Document:

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                                                                    Exhibit 4.18
                                                                  EXECUTION COPY

                                  $300,000,000

                          CHESAPEAKE ENERGY CORPORATION

                           7.5% Senior Notes due 2013

                          REGISTRATION RIGHTS AGREEMENT

                                                                   March 5, 2003

SALOMON SMITH BARNEY INC.
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON LLC
LEHMAN BROTHERS INC.
MORGAN STANLEY & CO. INCORPORATED
BNP PARIBAS SECURITIES CORP.
CREDIT LYONNAIS SECURITIES (USA) INC.
TD SECURITIES (USA) INC.
 c/o Salomon Smith Barney Inc.
     388 Greenwich Street
     New York, New York 10013

Dear Sirs:

     Chesapeake Energy Corporation, an Oklahoma corporation (the "Issuer"),
proposes to issue and sell to Salomon Smith Barney Inc., Bear, Stearns & Co.
Inc., Credit Suisse First Boston LLC, Lehman Brothers Inc., Morgan Stanley & Co.
Incorporated, BNP Paribas Securities Corp., Credit Lyonnais Securities (USA)
Inc. and TD Securities (USA) (collectively, the "Initial Purchasers"), upon the
terms set forth in a purchase agreement dated February 28, 2003 (the "Purchase
Agreement"), $300,000,000 aggregate principal amount of its 7.5% Senior Notes
due 2013 (the "Initial Securities") to be initially guaranteed (the
"Guarantees") by The Ames Company, L.L.C., Carmen Acquisition, L.L.C.,
Chesapeake Acquisition, L.L.C., Chesapeake EP Corporation, Chesapeake Delta
Corp., Chesapeake Energy Louisiana Corporation, Chesapeake ENO Acquisition,
L.L.C., Chesapeake Focus, L.L.C., Chesapeake KNAN Acquisition, L.L.C.,
Chesapeake Mountain Front, L.L.C., Chesapeake Operating, Inc., Chesapeake ORC,
L.L.C., Chesapeake Royalty, L.L.C., Gothic Energy, L.L.C., Gothic Production,
L.L.C., Nomac Drilling Corporation, Sap Acquistion, L.L.C., Chesapeake
Exploration Limited Partnership, Chesapeake Louisiana, L.P., Chesapeake
Panhandle Limited Partnership, Chesapeake-Staghorn Acquisition L.P., Chesapeake
Sigma, L.P. (the "Guarantors" and, collectively with the Issuer, the "Company").
The Initial Securities will be issued pursuant to the Indenture, dated as of
March 5, 2003 (the "Indenture"), among the Issuer, the Guarantors named therein
and The Bank of New York, as trustee (the "Trustee"). As an inducement to the
Initial Purchasers to enter into the Purchase Agreement, the Company agrees with
the Initial Purchasers, for the benefit of the Initial Purchasers and the
holders of the Securities (as defined below) (collectively the "Holders"), as
follows:

     1. Registered Exchange Offer. Unless not permitted by applicable law (after
the Company has complied with the ultimate paragraph of this Section 1), the
Company shall prepare and, not later than 60 days (such 60th day being a "Filing
Deadline") after the date on which the Initial Purchasers purchase the Initial
Securities pursuant to the Purchase Agreement (the "Closing Date"), file with
the Securities and Exchange Commission (the "Commission") a registration
statement on an appropriate form under the Securities Act of 1933, as amended
(the "Securities Act"), or amend an existing registration statement

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(each such registration statement, an "Exchange Offer Registration Statement"),
with respect to a proposed offer (the "Registered Exchange Offer") to the
Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who
are not prohibited by any law or policy of the Commission from participating in
the Registered Exchange Offer, to issue and deliver to such Holders, in exchange
for the Initial Securities, a like aggregate principal amount of debt securities
of the Company issued under the Indenture, identical in all material respects to
the Initial Securities and registered under the Securities Act (the "Exchange
Securities"). Each of the Issuer and the Guarantors shall use its best efforts
to (i) cause such Exchange Offer Registration Statement to become effective
under the Securities Act within 180 days after the Closing Date (such 180th day
being an "Effectiveness Deadline") and (ii) keep the Exchange Offer Registration
Statement effective for not less than 30 days (or longer, if required by
applicable law) after the date notice of the Registered Exchange Offer is mailed
to the Holders (such period being called the "Exchange Offer Registration
Period").

     If the Company commences the Registered Exchange Offer, each of the Issuer
and the Guarantors (i) shall use its best efforts to consummate the Registered
Exchange Offer on the earliest practicable date after the Exchange Offer
Registration Statement has become effective and (ii) will be required to
consummate the Registered Exchange Offer no later than 60 days after the date on
which the Exchange Offer Registration Statement is declared effective (such 60th
day being the "Consummation Deadline").

     Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder of Transfer Restricted Securities electing to exchange the
Initial Securities for Exchange Securities (assuming that such Holder is not an
affiliate of the Company within the meaning of the Securities Act, acquires the
Exchange Securities in the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution of the Exchange
Securities and is not prohibited by any law or policy of the Commission from
participating in the Registered Exchange Offer) to trade such Exchange
Securities from and after their receipt without any limitations or restrictions
under the Securities Act and without material restrictions under the securities
laws of the several states of the United States.

     The Company acknowledges that, pursuant to current interpretations by the
Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Initial Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required to deliver a prospectus
containing the information set forth in (a) Annex A hereto on the cover, (b)
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section and (c) Annex C hereto in the "Plan of Distribution"
section of such prospectus in connection with a sale of any such Exchange
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer and (ii) if an Initial Purchaser elects to sell Securities (as
defined below) acquired in exchange for Initial Securities constituting any
portion of an unsold allotment, such Initial Purchaser is required to deliver a
prospectus containing the information required by Items 507 or 508 of Regulation
S-K under the Securities Act, as applicable, in connection with such sale.

     The Company shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the prospectus
contained therein, in order to permit such prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided, however, that (i) in the
case where such prospectus and any amendment or supplement thereto must be
delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be
the lesser of 180 days and the date on which all Exchanging Dealers and the
Initial Purchasers have sold all Exchange Securities held by them (unless such
period is extended pursuant to Section 3(j) below) and (ii) the Company shall
make such prospectus and any amendment or supplement thereto available to any

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broker-dealer for use in connection with any resale of any Exchange Securities
for a period of not less than 180 days after the consummation of the Registered
Exchange Offer.

     If, upon consummation of the Registered Exchange Offer, any Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, the Company, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
such Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (the "Private Exchange") for the Initial Securities held by such
Initial Purchaser, a like principal amount of debt securities of the Company
issued under the Indenture and identical in all material respects to the Initial
Securities (the "Private Exchange Securities"). The Initial Securities, the
Exchange Securities and the Private Exchange Securities are herein collectively
called the "Securities".

     In connection with the Registered Exchange Offer, the Company shall:

          (a) mail to each Holder a copy of the prospectus forming part of the
     Exchange Offer Registration Statement, together with an appropriate letter
     of transmittal and related documents;

          (b) keep the Registered Exchange Offer open for the minimum period
     required under applicable Federal and state securities laws, which shall
     not be less than 30 days nor more than 60 days after the date notice
     thereof is mailed to the Holders;

          (c) utilize the services of a depositary for the Registered Exchange
     Offer with an address in the Borough of Manhattan, The City of New York,
     which may be the Trustee or an affiliate of the Trustee;

          (d) permit Holders to withdraw tendered Securities at any time prior
     to the close of business, New York time, on the last business day on which
     the Registered Exchange Offer shall remain open; and

          (e) otherwise comply with all applicable laws.

     As soon as practicable after the close of the Registered Exchange Offer or
the Private Exchange, as the case may be, the Company shall:

          (x) accept for exchange all the Securities validly tendered and not
     withdrawn pursuant to the Registered Exchange Offer and the Private
     Exchange;

          (y) deliver to the Trustee for cancellation all the Initial Securities
     so accepted for exchange; and

          (z) cause the Trustee to authenticate and deliver promptly to each
     Holder of the Initial Securities, Exchange Securities or Private Exchange
     Securities, as the case may be, equal in principal amount to the Initial
     Securities of such Holder so accepted for exchange.

     The Indenture provides that the Exchange Securities will not be subject to
the transfer restrictions set forth in the Indenture and that all the Securities
will vote and consent together on all matters as one class and that none of the
Securities will have the right to vote or consent as a class separate from one
another on any matter.

     Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on

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which interest was paid on the Initial Securities surrendered in exchange
therefor or, if no interest has been paid on the Initial Securities, from date
of original issue of the Initial Securities.

     Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Company or if it is an affiliate, such Holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Initial Securities that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities.

     Notwithstanding any other provisions hereof, the Company will ensure that
(i) any Exchange Offer Registration Statement and any amendment thereto and any
prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

     If following the date hereof there has been announced a change in
Commission policy with respect to exchange offers that in the reasonable opinion
of counsel to the Company raises a substantial question as to whether the
Registered Exchange Offer is permitted by applicable federal law, the Company
will seek a no-action letter or other favorable decision from the Commission
allowing the Company to consummate the Registered Exchange Offer. The Company
will pursue the issuance of such a decision to the Commission staff level. In
connection with the foregoing, the Company will take all such other actions as
may be requested by the Commission or otherwise required in connection with the
issuance of such decision, including without limitation (i) participating in
telephonic conferences with the Commission, (ii) delivering to the Commission
staff an analysis prepared by counsel to the Company setting forth the legal
bases, if any, upon which such counsel has concluded that the Registered
Exchange Offer should be permitted and (iii) diligently pursuing a resolution
(which need not be favorable) by the Commission staff.

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     2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) for any other reason the Registered Exchange Offer is not
consummated within 240 days of the Closing Date, (iii) any Initial Purchaser so
requests with respect to the Initial Securities (or the Private Exchange
Securities) not eligible to be exchanged for Exchange Securities in the
Registered Exchange Offer and held by it following consummation of the
Registered Exchange Offer or (iv) any Holder (other than an Exchanging Dealer)
is not eligible to participate in the Registered Exchange Offer or, in the case
of any Holder (other than an Exchanging Dealer) that participates in the
Registered Exchange Offer, such Holder does not receive freely tradeable
Exchange Securities on the date of the exchange and any such Holder so requests,
the Company shall take the following actions (the date on which any of the
conditions described in the foregoing clauses (i) through (iv) occur, including
in the case of clauses (iii) or (iv) the receipt of the required notice, being a
"Trigger Date"):

          (a) The Company shall promptly (but in no event more than 30 days
     after the Trigger Date (such 30th day being a "Filing Deadline")) file with
     the Commission and thereafter use its best efforts to cause to be declared
     effective no later than the date (the "Effectiveness Date") that is (1) in
     the case of clause (i) above, 180 days after the Issue Date or (2) in the
     case of clauses (ii), (iii) or (iv) above, 60 days after the Filing
     Deadline, a registration statement (the "Shelf Registration Statement" and,
     together with the Exchange Offer Registration Statement, a "Registration
     Statement") on an appropriate form under the Securities Act relating to the
     offer and sale of the Transfer Restricted Securities by the Holders thereof
     from time to time in accordance with the methods of distribution set forth
     in the Shelf Registration Statement and Rule 415 under the Securities Act
     (hereinafter, the "Shelf Registration"); provided, however, that no Holder
     (other than an Initial Purchaser) shall be entitled to have the Securities
     held by it covered by such Shelf Registration Statement unless such Holder
     agrees in writing to be bound by all the provisions of this Agreement
     applicable to such Holder.

          (b) The Company shall use its best efforts to keep the Shelf
     Registration Statement continuously effective in order to permit the
     prospectus included therein to be lawfully delivered by the Holders of the
     relevant Securities, for a period of two years (or for such longer period
     if extended pursuant to Section 3(j) below) from the date of its
     effectiveness or such shorter period that will terminate when all the
     Securities covered by the Shelf Registration Statement (i) have been sold
     pursuant thereto or (ii) are no longer restricted securities (as defined in
     Rule 144 under the Securities Act, or any successor rule thereof). The
     Company shall be deemed not to have used its best efforts to keep the Shelf
     Registration Statement effective during the requisite period if it
     voluntarily takes any action that would result in Holders of Securities
     covered thereby not being able to offer and sell such Securities during
     that period, unless such action is required by applicable law.

          (c) Notwithstanding any other provisions of this Agreement to the
     contrary, the Company shall cause the Shelf Registration Statement and the
     related prospectus and any amendment or supplement thereto, as of the
     effective date of the Shelf Registration Statement, amendment or
     supplement, (i) to comply in all material respects with the applicable
     requirements of the Securities Act and the rules and regulations of the
     Commission and (ii) not to contain any untrue statement of a material fact
     or omit to state a material fact required to be stated therein or necessary
     in order to make the statements therein, in light of the circumstances
     under which they were made, not misleading.

     3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:

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                  (a) The Company shall (i), if requested by an Initial
         Purchaser, furnish to such Initial Purchaser, prior to the filing
         thereof with the Commission, a copy of the Registration Statement and
         each amendment thereof and each supplement, if any, to the prospectus
         included therein and, in the event that an Initial Purchaser (with
         respect to any portion of an unsold allotment from the original
         offering) is participating in the Registered Exchange Offer or the
         Shelf Registration Statement, the Company shall use its best efforts to
         reflect in each such document, when so filed with the Commission, such
         comments as such Initial Purchaser reasonably may propose; (ii) include
         the information set forth in Annex A hereto on the cover, in Annex B
         hereto in the "Exchange Offer Procedures" section and the "Purpose of
         the Exchange Offer" section and in Annex C hereto in the "Plan of
         Distribution" section of the prospectus forming a part of the Exchange
         Offer Registration Statement and include the information set forth in
         Annex D hereto in the Letter of Transmittal delivered pursuant to the
         Registered Exchange Offer; (iii) if requested by an Initial Purchaser,
         include the information required by Items 507 or 508 of Regulation S-K
         under the Securities Act, as applicable, in the prospectus forming a
         part of the Exchange Offer Registration Statement; (iv) include within
         the prospectus contained in the Exchange Offer Registration Statement a
         section entitled "Plan of Distribution," reasonably acceptable to the
         Initial Purchasers, which shall contain a summary statement of the
         positions taken or policies made by the staff of the Commission with
         respect to the potential "underwriter" status of any broker-dealer that
         is the beneficial owner (as defined in Rule 13d-3 under the Securities
         Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange
         Securities received by such broker-dealer in the Registered Exchange
         Offer (a "Participating Broker-Dealer"), whether such positions or
         policies have been publicly disseminated by the staff of the Commission
         or such positions or policies, in the reasonable judgment of the
         Initial Purchasers based upon advice of counsel (which may be in-house
         counsel), represent the prevailing views of the staff of the
         Commission; and (v) in the case of a Shelf Registration Statement,
         include the names of the Holders who propose to sell Securities
         pursuant to the Shelf Registration Statement as selling
         securityholders.

                  (b) The Company shall give written notice to the Initial
         Purchasers, the Holders of the Securities and any Participating
         Broker-Dealer from whom the Company has received prior written notice
         that it will be a Participating Broker-Dealer in the Registered
         Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall
         be accompanied by an instruction to suspend the use of the prospectus
         until the requisite changes have been made):

                           (i)   when the Registration Statement or any
                  amendment thereto has been filed with the Commission and when
                  the Registration Statement or any post-effective amendment
                  thereto has become effective;

                           (ii)  of any request by the Commission for amendments
                  or supplements to the Registration Statement or the prospectus
                  included therein or for additional information;

                           (iii) of the issuance by the Commission of any stop
                  order suspending the effectiveness of the Registration
                  Statement or the initiation of any proceedings for that
                  purpose;

                           (iv)  of the receipt by the Company or its legal
                  counsel of any notification with respect to the suspension of
                  the qualification of the Securities for sale in any
                  jurisdiction or the initiation or threatening of any
                  proceeding for such purpose; and

                           (v)   of the happening of any event that requires the
                  Company to make changes in the Registration Statement or the
                  prospectus in order that the Registration Statement or the
                  prospectus does not contain an untrue statement of a material
                  fact or omit to state a material fact required to be stated
                  therein or necessary to make the statements therein (in

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                  the case of the prospectus, in light of the circumstances
                  under which they were made) not misleading.

                  (c) The Company shall make every reasonable effort to obtain
         the withdrawal at the earliest possible time, of any order suspending
         the effectiveness of the Registration Statement.

                  (d) The Company shall furnish to each Holder of Securities
         included within the coverage of the Shelf Registration, without charge,
         at least one copy of the Shelf Registration Statement and any
         post-effective amendment thereto, including financial statements and
         schedules, and, if the Holder so requests in writing, all exhibits
         thereto (including those, if any, incorporated by reference).

                  (e) The Company shall deliver to each Exchanging Dealer and
         each Initial Purchaser who so requests, and to any other Holder who so
         requests, without charge, at least one copy of the Exchange Offer
         Registration Statement and any post-effective amendment thereto,
         including financial statements and schedules, and, if any Initial
         Purchaser or any such Holder requests, all exhibits thereto (including
         those incorporated by reference).

                  (f) The Company shall, during the Shelf Registration Period,
         deliver to each Holder of Securities included within the coverage of
         the Shelf Registration, without charge, as many copies of the
         prospectus (including each preliminary prospectus) included in the
         Shelf Registration Statement and any amendment or supplement thereto as
         such person may reasonably request. The Company consents, subject to
         the provisions of this Agreement, to the use of the prospectus or any
         amendment or supplement thereto by each of the selling Holders of the
         Securities in connection with the offering and sale of the Securities
         covered by the prospectus, or any amendment or supplement thereto,
         included in the Shelf Registration Statement.

                  (g) The Company shall deliver to each Initial Purchaser, any
         Exchanging Dealer, any Participating Broker-Dealer and such other
         persons required to deliver a prospectus following the Registered
         Exchange Offer, without charge, as many copies of the final prospectus
         included in the Exchange Offer Registration Statement and any amendment
         or supplement thereto as such persons may reasonably request. The
         Company consents, subject to the provisions of this Agreement, to the
         use of the prospectus or any amendment or supplement thereto by any
         Initial Purchaser, if necessary, any Participating Broker-Dealer and
         such other persons required to deliver a prospectus following the
         Registered Exchange Offer in connection with the offering and sale of
         the Exchange Securities covered by the prospectus, or any amendment or
         supplement thereto, included in such Exchange Offer Registration
         Statement.

                  (h) Prior to any public offering of the Securities pursuant to
         any Registration Statement the Company shall register or qualify or
         cooperate with the Holders of the Securities included therein and their
         respective counsel in connection with the registration or qualification
         of the Securities for offer and sale under the securities or "blue sky"
         laws of such states of the United States as any Holder of the
         Securities reasonably requests in writing and do any and all other acts
         or things necessary or advisable to enable the offer and sale in such
         jurisdictions of the Securities covered by such Registration Statement;
         provided, however, that the Company shall not be required to (i)
         qualify generally to do business in any jurisdiction where it is not
         then so qualified or (ii) take any action which would subject it to
         general service of process or to taxation in any jurisdiction where it
         is not then so subject.

                  (i) The Company shall cooperate with the Holders of the
         Securities to facilitate the timely preparation and delivery of
         certificates representing the Securities to be sold pursuant to any
         Registration Statement free of any restrictive legends and in such
         denominations and registered in

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         such names as the Holders may request a reasonable period of time prior
         to sales of the Securities pursuant to such Registration Statement.

                  (j) Upon the occurrence of any event contemplated by
         paragraphs (ii) through (v) of Section 3(b) above during the period for
         which the Company is required to maintain an effective Registration
         Statement, the Company shall promptly prepare and file a post-effective
         amendment to the Registration Statement or a supplement to the related
         prospectus and any other required document so that, as thereafter
         delivered to Holders of the Securities or purchasers of Securities, the
         prospectus will not contain an untrue statement of a material fact or
         omit to state any material fact required to be stated therein or
         necessary to make the statements therein, in light of the circumstances
         under which they were made, not misleading. If the Company notifies the
         Initial Purchasers, the Holders of the Securities and any known
         Participating Broker-Dealer in accordance with paragraphs (ii) through
         (v) of Section 3(b) above to suspend the use of the prospectus until
         the requisite changes to the prospectus have been made, then the
         Initial Purchasers, the Holders of the Securities and any such
         Participating Broker-Dealers shall suspend use of such prospectus, and
         the period of effectiveness of the Shelf Registration Statement
         provided for in Section 2(b) above and the Exchange Offer Registration
         Statement provided for in Section 1 above shall each be extended by the
         number of days from and including the date of the giving of such notice
         to and including the date when the Initial Purchasers, the Holders of
         the Securities and any known Participating Broker-Dealer shall have
         received such amended or supplemented prospectus pursuant to this
         Section 3(j).

                  (k) Not later than the effective date of the applicable
         Registration Statement, the Company will provide a CUSIP number for the
         Initial Securities, the Exchange Securities or the Private Exchange
         Securities, as the case may be, and provide the applicable trustee with
         certificates for the Initial Securities, the Exchange Securities or the
         Private Exchange Securities, as the case may be, in a form eligible for
         deposit with The Depository Trust Company.

                  (l) The Company will comply with all rules and regulations of
         the Commission to the extent and so long as they are applicable to the
         Registered Exchange Offer or the Shelf Registration and will make
         generally available to its security holders (or otherwise provide in
         accordance with Section 11(a) of the Securities Act) an earnings
         statement satisfying the provisions of Section 11(a) of the Securities
         Act, no later than 45 days after the end of a 12-month period (or 90
         days, if such period is a fiscal year) beginning with the first month
         of the Company's first fiscal quarter commencing after the effective
         date of the Registration Statement, which statement shall cover such
         12-month period.

                  (m) The Company shall cause the Indenture to be qualified
         under the Trust Indenture Act of 1939, as amended, in a timely manner
         and containing such changes, if any, as shall be necessary for such
         qualification. In the event that such qualification would require the
         appointment of a new trustee under the Indenture, the Company shall
         appoint a new trustee thereunder pursuant to the applicable provisions
         of the Indenture.

                  (n) The Company may require each Holder of Securities to be
         sold pursuant to the Shelf Registration Statement to furnish to the
         Company such information regarding the Holder and the distribution of
         the Securities as the Company may from time to time reasonably require
         for inclusion in the Shelf Registration Statement, and the Company may
         exclude from such registration the Securities of any Holder that
         unreasonably fails to furnish such information within a reasonable time
         after receiving such request.

                  (o) The Company shall enter into such customary agreements
         (including, if requested, an underwriting agreement in customary form)
         and take all such other action, if any, as any Holder of

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         the Securities shall reasonably request in order to facilitate the
         disposition of the Securities pursuant to any Shelf Registration.

                  (p) In the case of any Shelf Registration, the Company shall
         (i) make reasonably available for inspection by the Holders of the
         Securities, any underwriter participating in any disposition pursuant
         to the Shelf Registration Statement and any attorney, accountant or
         other agent retained by the Holders of the Securities or any such
         underwriter all relevant financial and other records, pertinent
         corporate documents and properties of the Company and (ii) cause the
         Company's officers, directors, employees, accountants and auditors to
         supply all relevant information reasonably requested by the Holders of
         the Securities or any such underwriter, attorney, accountant or agent
         in connection with the Shelf Registration Statement, in each case, as
         shall be reasonably necessary to enable such persons, to conduct a
         reasonable investigation within the meaning of Section 11 of the
         Securities Act; provided, however, that the foregoing inspection and
         information gathering shall be coordinated on behalf of the Initial
         Purchasers by Salomon Smith Barney Inc., and on behalf of the other
         parties, by one counsel designated by and on behalf of such other
         parties as described in Section 4 hereof.

                  (q) In the case of any Shelf Registration, the Company, if
         requested by any Holder of Securities covered thereby, shall cause (i)
         its counsel to deliver an opinion and updates thereof relating to the
         Securities in customary form addressed to such Holders and the Managing
         Underwriters (as defined below), if any, thereof and dated, in the case
         of the initial opinion, the effective date of such Shelf Registration
         Statement (it being agreed that the matters to be covered by such
         opinion shall include, without limitation, the due incorporation and
         good standing of the Company and its subsidiaries; the qualification of
         the Company and its subsidiaries to transact business as foreign
         corporations; the due authorization, execution and delivery of the
         relevant agreement of the type referred to in Section 3(o) hereof; the
         due authorization, execution, authentication and issuance, and the
         validity and enforceability, of the applicable Securities; the absence
         of material legal or governmental proceedings involving the Company and
         its subsidiaries; the absence of governmental approvals required to be
         obtained in connection with the Shelf Registration Statement, the
         offering and sale of the applicable Securities, or any agreement of the
         type referred to in Section 3(o) hereof; the compliance as to form of
         such Shelf Registration Statement and any documents incorporated by
         reference therein and of the Indenture with the requirements of the
         Securities Act and the Trust Indenture Act, respectively; and, as of
         the date of the opinion and as of the effective date of the Shelf
         Registration Statement or most recent post-effective amendment thereto,
         as the case may be, the absence from such Shelf Registration Statement
         and the prospectus included therein, as then amended or supplemented,
         and from any documents incorporated by reference therein of an untrue
         statement of a material fact or the omission to state therein a
         material fact required to be stated therein or necessary to make the
         statements therein not misleading (in the case of any such documents,
         in the light of the circumstances existing at the time that such
         documents were filed with the Commission under the Exchange Act); (ii)
         its officers to execute and deliver all customary documents and
         certificates and updates thereof requested by any underwriters of the
         applicable Securities and (iii) its independent public accountants to
         provide to the selling Holders of the applicable Securities and any
         underwriter therefor a comfort letter in customary form and covering
         matters of the type customarily covered in comfort letters in
         connection with primary underwritten offerings, subject to receipt of
         appropriate documentation as contemplated, and only if permitted, by
         Statement of Auditing Standards No. 72.

                  (r) In the case of the Registered Exchange Offer, if requested
         by any Initial Purchaser or any known Participating Broker-Dealer, the
         Company shall cause (i) its counsel to deliver to such Initial
         Purchaser or such Participating Broker-Dealer a signed opinion in the
         form set forth in Section 6(c) of the Purchase Agreement with such
         changes as are customary in connection with the

                                       9

<PAGE>

         preparation of a Registration Statement and (ii) its independent public
         accountants to deliver to such Initial Purchaser or such Participating
         Broker-Dealer a comfort letter, in customary form, meeting the
         requirements as to the substance thereof as set forth in Section 6(a)
         of the Purchase Agreement, with appropriate date changes.

                  (s) If a Registered Exchange Offer or a Private Exchange is to
         be consummated, upon delivery of the Initial Securities by Holders to
         the Company (or to such other Person as directed by the Company) in
         exchange for the Exchange Securities or the Private Exchange
         Securities, as the case may be, the Company shall mark, or caused to be
         marked, on the Initial Securities so exchanged that such Initial
         Securities are being canceled in exchange for the Exchange Securities
         or the Private Exchange Securities, as the case may be; in no event
         shall the Initial Securities be marked as paid or otherwise satisfied.

                  (t) The Company will use its best efforts to (a) if the
         Initial Securities have been rated prior to the initial sale of such
         Initial Securities, confirm such ratings will apply to the Securities
         covered by a Registration Statement, or (b) if the Initial Securities
         were not previously rated, cause the Securities covered by a
         Registration Statement to be rated with the appropriate rating
         agencies, if so requested by Holders of a majority in aggregate
         principal amount of Securities covered by such Registration Statement,
         or by the Managing Underwriters, if any.

                  (u) In the event that any broker-dealer registered under the
         Exchange Act shall underwrite any Securities or participate as a member
         of an underwriting syndicate or selling group or "assist in the
         distribution" (within the meaning of the Conduct Rules (the "Rules") of
         the National Association of Securities Dealers, Inc. ("NASD")) thereof,
         whether as a Holder of such Securities or as an underwriter, a
         placement or sales agent or a broker or dealer in respect thereof, or
         otherwise, the Company will assist such broker-dealer in complying with
         the requirements of such Rules, including, without limitation, by (i)
         if such Rules, including Rule 2720, shall so require, engaging a
         "qualified independent underwriter" (as defined in Rule 2720) to
         participate in the preparation of the Registration Statement relating
         to such Securities, to exercise usual standards of due diligence in
         respect thereto and, if any portion of the offering contemplated by
         such Registration Statement is an underwritten offering or is made
         through a placement or sales agent, to recommend the yield of such
         Securities, (ii) indemnifying any such qualified independent
         underwriter to the extent of the indemnification of underwriters
         provided in Section 5 hereof and (iii) providing such information to
         such broker-dealer as may be required in order for such broker-dealer
         to comply with the requirements of the Rules.

                  (v) The Company shall use its best efforts to take all other
         steps necessary to effect the registration of the Securities covered by
         a Registration Statement contemplated hereby.

         4. Registration Expenses. (a) All expenses incident to the Company's
performance of and compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement is ever filed or becomes
effective, including without limitation;

                  (i)   all registration and filing fees and expenses;

                  (ii)  all fees and expenses of compliance with federal
securities and state "blue sky" or securities laws;

                  (iii) all expenses of printing (including printing
         certificates for the Securities to be issued in the Registered Exchange
         Offer and the Private Exchange and printing of prospectuses), messenger
         and delivery services and telephone;

                                       10

<PAGE>

          (iv) all fees and disbursements of counsel for the Company;

          (v)  all application and filing fees in connection with listing the
     Exchange Securities on a national securities exchange or automated
     quotation system pursuant to the requirements hereof; and

          (vi) all fees and disbursements of independent certified public
     accountants of the Company (including the expenses of any special audit and
     comfort letters required by or incident to such performance).

The Company will bear its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any person, including special experts, retained by the Company.

     (b) In connection with any Registration Statement required by this
Agreement, the Company will reimburse the Initial Purchasers and the Holders of
Transfer Restricted Securities who are tendering Initial Securities in the
Registered Exchange Offer and/or selling or reselling Securities pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Cravath Swaine & Moore
unless another firm shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.

     5. Indemnification. (a) The Company agrees to indemnify and hold harmless
each Holder of the Securities, any Participating Broker-Dealer and each person,
if any, who controls such Holder or such Participating Broker-Dealer within the
meaning of the Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons are referred to
collectively as the "Indemnified Parties") from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Shelf Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse, as
incurred, the Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof; provided, however, that
(i) the Company shall not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration in reliance
upon and in conformity with written information pertaining to such Holder and
furnished to the Company by or on behalf of such Holder specifically for
inclusion therein and (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus relating
to a Shelf Registration Statement, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Holder or Participating
Broker-Dealer from whom the person asserting any such losses, claims, damages or
liabilities purchased the Securities concerned, to the extent that a prospectus
relating to such Securities was required to be delivered by such Holder or
Participating Broker-Dealer under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder or
Participating Broker-Dealer results from the fact that there was not sent or
given to such person, at or prior to the written confirmation of the sale of
such Securities to such person, a copy of the final prospectus if the Company
had previously furnished copies thereof to such Holder or Participating
Broker-Dealer; provided further, however, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company

                                       11

<PAGE>

shall also indemnify underwriters, their officers and directors and each person
who controls such underwriters within the meaning of the Securities Act or the
Exchange Act to the same extent as provided above with respect to the
indemnification of the Holders of the Securities if requested by such Holders.

     (b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act from
and against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Company or any such controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by the
Company or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or any of its controlling persons.

     (c) Promptly after receipt by an indemnified party under this Section 5 of
notice of the commencement of any action or proceeding (including a governmental
investigation), such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 5, notify the
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party (i) will not relieve the indemnifying party from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and the indemnifying party has been materially
prejudiced by such failure and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 5 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action, and does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

     (d) If the indemnification provided for in this Section 5 is unavailable or
insufficient to hold harmless an indemnified party under subsections (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the exchange of the Securities, pursuant to
the Registered Exchange Offer, or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by

                                       12

<PAGE>

applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or such Holder or such other indemnified party, as the case may
be, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 5(d), the Holders of the Securities shall not be
required to contribute any amount in excess of the amount by which the net
proceeds received by such Holders from the sale of the Securities pursuant to a
Registration Statement exceeds the amount of damages which such Holders have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls such indemnified party within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as such
indemnified party and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act shall have the same rights to
contribution as the Company.

     (e) The agreements contained in this Section 5 shall survive the sale of
the Securities pursuant to a Registration Statement and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.

     6. Additional Interest Under Certain Circumstances. (a) Additional interest
(the "Additional Interest") with respect to the Securities shall be assessed as
follows if any of the following events occur (each such event in clauses (i)
through (iv) below being herein called a "Registration Default"):

     (i)   any Registration Statement required by this Agreement is not filed
           with the Commission on or prior to the applicable Filing Deadline;

     (ii)  any Registration Statement required by this Agreement is not declared
           effective by the Commission on or prior to the applicable
           Effectiveness Deadline;

     (iii) the Registered Exchange Offer has not been consummated on or prior to
           the Consummation Deadline; or

     (iv)  any Registration Statement required by this Agreement has been
           declared effective by the Commission but (A) such Registration
           Statement thereafter ceases to be effective or (B) such Registration
           Statement or the related prospectus ceases to be usable in connection
           with resales of Transfer Restricted Securities during the periods
           specified herein because either (1) any event occurs as a result of
           which the related prospectus forming part of such Registration
           Statement would include any untrue statement of a material fact or
           omit to state any material fact necessary to make the statements
           therein in the light of the circumstances under which they were made
           not misleading or (2) it shall be necessary to amend such
           Registration Statement or supplement the related prospectus, to
           comply with the Securities Act or the Exchange Act or the respective
           rules thereunder.

                                       13

<PAGE>

Each of the foregoing will constitute a Registration Default whatever the reason
for any such event and whether it is voluntary or involuntary or is beyond the
control of the Company or pursuant to operation of law or as a result of any
action or inaction by the Commission.

     Additional Interest shall accrue on the Securities over and above the
interest set forth in the title of the Securities from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all such Registration Defaults have been cured, at a rate of 0.50% per
annum (the "Additional Interest Rate") for the first 90-day period immediately
following the occurrence of such Registration Default. The Additional Interest
Rate shall increase by an additional 0.50% per annum with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum Additional Interest Rate of 2.0% per annum.

     (b) A Registration Default referred to in Section 6(a)(iv) hereof shall be
deemed not to have occurred and be continuing in relation to a Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to such Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events with respect
to the Company that would need to be described in such Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement such
Shelf Registration Statement and related prospectus to describe such events;
provided, however, that in any case if such Registration Default occurs for a
continuous period in excess of 30 days, Additional Interest shall be payable in
accordance with the above paragraph from the day such Registration Default
occurs until such Registration Default is cured.

     (c) Any amounts of Additional Interest due pursuant to Section 6(a) will be
payable in cash on the regular interest payment dates with respect to the
Securities. The amount of Additional Interest will be determined by multiplying
the applicable Additional Interest Rate by the principal amount of the
Securities and further multiplied by a fraction, the numerator of which is the
number of days such Additional Interest Rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360.

     (d) "Transfer Restricted Securities" means each Security until (i) the date
on which such Security has been exchanged by a person other than a broker-dealer
for a freely transferable Exchange Security in the Registered Exchange Offer,
(ii) following the exchange by a broker-dealer in the Registered Exchange Offer
of an Initial Security for an Exchange Note, the date on which such Exchange
Note is sold to a purchaser who receives from such broker-dealer on or prior to
the date of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (iii) the date on which such Security has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iv) the date on which such Security is
distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act.

     7. Rules 144 and 144A. The Company shall use its best efforts to file the
reports required to be filed by it under the Securities Act and the Exchange Act
in a timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder of Securities, make publicly
available other information so long as necessary to permit sales of their
securities pursuant to Rules 144 and 144A. The Company covenants that it will
take such further action as any Holder of Securities may reasonably request, all
to the extent required from time to time to enable such Holder to sell
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rules 144 and 144A (including the requirements of
Rule 144A(d)(4)). The Company will provide a copy of this Agreement to
prospective purchasers of Initial Securities identified to the Company by the
Initial Purchasers upon request. Upon the request of any Holder of Initial
Securities, the Company shall deliver to

                                       14

<PAGE>

such Holder a written statement as to whether it has complied with such
requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be
deemed to require the Company to register any of its securities pursuant to the
Exchange Act.

     8. Underwritten Registrations. If any of the Transfer Restricted Securities
covered by any Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
administer the offering ("Managing Underwriters") will be selected by the
Holders of a majority in aggregate principal amount of such Transfer Restricted
Securities to be included in such offering.

     No person may participate in any underwritten registration hereunder unless
such person (i) agrees to sell such person's Transfer Restricted Securities on
the basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.

     9. Miscellaneous.

     (a) Remedies. The Company acknowledges and agrees that any failure by the
Company to comply with its obligations under Sections 1 and 2 hereof may result
in material irreparable injury to the Initial Purchasers or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Sections 1 and
2 hereof. The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.

     (b) No Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.

     (c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the Holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents.

     (d) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, first-class mail, facsimile
transmission, or air courier which guarantees overnight delivery:

          (1) if to a Holder of the Securities, at the most current
address given by such Holder to the Company.

          (2) if to the Initial Purchasers:

                 Salomon Smith Barney Inc.
                 388 Greenwich Street
                 New York, NY 10013
                 Fax No.: (214)979-7938
                 Attention: Stephen P. Cunningham

                                       15

<PAGE>

       with a copy to:

                         Cravath, Swaine & Moore
                         Worldwide Plaza
                         825 Eighth Avenue
                         New York, NY 10019-7475
                         Fax No.: (212) 474-3700
                         Attention: Stephen L. Burns, Esq.

                  (3)    if to the Company, at its address as follows:

                         Chesapeake Energy Corporation
                         6100 North Western Avenue
                         Oklahoma City, OK 73118
                         Fax No.: (405) 848-8588
                         Attention: Marcus C. Rowland

       with a copy to:

                         Vinson & Elkins L.L.P.
                         2300 First City Tower
                         1001 Fannin Street
                         Houston, TX 77002-6760
                         Fax No.: (713) 758-2346
                         Attention: Jim Prince, Esq.

       All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.

       (e) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.

       (f) Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.

       (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

       (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

       (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.

                                       16

<PAGE>

       (j) Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.

       (k) Securities Held by the Company. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.

                                       17

<PAGE>

       If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Issuer a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers, the Issuer and the Guarantors in
accordance with its terms.

                                     Very truly yours,

                                     CHESAPEAKE ENERGY CORPORATION

                                     By: /s/ Aubrey K. McClendon
                                        _______________________________________
                                        Name: Aubrey K. McClendon
                                        Title: Chairman of the Board
                                               and Chief Executive Officer

                                     SUBSIDIARY GUARANTORS:

                                     THE AMES COMPANY, L.L.C.
                                     CARMEN ACQUISITION, L.L.C.
                                     CHESAPEAKE ACQUISITION, L.L.C.
                                     CHESAPEAKE EP CORPORATION
                                     CHESAPEAKE DELTA CORP.
                                     CHESAPEAKE ENERGY LOUISIANA CORPORATION
                                     CHESAPEAKE ENO ACQUISITION, L.L.C.
                                     CHESAPEAKE FOCUS, L.L.C.
                                     CHESAPEAKE KNAN ACQUISITION, L.L.C.
                                     CHESAPEAKE MOUNTAIN FRONT, L.L.C.
                                     CHESAPEAKE OPERATING, INC.
                                     CHESAPEAKE ORC, L.L.C.
                                     CHESAPEAKE ROYALTY, L.L.C.
                                     GOTHIC ENERGY, L.L.C.
                                     GOTHIC PRODUCTION, L.L.C.
                                     NOMAC DRILLING CORPORATION
                                     SAP ACQUISTION, L.L.C.

                                     By: /s/ Aubrey K. McClendon
                                        _______________________________________
                                        Name: Aubrey K. McClendon
                                        Title: Chairman of the Board
                                               and Chief Executive Officer

                                     CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP
                                     CHESAPEAKE LOUISIANA, L.P.
                                     CHESAPEAKE PANHANDLE LIMITED PARTNERSHIP
                                     CHESAPEAKE-STAGHORN ACQUISITION L.P.
                                     CHESAPEAKE SIGMA, L.P.

                                     By  Chesapeake Operating, Inc., as general
                                         partner of each respective entity

                                     By: /s/ Aubrey K. McClendon
                                        _______________________________________
                                        Name: Aubrey K. McClendon
                                        Title: Chairman of the Board
                                               and Chief Executive Officer

The foregoing Registration Rights Agreement

                                       18

<PAGE>

is hereby confirmed and accepted
as of the date first above written.

SALOMON SMITH BARNEY INC.
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON LLC
LEHMAN BROTHERS INC.
MORGAN STANLEY & CO. INCORPORATED
BNP PARIBAS SECURITIES CORP.
CREDIT LYONNAIS SECURITIES (USA) INC.
TD SECURITIES (USA) INC.

Acting on behalf of themselves and as Representative of the several Initial
Purchasers

By:  SALOMON SMITH BARNEY INC.

  By: /s/ Brian Byrne
     ___________________________
     Name: Brian Byrne
     Title: Vice President

                                       19

<PAGE>

                                                                         ANNEX A

       Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."

                                       1

<PAGE>

                                                                         ANNEX B

       Each broker-dealer that receives Exchange Securities for its own account
in exchange for Initial Securities, where such Initial Securities were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."

                                       1

<PAGE>

                                                                         ANNEX C

                              PLAN OF DISTRIBUTION

       Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 90 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until         , 200 , all
dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus./(1)/

       The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.

       For a period of 90 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.

                                       1

<PAGE>

                                                                         ANNEX D

[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

           Name:
           Address:

If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

----------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.<PAGE>
Certain confidential portions of this Exhibit were omitted by means of asterisks
in lieu of the text (the "Mark"). This Exhibit has been filed separately with
the Secretary of the Securities and Exchange Commission without the Mark
pursuant to the Company's request for confidential treatment pursuant to Rule
406 under the Securities Act of 1933, as amended.

                                                                   Exhibit 10.16

                                                                  Execution Copy

                                SERVICE AGREEMENT

                               DATED JULY 1, 2002

                                     BETWEEN

                    FIRST DATA MERCHANT SERVICES CORPORATION

                                       AND

                             IPAYMENT HOLDINGS, INC.

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>         <C>                                                             <C>
ARTICLE 1   DEFINITIONS AND INTERPRETATION................................     2

ARTICLE 2   SERVICES......................................................     2

ARTICLE 3   ACQUIRED PORTFOLIOS AND MERGER OR CHANGE OF CONTROL...........     4

ARTICLE 4   PAYMENT FOR SERVICES..........................................     7

ARTICLE 5   DISPUTE RESOLUTION AND INDEMNIFICATION........................    10

ARTICLE 6   LIMITATION OF LIABILITY.......................................    11

ARTICLE 7   DISCLAIMER OF WARRANTIES......................................    11

ARTICLE 8   TERM OF AGREEMENT.............................................    12

ARTICLE 9   TERMINATION...................................................    12

ARTICLE 10  CONFIDENTIAL NATURE OF DATA...................................    15

ARTICLE 11  REPRESENTATIONS...............................................    17

ARTICLE 12  MISCELLANEOUS.................................................    17
</TABLE>

                                    EXHIBITS

<TABLE>
<S>               <C>
EXHIBIT A         SERVICES
EXHIBIT B         PRICING
EXHIBIT C         DEFINITIONS
EXHIBIT D         ARBITRATION
EXHIBIT E         INDEMNIFICATION
EXHIBIT F         CLEARING BANK AGREEMENT
EXHIBIT G         VERISIGN B2C GATEWAY TERMS AND CONDITIONS
EXHIBIT H         CINGULAR WIRELESS SERVICES TERMS AND CONDITIONS
EXHIBIT I         EMERCHANTVIEW(R) SERVICES TERMS AND CONDITIONS
EXHIBIT J         PERFORMANCE GUIDELINES
</TABLE>

                                       i
<PAGE>
                                SERVICE AGREEMENT

      This Service Agreement dated as of July 1, 2002 is between First Data
Merchant Services Corporation ("FDMS") and iPayment Holdings, Inc. ("Customer").
References to "Customer" throughout shall include Customer's Affiliates.

                                    RECITALS

      A. First Data Resources Inc. ("FDR"), an Affiliate of FDMS, and Beverly
Hills Acquisition Corp. ("BHAC"), an Affiliate of Customer, are parties to that
certain Service Agreement dated as of February 1, 2000, as amended by amendments
dated July 24, 2000 and June 22, 2001 (the "BHAC Service Agreement"), pursuant
to which FDR performs certain data processing and other related services in
connection with Merchant Transactions for the benefit of BHAC.

      B. iPayment Technologies, Inc., an Affiliate of Customer, purchased
certain Merchant Accounts that are currently processed by FDR pursuant to that
certain Service Agreement between FDR and Humboldt Bank dated as of November 1,
1994, as amended by amendments dated November 12, 1996, March 1, 1998, November
1, 1998 and May 25, 2000 (the "Humboldt Agreement"), pursuant to which FDR
performs certain data processing and other related services in connection with
Merchant Transactions for the benefit of iPayment Technologies, Inc.

      C. FDMS and The Northern Trust Company ("Northern"), as assignees of
AmTrade International Bank of Georgia ("AmTrade"), and First National
Processing, Inc. (formerly known as First Acquisition Company) ("FAC"), as
assignee of 1st National Processing, Inc. ("FNP"), are parties to that certain
Marketing Agreement dated as of July 16, 1999 between AmTrade and FNP, as
subsequently amended on January 5, 2001 (the "FNP Agreement"). Under the FNP
Agreement, FDMS provides FAC with certain data processing and other related
services in connection with Merchant Transactions for the benefit of FAC
("Merchant Processing Services"), and Northern provides FAC with certain
sponsorship, clearing and other related services in connection with Merchant
Accounts and Transactions ("Clearing Services"). The parties contemplate that
the Clearing Services and the FNP Agreement will be terminated within six (6)
months of the execution of this Agreement, during which time Customer will
attempt to transition the Clearing Services to a new sponsoring financial
institution under a separate agreement.

      D. FDMS has assumed FDR's rights and obligations and Customer has assumed
BHAC's and certain of Humboldt's rights and obligations under the BHAC Service
Agreement and the Humboldt Agreement, respectively.

      E. FDMS and Customer wish to terminate the BHAC Agreement, the Humboldt
Agreement and the Merchant Processing Services portions of the FNP Agreement and
to enter into this Agreement to provide for the continuing provision of data
processing and related services by FDMS in connection with Customer's Accounts.
The parties intend for all terms of this Agreement to go into effect as of the
date hereof, except for some of the pricing provisions which will go into

                                       1
<PAGE>
effect on October 1, 2002.

      F. FDMS is willing to perform certain data processing and related services
with respect to Customer's Accounts in accordance with the terms and conditions
of this Agreement.

                                    AGREEMENT

      In consideration of the foregoing and the covenants and conditions
contained herein, FDMS and Customer agree as follows:

                                   ARTICLE 1
                         DEFINITIONS AND INTERPRETATION

      1.1 DEFINITIONS. Unless the context otherwise requires, capitalized terms
used herein shall have the meanings specified in Exhibit C.

      1.2 INTERPRETATION. Each definition in this Agreement includes the
singular and the plural and the word "including" means "including but not
limited to." References to any statute or regulation means such statute or
regulation as amended at the time and includes any successor statute or
regulation. The section headings in this Agreement are solely for convenience
and shall not be considered in its interpretation. The Exhibits referred to
throughout this Agreement are attached hereto and are incorporated herein.
Except as otherwise stated, references to Articles, Sections, Exhibits and
Attachments mean the Articles, Sections, Exhibits and Attachments of this
Agreement.

                                   ARTICLE 2
                                    SERVICES

      2.1 SERVICES AND CLEARING BANK.

            (a) FDMS will make available to and perform for Customer those
services described in Exhibit A which are applicable to Customer's Accounts or
as specifically provided in Exhibit A (the "Services"). Exhibit A and any
document or service referred to in Exhibit A are subject to periodic revision by
FDMS, subject to the Performance Guidelines described in Section 2.5, to reflect
changes (i) to the FDMS System or the services provided by FDMS and offered
generally to FDMS customers and (ii) in the specific Services provided to
Customer; provided, however, that FDMS will not implement any changes or
improvements to the FDMS System if such action will materially degrade the
quality of the services being provided to Customer by FDMS hereunder unless such
change is required by the VISA or MasterCard rules and regulations.

            (b) Customer will at all times during the Term have in place
contractual arrangements with one or more financial institution members of VISA
and/or MasterCard (each a

                                       2
<PAGE>
"Clearing Bank") for clearing and settlement of transactions with respect to all
of Customer's Accounts. Customer will cause each Clearing Bank to execute a
clearing bank agreement (each a "Clearing Bank Agreement") with FDMS in the form
set forth as Exhibit F or such other arrangement as may be agreed to between
FDMS and Clearing Bank. Customer will pay to FDMS any amount due to FDMS by a
Clearing Bank pursuant to a Clearing Bank Agreement that is not paid by a
Clearing Bank with respect to Customer's Accounts within twenty-four (24) hours
after written notice to Customer and such Clearing Bank.

      2.2 COMMUNICATION LINKS. FDMS periodically will install, provide or cause
to be installed or provided the means for communicating data from its facilities
or equipment to the facilities or equipment of Customer, and third parties
designated by Customer, as FDMS reasonably determines is desirable to perform
this Agreement. The method of transmission and the media employed will be
determined jointly by FDMS and Customer taking into consideration relevant
factors such as traffic type, inbound and outbound message sizes, traffic
loading distribution, and the equipment or devices which are or may be used.

      2.3 COMPLIANCE WITH LAW.

            (a) FDMS and Customer acknowledge that Customer is subject to a
variety of federal, state and local laws, regulations and judicial and
administrative decisions and interpretations applicable to its Transaction Card
business (the "Legal Requirements"). The parties shall cooperate with each other
in resolving issues relating to compliance with the Legal Requirements in
accordance with the provisions of this Section 2.3.

            (b) Customer is solely responsible for (i) monitoring and
interpreting the Legal Requirements, (ii) determining the particular actions,
disclosures, formulas, calculations and procedures required for compliance with
the Legal Requirements (whether to be performed by FDMS or by Customer) and
(iii) maintaining an ongoing program for compliance with the Legal Requirements.
In addition, Customer is solely responsible for reviewing and selecting the
parameter settings and programming features and options within the FDMS System
that will apply to Customer's Transaction Card programs, and for determining
that its selection of such settings, features and options is consistent with the
Legal Requirements and with the terms and conditions of Customer's Accounts. In
making such determinations, Customer may rely on the written description of such
settings, features and options in the User Manuals, customer bulletins and other
system documentation provided by FDMS to Customer.

            (c) FDMS is solely responsible for compliance with all laws,
regulations and judicial and administrative decisions applicable to FDMS as a
third party provider of data processing services. FDMS will not be responsible
for any violation by Customer of a Legal Requirement to the extent such
violation occurs as a result of performance by FDMS of the Services in
accordance with instructions of Customer or written procedures provided by or
approved by Customer.

            (d) Subject to the terms of Article 10, FDMS and Customer shall
cooperate with

                                       3
<PAGE>
each other in providing information or records in connection with examinations,
requests or proceedings of each other's regulatory authorities.

      2.4 DEPENDENCE ON PERFORMANCE BY OTHERS. The obligation of FDMS to timely
perform the Services is expressly subject to the timely performance by Customer,
and third party vendors Customer engages, of their obligations and
responsibilities, but only to the extent that failure to so perform directly
affects FDMS's ability to timely perform hereunder or the cost to FDMS of
performing hereunder.

      2.5 PERFORMANCE GUIDELINES. While this Agreement is in effect, FDMS shall
at all times provide the services in accordance with the performance guidelines
set forth in Exhibit J (the "Performance Guidelines"). During each calendar
month, FDMS agrees to provide Customer with a monthly report setting forth the
Performance Guidelines and FDMS' performance during the just concluded calendar
month relative to the Performance Guidelines. Upon request, FDMS will review the
Performance Guidelines with Customer monthly. If FDMS fails to meet the same
Performance Guideline in any three (3) consecutive months, FDMS will credit or
pay to Customer one percent (1%) of the fees paid by Customer to FDMS under this
Agreement during such third failed month as liquidated damages. If FDMS fails to
meet the same two (2) Performance Guidelines in any three (3) consecutive
months, FDMS will credit or pay to Customer two percent (2%) of the fees paid by
Customer to FDMS under this Agreement during such third failed month as
liquidated damages. If FDMS fails to meet the same three (3) Performance
Guidelines in any three (3) consecutive months, FDMS will credit or pay to
Customer three percent (3%) of the fees paid by Customer to FDMS under this
Agreement during such third failed month as liquidated damages. If FDMS fails to
meet any one of Performance Guidelines numbers 1 (Authorization System
Availability), 4 (Postings, Monetary/Non-Monetary), 5 (Settlement Screens) or 7
(Daily ACH File Transmissions), as set forth in Exhibit J, in any four (4)
consecutive months, Customer, at its election, may terminate this Agreement
without penalty; provided, that this termination option is exercised within
sixty (60) days following the end of such fourth month and provided that such
termination shall become effective on a date specified by Customer, which date
shall not be later than nine (9) months after Customer's delivery to FDMS of a
written notice of its intention to so terminate this Agreement. FDMS' failure to
meet a Performance Guideline due to any cause beyond its control shall not be
considered to be a failure for which FDMS shall be responsible under this
Agreement.

      2.6 SIGN-UP BONUS. FDMS shall pay to Customer a sign-up bonus in the
amount of [****] dollars ($[****]) within ten (10) Business Days after the
execution of this Agreement. FDMS shall pay the signing bonus by wire transfer
to an account designated in writing by Customer.

                                   ARTICLE 3
               ACQUIRED PORTFOLIOS AND MERGER OR CHANGE OF CONTROL

      3.1  ACQUIRED FDMS PORTFOLIOS.  If Customer or any of its Affiliates
("Purchaser")  Acquires any Customer Accounts for which FDMS or any of its
Affiliates is then providing services similar to the Services (an "FDMS
Portfolio") pursuant to a pre-existing service agreement (an "Existing FDMS
Agreement") that has a then-current term that is longer that the remaining
then-current Original Term or Renewal Term of this Agreement, FDMS or its
Affiliates shall continue to perform the services pursuant to the Existing FDMS
Agreement which shall remain in effect through the expiration of its
then-current term.  If, however, Purchaser Acquires an FDMS Portfolio and the
then-current Original Term or Renewal Term of this Agreement is longer than the
remaining then-current term of the Existing FDMS Agreement, then Customer may
elect, in its sole discretion, to pay to FDMS an NPV Payment, as described
below, and have FDMS perform services with respect to the FDMS Portfolio under
the terms of this Agreement; provided, however, that nothing herein will (i)
require Customer to make such election or (ii) prevent Customer from keeping the
Existing FDMS Agreement in effect through the expiration of its then-current
term.  The "NPV Payment" will be calculated as the net present value (using a
discount rate of ten percent (10%) annually) of the difference between (i) the
amount that the FDMS Portfolio would have paid to FDMS for services under the
remaining term of the Existing FDMS Agreement, and (ii) the amount that the FDMS
Portfolio will pay to FDMS for Services under this Agreement for the same time
period, based on the growth rate, if any, of the FDMS Portfolio during the last
six (6) full calendar months prior to Purchaser's Acquisition of the FDMS
Portfolio as compared to the same six (6) calendar month period from the
immediately preceding calendar year(s).  Upon the transfer of the FDMS Portfolio
to Customer on the FDMS System, the FDMS Portfolio shall be processed in
accordance with the terms of this Agreement.  FDMS shall not include the volumes
from the FDMS Portfolio in any volume based priced schedules set forth in
Exhibit B until such time as there is a transfer of the FDMS Portfolio to
Customer on the FDMS system.  Such a transfer of the FDMS Portfolio shall occur
on a mutually agreed upon date.  In connection with such transfer, Customer
shall bear the costs and expenses of such transfer, at the then-standard hourly
rates of FDMS plus related material charges.  If Purchaser Acquires an FDMS
Portfolio and the Existing FDMS Agreement contains a provision that requires
FDMS' consent before the Existing FDMS Agreement can be assigned to Customer,
FDMS (i) will not unreasonably withhold its consent to such assignment and (ii)
will waive any consent fee specifically set forth in such Existing FDMS
Agreement as consideration for FDMS giving its consent to an assignment of such
Existing FDMS Agreement.

[****] Represents material which has been redacted and filed separately with the
Commission pursuant to a request for confidential treatment pursuant to Rule 406
under the Securities Act of 1933, as amended.

                                       4
<PAGE>

      3.2 ACQUIRED NON-FDMS PORTFOLIO

      (a) If Purchaser acquires any Merchant accounts that require services
substantially similar to the Services but for which FDMS or any of its
Affiliates is not then providing such services (a "Non-FDMS Portfolio"),
Customer may elect, in its sole discretion, to convert such Non-FDMS Portfolio
to the FDMS System.  If Customer elects to convert such Non-FDMS Portfolio to
the FDMS System, FDMS shall perform Services pursuant to the terms of and under
this Agreement for such Non-FDMS Portfolio and FDMS shall pay or credit to
Customer a rebate as described in the following sentence.  FDMS shall rebate to
Customer an amount equal to the product of [****] multiplied by the lesser of:
(i) the number of ETC Tickets (which are identified in Exhibit "B" and currently
billed as item numbers 63 and 270) processed by FDMS for the Non-FDMS Portfolio
after conversion to the FDMS System, or (ii) the number of Authorizations (as
defined in Section 4.4) processed by FDMS for the Non-FDMS Portfolio after
conversion to the FDMS System.  The rebates will be aggregated and paid or
credited to Customer quarterly.  For purposes of this Section 3.2, Customer must
convert at least [****] of the front-end and [****] of the back end and other
processing for the Non-FDMS Portfolio to the FDMS System in order to receive the
rebates contemplated herein.  In connection with any conversion of a Non-FDMS
Portfolio to the FDMS System, FDMS shall have a reasonable period of time to
perform due diligence and propose a conversion plan.  Unless the parties
mutually agree otherwise, Customer shall pay all charges for conversion of each
Non-FDMS Portfolio including (i) FDMS's standard conversion charges (at FDMS
cost plus related material charges), and (ii) any charges (at then-current
hourly rates plus related materials charges) associated with any customization
of the FDMS System specified in the conversion plan applicable to each such
Non-FDMS Portfolio.  Any such customization shall remain solely the property of
FDMS, and Customer shall acquire no right, claim, or interest in the FDMS System
or any customization thereof during or after the Term.

[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.

                                       5
<PAGE>
            (b) Customer shall notify FDMS, in writing, within thirty (30) days
after the execution of any binding agreement to Acquire a Non-FDMS Portfolio
that Customer plans to convert to the FDMS System.

      3.3 DISPOSITION OF PORTFOLIOS. Upon the sale or other disposition by
Customer of any portion of Customer's Accounts (the "Former Accounts"), FDMS
will no longer be obligated to provide Services for the Former Accounts for
Customer pursuant to this Agreement and Customer and FDMS agree that (i) there
shall be no reduction in the Year 1 Minimum Authorizations, Year 2 Minimum
Authorizations, Year 3 Minimum Authorizations, Year 4 Minimum Authorizations or
the Minimum Authorizations set forth in Section 4.4, and (ii) FDMS will provide
Deconversion services, as more fully described in Section 4.8, with respect to
such Former Accounts.

      3.4 MERGER OR CHANGE OF CONTROL. If Customer is merged into an Entity
that, prior to such merger, was not an Affiliate of Customer, and such Entity is
the survivor of such merger (the "Surviving Entity"), then (i) the provisions of
this Agreement shall continue to apply to all Customer Accounts which were
subject to this Agreement prior to such merger, but shall not apply to any
Customer Accounts of the Surviving Entity or any of its Affiliates which were
not subject to this Agreement prior to such merger and (ii) the Surviving
Entity, as Customer's successor-in-interest, shall continue to be bound by
Customer's obligations hereunder. If there is a Change of Control of Customer,
then the provisions of this Agreement shall continue to apply to all Customer
Accounts of Customer and its Affiliates immediately prior to such Change of
Control, but shall not apply to any Customer Accounts of the Entity or Entities
that Acquire Control of Customer which were not subject to this Agreement prior
to such Change of Control.

                                   ARTICLE 4
                              PAYMENT FOR SERVICES

                                       6
<PAGE>
      4.1 PROCESSING FEES.

            (a) Effective October 1, 2002, Customer shall pay FDMS the
Processing Fees set forth in Exhibit B to this Agreement. Beginning on the date
hereof and ending on September 30, 2002, Customer shall pay FDMS the prices set
forth in the BHAC Service Agreement, the Humboldt Agreement and the Merchant
Processing Services portions of the FNP Agreement, respectively. Notwithstanding
the two immediately preceding sentences, effective on the date hereof, Customer
shall pay FDMS the Processing Fees set forth in Exhibit B to this Agreement for
the line items designated with a pound sign (#). For each Processing Year after
Processing Year 2, FDMS may increase the Processing Fees designated with an
asterisk (*) in Exhibit B to this Agreement which were in effect for the
immediately preceding Processing Year by an amount not to exceed eighty percent
(80%) of the percentage increase in the Consumer Price Index ("CPI"), during
the period described below. For purposes of this paragraph, the CPI shall be the
index compiled by the United States Department of Labor's Bureau of Labor
Statistics, Consumer Price Index for All Urban Consumers ("CPI-U") having a base
of 100 in 1982-1984. The percentage increase in the CPI shall be calculated and
written notice given to Customer as of ninety (90) days in advance of the
effective date of the Processing Fees increase, by comparing the CPI using a
twelve (12) month period ending as of the date of calculation and expressing the
increase in the CPI through the twelve (12) month period as a percentage. If the
federal government changes its definition of or method of calculating the CPI-U
or its applicable components during the Term of this Agreement, the parties will
negotiate in good faith to determine the changes, if any, that should be made to
this annual adjustment provision to reflect such CPI-U changes.

            (b) In order for Customer to evaluate the Processing Fees to be
charged under this Agreement effective October 1, 2002 as contemplated by
Sections 4.1(a) and 9.2(b) herein, FDMS will prepare and provide to Customer two
separate invoices for the Services provided during the months of July, August
and September 2002. One invoice will show the amount of processing fees actually
due and owing from Customer and billed under the BHAC Service Agreement, the
Humboldt Agreement and the Merchant Processing Services portions of the FNP
Agreement, and the other invoice will show the Processing Fees that would have
been due and owing from Customer if they had been billed under this Agreement.
FDMS will deliver the invoices for September 2002 on or before October 21, 2002.

      4.2 SPECIAL FEES. Customer shall pay to FDMS the Special Fees for amounts
paid to third-party providers, computed in accordance with Exhibit B to this
Agreement. Any price change for Special Fees shall be effective on the effective
date of the increase or decrease to FDMS. FDMS will give written notice of each
such increase or decrease to Customer as soon as practicable following FDMS's
first awareness of any such increase or decrease.

      4.3 NEW PRODUCTS. If FDMS commences to offer any new services or products
generally to its customers and Customer elects to use any such service or
product, or if Customer elects to use services or products which Customer had
not previously elected to use, then FDMS shall provide such service or product
at FDMS's then-current fees and charges for such service or product or such

                                       7
<PAGE>
other price as FDMS and Customer may mutually agree.

      4.4 MINIMUM AUTHORIZATION COMMITMENT. In Processing Year 1, Customer will
submit to FDMS for processing authorization inquiries (which are identified in
Exhibit "B" and currently billed as items number 300, 305, 317, 318, 1101, 1102,
6601, 6602, 6603, 6604, 6605, 6606, 6607, 6611, 6621 and 6624 (which numbers may
change during the Term of this Agreement), and collectively referred to as the
"Authorizations") in an amount equal to [****] ([****]) Authorizations (the
"Year 1 Minimum Authorizations"). In Processing Year 2, Customer will submit to
FDMS for processing at least [****] ([****]) Authorizations (the "Year 2 Minimum
Authorizations"). In Processing Year 3, Customer will submit to FDMS for
processing at least [****] ([****]) Authorizations (the "Year 3 Minimum
Authorizations"). In Processing Year 4, Customer will submit to FDMS for
processing at least [****] ([****]) Authorizations (the "Year 4 Minimum
Authorizations"). In each Processing Year after Processing Year 4, Customer will
submit to FDMS for processing Authorizations at least equal to one hundred
percent (100%) of the actual Authorizations submitted during the immediately
preceding Processing Year (the "Minimum Authorizations"). FDMS shall calculate
the total Authorizations submitted by Customer during each Processing Year (the
"Total Annual Authorizations") within ninety (90) days after the end of each
Processing Year and will, after ten (10) days written notice to Customer, draw
upon Customer's account pursuant to Section 4.5 of this Agreement for the dollar
amount, if any, equal to the product of (i) the amount by which the Year 1
Minimum Authorizations, Year 2 Minimum Authorizations, Year 3 Minimum
Authorizations, Year 4 Minimum Authorizations or the Minimum Authorizations, as
applicable, for the Processing Year exceed the Total Annual Authorizations for
the Processing Year, multiplied by (ii) [****] ([$****]). For the avoidance of
doubt and based on economic assumptions material to each party underlying this
transaction, Customer and FDMS expressly agree that Customer shall submit to
FDMS Authorizations each Processing Year in an amount at least equal to the Year
1 Minimum Authorizations, Year 2 Minimum Authorizations, Year 3 Minimum
Authorizations, Year 4 Minimum Authorizations or the Minimum Authorizations, as
applicable, until this Agreement is terminated by Customer solely pursuant to
the provisions of Section 9.2 of this Agreement or until FDMS terminates this
Agreement and invokes compensatory payments pursuant to Section 9.4 of this
Agreement. Further, and for the avoidance of doubt, the parties agree that in
order for an authorization inquiry submitted to FDMS to be counted in the total
number of Authorizations for purposes of this Agreement, FDMS must also perform
core merchant settlement services with respect to the Transaction so authorized,
including Interchange Settlement and Merchant statementing.

      4.5 METHOD OF PAYMENT. To facilitate the payment of Processing Fees,
Special Fees, compensatory payments pursuant to Section 9.4 of this Agreement
and any other fee, tax, interest payment, charge or amount due or payable to
FDMS under this Agreement, Customer shall provide FDMS with access to a bank
account of Customer's funds not requiring signature including notifying FDMS of
the demand deposit account number and transit routing number for the account.
Except with respect to amounts in dispute pursuant to Section VII of Exhibit "B"
to this Agreement, FDMS

[****] Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment pursuant to
Rule 406 under the Securities Act of 1933, as amended.

                                       8
<PAGE>
may draw upon the bank account to pay fees, taxes, interest payments, charges,
or any other amount due or payable to FDMS under the terms of this Agreement.
The detailed records of the amounts drawn on the account of Customer will be
provided by FDMS to Customer on a monthly basis. FDMS shall be under no
obligation to effect any conversion until the account has been established as
provided herein.

      4.6 INTEREST. If FDMS is unable to obtain payment of Processing Fees,
Special Fees, compensatory payments pursuant to Section 9.4 of this Agreement or
any other fee, tax, interest payment, charge or amount due or payable to FDMS
under this Agreement at the time provided for payment under this Agreement, the
unpaid amount shall bear interest at the rate equal to the lesser of (i) six
percent (6%) per annum, or (ii) the maximum rate permitted by applicable law,
from the date on which payment should have been available until the date on
which FDMS receives the payment.

      4.7 TAXES.

            (a) Customer shall pay all taxes and similar charges, however
designated, which are imposed by any governmental authority by reason of FDMS's
fulfillment of its obligations hereunder except for income taxes payable by FDMS
on amounts earned by FDMS or property taxes payable by FDMS on property owned by
FDMS. Without limiting the foregoing, Customer shall promptly pay FDMS for
amounts actually paid or required to be collected or paid by FDMS.

            (b) Customer authorizes FDMS to calculate the total amount of sales
taxes due from Customer hereunder. Customer shall supply FDMS with all
information necessary for FDMS to compute and remit the taxes (including any tax
exempt certificate, claim letter, or similar documentation). FDMS shall remit
the sales taxes to the appropriate taxing authority on behalf of Customer based
on the information available to FDMS. If FDMS underpays or overpays such sales
taxes, Customer shall be responsible for promptly paying any shortfalls
(including any penalties or interest) and for collecting any refunds from the
appropriate taxing authority; provided, however, if such underpayment is solely
the result of the negligence of FDMS, FDMS shall be responsible for any
penalties associated with such underpayment. FDMS will give written notice of
any applicable tax to Customer as soon as practicable following FDMS's first
awareness of any such tax.

      4.8 DECONVERSION.

            (a) Notwithstanding anything contained herein to the contrary, upon
(i) expiration or termination of this Agreement, (ii) transfer by Customer of
any accounts from the FDMS System to a third party, (iii) abandonment or
deletion by Customer of a Clearing Bank (or by FDMS, MasterCard or VISA on
behalf of Customer or a Clearing Bank) of any BIN or ICA of Customer relating to
accounts from the FDMS System, or (iv) manual removal by Customer or a Clearing
Bank of any accounts from the FDMS System, Customer and FDMS shall mutually,
expeditiously, and in good faith, agree upon and document a project plan for any
such Deconversion (a "Deconversion Plan").

                                       9
<PAGE>
            (b) As part of the Deconversion Plan, FDMS shall perform (i) at the
request of Customer, all Services being rendered by FDMS under this Agreement at
the time of expiration or termination in accordance with the then-current
Processing Fees and Performance Guidelines for a period of up to one hundred
eighty (180) days, and (ii) all other services necessary to accomplish the
Deconversion of affected accounts, including systematic stripping and removal of
all such account information from the FDMS System, at FDMS's then-current rates.

                                   ARTICLE 5
                     DISPUTE RESOLUTION AND INDEMNIFICATION

      5.1 INFORMAL DISPUTE RESOLUTION. Any controversy or claim between FDMS and
Customer arising from or in connection with this Agreement whether based on
contract, tort, common law, equity, statute, regulation, order or otherwise
("Dispute"), shall be resolved as follows:

            (a) upon written request of either FDMS or Customer, the parties
shall each appoint a representative to meet and attempt to resolve such Dispute;

            (b) the designated representatives shall meet as often as the
parties reasonably deem necessary to discuss the problem in an effort to resolve
the Dispute without the necessity of any formal proceeding; and

            (c) arbitration pursuant to Exhibit D for the resolution of a
Dispute may not be commenced until the earlier of:

                  (i) the date that the designated representatives conclude in
good faith that amicable resolution through continued negotiation of the matter
does not appear likely; or

                  (ii) thirty (30) days after the date that either party
requested negotiation of the Dispute pursuant to Section 5.1(a) of this
Agreement.

            (d) Notwithstanding the foregoing, this Section 5.1 shall not be
construed to prevent a party from instituting formal proceedings at any time to
avoid the expiration of any applicable limitations period, to preserve a
superior position with respect to other creditors or to seek temporary or
preliminary injunctive relief pursuant to Section 10.7.

            (e) The parties acknowledge and agree that time is of the essence in
performing their respective obligations under this Agreement.

      5.2 ARBITRATION. If Customer and FDMS are unable to resolve any Dispute in
the manner set forth in Section 5.1, such Dispute shall be submitted to
arbitration in the manner set forth in Exhibit D.

                                       10
<PAGE>
      5.3 INDEMNIFICATION. The indemnification rights and obligations of
Customer and FDMS under this Agreement are contained in Exhibit E.

                                   ARTICLE 6
                             LIMITATION OF LIABILITY

      6.1 LIMITATION ON LIABILITY.

            (a) Each of Customer's and FDMS's cumulative liability for any loss
or damage, direct or indirect, for any cause whatsoever (including, but not
limited to, those arising out of or related to this Agreement) with respect to
claims (whether third party claims, indemnity claims or otherwise) relating to
events in any one Processing Year shall not under any circumstances exceed the
greater of (i) the amount of the Processing Fees paid to FDMS by Customer
pursuant to this Agreement for Services performed during such Processing Year,
or (ii) three million five hundred thousand dollars ($3,500,000).

            (b) The monetary limits provided for in Section 6.1(a) shall not be
construed to limit the payment obligations of Customer or FDMS, as applicable,
with respect to (i) acts of gross negligence or willful misconduct by either
Customer or FDMS, (ii) breaches by either Customer or FDMS of their obligations
under Article 10 or (iii) Processing Fees, Special Fees, compensatory payments
pursuant to Section 9.4 of this Agreement, or any other fee, tax, interest or
other amount due and owing by Customer under this Agreement.

      6.2 NO SPECIAL DAMAGES. EXCEPT FOR ACTS OF GROSS NEGLIGENCE, WILLFUL
MISCONDUCT OR BREACHES OF OBLIGATIONS UNDER ARTICLE 10, IN NO EVENT SHALL FDMS
BE LIABLE UNDER ANY LEGAL THEORY FOR ANY LOST PROFITS, EXEMPLARY, PUNITIVE,
SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, WHICH ARE HEREBY
EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER FDMS HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.

                                   ARTICLE 7
                            DISCLAIMER OF WARRANTIES

EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT (INCLUDING ARTICLE 11), FDMS
SPECIFICALLY DISCLAIMS ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OF MERCHANTABILITY OR NONINFRINGEMENT, ARISING OUT OF OR RELATED TO
THIS AGREEMENT, WHICH ARE HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES. THE
PARTIES AGREE THAT THIS AGREEMENT IS A SERVICE AGREEMENT AND IS NOT SUBJECT TO
THE PROVISIONS OF THE UNIFORM COMMERCIAL CODE.

                                       11
<PAGE>
                                   ARTICLE 8
                                TERM OF AGREEMENT

      8.1 TERM. Except as set forth in Section 4.1, this Agreement is effective
from the date hereof and shall extend for four (4) Processing Years (the
"Original Term"). Processing Year 1 of the Term shall commence on the first day
of July, 2002 and continue through the last day of June, 2003. For purposes of
this Agreement, a "Processing Year" means each twelve (12) month period
commencing on the first day of July and ending on the last day of June.

      8.2 RENEWAL. After the Original Term, this Agreement shall automatically
continue in effect until either party gives the other at least six (6) months
prior written notice of termination.

                                   ARTICLE 9
                                   TERMINATION

      9.1 TERMINATION BY FDMS. FDMS may terminate this Agreement without
penalty:

            (a) if Customer fails to pay any amount due under this Agreement, or
establish, fund or maintain any account as required under this Agreement, within
thirty (30) days after Customer's receipt of written notice of its failure to do
so; provided, however, that FDMS may suspend the rendering of Services or
Interchange Settlement prior to termination if necessary;

            (b) if any Insolvency Event occurs with respect to Customer;

            (c) if Customer fails to maintain or re-establish good standing as
an independent sales organization or a member services provider with VISA or
MasterCard within thirty (30) days after Customer's receipt of written notice of
its failure to do so; provided, however, that FDMS may suspend the rendering of
Services prior to termination if required by VISA or MasterCard;

            (d) if Customer fails to provide or maintain clearing arrangements
for the Merchant Accounts processed under this Agreement in accordance with all
applicable rules and regulations of VISA and MasterCard within thirty (30) days
after Customer's receipt of written notice of its failure to do so; provided,
however, that FDMS may suspend the rendering of Services prior to termination if
required by VISA or MasterCard;

            (e) if FDMS has been required by a governmental or regulatory body
or agency or by VISA and MasterCard to terminate the Services on behalf of
Customer and Customer fails to remedy such situation within thirty (30) days
after Customer's receipt of written notice; provided, however, that FDMS may
suspend the rendering of Services prior to termination if so required;

                                       12
<PAGE>
            (f) upon the termination of the membership in VISA or MasterCard of
the last remaining Clearing Bank and Customer fails to remedy such situation
within thirty (30) days after Customer's receipt of written notice; provided,
however, that FDMS may suspend the rendering of Services prior to termination if
necessary; or

            (g) if FDMS has terminated Interchange Settlement of Transactions on
behalf of Customer or the last remaining Clearing Bank pursuant to any clearing
bank arrangement and Customer fails to remedy such situation within thirty (30)
days after Customer's receipt of written notice; provided, however, that FDMS
may suspend the rendering of Services prior to termination if necessary.

The rights of FDMS to terminate under this Section 9.1 are cumulative and the
existence of the right under any provision or subsection is not exclusive of the
right under any other provision or subsection.

      9.2 TERMINATION BY CUSTOMER.

            (a) Customer may terminate this Agreement without penalty:

                  (i) if any Insolvency Event occurs with respect to FDMS;

                  (ii) upon notice to FDMS if FDMS fails to perform or observe
any of the terms, covenants or conditions of this Agreement and FDMS fails to
cure such breach within thirty (30) days following its receipt of the notice of
such breach;

                  (iii) pursuant to Section 2.5 of this Agreement;

                  (iv)  pursuant to Section 12.1 of this Agreement; or

                  (v) immediately if FDMS is unable to perform Interchange
Settlement services for more than forty eight (48) continuous hours; provided,
however, that FDMS' inability to perform Interchange Settlement services due to
any cause beyond its control shall not be considered to be an inability for
which Customer may terminate (or for which FDMS shall be responsible under) this
Agreement.

                                       13
<PAGE>
            (b) Notwithstanding anything contained herein, the parties agree
that Customer will have the right, on or before October 26, 2002, to provide
written notice to FDMS of its election to terminate this Agreement if Customer,
in good faith, is not satisfied with the Processing Fees under this Agreement
and to revert to each of the existing BHAC Service Agreement, Humboldt Agreement
and FNP Agreement. Upon Customer's election to terminate this Agreement and
revert to the BHAC Service Agreement, Humboldt Agreement and FNP Agreement,
Customer agrees to return to FDMS any sign-up bonus or other compensation
received by Customer specifically in exchange for entering into this Agreement,
including the sign-up bonus described in Section 2.6. During such period ending
October 26, 2002, Customer shall not, and shall cause its Affiliates not to,
directly or indirectly, solicit, encourage, engage or participate in any
discussions or negotiations with any other person or entity, including providing
any information, with respect to an agreement for services similar to the
Services being provided by FDMS under this Agreement, excluding discussions
related to acquisitions by Customer of Merchant Accounts.

      9.3 EFFECT OF TERMINATION. Upon termination, FDMS shall have no further
obligation to provide services to Customer and all outstanding unpaid amounts
due and owing to FDMS shall become immediately due and payable. Termination
shall not affect the following:

            (a) the obligation of Customer to pay for services rendered or any
other obligation or liability owing or which becomes owing under this Agreement
whether the obligations arise prior to or after the date of termination
including the obligations to make the payments provided in Article 4 and Section
9.4 of this Agreement;

            (b) the obligations of Customer set forth in this Agreement in
connection with any FDMS or third party software pursuant to Exhibit A; or

            (c) the obligations of each party under Sections 2.5 and 4.8,
Articles 5, 6, 7 and 10, and Exhibits C, D and E, which shall survive expiration
or termination of this Agreement for any reason; provided, however, that if FDMS
terminates this Agreement pursuant to Section 9.1(a), FDMS shall not be required
to continue to perform Services as described in Section 4.8(b)(i).

      9.4 PAYMENTS UPON TERMINATION.

            (a) If FDMS terminates this Agreement under Section 9.1 due to a
default of Customer at any time prior to the expiration of the Term, Customer
and FDMS agree that, based on economic assumptions material to each party,
Customer shall make a compensatory payment to FDMS. Such compensatory payment
shall be made by Customer upon termination by FDMS, and prior to Deconversion,
and shall equal the sum of:

                  (i) the product of (1) the Year 1 Minimum Authorizations, Year
2 Minimum Authorizations, Year 3 Minimum Authorizations, Year 4 Minimum
Authorizations or the Minimum Authorizations, as applicable, as set forth in
Section 4.4 of this Agreement, for the Processing Year in which the termination
occurs (after crediting Customer for any Authorizations

                                       14
<PAGE>
processed by FDMS in such Processing Year), multiplied by (2) eight cents
($0.08); plus

                  (ii) the sum of the present values of a payment in each full
Processing Year (other than the year of termination) which remains during the
Term of this Agreement in an amount equal to the product of (1) the Year 1
Minimum Authorizations, Year 2 Minimum Authorizations, Year 3 Minimum
Authorizations, Year 4 Minimum Authorizations and the Minimum Authorizations, as
applicable, as set forth in Section 4.4 of this Agreement, multiplied by (2)
five cents ($0.05); plus

                  (iii) the amount of Balance Sheet Expenses remaining
unamortized on the balance sheet of FDMS.

            (b) In determining the present value of the amount set forth in
(a)(ii) above, an interest rate equal to the three (3) month Treasury Bill Rate,
as quoted by The Wall Street Journal for the date on which termination occurs,
or if not available on the date of termination, as soon thereafter as the next
edition of The Wall Street Journal is published, shall be assumed and the
payments shall be assumed to be made on the first day of each Processing Year.

            (c) FDMS and Customer agree that the compensatory payment set forth
in Section 9.4(a) is a reasonable estimation, as of the date of this Agreement,
of the actual damages which FDMS would suffer if FDMS were to fail to receive
the processing business for the full Term.

                                   ARTICLE 10
                           CONFIDENTIAL NATURE OF DATA

      10.1 CUSTOMER'S PROPRIETARY INFORMATION. FDMS acknowledges the proprietary
and confidential data of Customer disclosed to FDMS, including without
limitation Customer's Merchant master files, the names and information related
to Customer's Merchant Accounts, and the names and information related to any
independent sales organization or member service providers utilized by Customer
(collectively, "Customer's Proprietary Information"). FDMS shall, and shall
cause its Affiliates to, return to Customer all or any requested portion of
Customer's Proprietary Information upon the expiration or termination of this
Agreement.

      10.2 FDMS'S PROPRIETARY INFORMATION. Customer acknowledges that all
product and system developments, enhancements, improvements and modifications
disclosed, provided or used by FDMS shall remain solely and exclusively the
property of FDMS. Customer shall not obtain any proprietary rights in any
proprietary or confidential information which has been or is disclosed to
Customer by FDMS, including without limitation, any data or information that is
a trade secret or competitively sensitive material, User Manuals, screen
displays and formats, FDMS's computer software and documentation, software
performance results, flow charts and other specifications (whether or not
electronically stored), data and data formats (collectively, "FDMS's Proprietary
Information") whether any of the materials are developed or purchased
specifically for performance

                                       15
<PAGE>
of this Agreement or otherwise. Customer shall, and shall cause its Affiliates
to, return to FDMS all of FDMS's Proprietary Information upon the expiration or
termination of this Agreement.

      10.3 CONFIDENTIALITY OF AGREEMENT. Except as required by law, each of FDMS
and Customer shall keep confidential and not disclose, and shall cause its
Affiliates and their respective directors, officers, employees, representatives,
agents and independent contractors to keep confidential and not disclose, any of
the terms and conditions of this Agreement to any third party without the prior
written consent of FDMS. The parties acknowledge and agree that Customer may,
upon the advice of counsel and provision of notice to FDMS, file a copy of this
Agreement with and/or provide a description of this Agreement to applicable
government authorities if this Agreement is deemed material to Customer.

      10.4 CONFIDENTIALITY. FDMS and Customer shall maintain Customer's
Proprietary Information and FDMS's Proprietary Information, respectively, in
strict confidence. Without limiting the generality of the foregoing, FDMS and
Customer each agree:

            (a) not to disclose or permit any other person or Entity access to
Customer's Proprietary Information or FDMS's Proprietary Information, as
appropriate, except that the disclosure or access shall be permitted to an
employee, officer, director, agent, representative, external or internal
auditors or independent contractor of the party requiring access to the same in
the course of his or her employment or services;

            (b) to ensure that its employees, officers, directors, agents,
representatives and independent contractors are advised of the confidential
nature of Customer's Proprietary Information and FDMS's Proprietary Information,
as appropriate, and are precluded from taking any action prohibited under this
Article 10, provided that in any event Customer and FDMS shall each be liable
for any breach of this Article 10 by their respective employees, officers,
directors, agents, representatives and independent contractors;

            (c) not to alter or remove any identification, copyright or
proprietary rights notice which indicates the ownership of any part of
Customer's Proprietary Information or FDMS's Proprietary Information, as
appropriate;

            (d) to notify the other promptly and in writing of the circumstances
surrounding any possession, use or knowledge of Customer's Proprietary
Information or FDMS's Proprietary Information, as appropriate, at any location
or by any Entity other than those authorized by this Agreement; and

            (e) not to use Customer's Proprietary Information or FDMS's
Proprietary Information, as appropriate, except for the purposes of fulfilling
its obligations under this Agreement.

      10.5 RELEASE OF INFORMATION. Despite the foregoing, Customer and FDMS
agree that

                                       16
<PAGE>
Customer's Proprietary Information may be made available to VISA, MasterCard or
to supervisory or regulatory authorities of Customer upon the written request of
any of the foregoing.

      10.6 EXCLUSIONS. Nothing in this Article 10 shall restrict either party
with respect to information or data identical or similar to that contained in
Customer's Proprietary Information or FDMS's Proprietary Information, as
appropriate, but which: (i) the receiving party can demonstrate was rightfully
possessed by it before it received the information from the disclosing party;
(ii) was in the public domain prior to the date of this Agreement or
subsequently becomes publicly available through no fault of the receiving party
or any Entity acting on its behalf; (iii) was previously received by the
receiving party from a third party or is subsequently furnished rightfully to
the receiving party by a third party (no Affiliate of FDMS or Customer shall be
considered to be a third party) not known to be under restrictions on use or
disclosure; (iv) is independently developed by such party; (v) is required to be
disclosed by law, regulation or court order, provided that the disclosing party
will exercise reasonable efforts to notify the other party prior to disclosure;
or (vi) is required to be disclosed to comply with or to enforce the terms of
this Agreement.

      10.7 REMEDY. If either party breaches this Article 10, the non-breaching
party will suffer irreparable harm and the total amount of monetary damages for
any injury to such party will be impossible to calculate and therefore an
inadequate remedy. Accordingly, the non-breaching party may (i) seek temporary
and permanent injunctive relief against the breaching party or (ii) exercise any
other rights and seek any other remedies to which the non-breaching party may be
entitled to at law, in equity and under this Agreement (including Article 6) for
any violation of this Article 10. The provisions of this Article 10 shall
survive the expiration or termination of this Agreement.

                                   ARTICLE 11
                                 REPRESENTATIONS

      11.1 FDMS'S REPRESENTATION. FDMS represents and warrants that the
execution and delivery of this Agreement and the consummation of the transaction
herein contemplated does not conflict in any material respect with or constitute
a material breach or material default under the terms and conditions of any
documents, agreements or other writings to which it is a party.

      11.2 CUSTOMER'S REPRESENTATION. Customer represents and warrants that the
execution and delivery of this Agreement and the consummation of the transaction
herein contemplated does not conflict in any material respect with or constitute
a material breach or material default under the terms and conditions of any
documents, agreements or other writings to which it is a party.

                                   ARTICLE 12
                                  MISCELLANEOUS

      12.1 ASSIGNMENT OF THIS AGREEMENT. Except as otherwise provided herein,
the rights and

                                       17
<PAGE>
obligations of each party under this Agreement are personal and this Agreement
shall not be assigned, either voluntarily or by operation of law, without the
prior written consent of the other party, which will not be unreasonably
withheld or delayed beyond thirty (30) days; provided, however, that if FDMS
fails to consent to any such proposed assignment by Customer, Customer may
terminate this Agreement without penalty and shall have the right to begin
Deconversion as described in Section 4.8 hereof. Subject to the foregoing, all
provisions contained in this Agreement shall extend to and be binding upon the
parties hereto or their respective successors and permitted assigns.

      12.2 STATE LAW. Except as provided in Exhibit D, this Agreement shall be
governed by the laws of the State of New York as to all matters including
validity, construction, effect, performance and remedies without giving effect
to the principles of choice of law thereof. With respect to any suit, action or
proceeding arising out of or relating to this Agreement, Customer agrees that
any process to be served in connection therewith shall, if delivered, sent or
mailed in accordance with Section 12.3, constitute good, proper and sufficient
service thereof.

      12.3 NOTICE. All notices which either party may be required or desire to
give to the other party shall be in writing and shall be given by personal
service, telecopy, registered mail or certified mail (or its equivalent), or
overnight courier to the other party at its respective address or telecopy
telephone number set forth below. Mailed notices and notices by overnight
courier shall be deemed to be given upon actual receipt by the party to be
notified. Notices delivered by telecopy shall be confirmed in writing by
overnight courier and shall be deemed to be given upon actual receipt by the
party to be notified.

<TABLE>
<CAPTION>
If to FDMS:                              With a copy to:
<S>                                      <C>
First Data Merchant                      First Data Merchant
 Services Corporation                    Services Corporation
265 Broadhollow Road                     12500 E. Mt. Belford Avenue, Suite M5-C
Melville, NY 11747                       Englewood, Colorado 80112
Attn: General Manager                    Attn: General Counsel
Telecopy Number:  631-577-7015           Telecopy Number:  720-332-0033

If to Customer:                          With a copy to:

iPayment Holdings, Inc.                  iPayment, Inc.
30 Burton Hills, Suite 520               9121 Oakdale Avenue, Suite 201
Nashville, TN 37215                      Chatsworth, CA 91311
Attn: Afshin Yazdian                     Attn: Joe Jorling
Telecopy Number: 615-665-8434            Telecopy Number: 818-701-2406

And a copy to:
</TABLE>

                                       18
<PAGE>
<TABLE>
<S>                                      <C>
Howard Herndon
Waller Lansden
511 Union Street, Suite 2100
Nashville, TN 37219
Telecopy Number: 615-244-6804
</TABLE>

A party may change its address or addresses set forth above by giving the other
party notice of the change in accordance with the provisions of this section.

      12.4 WAIVER. The failure of either party at any time to require
performance by the other party of any provision of this Agreement shall not
affect in any way the full right to require the performance at any subsequent
time. The waiver by either party of a breach of any provision of this Agreement
shall not be taken or held to be a waiver of the provision itself.

      12.5 RELATIONSHIP OF PARTIES. Nothing contained in this Agreement shall be
deemed to create a partnership, joint venture or similar relationship between
the parties. The parties' relationship shall be that of independent parties
contracting for services. Neither party shall hold itself out as having the
authority to bind the other except as specifically provided in connection with
Interchange Settlement. All personnel and other agents employed by either party
in connection with this Agreement are such party's or its agent's employees and
not employees or agents of the other party. Nothing contained in this Agreement
shall be deemed to convey to FDMS any interest in the business or assets of
Customer.

      12.6 THIRD PARTY BENEFICIARIES. This Agreement is entered into solely for
the benefit of FDMS, Customer and their respective Affiliates and shall not
confer any rights upon any other Entity.

      12.7 SUBCONTRACTORS. FDMS may subcontract all or any part of the Services,
but, notwithstanding any such subcontract, FDMS shall remain primarily
responsible for performance of the Services.

      12.8 FORCE MAJEURE AND RESTRICTED PERFORMANCE. If performance by FDMS or
Customer of any service or obligation under this Agreement, including conversion
or Deconversion, is prevented, restricted, delayed or interfered with by reason
of labor disputes, strikes, acts of God, floods, lightning, severe weather,
shortages of materials, rationing, utility or communication failures, failure of
MasterCard or VISA, failure or delay in receiving electronic data, earthquakes,
war, revolution, civil commotion, acts of public enemies, blockade, embargo, or
any law, order, proclamation, regulation, ordinance, demand or requirement
having legal effect of any government or any judicial authority or
representative of any such government, or any other act, omission or cause
whatsoever, whether similar or dissimilar to those referred to in this clause,
which are beyond the reasonable control of FDMS or Customer, then FDMS or
Customer, as applicable, shall be excused from the performance to the extent of
the prevention, restriction, delay or interference.

                                       19
<PAGE>
      12.9 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable for any reason, the invalidity shall not affect the validity of
the remaining provisions of this Agreement, and the parties shall substitute for
the invalid provisions a valid provision which most closely approximates the
intent and economic effect of the invalid provision.

      12.10 AUDIT. From time to time during the Term of this Agreement, FDMS
will allow a third party, selected by FDMS, to perform an audit of the
electronic data processing environment maintained by FDMS to provide the
services contemplated under this Agreement. FDMS shall provide Customer with a
copy of the results of the audit if Customer requests a copy in writing.

      12.11 RISK OF LOSS. Customer shall be responsible for any and all risk of
loss to any tangible item (i) provided by FDMS for Customer (including without
limitation statements and embossed cards) upon the delivery of such items to the
U.S. Postal Service or such other courier as Customer may select, and (ii)
provided by Customer to FDMS until actual receipt of such items by FDMS. It is
expressly understood that the U.S. Postal Service and any courier selected by
Customer are the agents of Customer and not FDMS.

      12.12 EQUAL EMPLOYMENT OPPORTUNITY. FDMS will not discriminate against any
employee or applicant for employment because of race, color, religion, sex,
national origin, disability, age or veteran status as ordered by the Secretary
of Labor pursuant to Section 202 of Executive Order 11246, Section 503 of the
Rehabilitation Act of 1973, and Section 402 of the Vietnam Era Veterans
Readjustment Assistance Act of 1974.

      12.13 ENTIRE AGREEMENT. This Agreement, including Exhibits and the
executed Affiliate Agreements, if any, sets forth all of the promises,
agreements, conditions and understandings between the parties respecting the
subject matter hereof and supersedes all negotiations, conversations,
discussions, correspondence, memorandums and agreements between the parties
concerning the subject matter.

      12.14 AMENDMENTS. This Agreement may not be amended except by a writing
signed by authorized representatives of both parties to this Agreement.

      12.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

      12.16 TERMINATION OF SERVICE AGREEMENTS. Unless Customer makes the
election to terminate this Agreement as provided in Section 9.2(b), the BHAC
Service Agreement, the Humboldt Agreement and the Merchant Processing Services
portions of the FNP Agreement are hereby terminated as of October 27, 2002.

  [The rest of this page is intentionally left blank; signature page follows.]

                                       20
<PAGE>
      The parties to this Agreement have caused it to be executed by their duly
authorized officers as of the date set forth at the beginning of this Agreement.

FIRST DATA MERCHANT SERVICES CORPORATION

By: /s/ Anthony Lucatuorto
    ----------------------------------------------

Name:   Anthony Lucatuorto
      --------------------------------------------

Title:  SVP
       -------------------------------------------

iPAYMENT HOLDINGS, INC.

By: /s/ Joseph Jorling
    ----------------------------------------------

Name:   Joseph Jorling
      --------------------------------------------

Title:  COO
       -------------------------------------------

                                       21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00050-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00050-of-00352.parquet"}]]