Document:

SECOND AMENDMENT TO CREDIT AGREEMENT

 

Exhibit 10.28

AMENDMENT NO. 2

DATED AS OF DECEMBER 19, 2003

TO

IPAYMENT CREDIT AGREEMENT

DATED AS OF AUGUST 1, 2003

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	1.
	 	Capitalized Terms	 	 	1	 
	2.
	 	Definitions	 	 	1	 
	3.
	 	Representations and Warranties	 	 	4	 
	 
	 	3.1  Incorporation	 	 	4	 
	 
	 	3.2  Due Authorization, No Conflicts, Etc.	 	 	4	 
	 
	 	3.3  Due Execution, Etc.	 	 	5	 
	4.
	 	Conditions Precedent	 	 	5	 
	 
	 	4.1  Conditions Precedent to Effectiveness of Amendment No. 2	 	 	5	 
	5.
	 	Effectiveness of Amendment No. 2	 	 	6	 
	6.
	 	Closing	 	 	6	 
	7.
	 	Governing Law, Etc.	 	 	6	 
	8.
	 	Section Titles and Table of Contents	 	 	6	 
	9.
	 	Arbitration	 	 	6	 
	10.
	 	Counterparts	 	 	7	 
	11.
	 	Agreement to Remain in Effect	 	 	7	 

 

 

     This Amendment No. 2 to Credit Agreement, dated as of this 19th day of
December, 2003, by and among iPayment, Inc., a Delaware corporation
(hereinafter referred to as the “Borrower”), Bank of America, N.A. and AmSouth
Bank (hereinafter referred to individually as the “Lender” and collectively as
the “Lenders”), Bank of America, N.A. as the Swingline Lender (the “Swingline
Lender”), and Bank of America, N.A., in its capacity as the Administrative
Agent (hereinafter referred to as the “Agent”).

W I T N E S S E T H:

     WHEREAS, Borrower, Lenders, Swingline Lender and Agent entered into a
certain Credit Agreement dated as of August 1, 2003 as amended by Amendment No.
1 thereto dated September 30, 2003 (collectively, the “Credit Agreement”); and

     WHEREAS, Borrower and its newly formed subsidiary, iPayment Acquisition
Sub LLC, have entered into an Asset Purchase Agreement with First Data Merchant
Services Corporation (“FDMS”), as the Seller therein, pursuant to which
Borrower and iPayment Acquisition Sub LLC have agreed to purchase from FDMS
certain agent bank and merchant portfolio assets described therein for a
purchase price equal to $55,000,000 in cash; and

     WHEREAS, to assist in financing the asset purchase, the Borrower has
requested that the Lenders amend and increase the Total Revolving Credit
Commitment under the Credit Agreement from Thirty Million Dollars ($30,000,000)
to Sixty-Five Million Dollars ($65,000,000); and

     WHEREAS, the Lenders and the Agent are willing to agree to said increase,
subject to the Credit Agreement being modified as hereinafter set forth;

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the
Agent hereby agree as follows:

     1. Capitalized terms used herein shall, except as hereinafter expressly
set forth, have the same meaning given them in the Credit Agreement.

     2. Article I of the Credit Agreement, DEFINITIONS, is hereby amended by
deleting the definition of “EBITDA” contained therein, and by adding thereto
the following new definitions in the appropriate alphabetical sequence, as
follows:

	 	 	“EBITDA” shall mean, for any period of determination,
Consolidated Earnings Before Interest and Taxes of the
Borrower and its Subsidiaries for the immediately
prior four (4) fiscal quarters, plus depreciation and
amortization deducted from the determination of
Consolidated Earnings Before Interest and Taxes for
such period; provided, for the period ending September
30, 2003, there shall be added thereto an amount equal
to the FDMS Portfolio EBITDA for the period July 1,
2003 to September 30, 2003 multiplied by the number
four (4); and provided further, for

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	 	 	the period ending December 31, 2003, there shall be
added thereto an amount equal to the FDMS Portfolio
EBITDA for the period July 1, 2003 through December
31, 2003 multiplied by the number two (2); and
provided further, that for the fiscal quarter ending
March 31, 2004, there shall be added thereto an amount
equal to the FDMS Portfolio EBITDA for the period July
1, 2003 through December 31, 2003 multiplied by the
number 1.50; and provided further, that for the fiscal
quarter ending June 30, 2004 there shall be added
thereto an amount equal to the FDMS portfolio EBITDA
for the period July 1, 2003 through December 31, 2003;
and provided further, that for the fiscal quarter
ending September 30, 2004 there shall be added thereto
an amount equal to the FDMS portfolio EBITDA for the
period October 1, 2003 through December 31, 2003.
	 
	 	 	“FDMS Portfolio” shall mean the agent bank and
merchant portfolio assets acquired by Borrower and
iPayment Acquisition Sub LLC from First Data Merchant
Services Corporation on December 19, 2003, as more
specifically described in that Asset Purchase
Agreement and the schedules thereto executed among
iPayment, Inc., iPayment Acquisition Sub LLC and First
Data Merchant Services Corporation as of December 19,
2003.
	 
	 	 	“FDMS Portfolio EBITDA” shall mean, for any period of
determination, the Net Revenues generated by the FDMS
Portfolio less merchant losses and processing expenses
but without deduction for interest expense, taxes,
depreciation and/or amortization, all as calculated in
a manner satisfactory to the Lenders. For the
purposes hereof, “Net Revenues” means an amount equal
to the merchant’s discount generated by the FDMS
Portfolio less (i) interchange, (ii) assessments, and
(iii) payment required by the ISO agreements and
contracts with agent banks plus other recurring
revenues generated from bank card acquiring services,
all as generally defined and set forth in the FDMS
Asset Purchase Agreement and the schedules attached
thereto, including without limitation, Schedule 5.6
thereof.
	 
	 	 	“Net Cash Proceeds” shall mean the cash proceeds
(including, without limitation, all deferred cash
proceeds) received by the Borrower or any Subsidiary,
net of (i) brokerage and underwriting commissions and
other fees and expenses related thereto, (ii)
provision for all taxes payable as a result of such
sale or other disposition of assets, (iii) deduction
of appropriate amounts to be provided by the Borrower
or any Subsidiary, as the case may be, as a reserve
against any liabilities associated with such assets
and retained by the Borrower or any Subsidiary, and
(iv) the amount of any Debt (other than debt under the
Loan Documents or an

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	 	 	accompanying Debt) required to be repaid or prepaid in
connection with such sale or other disposition of
assets.

     In addition to the foregoing new definitions, the following definitions
are hereby amended:

          (i) “Fee Letter” is hereby amended to add at the end thereof before the
period the clause “including without limitation any letters now or hereafter
executed among Bank of America, Bank of America Securities LLC (“BAS”), and
Borrower relating to other fees payable to Bank of America and BAS”.

          (ii) “Revolving Credit Facility Maturity Date” is hereby amended to
replace the date of August 1, 2006 with the date of December 31, 2006.

     2.1 Section 6.11 is hereby amended to replace the ratio of 1.00 to 1.00
with 1.50 to 1.00.

     2.2 Section 6.12 is hereby amended to replace the number of Twenty-Two
Million Five Hundred Thousand Dollars ($22,500,000) where it appears therein
with the number of Forty Million Dollars ($40,000,000).

     2.3 Unless and until the Revolving Credit Commitment of Bank of America,
which is $50,000,000 as of the date hereof, has been syndicated to other
lenders (who become Lenders hereunder) such that its Revolving Credit
Commitment has been reduced to $25,000,000, the Borrower covenants with the
Lenders that, notwithstanding the provisions of Section 5.13 (including
5.13(c)(ii)) or the definition of “Permitted Acquisition”, it will not
undertake, nor allow any Subsidiary of Borrower to undertake, any Acquisition
in excess of One Million Dollars ($1,000,000.00) without the prior written
consent of the Lenders, which may be granted or withheld in their sole
discretion.

     2.4 To the extent that the terms of this Credit Agreement conflict with
the terms of any Fee Letter executed in December of 2003, the terms of the Fee
Letter shall govern.

     2.5 A new Section 6.22 is hereby added to the Credit Agreement as follows:

	 	 	“6.22 Capital Expenditures. Make any Capital
Expenditures in excess of Three Million Dollars
($3,000,000) in any fiscal year.

     2.6 In connection with completing the FDMS asset acquisition, the Borrower
covenants that it shall comply and cause all its Subsidiaries to comply with
Section 5.13 of the Credit Agreement, including without limitation, executing
or causing to be executed all documents and accession agreements required
thereunder.

     2.7 If the Borrower has not completed a sale of its capital stock after
January 1, 2004 but prior to June 30, 2004, which results in the Borrower (as
opposed to any selling shareholders) receiving Net Cash Proceeds of
$100,000,000 or more, then as of the close of business on June 30, 2004, all
amounts outstanding under the Revolving Credit Facility in excess of
$20,000,000 shall be converted to a new term loan (the “New Term Loan”), and
the Total Revolving Credit Commitments of the Lenders shall henceforth be that
amount determined by subtracting the balance of the New Term Loan as of July 1,
2004 from the figure of $65,000,000. The New Term Loan shall be evidenced by
new term loan notes to be dated as of July 1, 2004 payable to the order of each
Lender (the “Term Loan Notes”), pro rata in amount in accordance with their
respective Revolving Credit

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Commitment Percentages, which notes shall be in form and substance
satisfactory to the Lenders and shall provide for repayment of principal in
equal quarter-annual installments commencing October 1, 2004, based on dividing
the respective amount of each note as of July 1, 2004 by the figure of twenty
(20). The maturity date of each Term Loan Note shall be the same as the
Revolving Credit Facility Maturity Date, at which time each Term Loan Note
shall be due and payable in full together with all accrued interest. Interest
on the Term Loan Notes shall be computed at the same rate as interest on the
Revolving Credit Notes from time to time in effect, and shall be payable at the
same time as interest on the Revolving Credit Notes.

     2.8 The Revolving Credit Notes attached to the Credit Agreement for Bank
of America and AmSouth as Exhibit A-1 are hereby deleted and replaced with the
Revolving Credit Notes payable to the order of Bank of America and AmSouth
attached hereto as Exhibit A-1.

     2.9 The Applicable Margin Grid attached as Exhibit B-4 to the Credit
Agreement is hereby revised with respect to the annual unused fees to replace
the percentages of “0.20% per annum, 0.15% per annum, and 0.125% per annum”
with, respectively, the percentages of “0.50% per annum, 0.50% per annum, and
0.375% per annum”.

     2.10 The Compliance Certificate attached as Exhibit C to the Credit
Agreement is hereby deleted in its entirety and replaced with the revised
Compliance Certificate attached hereto as Exhibit C.

     2.11 On the signature page, under the signature of Bank of America as a
Lender, the Revolving Credit Commitment amount is hereby deleted and replaced
with the figure of $50,000,000. Likewise, on the signature page, under the
signature of AmSouth as a Lender, AmSouth’s Revolving Credit Commitment in the
amount of $10,000,000 is hereby deleted and replaced with the figure of
$15,000,000.00.

     3. Representations and Warranties. To induce the Lenders and the Agent to
enter into this Amendment No. 2, the Borrower represents and warrants to the
Lenders and the Agent as follows:

          3.1 Incorporation. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware; has the
corporate power to own its properties and to engage in the business it
conducts, and is duly qualified and in good standing as a foreign corporation
in the jurisdictions wherein the nature of its business or the ownership of its
properties requires it to be so qualified and where the failure to be so
qualified would have a Material Adverse Effect.

          3.2 Due Authorization, No Conflicts, Etc. The execution, delivery and
performance by the Borrower of this Amendment No. 2 and any and all other
agreements, instruments and documents to be executed and/or delivered by the
Borrower pursuant hereto or in connection herewith, and the consummation by the
Borrower of the transactions contemplated hereby or thereby: (a) are within
its corporate powers; (b) has been duly authorized by all necessary corporate
action, including without limitation, the consent of stockholders where
required; (c) do not and will not conflict with or result in any breach of, or
constitute with the passage of time or the giving of notice or both, a default
under (i) any Requirement of Law or (ii) any agreement to which Borrower is a
party or by which it, or any of its property, is bound; and (d) do not require
the
consent, authorization by, or approval of, or notice to, or filing or

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registration with, any governmental authority or any other Person other than
those which have been obtained and copies of which have been delivered to the
Agent pursuant to Subsection 4.1(a)(ii) hereof, each of which is in full force
and effect.

          3.3 Due Execution, Etc. This Amendment No. 2 and each of the other
agreements, instruments and documents to be executed and/or delivered by the
Borrower pursuant hereto or in connection herewith (a) has been duly executed
and delivered, and (b) constitutes the legal, valid and binding obligation of
the Borrower, enforceable against it in accordance with its terms, subject
however to state and federal bankruptcy, insolvency, reorganization and other
laws and general principles of equity affecting enforcement of the rights of
creditors generally.

     4. Conditions Precedent. The effectiveness of this Amendment No. 2 is
subject to the fulfillment of the following conditions precedent on or prior to
the Amendment No. 2 Effective Date (as hereinafter defined in Section 5
hereof):

          4.1 Conditions Precedent to Effectiveness of Amendment No. 2. The
Administrative Agent shall have received, on or prior to the Amendment No. 2
Effective Date, the following, each dated on or prior to the Amendment No. 2
Effective Date unless otherwise indicated, in form and substance satisfactory
to the Administrative Agent and in sufficient copies for each Lender:

          (a) Certified copies of (i) the resolutions of the Board of Directors of
the Borrower approving this Amendment No. 2 and each other agreement,
instrument or document to be executed by it pursuant hereto or as contemplated
hereby, and (ii) all documents evidencing other necessary corporate action and
required governmental and third party approvals, licenses and consents with
respect to this Amendment No. 2 and the transactions contemplated hereby.

          (b) A certificate of the Secretary or an Assistant Secretary of Borrower
certifying the names and true signatures of the officers of Borrower who have
been authorized to execute on behalf of Borrower this Amendment No. 2 and any
other agreement, instrument or document executed or to be executed by Borrower
in connection herewith.

     (c) A certificate dated the Amendment No. 2 Effective Date signed by the
Chief Executive Officer, President or any Vice-President of Borrower, to the
following effect to their best knowledge after diligent inquiry:

               (i) The representations and warranties of the Borrower contained in
Sections 3.1, 3.2, and 3.3 of this Amendment No. 2 are true and correct on and
as of such date as though made on and as of such date;

               (ii) No Default or Event of Default has occurred and is continuing, and no
Default or Event of Default would result from the execution and delivery of
this Amendment No. 2 or the other agreements, instruments and documents
contemplated hereby; and

               (iii) The Borrower has paid or agreed to pay all amounts payable by it
pursuant to the Credit Agreement as amended hereby (including, without
limitation, all legal fees

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and expenses of Lenders’ counsel incurred in
connection herewith) and any Fee Letter, to the extent then due and payable.

          (d) Executed $50,000,000 Revolving Credit Note payable to the order of
Bank of America and the $15,000,000 Revolving Credit Note payable to the order
of AmSouth in the form attached hereto as Replacement Exhibit A-1.

          (e) Executed Accession documents from iPayment Acquisition Sub LLC in the
form attached hereto as collective Exhibit 1.

          (f) A favorable opinion of Messrs. Waller Lansden Dortch & Davis, counsel
to the Borrower, in substantially the form of Exhibit 2 hereto, and as to such
other matters as any Lender, through the Administrative Agent, may reasonably
request.

          (g) An executed copy, together with all schedules, of the Asset Purchase
Agreement by and among Borrower, iPayment Acquisition Sub LLC, and First Data
Merchant Services Corporation.

     5. Effectiveness of Amendment No. 2. This Amendment No. 2 shall become
effective at such time as (a) each of the conditions precedent set forth in
Section 4.1 hereof shall have been satisfied, and (b) counterparts of this
Amendment No. 2, executed and delivered by the Borrowers, the Lenders, the
Swingline Lender, and the Agent shall have been received by the Agent (or,
alternatively, confirmation of the execution hereof by such parties shall have
been received by the Agent). The date upon which the conditions described in
clauses (a) and (b) of the foregoing sentence shall have been fulfilled is
referred to herein as the “Amendment No. 2 Effective Date”.

     6. Closing. The Closing under this Amendment No. 2 shall occur on the
Amendment Effective Date at the offices of Boult, Cummings, Conners & Berry,
PLC, 414 Union Street, Suite 1600, Nashville, Tennessee 37219, or such other
location as the parties may agree.

     7. Governing Law, Etc. This Amendment No. 2 shall be governed by, and
construed in accordance with, the laws of the State of Tennessee as provided in
Section 10.2 of the Agreement, which Section is incorporated herein by
reference and made a part hereof as though set forth in full herein.

     8. Section Titles and Table of Contents. The Section Titles and Table of
Contents contained in this Amendment No. 2 are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
among the parties hereto.

     9. Arbitration. Any controversy or claim between or among the parties
hereto including but not limited to those arising out of or relating to this
Instrument, Agreement or document or any related instruments, agreements or
documents, including any claim based on or arising from an alleged tort, shall
be determined by binding arbitration in
accordance with the Federal Arbitration Act (or if not applicable, the
applicable state law), the Rules of Practice and Procedure for the Arbitration
of Commercial Disputes of Judicial Arbitration and Mediation Services, Inc.
(J.A.M.S.), and the “Special Rules” set forth below. In the event of any

- 6 -

 

inconsistency,
the Special Rules shall control. Judgment upon any arbitration
award may be entered in any court having jurisdiction. Any party to this
Agreement may bring an action, including a summary or expedited proceeding, to
compel arbitration of any controversy or claim to which this agreement applies
in any court having jurisdiction over such action.

          (a) Special Rules. The arbitration shall be conducted in the city of the
Borrower’s domicile at the time of the execution of this instrument, agreement
or document and administered by J.A.M.S. who will appoint an arbitrator; if
J.A.M.S. is unable or legally precluded from administering the arbitration,
then the American Arbitration Association will serve. All arbitration hearings
will be commenced within 90 days of the demand for arbitration; further, the
arbitrator shall only, upon a showing of cause, be permitted to extend the
commencement of such hearing for up to an additional 60 days. In any such
arbitration, the prevailing party will be awarded attorney’s fees, costs of
arbitration and all out-of-pocket expenses against the defaulting party.

          (b) Reservation of Rights. Nothing in this instrument, agreement or
document shall be deemed to (i) limit the applicability of any otherwise
applicable statutes of limitation or repose or any waivers contained in this
Agreement; or (ii) be a waiver by the Administrative Agent or Lenders of the
protection afforded to them by 12 U.S.C. § 91 or any substantially equivalent
state law; or (iii) limit the right of the Administrative Agent or Lenders
hereto (A) to exercise self help remedies such as (but not limited to) setoff,
or (B) to foreclose against any real or personal property collateral, or (C) to
obtain from a court provisional or ancillary remedies such as (but not limited
to) injunctive relief, writ of possession or the appointment of a receiver.
The Administrative Agent or Lenders may exercise such self help rights,
foreclose upon such property, or obtain such provisional or ancillary remedies
before, during or after the pendency of any arbitration proceeding brought
pursuant to this instrument, agreement or document. Neither this exercise of
self help remedies nor the institution or maintenance of an action for
foreclosure or provisional or ancillary remedies shall constitute a waiver of
the right of any party, including the claimant in any such action, to arbitrate
the merits of the controversy or claim occasioning resort to such remedies.

     10. Counterparts. This Amendment No. 2 may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument.

     11. Agreement to Remain in Effect. Except as expressly provided herein,
the Agreement and each other Collateral Document shall be and shall continue in
full force and effect in accordance with its respective terms.

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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

	 	 	 	 	 	 	 
	AGENT	 	BORROWER
	BANK OF AMERICA, N.A., as

Administrative Agent	 	IPAYMENT, INC., a Delaware

corporation
	 
	 	 	 	 	 	 
	By:

	 	 
	 	By:	 	 
	

	 	

	 	 	 	

	 
	 	 	 	 	 	 
	Its:

	 	SVP	 	Its:	 	EVP
	 
	 	 	 	 	 	 
	LENDERS:	 	 	 	 
	 
	 	 	 	 	 	 
	BANK OF AMERICA, N.A.	 	AMSOUTH BANK
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	

	 	

	 	 	 	

	 
	 	 	 	 	 	 
	Its:

	 	SVP	 	Its:	 	Vice President

	 	 	 	 	 	 	 	 	 	 	 
	Revolving Credit
	 	 	 	 	 	Revolving Credit	 	 	 	 
	Commitment:
	 	$	50,000,000	 	 	Commitment:	 	$	15,000,000	 
	 	 	 	 	 	 	 	 	 	 	 
	Letter of Credit
	 	 	 	 	 	 	 	 	 	 
	Sublimit:
	 	$	3,000,000	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Swingline Commitment
	 	 	 	 	 	 	 	 	 	 
	Sublimit:
	 	$	500,000	 	 	 	 	 	 	 

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EXHIBIT A-l

REVOLVING CREDIT NOTE

	 	 	 
	$50,000,000.00

	 	December 19, 2003

Davidson County, Tennessee

     FOR VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to
pay to the order of

     Bank of America, N.A. (the “Lender”), at the offices of Bank of America,
N.A. (the “Administrative Agent”) located at 414 Union Street, Nashville,
Tennessee 37219 (or at such other place or places as the Administrative Agent
may designate), the principal sum of up to

     FIFTY MILLION AND NO/DOLLARS ($50,000,000.00), or such lesser amount as
may constitute the unpaid principal amount of the Revolving Credit Loans
payable to the Lender, under the terms and conditions of this Revolving Credit
Note (this “Revolving Credit Note”) and that certain Credit Agreement, dated as
of August 1, 2003, by and between the Borrower, the Administrative Agent, and
the Lenders set forth therein (as amended by Amendment No. 1 dated September
30, 2003 and Amendment No. 2 dated as of December 19, 2003, and as the same may
be further amended, modified, renewed, restated, extended or supplemented from
time to time, collectively the “Credit Agreement”).

     The Borrower also unconditionally promises to pay interest on the
aggregate unpaid principal amount of this Revolving Credit Note at the rates
provided in the Credit Agreement.

     This Revolving Credit Note is one of a series of Revolving Credit Notes
(as defined in the Credit Agreement) issued to evidence the Revolving Credit
Facility made pursuant to Article II of the Credit Agreement, and is a renewal
and modification of as well as an increase in that certain Revolving Credit
Note of undersigned to Lender dated as of August 1, 2003. The defined terms in
the Credit Agreement are used herein with the same meanings. All of the terms,
conditions and covenants of the Credit Agreement are expressly made a part of
this Revolving Credit Note by reference in the same manner and with the same
effect as if set forth herein at length, and any holder of this Revolving
Credit Note is entitled to the benefits of and remedies provided in the Credit
Agreement and the other Loan Documents. Reference is made to the Credit
Agreement for provisions relating to the interest rate, maturity, payment,
prepayment, acceleration and other terms affecting this Revolving Credit Note.

     The Borrower may borrow, repay and reborrow under this Revolving Credit
Note in accordance with the terms and conditions of the Credit Agreement. The
Borrower shall repay the Revolving Credit Notes in full on the Revolving
Credit Facility Termination Date.

     In the event of an acceleration of the maturity of this Revolving Credit
Note, this Revolving Credit Note, and all other indebtedness of the Borrower
to the Lender, shall become immediately due and payable, without presentation,
demand, protest or notice of any kind, all of which are hereby waived by the
Borrower.

     In the event this Revolving Credit Note is not paid when due at any
stated or accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest, all costs of collection, including reasonable
attorneys’ fees.

     This Revolving Credit Note shall be governed by and construed in
accordance with the internal laws and judicial decisions of the State of
Tennessee.

- 1 -

 

     Any controversy or claim between or among the parties hereto including but
not limited to those arising out of or relating to this Note or any related
instruments, agreements or documents, including any claim based on or arising
from an alleged tort, shall be determined by binding arbitration in accordance
with the Federal Arbitration Act (or if not applicable, the applicable state
law), the Rules of Practice and Procedure for the Arbitration of Commercial
Disputes of J.A.M.S/Endispute or any successor thereof (“J.A.M.S.”), and the
“Special Rules” set forth below. In the event of any inconsistency, the Special
Rules shall control. Judgment upon any arbitration award may be entered in any
court having jurisdiction. Any party to this Note may bring an action,
including a summary or expedited proceeding, to compel arbitration of any
controversy or claim to which this Note applies in any court having
jurisdiction over such action.

     (a) Special Rules. The arbitration shall be conducted in the city of
the
undersigned’s domicile at the tune of the execution of this instrument,
agreement or
document and administered by J.A.M.S who will appoint an arbitrator; if
J.A.M.S. is
unable or legally precluded from administering the arbitration, then the
American
Arbitration Association will serve. All arbitration hearings will be
commenced within 90
days of the demand for arbitration; further, the arbitrator shall only,
upon a showing of
cause, be permitted to extend the commencement of such hearing for up to
an additional 60
days.

     (b) Reservation of Rights. Nothing in this arbitration provision shall be
deemed
to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and
any waivers contained in this arbitration provision; or (ii) be a waiver
by the Agent or any
Lender of the protection afforded to it by 12 U.S.C. Sec. 91 or any
substantially equivalent
state law; or (iii) limit the right of the Agent or any Lender hereto (a)
to exercise self help
remedies such as (but not limited to) setoff, or (b) to foreclose against
any real or personal
property collateral, or (c) to obtain from a court provisional or
ancillary remedies such as
(but not limited to) injunctive relief, writ of possession or the
appointment of a receiver.
The Agent or any Lender may exercise such self help rights, foreclose upon
such property,
or obtain such provisional or ancillary remedies before, during or after
the pendency of
any arbitration proceeding brought pursuant to this instrument, agreement
or document
Neither this exercise of self help remedies nor the institution or
maintenance of an action
for foreclosure or provisional or ancillary remedies shall constitute a
waiver of the right of
any party, including the claimant in such action, to arbitrate the merits
of the controversy
or claim occasioning resort to such remedies.

     IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note to
be executed under seal by its duly authorized corporate officers as of the day
and year first above written.

	 	 	 	 	 
	 	 	iPAYMENT, INC.
	 
	 	 	 	 
	

	 	BY:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	ITS:
	 	EVP

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REVOLVING CREDIT NOTE

	 	 	 
	$15,000,000.00

	 	December 19, 2003

Davidson County, Tennessee

     FOR VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to
pay to the order of

     AmSouth Bank, an Alabama state chartered bank (the “Lender”), at the
offices of Bank of America, N.A. (the “Administrative Agent”) located at 414
Union Street, Nashville, Tennessee 37219 (or at such other place or places as
the Administrative Agent may designate), the principal sum of up to

     FIFTEEN MILLION AND NO/DOLLARS ($15,000,000.00), or such lesser amount as
may constitute the unpaid principal amount of the Revolving Credit Loans
payable to the Lender, under the terms and conditions of this Revolving Credit
Note (this “Revolving Credit Note”) and that certain Credit Agreement, dated
as of August 1, 2003, by and between the Borrower, the Administrative Agent,
and the Lenders set forth therein (as amended by Amendment No. 1 dated
September 30, 2003 and Amendment No. 2 dated as of December 19, 2003 and as
the same may be amended, modified, renewed, restated, extended or supplemented
from time to time, collectively, the “Credit Agreement”).

     The Borrower also unconditionally promises to pay interest on the
aggregate unpaid principal amount of this Revolving Credit Note at the rates
provided in the Credit Agreement.

     This Revolving Credit Note is one of a series of Revolving Credit Notes
(as defined in the Credit Agreement) issued to evidence the Revolving Credit
Facility made pursuant to Article II of the Credit Agreement, and is a renewal
and modification of as well as an increase in that certain Revolving Credit
Note of undersigned to Lender dated as of October 31, 2003. The defined terms
in the Credit Agreement are used herein with the same meanings. All of the
terms, conditions and covenants of the Credit Agreement are expressly made a
part of this Revolving Credit Note by reference in the same manner and with
the same effect as if set forth herein at length, and any holder of this
Revolving Credit Note is entitled to the benefits of and remedies provided in
the Credit Agreement and the other Loan Documents. Reference is made to the
Credit Agreement for provisions relating to the interest rate, maturity,
payment, prepayment, acceleration and other terms affecting this Revolving
Credit Note.

     The Borrower may borrow, repay and reborrow under this Revolving Credit
Note in accordance with the terms and conditions of the Credit Agreement. The
Borrower shall repay the Revolving Credit Notes in full on the Revolving
Credit Facility Termination Date.

     In the event of an acceleration of the maturity of this Revolving Credit
Note, this Revolving Credit Note, and all other indebtedness of the Borrower
to the Lender, shall become immediately due and payable, without presentation,
demand, protest or notice of any kind, all of which are hereby waived by the
Borrower.

     In the event this Revolving Credit Note is not paid when due at any
stated or accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest, all costs of collection, including reasonable
attorneys’ fees.

     This Revolving Credit Note shall be governed by and construed in
accordance with the internal laws and judicial decisions of the State of
Tennessee.

- 1 -

 

     Any controversy or claim between or among the parties hereto including but
not limited to those arising out of or relating to this Note or any related
instruments, agreements or documents, including any claim based on or arising
from an alleged tort, shall be determined by binding arbitration in accordance
with the Federal Arbitration Act (or if not applicable, the applicable state
law), the Rules of Practice and Procedure for the Arbitration of Commercial
Disputes of J.A.M.S./Endispute or any successor thereof (“J.A.M.S.”), and the
“Special Rules” set forth below. In the event of any inconsistency, the Special
Rules shall control. Judgment upon any arbitration award may be entered in any
court having jurisdiction. Any party to this Note may bring an action,
including a summary or expedited proceeding, to compel arbitration of any
controversy or claim to which this Note applies in any court having
jurisdiction over such action.

     (a) Special Rules. The arbitration shall be conducted in the
city of the
undersigned’s domicile at the time of the execution of this
instrument, agreement or
document and administered by J.A.M.S who will appoint an
arbitrator; if J.A.M.S. is
unable or legally precluded from administering the arbitration,
then the American
Arbitration Association will serve. All arbitration hearings will
be commenced within 90
days of the demand for arbitration; further, the arbitrator shall
only, upon a showing of
cause, be permitted to extend the commencement of such hearing for
up to an additional 60
days.

     (b) Reservation of Rights. Nothing in this arbitration provision
shall be deemed
to (i) limit the applicability of any otherwise applicable statutes
of limitation or repose and
any waivers contained in this arbitration provision; or (ii) be a
waiver by the Agent or any
Lender of the protection afforded to it by 12 U.S.C. Sec. 91 or any
substantially equivalent
state law; or (iii) limit the right of the Agent or any Lender
hereto (a) to exercise self help
remedies such as (but not limited to) setoff, or (b) to foreclose
against any real or personal
property collateral, or (c) to obtain from a court provisional or
ancillary remedies such as
(but not limited to) injunctive relief, writ of possession or the
appointment of a receiver.
The Agent or any Lender may exercise such self help rights,
foreclose upon such property,
or obtain such provisional or ancillary remedies before, during or
after the pendency of
any arbitration proceeding brought pursuant to this instrument,
agreement or document.
Neither this exercise of self help remedies nor the institution or
maintenance of an action
for foreclosure or provisional or ancillary remedies shall
constitute a waiver of the right of
any party, including the claimant in such action, to arbitrate the
merits of the controversy
or claim occasioning resort to such remedies.

     IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note to
be executed under seal by its duly authorized corporate officers as of the day
and year first above written.

	 	 	 	 	 
	 	 	iPAYMENT, INC.
	 
	 	 	 	 
	

	 	BY:	 	 
	

	 	 	 	/s/ Afshin Yazdian

	 
	 	 	 	 
	

	 	ITS:
	 	EVP

- 2 -

 

EXHIBIT C

COMPLIANCE CERTIFICATE

     THIS CERTIFICATE is given pursuant to 
Section 5.1(d) of the Credit
Agreement, dated as of              , 2004,
among iPayment, Inc. (the “Company”), certain banks and other
financial
institutions from time to time parties thereto (the “Lenders”), and Bank of
America, N.A., as Administrative Agent for the Lenders (as amended, modified,
supplemented or restated from time to time, the “Credit Agreement,” the terms
defined therein being used herein as therein defined).

     The undersigned hereby certifies that:

     i. He is the duly elected [President] [Chief Financial Officer]
of the Company.

     ii. Enclosed with this Certificate are copies of the financial
statements of the Company and
its Subsidiaries as of               and for the

[          -quarter period] [year] then
ended, required to be delivered under Section [5.1(a)] [5.1(b)] of the Credit
Agreement. Such financial statements fairly present the financial condition of
the Company and its Subsidiaries on a consolidated basis as of the date
indicated and the results of operation of the Company and its Subsidiaries on a
consolidated basis for the period covered thereby.

     iii. The undersigned has reviewed the terms of the Credit Agreement
and has made, or caused to be made under the supervision of the undersigned, a
review in reasonable detail of the transactions and condition of the Company
and its Subsidiaries during the accounting period covered by such financial
statements.

     iv. The examination described in paragraph iii above did not
disclose, and the undersigned has no knowledge of the existence of, any Default
or Event of Default during or at the end of the accounting period covered by
such financial statements or as of the date of this Certificate.

     v. Attached to this Certificate as Attachment A is a Covenant
Compliance Worksheet reflecting the computation of the financial covenants set
forth in Article VI of the Credit Agreement as of the last day of the period
covered by the financial statements enclosed herewith.

     IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of the
day of            , 2004.

	 	 	 	 	 
	 	 	[signature of President or

CFO or VP-Finance of Company]
	 
	 	 	 	 
	

	 	Name:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	

- 1 -

 

Covenant Compliance Worksheet

For

iPayment, Inc.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	1.	 	 	(a) Base Stockholders Equity per section 6.9
	 	$	93,000,000	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(b) 75% of the cumulative Consolidated Net
Income (to the extent positive) for each quarter
ending from and after June 30, 2003.
	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	(c) 100% of the net proceeds from any
equity issuances of the Borrower after June
30, 2003.
	 	 	 	 	 	$	    	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(d) Add lines l(a), l(b) and l(c).
	 	 	 	 	 	$	             	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	2.	 	 	Stockholders Equity as of measurement date
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Line 2 must exceed line l(d)
	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	1.	 	 	(a) Consolidated
Debt1 of Borrower and any
Subsidiaries as of measurement date
	 	$	             	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(b) Cash Investments then on hand
	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(c) Subtract Line l(b) from Line l(a):
	 	 	 	 	 	$	             	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	2.	 	 	EBITDA as of measurement date
	 	 	 	 	 	 	 	 
	 	 	 	 	(a) Consolidated Net Income for immediately
preceding four quarters
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(b) The Sum of the following for such period of
	 	 	 	 	 	 	 	 
	 	 	 	 	Interest Expense
	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	Taxes
	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	Depreciation and Amortization
	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Total
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(c) FDMS Portfolio EBITDA for applicable pre-acquisition periods
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(d) EBITDA: Add lines (2)(a), (2)(b) and 2(c)
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	3.	 	 	Consolidated Debt to EBITDA Ratio: Divide line (l)(c) by line (2)(d)
	 	 	 	 	 	 	 	 

     Consolidated debt at                   

	 	 	 	 	 
	 
	 	$	             	 
	 
	 	 	
 	 
	 
	 	$	 	 
	 
	 	 	
 	 

	1	 	Attach calculation of Consolidated Debt of Borrower and
Subsidiaries on a consolidated basis.

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	1.	 	 	Consolidated Senior Debt of Borrower and any Subsidiaries as of
measurement date
	 	 	 	 	 	$	             	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	2.	 	 	EBITDA as of measurement date
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	(a) Consolidated Net Income for immediately preceding four quarters
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(b) The Sum of the following for such period of
	 	 	 	 	 	 	 	 
	 	 	 	 	Interest Expense
	 	$	             	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	Taxes
	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	Depreciation and Amortization
	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Total
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(c) FDMS Portfolio EBITDA for applicable pre-acquisition periods
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(d) EBITDA: Add lines (2)(a), (2)(b) and 2(c)
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	3.	 	 	Consolidated Senior Debt to EBITDA Ratio: Divide line 1 by line 2(d)
	 	 	 	 	 	 	             	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	1.	 	 	EBITDA as of measurement date
	 	 	 	 	 	 	             	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(a) Consolidated Net Income for immediately preceding four quarters
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(b) The Sum of the following for such period of
	 	 	 	 	 	 	 	 
	 	 	 	 	Interest Expense
	 	$	             	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	Taxes
	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	Depreciation and Amortization
	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Total
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(c) FDMS Portfolio EBITDA for applicable pre-acquisition periods
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(d) EBITDA: Add lines (2)(a), (2)(b) and 2(c)
	 	 	 	 	 	$	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 

- 4 -

 

ATTACHMENT B

Interest Rate and Unused Fee Calculation Worksheet

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	1.	 	 	Consolidated Debt of Borrower and any Subsidiaries as of measurement
date
	 	 	 	 	 	$	             	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	2.	 	 	EBITDA as of measurement date
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(a) Consolidated Net Income for immediately preceding four quarters
	 	 	 	 	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(b) The Sum of the following for such period of
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Interest Expense
	 	$	             	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Taxes
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Depreciation and Amortization
	 	$	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	
 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total
	 	 	 	 	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(c) FDMS Portfolio EBITDA for applicable pre-acquisition periods
	 	 	 	 	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(d) EBITDA: Add lines (2)(a), (2)(b) and 2(c)
	 	 	 	 	 	$	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	$	 	 	 	 	 	 
	 	3.	 	 	Consolidated Debt to EBITDA Ratio: Divide line (1) by line (2)(d)
	 	 	 	 	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	4.	 	 	Applicable
Margins1 effective as of the third (3rd)
Business Day after delivery hereof
and delivery of such other items required by Credit Agreement (based on the matrix set
forth in Exhibit B-4 as referenced in the definition of Applicable Margin in the Credit
Agreement):
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Applicable Margin (LIBOR Loans)
	 	 	 	 	 	 	 	%	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	5.	 	 	Applicable
unused fee percentage rate2 effective as
of the third (3rd) Business Day after
delivery hereof and delivery of such other items required by Credit Agreement (based
on matrix set forth in Section 2.7 (a) and Exhibit B-4 of the Credit Agreement) applied
to the average daily Unutilized Revolving Credit Commitment.
	 	 	 	 	 	 	 	%	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	
 	 	 	 	 	 

	1	 	Change in Applicable Margin is subject to satisfaction of the additional terms and conditions set forth in the
Credit Agreement, including without limitation, the terms and conditions set forth in the definition of
Applicable Margin therein.
	 
	2	 	Change in applicable unused fee percentage rate is subject to satisfaction of the additional terms and conditions
set forth in the Credit Agreement, including without limitation,
the terms and conditions set forth in Section
2.8(a) and Exhibit B-4 therein.

 

 

EXHIBIT 1

GUARANTOR ACCESSION

     THIS GUARANTOR ACCESSION, dated as of December 19, 2003, is delivered by
iPayment Acquisition Sub LLC, a Delaware limited liability company (the
“Guarantor”) pursuant to the Guaranty and Suretyship Agreement referred to
hereinbelow.

     Reference is hereby made to the Guaranty and Suretyship Agreement,
initially dated as of August 1, 2003, made by the Guarantors (as defined
therein) named therein (as amended, modified, supplemented or restated from
time to time, the “Guaranty,” capitalized terms defined therein being used
herein as therein defined) in favor of Bank of America, N.A., as Agent for the
benefit of the Guaranteed Parties, its successors and assigns.

     The undersigned is a direct or indirect Subsidiary of IPAYMENT, INC. (the
“Borrower”) and is required to guarantee the Obligations. The undersigned
hereby adopts and makes for itself all of the representations and warranties
set forth in Article V of the Guaranty and Suretyship Agreement as if such
representations and warranties were set forth herein at length.

     The undersigned hereby acknowledges that, upon the execution and delivery
of this Guarantor Accession, it will become a party to the Guaranty and
Suretyship Agreement as a Guarantor thereunder. The undersigned hereby adopts
the terms and provisions of the Guaranty and Suretyship Agreement and agrees
to be bound by all of the duties, liabilities and obligations of the
Guarantors set forth in the Guaranty and Suretyship Agreement. This Guarantor
Accession and its attachments are hereby incorporated into the Guaranty and
Suretyship Agreement and made a part thereof.

	 	 	 	 	 
	 	 	IPAYMENT ACQUISITION SUB LLC :
	 
	 	 	 	 
	

	 	By:
	 	/s/ Afshin Yazdian

	

	 	Name:
	 	Afshin Yazdian
	

	 	Title:
	 	Manager

- 1 -

 

ACCESSION TO

GUARANTOR SECURITY AGREEMENT

     THIS ACCESSION TO GUARANTOR SECURITY AGREEMENT, dated as of December 19,
2003, is delivered by iPayment Acquisition Sub LLC, a Delaware limited
liability company (the “Guarantor”), to Bank of America, N.A., as
Administrative Agent (the “Administrative Agent”) under the Credit Agreement
referred to below, pursuant
to Section 7.9 of the Guarantor Security Agreement referred to below.

     Reference is made to the Credit Agreement initially dated as of August 1,
2003, among the Borrower, the Administrative Agent and the Lenders identified
therein (as amended, modified, supplemented or restated from time to time, the
“Credit Agreement”). Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Credit Agreement.

     Pursuant to the Credit Agreement, certain Affiliates of the Borrower have
executed and delivered the Guaranty Agreement, dated as of August 1, 2003, and
the Guarantor Security Agreement, dated as of August 1, 2003, and any and all
future Subsidiaries of the Borrower are also required to become parties to
such agreements, subject to the provisions of the Credit Agreement.

     The undersigned Guarantor is a Subsidiary of the Borrower, and as
required by the Credit Agreement, has acceded as of the date hereof to the
Guaranty Agreement, thereby guaranteeing the Obligations. To secure its
obligations under the Guaranty Agreement, the undersigned Guarantor hereby
adopts and hereby grants a security interest in its Collateral as set forth in
Article II of the Guarantor Security Agreement as if such grant was set forth
herein at length. The locations for the filing of financing statements to
perfect the security interest granted hereby and the location of each of the
Guarantor’s Collateral and records are listed on the revised Exhibits A and B
to the Guarantor Security Agreement attached hereto.

     The undersigned hereby acknowledges that, upon the execution and delivery
of this Accession, it will become a party to the Guarantor Security Agreement.
The undersigned hereby adopts the terms, provisions, representations and
warranties of the Guarantor Security Agreement and agrees to be bound thereby.
This Accession and its attachments are hereby incorporated into the Guarantor
Security Agreement and made a part thereof.

	 	 	 	 	 
	 	 	IPAYMENT ACQUISITION SUB LLC
	 
	 	 	 	 
	

	 	By:
	 	/s/ Afshin Yazdian

	

	 	Title:
	 	Secretary

- 1 -

 

EXHIBIT A TO SECURITY AGREEMENT

SCHEDULE OF LOCATIONS FOR FILING UCC-1 FINANCING STATEMENTS

	A.	 	iPayment, Inc. (Delaware & Tennessee Secretary of State)
	 
	B.	 	E-Commerce Exchange, Inc. (Delaware Secretary of State)
	 
	C.	 	Online Data Corp. (Delaware & Illinois Secretary of State)
	 
	D.	 	iPayment of Maine, Inc. (Delaware & Maine Secretary of State)
	 
	E.	 	iPayment of Eureka, Inc. (Delaware Secretary of State)
	 
	F.	 	Quad City Acquisition Sub, Inc. (Delaware Secretary of State)
	 
	G.	 	CardPayment Solutions, L.L.C. (Delaware Secretary of State)
	 
	H.	 	Cardsync Processing, Inc. (California Secretary of State)
	 
	I.	 	iPayment Technologies, Inc. (California Secretary of State)
	 
	J.	 	iPayment of California, LLC (Tennessee & California Secretary of State)
	 
	K.	 	1st National Processing, Inc. (Nevada & California Secretary of State)
	 
	L.	 	iPayment Acquisition Sub LLC (Delaware Secretary of State)

- 2 -

 

EXHIBIT B TO SECURITY AGREEMENT

LOCATIONS OF RECORDS AND COLLATERAL

     The chief executive office and principal place of business of the
Guarantor is 40 Burton Hills Boulevard, Suite 415, Nashville, Tennessee 37215.
This is also the location where the Borrower maintains billing and related
records relating to Accounts Receivable.

     Set forth below is a list of all locations where personal property valued
at $50,000.00 or more in the aggregate of Guarantor is presently maintained.

List of Inventory, Machinery and Equipment Locations

	 	 	 	 	 	 	 
	Address
	 	City
	 	State
	 	Owner of Premises

	40 Burton Hills,
Suite 415

	 	Nashville

	 	TN
	 	iPayment, Inc.
	 
	 	 	 	 	 	 
	9121 Oakdale
Avenue, Suite 201

	 	Chatsworth
	 	CA
	 	iPayment of California, LLC,
1st
National Processing, Inc.,
iPayment Technologies, Inc.,
E-Commerce Exchange, Inc.
	 
	 	 	 	 	 	 
	25322 Rye Canyon

Road

	 	Santa Clarita
	 	CA
	 	Cardsync, Inc.
	 
	 	 	 	 	 	 
	Two Westbrook

	 	Westchester
	 	IL
	 	Online Data Corp., Quad City
	Corporate Center,
Suite 200

	 		 		 	Acquisition Sub, Inc., iPayment
of Maine, Inc.
	 
	 	 	 	 	 	 
	4213 State Street
Suite 303

	 	Santa Barbara
	 	CA
	 	CardPayment Solutions, L.L.C.

- 3 -

 

ACCESSION TO PLEDGE AMENDMENT

     THIS PLEDGE AMENDMENT dated as of December 19, 2003, is delivered by
iPayment, Inc. (the “Pledgor”) pursuant to Section 3 of the Pledge Agreement
referred to hereinbelow. The Pledgor hereby agrees that this Pledge Amendment
may be attached to the Pledge Agreement, dated as of August 1, 2003, made by
the Pledgor to Bank of America, N.A., as Agent (as amended, modified,
supplemented or restated from time to time, the “Pledge Agreement,” capitalized
terms defined therein being used herein as therein defined), and that the
Pledged Securities listed on Annex A to this Pledge Amendment shall be deemed
to be part of the Pledged Securities within the meaning of the Pledge Agreement
and shall become part of the Collateral and shall secure all of the Pledge
Obligations as provided in the Pledge Agreement. This Pledge Amendment and its
attachments are hereby incorporated into the Pledge Agreement and made a part
thereof.

	 	 	 	 	 
	 	 	IPAYMENT, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Afshin Yazdian

- 1 -

 

ANNEX A

PLEDGED SECURITIES

Part I. Pledged Stock

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Percentage of
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Outstanding
	Name of Issuing	 	 	 	 	 	Type of	 	Number	 	Certificate	 	Shares of
	Corporation
	 	Name of Pledger
	 	Shares
	 	of Shares
	 	Number
	 	Capital Stock

	iPayment
Technologies, Inc.
	 	iPayment, Inc.	 	Common	 	 	1,000	 	 	 	1	 	 	 	100	%
	1st
National
Processing, Inc.
(formerly First
Acquisition
Company)
	 	iPayment, Inc.	 	Common	 	 	100	 	 	 	2	 	 	 	100	%
	OnLine Data Corp.
	 	iPayment, Inc.	 	Common	 	 	1,000	 	 	 	1	 	 	 	100	%
	iPayment of Maine,
Inc.
	 	iPayment, Inc.	 	Common	 	 	1,000	 	 	 	1	 	 	 	100	%
	Cardsync
Processing, Inc.
	 	iPayment, Inc.	 	Common	 	 	1,000	 	 	 	1	 	 	 	100	%
	iPayment of Eureka,
Inc.
	 	iPayment, Inc.	 	Common	 	 	1,000	 	 	 	1	 	 	 	100	%
	Quad City
Acquisition Sub,
Inc.
	 	iPayment, Inc.	 	Common	 	 	1,000	 	 	 	1	 	 	 	100	%
	E-Commerce
Exchange, Inc.
	 	iPayment, Inc.	 	Common	 	 	1,000	 	 	 	2	 	 	 	100	%

- 2 -

 

Part II. Pledged Interests

	 	 	 	 	 	 	 	 	 
	Name of Limited	 	 	 	 	 	 
	Liability Company,	 	 	 	 	 	 
	Partnership or	 	Name of	 	Name of	 	Ownership
	Other Entity
	 	Pledger
	 	Interest
	 	Percentage

	Card Payment
Solutions, L.L.C.

	 	iPayment, Inc.
	 	Membership Interest
	 	 	100	%
	 
	 	 	 	 	 	 	 	 
	iPayment of
California, LLC

	 	iPayment, Inc.
	 	Membership Interest
	 	 	100	%
	 
	 	 	 	 	 	 	 	 
	iPayment

Acquisition Sub LLC

	 	iPayment, Inc.
	 	Membership Interest
	 	 	100	%

Part III. Pledged Notes

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	Original
	 	 	 	 	 	 	 	 	 	 	 	Principal
	 	 	Date
	 	 	Lender
	 	 	Borrower
	 	 	Amount

	 	Part IV.	Rights and/or Restrictions in Favor of Third Parties in respect of Pledged Stock,
Pledged Interests and Pledged Notes.

- 3 -

 

EXHIBIT 2

	 	 	 	 	 
	

	 	WALLER LANSDEN DORTCH & DAVIS	 	 
	

	 	A PROFESSIONAL LIMITED LIABILITY COMPANY	 	 
	

	 	NASHVILLE CITY CENTER	 	 
	

	 	511 UNION STREET, SUITE 2100	 	 
	

	 	POST OFFICE BOX 198966	 	 
	

	 	NASHVILLE, TENNESSEE 37219-8966	 	 
	WALLER LANSDEN DORTCH & DAVIS, LLP

	 	(615) 244-6380
	 	WALLER LANSDEN DORTCH & DAVIS
	AFFILIATED WITH THE PROFESSIONAL LIMITED LIABILITY COMPANY

	 	FAX: (615) 244-6804
	 	A PROFESSIONAL LIMITED LIABILITY COMPANY
	520 SOUTH GRAND AVENUE, SUITE 800

	 	www.wallerlaw.com
	 	809 SOUTH MAIN STREET
	LOS ANGELES, CALIFORNIA 90071

	 	 	 	POST OFFICE BOX 1035
	(213) 362-3680

	 	 	 	COLUMBIA, TENNESSEE 38402-1035
	

	 	 	 	(931) 388-6031

December 19, 2003

Bank of America, N.A. as
Administrative Agent and Lender
    under the Credit Agreement, dated August 7, 2003
414 Union Street

    Nashville, Tennessee 37219

	 	Re:	Amendment No. 2 to Credit Agreement,
dated as of December 19, 2003 (the “Amendment”) between
Bank of America, N.A., as Administrative Agent (the
“Agent”), the Lenders on Schedule I hereto (the
“Lenders”), and iPayment, Inc. a Delaware corporation,
as the borrower (the “Borrower”).

Ladies and Gentlemen:

     We have acted as special counsel to the Borrower and iPayment
Acquisition Sub LLC, a Delaware limited liability company (“AcqSub” and
together with the Borrower, the “Loan Parties”) in connection with the
negotiation, execution, and delivery of the Amendment and certain
related documents and instruments. This opinion is being delivered to
you at the request of the Borrower as required in connection with the
Amendment.

     In our capacity as such counsel we have examined originals, or
copies identified to our satisfaction as being true copies, of the
following documents, each dated as of the date hereof (unless otherwise
noted):

	1.	 	the Amendment;
	 
	2.	 	the $15,000,000 Revolving Credit Note;
	 
	3.	 	the $50,000,000 Revolving Credit Note;
	 
	4.	 	the Guarantor Accession, between AcqSub and the Agent;
	 
	5.	 	the Accession to Guarantor Security Agreement, between AcqSub and the Agent;

1

 

	 	 	 
	WALLER LANSDEN DORTCH & DAVIS

	 	 
	A PROFESSIONAL LIMITED LIABILITY COMPANY

	 	 

	6.	 	the Accession to Pledge Amendment,
between the Borrower and
the Agent;
	 
	7.	 	the charter or articles or certificate
of incorporation and bylaws
of the Borrower, and the articles of organization and
operating
agreement of AcqSub (with respect to each Loan Party,
its
“Governing Documents”): and
	 
	8.	 	resolutions adopted by or on behalf of each Loan Party.

               The documents in 1-6 above are sometimes referred to collectively as
the “Loan Documents.” In addition, we have examined such other documents,
agreements and certificates as we have deemed necessary or appropriate as
a basis for the opinion set forth below.

               As used in this opinion, the term “Governmental Authorities” shall
mean any executive, legislative, judicial, administrative, or regulatory
body of the State of Tennessee or the United States of America having
jurisdiction over the Loan Parties. The term “Applicable Law” means
statutes, rules, regulations, and judicial decisions of the State of
Tennessee and the United States of America that, in our experience, are
normally applicable to transactions of the type contemplated by the Loan
Documents, and the Delaware General Corporation Law and Delaware Limited
Liability Company Act. The term “Applicable Order” means any order,
ruling, decree, judgment, or similar action of a Governmental Authority
or mediator or arbitrator known to us or identified to us by the Loan
Parties as being applicable to them. The term “Applicable Contracts”
shall mean any agreement or instrument to which the Loan Parties are
subject and which have been specifically identified to us by the Borrower
in Exhibit 1 hereto. The abbreviation “TCA” means the Tennessee Code
Annotated as in effect in the State of Tennessee on the date hereof.

               In addition to the foregoing, we have examined originals, or copies
identified to our satisfaction as being true copies, of such records,
documents or other instruments as in our judgment are necessary or
appropriate to enable us to render the opinions expressed below. We have
obtained and relied upon such certificates and assurances from public
officials as we have deemed necessary. In all such examinations, we have
assumed the genuineness of all signatures on original and certified
documents (other than the signatures of the Loan Parties to the Loan
Documents), and the conformity to original or certified documents of all
documents submitted to us as conformed or photostatic copies.

               We are admitted to the bar in the State of Tennessee. We express no
opinion herein as to any laws other than (i) the laws of the State of
Tennessee, (ii) the Delaware General Corporation Law and the Delaware
Limited Liability Company Act, and (iii) the federal laws of the United
States to the extent specifically referred to herein.

2

 

WALLER LANSDEN DORTCH & DAVIS

A PROFESSIONAL LIMITED LIABILITY COMPANY

Assumptions

     In rendering this opinion we have assumed without having made any
independent investigation of the facts and without expressing any opinion
with respect to (except, in each case, with respect to matters on which
we have specifically opined below), the following:

	(i)	 	that all factual matters, including without
limitation representations and warranties contained in the
Loan Documents or in certificates provided to us by or on
behalf of the Loan Parties or others (including the
certificate attached as Exhibit 1 hereto), are true and
correct as set forth therein;
	 
	(ii)	 	the execution, delivery and performance by each
Loan Party of the Loan Documents to which it is a party do not
and will not conflict with, contravene, violate or constitute
a default under (i) any lease, indenture, instrument or other
agreement to which such Loan Party or its property is subject
(other than the Applicable Contracts as to which we express
our opinion in paragraph 4 herein) or (ii) any rule, law or
regulation to which such Loan Party is subject (other than
Applicable Laws as to which we express our opinion in
paragraph 4 herein);
	 
	(iii)	 	no authorization, consent or other approval of,
notice to or filing with any court, governmental authority or
regulatory body (other than Governmental Approvals as to which
we express our opinion in paragraph 4 herein) is required to
authorize or is required in connection with the execution,
delivery or performance by any Loan Party of any Loan Document
to which it is a party or the transactions contemplated
thereby; and
	 
	(iv)	 	each Loan Document is the legal, valid, and
binding obligation of each party thereto (other than the Loan
Parties), enforceable against such party in accordance with
its terms.

     On the basis of the foregoing, and in reliance thereon, and subject
to the limitations, qualifications and exceptions set forth herein, we
are of the opinion that:

     1.     Based solely on the good standing certificates identified on
Schedule II hereto, each Loan Party is a corporation or limited liability
company existing and in good standing under the laws of its state of
organization listed on Schedule II hereto.

3

 

WALLER LANSDEN DORTCH & DAVIS

A PROFESSIONAL LIMITED LIABILITY COMPANY

     2.     Each Loan Party has the corporate or limited liability power and
authority, as the case may be, to execute, deliver, and perform the
Loan Documents
to which it is a party.

     3.     Each Loan Party has taken all necessary corporate or limited
liability company action, as the case may be, to authorize its
execution, delivery,
and performance of the Loan Documents to which it is a party.

     4.      The execution, delivery and performance of each Loan Document
by each Loan Party do not (i) violate any provision of its Governing
Documents, (ii)
violate any provision of Applicable Law, (iii) violate or contravene
any Applicable
Order, (iv) conflict with or constitute a breach or result in the
imposition of any lien
under any Applicable Contract, Applicable Law or Applicable Order, or
(v) require
any registration with, consent or approval of, or notice to, or
filing with or other
action to, with or by, any Governmental Authority.

     5.      Each Loan Party has executed and delivered each Loan
Document to which it is a party, and each such Loan Document
constitutes the valid
and binding obligation of the executing Loan Party, enforceable in
accordance with
its terms against such Loan Party.

Qualifications

     The opinions set forth above are qualified as follows:

     a.     The opinions expressed above are subject to (i) the effect of all
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization,
moratorium or similar laws affecting creditors’ rights generally, and
(ii) the effect of
general principles of equity including, without limitation, concepts
of materiality,
reasonableness, good faith and fair dealing and the possible
unavailability of
specific performance or injunctive relief, regardless of whether
considered in a
proceeding in equity or at law.

     b.      We express no opinion as to the effect of compliance by the
Agent or any Lender with any laws, rules or regulations applicable to
the Loan
Documents or the transactions contemplated thereby because of the
status of the
Agent or any Lender as a regulated entity or the nature of the Agent
or any
Lender’s businesses. We express no opinion regarding compliance by
the Agent or
any Lender with any law regulating rates of interest, loan charges,
or commitment
fees.

     c.     Where we render an opinion on facts “known to us” or “to our
knowledge,” we have based such opinion not upon our own
independent verification
but solely upon (i) receipt of certificates executed by the Loan Parties
and other persons covering such matters, and (ii) the conscious awareness
of any attorney actively involved in the negotiation and preparation of
the Loan Documents. Where

4

 

WALLER LANSDEN DORTCH & DAVIS

A PROFESSIONAL LIMITED LIABILITY COMPANY

we render an opinion “to our knowledge,” we have therefore conducted no
independent investigation of such matters.

     d.      We express no opinion regarding provisions of the Loan
Documents that purport to confer jurisdiction upon any court, which
lay venue in a
specific court or courts or which require or pertain to arbitration.

     e.      We express no opinion with respect to the enforceability of (i)
provisions stating that the failure to exercise or delay in
exercising rights or
remedies will not operate as a waiver of such right or remedy, (ii)
rights to
attorneys’ fees to the extent limited by applicable laws that provide
that any
recovery of attorneys’ fees is limited to reasonable attorneys’ fees,
(iii) purported
waivers of the benefits of statutory provisions or common law rights
that may be
unenforceable where held to be contrary to public policy; or (iv) the
enforceability of
self-help provisions and provisions which purport to
establish evidentiary
standards.

     This opinion is given as of the date hereof, and we disclaim any
obligation to update this opinion letter after the date hereof. This
opinion is rendered only to the Agent and the Lenders (and their
respective successors and assigns) and is solely for their benefit in
connection with the above transactions. This opinion may not be relied
upon by the Agent or the Lenders for any other purpose, or quoted to or
relied upon by any other person, firm, corporation, or other entity for
any purpose without our prior written consent, other than regulatory
authorities having jurisdiction over the Agent or any Lender. The
rendering of this opinion does not affect our opinion to you dated
August 7,2003, and you may continue to rely on such opinion as to the
subject matter addressed therein, subject to the assumptions,
qualifications, and limitations expressed therein.

	 	 	 
	 

	 	Very truly yours,
	

	 	/s/ Waller Lansden Dortch &
Davis PLLC

5

 

Exhibit 1 to Opinion of

Waller Lansden Dortch & Davis

iPayment, Inc. and Subsidiaries

     I, Afshin M. Yazdian, as Executive Vice President and General Counsel of
iPayment, Inc., a Delaware corporation (the “Company”), do hereby make this
certificate in such capacity to Waller Lansden Dortch & Davis, A Professional
Limited Liability Company (“WLD&D”). This certificate is made in connection
with the rendering of an opinion by WLD&D to Bank of America, N.A. (“BoA”) as
required by the terms of certain amended credit facilities being extended to
the Company and its subsidiaries by BoA and any other Lenders on the date
hereof (the “Credit Facilities”), Capitalized terms used in this certificate
are used as defined in the opinion unless otherwise noted.

     1.      There are no orders or decrees of Governmental Authorities
applicable to or binding upon the Company or its subsidiaries that in any
manner
affect the execution, delivery, or performance of the Loan Documents or
the
transactions contemplated thereby.

     2.      There is no agreement or instrument to which the Company or
its subsidiaries are subject which affects, restricts, or is affected by
the execution,
delivery and performance of the documentation relating to the Credit
Facilities in
accordance with the terms of such documents. The Applicable Contracts as
to which we have requested your review consist of the “material contracts”
listed on
Exhibit 10 to the S-l Registration Statement of the Company filed on
December 6,
2002, as amended to the date hereof.

     3.      There is no action, suit or proceeding pending or threatened
against or affecting the Company or its subsidiaries before any court,
governmental
department, or other authority which is required to be disclosed in the
Loan
Documents and is not so disclosed, or which purports to affect the
legality, validity
or enforceability of any Loan Document or the transactions contemplated
thereby.
There is no order, ruling, decree, judgment or similar action of any
Governmental
Authority or mediator or arbitrator affecting the Company or its
subsidiaries.

     4.      The representations and warranties in all Loan Documents and
any certificates or other instruments delivered in connection therewith,
are true,
complete and accurate in all respects relevant to this opinion.

     IN WITNESS WHEREOF, the undersigned has set his hand this 19th
day of December, 2003.

	 	 	 
	 

	 	Afshin M. Yazdian
	

	 	

	 

	 	Afshin M. Yazdian

 

 

SCHEDULE I

Lenders

Bank of America, N.A.

AmSouth Bank

 

 

SCHEDULE II

GOOD STANDINGS

	 	 	 	 	 
	 	 	 	 	State of
	 	 	 	 	Incorporation/
	Subsidiary
	 	Organization

	1.
	 	iPayment, Inc.	 	DE
	2.
	 	IPayment Acquisition Sub LLC	 	DETHIRD AMENDMENT TO CREDIT AGREEMENT

 

EXHIBIT 10.29

AMENDMENT NO. 3

     THIS AMENDMENT NO. 3 (this “Amendment”), dated as of February 13, 2004, to
the Credit Agreement referenced below, is by and among IPAYMENT, INC., a
Delaware corporation (the “Borrower”), the Lenders identified on the signature
pages hereto and BANK OF AMERICA, N.A., as Administrative Agent. Capitalized
terms used herein but not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement.

W I T N E S S E T H

     WHEREAS, a $65 million credit facility has been extended to the Borrower
pursuant to the terms of that Credit Agreement (as amended, modified and
supplemented, the “Credit Agreement”), dated as of August 1, 2003, amended by
Amendment No. 1, dated as of September 30, 2003 (“Amendment No. 1”), and
Amendment No. 2, dated as of December 19, 2003 (“Amendment No. 2”), among the
Borrower, the Lenders identified therein and Bank of America, N.A., as
Swingline Lender and Administrative Agent;

     WHEREAS, the Borrower has requested certain modifications to the Credit
Agreement; and

     WHEREAS, the Lenders have consented to the requested modifications on the
terms and conditions set forth herein.

     NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     1. Amendments to Credit Agreement.

     (a) The Total Revolving Credit Commitment is increased to $70 million and
the Credit Agreement is amended to add Schedule 2.1 attached hereto.

     (b) The Credit Agreement is amended to replace Exhibit D with the revised
Exhibit D attached hereto.

     (c) In the Credit Agreement, each reference to (i) “Agent” (and not
“Administrative Agent”) is amended to read “Administrative Agent”, (ii)
“Indemnified Costs” is amended to read “Indemnified Liabilities”, (iii)
“Indemnified Person” is amended to read “Indemnitees” and (iv) “L/C Obligation”
is amended to read “Letter of Credit Outstandings”.

     (d) In Section 2.2(a)(iv) and Section 10.8(b)(iii) of the Credit
Agreement, each reference to “Revolving Credit Facility” is amended to read
“Facility”.

     (e) In Section 2.5(a)(ii), Section 2.8(ii), Section 2.14 and Section
5.5(b) of the Credit Agreement, each reference to “Revolving Credit Loans” is
amended to read “Loans”.

     (f) The definition of “Debt” in Section 1.1 of the Credit Agreement is
amended to delete the following proviso:

	 	 	 	; provided, there shall be excluded from the foregoing calculation
of Debt the then outstanding amount of Point-of-Sale Equipment
Financing up to a maximum of $5,000,000

 

 

     (g) Clause (ii) of the definition of “Obligations” in Section 1.1 of the
Credit Agreement is amended to read as follows:

	 	 	 	(ii) any amounts now or hereafter owed under any Interest Rate
Contracts to a Lender or an Affiliate of a Lender,

     (h) The definitions of “Change of Control”, “Eligible Assignee”,
“Facility”, “Federal Funds Rate”, “LIBOR Rate”, “Loans”, “Notes”, “Percentage”,
“Required Lenders”, “Revolving Credit Commitment” and “Revolving Credit
Facility Maturity Date” in Section 1.1 of the Credit Agreement are amended to
read as follows:

	 	 	 	“Change of Control” means an event or series of events by which:

          (a) Greg Daily, any member of his immediate family and any
partnership owned or controlled by him or any member of his
immediately family shall not beneficially own, directly or
indirectly, in excess of 1,600,000 shares of the equity securities
of the Borrower entitled to vote for members of the board of
directors or equivalent governing body of the Borrower (as such
amount is adjusted by stock splits and stock dividends);

          (b) any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
but excluding (i) Greg Daily, any member of his immediate family
and any partnership owned or controlled by him or any member of his
immediately family and (ii) any employee benefit plan of the
Borrower or its Subsidiaries and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of
any such plan) becomes the “beneficial owner” (as defined in Rules
13d-3 and 13d-5 under the Securities Exchange Act of 1934, except
that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the
right to acquire (such right, an “option right”), whether such
right is exercisable immediately or only after the passage of
time), directly or indirectly, of 35% or more of the equity
securities of the Borrower entitled to vote for members of the
board of directors or equivalent governing body of the Borrower on
a fully-diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to any
option right); or

          (c) during any period of 12 consecutive months, a majority of
the members of the board of directors of the Borrower cease to be
composed of individuals (i) who were members of that board on the
first day of such period, (ii) whose election or nomination to that
board was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a
majority of that board or or (iii) whose election or nomination to
that board was approved by individuals referred to in clauses (i)
and (ii) above constituting at the time of such election or
nomination at least a majority of that board (excluding, in the
case of both clause (ii) and clause (iii), any individual whose
initial nomination for, or assumption of office as, a member of
that board occurs as a result of an actual or threatened
solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a
solicitation for the election of one or more directors by or on
behalf of the board of directors).

	 	 	 	“Eligible Assignee” shall have the meaning assigned to such term in
Section 10.5(g) hereof.

2

 

	 	 	 	“Facility” shall mean either or both, as context requires, of the
Revolving Credit Facility or the New Term Loans.
	 
	 	 	 	“Federal Funds Rate” shall mean, for any day, the rate per annum
equal to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System
arranged by federal funds brokers on such day, as published by the
Federal Reserve Bank on the Business Day next succeeding such day;
provided that (a) if such day is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on
such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate (rounded upward, if necessary, to a
whole multiple of 1/100 of 1%) charged to Bank of America on such
day on such transactions as determined by the Administrative Agent.
	 
	 	 	 	“LIBOR Rate” shall mean for any Interest Period with respect to any
LIBOR Loan, a rate per annum determined by the Administrative Agent
to be equal to the quotient obtained by dividing (a) the LIBOR Base
Rate for such LIBOR Loan for such Interest Period by (b) one minus
the Reserve Requirement for such LIBOR Loan for such Interest
Period.
	 
	 	 	 	“Loans” or “Loan” shall mean and refer to any of the Revolving
Credit Loans, the Swingline Loans and the New Term Loan.
	 
	 	 	 	“Notes” or “Note” shall mean the Revolving Credit Notes, the Swingline
Note and/or the Term Loan Notes, collectively, separately or individually, as
appropriate.
	 
	 	 	 	“Percentage” shall mean, with respect to any Lender at any time,
such Lender’s Revolving Credit Percentage or Term Loan Percentage.
	 
	 	 	 	“Required Lenders” means, at any time, Lenders which are then in
compliance with their obligations hereunder and which hold in the
aggregate more than 50% of (i) the Revolving Credit Commitments and
the New Term Loan or (b) if the Revolving Credit Commitments have
been terminated, the sum of (i) the then aggregate principal amount
of the Loans then outstanding plus the aggregate Stated Amount of
all Letters of Credit then outstanding. For purposes of this
definition, the Stated Amount of each Letter of Credit shall be
considered to be owed to the Lenders according to their respective
Revolving Credit Percentages.
	 
	 	 	 	“Revolving Credit Commitment” means, with respect to any Lender,
the amount set forth opposite such Lender’s name on Schedule 2.1 or
in the Assignment and Acceptance pursuant to which such Lender
becomes a party hereto, as applicable, as such amount may be
adjusted from time to time in accordance with this Agreement.
	 
	 	 	 	“Revolving Credit Facility Maturity Date” shall mean December 31,
2006, or such later date as may be consented to by all Lenders, in
their sole discretion, in writing; in this regard, the Borrower may
request no later than ninety (90) days prior to each anniversary
date of this Credit Agreement, a one (1) year extension of the
Revolving Credit Facility Maturity Date, and if all Lenders agree,
in their sole discretion, such extension shall be granted in
writing signed by the Agent on behalf of all Lenders.

3

 

     (i) The definitions of “Approved Fund”, “Fund”, “LIBOR Base Rate”, “New
Term Loan”, “Supermajority Lenders”, “Term Loan Notes” and “Term Loan
Percentage” are added to Section 1.1 of the Credit Agreement to read as
follows:

	 	 	 	“Approved Fund” shall have the meaning assigned to such term in
Section 10.5(g).
	 
	 	 	 	“Fund” shall have the meaning assigned to such term in Section
10.5(g).
	 
	 	 	 	“LIBOR Base Rate” shall mean for any Interest Period with respect to
any LIBOR Loan:

          (a) the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate that appears on the
page of the Telerate screen (or any successor thereto) that
displays an average British Bankers Association Interest Settlement
Rate for deposits in Dollars (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, or

          (b) if the rate referenced in the preceding clause (a) does
not appear on such page or service or such page or service shall
not be available, the rate per annum equal to the rate determined
by the Administrative Agent to be the offered rate on such other
page or other service that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period, or

          (c) if the rates referenced in the preceding clauses (a) and
(b) are not available, the rate per annum determined by the
Administrative Agent as the rate of interest at which deposits in
Dollars for delivery on the first day of such Interest Period in
same day funds in the approximate amount of the Eurodollar Rate
Loan being made, continued or converted by Bank of America and with
a term equivalent to such Interest Period would be offered by Bank
of America’s London Branch to major banks in the London interbank
eurodollar market at their request at approximately 4:00 p.m.
(London time) two Business Days prior to the first day of such
Interest Period.

	 	 	 	“New Term Loan” shall have the meaning assigned to such term in
Section 2.7 of Amendment No. 2.
	 
	 	 	 	“Supermajority Lenders” means at least three (3) Lenders that
together constitute the Required Lenders.
	 
	 	 	 	“Term Loan Notes” shall have the meaning assigned to such term in
Section 2.7 of Amendment No. 2.
	 
	 	 	 	“Term Loan Percentage” shall mean, with respect to any Lender at
any time, a fraction (expressed as a percentage) the numerator of
which is the New Term Loan held by such Lender at such time and the
denominator of which is the aggregate New Term Loan held by all the
Lenders at such time.

     (j) In the definition of “Letter of Credit Sublimit” in Section 1.1 of the
Credit Agreement, the reference to “$3,000,000” is amended to read
“$5,000,000”.

4

 

     (k) In the definition of “Permitted Acquisition” in Section 1.1 of the
Credit Agreement, the reference to “$6,000,000” in clause (A) is amended to
read “$10,000,000”.

     (l) Section 1.1 of the Credit Agreement is amended by deleting the defined
term and definition for “Related Fund”.

     (m) In Section 2.1(b)(i) of the Credit Agreement the reference to “Five
Hundred Thousand Dollars ($500,000)” is amended to read “Five Million Dollars
($5,000,000)”.

     (n) A new clause (e) is added to Section 2.1 of the Credit Agreement to
read as follows:

	 	 	 	(e) Additional Revolving Credit Commitments. The Borrower may at
any time prior to the date six (6) months after the date of
Amendment No. 3 to the Credit Agreement, upon prior written notice
by the Borrower to the Administrative Agent, increase the Total
Revolving Credit Commitment by up to TEN MILLION DOLLARS
($10,000,000) with additional Revolving Credit Commitments from any
existing Lender or new Revolving Credit Commitments from any other
Person selected by the Borrower and approved by the Administrative
Agent; provided that:

          (i) any such increase shall be in a minimum principal amount
of $5 million and in integral multiples of $5 million in
excess thereof;

          (ii) no Default shall be continuing at the time of any such
increase;

          (iii) no existing Lender shall be under any obligation to
increase its Revolving Credit Commitment and any such decision
whether to increase its Revolving Credit Commitment shall be in
such Lender’s sole and absolute discretion; and

          (iv) any new Lender shall join this Agreement by executing
such joinder documents reasonably required by the Administrative
Agent.

	 	 	 	In connection with any such increase in the Total Revolving Credit
Commitment, (A) Schedule 2.1 shall be revised by the Administrative
Agent to reflect the new Revolving Credit Commitments and shall be
distributed to the Lenders, (B) with respect to any outstanding
Letters of Credit or Reimbursement Obligations, there shall be an
automatic adjustment to the participation interests therein in
order to reflect the new Revolving Credit Percentages of each
Lender with a Revolving Credit Commitment and (C) with respect to
any outstanding Revolving Loans, the amount of such Revolving Loans
held by each Lender shall be reallocated in order to reflect the
new Revolving Credit Percentages of each Lender with a Revolving
Credit Commitment.

     (o) Clause (b) of Section 2.2 of the Credit Agreement is amended to delete
the last four (4) sentences thereof.

     (p) Clause (c) of Section 2.2 of the Credit Agreement is amended to add
the following sentence at the end thereof:

	 	 	 	Notwithstanding the foregoing, if the Borrower has entered into an
“auto-borrow” arrangement with the Swingline Lender, then Swingline
Loan advances shall be made at

5

 

	 	 	 	such times and in such amounts as provided in the agreement(s)
between the Swingline Lender and the Borrower relating to such
“auto-borrow” arrangement.

     (q) The second sentence of clause (a) of Section 2.5 of the Credit
Agreement is amended to read as follows:

	 	 	 	Each prepayment of a LIBOR Loan shall be in a minimum principal
amount of $1,000,000 or a whole multiple of $1,000,000 in excess
thereof (or, if less, the entire principal amount thereof then
outstanding) and each prepayment of a Base Rate Loan or a Swing
Line Loan shall be in a minimum principal amount of $250,000 or a
whole multiple of $250,000 in excess thereof (or, if less, the
entire principal amount thereof then outstanding).

     (r) Clause (a) of Section 2.5 of the Credit Agreement is amended to add
the following sentence at the end thereof:

	 	 	 	Notwithstanding the foregoing, if the Borrower has entered into an
“auto-borrow” arrangement with the Swingline Lender, then Swingline
Loan shall be prepaid at such times and in such amounts as provided
in the agreement(s) between the Swingline Lender and the Borrower
relating to such “auto-borrow” arrangement.

     (s) In clause (d) of Section 2.5 of the Credit Agreement, the term
“Commitment Percentage” is amended to read “Revolving Credit Percentage”.

     (t) Clause (c) of Section 2.10 of the Credit Agreement is amended to read
as follows:

	 	 	 	(c) Unless the Borrower or any Lender has notified the
Administrative Agent, prior to the date any payment is required to
be made by it to the Administrative Agent hereunder, that the
Borrower or such Lender, as the case may be, will not make such
payment, the Administrative Agent may assume that the Borrower or
such Lender, as the case may be, has timely made such payment and
may (but shall not be so required to), in reliance thereon, make
available a corresponding amount to the Person entitled thereto.
If and to the extent that such payment was not in fact made to the
Administrative Agent in immediately available funds, then:

	 	 	 	(i) if the Borrower failed to make such payment, each Lender
shall forthwith on demand repay to the Administrative Agent
the portion of such assumed payment that was made available
to such Lender in immediately available funds, together with
interest thereon in respect of each day from and including
the date such amount was made available by the Administrative
Agent to such Lender to the date such amount is repaid to the
Administrative Agent in immediately available funds at the
Federal Funds Rate from time to time in effect; and
	 
	 	 	 	(ii) if any Lender failed to make such payment, such Lender
shall forthwith on demand pay to the Administrative Agent the
amount thereof in immediately available funds, together with
interest thereon for the period from the date such amount was
made available by the Administrative Agent to the Borrower to
the date such amount is recovered by the Administrative Agent
(the “Compensation Period”) at a rate per annum equal to the
Federal Funds Rate from time to time in effect. If such
Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Loan included in
the applicable

6

 

	 	 	 	Borrowing. If such Lender does not pay such amount forthwith
upon the Administrative Agent’s demand therefor, the
Administrative Agent may make a demand therefor upon the
Borrower, and the Borrower shall pay such amount to the
Administrative Agent, together with interest thereon for the
Compensation Period (without duplication) at a rate per annum
equal to the rate of interest applicable to the applicable
Borrowing.

	 	 	 	Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment or to prejudice any rights
which the Administrative Agent or the Borrower may have against any
Lender as a result of any default by such Lender hereunder. A
notice of the Administrative Agent to any Lender or the Borrower
with respect to any amount owing under this clause (c) shall be
conclusive, absent manifest error.

     (u) A new clause (g) is added to Section 2.10 of the Credit Agreement to
read as follows:

	 	 	 	(g) The obligations of the Lenders hereunder to make Loans and to
fund participations in Letters of Credit and Swingline Loans are
several and not joint. The failure of any Lender to make any Loan
or to fund any such participation on any date required hereunder
shall not relieve any other Lender of its corresponding obligation
to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loan or purchase its
participation.

     (v) In Section 2.14(ii) of the Credit Agreement, the reference to
“$3,000,000” is amended to read “$5,000,000”.

     (w) In the first sentence of clause (a) of Section 2.17 of the Credit
Agreement, the following phrase is added immediately following “herein set
forth”:

	 	 	 	and in reliance upon the agreements of the other Lenders set forth
in this Section 2.17

     (x) Clause (iii) of Section 2.17(a) of the Credit Agreement is amended by
adding a new clause (C) at the end thereof to read as follows:

	 	 	 	or (C) the issuance of such Letter of Credit would violate one or
more policies of the Issuing Bank

     (y) Section 3.10 of the Credit Agreement is deleted in its entirety.

     (z) The Credit Agreement is amended to replace Schedule 4.15 with the
revised Schedule 4.15 attached hereto, and the Borrower affirms the
representations and warranties set forth in Section 4.15 as of the date hereof.

     (aa) A new Section 4.26 is added to the Credit Agreement to read as
follows:

          4.26 Tax Shelter Regulations. The Borrower does not intend
to treat the Loans and/or Letters of Credit and related
transactions as being a “reportable transaction” (within the
meaning of Treasury Regulation Section 1.6011-4). In the event the
Borrower determines to take any action inconsistent with such
intention, it will promptly notify the Administrative Agent
thereof. If the Borrower so notifies the Administrative Agent, the
Borrower acknowledges that one or more of the Lenders may treat its
Loans and/or its interest in Swingline Loans and/or Letters of
Credit as part of a transaction that

7

 

is subject to Treasury Regulation Section 301.6112-1, and such
Lender or Lenders, as applicable, will maintain the lists and other
records required by such Treasury Regulation.

     (bb) In Section 5.1 of the Credit Agreement, clause (h) thereof is
renumbered as clause (i) thereof and a new clause (h) is added thereto to read
as follows:

	 	 	 	(h) Promptly after the Borrower has notified the Administrative
Agent of any intention by the Borrower to treat the Loans and/or
Letters of Credit and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section
1.6011-4), a duly completed copy of IRS Form 8886 or any successor
form; and

     (cc) Clause (i) of Section 5.13(a) of the Credit Agreement is amended in
its entirety to read as follows:

	 	 	 	(i) the total Cash Acquisition Amount payable with respect to all
such Acquisitions, whether Permitted Acquisitions or other
Acquisitions for which the Borrower has obtained the prior written
approval of the Required Lenders, shall not exceed $50 million in
the aggregate for any fiscal year (unless approved in writing by
the Supermajority Lenders), and the sum of the Acquisition Amounts
of all such Acquisitions during the term of this Agreement shall
not exceed $100 million in the aggregate (unless approved in
writing by the Supermajority Lenders); and

     (dd) In the last sentence of Section 5.13(d) of the Credit Agreement, the
following phrase “for which the total Cash Acquisition Amount exceeds
$3,000,000” is added immediately after “With respect to Permitted
Acquisitions”.

     (ee) In Section 6.2(viii) of the Credit Agreement the reference to
“$5,000,000” is amended to read “$8,000,000”.

     (ff) In Section 6.2(ix) of the Credit Agreement the reference to
“$1,000,000” is amended to read “$2,000,000”.

     (gg) In Section 6.5 of the Credit Agreement the reference to “$200,000” in
clause (i) thereof is amended to read “$400,000” and the reference to
“$500,000.00” in clause (iii) thereof is amended to read “$1,000,000”.

     (hh) In Section 6.7 of the Credit Agreement the reference to “$100,000” in
clause (b) thereof is amended to read “$200,000” and the reference to
“$5,000,000” in clause (h) thereof is amended to read “$7,000,000”.

     (ii) Section 6.10 of the Credit Agreement is amended to read as follows:

	 	 	 	6.10 Consolidated Debt to EBITDA. Permit the ratio of Consolidated
Debt less Cash Investments then on hand to EBITDA to be greater
than 2.50 to 1.00 as of the end of any fiscal quarter commencing
with the quarter ending December 31, 2003.

     (jj) Clause (c) of Section 6.14 of the Credit Agreement is amended by
inserting “(except as permitted by Section 5.13)” immediately after the term
“Subsidiary”.

8

 

     (kk) In Section 6.15 of the Credit Agreement the reference to “$6,000,000”
is amended to read “$8,000,000”.

     (ll) In Section 6.22 of the Credit Agreement the reference to “Three
Million Dollars ($3,000,000)” is amended to read “Five Million Dollars
($5,000,000)”.

     (mm) New Sections 6.23 is added to the Credit Agreement to read as
follows::

          6.23 Certain Subsidiaries of E-Commerce Exchange, Inc.
Neither the Borrower nor its Subsidiaries will use or permit to be
used the six (6) wholly-owned Subsidiaries of E-Commerce Exchange,
Inc., set forth on Schedule 4.1, to conduct any business
operations, including, without limitation, owning, leasing, holding
or maintaining any assets, entering into any agreements or
incurring any Indebtedness or other liabilities, other than in
connection with their corporate dissolution.

     (nn) In clauses (f) and (h) of Section 7.1 of the Credit Agreement, the
word “results” is amended to read “could reasonably be expected to result” and
the word “has” is amended to read “could reasonably be expected to have”.

     (oo) Clause (j) of Section 7.1 of the Credit Agreement is amended by
inserting the words “or an order for relief is entered” at the end of such
clause.

     (pp) Clause (n) of Section 7.1 of the Credit Agreement is amended to read
as follows:

          The entry against the Borrower or any Guarantor of a final,
nonappealable judgment or order for the payment of money in an
aggregate amount exceeding $3 million (to the extent not covered by
independent third-party insurance as to which the insurer does not
dispute coverage) and/or the issuance of a warrant of attachment,
execution or similar process against the Borrower or any Guarantor
or any of their respective assets which in either case shall not be
paid, stayed, dismissed, discharged or bonded within sixty (60)
days after entry and, if bonded, such bond (or a replacement bond)
shall not continue in effect at all times until such judgment is
dismissed or discharged.

     (qq) Section 8.3 of the Credit Agreement is amended to read as follows:

          8.3 Application of Proceeds. Notwithstanding anything to the
contrary in this Agreement or the Loan Documents, after an Event of
Default, the proceeds of any offsets, voluntary payments by the
Borrower or others or any other sums received and collected in
respect of the Obligations, shall be applied by the Administrative
Agent in the following order:

          First, to payment of that portion of the Obligations
constituting fees, indemnities, expenses and other amounts
(including attorneys’ fees) payable to the Administrative Agent in
its capacity as such;

          Second, to payment of that portion of the Obligations
constituting fees, indemnities and other amounts (other than
principal and interest) payable to the Lenders (including
attorneys’ fees), according to the Pro Rata Share of each Lender;

9

 

          Third, to payment of that portion of the Obligations
constituting accrued and unpaid interest on the Loans and
Reimbursement Obligations, and fees, premiums and scheduled
periodic payments, and any interest accrued thereon, due under any
Interest Rate Contracts between any Loan Party and any Lender, or
any Affiliate of a Lender, to the extent such Interest Rate
Contract is permitted hereunder, according to the Pro Rata Share of
each Lender (and in the case of such Interest Rate Contracts,
Affiliates of the Lenders, as applicable);

          Fourth, to payment of that portion of the Obligations
constituting unpaid principal of the Loans and Reimbursement
Obligations, and breakage, termination or other payments, and any
interest accrued thereon, due under any Interest Rate Contract
between any Loan Party and any Lender, or any Affiliate of a
Lender, to the extent such Interest Rate Contract is permitted
hereunder, according to the Pro Rata Share of each Lender (and in
the case of such Interest Rate Contracts, Affiliates of the
Lenders, as applicable);

          Fifth, to the Administrative Agent for the account of the
Issuing Bank, as collateral for the aggregate Stated Amount of
outstanding Letters of Credit;

          Sixth, to pay any other obligations due and outstanding,
according to the Pro Rata Share of each Lender; and

          Last, the balance, if any, after all of the Obligations have
been indefeasibly paid in full, to the Borrower or as otherwise
required by Law.

     (rr) Section 9.1 of the Credit Agreement is amended by denominating the
existing paragraph as section (a) and adding a new section (b) thereto to read
as follows:

	 	 	 	(b) The Issuing Bank shall act on behalf of the Lenders with
respect to any Letters of Credit issued by it and the documents
associated therewith, and the Issuing Bank shall have all of the
benefits and immunities (i) provided to the Administrative Agent in
this Article 9 with respect to any acts taken or omissions suffered
by the Issuing Bank in connection with Letters of Credit issued by
it or proposed to be issued by it and the applications and
agreements for letters of credit pertaining to such Letters of
Credit as fully as if the term “Administrative Agent” as used in
this Article 9 and in the definition of “Agent-Related Person”
included the Issuing Bank with respect to such acts or omissions
and (ii) as additionally provided herein with respect to the
Issuing Bank.”

     (ss) In Section 9.7 of the Credit Agreement, the term “Aggregate
Commitments” is amended to read “Commitments”.

     (tt) In Section 9.12 of the Credit Agreement, each reference to “Section
10.1” is amended to read “Section 10.8”.

     (uu) Clause (d) of Section 9.12 of the Credit Agreement is amended to read
as follows:

	 	 	 	(d) Administrative Agent shall have no obligation whatsoever to any
Lender or any other Person to assure that the Collateral exists or
is owned by Borrower or any other Loan Party or is cared for or
protected.

     (vv) Section 10.3 of the Credit Agreement is amended to read as follows:

10

 

	 	 	 	10.3 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR
THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     (ww) Section 10.5 of the Credit Agreement is amended and replaced in its
entirety to read as follows:

	 	 	 	Section 10.5 Assignments and Participations.

          (a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Borrower
may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each
Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an Eligible Assignee
in accordance with the provisions of subsection (b) of this Section
10.5, (ii) by way of participation in accordance with the
provisions of subsection (d) of this Section 10.5 or (iii) by way
of pledge or assignment of a security interest subject to the
restrictions of subsection (f) (and any other attempted assignment
or transfer by any party hereto shall be null and void, except as
provided in the last sentence of Section 10.5(b)). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon
any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent
provided in subsection (d) of this Section 10.5 and, to the extent
expressly contemplated hereby, the Indemnitees) any legal or
equitable right, remedy or claim under or by reason of this
Agreement.

          (b) Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the
Loans (including for purposes of this subsection (b),
participations in Letter of Credit Outstandings and in Swingline
Loans) at the time owing to it); provided that (i) except in the
case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it
or in the case of an assignment to a Lender or an Affiliate of a
Lender or an Approved Fund (as defined in subsection (g) of this
Section 10.5) with respect to a Lender, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding
thereunder) subject to each such assignment, determined as of the
date the Assignment and Acceptance with respect to such assignment
is delivered to the Administrative Agent or, if “Trade Date” is
specified in the Assignment and Acceptance, as of the Trade Date,
shall not be less than $5,000,000 unless each of the Administrative
Agent and, so long as

11

 

no Event of Default has occurred and is continuing, the
Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); (ii) each partial assignment
shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations under this Agreement with
respect to the Loans or the Commitment assigned, except that this
clause (ii) shall not apply to rights in respect of Swingline
Loans; (iii) any assignment of a Commitment must be approved by the
Administrative Agent (in its reasonable discretion) and, with
respect to any assignments of the Revolving Credit Commitments, the
Issuing Bank and the Swingline Lender, unless the Person that is
the proposed assignee is itself a Lender (whether or not the
proposed assignee would otherwise qualify as an Eligible Assignee
or an Approved Fund); and (iv) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of
$3,500. Subject to acceptance and recording thereof by the
Administrative Agent pursuant to subsection (c) of this Section
10.5, from and after the effective date specified in each
Assignment and Acceptance, the Eligible Assignee thereunder shall
be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Sections 2.11, 2.12, 2.13, 10.6 and 10.7 with respect to facts and
circumstances occurring prior to the effective date of such
assignment). Upon request, the Borrower (at its expense) shall
execute and deliver a Note to the assignee Lender. Any assignment
or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this subsection shall be
treated for purposes of this Agreement as a sale by such Lender of
a participation in such rights and obligations in accordance with
subsection (d) of this Section 10.5.

          (c) The Administrative Agent, acting solely for this purpose
as an agent of the Borrower, shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans and Letter of
Credit Outstandings owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the
Register shall be conclusive, absent manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.

          (d) Any Lender may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell
participations to any Person (other than a natural person or the
Borrower or any of the Borrower’s Affiliates or Subsidiaries)
(each, a “Participant”) in all or a portion of such Lender’s rights
and/or obligations under this Agreement (including all or a portion
of its Commitment and/or the Loans (including such Lender’s
participations in Letter of Credit Outstandings and/or Swingline
Loans) owing to it); provided that (i) such Lender’s obligations
under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the
Administrative

12

 

Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 10.8 that
directly affects such Participant. Subject to subsection (e) of
this Section 10.5, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.11, 2.12 and 2.13 to the
same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section 10.5. To the
extent permitted by law, each Participant also shall be entitled to
the benefits of Section 8.2 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.16(b) as though
it were a Lender.

          (e) A Participant shall not be entitled to receive any greater
payment under Section 2.11 or 2.12 than the applicable Lender would
have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.
A Participant that would be subject to Section 2.12(c) if it were
a Lender shall not be entitled to the benefits of Section 2.12
unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.12(c) as though it were a
Lender.

          (f) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such
Lender, including any pledge or assignment to secure obligations to
a Federal Reserve Bank; provided that no such pledge or assignment
shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party
hereto.

          (g) As used herein, the following terms have the following meanings:

	 	 	 	“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a
Lender; (c) an Approved Fund; and (d) any other Person (other
than a natural person) approved by (i) the Administrative
Agent and, with respect to any assignments of the Revolving
Credit Commitments, the Issuing Bank and the Swingline
Lender, and (ii) unless an Event of Default has occurred and
is continuing, the Borrower (each such approval not to be
unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not
include the Borrower or any of the Borrower’s Affiliates or
Subsidiaries.
	 
	 	 	 	“Fund” means any Person (other than a natural person) that is
(or will be) engaged in making, purchasing, holding or
otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business.
	 
	 	 	 	“Approved Fund” means any Fund that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c)
an entity or an Affiliate of an entity that administers or
manages a Lender.

13

 

          (h) Notwithstanding anything to the contrary contained herein,
if at any time Bank of America assigns all of its Commitment and
Loans pursuant to subsection (b) above, Bank of America may, (i)
upon 30 days’ notice to the Borrower and the Lenders, resign as
Issuing Bank and/or (ii) upon 30 days’ notice to the Borrower,
resign as Swingline Lender. In the event of any such resignation
as Issuing Bank or Swingline Lender, the Borrower shall be entitled
to appoint from among the Lenders a successor Issuing Bank or
Swingline Lender hereunder; provided, however, that no failure by
the Borrower to appoint any such successor shall affect the
resignation of Bank of America as Issuing Bank or Swingline Lender,
as the case may be. If Bank of America resigns as Issuing Bank, it
shall retain all the rights and obligations of the Issuing Bank
hereunder with respect to all Letters of Credit outstanding as of
the effective date of its resignation as Issuing Bank and all
Letter of Credit Outstandings with respect thereto (including the
right to require the Lenders to make Revolving Credit Loans or to
fund risk participations in Letter of Credit Outstandings pursuant
to Section 2.17). If Bank of America resigns as Swingline Lender,
it shall retain all the rights of the Swingline Lender provided for
hereunder with respect to Swingline Loans made by it and
outstanding as of the effective date of such resignation, including
the right to require the Lenders to make Base Rate Loans or fund
risk participations in outstanding Swingline Loans pursuant to
Section 2.5.

     (xx) Section 10.6 of the Credit Agreement is amended by deleting the “.”
at the end of subsection (d) and replacing it with “; and” and adding a new
section (e), which is to read as follows:

	 	 	 	(e) The agreements in this Section 10.6 shall survive the
termination of the aggregate Commitments and the repayment in full
of the Obligations.

     (yy) In Section 10.8 of the Credit Agreement, clauses (c) and (d) are
renumbered as clauses (d) and (e) and a new clause (c) is added thereto to read
as follows:

	 	 	 	(c) None of Section 6.11, Section 8.3 and the $50 million and $100
million amounts contained in Section 5.13(a)(i) may be amended,
modified, waived, discharged or terminated without the written
consent of the Supermajority Lenders;

     (zz) Section 10.10 of the Credit Agreement is amended to read as follows:

	 	 	 	10.10 Reserved.

     (aaa) Section 10.17 of the Credit Agreement is amended to read as follows:

	 	 	 	10.17 Confidentiality. Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority (including any
self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process,
(d) to any other party hereto, (e) in connection with the exercise
of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f)
subject to an agreement containing provisions substantially the
same as those of this Section 10.17,

14

 

	 	 	 	to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any swap or derivative transaction relating to
the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (x) becomes publicly
available other than as a result of a breach of this Section 10.17
or (y) becomes available to the Administrative Agent or any Lender
on a non-confidential basis from a source other than the Borrower.
For purposes of this Section 10.17, “Information” means all
information received from any Loan Party relating to any Loan Party
or any of their respective businesses, other than any such
information that is available to the Administrative Agent or any
Lender on a non-confidential basis prior to disclosure by any Loan
Party, provided that, in the case of information received from a
Loan Party after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided
in this Section 10.17 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

     (bbb) New Sections 10.20 and 10.21 are added to the Credit Agreement to
read as follows:

	 	 	 	10.20 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or
in connection herewith or therewith shall survive the execution and
delivery hereof and thereof. Such representations and warranties
have been or will be relied upon by the Administrative Agent and
each Lender, regardless of any investigation made by the
Administrative Agent or any Lender or on their behalf and
notwithstanding that the Administrative Agent or any Lender may
have had notice or knowledge of any Default at the time of any
credit extension, and shall continue in full force and effect as
long as any Loan or any other Obligation hereunder shall remain
unpaid or unsatisfied or any Letter of Credit shall remain
outstanding.
	 
	 	 	 	10.21 USA Patriot Act Notice. Each Lender and the Administrative
Agent (for itself and not on behalf of any Lender) hereby notifies
the Borrower that pursuant to the requirements of the USA Patriot
Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information
includes the name and address of the Borrower and other information
that will allow such Lender or the Administrative Agent, as
applicable, to identify the Borrower in accordance with the Act.

     2. Amendment to Amendment No. 2 to Credit Agreement.

     (a) The first sentence of Section 2.7 of Amendment No. 2 to the Credit
Agreement is amended to read as follows:

	 	 	 	If the Borrower has not completed a sale of its capital stock after
January 1, 2004 but prior to June 30, 2004 that results in the
Borrower (as opposed to any selling shareholders) receiving Net
Cash Proceeds of $100 million or more, then as of the close of
business on June 30, 2004:

	 	 	 	(a) (i) if the amount of the Total
Revolving Credit Commitment is less than $80 million,
then $30 million of the amounts outstanding under the

15

 

	 	 	 	Revolving Credit Facility (or, if less, all amounts
outstanding under the Revolving Credit Facility in
excess of $20 million) shall be converted to a new term
loan; or
	 
	 	 	 	(ii) if the amount of the Total Revolving Credit
Commitment is $80 million, then $35 million of the
amounts outstanding under the Revolving Credit Facility
(or, if less, all amounts outstanding under the
Revolving Credit Facility in excess of $20 million)
shall be converted to a new term loan;

	 	 	 	(b) the Total Revolving Credit Commitments of the Lenders
shall be permanently reduced by the amount of the new term
loan described in clause (a) (the “New Term Loan”); and
	 
	 	 	 	(c) other than as set forth in Section 2.13, there shall be
no prepayment premium or penalty applicable to the New Term
Loan.

     (b) Section 9 of Amendment No. 2 to the Credit Agreement is amended to
read as follows:

	 	 	 	9. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR
THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     3. Amendment to Guaranty Agreement. Section 7.8 of the Guaranty Agreement
is amended to read as follows:

	 	 	 	7.8 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR
THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT

16

 

	 	 	 	OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.

     4. Amendments to the Security Agreement and Guarantor Security Agreement.

     (a) Section 7.11 of the Security Agreement and Section 7.11 of the
Guarantor Security Agreement are each, respectively, amended to read as
follows:

	 	 	 	7.11 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR
THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     (b) In Section 1.1 of the Security Agreement, the definition of “General
Intangibles” is amended by inserting “merchant portfolios,” between the words
“all” and “contract”.

     (c) In Section 1.1 of the Guarantor Security Agreement, the definition of
“General Intangibles” is amended by inserting “merchant portfolios,” between
the words “all” and “contract”.

     (d) In Section 1.1 of the Security Agreement, the definition of “Other
Assets” is amended to read as follows:

	 	 	 	“Other Assets” means and includes all right, title and interest of
the Borrower in each of the following, whether now owned or
existing or owned, acquired or arising hereafter and all
substitutions or replacements thereof and all products and proceeds
thereof, including, without limitation, insurance proceeds:

	 	(i)	 	all cash;
	 
	 	(ii)	 	all deposit accounts;
	 
	 	(iii)	 	all chattel paper
	 
	 	(iv)	 	all fixtures;
	 
	 	(v)	 	all goods;
	 
	 	(vi)	 	all instruments
	 
	 	(vii)	 	all investment property;

17

 

	 	(viii)	 	all letter-of-credit rights;
	 
	 	(ix)	 	all payment intangibles;
	 
	 	(x)	 	all software;
	 
	 	(xi)	 	all supporting obligations;
	 
	 	(xii)	 	all other personal property of any kind or type
whatsoever owned by the Borrower; and
	 
	 	(xiii)	 	to the extent not otherwise included, all
accessions, proceeds and products of any and all of the
foregoing.

     (e) In Section 1.1 of the Guarantor Security Agreement, the definition of
“Other Assets” is amended to read as follows:

	 	 	 	“Other Assets” means and includes all right, title and interest of
each Guarantors in each of the following, whether now owned or
existing or owned, acquired or arising hereafter and all
substitutions or replacements thereof and all products and proceeds
thereof, including, without limitation, insurance proceeds:

	 	(i)	 	all cash;
	 
	 	(ii)	 	all deposit accounts;
	 
	 	(iii)	 	all chattel paper
	 
	 	(iv)	 	all fixtures;
	 
	 	(v)	 	all goods;
	 
	 	(vi)	 	all instruments
	 
	 	(vii)	 	all investment property;
	 
	 	(viii)	 	all letter-of-credit rights;
	 
	 	(ix)	 	all payment intangibles;
	 
	 	(x)	 	all software;
	 
	 	(xi)	 	all supporting obligations;
	 
	 	(xii)	 	all other personal property of any kind or type
whatsoever owned by such Guarantor; and
	 
	 	(xiii)	 	to the extent not otherwise included, all
accessions, proceeds and products of any and all of the
foregoing.

18

 

     5. Amendments to Guaranty and Suretyship Agreement. In Article II of the
Guaranty and Suretyship Agreement,

     (a) the term “Note” and its definition are deleted; and

     (b) any references to the term “Application” are amended to read
“application”.

     6. Joinder of New Lenders. Each of Wachovia Bank, National Association
and JPMorgan Chase Bank (each a “New Lender”) hereby agrees to provide a
Revolving Credit Commitment under the Credit Agreement in the amount set forth
on the new Schedule 2.1 to the Credit Agreement attached hereto. The Borrower,
the Guarantors and each New Lender hereby acknowledge, agree and confirm that
each New Lender shall from and after the date hereof be deemed to be a party to
the Credit Agreement and a “Lender” for all purposes of the Credit Agreement,
and shall have all of the rights and obligations of a Lender under the Credit
Agreement as if such New Lender had executed the Credit Agreement. On the date
hereof, (i) with respect to any outstanding Letters of Credit or Reimbursement
Obligations, there shall be an automatic adjustment to the participation
interests therein in order to reflect the new Revolving Credit Percentages of
each Lender with a Revolving Credit Commitment and (ii) with respect to any
outstanding Revolving Loans, the amount of such Revolving Loans held by each
Lender shall be reallocated in order to reflect the new Revolving Credit
Percentages of each Lender with a Revolving Credit Commitment.

     7. Conditions Precedent. This Amendment shall be effective as of the date
set forth above upon satisfaction of each of the following conditions
precedent:

     (a) receipt by the Administrative Agent of counterparts of this Amendment
executed by the Loan Parties and all of the Lenders;

     (b) receipt by the Administrative Agent of certified resolutions of the
board of directors of the Borrower and each Guarantor approving this Amendment;

     (c) receipt by the Administrative Agent of a Revolving Credit Note for

each Lender (including each New Lender) in the amount of its Revolving Credit
Commitment;

     (d) receipt by the Administrative Agent of a Swingline Note for the
Swingline Lender in the amount of its Swingline Commitment;

     (e) receipt by the Administrative Agent of all fees and expenses owing in
connection with this Amendment; and

     (f) receipt by the Administrative Agent of duly executed favorable opinion
of counsel to the Loan Parties, dated as of the Closing Date, in form and
substance reasonably acceptable to the Administrative Agent.

     8. No Other Changes. Except as expressly modified hereby, all of the
terms and provisions of the Loan Documents shall remain in full force and
effect.

     9. Amendment is a Loan Document. This Amendment is a Loan Document.

     10. Reaffirmation of Representations and Warranties. The Borrower hereby
represents and warrants to the Administrative Agent and the Lenders that, after
giving effect to this Amendment, (a) each of the representations and
warranties set forth in Article IV of the Credit Agreement and in the other

19

 

Loan Documents is true and correct in all material respects on and as of the
date of this Amendment, except to the extent that any such representations and
warranties specifically refer to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date and (b) no Default or Event of Default has occurred and is continuing.

     11. Reaffirmation of Security Interests. The Borrower (i) affirms that
each of the Liens granted in or pursuant to the Loan Documents is valid and
subsisting and (ii) agrees that this Amendment shall in no manner impair or
otherwise adversely effect any of the Liens granted in or pursuant to the Loan
Documents.

     12. Counterparts. This Amendment may be executed (a) in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and it shall not be necessary in making proof of this Amendment to
produce or account for more than one such counterpart and (b) by facsimile
signature, which shall be deemed for all purposes to be an original signature.

     13. Governing Law. This Amendment shall be deemed to be a contract made
under, and for all purposes shall be construed in accordance with the laws of
the State of Tennessee.

     14. Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

     15. Entirety. This Amendment and the other Loan Documents embody the
entire agreement among the parties and supercede all prior agreements and
understandings, if any, relating to the subject matter hereof. These Loan
Documents represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements among the parties.

[Signature Pages Follow]

20

 

     IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.

	 	 	 	 	 
	BORROWER:	 	IPAYMENT, INC.,

a Delaware corporation
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	Title:	 	 
	 
	 	 	 	 
	ADMINISTRATIVE AGENT	 	BANK OF AMERICA, N.A.,

as Administrative Agent
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	Title:	 	 
	 
	 	 	 	 
	LENDERS:	 	BANK OF AMERICA, N.A.,

as Lender, Swingline Lender and Issuing Bank
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	Title:	 	 
	 
	 	 	 	 
	 	 	AMSOUTH BANK
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	Title:	 	 
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	Title:	 	 
	 
	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	Title:	 	 

 

 

	 	 	Each of the undersigned Guarantors, by executing this Amendment below, (a)
acknowledges and consents to all of the terms and conditions of this Amendment,
Amendment No. 2 and Amendment No. 1, (b) affirms all of its obligations under
the Loan Documents, (c) affirms that each of the Liens granted by such
Guarantor in or pursuant to the Loan Documents is valid and subsisting and (c)
agrees that this Amendment and all documents executed in connection herewith do
not operate to reduce or discharge such Guarantor’s obligations under the Loan
Documents or any of the Liens granted by such Guarantor in or pursuant to the
Loan Documents.

	 	 	 	 	 
	 	 	iPAYMENT TECHNOLOGIES, INC.,

a California corporation

iPAYMENT OF CALIFORNIA, LLC,

a Tennessee limited liability company

1ST NATIONAL PROCESSING, INC.,

a Nevada corporation

E-COMMERCE EXCHANGE, INC.,

a Delaware corporation

ONLINE DATA CORP.,

a Delaware corporation

iPAYMENT OF MAINE, INC.,

a Delaware corporation

CARDSYNC PROCESSING, INC.,

a California corporation

iPAYMENT OF EUREKA, INC.,

a Delaware corporation

QUAD CITY ACQUISITION SUB, INC.,

a Delaware corporation

CARDPAYMENT SOLUTIONS, L.L.C.,

a Delaware limited liability company

iPAYMENT ACQUISITION SUB LLC,

a Delaware limited liability company
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	Title:	 	 

 

 

SCHEDULE 2.1

REVOLVING CREDIT COMMITMENTS

	 	 	 	 	 	 	 	 	 
	 	 	Revolving Credit	 	Revolving Credit
	Lender
	 	Percentage
	 	Commitment

	Bank of America, N.A.
	 	 	35.71428571	%	 	$	25,000,000	 
	Wachovia Bank, National Association
	 	 	27.14285714	%	 	$	19,000,000	 
	JPMorgan Chase Bank
	 	 	22.85714286	%	 	$	16,000,000	 
	AmSouth Bank
	 	 	14.28571429	%	 	$	10,000,000	 
	 
	 	 	
 	 	 	 	
 	 
	Total
	 	 	100.00000000	%	 	$	70,000,000	 
	 
	 	 	
 	 	 	 	
 	 

 

 

SCHEDULE 4.15

LITIGATION

None.

 

 

Exhibit D

FORM OF ASSIGNMENT AND ACCEPTANCE

This Assignment and Acceptance (this “Assignment and Acceptance”) is dated as
of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein have the meanings
provided in the Credit Agreement identified below, receipt of a copy of which
is hereby acknowledged by the Assignee. The Standard Terms and Conditions set
forth in Annex 1 attached hereto are hereby agreed to and incorporated herein
by reference and made a part of this Assignment and Acceptance as if set forth
herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and
obligations of the Assignor under the respective facilities identified below
(including, without limitation, Letters of Credit, Guarantees and Swingline
Loans included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any
other right of the Assignor (in its capacity as a Lender) against any Person,
whether known or unknown, arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and
(ii) above being referred to herein collectively as, the “Assigned Interest”).
Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment and Acceptance, without representation or
warranty by the Assignor.

	 	 	 	 	 
	1.

	 	Assignor:	 	 
	

	 	 	 	

	 
	 	 	 	 
	2.

	 	Assignee:	 	 
	

	 	 	 	

	

	 	 	 	[and is an
Affiliate/Approved Fund of [identify Lender]]
	 
	 	 	 	 
	3.

	 	Borrower:
	 	iPayment, Inc., a Delaware corporation
	 
	 	 	 	 
	4.

	 	Administrative Agent:
	 	Bank of America, N.A., as the administrative agent under the
Credit Agreement
	 
	 	 	 	 
	5.

	 	Credit Agreement:
	 	Credit Agreement dated as of August 1, 2003
by and among the
Borrower, the Guarantors identified therein, the
Lenders parties thereto and Bank of America,
N.A., as Administrative Agent

 

 

	 	 	 	 	 
	6.

	 	Assigned Interest:	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount of	 	Percentage of
	 	 	Total Revolving	 	Revolving Credit	 	Revolving Credit
	Facility Assigned
	 	Credit Commitment
	 	Commitment Assigned
	 	Commitment Assigned

	Revolving Credit Commitment
	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 
	7.

	 	Trade Date:
	 	               1
	 
	 	 	 	 
	8.

	 	Effective Date:
	 	               2

     1 To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.

     2 To be inserted by Administrative Agent and shall be the effective date of
recordation of transfer in the register therefor.

 

 

The terms set forth in this Assignment and Acceptance are hereby agreed to:

	 	 	 	 	 
	ASSIGNOR:	 	[NAME OF ASSIGNOR]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	Title:	 	 
	 
	 	 	 	 
	ASSIGNEE:	 	[NAME OF ASSIGNEE]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Name:	 	 
	

	 	Title:	 	 

[Consented to and]3 Accepted:

BANK OF AMERICA, N.A., as Administrative Agent

	 	 	 
	By:
	 	 
	

	 	

	Name:
	 	 
	Title:
	 	 

[Consented to:]4

IPAYMENT, INC., a Delaware corporation

	 	 	 
	By:
	 	 
	

	 	

	Name:
	 	 
	Title:
	 	 

[Consented to:] 5

BANK OF AMERICA, N.A., as Issuing Bank and Swingline Lender

	 	 	 
	By:
	 	 
	

	 	

	Name:
	 	 
	Title:
	 	 

	3	 	To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.
	 
	4	 	To be added only if the consent of the Borrower is required by the terms of
the Credit Agreement.
	 
	5	 	To be added only if the consent of the Swingline Lender and Issuing Bank is
required by the terms of the Credit Agreement.

 

 

Annex 1 to Assignment and Acceptance

STANDARD TERMS AND CONDITIONS

1. Representations and Warranties.

1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute
and deliver this Assignment and Acceptance and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated
in respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Acceptance and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an Eligible Assignee under the Credit Agreement (subject to
receipt of such consents as may be required under the Credit Agreement), (iii)
from and after the Effective Date, it shall be bound by the provisions of the
Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 7.01 thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender, attached hereto is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed by
the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Acceptance shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns. This Assignment and Acceptance may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Acceptance by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance. This Assignment and Acceptance shall be
governed by, and construed in accordance with, the law of the State of
Tennessee.

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