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SHARE EXCHANGE AGREEMENT

BY AND AMONG

     ASIA PAYMENT SYSTEMS, INC. (“COMPANY”), 

CARDTREND SYSTEMS SDN. BHD. (“CARDTREND”), 

LOW KOK KENG (“LKK”), 

CHAI HOONG YOON (“CHAI”), 

CHONG SHIAN CHANG (“CHONG”), 

AND

NG CHEE KEONG (“CKN”)

 

 

 

 

	
September 28, 2006

 

 

 

	                                                                                     TABLE OF CONTENTS    
	  
	SHARE EXCHANGE AGREEMENT  	  	1  
	  
	W I T N E S S E T H:  	  	1  
	  
	ARTICLE 1  	  	1  
	Definitions  	  	1  
	  
	ARTICLE II  	  	5  
	Transactions; Terms Of Share Exchange; Manner Of Exchange  	  	5  
	2.1  	  	Exchange Of Shares.  	  	5  
	2.2  	  	Time And Place Of Closing.  	  	5  
	2.3  	  	Effective Time.  	  	5  
	2.4  	  	Exchange Of Shares.  	  	5  
	2.5  	  	Legending Of Securities.  	  	6  
	2.6  	  	Fractional Shares.  	  	6  
	2.7  	  	Lost, Stolen Or Destroyed Certificates.  	  	6  
	  
	ARTICLE III  	  	7  
	Representations And Warranties Of The Company  	  	6  
	3.1  	  	Organization.  	  	7  
	3.2  	  	Authorization; Enforceability.  	  	7  
	3.3  	  	No Violation Or Conflict.  	  	7  
	3.4  	  	Consents Of Governmental Authorities And Others.  	  	7  
	3.5  	  	Conduct Of Business.  	  	7  
	3.6  	  	Litigation.  	  	8  
	3.7  	  	Brokers.  	  	8  
	3.8  	  	Compliance.  	  	8  
	3.9  	  	Charter, Bylaws And Corporate Records.  	  	8  
	3.10  	  	Subsidiaries.  	  	8  
	3.11  	  	Capitalization.  	  	9  
	3.12  	  	Rights, Warrants, Options.  	  	9  
	3.13  	  	Commission Filings And Financial Statements.  	  	9  
	3.14  	  	Absence Of Undisclosed Liabilities.  	  	9  
	3.15  	  	Real Property.  	  	10  
	3.16  	  	Benefit Plans And Agreements.  	  	9  
	3.17  	  	Taxes.  	  	9  
	3.18  	  	Environmental Matters.  	  	11  
	3.19  	  	Material Agreements.  	  	11  
	3.20  	  	Disclosure.  	  	11  
	  
	ARTICLE IV  	  	13  
	Representations And Warranties Of CARDTREND, LKK, CHAI, CHONG and CKN  	  	12  
	4.1  	  	Organization.  	  	12  
	4.2  	  	Authorization; Enforceability.  	  	12  
	4.3  	  	No Violation Or Conflict.  	  	12  
	4.4  	  	Consents Of Governmental Authorities And Others.  	  	12  
	4.5  	  	Litigation.  	  	13  

 

	4.6  	  	Brokers.  	  	13  
	4.7  	  	Compliance.  	  	14  
	4.8  	  	Charter, Bylaws And Corporate Records.  	  	13  
	4.9  	  	Capitalization.  	  	13  
	4.10  	  	Subsidiaries.  	  	13  
	4.11  	  	Rights, Warrants, Options.  	  	14  
	4.12  	  	Conduct Of Business.  	  	14  
	4.13  	  	Taxes.  	  	14  
	4.14  	  	Environmental Matters.  	  	15  
	4.15  	  	Financial Statements.  	  	16  
	4.16  	  	Absence Of Undisclosed Liabilities.  	  	17  
	4.17  	  	Employment Agreements; Employee Benefit Plans And Employee Payments.  	  	16  
	4.18  	  	Intellectual Property.  	  	16  
	4.19  	  	Properties.  	  	19  
	4.20  	  	Disclosure.  	  	17  
	  
	ARTICLE V  	  	19  
	Additional Agreements  	  	19  
	5.1  	  	Survival Of The Representations And Warranties.  	  	19  
	5.2  	  	Investigation.  	  	19  
	5.3  	  	Ionnex’s Indemnification.  	  	19  
	5.4  	  	Limitations On CARDTREND’s Indemnification From the Company.  	  	19  
	5.5  	  	The Company’s Indemnification.  	  	20  
	5.6  	  	Limitations On the Company’s Indemnification.  	  	20  
	5.7  	  	Indemnity Procedures.  	  	20  
	  
	ARTICLE VI  	  	21  
	Closing; Deliveries; Conditions Precedent  	  	21  
	6.1  	  	Closing; Effective Date.  	  	21  
	6.2  	  	Deliveries.  	  	22  
	6.3  	  	Conditions Precedent To The Obligations Of  	  	  
	  	  	CARDTREND, LKK, CHAI, CHONG and CKN  	  	22  
	6.4  	  	Conditions Precedent To The Obligations Of The Company.  	  	23  
	6.5  	  	Best Efforts.  	  	24  
	6.6  	  	Termination.  	  	25  
	6.7  	  	Registration Rights.  	  	25  
	  
	ARTICLE VII  	  	26  
	Covenants  	  	26  
	7.1  	  	General Confidentiality.  	  	26  
	7.2  	  	Tax Treatment.  	  	26  
	7.3  	  	General.  	  	26  
	  
	ARTICLE VIII  	  	27  
	Miscellaneous  	  	27  
	8.1  	  	Notices.  	  	27  
	8.2  	  	Entire Agreement; Incorporation.  	  	27  
	8.3  	  	Binding Effect.  	  	27  
	8.4  	  	Assignment.  	  	28  

 

	8.5  	  	Waiver And Amendment.  	  	27  
	8.6  	  	No Third Party Beneficiary.  	  	28  
	8.7  	  	Severability.  	  	28  
	8.8  	  	Expenses.  	  	  	  	28  
	8.9  	  	Headings.  	  	  	  	28  
	8.10  	  	Other Remedies; Injunctive Relief.  	  	28  
	8.11  	  	Counterparts.  	  	29  
	8.12  	  	Remedies Exclusive.  	  	29  
	8.13  	  	Governing Law.  	  	29  
	8.14  	  	Jurisdiction And Venue.  	  	29  
	8.15  	  	Participation Of Parties.  	  	29  
	8.16  	  	Further Assurances.  	  	29  
	8.17  	  	Publicity.  	  	  	  	30  
	8.18  	  	No Solicitation.  	  	30  
	  
	  
	Exhibits  	  	  	  	  	  	  
	  
	Exhibit A  	  	-  	  	Rights and Preferences of Series B Convertible Preferred Shares of the Company  

 

 

 

 

 

 

 

 

 

 

	SHARE EXCHANGE AGREEMENT

     This SHARE EXCHANGE AGREEMENT (the “Agreement”), dated as of September 28th, 2006, by and among Asia Payment Systems, Inc., a Nevada corporation (“the Company”), and CardTrend Systems Sdn. Bhd., a corporation incorporated in Malaysia (“CARDTREND”), having a business address at Unit 506, Block D, Phileo Damansara 1, 9, Jalan 16/11, 46350, Petaling Jaya, Malaysia, and the shareholders of CARDTREND, namely Low Kok Keng (“LKK”), holding Malaysian I/D Card Number – 590226-10-6637; Chai Hoong Yoon (“CHAI”), holding Malaysian I/D Card number – 690213-106767; Chong Shian Chang (“CHONG”), holding Malaysian I/D Card Number – 690816-10-5667; and Ng Chee Keong, holding Malaysian I/D Card Number – 790428-10-5487.

	W I T N E S S E T H:

     WHEREAS, LKK, CHAI, CHONG and CKN presently own 100% of the common stock of CARDTREND (the “Cardtrend Shares”);

     WHEREAS, the Company desires to acquire from LKK, CHAI, CHONG and CKN all of the Cardtrend Shares in exchange for the issuance by the Company of 2,500,000 Series B Convertible Preferred Shares on the terms and conditions set forth below (the “Exchange”); and 

     WHEREAS, the parties desire this to be a tax-free exchange under the United States Internal Revenue Code.

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

	ARTICLE I

Definitions

     In addition to terms defined elsewhere in this Agreement, the following terms when used in this Agreement shall have the meanings indicated below:

     “Affiliate” shall mean with respect to a specified Person, any other Person which, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes, with respect to a Person (a) any other Person which beneficially owns or holds ten percent (10%) or more of any class of voting securities or other securities convertible into voting securities of such Person or beneficially owns or holds ten percent (10%) or more of any other equity interests in such Person, (b) any other Person with respect to which such Person beneficially owns or holds ten percent (10%) or more of any class of voting securities or other securities convertible into voting securities of such Person, or owns or holds ten percent (10%) or more of the equity interests of the other Person, and (c) any director or senior officer of such Person. For purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

 

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     “Agreement” shall mean this Share Exchange Agreement together with all exhibits and schedules referred to herein, which exhibits and schedules are incorporated herein and made a part hereof.

     “Certificates” shall have the meaning set forth in Section 2.4. 

     “Closing” shall have the meaning set forth in Section 2.2. 

     “Closing Date” shall mean the date that the Closing takes place. 

     “Code” shall mean the Internal Revenue Code of 1986, as amended. 

     “Commission” shall mean the United States Securities and Exchange Commission.

     “Company Common Stock” shall mean the shares of the Company’s $0.001 par value per share common stock.

     “Company Loss” shall have the meaning set forth in Section 5.5.

     “Confidential Information” means any information concerning the businesses and affairs of CARDTREND or the Company that is not already generally available to the public.

     “Effective Time” shall have the meaning set forth in Section 2.3. 

     “Environmental Laws” shall have the meaning set forth in Section 3.18. 

     “Exchange” shall have the meaning set forth in the recitals.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 

     “Exchange Consideration” shall have the meaning set forth in Section 2.1(a) . 

     “Exchange Documents” shall have the meaning set forth in Section 3.2.

     “Financial Statements” shall mean CARDTREND’s audited consolidated balance sheets, statement of operations, changes in stockholders equity and cash flow as of and for the fiscal years ended December 31, 2004 and 2005 and unaudited statements as at July 31st, 2006 prepared in conformity with GAAP.

      “GAAP” shall mean United States generally accepted accounting principles.

     “Guaranty” shall mean, as to any Person, all liabilities or obligations of such Person, with respect to any indebtedness or other obligations of any other Person, which have been guaranteed, directly or indirectly, in any manner by such Person, through an agreement, contingent or otherwise, to purchase such indebtedness or obligation, or to purchase or sell property or services, primarily for the purpose of enabling the debtor to make payment of such indebtedness or obligation or to guarantee the payment to the owner of such indebtedness or obligation against loss, or to supply funds to or in any manner invest in the debtor.

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      “Indemnified Party” shall have the meaning set forth in Section 5.7.

      “Indemnifying Party” shall have the meaning set forth in Section 5.7.

      “Intellectual Property” means patents, copyrights, Trademarks, applications for any of the foregoing, and Trade Secrets.

      “Cardtrend Share” shall mean the shares of CARDTREND’s Ringgit Malaysia One (RM1.00) par value per share common stock.

      “Cardtrend Loss” shall have the meaning set forth in Section 5.3.

      “Investments” shall mean, with respect to any Person, all advances, loans or extensions of credit to any other Person (except for extensions of credit to customers in the ordinary course of business), all purchases or commitments to purchase any stock, bonds, notes, debentures or other securities of any other Person, and any other investment in any other Person, including partnerships or joint ventures (whether by capital contribution or otherwise) or other similar arrangement (whether written or oral) with any Person, including, but not limited to, arrangements in which (i) the first Person shares profits and losses of the other Person, (ii) any such other Person has the right to obligate or bind the first Person to any third party, or (iii) the first Person may be wholly or partially liable for the debts or obligations of such partnership, joint venture or other entity.

      “Knowledge” shall mean, in the case of any Person who is an individual, knowledge that a reasonable individual under similar circumstances would have after such reasonable investigation and inquiry as such reasonable individual would under such similar circumstances make, and in the case of a Person other than an individual, the knowledge that a senior officer, director or manager of such Person, or any other Person having responsibility for the particular subject matter at issue of such Person, would have after such reasonable investigation and inquiry as such senior officer, director, manager or responsible Person would under such similar circumstances make.

      “Law” and “Laws” shall mean any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order or other requirement or rule of law.

      “Liabilities” shall mean any direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise, including, without limitation, liabilities on account of taxes, other governmental charges or Litigation, whether or not of a kind required by GAAP to be set forth on a financial statement.

      “Litigation” shall mean any actions, suits, investigations, claims or proceedings.

      “Material Adverse Effect” shall mean any event or condition of any character which has had or could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), results of operations, assets, liabilities, properties, or business of the Company or CARDTREND, as applicable.

 

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      “Periodic Reports” shall mean the Forms 10-KSB, 10-QSB, 8-K, and other Commission filings required by the Securities Exchange Act of 1934, as amended and Securities Act of 1933, as amended which have been filed by the Company with the Commission for the period beginning on January 1, 2005 and ending at the Closing Date.

      “Person” shall mean any natural person, corporation, unincorporated organization, partnership, association, limited liability company, joint stock company, joint venture, trust or government, or any agency or political subdivision of any government or any other entity.

      “Preferred Shares” shall mean the Series B Convertible Preferred Shares of the Company containing the rights and preferences thereof as set forth on Exhibit A to this Agreement.

      “Securities Act” shall mean the Securities Act of 1933, as amended.

      “Subsidiary” of any Person shall mean any Person, whether or not capitalized, in which such Person owns, directly or indirectly, an equity interest of more than fifty percent (50%), or which may effectively be controlled, directly or indirectly, by such Person.

      “Tax” and “Taxes” shall mean (i) all income, excise, gross receipts, ad valorem, sales, use, employment, franchise, profits, gains, property, transfer, payroll, withholding, severance, occupation, social security, unemployment compensation, alternative minimum, value added, intangibles or other taxes, fees, stamp taxes, duties, charges, levies or assessments of any kind whatsoever (whether payable directly or by withholding), together with any interest and any penalties, fines, additions to tax or additional amounts imposed by any governmental or regulatory authority with respect thereto, (ii) any liability for the payment of any amounts of the type described in (i) as a result of being a member of a consolidated, combined, unitary or aggregate group for any Taxable period, and (iii) any liability for the payment of any amounts of the type described in (i) or (ii) as a result of being a transferee or successor to any person or as a result of any express or implied obligation to indemnify any other Person.

      “Tax Returns” shall mean returns, declarations, reports, claims for refund, information returns or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes.

      “Termination Date” shall have the meaning set forth in Section 6.6.

      “Trademarks” means trademarks, service marks, trade names, Internet domain names, designs, slogans, and general intangibles of like nature.

      “Trade Secrets” means technology, trade secrets and other confidential information, know-how, proprietary processes, formulae, algorithms, models, and methodologies.

     The words “hereof”, “herein” and “hereunder” and the words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The terms defined in the singular shall have a comparable meaning when used in the plural and vice versa.

 

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	ARTICLE II

Transactions; Terms of Share Exchange; Manner of Exchange

     2.1  Exchange of Shares. Subject to the terms and conditions of this Agreement, at the Effective Time (as defined below):

            (a)   The Company shall issue to LKK, CHAI, CHONG, CKN and/or their designees (hereinafter collectively known as “Cardtrend Investors”) an aggregate of 2,500,000 newly issued restricted Preferred Shares of the Company (the “Exchange Consideration”) in the names and denominations as set forth on Schedule 2.1 hereto. 

            (b)   LKK, CHAI, CHONG and CKN agree to deliver to the Company an original stock certificate or certificates evidencing seven hundred thousand (700,000) issued shares of Cardtrend Shares valued at RM1.00 each, representing 100% of the issued and fully paid up Cardtrend Shares. Further, LKK, CHAI, CHONG and CKN agree to provide appropriately executed transfer documents in favor of the Company, in order to effectively vest in the Company all right, title and interest in and to the Cardtrend Shares. 

            (c)   The Exchange shall be consummated pursuant to the terms of this Agreement, which has been approved and adopted by the respective Board of Directors of the Company and CARDTREND.

            (d)   The securities issued by the Company in connection with this Share Exchange Agreement are issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933.

     2.2  Time and Place of Closing. The closing of the transactions contemplated hereby (the “Closing”) will take place at 10:00 A.M. on the date following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby as set forth in Article VI (other than conditions with respect to actions the respective parties will take at the Closing itself) (the “Closing Date”). The Closing shall be held at such location or time as may be mutually agreed upon by the parties. The parties agree to take all necessary and prompt actions so as to complete the Closing, if possible, on or before October 31st, 2006.

     2.3  Effective Time. The Exchange and other transactions contemplated by this Agreement shall become effective on the Closing Date (the “Effective Time”).

     2.4  Exchange of Shares. At the Closing, LKK, CHAI, CHONG and CKN shall surrender each certificate or certificates which represented 100% of the issued and fully paid up shares of Cardtrend Shares immediately prior to the Closing Date (the “Certificates”) and LKK, CHAI, CHONG, CKN and the Cardtrend Investors shall at the Effective Time receive in exchange therefore the number of whole Exchange Consideration issuable (the number of shares issuable to the respective stockholder shall be rounded up to the next whole number). The Company shall not be obligated to deliver the Exchange Consideration to which any of LKK, CHAI, CHONG, CKN and the Cardtrend Investors is entitled as a result of the Exchange until LKK, CHAI, CHONG and CKN surrender the Certificate or Certificates for exchange as provided in this Section 2.4. Any other provision of this Agreement notwithstanding, the Company shall not be liable to any of LKK, CHAI, CHONG, CKN and the Cardtrend Investors for any amounts paid or property delivered in good faith to a public official pursuant to any applicable abandoned property, escheat or similar law.

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     2.5   Legending of Securities. Each certificate for the Company Common Stock to be issued to LKK, CHAI, CHONG, CKN and the Cardtrend Investors as part of the Exchange Consideration shall bear substantially the following legend:

     “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS IS AVAILABLE. FURTHER, HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.”

     2.6   Fractional Shares. Notwithstanding any other provision of this Agreement, if LKK, CHAI, CHONG, CKN and the Cardtrend Investors would otherwise have been entitled to receive a fraction of a share of the Company Common Stock (after taking into account all certificates delivered by LKK, CHAI, CHONG and CKN), the number of shares issuable to the respective stockholder shall be rounded up to the next whole number. 

     2.7   Lost, Stolen or Destroyed Certificates. In the event that any Certificates shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by such stockholder of CARDTREND (setting forth the number Cardtrend Shares, represented by such lost, stolen or destroyed Certificates), after reasonable investigation by the Company to confirm ownership of such Certificate, which shall be satisfactory to the Company, in the Company’s sole satisfaction, the Company shall pay such stockholder of CARDTREND the Exchange Consideration to which such stockholder is entitled. Further, any stockholder representing that there is a lost, stolen or destroyed Certificate shall agree to indemnify and hold harmless the Company from and against any and all liability, loss, damage and expense in connection with, or arising out of such lost, stolen or destroyed Certificate.

	ARTICLE III

Representations and Warranties of the Company

     In order to induce CARDTREND, LKK, CHAI, CHONG and CKN to enter into this Agreement and to consummate the transactions contemplated hereby, the Company makes the representations and warranties set forth below to CARDTREND, LKK, CHAI, CHONG and CKN. 

     3.1   Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. The Company is duly qualified to transact business as a foreign corporation in all jurisdictions where the ownership or leasing of its properties or the conduct of its business requires such qualification except where the failure to so qualify would not have a Material Adverse Effect on the Company.

     3.2   Authorization; Enforceability. The execution, delivery and performance of this Agreement by the Company and all other agreements to be executed, delivered and performed by the Company pursuant to this Agreement (collectively, the “Exchange Documents”) and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all requisite

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corporate or individual action on the part of the Company. This Agreement and the Exchange Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligation of the Company, assuming the due authorization, execution and delivery of this Agreement by CARDTREND, LKK, CHAI, CHONG and CKN, enforceable in accordance with their respective terms, except to the extent that their enforcement is limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors’ rights generally and by general principles of equity.

     3.3   No Violation or Conflict. To the Knowledge of the Company, the execution, delivery and performance of this Agreement and the Exchange Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby: (a) do not violate or conflict with any provision of law or regulation (whether federal, state or local), or any writ, order or decree of any court or governmental or regulatory authority, or any provision of the Company’s Articles of Incorporation or Bylaws; and (b) do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default), cause the acceleration of performance, give to others any right of termination, amendment, acceleration or cancellation of or require any consent under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Company pursuant to any instrument or agreement to which the Company is a party or by which the Company or its properties may be bound or affected, other than instruments or agreements as to which consent shall have been obtained at or prior to the Closing.

     3.4   Consents of Governmental Authorities and Others. To the Knowledge of the Company, other than in connection with the provisions of the Nevada Revised Statutes, the Exchange Act, and the Securities Act, no consent, approval, order or authorization of, or registration, declaration, qualification or filing with any federal, state or local governmental or regulatory authority, or any other Person, is required to be made by the Company in connection with the execution, delivery or performance of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby, excluding the execution, delivery and performance of this Agreement by CARDTREND, LKK, CHAI, CHONG and CKN.

     3.5   Conduct of Business. Since 31st March, 2005, the Company has conducted its business in the ordinary and usual course consistent with past practices and there has not occurred any Material Adverse Effect on the Company, except as has been previously notified in its Periodic Reports filed with the United States Securities and Exchange Commission. Since 31st March, 2005, the Company has not (a) amended its Articles of Incorporation or Bylaws; (b) redeemed, purchased or otherwise acquired, directly or indirectly, any shares of its capital stock or any option, warrant or other right to purchase or acquire any such capital stock; (c) granted or made any mortgage or pledge or subjected itself or any of its properties or assets to any lien, charge or encumbrance of any kind; (d) made or committed to make any capital expenditures in excess of $100,000; (e) become subject to any Guaranty; (f) to the Knowledge of the Company, been named as a party in any Litigation, or become the focus of any investigation by any government or regulatory agency or authority; (g) declared or paid any dividend or other distribution with respect to its capital stock; or (h) to the Knowledge of the Company, experienced any other event or condition of any character which has had, or could reasonably be expected to have, a Material Adverse Effect on the Company.

     3.6   Litigation. There is no Litigation pending or, to the Knowledge of the Company, threatened before any court or by or before any governmental or regulatory authority or arbitrator, (a) affecting the

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Company (as plaintiff or defendant) or (b) against the Company relating to the Company Common Stock or the transactions contemplated by this Agreement. 

     3.7   Brokers. The Company has not employed any broker or finder, nor has it nor will it incur, directly or indirectly, any broker’s, finder’s, investment banking or similar fees, commissions or expenses in connection with the transactions contemplated by this Agreement or the Exchange Documents.

     3.8   Compliance. To the Knowledge of the Company, the Company is in compliance with all federal, state, local and foreign laws, ordinances, regulations, judgments, rulings, orders and other requirements applicable to the Company and its assets and properties. To the Knowledge of the Company, the Company is not subject to any judicial, governmental or administrative inquiry, investigation, order, judgment or decree.

     3.9   Charter, Bylaws and Corporate Records. CARDTREND, LKK, CHAI, CHONG and CKN have been provided with true, correct and complete copies of (a) the Articles of Incorporation of the Company, as amended and in effect on the date hereof, (b) the Bylaws of the Company, as amended and in effect on the date hereof, (c) the minute books of the Company (containing all corporate proceedings from the date of incorporation) and (d) all reports filed with the United States Securities and Exchange Commission. Such minute books contain accurate records of all meetings and other corporate actions of the board of directors, committees of the board of directors, incorporators and shareholders of the Company from the date of their incorporation to the date hereof which were memorialized in writing.

     3.10   Subsidiaries. The Company has the following Subsidiaries and Investments:

               -      Asia Payment Systems (HK) Ltd. (formerly Asian Alliance Ventures (HK) Ltd.), incorporated under the Company Ordinance of Hong Kong.

               -      Asia Payments, Inc., incorporated in the State of Delaware, USA. 

               -      WelWay Development Ltd., incorporated under the Company Ordinance of Hong Kong.

               -      Asia Payment Systems Pte. Ltd., incorporated under the Company Ordinance of Singapore.

               -      Asia Payment System (China) Co., Ltd., incorporated under the Company Ordinance of China.

               -      Interpay International Group Ltd., incorporated in the British Virgin Islands, and its subsidiaries and associated companies in the British Virgin Islands, Malaysia, and Singapore. 

     3.11   Capitalization. As of the date of this Agreement, the authorized capital stock of the Company consists of (a) 50,000,000 shares of common stock, $0.001 par value per share, of which as of the date of this Agreement, about 36 million shares of common stock are issued and outstanding and (b) 10,000,000 shares of preferred stock, $0.001 par value per share, of which as of the date of this

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Agreement, 3,500,000 shares of preferred stock are issued and outstanding and are convertible to Company Common Stock at the rate of five (5) Company Common Stock for each Series A Convertible Preferred Share. All shares of outstanding Company Common Stock and Series A Convertible Preferred Shares have been duly authorized, are validly issued and outstanding, and are fully paid and non-assessable.

     3.12   Rights, Warrants, Options. Except as disclosed in the Periodic Reports, there are no outstanding (a) securities or instruments convertible into or exercisable for any of the capital stock or other equity interests of the Company; (b) options, warrants, subscriptions, puts, calls, or other rights to acquire capital stock or other equity interests of the Company; or (c) commitments, agreements or understandings of any kind, including employee benefit arrangements, relating to the issuance or repurchase by the Company of any capital stock or other equity interests of the Company, or any instruments convertible or exercisable for any such securities or any options, warrants or rights to acquire such securities.

     3.13   Commission Filings and Financial Statements. All of the Periodic Reports and other filings required to be filed by the Company have been filed with the Commission for the periods indicated in the definition of Periodic Reports, and as of the date filed, each of the Periodic Reports were true, accurate and complete in all material respects and did not omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. The financial statements included in the Periodic Reports of the Company: (a) have been prepared in accordance with the books of account and records of the Company; (b) fairly present, and are true, correct and complete statements in all material respects of the Company’s financial condition and the results of its operations at the dates and for the periods specified in those statements; and (c) have been prepared in accordance with GAAP consistently applied with prior periods.

     3.14   Absence of Undisclosed Liabilities. Other than as disclosed by the Periodic Reports and the financial statements of the Company included in the Periodic Reports, the Company does not have any Liabilities. The Company has no Knowledge of any circumstances, conditions, events or arrangements which may hereafter give rise to any Liabilities of the Company.

     3.15   Real Property. The Company does not own any fee simple interest in real property. The Company does not lease, sublease, or have any other contractual interest in any real property. 

     3.16   Benefit Plans and Agreements. Except as disclosed in the Periodic Reports, the Company is not a party to any Benefit Plan (as defined in Section 4.17) or employment agreement under which the Company currently has an obligation to provide benefits to any current or former employee, officer, director, consultant or advisor of the Company.

     3.17   Taxes.

               (a)    Neither the Company nor any Person on behalf of or with respect to the Company has executed or filed any agreements or waivers extending any statute of limitations on or extending the period for the assessment or collection of any Tax. No power of attorney on behalf of the Company with respect to any Tax matter is currently in force.

               (b)    The Company is not a party to any Tax-sharing agreement or similar arrangement with any other party (whether or not written), and the Company has not assumed any Tax obligations of, or with

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respect to any transaction relating to, any other Person, or agreed to indemnify any other Person with respect to any Tax.

       (c)   No Tax Return concerning or relating to the Company or its operations has ever been audited by a government or taxing authority, nor is any such audit in process or pending, and the Company has not been notified of any request for such an audit or other examination. To the Knowledge of the Company, no claim has been made by a taxing authority in a jurisdiction where Tax Returns concerning or relating to the Company, or its operations, has not been filed, that it is or may be subject to taxation by that jurisdiction.

       (d)   The Company has never been included in any consolidated, combined, or unitary Tax Return.        

       (e)   The Company has not (i) agreed to or is required to make any adjustments pursuant to Section 481(a) of the Code or any similar provision of state, or local law by reason of a change in accounting method initiated by the Company, and the Company has no Knowledge that the Internal Revenue Service (“IRS”) has proposed any such adjustment or change in accounting method, or has any application pending with any taxing authority requesting permission for any changes in accounting methods that relate to the business or operations of the Company, (ii) executed or entered into a closing agreement pursuant to Section 7121 of the Code or any predecessor provision thereof or any similar provision of state, local or foreign law with respect to the Company or (iii) requested any extension of time within which to file any Tax Return concerning or relating to the Company or its operations. 

       (f)    To the Knowledge of the Company, no property owned by the Company is (i) property required to be treated as being owned by another Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986, (ii) constitutes “tax-exempt use property” within the meaning of Section 168(h)(1) of the Code or (iii) is “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code.

       (g)   The Company is not subject to any private letter ruling of the IRS, or comparable rulings of other taxing authorities.

       (h)   The Company does not own any interest in any entity that is treated as a partnership for U.S. federal income Tax purposes, or would be treated as a pass-through or disregarded entity for any Tax purpose.

       (i)   The Company has not constituted either a “distributing corporation” or a “controlled corporation” within the meaning of Section 355(a)(1)(A) of the Code in a distribution qualifying for tax-free treatment under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of transactions” (within the meaning of Section 355(e) of the Code) in conjunction with this Agreement.

       (j)   The Company has no elections in effect for U.S. federal income Tax purposes under Sections 108, 168, 441, 472, 1017, 1033 or 4977 of the Code.

       3.18   Environmental Matters. No real property used by the Company presently or in the past has

 

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been used to manufacture, treat, store, or dispose of any hazardous substance and such property is free of all such substances such that the condition of the property is in compliance with applicable Environmental Laws (as defined below). To the Knowledge of the Company, the Company is in compliance with all laws, regulations and other federal, state or local governmental requirements, and all applicable judgments, orders, writs, notices, decrees, permits, licenses, approvals, consents or injunctions relating to the generation, management, handling, transportation, treatment, disposal, storage, delivery, discharge, release or emission of any waste, pollutant or toxic or hazardous substance (including, without limitation, asbestos, radioactive material and pesticides) (the “Environmental Laws”) applicable to the Company or its business as a result of any hazardous substance utilized by the Company in its businesses or otherwise placed at any of the facilities owned, leased or operated by the Company, or in which the Company has a contractual interest. The Company has not received any complaint, notice, order, or citation of any actual, threatened or alleged noncompliance by the Company with any Environmental Laws, and to the Knowledge of the Company, there is no Litigation pending or threatened against the Company with respect to any violation or alleged violation of the Environmental Laws, and to the Company’s Knowledge, there is no reasonable basis for the institution of any such Litigation.

     3.19   Material Agreements. Except as disclosed in the Periodic Reports, the Company has no other material written and oral contracts or agreements including without limitation any: (i) contract resulting in a commitment or potential commitment for expenditure or other obligation or potential obligation, or which provides for the receipt or potential receipt, involving in excess of One Hundred Thousand Dollars ($100,000.00) in any instance, or series of related contracts that in the aggregate give rise to rights or obligations exceeding such amount; (ii) indenture, mortgage, promissory note, loan agreement, guarantee or other agreement or commitment for the borrowing or lending of money or encumbrance of assets involving more than One Hundred Thousand Dollars ($100,000.00) in each instance; (iii) agreement which restricts the Company from engaging in any line of business or from competing with any other Person; or (iv) any other contract, agreement, instrument, arrangement or commitment that is material to the condition (financial or otherwise), results of operation, assets, properties, liabilities, or business of the Company (collectively, and together with the employment agreements, Employee Benefit Plans and all other agreements required to be disclosed on any Schedule to this Agreement, the “Material Company Agreements”).

     3.20   Disclosure. No representation or warranty of the Company contained in this Agreement, and no statement, report, or certificate furnished by or on behalf of the Company to CARDTREND, LKK, CHAI, CHONG and CKN pursuant hereto or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading or omits to state a material fact necessary in order to provide CARDTREND, LKK, CHAI, CHONG and CKN with full and proper information as to the business, financial condition, assets, liabilities, and results of operation of the Company and the value of the properties or the ownership of the Company.

ARTICLE IV

Representations and Warranties of CARDTREND, LKK, CHAI, CHONG and CKN

     In order to induce the Company to enter into this Agreement and to consummate the transactions contemplated hereby, make the representations and warranties set forth below to the Company.

     4.1   Organization. CARDTREND is company duly organized, validly existing and in good

 

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standing under the laws of Malaysia. CARDTREND is duly qualified to transact business in Malaysia.

     4.2   Authorization; Enforceability. CARDTREND, LKK, CHAI, CHONG and CKN each has the capacity to execute, deliver and perform this Agreement. This Agreement and all other documents executed and delivered by CARDTREND, LKK, CHAI, CHONG and CKN pursuant to this Agreement have been duly executed and delivered and constitute the legal, valid and binding obligations of CARDTREND, LKK, CHAI, CHONG and CKN, assuming the due authorization, execution and delivery of this Agreement by the Company, enforceable in accordance with their respective terms, except to the extent that their enforcement is limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors’ rights generally and by general principals of equity.

     4.3   No Violation or Conflict. To the Knowledge of CARDTREND, LKK, CHAI, CHONG and CKN, the execution, delivery and performance of this Agreement and the other documents contemplated hereby by CARDTREND, LKK, CHAI, CHONG and CKN respectively, and the consummation by CARDTREND, LKK, CHAI, CHONG and CKN of the transactions contemplated hereby: (a) do not violate or conflict with any provision of law or regulation (whether federal, state or local), or any writ, order or decree of any court or governmental or regulatory authority, or any provision of CARDTREND’s memorandum and articles of association; and (b) do not and will not, with or without the passage of time or the giving of notice, result in the breach of, or constitute a default (or an event that with notice or lapse of time or both would become a default), cause the acceleration of performance, give to others any right of termination, amendment, acceleration or cancellation of or require any consent under, or result in the creation of any lien, charge or encumbrance upon any property or assets of CARDTREND, as the case may be, pursuant to any instrument or agreement to which CARDTREND is a party or by which CARDTREND or its properties may be bound or affected, other than instruments or agreements as to which consent shall have been obtained at or prior to the Closing.

     4.4   Consents of Governmental Authorities and Others. CARDTREND has not obtained any consent in connection with the provisions of the Malaysia Companies Act. No consent, approval or authorization of, or registration, qualification or filing with any federal, state or local governmental or regulatory authority, or any other Person, is required to be made by CARDTREND, LKK, CHAI, CHONG and CKN in connection with the execution, delivery or performance of this Agreement by CARDTREND, LKK, CHAI, CHONG and CKN or the consummation by them of the transactions contemplated hereby, including the execution, delivery and performance of this Agreement by the Company.

     4.5   Litigation. To the Knowledge of CARDTREND, LKK, CHAI, CHONG and CKN there is no Litigation pending or threatened before any court or by or before any governmental or regulatory authority or arbitrator (a) affecting CARDTREND as plaintiff or defendant or (b) against CARDTREND relating to the Cardtrend Shares or the transactions contemplated by this Agreement. 

     4.6   Brokers. CARDTREND, LKK, CHAI, CHONG or CKN has not employed any broker or finder, and has not incurred and will not incur, directly or indirectly, any broker’s, finder’s, investment banking or similar fees, commissions or expenses in connection with the transactions contemplated by this Agreement or the Exchange Documents.

     4.7   Compliance. To the Knowledge of CARDTREND, LKK, CHAI, CHONG and CKN, CARDTREND is in compliance with all federal, state, local and foreign laws, ordinances, regulations, judgments, rulings, orders and other requirements applicable to CARDTREND and its assets and

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properties, except where such noncompliance would not have a Material Adverse Effect on CARDTREND. To the Knowledge of CARDTEND, LKK, CHAI, CHONG and CKN, it is not subject to any judicial, governmental or administrative inquiry, investigation, order, judgment or decree.

     4.8   Charter, Bylaws and Corporate Records. The Company has been provided with true, correct and complete copies of (a) the memorandum and articles of association of CARDTREND, as amended and in effect on the date hereof and (b) the minute books of CARDTREND (containing all corporate proceedings from the date of incorporation). Such minute books contain accurate records of all meetings and other corporate actions of the board of directors, committees of the board of directors, incorporators and shareholders of CARDTREND, respectively, from the date of its incorporation to the date hereof which were memorialized in writing.

     4.9   Capitalization. As of the date of this Agreement, the authorized capital stock of CARDTREND consists of one million (1,000,000) shares of common stock, and CARDTREND has issued and outstanding seven hundred thousand (700,000) shares of common stock at RM1.00 each. The outstanding shares of common stock (the “Cardtrend Shares”) constitute one hundred percent (100%) of the issued and outstanding capital stock of CARDTREND. All of the outstanding Cardtrend Shares have been duly authorized, are validly issued and outstanding, and are fully paid and non-assessable. AS of the July 31st, 2006, there was a total of RM 800,000 of dividends which have been accrued or been declared but are unpaid on the capital stock of CARDTREND. LKK, CHAI, CHONG and CKN shall be entitled to receive such unpaid dividends upon CARDTREND receiving the payments from the debtors as at July 31st, 2006 from August 1st, 2006 onwards, at such amount equal to the said payments by the debtors from time to time, on a monthly basis, until such receivables are fully collected or for a period of five (5) years from August 1st, 2006, whichever is the earlier, and thereafter, LKK, CHAI, CHONG and CKN shall no longer be entitled to receive any unpaid dividends .

     4.10   Subsidiaries. The subsidiaries or investments of CARDTREND are two (2) dormant companies as follows: - Cardtrend Reward Sdn. Bhd., a 100% owned subsidiary incorporated in Malaysia and is dormant as at the date of this agreement; - Cardtrend Mobile Sdn. Bhd., a 100% owned subsidiary incorporated in Malaysia and is dormant as at the date of this agreement.

     4.11   Rights, Warrants, Options. There are no outstanding: (a) securities or instruments convertible into or exercisable for any of the capital stock or other equity interests of CARDTREND; (b) options, warrants, subscriptions or other rights to acquire capital stock or other equity interests of CARDTREND; or (c) commitments, agreements or understandings of any kind, including employee benefit arrangements, relating to the issuance or repurchase by CARDTREND of any capital stock or other equity interests of CARDTREND, or any instruments convertible or exercisable for any such securities or any options, warrants or rights to acquire such securities. 

     4.12   Conduct of Business. Since January 1st, 2006, CARDTREND and its Subsidiaries have conducted their businesses in the ordinary and usual course consistent with past practices and except as already disclosed in its financial statements and reports there has not occurred any Material Adverse Effect in the condition (financial or otherwise), results of operations, properties, assets, liabilities, or businesses of CARDTREND and its subsidiaries. Since January 1st, 2006, neither CARDTREND nor any

 

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of its subsidiaries has (a) amended its memorandum and articles of association; (b) issued, sold or authorized for issuance or sale, shares of any class of its securities (including, but not limited to, by way of stock split or dividend) or any subscriptions, options, warrants, rights or convertible securities or entered into any agreements or commitments of any character obligating it to issue or sell any such securities; (c) redeemed, purchased or otherwise acquired, directly or indirectly, any shares of its capital stock or any option, warrant or other right to purchase or acquire any such capital stock; (d) suffered any damage, destruction or loss, whether or not covered by insurance, which has had or could reasonably be expected to have a Material Adverse Effect on any of its properties, assets, or business; (e) granted or made any mortgage or pledge or subjected itself or any of its properties or assets to any lien, charge or encumbrance of any kind; (f) made or committed to make any capital expenditures in excess of $10,000; (g) become subject to any Guaranty; (h) granted any increase in the compensation payable or to become payable to directors, officers or employees (including, without limitation, any such increase pursuant to any severance package, bonus, pension, profit-sharing or other plan or commitment); (i) entered into any agreement which would be a material agreement, or amended or terminated any existing material agreement; (j) to the Knowledge of CARDTREND, LKK, CHAI, CHONG and CKN, been named as a party in any Litigation, or become the focus of any investigation by any government or regulatory agency or authority; (k) declared or paid any dividend or other distribution with respect to its capital stock; or (l) to the Knowledge of CARDTREND, LKK, CHAI, CHONG and CKN, experienced any other event or condition of any character which has had, or could reasonably be expected to have, a Material Adverse Effect on CARDTREND.

       4.13   Taxes 

                 (a)     All Taxes payable by CARDTREND have been fully and timely paid or are fully provided  for.  (b) CARDTREN, LKK, CHAI, CHONG, CKN or any Person on behalf of or with respect to

                 (b)     CARDTREND has not executed or filed any agreements or waivers extending any statute of limitations on or extending the period for the assessment or collection of any Tax. No power of attorney on behalf of CARDTREND with respect to any Tax matter is currently in force.

                 (c)     CARDTREND is not a party to any Tax-sharing agreement or similar arrangement with any other party (whether or not written), and neither CARDTREND has not assumed any Tax obligations of, or with respect to any transaction relating to, any other Person, or agreed to indemnify any other Person with respect to any Tax.

                 (d)     No Tax Return concerning or relating to CARDTREND or its operations has ever been audited by a government or taxing authority, nor is any such audit in process or pending, and CARDTREND has been notified of any request for such an audit or other examination. To the Knowledge of CARDTREND, LKK, CHAI, CHONG and CKN, no claim has been made by a taxing authority in a jurisdiction where Tax Returns concerning or relating to CARDTREND or its operations have not been filed, that it is or may be subject to taxation by that jurisdiction.

                 (e)     CARDTREND has never been included in any consolidated, combined, or unitary Tax Return. 

                 (f)      To the Knowledge of CARDTREND, LKK, CHAI, CHONG and CKN, CARDTREND has

 

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complied in all material respects with all applicable Laws relating to the payment and withholding of Taxes, and has duly and timely withheld from employee salaries, wages and other compensation, and has paid over to the appropriate taxing authorities, all amounts required to be so withheld and paid over for all periods under all applicable laws.

     4.14   Environmental Matters. No real property used by CARDTREND presently or in the past has been used to manufacture, treat, store, or dispose of any hazardous substance and such property is free of all such substances such that the condition of the property is in compliance with applicable Environmental Laws. To the Knowledge of CARDTREND, LKK, CHAI, CHONG and CKN, CARDTREND is in compliance with all Environmental Laws applicable to CARDTREND or its businesses as a result of any hazardous substance utilized by CARDTREND in its businesses or otherwise placed at any of the facilities owned, leased or operated by CARDTREND, or in which CARDTREND has a contractual interest. CARDTREND has not received any complaint, notice, order, or citation of any actual, threatened or alleged noncompliance by CARDTREND, as the case may be, with any Environmental Laws, and to the Knowledge of CARDTREND, there is no Litigation pending or threatened against CARDTREND with respect to any violation or alleged violation of the Environmental Laws, and to the Knowledge of CARDTREND, LKK, CHAI, CHONG and CKN, there is no reasonable basis for the institution of any such Litigation. 

     4.15   Financial Statements. The Financial Statements of CARDTREND (a) have been prepared in accordance with the books of account and records of CARDTREND; (b) fairly present, and are true, correct and complete statements in all material respects of CARDTREND’s financial condition and the results of their operations at the dates and for the periods specified in those statements; (c) have been prepared in accordance with general acceptable accounting policies, consistently applied with prior periods; and (d) have been adjustedfor the periods ending December 31st, 2004 and December 31st, 2005 in accordance to GAAP.CARDTREND will provide all financial statements, including auditor's reports, for compliance with the applicable statues and the regulations of the United States Securities and Exchange Commission.

     4.16   Absence of Undisclosed Liabilities. Other than as disclosed in the Financial Statements, CARDTREND has no Liabilities. None of CARDTREND, LKK, CHAI, CHONG and CKN has any Knowledge of any circumstances, conditions, events or arrangements which may hereafter give rise to any Liabilities of CARDTREND.

     4.17   Employment Agreements; Employee Benefit Plans and Employee Payments. Other than the normal employment contract and benefits generally practiced by CARDTREND, CARDTREND is not a party to any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, arrangement or understanding (whether or not legally binding) under which CARDTREND currently has an obligation to provide benefits to any current or former employee, officer, director, consultant or advisor of CARDTREND (collectively, “Benefit Plans”). 

	 	4.18   Intellectual Property.

                     (a)    Schedule 4.18 contains a true and correct statement of all of the Intellectual Property owned by CARDTREND, as well as licensing of use of its software to third parties as at the date of this agreement.

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         (b)   CARDTREND has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any intellectual property rights of third parties, and has not received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that CARDTREND must license or refrain from using any intellectual property rights of any third party). To the Knowledge of CARDTREND, LKK, CHAI, CHONG and CKN, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any of its Intellectual Property rights.

         (c)   CARDTREND has not granted any license, agreement, or other permission to any third party with respect to any of its Intellectual Property, except as disclosed in Schedule 4.18.

         (d)   With respect to each item of Intellectual Property, CARDTREND possesses all right, title, and interest in and to the Intellectual Property free and clear of any security interest, license or other encumbrance, except as disclosed in Schedule 4.18.

        (e)    The Intellectual Property is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge.

        (f)     No action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or is threatened which challenges the legality, validity, enforceability, use, or ownership of the Intellectual Property.

         (g)   None of CARDTREND, LKK, CHAI, CHONG and CKN has agreed to indemnify any Person for or against any interference, infringement, misappropriation, or other conflict with respect to the Intellectual Property.

     4.19   Properties. CARDTREND has good, clear and marketable title to all the tangible properties and tangible assets reflected in the Financial Statements as being owned by CARDTREND or acquired after the date thereof which are, individually or in the aggregate, material to CARDTREND’s businesses (except properties sold or otherwise disposed of since the date thereof in the ordinary course of business), free and clear of all material liens.

     4.20   Disclosure. No representation or warranty of CARDTRREND, LKK, CHAI, CHONG and CKN contained in this Agreement, and no statement, report, or certificate furnished by or on behalf of CARDTREND, LKK, CHAI, CHONG and CKN to the Company pursuant hereto or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading or omits to state a material fact necessary in order to provide the Company with full and proper information as to the business, financial condition, assets, liabilities, or results of operation of CARDTREND and the value of the properties or the ownership of CARDTREND.

     4.21   CARDTRREND, LKK, CHAI, CHONG and CKN further hereby represent and warrant to the Company that:

                a.    They understand that the Company's SHARES HAVE NOT BEEN

 

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APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES AGENCIES AND NO REGISTRATION STATEMENT HAS BEEN FILED WITH ANY REGULATORY AGENCY.

         b.   They are not an underwriter and would be acquiring the Company's Shares solely for investment for his or her own account and not with a view to, or for, resale in connection with any distribution with in the meaning of the federal securities act, the state securities acts or any other applicable state securities acts.

         c.   They are not a person in the United States of America and at the time the buy order was originated, were outside the United States of America and are not a citizen of the United States (a U.S. Person) as that term is defined in Reg. S of the Securities Act of 1933 and was not formed by a U. S. person principally for the purpose of investing in securities not registered under the Securities Act of 1933.

         d.   They understand the speculative nature and risks of investments associated with the Company, and confirm that the Shares would be suitable and consistent with their investment program and that their financial position enables him or her to bear the risks of this investment.

         e.   To the extent that any federal, and/or state securities laws shall require, they hereby agree that any securities acquired pursuant to this Agreement shall be without preference as to assets.

         f.    The certificate for Shares will contain a legend that transfer is prohibited except in accordance with the provisions of Regulation S.

         g.   They have had the opportunity to ask questions of the Company and have received all information from the Company to the extent that the Company possessed such information, necessary to evaluate the merits and risks of any investment in the Company. Further, the Subscriber acknowledges receipt of: (1) all material books, records and financial statements of the Company; (2) all material contracts and documents relating to the proposed transaction; (3) all documents and reports filed with the Commission; and, (4) an opportunity to question the appropriate executive officers or partners.

         h.   The Subscriber has satisfied the suitability standards and securities laws imposed by the government of Malaysia.

         i.   They have adequate means of providing for their current needs and personal contingencies and have no need to sell the Shares in the foreseeable future (that is at the time of the investment, they can afford to hold the investment for an indefinite period of time). 

         j.   They have sufficient knowledge and experience in financial matters to evaluate the merits and risks of this investment and further, are capable of reading and interpreting financial statements. Further, they are “sophisticated investors” as that term is defined in applicable court cases and the rules, regulations and decisions of the United States Securities and Exchange Commission.

         k.  The offer and sale of the Shares referred to herein is being made outside the

 

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United States within the meaning of and in full compliance with Regulation S.

         l.     They are not a U. S. person within the meaning of Regulation S and are not acquiring the Shares for the account or benefit of any U. S. person.

         m.   They agree to resell such Shares only in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act of 1933, as amended, or pursuant to an available exemption from registration.

     4.22   CARDTRREND, LKK, CHAI, CHONG and CKN hereby declare that: a. CARDTREND has entered into a tenancy agreement with Uni-telco (Malaysia) Sdn. Bhd. on September 2002 to lease the office premises at Unit 506, Block D, Phileo Damansara 1, 9, Jalan 16/11, 46350, Petaling Jaya, Malaysia, and that Uni-telco (Malaysia) Sdn. Bhd. has on August 2006 sold such premises to Optimara Sdn. Bhd, a Malaysia incorporated company owned and controlled by LKK and his spouse, with the assignment of such tenancy agreement to Optimara Sdn. Bhd., 

         b.   LKK, CHAI, CHONG and CKN each own less than Five percent (5%) of the Common Shares of Smartpay Limited, a public company incorporated in New Zealand and listed in the New Zealand Stock Exchange, and

         c.   None of LKK, CHAI, CHONG and CKN is an executive or Affiliate of Smartpay Limited and that they are holding the shares of Smartpay for investment purpose only.

	ARTICLE V

	Additional Agreements

     5.1   Survival of the Representations and Warranties. The representations and warranties and covenants set forth in Article III and Article IV of this Agreement shall survive the Closing until the expiration of twenty-four (24) months from the Closing Date. No claim for indemnity with respect to breaches of representations and warranties may be brought by any party hereto, other than a claim for fraud or intentional misrepresentation, after expiration of the applicable survival period therefore as set forth in this Section 5.1.

     5.2   Investigation. The representations, warranties, covenants and agreements set forth in this Agreement shall not be affected or diminished in any way by any investigation (or failure to investigate) at any time by or on behalf of the party for whose benefit such representations, warranties, covenants and agreements were made. All statements contained herein or in any schedule, certificate, exhibit, list or other document required to be delivered pursuant hereto, shall be deemed to be representations and warranties for purposes of this Agreement; provided, that any knowledge or materiality qualifications contained herein shall be applicable to such other documents.

     5.3   CARDTREND’s, LKK’s, CHAI’s , CHONG’s and CKN’s Indemnification. The Company agrees to indemnify and hold harmless CARDTREND, LKK, CHAI and CHONG and each of

 

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CARDTREND’s directors, officers, employees, Affiliates and agents (collectively known as “Cardtrend Party”) from and against any loss, claim, liability, cost, expense or other damages (including reasonable legal fees and expenses) (hereinafter known as “an Cardtrend Loss”) which is caused by or arises out of: (a) any breach or default in the performance by the Company of any covenant or agreement made by the Company in this Agreement; (b) any breach of any representation or warranty made by the Company in this Agreement; and (c) any and all Litigation incident to any of the foregoing. 

     5.4   Limitations on CARDTREND’s, LKK’s, CHAI’s, CHONG’s and CKN’s Indemnification from the Company. Notwithstanding anything contained herein to the contrary, the Cardtrend Party shall not be entitled to indemnification from the Company for an Cardtrend Loss under the provisions of Section 5.3 hereof, unless and until the aggregate amount of all Cardtrend Losses under Section 5.3 shall have exceeded $5,000, in which event Cardtrend Party shall be entitled to such indemnification from the Company for all of the Cardtrend Loss that exceeds $5,000; provided, that the amount of any Cardtrend Loss for which indemnification is provided under Section 5.3 hereof shall be net of any amounts recovered by Cardtrend Party under insurance policies (if any) with respect to such Cardtrend Loss from the Company. Cardtrend Party shall in a timely fashion submit a claim to its insurance carrier with respect to any Cardtrend Loss from the Company for which the Company is obligated to provide indemnification to Cardtrend Party hereunder. Indemnification from the Company shall be limited to US$100,000.

     5.5   The Company’s Indemnification. CARDTREND, LKK, CHAI, CHONG and CKN, jointly and severally, agree to indemnify and hold harmless the Company, and each of its current and former directors, officers, employees, Affiliates and agents (hereinafter known as “Asiapay Party”) from and against any loss, claim, liability, cost, expense or other damages (including reasonable legal fees and expenses) (a “Company Loss”) which is caused by or arises out of: (a) any breach or default in the performance by CARDTREND, LKK, CHAI, CHONG and CKN of any covenant or agreement made by CARDTREND, LKK, CHAI and CHONG in this Agreement; (b) any breach of any representation or warranty made by CARDTREND, LKK, CHAI, CHONG and/or CKN in this Agreement; and (c) any and all Litigation incident to any of the foregoing.

     5.6   Limitations on the Company’s Indemnification. Notwithstanding anything contained herein to the contrary, the Company shall not be entitled to indemnification for a Company Loss under the provisions of Section 5.5 hereof, unless and until the aggregate amount of all Company Losses under Section 5.5 shall have exceeded $5,000, in which event the Company shall be entitled to such indemnification from CARDTREND, LKK, CHAI, CHONG and/or CKN for all Company Losses that exceeds $5,000; provided, that the amount of any Company Losses for which indemnification is provided under Section 5.5 hereof shall be net of any amounts recovered by the Company under insurance policies (if any) with respect to such Company Loss. The Company shall in a timely fashion submit a claim to its insurance carrier with respect to any Company Losses for which CARDTREND, LKK, CHAI, CHONG and/or CKN are obligated to provide indemnification to the Company hereunder. Indemnification from CARDTREND, LKK, CHAI, CHONG and CKN shall be limited to US$100,000.

     5.7   Indemnity Procedure. A party or parties hereto agreeing to be responsible for or to indemnify against any matter pursuant to this Agreement is referred to herein as the “Indemnifying Party” and the other party or parties claiming indemnity is referred to as the “Indemnified Party”.

       (a)   An Indemnified Party under this Agreement shall, with respect to claims asserted against such party by any third party, give written notice to the Indemnifying Party of any liability which might

 

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give rise to a claim for indemnity under this Agreement within thirty (30) calendar days of the receipt of any written claim from any such third party, but not later than twenty (20) days prior to the date any answer or responsive pleading is due, and with respect to other matters for which the Indemnified Party may seek indemnification, give prompt written notice to the Indemnifying Party of any liability which might give rise to a claim for indemnity; provided, however, that any failure to give such notice will not waive any rights of the Indemnified Party except to the extent the rights of the Indemnifying Party are materially prejudiced.

     (b)   The Indemnifying Party shall have the right, at its election, to take over the defense or settlement of such claim by giving written notice to the Indemnified Party at least fifteen (15) days prior to the time when an answer or other responsive pleading or notice with respect thereto is required. If the Indemnifying Party makes such election, it may conduct the defense of such claim through counsel of its choosing (subject to the Indemnified Party’s approval of such counsel, which approval shall not be unreasonably withheld), shall be solely responsible for the expenses of such defense and shall be bound by the results of its defense or settlement of the claim. The Indemnifying Party shall not settle any such claim without prior notice to and consultation with the Indemnified Party, and no such settlement involving any equitable relief or which might have an adverse effect on the Indemnified Party may be agreed to without the written consent of the Indemnified Party (which consent shall not be unreasonably withheld). So long as the Indemnifying Party is diligently contesting any such claim in good faith, the Indemnified Party may pay or settle such claim only at its own expense and the Indemnifying Party will not be responsible for the fees of separate legal counsel to the Indemnified Party, unless the named parties to any proceeding include both parties and representation of both parties by the same counsel would be inappropriate. If the Indemnifying Party does not make such election, or having made such election does not, in the reasonable opinion of the Indemnified Party, proceed diligently to defend such claim, then the Indemnified Party may (after written notice to the Indemnifying Party), at the expense of the Indemnifying Party, elect to take over the defense of and proceed to handle such claim in its discretion and the Indemnifying Party shall be bound by any defense or settlement that the Indemnified Party may make in good faith with respect to such claim. In connection therewith, the Indemnifying Party will fully cooperate with the Indemnified Party should the Indemnified Party elect to take over the defense of any such claim.

     (c)   The parties agree to cooperate in defending such third party claims and the Indemnified Party shall provide such cooperation and such access to its books, records and properties as the Indemnifying Party shall reasonably request with respect to any matter for which indemnification is sought hereunder; and the parties hereto agree to cooperate with each other in order to ensure the proper and adequate defense thereof.

     With regard to claims of third parties for which indemnification is payable hereunder, such indemnification shall be paid by the Indemnifying Party upon the earlier to occur of: (i) the entry of a judgment against the Indemnified Party and the expiration of any applicable appeal period, or if earlier, five (5) days prior to the date that the judgment creditor has the right to execute the judgment; (ii) the entry of an unappealable judgment or final appellate decision against the Indemnified Party; or (iii) a settlement of the claim. Notwithstanding the foregoing, provided that there is no dispute as to the applicability of indemnification, the reasonable expenses of counsel to the Indemnified Party shall be reimbursed on a current basis by the Indemnifying Party if such expenses are a liability of the Indemnifying Party. With regard to other claims for which indemnification is payable hereunder, such indemnification shall be paid promptly by the Indemnifying Party upon demand by the Indemnified Party.

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	ARTICLE VI

	Closing; Deliveries; Conditions Precedent

     6.1   Closing; Effective Date. All proceedings taken and all documents executed at the Closing shall be deemed to have been taken, delivered and executed simultaneously, and no proceeding shall be deemed taken nor documents deemed executed or delivered until all have been taken, delivered and executed.

     6.2   On Signing of this Agreement

     6.2.1  Employment of LKK, CHAI, CHONG and CKN:

               (i)    consent minutes from the Board of Directors of the Company confirming (I) the appointment of LKK as a Director of the Company, (II) the appointment of LKK as the Executive Vice President – Chief Technology Officer under the employment contract to be entered into between LKK and the Company, for a term of five (5) years commencing from the 1st October 2006; (III) the continuation of LKK’s appointment as the Managing Director of CARDTREND as well as its Subsidiaries; and (IV) the entitlement of LKK, CHAI, CHONG and CKN to participate in the Company’s Stock Option Plan.

               (ii)   The employment contract to be entered into between CHAI and CARDTREND as Senior Vice President-Technology Development for a term of five (5) years commencing from the 1st October 2006.

               (iii)   The employment contracts to be entered into between CARDTREND and each of CHONG and CKN as Vice President-Software Development and Vice President-Sales, respectively, for a term of three (3) years from the 1st October 2006.

     6.2.2   Deliveries:

	(a)     	At Closing, the Company shall deliver the following documents to LKK, CHAI, CHONG and CKN:
	 
	 	(i)     	the certificates representing the Exchange Consideration;
	 
	 	(ii)     	certificates, dated the Closing Date, of an officer of the Company setting forth that authorizing resolutions were adopted by the Company’s Board of Directors approving the terms and conditions of this Agreement and the other documents contemplated hereby and the transactions contemplated hereby and thereby;
	 
	 	(iii)     	the certificate referred to in Section 6.3(d); and
	 
	(b)     	At Closing, CARDTREND, LKK, CHAI, CHONG and CKN shall deliver the following documents to the Company:
	 
	 	(i)     	the certificates representing 100% of the outstanding Cardtrend Shares to be delivered to the Company duly endorsed by all the directors of CARDTREND;
	 
	 	(ii)     	a certificate each from the Registrar of Companies of Malaysia, certified by the Company Secretary of CARDTREND, as of a recent date, as to the good standing of the company and certifying its Memorandum and Articles of Association;
	 

 

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	(iii)      	certificates, dated the Closing Date, of the Company Secretary of CARDTREND setting forth that authorizing resolutions were adopted by CARDTREND’s Board of Directors approving the terms and conditions of this Agreement and the other documents contemplated hereby and the transactions contemplated hereby and thereby; 
	 
	(iv)      	the Financial Statements; 
	 
	(v)      	the certificates referred to in Section 6.4(d). 
	 
	(vi)      	the Confidentiality and Non-compete Agreement executed by LKK, CHAI, CHONG and CKN, respectively. 

     6.3 Conditions Precedent to the Obligations of CARDTREND, LKK, CHAI, CHONG and CKN. Each and every obligation of to consummate the transactions described in this Agreement and any and all liability of CARDTREND, LKK, CHAI, CHONG and CKN to the Company shall be subject to the following conditions precedent:

         (a)   Representations and Warranties True. Each of the representations and warranties of the Company contained herein or in any certificate or other document delivered pursuant to this Agreement or in connection with the transactions contemplated hereby shall be true and correct in all material respects as of the Closing Date with the same force and effect as though made on and as of such date.

         (b)   Performance. The Company shall have performed and complied in all material respects with all of the agreements, covenants and obligations required under this Agreement to be performed or complied with by them on or prior to the Closing Date.

         (c)   No Material Adverse Change. Except as expressly permitted or contemplated by this Agreement, no event or condition shall have occurred which has adversely affected or may adversely affect in any respect the condition (financial or otherwise) of the Company between the date of execution of this Agreement and the Closing Date.

         (d)   The Company’s Certificate. The Company shall have delivered to LKK, CHAI, CHONG and CKN a certificate dated the Closing Date, certifying that the conditions specified in Sections 6.3(a), (b) and (c) above have been fulfilled and as to such other matters as CARDTREND, LKK, CHAI, CHONG and CKN may reasonably request.

         (e)   Appointment. LKK shall have been appointed as a Director and as Executive Vice President-Chief Technology Officer of the Company and as the Managing Director of CARDTREND and its Subsidiaries.

         (f)    Consents. The Company shall have obtained all authorizations, consents, waivers and approvals as may be required to consummate the transactions contemplated by this Agreement. 

         (g)    Due Diligence Review. CARDTREND, LKK, CHAI, CHONG and CKN shall have completed their due diligence investigation of the Company to their satisfaction, in their sole and absolute discretion.

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     (h)   Increase in Authorized Shares of Common Stock. As soon as practicable after the Closing Date or not more than 90 days from the Closing Date, subject to any review imposed by the SEC, the Company shall submit to the shareholders of the Company a proposal to amend its Articles of Incorporation, and all other necessary documentation, to effectuate an increase in the authorized number of shares of the Company Common Stock from 50,000,000 to 200,000,000. The Directors will provide written confirmation at the Closing of their intention to vote in favour of the increase and to identify and obtain the confirmation of favourable votes of other shareholders, to a total of at least 20,000,000 votes.

     (i)   Appointment of another Director. The Directors will provide written confirmation at the Closing of their intention to vote in favor of the appointment of a person nominated by LKK as a Director of the Company upon a Director position falling vacant after LKK and another person have been appointed as Directors of the Company subsequent to the signing of this Agreement.

     6.4   Conditions Precedent to the Obligations of the Company. Each and every obligation of the Company to consummate the transactions described in this Agreement and any and all liability of the Company to CARDTREND, LKK, CHAI, CHONG and CKN shall be subject to the fulfillment of the following conditions precedent:

     (a)   Representations and Warranties True. Each of the representations and warranties of CARDTREND, LKK, CHJJAI, CHONG and CKN contained herein or in any certificate or other document delivered pursuant to this Agreement or in connection with the transactions contemplated hereby shall be true and correct in all material respects as of the Closing Date with the same force and effect as though made on and as of such date. 

     (b)   Performance. CARDTREND, LKK, CHAI, CHONG and CKN shall have performed and complied in all material respects with all of the agreements, covenants and obligations required under this Agreement to be performed or complied with by it on or prior to the Closing Date.

     (c)   No Material Adverse Change. Except as expressly permitted or contemplated by this Agreement, no event or condition shall have occurred which has adversely affected or may adversely affect in any respect the condition (financial or otherwise) of CARDTREND between the date of execution of this Agreement and the Closing Date.

     (d)   CARDTREND, LKK, CHAI, CHONG and CKN Certificates. CARDTREND, LKK, CHAI, CHONG and CKN shall each have delivered a certificate addressed to the Company, dated the Closing Date, certifying that the conditions specified in Sections 6.4(a), (b) and (c) above have been fulfilled.

     (e)   Consents. CARDTREND, LKK, CHAI, CHONG and CKN shall have obtained all authorizations, consents, waivers and approvals as may be required to consummate the transactions contemplated by this Agreement, including but not limited to those with respect to any material agreement entered into by, and licenses granted to, CARDTREND. 

     (f)   Due Diligence Review. The Company shall have completed its due diligence investigation of CARDTREND to its satisfaction, in its sole and absolute discretion.

 

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     (g)   Consolidated Financial Statements. CARDTREND, LKK, CHAI, CHONG and CKN shall have delivered to the Company CARDTREND’s audited consolidated balance sheets, statement of operations, changes in stockholders equity and cash flow as of and for the fiscal years ended December 31st, 2005 and 2004 and unaudited financial statements as at July 31st, 2006. The financial statements described above in this Section 6.4(g) shall: (a) have been prepared in accordance with the books of account and records of CARDTREND; (b) fairly present, and are true, correct and complete statements in all material respects of CARDTREND’s financial condition and the results of its operations at the dates and for the periods specified in those statements; and (c) have been prepared in accordance with accounting principles acceptable to the Company consistently applied with prior periods and with adjustments made in accordance to GAAP at the Company costs.

     6.5   Best Efforts. Subject to the terms and conditions provided in this Agreement, each of the parties shall use their respective best efforts in good faith to take or cause to be taken as promptly as practicable all reasonable actions that are within its power to cause to be fulfilled those of the conditions precedent to its obligations or the obligations of the other parties to consummate the transactions contemplated by this Agreement that are dependent upon its actions, including obtaining all necessary consents, authorizations, orders, approvals and waivers.

     6.6   Termination. This Agreement and the transactions contemplated hereby may be terminated (a) at any time by the mutual consent of the parties hereto; (b) LKK, CHAI, CHONG and CKN jointly or by the Company, if the Closing has not occurred on or prior to October 30th, 2006 (such date of termination being referred to herein as the “Termination Date”), provided the failure of the Closing to occur by such date is not the result of the failure of the party seeking to terminate this Agreement to perform or fulfill any of its obligations hereunder; (c) by LKK, CHAI, CHONG and CKN jointly or severally at any time at or prior to Closing in their or individual’s sole discretion if (i) any of the representations or warranties of the Company in this Agreement are not in all material respects true, accurate and complete or if the Company breaches in any material respect any covenant contained in this Agreement, provided that such misrepresentation or breach is not cured within ten (10) business days after notice thereof, but in any event prior to the Termination Date or (ii) any of the conditions precedent to the Company’s obligations to conduct the Closing have not been satisfied by the date required thereof; or (d) by the Company at any time at or prior to Closing in its sole discretion if (i) any of the representations or warranties of CARDTREND, LKK, CHAI, CHONG and/or CKN in this Agreement are not in all material respects true, accurate and complete or if CARDTREND, LKK, CHAI, CHONG and/or CKN breaches in any material respect any covenant contained in this Agreement, provided that such misrepresentation or breach is not cured within ten (10) business days after notice thereof, but in any event prior to the Termination Date or (ii) any of the conditions precedent to CARDTREND’s, LKK’S, CHAI’s, CHONG’s, and/or CKN’s obligations to conduct the Closing have not been satisfied by the date required thereof. If this Agreement is terminated pursuant to this Section 6.6, written notice thereof shall promptly be given by the party electing such termination to the other party and, subject to the expiration of the cure periods provided in clauses (c) and (d) above, if any, this Agreement shall terminate without further actions by the parties and no party shall have any further obligations under this Agreement. Notwithstanding the preceding sentence, the respective indemnification obligations of the parties under Article V shall survive the termination of this Agreement.

	 	6.7   Registration Rights.

                  (a)   Demand Rights. Within 120 days after the Closing Date, the Company undertakes to take

 

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all necessary steps to prepare and file a registration statement pursuant to the Securities Act in connection with the proposed resale by the holders of shares of Common Stock of the Company which are to be issued as a consequence of this agreement. The Company will use all efforts to promptly follow up with the SEC and to ensure that expeditious responses are given to any SEC enquiries relating to the best efforts to effect the registration of 100% of such shares of the Company Common Stock then owned by LKK, CHAI, CHONG and CKN and each respective Cardtrend Investors and as requested by LKK.CHAI, CHONG and CKN and each Cardtrend Investor to be included in such registration statement, all to the extent required to permit the sale or other disposition by LKK, CHAI, CHONG, CKN and such Cardtrend Investors of such shares. The Company will notify LKK, CHAI, CHONG, CKN and each Cardtrend Investor of the date of effectiveness of any registration statement in which such Company Common Stock is registered. Concurrent with the preparation and filing of the registration statement the Company will prepare an agreement to be signed by LKK, CHAI ,CHONG, CKN and each Cardtrend party restricting the sale of their shares, once registered, as follows:

              (i)    40% of the total number of shares registered for LKK, CHAI, CHONG, CKN and each Cardtrend Investor to be saleable from the effective date of the registration statement.

              (ii)   an additional 30% of the total number of shares registered for LKK, CHAI, CHONG, CKN and each Cardtrend Investor to be saleable from 6 months after the effective date of the registration statement.

              (iii)  an additional 30% of the total number of shares registered for LKK, CHAI, CHONG, CKN and each Cardtrend Investor to be saleable from 12 months after the effective date of the registration statement.

         (b)   Expenses. All expenses incurred by the Company in connection with the registration of such securities pursuant to this Section 6.7 shall be borne by the Company.

ARTICLE VII

Covenants

     7.1   General Confidentiality. Each of the Parties will treat and hold as such all of the Confidential Information of the other Parties, refrain from using any of the Confidential Information except in connection with this Agreement, and unless there is a closing on the Exchange, deliver promptly to the owner of such Confidential Information or destroy, at the request and option of the owner of the Confidential Information, all tangible embodiments (and all copies) of the Confidential Information which are in its possession. In the event that any of the Parties is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, that Party will notify the affected Party promptly of the request or requirement so that the affected Party may seek an appropriate protective order or waive compliance with the provisions of this Section 7.1. If, in the absence of a protective order or the receipt of a waiver hereunder, any of the Parties is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, that Party may disclose the Confidential Information to the tribunal; provided, however, that the disclosing Party shall use its commercially reasonable efforts to obtain, at the request of the affected Party, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as the affected Party shall designate. The foregoing provisions shall not apply to any

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Confidential Information which is generally available to the public immediately prior to the time of disclosure.

     7.2   Tax Treatment. Neither the Company, CARDTREND nor the Cardtrend Investors will knowingly take any action, written or otherwise, which would result in the transactions contemplated by this Agreement not being accounted for as tax-free exchange under the Code.

     7.3   General. In case at any time after the Closing Date any further action is necessary to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefore under Article V).

ARTICLE VIII

Miscellaneous

     8.1   Notices. Any notice, demand, claim or other communication under this Agreement shall be in writing and delivered personally or sent by certified mail, return receipt requested, postage prepaid, or sent by facsimile or prepaid overnight courier to the parties at the addresses as follows (or at such other addresses as shall be specified by the parties by like notice):

	
If to the Company

	
Asia Payment Systems, Inc. 39th Floor, One Exchange Square 8 Connaught Place Central, Hong Kong Attn: KK Ng, President & CEO

	  
	  
	
With a copy to:

	
Conrad C. Lysiak 601 West First Ave., Suite 903, Spokane, WA 99201, USA

	  
	
If to CARDTREND, LKK, CHAI, CHONG, CKN or

The Cardtrend Investors:

	
 

CardTrend Systems Sdn. Bhd. Unit 506, Block D, Phileo Damansara 1, 9, Jalan 16/11, 46350, Petaling Jaya, Malaysia.

     Such notice shall be deemed delivered upon receipt against acknowledgment thereof if delivered personally, on the third business day following mailing if sent by certified mail, upon transmission against confirmation if sent by facsimile and on the next business day if sent by overnight courier.

 

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     8.2   Entire Agreement; Incorporation. This Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein contain every obligation and understanding between the parties relating to the subject matter hereof and merges all prior discussions, negotiations, agreements and understandings, both written and oral, if any, between them, and none of the parties shall be bound by any conditions, definitions, understandings, warranties or representations other than as expressly provided or referred to herein. All schedules, exhibits and other documents and agreements executed and delivered pursuant hereto are incorporated herein as if set forth in their entirety herein.

     8.3   Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs, personal representatives, legal representatives, and permitted assigns.

     8.4   Assignment. This Agreement may not be assigned by any party without the written prior consent of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

     8.5   Waiver and Amendment. Any representation, warranty, covenant, term or condition of this Agreement which may legally be waived, may be waived, or the time of performance thereof extended, at any time by the party hereto entitled to the benefit thereof, and any term, condition or covenant hereof (including, without limitation, the period during which any condition is to be satisfied or any obligation performed) may be amended by the parties thereto at any time. Any such waiver, extension or amendment shall be evidenced by an instrument in writing executed on behalf of the party against whom such waiver, extension or amendment is sought to be charged. No waiver by any party hereto, whether express or implied, of its rights under any provision of this Agreement shall constitute a waiver of such party’s rights under such provisions at any other time or a waiver of such party’s rights under any other provision of this Agreement. No failure by any party thereof to take any action against any breach of this Agreement or default by another party shall constitute a waiver of the former party’s right to enforce any provision of this Agreement or to take action against such breach or default or any subsequent breach or default by such other party.

     8.6   No Third Party Beneficiary. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any Person other than the parties hereto and their respective heirs, personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement, except as otherwise provided herein.

     8.7   Severability. In the event that any one or more of the provisions contained in this Agreement, or the application thereof, shall be declared invalid, void or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such invalid, void or unenforceable provision with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid, void or unenforceable provision.

     8.8   Expenses. Except as otherwise provided herein, each party agrees to pay, without right of reimbursement from the other party, the costs incurred by it incident to the performance of its obligations

 

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under this Agreement and the consummation of the transactions contemplated hereby, including, without limitation, costs incident to the preparation of this Agreement, and the fees and disbursements of counsel, accountants and consultants employed by such party in connection herewith.

     8.9   Headings. The table of contents and the section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of any provisions of this Agreement.

     8.10   Other Remedies; Injunctive Relief. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. In any action at law or suit in equity to enforce this Agreement or the rights of the parties hereunder, the prevailing party in any such action or suit shall be entitled to receive a reasonable sum for its attorneys’ fees and all other reasonable costs and expenses incurred in such action or suit.

     8.11   Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Facsimile signatures shall be deemed valid and binding.

     8.12   Remedies Exclusive. Except in the case of fraud or equitable remedies expressly provided for herein, the parties acknowledge and agree that the indemnification provisions set forth in Article V of this Agreement constitute the parties’ sole and exclusive remedy with respect to any and all claims relating to the transactions contemplated by this Agreement.

     8.13   Governing Law. This Agreement has been entered into and shall be construed and enforced in accordance with the laws of the State of Nevada, without reference to the choice of law principles thereof. 

     8.14   Jurisdiction and Venue. This Agreement shall be subject to the exclusive jurisdiction of the courts of the State of Nevada. The parties to this Agreement agree that any breach of any term or condition of this Agreement shall be deemed to be a breach occurring in the State of Nevada by virtue of a failure to perform an act required to be performed in the State of Nevada and irrevocably and expressly agree to submit to the jurisdiction of the courts of the State of Nevada for the purpose of resolving any disputes among the parties relating to this Agreement or the transactions contemplated hereby. The parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, or any judgment entered by any court in respect hereof brought in the State of Nevada, and further irrevocably waive any claim that any suit, action or proceeding brought in the State of Nevada has been brought in an inconvenient forum.

     8.15   Participation of Parties. The parties hereby agree that they have been represented by

 

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counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding, or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

     8.16   Further Assurances. The parties hereto shall deliver any and all other instruments or documents reasonably required to be delivered pursuant to, or necessary or proper in order to give effect to, all of the terms and provisions of this Agreement including, without limitation, all necessary stock powers and such other instruments of transfer as may be necessary or desirable to transfer full and complete ownership of the shares of CARDTREND Common Stock free and clear of any liens or encumbrances.

     8.17   Publicity. No public announcement or other publicity concerning this Agreement or the transactions contemplated hereby shall be made without the prior written consent of the Company and LKK, CHAI, CHONG and CKN jointly as to form, content, timing and manner of distribution. Nothing contained herein shall prevent any party from making any filing required by federal or state securities laws or stock exchange rules.

     8.18   No Solicitation. Neither CARDTREND nor the Company shall authorize or permit any of its officers, directors, agents, representatives, managers, members, agents, or advisors to solicit, initiate or encourage or take any action to facilitate the submission of inquiries, proposals or offers from any person relating to any matter concerning any merger, consolidation, business combination, recapitalization or similar transaction involving CARDTREND or the Company, respectively, other than the transaction contemplated by this Agreement or any other transaction the consummation of which would or could reasonably be expected to impede, interfere with, prevent or delay the Exchange or which would or could be expected to dilute the benefits to each of the parties of the transactions contemplated hereby. CARDTREND and the Company will immediately cease and cause to be terminated any existing activities, discussions and negotiations with any parties conducted heretofore with respect to any of the foregoing.

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     IN WITNESS WHEREOF, the parties hereto have each executed and delivered this Agreement as of the day and year first above written.

ASIA PAYMENT SYSTEMS, INC. (“COMPANY”)

                                                                               By: KING K. NG

                                                                                     King K. Ng President & CEO

                                                                               CARDTREND SYSTEMS SDN. BHD. (“CARDTREND”)

                                                                               By: LOW KOK KENG

                                                                                     Low Kok Keng Director

	 	                                                   LOW KOK KENG (”LKK”)

                                                                                By: LOW KOK KENG

                                                                                      Low Kok Keng Malaysian I/C No.: 590226-10-6637

	 	                                                    CHAI HOONG YOON (“CHAI”)

                                                                                 By:  CHAI HOONG YOON 

                                                                                        Chai Hoong Yoon Malaysian I/C No.: 690213-10-6767

	                                                                                 CHONG SHIAN CHANG (“CHONG”)

                                                                                  By:  CHONG SHIAN CHANG

                                                                                         Chong Shian Chang Malaysian I/C No.: 690816-10-5667

	 	                                                      NG CHEE KEONG (“CKN”)

                                                                                  By:  NG CHEE KEONG

                                                                                         Ng Chee Keong Malaysian I/C No.: 790428-10-5487

 

 

 

-30-

	EXHIBIT A

RIGHTS AND PREFERENCES OF SERIES B CONVERTIBLE

PREFERRED SHARES OF THE COMPANY

Series B Convertible Preferred Shares of Asia Payment Systems, Inc., a Nevada company, have the following rights and preferences:

	1.      	Preference ranking ahead of shares of Common Stock at dissolution or any distribution of assets. 
	 
	2.      	Convertible into shares of Common Stock of the Company at the rate of one (1) Series B Preferred share converting into ten (10) shares of Common Stock. 
	 
	3.      	Voting rights at all general or special meetings of the Company or via shareholder resolutions at the rate of ten (10) votes for each Series B Preferred share. 
	 
	4.      	Within five (5) business days from the date the Company receives approval to increase its authorized share capital to 100 million or more shares of Common Stock, holders of Series B Preferred Share will be required to surrender 1,500,000 of their Preferred Shares to the company for conversion into shares of Common Stock, at the rate of ten (10) shares of Common Stock to be issued for each Series B Preferred Share surrendered. 
	 
	5.      	Within five (5) business days from the date the Company receives confirmation from its Senior Vice President- Accounting & Finance and the Executive Vice President- Chief Financial Officer or the Auditors of CARDTREND that CARDTREND has accounted for the first US$ 150,000 (or its equivalent in Ringgit Malaysia) of sales revenue of CARDTREND from October 1st, 2006, holders of Series B Preferred Shares shall be entitled to surrender 500,000 of their Preferred Shares to the Company for conversion into shares of Common Stock, at the rate of ten (10) shares of Common Stock to be issued for each Series C Preferred Share surrendered. 
	 
	6.      	Within five (5) business days from the date the Company receives confirmation from its Senior Vice President-Accounting & Finance and Executive Vice President-Chief Financial Officer or the Auditors of CARDTREND that CARDTREND has accounted for the second US$ 150,000 (or its equivalent in Ringgit Malaysia) of sales revenue of CARDTREND from October 1st, 2006, holders of Series B Preferred Shares shall be entitled to surrendered 500,000 of their Preferred Shares to the Company for conversion into shares of Common Stock, at the rate of ten (10) shares of Common Stock to be issued for each Series B Preferred Shares surrendered. 
	 
	7.      	Within five (5) business days from the date of surrender of the holder’s Series B Preferred Shares the Company will issue a new certificate or certificates for the requisite number of shares of Common Stock of the Company. 
	 
	8.      	The Common Stock so issued will bear a legend as described in Section 2.5 of this Share Exchange Agreement. 
	 

 

-31-

	9.      	Each Series B Preferred Share will be entitled to dividends at the rate of ten (10) times the dividends declared for each share of Common Stock. 

	SCHEDULE 2.1

List Of CardTrend Investors And No. Of Series B Preferred Shares To Be Issued To

	Name  	  	Address  	  	No. of Series B Preferred Shares  
	Total No. of Series B Preferred Shares to be Issued :  	  	1,500,000  	  	500,000  	  	500,000  
	  
	  
	Low Kok Keng  	  	35, Jalan USJ 5/4,  	  	250,000  	  	250,000  	  	400,000  
	Malaysian I/C No.:  	  	47610 Subang UEP  	  	  	  	  	  	  
	590226-10-6637  	  	Selangor, Malaysia  	  	  	  	  	  	  
	  
	  
	Ng Soo Liang  	  	35, Jalan USJ 5/4,  	  	400,000  	  	  	  	  
	Malaysia I/C No.:  	  	47610 Subang UEP,  	  	  	  	  	  	  
	580523-10-5674  	  	Selangor, Malaysia  	  	  	  	  	  	  
	  
	  
	Zhuo Peishan Angeline  	  	22 Bayshore Road,  	  	200,000  	  	  	  	  
	Singapore I/C No.:  	  	#28-07 Singapore,  	  	  	  	  	  	  
	S83206821  	  	469970  	  	  	  	  	  	  
	  
	  
	Low Chin Kuan  	  	71, Jalan 4/58A,  	  	100,000  	  	  	  	  
	Malaysia I/C No.:  	  	Taman Kaya, Jalan Ipoh,  	  	  	  	  	  	  
	760928-14-5381  	  	51100, Kuala Lumpur, Malaysia  	  	  	  	  	  	  

	Chai Hoong Yoon  	  	14, Jalan 1/14K,  	  	50,000  	 	50,000  	  	
	Malaysian I/C No.:  	  	Bandar Baru Seri Petaling,  	  	 	 	  	  	  
	690213-10-6767  	  	57000, Kuala Lumpur, Malaysia  	  		 	  	  	  
	  
	  
	Yau Sheue Chin  	  	14, Jalan 1/14K,  	  	50,000  	 	50,000  	  	
	Malaysia I/C No.:  	  	Bandar Baru Seri Petaling,  	  		 	  	  	  
	670510-01-5476  	  	57000, Kuala Lumpur, Malaysia  	  		 	  	  	  

 

-32-

	Chai Thian Yoon  	  	20, Jalan Kasawari 7,  	  	200,000  
	Malaysia I/C No.:  	  	Bandar Puchong Jaya, Puchong,  	  	  
	640107-10-8317  	  	47100, Selangor, Malaysia  	  	  

	Chong Shian Chang  	  	B4-08-08, Pandan Mewah Heights,  	  	25,000  	  	75,000  
	Malaysian I/C No.:  	  	Jalan Mewah Utara, 68000,  	  	  	  	  
	690816-10-5667  	  	Ampang, Selangor, Malaysia  	  	  	  	  
	  
	Yee Wei Kheng  	  	B4-08-08, Pandan Mewah Heights,  	  	50,000  	  	  
	Malaysia I/C No.:  	  	Jalan Mewah Utara, 68000,  	  	  	  	  
	690420-10-5812  	  	Ampang, Selangor, Malaysia  	  	  	  	  
	  
	Chong Pei Ling  	  	4, Jalan Enau, Tmn Bkt Belimbing,  	  	150,000  	  	  
	Malaysia I/C No.:  	  	43300, Seri Kembangan  	  	  	  	  
	680210-10-5890  	  	Selangor, Malaysia  	  	  	  	  

	Ng Chee Keong  	  	35, Jalan USJ 5/4,  	  	75,000  	  	    75,000  
	Malaysian I/C No.:  	  	47610 Subang UEP,  	  	  	  	  
	790428-10-5487  	  	Selangor, Malaysia  	  	  	  	  
	  
	Tan Cheng Hoon  	  	443, Jalan E9, Taman Melawati,  	  	50,000  	  	  
	Malaysia I/C No.:  	  	53100, Kuala Lumpur,  	  	  	  	  
	820816-08-5654  	  	Malaysia  	  	  	  	  

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-33-

SCHEDULE 4.11

Outstanding Convertible Securities, Options, Warrants and other Rights and/or Commitments of CARDTREND.

	(a)      	Securities or instruments convertible into or exercisable for any of the capital stock or other equity interests of CARDTREND.: 
	 
	 	NONE 
	 
	(b)      	Options, warrants, subscriptions or other rights to acquire capital stock or other equity interests of CARDTREND : 
	 
	 	NONE 
	 
	(c)      	Commitments, agreements or understandings of any kind, including employee benefit arrangements, relating to the issuance or repurchase by CARDTREND and of any capital stock or other equity interests of CARDTREND, or any instruments convertible or exercisable for any such securities or any options, warrants or rights to acquire such securities: 
	 
	 	NONE 
	 

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-34-

SCHEDULE 4.18

INTELLECTUAL PROPERTY OF CARDTREND.

         (I) SOFTWARE

         CARDTREND has developed the following payment and loyalty related software:

	1)     	iTrans Server
	 
	 	Is an online transaction handling system that provides real time management of communication between capturing device (EDC, POS, Terminal, etc) and the card system backend host.
	 
	2)     	ARMS (Airtime Reload Management System)
	 
	 	A     	system that enables prepaid reload service for reload service operators to top up prepay
	 
	 	cards for mobile prepay subscribers, VOIP for IDD, STD, internet access top-up. Top up via multiple channels electronically.
	 
	3)     	Card Management System (“CMS” – card engine) to support the following business process:
	 
	 	a) CMS-Fleet
	 
	 	 	This is a Fleet/Fuel payment card system to support both prepaid and postpaid fuel purchase payment program.
	 
	 	b) CMS-Credit
	 
	 	 	This is a Credit Card system used to manage credit card payment operation for both card issuing and acquiring.
	 
	 	c) CMS-Cash
	 
	 	 	This is a stored value card solution for cash/gift card operators to manage their card issuing and acquire operations, like eWallet / ePurse. CMS-Cash supports both magnetic stripe and smartcard cards.
	 
	 	d) CMS-Loyalty
	 
	 	 	This is a card system to support loyalty program. CMS-Loyalty provides comprehensive features and tools for the loyalty card operators to maintain a dynamic loyalty campaign.

CARDTREND has not submitted the above software for patent, copyright, trademark and other intellectual property registration, and it owns the source codes.

 

 

-35-

II LICENSING

CARDTREND has licensed to the use of the above software and/or provided services to the following corporations and/or persons (where source codes are included in the licensing for use, it is indicated alongside the name of the corporations and/or persons):

	(a)      	Petron Oil Philippines 
	 
	(b)      	Shell Asean (Macau, Hong Kong, Singapore, Philippines) 
	 
	(c)      	iNet Ltd; for KhrungThai Card Ltd, PTT Oil Ltd, Bangcak Oil Ltd 
	 
	(d)      	Kompakar Sdn Bhd 
	 
	(e)      	SmartPay Ltd; the “Teaming Development Agreement Relating To Intellectual Property” sharing signed on 23rd May 2006
	 

	(f)      	Shell Brunei 
	 
	(g)      	IDBB 
	 
	(h)      	MCAT 
	 

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-36-Exhibit 10.2 - EMPLOYMENT CONTRACT

Exhibit 10.2

EMPLOYMENT CONTRACT

The Employment Contract (hereinafter referred to as the "Agreement") is made on September 28, 2006.

BETWEEN:

ASIA PAYMENT SYSTEMS, INC, a corporation incorporated under the laws of the State of Nevada, U.S.A. which is a fully reporting company registered with the United States Securities and Exchange Commission and trades on the NASD OTCBB under the symbol APYM and having a registered office address at 711 South Carson Street, Suite 4, Carson City, Nevada 89701, USA  and a principal office located at 39th Floor, One Exchange Square, 8 Connaught Place, Central, Hong Kong, SAR China (hereinafter referred to as "Asia Payments")

AND:

Low Kok Keng, a Malaysian citizen holding a Malaysian Identity Card No: 590226-10-6637 and residing at 35, Jalan USJ 5/4, 47610 Subang UEP, Selangor, Malaysia (hereinafter referred to as "KK Low").

WHEREAS

	
a) 
	
Asia Payments is in the payments and loyalty rewards related businesses which includes Processing Business, Cards Business and Prepaid Business and wishes to expand its business to include the provision of payments and loyalty rewards related software, consultancy, technical and management services to operators of payments and loyalty rewards card in the Asian countries (hereinafter collectively referred to as the "Business").

	 
	
b)
	
KK Low is acknowledged as a leading IT expert in the Business.

	 
	
c) 
	
Asia Payments wishes to formalize its agreement with KK Low for his provision of services to Asia Payments by engaging his service as its Executive Vice President-Chief Technology Officer and Head of Processing Business, and KK Low has agreed to be engaged by Asia Payments upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants, promises, terms and conditions herein contained, the parties agree as follows:

	
1.
	
EMPLOYMENT 

	 
	
 
	
Asia Payments agrees to employ KK Low as its Executive Vice President-Chief Technology Officer and Head of Processing Business, and KK Low agrees to be employed in this capacity, upon the terms and conditions hereinafter set forth.

 

 

	
2.
	
TERM

	 
	
 
	
This Agreement shall commence on the date of the agreement as referenced above (hereinafter referred to as the "
Commencement Date"
) and shall terminate as of the earlier of:

	 
	
 
	
a)
	
Five (5) years from the Commencement Date (hereinafter referred to as the "
Initial Agreement"
) unless either KK Low or Asia Payments notifies the other that he or it elects to enter negotiations for a further agreement of an additional five (5) years (hereinafter referred to as "
Renewal Agreement"
), such Renewal Agreement to be concluded at least one hundred and eighty (180) days before the end of the Initial Agreement hereof; or

	 
	 	
b)
	
the death of KK Low; or

	 
	
 
	
c)
	
election of either party to terminate the employment of KK Low with Asia Payments pursuant to the respectively rights as contained in subsection 6(a) or subsection 6(b) hereof.

	 
	
 
	
The Exercise of the right of Asia Payments or KK Low to terminate this Agreement pursuant to subsections 6(a) or 6(b) hereof shall not abrogate the rights and remedies of the terminating party in respect of the breach given rise to such termination. 

	 
	
3.
	
JOB TITLE AND DUTIES

	 
	 	
At all time during the term of this Agreement, KK Low shall:

	 
	
 
	
a)
	
be designated by Asia Payments with the title "
Executive Vice President-Chief Technology Office & Head of Processing Business"
, unless in the reasonable judgment of the Board of Directors of Asia Payments (hereinafter referred to as the "
Board"
) in the best interest of Asia Payments, such title may be changed by Asia Payments, provided however that the new title shall continue to reflect the position of KK Low as the Chief Technology Office and Head of Processing Business of Asia Payments.

	 
	
 
	
b)
	
have duties and responsibilities commensurate with his title and position in Asia Payments.

	 
	
 
	
c)
	
perform and discharge well and faithfully the duties which may be assigned to him from time to time by Asia Payments and/or its President & Chief Executive Officer in connection with the conduct of the Business, such duties shall include:

	 
	
 
	 	
(i)
	
the formulation and development of the payments and loyalty rewards related technology required by Asia Payments and its subsidiaries and related companies to conduct the Business;

	 
	
 
	 	
(ii)
	
presiding at all corporate meetings but shall be entitled to delegate such duty to his subordinate(s) should he not be available due to business reason or on leave;

	 
	
 
	 	
(iii)
	
the general supervision of Asia Payments'
 subsidiaries which conduct Asia Payments'
 Processing Business;

 

 - 2 - 

	 	
(iv)
	
set out the duties of subordinate officers

	 
	
 
	 	
(v)
	
identifying new business opportunities related to the Processing Business across the Asia Pacific Region and elsewhere;

	 
	
 
	 	
(vi)
	
developing and updating from time to time the strategic plan and annual business plans for Asia Payments' Processing Business as well as the IT plans for Asia Payments;

	 
	
 
	 	
(vii)
	
executing the IT plans of Asia Payments and the strategic plan and annual business plans of Asia Payments'
 Processing Business as approved by the Board of Asia Payments and/or the Board of Asia Payments'
 subsidiaries which conduct the Processing Business.

	 
	
 
	
d)
	
be given the co-signing authority on the bank accounts of Asia Payments'
 subsidiaries which conduct the Processing Business as may be directed by the Board;

	 
	
 
	
e)
	
be appointed as a Director of Asia Payments and he shall be entitled to receive compensation and/or benefits and/or stock options in an  amount and quantity not less than and on similar terms as other Directors of Asia Payments, consistent with Asia Payments'
 Stock Option Plans and policies and SEC and NASD guidelines.

	 
	
 
	
f)
	
be appointed as a director of Asia Payments'
 subsidiaries and related companies that conduct the Processing Business and any subsidiary and/or related company of Asia Payments as and when required by Asia Payments and KK Low May may, subject to the approval of the Board, receive and keep for his own account compensation and/or benefits from any such subsidiary and/or related company. It is hereby acknowledged by Asia Payments that KK Low is currently the Managing Director of Cardtrend Systems Sdn. Bhd. ("
Cardtrend"
) and that he is receiving and/or will receive compensation and/or benefits from Cardtrend. Asia Payments further acknowledges and agrees that KK Low will continue to be the Managing Director of Cardtrend and the compensation and/or benefits received and/or to be received by KK Low from Cardtrend shall be deemed part of the compensation and/or benefits as stipulated in subsection 4 hereof.

	 
	
4.
	
COMPENSATION, BENEFITS AND EXPENSES

	 
	 	
For the services rendered by KK Low under this agreement:

	 
	
 
	
a)
	
Asia Payments shall pay KK Low a base salary of Hong Kong Dollars Seventy Five Thousand (HK$75,000) or an equivalent in United States Dollars (US$) per month. Such salary shall be reviewed and adjusted upwards annually, on the anniversary date of his employment with Asia Payments during the term of this Initial Agreement with a view to bring his salary in line with the salary scale of a chief technology officer of a multinational mono-line payment card company or a head of a business unit of a multinational payments company by the second anniversary date of his employment with Asia Payments, taking into considerations the revenues and earnings of Asia Payments, the skills and experience required of the incumbent for the position and the performance of KK Low as reviewed and judged reasonably by the Board. When making payment of such salary to KK Low, Asia Payments shall be entitled to deduct the amount of cash compensation received by KK Low from Cardtrend and the subsidiaries and/or related companies of Asia Payments as mentioned in subsection 3(f) above.

 

 - 3 - 

	 	
b)
	
Profit Share

	 
	
 
	 	
KK Low shall be entitled to an annual profit share payable by Asia Payments within thirty (30) days after the completion of Asia Payments'
 annual audited financial statements for each fiscal year, as follows:

	 
	
 
	 	
(i)
	
One and a half (1.5) percent of the earnings before interest, taxes, depreciation and amortization ("EBITDA") and before stock based compensation  attained by Asia Payments and its subsidiaries and related companies or

	 
	
 
	 	
(ii)
	
such other formula as may be agreed between the parties from time to time, and such profit sharing may be paid to KK Low in cash or in the equivalent value of unrestricted common shares of Asia Payments at the time of payment.

	 
	 	
c)
	
Stock Option

	 
	
 
	 	
(i)
	
During the term of the Initial Agreement, KK Low will be eligible to participate and be entitled to receive stock options to purchase One Million Eight Hundred and Fifty Thousand (1,850,000) common shares of Asia Payments at an option price of United State Dollars Thirteen cents only (US$0.13) per share, such share options which are subject to rules and regulation applicable to the employees of Asia Payments, shall be vested to KK Low at an amount of Seventy Five Thousand (75,000) shares at the end of every quarter from the  Commencement Date until the expiration of the Initial Agreement, with an additional 350,000 options at the expiration of the Initial Agreement..

	 
	
 
	 	
(ii)
	
During the term of the Initial Agreement, KK Low will also be entitled to any stock options as may be authorized from time to time by the Board.

	 
	 	
d)
	
Benefits

	 
	
 
	 	
KK Low will be eligible and entitled to the employment benefits as follows:

	 
	 	 	
(i)
	
Holidays and Annual Vacation Leave

	 
	
 
	 	 	
KK Low shall be entitled to all public holidays in the country/territories he is located at the time, in addition, to annual vacation leave which shall accrue on a pro rata basis during the term of this Agreement at the rate of twenty eight (28) working days per annum which vacation and/or personal day(s) shall be taken by him at such time or times as are consistent with the needs of the business of Asia Payments and such vacation leave accrued but not taken by KK Low due to the needs of the business of Asia Payments shall be carried forward until the termination of this Agreement.

	 
	 	 	
(ii)
	
Health Insurance

	 
	
 
	 	 	
KK Low shall be entitled to be enrolled in a corporate health insurance program which may be implemented by Asia Payments or one of its affiliates. The enrolment will be as executive status and will entitle KK Low to the same coverage as provided to the other key executives of Asia Payments.

 

 - 4 - 

	 	 	
(iii)
	
Indemnification

	 
	
 
	 	 	
KK Low shall be indemnified by Asia Payments to the fullest extend provided under the indemnification provisions of the By-laws and/or Certificate of Incorporation presently in existence, or, to the extend that the scope of such indemnification is greater, under any amendments to the By-laws and/or Certificate of Incorporation to the extend that Asia Payments obtains indemnification insurance for its officers and/or directors, such insurance also cover KK Low to the same extend.

	 
	 	 	
(iv)
	
Other Benefits

	 
	
 
	 	 	
KK Low will be eligible for such other employment and executive benefits as may be offered by Asia Payments from time to time.

	 
	 	
e)
	
Business Expenses

	 
	
 
	 	
Asia Payments will reimburse KK Low for all reasonable expenses properly incurred by KK Low in the performance of his duties under this Agreement, upon presentation of properly itemised charges, receipts and/or similar documentation, and otherwise in accordance with policies established from time to time by the Board. The parties acknowledge that KK Low may be required to travel extensively in connection with the performance of these duties under this Agreement and in this regard, KK Low will be entitled to economy class or business class (with the prior approval of the President & Chief Executive Officer of Asia Payments) air travel.

	 
	 
	
5.
	
WORK LOCATION & RELOCATION

	 
	
 
	
i)
	
During the term of this Agreement, KK Low shall be based in Hong Kong and Kuala Lumpur to perform his obligation under this Agreement, unless otherwise determined and agreed by both parties from time to time depending on the needs of the Business. Asia Payments shall pay for KK Low'
s hotel accommodation costs reasonably incurred by him while he is discharging his duties from Hong Kong. In the event of KK Low relocating to a work place outside of Hong Kong and Kuala Lumpur, Asia Payments shall pay all of the costs and expenses of KK Low and his immediate family members connected with such relocation, including reasonable moving and travel expenses and reasonable dwelling costs and education costs (for children under eighteen (18) years of age) during the entire period in such relocated work place. KK Low and his immediate family members shall be entitled to an economy class round trip return air-travel from the relocated work place to Kuala Lumpur, once a year from the time of such relocation for taking his home leave. In addition, if KK Low is relocated outside of Hong Kong and Kuala Lumpur, Asia Payments will furnish KK Low, without cost to him and during the entire period in such relocated work place, a company owned or leased automobile of the make and model befitting his position and status in the business community in such work place. 

	 	 	 
	 	
ii)
	
In the event of termination of KK Low'
s employment due to whatever reason while he his performing his obligations under this Agreement: (a) in Hong Kong, Asia Payments will pay for his airfare returning to Kuala Lumpur; or (b) in location outside of Hong Kong or Kuala Lumpur, Asia Payments will pay all of the costs and expenses of KK Low and his immediate family members connected with their returning to Kuala Lumpur, including moving and travel expenses and reasonable temporary dwelling costs (for a period not exceeding 60 days).

 

 - 5 - 

	 
	
6.
	
TERMINATION, SEVERANCE PAYMENT AND LIQUIDATED DAMAGES

	 
	 	
a)
	
Elect To Terminate Employment By KK Low

	 
	
 
	 	
Upon the occurrence of the material breach of this Agreement by Asia Payments and such breach continues for at least thirty (30) days following written notification by KK Low, KK Low shall have the right to elect to terminate his employment under this Agreement by resignation upon not less than thirty (30) days prior written notice given within a reasonable period of time not to exceed, except in case of continuing breach, four (4) calendar months after the event giving rise to said right to elect.

	 
	 	
b)
	
Elect To Terminate Employment By Asia Payments (Termination For Cause)

	 
	
 
	 	
Upon the occurrence of any of the following events during the period of KK Low'
s employment under this Agreement: 

	 
	 	 	
(i)
	
KK Low has been convicted of a felony; or

	 
	

	 	
(ii)
	
material breach of this Agreement by KK Low and such breach continues for at least thirty (30) days following written notification by Asia Payments; or

	 
	
 
	 	
(iii)
	
the Board has determined that KK Low's employment with Asia Payments may be terminated with "cause" as defined hereunder,

	 
	
 
	 	
Asia Payments shall have the right to elect to terminate KK Low'
s employment under this Agreement by giving seven (7) days prior written notice given within a reasonable period of time not to exceed, except in case of continuing breach four (4) calendar months after the event giving rise to said right to elect.

	 
	
 
	 	
For the purpose of the provision of subsection 6(b)(iii) hereof, termination of KK Low's employment with Asia Payments under this Agreement, by Asia Payments for "cause" shall mean KK Low's termination by action of the Board arising from their findings with evidence on KK Low's dishonesty and/or willful misconduct.

	 
	 	
c)
	
Severance Payment

	 
	
 
	 	
(i)
	
In the event of termination of KK Low's employment under this Agreement, which termination was either elected by KK Low pursuant to subsection 6(a) hereof or actioned by the Board without "cause" as defined in the last paragraph of subsection 6(b) hereof, Asia Payments will:

	 

 

 - 6 - 

	 	 	 	
(A)
	
pay KK Low a severance payment, within thirty (30) days from the date of such termination, equal to the product of KK Low's monthly base salary at the time of such termination, multiplied by the remaining months for KK Low to provide his services to Asia Payments under this Agreement as if such termination had not occurred plus a reasonable amount of ex-gratia payment as determined by the Board for KK Low'
s loss of office and his past length and performance of services rendered, such amount, however, shall not be less than Hong Kong Dollars One Million (HK$1,000,000);

	 
	
 
	 	 	
(B)
	
take all necessary actions to ensure that all share options which KK Low is entitled to pursuant to subsection 4(c) above and which would have been vested to KK Low if such termination had not occurred, will become fully vested within thirty (30) days from the date of such termination.

	 
	
 
	 	
(ii)
	
In the event of termination of KK Low'
s employment with Asia Payments under this Agreement, which termination was elected by Asia Payments pursuant to subsection 6(b) hereof (Termination for Cause), KK Low will be entitled to a severance payment, within thirty (30) days from the date of such termination, of a reasonable amount of ex-gratia payment as determined by the Board for KK Low'
s loss of office and his past length and performance of services rendered.

	 
	 	
d)
	
Liquidated Damages

	 
	
 
	 	
In the event of termination of KK Low'
s employment, which termination was elected by KK Low not under any provision of this Agreement, Asia Pay shall be entitled to seek liquidated damages from KK Low. However, the parties hereto acknowledge that the damages that may be suffered by Asia Payments from such termination of KK Low'
s employment with Asia Payments, is not ascertainable. Accordingly, the liquidated damages, if it is sought by Asia Payments, shall be an amount equal to the costs reasonably incurred by Asia Payments in recruiting a person to replace KK Low, subject to no more than Hong Kong Dollar Three Hundred and Seventy Five Thousand (HKD 375,000). KK Low shall pay Asia Payments such amount within thirty (30) days from the date of presentment of such bills by Asia Payments.

	 
	
 
	
e)
	
Neither party shall be obligated to mitigate any damages arising from the early termination of this Agreement pursuant to subsection 6(a) or subsection 6(b) or arising from the election by KK Low not under any provision of this Agreement, as the case may be. The severance payment provided for under subsection 6(c)(i) or subsection 6(c)(ii) above shall not reduce any amount of money that may be owed by Asia Payments to KK Low or due to him. The liquidated damages provided for under subsection 6(d) above shall not reduce any amount of money that may be owed by KK Low to Asia Payments or due to Asia Payments.

	 
	
7.
	
EXTENT OF SERVICE

	 
	
 
	
a)
	
KK Low shall devote his full time and attention to, and extent his best efforts in the performance of his duties under this Agreement, so as to promote the Business of Asia Payments and Asia Payments'
 subsidiaries, associated companies and affiliates.

	 

 

 - 7 - 

	 	
b)
	
Both parties acknowledge and agree that subsection 7(a) above shall not be construed as preventing KK Low from the following activities of KK Low:

	 
	
 
	 	
(i)
	
KK Low, being an individual businessman, has made prior to the Commencement Date and may make after the Commencement Date, investments with his personal assets in businesses which do not compete with the Business of Asia Payments and that he is and may continue to be or may become a non-executive director of those companies which conduct such non-competing businesses.

	 
	
 
	 	
(ii)
	
KK Low being an individual investor, has purchased prior to the Commencement Date and may continue to purchase after the Commencement Date, securities in any corporation whose securities are regularly traded in any stock exchanges in the world PROVIDED THAT such purchase shall not result in his collectively owning beneficially at any time, five percent (5%) or more of the equity securities of any corporation engaged in a business competitive to that of Asia Payments'

	 
	
 
	 	
(iii)
	
KK Low, being a leading IT expert in the payment and loyalty related businesses, has participated prior to the Commencement Date and may continue to participate after the Commencement Date, in conferences, seminars and the likes in which, he may be delivering articles, papers or materials which may or may not belong to him relating to the payment and loyalty business and/or industry PROVIDED THAT such disclosure of information and knowledge relating to the payment and loyalty related business are made in a general manner and that it may be for the purpose of promoting Asia Payments and/or Asia Payments'
 Business.

	 
	
8.
	
CONFIDENTIAL INFORMATION

	 
	
 
	
KK Low shall not, directly or indirectly, or at any time during the term of this Agreement hereunder or thereafter and without regard to when or for what reason, if any, use or permit the use of other information of or relating to Asia Payments or any subsidiary or affiliate which is not in the public domain and shall not divulge such trade secrets, customers'
 lists, and information to any person, firm, or corporation whatsoever except as may be required by any applicable law or determination of any duly constituted administration agency. For the avoidance of doubt, this Clause shall not be applicable to the disclosure of any information relating to Asia Payments or its subsidiaries or affiliates by KK Low or Asia Payments'
 officer authorised by him, to any third party during any business negotiations or discussions or delivering speeches in any conference or seminar as referred to in subsection 7(b)(iii) above.

	 
	
9.
	
NON-COMPETE

	 
	
 
	
In consideration of KK Low'
s promises of (a) not to compete, directly or indirectly, with Asia Payments either (i) by the establishment of a new company engaged in the same business as Asia Payments or (ii) to actively seek employment with other companies who directly compete with Asia Payments; and/or (b) not to recruit any employee of Asia Payments to work either (i) for a new company established to engage in the same business as Asia Payments or (ii) with other companies who directly compete with Asia Payments, for a period of  one (1) year from the date of termination of his employment with Asia Payments (hereinafter referred to as the "
Restrain Period"
), Asia Payments shall pay to KK Low a sum of Hong Kong Dollar Nine  Hundred Thousand (HK$900,000) or the equivalent in United States Dollars in two equal installments, first installment being made on the date of termination of his employment and the second installment to be made on the expiration of the Restrain Period.

 

 - 8 - 

	
10.
	
INTELLECTUAL PROPERTY

	 
	
 
	
Any idea, invention, design, written material, manual, system, procedure, improvement, development or discovery conceived, developed, created or made by KK Low alone or with others relating to the Business of Asia Payments or any of its subsidiaries or affiliates during the contract period and whether or not patentable or registerable, shall become the sole and exclusive property of Asia Payments. KK Low shall disclose the same promptly and completely to Asia Payments and shall, during the employment period (I) execute all documents required by Asia Payments for vesting in Asia Payments the entire right, title and interest in and to same, (ii) execute all documents required by Asia Payments for filing and prosecuting such applications for patents, trademarks, service marks and/or copyrights as Asia Payments, in its sole discretion, any desire to prosecute, and (iii) given Asia Payments all assistance it reasonably requires, including the giving of testimony in any suit, action or proceeding, in order to obtain, maintain and protect Asia Payments'
 right therein and thereto.

	 
	
11.
	
ASSIGNMENT

	 
	
 
	
This Agreement and any rights (including KK Low'
s Compensation) hereunder shall not be assigned, pledged or transferred in any way by either party hereto except that Asia Payments shall have, with KK Low'
s consent, the right to assign its rights hereunder to any third party successor in interest of Asia Payments whether by merger, consolidation, purchase of assets or stock or otherwise. Any attempted assignment, pledge, transfer or other disposition of this Agreement or any rights, interests or benefits contrary to the foregoing provisions shall be null and void.

	 
	
12.
	
NOTICES

	 
	
 
	
All notices, request, demands and other communications hereunder must be in writing and shall be deemed to have been duly given if delivered by hand, sent by facsimile, or mailed by first class, registered mail, return receipt requested, postage and registry fees prepaid to, the application party and addressed as follows:

	 
	 	
(i)
	
if to the ASIA PAYMENTS:
	
Asia Payment Systems, Inc.

	 	 	 	 	 	 	
39th Floor

	 	 	 	 	 	 	
One Exchange Square

	 	 	 	 	 	 	
8 Connaught Place

	 	 	 	 	 	 	
Central

	 	 	 	 	 	 	
Hong Kong

	 	 	 	 	 	 	
Facsimile: 852-2110-9983

	 
	 	
(ii)
	
if to KK Low:
	 	 	
35, Jalan USJ 5/4,

	 	 	 	 	 	 	
Subang UEP 47610,

	 	 	 	 	 	 	
Selangor, Malaysia

	 
	
13.
	
SEVERABILITY

	 
	
 
	
If any provision of this Agreement shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid or unenforceable, such judgment shall not affect, impair or invalidate the remainder of this Agreement but shall be confined in its operation to the jurisdiction in which made and to the provisions of this Agreement directly involved in the controversy in which such judgment shall have been rendered.

	 

 

 - 9 - 

	
14.
	
WAIVER

	 
	
 
	
No course of dealing and no delay on the part of any party hereto in exercising any right, power, or remedy under or relating to this Agreement shall operate as a waiver thereof or otherwise prejudice such party'
s rights, powers and remedies. No single or partial exercise of any rights, powers or remedies under or relating to this Agreement shall preclude any other or further exercise thereof or the exercise of any right, power or remedy. 

	 
	
15.
	
ENTIRE AGREEMENT/GOVERNING LAW

	 
	
 
	
This Agreement embodies the entire understanding and supersedes all other oral or written contracts or understandings, between the parties regarding the subject matter hereof. No change, alteration, or modification hereof may be made except in writing signed by both parties hereto, This Agreement shall be construed and governed in all respect and shall at all times be determined in accordance with the laws of the State Of Nevada, USA..

	 
	
16.
	
HEADINGS

	 
	
 
	
The headings of Paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

 

 

 

 

 

 

 

 

 

 

 

 - 10 - 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement consisting of eleven (11) pages, on this 28th day of September, 2006.

	
For And On-half of
	 	 	 	
For And On-behalf of

	
Low Kok Keng
	 	 	 	 	
Asia Payment Systems, Inc.

	 
	 
	 
	 
	 
	
LOW KOK KENG
	 	 	 	
KING K. NG

	
By : Low Kok Keng
	 	 	 	
By: King K. Ng

	
Malaysia I/C No.:
	 	 	 	
Director, President & 

	
590226-10-6637
	 	 	 	
Chief executive Officer     

	 
	 
	 
	 
	 
	
Witnessed By:
	 	 	 	 	
Witnessed By:

	 
	 
	 
	 
	 
	
C. K. NG
	 	 	 	 	
LOKE KOK YUN

	
Name:
	
C. K. Ng
	 	 	 	
Name: Loke Kok Yun

	 

 

 

 

 

 

 

 - 11 -

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