supplement
thereto), in reliance upon and in conformity with written information furnished to the Company by
the Initial Purchasers expressly for use therein; and to reimburse the Company, any Guarantor and
each such director or controlling person for any and all expenses (including the fees and
disbursements of counsel) as such expenses are reasonably incurred by the Company, any Guarantor or
such director or controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or action. Each of the
Company and the Guarantors hereby acknowledges that the only information that the Initial
Purchasers have furnished to the Company expressly for use in the Pricing Disclosure Package or the
Final Offering Memorandum (or any amendment or supplement thereto) are the statements set forth in
the 7th and 9th paragraphs under the caption “Plan of Distribution” in the Preliminary Offering
Memorandum and the Final Offering Memorandum. The indemnity agreement set forth in this Section
8(b) shall be in addition to any liabilities that each Initial Purchaser may otherwise have.



     (c) Notifications and Other Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 8, notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any liability which it



22









 







may have to any indemnified party hereunder for contribution or otherwise than under the
indemnity agreement contained in this Section 8 or to the extent it is not prejudiced as a
proximate result of such failure. In case any such action is brought against any indemnified party
and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded that a conflict may
arise between the positions of the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to the indemnifying
party, which if raised in a proceeding involving both parties would give rise to such conflict, the
indemnified party or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of
such indemnifying party’s election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the expenses of more than
one separate counsel (together with local counsel), approved by the indemnifying party (Banc of
America Securities LLC in the case of Sections 8(b) and 9 hereof), representing the indemnified
parties who are parties to such action) or (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.



     (d) Settlements. The indemnifying party under this Section 8 shall not be liable for any
settlement of any proceeding effected without its written consent, but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of
such settlement or judgment as set forth in Section 8(a) or 8(b), as the case may be. No
indemnifying party shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party, unless such
settlement, compromise or consent (i) includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such action, suit or proceeding and
(ii) does not include any statements as to or any findings of fault, culpability or failure to act
by or on behalf of any indemnified party.



     Section 9. Contribution. If the indemnification provided for in Section 8 hereof is for any
reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified



23









 







party in respect of any losses, claims, damages, liabilities or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount paid or payable by such
indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the
other hand, from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company and the Guarantors, on the one hand, and the Initial Purchasers,
on the other hand, in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other hand, in connection with the offering of the Securities pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total net proceeds from
the offering of the Securities pursuant to this Agreement (before deducting expenses) received by
the Company, and the total discount received by the Initial Purchasers bear to the aggregate
initial offering price of the Securities. The relative fault of the Company and the Guarantors, on
the one hand, and the Initial Purchasers, on the other hand, shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information supplied by the
Company and the Guarantors, on the one hand, or the Initial Purchasers, on the other hand, and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or inaccuracy.



     The amount paid or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the limitations set forth in
Section 8 hereof, any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The provisions set forth in
Section 8 hereof with respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 9; provided, however, that no additional notice shall
be required with respect to any action for which notice has been given under Section 8 hereof for
purposes of indemnification.



     The Company, the Initial Purchasers and the Guarantors agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even
if the Initial Purchasers were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred to in this Section
9.



     Notwithstanding the provisions of this Section 9, no Initial Purchaser shall be required to
contribute any amount in excess of the discount received by such Initial Purchaser in connection
with the Securities distributed by it. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11 of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Initial Purchasers’ obligations to
contribute pursuant to this Section 9 are several, and not joint, in proportion to their respective
commitments as set forth opposite their names in Schedule A. For purposes of this Section 9, each
director, officer and employee of an Initial Purchaser and each person, if any, who controls



24









 







an Initial Purchaser within the meaning of the Securities Act and the Exchange Act shall have
the same rights to contribution as such Initial Purchaser, and each director, officer and employee
of the Company or any Guarantor, and each person, if any, who controls the Company or any Guarantor
within the meaning of the Securities Act and the Exchange Act, shall have the same rights to
contribution as the Company and the Guarantors.



     Section 10. Termination of this Agreement. Prior to the Closing Date, this Agreement may be
terminated by the Initial Purchasers by notice given to the Company if at any time: (i) trading or
quotation in any of the Company’s securities shall have been suspended or limited by the Commission
or by the Nasdaq Stock Market, or trading in securities generally on either the Nasdaq Stock Market
or the NYSE shall have been suspended or limited, or minimum or maximum prices shall have been
generally established on any of such quotation system or stock exchange by the Commission or the
NASD; (ii) a general banking moratorium shall have been declared by any of federal, New York or
Delaware authorities; (iii) there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United States or
international financial markets, or any substantial change or development involving a prospective
substantial change in United States’ or international political, financial or economic conditions,
as in the judgment of the Initial Purchasers is material and adverse and makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of the Securities in the manner and on
the terms described in the Pricing Disclosure Package or to enforce contracts for the sale of
securities; (iv) a material disruption has occurred in securities settlement or clearance services
in the United States or with respect to Clearstream or Euroclear systems in Europe; or (v) in the
judgment of the Initial Purchasers there shall have occurred any Material Adverse Change. Any
termination pursuant to this Section 10 shall be without liability on the part of (i) the Company
or any Guarantor to any Initial Purchaser, except that the Company and the Guarantors shall be
obligated to reimburse the expenses of the Initial Purchasers pursuant to Sections 4 and 6 hereof,
(ii) any Initial Purchaser to the Company or (iii) any party hereto to any other party except that
the provisions of Sections 8 and 9 hereof shall at all times be effective and shall survive such
termination.



     Section 11. Representations and Indemnities to Survive Delivery. The respective indemnities,
agreements, representations, warranties and other statements of the Company, the Guarantors, their
respective officers and the several Initial Purchasers set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation made by or on
behalf of any Initial Purchaser, the Company, any Guarantor or any of their partners, officers or
directors or any controlling person, as the case may be, and will survive delivery of and payment
for the Notes sold hereunder.



     Section 12. Notices. All communications hereunder shall be in writing and shall be mailed,
hand delivered, couriered or facsimiled and confirmed to the parties hereto as follows:



     If to the Initial Purchasers:


Banc of America Securities LLC

9 West 57th Street




25









 







New York, New York 10019

Facsimile: 212-701-9897

Attention: Legal Department




     with a copy to:


Shearman & Sterling LLP

599 Lexington Avenue

New York, New York 10022

Facsimile: 212-848-7179

Attention: Jason Lehner




     If to the Company or the Guarantors:


iPayment, Inc.

40 Burton Hills Boulevard, Suite 415

Nashville, Tennessee 37215

Facsimile: 615-665-8434

Attention: Afshin Yazdian, General Counsel




     with a copy to:


White & Case LLP

1155 Avenue of the Americas

New York, New York 10036

Facsimile: 212-819-8200

Attention: Mark Mandel



Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Facsimile: 212-909-6836

Attention: David Brittenham




     Any party hereto may change the address or facsimile number for receipt of communications by
giving written notice to the others.



     Section 13. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Initial Purchasers pursuant to Section 16 hereof, and to
the benefit of the indemnified parties referred to in Sections 8 and 9 hereof, and in each case
their respective successors, and no other person will have any right or obligation hereunder. The
term “successors” shall not include any Subsequent Purchaser or other purchaser of the Securities
as such from any of the Initial Purchasers merely by reason of such purchase.



     Section 14. Partial Unenforceability. The invalidity or unenforceability of any section,
paragraph or provision of this Agreement shall not affect the validity or enforceability of any
other section, paragraph or provision hereof. If any section, paragraph or provision of this



26









 







Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to make it valid and
enforceable.



     Section 15. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN SUCH STATE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF TO THE EXTENT SUCH
PRINCIPLES WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.



     (a) Consent to Jurisdiction. Any legal suit, action or proceeding arising out of or based
upon this Agreement or the transactions contemplated hereby (“Related Proceedings”) may be
instituted in the federal courts of the United States of America located in the City and County of
New York or the courts of the State of New York in each case located in the City and County of New
York (collectively, the “Specified Courts”), and each party irrevocably submits to the jurisdiction
(except for suits, actions, or proceedings instituted in regard to the enforcement of a judgment of
any Specified Court in a Related Proceeding (a “Related Judgment”), as to which such jurisdiction
is non-exclusive) of the Specified Courts in any Related Proceeding. Service of any process,
summons, notice or document by mail to such party’s address set forth above shall be effective
service of process for any Related Proceeding brought in any Specified Court. To the maximum
extent permitted under applicable law, the parties irrevocably and unconditionally waive any
objection to the laying of venue of any Specified Proceeding in the Specified Courts and
irrevocably and unconditionally waive and agree not to plead or claim in any Specified Court that
any Related Proceeding brought in any Specified Court has been brought in an inconvenient forum.



     Section 16. Default of One or More of the Several Initial Purchasers. If any one or more of
the several Initial Purchasers shall fail or refuse to purchase Securities that it or they have
agreed to purchase hereunder on the Closing Date, and the aggregate number of Securities which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase does
not exceed 10% of the aggregate number of the Securities to be purchased on such date, the other
Initial Purchasers shall be obligated, severally, in the proportions that the number of Securities
set forth opposite their respective names on Schedule A bears to the aggregate number of Securities
set forth opposite the names of all such non-defaulting Initial Purchasers, or in such other
proportions as may be specified by the Initial Purchasers with the consent of the non-defaulting
Initial Purchasers, to purchase the Securities which such defaulting Initial Purchaser or Initial
Purchasers agreed but failed or refused to purchase on the Closing Date. If any one or more of the
Initial Purchasers shall fail or refuse to purchase Securities and the aggregate number of
Securities with respect to which such default occurs exceeds 10% of the aggregate number of
Securities to be purchased on the Closing Date, and arrangements satisfactory to the Initial
Purchasers and the Company for the purchase of such Securities are not made within 48 hours after
such default, this Agreement shall terminate without liability of any party to any other party
except that the provisions of Sections 4, 8 and 9 hereof shall at all times be effective and shall
survive such termination. In any such case, either the Initial Purchasers or the Company shall
have the right to postpone the Closing Date, as the case may be, but in no



27









 







event for longer than seven days in order that the required changes, if any, to the Offering
Memorandum or any other documents or arrangements may be effected.



     As used in this Agreement, the term “Initial Purchaser” shall be deemed to include any person
substituted for a defaulting Initial Purchaser under this Section 16. Any action taken under this
Section 16 shall not relieve any defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.



     Section 17. No Advisory or Fiduciary Responsibility. Each of the Company and the Guarantors
acknowledges and agrees that: (i) the purchase and sale of the Securities pursuant to this
Agreement, including the determination of the offering price of the Securities and any related
discounts and commissions, is an arm’s-length commercial transaction between the Company and the
Guarantors, on the one hand, and the several Initial Purchasers, on the other hand, and the Company
and the Guarantors are capable of evaluating and understanding and understand and accept the terms,
risks and conditions of the transactions contemplated by this Agreement; (ii) in connection with
each transaction contemplated hereby and the process leading to such transaction, each Initial
Purchaser is and has been acting solely as a principal and is not the agent or fiduciary of the
Company, the Guarantors or their respective affiliates, stockholders, creditors or employees or any
other party; (iii) no Initial Purchaser has assumed or will assume an advisory or fiduciary
responsibility in favor of the Company or the Guarantors with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether such Initial Purchaser
has advised or is currently advising the Company or the Guarantors on other matters) or any other
obligation to the Company and the Guarantors except the obligations expressly set forth in this
Agreement; (iv) the several Initial Purchasers and their respective affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of the Company and the
Guarantors and that the several Initial Purchasers have no obligation to disclose any of such
interests by virtue of any fiduciary or advisory relationship; and (v) the Initial Purchasers have
not provided any legal, accounting, regulatory or tax advice with respect to the offering
contemplated hereby and the Company and the Guarantors have consulted their own legal, accounting,
regulatory and tax advisors to the extent they deemed appropriate.



     The Company and the Guarantors hereby waive and release, to the fullest extent permitted by
law, any claims that the Company and the Guarantors may have against the several Initial Purchasers
with respect to any breach or alleged breach of fiduciary duty.



     Section 18. General Provisions. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter hereof; provided
that, notwithstanding anything to the contrary herein, upon and after the execution of this
Agreement, the Commitment Letter and the fee letter, dated as of December 27, 2005, among Banc of
America Securities LLC, Banc of America Bridge LLC, Bank of America, N.A. and Holdings, and the
engagement letter between Holdings and Banc of America Securities LLC, dated as of December 27,
2005, shall remain in full force and effect until the purchase of the Notes by the Initial
Purchasers, notwithstanding any failure to meet or fulfill any of the conditions precedent to the
purchase of the Notes contained herein or any termination of this Agreement pursuant to Section 10.
This Agreement may be executed in two or more



28









 







counterparts, each one of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition is meant to
benefit. The section headings herein are for the convenience of the parties only and shall not
affect the construction or interpretation of this Agreement.




29










 







     If the foregoing is in accordance with your understanding of our agreement, kindly sign
and return to the Company the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.



	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	iPAYMENT, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	iPAYMENT OF CALIFORNIA, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	1ST NATIONAL PROCESSING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	E-COMMERCE EXCHANGE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 






30









 






	 	 	 	 	 	 	 
	 	 	ONLINE DATA CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: /s/ Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	iPAYMENT OF MAINE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: /s/ Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	CARDSYNC PROCESSING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: /s/ Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	QUAD CITY ACQUISITION SUB, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:		/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: /s/ Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	CARDPAYMENT SOLUTIONS, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: /s/ Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	iPAYMENT ACQUISITION SUB LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: /s/ Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 






31









 






	 	 	 	 	 	 	 
	 	 	TS ACQUISITION SUB, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	IPAYMENT ICE HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	PCS ACQUISITION SUB, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	NPMG ACQUISITION SUB, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	iPAYMENT CENTRAL HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Afshin Yazdian	 	 
	 

	 	 	 	 

Name: Afshin Yazdian
	 	 
	 

	 	 	 	Title:	 	 






32









 






     The foregoing Purchase Agreement is hereby confirmed and accepted by the Initial Purchasers as
of the date first above written.



	 	 	 	 	 
	BANC OF AMERICA SECURITIES LLC	 	 
	 
	 	 	 	 
	By:

	 	Banc of America Securities LLC	 	 
	 
	 	 	 	 
	By:
	 	[illegible]	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title: Managing Director	 	 
	 
	 	 	 	 
	J.P. MORGAN SECURITIES INC.	 	 
	 
	 	 	 	 
	By:

	 	J.P. Morgan Securities Inc.	 	 
	 
	 	 	 	 
	By:
	 	[illegible]	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title: Managing Director	 	 






33









 






Schedule A




INITIAL PURCHASERS




	 	 	 	 	 
	 	 	Aggregate	 
	 	 	Principal Amount	 
	 	 	of Notes to be	 
	Initial Purchasers	 	Purchased	 
	Banc of America Securities LLC
	 	$	184,500,000	 
	J.P. Morgan Securities Inc.
	 	 	20,500,000	 
	 
	 	 	 
	Total
	 	$	205,000,000	 







1









 








Schedule B




GUARANTORS




iPayment of California, LLC

1st National Processing, Inc.

E-Commerce Exchange, Inc.

Online Data Corp.

iPayment of Maine, Inc.

Cardsync Processing, Inc.

Quad City Acquisition Sub, Inc.

Cardpayment Solutions, L.L.C.

iPayment Acquisition Sub LLC

TS Acquisition Sub, LLC

iPayment ICE Holdings, Inc.

PCS Acquisition Sub, LLC

NPMG Acquisition Sub, LLC

iPayment Central Holdings, Inc.





1









 








Schedule C




PRICING SUPPLEMENT





1









 








EXHIBIT A-1




Form of Opinion of White & Case LLP





EXHIBIT A-1-1









 








EXHIBIT A-2




Form of Opinion of Debevoise & Plimpton LLP





EXHIBIT A-2-1









 








EXHIBIT A-3




Form of Opinion of Afshin Yazdian





EXHIBIT A-3-1









 








ANNEX I



Resale Pursuant to Regulation S or Rule 144A. Each Initial Purchaser understands that the
Securities have not been and will not be registered under the Securities Act and may not be offered
or sold within the United States except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. Each Initial Purchaser represents
and agrees that it has not offered or sold, and will not offer or sell, any Securities constituting
part of its allotment within the United States except in accordance with Rule 903 of Regulation S
or Rule 144A. Accordingly, neither it nor its affiliates or any persons acting on its or their
behalf have engaged or will engage in any directed selling efforts with respect to the Securities.
Terms used in this paragraph have the meanings given to them by Regulation S.



Resale Pursuant to Regulation S or Rule 144A. Each Initial Purchaser understands that:



Such Initial Purchaser agrees that it has not offered or sold and will not offer or sell the
Securities in the United States or to, or for the benefit or account of, a U.S. Person (other than
a distributor), in each case, as defined in Rule 902 of Regulation S (i) as part of its
distribution at any time and (ii) otherwise until 40 days after the later of the commencement of
the offering of the Securities pursuant hereto and the Closing Date, other than in accordance with
Regulation S or another exemption from the registration requirements of the Securities Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it will not cause any
advertisement with respect to the Securities (including any “tombstone” advertisement) to be
published in any newspaper or periodical or posted in any public place and will not issue any
circular relating to the Securities, except such advertisements as are permitted by and include the
statements required by Regulation S.



Such Initial Purchaser agrees that, at or prior to confirmation of a sale of Securities by it to
any distributor, dealer or person receiving a selling concession, fee or other remuneration during
the 40-day restricted period referred to in Rule 903 of Regulation S, it will send to such
distributor, dealer or person receiving a selling concession, fee or other remuneration a
confirmation or notice to substantially the following effect:



“The Securities covered hereby have not been registered under the U.S. Securities Act of 1933, as
amended (the “Securities Act”), and may not be offered and sold within the United States or to, or
for the account or benefit of, U.S. persons (i) as part of your distribution at any time or (ii)
otherwise until 40 days after the later of the date the Securities were first offered to persons
other than distributors in reliance upon Regulation S and the Closing Date, except in either case
in accordance with Regulation S under the Securities Act (or in accordance with Rule 144A under the
Securities Act or to accredited investors in transactions that are exempt from the registration
requirements of the Securities Act), and in connection with any subsequent sale by you of the
Securities covered hereby in reliance on Regulation S under the Securities Act during the period
referred to above to any distributor, dealer or person receiving a selling concession, fee or other
remuneration, you must deliver a notice to substantially the foregoing effect. Terms used above
have the meanings assigned to them in Regulation S under the Securities Act.”




ANNEX I-1