exv10w29





Exhibit 10.29




EXECUTION VERSION




iPayment Holdings, Inc.




and



Wilmington Trust FSB,

as Warrant Agent



 






Warrant Agreement



Dated as of May 6, 2011



Warrants to Purchase

125,000 Shares of Common Stock




 





 









 




TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1
 Definitions
	 
	Section 1.01. Definitions
	 	 	1	 
	Section 1.02. Rules of Construction
	 	 	4	 
	 
	ARTICLE 2
 Appointment Of Warrant Agent
	 
	Section 2.01. Appointment Of Warrant Agent
	 	 	5	 
	 
	ARTICLE 3
 The Warrants
	 
	Section 3.01. Form And Dating; Legends
	 	 	5	 
	Section 3.02. Execution and Countersignature
	 	 	6	 
	Section 3.03. Warrant Registrar And Countersignature Agent
	 	 	6	 
	Section 3.04. Replacement Warrants
	 	 	7	 
	Section 3.05. Outstanding Warrants
	 	 	7	 
	Section 3.06. Temporary Warrants
	 	 	7	 
	Section 3.07. Cancellation
	 	 	8	 
	Section 3.08. CUSIP Numbers
	 	 	8	 
	Section 3.09. Registration, Transfer And Exchange
	 	 	8	 
	Section 3.10. Restrictions On Transfer And Exchange
	 	 	11	 
	Section 3.11. Uncertificated Warrants
	 	 	12	 
	 
	ARTICLE 4
 Separation Of Warrants; Terms Of Warrants; Exercise Of Warrants
	 
	Section 4.01. Separation Of Warrants; Terms Of Warrants; Exercise Of Warrants
	 	 	12	 
	 
	ARTICLE 5
 Covenants of the Company
	 
	Section 5.01. Maintenance Of Office Or Agency
	 	 	15	 
	Section 5.02. Payment Of Taxes
	 	 	15	 
	Section 5.03. Reports
	 	 	15	 
	Section 5.04. Reservation Of Warrant Shares
	 	 	16	 
	Section 5.05. Obtaining Stock Exchange Listings
	 	 	16	 






 









 





	 	 	 	 	 
	 	 	Page	 
	ARTICLE 6
 Adjustment Of Exercise Price And Number Of Warrant Shares Issuable
	 
	Section 6.01. Adjustment Of Exercise Price And Number Of Warrant Shares Issuable
	 	 	17	 
	Section 6.02. Fractional Interests
	 	 	25	 
	Section 6.03. Notices To Warrant Holders
	 	 	25	 
	Section 6.04. No Rights As Stockholders
	 	 	26	 
	 
	ARTICLE 7
 Warrant Agent
	 
	Section 7.01. Warrant Agent
	 	 	26	 
	Section 7.02. Compensation; Indemnity
	 	 	28	 
	Section 7.03. Individual Rights Of Warrant Agent
	 	 	28	 
	Section 7.04. Replacement of Warrant Agent
	 	 	28	 
	Section 7.05. Successor Warrant Agent By Merger
	 	 	29	 
	Section 7.06. Eligibility
	 	 	30	 
	Section 7.07. Holder Lists
	 	 	30	 
	 
	ARTICLE 8
 Miscellaneous
	 
	Section 8.01. Warrantholder Actions
	 	 	30	 
	Section 8.02. Notices
	 	 	30	 
	Section 8.03. Supplements And Amendments
	 	 	31	 
	Section 8.04. Governing Law
	 	 	33	 
	Section 8.05. No Adverse Interpretation of Other Agreements
	 	 	33	 
	Section 8.06. Successors
	 	 	33	 
	Section 8.07. Duplicate Originals
	 	 	33	 
	Section 8.08. Separability
	 	 	33	 
	Section 8.09. Table of Contents and Headings
	 	 	33	 
	Section 8.10. Benefits Of This Agreement
	 	 	33	 






Exhibits




Exhibit A Form of Warrant

Exhibit B Restricted Legend

Exhibit C DTC Legend

Exhibit D Regulation S Certificate

Exhibit E Rule 144A Certificate

Exhibit F Institutional Accredited Investor Certificate

Exhibit G Unit Legend




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     WARRANT AGREEMENT, dated as of May 6, 2011, between iPayment Holdings, Inc., a Delaware
corporation (as further defined below, the “Company”), and Wilmington Trust FSB, as warrant agent
(the “Warrant Agent”).



     WHEREAS, the Company proposes to issue warrants (the “Warrants”) to initially purchase up to
an aggregate of 125,000 shares of Common Stock, par value $0.01 per share (the “Common Stock”), of
the Company (the Common Stock issuable on exercise of the Warrants being referred to herein as the
“Warrant Shares”), in connection with the offering by the Company of Units (the “Units”), each
consisting of $1,000 principal amount at maturity of the Company’s 15.00%/15.00% Senior Notes due
2018 (the “Notes”) and one Warrant.



     WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing so to act in connection with the issuance of the Warrants and other
matters as provided herein.



     NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereto agree as follows:



ARTICLE 1

Definitions




     Section 1.01. Definitions. As used in this Agreement, the following terms shall have the
following respective meanings:



     “Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with, such Person. For
purposes of this definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”) with respect to any Person, means
the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.



     “Agent” means any Registrar or Countersignature Agent.



     “Agent Member” means a member of, or a participant in, the Depositary.



     “Agreement” means this Warrant Agreement, as amended or supplemented from time to time.



     “Board of Directors” means the board of directors or comparable governing body of the Company,
or any committee thereof duly authorized to act on its behalf.



 









 





     “Board Resolution” means a resolution duly adopted by the Board of Directors which is
certified by the Secretary or an Assistant Secretary of the Company and remains in full force and
effect as of the date of its certification.



     “Business Day” means any day other than a Legal Holiday..



     “Certificated Warrant” means a Warrant in registered individual form.



     “Commission” means the Securities and Exchange Commission.



     “Company” means the party named as such in the first paragraph of the Agreement or any
successor to the Company under the Agreement and the Warrants pursuant to Section 6.01(k).



     “Corporate Trust Office” means the office of the Warrant Agent at which the corporate trust
business of the Warrant Agent is principally administered, which at the Issue Date is located at
246 Goose Lane, Suite 105, Guilford, Connecticut 06437.



     “Countersignature Agent” refers to a Person engaged to countersign the Warrants in the stead
of the Warrant Agent.



     “Daily Price” means, for any determination date, the closing price on such day as reported by
the principal national securities exchange on which the shares are listed and traded. If on any
determination date the shares of such class of Common Stock are not quoted by any such
organization, the Daily Price per share of Common Stock shall be the Fair Value of such share on
such determination date as determined pursuant to Section 6.01(g).



     “Depositary” means the depositary of each Global Warrant, which will initially be DTC.



     “Disinterested Director” means, in connection with any issuance of securities that gives rise
to a determination of the Fair Value thereof, each member of the Board of Directors who is not an
officer, employee, director or other Affiliate of the party to whom the Company is proposing to
issue the securities giving rise to such determination.



     “DTC” means The Depository Trust Company, a New York corporation, and its successors.



     “DTC Legend” means the legend set forth in Exhibit C.



     “Exchange Act” means the Securities Exchange Act of 1934.



     “Exercise Price” has the meaning assigned to such term in Section 4.01.



     “Expiration Date” has the meaning assigned to such term in Section 4.01.



     “Fair Value” has the meaning set forth in Section 6.01.



     “GAAP” means generally accepted accounting principles in the United States, including those
set forth in the opinions and pronouncements of the Accounting Principles Board of the



2









 




American Institute of Certified Public Accountants, the opinions and pronouncements of the Public
Company Accounting Oversight Board and in the statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as have been approved
by a significant segment of the accounting profession, as in effect from time to time.




     “Global Warrant” means a Warrant in registered global form.



     “Holder” or “Warrantholder” means the registered holder of any Warrant.



     “Indenture” means the indenture, dated the date hereof, between the Company and Wilmington
Trust FSB, as trustee relating to the Notes.



     “I.A.I. Global Warrant” means a Global Warrant that bears the Restricted Legend representing
Warrants resold to Institutional Accredited Investors within the meaning of subparagraph (a)(1),
(2), (3) or (7) of Rule 501 of Regulation D under the Securities Act.



     “Initial Purchasers” means the initial purchasers party to a purchase agreement with the
Company relating to the sale of the Units by the Company.



     “Institutional Accredited Investor Certificate” means a certificate substantially in the form
of Exhibit F hereto.



     “Issue Date” means the date on which the Warrants are originally issued under the Agreement.



     “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in The City
of New York or at a place of payment are authorized or required by law, regulation or executive
order to remain closed.



     “Non-U.S. Person” means a Person that is not a U.S. person, as defined in Regulation S.



     “Officer” means with respect to any Person, the Chairman of the Board of Directors, the Chief
Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any
Vice-President of such Person.



     “Officers’ Certificate” means a certificate signed in the name of the Company (i) by the
chairman of the Board of Directors, the president or chief executive officer or a vice president
and (ii) by the chief financial officer, the treasurer or any assistant treasurer or the secretary
or any assistant secretary.



     “Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable
to the Warrant Agent (who may be counsel to or any employee of the Company).



     “Person” means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, limited liability company or government or
other entity.



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     “Register” has the meaning assigned to such term in Section 3.09.



     “Registrar” means a Person engaged to maintain the Register.



     “Regulation S” means Regulation S under the Securities Act.



     “Regulation S Certificate” means a certificate substantially in the form of Exhibit D hereto.



     “Restricted Legend” means the legend set forth in Exhibit B.



     “Rule 144” means Rule 144 promulgated under the Securities Act.



     “Rule 144A” means Rule 144A under the Securities Act.



     “Rule 144A Certificate” means a certificate substantially in the form of Exhibit E hereto.



     “Securities Act” means the Securities Act of 1933.



     “Separation Date” means the earliest of (i) 180 days after the Issue Date, (ii) the date on
which a registration statement with respect to a registered exchange offer for the Notes is
declared effective under the Securities Act, (iii) such date as J.P. Morgan Securities LLC in its
sole discretion shall establish on at least one Business Days’ notice to the Company and (iv) in
the event of the occurrence of a Change of Control (as defined in the Indenture), the date on which
the requisite notice is mailed to the holders of Notes; provided that the Separation Date shall not
be prior to the Equity Redemption (as defined in the Indenture).



     “Transfer Agent” has the meaning assigned to such term in Section 5.04.



     “Trustee” means the trustee under the Indenture.



     “Unit Legend” means the legend set forth in Exhibit G.



     “U.S. Global Warrant” means a Global Warrant that bears the Restricted Legend representing
Warrants issued and sold pursuant to Rule 144A.



     “Warrant Agent” means the party named as such in the first paragraph of the Agreement or any
successor warrant agent under the Agreement pursuant to Article 7.



     “Warrants” has the meaning assigned to such term in the Recitals.



     Section 1.02. Rules of Construction. Unless the context otherwise requires or except as
otherwise expressly provided,




     (i) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;



4









 






     (ii) “herein,” “hereof” and other words of similar import refer to the Agreement as a
whole and not to any particular Section, Article or other subdivision;




     (iii) all references to Sections or Articles or Exhibits refer to Sections or Articles
or Exhibits of or to the Agreement unless otherwise indicated; and




     (iv) references to agreements or instruments, or to statutes or regulations, are to
such agreements or instruments, or statutes or regulations, as amended from time to time (or
to successor statutes and regulations).



ARTICLE 2

Appointment Of Warrant Agent




     Section 2.01. Appointment Of Warrant Agent. The Company hereby appoints the Warrant Agent to
act as agent for the Company in accordance with the instructions set forth hereinafter in this
Agreement and the Warrant Agent hereby accepts such appointment.



ARTICLE 3

The Warrants



      Section 3.01. Form And Dating; Legends. (a)  The Warrants will be substantially in
the form attached as Exhibit A. The terms and provisions contained in the form of the Warrants
annexed as Exhibit A constitute, and are hereby expressly made, a part of the Warrant Agreement.
The Warrants may have notations, legends or endorsements required by law, rules of or agreements
with national securities exchanges to which the Company is subject, or usage. Each Warrant will be
dated the date of its countersignature.



     (b) (i) Except as otherwise provided in paragraph (c), Section 3.10(b)(ii),or (c), or Section
3.09(b)(iv), each Warrant will bear the Restricted Legend.




     (ii) Each Global Warrant will bear the DTC Legend.




     (iii) Warrants offered and sold in reliance on any exception under the Securities Act
other than Rule 144A will be issued, and upon the request of the Company to the Warrant
Agent, Warrants offered and sold in reliance on Rule 144A may be issued, in the form of
Certificated Warrants. Warrants resold to Institutional Accredited Investors within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of
Regulation D under the Securities Act shall be issued in the form of I.A.I. Global
Warrants.




     (iv) Each Warrant issued prior to the Separation Date will bear the Unit Legend which
may be contained on the face of the Unit.



     (c) (i) If the Company determines (upon the advice of counsel and such other certifications
and evidence as the Company may reasonably require) that a Warrant is eligible for



5









 



resale pursuant to Rule 144 under the Securities Act (or a successor provision) without the need to
satisfy current information or other requirements therein and that the Restricted Legend is no
longer necessary or appropriate in order to ensure that subsequent transfers of the Warrant (or a
beneficial interest therein) are effected in compliance with the Securities Act, or





     (ii) after a Warrant is sold pursuant to an effective registration statement under the
Securities Act,


the Company may instruct the Warrant Agent in writing to cancel the Warrant and issue to the Holder
thereof (or to its transferee) a new Warrant of like tenor, registered in the name of the Holder
thereof (or its transferee), that does not bear the Restricted Legend, and the Warrant Agent will
comply with such instruction.




     (d) By its acceptance of any Warrant bearing the Restricted Legend (or any beneficial interest
in such a Warrant), each Holder thereof and each owner of a beneficial interest therein
acknowledges the restrictions on transfer of such Warrant (and any such beneficial interest) set
forth in this Agreement and in the Restricted Legend and agrees that it will transfer such Warrant
(and any such beneficial interest) only in accordance with the Agreement and such legend.



     Section 3.02. Execution and Countersignature. (a) An Officer shall execute the Warrants for
the Company by facsimile or manual signature in the name and on behalf of the Company. If an
Officer whose signature is on a Warrant no longer holds that office at the time the Warrant is
countersigned, the Warrant will still be valid.



     (b) A Warrant will not be valid until the Warrant Agent manually countersigns the Warrant,
with the signature conclusive evidence that the Warrant has been countersigned under this
Agreement. At any time and from time to time after the execution and delivery of this Agreement,
the Company may deliver Warrants executed by the Company to the Warrant Agent for countersignature.
The Warrant Agent will countersign and deliver a number of Warrants for original issue
convertible into an aggregate number of Warrant Shares not to exceed the amount stated in the
preamble hereto (except as may be adjusted pursuant to Article 6 hereof) after receipt by the
Warrant Agent of an Officers’ Certificate specifying




     (i) the number of Warrants to be countersigned and the date on which the Warrants are
to be countersigned,




     (ii) whether the Warrants are to be issued as one or more Global Warrant or
Certificated Warrants, and




     (iii) other information the Company may determine to include or the Warrant Agent may
reasonably request.



     Section 3.03. Warrant Registrar And Countersignature Agent. The Company may appoint one or
more Registrars, and the Warrant Agent may appoint a Countersignature Agent, in which case each
reference in the Agreement to the Warrant Agent in respect of the obligations of the Warrant Agent
to be performed by that Agent will be deemed to be references to the Agent. The Company may act as
Registrar. In each case the Company and the Warrant Agent will enter into an appropriate agreement
with the Agent implementing the provisions of the



6









 




Agreement relating to the obligations of the Warrant Agent to be performed by the Agent and the
related rights. The Company initially appoints the Warrant Agent as Registrar.




     Section 3.04. Replacement Warrants. If a mutilated Warrant is surrendered to the Warrant
Agent or if a Holder claims that its Warrant has been lost, destroyed or wrongfully taken, the
Company will issue and the Warrant Agent will countersign a replacement Warrant. Every replacement
Warrant is an additional obligation of the Company and entitled to the benefits of the Warrant
Agreement. If required by the Warrant Agent or the Company, an indemnity must be furnished by the
Holder that is sufficient in the judgment of (i) the Warrant Agent to protect the Warrant Agent and
(ii) the Company to protect the Company and the Warrant Agent from any loss they may suffer if a
Warrant is replaced. The Company may charge the Holder for the expenses of the Company and the
Warrant Agent in replacing a Warrant.



     Section 3.05. Outstanding Warrants. (a) Warrants outstanding at any time are all Warrants
that have been countersigned by the Warrant Agent except for




     (i) Warrants cancelled by the Warrant Agent or delivered to it for cancellation;




     (ii) Warrants exercised by the Holder thereof; and




     (iii) any Warrant which has been replaced pursuant to Section 3.04 unless and until the
Warrant Agent and the Company receive proof satisfactory to them that the replaced Warrant
is held by a bona fide purchaser, in which case the replacement Warrant issued pursuant to
Section 3.04 shall be automatically cancelled.



     (b) A Warrant does not cease to be outstanding because the Company or one of its Affiliates
holds the Warrant, provided that in determining whether the Holders of the requisite principal
amount of the outstanding Warrants have given or taken any request, demand, authorization,
direction, notice, consent, waiver or other action hereunder, Warrants owned by the Company or any
Affiliate of the Company will be disregarded and deemed not to be outstanding (it being understood
that in determining whether the Warrant Agent is protected in relying upon any such request,
demand, authorization, direction, notice, consent, waiver or other action, only Warrants which the
Warrant Agent knows to be so owned will be so disregarded). Warrants so owned which have been
pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction
of the Warrant Agent the pledgee’s right so to act with
respect to such Warrants and that the pledgee is not the Company or any Affiliate of the
Company.



     Section 3.06. Temporary Warrants. Until definitive Warrants are ready for delivery, the
Company may prepare and the Warrant Agent will countersign temporary Warrants. Temporary Warrants
will be substantially in the form of definitive Warrants but may have insertions, substitutions,
omissions and other variations determined to be appropriate by the Officer executing the temporary
Warrants, as evidenced by the execution of the temporary Warrants. If temporary Warrants are
issued, the Company will cause definitive Warrants to be prepared without unreasonable delay.
After the preparation of definitive Warrants, the temporary




7











 





Warrants will be exchangeable for
definitive Warrants upon surrender of the temporary Warrants without charge to the Holder. Upon
surrender for cancellation of any temporary Warrants, the Company will execute and the Warrant
Agent will countersign and deliver in exchange therefor a like amount of definitive Warrants.
Until so exchanged, the temporary Warrants will be entitled to the same benefits under this
Agreement as definitive Warrants.




     Section 3.07 . Cancellation. The Company at any time may deliver to the Warrant Agent for
cancellation any Warrants previously countersigned and delivered hereunder which the Company may
have acquired in any manner whatsoever, and may deliver to the Warrant Agent for cancellation any
Warrants previously countersigned hereunder which the Company has not issued and sold. Any
Registrar will forward to the Warrant Agent any Warrants surrendered to it for transfer, exchange
or exercise. The Warrant Agent will cancel all Warrants surrendered for transfer, exchange,
exercise or cancellation and dispose of them in accordance with its normal procedures.
Certification of the cancellation of all cancelled Warrants shall be delivered to the Company upon
written request. The Company may not issue new Warrants to replace Warrants that have been
exercised or delivered to the Warrant Agent for cancellation. In addition, all Warrants will be
automatically canceled for no consideration in the event that the Notes associated with such
Warrants are redeemed pursuant to Section 3.07(b) or Section 3.08 of the Indenture.



     Section 3.08 . CUSIP Numbers. The Company in issuing the Warrants may use “CUSIP” numbers,
and the Warrant Agent will use CUSIP numbers in notices as a convenience to Holders, the notice to
state that no representation is made as to the correctness of such numbers either as printed on the
Warrants or as contained in any notice to any Holder. The Company will promptly notify the Warrant
Agent in writing of any change in the CUSIP numbers.



     Section 3.09 . Registration, Transfer And Exchange. (a) The
Warrants will be issued in registered form only, and the Company shall cause the Warrant Agent to
maintain a register (the “Register”) of the Warrants, for registering the record ownership of the
Warrants by the Holders and transfers and exchanges of the Warrants.



     (b) (i) Each Global Warrant will be registered in the name of the
Depositary or its nominee and, so long as DTC is serving as the Depositary thereof, will bear the
DTC Legend.




     (ii) Each Global Warrant will be delivered to the Warrant Agent as custodian for the
Depositary. Transfers of a Global Warrant (but not a beneficial interest therein) will be
limited to transfers thereof in whole, but not in part, to the Depositary, its successors or
their respective nominees, except (1) as set forth in Section 3.09(b)(iv) and (2) transfers
of portions thereof in the form of Certificated Warrants may be made upon request of an
Agent Member (for itself or on behalf of a beneficial owner) by written notice given to the
Warrant Agent by or on behalf of the Depositary in accordance with customary procedures of
the Depositary and in compliance with this Section and Section 3.10.




     (iii) Agent Members will have no rights under the Agreement with respect to any Global
Warrant held on their behalf by the Depositary, and the Depositary may be treated by the
Company, the Warrant Agent and any agent of the Company or the



8









 






Warrant Agent as the absolute
owner and Holder of such Global Warrant for all purposes whatsoever. Notwithstanding the
foregoing, the Depositary or its nominee may grant proxies and otherwise authorize any
Person (including any Agent Member and any Person that holds a beneficial interest in a
Global Warrant through an Agent Member) to take any action which a Holder is entitled to
take under the Warrant or the Warrants, and nothing herein will impair, as between the
Depositary and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any security.




     (iv) If (1) the Depositary (a) notifies the Company that it is unwilling or unable to
continue as Depositary for a Global Warrant or (y) has ceased to be a clearing agency
registered under the Exchange Act, and in each case a successor depositary is not appointed
by the Company within 90 days of the notice; or (2) the Company, at its option, notifies the
Warrant Agent in writing that it elects to cause the issuance of Certificated Warrants, the
Warrant Agent will promptly exchange each beneficial interest in the Global Warrant for one
or more Certificated Warrants in authorized denominations having an equal aggregate
principal amount registered in the name of the owner of such beneficial interest, as
identified to the Warrant Agent by the Depositary, and thereupon the Global Warrant will be
deemed canceled. If such Warrant does not bear the Restricted Legend, then the Certificated
Warrants issued in exchange therefor will not bear the Restricted Legend. Except as
otherwise provided in Section 3.01(c)(i) and (ii), if such Warrant bears the Restricted
Legend, then the Certificated Warrants issued in exchange therefor will bear the Restricted
Legend.



     (c) Each Certificated Warrant will be registered in the name of the holder thereof or its
nominee.



     (d) Prior to the Separation Date, when a Note issued under the Indenture is transferred, the
Warrant associated with such Note shall be automatically transferred to the same party and during
such period each time a notation of a transfer of a Note is made on the register for the Notes
maintained under the Indenture, a corresponding notation shall be made in the Register. On and
after the Separation Date, a Holder may transfer a Warrant (or a beneficial interest therein) to
another Person or exchange a Warrant (or a beneficial interest therein) for another Warrant by
presenting to the Warrant Agent a written request therefor stating the name of the proposed
transferee or requesting such an exchange, accompanied by any certification, opinion or other
document required by the Agreement. The Warrant Agent will promptly register any transfer or
exchange that meets the requirements of this Section by noting the same in the Register maintained
by the Warrant Agent for the purpose; provided that no transfer or exchange will be effective until
it is registered in the Register. Prior to the registration of any transfer, the Company, the
Warrant Agent and their agents will treat the Person in whose name the Warrant is registered as the
owner and Holder thereof for all purposes, and will not be affected by notice to the contrary.



     Neither the Company nor any agent of the Company shall have any responsibility or liability
for any aspect of the records on account of beneficial ownership interests of a Global Warrant, or
for maintaining, supervising or reviewing any records relating to such beneficial ownership
interests.



9









 




     From time to time the Company will execute and the Warrant Agent will countersign additional
Warrants as necessary in order to permit the registration of a transfer or exchange in accordance
with this Section. All Warrants issued upon transfer or exchange shall be the duly authorized,
executed and delivered Warrants of the Company entitled to the benefits of the Agreement.



     No service charge will be imposed in connection with any transfer or exchange of any Warrant,
but the Company may require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than a transfer tax or other similar
governmental charge payable upon exchange pursuant to Section 3.09(b)(iv)).



     (e) (i) Global Warrant to Global Warrant. Subject to compliance with
Section 3.10(b), if a beneficial interest in a Global Warrant is transferred or exchanged for a
beneficial interest in another Global Warrant, the Warrant Agent will (x) record a decrease in the
amount of the Global Warrant being transferred or exchanged equal to the amount of such transfer or
exchange and (y) record a like increase in the amount of the other Global Warrant. Any beneficial
interest in one Global Warrant that is transferred to a Person who takes delivery in the form of an
interest in another Global Warrant, or exchanged for an interest in another Global Warrant, will,
upon transfer or exchange, cease to be an interest in such Global Warrant and become an interest in
the other Global Warrant and, accordingly, will thereafter be subject to all transfer and exchange
restrictions, if any, and other procedures applicable to beneficial interests in such other Global
Warrant for as long as it remains such an interest.




     (ii) Global Warrant to Certificated Warrant. Subject to compliance with Section
3.10(b), if a beneficial interest in a Global Warrant is transferred or exchanged for a
Certificated Warrant, the Warrant Agent will (x) record a decrease in the principal amount
of such Global Warrant equal to the principal amount of such transfer or exchange and (y)
deliver a new Certificated Warrants to the transferee (in the case of a transfer) or the
owner of such beneficial interest (in the case of an exchange), registered in the name of
such transferee or owner, as applicable.




     (iii) Certificated Warrant to Global Warrant. Subject to compliance with Section
3.10(b), if a Certificated Warrant is transferred or exchanged for a beneficial interest in
a Global Warrant, the Warrant Agent will (x) cancel such Certificated Warrant, (y) record an
increase in such Global Warrant equal to the number of Warrants being transferred or
exchanged and (z) in the event that such transfer or exchange involves less than the entire
amount of the canceled Certificated Warrant, deliver to the Holder thereof one or more new
Certificated Warrants having an aggregate number of Warrants equal to the untransferred or
unexchanged portion of the canceled Certificated Warrant, registered in the name of the
Holder thereof.




     (iv) Certificated Warrant to Certificated Warrant. Subject to compliance with Section
3.10(b), if a Certificated Warrant is transferred or exchanged for another Certificated
Warrant, the Warrant Agent will (x) cancel the Certificated Warrant being transferred or
exchanged, (y) deliver one or more new Certificated Warrants having an aggregate principal
amount equal to the amount of Warrants being transferred or



10









 





exchanged to the transferee (in
the case of a transfer) or the Holder of the canceled Certificated Warrant (in the case of
an exchange), registered in the name of such transferee or Holder, as applicable, and (z) if
such transfer or exchange involves less than the entire amount of the canceled Certificated
Warrant, deliver to the Holder thereof one or more Certificated Warrants having an aggregate
amount of Warrants equal to the untransferred or unexchanged portion of the canceled
Certificated Warrant, registered in the name of the Holder thereof.



     Section 3.10 . Restrictions On Transfer And Exchange. (a) The
transfer or exchange of any Warrant (or a beneficial interest therein) may only be made in
accordance with this Section and Section 3.09 and, in the case of a Global Warrant (or a beneficial
interest therein), the applicable rules and procedures of the Depositary. The Warrant Agent shall
refuse to register any requested transfer or exchange that does not comply with the preceding
sentence.



     (b) Subject to paragraph (c), the transfer or exchange of any Warrant (or a beneficial
interest therein) of the type set forth in column A below for a Warrant (or a beneficial interest
therein) of the type set forth opposite in column B below may only be made in compliance with the
certification requirements (if any) described in the clause of this paragraph set forth opposite in
column C below.



	 	 	 	 	 
	A	 	B	 	C
	U.S. Global Warrant

	 	U.S. Global Warrant
	 	(i)
	U.S. Global Warrant

	 	Certificated Warrant
	 	(ii)
	U.S. Global Warrant

	 	I.A.I. Global Warrant
	 	(ii)
	Certificated Warrant

	 	U.S. Global Warrant
	 	(iii)
	Certificated Warrant

	 	Certificated Warrant
	 	(ii)
	Certificated Warrant

	 	I.A.I. Global Warrant
	 	(ii)
	I.A.I. Global Warrant

	 	U.S. Global Warrant
	 	(iii)
	I.A.I. Global Warrant

	 	Certificated Warrant
	 	(ii)
	I.A.I. Global Warrant

	 	I.A.I. Global Warrant
	 	(i)







     (i) No certification is required.




     (ii) The Person requesting the transfer or exchange must deliver or cause to be
delivered to the Warrant Agent (x) a duly completed Rule 144A Certificate, (y) a duly
completed Regulation S Certificate or (z) a duly completed Institutional Accredited Investor
Certificate, and/or an Opinion of Counsel and such other certifications and evidence as the
Company may reasonably require in order to determine that the proposed transfer or exchange
is being made in compliance with the Securities Act and any applicable securities laws of
any state of the United States; provided that if the requested transfer or exchange is made
by the Holder of a Certificated Warrant that does not bear the Restricted Legend, then no
certification is required. In the event that a Certificated Warrant that does not bear the
Restricted Legend is surrendered for transfer or exchange, upon transfer or exchange the
Warrant Agent will deliver a Certificated Warrant that does not bear the Restricted Legend.



11









 





     (iii) The Person requesting the transfer or exchange must deliver or cause to be
delivered to the Warrant Agent a duly completed Rule 144A Certificate.



     (c) No certification is required in connection with any transfer or exchange of any Warrant
(or a beneficial interest therein)




     (i) after such Warrant is eligible for resale pursuant to Rule 144 under the Securities
Act (or a successor provision) without the need to satisfy current information or other
requirements therein; provided that the Company has provided the Warrant Agent with an
Officers’ Certificate to that effect, and the Company may require from any Person requesting
a transfer or exchange in reliance upon this clause (i) an opinion of counsel and any other
reasonable certifications and evidence in order to support such certificate; or




     (ii) sold pursuant to an effective registration statement.



     Any Certificated Warrant delivered in reliance upon this paragraph will not bear the
Restricted Legend.



     (d) The Warrant Agent will retain copies of all certificates, opinions and other documents
received in connection with the transfer or exchange of a Warrant (or a beneficial interest
therein), and the Company will have the right to inspect and make copies thereof at any reasonable
time upon written notice to the Warrant Agent.



     Section 3.11 . Uncertificated Warrants. Notwithstanding anything herein to the contrary, any
Warrant issued hereunder, except a Warrant issued pursuant to Regulation S, may be issued in
uncertificated or book-entry form through the Warrant Agent and/or the facilities of DTC or other
book-entry depositary system, in each case as determined by the Board of Directors of the Company
or by an authorized committee thereof. Any Warrant so issued shall have the same terms, force and
effect as a certificated Warrant that has been duly countersigned by the Warrant Agent in
accordance with the terms of this Warrant Agreement.



ARTICLE 4

Separation Of Warrants; Terms Of Warrants; Exercise Of Warrants




     Section 4.01 . Separation Of Warrants; Terms Of Warrants; Exercise Of Warrants. (a) The Notes and Warrants will not be separately transferable until the
Separation Date. The Company shall provide written notice to the Warrant Agent upon the occurrence
of the Separation Date. The Warrant Agent shall not be deemed to have any knowledge of the
occurrence of such Separation Date until it receives such notice from the Company. On the
Separation Date, the Unit Legend shall be deemed removed from the Warrant, or face of Unit, and,
whether or not such Unit Legend is actually removed, each Warrant shall be deemed automatically
separated from the associated Note and may be transferred separately from such Note. Each Warrant
not exercised prior to 5:00 p.m., New York City time, on November 15, 2018 (the “Expiration Date”)
shall become void and all rights thereunder and all rights in respect thereof under this agreement
shall cease as of such time.



12









 





     (b) Subject to the terms of this Agreement, the Warrants shall be exercisable, at the election
of the Holders thereof, either in full or from time to time in part during the period commencing at
the opening of business on the Separation Date and until 5:00 p.m., New York City time on the
Expiration Date, and shall entitle any Holder thereof to receive from the Company the number of
fully paid and nonassessable Warrant Shares which the Holder may at the time be entitled to receive
on exercise of such Warrants and payment of the exercise price set forth in the form of Warrant
attached as Exhibit A hereto (as adjusted from time to time hereunder, the “Exercise Price”) in
cash, by wire transfer or by certified or official check payable to the order of the Company, in
each case, equal to the Exercise Price then in effect for such Warrant Shares; provided that
Holders shall be able to exercise their Warrants only if the exercise of such Warrants is exempt
from, or in compliance with, the registration requirements of the Securities Act and such
securities are qualified for sale or exempt from qualification under the applicable securities laws
of the states in which the various holders of the Warrants or other persons to whom it is proposed
that the Warrant Shares be issued on exercise of the Warrants reside. No adjustments as to
dividends will be made upon exercise of the Warrants.



     (c) Notwithstanding anything herein to the contrary, (but in all other respects in accordance
with the exercise procedure set forth herein), a Holder may elect to convert Warrants into shares
of Common Stock, in which event the Company will issue to the Holder the number of shares of Common
Stock equal to the result obtained by (i) subtracting B from A, (ii) dividing the result by A, and (iii) multiplying the
quotient by C as set forth in the following equation:



	 	 	 	 	 	 	 	 	 

	X =

	 	(A — B)
	 	x
	 	C
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	A	 	 	 	 	 	 





where:




	 	 	 	 	 	 	 

	 

	 	X
	 	=
	 	the number of shares of Common Stock issuable upon exercise
pursuant to this paragraph (c).
	 
	 

	 	A
	 	=
	 	the Daily Price on the day immediately preceding the date on
which the Holder delivers written notice to the Company pursuant to paragraph
(d).
	 
	 

	 	B
	 	=
	 	the Exercise Price.
	 
	 

	 	C
	 	=
	 	the number of shares of Common Stock as to which the Warrants are
then being exercised (prior to payment of the Exercise Price).






     If the foregoing calculation results in a negative number, then no shares of Common Stock
shall be issued upon exercise pursuant to this paragraph.



     (d) In order to exercise all or any of the Warrants, the Holder thereof must deliver to the
Warrant Agent at its Corporate Trust Office (i) such Warrants, (ii) the form of election to purchase on the reverse thereof duly filled in and
signed, which signature shall be medallion guaranteed by an institution which is a member of a
Securities Transfer Association recognized signature guarantee program, and (iii) payment to the Warrant Agent for the account of the



13









 



Company of the then-current Exercise
Price (in the manner set forth in paragraphs (b) or (c) above) for the number of Warrant Shares in
respect of which the Warrants are being exercised.




     (e) Upon compliance with the provisions set forth above, the Warrant Agent shall deliver such
information and payment amount, if any, to the Company for verification and shall request in
writing from the Company and the Company shall upon such verification deliver or cause to be
delivered with all reasonable dispatch, to or upon the written order of the Holder and in such name
or names as the Holder may designate, a certificate or certificates for the number of whole Warrant
Shares issuable upon the exercise of such Warrants or other securities or property to which such
Holder is entitled, together with cash in lieu of fractional shares as provided in Section 6.02
hereof. Such certificate or certificates or other securities or property shall be deemed to have
been issued, and any person so designated to be named therein shall be deemed to have become a
holder of record of such Warrant Shares or other securities or property, as of the date of the
surrender of such Warrants and payment of the Exercise Price, notwithstanding that the stock
transfer books of the Company shall then be closed or the certificates or other securities or
property have not been delivered.



     (f) If less than all the Warrants represented by a Warrant certificate are exercised, such
Warrant certificate shall be surrendered and a new Warrant certificate of the same tenor and for
the number of Warrants which were not exercised shall be executed by the Company and delivered to
the Warrant Agent and the Warrant Agent shall countersign the new Warrant certificate, registered
in such name or names as may be directed in writing by the Holder, and shall deliver the new
Warrant certificate to the Person or Persons entitled to receive the same.



     (g) All Warrant certificates surrendered upon exercise of Warrants shall be cancelled by the
Warrant Agent. Such cancelled Warrant certificates shall then be cancelled and disposed of by the
Warrant Agent in accordance with its standard procedures. The Warrant Agent shall account promptly
to the Company with respect to Warrants exercised and concurrently pay to the Company all monies
received by the Warrant Agent for the purchase of the Warrant Shares through the exercise of such
Warrants.



     (h) The Warrant Agent shall keep copies of this Agreement and any notices given or received
hereunder available for inspection by the Holders during normal business hours at its office. The
Company shall supply the Warrant Agent from time to time with such numbers of copies of this
Agreement as the Warrant Agent may request.



     (i) Certificates representing Warrant Shares shall bear a Restricted Legend (with all
references to Warrants therein replaced by references to Common Stock, and with such changes
thereto as the Company may deem appropriate) if (i) the Warrants for which
they were issued carried a Restricted Legend or (ii) the Warrant Shares are
issued in a transaction exempt from registration under the Securities Act (other than the exemption
provided by Section 3(a)(9) of the Securities Act), in each case until and unless the circumstances
set forth in Section 3.01(c) apply to such Shares, and any transfers thereof shall comply with the
Restricted Legend.



     (j) Notwithstanding Sections 3.09(d) and 4.01(a), the Separation Date shall in the case of any
Global Warrant be subject to timing requirements imposed by the applicable rules and procedures of
the Depositary in effecting a separation pursuant to clause (iii) of the definition of



14









 



Separation
Date. The Company shall use reasonable efforts to comply with the applicable rules and procedures
of the Depositary in order to effect a separation of the Global Warrants and Global Notes on the
Separation Date or as shortly thereafter as is practicable.




ARTICLE 5

Covenants of the Company




     Section 5.01 . Maintenance Of Office Or Agency. The Company will maintain in the United
States an office or agency where Warrants may be surrendered for registration of transfer or
exchange or for presentation for exercise. The Company hereby initially designates the Corporate
Trust Office of the Warrant Agent as such office of the Company. The Company will give prompt
written notice to the Warrant Agent of the location, and any change in the location, of such office
or agency. If at any time the Company fails to maintain any such required office or agency or
fails to furnish the Warrant Agent with the address thereof, such presentations, surrenders,
notices and demands may be made or served to the Warrant Agent.



     The Company may also from time to time designate one or more other offices or agencies where
the Warrants may be surrendered or presented for any of such purposes and may from time to time
rescind such designations. The Company will give prompt written notice to the Warrant Agent of any
such designation or rescission and of any change in the location of any such other office or
agency.



     Section 5.02 . Payment Of Taxes. The Company will pay all documentary, stamp or similar
issue or transfer taxes in respect of the issuance or delivery of Warrant Shares upon the exercise
of Warrants; provided that the Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issue of any Warrants or any Warrant Shares in a
name other than that of the registered holder of a Warrant surrendered upon exercise (other than a
transfer tax or other similar governmental charge payable upon exchange pursuant to Section
3.09(b)(iv)), and the Company shall not be required to issue or deliver such Warrant unless or
until the person or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company that such tax has
been paid.



     Section 5.03 . Reports. (a) Whether or not the Company is subject
to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, the Company must
provide the Warrant Agent and Holders within 15 days of the time period specified in those sections
with




     (i) all quarterly and annual reports that would be required to be filed with the
Commission on Forms 10-Q and 10-K if the Company were required to file such reports,
including a “Management’s discussion and analysis of financial condition and results of
operations” and, with respect to annual information only, a report thereon by the Company’s
certified public accountants, and




     (ii) all current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports.



15









 




     In addition, whether or not required by the Commission, the Company will, if the Commission
will accept the filing, file a copy of all of the information and reports referred to in clauses
(i) and (ii) with the Commission for public availability within the time periods specified in the
Commission’s rules and regulations. In addition, the Company will make the information and reports
available to securities analysts and prospective investors upon request.



     Notwithstanding the foregoing, such information and reports may, prior to the filing of the
exchange offer registration statement or shelf registration statement for the Notes, be with
respect to iPayment, Inc. so long as the Company’s assets (other than the capital stock of
iPayment, Inc.) do not exceed the greater of (x) $70.0 million and (y) 10% of Total Assets (as
defined in the Indenture), and it has no material liabilities other than the Notes and the Credit
Agreement (as defined in the Indenture).



     For so long as any of the Warrants or Warrant Shares remain outstanding and constitute
“restricted securities” under Rule 144, the Company will make available upon request to any
prospective purchaser of the Warrants or Warrant Shares or beneficial owner of Warrants or Warrants
Shares in connection with any sale thereof the information required by Rule 144A(d)(4) under the
Securities Act.



     Section 5.04 . Reservation Of Warrant Shares. (a) The Company will
at all times reserve and keep available for issuance and delivery, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale and free and clear of
all preemptive rights, such number of its authorized but unissued Common Stock or other securities
of the Company from time to time issuable upon exercise of the Warrants as will be sufficient to
permit the exercise in full of all outstanding Warrants.



     (b) The Company or, if appointed, the transfer agent for the Common Stock (the “Transfer
Agent”) and every subsequent transfer agent for any securities of the Company issuable upon the
exercise of the Warrants will be irrevocably authorized and directed at all times to reserve such
number of authorized securities as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent and with every subsequent transfer agent for
any of the Company’s securities issuable upon the exercise of the Warrants. The Company will
supply such Transfer Agent with duly executed certificates for such purposes and will provide or
otherwise make available any cash which may be payable as provided in Section 6.02 hereof. The
Company will furnish such Transfer Agent a copy of all notices of adjustments, and certificates
related thereto, transmitted to each holder pursuant to Section 6.03 hereof.



     (c) The Company covenants that all Warrant Shares which may be issued upon exercise of
Warrants in accordance with their terms will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests with respect to
the issuance thereof.



     Section 5.05 . Obtaining Stock Exchange Listings. The Company will from time to time take
all action which may be necessary so that the Warrant Shares, immediately upon their issuance upon
the exercise of Warrants, will be listed on the principal securities exchanges,




16











 




automated quotation systems or other markets within the United States of America, if any, on
which other shares of Common Stock are then listed, if any.




ARTICLE 6

Adjustment Of Exercise Price And Number Of Warrant Shares Issuable




     Section 6.01. Adjustment Of Exercise Price And Number Of Warrant Shares Issuable. The
Exercise Price and the number of Warrant Shares issuable upon the exercise of each Warrant are
subject to adjustment from time to time upon the occurrence of the events enumerated in this
Section 6.01. For purposes of this Section 6.01, “Common Stock” means shares now or hereafter
authorized of any class of common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or series of preferred
stock) to participate in any distribution of the assets or earnings of the Company without limit as
to per share amount.



     In the event that, at any time as a result of the provisions of this Section, the Holders of
the Warrants shall become entitled upon subsequent exercise to receive any shares of capital stock
of the Company other than Common Stock, the number of such other shares so receivable upon exercise
of this Warrant shall thereafter be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions contained herein.



     (a) Adjustment for Change in Capital Stock.



     If the Company (i) pays a dividend or makes a distribution on its Common Stock in shares of
its Common Stock, (ii) subdivides its outstanding shares of Common Stock into a greater number of
shares, (iii) combines its outstanding shares of Common Stock into a smaller number of shares, (iv)
makes a distribution on its Common Stock in shares of its capital stock other than Common Stock or
(v) issues by reclassification of its Common Stock any shares of its capital stock, then the
Exercise Price in effect immediately prior to such action shall be proportionately adjusted so that
the holder of any Warrant thereafter exercised may receive the aggregate number and kind of shares
of capital stock of the Company which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.



     The adjustment shall become effective immediately after the record date in the case of a
dividend or distribution and immediately after the effective date in the case of a subdivision,
combination or reclassification. If, after an adjustment, a holder of a Warrant upon exercise of
it may receive shares of two or more classes of capital stock of the Company, the Company shall
determine, in good faith, the allocation of the adjusted Exercise Price between the classes of
capital stock. After such allocation, the exercise privilege and the Exercise Price of each class
of capital stock shall thereafter be subject to adjustment on terms comparable to those applicable
to Common Stock in this Section 6.01. Such adjustment shall be made successively whenever any
event listed above shall occur.



     (b) Adjustment for Rights Issue.



17









 





     If the Company distributes any rights, options or warrants to all holders of its Common Stock
entitling them for a period expiring within 45 days after the record date mentioned below to
purchase shares of Common Stock or securities convertible into, or exercisable or exchangeable for,
Common Stock, at a price per share less than the Fair Value per share on that record date, the
Exercise Price shall be adjusted in accordance with the formula:



	 	 	 	 	 	 	 	 	 	 	 	 	 

	 

	 	 	 	 	 	 	 	 
  O
 +
	 	N x P
 

	 	 
	 

	 	E’
	 	=
	 	E
	 	x
	 	M	 	 
	 

	 	 	 	 	 	 	 	 	 	 

O + N
	 	 





where:




	 	 	 	 	 	 	 

	 

	 	E’
	 	=
	 	the adjusted Exercise Price.
	 
	 	 	 	 	 	 
	 

	 	E
	 	=
	 	the then current Exercise Price.
	 
	 	 	 	 	 	 
	 

	 	O
	 	=
	 	the number of shares of Common Stock outstanding on the
record date.
	 
	 	 	 	 	 	 
	 

	 	N
	 	=
	 	the number of additional shares of Common Stock issuable
pursuant to such rights, options or warrants.
	 
	 	 	 	 	 	 
	 

	 	P
	 	=
	 	the aggregate price per share of the additional shares.
	 
	 	 	 	 	 	 
	 

	 	M
	 	=
	 	the Fair Value per share of Common Stock on the record date.






     The adjustment shall be made successively whenever any such rights, options or warrants are
issued and shall become effective immediately after the record date for the determination of
stockholders entitled to receive the rights, options or warrants. If at the end of the period
during which such rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Exercise Price shall be immediately readjusted to what it would have
been if “N” in the above formula had been the number of shares actually issued.



     (c) Adjustment for Other Distributions.



     If the Company distributes to all holders of its Common Stock any of its assets or debt
securities or any rights or warrants to purchase debt securities of the Company, the Exercise Price
shall be adjusted in accordance with the formula:



	 	 	 	 	 	 	 	 	 	 	 

	 

	 	E’ =
	 	E
	 	x
	 	M — F
 

M
	 	 





where:




	 	 	 	 	 	 	 

	 

	 	E’
	 	=
	 	the adjusted Exercise Price.
	 
	 	 	 	 	 	 
	 

	 	E
	 	=
	 	the then current Exercise Price.






18









 






	 	 	 	 	 	 	 

	 

	 	M
	 	=
	 	the Fair Value per share of Common Stock on the record date
mentioned below.
	 
	 	 	 	 	 	 
	 

	 	F
	 	=
	 	the fair market value on the record date of the assets,
securities, rights or warrants to be distributed in respect of one share of
Common Stock as determined in good faith by the Board of Directors.






     The adjustment shall be made successively whenever any such distribution is made and shall
become effective immediately after the record date for the determination of stockholders entitled
to receive the distribution.



     This Section 6.01(c) does not apply to (i) rights, options or warrants referred to in Section
6.01(b) hereof and (ii) dividends and other distributions in connection with the Investors
Recapitalization as defined in the Indenture.



     (d) Adjustment for Common Stock Issue.



     If the Company issues shares of Common Stock for a consideration per share less than the Fair
Value per share on the date the Company fixes the offering price of such additional shares, the
Exercise Price shall be adjusted in accordance with the formula:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 

	 	 	 	 	 	 	 	 	 	 	 	P
 

	 	 
	 

	 	E’ =
	 	E
	 	x
	 	O
	 	+
	 	M	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	A	 	 	 	 	 	 





where:




	 	 	 	 	 	 	 

	 

	 	E’
	 	=
	 	the adjusted Exercise Price.
	 
	 	 	 	 	 	 
	 

	 	E
	 	=
	 	the then current Exercise Price.
	 
	 	 	 	 	 	 
	 

	 	O
	 	=
	 	the number of shares outstanding immediately prior to the
issuance of such additional shares.
	 
	 	 	 	 	 	 
	 

	 	P
	 	=
	 	the aggregate consideration received for the issuance of such
additional shares.
	 
	 	 	 	 	 	 
	 

	 	M
	 	=
	 	the Fair Value per share on the date of issuance of such
additional shares.
	 
	 	 	 	 	 	 
	 

	 	A
	 	=
	 	the number of shares outstanding immediately after the
issuance of such additional shares.






     The adjustment shall be made successively whenever any such issuance is made, and shall become
effective immediately after such issuance.



     This subsection (d) does not apply to:



19









 





     (i) any of the transactions described in subsections (a), (b) and (c) of this Section
6.01,




     (ii) the exercise of Warrants, or the conversion or exchange of other securities
convertible or exchangeable for Common Stock, which are the subject of Section 6.01(e),




     (iii) shares of Common Stock issued in a merger of the Company with a Person who is not
an Affiliate of the Company;




     (iv) shares of Common Stock issued as consideration in a merger of the Company with any
of its Affiliates, if the Company obtains an opinion from a nationally recognized investment
banking, appraisal or valuation firm stating that the consideration received in such merger
is fair to the Company; provided, however, that such opinion shall not be required in the
case of a merger of iPayment Investors, L.P. with and into the Company where the partners in
iPayment Investors, L.P. receive in consideration only the shares of Common Stock owned by
iPayment Investors, L.P. prior to such transaction; and




     (v) shares of Common Stock issued pursuant to, or upon the exercise of awards granted
pursuant to, employee benefit plans of the Company in an aggregate amount not to exceed,
together with Common Stock issuable pursuant to Section 6.01(e)(iii), 20% of the outstanding
shares of Common Stock of the Company on the date of this Agreement on a fully-diluted basis
after giving effect to the issuance of the Warrants, subject to any applicable anti-dilution
adjustment.



     (e) Adjustment for Convertible Securities Issue.



     If the Company issues any securities convertible into or exchangeable for Common Stock (other
than (x) securities issued in transactions described in subsections (b) or (c) or (y) the Warrants)
for a consideration per share of Common Stock received for such securities that is less than the
Fair Value per share on the date the Company fixes the offering price of such securities, the
Exercise Price shall be adjusted in accordance with this formula:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 

	 	 	 	 	 	 	 	 	 	 	 	P
 

	 	 
	 

	 	E’ =
	 	E
	 	x
	 	O
	 	+
	 	M	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	O
	 	+
	 	D	 	 





where:




	 	 	 	 	 	 	 

	 

	 	E’
	 	=
	 	the adjusted Exercise Price.
	 
	 	 	 	 	 	 
	 

	 	E
	 	=
	 	the then current Exercise Price.
	 
	 	 	 	 	 	 
	 

	 	O
	 	=
	 	the number of shares outstanding immediately prior to the
issuance of such securities.
	 
	 	 	 	 	 	 
	 

	 	P
	 	=
	 	the aggregate consideration received for such securities.
	 
	 	 	 	 	 	 
	 

	 	M
	 	=
	 	the Fair Value per share on the date of issuance of such
securities.






20









 






	 	 	 	 	 	 	 

	 

	 	D
	 	=
	 	the maximum number of shares deliverable upon conversion or
in exchange for such securities at the initial conversion or exchange rate.
	 
	 	 	 	 	 	 
	 	 	The adjustment shall be made successively whenever any such issuance is made, and
shall become effective immediately after such issuance.






     If all of the Common Stock deliverable upon conversion or exchange of such securities have not
been issued when such securities are no longer outstanding, then the Exercise Price shall promptly
be readjusted to the Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of shares of Common Stock
issued upon conversion or exchange of such securities.



     This subsection (e) does not apply to




     (i) convertible or exchangeable securities issued in a merger of the Company with a
Person who is not an Affiliate of the Company;




     (ii) convertible or exchangeable securities issued as consideration in a merger of the
Company with any of its Affiliates, if the Company obtains an opinion from a nationally
recognized investment banking, appraisal or valuation firm stating that the consideration
received in such merger is fair to the Company;




     (iii) securities issued pursuant to employee benefit plans of the Company convertible
into an aggregate number of shares of Common Stock not to exceed (together with shares
issued pursuant to clause (d)(v) above under employee benefit plans of the Company) 20% of
the outstanding shares of Common Stock of the Company on the date of this Agreement on a
fully-diluted basis after giving effect to the issuance of the Warrants, subject to any
applicable anti-dilution adjustment.



     (f) Consideration Received.



     For purposes of any computation respecting consideration received pursuant to subsections (d)
and (e) of this Section 6.01, the following shall apply:




     (i) in the case of the issuance of shares of Common Stock for cash, the consideration
shall be the amount of such cash, provided that in no case shall any deduction be made for
any commissions, discounts or other expenses incurred by the Company for any underwriting of
the issue or otherwise in connection therewith;




     (ii) in the case of the issuance of shares of Common Stock for a consideration in whole
or in part other than cash, the consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of Directors and described in
a Board Resolution (and, if such issuance is to an Affiliate of the Company, approved by a
majority of the Disinterested Directors or confirmed by a written opinion of a nationally
recognized investment banking, appraisal of valuation firm that is not an Affiliate of the
Company);



21









 





     (iii)
in the case of the issuance of securities convertible into or exchangeable for
shares of Common Stock, the aggregate consideration received therefor
shall be deemed to be
the consideration received by the Company for the issuance of such securities plus the
additional minimum consideration, if any, to be received by the Company upon the conversion
or exchange thereof (the consideration in each case to be determined in the same manner as
provided in clauses (i) and (ii) of this subsection); and




     (iv) in the case of the issuance of shares of Common Stock pursuant to rights, options
or warrants which rights, options or warrants were originally issued together with one or
more other securities as part of a unit at a price per unit, the consideration shall be
deemed to be the fair value of such rights, options or warrants at the time of issuance
thereof as determined in good faith by the Board of Directors in accordance with GAAP whose
determination shall be described in a Board Resolution (and, if such issuance is to an
Affiliate of the Company, approved by a majority of the Disinterested Directors or confirmed
by a written opinion of a nationally recognized investment banking, appraisal of valuation
firm that is not an Affiliate of the Company) plus the additional minimum consideration, if
any, to be received by the Company upon the exercise, conversion or exchange thereof (as
determined in the same manner as provided in clauses (i) and (ii) of this subsection).



     (g) Fair Value. The “Fair Value” per security at any date of determination shall be (x) in
connection with a sale to a party that is not an Affiliate of the Company in an arm’s-length
transaction (a “Non-Affiliate Sale”), the price per security at which such security is sold, and
(y) in connection with any sale to an Affiliate of the Company, (1) if shares of the applicable
class of Common Stock are then quoted by any national securities exchange, the average (weighted by
daily trading volume) of the Daily Prices per share of the applicable class of Common Stock for the
20 consecutive trading days immediately prior to such date, or (2) if shares of the applicable
class of Common Stock are not then quoted by any national securities exchange:



     (a) the last price per security at which such security was sold in a Non-Affiliate Sale within
the three-month period ending on such date of determination or



     (b) if clause (a) is not applicable, the fair market value of such security determined in good
faith by




(i) a majority of the Board of Directors of the Company, including a majority of




the Disinterested Directors, and approved in a board resolution delivered to the
Warrant Agent or




(ii) a nationally recognized investment banking, appraisal or valuation firm, which
is not an Affiliate of the Company, in each case, taking into account, among all
other factors deemed relevant by the Board of Directors or the investment banking,
appraisal or valuation firm, the trading price and volume of such security on any
national securities exchange or automated quotation system on which such security is
traded.



     (h) When De Minimis Adjustment May Be Deferred.




22











 





     No adjustment in the Exercise Price need be made unless the adjustment would require an
increase or decrease of at least 1% in the Exercise Price. Any adjustments that are not made shall
be carried forward and taken into account in any subsequent adjustment. All calculations under
this Section 6.01 shall be made to the nearest cent or to the nearest 1/10,000th of a share, as the
case may be, it being understood that no such rounding shall be made under subsection (n) (and, in
calculations made pursuant to such paragraph, the adjusted Exercise Price shall refer to such
adjusted price before rounding).



     (i) When No Adjustment Required.



     No adjustment need be made for a transaction referred to in Section 6.01(a), (b), (c), (d) or
(e) hereof, if Holders are to participate (without being required to exercise their Warrants) in
the transaction on a basis and with notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of Common Stock participate in the
transaction. No adjustment need be made for (i) rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest, or (ii) a change in the par value or no par
value of the Common Stock. To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.



     (j) Notice of Adjustment.



     Whenever the Exercise Price is adjusted, the Company shall provide the notices required by
Section 6.03 hereof.



     (k) Reorganization of Company.



     If the Company consolidates or merges with or into, or transfers or leases all or
substantially all its assets to, any Person, upon consummation of such transaction the Warrants
shall automatically become exercisable for the kind and amount of securities, cash or other assets
which the Holder of a Warrant would have owned immediately after the consolidation, merger,
transfer or lease if the Holder had exercised the Warrant immediately before the effective date of
the transaction. Concurrently with the consummation of such transaction, the Person formed by or
surviving any such consolidation or merger if other than the Company, or the Person to which such
transfer or lease shall have been made, shall enter into a supplemental Agreement so providing and
further providing for adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 6.01. The successor Company shall mail to Warrant Holders
a notice describing the supplemental Agreement. If the issuer of securities deliverable upon
exercise of Warrants under the supplemental Agreement is an Affiliate of the formed, surviving,
transferee or lessee person, that issuer shall join in the supplemental Agreement. If this Section
6.01(k) applies to a transaction, Section 6.01(a),(b), (c), (d) and (e) hereof do not apply.



     (l) Company Determination Final.



     Any determination that the Company or the Board of Directors must make pursuant to Section
6.01(a) through (i) hereof is conclusive in the absence of manifest error or bad faith.



     (m) When Issuance or Payment May Be Deferred.



23









 




     In any case in which this Section 6.01 shall require that an adjustment in the Exercise Price
be made effective as of a record date for a specified event, the Company may elect to defer until
the occurrence of such event (i) issuing to the holder of any Warrant exercised after such record
date the Warrant Shares and other capital stock of the Company, if any, issuable upon such exercise
over and above the Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise on the basis of the Exercise Price and (ii) paying to such holder any amount in cash
in lieu of a fractional share pursuant to Section 6.02 hereof; provided that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to
receive such additional Warrant Shares, other capital stock and cash upon the occurrence of the
event requiring such adjustment.



     (n) Adjustment in Number of Shares.



     Upon each adjustment of the Exercise Price pursuant to this Section 6.01, each Warrant
outstanding prior to the making of the adjustment in the Exercise Price shall thereafter evidence
the right to receive upon payment of the adjusted Exercise Price that number of shares of Common
Stock (calculated to the nearest hundredth) obtained from the following formula:



	 	 	 	 	 	 	 	 	 

	N’ 

	=	N
	 	x
	 	E
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	E’	 	 





where:




	 	 	 	 	 

	N’

	 	=
	 	the adjusted number of Warrant Shares issuable upon exercise of a Warrant by payment of the adjusted Exercise Price.
	 
	N 

	 	=
	 	the number of Warrant Shares previously issuable upon exercise of a Warrant by payment of the Exercise Price prior to adjustment.
	 
	E’

	 	=
	 	the adjusted Exercise Price.
	 
	E 

	 	=
	 	the Exercise Price prior to adjustment.






     (o) Form of Warrants.



     Irrespective of any adjustments in the Exercise Price or the number or kind of shares
purchasable upon the exercise of the Warrants, Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.



     (p) No Adjustment Below Par Value.



     Notwithstanding anything herein to the contrary, no adjustment will be made to the Exercise
Price if, as a result of such adjustment, the Exercise Price per Warrant Share would be less than
the par value of the Company’s Common Stock (or other capital stock for which any Warrant is
exercisable); provided that, before taking any action which would but for the foregoing limitation
in this sentence have caused an adjustment to reduce the Exercise Price below the then par value
(if any) of its Common Stock (or other capital stock for which any



24









 




Warrant is exercisable), the Company will take any corporate action which would, in the
opinion of its counsel, be necessary in order that the Company may validly issue Warrant Shares at
the Exercise Price as so adjusted.




     Section 6.02. Fractional Interests. The Company shall not be required to issue fractional
Warrant Shares or scrip representing fractional shares on the exercise of Warrants. If more than
one Warrant shall be presented for exercise in full at the same time by the same Holder, the number
of full Warrant Shares which shall be issuable upon the exercise thereof shall be computed on the
basis of the aggregate number of Warrant Shares purchasable on exercise of the Warrants so
presented. If any fraction of a Warrant Share would, except for the provisions of this Section
6.02, be issuable on the exercise of any Warrants (or specified portion thereof), the Company shall
pay an amount in cash equal to the current Daily Price per Warrant Share, as determined on the date
the Warrant is presented for exercise, multiplied by such fraction, computed to the nearest whole
U.S. cent.



     Section 6.03. Notices To Warrant Holders. (a) Upon any adjustment of the Exercise Price
pursuant to Section 6.01 hereof, the Company shall promptly thereafter (i) cause to be filed with
the Warrant Agent a certificate of a firm of independent public accountants of recognized standing
selected by the Board of Directors (who may be the regular auditors of the Company) setting forth
the Exercise Price after such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based and setting forth the number of
Warrant Shares (or portion thereof) or other securities or property issuable after such adjustment
in the Exercise Price, upon exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters set forth therein, and
(ii) cause to be given to each of the Holders written notice of such adjustments by first-class
mail, postage prepaid. Where appropriate, such notice may be given in advance and included as a
part of the notice required to be mailed under the other provisions of this Section 6.03.



     (b) In case:




     (i) the Company shall authorize the issuance to all holders of shares of Common Stock
of rights, options or warrants to subscribe for or purchase shares of Common Stock or of any
other subscription rights or warrants;




     (ii) the Company shall authorize the distribution to all holders of shares of Common
Stock of evidences of its indebtedness or assets (other than dividends or distributions
referred to in Section 6.01(a) hereof);




     (iii) of any consolidation or merger to which the Company is a party, or of the
transfer or lease of all or substantially all assets of the Company, or of any
reclassification or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or a tender offer or exchange offer
for shares of Common Stock by the Company;



25









 






     (iv) of the voluntary or involuntary dissolution, liquidation or winding up of the
Company; or




     (v) the Company proposes to take any action which would require an adjustment of the
Exercise Price pursuant to Section 6.01 hereof;


then the Company shall cause to be filed with the Warrant Agent and shall cause to be given to each
of the Holders, at least 20 days (or 10 days in any case specified in clauses (i) or (ii) above)
prior to any applicable record date, or promptly in the case of events for which there is no record
date, by first-class mail, postage prepaid, a written notice stating (x) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any such rights, options,
warrants or distribution are to be determined, (y) the initial expiration date set forth in any
tender offer or exchange offer for shares of Common Stock, or (z) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective or consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities or other property,
if any, deliverable upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required by this Section
6.03 or any defect therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up, or the vote upon any action.




     Section 6.04. No Rights As Stockholders. Nothing contained in this Agreement or the Warrants
shall be construed as conferring upon the holders of Warrants the right to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the election of
directors of the Company or any other matter, or any rights whatsoever, including the right to
receive dividends, as stockholders of the Company, or the right to share in the assets of the
Company in the event of its liquidation, dissolution or winding up.



ARTICLE 7

Warrant Agent




     Section 7.01. Warrant Agent. The Warrant Agent undertakes the duties and obligations imposed
by this Agreement upon the following terms and conditions, by all of which the Company and the
holders of Warrants, by their acceptance thereof, shall be bound:



     (a) The statements contained herein and in the Warrants shall be taken as statements of the
Company and the Warrant Agent assumes no responsibility for the correctness of any of the same
except such as describe the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrants except as herein
otherwise provided.



     (b) The Warrant Agent has no duty to determine when an adjustment under Article 6 should be
made, how it should be made or what it should be. The Warrant Agent has no duty to determine
whether any provisions of a supplemental Agreement under Section 6.01(k) hereof are



26









 




correct. The Warrant Agent makes no representation as to the validity or value of any
securities or assets issued upon exercise of Warrants.




     (c) The Warrant Agent shall not be accountable with respect to the validity or value or the
kind or amount of any Warrant Shares or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or with respect to whether any such Warrant
Shares or other securities will, when issued, be validly issued and fully paid and nonassessable,
and makes no representation with respect thereto.



     (d) The Warrant Agent shall not be responsible for any failure of the Company to comply with
any of the covenants contained in this Agreement or in the Warrants.



     (e) In the absence of bad faith on its part, the Warrant Agent may rely, and will be protected
in acting or refraining from acting, upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine and to have been signed or
presented by the proper Person. The Warrant Agent need not investigate any fact or matter stated
in the document, but, in the case of any document which is specifically required to be furnished to
the Warrant Agent pursuant to any provision hereof, the Warrant Agent shall examine the document to
determine whether it conforms to the requirements of the Agreement (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated therein). The Warrant
Agent, in its discretion, may make further inquiry or investigation into such facts or matters as
it sees fit.



     (f) The Warrant Agent may not be relieved from liabilities for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that this paragraph does not
limit the effect of Section 7.01(e).



     (g) The Warrant Agent may act through its attorneys and agents and will not be responsible for
the misconduct or negligence of any agent appointed with due care.



     (h) The Warrant Agent shall not be subject to any fiduciary or other implied duties of any
kind or nature and its sole obligations shall be to comply with the terms contained in this
Agreement.



     (i) The Warrant Agent may consult with counsel, and the written advice of such counsel or any
Opinion of Counsel will be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance thereon.



     (j) No provision of the Agreement will require the Warrant Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of its duties hereunder, or in
the exercise of its rights or powers, unless it receives indemnity satisfactory to it against any
loss, liability or expense.



     (k) The Warrant Agent shall act hereunder solely as agent for the Company, and its duties
shall be determined solely by the provisions hereof. No provision of the Agreement shall



27









 




be construed to relieve the Warrant Agent from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct.




     Section 7.02. Compensation; Indemnity. (a) The Company will pay the Warrant Agent
compensation as agreed upon in writing for its services. The Company will reimburse the Warrant
Agent upon request for all reasonable out-of-pocket expenses, disbursements and advances incurred
or made by the Warrant Agent, except any such expense, disbursement or advance attributable to its
negligence or bad faith. Such expenses shall include the reasonable compensation and expenses of
the Warrant Agent’s agents and counsel.



     (b) The Company will indemnify the Warrant Agent for, and hold it harmless against, any loss
or liability or expense incurred by it without negligence or bad faith on its part arising out of
or in connection with the acceptance or administration of the Agreement and its duties under the
Agreement and the Warrants, including the costs and expenses of defending itself against any claim
or liability and of complying with any process served upon it or any of its officers in connection
with the exercise or performance of any of its powers or duties under the Agreement and the
Warrants, except to the extent any such loss, liability or expense may be attributable to its
negligence or willful misconduct. The Warrant Agent shall notify the Company promptly of any claim
for which it may seek indemnity. Failure by the Warrant Agent to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the claim and the
Warrant Agent shall cooperate in the defense at the Company’s expense. The Warrant Agent may have
separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.



     Section 7.03. Individual Rights Of Warrant Agent. The Warrant Agent, and any stockholder,
director, officer or employee of it, may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or otherwise act as fully and
freely as though it were not Warrant Agent under this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any other legal entity. An
Agent may do the same with like rights.



     Section 7.04. Replacement of Warrant Agent. (a) The Warrant Agent




     (i) may resign at any time by 30 days written notice to the Company,




     (ii) may be removed at any time by the Company by 30 days written notice to the Warrant
Agent,




     (iii) may be removed at any time by the Holders of a majority of the outstanding
Warrants by written notice to the Warrant Agent,




     (iv) shall, if no longer eligible under Section 7.06, be subject to removal upon the
request of any Holder to the Company; and




     (v) may be removed by the Company if: (A) the Warrant Agent is no longer eligible under
Section 7.06; (B) the Warrant Agent is adjudged a bankrupt or an



28









 







insolvent; (C) a receiver or other public officer takes charge of the Warrant Agent or
its property; or (D) the Warrant Agent becomes incapable of acting.


A resignation or removal of the Warrant Agent and appointment of a successor Warrant Agent will
become effective only upon the successor Warrant Agent’s acceptance of appointment as provided in
this Section.




     (b) If the Warrant Agent has been removed by the Holders, Holders of a majority of the
Warrants may appoint a successor Warrant Agent with the consent of the Company. Otherwise, if the
Warrant Agent resigns or is removed, or if a vacancy exists in the office of Warrant Agent for any
reason, the Company will promptly appoint a successor Warrant Agent. If the successor Warrant
Agent does not deliver its written acceptance within 30 days after the retiring Warrant Agent
resigns or is removed, the retiring Warrant Agent, the Company or the Holders of a majority of the
outstanding Warrants may petition any court of competent jurisdiction for the appointment of a
successor Warrant Agent.



     (c) Upon delivery by the successor Warrant Agent of a written acceptance of its appointment to
the retiring Warrant Agent and to the Company, (i) the retiring Warrant Agent will transfer all
property held by it as Warrant Agent to the successor Warrant Agent, (ii) the resignation or
removal of the retiring Warrant Agent will become effective, and (iii) the successor Warrant Agent
will have all the rights, powers and duties of the Warrant Agent under the Warrant Agreement. Upon
request of any successor Warrant Agent, the Company will execute any and all instruments for fully
and vesting in and confirming to the successor Warrant Agent all such rights, powers and trusts.
The Company will give notice of any resignation and any removal of the Warrant Agent and each
appointment of a successor Warrant Agent to all Holders, and include in the notice the name of the
successor Warrant Agent and the address of its Corporate Trust Office.



     (d) Notwithstanding replacement of the Warrant Agent pursuant to this Section, the Company’s
obligations under Section 7.02 will continue for the benefit of the retiring Warrant Agent.



     Section 7.05. Successor Warrant Agent By Merger. (a) If the Warrant Agent consolidates with,
merges or converts into, or transfers all or substantially all of its corporate trust business to,
another corporation or national banking association, the resulting, surviving or transferee
corporation or national banking association without any further act will be the successor Warrant
Agent with the same effect as if the successor Warrant Agent had been named as the Warrant Agent in
the Agreement.



     (b) If, at the time such successor to the Warrant Agent shall succeed to the agency created by
this Agreement, any of the Warrants have been countersigned but not delivered, the successor
Warrant Agent may adopt the countersignature of the original Warrant Agent; and if any of the
Warrants shall not have been countersigned, the successor Warrant Agent may countersign such
Warrants, and in all such cases such Warrants shall have the full force and effect provided in the
Warrants and in this Agreement.



29









 





     Section 7.06. Eligibility. The Agreement must always have a Warrant Agent that has
a combined capital and surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition and satisfies the eligibility requirements set forth in Section 310(a)
of the Trust Indenture Act of 1939.



     Section 7.07. Holder Lists. The Warrant Agent shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and addresses of all
Holders. If the Warrant Agent is not the Warrant Registrar, the Company shall promptly furnish to
the Warrant Agent at such times as the Warrant Agent may request in writing, a list in such form
and as of such date as the Warrant Agent may reasonably require of the names and addresses of the
Holders.



ARTICLE 8

Miscellaneous




     Section 8.01. Warrantholder Actions. (a) Any notice, consent to amendment, supplement or
waiver provided by this Agreement to be given by a Holder (an “act”) may be evidenced by an
instrument signed by the Holder delivered to the Warrant Agent.



     (b) Any act by the Holder of any Warrant binds that Holder and every subsequent Holder of a
Warrant certificate that evidences the same Warrant of the acting Holder, even if no notation
thereof appears on the Warrant certificate. Subject to paragraph (c), a Holder may revoke an act
as to its Warrants, but only if the Warrant Agent receives the notice of revocation before the date
the amendment or waiver or other consequence of the act becomes effective.



     (c) The Company may, but is not obligated to, fix a record date for the purpose of determining
the Holders entitled to act with respect to any amendment or waiver or in any other regard. If a
record date is fixed, those Persons that were Holders at such record date and only those Persons
will be entitled to act, or to revoke any previous act, whether or not those Persons continue to be
Holders after the record date. No act will be valid or effective for more than 90 days after the
record date.



     Section 8.02. Notices. (a) Any notice or communication by the Company, on the one hand, or
the Warrant Agent, on the other hand, to the other is duly given if in writing (i) when delivered
in person or (ii) five days after mailing when mailed by first class mail, or (iii) when sent by
facsimile transmission, with transmission confirmed. In each case the notice or communication
should be addressed as follows:



     if to the Company: 





iPayment Holdings, Inc.
40 Burton Hills Boulevard, Suite 415

Nashville, Tennessee 37215

Attention: Mark C. Monaco, Chief Financial Officer

Facsimile: 615-665-8434





30









 




With a copy to:




Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention: Gregory V. Gooding

Facsimile: 212-909-6836




     if to the Warrant Agent:


Wilmington Trust FSB

246 Goose Lane, Suite 105

Guilford, Connecticut 06437

Facsimile: 203-453-1183

Attention: Joseph O’Donnell




     The Company or the Warrant Agent by notice to the other may designate additional or different
addresses for subsequent notices or communications.



     (b) Except as otherwise expressly provided with respect to published notices, any notice or
communication to a Holder will be deemed given when mailed to the Holder at its address as it
appears on the Register by first class mail or, as to any Global Warrant registered in the name of
DTC or its nominee, as agreed by the Company, the Warrant Agent and DTC. Copies of any notice or
communication to a Holder, if given by the Company, will be mailed to the Warrant Agent at the same
time. Defect in mailing a notice or communication to any particular Holder will not affect its
sufficiency with respect to other Holders.



     (c) Where the Agreement provides for notice, the notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and the waiver will be the
equivalent of the notice. Waivers of notice by Holders must be filed with the Warrant Agent, but
such filing is not a condition precedent to the validity of any action taken in reliance upon such
waivers.



     Section 8.03. Supplements And Amendments. (a) The Company and the Warrant Agent may amend or
supplement the Agreement or the Warrants without notice to or the consent of any Holder




     (i) to cure any ambiguity, defect or inconsistency in the Agreement or the Warrants;




     (ii) to comply with Section 6.01(k);




     (iii) to evidence and provide for the acceptance of an appointment hereunder by a
successor Warrant Agent; or




     (iv) to make any other change that does not materially and adversely affect the rights
of any Holder.



31









 





     (b) Except as otherwise provided in paragraphs (a) or (c), the Company and the Warrant Agent
may amend the Agreement and the Warrants with the written consent of the Holders of a majority of
the outstanding Warrants, and the Holders of a majority of the outstanding Warrants by written
notice to the Warrant Agent may waive future compliance by the Company with any provision of the
Agreement or the Warrants. In addition, any term of a specific Warrant may be amended or waived
with the written consent of the Company and the Holder of such Warrant.



     (c) Notwithstanding the provisions of paragraph (b), without the consent of each Holder
affected, an amendment or waiver may not




     (i) increase the Exercise Price; or




     (ii) decrease the number of shares of Common Stock or other securities or property
issuable upon exercise of the Warrants


except, in each case, for adjustments provided for in the Agreement.




     (d) It is not necessary for Holders to approve the particular form of any proposed amendment,
supplement or waiver, but is sufficient if their consent approves the substance thereof.



     (e) An amendment, supplement or waiver under this Section will become effective on receipt by
the Warrant Agent of written consents from the Holders of the requisite percentage of the
outstanding Warrants. After an amendment, supplement or waiver under this Section becomes
effective, the Company will send to the Holders affected thereby a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to send such notice, or any defect
therein, will not, however, in any way impair or affect the validity of any such supplemental
indenture or waiver.



     (f) After an amendment, supplement or waiver becomes effective, it will bind every Holder
unless it is of the type requiring the consent of each Holder affected. If the amendment,
supplement or waiver is of the type requiring the consent of each Holder affected, the amendment,
supplement or waiver will bind each Holder that has consented to it and every subsequent Holder of
a Warrant with respect to which consent was granted.



     (g) If an amendment, supplement or waiver changes the terms of a Warrant, the Company or the
Warrant Agent may require the Holder to deliver it to the Warrant Agent so that the Warrant Agent
may place an appropriate notation of the changed terms on the Warrant and return it to the Holder,
or exchange it for a new Warrant that reflects the changed terms. The Warrant Agent may also place
an appropriate notation on any Warrant thereafter countersigned. However, the effectiveness of the
amendment, supplement or waiver is not affected by any failure to annotate or exchange Warrants in
this fashion.



     (h) The Warrant Agent is entitled to receive, and will be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or waiver authorized
pursuant to this section is authorized or permitted by the Agreement. If the Warrant Agent has
received such an Opinion of Counsel, it shall sign the amendment, supplement or



32









 




waiver so long as the same does not adversely affect the rights of the Warrant Agent. The
Warrant Agent may, but is not obligated to, execute any amendment, supplement or waiver that
affects the Warrant Agent’s own rights, duties or immunities under the Agreement.




     Section 8.04. Governing Law. The Agreement and the Warrants shall be governed by, and
construed in accordance with, the laws of the State of New York.



     Section 8.05. No Adverse Interpretation of Other Agreements. The Agreement may not be used
to interpret another agreement of the Company, and no such agreement may be used to interpret the
Agreement.



     Section 8.06. Successors. All agreements of the Company in the Agreement and the Warrants
will bind its successors. All agreements of the Warrant Agent in the Agreement will bind its
successors.



     Section 8.07. Duplicate Originals. The parties may sign any number of copies of the
Agreement. Each signed copy shall be an original, but all of them together represent the same
agreement.



     Section 8.08. Separability. In case any provision in the Agreement or in the Warrants is
invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired thereby.



     Section 8.09. Table of Contents and Headings. The Table of Contents and headings of the
Articles and Sections of the Agreement have been inserted for convenience of reference only, are
not to be considered a part of the Agreement and in no way modify or restrict any of the terms and
provisions of the Indenture.



     Section 8.10. Benefits Of This Agreement. Nothing in this Agreement shall be construed to
give to any person or corporation other than the Company, the Warrant Agent and the registered
holders of Warrants any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent and the
registered holders of Warrants.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




33









 






     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of
the day and year first above written.



	 	 	 	 	 
	 	iPAYMENT HOLDINGS, INC.

 	 
	 	By:  	/s/ Mark C. Monaco
 	 
	 	 	Name:  	Mark C. Monaco 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	WILMINGTON TRUST FSB, as 
Warrant Agent

 	 
	 	By:  	/s/ Joseph P. O’Donnell
 	 
	 	 	Name:  	Joseph P. O’Donnell 	 
	 	 	Title:  	Vice President 	 
	 




 











 






EXHIBIT A




[Face of Warrant Certificate]




[Insert appropriate legend]



			
	No. ___________
	 	___Warrants
	 
	 	CUSIP No. ________






Warrant Certificate




     This Warrant Certificate certifies that ___________, or its registered assigns, is the
registered holder of Warrants (the “Warrants”) to purchase Common Stock, par value $0.01 (the
“Common Stock”), of iPayment Holdings, Inc., a Delaware corporation. Each Warrant entitles the
registered holder upon exercise at any time from 9:00 a.m. on the Separation Date referred to below
until 5:00 p.m. New York City Time on November 15, 2018 (the “Expiration Date”), to receive from
the Company one (1) fully paid and nonassessable share of Common Stock (the “Warrant Shares”) at an
initial exercise price (the “Exercise Price”) of $0.01 per share payable upon surrender of this
Warrant Certificate at the office or agency of the Company, subject to the conditions set forth
herein and in the Warrant Agreement referred to on the reverse hereof. The Exercise Price and
number of Warrant Shares issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.



     WARRANTS WILL BE AUTOMATICALLY CANCELLED FOR NO CONSIDERATION IN THE EVENT THAT THE NOTES
ASSOCIATED WITH SUCH WARRANTS ARE REDEEMED PURSUANT TO SECTION 3.07(B) OR SECTION 3.08 OF THE
INDENTURE.1



     Reference is hereby made to the further provisions of this Warrant Certificate set forth on
the reverse hereof and such further provisions shall for all purposes have the same effect as
though fully set forth at this place.



     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be signed below
manually or by facsimile by its duly authorized officer.


Dated: [___]




	 	 	 	 	 
	 	iPayment Holdings, Inc.

 	 





 




			
	1	 	May be removed following August 4, 2011 if
neither redemption option is exercised.




A-1









 










	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	Countersigned on [ ]:



Wilmington Trust FSB

as Warrant Agent

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 



A-2









 






	 	 	 	 	 



iPayment Holdings, Inc.




[Reverse of Warrant Certificate]




     1. Warrant Agreement



          The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of
Warrants issued or to be issued pursuant to a Warrant Agreement dated as of May 6, 2011 (the
“Warrant Agreement”), between the Company and Wilmington Trust FSB, as warrant agent (the “Warrant
Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders
(the words “holders” or “holder” meaning the registered holders or registered holder) of the
Warrants. To the extent permitted by law, in the event of an inconsistency or conflict between the
terms of this Warrant and the Warrant Agreement, the terms of the Warrant Agreement will prevail.




     2. Exercise



     Warrants may be exercised at any time on or after the Separation Date (as defined in the
Warrant Agreement) and on or before 5:00 p.m. New York City time on the Expiration Date; provided
that holders shall be able to exercise their Warrants only if the exercise of such Warrants is
exempt from, or in compliance with, the registration requirements of the Securities Act of 1933, as
amended (the “Securities Act”), and such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the various holders of
the Warrants or other persons to whom it is proposed that the Warrant Shares be issued on exercise
of the Warrants reside. In order to exercise all or any of the Warrants represented by this
Warrant Certificate, the holder must deliver to the Warrant Agent at its Corporate Trust Office set
forth in the Warrant Agreement this Warrant Certificate and the form of election to purchase on the
reverse hereof duly completed, which signature shall be medallion guaranteed by an institution
which is a member of a Securities Transfer Association recognized signature guarantee program, and
upon payment to the Warrant Agent for the account of the Company of the Exercise Price in the
manner set forth in the Warrant Agreement for the number of Warrant Shares in respect of which such
Warrants are then exercised.



     No Warrant may be exercised after 5:00 p.m., New York City time on the Expiration Date, and to
the extent not exercised by such time the Warrants shall become void.



     3. Adjustments



     The Warrant Agreement provides that, upon the occurrence of certain events, the Exercise Price
set forth on the face hereof may, subject to certain conditions, be adjusted. The Warrant Agreement
also provides that the number of shares of Common Stock issuable upon the exercise of each Warrant
shall be adjusted in certain events.



A-3









 





     4. No Fractional Shares.



     No fractions of a share of Common Stock will be issued upon the exercise of any Warrant, but
the Company will pay the cash value thereof determined as provided in the Warrant Agreement.



     5. No Registration Rights.



     The Company is not required and does not intend to file any registration statement for the
Warrants or the underlying shares of Common Stock.



     6. Registered Form; Transfer and Exchange.



     The Warrants are in registered form. Warrant Certificates, when surrendered at the office of
the Warrant Agent by the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided
in the Warrant Agreement, but without payment of any service charge (except as specified in the
Warrant Agreement), for another Warrant Certificate or Warrant Certificates of like tenor
evidencing in the aggregate a like number of Warrants.



     Upon due presentation for registration of transfer of this Warrant Certificate at the office
of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing
in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for
this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without
charge except for any tax or other governmental charge imposed in connection therewith.



     The Company and the Warrant Agent may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other
writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate
entitles any holder hereof to any rights of a stockholder of the Company.



     7. Countersignature.



     This Warrant Certificate shall not be valid unless manually countersigned by the Warrant
Agent, as such term is used in the Warrant Agreement.



     8. Governing Law.



     This Warrant Certificate shall be governed by and construed in accordance with the internal
laws of the State of New York.



     9. Abbreviations.



A-4









 






     Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A/ (= Uniform Gifts to
Minors Act).



     A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to
the Company.



A-5









 





[Form of Election to Purchase]




(To Be Executed Upon Exercise Of Warrant)



     (1) The undersigned hereby irrevocably elects to exercise the right, represented by this
Warrant Certificate, to receive _____________ shares of Common Stock and herewith tenders payment
for such shares to the order of iPayment Holdings, Inc., in the amount of $__________ in accordance
with the terms hereof.



OR




     (2) The undersigned hereby irrevocably elects to convert this Warrant into ___________ shares
of Common Stock (before giving effect to the cashless exercise provisions) and herewith agrees to
make payment therefor pursuant to the cashless exercise provisions of the Warrant Agreement, all on
the terms and the conditions specified in the Warrant Certificate and the Warrant Agreement.



     The undersigned requests that a certificate for such shares be registered in the name of
_______________, whose address is __________________ and that such shares be delivered to
___________, whose address is __________________________. If said number of shares is less than
all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such shares be registered in the name of
______________________, whose address is ____________________, and that such Warrant Certificate be
delivered to whose address is __________________.



     If the undersigned has elected to purchase Warrant Shares pursuant to option (1) above and
such Warrant Shares have not been registered pursuant to a registration statement that has been
declared effective under the securities act, the undersigned represents and warrants that (w) it is
not a U.S. person (as defined in Regulation S) or purchasing for the account or benefit of a U.S.
person, other than a distributor, and it is purchasing the Warrant Shares in an offshore
transaction in accordance with Regulation S, (x) it is a qualified institutional buyer (as defined
in Rule 144A) and is purchasing the Warrant Shares for its own account or for the account of
another qualified institutional buyer, and it is aware that the Company is selling the Warrant
Shares to it in reliance on Rule 144A; (y) it is an institutional “accredited investor” within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act or (z) it is purchasing the
Warrant Shares pursuant to another available exemption from the registration requirements of the
Securities Act. Prior to a purchase of Warrant Shares pursuant to clauses (w) and (x) above, the
Company and the Warrant Agent may request a certificate substantially in the form of Exhibit D and
Exhibit E to the Warrant Agreement respectively. Prior to the purchase of Warrant Shares pursuant
to clause (y) above, the Company may request a certificate substantially in the form of Exhibit F
and/or an opinion of counsel. Prior to the purchase of Warrant Shares pursuant to clause (z) above
the Warrant Agent may request appropriate certificates and/or an opinion of counsel.



A-6









 





	 	 	 	 	 
	 	 	 
	 	 	 
	 	Signature 	 




Date:




	 	 	 	 	 
	 	 	 
	 	 	 
	 	Signature Guaranteed 	 
	 	 	 
	 


Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of
the Warrant Agent, which requirements include membership or participation in the Security Transfer
Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined
by the Warrant Agent in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.







A-7









 








SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL WARRANTS



The following exchanges of a part of this Global Warrant have been made:




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Number of Warrants	 	 
	 	 	Amount of decrease	 	Amount of increase in	 	in this Global	 	 
	 	 	in Number of	 	Number of Warrants	 	Warrant following	 	Signature of
	 	 	warrants in this	 	in this Global	 	such decrease or	 	authorized officer of
	Date of Exchange	 	Global Warrant	 	Warrant	 	increase	 	Warrant Agent
	 





A-8









 






[FORM OF TRANSFER NOTICE]




     FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s)
unto _____________________________ (the “Assignee”)



(Please type or print block letters)




 

(Please print or typewrite name and address including zip code of assignee)




 




the within Warrant and all rights thereunder (the “Securities”), hereby irrevocably
constituting and appointing



 




attorney to transfer said Warrant on the books of the Company with full power of substitution in
the premises.




     [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES BEARING A RESTRICTED LEGEND]



     In connection with any transfer of this Warrant occurring prior to the removal of the
Restricted Legend, the undersigned confirms (i) the understanding that the Securities have not been
registered under the Securities Act of 1933, as amended; (ii) that such transfer is made without
utilizing any general solicitation or general advertising; and (iii) further as follows:



          Check One




     9 (1) This Warrant is being transferred to a “qualified institutional buyer” in compliance
with Rule 144A under the Securities Act of 1933, as amended and certification in the form of
Exhibit E to the Warrant Agreement is being furnished herewith.



     9 (2) This Warrant is being transferred to a Non-U.S. Person in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided by Regulation S
thereunder, and certification in the form of Exhibit D to the Warrant Agreement is being furnished
herewith.



          or




     9 (3) This Warrant is being transferred other than in accordance with (1) or (2) above and
documents are being furnished which comply with the conditions of transfer set forth in this
Warrant and the Warrant Agreement.



     If none of the foregoing boxes is checked, the Warrant Agent is not obligated to register this
Warrant in the name of any Person other than the Holder hereof unless and until the



A-9









 




conditions to any such transfer of registration set forth herein and in the Warrant Agreement
have been satisfied.




     Date:____________________



     __________________________



     Seller



     By________________________



     NOTICE: The signature to this assignment must correspond with the name as written upon the
face of the within-mentioned instrument in every particular, without alteration or any change
whatsoever.



     Signature Guarantee:5 _____________________





 




			
	5	 	Signatures must be guaranteed by an “eligible
guarantor institution” meeting the requirements of the Registrar, which
requirements include membership or participation in the Securities Transfer
Association Medallion Program (“STAMP”) or such other “signature guarantee
program” as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of
1934, as amended.






A-10











 





EXHIBIT B




RESTRICTED LEGEND




     THIS WARRANT AND THE UNDERLYING COMMON STOCK TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE.
THE HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY
INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
WARRANT AND THE UNDERLYING COMMON STOCK TO BE ISSUED UPON ITS EXERCISE, ONLY (A) TO THE COMPANY OR
ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE WARRANTS OR UNDERLYING COMMON STOCK TO BE
EXERCISED UPON ITS ISSUANCE (AS APPLICABLE) ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS IN OFFSHORE TRANSACTIONS WITHIN
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH THE LAWS APPLICABLE TO
SUCH PURCHASER IN THE JURISDICTION IN WHICH SUCH PURCHASE IS MADE, (E) TO AN INSTITUTIONAL
“ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 OF
REGULATION D UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE WARRANT AGENT’S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF A



B-1









 




DULY COMPLETED
AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM THE WARRANT AGENT) AND PURSUANT
TO CLAUSES (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR
OTHER INFORMATION SATISFACTORY TO THE COMPANY. EACH HOLDER AGREES NOT TO ENGAGE IN ANY HEDGING
TRANSACTIONS WITH REGARDS TO THE WARRANTS OR WARRANT SHARES UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION PERIOD.










B-2









 








EXHIBIT C




DTC LEGEND




     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS A BENEFICIAL INTEREST HEREIN.



     TRANSFERS OF THIS GLOBAL WARRANT ARE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL WARRANT ARE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE TRANSFER
PROVISIONS OF THE WARRANT AGREEMENT.



C-1









 






EXHIBIT D




Regulation S Certificate




_________, ____



Wilmington Trust FSB

246 Goose Lane, Suite 105

Guilford, Connecticut 06437

Attention: Joseph O’Donnell





	 	Re: 	 	 iPayment Holdings, Inc. Warrants to acquire Common Stock of iPayment
Holdings, Inc. (the “Warrants”) Issued under the Warrant Agreement (the “Agreement”)
dated as of May 6, 2011 relating to the Warrants




Ladies and Gentlemen:




     Terms are used in this Certificate as used in Regulation S (“Regulation S”) under the
Securities Act of 1933, as amended (the “Securities Act”), except as otherwise stated herein.



     [CHECK A OR B AS APPLICABLE.]


G A. This Certificate relates to our proposed transfer of ____ principal amount of Warrants
issued under the Indenture. We hereby certify as follows:





		 	1. The offer and sale of the Warrants was not and will not be made to a person in the
United States (unless such person is excluded from the definition of “U.S. person”
pursuant to Rule 902(k)(2)(vi) or the account held by it for which it is acting is
excluded from the definition of “U.S. person” pursuant to Rule 902(k)(2)(i) under the
circumstances described in Rule 902(h)(3)) and such offer and sale was not and will not be
specifically targeted at an identifiable group of U.S. citizens abroad.
	 
		 	2. Unless the circumstances described in the parenthetical in paragraph 1 above are
applicable, either (a) at the time the buy order was originated, the buyer was outside the
United States or we and any person acting on our behalf reasonably believed that the buyer
was outside the United States or (b) the transaction was executed in, on or through the
facilities of a designated offshore securities market, and neither we nor any person
acting on our behalf knows that the transaction was pre-arranged with a buyer in the
United States.




D-1









 













		 	3. Neither we, any of our affiliates, nor any person acting on our or their behalf has
made any directed selling efforts in the United States with respect to the Warrants.
	 
		 	4. The proposed transfer of Warrants is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
	 
		 	5. If we are a dealer or a person receiving a selling concession, fee or other
remuneration in respect of the Warrants, and the proposed transfer takes place during the
one-year distribution compliance period (as defined in Rule 902(f) of Regulation S), or we
are an officer or director of the Company or an Initial Purchaser (as defined in the
Agreement), we certify that the proposed transfer is being made in accordance with the
provisions of Rule 904(b) of Regulation S.




G B. This Certificate relates to our proposed exchange of ____ of Warrants issued under the
Agreement for an equal number of Warrants to be held by us. We hereby certify as follows:





		 	1. At the time the offer and sale of the Warrants was made to us, either (i) we were not
in the United States or (ii) we were excluded from the definition of “U.S. person”
pursuant to Rule 902(k)(2)(vi) or the account held by us for which we were acting was
excluded from the definition of “U.S. person” pursuant to Rule 902(k)(2)(i) under the
circumstances described in Rule 902(h)(3); and we were not a member of an identifiable
group of U.S. citizens abroad.
	 
		 	2. Unless the circumstances described in paragraph 1(ii) above are applicable, either (a)
at the time our buy order was originated, we were outside the United States or (b) the
transaction was executed in, on or through the facilities of a designated offshore
securities market and we did not pre-arrange the transaction in the United States.
	 
		 	3. The proposed exchange of Warrants is not part of a plan or scheme to evade the
registration requirements of the Securities Act.




D-2









 











     You and the Company are entitled to rely upon this Certificate and are irrevocably authorized
to produce this Certificate or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.



	 	 	 	 	 
	 	Very truly yours,



[NAME OF SELLER (FOR TRANSFERS) 

OR OWNER (FOR EXCHANGES)]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	
 	 
	 	 	Address:  	 	 
	 	 	Date:  	 	 



D-3









 






	 	 	 	 	 



EXHIBIT E




Rule 144A Certificate



_________, ____



Wilmington Trust FSB

246 Goose Lane, Suite 105

Guilford, Connecticut 06437

Attention: Joseph O’Donnell





	 	Re: 	 	 iPayment Holdings, Inc. Warrants to acquire Common Stock of iPayment
Holdings, Inc. (the “Warrants”) Issued under the Warrant Agreement (the “Agreement”)
dated as of May 6, 2011 relating to the Warrants




Ladies and Gentlemen:




     This Certificate relates to:



     [CHECK A OR B AS APPLICABLE.]


G A. Our proposed purchase of ____ of Warrants issued under the Agreement.



G B. Our proposed exchange of ____ of Warrants issued under the Agreement for an equal
number of Warrants to be held by us.




     We and, if applicable, each account for which we are acting in the aggregate owned and
invested more than $100,000,000 in securities of issuers that are not affiliated with us (or such
accounts, if applicable), as of _________, 20__, which is a date on or since close of our most
recent fiscal year. We and, if applicable, each account for which we are acting, are a qualified
institutional buyer within the meaning of Rule 144A (“Rule 144A”) under the Securities Act of 1933,
as amended (the “Securities Act”). If we are acting on behalf of an account, we exercise sole
investment discretion with respect to such account. We are aware that the transfer of Warrants to
us, or such exchange, as applicable, is being made in reliance upon the exemption from the
provisions of Section 5 of the Securities Act provided by Rule 144A. Prior to the date of this
Certificate we have received such information regarding the Company as we have requested pursuant
to Rule 144A(d)(4) or have determined not to request such information.



E-1









 





     You and the Company are entitled to rely upon this Certificate and are irrevocably authorized
to produce this Certificate or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.



	 	 	 	 	 
	 	Very truly yours,



[NAME OF PURCHASER (FOR TRANSFERS)

OR OWNER (FOR EXCHANGES)]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	
 	 
	 	 	Address:  	 	 
	 	 	Date:  	 	 



E-2









 






	 	 	 	 	 



EXHIBIT F




Institutional Accredited Investor Certificate



__________, ________



Wilmington Trust FSB

246 Goose Lane, Suite 105

Guilford, Connecticut 06437

Attention: Joseph O’Donnell





	 	Re: 	 	 iPayment Holdings, Inc. Warrants to acquire Common Stock of iPayment
Holdings, Inc. (the “Warrants”) Issued under the Warrant Agreement (the “Agreement”)
dated as of May 6, 2011 relating to the Warrants




Ladies and Gentlemen:




     This Certificate relates to:



     [CHECK A OR B AS APPLICABLE.]


G A. Our proposed purchase of ____ Warrants issued under the Indenture.



G B. Our proposed exchange of ____ Warrants issued under the Indenture for an equal number
of Warrants to be held by us.




     We hereby confirm that:


1. We are an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or
(7) under the Securities Act of 1933, as amended (the “Securities Act”) (an “Institutional
Accredited Investor”).



2. Any acquisition of Warrants by us will be for our own account or for the account of one or more
other Institutional Accredited Investors as to which we exercise sole investment discretion.



3. We have such knowledge and experience in financial and business matters that we are capable of
evaluating the merits and risks of an investment in the Warrants and we and any accounts for which
we are acting are able to bear the economic risks of and an entire loss of our or their investment
in the Warrants.







F-1









 







4. We are not acquiring the Warrants with a view to any distribution thereof in a transaction that
would violate the Securities Act or the securities laws of any State of the United States or any
other applicable jurisdiction; provided that the disposition of our property and the property of
any accounts for which we are acting as fiduciary will remain at all times within our and their
control.



5. We acknowledge that the Warrants have not been registered under the Securities Act and that the
Warrants may not be offered or sold within the United States or to or for the benefit of U.S.
persons except as set forth below.



6. The purchase price of the Warrants to which this Certificate relates is at least equal to
$250,000.




     We agree for the benefit of the Company, on our own behalf and on behalf of each account for
which we are acting, that such Warrants may be offered, sold, pledged or otherwise transferred only
in accordance with the Securities Act and any applicable securities laws of any State of the United
States and only (a) to the Company or any subsidiary thereof, (b) pursuant to a registration
statement that has been declared effective under the Securities Act, (c) to a person it reasonably
believes is a qualified institutional buyer in compliance with Rule 144A under the Securities Act,
(d) in an offshore transaction in compliance with Rule 904 of Regulation S under the Securities
Act, (e) for a purchase price of not less than $250,000, to an Institutional Accredited Investor
that, prior to such transfer, delivers to the Warrant Agent a duly completed and signed certificate
(the form of which may be obtained from the Warrant Agent) relating to the restrictions on transfer
of the Warrants or (f) pursuant to any other available exemption from the registration requirements
of the Securities Act.



     Prior to the registration of any transfer in accordance with (c) or (d) above, we acknowledge
that a duly completed and signed certificate (the form of which may be obtained from the Warrant
Agent) must be delivered to the Warrant Agent. Prior to the registration of any transfer in
accordance with (e) or (f) above, we acknowledge that the Company reserves the right to require the
delivery of such legal opinions, certifications or other evidence as may reasonably be required in
order to determine that the proposed transfer is being made in compliance with the Securities Act
and applicable state securities laws. We acknowledge that no representation is made as to the
availability of any exemption from the registration requirements of the Securities Act.



     We understand that the Warrant Agent will not be required to accept for registration of
transfer any Warrants acquired by us, except upon presentation of evidence satisfactory to the
Company and the Warrant Agent that the foregoing restrictions on transfer have been complied with.
We further understand that the Warrants acquired by us will bear a legend reflecting the substance
of the preceding paragraph. We further agree to provide to any person acquiring any of



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the Warrants from us a notice advising such person that resales of the Warrants are restricted
as stated herein and that the Warrants will bear a legend to that effect.




     We agree to notify you promptly in writing if any of our acknowledgments, representations or
agreements herein ceases to be accurate and complete.



     We represent to you that we have full power to make the foregoing acknowledgments,
representations and agreements on our own behalf and on behalf of any account for which we are
acting.



     You and the Company are entitled to rely upon this Certificate and are irrevocably authorized
to produce this Certificate or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.



	 	 	 	 	 
	 	Very truly yours,



[NAME OF PURCHASER (FOR TRANSFERS)

OR OWNER (FOR EXCHANGES)]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	
 	 
	 	 	Address:  	 	 
	 	 	Date:  	 	 




     Upon transfer, the Warrants would be registered in the name of the new beneficial owner as
follows:



     _________________________________________



     Taxpayer ID number: _______________________



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EXHIBIT G




     THE NOTES AND WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS (THE “UNITS”), EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT AT MATURITY OF
THE 15.00%/15.00% SENIOR NOTES DUE 2018 (THE “NOTES”) OF IPAYMENT HOLDINGS, INC. AND ONE WARRANT
(THE “WARRANTS”) INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE ONE SHARE, PAR VALUE $0.01 PER
SHARE, OF COMMON STOCK OF IPAYMENT HOLDINGS, INC.



     PRIOR TO THE EARLIEST TO OCCUR OF (I) 180 DAYS AFTER THE CLOSING OF THE OFFERING OF THE UNITS,
(II) THE DATE ON WHICH A REGISTRATION STATEMENT WITH RESPECT TO A REGISTERED EXCHANGE OFFER FOR THE
NOTES IS DECLARED EFFECTIVE UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), (III) SUCH DATE AS J.P. MORGAN SECURITIES LLC IN ITS SOLE DISCRETION SHALL
ESTABLISH ON AT LEAST ONE BUSINESS DAYS’ NOTICE TO THE COMPANY AND (IV) IN THE EVENT OF A CHANGE OF
CONTROL (AS DEFINED IN THE INDENTURE GOVERNING THE NOTES), THE DATE ON WHICH THE REQUISITE NOTICE
IS MAILED TO HOLDERS OF THE NOTES, THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH,
THE ATTACHED NOTE, AND THE NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE ATTACHED WARRANT.



     PRIOR TO THE EQUITY REDEMPTION AS DEFINED IN THE INDENTURE GOVERNING THE NOTES, THE WARRANTS
EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE
TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE ATTACHED NOTE, AND THE NOTES EVIDENCED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR
EXCHANGED ONLY TOGETHER WITH, THE ATTACHED WARRANT.



     NEITHER THIS UNIT, NOR THE UNDERLYING NOTE AND WARRANT OF WHICH IT IS CONSTITUTED, HAS BEEN
REGISTERED UNDER THE SECURITIES ACT. SEE THE TRANSFER RESTRICTION LEGENDS SET FORTH ON THE FACE OF
NOTE AND FACE OF WARRANT FOR IMPORTANT INFORMATION.




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