Document:

Exhibit 10.1

    AGREEMENT
      BY AND BETWEEN

    Commerce
      Bank/Harrisburg National Association

    Harrisburg,
      Pennsylvania

    and

    The
      Comptroller of the Currency

    

    Commerce
      Bank/Harrisburg National Association, Harrisburg, Pennsylvania (“Bank”) and the
      Comptroller of the Currency of the United States of America (“Comptroller”) wish
      to protect the interests of the depositors, other customers, and shareholders
      of
      the Bank, and, toward that end, wish the Bank to operate safely and soundly
      and
      in accordance with all applicable laws, rules and regulations.

     

    In
      consideration of the above premises, it is agreed, between the Bank, by and
      through its duly elected and acting Board of Directors (“Board”), and the
      Comptroller, through his authorized representative, that the Bank shall operate
      at all times in compliance with the articles of this Agreement.

    

    ARTICLE
      I

     

    JURISDICTION

     

    (1)  This
      Agreement shall be construed to be a “written agreement entered into with the
      agency” within the meaning of 12 U.S.C. § 1818(b)(1).

     

    (2)  This
      Agreement shall be construed to be a “written agreement between such depository
      institution and such agency” within the meaning of 12 U.S.C.
§ 1818(e)(1) and 12 U.S.C. § 1818(i)(2).

     

    (3)  This
      Agreement shall be construed to be a “formal written agreement” within the
      meaning of 12 C.F.R. § 5.51(c)(6)(ii). See
      12 U.S.C. § 1831i.

     

    (4)  This
      Agreement shall be construed to be a “written agreement” within the meaning of
      12 U.S.C. § 1818(u)(1)(A).

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

    (5)  Pursuant
      to 12 CFR 5.51c(6)(ii), the Bank shall be subject to the requirements of 12
      CFR
      5.51 unless otherwise informed in writing by the OCC.
      In
      addition, this Agreement shall cause the Bank not to be designated as an
“eligible bank” for purposes of 12 C.F.R. § 5.3(g),
      unless otherwise informed in writing by the Comptroller. For purposes of 12
      C.F.R. Part 24, the Bank may be treated as an “eligible bank,” unless otherwise
      informed in writing by the Comptroller.

     

    (6)  All
      reports or plans which the Bank or Board has agreed to submit to the Assistant
      Deputy Comptroller pursuant to this Agreement shall be forwarded
      to:

     

    William
      D. Haas

    Assistant
      Deputy Comptroller

    Midsize
      Bank Supervision

    One
      Financial Place, Suite 2700

    440
      South
      LaSalle Street

    Chicago,
      IL 60605-1073

    

    With
      copies to:

    

    Guillermo
      Torres

    OCC
      Examiner-in-Charge

    Commerce
      Bank 

    2059
      Springdale Road

    Cherry
      Hill, N. J. 08003

    

    ARTICLE
      II

     

    COMPLIANCE
      COMMITTEE

     

    (1)  Within
      five (5) days, the Board shall appoint a Compliance Committee of at least three
      (3) directors, of which no more than one (1) shall be an employee or controlling
      shareholder of the Bank or any of its affiliates (as the term “affiliate” is
      defined in 12 U.S.C. § 371c(b)(1)), or a family member of any such
      person. Upon appointment, the names of the members of the Compliance Committee
      and, in the event of a change of the membership, the name of any new member
      shall be submitted in writing to the Assistant Deputy Comptroller. The
      Compliance Committee shall be responsible for monitoring and coordinating the
      Bank's adherence to the provisions of this Agreement.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (2)  The
      Compliance Committee shall meet at least monthly and maintain detailed minutes
      of all meetings.

     

    (3)  Within
      forty-five (45) days, and at the end of each calendar quarter thereafter, the
      Compliance Committee shall submit a written progress report to the Board setting
      forth in detail:

     

     

    
      	(a)  	
              a
                description of the actions needed to achieve full compliance with
                each
                Article of this Agreement, including the names of the parties responsible
                for completing those actions and the specific timeframe for completion
                of
                each action;

            

    

     

     

    
      	(b)  	
              actions
                taken to comply with each Article of this Agreement;
                and

            

    

     

     

    
      	(c)  	
              the
                results and status of those
                actions.

            

    

     

    (4)  The
      Board
      shall forward a copy of the Compliance Committee's first report, with any
      additional comments by the Board, to the Assistant Deputy Comptroller within
      ten
      (10) days of receiving such report, and shall forward all subsequent Compliance
      Committee reports, with any additional comments by the Board, to the Assistant
      Deputy Comptroller within twenty (20) days of each quarter end. 

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

    ARTICLE
      III

     

    MANAGEMENT
      AND BOARD SUPERVISION STUDY

     

    (1)  The
      Board
      has previously engaged an independent management consultant (“Consultant”) to
      which the Assistant Deputy Comptroller has no supervisory objection. The Board
      shall contract with and require the Consultant to complete and provide to it,
      within ninety (90) days, a written report of the Board and current management
      supervision presently being provided to the Bank, the Bank’s management
      structure, and its staffing requirements in light of the Bank’s present
      condition, with particular emphasis in the areas of risk management, internal
      audit, consumer compliance and Bank Secrecy Act/Anti-Money Laundering (BSA/AML)
      compliance. The findings and recommendations of the Consultant shall be set
      forth in the written Report to the Board and the Report, at a minimum, shall
      contain:

     

     

    
      	(a)  	
              an
                analysis of the Board’s composition and committee structure, including
                committee composition and responsibility, and whether current members
                possess the knowledge and skills to oversee management of the Bank
                in a
                sound manner, with specific recommendations to address any identified
                weaknesses;

            

    

     

     

    
      	(b)  	
              an
                assessment of whether Board members are receiving adequate information
                on
                the operation of the Bank to enable them to fulfill their fiduciary
                responsibilities and other responsibilities under law, and specific
                recommendations to expand the scope, frequency and sufficiency of
                information provided to the Board by management to address any identified
                weaknesses;

            

    

     

     

    
      	(c)  	
              an
                assessment of whether the content of the Board and committee minutes
                adequately reflect discussions and decisions, specifically in the
                areas of
                the Bank’s internal and external audit activities, compliance management
                program, BSA/AML program and vendor management
                practices.

            

    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    
      	(d)  	
              the
                identification of present and future management and staffing requirements
                of each area of the Bank, with particular emphasis given to the Executive
                Management Group, and the Risk Management, Internal Audit, Compliance, and
                BSA/AML areas;

            

    

    

      	(e)  	
              an
                assessment of the adequacy of written job descriptions for all executive
                officers and for the direct department heads of Internal Audit, Compliance
                and the BSA/AML area, including whether accountabilities are appropriately
                defined;

            

    

     

    
      	(f)  	
              an
                evaluation of the qualifications and abilities of each individual
                identified in (e) above and a determination of whether each individual
                possesses the experience and other qualifications required to perform
                present and anticipated duties of his/her
                position;

            

    

     

    
      	(g)  	
              recommendations
                as to whether management or staffing changes should be made, including
                the
                need for additions to or deletions from the current management
                team;

            

    

     

    
      	(h)  	
              assessment
                of the objectives by which management's effectiveness is measured
                and the
                standards by which employees are held accountable through the Bank’s
                performance management and compensation programs, with recommendations
                for
                any enhancements; and

            

    

     

    
      	(i)  	
              an
                evaluation of current lines of authority, reporting responsibilities
                and
                delegation of duties for all officers, including identification of
                any
                overlapping duties or
                responsibilities.

            

    

     

    (2)  Within
      sixty (60) days of its receipt of the Consultant’s Report, the Board shall
      develop, implement, and thereafter ensure Bank adherence to a written plan,
      with
      specific time frames, that will correct any deficiencies noted in the Report,
      including a specific plan to address any staffing issues, qualitative and
      quantitative, identified in the Report.

     

    (3)  The
      Board
      shall ensure that the Bank has processes, personnel, and control systems to
      ensure implementation of and adherence to the plan developed pursuant to this
      Article.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (4)  Copies
      of
      the Consultant’s Report and the Board's written plan(s) shall be forwarded to
      the Assistant Deputy Comptroller. The Assistant Deputy Comptroller shall retain
      the right to determine the adequacy of the Report and its compliance with the
      terms of this Agreement. In the event the written plan, or any portion thereof,
      is not implemented, the Board shall immediately advise the Assistant Deputy
      Comptroller, in writing, of specific reasons for deviating from the
      plan.

     

    ARTICLE
      IV

     

    INTERNAL
      AUDIT

     

    (1)  Within
      thirty (30) days, the Board shall review and revise the Bank’s internal audit
      program and ensure implementation of and Bank adherence to an independent,
      internal audit program that adequately identifies the Bank’s audit universe and
      includes a risk-based evaluation of all financial and non-financial areas of
      the
      Bank for inclusion in the Bank’s audit plan. The program’s scope, testing, and
      documentation shall be sufficient to: 

     

     

    
      	(a)  	
              ensure
                the development and maintenance of a risk-based audit plan, covering
                both
                financial and non-financial areas of the Bank, that includes risk
                assessments to support the frequency and scope of reviews for all
                areas
                covered by the plan; 

            

    

     

     

    
      	(b)  	
              ensure
                that the risk-based audit plan is annually approved by the Board
                or its
                designated committee;

            

    

     

     

    
      	(c)  	
              ensure
                that any deviation of sixty (60) days or more from the Board approved
                audit plan requires, and only occurs with, the prior written approval
                of
                the Board or its designated
                committee;

            

    

     

     

    
      	(d)  	
              ensure
                that the Board or its designated committee maintains a process to
                track
                adherence to the approved audit
                plan;

            

    

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    
      	(e)  	
              detect
                irregularities and weak practices in the Bank's
                operations;

            

    

     

     

    
      	(f)  	
              determine
                the Bank's level of compliance with all applicable laws, rules and
                regulations, including consumer compliance and BSA/AML related laws
                and
                regulations;

            

    

     

     

    
      	(g)  	
              assess
                and report the effectiveness of policies, procedures, controls, and
                management oversight relating to each area covered by the audit
                plan;

            

    

     

     

    
      	(h)  	
              evaluate
                the Bank’s adherence to established policies, procedures and programs,
                including the Bank’s adherence to the consumer compliance, BSA/AML and
                third party management programs required to be developed under the
                terms
                of this Agreement; and

            

    

     

     

    
      	(i)  	
              ensure
                an appropriate level of testing to support the audit findings in
                all
                areas, including in the BSA/AML area, testing that covers the adequacy
                of
                the Bank’s:

            

    

     

     

    
      	(i)  	
              customer
                risk identification practices;

            

    

     

     

    
      	(ii)  	
              systems
                for monitoring transactions and accounts for suspicious activity;
                and

            

    

     

     

    
      	(iii)  	
              identification
                of suspicious activity and compliance with suspicious activity reporting
                requirements. 

            

    

     

    (2)  As
      part
      of this audit program, the Board shall evaluate the audit reports and shall
      assess the impact on the Bank of any audit deficiencies cited in such reports.
      If the Board’s designated committee is charged with responsibility for reviewing
      the audit reports, the committee shall report its findings to the full
      Board.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     

    (3)  The
      Board
      shall ensure that the Bank has processes, personnel (with respect to both the
      experience level and number of individuals employed), and control systems to
      ensure implementation of and adherence to the audit program developed pursuant
      to this Article.

     

    (4)  The
      Board
      shall ensure that immediate actions are taken to remedy deficiencies cited
      in
      audit reports, and that auditors maintain a written record describing such
      actions.

     

    (5)  Upon
      adoption, a copy of the internal audit program shall be promptly submitted
      to
      the Assistant Deputy Comptroller.

    

    ARTICLE
      V

     

    CONSUMER
      COMPLIANCE PROGRAM

     

    (1)  Within
      sixty (60) days, the Board shall review and revise the Bank’s consumer
      compliance program and implement the revised program, and thereafter ensure
      adherence to the written program which shall be designed to ensure the Bank
      is
      operating in compliance with all applicable consumer protection laws, rules
      and
      regulations. The program shall include:

     

     

    
      	(a)  	
              written
                descriptions of the duties and responsibilities of the Compliance
                Officer
                and other key positions in the Compliance area, that clearly define
                authority and accountability;

            

    

     

     

    
      	(b)  	
              adequate
                internal controls to ensure compliance with consumer protection laws,
                rules, and regulations, including quality assurance reviews to
                periodically evaluate compliance; 

            

    

     

     

    
      	(c)  	
              a
                policies and procedures manual covering all applicable consumer protection
                laws, rules and regulations for use by appropriate Bank personnel
                in the
                performance of their duties and responsibilities, which identifies
                employee accountability for required procedures;
                

            

    

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

    
      	(d)  	
              updates
                of the written policies and procedures at least semi-annually, or
                as
                required by more frequent changes in laws or regulations, to ensure
                the
                program remains current;

            

    

     

     

    
      	(e)  	
              a
                formal compliance review process for new or changed products and
                services;

            

    

     

     

    
      	(f)  	
              procedures
                to ensure that exceptions noted in the audit reports are corrected
                and
                responded to by appropriate Bank personnel;
                and

            

    

     

     

    
      	(g)  	
              an
                education and training program for all appropriate Bank personnel
                in the
                requirements of all applicable federal and state consumer protection
                laws,
                rules and regulations, with training tailored to each individual’s
                responsibilities and duties. 

            

    

     

    (2)  Upon
      adoption, a copy of the program shall be forwarded to the Assistant Deputy
      Comptroller for review.

     

    (3)  The
      Board
      shall ensure that the Bank has processes, personnel, and control systems to
      ensure implementation of and adherence to the program developed pursuant to
      this
      Article.

    

    ARTICLE
      VI

     

    BANK
      SECRECY ACT/ANTI-MONEY LAUNDERING 

     

    (1)  Within
      sixty (60) days, the Board shall review and enhance the Bank’s BSA/AML program
      and ensure implementation and Bank adherence to a written program of policies
      and procedures to provide for compliance with the Bank Secrecy Act (“BSA”), as
      amended (31 U.S.C. §§ 5311 et seq.), the regulations promulgated there
      under at 31 C.F.R. Part 103, as amended, and 12 C.F.R. Part 21,
      Subparts B and C, and the rules and regulations of the Office of Foreign Assets
      Control (“OFAC”) (collectively referred to as the “Bank Secrecy Act” or “BSA”)
      and for the appropriate identification and monitoring of transactions that
      pose
      greater than normal risk for compliance with the BSA. This program shall include
      the following:

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	(a)  	
              Enhanced
                policies and procedures, including written criteria, for identification
                of
                transactions that pose greater than normal risk for compliance with
                the
                Bank Secrecy Act and for the enhanced monitoring of such transactions;
                

            

    

     

     

    
      	(b)  	
              formal
                evaluation of the knowledge of the Bank’s operational and supervisory
                personnel of the Bank’s policies and procedures for identifying
                transactions that pose greater than normal risk for compliance with
                the
                Bank Secrecy Act;

            

    

     

     

    
      	(c)  	
              enhanced
                training for bank personnel appropriately tailored to the roles and
                responsibilities of each job function, and to address any weaknesses
                identified as a result of the evaluation required in (b);
                

            

    

     

     

    
      	(d)  	
              periodic
                evaluation of the Bank’s BSA training program to ensure on-going
                effectiveness of training provided;

            

    

     

     

    
      	(e)  	
              enhanced
                policies and procedures for recording, maintaining, and recalling
                information about transactions that pose greater than normal risk
                for
                compliance with the Bank Secrecy
                Act;

            

    

     

     

    
      	(f)  	
              enhanced
                policies and procedures for risk rating the bank’s customer
                base;

            

    

     

     

    
      	(g)  	
              on-going
                risk focused assessment of the Bank’s customer base, products, services,
                and geographic locations;

            

    

     

     

    
      	(h)  	
              well-defined
                policies and procedures for investigating and resolving the Bank’s
                response to transactions that have been identified as posing greater
                than
                normal risk for compliance with the Bank Secrecy Act;
                

            

    

     

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

     

    
      	(i)  	
              adequate
                controls and procedures to ensure that all suspicious and large currency
                transactions are identified and
                reported;

            

    

     

     

    
      	(j)  	
              adequate
                controls and procedures to ensure Currency Transaction Reports (CTRs)
                and
                Suspicious Activity Reports (SARs) are filed accurately and timely,
                including procedures to ensure that errors noted in internal or external
                reports are addressed and remedied within specified timeframes;
                

            

    

     

     

    
      	(k)  	
              a
                method for introducing new products and services that ensures that
                the
                policies and procedures governing new products and services are consistent
                with the Bank’s program for compliance with the Bank Secrecy
                Act.

            

    

     

     

    
      	(l)  	
              a
                policy that addresses the circumstances under which customer transactions
                are permitted to be conducted through Bank related accounts with
                specific
                documentation requirements to ensure sufficient customer information
                is
                obtained and maintained.

            

    

     

    (2)  Within
      sixty (60) days, the Board shall review and enhance the Bank’s policies and
      procedures and ensure implementation and Bank adherence to a written program
      for
      the Bank’s monitoring of suspicious cash, monetary instrument and wire
      transactions, and for other activities involving accounts, customers, products,
      services, and geographic areas that pose greater than normal risk for compliance
      with the Bank Secrecy Act. At a minimum, this written program shall
      include:

     

     

    
      	(a)  	
              reviews
                of cash purchases of monetary instruments on a periodic basis commensurate
                with risk;

            

    

     

     

    
      	(b)  	
              reviews
                of wire and cash transactions on a periodic basis commensurate with
                risk;

            

    

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

    
      	(c)  	
              analysis
                of aggregate cash, monetary instrument, and wire activity on a periodic
                basis commensurate with risk;

            

    

     

     

    
      	(d)  	
              analysis
                of Currency Transaction Report filings on a periodic basis commensurate
                with risk; 

            

    

     

     

    
      	(e)  	
              enhanced
                review of accounts, customers, products, services, and geographic
                areas
                that pose greater than normal risk for compliance with the Bank Secrecy
                Act; and 

            

    

     

     

    
      	(f)  	
              submission
                of SARs based on these reviews and analyses, as
                required.

            

    

     

    (3)  Within
      sixty (60) days, the Board shall develop, implement, and thereafter ensure
      Bank
      adherence to a written program of policies and procedures to provide for the
      application of appropriate thresholds for monitoring all types of transactions,
      accounts, customers, products, services, and geographic areas that pose greater
      than normal risk for compliance with the Bank Secrecy Act. At a minimum, this
      written program shall establish:

     

     

    
      	(a)  	
              meaningful
                thresholds for filtering accounts and customers for further monitoring,
                review, and analyses;

            

    

     

     

    
      	(b)  	
              an
                analysis of the filtering thresholds established by the Bank;
                and

            

    

     

     

    
      	(c)  	
              periodic
                testing and monitoring of thresholds for their appropriateness to
                the
                Bank’s customer base, products, services, and geographic
                area.

            

    

     

    (4)  Within
      sixty (60) days, the Board shall develop, implement, and thereafter ensure
      Bank
      adherence to expanded account-opening procedures for all accounts that pose
      greater than normal risk for compliance with the Bank Secrecy Act by
      requiring:

     

     

    
      	(a)  	
              identification
                of all account owners and beneficial owners in compliance with
                31 C.F.R. § 103.121;

            

    

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    
      	(b)  	
              identification
                of the officers, directors, major shareholders or partners, as applicable;
                

            

    

     

     

    
      	(c)  	
              documentation
                of the following information:

            

    

     

     

    
      	(i)  	
              any
                relevant financial information concerning the
                customer;

            

    

     

     

    
      	(ii)  	
              the
                type of business conducted by the
                customer;

            

    

     

     

    
      	(iii)  	
              the
                customer’s source of income or wealth;
                and

            

    

     

     

    
      	(iv)  	
              any
                other due diligence required by this Agreement, the BSA Officer or
                the
                Bank.

            

    

     

    (5)  The
      Bank
      shall obtain the information required in the preceding paragraph (4)
      of this
      Article before renewing or modifying an existing customer’s account within the
      scope of the preceding paragraph (4). 

     

    (6)  Within
      sixty (60) days, the Board shall develop, implement, and thereafter ensure
      Bank
      maintenance of an integrated, accurate system for all Bank areas to produce
      periodic reports designed to identify unusual or suspicious activity, including
      patterns of activity, to monitor and evaluate unusual or suspicious activity,
      and to maintain accurate information needed to produce these reports.

     

     

    
      	(a)  	
              the
                Bank’s system shall be able to link related accounts to evaluate patterns
                of activity and generate a list of all accounts associated with a
                relationship;

            

    

     

     

    
      	(b)  	
              The
                Bank’s system shall include information on all high risk customers or
                accounts (newly established, renewed or modified), which shall be
                maintained and kept current, including the following
                information:

            

    

     

     

    
      	(i)  	
              the
                name of the customer;

            

    

     

     

    
      	(ii)  	
              the
                officers, directors and major shareholder of any corporate customer
                and
                the partners of any partnership
                customer;

            

    

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

     

    
      	(iii)  	
              any
                other accounts maintained by the customer and, as applicable, its
                officers, directors, major shareholders or
                partners;

            

    

     

    
      	(iv)  	
              a
                detailed analysis of the due diligence performed on the customer
                and, as
                applicable, its officers, directors, major shareholders or
                partners;

            

    

     

     

    
      	(v)  	
              any
                related accounts of the customer at the Bank;

            

    

     

     

    
      	(vi)  	
              any
                action the Bank has taken on the account;

            

    

     

     

    
      	(vii)  	
              the
                purpose and balance of the account; and

            

    

     

     

    
      	(viii)  	
              any
                unusual activity for each account; 

            

    

     

     

    
      	(c)  	
              The
                periodic reports shall cover one day, a number of days, and include
                monthly reports and shall segregate transactions that pose a greater
                than
                normal risk for compliance with the Bank Secrecy
                Act;

            

    

    

    
      	(d)  	
              The
                periodic reports shall include reports on any type of subpoena received
                by
                the Bank and on any law enforcement inquiry directed to the Bank
                and any
                action taken by the Bank on the affected account;
                and

            

    

     

     

    
      	(e)  	
              The
                periodic reports shall include reports deemed necessary or appropriate
                by
                the BSA Officer or the Bank. 

            

    

     

    (7)  The
      BSA
      Officer or his/her designee shall periodically review, not less than each
      calendar year, account documentation for all high risk accounts and the related
      accounts of those customers at the Bank to determine whether the account
      activity is consistent with the customer’s business and the stated purpose of
      the account. 

     

    (8)  The
      Board
      shall ensure that the Bank has processes, personnel, and control systems to
      implement and adhere to the program developed pursuant to this
      Article.

     

    (9)  Upon
      adoption, a copy of the program shall be forwarded to the Assistant Deputy
      Comptroller for review.

     

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VII

     

    ACCOUNT/TRANSACTION
      ACTIVITY REVIEW

     

    (1)  Within
      sixty (60) days, the Bank shall submit to the Assistant Deputy Comptroller
      for a
      written determination of no objection, a written plan to review monetary
      instrument, wire and cash transactions (including structuring) occurring at
      the
      Bank since January 1, 2006, and customer accounts that pose greater than normal
      risk for compliance with the BSA in order to ascertain whether any unusual
      or
      suspicious activity may have occurred since January 1, 2006. In the event the
      Assistant Deputy Comptroller objects in writing to the plan or provides written
      comments, the Board shall immediately make the necessary revisions to the plan.
      

     

    (2)  Within
      one hundred and twenty (120) days of receiving a written determination of no
      objection from the Assistant Deputy Comptroller, the Bank shall complete the
      account and transaction activity review in accordance with the plan submitted
      pursuant to paragraph (1) of this Article. Upon
      completion of this review, the written findings shall be reported to the Board,
      with a copy to the Assistant Deputy Comptroller. Within thirty (30) days of
      receiving the written report, the Bank shall file SARs for any previously
      unreported suspicious activity identified during the review. At the
      Comptroller’s sole discretion, the Bank may be required to extend the suspicious
      activity review period to capture transactions and activity occurring at the
      Bank prior to January 1, 2006, after the written findings are provided to the
      Assistant Deputy Comptroller. 

    

    ARTICLE
      VIII

     

    OUTSOURCING
      SERVICES TO THIRD PARTIES

    

    (1)  Within
      ninety (90) days, the Board shall develop, implement, and thereafter adhere
      to a
      written program to oversee and manage risks associated with outsourcing services
      to third parties, including consultants and technology service providers and
      vendors. The third party management program shall be consistent with OCC
      Bulletin 2001-47, “Third Party Relationships,” and any applicable guidance
      listed in the attachment thereto, and the “Outsourcing Technology Services”
Booklet of the FFIEC
      Information Technology Examination Handbook,
      to the
      extent applicable. The program shall, at a minimum, include:

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

    
      	(a)  	
              an
                analysis of how the relationship fits into the Bank’s overall business
                strategy and objectives;

            

    

     

     

    
      	(b)  	
              identification
                of the strategic purposes, benefits, legal aspects, costs and risks
                associated with the third party
                relationship;

            

    

     

     

    
      	(c)  	
              assessment
                of internal Bank expertise to evaluate and manage the activity and
                the
                third-party relationship;

            

    

     

     

    
      	(d)  	
              an
                initial and on-going due diligence process that identifies qualitative
                and
                quantitative aspects, both financial and operational, of the third
                party
                to assess whether the third party can help the bank achieve its strategic
                goals;

            

    

     

     

    
      	(e)  	
              the
                execution of enforceable contracts that clearly define the expectations
                and obligations of the each party and include, as appropriate, the
                following:

            

    

     

     

    
      	(i)  	
              scope
                of the arrangement, including the frequency, content and format of the
                services to be provided, training of bank employees, customer service,
                and
                whether or not the service provider may subcontract any of its
                obligations;

            

    

     

     

    
      	(ii)  	
              performance
                measures that clearly specify the expectations and responsibilities
                for
                both parties;

            

    

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

     

    
      	(iii)  	
              identification
                of the frequency and content of specific reports the third party
                is
                required to provide to the Bank to assess performance, service levels,
                and
                risks;

            

    

     

     

    
      	(iv)  	
              thresholds
                and procedures for notifying the Bank when service disruptions, security
                breaches or other events that pose a material risk to the Bank
                occur;

            

    

     

     

    
      	(v)  	
              the
                right to audit the third party (and any of its subcontractors) as
                needed
                to monitor contract performance and identification of the types and
                frequency of audit information the Bank is entitled to receive from
                the
                third party;

            

    

     

     

    
      	(vi)  	
              a
                full description of the compensation, fees, calculations for base
                services
                or any special charges that may be imposed, including conditions
                under
                which the cost structure may be changed, and to the extent applicable,
                standards and documentation required for reimbursement of any expenses
                chargeable to the Bank;

            

    

     

     

    
      	(vii)  	
              whether
                and how the third party has the right to use the Bank’s data and whether
                any records generated by the third party are the property of the
                Bank;

            

    

     

     

    
      	(viii)  	
              standards
                for maintaining the confidentiality and security of the Bank’s
                information;

            

    

     

     

    
      	(ix)  	
              provision
                and standards for business resumption and contingency
                plans;

            

    

     

     

    
      	(x)  	
              stipulation
                of events constituting default, available remedies and opportunities
                to
                cure defaults, and identification of termination rights, including
                a
                provision that enables the Bank to terminate the contract, upon reasonable
                notice and without penalty, in the event the OCC formally objects
                to the
                particular third-party arrangement;
                and

            

    

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

     

    
      	(xi)  	
              to
                the extent terms limiting third party liability are included, only
                limits
                on liability that are proper in proportion to the amount of loss
                the Bank
                might experience as a result of the third party’s failure to
                perform.

            

    

     

     

    
      	(f)  	
              on-going
                oversight of the third party’s activities and performance, including the
                designation of a bank officer responsible for the administration
                and
                oversight of third party relationships, and assignment of sufficient
                staff
                with the necessary expertise to:

            

    

     

     

    
      	(i)  	
              monitor
                the third party’s financial
                condition;

            

    

     

     

    
      	(ii)  	
              monitor
                the third party’s controls, including review of audit information;
                policies relating to internal controls and security; business resumption
                contingency planning and testing; and compliance with applicable
                laws and
                regulations, including the BSA and consumer laws and regulations;
                

            

    

     

     

    
      	(iii)  	
              monitor
                key third party personnel changes and assess how such changes may
                impact
                the Bank;

            

    

     

     

    
      	(iv)  	
              review
                information documenting the third party’s performance relative to service
                level agreements and determine whether contractual terms and conditions
                are being met, or whether any revisions to service-level agreements
                or
                other terms are needed;

            

    

     

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

    
      	(v)  	
              document
                and follow-up on performance problems in a timely
                manner;

            

    

     

     

    
      	(vi)  	
              determine
                the adequacy of training provided to bank
                employees;

            

    

     

     

    
      	(vii)  	
              periodically
                meet with contract parties to discuss performance and operational
                issues;

            

    

     

     

    
      	(g)  	
              documentation
                of the Bank’s oversight of third party activities and performance
                including:

            

    

     

     

    
      	(i)  	
              a
                list of third parties deemed critical to the operation of the Bank
                or for
                which the Bank spends substantial amounts of
                money;

            

    

     

     

    
      	(ii)  	
              valid,
                current and complete contracts;

            

    

     

     

    
      	(iii)  	
              business
                plans for new lines of business or products that identify management’s
                planning process, decision making and due diligence in selecting
                a third
                party;

            

    

     

     

    
      	(iv)  	
              regular
                risk management and performance information received from the third
                party
                (e.g., audit information, security reviews, reports or information
                indicating compliance with service-level agreements); and
                

            

    

     

     

    
      	(v)  	
              regular
                reports to the Board, or its delegated committee, of the results
                of the
                Bank’s ongoing oversight activities.

            

    

     

    (2)  Within
      one hundred and twenty (120) days, the Board shall review each of the Bank’s
      current arrangements with any third party consultant or servicer and prepare
      a
      written analysis detailing whether and how each arrangement complies with the
      third party management program required to be developed under paragraph (1)
      of
      this Article. The Board’s analysis shall include an evaluation of the extent to
      which the third party is meeting the Bank’s expectations in providing the
      services for which it was contracted. For each consultant or servicer
      arrangement that does not meet the requirements of the program required under
      paragraph (1), or in the event any consultant or servicer is not meeting its
      

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     

    obligations
      under the terms of an existing contract, the Board shall prepare, within 60
      days
      of completing its review, a written plan of the steps it will take to address
      any identified deficiencies, including how the Bank will terminate the
      arrangement in the event the Board is unable to address an identified
      deficiency. In the event the written plan, or any portion thereof, is not
      implemented, the Board shall immediately advise the Assistant Deputy
      Comptroller, in writing, of specific reasons for deviating from the plan.

     

    (3)  For
      each
      review it must undertake pursuant to paragraph (2) above, the Board shall
      indicate whether:

     

    
      	(a)  	
              legal
                counsel was involved in the negotiation of any contracts executed
                with the
                third party; 

            

    

     

    
      	(b)  	
              prior
                to entering into any contract executed within one year from the effective
                date of this Agreement, the Board or Bank counsel reviewed any existing
                contract with the third party to determine whether the third party
                was
                already obligated to provide any of the services covered under the
                terms
                of the new contract, and the Board or Bank counsel’s determination in that
                regard; and 

            

    

     

    
      	(c)  	
              the
                contract is on market terms and fair and equitable to the Bank.
                

            

    

     

    (4)  The
      Bank
      shall not enter into any new or renegotiate any existing third party outsourcing
      arrangement which does not meet the requirements of the third party management
      program required to be developed under paragraph (1) of this Article.

     

    (5)  The
      Board
      shall submit copies of the program, analyses and plans required under the terms
      of this Article to the Assistant Deputy Comptroller for review. 

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (6)  The
      Board
      shall ensure the Bank has processes, personnel, and control systems to ensure
      implementation of and adherence to the programs and plans developed pursuant
      to
      this Article. 

    

    ARTICLE
      IX

     

    VIOLATIONS
      OF LAW

     

    (1)  The
      Board
      shall immediately take all necessary steps to ensure that Bank management
      corrects each violation of law, rule or regulation cited in the ROE. The
      quarterly progress reports required by Article II of this Agreement shall
      include the date and manner in which each correction has been effected during
      that reporting period.

    

    ARTICLE
      X

     

    CLOSING

     

    (1)  Although
      the Board has agreed to submit certain programs and reports to the Assistant
      Deputy Comptroller for review or prior written determination of no supervisory
      objection, the Board has the ultimate responsibility for proper and sound
      management of the Bank.

     

    (2)  It
      is
      expressly and clearly understood that if, at any time, the Comptroller deems
      it
      appropriate in fulfilling the responsibilities placed upon him by the several
      laws of the United States of America to undertake any action affecting the
      Bank,
      nothing in this Agreement shall in any way inhibit, estop, bar, or otherwise
      prevent the Comptroller from so doing.

     

    (3)  Any
      time
      limitations imposed by this Agreement shall begin to run from the effective
      date
      of this Agreement. Such time requirements may be extended in writing by the
      Assistant Deputy Comptroller for good cause upon written application by the
      Board.

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (4)  The
      provisions of this Agreement shall be effective upon execution by the parties
      hereto and its provisions shall continue in full force and effect unless or
      until such provisions are amended in writing by mutual consent of the parties
      to
      the Agreement or excepted, waived, or terminated in writing by the
      Comptroller.

     

    (5)  This
      Agreement is intended to be, and shall be construed to be, a supervisory
“written agreement entered into with the agency” as contemplated by 12 U.S.C. §
1818(b)(1), and expressly does not form, and may not be construed to form,
      a
      contract binding on the Comptroller or the United States. Notwithstanding the
      absence of mutuality of obligation, or of consideration, or of a contract,
      the
      Comptroller may enforce any of the commitments or obligations herein undertaken
      by the Bank under his supervisory powers, including 12 U.S.C. § 1818(b)(1),
      and not as a matter of contract law. The Bank expressly acknowledges that
      neither the Bank nor the Comptroller has any intention to enter into a contract.
      The Bank also expressly acknowledges that no officer or employee of the Office
      of the Comptroller of the Currency has statutory or other authority to bind
      the
      United States, the U.S. Treasury Department, the Comptroller, or any other
      federal bank regulatory agency or entity, or any officer or employee of any
      of
      those entities to a contract affecting the Comptroller’s exercise of his
      supervisory responsibilities. The terms of this Agreement, including this
      paragraph, are not subject to amendment or modification by any extraneous
      expression, prior agreements or prior arrangements between the parties, whether
      oral or written.

     

    IN
      TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller, has hereunto
      set her hand on behalf of the Comptroller.

    

     

    
      	/s/
              Jennifer Kelly	 	January
              29, 2007
	
              Jennifer
                Kelly

              Deputy
                Comptroller

              Midsize
                and Credit Card Bank Supervision

            	 	
              Date

            

    

     

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    
 

    IN
      TESTIMONY WHEREOF, the undersigned, as the duly elected and acting Board of
      Directors of the Bank, have hereunto set their hands on behalf of the
      Bank.

    

         

    
      	/s/
              Gary L. Nalbandian	 	January
              26, 2007
	
               

               

              /s/
                James R. Adair

            	 	
              Date

               

              January
                26, 2007

            
	
               

              /s/
                John J. Cardello

            	 	
              Date

               

              January
                26, 2007

            
	
              /s/
                Douglas S. Gelder

            	 	
              Date

               

              January
                26, 2007

            
	
              /s/
                Alan R. Hassman

            	 	
              Date

               

              January
                26, 2007

            
	
              /s/
                Howell C. Mette

            	 	
              Date

               

              January
                26, 2007

            
	
              /s/
                Michael A. Serluco

            	 	
              Date

               

              January
                26, 2007

            
	
               

               

              /s/
                Samir J. Srouji, MD

            	 	
              Date

               

              January
                26, 2007

            
	 	 	
              Date

            

    

     

     

     

    232007 STOCK OPTION PLAN

EXHIBIT 10.1

ASIA PAYMENT SYSTEMS INC.

2007 NONQUALIFIED STOCK OPTION PLAN 

ARTICLE I 

Purpose of Plan 

This 2007 NONQUALIFIED STOCK OPTION PLAN (the "Plan") of ASIA PAYMENT SYSTEMS INC.(the "Company") for persons employed or associated with the Company, including without limitation any employee, director, general partner, officer, attorney, accountant, consultant or advisor, is intended to advance the best interests of the Company by providing additional incentive to those persons who have a substantial responsibility for its management, affairs, and growth by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company.  Further, the availability and offering of Stock Options under the Plan supports and increases the Company's ability to attract, engage and retain individuals of exceptional talent upon whom, in large measure, the sustained progress growth and profitability of the Company for the shareholders depends. 

ARTICLE II 

Definitions 

For Plan purposes, except where the context might clearly indicate otherwise, the following terms shall have the meanings set forth below:  

"Board" shall mean the Board of Directors of the Company.

"Code" shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

"Committee" shall mean the Compensation Committee, or such other committee appointed by the Board, which shall be designated by the Board to administer the Plan.  The Company shall be composed of two or more persons as from time to time are appointed to serve by the Board and may be members of the Board or the entire Board. 

"Common Shares" shall mean the Company's Common Shares $0.001 par value per share, or, in the event that the outstanding Common Shares are hereafter changed into or exchanged for different shares or securities of the Company, such other shares or securities.

"Company" shall mean ASIA PAYMENT SYSTEMS, INC., a Nevada corporation, and any parent or subsidiary corporation of ASIA PAYMENT SYSTEMS, INC., as such terms are defined in Section 425(e) and 425(f), respectively of the Code.  

"Optionee" shall mean any person employed or associated with the affairs of the Company who has been granted one or more Stock Options under the Plan.

 

"Stock Option" or "NQSO" shall mean a stock option granted pursuant to the terms of the Plan.

"Stock Option Agreement" shall mean the agreement between the Company and the Optionee under which the Optionee may purchase Common Shares hereunder. 

ARTICLE III  

Administration of the Plan 

1.   The Committee shall administer the plan and accordingly, it shall have full power to grant Stock Options, construe and interpret the Plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, it believes reasonable and proper. 

2.   The determination of those eligible to receive Stock Options, and the amount, price, type and timing of each Stock Option and the terms and conditions of the respective stock option agreements shall rest in the sole discretion of the Committee, subject to the provisions of the Plan. 

3.   The Committee may cancel any Stock Options awarded under the Plan if an Optionee conducts himself in a manner which the Committee determines to be inimical to the best interest of the Company and its shareholders as set forth more fully in paragraph 8 of Article X of the Plan.

4.   The Board, or the Committee, may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any granted Stock Option, in the manner and to the extent it shall deem necessary to carry it into effect. 

5.   Any decision made, or action taken, by the Committee or the Board arising out or in connection with the interpretation and administration of the Plan shall be final and conclusive. 

6.   Meetings of the Committee shall be held at such times and places as shall be determined by the Committee.  A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting shall decide any question brought before that meeting.  In addition, the Company may take any action otherwise proper under the Plan by the affirmative vote, taken without a meeting, of a majority of its members. 

7.   No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his own part, including, but not limited to, the exercise of any power or discretion given to him under the Plan except those resulting form his own gross negligence or willful misconduct.

 

 - 2 - 

8.   The Company, through its management, shall supply full and timely information to the Committee on all matters relating to the eligibility of Optionees, their duties and performance, and current information on any Optionee's death, retirement, disability or other termination of association with the Company, and such other pertinent information as the Committee may require.  The Company shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties hereunder. 

ARTICLE IV 

Shares Subject to the Plan 

1.   The total number of shares of the Company available for grants of Stock Options under the Plan shall be 25,000,000 Common Shares, subject to adjustment as herein provided, which shares may be either authorized but unissued or reacquired Common Shares of the Company.

2.   If a Stock Option or portion thereof shall expire or terminate for any reason without having been exercised in full, the unpurchased shares covered by such NQSO shall be available for future grants of Stock Options.

ARTICLE V 

Stock Option Terms and Conditions 

1.   Consistent with the Plan's purpose, Stock Options may be granted to any person who is performing or who has been engaged to perform services of special importance to management in the operation, development and growth of the Company.

2.   Determination of the option price per share for any stock option issues hereunder shall rest in the sole and unfettered discretion of the Committee. 

3.   All Stock Options granted under the Plan shall be evidenced by agreements which shall be subject to applicable provisions of the Plan, and such other provisions as the Committee may adopt, including the provisions set forth in paragraphs 2 through 11 of this Article V.

4.   All Stock Options granted hereunder must be granted within ten years from the date this Plan is adopted. 

5.   No Stock Option granted hereunder shall be exercisable after the expiration of ten years from the date such NQSO is granted.  The Committee, in its discretion, may provide that an option shall be exercisable during such ten year period or during any lesser period of time.  The Committee may establish installment exercise terms for a Stock Option such that the NQSO becomes fully exercisable in a series of cumulating portions.  If an Optionee shall not, in any given installment period, purchase all the Common Shares which such Optionee is entitled to purchase within such installment period, such Optionee's right to purchase any Common Shares not purchased in such installment period shall continue until the expiration or sooner termination of such NQSO.  The Committee may also accelerate the exercise of any NQSO. 

 

 - 3 - 

6.   A Stock Option, or portion thereof, shall be exercised by deliver of (i) a written notice of exercise to the Company specifying the number of Common Shares to be purchased, and (ii) payment of the full price of such Common Shares, as fully set forth in paragraph 7 of this Article V.  No NQSO or installment thereof shall be reusable except with respect to whole shares, and fractional share interests shall be disregarded.  Not less than 100 Common Shares  may be purchased at one time unless the number purchased is the total number at the time available for purchase under the NQSO.  Until the Common Shares represented by an exercised NQSO are issued to an Optionee, he shall have none of the rights of a shareholder.

7.   The exercise price of a Stock Option, or portion thereof, may be paid: 

A.   In United States dollars, in cash or by cashier's check, certified check, bank draft or money order, payable to the order of the Company in an amount equal to the option price; or,      

B.   At the discretion of the Committee, through the delivery of fully paid and nonassessable Common Shares, with an aggregate fair market value (determined as the average of the highest and lowest reported sales prices on the Common Shares as of the date of exercise of the NQSO, as reported by such responsible reporting service as the Committee may select, or if there were not transactions in the Common Shares on such day, then the last preceding day on which transactions took place), as of the date of the NQSO exercise equal to the option price, provided such tendered shares, or any derivative security resulting in the issuance of Common Shares, have been owned by he Optionee for at least 30 days prior to such exercise; or, 

C.   By a combination of both A and B above. 

8.   The Committee shall determine acceptable methods for tendering Common Shares as payment upon exercise of a Stock Option and may impose such limitations and prohibitions on the use of Common Shares to exercise an NQSO as it deems appropriate. 

9.   With the Optionee's consent, the Committee may cancel any Stock Option issued under this Plan and issue a new NQSO to such Optionee. 

10.  Except by will, the laws of descent and distribution, or with the written consent of the Committee, no right or interest in any Stock Option granted under the Plan shall be assignable or transferable, and no right or interest of any Optionee shall be liable for, or subject to, any lien, obligation or liability of the Optionee.  Upon petition to, and thereafter with the written consent of the Committee, an Optionee may assign or transfer all or a portion of the Optionee's rights and interest in any stock option granted hereunder.  Stock Options shall be exercisable during the Optionee's lifetime only by the Optionee or assignees, or the duly appointed legal representative of an incompetent Optionee, including following an assignment consented to by the Committee herein. 

 

 - 4 - 

11.  No NQSO shall be exercisable while there is outstanding any other NQSO which was granted to the Optionee before the grant of such option under the Plan or any other plan which gives the right to the Optionee to purchase stock in the Company or in a corporation which is a parent corporation (as defined in Section 425(e) of the Code) of the Company, or any predecessor corporation of any of such corporations at the time of the grant.  An NQSO shall be treated as outstanding until it is either exercised in full or expires by reason of lapse of time. 

12.  Any Optionee who disposes of Common Shares acquired on the exercise of a NQSO by sale or exchange either (i) within two years after the date of the grant of the NQSO under which the stock was acquired, or (ii) within one year after the acquisition of such Shares, shall notify the Company of such disposition and of the amount realized upon such disposition.  The transfer of Common Shares may also be restricted by applicable provisions of the Securities Act of 1933, as amended.

ARTICLE VI  

Adjustments or Changes in Capitalization 

1.   In the event that the outstanding Common Shares of the Company are hereafter changed into or exchanged for a different number of kinds of shares or other securities of the Company by reason of merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up or stock dividend:

A.   Prompt, proportionate, equitable, lawful and adequate adjustment shall be made of the aggregate number and kind of shares subject to Stock Options which may be granted under the Plan, such that the Optionee shall have the right to purchase such Common Shares as may be issued in exchange for the Common Shares purchasable on exercise of the NQSO had such merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up or stock dividend not taken place;

B.   Rights under unexercised Stock Options or portions thereof granted prior to any such change, both as to the number or kind of shares and the exercise price per share, shall be adjusted appropriately, provided that such adjustments shall be made without change in the total exercise price applicable to the unexercised portion of such NQSO's but by an adjustment in the price for each share covered by such NQSO's; or, 

C.   Upon any dissolution or liquidation of the Company or any merger or combination in which the Company is not a surviving corporation, each outstanding Stock Option granted hereunder shall terminate, but the Optionee shall have the right, immediately prior to such dissolution, liquidation, merger or combination, to exercise his NQSO in whole or in part, to the extent that it shall not have been exercised, without regard to any installment exercise provisions in such NQSO. 

 

 - 5 - 

2.   The foregoing adjustment and the manner of application of the foregoing provisions shall be determined solely by the Committee, whose determination as to what adjustments shall be made and the extent thereof, shall be final, binding and conclusive.  No fractional Shares shall be issued under the Plan on account of any such adjustments.    

ARTICLE VII

Merger, Consolidation or Tender Offer 

1.   If the Company shall be a party to a binding agreement to any merger, consolidation or reorganization or sale of substantially all the assets of the Company, each outstanding Stock Option shall pertain and apply to the securities and/or property which a shareholder of the number of Common Shares of the Company subject to the NQSO would be entitled to receive pursuant to such merger, consolidation or reorganization or sale of assets.

2.   In the event that: 

A.   Any person other than the Company shall acquire more than 20% of the Common Shares of the Company through a tender offer, exchange offer or otherwise; 

B.   A change in the "control" of the Company occurs, as such term is defined in Rule 405 under the Securities Act of 1933; 

C.   There shall be a sale of all or substantially all of the assets of the Company;  any then outstanding Stock Option held by an Optionee, who is deemed by the Committee to be a statutory officer ("insider") for purposes of Section 16 of the Securities Exchange Act of 1934 shall be entitled to receive, subject to any action by the Committee revoking such an entitlement as provided for below, in lieu of exercise of such Stock Option, to the extent that it is then exercisable, a cash payment in an amount equal to the difference between the aggregate exercise price of such NQSO, or portion thereof, and, (i) in the event of an offer or similar event, the final offer price per share paid for Common Shares, or such lower price as the Committee may determine to conform an option to preserve its Stock Option status, times the number of Common Shares covered by the NQSO or portion thereof, or (ii) in the case of an event covered by B or C above, the aggregate fair market value of the Common Shares covered by the Stock Option, as determined by the Committee at such time. 

3.   Any payment which the Company is required to make pursuant to paragraph 2 of this Article VII, shall be made within 15 business days, following the event which results in the Optionee's right to such payment.  In the event of a tender offer in which fewer than all the shares which are validity tendered in compliance with such offer are purchased or exchanged, then only  that portion of the shares covered by an NQSO as results from multiplying such shares by a fraction, the numerator of which is the number of Common Shares acquired purchase to the offer and the denominator of which is the number of Common Shares tendered in compliance with such offer, shall be used to determine the payment thereupon.  To the extent that all or any portion of a Stock Option shall be affected by this provision, all or such portion of the NQSO shall be terminated.

 

 - 6 - 

4.   Notwithstanding paragraphs 1 and 3 of this Article VII, the Company may, by unanimous vote and resolution, unilaterally revoke the benefits of the above provisions; provided, however, that such vote is taken no later than ten business days following public announcement of the intent of an offer of the change of control, whichever occurs earlier. 

ARTICLE VIII 

Amendment and Termination of Plan 

1.   The Board may at any time, and from time to time, suspend or terminate the Plan in whole or in part or amend it from time to time in such respects as the Board may deem appropriate and in the best interest of the Company. 

2.   No amendment, suspension or termination of this Plan shall, without the Optionee's consent, alter or impair any of the rights or obligations under any Stock Option theretofore granted to him under the Plan.

3.   The Board may amend the Plan, subject to the limitations cited above, in such manner as it deems necessary to permit the granting of Stock Options meeting the requirements of future amendments or issued regulations, if any, to the Code. 

4.   No NQSO may be granted during any suspension of the Plan or after termination of the Plan. 

ARTICLE IX 

Government and Other Regulations 

The obligation of the Company to issue, transfer and deliver Common Shares for Stock Options exercised under the Plan shall be subject to all applicable laws, regulations, rules, orders and approval which shall then be in effect and required by the relevant stock exchanges on which the Common Shares are traded and by government entities as set forth below or as the Committee in its sole discretion shall deem necessary or advisable.  Specifically, in connection with the Securities Act of 1933, as amended, upon exercise of any Stock Option, the Company shall not be required to issue Common Shares unless the Committee has received evidence satisfactory to it to the effect that the Optionee will not transfer such shares except pursuant to a registration statement in effect under such Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required.  Any determination in this connection by the Committee shall be final, binding and conclusive.  The Company may, but shall in no event be obligated to take any other affirmative action in order to cause the exercise of a Stock Option or the issuance of Common Shares purchase thereto to comply with any law or regulation of any government authority. 

 

 - 7 - 

ARTICLE X 

Miscellaneous Provisions 

1.   No person shall have any claim or right to be granted a Stock Option under the Plan, and the grant of an NQSO under the Plan shall not be construed as giving an Optionee the right to be retained by the Company.  Furthermore, the Company expressly reserves the right at any time to terminate its relationship with an Optionee with or without cause, free from any liability, or any claim under the Plan, except as provided herein, in an option agreement, or in any agreement between the Company and the Optionee. 

2.   Any expenses of administering this Plan shall be borne by the Company.

3.   The payment received from Optionee from the exercise of Stock Options under the Plan shall be used for the general corporate purposes of the Company.

4.   The place of administration of the Plan shall be in the State of Nevada, and the validity, contraction, interpretation, administration and effect of the Plan and its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the State of Nevada.

5.   Without amending the Plan, grants may be made to persons who are foreign nationals or employed outside the United States, or both, on such terms and conditions, consistent with the Plan's purpose, different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to create equitable opportunities given differences in tax laws in other countries.

6.   In addition to such other rights of indemnification as they may have as members of the Board or Committee, the members of the Committee shall be indemnified by the Company against all costs and expenses reasonably incurred by them in connection with any action, suite or proceeding to which they or any of them may be party by reason of any action taken or failure to act under or in connection with the Plan or any Stock Option granted thereunder, an against all amount paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except a judgment based upon a finding of bad faith; provided that upon the institution of any such action, suit or proceeding a Committee member shall in writing, give the Company notice thereof and an opportunity, at its own expense, to handle and defend the same before such Committee member undertakes to handle and defend it on his own behalf.

7.   Stock Options may be granted under this Plan form time to time, in substitution for stock options held by employees of other corporations who are about to become employees of the Company as the result of a merger or consolidation of the employing corporation with the Company or the acquisition by the Company of the assets of the employing corporation or the acquisition by the Company of stock of the employing corporation as a result of which it become a subsidiary of the Company.  The terms and conditions of such substitute stock options so granted my vary from

 

 - 8 - 

the terms and conditions set forth in this Plan to such extent as the Board of Director of the Company at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the stock options in substitution for which they are granted, but no such variations shall be such as to affect the status of any such substitute stock options as a stock option under Section 422A of the Code.

8.   Notwithstanding anything to the contrary in the Plan, if the Committee finds by a majority vote, after full consideration of the facts presented on behalf of both the Company the Optionee, that the Optionee has been engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his association with the Company or any subsidiary corporation which damaged the Company or any subsidiary corporation, or for disclosing trade secrets of the Company or any subsidiary corporation, the Optionee shall forfeit all unexercised Stock Options and all exercised NQSO's under which the Company has not yet delivered the certificates and which have been earlier granted the Optionee by the Committee.  The decision of the Committee as to the case of an Optionee's discharge and the damage done to the Company shall be final.  No decision of the Committee, however, shall affect the finality of the discharge of such Optionee by the Company or any subsidiary corporation in any manner.  Further, if Optionee voluntarily terminates employment with the Company, the Optionee shall forfeit all unexercised stock options.

ARTICLE XI 

Written Agreement

Each Stock Option granted hereunder shall be embodied in a written Stock Option Agreement which shall be subject to the terms and conditions prescribed above and shall be signed by the Optionee and by the President or any Vice President of the Company, for and in the name and on behalf of the Company.  Such Stock Option Agreement shall contain such other provisions as the Committee, in its discretion shall deem advisable. 

ARTICLE XII 

Effective Date 

This Plan shall become unconditionally effective as of the effective date of approval of the Plan by the Board of Directors of the Company.  No Stock Option may be granted later than ten (10) years from the effective date of the Plan; provided, however, that the Plan and all outstanding Stock Options shall remain in effect until such NQSO's have expired or until such options are cancelled. 

 

 

 

 

 - 9 - 

	
Number of Shares: _______________
	
Date of Grant: _______________       

NONQUALIFIED STOCK OPTION AGREEMENT 

AGREEMENT made this _____ day of __________________, 20____, between ____________________________ (the "Optionee"), and ASIA PAYMENT SYSTEMS INC., a Nevada corporation (the "Company").

1.   Grant of Option.  The Company, pursuant to the provisions of the 2007 ASIA PAYMENT SYSTEMS INC. NONQUALIFIED STOCK OPTION PLAN (the "2007 Plan"), set forth as Attachment A hereto, hereby grants to the Optionee, subject to the terms and conditions set forth or incorporated herein, an Option and Purchase from the Company all or any part of an aggregate of _______________ Common Shares, as such Common Shares are now constituted, at the purchase price of $_______________ per share.  The provisions of the 2007 Plan governing the terms and conditions of the Option granted hereby are incorporated in full herein by reference. 

2.   Exercise.  The Option evidenced hereby shall be exercisable in whole or in part (but only in multiples of 100 Shares unless such exercise is as to the remaining balance of this Option) on or after __________________, 20___ and on or before _________________, 20___, provided that the cumulative number of Common Shares as to which this Option may be exercised (except as provided in paragraph 1 of Article VI of this 2007 Plan) shall not exceed the following amounts:     

	
Cumulative Number of Shares

	

Prior to Date (Not Inclusive of) 

 

 

 

 

 

The Option evidenced hereby shall be exercisable by the deliver to and receipt by the Company of (i) a written notice of election to exercise, in the form set forth in Attachment B hereto, specifying the number of shares to be purchased; (ii) accompanied by payment of the full purchase price thereof in case or certified check payable to the order of the Company, or by fully-paid and nonassessable Common Shares of the Company properly endorsed over to the Company, or by a combination thereof; and, (iii) by return of this Stock Option Agreement for endorsement of exercise by the Company on Schedule I hereof.  In the event fully paid and nonassessable Common Shares are submitted as whole or partial payment for Shares to be purchased hereunder, such Common Shares will be valued at their Fair Market Value (as defined in the 2007 Plan) on the date such Shares are received by the Company and applied to payment of the exercise price. 

 

 - 10 - 

3.   Transferability.  The Option evidenced hereby is NOT assignable or transferable by the Optionee other than by the Optionee's will, by the laws of descent and distribution, as provided in paragraph 9 of Article V of the 2007 Plan.  The Option shall be exercisable only by the Optionee during his lifetime. 

ASIA PAYMENT SYSTEMS INC.

 

BY:   ______________________________

           King K. Ng, President  

ATTEST: 

________________________________________ 

Secretary 

Optionee hereby acknowledges receipt of a copy of the 2007 Plan, attached hereto and accepts this Option subject to each and every term and provision of such Plan.  Optionee hereby agrees to accept as binding,  conclusive and final, all decisions or interpretations of the Compensation Committee of the Board of Directors administering the 2007 Plan on any questions arising under such Plan.  Optionee recognizes that if Optionee's employment with the Company or any subsidiary thereof shall be terminated with cause, or by the Optionee, all of the Optionee's rights hereunder shall thereupon terminate; and that, pursuant to paragraph 10 of Article V of the 2007 Plan, this Option may not be exercised while there is outstanding to Optionee any unexercised Stock Option, granted to Optionee before the date of grant of this Option, to purchase Common Shares of the Company or any parent or subsidiary thereof.  

Dated: _________________________________  

 

___________________________________  

Optionee 

___________________________________ 

Type or Print Name 

___________________________________ 

Address 

___________________________________ 

Social Security No.

 

 

 - 11 - 

Attachment B 

Date:

Secretary, 

ASIA PAYMENT SYSTEMS INC.

800 5th Avenue, Suite 4100

Seattle, WA 98104

Dear Sir: 

In accordance with paragraph 2 of the Nonqualified Stock Option Agreement evidencing the Option granted to me on _____________________ under the 2007 ASIA PAYMENT SYSTEMS INC.NON QUALIFIED STOCK OPTION PLAN, I hereby elect to exercise this Option to the extent of __________________ Common Shares. 

Enclosed are (i) Certificate(s) No.(s) ____________________ representing fully-paid common shares of ASIA PAYMENT SYSTEMS INC. endorsed to the Company with signature guaranteed, and/or a certified check payable to the order of ASIA PAYMENT SYSTEMS INC .in the amount of $_______________ as the balance of the purchase price of $______________ for the Shares which I have elected to purchase and (ii) the original Stock Option Agreement for endorsement by the Company as to exercise on Schedule I thereof.  I acknowledge that the Common Shares (if any) submitted as part payment for the exercise price due hereunder will be valued by the Company at their Fair Market Value (as defined in the 2007 Plan) on the date this Option exercise is effected by the Company.  In the event I hereafter sell any Common Shares issued pursuant to this option exercise within one year from the date of exercise or within two years after the date of grant of this Option, I agree to notify the Company promptly of the amount of taxable compensation realized by me by reason of such sale for federal income tax purposes. 

When the certificate for Common Shares which I have elected to purchase has been issued, please deliver it to me, along with my endorsed Stock Option Agreement in the event there remains an unexercised balance of Shares under the Option, at the following address:

Include Optionee's address here.

 

 

__________________________________ 

Signature of Optionee 

__________________________________ 

Type or Print Name 

 

 

 

 - 12 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}]]