Document:

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                                                                   EXHIBIT 10.37

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 the
Company's request for confidential treatment pursuant to Rule 406 under the
Securities Act of 1933, as amended.

                                 IPAYMENT, INC.

                      CHASE MERCHANT SERVICES, L.L.C., AND

                              JPMORGAN CHASE BANK

                                MERCHANT PROGRAM

                              PROCESSING AGREEMENT
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                     MERCHANT PROGRAM PROCESSING AGREEMENT

         THIS MERCHANT PROGRAM PROCESSING AGREEMENT ("Agreement") is entered
into this 31st day of January 2003, among IPAYMENT, INC., a Delaware
corporation, having its principal place of business at 40 Burton Hills, Suite
415, Nashville, TN 37215 ("IPAYMENT"), CHASE MERCHANT SERVICES, L.L.C. ("CMS"),
with an office at 3975 N.W. 120th Avenue, Coral Springs, Florida 33065, and
JPMORGAN CHASE BANK ("CHASE"), with an office at 100 Duffy Avenue, Hicksville,
New York 11801. Under this Agreement, CMS and CHASE will collectively be
referred to as "SERVICERS".

                                    RECITALS

         WHEREAS, CHASE, as a principal Member of VISA, U.S.A. Incorporated
("VISA") and MasterCard International, Inc. ("MasterCard"), and a member of
certain Networks, together with CMS, provides Merchants the ability to establish
a merchant account through which CHASE and CMS provide electronic Card
processing services, including authorization, data capture, processing,
settlement and reconciliation of United States Dollar denominated credit and
debit card transactions (the "Payment Processing Services").

         WHEREAS, IPAYMENT and its wholly-owned subsidiaries listed on EXHIBIT B
to this Agreement ("Subsidiaries") are in the business of developing and
marketing Merchant credit and debit card programs, originating Merchant
relationships, and providing (either directly or through a third party provider)
Merchant bankcard processing services.

         WHEREAS, IPAYMENT and its Subsidiaries, pursuant to existing marketing
and service agreements with other Member banks, are sponsored and registered as
an Independent Sales Organizations ("ISO") and Member Service Providers ("MSP")
for Visa and MasterCard, respectively, and have acquired and/or established a
credit card merchant portfolio (through other Member banks), for which IPAYMENT
and its Subsidiaries, as of the effective date of this Agreement, either
directly or through a third party provider, provide processing services for the
merchants identified on EXHIBIT C hereto and made a part hereof (the "Existing
Portfolio").

         WHEREAS, IPAYMENT and SERVICERS desire to establish a Merchant Program
whereby CHASE will sponsor as ISOs and MSPs for Visa and MasterCard,
respectively, IPAYMENT and Subsidiaries, as well as Subsidiaries' respective
Sub-Independent Sales Organizations (as such term is defined in Section 2.7 of
this Agreement) as are approved by SERVICERS in SERVICERS' sole discretion, in
accordance with this Agreement, and whereby SERVICERS will settle Card
transactions and perform certain other functions in connection therewith
pursuant to and as outlined in the terms of this Agreement, with respect to (i)
the Existing Portfolio; (ii) Approved Merchants; and (iii) any Subsequently
Acquired Portfolio approved by SERVICES under this Agreement.

         WHEREAS, SERVICERS and IPAYMENT have arrived at mutually acceptable
parameters for the Program and desire to enter into this Agreement reflecting
such parameters and establishing the business and legal terms relating to the
establishment of the Program.

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         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                                   SECTION 1
                                  DEFINITIONS

As used in this Agreement, the following capitalized terms shall have the
meanings set forth below:

         "ACH" shall mean the electronic transfer of funds through the Automated
Clearing House System.

         "ACTIVE ACCOUNT" shall mean an Approved Merchant that is subject to
assessment for the monthly minimum fee for processing.

         "AFFILIATE" shall mean any entity that directly or indirectly controls,
is controlled by or is under common control with any party to this Agreement.
Chase Merchant Ventures, Inc., First Data Merchant Services Corporation and each
of their Affiliates shall also be considered Affiliates of CMS for purposes of
this Agreement, regardless of whether they satisfy the requirements of the
preceding sentence.

         "APPLICANT" shall mean a Merchant who submits a Merchant Application.

         "APPLICATION" shall mean the Merchant application (approved by
SERVICERS and IPAYMENT) and disseminated by IPAYMENT. The Application may be
modified by mutual written agreement of SERVICERS and IPAYMENT. IPAYMENT shall
cease its use of any Application which may become unacceptable to SERVICERS, in
SERVICERS' sole, reasonable judgment, upon thirty (30) days' notice (unless,
however, a shorter timeframe is required by an Association, the Rules or
applicable law, rules or regulations, in which case, such shorter timeframe will
apply).

         "APPLICATION MATERIALS" shall mean the Application and all other
materials developed to facilitate the execution of Merchant Processing
Agreements, as approved by SERVICERS and IPAYMENT. IPAYMENT shall cease its use
of any Application Materials which may become unacceptable to SERVICERS, in
SERVICERS' sole, reasonable judgment, upon thirty (30) days' notice (unless,
however, a shorter timeframe is required by an Association, the Rules or
applicable law, rules or regulations, in which case, such shorter timeframe will
apply).

         "APPROVED MERCHANT" means each: (i) Merchant approved by SERVICERS for
participation in the Program that enters into a Merchant Processing Agreement
with SERVICERS; (ii) each Existing Merchant in the Existing Portfolio which is
approved to participate in the Program by SERVICERS pursuant to the terms of
this Agreement and whose contract for Transaction processing and settlement
services with another Member (and/or IPAYMENT or one of its Subsidiaries or a
predecessor in interest to IPAYMENT), has been assigned to SERVICERS; and (iii)
each Merchant in a Subsequently Acquired Portfolio which is approved to
participate in the Program by SERVICERS pursuant to the terms of this Agreement
and whose contract for Transaction processing and settlement services with
another Member (and/or IPAYMENT, or a predecessor in interest to IPAYMENT), has
been assigned to SERVICERS.

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         "ASSOCIATION" means any entity formed to administer and promote credit
cards, including VISA and MasterCard.

         "BASE AMOUNT" shall be mean $50,000 or a greater amount determined by
SERVICERS in their sole, reasonable discretion.

         "BIN" means a unique Bank Identification Number assigned by Visa to
identify a Member or Processor for authorization, clearing or settlement
processing. "ICA" is the corresponding number assigned by MasterCard for the
same purpose.

         "BUSINESS DAY" shall mean any day on which CHASE is open for business,
other than Saturdays, Sundays, or State or Federal holidays.

         "CARD" means a credit card or debit card issued by a member of either
MasterCard or VISA and bearing its respective trade names, trademarks, and/or
trade symbols, as well as on-line debit cards issued by a participating debit
network.

         "CARDHOLDER" means the individual whose name is embossed on the Card
and any authorized user of such Card.

         "CONFIDENTIAL INFORMATION" shall mean non-public information about, and
proprietary materials of, either party as defined and more fully described in
SECTION 9.1 of this Agreement.

         "CONVERSION" OR "CONVERTED" shall mean the conversion of Existing
Merchants in the Existing Portfolio to SERVICERS' system for settlement services
in accordance with the terms of this Agreement in conjunction with the transfer
of the BINs and ICAs to SERVICERS for such Existing Portfolio.

         "CREDIT TRANSACTION" means the evidence of a refund or price adjustment
by a Merchant to a Cardholder's account in connection with a prior purchase by
such Cardholder using a Card, regardless of whether the form of such evidence is
in paper, electronic or otherwise, all of which must conform to the Rules.

         "DAY" means a calendar day unless otherwise specified.

         "DDA" means a direct deposit account.

         "ELIGIBLE MERCHANT" shall mean a Merchant that meets the Program
approval standards, is not presently a party to a payment processing agreement
with SERVICERS, is not presently receiving Payment Processing Services from
SERVICERS, and is solicited by IPAYMENT, Subsidiaries, or IPAYMENT's
Sub-Independent Service Organizations that are approved for the Program.
Merchants whose business involves future delivery risk and whose projected Card
sales exceed $20 million per year shall not be targeted under this Program.

         "EVENT OF DEFAULT" shall mean any event specified in Section 11.4.

         "EXISTING MERCHANTS" shall mean those Merchants in the Existing
Portfolio which are approved to participate in the Program by SERVICERS pursuant
to the terms of this Agreement and whose contract

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for Transaction processing and settlement services with another Member, merchant
account and merchant reserves have been assigned to SERVICERS.

         "EXISTING PORTFOLIO" means that collective of Merchants approved to
participate in the Program by SERVICERS that were: (i) prior to Conversion,
receiving Transaction processing and settlement services from another Member,
and (ii) whose contract has been assigned to SERVICERS pursuant to the terms of
this Agreement.

         "FDMS" shall refer to First Data Merchant Services Corporation, which
will be the exclusive processing entity for the Merchant Portfolio, unless
SERVICERS approve otherwise in their sole discretion.

         "INACTIVE ACCOUNT" shall mean an Approved Merchant that is not an
Active Account.

         "INTELLECTUAL PROPERTY" shall mean copyrights, Marks (as defined
below), trade secrets, patents or other intellectual property of either party.

         "INTEREST PAYMENT" shall have the meaning ascribed to it in Section 6.4
herein.

         "LOSS OR LOSSES" shall mean any loss, liability, claim, suit, demand,
damages, judgments, expenses (including, without limitation, reasonable
attorneys' fees and collection costs), orders of restitution, and penalties
(including, without limitation, civil monetary penalties and VISA and MasterCard
fines and penalties).

         "MARKS" shall mean the trademarks or service marks of either party.

         "MATERIAL" when used with reference to information, a fact or
circumstance, a course of action, a decision-making process or other matter,
shall be limited to information, facts and circumstances, courses of action,
decision-making processes or other matters as to which there is a substantial
likelihood that a reasonable person would attach importance.

         "MEMBER" means a licensee or member of an Association which is
authorized by the Association Ito enter or receive Transactions into (or from)
the Association's authorization and settlement systems, and to participate in
the Association's Card program.

         "MERCHANT" shall mean an individual or entity that engages in, or
desires to engage in credit, debit or charge card transactions with its
customers.

         "MERCHANT ACCOUNT" shall mean the account relationship established
between SERVICERS and an Approved Merchant pursuant to a Merchant Processing
Agreement.

         "MERCHANT DISCOUNT AMOUNT" shall mean the portion of the face amount of
credit card drafts or transactions submitted by Approved Merchants and processed
through the Program that is paid to SERVICERS. Further, this portion shall be
determined by application of the Merchant Discount Rate that is reflected in
each Merchant Processing Agreement.

         "MERCHANT DISCOUNT RATE" shall mean a percentage rate to be applied to
determine the portion of the face amount of a credit card draft or transaction
that will not be paid or credited to the originating Merchant, which rate shall
be reflected in each Merchant Processing Agreement and subject to change from
time to time pursuant to the terms of the Merchant Processing Agreement.

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         "MERCHANT PORTFOLIO" shall mean the aggregate of Approved Merchants
participating in the Program pursuant to this Agreement and all additional
Merchants in a Subsequently Acquired Portfolio which are approved by SERVICERS
to participate in the Program pursuant to this Agreement and whose contract for
Transaction processing and settlement services with another Member has been
assigned to SERVICERS.

         "MERCHANT PROCESSING AGREEMENT" shall mean a written agreement among
SERVICERS and an Approved Merchant that governs the Approved Merchant's
participation in the Program. The initial Merchant Processing Agreement agreed
to by the parties is attached hereto as EXHIBIT F. The Merchant Processing
Agreement may be modified by mutual written agreement of SERVICERS and IPAYMENT.
IPAYMENT shall cease its use of any Merchant Processing Agreement which may
become unacceptable to SERVICERS, in SERVICERS' sole, reasonable judgment, upon
thirty (30) days' notice (unless, however, a shorter timeframe is required by an
Association, the Rules or applicable law, rules or regulations, in which case,
such shorter timeframe will apply).

         "MERCHANT PROCESSING POLICY" shall mean the merchant policy, guidelines
and standards established by SERVICERS under which SERVICERS will enter into a
Merchant Processing Agreement with a Merchant as in effect from time to time
during the term of this Agreement, a copy of which is attached hereto as EXHIBIT
D, which may be modified from time to time by SERVICERS upon 30 days prior
written notice to IPAYMENT.

         "MERCHANT RESERVE ACCOUNT" shall mean one or more accounts maintained
and controlled by SERVICERS for the deposit of funds received from Merchants
pursuant to their respective Merchant Processing Agreements as security and
collateral against Merchant Loss that might be incurred by IPAYMENT or
SERVICERS.

         "MINIMUM BALANCE" shall have the meaning provided in SECTION 6.1 (A).

         "NET PROGRAM PARTICIPATION FEES" shall mean, at any point in time, all
         Program Participation Fees minus the sum of:

                  (a) All compensation and other amounts (including unreimbursed
                  chargebacks and payments to the Reserve Account) due SERVICERS
                  plus

                  (b) All fees and other amounts due third party processors
                  under or in connection with this Agreement or any Merchant
                  Processing Agreements.

         "NET SALES" shall mean the dollar amount of MasterCard and VISA sales
draft and Transactions processed under the Program for an Approved Merchant,
which drafts and Transactions are generated through the use of VISA and
MasterCard cards at an Approved Merchant during a particular period, minus the
dollar amount of all chargebacks, refunds, purchase returns and credits made
regarding the Approved Merchant during the period in connection with
Transactions that originated at the Approved Merchant.

         "NET VOLUME" shall mean the gross Card volume processed monthly by the
Merchant less any credits, chargebacks and adjustments settled.

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         "NETWORK" means those certain debit networks, formed to allow debit
cards from banks subscribing to the network to be used at other subscribing
banks and at subscribing retailers, that SERVICERS participate in, as such
participation may change from time to time in SERVICERS' sole discretion.

         "PAYMENT DATE" shall mean the tenth (10th) Day of each calendar month
during the term of this Agreement.

         "PAYMENT PROCESSING SERVICES" shall have the meaning provided in the
first recital of this Agreement.

         "PRICING SCHEDULE" shall mean the pricing attached to this Agreement as
EXHIBIT A.

         "PROGRAM" shall mean IPAYMENT's and Subsidiaries' sales and marketing
activities on behalf of itself and SERVICERS for the purpose of SERVICERS
providing clearing and settlement services for United States Dollar denominated
VISA and MasterCard credit card transactions and off-line debit card
transactions for Merchants located in the United States.

         "PROGRAM PARTICIPATION FEES" shall mean all fees owed by Merchants
under the applicable Merchant Processing Agreements, including, but not limited
to, the Merchant Discount Amounts or Transaction fees, which amounts may be
recommended by IPAYMENT and finally determined by SERVICERS.

         "PROGRAM RECEIPTS" shall mean all amounts collected by SERVICERS for a
Merchant under a Merchant Processing Agreement.

         "PROGRAM TRANSFER" shall mean SERVICERS' transfer and assignment of
their rights and obligations under the Merchant Processing Agreements and
Merchant Accounts for the Merchant Portfolio, in conjunction with a transfer of
the BINs and ICAs for the Merchant Portfolio to a VISA and MasterCard Member
designated by IPAYMENT in accordance with SECTION 10.1.

         "PROMOTIONAL MATERIALS" shall mean all oral and written solicitations
and advertisements and other communications (including telemarketing scripts)
used to market, promote, and solicit the establishment of Merchant Processing
Agreements with Merchants.

         "PROSPECTIVE MERCHANT" is a Merchant solicited by IPAYMENT or
Subsidiaries (or IPAYMENT's Sub-Independent Service Organizations) for
participation in the Program defined in SECTION 2.4 of this Agreement.

         "RESERVE ACCOUNT" shall mean the account at SERVICERS that is to be
established by IPAYMENT and fully controlled by SERVICERS as described in
SECTION 8.1 to insure payment of chargebacks, fees and other amounts due to
SERVICERS.

         "RULES" shall mean the rules, bylaws, regulations and/or requirements,
releases, interpretations and other requirements that are promulgated, imposed
or adopted by VISA and/or MasterCard, as they may from time to time be amended.

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         "SUBSEQUENTLY ACQUIRED PORTFOLIO" shall mean any portfolio of merchant
agreements that is acquired by IPAYMENT after the date of this Agreement.

         "SUBSIDIARIES" shall mean the wholly-owned subsidiaries of IPAYMENT
which are identified on EXHIBIT B to this Agreement.

         "TERMINATION RESERVE ACCOUNT" shall mean a Reserve Account to be
established upon notice of termination of this Agreement to insure the payment
of chargebacks, fees and other amounts which may become due to SERVICERS
following termination of the Agreement.

         "TRANSACTION" means the consummation of a sale of goods and/or services
by a Merchant through the use of a Card or the initiation of a credit to a
Cardholder by a Merchant with respect to a Card.

         "TRANSFER ACCOUNT" shall mean one or more accounts at CHASE that are
established and maintained by (and in the name of) IPAYMENT to allow SERVICERS
to credit and debit funds as provided in SECTION 6.

                                   SECTION 2
                                PROGRAM SERVICES

2.1      SERVICERS' SERVICES.

         (a) SERVICERS shall provide the services specified in this Agreement
         and shall be compensated therefor as set forth in the Pricing Schedule
         attached as EXHIBIT A. During the Initial Term of this Agreement,
         SERVICERS shall not change the pricing set forth on EXHIBIT A, except
         that such pricing may be adjusted by SERVICERS to (i) reflect actual
         increases by an Association in interchange, assessments or other
         Association fees, or (ii) pass through actual increases charged by
         third party processors or third parties for on-line communication costs
         and similar items for which SERVICERS are responsible for payment.
         SERVICERS may adjust the pricing set forth in Exhibit A for any renewal
         term by providing IPAYMENT with notice of such adjusted pricing at
         least one-hundred and twenty (120) days' prior to the expiration of the
         Initial Term or any renewal term.

         (b) SERVICERS shall, after the full execution of this Agreement by the
         parties, take such actions, with assistance from IPAYMENT and
         Subsidiaries, to initially sponsor IPAYMENT and Subsidiaries, at
         IPAYMENT's expense, as ISOs for Visa and as MSPs for MasterCard.
         SERVICERS agree to maintain such sponsorships during the term of this
         Agreement at IPAYMENT's expense and subject to IPAYMENT providing any
         and all information, documents or materials as may be necessary for
         such sponsorship maintenance.

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         (c) SERVICERS agree, on a non-exclusive basis, to settle Transactions
         for Approved Merchants in accordance with the settlement procedures and
         terms and conditions set forth in SECTION 6 below of this Agreement.

         (d) SERVICERS agrees that pursuant to and in accordance with the terms
         and provisions set forth in Section 4, below, it will timely review and
         process the Application of each Prospective Merchant submitted by
         IPAYMENT or one of Subsidiaries.

         (e) SERVICERS will obtain copies for IPAYMENT of the Rules or any
         Association or Network manuals and publications that are available to
         Members. IPAYMENT will reimburse SERVICERS for all costs incurred in
         connection with this subsection 2.1(e).

         (f) From time to time, and within a reasonable time following
         SERVICERS' receipt of notice of Material changes in the Rules
         applicable to the Program, SERVICERS will advise IPAYMENT, who shall,
         in turn, notify each Merchant in the Merchant Portfolio with an Active
         Account, of such changes imposed by the Rules.

         (g) SERVICERS will materially comply with applicable Association Rules
         and applicable law concerning Cardholder information and Transaction
         data.

         (h) SERVICERS will approve or disapprove, in their sole discretion, all
         Application Materials and Promotional Materials proposed to be used by
         IPAYMENT in marketing the Program as soon as practicable following the
         submission by IPAYMENT for SERVICERS' review thereof pursuant to
         Section 3.

         (i) From time to time in their sole discretion and at their sole cost
         and expense, SERVICERS may also perform certain risk management
         services, such as periodic credit reviews, fraud reviews and monitoring
         and collections, with respect to Program Merchants. SERVICERS'
         participation in any such activity shall not in any way relieve
         IPAYMENT from its responsibility for credit and fraud losses which may
         result from or be related to Program Merchants' transactions.

2.2      IPAYMENT'S OBLIGATIONS. IPAYMENT shall perform all sales and marketing
         activities in furtherance of the Program, subject to the terms of this
         Agreement. It is understood that (at all times) SERVICERS have the
         ultimate approval right for IPAYMENT's solicitation procedures,
         Application Materials, application processing procedures, Merchant
         qualification criteria, transaction processing procedures, customer
         service levels, Program terms, Program fees, and other Program
         policies, all of which must be approved in advance by SERVICERS in
         writing. IPAYMENT shall also perform all initial Merchant credit review
         and underwriting on Prospective Merchants in a manner consistent with
         Section 4 of this Agreement. IPAYMENT shall submit a minimum of
         [****] of Visa and MasterCard transactions processed
         by 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.

                                                                    Page 8 of 46

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         to SERVICERS for clearing and settlement services; provided, however,
         that Merchants that do not meet the Merchant Processing Policy, or are
         otherwise declined by SERVCERS, shall not be included in calculating
         this [****] performance minimum.

2.3      EXISTING MERCHANTS.

         (a) IPAYMENT represents and warrants: (i) that a true and correct list
         of Merchants in the Existing Portfolio as of January 16, 2003 is
         attached hereto and made a part hereof as EXHIBIT C; (ii) that none of
         the Merchants in the Existing Portfolio operate in the unacceptable
         industries outlined in the Merchant Processing Policy (attached as
         EXHIBIT D); and (iii) that it has the authority and right to assign and
         transfer the Card processing agreements, merchant accounts and merchant
         reserves for the Existing Merchants in the Existing Portfolio to
         SERVICERS. IPAYMENT shall obtain a signed Merchant Processing Agreement
         from each of its Existing Merchants and shall provide a signed copy
         thereof to SERVICERS; provided, however, that IPAYMENT is not required
         to obtain a substitute agreement from any Existing Merchant that
         currently has in effect a valid and binding Card processing agreement
         in a form acceptable to SERVICERS in their sole discretion. SERVICERS
         acknowledge that they have received forms of Card processing agreements
         from IPAYMENT for the Existing Portfolio as outlined on EXHIBIT E
         (attached hereto), which are acceptable provided they comply with the
         Rules and applicable law, rules and regulations.

         (b) SERVICERS agree that each Merchant in the Existing Portfolio is
         approved by SERVICERS to participate in the Program pursuant to the
         terms of this Agreement, subject to SERVICERS' continued credit review.
         Should SERVICERS' determine that an Existing Merchant within the
         Existing Portfolio does not meet the Merchant Processing Policy,
         following the Conversion, SERVICERS may decline such Merchant and cease
         providing settlement services under this Agreement, in SERVICERS' sole
         discretion.

         (c) IPAYMENT represents and warrants that its merchant processing
         business has in all material respects been operated in compliance with
         all applicable laws, rules, orders, regulations, policies and
         guidelines of all governmental and regulatory entities and all
         Associations, including all underwriting and monitoring procedures.

         (d) Following the effective date of this Agreement, IPAYMENT shall
         assist SERVICERS in performing SERVICERS' continued credit review on
         each Existing Merchant and agrees to provide SERVICERS at a minimum
         with the following documentation:

                  (i) An electronic report of the annual Card sales volume for
                  each Existing Merchant account, including account numbers,
                  d.b.a. names, legal names, addresses, start dates, MCC codes,
                  annual sales and transactions, annual returns and annual
                  Chargebacks.

                  (ii) Upon request by SERVICERS, a copy of the Existing
                  Merchant's application, data sheets, DDA account balances, and
                  any other information SERVICERS deem necessary to perform a
                  credit review.

[****] 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.

                                                                    Page 9 of 46
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                  (iii)    A list of all Existing Merchants on Association
                           compliance programs, internal watch list or
                           classified accounts or any collateralized accounts.

                  (iv)     Upon request by SERVICERS, a financial statement
                           (including a balance sheet and an income statement)
                           on all Existing Merchants with $1,000,000 or more in
                           high risk annual Bank Card sales volume, or those
                           Existing Merchants where SERVICERS find such
                           financial statements necessary. In addition to the
                           foregoing, IPAYMENT shall promptly provide any
                           additional documentation requested by SERVICERS.

         (e)      If under Section 2.3(d) SERVICERS determine, in their sole
                  discretion, that IPAYMENT has insufficient data upon which
                  SERVICERS can perform an adequate and proper credit review on
                  an Existing Merchant, IPAYMENT will obtain a fully completed
                  Merchant Application from each such Existing Merchant. If
                  IPAYMENT is unable to obtain a fully completed Merchant
                  Application from an Existing Merchant, SERVICERS may decline
                  such Merchant and cease providing settlement services under
                  this Agreement

         (f)      The parties acknowledge that certain of the Existing Merchants
                  are Inactive Accounts. The reserve accounts, along with the
                  merchant accounts, for such Existing Merchants shall be
                  transferred to SERVICERS upon Conversion.

2.4      PROSPECTIVE MERCHANTS. IPAYMENT will actively promote and recommend
         SERVICERS' Payment Processing Services to Prospective Merchants.

2.5      PRICING. All Program Participation Fees shall be recommended by
         IPAYMENT and finally determined by SERVICERS and reflected in
         applicable Merchant Processing Agreements.

2.6      BINS AND ICAS TRANSFER AND ASSIGNMENT.

         (a)      For purposes of Prospective Merchants that are approved by
         SERVICERS for participation in the Program, SERVICERS will make
         available the use of BINs and ICAs to facilitate the Program and to
         segregate Program Merchants into BINs and ICAs separate from Merchants
         not covered by the Program.

         (b)      Immediately following execution of this Agreement, for
         purposes of facilitating the assignment of the Existing Portfolio to
         SERVICERS, IPAYMENT shall initiate and be responsible for the transfer
         of the BINs and ICAs from other Member Banks to SERVICERS with respect
         to the Existing Portfolio. To that end, IPAYMENT shall be responsible
         for providing any and all information, documents or materials as may be
         necessary to transfer the BINs and ICAs for the Merchant Portfolio and
         for addressing any information requests from VISA or MasterCard. Upon
         completion of such transfer to SERVICERS, including without limitation,
         approval by VISA and MasterCard, SERVICES shall use such BINs and ICAs
         solely for the Program.

         (c)      IPAYMENT shall be solely responsible for, and reimburse
         SERVICERS for, any and all costs arising out of or related to making
         available, converting or transferring the BINs and ICAs pursuant to
         Sections 2.6(a) and (b).

                                                                   Page 10 of 46
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2.7      USE OF SUB-INDEPENDENT SALES ORGANIZATIONS. If IPAYMENT desires to use
         the services of any other independent sales organization (a
         "Sub-Independent Sales Organization"):

         (a)      IPAYMENT shall provide adequate notice to SERVICERS of
                  IPAYMENT's intention to use the services of any
                  Sub-Independent Sales Organization;

         (b)      SERVICERS shall be provided an adequate opportunity to review
                  the business practices of such Sub-Independent Sales
                  Organization;

         (c)      SERVICERS may request any additional information regarding a
                  proposed Sub-Independent Sales Organization which they deem
                  appropriate prior to SERVICERS approving or disapproving of
                  IPAYMENT's use of such Sub-Independent Sales Organization;

         (d)      If SERVICERS object to IPAYMENT's use of a Sub-Independent
                  Sales Organization IPAYMENT shall not obtain any services
                  (including sales and marketing services) from such entity for
                  the Program;

         (e)      A Sub-Independent Sales Organization may not use SERVICERS'
                  names or Marks without written approval from the applicable
                  SERVICER(s); and

         (f)      IPAYMENT shall enter into a written agreement with each
                  Sub-Independent Sales Organization that (i) requires the
                  Sub-Independent Sales Organization to comply with all
                  applicable terms of this Agreement and all rules and
                  regulations of VISA and MasterCard, (ii) prohibits the use of
                  any of SERVICERS' names or Marks without prior approval, (iii)
                  prohibits the making of any representation or creating any
                  liability on behalf of SERVICERS, (iv) provides for
                  indemnification of SERVICERS by the Sub-Independent Sales
                  Organization to the same extent IPAYMENT indemnifies SERVICERS
                  pursuant to this Agreement, and (v) makes SERVICERS third
                  party beneficiaries thereunder. Notwithstanding, IPAYMENT's
                  compliance with this Section 2.7, IPAYMENT shall not be
                  relieved of any responsibilities or obligations it is
                  otherwise assuming with regard to Merchants Accounts obtained
                  as a result of the activities of any Sub-Independent Sales
                  Organization or the activities of a Sub-Independent Sales
                  Organization. SERVICERS shall also have the right to require
                  IPAYMENT to terminate its use for the Program of any
                  Sub-Independent Sales Organization at any time upon written
                  notice to IPAYMENT.

2.8      IPAYMENT shall not enter any CHASE bank branches located in New York,
         New Jersey, Connecticut or Texas for purposes of soliciting Prospective
         Merchants. IPAYMENT further agrees not to enter into marketing
         arrangements with any CHASE bank division or branch or other third
         party for purposes of soliciting existing CMS or CHASE customers or
         existing CMS or CHASE Merchants for the Program. In the event of a
         material breach of the obligations set forth in this Section 2.8 by
         IPAYMENT that is not cured within a thirty (30) day notification and
         cure period, SERVICERS may discontinue accepting Applications and
         Application Materials from IPAYMENT for Merchants in New York, New
         Jersey, Connecticut and Texas, and/or may terminate this Agreement upon
         thirty (30) days' notice, in their sole discretion, in addition to any

                                                                   Page 11 of 46
<PAGE>
         other rights or remedies that SERVICERS may have under this Agreement
         or applicable law. Should SERVICERS discontinue accepting Applications
         and Application Materials in New York, New Jersey, Connecticut and
         Texas, pursuant to the preceding sentence, IPAYMENT shall not be
         restricted from soliciting Merchants, located within New York, New
         Jersey, Connecticut and Texas, on behalf of a processing services
         provider other than Service Providers (a "Third Party Provider"). The
         parties agree that in the event of a material breach of the obligations
         set forth in this Section 2.8 by IPAYMENT, or one of IPAYMENT's
         employees or independent representatives, IPAYMENT may attempt to cure
         by terminating or canceling any marketing arrangements or by taking
         internal disciplinary action up to and including termination of the
         employee or independent representative, as applicable; provided,
         however, that SERVICERS, in their sole discretion, believe that such
         actions taken by IPAYMENT will remedy the breach.

2.9      ADDITIONAL OBLIGATIONS OF IPAYMENT.

         (a)      IPAYMENT and its Subsidiaries may sell or make arrangements
         for the lease or rental by Approved Merchants of terminals and
         equipment or software applications necessary for Approved Merchant to
         participate in the Merchant Program. IPAYMENT and Subsidiaries will
         install (and, pursuant to a separate agreement, if any, with the
         Approved Merchant, maintain and/or upgrade) such terminals, equipment
         and applications at no expense to SERVICERS. IPAYMENT and its
         Subsidiaries may, at its option, provide the services set forth in this
         subsection 2.9(a) itself or through one or more subcontractors. Neither
         CMS nor CHASE are to be parties to any such agreements for terminals,
         software or equipment. IPAYMENT represents and warrants that it shall
         be solely and exclusively responsible for providing any terminals,
         software or equipment, as well as any and all costs related thereto,
         and shall indemnify, defend and hold harmless SERVICERS from and
         against any and all claims or liabilities arising out of such
         provision, in accordance with Section 12.1 of this Agreement.

         (b)      IPAYMENT will be responsible for Merchant Account
         implementation and will be responsible for all Losses relating to
         inaccuracies or omissions in account data entry.

         (c)      IPAYMENT will timely respond to all inquiries from Approved
         Merchants concerning the Program using above industry standards.

         (d)      IPAYMENT will perform daily risk management monitoring and
         review of all Active Accounts, in accordance with the Rules and the
         terms of this Agreement, to attempt to minimize Merchant Losses and
         shall, upon written request thereof from SERVICERS, provide SERVICERS
         with summary reports thereof.

         (e)      IPAYMENT will be responsible for processing chargebacks in
         accordance with the Rules.

                                                                   Page 12 of 46
<PAGE>
                                    SECTION 3

                        MARKETING AND COMPLIANCE

3.1      APPLICATION MATERIALS. The initial approved Application and Application
         Materials are attached hereto as EXHIBIT F. Any changes to the form and
         content of the approved Application and/or Application Materials,
         attached hereto, must be presented to SERVICERS for prior approval in
         writing by SERVICERS. IPAYMENT shall use reasonable efforts to ensure
         that each Application completed by an Applicant is current and contains
         accurate and complete information.

3.2      COMPLIANCE RESPONSIBILITY. IPAYMENT understands and agrees that the
         Merchant Processing Agreement, Application and Application Materials
         shall comply with all applicable laws, rules, regulations and the
         Rules. IPAYMENT shall have the sole responsibility for ensuring that
         the Merchant Processing Agreement, Application, Application Materials,
         marketing plans, Promotional Materials and all services performed
         hereunder comply, and remain in compliance, with all applicable laws,
         rules, regulations and the Rules. IPAYMENT agrees to provide all
         documents to SERVICERS for approval prior to IPAYMENT's use.

3.3      MARKETING PLAN. IPAYMENT will develop an annual marketing plan, subject
         to approval by SERVICERS, in their reasonable discretion, which the
         parties acknowledge is part of IPAYMENT's annual report. SERVICERS may
         at any time and from time to time request additional information
         regarding IPAYMENT's marketing plan or procedures (in addition to the
         information provided in the annual report), which IPAYMENT agrees to
         promptly provide to SERVICERS. IPAYMENT shall comply with the marketing
         plan and all activities conducted thereunder shall comply with all
         applicable laws, rules, regulations and the Rules.

3.4      PROMOTIONAL MATERIALS. IPAYMENT shall be responsible, at its sole
         expense, for the development of all Promotional Materials and shall
         bear the cost of the development and the printing and distribution of
         the Promotional Materials. The Promotional Materials shall comply with
         all applicable laws, rules, regulations and the Rules and otherwise be
         approved in writing by SERVICERS prior to IPAYMENT's use. IPAYMENT will
         not use SERVICERS' Marks in any advertising, promotional or display
         materials without SERVICERS' prior written approval. Any use of the
         CHASE name or Mark(s) will be subject to the prior written approval of
         CHASE.

3.5      OTHER PROMOTIONS. At the sole discretion ofCHASE, CHASE may enter into
         negotiations with IPAYMENT whereby IPAYMENT may refer Eligible
         Merchants to CHASE for other CHASE products and services.

                                    SECTION 4

                     APPLICATION AND UNDERWRITING PROCEDURES

4.1      APPLICATIONS. IPAYMENT shall solicit Applications from Eligible
         Merchants at IPAYMENT's sole expense and shall provide each Applicant
         with Application Materials. IPAYMENT shall collect completed and signed
         Application Materials from Applicants and shall forward the

                                                                   Page 13 of 46
<PAGE>
         Application Materials to SERVICERS (which may be forwarded to SERVICERS
         via IPAYMENT's automated application system or to a facsimile number
         designated by SERVICERS, provided such complies with the Rules and
         applicable laws, rules and regulations) or to any other place(s) as
         SERVICERS may designate for processing and document storage. IPAYMENT
         shall retain copies of all Application Materials and documents
         forwarded to SERVICERS. IPAYMENT shall provide SERVICERS with access to
         IPAYMENT's automated application system and IPAYMENT's online Merchant
         Account system (BAMS, or any such successor or replacement system) at
         no cost to SERVICERS.

4.2      UNDERWRITING. IPAYMENT shall underwrite, perform a credit review and
         conduct a site inspection for each Application as required by this
         Agreement, the Merchant Processing Policy and the Rules to determine
         whether each Applicant is an Eligible Merchant. IPAYMENT may conduct
         such credit review without notification to and participation by
         SERVICERS, except as otherwise provided below (i.e., for any
         Prospective Merchant that falls within the risk and volume parameters
         set forth in this Section 4.2), provided that IPAYMENT performs the
         credit review in accordance with the Merchant Processing Policy
         (attached as EXHIBIT D), the terms of this Agreement and the Rules. A
         Sub-Independent Sales Organization, in accordance with and as permitted
         by this Agreement, or third-party service provider approved by
         SERVICERS may perform site inspections for IPAYMENT. IPAYMENT shall be
         responsible for such Sub- Independent Sales Organization or approved
         third-party service provider's compliance with this Section 4.2 in
         performing such site inspection. IPAYMENT shall be responsible for all
         credit and fraud Losses associated with any Program Merchants or the
         Program, regardless of any services or assistance, which may be
         provided by SERVICERS or any of their Affiliates. Notwithstanding
         anything in this Section 4.2 to the contrary, for any high risk
         Prospective Merchant who in good faith IPAYMENT anticipates will have
         annual VISA and MasterCard transaction volume equal to or greater than
         [****], and any low risk Prospective Merchant who in good faith
         IPAYMENT anticipates will have an annual VISA and MasterCard volume
         equal to or greater than [****], IPAYMENT shall advise SERVICERS in
         writing and permit SERVICERS to conduct their own credit review. Upon
         receipt of a complete underwriting package from IPAYMENT, SERVICERS
         will respond to IPAYMENT within three (3) Business Days as to
         SERVICERS' acceptance or rejection of such Merchant. SERVICERS'
         participation in any such credit review will not in any way relieve
         IPAYMENT from its responsibility for credit and fraud losses which may
         result from a Merchant's transaction processing. SERVICERS may at any
         time require that a Merchant relationship be terminated by IPAYMENT and
         SERVICERS may cease the provision of Payment Processing Services to any
         such Merchant. SERVICERS shall have the sole right and authority to
         accept or reject any Application. IPAYMENT shall obtain Prospective
         Merchants' authorization for IPAYMENT and/or SERVICERS to obtain all
         reports (including personal and business credit reports) and other
         information necessary in connection with their Application. Upon any
         rejection of a Prospective Merchant by SERVICERS, IPAYMENT may refer
         such Prospective Merchant to another Member.

[****] 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.

                                                                   Page 14 of 46
<PAGE>
4.3      CREDIT DECISIONS. IPAYMENT shall employ the Merchant Processing Policy
         (attached as EXHIBIT D) in making credit evaluations. SERVICERS reserve
         the right, in their sole and absolute discretion to:

                  (i)      Change the Merchant Processing Policy upon thirty
                  days' notice to IPAYMENT;

                  (ii)     Reject the Application of any Applicant who SERVICERS
                  determine does not satisfy SERVICERS' Merchant Processing
                  Policy; and

                  (iii)    Terminate the Merchant Processing Agreement with
                  respect to any Merchant at any time in accordance with the
                  terms of the Merchant Processing Agreement with such Merchant,
                  unless the termination is due to a policy change affecting
                  numerous Merchants (rather than a violation of the Rules), in
                  which case SERVICERS will provide at least 30 days written
                  notice.

4.4      MERCHANT RESERVE ACCOUNTS. IPAYMENT shall be responsible for
         determining the amount of any Merchant Reserve Accounts. IPAYMENT shall
         also be responsible for ensuring all Merchant Reserve Accounts are
         adequately funded. All Merchant Reserve Accounts, along with any other
         monies or collateral collected from Program Merchants, shall be
         deposited with SERVICERS. SERVICERS may generate interest on such
         deposits at a rate determined by SERVICERS in their sole discretion.
         Any and all interest amounts shall be retained by SERVICERS and
         IPAYMENT shall have no interest in or right to receive any portion
         thereof. Once monies or other collateral are deposited in a Merchant
         Reserve Account, SERVICERS shall control the disbursements of such
         funds which are to be (i) paid to IPAYMENT or SERVICERS to cover
         potential Losses incurred in connection with the applicable Program
         Merchant, or (ii) returned to the applicable Program Merchant upon a
         reduction in the potential risk to IPAYMENT and SERVICERS arising from
         the provision of services to such Program Merchant. From time to time,
         IPAYMENT may request SERVICERS to disburse monies held in a Merchant
         Reserve Account to IPAYMENT or a Program Merchant as set forth in the
         preceding sentence. SERVICERS shall consider such requests in good
         faith, but shall not be under any obligation to honor any such request.
         SERVICERS may draw against any Merchant Reserve Account to cover any
         Losses from the applicable Program Merchant incurred by SERVICERS
         without the consent of IPAYMENT or the applicable Program Merchant. A
         return of monies from a Merchant Reserve Account to the applicable
         Program Merchant will be initiated within two (2) Business Days after
         such return is approved.

4.5      SURVIVAL. The provisions of SECTION 4.4 shall survive termination or
         expiration of this Agreement.

                                    SECTION 5

                               PROPRIETARY RIGHTS

                                                                   Page 15 of 46
<PAGE>
5.1      SERVICERS shall have all rights conferred on it under the Merchant
         Processing Agreements until a Program Transfer pursuant to Section 10
         of this Agreement. SERVICERS shall be exclusively entitled to receive
         all payments, collections, and other amounts due from Merchants until a
         Program Transfer is consummated, subject to SERVICERS' payment
         obligations to IPAYMENT in accordance with the terms of this Agreement.
         SERVICERS' rights under the Merchant Processing Agreements shall
         survive the termination of this Agreement by either party and for
         whatever cause.
5.2      EARLY TERMINATION FEE. In the event IPAYMENT requests to sell, transfer
         or assign all or a portion of its interest in the Merchant Portfolio
         pursuant to a Program Transfer during the first thirty-six months
         following the Conversion, then IPAYMENT agrees to pay SERVICERS: (i)
         $2,500,000 if such Program Transfer occurs during the first twelve
         months following the Conversion; (ii) $1,500,000 if such Program
         Transfer occurs during months thirteen through twenty-four following
         the Conversion; or (iii) $750,000 if such Program Transfer occurs
         during months twenty-five through thirty-six following the Conversion.

5.3      SURVIVAL. The provisions of SECTION 5.2 shall survive the termination
         of this Agreement.

                                    SECTION 6

                             SETTLEMENT AND PAYMENT

6.1      TRANSFER ACCOUNT.

         (a) IPAYMENT shall establish and maintain the Transfer Account at CHASE
         during the term of this Agreement to facilitate the making of all
         payments due to SERVICERS from IPAYMENT and to IPAYMENT from SERVICERS.
         IPAYMENT agrees that it will, at all times, maintain collected funds in
         the Transfer Account in an amount at least equal to the greater of the
         Base Amount or the amount then due SERVICERS hereunder (which greater
         amount shall be referred to herein as the "Minimum Balance"). IPAYMENT
         hereby authorizes SERVICERS to withdraw funds from the Transfer Account
         without signature or notice to effect all payments, offsets,
         deductions, and other transactions due SERVICERS or otherwise provided
         for under this Agreement. IPAYMENT further agrees to execute any
         additional documents, which may be required for SERVICERS to execute
         their rights under this section. IPAYMENT shall be responsible for all
         fees associated with maintaining the Transfer Account.

         (b) If the collected funds on deposit in the Transfer Account at any
         point in time are less than the Minimum Balance, IPAYMENT shall, by
         12:00 P.M. P.T. on the third Business Day after being notified by
         SERVICERS, wire transfer to SERVICERS, or otherwise deposit to the
         Transfer Account, additional collected funds in an amount sufficient to
         cover the deficiency.

         (c) Each Banking Day, SERVICERS will transfer to the Transfer Account
         any funds that are payable to IPAYMENT under this Agreement.

                                                                   Page 16 of 46
<PAGE>
         (d) IPAYMENT hereby grants SERVICERS a security interest in the
         Transfer Account to secure all of IPAYMENT's obligations to SERVICERS
         under this Agreement. IPAYMENT further grants SERVICERS the right to
         set-off against the Transfer Account or any other monies belonging or
         payable to IPAYMENT which are in SERVICERS' possession, which right may
         be executed to fulfill any payment obligations of IPAYMENT under this
         Agreement, including IPAYMENT's obligations related to Merchant
         chargebacks, regardless of whether such obligations are contingent or
         matured.

6.2      SETTLEMENT PROCEDURES.

         (a) SERVICERS shall settle each Merchant Account in accordance with the
         terms of the applicable Merchant Processing Agreement, remitting to
         each Approved Merchant, by ACH or other acceptable method, all Program
         Receipts due to the Approved Merchant after first deducting from the
         Program Receipts all applicable Program Participation Fees and any
         other amounts due to SERVICERS.

         (b) On each Payment Date, SERVICERS shall credit the Transfer Account
         in an amount equal to all Net Program Participation Fees less
         interchange, assessments, and other amounts due to SERVICERS
         corresponding to the Program Participation Fees that were actually
         collected by SERVICERS since the immediately preceding Payment Date and
         which have not otherwise been paid to IPAYMENT, subject to SERVICERS
         absolute right hereunder to withhold, defer and divert the credits
         during any period of time in which IPAYMENT is in default of any
         Material obligation under this Agreement or if an Event of Default
         shall have occurred. All compensation due SERVICERS, all chargebacks
         and credits, and all third party processing fees, will, in all events,
         be collected or deducted from Program Receipts or otherwise paid to
         SERVICERS prior to the transfer of any funds to, or the crediting of,
         the Transfer Account. In the event there are insufficient Program
         Receipts to cover the foregoing fees and expenses, payments or
         distributions, the amounts will be paid or deducted from Program
         Receipts in any order determined by SERVICERS. The parties agree that
         in the event credits or payments to the Transfer Account are withheld,
         deferred or diverted pursuant to this Section 6.2(b), such period of
         withholding, deferment or diversion will be limited to the greater of
         three business days or for such longer period of time as is required
         for SERVICERS to withhold sufficient funds to cover any matured or
         unmatured obligations of IPAYMENT under the terms of this Agreement,
         after which, funding will resume. SERVICERS may also divert any credits
         or payments to the Transfer Account to fund a Reserve Account or
         Termination Reserve Account as provided in Section 6.3.

         (c) In the event that there are insufficient funds to pay SERVICERS'
         compensation, payments to the Reserve Account, chargebacks or credits
         for which SERVICERS have not been reimbursed or third party processing
         fees, IPAYMENT shall provide sufficient additional funds to SERVICERS
         in accordance with SECTION 6.1(B). IPAYMENT may withdraw funds from the
         Transfer Account so long as the collected funds on deposit therein do
         not fall below the Minimum Balance and IPAYMENT is not in default of
         any Material obligation under this Agreement.

                                                                   Page 17 of 46
<PAGE>
6.3      PAYMENT DEFERRALS. SERVICERS shall have the absolute right to defer,
         delay or divert any payment due to IPAYMENT to add additional funds to
         the Reserve Account, or to otherwise offset any future chargebacks or
         other amounts due to SERVICERS.

6.4      INTEREST PAYMENT. In the event that IPAYMENT fails at any time to
         maintain the Minimum Balance in the Transfer Account (as required in
         Section 6.1(a) above) and SERVICERS elect to use SERVICERS' funds to
         cover the deficiency, then IPAYMENT shall pay SERVICERS interest on
         such funds as follows. SERVICERS' funds used to cover a deficiency
         shall accrue interest, which will be calculated on a monthly basis, at
         the rate of: (i) 5.5%; or (ii) the Prime Rate (as published in the Wall
         Street Journal or any successor publication) plus one percent (1%),
         whichever is greater. In calculating the interest payment due from
         IPAYMENT under this Section 6.4, SERVICERS will offset any interest
         generated on Merchant Reserve Accounts (as provided in Section 4.4).
         Should the interest payment calculated under this Section 6.4 exceed
         the amount generated on Merchant Reserve Accounts under Section 4.4,
         IPAYMENT shall pay the difference to SERVICERS.

6.5      EXPENSES. Except as otherwise provided, each party shall bear its own
         administrative costs and overhead expenses arising out of its
         performance of this Agreement.

6.6      LIABILITY FOR LOSSES. SERVICERS shall have recourse from IPAYMENT, and
         IPAYMENT shall be liable to, and shall indemnify SERVICERS for, one
         hundred percent (100%) of any Losses to SERVICERS that are caused by:

         (a) Chargebacks, purchase returns, refunds, credits, adjustments, fees
         or Association costs and expenses related to Approved Merchants,
         Eligible Merchants, or any Merchant activity hereunder;

         (b) Amounts remaining due to SERVICERS after the deduction of
         SERVICERS' compensation as provided herein; and

         (c) All third party processing fees and other amounts that SERVICERS
         are obligated to pay third parties in connection with services relating
         to this Agreement or any Merchant Processing Agreement.

6.7      SURVIVAL. The provisions of this SECTION 6 shall survive the
         termination or expiration of this Agreement.

                                    SECTION 7

                   REPRESENTATIONS AND WARRANTIES OF IPAYMENT

IPAYMENT represents and warrants to SERVICERS that, as of the date of this
Agreement, the following are true and correct, and will remain true and correct
at all times during the term of this Agreement:

7.1      ORGANIZATION AND GOOD STANDING. IPAYMENT is a Delaware corporation duly
         organized, validly existing and in good standing under the laws of the
         State of Delaware and has full corporate power and authority to carry
         on its business as it is now being conducted. IPAYMENT is and will be
         qualified as a foreign corporation in good standing under the laws of
         each jurisdiction in which the conduct of its business or the ownership
         of its properties requires the qualification.

                                                                   Page 18 of 46
<PAGE>
         IPAYMENT acknowledges, represents and warrants that it is responsible
         for all obligations under this Agreement on behalf of itself and
         Subsidiaries.

7.2      EXECUTION AND EFFECT OF AGREEMENT. IPAYMENT has the corporate power and
         authority to enter into this Agreement and the execution and delivery
         of this Agreement and the performance of IPAYMENT's obligations
         hereunder have been duly authorized by all necessary corporate action.
         This Agreement has been duly executed and delivered by IPAYMENT and
         constitutes a legal, valid, and binding obligation of IPAYMENT,
         enforceable in accordance with its terms, subject to applicable
         bankruptcy, insolvency, reorganization, moratorium, and other laws
         affecting the rights of creditors generally and to the exercise of
         judicial discretion in accordance with general principles of equity
         (whether applied by a court of law or of equity).

7.3      RESTRICTIONS. Neither the execution nor delivery of this Agreement nor
         the conduct of the Program contemplated here will:

         (a)      Violate any of the provisions of the Charter or Bylaws of
         IPAYMENT; or

         (b)      Conflict with, or result in a breach of, or give rise to a
         right of Termination of, or accelerate the performance required by the
         terms of any Judgment, court order or consent decree, or any agreement,
         including without limitation, a restrictive covenant or covenant
         against competition, indenture, mortgage, or instrument to which
         IPAYMENT is a party or to which its property is subject, or constitute
         a default thereunder, except where the conflict, breach, right of
         termination, acceleration or default would not prevent or have a
         Material adverse effect on the conduct of the activities
         contemplated hereby.

7.4      CONSENTS. Except for filings, consents, waivers, approvals, and
         authorizations that the failure to obtain or make would not have a
         Material adverse effect on IPAYMENT or the Program, no filing, consent,
         waiver, approval, or authorization of any governmental authority or of
         any third party other than VISA and MasterCard, or notice to, or filing
         with, any governmental authority or any third party on the part of
         IPAYMENT is required in connection with the execution and delivery of
         this Agreement or the conduct of the activities contemplated hereby.

7.5      LITIGATION. There is no action at law or in equity, arbitration,
         proceeding, or governmental investigation pending, or to the knowledge
         of IPAYMENT threatened, by or before any court, any governmental or
         administrative agency or commission, or arbitrator, against IPAYMENT
         regarding this Agreement or any of the transactions contemplated hereby
         that could reasonably be expected to prevent or have a Material adverse
         effect on the conduct of the activities contemplated hereby.

7.6      REGISTRATION AS IPAYMENT. IPAYMENT (and each Subsidiary that provides
         services under this Agreement) shall at all times, at its cost and
         expense, maintain in effect during the term of this Agreement, a valid
         and effective registration as an ISO with VISA and a MSP with
         MasterCard and shall provide any information as VISA and MasterCard may
         reasonably request in connection therewith or in connection with the
         services of IPAYMENT (or such sponsored Subsidiary)

                                                                   Page 19 of 46
<PAGE>
         hereunder, and shall provide SERVICERS the information as it may
         reasonably request concerning IPAYMENT's (or such sponsored Subsidiary)
         compliance with the requirements set forth herein.

7.7      MARK RESTRICTION. IPAYMENT shall not make any use of SERVICERS' Marks
         or any other intellectual property without SERVICERS' prior written
         consent, which may be withheld or revoked by SERVICERS in their sole
         discretion.

7.8      FINANCIAL STATEMENTS/AUDIT RIGHTS. IPAYMENT shall supply SERVICERS with
         quarterly financial statements (which may be unaudited statements) and
         with annual audited financial statements for each fiscal year, starting
         with the fiscal year ending December 31, 2002, prepared in accordance
         with generally accepted accounting principles by a nationally
         recognized auditing firm within 120 days after the end of each fiscal
         quarter (or after the end of each fiscal year) unless a shorter
         timeframe is required by VISA, MasterCard or the Rules, in which case,
         such shorter timeframe will apply. IPAYMENT will, at any and all
         reasonable times upon seven days prior written notice, unless a shorter
         timeframe is required by VISA, MasterCard or the Rules (in which case,
         the shorter timeframe will apply), permit SERVICERS' employees, agents
         auditors and/or regulators to inspect IPAYMENT's books and records at
         SERVICERS' expense.

7.9      IPAYMENT'S ASSETS. IPAYMENT has net assets as of the effective date of
         this Agreement of at least $14,000,000.00. Beginning ninety days after
         the effective date of this Agreement, IPAYMENT shall at all times have
         net assets of at least $14,000,000.00.

7.10     MAINTENANCE OF UNDERWRITING STAFF. IPAYMENT shall at all times maintain
         an adequate and qualified staff to perform underwriting and credit
         reviews of Program Merchants.

                                    SECTION 8

                              ADDITIONAL COVENANTS

8.1      RESERVE ACCOUNT.

         (a) IPAYMENT expressly authorizes SERVICERS to establish a Reserve
         Account pursuant to the terms and conditions set forth in this Section
         8.1. The initial amount of such Reserve Account shall be [****]
         and may be increased by SERVICERS from time to time, in their sole
         reasonable discretion, based upon any anticipated risk of Loss to
         SERVICERS. Such Reserve Account shall be established and maintained at
         CHASE.

         (b) The Reserve Account shall be fully funded upon three (3) Business
         Days notice to IPAYMENT. Such Reserve Account may be funded by all or
         any combination of the following: (i) one or more debits to the
         Transfer Account or any other accounts held by CHASE or any of its
         Affiliates; (ii) one or more deductions or off sets to any payments
         otherwise due to IPAYMENT; or (iii) IPAYMENT's delivery to SERVICERS of
         a letter of credit issued by a bank acceptable to SERVICERS and in a
         form acceptable to SERVICERS. Any Reserve Account will be held by
         SERVICERS for the greater of twelve months after termination of this
         Agreement or for such longer period of time as is consistent with
         SERVICERS' liability for Card transactions in accordance with the
         Rules.

         [****] 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.

                                                                   Page 20 of 46
<PAGE>
         Twelve months after termination, SERVICERS agree that it shall reduce
         the Reserve Account balance to reflect IPAYMENT's then potential
         liability.

         (c) If IPAYMENT's funds in the Reserve Account are not sufficient to
         cover the Chargebacks, adjustments, fees and other charges due from
         IPAYMENT or Merchants, or if the funds in the Reserve Account have been
         released, IPAYMENT agrees to pay SERVICERS such sums within one (1)
         Business Day of any such request by SERVICERS. In the event of a
         failure by IPAYMENT to fund the Reserve Account, SERVICERS may fund
         such Reserve Account in any of the manners set forth above in SECTION
         8.1(B).

         (d) To secure IPAYMENT's obligations to SERVICERS under this Agreement,
         IPAYMENT grants to SERVICERS a lien and security interest in and to any
         of IPAYMENT's funds in the Reserve Account or otherwise related to this
         Agreement now or hereafter in the possession of SERVICERS, whether now
         or hereafter due or to become due to IPAYMENT from SERVICERS. In
         addition to any rights now or hereafter granted under applicable law
         and not by way of limitation of any such rights, SERVICERS are hereby
         authorized by IPAYMENT at any time and from time to time, without
         notice or demand to IPAYMENT or to any other person (any such notice
         and demand being hereby expressly waived), to set off, recoup and to
         appropriate and to apply any and all such funds against and on account
         of IPAYMENT's obligations to SERVICERS under this Agreement and any
         other agreement with SERVICERS, whether such obligations are
         liquidated, unliquidated, fixed, contingent, matured or unmatured.
         IPAYMENT agrees to duly execute and deliver to SERVICERS such
         instruments and documents as SERVICERS may reasonably request to
         perfect and confirm the lien, security interest, right of set off,
         recoupment and subordination set forth in this Agreement.

         (e) Any funds maintained in the Reserve Account shall yield interest
         equal to the federal funds rate, as stated from time to time in the
         Wall Street Journal (or any successor publication), plus one percent
         (1%), which will be payable monthly on each Payment Date.

8.2      INSPECTION. IPAYMENT will, at any and all reasonable times and upon
         notice reasonable under the circumstances, permit SERVICERS' employees,
         agents, attorneys, auditors, or regulators to inspect IPAYMENT's place
         of business to audit its operations for compliance with all laws,
         rules, regulations, and directives of any governmental regulatory
         agency, as well as all rules, regulations and directives of MasterCard,
         or VISA all at SERVICERS' expense.

8.3      COOPERATION. SERVICERS and IPAYMENT will each timely furnish to the
         other any and all information and materials that the other may, from
         time to time, reasonably request in connection with all matters
         contemplated by this Agreement. Each party also shall take the action
         as the other may, from time to time, reasonably request in order that
         the purposes of this Agreement will be

                                                                   Page 21 of 46
<PAGE>
         fully accomplished and that all matters contemplated hereby will comply
         with all applicable statutory, regulatory or other legal requirements.

8.4      EXCLUSION OF WARRANTIES, LIMITATIONS OF LIABILITY.

         (a) This Agreement is a service agreement and, except as expressly
         provided in this Agreement, SERVICERS disclaim all other
         representations or warranties, express or implied, made to IPAYMENT,
         Merchants or any other person or entity, including without limitation,
         any warranties regarding quality, suitability, merchantability, fitness
         for a particular purpose or otherwise (regardless of any course of
         dealing, custom or usage of trade) of any services or any goods
         provided incidental to the services provided under this Agreement.

         (b) Notwithstanding anything in this Agreement to the contrary, in no
         event shall SERVICERS, their respective Affiliates or any of their
         respective directors, officers, employees, agents or subcontractors, be
         liable under any theory of tort, contract, strict liability or other
         legal theory for lost profits, lost revenues, lost business
         opportunities, exemplary, punitive, special, incidental, indirect or
         consequential damages, each of which is hereby excluded by Agreement of
         the parties, regardless of whether the damages where foreseeable or
         whether any party or any entity has been advised of the possibility of
         the damages. For sake of clarification, the exclusion set forth in this
         Section 8.4(b) does not apply to direct damages.

         (c) Except for claims related to payments due to IPAYMENT under Section
         6.2(b) that have not been paid to IPAYMENT and notwithstanding anything
         in this Agreement to the contrary, SERVICERS' cumulative liability for
         all losses, claims, suits, controversies, breaches, or damages for any
         cause whatsoever including, but not limited to, those arising out of or
         related to this Agreement and regardless of the form of action or legal
         theory shall not exceed $2,500,000.00.

8.5      COMPLIANCE WITH RULES. IPAYMENT also covenants to the following on
         behalf of itself and Subsidiaries:

         (a) IPAYMENT has received, understands, and agrees to comply fully with
         all Rules and applicable laws, rules and regulations.

         (b) On an ongoing basis, IPAYMENT will regularly provide SERVICERS with
         the current addresses for all its offices.

         (c) In the event of any inconsistency between any provision of this
         Agreement and the Rules, the Rules in each instance shall be afforded
         precedence and shall apply.

         (d) This Agreement will automatically terminate if IPAYMENT
         de-registers with VISA and/or MasterCard or when SERVICERS cease for
         any reason to be a Member.

         (e) IPAYMENT acknowledges and agrees that VISA and/or MasterCard are
         the sole and exclusive owner of VISA and/or MasterCard Marks. IPAYMENT
         agrees to never contest the ownership of these Marks and VISA and/or
         MasterCard may at any time immediately and without advance notice
         prohibit IPAYMENT from using their respective Marks.

         (f) IPAYMENT acknowledges and agrees that VISA and/or MasterCard shall
         have the right, either in law or in equity, to enforce any provision of
         the Rules and to prohibit IPAYMENT's conduct that creates a risk of
         injury to VISA and/or MasterCard or that may adversely affect the

                                                         Page 22 of 46
<PAGE>
         integrity of VISA's and/or MasterCard's systems, information or both.
         IPAYMENT agrees to refrain from taking any action that would have the
         effect of interfering with or preventing an exercise of these rights by
         VISA and/or MasterCard.

         (g) IPAYMENT agrees not to use any Marks of VISA and/or MasterCard on
         its own behalf in the furtherance of the Program. IPAYMENT also agrees
         not to suggest, imply or in any manner create an impression that it is
         a Member or an authorized representative of VISA and/or MasterCard or
         that it is other than an Independent Sales Organization for a Member.
         Further, IPAYMENT may not create an impression that VISA and/or
         MasterCard in any way endorses IPAYMENT or the Program it coordinates
         through SERVICERS.

         (h) IPAYMENT may use one (1) or more of VISA's or MasterCard's Marks
         under the following conditions:

                  (A)      Marks are used in accordance with the Rules; and

                  (B)      Marks are used pursuant to the express written
                           permission of CHASE.

         (i) IPAYMENT may not subcontract, sublicense, assign, license,
         franchise or in any other manner extend or transfer to any third party
         any right or obligation IPAYMENT may have in connection with the
         Program. IPAYMENT agrees to provide services under the Program only
         with IPAYMENT's or Subsidiaries' employees, independent representatives
         or another Independent Sales Organization that is registered with VISA
         and/or MasterCard to provide services for a Member, which has been
         approved in advance by SERVICERS in writing. An "employee or
         independent representative" of IPAYMENT or Subsidiary is defined as an
         individual who, while providing services for the Program (i) represents
         himself or herself as working for or on behalf of IPAYMENT or
         Subsidiary while using only IPAYMENT's or Subsidiary's legal or "doing
         business as" name(s) as registered with VISA and/or MasterCard; and
         (ii) receives compensation for services rendered for the Program from
         IPAYMENT or Subsidiary. An employee or independent representative may
         not extend or transfer to any third party any right or obligation the
         employee or independent representative may have regarding the Program
         as an employee or independent representative of IPAYMENT or Subsidiary.
         IPAYMENT further agrees to the following:

                  (i)      IPAYMENT will not use VISA's and/or MasterCard's
                           equipment and software ("V/MC Systems") and VISA
                           and/or MasterCard information identified or
                           reasonably understood to be confidential or
                           proprietary ("V/MC Confidential Information") for
                           anything other than to perform its duties on behalf
                           of SERVICERS and definitely not for its own use or
                           for any other purpose;

                  (ii)     To treat the V/MC Systems and V/MC Confidential
                           Information in at least as careful and confidential a
                           manner as IPAYMENT treats its own or the SERVICERS'
                           systems and confidential or proprietary information;

                  (iii)    To acknowledge that access to the V/MC Systems and
                           V/MC Confidential Information does not convey to
                           IPAYMENT any right, title, interest or copyright
                           therein or any license to use, sell, exploit, copy or
                           develop them further;

                                                                   Page 23 of 46
<PAGE>
                  (iv)     To limit access to the V/MC Systems and V/MC
                           Confidential Information to only those IPAYMENT
                           employees with a need to have access for the IPAYMENT
                           to perform services under the Program and to
                           implement and maintain reasonable and appropriate
                           safeguards to prevent unauthorized access to or use
                           of the V/MC Systems or V/MC Confidential Information;

                  (v)      Upon request by SERVICERS, or, absent such requests,
                           upon termination of IPAYMENT's performance under the
                           Program, to immediately cease any and all use of V/MC
                           Systems and promptly thereafter deliver to SERVICERS
                           all V/MC Confidential Information then in the
                           possession or control or, upon request by VISA and/or
                           MasterCard, to immediately cease any and all use of
                           the V/MC Systems and promptly thereafter deliver all
                           V/MC Confidential Information then in its possession
                           or control to VISA and/or MasterCard; and

                  (vi)     To immediately advise both SERVICERS and VISA and/or
                           MasterCard if any unauthorized person or external
                           entity seeks access to the V/MC Systems or V/MC
                           Confidential Information whether by legal proceeding
                           or otherwise.

         (j)      VISA and/or MasterCard may at any time conduct financial and
                  procedural audits of IPAYMENT. IPAYMENT agrees to cooperate
                  with and promptly supply VISA and/or MasterCard with all
                  information and material requested.

         (k)      IPAYMENT understands that all Program materials including, by
                  way of example and not limitation, Merchant Applications,
                  Merchant Processing Agreements, Merchant statements, and
                  Promotional Materials (i) must be approved by SERVICERS before
                  use and (ii) may not state or imply that IPAYMENT is
                  participating in or conducting any activity precluded by the
                  Rules.

         (l)      IPAYMENT recognizes that SERVICERS must approve (in advance)
                  any fee associated with the Program which must be clearly and
                  conspicuously disclosed in writing to the Merchant prior to
                  any payment or application.

         (m)      IPAYMENT acknowledges that under the Rules it will not have
                  access to any account for funds (i) then or subsequently due a
                  Merchant under the Program and/or (ii) withheld from a
                  Merchant for chargebacks arising out of the Program. IPAYMENT
                  also recognizes that SERVICERS may not assign or otherwise
                  transfer an obligation to pay or reimburse a Merchant to
                  IPAYMENT if the obligation arises from the Merchant's Program
                  participation.

8.6      GUARANTY. The parties acknowledge that they are entering into this
         agreement with a personal guaranty which guarantees IPAYMENT's
         performance of its obligations under this Agreement as partial
         collateral. In the event IPAYMENT becomes a company whose shares of
         common stock are traded on an organized national domestic exchange (a
         "public company"), SERVICERS agree, upon receipt of a written request
         from IPAYMENT, to review the personal guaranty requirement and to
         consider a release of such guaranty in exchange for an increase in the
         Reserve, to be determined by SERVICERS in their sole discretion.

8.7      SURVIVAL. The provisions of SECTION 8.1 and SECTION 8.4 shall survive
         the termination or expiration of this Agreement.

                                                                   Page 24 of 46
<PAGE>
                                    SECTION 9

                            CONFIDENTIAL INFORMATION

9.1      CONFIDENTIAL INFORMATION. Confidential Information is non-public and
         proprietary information relating to the business of IPAYMENT or its
         Affiliates that SERVICERS acquire during the term of this Agreement,
         and information relating to the business of SERVICERS and their
         Affiliates. It includes, but is not limited to, the following, whether
         used in, or to be used in, the business of IPAYMENT or SERVICERS, and
         whether or not reduced to practice; physical systems for the operation
         of the business; all present and planned strategies, business plans,
         and projections; all market and sales and marketing information; and
         all financial, accounting, and credit information. Neither party will
         disclose, furnish, sell or otherwise convey any of the other parties'
         Confidential Information or materials without written authorization,
         except that SERVICERS may disclose Confidential Information to its
         members or Affiliates.

9.2      EXCLUSIONS. Nothing in this Section 9 shall restrict either party with
         respect to Confidential Information 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 person 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 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.

9.3      OWNERSHIP OF WORK PRODUCT. Each party shall have and retain all
         ownership rights (including, without limitation, ownership of any
         Marks) in the work product developed for the implementation of the
         Program, including, without limitation, the marketing plans,
         Promotional Materials, and account materials that it creates, prepares
         or produces in connection with this Agreement, and all the work
         products shall remain the exclusive property of that party. Upon
         termination of the Agreement, each party shall immediately cease using
         any materials using the other's Marks or Intellectual Property, and
         shall immediately destroy all such materials.

9.4      SURVIVAL. The provisions of this SECTION 9 shall survive the
         termination or expiration of this Agreement.

                                   SECTION 10

                                PROGRAM TRANSFER

10.1     PROGRAM TRANSFER. At the request of IPAYMENT, SERVICERS will transfer
         and assign all Merchant Processing Agreements and Merchant Accounts in
         the Merchant Portfolio, to a VISA

                                                                   Page 25 of 46
<PAGE>
         and MasterCard Member designated by IPAYMENT, provided: (a) all amounts
         due (or estimated to become due) in connection with each Merchant
         Processing Agreement and under this Agreement have been paid to
         SERVICERS; (b) the Termination Reserve Account has been adequately
         funded; (c) an Event of Default which has created a material increase
         in risk of Loss to SERVICERS has not occurred and is not continuing;
         (d) the transfer will be without recourse of any kind to SERVICERS; (e)
         IPAYMENT provides full written indemnities to SERVICERS regarding
         actual and potential losses or other obligations arising out of
         operation of the Program or arising out of, or related to, this
         Agreement or any Merchant Processing Agreement; and (f) the Program
         Transfer complies with all Applicable laws and regulations. The
         Merchant Reserve Accounts for Merchant Accounts in the Merchant
         Portfolio will be transferred and assigned within 30 Days of completion
         of a transfer of the BINs and ICAs for the Merchant Portfolio to
         another a VISA and MasterCard Member pursuant to SECTION 10.2.

10.2     BIN AND ICA TRANSFER. IPAYMENT shall be responsible for initiating a
         transfer of the BINs and ICAs for the Merchants in Merchant Portfolio
         to another Member, for providing any and all information, documents or
         materials as may be necessary to effectuate the transfer and addressing
         any information requests from VISA or MasterCard. The BINs and ICAs
         transfer shall only be complete upon approval by VISA and MasterCard.
         IPAYMENT shall be solely responsible for, and reimburse SERVICERS for,
         any and all costs arising out of or related to the transfer of the BINs
         and ICAs and deconverting the Program Merchants.

10.3     SURVIVAL. The provisions of this Section 10 shall survive the
         termination or expiration of this Agreement for a period of one-hundred
         eighty (180) Days from the date of expiration or termination or until
         the effective date of a Program Transfer under this Section 10,
         whichever shall occur first.

                                   SECTION 11

                              TERM AND TERMINATION

11.1     INITIAL TERM. The initial term of this Agreement shall commence upon
         the initial Conversion of the Existing Portfolio and continue for four
         (4) years ("Initial Term"), unless terminated earlier as provided in
         this Agreement. Thereafter, this Agreement shall automatically renew
         for successive one-year periods unless IPAYMENT or SERVICERS give
         written notice of non- renewal to the other at least sixty (60) days
         prior to the expiration of the Initial Term or renewal term, as
         applicable.

11.2     TERMINATION FOR CAUSE. Either party may terminate this Agreement prior
         to its expiration for cause with thirty (30) Days prior written notice
         to the non-terminating party as follows:

         (a)      If SERVICERS or IPAYMENT become unable to perform its
                  obligations under this Agreement or, specifically and without
                  limiting the generality of the foregoing, SERVICERS or
                  IPAYMENT becomes unable to perform its

                                                                   Page 26 of 46
<PAGE>
                  obligations hereunder because of any applicable law or
                  regulation, or any judgment, order, decree, or agency
                  requirement;

         (b)      If VISA or MasterCard does not approve, or objects to, the
                  transactions contemplated hereby or imposes costs or requires
                  changes in connection with any activity or transaction
                  contemplated hereby that reduce or otherwise adversely affect
                  the financial benefits that either party is intended to derive
                  from this Agreement. Termination under this Subsection,
                  however, requires an additional thirty (30) days after notice
                  to cure. This additional time will permit an opportunity to
                  negotiate with VISA or MasterCard and for the parties to
                  renegotiate as to the manner in which to proceed; or

         (c)      This Agreement, the transactions contemplated hereby or
                  SERVICERS' participation therein is deemed or criticized by
                  the Office of the Comptroller of the Currency or other
                  regulatory agency to be unlawful, unsafe, and unsound or
                  otherwise inappropriate.

         Notwithstanding the foregoing, (i) SERVICERS and IPAYMENT reserve the
         right to immediately terminate this Agreement upon written notice for
         any breach of confidentiality obligations or any infringement of
         SERVICERS' or IPAYMENT's Intellectual Property or misuse of SERVICERS'
         or IPAYMENT's Marks by the other party; and (ii) SERVICERS reserve the
         right to immediately terminate this Agreement upon written notice for
         any commission of any fraudulent or illegal activity of any Sub
         Independent Sales Organization wherein either (A) the fraudulent or
         illegal activity is material and IPAYMENT has not taken immediate
         action to cease such activities upon any notification, or (B) VISA
         and/or MasterCard require immediate termination.

11.3     TERMINATION UPON BREACH. This Agreement may be terminated by either
         party upon sixty (60) Days prior written notice if the other party
         Materially breaches any representation, warranty, covenant, condition
         or term in this Agreement, or if any warranty or representation becomes
         untrue or incorrect during the term hereof. The breaching party shall
         have the right to cure any breach that is susceptible of cure during
         the sixty (60) Day notice period and if the breach is cured to the
         reasonable satisfaction of the non-breaching party, this Agreement
         shall not be terminated and shall continue in full force and effect.
         Notwithstanding the foregoing, the notice and cure periods provided for
         herein shall be reduced from sixty (60) Days to ten (10) Business Days
         in the event that either SERVICERS or IPAYMENT fails to make a monetary
         payment it is required to make to the other (pursuant to this
         Agreement) when the payment is due and the payment has not been
         deferred by SERVICERS pursuant to SECTIONS 6.2, 6.3 or 8.1 of this
         Agreement.

11.4     ADDITIONAL TERMINATION RIGHTS OF SERVICERS. SERVICERS may immediately
         terminate this Agreement upon expiration of a thirty (30) Day notice
         and cure period (such notice and cure period to run concurrently
         commencing upon the date of notice from SERVICERS to IPAYMENT) if any
         of the following "Events of Default" shall occur:

            (a)   a material adverse change in the business or financial
                  condition of IPAYMENT;

                                                                   Page 27 of 46

<PAGE>
            (b)   an assignment of this Agreement by IPAYMENT without SERVICERS
                  written consent;

            (c)   a sale of all or a substantial portion of IPAYMENT's assets,
                  which shall mean at least 50% of IPAYMENT's assets, which
                  shall in SERVICERS sole, reasonable discretion materially
                  increase SERVICERS risk of Loss, unless such sale is part of
                  IPAYMENT'S initial public offering;

            (d)   any change in 50% or more of ownership or control of IPAYMENT,
                  which shall in SERVICERS' sole, reasonable discretion
                  materially increase SERVICERS' risk of Loss, unless such sale
                  is part of IPAYMENT's initial public offering;

            (e)   any material failure on the part of IPAYMENT to comply with
                  the Merchant Processing Policy;

            (f)   IPAYMENT shall default in any Material respect in the payment
                  of any Material indebtedness, notwithstanding the provisions
                  of Section 11.3;

            (g)   IPAYMENT fails to fund the Reserve Account as required under
                  this Agreement; or

            (h)   IPAYMENT or any of its employees or independent
                  representatives engage in any fraudulent activity or is
                  reasonably suspected or accused of engaging in any fraudulent
                  activity in connection with the performance of their duties
                  under this Agreement.

            (i)   a material adverse change in the financial condition of any
                  individual or entity which has executed a guaranty which
                  guarantees IPAYMENT's performance of its obligations
                  hereunder;

            (j)   the termination or revocation of any guaranty which guarantees
                  IPAYMENT's performance of its obligations hereunder; or

            (k)   the death of any individual which has executed a guaranty
                  which guarantees IPAYMENT's performance of its obligations
                  hereunder.

      In addition to SERVICERS' right to terminate this Agreement, if any Event
      of Default shall occur and is not cured within the thirty Day notice and
      cure period (as described above), then SERVICERS may, at their option: (A)
      withhold any monies due or scheduled to become due to IPAYMENT in
      satisfaction of any amounts due to SERVICERS; (B) withhold any monies due
      or scheduled to become due to IPAYMENT to fund the Reserve Account or
      Termination Reserve Account; and/or (C) sell the Merchant Portfolio to a
      third party upon terms to be determined by SERVICERS after a period of six
      (6) months from the date of SERVICERS' notice to IPAYMENT of an Event of
      Default (subject to SERVICERS' rights to take any and all of the actions
      described in Subsections (A) and (B) of this paragraph during such
      six-month period) should IPAYMENT not cover (which includes by application
      of all amounts withheld by SERVICERS under Subsections (A) and (B) of this
      paragraph) all matured and unmatured amounts due to SERVICERS from
      IPAYMENT or any Program Merchant under this Agreement prior to the end of
      such six-month period. In the event of any such sale of the Merchant
      Portfolio by SERVICERS, the sale proceeds shall be applied to cover any
      amounts due to SERVICERS

                                                                   Page 28 of 46

<PAGE>
          from IPAYMENT or any Program Merchants, as well as any costs incurred
          by SERVICERS as a result of the Event of Default and the resulting
          sale of the Merchant Portfolio. Also, in the event any sale proceeds
          remain thereafter, the remaining monies shall be paid to IPAYMENT to
          reimburse IPAYMENT for any losses or investment expense in the Program
          which IPAYMENT may have incurred. In the event an 11.4(h) Event of
          Default occurs, IPAYMENT may attempt to cure by terminating the
          employee or independent agent, provided SERVICERS, in their sole
          discretion, believe that such termination will stop the fraudulent or
          suspected fraudulent activity. Notwithstanding anything in this
          Section 11.4 to the contrary, in the event of a subsection 11.4(f)
          Event of Default, SERVICERS will be able to withhold, set-off or
          appropriate any credits or payments due or scheduled to become due to
          IPAYMENT in accordance with and as permitted in Section 8.1 of this
          Agreement.

11.5     TERMINATION UPON PROGRAM TRANSFER. This Agreement may be terminated by
         IPAYMENT upon one hundred eighty (180) days prior written notice to
         SERVICERS if IPAYMENT elects to complete a Program Transfer in
         accordance with SECTION 10, provided that this termination right shall
         be subject to IPAYMENT's compliance with each term, condition, and
         provision of SECTION 10.

11.6     ADDITIONAL TERMINATION RIGHTS OF IPAYMENT. This Agreement may be
         terminated by IPAYMENT and IPAYMENT may request a Program Transfer
         without invoking SECTION 5.2 (Early Termination Fee) during the Initial
         Term if SERVICERS make any change the Merchant Processing Policy which
         is not due or related to a change in the Rules and such change
         adversely affects IPAYMENT's solicitation of Eligible Merchants for the
         Program. By "adversely affects", the parties mean a change to the
         Merchant Processing Policy that reduces the number of Eligible
         Merchants by ten percent (10%) or more.

11.7     DISSOLUTION OF CMS. Upon notice to IPAYMENT, this Agreement may be
         terminated by CMS, one of its members, or its successor upon the
         dissolution of CMS; provided, however, that following any such
         termination, CHASE may continue to sponsor IPAYMENT as an ISO and MSP
         for Visa and MasterCard and to make available the use of BINs and ICAs
         to provide settlement and clearing services under separate, mutually
         acceptable terms and conditions.

11.8     FINANCIAL CONDITION. This Agreement may be terminated upon the
         insolvency or bankruptcy of either party.

11.9     LIABILITY FOLLOWING TERMINATION. Following expiration or termination of
         this Agreement, IPAYMENT shall continue to hold all risks associated
         with transactions processed by SERVICERS prior to the termination or
         expiration of this Agreement or deconversion of the Program Merchants,
         including all risk relating to Chargebacks and fraudulent transactions.
         IPAYMENT shall pay SERVICERS any amounts associated with such risks
         immediately upon demand. SERVICERS may also require additional monies
         be deposited in the Reserve Account or Termination Reserve Account upon
         any termination or expiration of this Agreement.

11.10    TERMINATION RESERVE ACCOUNT. Within seven (7) Days of the issuing of a
         notice of termination by either party, IPAYMENT shall fund a
         Termination Reserve Account. Except as specifically set

                                                                   Page 29 of 46
<PAGE>
         forth otherwise in this Section 11.9, all provisions of Section 8.1 of
         this Agreement with regard to the Reserve Account shall also apply to
         the Termination Reserve Account. The amount of the Termination Reserve
         Account shall equal:

            (i)   The most recent amount required for the Reserve Account under
                  Section 8.1 of this Agreement, or

            (ii)  The amount calculated as SERVICERS'estimated risk of Loss in
                  its sole discretion, whichever is greater. Upon termination,
                  any balance in the Reserve Account shall be transferred to,
                  and be applied toward, the Termination Reserve Account.
                  Notwithstanding anything in this Section 11.9 to the contrary,
                  upon completion of a transfer of the BINs and ICAs for the
                  Merchant Portfolio to another VISA and MasterCard Member
                  pursuant to Section 10 in connection with a Program Transfer,
                  SERVICERS shall review the amount of the Termination Reserve
                  Account and adjust the amount of such to reflect the risk of
                  Loss.

11.11    SURVIVAL. The provisions of SECTIONS 11.4, 11.9 and 11.10 shall survive
         the termination or expiration of this Agreement.

                                   SECTION 12

                                 INDEMNIFICATION

12.1     IPAYMENT'S INDEMNIFICATION. IPAYMENT shall indemnify, defend, protect,
         and hold SERVICERS, their Affiliates, CMS' members, and their
         respective officers, directors, employees, attorneys, and permitted
         assigns, harmless from and against any Losses arising directly from:

            (i)   Any failure by IPAYMENT to comply with any Material term or
                  condition of this Agreement applicable to IPAYMENT, or the
                  failure of any warranty or representations made by IPAYMENT to
                  SERVICERS to be true and correct;

            (ii)  Any claim for which IPAYMENT has otherwise agreed herein to
                  pay or indemnify SERVICERS;

            (iii) Credit or fraud Losses, regardless of who may have performed
                  (or failed to perform) any related underwriting, credit
                  review, periodic review or fraud monitoring services;

            (iv)  Any negligence on the part of IPAYMENT or any of its
                  employees, independent representatives, or Sub-Independent
                  Sales Organizations; and

            (v)   any infringement arising out of IPAYMENT's use of SERVICERS'
                  Marks or Intellectual Property, without any limitation of
                  liability whatsoever.

12.2     SERVICERS' INDEMNIFICATION. SERVICERS shall indemnify, defend, protect,
         and hold IPAYMENT, its Affiliates and their respective officers,
         directors, employees, attorneys, and permitted assigns, harmless from
         and against any Losses arising directly from:

                                                                   Page 30 of 46
<PAGE>
            (i)   Any failure by SERVICERS to comply with any Material term or
                  condition of this Agreement applicable to SERVICERS, or the
                  failure of any warranty or representations made by SERVICERS
                  to be true and correct;

            (ii)  Any claim for which SERVICERS has otherwise agreed herein to
                  pay or indemnify IPAYMENT; and

            (iii) Any Losses caused by SERVICERS' breach of a Merchant
                  Processing Agreement.

12.3     SURVIVAL. The provisions of this SECTION 12 shall survive the
         termination or expiration of this Agreement.

                                   SECTION 13

                                  MISCELLANEOUS

13.1     RELATIONSHIP OF THE PARTIES. SERVICERS and IPAYMENT agree that in
         performing their responsibilities pursuant to this Agreement they are
         in the position of independent contractors. This Agreement is not
         intended to create, nor does it create and shall not be construed to
         create, a relationship of partnership or joint venture or agency or any
         association for profit between SERVICERS and IPAYMENT. IPAYMENT is not
         authorized hereunder to hold itself out as an agent of SERVICERS or to
         inform or represent to any person that IPAYMENT has authority to bind
         or obligate SERVICERS or to otherwise act on behalf of SERVICERS.
         IPAYMENT shall not make any representation or warranty, or create any
         liability or potential liability on behalf of SERVICERS.

13.2     NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is intended to
         confer upon any person or entity other than the parties and their
         Affiliates any rights or remedies.

13.3     ASSIGNMENT AND TRANSFER. IPAYMENT shall not assign or otherwise
         transfer this Agreement or any of its rights or obligations hereunder,
         or contract with any third party (other than the third parties named
         herein) to perform any of its responsibilities or obligations relating
         to this Agreement without the prior written consent of the other
         parties. Upon thirty (30) Days' prior notice to IPAYMENT and subject to
         the Rules, SERVICERS may assign or transfer this Agreement and their
         rights and obligations hereunder and may delegate their duties
         hereunder, in whole or in party, to any third party, without the
         consent of IPAYMENT. Upon receipt of notice of any such assignment or
         transfer, IPAYMENT shall have 30 Days to review the assignment or
         transfer. If IPAYMENT disapproves of the assignment or transfer by
         SERVICERS, IPAYMENT may terminate this Agreement upon 30 Days' prior
         written notice to SERVICERS. IPAYMENT's failure to disapprove of the
         assignment or transfer within 30 Days of its receipt of notice shall
         constitute its approval. Alternatively, SERVICERS may request that
         IPAYMENT's consent to any such assignment or transfer in advance, which
         consent shall not be unreasonably withheld.

                                                                   Page 31 of 46
<PAGE>
         IPAYMENT's hereby consents to any transfer or assignment of this
         Agreement by SERVICERS to FDMS, CHASE or any of their Affiliates.

13.4     NOTICES. Any notice, request, consent, waiver or other communication
         required or permitted to be given hereunder shall be effective only if
         in writing and shall be deemed sufficiently given only if delivered in
         person or sent by certified, registered, or overnight mail or overnight
         courier service, postage prepaid, return receipt requested, addressed
         as follows:

               IF TO CMS:

               CHASE MERCHANT SERVICES, L.L.C.
               3975 N.W. 120th Avenue
               Coral Springs, Florida 33065
               Attention:  Chief Executive Officer

               WITH A COPY TO ATTENTION:  General Counsel (same address)

               IF TO CHASE:

               JPMORGAN CHASE BANK
               100 Duffy Avenue
               Hicksville, New York 11801
               Attention:  Merchant Services

               IF TO IPAYMENT:
               IPAYMENT, INC.
               40 Burton Hills, Suite 415
               Nashville, TN 37215
               ATTN: Greg Daily, CEO
               WITH A COPY TO ATTENTION: General Counsel
                                         IPAYMENT, INC.
                                         9121 Oakdale Avenue, Suite 201
                                         Chatsworth, CA 91311

         Or to such other person or address as either party may designate by
         notice given to the other party as provided herein. The notice or
         communication shall be deemed to have been given as of the date so
         delivered.

13.6     PRIOR AGREEMENTS, ENTIRE AGREEMENT, AND MODIFICATIONS. This Agreement
         supercedes all prior agreements, whether verbal or in writing, and
         contains the entire Agreement between the parties regarding all
         matters, issues and claims, and any other written documents exchanged,
         verbal agreements reached and representations made by or between the
         parties in the course of the

                                                                   Page 32 of 46
<PAGE>
         negotiation of this Agreement. This Agreement may be changed only by a
         written instrument specifically stating that it modifies this Agreement
         and it must be signed by all parties.

13.7     EFFECTIVENESS, APPLICABLE LAW, AND FORUM. This Agreement shall become
         effective as of the date first written above upon execution by the
         parties, and shall be governed by and construed in accordance with the
         laws of the State of New York, without giving effect to New York
         conflict laws.

13.8     WAIVERS. No failure or delay by either party to exercise, and no course
         of dealing regarding any right of the party concerning an obligation of
         the other party to this Agreement, shall operate as a waiver unless
         agreed to in writing by both parties. Both parties here waive their
         right to a jury trial in the event of any legal proceedings between
         them.

13.9     BINDING EFFECT, SPECIFIC PERFORMANCE. This Agreement and the rights and
         obligations created hereunder shall be binding upon and inure solely to
         the benefit of the parties and their respective successors and
         permitted assigns, and no other person or legal entity shall acquire or
         have any rights under or by virtue of this Agreement. The remedies, and
         any other remedies provided for in this Agreement shall be cumulative
         in nature, not exclusive, and shall be in addition to any other remedy
         allowed in law or equity.

13.10    SEVERABILITY. If any provision of this Agreement is held illegal,
         invalid, void, or unenforceable in any jurisdiction where this
         Agreement or any part there of is to be performed by reason of any rule
         of law, administrative or judicial proceeding or public policy, the
         provision shall be deemed deleted and the remaining provisions of this
         Agreement shall remain valid and binding.

13.11    HEADINGS. The Section headings of this Agreement are inserted as a
         matter of convenience only and shall in no way define, limit, extend or
         describe the scope of this Agreement or the intent of any provisions
         herein.

13.12    COUNTERPARTS. Provided that all parties execute a copy of this
         Agreement, this Agreement may be executed in counterparts, each of
         which shall be deemed an original and all of which together shall
         constitute one and the same instrument. The parties acknowledge that
         delivery of executed copies of this Agreement may be effected by
         facsimile or other comparable means, as well as by delivery of manually
         signed copies.

13.13    CONSTRUCTION. As used in this Agreement, any reference to the
         masculine, feminine or neuter gender shall include all genders, the
         plural shall include the singular, and the singular shall include the
         plural. With regard to each and every term and condition of this
         Agreement and any and all agreements and instruments subject to the
         terms hereof, the parties understand and agree that the same have or
         has been mutually negotiable, prepared and drafted, and that, if at any
         time the parties desire or are required to interpret or construe any
         term or condition of any agreement or instrument subject hereto, no
         consideration shall be given to the issue of which party actually
         prepared, drafted or requested any term or condition of this Agreement
         or any agreement or instrument subject hereto.

13.14    EXHIBITS. All Exhibits to this Agreement are incorporated by reference
         with the same force and effect as if fully set forth herein. This
         Agreement shall be given full force and effect without the

                                                                   Page 33 of 46
<PAGE>
         Exhibits or as to those Exhibits that are attached, in the event less
         than all of the Exhibits referenced herein are in fact attached.

13.15    SURVIVAL. The provisions of this SECTION 13 shall survive the
         termination or expiration of this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
         31st day of January, 2003.

                             IPAYMENT, INC.

                             By:/s/ Greg Daily
                                ----------------------------------
                             Title: Chief Executive Officer
                                   -------------------------------
                             Date:  January 28, 2003
                                  --------------------------------

                             CHASE MERCHANT SERVICES, L.L.C.

                             By:/s/ Patricia Keller
                                ----------------------------------
                             Title: Illegible
                                   -------------------------------
                             Date:  January 29, 2003
                                  --------------------------------

                             JPMORGAN CHASE BANK

                             By:/s/ Illegible
                                ----------------------------------
                             Title: Illegible
                                   -------------------------------
                             Date:  January 31, 2003
                                  --------------------------------

                                                                   Page 34 of 46<PAGE>
                                                                   EXHIBIT 10.38

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 the
Company's request for confidential treatment pursuant to Rule 406 under the
Securities Act of 1933, as amended.

                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

                          PROCESSING SERVICES AGREEMENT

                                     BETWEEN

                        VITAL PROCESSING SERVICES L.L.C.

                                       AND

                                 IPAYMENT, INC.

                                      DATED

                                 JANUARY 1, 2003

<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                     <C>
PREAMBLE                                                                                                 1

DEFINITIONS                                                                                              1
      Affiliates.........................................................................................1
      Average Monthly Billing............................................................................1
      BIN, BINs..........................................................................................1
      Confidential Information...........................................................................1
      Conversion Assistance..............................................................................1
      Conversion Plan....................................................................................1
      Dispute............................................................................................1
      Disputed Fees and Charges..........................................................................1
      Initial Term.......................................................................................1
      Merchant, Merchants................................................................................1
      Merchant Services..................................................................................2
      Service Levels.....................................................................................2

1.    OBLIGATIONS OF VITAL PROCESSING SERVICES, L.L.C.                                                   2
      1.1   Basic Services...............................................................................2
      1.2   Standard of Care.............................................................................3
      1.3   Conversion Assistance........................................................................3
      1.4   Service Levels...............................................................................3
      1.5   Compliance with Laws and Regulations.........................................................3
      1.6   Implementation Dates.........................................................................3
      1.7   Custom Code Projects.........................................................................3
      1.8   Initial Bank ID & File Transmission Settings.................................................3
      1.9   Merchant Conversion for Quad Cities (Nobel) Merchants........................................3

2.    OBLIGATIONS OF IPAYMENT, INC.                                                                      4
      2.1   POS Network..................................................................................4
      2.2   Clearing and Settlement......................................................................4
      2.3   Data and Information.........................................................................4
      2.4   MasterCard and Visa Sponsoring Bank..........................................................4

3.    FEES FOR MERCHANT SERVICES                                                                         4
      3.1   Payment of Fees and Expenses.................................................................4
      3.2   Dispute of Fees and Expenses.................................................................5
              3.2.1 Manner/Time of Payment...............................................................5
              3.2.2 Taxes................................................................................6
      3.3   Increase in Core Processing Fees.............................................................6
      3.4   Minimum Processing Transactions..............................................................6
              3.4.1 Dial Authorization Transactions......................................................6
              3.4.2 Clearing and Settlement Transactions.................................................7
              3.4.3 Sale of Portfolio....................................................................8
</TABLE>

                                       i
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

<TABLE>
<S>                                                                                                     <C>
      3.5   Acquisition of Portfolios....................................................................9
      3.6   Increased Fees and Expenses.................................................................11

4.    TERM OF THE AGREEMENT                                                                             11
      4.1   Initial Term................................................................................11
              4.1.1 Renewal.............................................................................11
      4.2   Termination at End of Initial Term or Renewal Term..........................................12
      4.3   Termination by VITAL........................................................................12
      4.4   Early Termination by IPI....................................................................12
      4.5   Default and Remedies........................................................................12
      4.6   Effect of Termination.......................................................................13
      4.7   Deconversion................................................................................13
              4.7.1 Deconversion Fees...................................................................13
              4.7.2 Time of Payment of Deconversion Fee.................................................14
      4.8   Partial Deconversion........................................................................14
      4.9   Final Deconversion..........................................................................14
      4.10  Pricing After Termination...................................................................15

5.    CONFIDENTIAL INFORMATION                                                                          15
      5.1   Confidential Information....................................................................15
              5.1.1 IPI's Confidential Information......................................................15
              5.1.2 VITAL's Confidential Information....................................................15
      5.2   Protection of Confidential Information......................................................16
      5.3   Confidentiality of Agreement................................................................16
      5.4   Exclusions..................................................................................16
      5.5   Confidential Information....................................................................17
      5.6   Survival....................................................................................17
      5.7   Ownership of Merchants......................................................................17

6.    NETWORK CONFIGURATION                                                                             17
      6.1   POS Access..................................................................................17
      6.2   Installation and Servicing..................................................................17
      6.3   Modification of Network Configuration.......................................................17

7.    INDEMNIFICATION                                                                                   18
      7.1   VITAL Indemnification.......................................................................18
      7.2   IPI Indemnification.........................................................................18
      7.3   Force Majeure / Business Continuity.........................................................18
      7.4   Data Transmission...........................................................................18
      7.5   Operational Breakdowns......................................................................18
      7.6   Errors......................................................................................19
      7.7   Reliance on IPI's Information...............................................................19
      7.8   Special Damages.............................................................................19
      7.9   Limitation of Liability.....................................................................19
</TABLE>

                                       ii

<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

<TABLE>
<S>                                                                                                     <C>
8.    NOTICES                                                                                           20
      8.1   Address.....................................................................................20
      8.2   Form of Notice..............................................................................20

9.    ADDITIONAL PROVISIONS                                                                             20
      9.1   Relationship of Parties.....................................................................20
      9.2   Assignment..................................................................................21
      9.3   Notice......................................................................................21
      9.4   Authority...................................................................................21
      9.5   Insolvency..................................................................................21
      9.6   Waiver......................................................................................21
      9.7   Dispute.....................................................................................21
      9.8   Business Continuity.........................................................................23
      9.9   Insurance...................................................................................23
      9.10  Off-Site Storage............................................................................23
      9.11  Property Rights.............................................................................24
      9.12  Hiring with Consent.........................................................................24
      9.13  Binding Nature..............................................................................24
      9.14  Section Headings............................................................................24
      9.15  Attorney's Fees.............................................................................24
      9.16  Survival....................................................................................25
      9.17  Entire Agreement............................................................................25
      9.18  Counterparts................................................................................25
      9.19  Governing Law...............................................................................25

EXHIBITS

      Merchant Point-of-Sale Service Descriptions and Pricing (Exhibit A)...............................26
      Verisign(R) Reseller Terms and Conditions- (Attachment I to Exhibit A)............................47
      Clearing and Settlement (Exhibit B)...............................................................50
      Service Levels (Exhibit C)........................................................................58
      Authorization for ACH Payments (Exhibit D)........................................................64
</TABLE>

                                      iii
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

      THIS AGREEMENT ("Agreement") is made and effective as of this 1st day of
January 2003 ("Effective Date") by and between VITAL PROCESSING SERVICES, L.L.C.
("VITAL"), of Tempe, AZ and IPAYMENT, INC. ("IPI"), of Nashville, TN and
supercedes and replaces any pre-existing agreement between VITAL and IPI.

                                    PREAMBLE

      The terms and provisions of this Agreement provide for the provision by
VITAL and utilization by IPI of the Merchant Services for card and merchant
authorization services as described in Exhibit "A" hereto and for merchant
accounting and clearing services as described in Exhibit "B" hereto. Merchant
authorization services and merchant accounting and clearing services are
hereinafter referred to as "Merchant Services". In consideration of the terms
and provisions specified in this Agreement, the parties hereto agree as follows:

                                   DEFINITIONS

      "Affiliates" shall mean any entity controlled by, controlling or under
      common control of IPI including the existing Affiliates listed in
      paragraph 1.1. For purposes of this definition, IPI will be deemed to
      "control" another entity if it owns at least fifty percent (50%) of the
      issued and outstanding capital stock of such entity on a fully diluted and
      fully converted basis.

      "Average Monthly Billing" shall have the meaning given in paragraph 7.9.1

      "BIN" or "BINs" shall mean any and all applicable BINs and shall include
      any and all related and corresponding ICAs.

      "Confidential Information" shall have the meaning given in Section 5

      "Conversion Assistance" shall have the meaning given in paragraph 1.3

      "Conversion Plan" shall have the meaning given in paragraph 1.3

      "Dispute" shall have the meaning given in paragraph 9.7

      "Disputed Fees and Charges" shall have the meaning given in paragraphs 3.1
      and 3.2

      "Initial Term" shall have the meaning given in paragraph 4.1

      "Merchant" or "Merchants" shall mean an entity that receives card and/or
      merchant authorization services and/or merchant accounting, clearing
      and/or settlement services (1) pursuant to a contractual arrangement with
      IPI or an Affiliate of IPI or (ii) pursuant to a contractual relationship
      with a financial institution, independent sales organization or other
      merchant acquirer having a contractual relationship with IPI or any such
      Affiliate, if in the case of (ii), IPI or any such Affiliate (a) is
      entitled to recognize twenty percent (20%) of the revenue related to such
      merchant on its income statement, (b) owns at least fifty percent (50%) of
      the merchant portfolio or (c) provides for transaction processing
      services, including authorization services, back office functions (such as
      underwriting,

                                       1
<PAGE>

                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

      customer services and risk monitoring) and merchant accounting, clearing
      and settlement services for such merchant in the absence of a direct
      contractual relationship.

      "Merchant Services" shall have the meaning given in the Preamble

      "Service Levels" shall have the meaning given in Exhibit "C"

1.    OBLIGATIONS OF VITAL PROCESSING SERVICES, L.L.C.

      1.1. Basic Services. VITAL will make Merchant Services available to IPI,
its Affiliates and its Merchants, in accordance with the terms and conditions of
this Agreement. As of the Effective Date, VITAL will provide services under this
Agreement to the following IPI Affiliates:

      1st National Processing, Inc.         CardSync Processing, Inc.
      E-Commerce Exchange, Inc.             iPayment, Inc.
      iPayment of California, Inc.          iPayment of Eureka, Inc.
      iPayment of Maine, Inc. (dba FMBS)    iPayment Technologies, Inc.
      Online Data Corp.                     Quad City Acquisition Sub, Inc.

      The specific BINs to be processed are as follows:

<TABLE>
<CAPTION>
                AFFILIATE                                         BIN #
                ---------                                         -----
<S>                                                              <C>
      E-Commerce Exchange, Inc.                                  [****]
                                                                 [****]
      FNP                                                        [****]
                                                                 [****]
      iPayment of California, Inc.                               [****]
      iPayment of Maine (FMBS)                                   [****]
      iPayment Technologies                                      [****]
                                                                 [****]
                                                                 [****]
                                                                 [****]
      Quad Cities (On-Line Data/CardSync)                        [****]
</TABLE>

      Any agreement with VITAL with any of the aforementioned IPI Affiliates is
hereby superceded and replaced by this Agreement and as of the Effective Date,
all such existing IPI Affiliates shall receive Merchant Services under this
Agreement. It is the intent of the parties hereto that, subject to the terms and
conditions of this Agreement, this Agreement is intended to be the agreement
governing VITAL's relationship with IPI, its current Affiliates and future
Affiliates.

[****] 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.

                                       2
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

      1.2. Standard of Care. In performing the Merchant Services contemplated
under this Agreement, and in the selection and use of facilities, equipment,
machines and personnel required for such performance, and in the custody and
safekeeping of materials furnished to VITAL by IPI, or acquired by VITAL on
behalf of IPI in connection therewith, VITAL shall exercise ordinary care and
diligence.

      1.3. Conversion Assistance. Upon the execution of the Agreement, VITAL
agrees to begin the conversion transition process, if terminals or merchant
accounts are to be converted for Merchant Services, that entails the analysis of
IPI's existing merchant data and POS services. At the conclusion of the above
analysis, the parties agree to define the commencement and conclusion dates for
the conversion of IPI's merchants and terminals for Merchant Services and to
complete a conversion plan ("Conversion Plan").

      1.4. Service Levels. VITAL agrees to provide or make available the
Merchant Services in accordance with the service levels set forth in Exhibit
"C", attached hereto.

      1.5. Compliance with Laws and Regulations. In providing Merchant Services
to IPI, VITAL agrees to comply with VISA and MasterCard bylaws and operating
regulations and federal and state regulations relating to Merchant Services for
IPI.

      1.6. Implementation Dates. VITAL will use commercially reasonable efforts
to meet reasonable implementation dates for acquisitions/conversions as required
by IPI.

      1.7. Custom Code Projects. VITAL will supply information and back-up
documentation for derivation of costs and time estimates for custom-code
projects for development of features and functions not included in this
Agreement.

      1.8. Initial Bank ID & File Transmission Setups. VITAL agrees to perform
clearing and settlement setups for three (3) initial Bank IDs which includes the
Bank ID setup and up to eight (8) file transmission setups, at no additional
charge to IPI for such setups; not to include any third party connectivity or
software costs which will be billed by VITAL to IPI on a pass-through basis. In
the event IPI requires additional Bank IDs, then VITAL's normal clearing and
settlement setup charges would apply.

      1.9. Merchant Conversion for Quad Cities (Nobel) Merchants. VITAL will
perform, free of charge to IPI, the master file conversion in order to load the
approximately [****] merchant accounts from the Quad Cities
platform onto VITAL's clearing

[****] 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.

                                       3
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

and settlement platform provided there are no extraordinary circumstances or
requests by IPI that would cause VITAL's investment in this endeavor to be out
of line with what would be considered normal for a conversion of similar size
and make-up. IPI agrees to pay for all reasonable travel expenses incurred by
VITAL in the course of the conversion.

2.    OBLIGATIONS OF IPAYMENT, INC.

      2.1. POS Network. VITAL's POS Network will be a POS network for IPI
merchant business.

      2.2. Clearing and Settlement. During the term of this Agreement, VITAL
will be a third party provider of merchant accounting and clearing service.

      2.3. Data and Information. Insofar as the performance of Merchant Services
under this Agreement by VITAL requires data, documents, information or materials
of any nature to be furnished, in whole or in part, by IPI or IPI's employees,
agents or other representatives, or requires other services to be performed by
IPI or IPI's employees, agents or other representatives, IPI hereby agrees to
furnish or cause its employees, agents or other representatives, to furnish all
such data, documents, information and materials, and to perform all such
services within such time or times, and in such form or manner, as is necessary
in order to enable VITAL to perform Merchant Services hereunder in a timely
manner.

      2.4. MasterCard and Visa Sponsoring Bank. IPI or its Affiliates agree,
during the term of this Agreement, to maintain a sponsor agreement with a
MasterCard and Visa financial institution of its choice. IPI will notify VITAL
in writing of the bank and the account which will be the ACH account in
accordance with paragraph 3.1 below ("Billing Account"). VITAL shall have the
right to directly debit the Billing Account in the event that IPI fails to pay
any undisputed fees to VITAL subject to the provisions of Section 3 below, if
applicable. IPI agrees to notify VITAL of any change in its MasterCard and Visa
sponsoring relationship and that such sponsoring institution will notify VITAL
in writing of the existence of the sponsoring relationship and identify the
Billing Account.

3.    FEES FOR MERCHANT SERVICES

      3.1. Payment of Fees and Expenses. As of the Effective Date, VITAL's fees
for Merchant Services provided are set forth in Exhibit "A" and Exhibit "B"
attached hereto and made a related part hereof. VITAL will render a billing
statement for all authorization, capture,

                                       4
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

clearing, settlement, and related processing fees and expenses contemplated by
this Agreement no later than the fifteenth (15th) day of the month [or the
following business day if the fifteenth (15th) day falls on a weekend or a
holiday] during the term of this Agreement. VITAL shall debit IPI's Billing
Account the undisputed amount due on the invoice on the twenty-seventh (27th)
day after of the month. IPI shall designate an IPI bank account with respect to
which VITAL shall have authority to debit the account for fees and expenses and
agrees to execute the ACH authorization attached hereto as Exhibit "D". In the
event that VITAL renders the billing statement above later than the fifteenth
(15th) day of the month, the date to dispute a charge (either the twenty-fifth
[25th] day or the forty-fifth [45th] day) and the date VITAL will ACH the
Billing Account (the twenty-seventh [27th] day) will be extended by the total
number of days and time VITAL is late rendering the billing statement.

      3.2. Dispute of Fees and Expenses. IPI may dispute any of the fees and
charges invoiced by VITAL by providing written notice, either via facsimile or
e-mail ("Notice of Dispute") as follows:

                        VITAL PROCESSING SERVICES, L.L.C.
                          Attention: Billing Department
                             8320 South Hardy Drive
                                 Tempe, AZ 85284
                               480.333.8737 (fax)
                        mary.whalen@vitalps.com (e-mail)

      The Notice of Dispute shall include a detailed description of the items
and amounts disputed as well as the nature of the dispute,. If the Notice of
Dispute is received by the close of business on the twenty-fifth (25th) day of
the month [or the following business day if the twenty-fifth (25th) day falls on
a weekend or holiday], VITAL will not debit for such disputed amounts until the
dispute is resolved, provided that the amount in dispute is greater than two
thousand five hundred dollars ($2,500.00). If the Notice of Dispute is received
no later than forty-five (45) days after the end of the month in which the
disputed fee or expense was assessed, and VITAL has debited IPI's account for
such amount or IPI has otherwise paid the disputed for and/or expense, VITAL
will credit IPI the amount in dispute, and provided the amount in dispute is
greater than two thousand five hundred dollars ($2,500.00). The provisions of
this paragraph 3.2 shall not be construed to prohibit IPI from disputing fees
and expenses in the amount of two thousand five hundred dollars ($2,500.00) or
less. All disputes under this paragraph 3.2 will be settled pursuant to
paragraph 9.7 of this Agreement.

      3.2.1 Manner/Time of Payment. VITAL may modify its billing procedures upon
ninety (90) days' notice to IPI. Any modification to these procedures will not
shorten the period

                                       5
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

of time that the fees and expenses are due to VITAL. IPI shall first consent,
such consent not to be unreasonably withheld, prior to the changes going into
effect.

      3.2.2 Taxes. It is understood and agreed between the parties hereto that
the fees provided for in this Agreement are exclusive of any and all applicable
taxes or assessments, whether designated as sales taxes, use taxes, ad valorem
taxes, property taxes or by some other name or designation, and including any
interest or penalties thereon, which may be levied upon or assessed by any
governmental or taxing jurisdiction in connection with the performance of
services hereunder for IPI or the provision of any equipment necessary for the
performance of services hereunder for IPI, and exclusive of any expenses which
expenses, by the express terms hereof, designated to be paid by IPI. In the
event of the payment of or for any such tax, assessment or expense by VITAL for
IPI, IPI shall in turn pay VITAL for such items. Notwithstanding anything
contained herein, IPI shall not have any liability whatsoever for any income,
franchise or gross receipt taxes due by VITAL.

      3.3. Increase in Core Processing Fees. The agreed upon fees stated in
Exhibit "A" and Exhibit "B" shall be guaranteed for a period of six (6) years
from the date this Agreement becomes effective, and during any Renewal Periods,
except for the services for which VITAL is a reseller of services, in which
instance VITAL will give ninety (90) days' prior written notice of any price
increase that results from a price increase from the provider of the services.

      3.4. Minimum Processing Transactions.

            3.4.1 Dial Authorization Transactions. IPI agrees, beginning January
1, 2003, to process a minimum number of Eligible Monthly Dial Transactions
(defined as IPI's total monthly dial authorization transactions on VITAL less
the transactions determined by the Acquisition Adjustment Factor as defined in
paragraph 3.5.8 below) per year for the Initial Term, and any Renewal Term, of
this Agreement, as outlined below:

<TABLE>
<CAPTION>
                        MINIMUM ELIGIBLE MONTHLY     MINIMUM ELIGIBLE ANNUAL DIAL/AUTH
  PERIOD                 DIAL/AUTH TRANSACTIONS             TRANSACTION TOTALS
  ------                 ----------------------             ------------------
<S>                     <C>                          <C>
Year 1 (1)                     [****]                            [****]
Year 2                         [****]                            [****]
Year 3                         [****]                            [****]
Year 4                         [****]                            [****]
Year 5                         [****]                            [****]
Year 6 (3)                     [****]                            [****]
</TABLE>

(1)   effective months 7-12 only

(2)   total for months 7-12 only

(3)   Year 6 minimums apply to any subsequent Renewal 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.

                                       6
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

            IPI shall pay the fees as outlined in paragraph 1.1 of Exhibit "A"
attached hereto for Dial Authorization and Capture Fees. In the event IPI fails
to meet this monthly transaction minimum for two (2) or more consecutive months,
the shortfall number of transactions will be billed monthly by VITAL to IPI at
the applicable transaction rate (as described in paragraph 1.1 of Exhibit "A")
and the amount due shall be payable to VITAL in accordance with paragraphs 3.1
and 3.2 above. For example, if IPI failed to meet the monthly minimum for three
(3) consecutive months, then VITAL would charge IPI for the first two (2) months
at the end of the second (2nd) month, and for the third (3rd) month at the end
of the third (3rd) month. Notwithstanding anything to the contrary herein, this
shall be VITAL's sole and exclusive remedy in the event the above minimums are
not met unless such fee is not paid by IPI.

            Should the total of the minimum Eligible Annual Dial Transactions
processed by IPI in Year One, as noted above, or any year thereafter meet or
exceed the Annual Total listed above, then VITAL will refund IPI for any monthly
shortfall amount charged to IPI in that year on the invoice for the following
January services or, if there are no subsequent January services, by no later
than January 31 of the following year.

            3.4.2 Clearing and Settlement Transactions. IPI agrees, beginning
January 1, 2003, to process a minimum number of Eligible Monthly Clearing and
Settlement Transactions (defined as IPI's total monthly clearing and settlement
transactions on VITAL less the Acquisition Adjustment Factor as defined in
paragraph 3.5.8 below) per year for the Initial Term, and any Renewal Term, of
this Agreement as outlined below:

<TABLE>
<CAPTION>
                 MINIMUM ELIGIBLE MONTHLY
               OUTGOING (CREDIT) AND CLEARING    MINIMUM ELIGIBLE ANNUAL OUTGOING (CREDIT)
                    & SETTLEMENT DEBIT                AND CLEARING & SETTLEMENT DEBIT
PERIOD                TRANSACTIONS (4)                       TRANSACTIONS TOTAL
------                ----------------                       ------------------
<S>            <C>                               <C>
Year 1 (5)               [****]                                [****]
Year 2                   [****]                                [****]
Year 3                   [****]                                [****]
Year 4                   [****]                                [****]
Year 5                   [****]                                [****]
Year 6 (6)               [****]                                [****]
</TABLE>

(4)   defined as Outgoing and Clearing & Settlement Debit transactions

(5)   effective months 7-12 only

(6)   Year 6 minimums apply to any subsequent Renewal Term

            IPI shall pay the fees as outlined in paragraph 1.1.2.a and
paragraph 1.1.2.b of Exhibit "B" attached hereto for outgoing credit and
clearing and settlement debit transactions. In the event IPI fails to meet this
monthly transaction minimum for two (2) or more consecutive months, the
shortfall number of transactions will be billed monthly by VITAL to IPI at the
applicable transaction rate (as described in paragraph 1.1.2.a and paragraph
1.1.2.b of Exhibit

Rider 1

[****]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.

                                       7
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

"B") and the amount due shall be payable to VITAL in accordance with paragraphs
3.1 and 3.2 above. For example, if IPI failed to meet the monthly minimum for
three (3) consecutive months, then VITAL would charge IPI for the first two (2)
months at the end of the second (2nd) month, and for the third (3rd) month at
the end of the third (3rd) month. Notwithstanding anything to the contrary
herein, this shall be VITAL's sole and exclusive remedy in the event the above
minimums are not met unless such fee is not paid by IPI.

            Should the total of the minimum Eligible Annual Clearing and
Settlement Transactions processed by IPI in any given year meet or exceed the
Annual Total listed above, then VITAL will refund IPI for any monthly shortfall
amount charged to IPI in that year on the invoice for the following January
services or, if there are no subsequent January services, by no later than
January 31 of the following year.

            3.4.3 Sale of Portfolio. Subject to paragraph 9.2 hereof, in the
event of the sale by IPI of all merchant accounts to a party which agrees to
continue to receive Merchant Services from VITAL for all such accounts sold
under the same terms and conditions of this Agreement, including price, for a
period at least as long as the then-remaining portion of the Initial Term, or
any Renewal Term, of this Agreement, this Agreement shall terminate and IPI
shall have no further obligation to VITAL hereunder.

                  3.4.3.1 Assuming that IPI is meeting or exceeding its minimum
requirements then, in the event of the sale by IPI of part of its merchant
accounts to a party which agrees to continue to receive Merchant Services from
VITAL for all such accounts sold under the same terms and conditions of this
Agreement, including price, for a period at least as long as the then-remaining
portion of the Initial Term, or any Renewal Term, of this Agreement then VITAL
will adjust IPI's minimums (defined in paragraphs 3.4.1 and 3.4.2 above) in the
following manner: the minimums will be adjusted by the same percentage of the
IPI transaction volume sold. For example, should IPI sell twenty percent (20%)
of their five million (5,000,000) Dial Authorizations processed on VITAL (based
on the average of the three months prior to the sale) to an entity that would
assume the minimums based on the conditions described above, then VITAL would
lower IPI's minimums for Dial Authorizations by twenty percent (20%) for the
remainder of the Agreement term. Assuming IPI's Dial Authorization minimums were
two million five hundred thousand (2,500,000) at the time of the sale, then
IPI's new minimums would be two million (2,000,000) transactions while the
Acquiring party would be responsible for a minimum of five hundred thousand
(500,000). In the event that IPI is not meeting its minimums, this provision is
not applicable.

                                       8
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

                  3.4.3.2 Assuming that IPI is not meeting its minimum
requirements then, in the event of the sale by IPI of part of its merchant
accounts to a party which agrees to continue to receive Merchant Services from
VITAL for all such accounts sold under the same terms and conditions of this
Agreement, including price, for a period at least as long as the then-remaining
portion of the Initial Term, or any Renewal Term, of this Agreement then VITAL
will reduce IPI's minimums (defined in paragraphs 3.4.1 and 3.4.2 above) by the
transaction volume sold.

      3.5. Acquisition of Portfolios. In the event that IPI acquires a merchant
portfolio or entity that utilizes VITAL for either authorization and capture or
clearing and settlement services, the following will apply:

            3.5.1 Subject to paragraph 3.5.7 below, should IPI acquire a
merchant portfolio or entity ("Acquired Volume") that is then currently
processing on VITAL and does not have minimum commitments with VITAL, then (a)
the Acquired Volume (based on the average of the three (3) monthly volumes
processed prior to acquisition) would be adjusted in accordance with the
Acquisition Adjustment Factor, as defined in paragraph 3.5.8 below, to determine
the eligible monthly transaction figure used to meet the minimum commitments of
this Agreement and (b) pre-acquisition pricing will remain in effect for the
acquired portfolio for a [****] following the date of acquisition. Should IPI
fail to provide written notice to VITAL within thirty (30) days of the closing
of the acquisition, then the [****] will begin on the first day of the month in
which IPI notifies VITAL.

            3.5.2 Subject to paragraph 3.5.7 below, should IPI acquire a
merchant portfolio ("Acquired Volume") from an entity that has minimum
commitments with VITAL, then (a) the Acquired Volume (based on the average of
the three (3) monthly volumes processed prior to acquisition) would be adjusted
in accordance with the Acquisition Adjustment Factor, as described in paragraph
3.5.8 below, to determine the eligible monthly transaction figure used to meet
the minimum commitments of this Agreement and (b) pre-acquisition pricing will
remain in effect for the acquired portfolio for a [****] following the date of
acquisition. Should IPI fail to provide written notice to VITAL within thirty
(30) days of the closing of the acquisition, then the [****] will begin on the
first day of the month in which IPI notifies VITAL.

            3.5.3 Subject to paragraph 3.5.6, should IPI acquire an entity with
minimum commitments with VITAL, then (a) IPI will assume the same minimum
commitments in the acquired contract and (b) pre-acquisition pricing will remain
in effect for the acquired portfolio

[****] 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.

                                       9
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

for a [****] following the date of acquisition. Should IPI fail to provide
written notice to VITAL within thirty (30) days of the acquisition, then the
[****] will begin on the first day of the month in which IPI notifies VITAL.

            3.5.4 Notwithstanding anything to the contrary contained herein,
IPI will have the option of paying the [****] differential (as described in
3.5.1, 3.5.2 and 3.5.3 above) to VITAL in an up-front payment. The payment will
be calculated by taking the difference between the price (average of the three
months prior to acquisition) of the product/service of the acquired business and
the resulting price under IPI's contract (i.e. the price at which that business
will be priced after it rolls up with IPI's volumes) times the acquired
business' average quantity (average of the three months prior to acquisition)
times [****]. This calculation will apply to the following products and
services: dial authorization & capture, as outlined in paragraph 1.1 of Exhibit
"A", SSL transactions, as outlined in paragraph 3.1.1 of Exhibit "A", debit
gateway transactions, as outlined in paragraph 12.1 of Exhibit "A" and clearing
& settlement transactions (outgoing and debit), as outlined in paragraph 1.1.2
of Exhibit "B.

            3.5.5 Should IPI acquire a merchant portfolio that is not processed
by VITAL for Merchant Services, the aforementioned minimums in paragraphs 3.4.1
and 3.4.2 shall not increase.

            3.5.6 In the event that IPI purchases an entity pursuant to
paragraph 3.5.3 above that has a written agreement with VITAL for Merchant
Services, IPI has the option to take Merchant Services under the entity's
contract when and if the contract is assigned to IPI or IPI can merge the
Merchant Services under this Agreement as provided for in this Agreement.

            3.5.7 In the event that IPI acquires a merchant portfolio or entity
that receives Merchant Services from VITAL and does not have minimum commitments
with VITAL pursuant to paragraphs 3.5.1 and 3.5.2 above, then IPI will have the
option to take Merchant Services under VITAL's then-standard pricing or IPI can
merge the Merchant Services under this Agreement as provided for in this
Agreement.

            3.5.8 In the event that IPI acquires a merchant portfolio or entity
("Acquired Volume") pursuant to paragraphs 3.5.1 or 3.5.2 above, then the
Acquired Volume will be adjusted, based on the following schedule ("Acquisition
Adjustment Factor"), before being applied to the Eligible Monthly Transactions
used to meet the minimum requirements in this Agreement. During the initial
twelve (12) months after acquisition, [****] of the

[****] 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.

                                       10
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

Acquired Volume will be subtracted from IPI's total transaction volume, [****]
in the second year, [****] in the third year, and [****] in the fourth year. An
illustration of the Acquisition Adjustment Factor follows:

            Assuming that IPI has one million (1,000,000) monthly dial
transactions on VITAL (and that remains static) and then acquires another one
million (1,000,000) monthly dial transactions which were already on VITAL, then
the following table illustrates the computation of the total Eligible Monthly
Dial Transactions to be applied against the minimum requirements:

<TABLE>
<CAPTION>
            IPI MONTHLY       ACQUIRED      ACQUISITION                          ELIGIBLE
PERIOD       DIAL AUTHS        AUTHS       ADJUST. FACTOR       IMPACT        MONTHLY TRANS.
------       ----------        -----       --------------       ------        --------------
<S>         <C>              <C>           <C>                  <C>           <C>
Year 1       1,000,000       1,000,000         [****]           [****]            [****]
Year 2       1,000,000       1,000,000         [****]           [****]            [****]
Year 3       1,000,000       1,000,000         [****]           [****]            [****]
Year 4       1,000,000       1,000,000         [****]           [****]            [****]
Year 5       1,000,000       1,000,000         [****]           [****]            [****]
</TABLE>

*     The above example would function the same for a Clearing and Settlement
      Acquisition.

      3.6. Increased Fees and Expenses. Any other provision herein to the
contrary notwithstanding, the fees and expenses to be paid by IPI for the
Merchant Services provided herein may be increased to directly offset any
increase in rates charged by any communication service providers, by providers
of products for which VITAL is a reseller or to offset any increase due to a
change in applicable law or the rules, regulations or operating procedures of
either VISA, MasterCard, other supported plans or any applicable federal or
state governmental agency or regulatory authority. Any such change shall become
effective on the same day as the increase in rates charged by the communications
service providers or the providers of products which VITAL resells or due to
change in such law, rules, regulations or operating procedures becomes
effective. VITAL shall give IPI ninety (90) days' written notice of any increase
or the amount of notice that VITAL receives of such increase if such notice to
VITAL is less than ninety (90) days.

4.    TERM OF THE AGREEMENT

      4.1 Initial Term. The term of this Agreement shall begin on January 1,
2003 and shall continue in full force and effect for a period of six (6) years
("Initial Term") unless sooner terminated pursuant to the terms of the
Agreement.

            4.1.1 Renewal. Upon the expiration of the Initial Term of this
Agreement, this Agreement shall automatically renew for consecutive one-year
terms thereafter ("Renewal Term") unless terminated as provided in paragraph 4.2
hereunder.

[****] 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.

                                       11
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

      4.2 Termination at End of Initial Term or Renewal Term. Subject to
providing one hundred and eighty (180) days prior written notice to VITAL, IPI
may terminate this Agreement at the end of the Initial Term, or at the end of
any Renewal Term. VITAL may terminate this Agreement at the end of the Initial
Term, or at the end of any Renewal Term, by giving at least one hundred and
eighty (180) days' prior written notice to IPI.

      4.3 Termination by VITAL. VITAL may terminate this Agreement in the event
IPI fails to make or adequately and timely provide for the payment of undisputed
fees and expenses due hereunder, but only if VITAL gives IPI written notice of
such failure and IPI fails to remedy such failure within thirty (30) days after
its receipt of said notice. Upon the expiration of the thirty (30) day period
provided for above, VITAL may terminate this Agreement by giving IPI written
notice, which termination shall be effective immediately upon IPI's receipt of
such notice. If such failure to pay is remedied by IPI within such thirty (30)
day period, then this Agreement shall continue as though no such notice had been
given.

      4.4 Early Termination by IPI. IPI may terminate this Agreement at any time
during the Initial Term, or any subsequent Renewal Term, by giving at least one
hundred and eighty (180) days' prior written notice to VITAL. In the event IPI
elects to terminate this Agreement without cause, or for convenience, at any
time pursuant to this paragraph, and such termination is effective before the
last day of the Initial Term, or any subsequent Renewal Term, IPI shall pay
VITAL a termination fee on the date of termination as VITAL's sole remedy. The
termination fee will be calculated by taking:

            4.4.1 The dollar value of the minimum transaction commitments
outlined in paragraph 3.4.1 (the applicable fees described in paragraph 1.1 of
Exhibit "A" attached hereto) and paragraph 3.4.2 (the applicable fees described
in paragraphs 1.1.2.a and 1.1.2.b of Exhibit "B" attached hereto) above for the
remaining period of the Initial Term or any Renewal Term.

            4.4.2 The termination fee is not applicable if IPI terminates
pursuant to paragraph 4.5 below, pursuant to breach of Section 5 or pursuant to
Section C of Exhibit "C".

      4.5 Default and Remedies. If either party fails to observe, keep or
perform any material term or condition of this Agreement, except for the service
levels which are addressed in Exhibit "C", required to be observed, kept or
performed by that party, the other party, in addition to any other rights and
remedies it may have, shall have the right to terminate this Agreement and, in
the case of IPI, IPI shall have the right to convert the Merchants to another
processor

                                       12
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

without paying a termination fee, including deconversion fees pursuant to
paragraph 4.7.1 below; provided, however, that the party seeking to terminate
the Agreement gives the other party a written notice of such failure claimed to
be a material breach of terms and conditions of this Agreement, and the party
receiving said notice fails to remedy the breach within thirty (30) days after
its receipt of said notice. If the material breach is not remedied by the
defaulting party within the thirty (30) day period provided for above, the
non-defaulting party may terminate this Agreement by giving the defaulting party
written notice effective immediately. If the material breach is remedied by the
defaulting party within such thirty (30) day period, then this Agreement shall
continue as though no such notice had been given. In the event that VITAL does
not meet the service level commitments described in Exhibit "C" attached hereto,
IPI shall have the rights described in said Exhibit "C".

      4.6 Effect of Termination. Termination of this Agreement shall not
terminate IPI's obligations to pay VITAL undisputed fees for all services
performed and expenses incurred under the Agreement prior to the discontinuance
of performance of Merchant Services by VITAL hereunder.

      4.7 Deconversion. IPI has the right to convert any or all of the Merchants
to another third party processor subject to the terms and conditions of this
Agreement. IPI agrees to provide VITAL with at least one hundred and eighty
(180) days' prior written notice of any complete or partial conversion from
VITAL to another processor. Upon a conversion or upon termination, VITAL shall
cooperate with IPI in transferring processing promptly and smoothly to any other
processor designated by IPI and VITAL shall make available to such processor all
information VITAL possesses regarding IPI's customers and accounts in such form
as IPI may reasonably request, together with adequate instructions concerning
the format and means of accessing the applicable data. There are no other
deconversion fees due to VITAL for a deconversion, except for the fees detailed
in paragraph 4.7.1 below.

            4.7.1 Deconversion Fees. Upon each deconversion, IPI shall pay VITAL
a deconversion fee of ten thousand dollars ($10,000.00) for each bank number
deconverted and pay VITAL at VITAL's current per diem or hourly charged rate for
all services provided by VITAL and shall pay VITAL for all out-of-pocket
expenses actually incurred by VITAL in connection therewith, including costs of
magnetic tapes, disks, punch cards or other storage devices or media transferred
by VITAL. The total fee per bank number will not exceed twenty thousand dollars
($20,000.00) provided that the deconversion is performed in the ordinary course
of deconversion. There is no deconversion fee if IPI terminates this Agreement
pursuant to

                                       13
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

paragraph 4.5 or Section C of Exhibit "C". All deconversion fees and
out-of-pocket expenses will be waived if IPI terminates this Agreement pursuant
to paragraph 4.2 hereof and IPI has either met all minimum commitments (as
defined in paragraphs 3.4.1 and 3.4.2 above) or has paid VITAL for any shortfall
in transactions.

            4.7.2 Time of Payment of Deconversion Fee. Any payments to be made
by IPI to VITAL under this paragraph 4.7 shall be made within thirty (30) days
of the receipt by IPI of an invoice from VITAL including such fees and expenses
provided that the deconversion fee is not disputed pursuant to paragraph 3.2
hereof.

      4.8 Partial Deconversion. Subject to the terms and conditions of this
Agreement, IPI shall be entitled to convert any designated group of Merchants
from VITAL at any time and from time to time hereunder. In the event that IPI
wishes to convert any designated group of Merchants receiving Clearing and
Settlement Services of a similar nature from VITAL's system to another
processor, and requires VITAL's assistance with such deconversion beyond
information or services rendered in the ordinary course, IPI shall provide at
least one hundred eighty (180) days prior written notice to VITAL of the
proposed effective date of such Merchant deconversion and VITAL shall cooperate
in good faith with IPI to convert such Merchants to a third party processor as
directed by IPI. In the event that IPI wishes to convert any designated group of
Merchants receiving Authorization Services of a similar nature, and VITAL shall
cooperate in good faith with IPI to convert such Merchants to a third party
processor as directed by IPI. In all cases, VITAL shall cooperate with IPI in
transferring such Merchant and VITAL shall make available to IPI all information
VITAL possesses regarding IPI's customers, Merchants and accounts in such form
as IPI may reasonably request, together with adequate instructions concerning
the format and means of accessing IPI's data. IPI shall pay VITAL for all
out-of-pocket expenses actually incurred by VITAL in connection with such
partial deconversion, including costs of magnetic tapes, disks, punch cards or
other storage devices or media transferred by VITAL, which such total costs
shall not exceed five thousand dollars ($5,000.00).

      4.9 Final Deconversion. Upon any termination of this Agreement pursuant to
paragraphs 4.2, 4.3 or 4.4, or if IPI terminates pursuant to paragraph 4.5 or
Section C of Exhibit "C", IPI shall deconvert Merchants from VITAL to another
processor or to its proprietary system ("Final Deconversion Period") within one
hundred eighty (180)-day. During the Final Deconversion Period, VITAL shall
cooperate with IPI in transferring the Merchants to another processor or to
IPI's proprietary systems and VITAL shall make available to IPI all information

                                       14
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

VITAL possesses regarding IPI's customers and accounts in such form as IPI may
reasonably request, together with adequate instructions concerning the format
and means of accessing IPI's data. If the transfer is delayed due to VITAL's
negligence, lack of cooperation or acts of omission, then the time period to
deconvert is extended by such time of the delay.

      4.10 Pricing After Termination. In the event that this Agreement
terminates due to a default by VITAL and the Merchants have not been converted
by IPI to a third party processor within the allotted one hundred eighty (180)
day time period described above, then VITAL agrees to continue to provide the
Merchant Services described herein, and in the attached exhibits, to IPI at the
same pricing for up to three hundred sixty-five (365) days. In the event that
this Agreement is terminated for any reason other than a default by VITAL, and
the Merchants have not been converted by IPI to a third party processor within
the allotted one hundred eighty (180) day time period described above, and such
delay is due to VITAL's lack of cooperation or such delay is caused by the
actions or the omissions of VITAL, then VITAL shall continue to provide to IPI
the pricing as described in this Agreement, and the attached exhibits, for a
period of time equal to that caused by VITAL's delay. In the event that this
Agreement is terminated for any reason other than a default by VITAL, and the
Merchants have not been converted by IPI to a third party processor within the
allotted one hundred eighty (180) day time period described above, and such
delay is not due to VITAL's lack of cooperation, then VITAL agrees to continue
to provide the Merchant Services to IPI, until the conversion is complete, at
VITAL's then standard pricing.

5.    CONFIDENTIAL INFORMATION

      5.1 Confidential Information.

            5.1.1 IPI's Confidential Information. All information of a business
nature relating to IPI's assets, liabilities, credit programs, customers,
vendors, agents, employees, independent contractors or other business affairs,
specifically including but not limited to any information about its Merchants,
disclosed to VITAL by IPI or disclosed in connection with this Agreement, or
known by VITAL as a result of providing Merchant Services to IPI ("Confidential
Information") is, and shall remain, confidential.

            5.1.2 VITAL's Confidential Information. All information of a
business nature relating to VITAL's assets, liabilities, credit programs,
customers, vendors, agents, employees, independent contractors or other business
affairs disclosed to IPI by VITAL or disclosed in

                                       15
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

connection with this Agreement, or known by IPI as a result of the provision of
Merchant Services by VITAL ("Confidential Information") is confidential.

      5.2 Protection of Confidential Information. Each party shall cause its
officers, employees and agents to take such action as shall be necessary, or
advisable, to preserve and protect the confidentiality of such Confidential
Information. This shall not prohibit each party from disclosing such
Confidential Information to persons, including attorneys and accountants,
required to have access thereto for the performance of this Agreement; provided,
however, that such persons shall be notified of the confidential nature of such
Confidential Information and be required to keep such Confidential Information
confidential to the same standard that the disclosing party is obligated to keep
the Confidential Information confidential. All IPI Confidential Information,
including records created therefrom by VITAL, shall remain the property of IPI,
and VITAL shall provide such Confidential Information to IPI or to another party
upon IPI's request. VITAL, its affiliates or successors, shall not use IPI's
Confidential Information to solicit the Merchants for merchant processing by
VITAL.

      5.3 Confidentiality of Agreement. Each party agrees that the terms and
conditions of this Agreement, including the fees for Merchant Services provided
hereunder which are set forth in Exhibit "A" and Exhibit "B" hereto, are
confidential. Neither party shall, without the express prior written consent of
the other party, disclose such terms and conditions (including fees) to any
other unaffiliated person, firm or corporation unless required by Federal or
State Securities Laws.

      5.4 Exclusions. VITAL's and IPI's obligations and agreements under this
paragraph 5.4 shall not apply to any information supplied that:

            5.4.1 Was known to either party prior to the disclosure by the
other,

            5.4.2 Is or becomes generally available to the public other than by
breach of this Agreement,

            5.4.3 Otherwise becomes lawfully available on a non-confidential
basis from a third party who is not under an obligation of confidence to either
party,

            5.4.4 Is independently developed by either party without the use of
Confidential Information provided by the other party, or

                                       16

<PAGE>
                                        ELECTRONIC EDITION OF SIGNED AGREEMENT

            5.4.5 Is disclosed in response to a court order, subpoena or other
request of a state or federal court or regulatory body.

      5.5   Confidential Information. If its obligations with respect to
Confidential Information provided in Section 5 are breached, the breaching party
must make reasonable efforts to minimize the breach and to prevent the recipient
of the Confidential Information from using same. Each party acknowledges and
agrees that the other party would suffer immediate and irreparable harm in the
event any Confidential Information is used in a manner not permitted by this
Agreement. In the event of a breach or a threatened breach of the provisions of
this Agreement, the non-breaching party shall be entitled, in addition to other
remedies available, to injunctive relief restraining the other party from such
breach or threatened breach and the right to terminate the Agreement pursuant to
paragraph 4.5. Nothing herein shall be construed as prohibiting either party
from pursuing any other remedy on account of such breach or threatened breach.

      5.6   Survival. The terms of Section 5 shall survive for three (3) years
after the termination of this Agreement.

      5.7   Ownership of Merchants. Notwithstanding anything contained herein,
VITAL hereby acknowledges that IPI has developed the primary relationship with
the Merchants and, as between VITAL and IPI, IPI owns the Merchants and all
rights to the Merchants, including any information VITAL obtains providing
services to the Merchants pursuant to this Agreement.

6.    NETWORK CONFIGURATION

      6.1   POS Access. IPI and IPI's merchants will access VITAL's system
utilizing data communication protocols, transaction formulas and devices
certified by VITAL.

      6.2   Installation and Servicing. IPI and/or IPI's merchants will be
responsible for the installation, servicing and maintenance of equipment at IPI
or it's merchant's facilities, and will be responsible for the connection of
those devices to the network in compliance with VITAL's requirements.

      6.3   Modification of Network Configuration. VITAL reserves the right to
change all or part of the protocols and the network configuration used by VITAL
in providing the Merchant Services, provided that if any change in the network
configuration would require IPI or it's merchants to change data communication
protocols or communication networks, VITAL will provide IPI with one hundred
eighty (180) days' written notice.

                                       17
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

7.    INDEMNIFICATION

      7.1   VITAL Indemnification. VITAL shall be liable to and shall indemnify
and hold IPI, its subsidiaries, affiliates, directors, officers, agents and
employees harmless from and against any claims by third parties for all loss,
liability, cost, damage and expense (including reasonable legal and accounting
fees and expenses) to which such indemnified parties may be subjected or which
they may incur in connection with any claims which arise from or out of or as a
result of the willful acts, negligent acts or omissions of VITAL, its officers,
employees, agents and affiliates, in the performance of their duties and
obligations under this Agreement.

      7.2   IPI Indemnification. IPI shall be liable to and shall indemnify and
hold VITAL, its subsidiaries, affiliates, directors, officers, agents and
employees harmless from and against any claims by third parties for all loss,
liability, cost, damage and expense (including reasonable legal and accounting
fees and expenses) to which such indemnified parties may be subjected or which
they may incur in connection with any claims which arise from or out of or as
the result of the willful acts, negligent acts or omissions of IPI, its
officers, employees, agents and affiliates, in the performance of their duties
and obligations under this Agreement.

      7.3   Force Majeure / Business Continuity. In no event shall VITAL or IPI
be liable with respect to the failure of its duties and obligations under this
Agreement (other than an obligation to pay outstanding, undisputed invoices as
provided for in paragraph 3.1 above) which is attributable to acts of God, war,
terrorism, conditions or events of nature, civil disturbances, work stoppages,
equipment failures, power failures, fire or other similar events beyond its
control, unless the failure to perform such duties and obligations is a result
of VITAL's failure to maintain adequate business continuity capabilities and to
periodically ensure the effectiveness of same.

      7.4   Data Transmission. VITAL shall not be liable with respect to any
loss, liability, cost, damage or expense arising from any loss, theft,
disappearance of or damage to data transmitted by dataline or other means of
electronic transmission that occurs during such transmission, provided that
VITAL does not control or is not responsible for the transmission.

     7.5 Operational Breakdowns. Except as otherwise provided herein, VITAL does
not guarantee the absence of break downs, operational failures, unavoidable
delays or other similar causes beyond VITAL's control. VITAL shall have no
liability for loss, liability, cost, damage or expense resulting directly or
indirectly from any such cause unless such loss, liability, cost,

                                       18
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

damage or expense results from VITAL's wanton and willful acts or negligence
subject to the terms and conditions of this Agreement.

      7.6   Errors. IPI agrees to check output information produced by VITAL,
including but not limited to, statements and interchange qualification levels to
determine if such information is correct, and will promptly report any errors
discovered therein to VITAL. In no event shall VITAL be liable with respect to
any loss, liability, cost, damage or expense caused by VITAL's failure to
perform hereunder but not reported by IPI to VITAL within ninety (90) days of
when such failure to perform is known to or should have been known to IPI.

      7.7   Reliance on IPI's Information. In no event shall VITAL be liable
with respect to any loss, liability, cost, damage or expense arising out of a
claim by IPI or by third parties in connection with the data, computations and
services provided and/or performed by VITAL hereunder to the extent that such
data, computations and/or services as to which such claim arises were provided
and/or performed in accordance with:

            7.7.1 IPI's written requirements and/or instructions in such regard,
including but not limited to, IPI's memoranda, data entry instructions or
computer field instructions or

            7.7.2 IPI's written concurrence that such data, computations and
services provided or performed or to be provided or performed comply with IPI's
previously communicated requirements and/or instructions in such regard.

      7.8   Special Damages. In no event will either party be liable for any
special, consequential or punitive damages, including but not limited to, lost
profits, even if such party knew of the possibility of such damages unless such
damage is the result of the fraudulent activity of the other party.

      7.9   Limitation of Liability. The liability of either party hereunder to
the other or to any party claiming by, through or under IPI, shall be limited in
the aggregate for the Initial Term, except for violation of Section 5, and for
all subsequent Renewal Terms, of the Agreement to twelve (12) times the "average
monthly billing" as defined hereinbelow, except in cases of willful misconduct
of the party seeking to assert the limitation of liability.

            7.9.1 For purposes of this paragraph 7.9.1, "average monthly
billing" shall be the average monthly billing of fees actually billed to IPI by
VITAL for providing Merchant Services computed over the twelve (12) month period
ending on the last day of the month immediately preceding the month in which
either party first receives notice from the other party

                                       19
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

or otherwise becomes aware of the claim which caused such party's liability to
the other party hereunder, or if this Agreement has not then been in effect for
twelve (12) months, then such average shall be computed over such fewer months
that this Agreement has been in effect.

8.    NOTICES

      8.1   Address. Any written notice required or permitted to be given by IPI
to VITAL hereunder shall be addressed to:

                        VITAL PROCESSING SERVICES, L.L.C.
                           Attention: General Counsel
                              8320 South Hardy Road
                                 Tempe, AZ 85284
                              (480) 333-8604 (fax)

and any written notice required, or permitted to be given by VITAL to IPI under
this Agreement shall be addressed to:

                                 IPAYMENT, INC.
                            Attention: Afshin Yazdian
                              40 Burton Hills, #415
                               Nashville, TN 37215
                              (615) 665-8434 (fax)

copy to:

                                 IPAYMENT, INC.
                              Attention: Greg Daily
                              40 Burton Hills, #415
                               Nashville, TN 37215
                              (615) 665-8434 (fax)

      8.2   Form of Notice. All written notices provided for hereunder shall be
delivered in person, by facsimile or shall be sent by courier or by certified
mail with a return receipt requested and shall be effective when delivered or,
in the case of certified mail, when deposited in the United States Post Office,
postage prepaid and addressed as provided above. The parties to this Agreement,
by notice in writing, may designate another address or office to which notices
shall be given pursuant to this Agreement.

9.    ADDITIONAL PROVISIONS

      9.1   Relationship of Parties. Nothing herein contained shall be construed
as constituting a partnership, joint venture or agency between IPI and VITAL.

                                       20
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

      9.2   Assignment. This Agreement shall not be assignable in whole or in
part by IPI or VITAL without the other party's prior written consent, except
that such consent shall not be required for the assignment of this Agreement to
any entity that is controlled by the assigning party, its parent, affiliate or a
subsidiary thereof (which assignment shall not relieve the assigning party of
any obligation hereunder).

      9.3   Notice. In the event that VITAL intends to make a written offer for
Merchant Services for clearing and settlement services to an ISO, agent or
independent contractor which has a written contract with IPI to process
Merchants, and VITAL becomes aware of such relationship or IPI has notified
VITAL of such relationship, VITAL agrees, as soon as reasonably possible, to
provide notice of such discussions to IPI.

      9.4   Authority. Each party to this Agreement hereby represents and
warrants to the other that it has the full right, power and authority to enter
into and perform this Agreement in accordance with all of the terms, provisions,
covenants and conditions hereof and that the execution and delivery of this
Agreement has been duly authorized by proper corporate action.

      9.5   Insolvency. In the event either party to this Agreement shall cease
conducting business in the ordinary course, become insolvent, make a general
assignment for the benefit of creditors, suffer or permit the appointment of a
receiver for its business or assets or shall avail itself of or become subject
to any proceeding under the federal bankruptcy laws of any statute or any state
relating to insolvency or the protection of the rights of creditors, which is
not dismissed within ninety (90) days, then (at the option of the other party
hereto), this Agreement may be terminated by the non-defaulting party, without
penalty or liquidated damages, in accordance with paragraph 4.5 and be of no
other force and effect, and any property or rights of such other party, tangible
or intangible, shall forthwith be returned to it.

      9.6   Waiver. Any delay, waiver or omission by IPI or VITAL to exercise
any right or power arising from any breach or default of the other party in any
of the terms, provisions or covenants of this Agreement shall not be construed
to be a waiver by VITAL or IPI of any subsequent breach or default of the same
or other terms, provisions or covenants on the part of the other party.

      9.7   Dispute. The following procedures shall be adhered to in all
disagreements ("Dispute") that arise under this Agreement, prior to the
escalation of a Dispute to arbitration. In the event of a Dispute, either party
shall notify the other party of the nature of the Dispute with as

                                       21
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

much detail as possible. IPI's representative and VITAL's representative shall
confer, in person or by telephone, within five (5) business days of the date of
notification for the purpose of negotiating a resolution of the Dispute and, if
applicable, determining the corrective action to be taken by the respective
parties. If the parties' representatives are unable to resolve the dispute or to
agree upon the appropriate corrective action to be taken within ten (10)
business days of such meeting, or if any of the completion dates in the
corrective action plan are later exceeded, then either party may initiate
arbitration proceedings. The foregoing procedures shall not limit or delay the
right of either party to seek provisional or ancillary remedies from a court of
competent jurisdiction. Pending resolution of the Dispute, and unless or until
this Agreement is terminated in accordance with the provisions hereof, both
parties will continue their performance of their obligations under this
Agreement in good faith, including without limitation the payment of all amounts
due to the other party that are not in dispute. Notwithstanding anything to the
contrary contained in this Agreement, in the event of a Dispute relating to or
arising out of a notice of default, the dispute resolution process described
herein must be commenced and completed within the applicable default cure
period.

            Unless the parties mutually agree otherwise, any controversy or
claim arising out of or relating to this Agreement, or the breach thereof, shall
be resolved by a single arbitrator who is a member of the Large, Complex Case
Panel of the American Arbitration Association (AAA), or similar professional
credentials, in accordance with its then-prevailing Commercial Arbitration Rules
with Expedited Procedures, as modified by this Agreement. Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in Arizona, or at such other place as may
be selected by mutual agreement. Nothing contained herein shall prohibit IPI
from seeking injunctive relief from any judicial authority before, during or
after any arbitration proceeding. The provisions of this arbitration clause
shall survive the termination or expiration of this Agreement.

            Notwithstanding the foregoing, any party may seek preliminary or
interim injunctive relief from any court having jurisdiction, whether or not
such party has pursued formal or informal dispute resolution in accordance with
this paragraph 9.7 or otherwise. The parties consent to the jurisdiction and
venue of the courts of the State of Arizona, including all federal courts
located in that state. By seeking or obtaining such remedy, the party seeking
injunctive relief shall not waive any of the provisions of this paragraph 9.7,
and any issues or claims arising in connection with such injunctive relief may,
at the election of the party seeking injunctive relief, be determined by
arbitration in accordance with this paragraph 9.7. Each party will share equally
the actual costs of the arbitration proceeding.

                                       22
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

      9.8   Business Continuity. VITAL and IPI shall work together throughout
the term of this Agreement to establish, update and improve strategies to
minimize disruption of Merchant Services and resulting financial loss and to
ensure timely resumption of operations in the event of any unforeseen disaster.
VITAL will provide a copy of its periodic third party review to IPI as and when
it becomes available.

      9.9   Insurance. VITAL agrees to retain insurance on its property for the
replacement value of such property and to retain general liability insurance in
an amount not less than twenty million dollars ($20,000,000.00) and errors and
omissions insurance that covers VITAL's errors and omissions in its performance
under this Agreement in an amount not less than five million dollars
($5,000,000.00) and providing for, among other things:

            9.9.1 Coverage for any and all amounts necessary to replace magnetic
tapes and reconstruct information stored on such magnetic tapes or any other
medium whatsoever or other evidence of any transactions received by VITAL and
required to be maintained by VITAL pursuant to this Agreement,

            9.9.2 Coverage for additional expenses incurred by VITAL which are
required to allow VITAL to continue processing and servicing in accordance with
this Agreement and in accordance with VITAL's past custom and practice and

            9.9.3 Coverage for any and all amounts necessary to replace all
processing units, computer consoles or other computer hardware of VITAL used in
connection with the processing activities of VITAL under this Agreement.

      9.10  Off-site Storage. Throughout the term of this Agreement, VITAL
agrees to maintain and retain:

            9.10.1 Adequate backup of all of its software in the form of the
offsite storage of its source and object codes as well as all documentation
necessary to reconstruct the software;

            9.10.2 Offsite storage for each of IPI's data files used in
connection with processing services provided by VITAL under this Agreement;

            9.10.3 A backup power supply system to guard against electrical
outages; and

                                       23
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

            9.10.4 Adequate backup for on-line communications, provided that IPI
maintains an appropriate modem for such on-line communications as specified by
VITAL.

      9.11  Property Rights. Concepts, ideas, know-how, techniques, software,
including but not limited to, programs, program listings and programming tools
and documentation, including but not limited to, manuals, techniques, reports
and drawings developed by VITAL and used by VITAL to fulfill its obligations
under this Agreement shall be the sole and exclusive property of VITAL even if
IPI assisted VITAL in the development or modification of such property and IPI
shall have no interest whatsoever in and to such property. Notwithstanding the
foregoing, in such event IPI has paid VITAL for the development of any such
property, IPI shall be given a fully paid perpetual license in such property for
its use and the use of its customers unless VITAL sets forth in writing what
other rights IPI shall have in such property before the development thereof. If
VITAL uses the property so developed and paid for by IPI for other clients
within one (1) year of the completion of the development, VITAL will reimburse
IPI the development costs actually paid to VITAL.

      9.12  Hiring with Consent. During the Initial Term of this Agreement, any
subsequent or Renewal Term, and for a period of one (1) year subsequent to the
termination of the provision of the Merchant Services hereunder, neither VITAL
nor IPI, without the prior written consent of the affected party, shall directly
solicit or seek to hire, any employee of such affected party having knowledge or
familiarity with the Merchant Services.

      9.13  Binding Nature. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their representatives and their
respective successors and assigns.

      9.14  Section Headings. Section headings are included for convenience or
reference only and are not intended to define or limit the scope of any
provision of this Agreement and should not be used to construe or interpret this
Agreement.

      9.15  Attorneys' Fees. In any action, arbitration, litigation or
proceeding ("Action") between the parties arising out of or in relation to this
Agreement, the prevailing party in such Action shall be awarded, in addition to
any damages, injunctions or other relief, and without regard to whether or not
such Action will be prosecuted to final judgment, such party's costs and
expenses, including reasonable attorneys' fees.

                                       24
<PAGE>
                                          ELECTRONIC EDITION OF SIGNED AGREEMENT

      9.16. Survival. Paragraphs 3.1, 3.2, 4.5, 4.6, 4.7, 4.10, Section 5,
paragraphs 7.1, 7.2, 7.8, 9.11, 9.12, 9.15 and 9.16 shall survive any expiration
or earlier termination of this Agreement.

      9.17  Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto relating to the subject matter hereof and all prior
negotiations, agreements and understandings, whether oral or written, are
superseded hereby. No modification or amendment to this Agreement shall be
effective unless and until set forth in writing and signed by both parties
hereto.

      9.18  Counterparts. This Agreement may be executed in counterparts, each
an original document, all of which taken together will constitute one single
agreement between the parties.

      9.19  Governing Law. This Agreement shall be governed in all respects by,
and construed in accordance with, the laws of the State of Arizona.

      IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day, month and
year first above written.

<TABLE>
<CAPTION>
VITAL PROCESSING SERVICES, L.L.C.         IPAYMENT, INC.

<S>     <C>                               <C>     <C>
By:     /s/ Bryan Daughtry                By:     /s/ Greg Daily
        ------------------------------            ------------------------------

Name:       Bryan Daughtry                Name:       Greg Daily
        ------------------------------            ------------------------------

Title:      Vice President                Title:      Chief Executive Officer
        ------------------------------            ------------------------------

Date:       February 13, 2003             Date:       February 13, 2003
        ------------------------------            -----------------------------

By:      /s/ Harry E. Hasselmann
        ------------------------------

Name:        Harry E. Hasselmann
        ------------------------------

Title:       Executive Vice President
        ------------------------------

Date:        February 14, 2003
        ------------------------------
</TABLE>

                                       25

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