Document:

Exhibit
4.3

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY FOREIGN OR STATE SECURITIES LAWS AND MAY NOT BE
OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT
TO RESTRICTIONS ON TRANSFER AS SET FORTH IN THE AMENDED AND RESTATED
SHAREHOLDERS’ AGREEMENT DATED AS OF OCTOBER 11, 2001, COPIES OF WHICH MAY
BE OBTAINED UPON REQUEST FROM HEARTLAND PAYMENT SYSTEMS, INC. OR ANY SUCCESSOR
THERETO.

 

Warrant No.
[    ]

 

Dated: October 11, 2001

 

WARRANT

TO PURCHASE SHARES OF COMMON STOCK OF

HEARTLAND PAYMENT SYSTEMS, INC.

 

FOR VALUE RECEIVED, Heartland Payment Systems, Inc., a Delaware
corporation (the “Company”), hereby certifies that
[                      ],
and its successors or registered assigns (the “Holder”), is entitled to
purchase from the Company, at the times specified herein,
[         ] fully paid and
non-assessable shares of the common stock, par value $0.001 per share, of the
Company (the “Common Stock”), at the purchase price of $5.25 per share of
Common Stock (the “Exercise Price”), subject to the terms and conditions
provided herein. The number of shares of Common Stock to be received upon any
exercise or exchange of this Warrant and the purchase price per share of Common
Stock are subject to adjustment from time to time as provided in
Section 3.

 

This
Warrant is one of the Warrants (the “Warrants”) of the same form and having the
same terms as this Warrant, entitling the holders initially to purchase up to
an aggregate 1,000,000 shares of Common Stock. The Warrants have been issued
pursuant to the Securities Purchase Agreement dated as of October 11, 2001
(the “Securities Purchase Agreement”) among the Company and the several
purchasers listed on Schedule I thereto.

 

SECTION 1.
Exercise
Period. This Warrant may be exercised or exchanged in whole or in
part, at any time or from time to time, on any Business Day on or after
October 11, 2001 (the “Effective Date”) to and including 5:00 p.m., New
York City time, on October 11, 2006 (the “Expiration Date”). October 11,
2001 (the “Effective
Date”) to and including 5:00 p.m., New York City time, on
October 11, 2006 (the “Expiration Date”).

 

SECTION 2. Exercise of Warrant;
Optional Redemption of Warrants by the Company. (a)
To exercise or exchange this Warrant in whole or in part, the Holder shall
deliver to the Company, at the Warrant Office, on any Business Day: (i) a
written notice of the Holder’s election to exercise or exchange this Warrant,
which notice shall be substantially in the form of Annex A attached hereto (the
“Exercise
Notice”), (ii) payment of the Exercise Price for the shares of
Common Stock as to which this Warrant is being exercised or exchanged, payable
in accordance with Section 2(b), and (iii) this Warrant. This Warrant shall
be exercisable or exchangeable in whole or in part, but only for a whole number
of shares.

 

(b)           The Exercise Price
shall be payable, at the option of the Holder, either: (i) by wire transfer or
in cash or by certified or official bank check payable to the order of the
Company (by

 

 

“exercise”) or (ii) by
acceptance of a reduced number of shares of Common Stock in accordance with the
further provisions of this Section 2(b) (by “exchange”). If the Holder
elects to acquire shares of Common Stock pursuant to the cashless exchange
procedure set forth in clause (ii), the Holder shall receive from the Company
upon exchange of this Warrant the number of shares of Common Stock determined
by multiplying (A) the number of shares of Common Stock with respect to which
this Warrant is being exchanged at such time by (B) a fraction, (1) the
numerator of which shall be the difference between (x) Current Market Price per
share of Common Stock at such time and (y) the Exercise Price per share of
Common Stock, and (2) the denominator of which shall be the Current Market
Price per share of Common Stock at such time. The Company shall issue a new
Warrant for the portion, if any, of this Warrant not being exercised or
exchanged as provided in Section 2(e).

 

(c)           Subject to the
provisions of Sections 2(d) and 4(b), upon receipt of an Exercise Notice, the
aggregate Exercise Price payable and this Warrant in accordance with
Section 2(a), the Company shall, as promptly as practicable and in any
event within five (5) Business Days thereafter, issue to the Holder one or more
stock certificates representing the aggregate number of shares of Common Stock
to which the Holder shall be entitled, and transfer to the Holder appropriate
evidence of ownership of such other securities or property (including any cash)
to which the Holder shall be entitled, in such denominations, and registered or
otherwise placed in, or payable to the order of, such name or names, as may be
directed in writing by the Holder, and the Company shall deliver such stock
certificates and evidence of ownership of such other securities or property
(including any cash) to the Person or Persons entitled to receive the same,
together with an amount in cash in lieu of any fraction of a share (or
fractional interest in any other security), as hereinafter provided. The
Company shall pay all expenses in connection with, and any and all documentary,
stamp or similar issue or transfer taxes of the United States or any state
thereof payable in respect of, the issue or delivery of shares of Common Stock
or other securities issuable upon exercise or exchange of this Warrant.
However, the Company shall not be required to pay any tax or other charge
imposed in connection with any assignment or transfer involved in the issuance
of any certificate or other evidence of ownership of Common Stock.

 

(d)           The stock certificate
or certificates or other evidence of ownership of Common Stock to be delivered
pursuant to Section 2(c) shall be deemed to have been issued, and the
Holder or any other Person so designated to be named therein shall, to the
extent permitted by law, be deemed to have become a holder of record of the
Common Stock or other securities or property represented thereby, including
having the right to vote any voting securities included therein or to consent
or to receive notice as a stockholder, as of the date on which the last of the
Exercise Notice, payment of the Exercise Price and this Warrant is received by
the Company as aforesaid, notwithstanding that the transfer books of the
Company shall then be closed or that such certificates or other evidence of
ownership shall not then actually have been delivered to the Holder.

 

(e)           If this Warrant shall
have been exercised or exchanged only in part, the Company shall, at the time
of delivery of the certificate or certificates or other evidence of ownership
of Common Stock, execute and deliver to the Holder, without charge, a new
Warrant evidencing the rights of the Holder to purchase the unpurchased Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be identical to this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant and the same returned to the Holder.

 

(f)            The Company shall not be required to
issue any fractional share of Common Stock (or fractional interest in any other
security) upon exercise or exchange of this Warrant. As to any fraction of a
share (or fractional interest in any other security) that the Holder would
otherwise be entitled to receive upon such exercise or exchange, the Company
shall pay a cash adjustment in. respect of such fraction in an amount equal to
the same fraction of the Current Market Price per share of Common Stock (and/or
other security) on the date of exercise; provided,
however, that in the event that the Company undertakes

 

2

 

a reduction in the number
of shares of Common Stock or other securities outstanding, it shall be required
to issue fractional shares or fractional interests in such other securities to
the Holder if the Holder exercises or exchanges all or any part of this
Warrant, unless the Holder shall have consented in writing to such reduction
and provided the Company with a written waiver of its right to receive fractional
shares or interests in accordance with this paragraph. If the Holder shall
exercise or exchange more than one Warrant in the same transaction, any payment
in respect of fractional shares (or other fractional interests) shall be based
on the final fraction resulting from aggregating all such exercises or
exchanges.

 

(g)           The Company hereby
agrees at all times to keep reserved for issuance and delivery upon exercise or
exchange of this Warrant such number of its authorized but unissued shares (or
treasury shares) of Common Stock or other securities of the Company from time
to time issuable upon exercise or exchange of this Warrant as will be
sufficient to permit the exercise or exchange in full of this Warrant. All such
shares and other securities shall be duly authorized and, when issued upon such
exercise or exchange, shall be validly issued, fully paid and non-assessable,
free and clear of all liens, security interests, charges and other encumbrances
or restrictions on sale (except to the extent of any applicable provisions set
forth in the Shareholders’ Agreement) and free and clear of all preemptive or
similar rights.

 

(h)           If the issuance of any
shares of Common Stock or other securities required to be reserved for purposes
of the exercise or exchange of this Warrant requires the registration with, or
approval of, any governmental authority or requires listing on any national
securities exchange or national market system before such shares or other
securities may be so issued, the Company shall at its expense use its best
efforts to cause such shares to be duly registered, approved or listed, as the
case may be, so that such shares or other securities may be issued in
accordance with the terms hereof, provided, however, that this provision
shall not obligate the Company to register such shares or other securities
under the Securities Act or qualify them under state securities or blue sky
laws, except as otherwise provided in the Shareholders’ Agreement.

 

(i)            Each certificate for securities issued upon exercise
of this Warrant, unless at the time of exercise or exchange such securities
shall be registered under the Securities Act, shall bear the following legend:

 

THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY FOREIGN OR
STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE
THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER
AS SET FORTH IN THE AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT DATED AS OF
OCTOBER 11, 2001, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM
HEARTLAND PAYMENT SYSTEMS, INC. OR ANY
SUCCESSOR THERETO.

 

Any certificate issued at
any time in exchange or substitution for any certificate bearing such legend
(except a new certificate issued upon completion of a public offering pursuant
to a registration statement under the Securities Act) shall also bear such
legend unless the securities represented thereby need no longer be subject to
restrictions on resale under the Securities Act or the Shareholders’ Agreement.

 

(j)            The Holder and the
Company agree to treat the exchange of this Warrant, in whole or in part, for
Common Stock pursuant to clause (ii) of Section 2(b) as a “reorganization”
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended (the “Code”) and will not take any position inconsistent therewith
except as may be required by law. For purposes of the preceding sentence, the
Holder and the Company agree that this Warrant shall constitute a “plan of
reorganization” within the

 

3

 

meaning of
Section 368(a) of the Code. The Holder and the Company agree to comply
with all applicable information reporting requirements under Section 368
of the Code.

 

(k)           Optional Redemption of
Warrants by the Company. (i) Subject to clause (ii) of this paragraph 2(k),
at any time prior to the earlier to occur of (a) October 11, 2004 (but
only on or after the date of delivery of the Adjustment Certificate described
in paragraph 3(o)) and (b) the 30th day after the occurrence of a Qualified
Public Offering, the Company shall have the right to redeem all, but not less
than all, of the outstanding Warrants and all, but not less than all, of the
shares of Common Stock issued upon any exercise or exchange hereof at the
applicable Optional Redemption Price, determined as of the date of redemption.
Irrevocable notice of such redemption shall be given by the Company to the
Holder not more than 30 days nor less than 15 days prior to the date of redemption,
stating the date of redemption and the redemption price, including a reasonably
detailed description of the method of calculation thereof. The Holder may
exercise or exchange this Warrant (in accordance with Section 2(a)) until
5:00 p.m., New York City time (the “Cutoff Time”), on the Business Day
preceding the date of redemption set forth in a valid notice of redemption. If
the Holder shall not have exercised or exchanged this Warrant prior to the
Cutoff Time then the right to purchase the Common Stock theretofore represented
by this Warrant shall terminate at such time and this Warrant shall thereafter
represent the right of the Holder to receive the Optional Redemption Price from
the Company in immediately available funds upon surrender of this Warrant to
the Company at the Warrant. Office. All Warrants redeemed by the Company shall
thereupon be canceled and retired by the Company.

 

(ii)           If Tested EBITDA is
less than $9.625 million, then the Company’s rights under clause (i) of this
paragraph 2(k) shall terminate, effective as of the earlier of the date of
delivery of the Adjustment Certificate described in paragraph 3(o) and May 15,
2003.

 

SECTION 3. Adjustments. (a) Stock
Splits and Reverse Splits. If, at any time on or after the Effective Date,
the Company shall (i) subdivide, split or reclassify its outstanding shares of
Common Stock into a larger number of shares of Common Stock; (ii) combine or
reclassify its outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (iii) issue by reclassification of its Common Stock
other securities of the Company, then, in each such case, immediately upon the
occurrence of any such event, (A) the number of shares of Common Stock issuable
upon exercise or exchange of this Warrant shall be adjusted so as to equal the
number of shares of Common Stock the holder of this Warrant would have held
immediately after the occurrence of such event if such Holder had exercised or
exchanged this Warrant immediately prior to the occurrence of such event and
(B) the Exercise Price shall be adjusted to be equal to (x) the Exercise Price
immediately prior to the occurrence of such, event multiplied by (y) a fraction
(1) the numerator of which is the number of shares of Common Stock issuable
upon exercise or exchange of this Warrant immediately prior to the adjustment
in clause (A) above and (2) the denominator of which is the number of shares of
Common Stock issuable upon exercise or exchange of this Warrant immediately
after the adjustment in clause (A).

 

(b)           Dilutive Issuances
of Common Stock. If, at any time on or after the Effective Date, the
Company shall issue, sell or otherwise distribute any shares of Common Stock at
a price per share (determined by dividing (1) the total amount, if any,
received or receivable by the Company in consideration of the issuance or sale
of such securities by (2) the aggregate number of shares of Common Stock
issued, sold or otherwise distributed) that is less than the Exercise Price
then in effect on the date of such issuance or sale (before giving effect to
such issuance or sale), other than as described in Section 3(a), then,
immediately after the occurrence of any such event, the Exercise Price shall be
lowered so as to be equal to the price per share at which such shares of Common
Stock were issued, sold or otherwise distributed (determined as set forth
above).

 

4

 

If any such issuance or
sale shall require an adjustment to the Exercise Price pursuant to the
foregoing provisions of this Section 3(b), then, effective at the time
such adjustment is made, the number of shares of Common Stock issuable upon
exercise or exchange of this Warrant shall be increased to a number determined
by multiplying the number of shares of Common Stock issuable upon exercise or
exchange of this Warrant immediately prior to such event by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after giving effect to such event and the denominator of which
shall be the sum of the number of shares of Common Stock outstanding
immediately before giving effect to such event (both calculated on a fully
diluted basis) plus the number of shares of Common Stock which the aggregate
consideration received by the Company with respect to such event would purchase
at the Exercise Price per share of Common Stock on the date of such event
(before giving effect to such event).

 

The provisions of this
Section 3(b) shall not operate to increase the Exercise Price or reduce
the Exercise Price below $0.01, or reduce the number of shares of Common Stock
issuable upon exercise or exchange of this Warrant.

 

(c)           Dilutive Issuances
of Options. If, at any time on or after the Effective Date, the Company
shall issue, sell, distribute or otherwise grant in any manner (including by
assumption) any options, warrants or other rights to purchase Common Stock or
to purchase any stock or securities convertible into or exchangeable for Common
Stock (such options, warrants or other rights being herein called “Options” and
such convertible or exchangeable obligations or securities being herein called “Convertible
Securities”), whether or not such Options or the rights to convert
or exchange any such Convertible Securities in respect of such Options are
immediately exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities in respect of such Options (determined by dividing
(i) the aggregate amount, if any, received or receivable by the Company in
consideration for the granting of such Options, plus the minimum aggregate
consideration payable to the Company upon the exercise of all such Options
plus, in the case of Options to acquire Convertible Securities, the minimum
aggregate consideration payable upon the issuance or sale of such Convertible
Securities and upon the conversion or exchange thereof (the “Total
Option Consideration”), by (ii) the total number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise of such
Options) shall be less than the Exercise Price then in effect on the date of
granting such Options (before giving effect to such grant), then, immediately
after the occurrence of any such event, the Exercise Price shall be lowered so
as to be equal to the price per share for which Common Stock is issuable upon
the exercise of such Options or upon conversion or exchange of such Convertible
Securities in respect of such Options (determined as set forth above).

 

If any such issuance or
sale shall require an adjustment to the Exercise Price pursuant to the
foregoing provisions of this Section 3(c), then, effective at the time
such adjustment is made, the number of shares of Common Stock issuable upon
exercise or exchange of this Warrant shall be increased to a number determined
by multiplying the number of shares of Common Stock issuable upon exercise or
exchange of this Warrant immediately prior to such event by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after giving effect to such event and the denominator of which
shall be the sum of the number of shares of Common Stock outstanding
immediately before giving effect to such event (both calculated on a fully
diluted basis) plus the number of shares of Common Stock which the aggregate
consideration received by the Company with respect to such event would purchase
at the Exercise Price per share of Common Stock on the date of such event
(before giving effect to such event). For purposes of this Section 3(c),
the total maximum number of shares of Common Stock issuable upon the exercise
of such Options or upon conversion or exchange of such Convertible Securities
shall be deemed to have been issued as of the date of granting of such Options
and thereafter shall be deemed to be outstanding and the Company shall be
deemed to have received as consideration thereof the

 

5

 

Total Option
Consideration. Except as otherwise provided in Section 3(e) below, no
additional adjustment of the Exercise Price shall be made upon the actual
exercise of such Options or upon conversion or exchange of such Convertible
Securities. If any Options shall be issued in connection with the issuance and
sale of other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated to such Options by
the parties thereto, such Options shall be deemed to have been issued for such
consideration, if any, as determined in good faith by the Board.

 

The provisions of this
Section 3(c) shall not operate to increase the Exercise Price or reduce
the Exercise Price below $0.01, or reduce the number of shares of Common Stock
issuable upon exercise or exchange of this Warrant.

 

(d)           Dilutive Issuances
of Convertible Securities. If, at any time on or after the Effective Date,
the Company shall issue, sell or otherwise distribute (including by assumption)
any Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which
Common Stock is issuable upon the conversion or exchange of such Convertible
Securities (determined by dividing (i) the aggregate amount received or
receivable by the Company as consideration for the issuance, sale or
distribution of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof (the “Total Consideration”), by (ii) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the Exercise
Price then in effect on the date of such event (before giving effect to such
event), then, immediately after the occurrence of any such event, the Exercise
Price shall be lowered so as to be equal to the price per share for which
Common Stock is issuable upon the conversion or exchange of such Convertible
Securities (determined as set forth above).

 

If any such issuance or
sale shall require an adjustment to the Exercise Price pursuant to the
foregoing provisions of this Section 3(d), then, effective at the time
such adjustment is made, the number of shares of Common Stock issuable upon
exercise or exchange of this Warrant shall be increased to a number determined
by multiplying the number of shares of Common Stock issuable upon exercise or exchange
of this Warrant immediately prior to such event by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
after giving effect to such event and the denominator of which shall be the sum
of the number of shares of Common Stock outstanding immediately before giving
effect to such event (both calculated on a fully diluted basis) plus the number
of shares of Common Stock which the aggregate consideration received by the
Company with respect to such event would purchase at the Exercise Price per
share of Common Stock on the date of such event (before giving effect to such
event). For purposes of this Section 3(d), the total maximum number of
shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued as of the date of
the issuance, sale or distribution of such Convertible Securities and
thereafter shall be deemed to be outstanding and the Company shall be deemed to
have received as consideration therefor the total Consideration. Except as
otherwise provided in Section 3(e) below, no additional adjustment of the
Exercise Price shall be made upon the actual conversion or exchange of such
Convertible Securities.

 

The provisions of this
Section 3(d) shall not operate to increase the Exercise Price or reduce
the Exercise Price below $0.01, or reduce the number of shares of Common Stock
issuable upon exercise or exchange of this Warrant.

 

(e)           Readjustment Upon
Expiration of Options and Convertible Securities. If (i) the purchase price
provided for in any Option referred to in Section 3(c) above or the
additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities referred to in Section 3(c) or 3(d) above or
the rate at which any Convertible Securities referred to in Section 3(c)
or 3(d) above are. convertible into or exchangeable for Common Stock shall
change at any time (other than under or by

 

6

 

reason of provisions
designed to protect against dilution upon an event which results in a related
adjustment pursuant to this Section 3), or (ii) any of such Options or
Convertible Securities shall terminate, lapse or expire, the Exercise Price
then in effect shall forthwith be readjusted (effective only with respect to
any exercise or exchange of this Warrant after such readjustment) to the
Exercise Price that would then be in effect had the adjustment made upon the
issuance, sale, distribution or grant of such Options or Convertible Securities
been made based upon such changed purchase price, additional consideration or
conversion rate, as the case may be (in the case of any event referred to in
clause (i) above) or had such adjustment not been made (in the case of any
event referred to in clause (ii) above).

 

(f)            Dividends and Distributions of Common Stock,
Options and Convertible Securities. If the Company shall pay a dividend or make
any other distribution upon any capital stock of the Company payable in Common
Stock, Options or Convertible Securities, then, for purposes of Sections 3(b),
3(c) and 3(d) above, such Common Stock, Options or Convertible Securities shall
be deemed to have been issued or sold without consideration; provided that (i)
if such a dividend is a periodic dividend on capital stock payable from time to
time in Common Stock, Options or Convertible Securities in accordance with the
terms thereof, the consideration for such dividend shall be as determined in
good faith by the Board in connection with the authorization of such capital
stock and approved in accordance with Section 2.09(a)(xix) of the
Shareholders’ Agreement, (ii) any dividend or distribution of Common Stock
payable to the holders of Common Stock shall be treated as a stock split and the
Exercise Price shall be adjusted in accordance with paragraph 3(a) above
instead of this paragraph 3(f) and (iii) the provisions of this paragraph (f)
shall not operate to reduce the Conversion Price below $0.01.

 

(g)           Adjustment Upon Any Excess Liability or
Excess EBITDA Loss. If at any time there shall be any Excess Liability or any
Excess EBITDA Loss, the Exercise Price shall be adjusted at such time by
multiplying the Exercise Price then in effect by a fraction, the numerator of
which shall be (x) 8,443,167 multiplied by the Exercise Price in effect
immediately prior to such event, minus (y) the amount of such Excess Liability
(to the extent not previously resulting in an adjustment to the Exercise Price
pursuant to this paragraph 3(g)) or Excess EBITDA Loss, and the denominator of
which shall be 8,443,167 multiplied by the Exercise Price in effect immediately
prior to such event. Any adjustment made pursuant to this paragraph 3(g) shall
be treated as an adjustment to the purchase price of this Warrant.

 

(h)           Mergers. If, at any time on or after
the Effective Date, the Company shall merge, consolidate or effect a share
exchange with another entity, or shall sell, transfer or otherwise dispose of
all or substantially all of its assets to another entity and pursuant to the
terms of such merger, consolidation, share exchange or disposition of assets,
cash, shares of Common Stock or other securities of the successor or acquiring
entity, or property of any nature is to be received by or distributed to the holders
of Common Stock of the Company, then the Holder shall be entitled to receive in
respect of the Common Stock issuable upon exercise or exchange of this Warrant,
and upon delivery to the Company of this Warrant for cancellation, the amount
of cash, shares of Common Stock, other securities or other property that it
would have been entitled to receive if such Holder had exercised or exchanged
this Warrant in full immediately prior to the occurrence of such merger,
consolidation, share exchange or disposition of assets. In the case of any such
merger, consolidation, share exchange or disposition of assets, the successor
or acquiring entity shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Warrant to be
performed and observed by the Company and all of the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as reasonably determined in good faith by resolution of the Board)
in order to provide for adjustments of the Common Stock issuable upon exercise
or exchange of this Warrant that shall be as nearly equivalent as practicable
to the adjustments provided for in this Section 3. The foregoing
provisions shall similarly apply to successive mergers, consolidations, share
exchanges and dispositions of assets.

 

7

 

(i)            Recapitalizations. If, at any time on or
after the Effective Date, the Company shall effect any capital reorganization
or any reclassification of its capital stock (other than a change in par value
or from par value to no par value or from no par value to par value or as a
result of a stock subdivision, split, reclassification or combination of shares
as provided for in Section 3(a)), then in each case the Company shall
cause effective provision to be made so that this Warrant shall be exercisable
for the kind and number of shares of stock, other securities, cash or other
property to which a holder of the Common Stock deliverable upon exercise or
exchange of this Warrant would have been entitled upon such reorganization or
reclassification and any such provision shall include adjustments in respect of
such stock, securities or other property that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 3 with
respect to this Warrant.

 

(j)            Special Dividends. Without duplication of any
other adjustment provided for in this, Section 3, if at any time on or
after the Effective Date the Company distributes to holders of Common Stock any
evidences of indebtedness, cash, preferred stock or any rights or other
securities of the Company, the Exercise Price shall be adjusted by multiplying
the Exercise Price in effect on the record date for such distribution by a ratio
(the “Ratio”) equal to the amount determined by dividing (i) the Market Value
of the Company on such record date less the fair market value on such record
date, as determined by the Board in good faith, of the total assets to be
distributed to the holders of Common Stock, by (ii) the Market Value of the
Company on such record date. The “Market Value of the Company” on a record date
shall be equal to the Current Market Price of a share of Common Stock on such
date, multiplied by the total number of shares of Common Stock outstanding on
the record date. Each adjustment of the Exercise Price required by this
Section 3(i) shall become effective immediately after the record date for
the determination of the stockholders entitled to receive the distribution in
respect of which such adjustment is made. When any such adjustment of the
Exercise Price is required to be made, the number of shares of Common Stock
issuable upon the exercise or exchange of this Warrant shall be changed to the
number equal to the number of shares of Common Stock issuable upon the exercise
or exchange of this Warrant immediately prior to such adjustment divided by the
Ratio.

 

(k)           Adjustment Rules. The following provisions
shall be applicable to the making of adjustments of the number of shares of
Common Stock issuable upon exercise or exchange of this Warrant:

 

(i)            No adjustment in the
Exercise Price shall be required in the case of: (A) the granting of options to
purchase shares of Common Stock pursuant to any employee benefit plans or employee
stock option plans approved by the Board and as required by Section 2.09
of the Shareholders’ Agreement, and the issuance of shares of Common Stock upon
the exercise thereof, (B) the issuance of any Warrants or the exercise or
exchange for shares of Common Stock of any Warrants or Bridge Warrants (as
defined in the Shareholders’ Agreement); (C) the granting of “equity kickers”
to senior lenders providing new senior loans to the Company or any of its
Subsidiaries; or (D) the issuance or sale of Common Stock upon conversion,
exercise or exchange of any Convertible Securities, but only if with respect to
this clause (D), any adjustments required to be made upon the issuance or sale
of such securities were so made.

 

(ii)           Whenever any adjustment
is required under any provision of this Section 3, the Company shall
compute (or may retain a firm of independent public accountants of recognized
national standing (which may be any such firm regularly employed by the
Company) to compute) the adjustments and shall prepare a certificate signed by
the principal financial officer of the Company (or cause any such independent
public accountants to execute a certificate) setting forth the adjusted
Exercise Price and adjusted amount of Common Stock or other stock, securities,
cash and other property issuable upon exercise or exchange of the Warrants, and
showing in reasonable detail the facts upon which such adjustments are based,
and the Company shall

 

8

 

forthwith deliver a
notice of such adjustments and setting forth such adjustments to all record
holders of the Warrants.

 

(iii)          If the amount of any
adjustment of the Exercise Price required pursuant to this Section 3 would
be less than 1% of the Exercise Price in effect at the time such adjustment is
otherwise so required to be made, such amount shall be carried forward and an
adjustment with respect thereto made at the earlier of (i) exercise or exchange
of any Warrants by any holder or (ii) at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least 1% of such Exercise Price.
All calculations under this Section 3 shall be made to the nearest
one-tenth of a cent ($0.001) or the nearest one-thousandth of a share or
security, as the case may be.

 

(iv)          If on or after the
Effective Date the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or distribution
or other rights and shall, thereafter and before the payment of such dividend
or distribution or the granting of such rights, legally abandon its plan to pay
or deliver such dividend, distribution or other rights, then thereafter no
adjustment shall be required by reason of the taking of such record and any
such adjustment previously made in respect thereof shall be rescinded and
annulled.

 

(l)            The Company may, at its option, at any time
during the term of the Warrant, reduce the then current Exercise Price to any
amount, consistent with applicable law, deemed appropriate by the Board.

 

(m)          If at any time, as a result of any adjustment
made pursuant to this Section 3, the Holder shall become entitled to
receive any shares of the Company other than shares of Common Stock or to
receive any other securities, the number of such other shares or securities so
receivable upon exercise or exchange of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in Section 3 with respect to the
Common Stock.

 

(n)           The Company will not, by amendment of its
certificate of incorporation or bylaws or other action or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 3 and in the taking of all such
action as may be necessary or appropriate in order to protect the exercise
rights of the Holder against impairment.

 

(o)           Simultaneous with the delivery of the audited
financial statements for the fiscal year ending December 31, 2002, the
Company shall deliver to each Holder a certificate of the chief financial
officer of the Company (an “Adjustment Certificate”) stating Tested EBITDA and
setting forth in reasonable detail the calculations required to determine
Tested EBITDA. Effective on the earlier of the date such Adjustment Certificate
is delivered and May 15, 2003:

 

(i)            If Tested EBITDA is
less than $13.125 million, then the number of shares of Common Stock issuable
upon exercise or exchange of this Warrant shall immediately be increased to a
number determined by multiplying the number of shares of Common Stock issuable
upon exercise or exchange of this Warrant immediately prior to such date by an
Adjustment Fraction determined as follows:

 

9

 

	
  Tested EBITDA:

  	
   

  	
  Adjustment
  Fraction:

  	
   

  
	
  Less than $11.125
  million

  	
   

  	
  2.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greater than or equal
  to $11.125 million but less than $11.625 million

  	
   

  	
  1.8

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greater than or equal
  to $11.625 million but less than $12.125 million

  	
   

  	
  1.6

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greater than or equal
  to $12.125 million but less than $12.625 million

  	
   

  	
  1.4

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greater than or equal
  to $12.625 million but less than $13.125 million

  	
   

  	
  1.2

  	
   

  

 

(ii)           If Tested EBITDA is
greater than or equal to $13.125 million but less than or equal to $18.375
million then there shall be no adjustment under this paragraph 3(o).

 

(iii)          If Tested EBITDA is
greater than $18.375 million, then the number of shares of Common Stock
issuable upon exercise or exchange of this Warrant shall immediately be
decreased to a number determined by multiplying the number of shares of Common
Stock issuable upon exercise or exchange of this Warrant immediately prior to
such date by an Adjustment Fraction determined as follows:

 

	
  Tested EBITDA:

  	
   

  	
  Adjustment
  Fraction:

  	
   

  
	
  Greater than $18.375
  million but less than or equal to $18.875 million

  	
   

  	
  0.8

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greater than $18.875
  million but less than or equal to $19.375 million

  	
   

  	
  0.6

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greater than $19.375
  million but less than or equal to $19.875 million

  	
   

  	
  0.4

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greater than $19.875
  million but less than or equal to $20.375 million

  	
   

  	
  0.2

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Greater than $20.375
  million

  	
   

  	
  0

  	
   

  

 

For the avoidance of
doubt, if the Adjustment Fraction is zero then this Warrant shall be deemed to
have been canceled in its entirety.

 

If the Company fails to
deliver an Adjustment Certificate to each Holder on or prior to May 15, 2003,
then, for purposes of this paragraph 3(o) and paragraph 2(k), Tested EBITDA
shall be deemed to be less than $9.625 million. Any adjustment made pursuant to
this paragraph 3(o) shall be treated as an adjustment to the purchase price of
this Warrant.

 

10

 

SECTION 4.
Warrant Office; Transfer, Division and Combination. (a) So long as this Warrant
remains outstanding, the Company shall maintain an office (the “Warrant
Office”) in the continental United States where the Warrants may be presented
for exercise, transfer, division or combination as provided in this Warrant.
The Warrant Office shall be at Heartland Payment Systems, Inc., 130 Nassau
Street, Princeton, NJ 08452, unless and until the Company shall designate and
maintain some other office for such purposes and give notice thereof to the
Holder.

 

(b)           So long as the Shareholders’ Agreement has
not terminated (whether by its terms or otherwise), the transfer of this
Warrant or any rights hereunder and the transfer of the securities issued upon
exercise of this Warrant shall be subject to the limitations set forth therein.

 

(c)           The Company may deem and treat the Person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until due presentment of this Warrant for
registration of transfer as provided in this Section 4.

 

(d)           The Company shall maintain at the Warrant
Office books for the registration of transfer of this Warrant, and, subject to
the limitations set forth in Section 4(b), transfer of this Warrant and
all rights hereunder shall be registered, in whole or in part, on such books,
upon the surrender of this Warrant at the Warrant Office, together with (i) a
written assignment of this Warrant, substantially in the form of Annex B
attached hereto, duly executed by the Holder or its duly authorized agent or
attorney, (ii) if the Shareholders’ Agreement has not terminated, evidence
reasonably satisfactory to the Company that such assignment has been made in
compliance therewith and (iii) funds sufficient to pay any transfer taxes
payable upon such transfer. Upon such surrender, the Company shall, without
charge, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of
assignment (which shall be whole numbers of the shares of Common Stock for
which this Warrant shall be exercisable only), and shall issue to the assignor
a new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall be promptly canceled.

 

(e)           This Warrant may be divided into new Warrants
or combined with other Warrants upon the presentment of this Warrant, or this
Warrant and any other Warrants with which this Warrant is to be combined, at
the Warrant Office, together with a written notice specifying the names and
denominations (which shall be whole numbers of shares of Common Stock only) in
which the new Warrant or Warrants are to be issued, signed by the Holders
hereof and thereof or their respective duly authorized agents or attorneys.
Subject to compliance with the other provisions of this Section 4 as to
any transfer or assignment which may be involved in the division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.

 

(f)            Upon receipt of evidence satisfactory to the
Company (in its reasonable discretion) of the ownership of and the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Company (if the Holder is a nationally chartered financial
institution, its own agreement being satisfactory) or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Company will
make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same
aggregate number of shares of Common Stock.

 

(g)           The Company shall pay all expenses, taxes
(other than transfer taxes) and other charges payable in connection with the
preparation, issuance and delivery of Warrants hereunder.

 

11

 

SECTION 5.
Definitions. As used herein, the following terms shall have the following
meanings (all terms defined in this Section 5 or in other provisions of
this Warrant in the singular to have the same meanings when used in the plural
and vice versa):

 

“Board”
shall mean the Board of Directors of the Company.

 

“Business
Day” shall mean any day, other than a Saturday, Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by
law or executive order to close.

 

“Current
Market Price” shall mean on any date, for any security, (i) if such security is
of a class or series of securities then listed or admitted to trading on any
national securities exchange or traded on any national market system, the
average of the daily closing prices for the ten trading days before such date,
excluding any trades which are not bona fide, arms’ length transactions (and
the closing price for each such day shall be the last sale price on such date
or, if no such sale takes place on such date, the average of the closing bid
and ask prices on such date, in each case as officially reported on the
principal national securities exchange or national market system on which
securities are then listed, admitted to trading or traded), (ii) if such
security is not of a class or series of securities then listed or admitted to
trading on any national securities exchange or traded on any national market
system, the average of the daily reported closing bid and ask prices in the
over-the-counter market for the ten trading days before such date, as shown by
the NASD automated quotation system, or if such securities are not then quoted
on such system, as published by the National Quotation Bureau, Incorporated or
any similar successor organization, and in either case as reported by any
member firm of the New York Stock Exchange selected by the Company, and (iii)
if such security is not of a class or series of securities then listed or
admitted to trading on any national securities exchange or traded on any
national market system, and if no closing bid and asked prices thereof are then
so quoted or published in the over-the-counter market, the “Current Market
Price” of such security shall be the fair value thereof on such date, which
shall be determined in good faith by the Board (provided, that, if the Majority
Holders notify the Company in writing disputing any such determination of the
Board within 20 days after such determination, the holders of the Warrants
shall select an investment bank of national recognition reasonably acceptable
to the Company to determine the fair value of such security, the investment
bank’s determination to be conclusive, absent manifest error, and the cost of
such determination to be borne by the Company, except that the holders of the
Warrants (with such costs allocated among them ratably, based on the number of
Warrants held by each of them) shall bear such costs if the investment bank’s
determination is equal to or less than the Board’s determination).

 

“Excess
EBITDA Loss” shall have the meaning set forth in the Securities Purchase
Agreement.

 

“Excess
Liability” shall have the meaning set forth in the Securities Purchase
Agreement. “include” and “including” shall be construed as if followed by the
phrase “without being limited to”.

 

“Majority
Holders” shall mean, at the time in question, those holders of the Warrants
which have the right to receive at least two-thirds of the total number of
shares of Common Stock issuable upon the exercise or exchange of all Warrants
then outstanding.

 

“NASD”
shall mean the National Association of Securities Dealers, Inc.

 

“Optional
Redemption Price” shall mean, at any time,

 

(i)            in the case of this
Warrant, an amount equal to (x) (A) $10.50 (which amount shall be subject to
adjustment consistent with the adjustments to the Exercise Price hereof
whenever there shall occur a stock dividend, stock split, combination,
reorganization,

 

12

 

reclassification or
similar event involving a change in the capital structure of the Company) minus
(B) the Exercise Price at such time, times (y) the total number of shares of
Common Stock for which this Warrant is exercisable or exchangeable at such
time; and

 

(ii)           in the case of shares
of Common Stock issued upon exercise or exchange of this Warrant, an amount
equal to (x) (A) $10.50 (which amount shall be subject to adjustment consistent
with the adjustments to the Exercise Price hereof whenever there shall occur a
stock dividend, stock split, combination, reorganization, reclassification or
similar event involving a change in the capital structure of the Company) minus
(B) the Exercise Price for Warrants outstanding at such time, times (y) the
total number of such shares of Common Stock.

 

“Person”
shall mean an individual, corporation, limited liability company, partnership,
association, trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.

 

“Qualified
Public Offering” shall mean a Qualified Public Offering as defined in the
Shareholders’ Agreement.

 

“Securities
Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Shareholders’
Agreement” shall mean the Amended and Restated Shareholders’ Agreement dated as
of October 11, 2001 among the Company and the parties named on
Schedule 1.01 thereto, as the same may be amended, restated, supplemented
or otherwise modified from time to time.

 

“Tested
EBITDA” means, for the twelve months ending December 31, 2002, the net
income or loss of the Company and its Subsidiaries plus (a) without duplication
and to the extent deducted in determining such net income or loss, the sum of
(i) consolidated interest expense for such period, (ii) consolidated income tax
expense for such period, (iii) all amounts attributable to depreciation and
amortization for such period, and minus (b) without duplication and to the
extent included in determining such net income or loss, any extraordinary gains
for such period, all determined on a consolidated basis in accordance with U.S.
generally accepted accounting principles and based on financial statements
audited and certified by a “big 5” firm of independent public accountants (or
any successor to such a firm) and determined on a basis consistent with the
“EBITDA” calculations set forth in Item VI.C (Financial Model) of the Private
Placement Memorandum attached as Schedule 3.23 to the Securities Purchase
Agreement.

 

SECTION 6. Notices. Any
notice, demand or delivery authorized by this Warrant shall be in writing and
shall be given or made to the Holder or the Company, as the case may be, by
physical delivery, U.S. mail (registered or certified mail, postage prepaid, return
receipt requested) or overnight courier or by transmission by facsimile to such
party at its, his or her address (or facsimile number) set forth below, or such
other address (or facsimile number) as shall have been specified by like notice
by such party:

 

(i) if to the Company, to

 

Heartland Payment
Systems, Inc.

130 Nassau Street

Princeton, NJ 08452

Attention: Robert H.B.
Baldwin, Jr.

Facsimile: 609-683-3815

 

13

 

with a copy to:

 

Dorsey & Whitney LLP

250 Park Avenue New York,
NY 10177

Attention: Wesley C.
Fredericks, Jr.

Facsimile: 212-953-7201

 

(ii) if to the Holder,
to:

 

[Address]

 Attention:
[                                      ]

Facsimile:
[                                       ]

 

with a copy to:

 

[Davis Polk &
Wardwell

450 Lexington Avenue

New York, New York 10017

Attention: Nancy L.
Sanborn

Facsimile: 212-450-3800]

 

[Pepper, Hamilton &
Scheetz

3000 Two Logan Square

18th and Arch Streets

Philadelphia, PA 19103

Attention: James D.
Epstein

Facsimile: 215-981-4750]

 

Each such notice, demand
or delivery shall be effective upon receipt in the case of physical delivery or
overnight courier, upon confirmation of receipt by or on behalf of the
addressee in the case of transmission by facsimile if received prior to 5:00
p.m., New York City time, and, if received after 5:00 p.m., New York City time,
on the date after such receipt, and three Business Days after deposit in the
U.S. mails in the case of mailing.

 

SECTION 7.
Rights of the Holder. Prior to the exercise or exchange of this Warrant, the
Holder shall not, by virtue hereof, be entitled to any rights of a stockholder
of the Company, including, without limitation, the right to vote, to receive
dividends or other distributions, to exercise any preemptive right or to
receive any notice of meetings of stockholders or any notice of any proceedings
of the Company except as may be specifically provided for herein.

 

SECTION 8.
Notices of Record Date, Etc. If the Company shall take a record of the holders
of its Common Stock (or other securities at the time deliverable upon the
exercise or exchange of this Warrant) for the purpose of (i) entitling or
enabling them to receive any dividend or other distribution, or to receive any
right to subscribe for or purchase any shares of stock of any class or any
other securities, or to receive any other right; or (ii) any capital
reorganization of the Company, any reclassification of the capital stock of the
Company, any consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the
surviving entity), or any transfer of all or substantially all of the assets of
the Company; or (iii) the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will give
notice thereof to the Holder of this Warrant, in accordance with
Section 6, specifying in such notice, as the case may be, (x) the date on
which a record is to be taken for the purpose of such dividend, distribution or
right, and stating

 

14

 

the
amount and character of such dividend, distribution or right, or (y) the
effective date on which such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record of Common Stock
(or such other securities at the time deliverable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other securities) for the securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be given by the Company at least
five Business Days prior to the record date or effective date for the event
specified in such notice, unless such event is to occur in connection with the
Company’s preparation for, or consummation of, an initial public offering, in
which case the Company shall be required to give such notice only two Business
Days prior to such record date or effective date.

 

SECTION 9.
Investment Representations of Holder. By acceptance of this Warrant, the Holder
of this Warrant hereby represents that:

 

(a)           It understands that this Warrant is not
registered, and the shares of Common Stock or other securities issuable upon
the exercise or exchange of this Warrant may not be registered under the
Securities Act or applicable state securities laws (except as provided in the
Shareholders’ Agreement or as the Company may otherwise agree), and that
neither this Warrant nor the shares of Common Stock or other securities
issuable upon the exercise or exchange of this Warrant may be offered or sold,
unless registered under the Securities Act or an exemption from such
registration is available.

 

(b)           It is acquiring this Warrant, and will
acquire the shares of Common Stock or other securities issuable upon the
exercise or exchange of this Warrant, if at all, for its own account, not as
nominee or agent for any other Person, for investment and not with a view to
the resale or distribution of such securities or any interest therein other
than in a transaction that is registered or exempt from registration under the
Securities Act; provided that by making this representation, the Holder, does
not agree to hold any securities for any minimum or specific term and reserves
the right to dispose of the securities in compliance with the Shareholders’
Agreement and applicable securities laws.

 

SECTION 10.
Governing Law. This Agreement shall be governed by the laws of the State of New
York, without regard to the conflicts of laws provisions thereof.

 

SECTION 11.
Waivers; Amendments. No failure or delay of the Holder in exercising any power
or right hereunder shall operate as a waiver thereof (except where a specific
time period for the exercise of such power or right is expressly set forth
herein), nor shall any single or partial exercise of any such right or power
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law. The provisions of this
Warrant may be amended, waived or otherwise modified with (and only with) the
written consent of the Company and the Majority Holders; provided that the
number of shares issuable upon exercise of this Warrant, the Exercise Price,
the Effective Date, the Expiration Date, the definition of Majority Holders,
Section 2(k), Section 3 and this Section 11 may be amended,
waived or otherwise modified only with the written consent of the Company and
the Holder of the Warrant to be so amended, waived or otherwise modified. In
the event of any such amendment, modification or waiver, the Company shall give
prompt notice thereof to all holders of Warrants and shares of Common Stock
issued upon the exercise or exchange of Warrants and, if appropriate, notation
thereof shall be made on all Warrants thereafter surrendered for registration
of transfer or exchange.

 

SECTION 12.
Separability. Any term or provision of this Warrant which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of

 

15

 

this
Warrant or affecting the validity or enforceability of any of the terms or
provisions of this Warrant in any other jurisdiction.

 

SECTION 13.
Section and Other Headings. The section and other headings contained
in this Warrant are for convenience of reference only, are not part of this
Warrant and are not to affect the construction of or be taken into
consideration in interpreting this Warrant.

 

16

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be signed by its duly authorized officer as
of the date hereof.

 

	
   

  	
  HEARTLAND PAYMENT SYSTEMS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

17

 

ANNEX A

 

FORM OF EXERCISE
NOTICE

 

(To be executed by
the registered holder hereof)

 

The undersigned
registered holder of this Warrant (the “Registered Holder”) exercises or exchanges
this Warrant for the purchase of
                                    
shares of the Common Stock, par value $0.001 per share (the “Common
Stock”), of Heartland Payment Systems, Inc., a Delaware corporation,
and herewith makes payment therefor of $
                                   
(such payment being made [check one] (x) [   ] by
wire transfer or in cash or by certified or official bank check or (y)
[   ] by acceptance of a reduced number of shares of Common
Stock upon cancellation of this Warrant as provided in Section 2(b)
of this Warrant, all on the terms and conditions specified in this Warrant, and
requests that (i) certificates and/or other instruments covering such shares of
Common Stock be issued in accordance with the instructions given below and (ii)
if such shares of Common Stock shall not include all of the shares of Common
Stock to which the Registered Holder is entitled under this Warrant, that a new
Warrant for the unpurchased balance of the shares of Common Stock issuable
hereunder be delivered to the undersigned.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name of Registered
  Holder (Please Print)

  
	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature of Registered
  Holder

  
	
   

  
	
   

  
	
  Instructions for
  issuance and

  registration of shares of

  Common Stock and any other

  assets deliverable upon exercise

  or exchange of this Warrant:

  
	
   

  
	
   

  
	
   

  	
   

  	
  Social Security or
  Other

  
	
  Name of Registered
  Holder

  	
  Identifying Number:

  	
   

  	
   

  
	
  (please print)

  
	
   

  
	
  Please deliver
  certificate and

  other assets to the following

  address:

  
								

 

1

 

ANNEX B

 

FORM OF ASSIGNMENT

(To be executed by the registered holder hereof)

 

FOR VALUE RECEIVED, the
undersigned registered owner of this Warrant hereby sells, assigns and
transfers unto the assignee named below all the rights of the undersigned under
this Warrant with respect to the number of shares of the Common Stock, par
value $0.001 per share, of Heartland Payment Systems, Inc. covered thereby set
forth below to:

 

	
  Name of Assignee

  	
   

  	
  Address

  	
   

  	
  Number of Shares of

  Common Stock

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name of Registered
  Holder (Please Print)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature of Registered
  Holder

  
	
   

  	
   

  
	
  Witness:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  

 

2Exhibit 10.1

 

REVOLVER ADVANCE AND PURPOSE AND ABILITY LINE
OF CREDIT LOAN

AGREEMENT

 

THIS
AGREEMENT is made as of the 28th day of August, 2002,
by and between the Borrower (as herein defined) and the Bank (as herein
defined).

 

In consideration of the covenants and
agreements contained herein, the Borrower and the Bank hereby mutually agree as
follows:

 

ARTICLE I.
DEFINITIONS

 

Section 1.1. General.
As used in this Agreement, the terms set forth in Section 1.2 hereof have
the respective meanings set forth in Section 1.2. Any accounting term used but
not specifically defined herein shall be construed in accordance with GAAP (as
defined below). The definition of each agreement, document, and instrument set
forth in Section 1.2 hereof shall be deemed to mean and include such agreement,
document, or instrument as amended, restated, modified or replaced from time to
time.

 

Section 1.2. Defined
Terms. As used in this Agreement:

 

“Account”, “Chattel Paper”, “Consumer Goods”, “Deposit Account”,
“Document”, “Farm Products”, “General Intangible”, “Goods”, “Instrument” and
“Proceeds”, have the meanings as set forth in Ohio Revised Code Sections
1309.01-1309.50 inclusive, including any amendments thereof and any
substitutions therefor, which definitions are hereby incorporated by reference
as though fully rewritten herein.

 

“Account Debtor” shall mean the Person who is obligated on an Account
Receivable.

 

“Account Receivable” means:

 

(a)                                  any
account receivable, Account, Chattel Paper, Contract Right, Document, or
Instrument owned, acquired, or received by a Person,

 

(b)                                 any
other indebtedness owed to or receivable owned, acquired, or received by a
Person of whatever kind and however evidenced, and

 

(c)                                  any
right, title, and interest in a Person’s Goods which were sold, leased, or
furnished by that Person and gave rise to either (a) or (b) above, or both of
them. This includes, without limitation:

 

(1)                                  any
rights of stoppage in transit of a Person’s sold, leased, or furnished Goods,

 

(2)                                  any rights to reclaim
a Person’s sold, leased, or furnished Goods, and

 

(3)                                  any
rights a Person has in such sold, leased, or furnished Goods that have been
returned to or repossessed by that Person.

 

“Accounts Receivable Collection Account” means a commercial Deposit
Account maintained by Borrower with Bank or an Affiliate Lender, without
liability by Bank or an Affiliate Lender to pay interest thereon, from which
account Bank shall have the exclusive right to withdraw funds until all
Obligations are paid, performed, and observed in full.

 

 

“Affiliate” of any specified entity means any other entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified entity and “control”, when used with respect to any
specified entity, means the power to direct the management and policies of such
entity, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.

 

“Affiliate Lender” shall mean any one or more bank or non-bank
subsidiaries (other than the Bank) of KeyCorp and its successors.

 

“Assignment of Contracts” means the Assignment of Contracts and Rights
executed by Borrower in favor of Bank dated of even date herewith collaterally
assigning to Bank all of Borrower’s rights, title and interests in and under
the Merchant Service Agreements, and the Bank Agreement, as the same may be
hereafter amended, modified, extended, restated or replaced from time to time.

 

“Agreement” means this Revolver Advance and Purpose and Ability Line of
Credit Loan Agreement between Borrower and Bank and includes any partial or
total amendment, renewal, restatement, extension, or substitution of or for
such Agreement.

 

“Bank” shall mean KeyBank National Association, a national banking
association with its main office at 127 Public Square, Cleveland, Ohio 44114,
and its successors and assigns.

 

“Bank Agreement” means that certain agreement executed by and between
Borrower and Bank dated April 1, 2002 pursuant to which Bank sponsors Borrower
as its Member Services Processor (as defined by VISA, USA and MasterCard
International, Inc.), as the same may be amended, modified, extended, restated
or replaced from time to time.

 

“Borrower” means Heartland Payment Systems, Inc., a Delaware
corporation.

 

“Borrower’s Certificate” means a certificate, substantially in the form
attached hereto as Exhibit “B”.

 

“Business Day” means a day of the year on
which banks are not required or authorized to close in Cleveland, Ohio.

 

“Collateral” means the collateral granted under the Assignment of
Contracts, the collateral in which Borrower has given the Bank a security
interest pursuant to the Security Agreement, the Assignment of Contracts, and
any other instrument given to Bank to secure Indebtedness, and/or this
Agreement, and any collateral held by Borrower in connection with Merchant
Service Agreements. Collateral does not include Servicing Accounts, as defined
herein, but does include the agreements to service the same and the Contract
Rights thereto.

 

“Contract Right” means (a) any contract right, and (b) any right to
payment under a contract not yet earned by performance and not evidenced by an
Instrument or Chattel Paper, and shall include, without limitation, all
Merchant Service Agreements, and all agreements for the provision of processing
services to Borrower.

 

“Deposit Account” means (a) any deposit account, and (b) any demand,
time, savings, passbook, or a similar account maintained with a bank, savings and
loan association, credit union, or similar organization, other than an account
evidenced by a certificate of deposit.

 

“Draw Request” means a request of Borrower for either a Revolver
Advance or a Purpose and Ability Advance submitted in accordance and compliance
with Section 2.3 hereof.

 

2

 

“EBIT” shall mean the Borrower’s earnings before payment of or
provision for interest and income taxes.

 

“EBITDA” shall mean the Borrower’s earnings before payment of or
provision for interest, income taxes, depreciation expense and amortization
expense.

 

“Environmental Law” means any federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability upon a Person in connection with the use, release or
disposal of any hazardous, toxic or dangerous substance, waste or material.

 

“Equipment” means:

 

(a)                                  any
equipment, including without limitation, machinery, office furniture and
furnishings;

 

(b)                                 all Goods that are
used or bought for use primarily in a Person’s business;

 

(c)                                  all Goods that are
not Consumer Goods, Farm Products, or Inventory; and

 

(d)                                 all
substitutes or replacements for, and all parts, accessories, additions,
attachments, or accessions to (a) to (c) above.

 

“ERISA” shall mean the Employee Retirement
Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” means each Person (whether or not incorporated) which
together with any of Borrower would be treated as a single employer under
ERISA.

 

“Event of Default” shall mean any one or more of the occurrences
described in ARTICLE VIII hereof.

 

“Financial Impairment” means the distressed economic condition of a
Person manifested by any one or more of the following events:

 

(a)                                  adjudicated
bankruptcy or insolvency of the Person;

 

(b)                                 the
Person ceases, is unable, or admits in writing its inability, to make timely
payment upon the Person’s debts, obligations, or liabilities as they mature or
come due;

 

(c)                                  assignment by the
Person for the benefit of creditors;

 

(d)                                 voluntary
institution by the Person or consent granted by the Person to the involuntary
institution whether by petition, complaint, application, default, answer
(including, without limitation, an answer or any other permissible or required
responsive pleading admitting any material allegations of the petition,
complaint, application, or other writing to which such answer serves as a
responsive pleading thereto), or otherwise of any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation,
receivership, trusteeship, or similar proceeding pursuant to or purporting to
be pursuant to any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation, receivership, trusteeship, or
similar law of any jurisdiction;

 

(e)                                  voluntary
application by the Person for or consent granted by the Person to the
involuntary appointment of any receiver, trustee, or similar officer (1) for
the Person or (2) of or for all or any substantial part of the Person’s
property;

 

3

 

(f)                                    entry,
without the Person’s application, approval, or consent, of any order that is
not dismissed, stayed, or discharged within sixty (60) days from its entry,
which is pursuant to or purporting to be pursuant to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution,
liquidation, receivership, trusteeship or similar law of any jurisdiction (1)
approving an involuntary petition seeking an arrangement of the Person’s
creditors, (2) approving an involuntary petition seeking reorganization of the
Person, or (3) appointing any receiver, trustee, or similar officer (i) for the
Person, or (ii) of or for all or any substantial part of the Person’s property;
or

 

(g)                                 any
judgment, writ, warrant of attachment, execution, or similar process is issued
or levied against all or any substantial part of the Person’s property and such
judgment, writ, warrant of attachment, execution, or similar process is not
released, vacated, or fully bonded within sixty (60) days after its issue or
levy.

 

“GAAP” shall mean generally accepted accounting principles as in
effect, which shall include the official interpretations thereof by the Financial
Accounting Standards Board, consistently applied.

 

“Indebtedness” shall mean for any Person (i) all obligations to repay
borrowed money, direct or indirect, incurred, assumed, or guaranteed, (ii) all
obligations for the deferred purchase price of capital assets excluding trade
payables, (iii) all obligations under conditional sales or other title
retention agreements, and (iv) all lease obligations which have been or should
be under GAAP capitalized on the books of such Person.

 

“Instrument” means:

 

(a)                                  any
Instrument as defined in Ohio Revised Code Sections 1309.01-1309.50, inclusive,
including any amendments thereof and any substitutions therefor,

 

(b)                                 any
negotiable or nonnegotiable instrument (including, without limitation, drafts,
checks, acceptances, certificates of deposit, and notes),

 

(c)                                any security, and

 

(d)                               any other writing which:

 

(1)                                evidences a right to
the payment of money,

 

(2)                                is not itself a
security agreement or lease, and

 

(3)                                  is
of a type which in the ordinary course of business is transferred by delivery
with any necessary endorsement or assignment.

 

“Interest Rate” shall mean either or both of the Revolver Advance
Interest Rate (as defined in Section 2.4(a) of the Agreement) and the Purpose
and Ability Advance Interest Rate (as defined in Section 2.5(a) of the
Agreement), as the context may require, and shall be the higher of such rates
unless the context clearly relates to one or the other of the foregoing.

 

“Inventory” means:

 

(a)                                  any
inventory, including but not limited to, Equipment held for sale or lease, new
accessories, parts and supplies,

 

4

 

(b)                                 all Goods that are raw
materials,

 

(c)                                  all
Goods that are materials used or consumed in the ordinary course of a Person’s
business,

 

(d)                                 all
Goods new or used that are, in the ordinary course of a Person’s business, held
for sale or lease or furnished or to be furnished under contracts of service,

 

(e)                                  all work in process,

 

(f)                                    all
office supplies, packaging utilized in shipment of the Inventory and
replacement parts utilized in maintaining the Person’s Equipment, and

 

(g)                                 all
substitutes and replacements for, and parts, accessories, additions,
attachments, or accessions to (a) through (f) above.

 

“ISO” shall mean any Person or group of Persons having an ownership
interest in Merchant Service Agreements.

 

“Lien” shall mean any mortgage, security interest, lien, charge,
encumbrance on, pledge or deposit of, or conditional sale or other title
retention agreement with respect to any property or asset.

 

“Loan” or “Loans” shall mean the credit to the Borrower extended by the
Bank in accordance with Sections 2.1 and 2.2 hereof.

 

“Loan Account” means an account maintained by Bank on its books, which
will evidence all advances or Loans, accrued interest thereon, other amounts
due Bank with respect to such advances or Loans, and all payments thereof by
Borrower under the Revolver Advance Facility pursuant to Section 2.1 and under
the Purpose and Ability Line of Credit Facility pursuant to Section 2.2.

 

“Loan Documents” shall mean this Agreement, the Notes, the Security
Instruments and any other documents relating hereto or thereto.

 

“Loan Fees” shall mean the Origination and other fees described in
Section 2.6 of the Agreement.

 

“Margin Stock” shall have the meaning given to it under Regulation U of
the Board of Governors of the Federal Reserve System, as amended from time to
time.

 

“Material Adverse Effect” shall mean a material adverse effect on (a)
the business, assets, liabilities, operations or condition, financial or
otherwise, of the Borrower taken as a whole, (b) the ability of Borrower to
perform any of its obligations under this Agreement or any of the other Loan
Documents to which it is a party, or (c) the rights of or benefits available to
the Bank under this Agreement or any of the other Loan Documents (but excluding
any such material adverse effect on Bank’s rights or benefits arising solely
out of any voluntary action on Bank’s part.)

 

“Maturity Date” shall mean, with respect to the Revolver Advance
Facility, May 31, 2004, subject to earlier acceleration in accordance with
Article IX hereof, and with respect to the Purpose and Ability Line of Credit
Facility, on demand.

 

5

 

“Merchant Portfolio Service Agreement” shall mean any contract for the
purchase of an ownership interest in a group of Merchant Service Agreements
where the owner is not a current or former Relationship Manager.

 

“Merchant Service Agreements” shall mean all payment services
agreements, card acceptance procedures, merchant processing agreements,
merchant services applications, and all other agreements now existing or
hereafter entered into or acquired by Borrower and any other Person pursuant to
which Borrower processes and/or obtains rights to process credit card
transactions for a Person.

 

“Multiemployer Plans” shall mean a Plan described in ERISA which covers
employees of the Borrower and employees of any other Person, which together
would be treated as a single employer for purposes of ERISA.

 

“Net Worth” means Borrower’s total assets including all intangible
assets (i.e., goodwill, trademarks, patents, copyrights, organizational
expenses, and similar intangible items), less Total Indebtedness, plus
Subordinated Debt, less related party loans and receivables.

 

“Note” or “Notes” shall mean, as the case may be, either or all of (1)
the promissory note in the form of Exhibit A-1 attached hereto signed and
delivered by the Borrower to evidence its Indebtedness to the Bank pursuant to
Section 2.1 hereof (the “Revolver Advance Note”) or (2) the promissory note in
the form of Exhibit A-2 signed and delivered by the Borrower to evidence its
Indebtedness to the Bank pursuant to Section 2.2 hereof (the “Purpose and
Ability Line of Credit Note”).

 

“Obligations” means any of the following obligations, whether direct or
indirect, absolute or contingent, secured or unsecured, matured or unmatured,
originally contracted with Bank or another Person and now owing to or hereafter
acquired in any manner partially or totally by Bank or in which Bank may have
acquired a participation, contracted by Borrower alone or jointly or severally
with another Person:

 

(a)                                  any
and all indebtedness, obligations, liabilities, contracts, indentures, agreements,
warranties, covenants, guaranties, representations, provisions, terms and
conditions of whatever kind, now existing or hereafter arising, and however
evidenced, that are now or hereafter owed, incurred, or executed by Borrower
to, in favor of, or with Bank or any Affiliate Lender (including, without
limitation, those as are set forth or contained in, referred to, evidenced by,
or executed with reference to this Agreement, the Loan Account, the Bank
Agreement, any promissory notes, leases, letter of credit agreements, advance
agreements, indemnity agreements, guaranties, lines of credit, mortgage deeds,
security agreements, assignments, pledge agreements, hypothecation agreements,
instruments, and acceptance financing agreements), and including any partial or
total extension, restatement, renewal, amendment, and substitution thereof or
therefor;

 

(b)                                 any
and all claims of whatever kind of Bank against Borrower, now existing or
hereafter arising including, without limitation, any arising out of or in any
way connected with warranties made by Borrower to Bank or any Affiliate Lender
in connection with the Bank Agreement or any Instrument or Account deposited
with or purchased by Bank or any Affiliate Lender;

 

(c)                                  any and all of Bank’s
Related Expenses.

 

“Operating Cash Flow” means net income after taxes (and exclusive of
extraordinary gains or losses, gains on asset sales and other similar income or
expenses), plus depreciation and amortization, plus interest expense, plus
lease expense, minus dividends and distributions.

 

6

 

“Organization” means a corporation, government or government
subdivision or agency, business trust, estate, trust, partnership, association,
two or more Persons having a joint or common interest, and any other legal or
commercial entity.

 

“Origination Fee” shall mean the fees described in Sections 2.4(d) and
2.5(c) of the Agreement.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation, and any
successors thereto.

 

“Permitted Encumbrances” shall mean, as of any particular time, (a)
liens for ad valorem taxes and special assessments not then delinquent, (b)
this Revolver Advance and Purpose and Ability Line of Credit Loan Agreement,
and any security interest or other lien created thereby, (c) any Permitted
Encumbrances defined in any of the Loan Documents, (d) any liens permitted by
Section 6.2 hereof (including without limitation the liens on the Pledged
Accounts), and (e) such minor defects, irregularities, encumbrances and clouds
on title as normally exist with respect to property similar in character to the
Pledged Collateral and as do not materially interfere with or impair the use or
value of the property affected thereby.

 

“Person” means an individual or an Organization.

 

“Plan” shall mean any plan (other than a Multiemployer Plan) defined in
ERISA in which the Borrower or any Subsidiary is, or has been at any time
during the preceding two (2) years, an “employer” or a “substantial employer”
as such terms are defined in ERISA.

 

“Pledged Accounts” means those Merchant Services Agreements pledged as
collateral as of the date of this Agreement to secure Borrower’s obligations to
Welsch Financial Merchant Services, Inc. pursuant to that certain Asset
Purchase Agreement dated as of May 15, 2002, Web Investment Group, Inc.
pursuant to that certain Merchant Portfolio Purchase Agreement dated as of
December 1, 2001, and Certegy Inc.

 

“Potential Default” shall mean any condition, action, or failure to act
which, with the passage of time, service of notice, or both, will constitute an
Event of Default under this Agreement.

 

“Prime Rate” shall mean that interest rate established from time to
time by Bank, as its Prime Rate, whether or not such rate is publicly
announced; the Prime Rate may not be the lowest interest rate charged by Bank
for commercial or other extensions of credit.

 

“Proceeds” means (a) any proceeds, and (b) whatever is received upon
the sale, exchange, collection, or other disposition of Collateral or Proceeds,
whether cash or non-cash. Cash Proceeds includes, without limitation, moneys,
checks, and Deposit Accounts. Proceeds includes, without limitation, any
Account arising when the right to payment is earned under a Contract Right, any
insurance payable by reason of loss or damage to the Collateral, and any return
or unearned premium upon any cancellation of insurance. Except as expressly
authorized in the Agreement or the Security Instruments, Bank’s right to
Proceeds specifically set forth herein or indicated in any financing statement
shall never constitute an express or implied authorization on the part of Bank
to Borrower’s sale, exchange, collection, or other disposition of any or all of
the Collateral.

 

“Prohibited Transaction” means any prohibited transaction as that term
is defined for purposes of ERISA.

 

“Purpose and Ability Advance” means any Advance made by Bank to
Borrower pursuant to the provisions, terms and conditions of Section 2.2
hereof, which Purpose and Ability Advance shall be payable in accordance with
the terms of such Purpose and Ability Line of Credit Facility described in
Section 2.2 and this Agreement.

 

7

 

“Quarter” or “Quarters” or “Quarterly” means calendar quarters, i.e.
each of the three (3) calendar month periods ending 3/31, 6/30, 9/30 and 12/31
of each calendar year.

 

“Related Expenses” means any and all out-of-pocket costs, liabilities,
and expenses (including, without limitation, losses, damages, penalties,
claims, actions, attorney’s fees, legal expenses, judgments, suits and
disbursements) incurred by, or imposed upon, or asserted against, Bank in any
attempt by Bank:

 

(a)                                  to
obtain, preserve, perfect, or enforce any security interest evidenced by (i)
this Agreement, or (ii) any other pledge agreement, mortgage deed,
hypothecation agreement, guaranty, security agreement, assignment, or security
instrument executed or given by Borrower to or in favor of Bank;

(b)                                 to obtain payment,
performance, and observance of any and all of the Obligations;

(c)                                  to
maintain, insure, audit, collect, preserve, repossess, and dispose of any of
the Collateral, including, without limitation, costs and expenses for
appraisals, assessments, and audits of Borrower or the Collateral; or

(d)                                 incidental
or related to (a) through (c) above, including, without limitation, interest
thereupon from the date incurred, imposed, or asserted until paid at the rate
payable as set forth in Article II of this Agreement, but in no event greater
than the highest rate permitted by law.

 

“Relationship Manager” means any Person who
enters into a Relationship Manager Agreement with Borrower.

 

“Relationship Manager Agreements” means all agreements and/or contracts
now or hereafter executed by and between Borrower and any Person or acquired by
Borrower pursuant to which a Person obtains Merchant Service Agreements on
behalf of Borrower or otherwise is authorized to sell services or products
offered by Borrower.

 

“Reportable Event” means any reportable event as that term is defined
for purposes of ERISA.

 

“Revolver Advance” means any advance made by Bank to the Borrower
pursuant to the provisions, terms and conditions of Section 2.1 hereof, which
Revolver Advance shall be payable in accordance with the terms of such Revolver
Advance Facility described in Section 2.1 and this Agreement.

 

“Security Instrument(s)” shall mean the written document(s) listed in
Exhibit C attached hereto, signed and delivered from time to time to the Bank
in connection with Indebtedness owed by Borrower to the Bank.

 

“Servicing Accounts” means those Merchant Services Agreements serviced
by Borrower on behalf of Certegy Inc. and National Processing Company, but not
owned by Borrower, as such agreements may be substituted, increased or
decreased from time to time.

 

“Subordinated Debt” shall mean Indebtedness which is subordinated, in a
manner, and pursuant to a written agreement, reasonably satisfactory to the
Bank, to all Indebtedness owing to the Bank, and shall include all debt to
shareholders of Borrower (except for the Permitted Encumbrances).

 

“Subsidiary” shall mean any Person of which more than fifty percent
(50%) of the following is, at the time, owned or controlled, directly or
indirectly, by Borrower or one or more other Subsidiaries: (i) the voting stock
or units entitling the holders thereof to elect a majority of the Board of
Directors, managers, or trustees thereof, or (ii) the interest in the capital
or profits of such Person.

 

8

 

“Total Fixed Charges” means interest expense, plus lease expense, plus
current maturities of long-term debt and current maturities of capital leases,
plus fixed asset capital expenditures for the preceding twelve (12) month
period.

 

“Total Indebtedness” shall mean the total of all items of indebtedness
or liability which in accordance with GAAP would be included in determining
total liabilities on the liability side of the balance sheet as of the date of
determination including capital leases and excluding Subordinated Debt and
Borrower’s preferred stock.

 

The foregoing definitions shall be applicable to the singulars and
plurals of the foregoing defined terms.

 

ARTICLE II. REVOLVER
ADVANCE FACILITY AND PURPOSE

AND ABILITY LINE OF CREDIT FACILITY

 

Section 2.1.  Revolver
Advance Facility. The Bank hereby agrees, subject to the terms
and conditions of this Agreement, to extend Revolver Advances to Borrower as
follows:

 

(a)                                  Bank
will, upon receipt of a Draw Request from Borrower and subject to the
conditions for Advance set forth in Section 2.3(a) hereof, make loan advances
(“Revolver Advances”) to or for the account of Borrower up to but not exceeding
an aggregate unpaid principal amount outstanding at any one time on Revolver
Advances equal to Three Million Five Hundred Thousand Dollars ($3,500,000.00).
The Bank shall debit to the Loan Account the amount of each Revolver Advance
made hereunder and all interest, other compensation, or other fees payable on
all Revolver Advances, and shall credit to the Loan Account each payment of
principal and interest on account of each Revolver Advance and other amounts
payable under this Revolver Advance Facility by the appropriate entries. All
Revolver Advances shall be made promptly upon receipt of the Draw Request
therefor and satisfaction of all of the conditions set forth in Section 2.3(a)
hereof and shall be in a minimum amount of at least Fifty Thousand Dollars
($50,000.00) or such lesser amount as is available under this Revolver Advance
Facility. The Loan Account shall constitute prima facie evidence of all Revolver
Advances made by Bank pursuant to the Revolver Advance Facility. The records of
Bank with regard to the Loan Account shall be conclusive absent manifest error.
Borrower shall execute and deliver to Bank a promissory note, substantially in
the form of attached Exhibit A-1 (“Revolver Advance Note”), to evidence all
Revolver Advances under this Revolver Advance Facility. Subject to the
foregoing limitations, Borrower may borrow, repay and reborrow up to the
maximum amount of the Revolver Advance Facility.

 

(b)                                 The
entire principal balance of the Loan Account, plus all accrued and unpaid
interest and fees, shall be due and payable on May 31, 2004, or the earlier
acceleration of the maturity of the Revolver Advance Note in accordance with
Article IX hereof.

 

(c)                                  Revolver
Advances shall be used solely for the purchase of Merchant Service Agreements
from current or former Relationship Managers or from an ISO as identified in
the Draw Request. Any other use of the Revolver Advance Proceeds by Borrower
shall be an Event of Default hereunder.

 

Section 2.2. Purpose
and Ability Line of Credit Facility. The Bank, in its sole
discretion, subject to the terms and conditions of this Agreement, may extend
Purpose and Ability Advances to Borrower as follows:

 

9

 

(a)                                  Bank
may, at its sole discretion, upon receipt of a Draw Request from Borrower and
subject to the conditions for Advance set forth in Section 2.3(b) hereof, make
loan advances (“Purpose and Ability Advances”) to or for the account of
Borrower up to but not exceeding an aggregate unpaid principal amount
outstanding at any one time on Purpose and Ability Advances equal to Three
Million Dollars ($3,000,000.00). The Bank shall debit to the Loan Account the
amount of each Purpose and Ability Advance made hereunder and all interest,
other compensation, or other fees payable on all Purpose and Ability Advances,
and shall credit to the Loan Account each payment of principal and interest on
account of each Purpose and Ability Advance and other amounts payable under
this Purpose and Ability Advance Facility by the appropriate entries. All
Purpose and Ability Advances shall be made promptly upon receipt of the Draw
Request therefor and satisfaction of all of the conditions set forth in Section
2.3(b) hereof and shall be in a minimum amount of at least Fifty Thousand
Dollars ($50,000.00) or such lesser amount as is available under this Purpose
and Ability Advance Facility. The Loan Account shall constitute prima facie
evidence of all Purpose and Ability Advances made by Bank pursuant to the
Purpose and Ability Advance Facility. The records of Bank with regard to the
Loan Account shall be conclusive absent manifest error. Borrower shall execute
and deliver to Bank a promissory note, substantially in the form of attached
Exhibit A-2 (“Purpose and Ability Line of Credit Note”), to evidence all
Purpose and Ability Advances under this Purpose and Ability Advance Facility.
Subject to the foregoing limitations, Borrower may borrow, repay and reborrow
up to the maximum amount of the Purpose and Ability Advance Facility.

 

(b)                                 The
entire principal balance of the Loan Account, plus all accrued and unpaid
interest and fees, shall be due and payable on demand, or the earlier
acceleration of the maturity of the Purpose and Ability Line of Credit Note in
accordance with Article IX hereof.

 

(c)                             Purpose
and Ability Advances shall be used solely for the purpose set forth in the Draw
Request for that Purpose and Ability Advance. Any other use of the Purpose and
Ability Advance Proceeds by Borrower shall be an Event of Default hereunder.

 

Section 2.3. Draw Requests;
Conditions for Advances.

 

(a)                                  Revolver
Advances. Each request for an Advance under the Revolver Advance Facility
shall be submitted to Bank at least two (2) Business Days in advance of the
desired funding of such Advance and shall contain the following:

 

(i)                                       a
detailed description of the portfolio being purchased;

 

(ii)                                    a
copy of the Relationship Manager Agreement and purchase agreement (if any) for
the portfolio being purchased, if from a Relationship Manager, or a copy of the
Merchant Portfolio Purchase Agreement, if from an ISO;

 

(iii)                                 customer
concentration, if any;

 

(iv)                                portfolio purchase
analysis with assumptions;

 

(v)                                   average monthly
residual paid versus draw amount requested; and

 

(vi)                                length of time to
recoup the purchase price from revenue stream.

 

10

 

In addition, Borrower shall promptly deliver
to Bank any additional information and/or documents requested by Bank or which
Bank deems necessary, in its sole discretion, to analyze, review and/or approve
the request. The amount of the Advance shall not exceed the amount approved by
Bank, regardless of the amount requested.

 

(b)                                 Purpose
and Ability Advances. Each request for an Advance under the Purpose and
Ability Line of Credit Facility shall be submitted to Bank at least two (2)
Business Days in advance of the desired funding of such Advance and shall
contain the following:

 

(i)                                       a detailed
description of the use of the funds requested;

 

(ii)                                    estimated
repayment timetable for such requested funds and source of repayment;

 

(iii)                                 copies
of all documents and/or agreements executed by Borrower or which Borrower
contemplates executing which relate to the purpose for which funds are
requested; and (iv)                             if
the funds are to be used for a product line extension, a detailed description
of such product line and how the same enhances Borrower’s existing business
and/or profitability.

 

In addition, Borrower shall promptly deliver
to Bank any additional information and/or documents requested by Bank or which
Bank deems necessary, in its sole discretion, to analyze, review and/or approve
the request. The amount of the Advance shall not exceed the amount approved by
Bank, regardless of the amount requested.

 

Section 2.4. Interest
Rate and Additional Terms for Revolver Advances.

 

(a)                                  Each
Revolver Advance shall bear interest prior to maturity at a rate per annum
equal to the Prime Rate (“Revolver Advance Interest Rate”). Interest for the
principal then outstanding under all Revolver Advances shall be paid monthly in
arrears on the second day of each calendar month for the preceding calendar
month then ended. Interest shall be calculated upon the average daily balances
for all Revolver Advances in Borrower’s Loan Account during the preceding month
(using a day rate based upon a year of 360 days and charged for actual number
of days elapsed). The rate will increase or decrease on the day of, and by an
amount equal to, each increase or decrease in the Prime Rate, except that such
Interest Rate shall not exceed the highest rate permitted by law.

 

(b)                                 As
compensation for the Bank’s commitment to make Revolver Advances to Borrower,
Borrower undertakes and agrees to pay to Bank on the last day of each Quarter
an amount equal to one quarter of one percent (1/4%) of the amount of the
Revolver Advance Facility not used by Borrower for that Quarter, calculated
using the average daily balances for all Revolver Advances in Borrower’s Loan
Account during the then-ending Quarter (“Unused Commitment Fee”).

 

(c)                                  Upon
the maturity of any Loan (whether by acceleration or otherwise), the unpaid
principal amount of the Loan, and accrued interest thereon, or any fees or any
other sum payable hereunder, shall thereafter until paid in full bear interest
at a rate per annum equal to three percent (3%) in excess of the interest rate
which would otherwise be applicable from time to time, which rate shall be
adjusted to immediately correspond with changes, except such interest rate
shall not exceed the highest rate permitted by law.

 

11

 

(d)                                 Borrower
shall pay to the Bank an Origination Fee for the Revolver Advance Facility of
Eight Thousand Seven Hundred Fifty Dollars ($8,750.00), which shall be due and
payable upon closing. Borrower acknowledges that the Origination Fee set forth
herein is for services actually rendered, is supported by good and valuable
consideration, and is not refundable for any reason.

 

Section 2.5. Interest
Rate and Additional Terms for Purpose and Ability Advances.

 

(a)                                  Each
Purpose and Ability Advance shall bear interest prior to maturity at a rate per
annum equal to the Prime Rate (“Purpose and Ability Advance Interest Rate”).
Interest for the principal then outstanding under all Purpose and Ability
Advances shall be paid monthly in arrears on the second day of each calendar
month for the preceding calendar month then ended. Interest shall be calculated
upon the average daily balances for all Purpose and Ability Advances in
Borrower’s Loan Account during the preceding month (using a day rate based upon
a year of 360 days and charged for actual number of days elapsed). The rate
will increase or decrease on the day of, and by an amount equal to, each
increase or decrease in the Prime Rate, except that such Interest Rate shall
not exceed the highest rate permitted by law.

 

(b)                                 Upon
the maturity of any Loan (whether by acceleration or otherwise), the unpaid
principal amount of the Loan, and accrued interest thereon, or any fees or any
other sum payable hereunder, shall thereafter until paid in full bear interest
at a rate per annum equal to three percent (3%) in excess of the interest rate
which would otherwise be applicable from time to time, which rate shall be
adjusted to immediately correspond with changes, except such interest rate
shall not exceed the highest rate permitted by law.

 

(c)                                  Borrower
shall pay to the Bank an Origination Fee for the Purpose and Ability Line of
Credit Facility of Seven Thousand Five Hundred Dollars ($7,500.00), which shall
be due and payable upon closing. Borrower acknowledges that the Origination Fee
set forth herein is for services actually rendered, is supported by good and
valuable consideration, and is not refundable for any reason.

 

Section 2.6. Prepayment of Loan(s).
The Borrower may prepay any Loans in whole or in part, at any time or times
without penalty or cost of any kind. Each principal prepayment shall be
accompanied by payment of all interest then earned and accrued on the principal
amount so prepaid. Bank may, in its sole discretion, apply any prepayment
tendered to any interest, late fees or Related Expenses then due and owing.

 

Section 2.7. Fees.
The Borrower shall pay the Bank:

 

(a)                                Unused
Commitment Fee and Origination Fees as set forth in Sections 2.4(b), 2.4(d) and
2.5(c).

 

(b)                               Outside
legal counsel’s fee, including without limitation all out-of-pocket expenses
for telephone charges, delivery charges, photocopying, postage and UCC filing
fees, in order to compensate the Bank for its services in preparing and
reviewing the Loan Documents.

 

(c)                                  Other
expenses, if any, determined in accordance with Section 10.2(a) hereof, payable
on the date of execution of this Agreement or the date such expense is
incurred. Other expenses to be paid by Borrower shall include the expenses for
UCC searches, filing

 

12

 

and/or recording fees, and other costs and
fees associated with the transaction as set forth in Section 10.2(a) hereof.

 

(d)                                 Prior
to maturity (whether by acceleration or otherwise), for each payment of
principal or interest not paid within ten (10) days of the date when due, a
late fee equal to five percent (5%) of such payment or $25, whichever shall be
greater.

 

Section 2.8. Computation
of Interest and Fees.  Interest
on Loans shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed. Interest on unpaid fees, if any, hereunder shall
be computed on the basis of a year of 360 days and paid for the actual number
of days elapsed.

 

ARTICLE III.
WARRANTIES

 

Borrower represents and warrants to the Bank
(which representations and warranties will survive the delivery of the Notes
and the making of the Loans) that:

 

Section 3.1. Existence
and Legal Authority.  Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite power and authority to own its property and
to carry on its business as now being conducted, to enter into the Loan
Documents to which it is a party and the other agreements referred to herein
and transactions contemplated thereby, and to carry out the provisions and
conditions of such Loan Documents to which it is a party. Borrower is duly
qualified to do business and is in good standing in every jurisdiction where
the failure to so qualify would have a Material Adverse Effect.

 

Section 3.2. Due
Execution and Delivery. Borrower has full power,
authority and legal right to incur the obligations provided for in, and to
execute and deliver and to perform and observe the terms and provisions of, the
Loan Documents to which it is a party, and each of them has been duly executed
and delivered by Borrower and has been authorized by all required action, and
Borrower has obtained all requisite consents to the transactions contemplated
thereby under any instrument to which it is a party, and the Loan Documents
constitute the legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency or
other similar laws affecting creditors’ rights generally.

 

Section 3.3. No
Breach of
Other Instruments.  Neither the execution and delivery of the
Loan Documents, nor the compliance by Borrower with the terms and conditions of
the Loan Documents, nor the consummation of the transactions contemplated
thereby, will conflict with or result in a breach of the Certificate of
Incorporation or Bylaws, as applicable, or other governing documents of
Borrower, or any of the terms, conditions or provisions of any agreement or
instrument or any charter or other corporate restriction or law, regulation, rule
or order of any governmental body or agency to which Borrower is now a party or
is subject, or result in the imposition of a lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of Borrower pursuant to
the terms of any such agreement or instrument.

 

Section 3.4. Government Authorization.
No consent, approval, authorization or order of any court or governmental
agency or body is required (which, if not obtained, would have a Material
Adverse Effect on such transaction) for the consummation by Borrower of the
transactions contemplated by the Loan Documents.

 

Section 3.5. Collateral.
Borrower, at the time of the execution of the Loan Documents, and at all times
thereafter, will have good and marketable title to the Collateral, free and
clear of all liens, pledges, mortgages, security interests, charges, claims and
other encumbrances, except Permitted Encumbrances. The Security Agreement
creates valid and prior perfected security interests and liens in favor of the
Bank,

 

13

 

subject to no other liens or encumbrances arising by, through or under
Borrower or any other Person, except for Permitted Encumbrances.

 

Section 3.6. Absence
of Defaults, etc.  The Borrower is not (i) in material default
under any indenture or contract or agreement to which it is a party or by which
it is bound, (ii) in violation of its Certificate of Incorporation or Bylaws,
as applicable, or any other governing document, (iii) in default with respect
to any order, writ, injunction or decree of any court, or (iv) in default under
any order or license of any federal or state governmental department, which
default or violation in any of the aforesaid cases causes a Material Adverse
Effect. There exists no condition, event or act which constitutes, or after
notice or lapse of time or both would constitute, an Event of Default.

 

Section 3.7. Indebtedness
of Borrower. Borrower does not have outstanding on the date
hereof, any Indebtedness for borrowed money, except for such Indebtedness
identified in the financial statements referred to in Section 3.8 hereof and
Indebtedness owed to the Bank.

 

Section 3.8. Financial
Condition. The
Borrower has furnished to the Bank true and correct financial statements as of
the years ending December 31, 2000 and December 31, 2001, audited by a
certified public accountant, and true and correct financial statements as of
the quarter ended June 30, 2002 certified as true and correct by Borrower’s
chief financial officer, which statements present fairly and accurately the
financial condition and operations of Borrower at such dates (subject only to
changes to such quarterly statements resulting from year end adjustments), and
there has been no material adverse change in the Borrower’s financial condition
or prospects since that date.

 

Section 3.9. No
Adverse Change. Subsequent to the date of the
financial statements referred to in Section 3.8 hereof, Borrower has not
incurred or agreed to incur any material liabilities or obligations, direct or
contingent, and there has not been any material increase in the anticipated
aggregate amount of debt of Borrower, or any material change in the business,
properties, prospects or condition, financial or otherwise, of Borrower.

 

Section 3.10. Taxes.
To the best of Borrower’s knowledge, Borrower has filed all tax returns
which are to be filed and has paid, or has made adequate provision for the
payment of, all taxes which have or may become due pursuant to said returns or
to assessments received by them. The provisions for taxes reflected in the
financial statements referred to in Section 3.8 are believed adequate to cover
any and all accrued and unpaid taxes for which Borrower believes it is liable
for the period ended on the date of such financial statements and all prior
periods. Borrower knows of no deficiency assessment or proposed deficiency
assessment of taxes for which Borrower may be liable, except as may be
otherwise disclosed in writing to the Bank prior to the date hereof.

 

Section 3.11. Litigation.
Except as set forth on Schedule 3.11 attached hereto and incorporated herein by
reference, prior to the date hereof, there are no actions, suits or proceedings
pending, or to the actual knowledge of Borrower, threatened against or
affecting Borrower or its respective property in any court, or before or by any
federal, state or municipal or other governmental department, commission,
board, bureau, agency or other instrumentality, domestic or foreign, which
could reasonably be expected to result in a Material Adverse Effect, except for
actions, suits or proceedings of a character normally incident to the kind of
business conducted by Borrower, none of which, either individually or in the
aggregate, if adversely determined, could reasonably be expected to result in a
Material Adverse Effect.

 

Section 3.12. Ownership
of Property. Except for Permitted Encumbrances,
Borrower has good and marketable fee title to, or valid leasehold interests in,
its real properties in accordance with the laws of the jurisdiction where
located, and good and marketable title to substantially all its other property
and assets, subject, however, in the case of real property, to title defects
and restrictions which do not materially

 

14

 

interfere with the operations conducted thereon by Borrower. Except for
Permitted Encumbrances, the real property and all other property and assets of
the Borrower is free from any liens or encumbrance securing Indebtedness and
from any other liens, encumbrances, charges or security interests of any kind.
Each lease, if any, to which Borrower is a party is in full force and effect,
and no material default on the part of Borrower or, to its knowledge, any other
party thereto exists.

 

Section 3.13. Environmental
Matters. Borrower is in compliance with all Environmental Laws
and all applicable federal, state and local health and safety laws,
regulations, ordinances or rules, except to the extent that any noncompliance
would not unreasonably be expected to result in a Material Adverse Effect.

 

Section 3.14. Subsidiaries
and Affiliates. Borrower does not have any Subsidiaries except
OmniCard, Inc., a Missouri corporation, and The Heartland Payroll Company, LLC,
an Ohio limited liability company. Borrower does not have any Affiliates. The
term “Borrower” as used in the Sections under Article V (Affirmative
Covenants), Article VI (Negative Covenants), and Article VIII (Events of
Default) shall include in its meaning Borrower and its Subsidiaries, for such
period or periods that Borrower has any Subsidiaries, unless the context
clearly requires otherwise. For any period during which Borrower has any
Subsidiaries, all financial statements, accounts and reports submitted by the
Borrower and all calculations hereunder based on same shall be consolidated
and/or on a consolidating basis or combined and/or on a combining basis with
such Subsidiaries, as the context required.

 

Section 3.15. ERISA.
No Reportable Event or Prohibited Transaction which could create a liability in
excess of One Hundred Thousand Dollars ($100,000.00) or a Material Adverse
Effect has occurred and is continuing with respect to any Plan of Borrower, and
Borrower has not incurred an “accumulated funding deficiency” (as that term is
defined by ERISA) since the effective date of ERISA.

 

Section 3.16. Solvency.
The Borrower is not insolvent as defined in any applicable state or federal
statute, nor will Borrower be rendered insolvent by the execution and delivery
of this Agreement or any of the Loan Documents to Bank. The Borrower is not
engaged or about to engage in any business or transaction for which the assets
retained by it shall constitute an unreasonably small capital, taking into
consideration the obligations to Bank incurred hereunder. Borrower does not
intend to, nor does it believe that it will, incur debts beyond its ability to
pay them as they mature.

 

Section 3.17. No
Burdensome Restrictions.
Borrower is not a party to any instrument or agreement or subject to any
charter or other corporate restriction which would cause a Material Adverse
Effect.

 

Section 3.18. Federal
Reserve Regulations; Use of Loan
Proceeds. Borrower is not engaged principally, or as one
of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock. No part of the proceeds of
the Loans will be used, directly or indirectly, for a purpose which violates
any law, rule or regulation of any governmental body, including without
limitation the provisions of Regulations G, U, or X of the Board of Governors
of the Federal Reserve System, as amended. No part of the proceeds of the Loans
will be used, directly or indirectly, to purchase or carry any Margin Stock or
to extend credit to others for the purpose of purchasing or carrying any Margin
Stock. Following application of the proceeds of each Loan, no more than
twenty-four percent (24%) of the value of the assets of Borrower will be Margin
Stock.

 

ARTICLE IV.
CONDITIONS OF LENDING

 

Section 4.1. Loan Funding.
The obligation of the Bank to close the transactions contemplated by this
Agreement shall be subject to satisfaction of the following conditions, unless
waived in writing by the Bank: (a) all legal matters and Loan Documents
incident to the transactions contemplated hereby shall be reasonably
satisfactory, in form and substance, to Bank’s counsel; (b) the Bank shall have
received (i)

 

15

 

certificates by an authorized officer or representative of Borrower
upon which the Bank may conclusively rely until superseded by similar
certificates delivered to the Bank, certifying that (1) all requisite action
taken in connection with the transactions contemplated hereby has been duly
authorized and (2) the names, signatures, and authority of Borrower’s
authorized signers executing the Loan Documents, and (ii) such other documents
as the Bank may reasonably require to be executed by, or delivered on behalf
of, Borrower; (c) the Bank shall have received the Notes with all blanks appropriately
completed, executed by an authorized signer for Borrower; (d) the Borrower
shall have paid to the Bank the fee(s) then due and payable in accordance with
Section 2.7 of this Agreement; (e) the Bank shall have a satisfactory review of
pertinent documents relating to the Collateral which is the subject of the
Assignment of Contracts; (f) Borrower shall have supplied Bank with a complete
listing of all Merchant Service Agreements as of the date of closing, and
containing such information as Bank may request; (g) Borrower shall have
maintained its financial condition in a manner satisfactory to the Bank, and no
Material Adverse change shall have occurred in Borrower’s financial condition
or prospects; (h) the Bank shall have received the written opinion(s) of legal
counsel for the Borrower selected by the Borrower and satisfactory to the Bank,
dated the date of this Agreement and covering the Loan Documents and such other
matter(s) as the Bank may reasonably require; and (i) the Bank shall have
received all Security Instruments duly executed by all parties thereto. No
Advance shall be made unless Bank has received a Draw Request therefor in
compliance with the terms of Section 2.3 of the Agreement.

 

Section 4.2. Security.
No Loan shall be made hereunder unless and until Borrower shall have
supplied to Bank as security for repayment of any and all Loans made hereunder
the following documents, in form and substance reasonably acceptable to Bank:

 

(a)                                  Security
Agreement duly executed by Borrower granting Bank a first lien and security
interest in and to all current and future business assets, including, without
limitation, all Accounts Receivable, Inventory, Documents, Instruments,
Equipment, furniture, General Intangibles, and Contract Rights of Borrower and all
proceeds thereof; and

 

(b)                                 Assignment
of Contracts duly executed by Borrower collaterally assigning to Bank all of
Borrower’s right, title and interests in and to all Merchant Service
Agreements, Bank Agreement and Relationship Manager Agreements.

 

All of the foregoing, together with all other instruments granting
collateral and/or security to Bank for any Indebtedness of Borrower to Bank are
collectively referred to herein as “Security Documents”.

 

Section 4.3. Each
Loan. The obligation of the Bank to make any Loan
shall be subject to initial compliance with Section 4.1 and 4.2 herein and also
subject to satisfaction of the following conditions that at the date of making
such Loan, and after giving effect thereto: (a) no Event of Default shall have
occurred and continue to exist, (b) each representation and warranty set forth
in Article III above is true and correct as if then made, and (c) receipt of a
Draw Request meeting all of the conditions of Section 2.3.

 

ARTICLE V.
AFFIRMATIVE COVENANTS

 

As long as credit is available hereunder or
until all principal of and interest on the Notes have been paid, the Borrower
covenants and agrees that it will comply with the following provisions:

 

Section 5.1. Accounting;
Financial Statements and Other Information.  Borrower will maintain a standard system
of accounting, established and administered in accordance with GAAP
consistently followed throughout the periods involved, and will set aside on
its books for each fiscal Quarter and fiscal year, the proper amounts or
accruals for depreciation, obsolescence, amortization, bad debts, current and

 

16

 

deferred taxes, prepaid expenses, and for other purposes as shall be
required by GAAP. Borrower will deliver or cause to be delivered to the Bank:

 

(a)                                  As
soon as practicable after the end of each calendar month in each fiscal year,
except the last, and in any event within thirty (30) days thereafter, unaudited
financial statements, including income statement, balance sheet, and statement
of cash flow, prepared in accordance with GAAP and certified as complete and
correct by the chief financial officer of Borrower, subject only to changes
resulting from year-end adjustments;

 

(b)                                 As
soon as practicable after the end of each fiscal Quarter in each fiscal year,
except the last, and in any event within forty-five (45) days thereafter,
unaudited financial statements, including income statement, balance sheet, and
statement of cash flow, prepared in accordance with GAAP and certified as
complete and correct by the chief financial officer of Borrower, subject only
to changes resulting from year-end adjustments;

 

(c)                                  As
soon as practicable after the end of each fiscal year, and in any event within
ninety (90) days thereafter, financial statements, including income statement,
balance sheet and statement of cash flow of the Borrower for such year, audited
by an independent certified public accountant, setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and certified as complete and correct by the principal financial officer
of Borrower, and accompanied by any management letters and an audit report of
independent certified public accountants of recognized standing (without qualification
as to any material matter covered thereby), selected by Borrower and
satisfactory to the Bank, and prepared in accordance with GAAP;

 

(d)                                 Together
with each set of financial statements required by subparagraph (c) above, an
annual operating budget for Borrower for the next fiscal year;

 

(e)                                  Together
with each set of financial statements required by subparagraphs (a) and (b)
above, a certificate by the chief financial officer or other authorized officer
of Borrower stating whether or not there exists any Event of Default or
Potential Default, specifying the nature and period of existence thereof and
what action, if any, the Borrower is taking or proposes to take with respect
thereto;

 

(f)                                    Promptly
and in any event within ten (10) days after the occurrence of a Reportable
Event with respect to a Plan, a copy of any materials required to be filed with
the PBGC with respect to such Reportable Event or those that would have been
required to be filed if the thirty (30) day notice requirement to PBGC were not
waived;

 

(g)                                 Promptly
upon receipt, and in no event more than two (2) Business Days after receipt, of
a notice by Borrower or any ERISA Affiliate or any administrator of any Plan or
Multiemployer Plan that the PBGC has instituted proceedings to terminate such
Plan or to appoint a trustee to administer such Plan, a copy of such notice;

 

(h)                                 Together
with each set of financial statements required by subparagraphs (a), (b) and
(c) above, a Covenant Compliance Certificate in the form attached hereto as
Exhibit B;

 

(i)                                     Promptly
upon receipt thereof, copies of all written reports submitted to the Borrower
by independent accountants in connection with any annual or interim review
and/or audit of the books of Borrower; and

 

17

 

(j)                                     With
reasonable promptness, such other data and information as from time to time may
be reasonably requested by the Bank, including, but not limited to, a quarterly
update to the listing of Merchant Service Agreements identifying the changes
(deletions and additions) to the list provided to Bank at closing within
fifteen (15) days of the end of each quarter.

 

Section 5.2. Additional
Financial Reports. Borrower shall, upon request of
Bank, within the later of five (5) days after request of Bank or filing,
deliver to the Bank its annual federal tax returns.

 

Section 5.3. Insurance;
Maintenance of Properties. Borrower shall: (a)
maintain with financially sound and reputable insurers, insurance with coverage
and limits as may be required by law and of such character and amounts as are
usually maintained by companies engaged in like business; (b) furnish to Bank
upon the execution of this Agreement and at the beginning of each fiscal year,
copies of policies and a statement of the insurance coverage; and (c) obtain
other or additional insurance promptly, upon the reasonable request of Bank, to
the extent that such insurance may be available. Bank shall be named a loss
payee under such policies to the extent of its interest. The policies shall provide
that no cancellation shall occur without thirty (30) days prior written notice
to Bank. Borrower shall provide to Bank notice that such policies have been
renewed and are paid in accordance with the terms of such policies at least
fifteen (15) days prior to the date of expiration. Borrower will at least
annually and upon any change, or more often upon the occurrence of an Event of
Default, upon request of Bank, furnish to the Bank a schedule of all insurance
carried by Borrower, setting forth in detail the amount and type of such
insurance. Except as otherwise permitted in this Agreement, Borrower will
maintain, in good repair, working order, and condition, all properties used in
the business of the Borrower, subject to ordinary wear and tear.

 

Section 5.4. Existence; Business.
Borrower will cause to be done all things necessary to preserve and keep in
full force and effect its existence and rights, to conduct its business in a
prudent manner, to maintain in full force and effect, and renew from time to time,
its franchises, permits, licenses, patents, and trademarks that are necessary
to operate its business. Borrower will comply in all material respects with all
valid laws and regulations now in effect or hereafter promulgated by any
properly constituted governmental authority having jurisdiction; provided,
however, that Borrower shall not be required to comply with any law or
regulation which it is contesting in good faith by appropriate proceedings as
long as either the effect of such law or regulation is stayed pending the
resolution of such proceedings or the effect of not complying with such law or
regulation would not reasonably be expected to create a Material Adverse
Effect.

 

Section 5.5. Payment
of Taxes.  Borrower will pay all taxes, assessments, and other
governmental charges levied upon any of its properties or assets or in respect
of its franchises, business, income, or profits before the same become
delinquent, except that no such taxes, assessments, or other charges need be
paid if contested in good faith and by appropriate proceedings promptly
initiated and diligently conducted and if proper amounts, determined in
accordance with GAAP, have been set aside for the payment of all such taxes,
charges, and assessments. Notwithstanding the foregoing, Borrower shall not be
deemed in default of this Section 5.5 or under Section 3.10 for any state or
local (but not federal) taxes, assessments and other governmental charges which
are unpaid due to Borrower’s mistake or oversight provided that the same are
paid or otherwise resolved or discharged within thirty (30) days after Borrower
becomes aware of the same.

 

18

 

Section 5.6. Adverse
Changes. Borrower will promptly notify the Bank in writing of
(a) the occurrence of any event which, if it had existed on the date of this
Agreement, would have required qualification of the representations and
warranties set forth in Article III hereof and (b) any Material Adverse Effect.

 

Section 5.7. Notice of Default.  Borrower
will promptly notify (but in no event more than five (5) days after the
occurrence thereof) the Bank of any Event of Default or Potential Default
hereunder and any demands made upon the Borrower by any Person for the
acceleration and immediate payment of any Indebtedness owed to such Person, if
the amount of such Indebtedness exceeds One Hundred Thousand Dollars
($100,000.00).

 

Section 5.8. Inspection;
Meetings.  Borrower will make available for inspection by duly
authorized representatives of the Bank, or its designated agent, Borrower’s
books, records, and properties when reasonably requested to do so, and will
furnish the Bank such information regarding its business affairs and financial
condition within a reasonable time after written request therefor. Borrower’s
chief operating officer or chief financial officer will, at Bank’s request,
attend meetings (either in person or by telephonic communication) with Bank on
a quarterly basis to discuss the financial and operating status of the
Borrower.

 

Section 5.9. Environmental Matters. Borrower:

 

(a)                                  Shall
comply in all respects with all Environmental Laws where a failure to comply
could result in a Material Adverse Effect;

 

(b)                                 Shall
deliver promptly to Bank (i) copies of any significant documents received from
the United States Environmental Protection Agency or any state, county,
foreign, provincial or municipal environmental or health agency, and (ii)
copies of any significant documents submitted by Borrower or any of its
Subsidiaries to the United States Environmental Protection Agency or any state,
county, foreign, provincial or municipal environmental or health agency
concerning its operations; and

 

(c)                                  Shall
promptly undertake and diligently pursue to completion all action recommended
by any environmental audit report(s) issued subsequent hereto and all action(s)
necessary to correct any environmental problem or defect identified in any
environmental audit report(s).

 

Borrower shall indemnify the Bank and hold it
harmless against any loss, costs, damages, or expense, including, but not
limited to, reasonable attorney’s fees, that Bank may incur, directly or
indirectly, as a result of or in connection with the assertion against Bank of
any claim relating to the presence or removal of any environmental contamination
on any premises utilized by Borrower.

 

Section 5.10. Health
and Safety. Borrower shall be in compliance with
all requirements of applicable federal, state, foreign, provincial and local
environmental, health and safety laws, regulations, ordinances or rules which
would, in the aggregate, if not complied with, result in a Material Adverse
effect on Borrower.

 

Section 5.11. Extraordinary
Services. In the event extraordinary services are
required by Bank for inspections, appraisals, or for securing estimates of
costs which, in the Bank’s reasonable judgment are not regular or routine, Bank
may deduct the reasonable out-of-pocket expense for such extraordinary services
from any moneys due to Borrower hereunder or from any account maintained by
Borrower with Bank or any Affiliate Lender. Bank shall give Borrower notice
prior to obtaining any such extraordinary services.

 

19

 

Section 5.12. Commercial
Operating Account. So long as credit is available
hereunder or until all principal of and interest on the Notes have been paid in
full, the Borrower shall maintain with Bank and/or an Affiliate Lender, as its
primary financial institution, corporate deposit, cash management and loan
accounts, where applicable. All disbursements of Loan proceeds shall be made by
the Bank’s or Affiliate Lender’s crediting of such disbursements directly into
the appropriate Borrower’s account. Bank is authorized to deduct from such
account, or any other account held at any time by Bank or any Affiliate Lender
for the benefit of Borrower, all payments required to be made by Borrower
hereunder.

 

Section 5.13. Additional
Assurance. Borrower
shall upon request of Bank promptly take such action and promptly make,
execute, and deliver all such additional and further items, deeds, assurances,
and instruments as Bank may reasonably require, so as to completely vest in and
ensure to Bank its rights hereunder and in or to the Collateral, including, but
not limited to, additional subordination agreements for all future shareholder
loans and/or undistributed earnings.

 

Section 5.14. Related
Expenses. Borrower hereby authorizes Bank or Bank’s designated
agent (but without obligation by Bank to do so) to incur Related Expenses
(whether prior to, upon, or subsequent to any Event of Default), and Borrower
shall promptly repay, reimburse, and indemnify Bank for any and all Related
Expenses. Bank may, at its option, debit Related Expenses directly to the Loan
Accounts or any Account of Borrower maintained with Bank or any Affiliate
Lender.

 

Section 5.15. Notification.
Borrower shall promptly provide Bank with prior
written notification of:

 

(1)                                  any
change in any location where Collateral is maintained, and any new locations
where Collateral is to be maintained,

 

(2)                                  any
change in the location of the office where Borrower’s records pertaining to its
Accounts and Contract Rights are kept,

 

(3)                                  the
location of any new places of business for Borrower and the changing or closing
of any of its existing places of business,

 

(4)                                  any change in
Borrower’s name, and

 

(5)                                  any change in
Borrower’s locations.

 

Section 5.16. Minimum
EBITDA. Borrower shall maintain EBITDA of at
least: (i) Four Million Seven Hundred Thousand Dollars ($4,700,000.00) for the
Quarter ending September 30, 2002; (ii) Four Million Two Hundred Thousand
Dollars ($4,200,000.00) for the Quarter ending December 31, 2002; (iii) Four
Million Dollars ($4,000,000.00) for the Quarter ending March 31, 2003; (iv)
Five Million Five Hundred Thousand Dollars ($5,500,000.00) for the Quarter
ending June 30, 2003; (v) Six Million Five Hundred Thousand Dollars
($6,500,000.00) for the Quarter ending September 30, 2003; (vi) Six Million
Five Hundred Thousand Dollars ($6,500,000.00) for the Quarter ending December 31,
2003; and (vii) Four Million Five Hundred Thousand Dollars ($4,500,000.00) for
the Quarter ending March 31, 2004. Borrower shall maintain EBITDA of at least
Thirteen Million Five Hundred Thousand Dollars ($13,500,000.00) for the year
ending December 31, 2002, and at least Twenty Three Million Five Hundred
Thousand Dollars ($23,500,000) for the year ending December 31, 2003,
calculated for the preceding four Quarters.

 

Section 5.17. Minimum
Operating Cash Flow to Total Fixed
Charges Ratio. Borrower shall maintain
a ratio of Operating Cash Flow to Total Fixed Charges, tested quarterly on a
rolling four-Quarter basis, commencing September 30, 2002, of not less than
2:50 to 1.00.

 

20

 

Section 5.18. Minimum
EBIT to Interest. Borrower shall maintain a ratio
of EBIT to total Interest Expense (calculated in accordance with GAAP), tested
quarterly on a rolling four-Quarter basis, commencing September 30, 2002, of
not less than 5.00 to 1.00.

 

Section 5.19. Maximum
Leverage.  Borrower
shall maintain a ratio of its Total Indebtedness divided by its total Net
Worth, tested quarterly, commencing September 30, 2002, of less than: (i) 2.75
to 1.00 through March 30, 2003; (ii) 2.50 to 1.00 from March 31, 2003 through
December 30, 2003; and (iii) 2.25 to 1.00 from December 31, 2003 and
thereafter.

 

ARTICLE VI. NEGATIVE
COVENANTS

 

The Borrower further covenants and agrees
that, so long as credit is available hereunder and until the obligations of the
Borrower to the Bank hereunder are satisfied in full, Borrower will, unless the
Bank shall otherwise consent or agree, comply with the following provisions:

 

Section 6.1. Sale, Purchase
of Assets.  Borrower will not, directly or indirectly, (a)
purchase, lease, or otherwise acquire any assets except in the ordinary course
of business (which shall not be deemed to include the purchase or acquisition
of ten percent (10%) or more of the capital stock or assets of operating
businesses unless expressly consented to by Bank in writing prior to such
purchase or acquisition) or as otherwise expressly permitted under this
Agreement, or (b) sell, lease, transfer, or otherwise dispose of any assets
except for (i) assets sold, leased, transferred or subject to other disposition
for full and adequate consideration in the reasonable judgment of Borrower
which Borrower has determined to be worn out or obsolete or not useful in the
ordinary course of its business, and (ii) assets sold, leased, transferred or
subject to other disposition in the ordinary course of business provided that
Borrower receives full and adequate consideration in the reasonable judgment of
Borrower in exchange for such assets sold, leased, transferred or otherwise
subject to disposition. Borrower may not sell, transfer or otherwise dispose of
any Account Receivable or any Contract Right without the prior written consent
of Bank. Notwithstanding the foregoing, upon written notice to Bank, Borrower
may sell or transfer Pledged Accounts provided that proceeds of the same are
used to reduce the debt secured by such Pledged Accounts.

 

Section 6.2. Mortgages,
Security
Interests, and Liens.  Borrower will not, directly or indirectly,
create, incur, assume, or permit to exist any Lien with respect to any property
or assets of Borrower, whether now owned or hereafter acquired other than:

 

(a)                                  Liens
for taxes, assessments, or governmental charges or levies the payment of which
is not at the time required by Section 5.5 hereof,

 

(b)                                 Liens
imposed by law, such as Liens of landlords, carriers, warehousemen, mechanics,
and materialmen arising in the ordinary course of business for sums not yet due
or being contested by appropriate proceedings promptly initiated and diligently
conducted, provided other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor;

 

(c)                                  Liens
incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance, and other types of social
security, or to secure the performance of tenders, statutory obligations, and
surety and appeal bonds, or to secure the performance and return of money bonds
and other similar obligations, excluding obligations for the payment of
borrowed money;

 

21

 

(d)                                 Any
judgment Lien, provided that the judgment it secures shall, within thirty (30)
days after the entry thereof, have been discharged or execution therefor stayed
pending appeal, or shall have been discharged within thirty (30) days after the
expiration of any such stay;

 

(e)                                  Liens
that secure the Indebtedness of Borrower for the purchase price of any real or
personal property and that only encumber the property purchased, provided the
aggregate amount of all such Liens shall not exceed One Hundred Thousand Dollars
($100,000.00);

 

(f)                                    Liens
that secure the repayment of Indebtedness of Borrower to the Bank or any
Affiliate Lender; or

 

(g)                                 Liens
evidenced by or permitted under the terms of the Security Agreement only, and
any other Permitted Encumbrances, including the liens set forth on Schedule
6.2(g).

 

Section 6.3. Borrowed Money.
Borrower will not, directly or indirectly, create, incur or assume
Indebtedness, or otherwise become, be, or remain liable with respect to, any
Indebtedness, provided that the foregoing restrictions shall not apply to:

 

(a)                                  The
Indebtedness evidenced by the Loan Documents, and any other Indebtedness now or
hereafter payable by Borrower to the Bank or any Affiliate Lender;

 

(b)                                 To
the extent permitted by Section 6.2(e) above, Indebtedness for the purchase
price of any real or personal property, which is secured only by a mortgage or
lien on the property purchased; and

 

(c)                                  Indebtedness
which is reflected on the Borrower’s financial assumptions referred to in
Section 3.8 hereof.

 

Section 6.4. Assumptions;
Guaranties.  Borrower will not assume, guarantee,
endorse, or otherwise become directly or contingently liable for (including,
without limitation, liable by way of agreement, contingent or otherwise, to
purchase, to provide funds for payment, to supply funds to, or otherwise invest
in any debtor or otherwise to assure the creditor against loss) any obligation
or Indebtedness of any other Person, except (i) guaranties by endorsement of
negotiable instruments for deposit, collection, or similar transactions in the
ordinary course of business, and (ii) Indebtedness of Borrower to the Bank or
any Affiliate Lender.

 

Section 6.5. Mergers;
Consolidation; Sale of Borrower.  Borrower will not merge or
consolidate with any Person, dissolve, wind up its affairs, or sell, assign,
lease, or otherwise dispose of (whether in one transaction or in a series of
transactions), all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person, except where such Person is or becomes a Borrower
hereunder as of the date of such transaction and such further assurances with
respect to any such transaction satisfactory to the Bank are delivered on or
before the effective date of such transaction.

 

Section 6.6. Investments; Loans.  Borrower will not, directly
or indirectly, (a) purchase or otherwise acquire or own any stock or other
securities of any other Person (other than as permitted under this Agreement)
or (b) make or permit to be outstanding any loan or advance (other than trade
advances in the ordinary course of business or as otherwise permitted under
this Agreement) or enter into any arrangement to provide funds or credit, to
any other Person, except that (i) it may purchase or otherwise acquire and own
marketable U.S. Treasury and governmental agency obligations, and certificates
of deposit and bankers acceptances issued or created by any domestic commercial
bank, the stock of any

 

22

 

Subsidiaries identified in Section 3.14, and shares of money market
accounts maintained at the Goldman Sachs Group, Inc., and (ii) they may make
loans or advances as permitted pursuant to Section 6.2 above.

 

Section 6.7. Payment
of Subordinated Debt. Borrower shall not make any
payment upon any outstanding Indebtedness which is subordinated to the Bank,
except as otherwise expressly authorized by the Bank in such subordination.

 

Section 6.8. Inventory
Location/Leases. Borrower shall not, without
thirty (30) days prior written notice to Bank, make any change in any location
where its respective Inventory is maintained or any change in the location of
the office where its respective records pertaining to its respective Accounts
and Contract Rights are kept. Borrower shall not enter into any new leases for
premises from which it will conduct business without first delivering to Bank a
fully executed copy of such lease.

 

ARTICLE VII.
CONDITIONS TO

DISBURSEMENT OF LOAN

 

Section 7.1. Documentation
Required Prior to Date of Loan Funding. In addition to the
documents required to be supplied to Bank by the Borrower and/or any Person as
a condition of lending as set forth in Article IV hereinabove, the Borrower
will, on or prior to the date of the execution of this Agreement, deliver or
cause to be delivered to the Bank the following:

 

(a)                                  Evidence
of fire, public liability and property damage insurance, or other evidence that
Borrower has met the insurance requirements of the Bank, all in form and amount
satisfactory to and approved by Bank. The insurance company must be acceptable
to the Bank and the Bank shall be named as an additional insured with a
mortgagee loss payable clause.

 

(b)                               Borrower shall have
provided the following in form acceptable to Bank:

 

(i)                                   Good
Standing Certificate and the Certificate of Incorporation of Borrower certified
by the Delaware Secretary of State;

 

(ii)                                By-Laws
of Borrower, certified as true, correct and complete by Borrower’s Secretary;

 

(iii)                               Evidence
in the form of a legal opinion from counsel to Borrower and borrowing
resolutions which are acceptable to Bank and which identify those individuals
by name and title who have the proper legal capacity and authority to enter
into this transaction, execute the Loan Documents, and request a Revolver
Advance and/or Purpose and Ability Advance;

 

(iv)                            Federal Tax I.D. number of
Borrower; and

 

(v)                                 List
of all Merchant Service Agreements, indicating the name and address of the
Person(s) executing the same and key information regarding the same, certified
as true, correct and complete by Borrower’s chief financial officer.

 

(c)                                  In
addition to, and not in limitation of the foregoing, the Bank’s obligation to
disburse pursuant to this Agreement is contingent upon the following:

 

23

 

(i)                                     Receipt
of a Draw Request complying with the conditions set forth in Section 2.3.

 

ARTICLE VIII. EVENTS
OF DEFAULT

 

The occurrence of any one or more of the
following events shall constitute an Event of Default under this Agreement:

 

Section 8.1. Principal
or Interest. If the Borrower fails: (a) to make payment of
principal on the Notes when due or (b) to pay interest, fees or any other
Obligation payable by the Borrower when required to be paid, to the extent such
failure under (b) is not remedied within five (5) Business Days after the date
when due or such required date of payment; or

 

Section 8.2. Misrepresentation.
If any representation or warranty made herein by
Borrower, or in any written statement, certificate, report, or financial
statement at any time furnished by Borrower, or on behalf of Borrower in
connection herewith, is incorrect or misleading in any material respect when
made (but not including any failure on the part of Borrower to meet the
estimated timetables provided by Borrower to Bank pursuant to Sections 2.3
(a)(vi) and/or 2.3 (b)(ii)); or

 

Section 8.3. Failure of Performance of
this Agreement. If Borrower fails to perform or
observe any covenant or agreement contained in this Agreement or any other Loan
Document applicable to it, other than any sums of money payable hereunder, and
such failure remains unremedied for fifteen (15) calendar days after the Bank
shall have given written notice thereof to the Borrower; or

 

Section 8.4. Cross-Default.
If Borrower (a) fails to pay any Indebtedness totaling One Hundred Thousand
Dollars ($100,000.00) or more (other than as evidenced by the Notes) owing by
Borrower when due, whether at maturity, by acceleration, or otherwise, or (b)
fails to perform any term, covenant, or agreement on its part to be performed
under any agreement or instrument (other than the Loan Documents) evidencing,
securing, or relating to such Indebtedness when required to be performed, or is
otherwise in default thereunder, if the effect of such failure is to
accelerate, or to permit the holder(s) of such Indebtedness or the trustee(s)
under any such agreement or instrument to accelerate, the maturity of such
Indebtedness, whether or not such failure shall be waived by such holder(s) or
trustee(s); or

 

Section 8.5. Event of Default Under Any
Security
Instrument. If an event of default occurs (with
passage of time or service of notice, or both) and is continuing under the
terms of any Security Instrument; or

 

Section 8.6. ERISA.
If any of the following occur and the resulting liability exceeds One Hundred
Thousand Dollars ($100,000.00) or creates a Material Adverse Effect: (a) any
Plan incurs any “accumulated funding deficiency” (as such term is defined in
ERISA) whether waived or not, (b) Borrower engages in any Prohibited
Transaction, (c) any Plan (other than an employee health care plan, Section 125
Plan or a 401(K) plan) is terminated, (d) a trustee is appointed by an
appropriate United States district court to administer any Plan, or (e) the
PBGC institutes proceedings to terminate any Plan or to appoint a trustee to
administer any Plan; or

 

Section 8.7. Termination
of Business; Insecurity. If Borrower discontinues a material
portion of its business, or if there occurs a Material Adverse Effect; or

 

Section 8.8. Assignment of Rights under this Agreement.
If Borrower assigns this Agreement or the right to receive any of said
disbursements or any interest therein, or if any of the assets of Borrower is

 

24

 

conveyed, sold, leased, transferred, assigned or further encumbered in
any way, except as otherwise permitted by this Agreement; or

 

Section 8.9. Requirements of Governmental
Authorities. If Borrower fails to comply with any
requirements of any governmental authority having jurisdiction, within thirty
(30) days after written notice of such requirements shall have been given to
Borrower; provided, however, that said thirty (30) day limitation shall not
apply to any requirements of governmental authorities which are being contested
by Borrower in good faith and for which the failure to comply will not cause a
Material Adverse Effect; or

 

Section 8.10. Hazardous
Waste. If at any time Borrower is in
material violation of any federal, state, or local statute, law, ordinance,
code, rule, regulation, order, or decree regulating or imposing liability for
any hazardous, toxic or dangerous substance, waste, or material at, on, or in
connection with Borrower’s business or operations which could reasonably be
expected to have a Material Adverse Effect; or

 

Section 8.11. Tax
Liens. If any tax lien individually or in the
aggregate with all other tax liens exceeding $50,000 shall be filed against
Borrower or any of its properties by any federal, state, foreign, provincial or
municipal authority (except as provided in Section 6.2 hereof); or

 

Section 8.12. Loss/Damage.
If there be an uninsured loss, damage, theft, or act of destruction in
excess of One Hundred Thousand Dollars ($100,000.00), or if there be any levy,
seizure, or attachment to, of, or upon any of the Collateral, including any
attempt to accomplish the foregoing; or

 

Section 8.13. Insolvency.
If Borrower, or any endorser, guarantor or surety upon
or for any of the Obligations shall suffer Financial Impairment, shall
discontinue business or (a) is adjudicated a bankrupt or insolvent under any
law of any existing jurisdiction, domestic or foreign, or ceases, is unable, or
admits in writing its inability, to pay its debts generally as they mature, or
makes a general assignment for the benefit of creditors, (b) applies for, or
consents to, the appointment of any receiver, trustee, or similar officer for
it or for any substantial part of its property, or any such receiver, trustee,
or similar officer is appointed without the application or consent of Borrower,
and such appointment continues thereafter undischarged for a period of sixty
(60) days, (c) institutes, or consents to the institution of any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution,
liquidation, or similar proceeding relating to it under the laws of any
jurisdiction, (d) any such proceeding is instituted against Borrower and
remains thereafter undismissed for a period of sixty (60) days, or (e) any
judgment, writ, warrant of attachment or execution, or similar process is
issued or levied against a substantial part of the property of Borrower or any
Subsidiary and such judgment, writ, or similar process is not effectively
stayed within sixty (60) days after its issue or levy.

 

ARTICLE IX. REMEDIES
UPON DEFAULT

 

Section 9.1. Optional
Acceleration. In the event that one or more of the
Events of Default set forth in Sections 8.1 through 8.12 above occurs and
continues and is not waived by the Bank, then, in any such event, and at any
time thereafter, the Bank may, at its option, terminate its commitment to make
any Loan and declare the unpaid principal of, and all accrued interest on the
Notes, and any other liabilities hereunder, and all other Indebtedness of the
Borrower to the Bank forthwith due and payable, whereupon the same will
forthwith become due and payable without presentment, demand, protest, or other
notice of any kind, all of which the Borrower hereby expressly waives, anything
contained herein or in the Notes to the contrary notwithstanding.

 

Section 9.2. Automatic Acceleration.
Upon the happening of an Event of Default referred to in Section 8.13 above,
the unpaid principal of and all accrued interest on the Notes, and any other
liabilities

 

25

 

hereunder and all other Indebtedness of the Borrower to the Bank then
existing will thereupon become immediately due and payable in full and the
commitment, if any, of the Bank to make any Loan, if not previously terminated,
will thereupon immediately terminate without presentment, demand, protest, or
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in the Notes to the contrary notwithstanding.

 

Section 9.3. Right of Set Off; Security.
Upon the occurrence and continuation of an Event of Default which is not waived
by the Bank, the Bank has the right, in addition to all other rights and
remedies available to it, to set off the unpaid balance of the Notes and any
other Indebtedness payable to the Bank held by it against any debt owing to
Borrower by the Bank or by any Affiliate Lender, including, without limitation,
any obligation under a repurchase agreement or any funds held at any time by
the Bank or any Affiliate Lender, whether collected or in the process of collection,
or in any time or demand deposit account maintained by Borrower at, or
evidenced by any certificate of deposit issued by, the Bank or any Affiliate
Lender. Borrower hereby grants, pledges, and assigns to the Bank a security
interest in, and lien upon, all cash, negotiable instruments, securities,
deposit accounts, and other cash equivalents, whether collected or in the
process of collection, whether matured or unmatured, now or hereafter in the
possession of the Bank or any Affiliate Lender and upon which Borrower has or
may hereafter have any claim. Borrower acknowledges and agrees that all of the
foregoing shall constitute “cash collateral” for purposes of this Agreement.
Borrower agrees, to the fullest extent it may effectively do so under applicable
law, that any holder of a participation in the Notes may exercise rights of
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of Borrower
pursuant to this Agreement in the amount of such participation.

 

Section 9.4. No
Waiver. The remedies in this Article IX are in addition to, not in
limitation of, any other right, power, privilege, or remedy, either in law, in
equity, or otherwise, to which the Bank may be entitled. No failure or delay on
the part of the Bank in exercising any right, power, or remedy will operate as
a waiver thereof, nor will any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right hereunder.

 

ARTICLE X.
MISCELLANEOUS

 

Section 10.1. Remedies;
Waiver; Amendments. The remedies in this Agreement are in
addition to, not in limitation of, any other right, power, privilege, or
remedy, either in law, in equity, or otherwise, to which the Bank may be
entitled. All Bank’s rights and remedies, whether evidenced by this Agreement
or by any other agreement, instrument or document shall be cumulative and may
be exercised singularly or concurrently. No waiver of any provision of this
Agreement or the Notes, or consent to departure therefrom, is effective unless
in writing and signed by the Bank. No such consent or waiver extends beyond the
particular case and purpose involved. No amendment to this Agreement is
effective unless in writing and signed by the Borrower and the Bank. If at any
time or times, by assignment or otherwise, Bank transfers any of the
Obligations or any part of the Collateral to another person, such transfer
shall carry with it Bank’s powers and rights under this Agreement with respect
to the Obligation or Collateral so transferred and the transferee shall have
said powers and rights, whether or not they are specifically referred to in the
transfer. To the extent that Bank retains any other of the Obligations or any
part of the Collateral, Bank will continue to have the rights and powers with
respect to the Obligations and the Collateral as set forth in this Agreement.

 

Section 10.2. Expenses;
Documentary Taxes. The Borrower shall pay (a) all
reasonable out-of-pocket expenses of the Bank, including fees and disbursements
of special counsel for the Bank, in connection with the preparation of this
Agreement, any waiver or consent hereunder or any amendment hereof or any Event
of Default hereunder and (b) if an Event of Default or Potential Default
occurs, all reasonable out-of-pocket expenses incurred by the Bank, including
fees and disbursements of counsel, in connection with

 

26

 

such Event of Default or Potential Default and collection and other
enforcement proceedings resulting therefrom. The Borrower shall reimburse the
Bank for its payment of all transfer taxes, documentary taxes, assessments, or
charges made by any governmental authority by reason of the execution and
delivery of this Agreement or the Notes.

 

Section 10.3. Indemnification.
The Borrower shall indemnify and hold the Bank harmless against any and all
liabilities, losses, damages, costs, and expenses of any kind (including,
without limitation, the reasonable fees and disbursements of counsel in
connection with any investigative, administrative or judicial proceeding,
whether or not the Bank shall be designated a party thereto) which may be
incurred by the Bank relating to or arising out of this Agreement or any actual
or proposed use of proceeds of any Loan hereunder; provided, that the Bank
shall have no right to be indemnified hereunder for its own bad faith, gross
negligence or willful misconduct as determined by a court of competent
jurisdiction. A certificate as to any such loss or expense shall be promptly
submitted by the Bank to the Borrower and shall, in the absence of manifest
error, be conclusive and binding as to the amount thereof.

 

Section 10.4. Construction.
This Agreement, the Notes and the rights and duties of Borrower and Bank
will be governed by and construed in accordance with the laws of the State of
Ohio, without regard to principles of conflict of law (including, without
limitation, any terms not specifically defined in this Agreement that may be so
specifically defined pursuant to Ohio Revised Code Sections 1309.01-1309.50
inclusive, and including any amendments thereof or any substitutions therefor).
The several captions to different Articles and Sections of this Agreement are
inserted for convenience only and shall be ignored in interpreting the
provisions hereof.

 

Section 10.5. Jurisdiction.

 

TO THE GREATEST EXTENT PERMITTED BY LAW,
BORROWER HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY
LENDER. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO THIS
AGREEMENT (EACH, A “PROCEEDING”), BORROWER IRREVOCABLY (A) SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS HAVING
JURISDICTION IN THE CITY OF CLEVELAND, COUNTY OF CUYAHOGA AND STATE OF OHIO,
AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF
VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE
RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE
JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT SHALL PRECLUDE LENDER
FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A
PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A
PROCEEDING IN ANY OTHER JURISDICTION. BORROWER FURTHER AGREES AND CONSENTS
THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER
APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY OHIO STATE OR
UNITED STATES COURT SITTING IN THE CITY OF CLEVELAND AND COUNTY OF CUYAHOGA MAY
BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO
BORROWER AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE
UPON RECEIPT; EXCEPT THAT IF BORROWER SHALL REFUSE TO ACCEPT DELIVERY,
SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN
SO MAILED.

 

Section 10.6. Extension
of Time. Whenever any payment hereunder or under
the Notes becomes due on a date which the Bank is not open for the transaction
of business, such payment will be due on the next

 

27

 

succeeding Business Day and such extension of time will be included in
computing interest in connection with such payment.

 

Section 10.7. Notices.
All written notices, requests, or other communications herein provided for must
be addressed:

 

to the Borrower as follows:

 

Heartland Payment Systems, Inc.

130 Nassau St.

Princeton, New Jersey 08542

Attn: Robert H.B. Baldwin, Jr., Chief Financial Officer

 

to the Bank as follows:

 

KeyBank National Association

800 Superior Avenue

Cleveland, OH 44114

Attn: Antoinette Nunes, Vice President

 

or at such other address as either party may designate to the other in
writing. Such communication will be effective (i) if given by mail, 72 hours
after such communication is deposited in the U.S. mail by certified mail,
return receipt requested, postage prepaid or (ii) if given by other means, when
delivered at the address specified in this Section 10.7.

 

Section 10.8. Survival
of Agreements; Relationship. All agreements,
representations, and warranties made in this Agreement will survive the making
of the extension of credit hereunder, and will bind and inure to the benefit of
the Borrower and the Bank, and their respective successors and assigns; provided,
that no subsequent holder of the Notes shall by reason of acquiring that Note
or Notes become obligated to make any Loan hereunder and no successor to or
assignee of the Borrower may borrow hereunder without the Bank’s written
assent. The rights and powers given in this Agreement to the Bank are in
addition to those otherwise created or existing in the same Collateral by
virtue of other agreements or writings. The relationship between the Borrower
and the Bank with respect to this Agreement, the Notes and any other Loan
Document is and shall be solely that of debtor and creditor, respectively, and
the Bank has no fiduciary obligation toward the Borrower with respect to any
such document or the transactions contemplated thereby.

 

Section 10.9. Severability.
If any provision of this Agreement or the Notes, or any action taken
hereunder, or any application thereof, is for any reason held to be illegal or
invalid, such illegality or invalidity shall not affect any other provision of
this Agreement or the Notes, each of which shall be construed and enforced
without reference to such illegal or invalid portion and shall be deemed to be
effective or taken in the manner and to the full extent permitted by law.

 

Section 10.10. Entire
Agreement. This Agreement, the Notes, the Security Instruments
and any other Loan Document executed in connection herewith integrate all the
terms and conditions mentioned herein or incidental hereto and supersede all
oral representations and negotiations and supersede, amend and restate prior
writings with respect to the subject matter hereof. In this Agreement unless
the context otherwise requires, words in the singular number include the
plural, and in the plural number include the singular.

 

28

 

Section 10.11. Participation/Syndication.
Borrower acknowledges that the Bank reserves the right
to syndicate and/or participate its interest in the Loans and Borrower agrees
to, at Bank’s request, execute such additional promissory notes and other
instruments as may be appropriate to evidence its obligation under the Loans to
such syndicate Banks as may commit, in the future, to fund a portion of the
Loans according to the terms of this Agreement.

 

Section
10.12. JURY TRIAL WAIVER.

 

BORROWER
AND BANK EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN BANK AND
BORROWER ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO. THIS WAIVER SHALL NOT
IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY BANK’S ABILITY TO PURSUE
REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED
IN ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT BETWEEN BANK AND
BORROWER.

 

IN WITNESS WHEREOF, the Borrower
and the Bank have each caused this Agreement to be executed by their duly
authorized officers in Cleveland, Ohio to be effective as of August 28, 2002.

 

	
   

  	
  BORROWER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HEARTLAND PAYMENT SYSTEMS,
  INC.,

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin Uhle

  	
   

  
	
   

  	
   

  	
  Martin Uhle, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KEYBANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Antoinette Nunes

  	
   

  
	
   

  	
   

  	
  Antoinette Nunes, Vice President

  
					

 

29

 

EXHIBIT A-1

REVOLVER ADVANCE NOTE

 

	
  $3,500,000.00

  	
   

  	
  Cleveland, Ohio, As

  of August 28, 2002

  

 

FOR VALUE RECEIVED, the undersigned HEARTLAND PAYMENT SYSTEMS, INC., a
Delaware corporation (the “Borrower”), promises to pay to the order of KEYBANK
NATIONAL ASSOCIATION (herein called `Bank”), the sum of Three
Million Five Hundred Thousand Dollars ($3,500,000.00) or such lesser amount as
shall have actually been borrowed by the Borrower from the Bank and not
previously repaid, pursuant to the terms of the Loan Agreement (as defined
below) with interest payable monthly in arrears on the second day of each month
for the preceding calendar month, starting on the second day of October, 2002,
or as otherwise set forth in the Loan Agreement, and at maturity, at the rate
and according to the provisions set forth in ARTICLE II of the Loan Agreement.

 

This Note is the Revolver Advance Note
referred to in, and is entitled to the benefits of, the Revolver Advance and
Purpose and Ability Line of Credit Loan Agreement by and between the Bank and
the Borrower dated as of August 28, 2002, as the same may be hereafter amended,
extended, restated, renewed and/or substituted, in whole or in part, from time
to time (the “Loan Agreement”). This Note may be declared forthwith due and
payable in the manner and with the effect provided in the Loan Agreement, which
contains provisions for acceleration of the maturity hereof upon the happening
of any Event of Default.

 

The Borrower has assigned to Bank all of
Borrower’s “Accounts Receivable” and “Contract Rights” and has granted to Bank
a security interest in all of Borrower’s “Accounts Receivable”, “Inventory”,
“Equipment”, “Cash Security”, funds on deposit in the “Cash Collateral
Account”, “General Intangibles”, and all “Proceeds”, products, and profits
thereof, as security for the payment of this note and all other “Obligations”,
as those terms are defined in ARTICLE I of the Loan Agreement and/or the
Security Agreement executed in connection with the Loan Agreement (all herein
called “Obligations”).

 

Each defined term used in this Note shall
have the meaning ascribed thereto in the Loan Agreement.

 

The Borrower expressly waives presentment,
demand, notice of dishonor, protest, and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement
of this Note, and assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
collateral, and to the addition or release of any other person primarily or
secondarily liable. Borrower understands and agrees that this Note is subject
to and shall be construed according to the laws of the State of Ohio.

 

The Borrower authorizes any attorney-at-law
to appear in any court of record in the State of Ohio or any other state or
territory in the United States after this Note becomes due, whether by lapse of
time or acceleration, waive the issuance and service of process, admit the
maturity of this Note, confess judgment against Borrower in favor of any holder
of this Note for the amount then appearing due hereon together with interest
thereon and costs of suit, and thereupon release all errors and waive all
rights of appeal and stay of execution. The foregoing warrant of attorney shall
survive any judgment rendered against the Borrower, and if any judgment be
vacated for any reason, the holder hereof nevertheless may thereafter use the
foregoing warrant of attorney to obtain any additional judgment or judgments
against Borrower.

 

1

 

Borrower agrees that the holder’s attorney
may confess judgment pursuant to the foregoing warrant of attorney and
expressly waives any conflict of interest arising therefrom. Borrower further
agrees that the attorney confessing judgment pursuant to the foregoing warrant
of attorney may receive a legal fee or other compensation from the holder.

 

The Borrower acknowledges that this Note was
signed in Cuyahoga County, in the State of Ohio.

 

[SIGNATURE ON NEXT
PAGE.]

 

2

 

WARNING: BY SIGNING THIS PAPER, YOU GIVE UP
YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT
JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS
OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY
HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON
HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

 

	
   

  	
  HEARTLAND PAYMENT
  SYSTEMS, INC.,

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Martin Uhle, President

  
					

 

WARNING: BY SIGNING THIS PAPER, YOU GIVE UP
YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT
JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS
OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY
HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON
HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

 

3

 

EXHIBIT A-2

PURPOSE AND ABILITY LINE OF CREDIT NOTE

 

	
  $3,000,000.00

  	
   

  	
  Cleveland, Ohio, As

  of August 28, 2002

  

 

FOR VALUE RECEIVED, the undersigned HEARTLAND PAYMENT SYSTEMS, INC., a
Delaware corporation (the “Borrower”), promises to pay to the order of KEYBANK
NATIONAL ASSOCIATION (herein called `Bank”), the sum of Three
Million Dollars ($3,000,000.00) or such lesser amount as shall have actually
been borrowed by the Borrower from the Bank and not previously repaid, pursuant
to the terms of the Loan Agreement (as defined below) with interest payable
monthly in arrears on the second day of each month for the preceding calendar
month, starting on the second day of October, 2002, or as otherwise set forth
in the Loan Agreement, and at maturity, at the rate and according to the
provisions set forth in ARTICLE II of the Loan Agreement.

 

This Note is the Purpose and Ability Line of
Credit Advance Note referred to in, and is entitled to the benefits of, the
Revolver Advance and Purpose and Ability Line of Credit Loan Agreement by and
between the Bank and the Borrower dated as of August 28, 2002, as the same may
be hereafter amended, extended, restated, renewed and/or substituted, in whole
or in part, from time to time (the “Loan Agreement”). This Note may be declared
forthwith due and payable in the manner and with the effect provided in the
Loan Agreement, which contains provisions for acceleration of the maturity
hereof upon the happening of any Event of Default.

 

The Borrower has assigned to Bank all of
Borrower’s “Accounts Receivable” and “Contract Rights” and has granted to Bank
a security interest in all of Borrower’s “Accounts Receivable”, “Inventory”,
“Equipment”, “Cash Security”, funds on deposit in the “Cash Collateral
Account”, “General Intangibles”, and all “Proceeds”, products, and profits thereof,
as security for the payment of this note and all other “Obligations”, as those
terms are defined in ARTICLE I of the Loan Agreement and/or the Security
Agreement executed in connection with the Loan Agreement (all herein called
“Obligations”).

 

Each defined term used in this Note shall
have the meaning ascribed thereto in the Loan Agreement.

 

The Borrower expressly waives presentment,
demand, notice of dishonor, protest, and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement
of this Note, and assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
collateral, and to the addition or release of any other person primarily or
secondarily liable. Borrower understands and agrees that this Note is subject
to and shall be construed according to the laws of the State of Ohio.

 

The Borrower authorizes any attorney-at-law
to appear in any court of record in the State of Ohio or any other state or
territory in the United States after this Note becomes due, whether by lapse of
time or acceleration, waive the issuance and service of process, admit the
maturity of this Note, confess judgment against Borrower in favor of any holder
of this Note for the amount then appearing due hereon together with interest
thereon and costs of suit, and thereupon release all errors and waive all
rights of appeal and stay of execution. The foregoing warrant of attorney shall
survive any judgment rendered against the Borrower, and if any judgment be
vacated for any reason, the holder hereof nevertheless may thereafter use the
foregoing warrant of attorney to obtain any additional judgment or judgments
against Borrower.

 

1

 

Borrower agrees that the holder’s attorney may confess judgment
pursuant to the foregoing warrant of attorney and expressly waives any conflict
of interest arising therefrom. Borrower further agrees that the attorney
confessing judgment pursuant to the foregoing warrant of attorney may receive a
legal fee or other compensation from the holder.

 

[SIGNATURE ON NEXT
PAGE.]

 

2

 

The Borrower acknowledges that this Note was signed in Cuyahoga County,
in the State of Ohio.

 

WARNING: BY SIGNING THIS PAPER, YOU GIVE UP
YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT
JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS
OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY
HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON
HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

 

	
   

  	
  HEARTLAND PAYMENT
  SYSTEMS, INC.,

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Martin Uhle, President

  
					

 

WARNING: BY SIGNING
THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY
ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE
AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY
CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY
GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}]]