ASSET PURCHASE AGREEMENT

BETWEEN:

OPTIMAL PAYMENTS INC. , a Canadian corporation;

AND:

OPTIMAL PAYMENTS (IRELAND) LIMITED , an Irish corporation;

AND:

OPTIMAL PAYMENTS LIMITED , an English corporation;

AND:

OPTIMAL PAYMENTS CORP., a Delaware corporation;

AND:

7012985 CANADA INC. , a Canadian corporation, on its behalf and/or that of a designee (in any case, the “Purchaser” )

AND INTERVENES:

CARD ONE PLUS LTD. , an Ontario corporation;

AND INTERVENES:

OPTIMAL GROUP INC. , a Canadian corporation;

1.1

Defined Terms.

1.1.1

“Accounts Receivable” means all accounts receivable derived exclusively from the Purchased Business in the Ordinary Course, less any allowance or provision for doubtful accounts and bad debts, as at the Closing Date.

1.1.2

“Accrued Vacation Pay” means all accrued vacation pay of the Designated Employees as at the Closing Date.

1.1.3

“Affiliate” means with respect to a specified Person, any Person that directly or indirectly controls, is controlled by, or is under common control with, the specified Person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

1.1.4

“Agreement” means this Asset Purchase Agreement (including its preamble and Schedules which shall form an integral part of this Agreement) and all instruments supplemental hereto or in amendment or confirmation hereof; “herein” , “hereof” , “hereto” , “hereunder” and similar expressions mean and refer to this Agreement and not to any particular Article, Section or other subdivision; “Article” , “Section” or other subdivision of this Agreement means and refers to the specified Article, Section or other subdivision of this Agreement.

1.1.5

“Assigned Contracts” means any agreement, indenture, contract, lease, deed of trust, license, software license, option, instrument or other commitment relating to the Purchased Business, whether written or oral, including, without limitation, (i) all acquiring bank agreements, merchant agreements, software supplier agreements and agency agreements and (ii) the agreements set forth in Schedule 1.1.5 .

1.1.6

“Assumed Liabilities” means the Current Liabilities, Accrued Vacation Pay, accrued bonuses of the Designated Employees, all liabilities for Chargebacks and Returns relating to the Purchased Assets, and all liabilities and obligations under the Assigned Contracts as at and following the Closing Date, provided that any such liabilities and obligations under the Assigned Contracts that ought to have been accrued in the Books and Records, have been so accrued and have been so

1.1.7

“Authorization” means, with respect to any Person, any order, regulation, permit, approval, waiver, licence or similar authorization of any Governmental Entity.

1.1.8

“Balance” means the exposure of a merchant calculated as follows: ‘security deposit’ + ‘reserve balance’ + ‘current balance’; for example, if a merchant has $10 as its security deposit, $75 in its reserve balance and ( - $150) in its current balance, then the Balance would be: $10 + $75 + ( - $150)=(- $65), in this example, the Balance is deemed a negative Balance; if the result of the foregoing formula is positive, then the Balance is deemed a positive Balance.

1.1.9

“Books and Records” means all books of account, tax records, sales and purchase records, customer and supplier lists and all other documents, files, correspondence and other information of a similar nature relating exclusively to the Purchased Assets, Designated Employees and Purchased Business whether in writing or electronic form, excluding, for greater certainty, business reports, plans and projections.

1.1.10

“Business Day” means any day other than a Saturday, Sunday or other day on which the principal commercial banks in Montreal, Quebec are not open for business during normal business hours.

1.1.11

“Chargebacks or Returns” means amounts owing as a result of a reversal of a previously approved credit card, ACH or EFT transaction, including any other fees, fines, charges and penalties relating specifically to such chargeback or return.

1.1.12

“Closing” means the completion of the transaction of purchase and sale contemplated in this Agreement.

1.1.13

“Closing Date” means August 29, 2008 or such other date as may be agreed upon in writing between Vendor and Purchaser.

1.1.14

“ Closing Statement ” has the meaning described thereto in Section 3.5.4.

1.1.15

“Consents” means the consents of a contracting party or other entity, including, without limitation, PCI/DSS certification, VISA and MasterCard (or any other credit, payment or debit card brand), through the existing banking relationships having jurisdiction over the Person, to the assignment of the Assigned Contracts to Purchaser.

1.1.16

“Current Assets” means the Accounts Receivable, Settlement Assets and all cash and short-term investments held as reserves and relating exclusively to merchants, as well as Prepaid Expenses and Deposits.

1.1.17

“Current Liabilities” means the trade accounts payable, accrued liabilities (excluding accrued liabilities for bonuses and Accrued Vacation Pay), customer reserves, accrued transaction processing fees, accrued commissions, commissions payable of the Purchased Business existing as at the Closing Date, except for those not listed in the Closing Statement.

1.1.18

“Damages” has the meaning ascribed thereto in Section 9.1.

1.1.19

“Deposits” means all security deposits and any other deposits made by Vendor or any of its Affiliates with any Person relating to the Purchased Business or the Purchased Assets.

1.1.20

“Designated Employees” means the employees of the Purchased Business listed on Schedule 4.15.1.

1.1.21

“Encumbrance” means any encumbrance, lien, charge, prior claim, hypothec, pledge, mortgage, title retention agreement, security interest of any nature, adverse claim, easement or servitude, right of occupation, restrictive covenant, any matter capable of registration or publication against title, option, right of pre-emption, privilege or any right or privilege capable of becoming any of the foregoing.

1.1.22

“Excluded Assets” means the following assets:

(a)

cash and short-term investments not expressly forming part of the Purchased Assets;

(b)

all Taxes receivable;

(c)

all interest receivable;

(d)

all furnishings, fixtures, machinery, equipment, computer hardware and software located in the Leased Premises and on the 16 ^th Floor of 2 Place Alexis Nihon, Montreal, Quebec, which are not required to operate the Purchased Business;

(e)

all assets relating to the United Bank Card, Moneris USA, NPS and Merrick Bank (in the case of Merrick Bank, only to the extent that it relates exclusively to the “card present” business) business divisions or portfolios of Vendor, other than the merchants listed in Section 13 of Schedule 2.1.1 ;

(f)

all assets relating to the MCA division of Vendor which are listed on Schedule 1.1.22(f);

(g)

all cash and short term investments held as reserves and relating exclusively to the processing of online gaming transactions with Persons in the United States;

(h)

all Excluded Merchants; and

(i)

all loans receivable from CommerceTel, Inc., Payone Solutions Inc. and Cygnus Etransactions Group Inc.

1.1.23

“Excluded Liabilities” has the meaning ascribed thereto in Section 3.7.

1.1.24

“Excluded Merchants” means all terminated merchants with a negative Balance, as set forth in Schedule 1.1.24 .

1.1.25

“Financial Statements” means the non-consolidated balance sheets and profit and loss statements, whether interim or annual, of the Vendor for each of the two (2) years ending December 31, 2006 and 2007, copies of which are annexed hereto as Schedule 1.1.25 .

1.1.26

“GAAP” means, at any time, accounting principles generally accepted in Canada, at the relevant time applied on a consistent basis.

1.1.27

“Governmental Entity” means any (a) multinational, national, federal, provincial, state, municipal, special administrative region, local or other governmental or public department, central bank, court, commission, board, bureau, agency or instrumentality, domestic or foreign, (b) any subdivision or authority of any of the foregoing, or (c) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the above.

1.1.28

“Intellectual Property” means (a) all domestic and foreign patents and applications therefor and all reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof; (b) all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know-how, technology, technical data, schematics and customer lists, and all documentation relating to any of the foregoing; (c) all copyrights, copyright registrations and applications therefor, and all other rights corresponding thereto throughout the world; (d) the Firepay® trademark; (e) all data, software (both source code and object code form) and any proprietary rights in such software, including documentation and other materials related thereto; (f) all other intangible

1.1.29

“Interim Period” means the period between the date hereof and the Closing Date.

1.1.30

“Laws” shall mean (a) all constitutions, treaties, laws, statutes, codes, ordinances, orders, decrees, rules, regulations, and municipal by-laws, whether domestic, foreign or international; and (b) all judgments, orders, writs, injunctions, decisions, rulings, decrees, and awards of any Governmental Entity, in each case binding on or affecting the Person referred to in the context in which such word is used; and “Law” shall mean any one of them.

1.1.31

“Leased Property” means the immovable properties listed in Schedule 4.8 which are used in the Purchased Business and leased by Vendor.

1.1.32

“Leases” has the meaning ascribed thereto in Section 4.11.

1.1.33

“Material Adverse Effect” means any change, effect or circumstance that is materially adverse to the financial condition or results of operations of the Purchased Business taken as a whole; but shall exclude any Material Adverse Effect arising out of: (i) a decline in the market price for the services of the Purchased Business; (ii) any adverse change, effect or circumstance relating generally to financial markets or general economic conditions; (iii) any adverse change, effect or circumstance relating to conditions generally affecting the industry in which the Purchased Business operates, and not affecting the Purchased Business in a disproportionate manner; (iv) war, act of terrorism, civil unrest or similar event; (v) any generally applicable change in Laws or interpretation thereof; (vi) any adverse change, effect or circumstance resulting from an action required or permitted by this Agreement; or (vii) any adverse change, effect or circumstance caused by the announcement or pendency of this Agreement or the transactions contemplated by this Agreement;

1.1.34

“Non-Assignable Rights” has the meaning ascribed thereto in Section 3.8.

1.1.35

“Ordinary Course” means, with respect to an action taken by a Person, that such action is consistent with the past practices of the Person and is taken in the ordinary course of the normal day-to-day operations of the Person.

1.1.36

“Permitted Encumbrances” means the Encumbrances listed in Schedule 1.1.36 ;

1.1.37

“Person” means an individual, partnership, limited partnership, joint venture, trustee, trust, corporation, company, unlimited liability company, unincorporated organization or other entity or a government, state or agency or political subdivision thereof, and pronouns have a similarly extended meaning.

1.1.38

“Prepaid Expenses” means all rent for the Leased Property and any other amounts prepaid by Vendor to any Person relating exclusively to the Purchased Business or the Purchased Assets including software licenses, hardware and software maintenance fees.

1.1.39

“Purchase Price” has the meaning ascribed thereto in Section 3.1.

1.1.40

“Purchased Assets” has the meaning ascribed thereto in Section 2.1.

1.1.41

“Purchaser’s Closing Certificate” has the meaning ascribed thereto in Section 7.3.1.

1.1.42

“Required Consents and Authorizations” means those Consents and Authorizations listed and described in Schedule 1.1.42.

1.1.43

“Settlement Assets” means settlement amounts due from financial institutions that are members of the card associations and debit networks.

1.1.44

“Tax” or collectively “Taxes” means (a) any and all national, federal, provincial, state, special administrative region, municipal, local and foreign taxes, assessments, reassessments and other governmental charges, duties, impositions and liabilities including, unemployment insurance contributions and employment insurance contributions, workers compensation and deductions at source, taxes based upon or measured by gross receipts, income, profits, sales, capital use and occupation, good and services, and value added, estimated, transfer, franchise, withholding, customs duties, payroll, recapture, employment, excise and property taxes, together with all interest, penalties, fines and additions imposed with respect to such amounts and (b) any liability for the payment of any amounts of the type described in clause (a) of this Section 1.1.44 as a result of any Law imposing liability for such amounts incurred by others (by way of successor liability, joint and several liability or otherwise), express or implied obligation to indemnify any other Person or as a result of any obligations under any agreements or arrangements with any other Person with respect to such amounts.

1.1.45

“Third Party Auditors” has the meaning ascribed thereto in Section 3.5.5.

1.1.46

“Third Party Claims” means any and all legal proceedings instituted, claims or demands asserted by any third party, and investigations or inquiries of any Governmental Entity against or in respect of an Indemnified Party.

1.1.47

“Vendor’s Closing Certificate” has the meaning ascribed thereto in Section 7.1.1.

1.2

Gender and Number.

1.3

Headings, etc.

1.4

Currency.

1.5

Accounting Terms.

1.6

Knowledge.

2.1

Purchased Assets.

2.1.1

All of the assets described in Schedule 2.1.1 ; and

2.1.2

The Current Assets;

2.2

Instruments of Conveyance.

2.3

Tax Elections.

2.3.1.

The Purchaser and the Vendor shall make and file, in a timely manner, a joint election to have the rules in subsection 20(24) of the Income Tax Act (Canada), and any equivalent or corresponding provision under applicable provincial tax legislation, apply to the obligations of the Vendor in respect of undertakings which arise from the operation of the Purchased Business and to which paragraph 12(1)(a) of the Income Tax Act (Canada), and any equivalent or corresponding provision under applicable provincial tax legislation, apply. The Purchaser and the Vendor acknowledge that the Vendor is transferring assets to the Purchaser which have a value at least equal to the amount of liabilities being assumed by the Purchaser.

2.3.2.

The Purchaser and the Vendor shall make and file, in a timely manner, a joint election to have the rules in section 22 of the Income Tax Act (Canada), and any equivalent or corresponding provision under applicable provincial tax legislation, apply in respect of the Accounts Receivable and shall designate therein that portion of the Purchase Price allocated to the Accounts Receivable in accordance with Section 3.2 of this Agreement.

2.3.3.

Vendor and Purchaser shall jointly execute an election under Section 167 of the Excise Tax Act (Canada) and Section 75 of An Act Respecting the Quebec Sales Tax on the forms prescribed for such purposes along with any documentation necessary or desirable in order to effect the transfer of the Purchased Assets by Vendor without payment of any Goods and Services Tax or Quebec Sales Tax. Vendor and Purchaser shall file the election forms referred to above, along with any documentation necessary or desirable to give effect to such, with Canada Revenue Agency and the Ministère du Revenu du Québec, respectively, together with the Goods and Services Tax and Quebec Sales Tax returns for the reporting period in which the transactions contemplated herein are consummated. Notwithstanding such elections, in the event it is determined by any taxation authority that there is a liability of the Purchaser to pay, or of Vendor to collect and remit, any goods and services tax or Quebec sales tax on all or part of the Purchase Price paid for the Purchased Assets, such taxes shall be forthwith paid by Purchaser to the appropriate taxation authorities and Purchaser shall indemnify and save Vendor harmless with respect to any such taxes as well as any interest and penalties relating thereto or imposed thereon.

2.3.4.

The Parties Agree that any amount which may reasonably be regarded as the consideration for the undertaking by Optimal Group Inc. not to compete in accordance with the terms set forth in Schedule 7.1.5(e) (the “Non-Compete Covenant”) is an amount received or receivable by a corporation that was an “eligible corporation” (within the meaning assigned to that term in subsection 56.4(1) of the Income Tax Act (Canada), as set out in Bill C-10, An Act to amend the Income Tax Act, including amendments in relation to foreign investment entities and non-resident trusts, and to provide for the bijural expression of the provisions of that Act, October 16, 2007 (the “Legislative Proposals”)) and is included in the amount that has been allocated to the goodwill of the Purchased Business in accordance with Schedule 3.2. The Parties further agree that the Non-Compete Covenant may reasonably be considered to have been granted by Optimal Group Inc. to Purchaser in order to maintain or preserve the value of the goodwill of the Purchased Business acquired by Purchaser in accordance with the terms of this Agreement.

3.1

Purchase Price.

3.2

Allocation.

3.3

Payment of the Purchase Price.

3.3.1

by remitting to Vendor at Closing, by bank draft, certified cheque or wire transfer, an amount of US $6,000,000;

3.3.2

by remitting to Vendor at each of the first (1 ^st ) and second (2 ^nd ) anniversary of the Closing Date, by certified cheque, bank draft or wire transfer, an amount of US $250,000 for a total amount of US $500,000 (the “Balance” ), said Balance to be guaranteed by separate irrevocable, unconditional letters of credit in the amount of US $250,000 each issued by a Canadian Schedule I chartered bank and in a form acceptable to the Vendor;

3.3.3

by remitting to the Vendor, by certified cheque, bank draft or wire transfer, eleven consecutive monthly payments each in the amount of US $40,000 starting on the date that is one (1) month after the Closing Date if the SiteSell Condition has been met; and

3.3.4

by remitting to the Vendor, by certified cheque, bank draft or wire transfer, an amount of US $60,000 on the first anniversary of the Closing Date if the SiteSell Condition has been met.

3.4

Assumed Liabilities.

3.5

Purchase Price Adjustment.

3.5.1

Concurrently with the execution of this Agreement, the parties have mutually agreed on the amount of the Current Liabilities and the Current Assets as at the date of and based on the most recent interim financial statements of Vendor, same being attached hereto as Schedule 3.5.1 (the “Signing Statement” ). Each of the accounts listed on the Signing Statement has been extracted from the general ledger of the Vendor (the “GL” ) and all amounts recorded in each such account and underlying the amounts listed on the Signing Statement has been recorded in the GL in accordance with GAAP applied on a basis consistent with prior years. In such respect, Vendor shall supply Purchaser with all supporting documents, including working papers, schedules and other documentation used or prepared by Vendor for the purposes of the Signing Statement.

3.5.2

At least 3 Business Days prior to the Closing Date, Vendor shall deliver to Purchaser a statement setting forth the estimated amount of the Current Liabilities and the Current Assets as at the close of business on the Closing Date (the “Estimated Closing Statement” ) which shall contain only those accounts listed on the Signing Statement; each of the accounts listed on the Estimated Closing Statement shall be extracted from the GL and all amounts recorded in each such account and underlying the amounts listed on the Estimated Closing Statement shall have been recorded in the GL in accordance with GAAP applied on a basis consistent with prior years. In such respect, Vendor shall supply Purchaser with all supporting documents, including working papers, schedules and other documentation used or prepared by Vendor for the purposes of the Estimated Closing Statement.

3.5.3

If the value of the Current Assets less the value of Current Liabilities as set forth on the Estimated Closing Statement (the “Estimated Adjustment Amount” ), is positive, Purchaser shall pay to Vendor, at Closing, by bank draft, certified cheque or wire transfer, the Estimated Adjustment Amount. If the value of the Estimated Adjustment Amount is negative, Vendor shall pay to Purchaser, at Closing, by bank draft, certified cheque or wire transfer, the Estimated Adjustment Amount.

3.5.4

Within thirty (30) calendar days following the Closing Date, Purchaser will, at its expense, prepare and deliver to Vendor a draft statement setting forth the Current Liabilities and the Current Assets as at the close of business on the Closing Date (the “Closing Statement” ). Each of the accounts listed on the Closing Statement shall be extracted from the GL and all amounts recorded in each such account and underlying the amounts listed on the Closing Statement shall have been recorded in the GL in accordance with GAAP applied on a basis consistent with prior years and in accordance with and contain only those accounts listed on the Signing Statement.

3.5.5

If Vendor wishes to dispute any matter in the Closing Statement, it may do so by notice ( “Notice of Dispute” ) to Purchaser given within twenty (20) calendar days of the delivery of the Closing Statement to Vendor. In this regard, Purchaser shall permit Vendor and its authorized representatives to examine all working papers, schedules and other documentation used or prepared by Purchaser. A Notice of Dispute shall specify the basis for each objection and the dollar amount involved. The parties hereto shall use their best efforts to amicably resolve any matters identified in a Notice of Dispute as promptly as practicable. If any such dispute shall not have been resolved within ten (10) calendar days following the date on which the Notice of Dispute is given, then either Party may refer such unresolved matters to Ernst & Young (the “Third Party Auditors” ) for resolution by a partner of the Third Party Auditors to be designated by the managing partner of the Third Party Auditors. The determination of the Third Party

3.5.6

The fees and disbursements of the Third Party Auditors shall be paid equally by the Purchaser and the Vendor, unless the Third Party Auditors determine, based on the outcome of their review, that it would be justified to split such fees and disbursements on another basis.

3.5.7

The rules and procedures to be followed by the Third Party Auditors shall be determined by the Third Party Auditors in their discretion.

3.5.8

If the difference between (a) the value of the Current Assets less the value of the Current Liabilities as reflected on the Closing Statement and (b) the Estimated Adjustment Amount (the “Adjustment Amount” ) is positive then, within five (5) calendar days of delivery of the final Closing Statement in accordance with Section 3.5.5, Purchaser shall pay to Vendor, by bank draft, certified cheque or wire transfer, the Adjustment Amount. If the Adjustment Amount is negative, then, within five (5) calendar days of delivery of the final Closing Statement in accordance with Section 3.5.5, Vendor shall pay to Purchaser, at Closing, by bank draft, certified cheque or wire transfer, the Adjustment Amount.

3.6

Customer Surcharge.

3.7

Excluded Liabilities.

3.7.1

inter-company liabilities of any nature whatsoever owed by Vendor to any of its Affiliates, including any inter-company trade payables;

3.7.2

all losses relating to Excluded Merchants including, but not limited to, losses arising from Chargebacks or Returns relating exclusively to Excluded Merchants;

3.7.3

all fees, penalties, fines and assessments relating to any breach, association related fines, portfolio wide fines, compliance related fines, billing error assessments or lawsuits relating to any activity of the Vendor prior to the Closing Date;

3.7.4

all current or potential fees, penalties, fines and assessments relating to investigations by any Governmental Entity or other;

3.7.5

the liabilities included in Schedule 3.7.5 ;

3.7.6

all contingent liabilities and liabilities outside the Ordinary Course;

3.7.7

any assessment or reassessment for (a) Taxes of Vendor or, (b) Taxes incurred or accruing due prior to the Closing Date, relating to the Purchased Business or Purchased Assets;

3.7.8

any liability for Taxes attributable to Vendor;

3.7.9

litigation and claims which relate to facts or events which occurred prior to the Closing Date;

3.7.10

all expenses accrued up to the Closing Date, except to the extent specifically included in the Assumed Liabilities;

3.7.11

Vendor’s payroll for the Designated Employees for the period prior to the Closing Date, except to the extent specifically included in the Assumed Liabilities;

3.7.12

any liabilities specifically excluded in the Signing Statement; and

3.7.13

any Current Liabilities not included in the Closing Statement.

3.8

Non-Assignable Rights.

3.9

Name.

3.9.1

Subject to Sections 3.9.2 and 3.9.2, Purchaser shall be allowed a period of two (2) years following the Closing Date to exclusively use, at no cost, the name “Optimal Payments” and any variation thereof provided that: (i) any such variation shall incorporate the word “Payments” or “Payment”; (ii) any such variation shall not incorporate “Group” or “Groups”; and (iii) from and after December 31, 2008, Purchaser shall no longer use the “Optimal Payments” logo in its current format on its website and on any other website relating to the Purchased Business. In such respect, Vendor agrees to remit to Purchaser, on the Closing Date, at no cost, all marketing material incorporating the “Optimal Payments” name (such as letterhead, signage, branding and business cards).

3.9.2

Purchaser acknowledges that Vendor has granted a limited license to use the name “Optimal Payments” or any variation thereof to Sterling Payment Solutions Inc. for a period of 120 days following the Closing Date in order for Sterling Payment Solutions Inc. to represent itself as the successor of the Vendor’s payments processing business for US “card present” transactions.

3.9.3

Notwithstanding the foregoing, Purchaser agrees and acknowledges that Optimal Payments Corp. shall retain the exclusive use of the name “Optimal Payments” or any variation thereof as well as any related trademarks for a period of nine (9) months following the Closing Date and that V