-STRICLTY CONFIDENTIAL-

A PROPOSAL TO EAST ASIA DYNAMICS (EAD)

OBJECTIVES OF : To enable EAD to immediately tap into the Financial Technologies (FinTech) Market
THE PROPOSAL : in the Philippines with assured market niche.

METHODOLOGY: Through the acquisition of an existing FinTech company that is presently an

Affiliate Switch Network of Bancnet with existing full-service subscribers and enormously
large target market.

BACKGROUND (Please see attached Diagram)

INFORMATION : INFOSERVE is duly licensed by the Bangko Sentral ng Pilipinas (BSP) to operate as a
Money Business Company (MBC). Among the activities that the Company is allowed to
perform are the following:
 ATM Switch (thru Bancnet) using NATIONLINK as its Network name;
 Electronic Money (e-Money) Operations
 POS Operations
 Money Transfer Operations or Remittance Business

For its ATM operations, the INFOSERVE is presently an Affiliate Switch Network (ASN) of
Bancnet (Note: Bancnet is the sole Network provider for ATM/POS operations in the
Philippines and it is owned by the big banks in the country). In turn, INFOSERVE is the
only non-bank institution that is authorized by Bancnet and the BSP to have its own
Switch to connect its own members or subscribers to the Bancnet Network.

INFOSERVE has a fully-developed and running ATM Connect Software/System that it

offers under licensing agreements to small banks, cooperatives and other financial
institutions that could not afford to become direct members of Bancnet. Its ATM connect
package consists of the software license, the ATM unit, a Server and back-up peripherals.
At present, the Company has 22 active full-service ATM subscribers that operate around
154 ATM units.

INFOSERVE’s greatest marketing advantage or potential at present is the fact that it is the
only non-bank financial institution that has been granted by Bancnet the “Affiliate
Switch Network (ASN)” status. Bancnet has stopped giving this status to other non-bank
financial institution. The Company was able to get such preferential status from Bancnet
and the Bangko Sentral ng Pilipinas because it presented a business model that will
implement the Total Financial Inclusion Program of the Monetary Board of the BSP. The
said program is pursuant to the Total Financial Inclusion Program of the World Bank. In
fact, INFOSERVE was able to secure a US$: 2.0 Million grant from the World Bank through
the Consultative Group to Assist the Poor (CGAP) in 2009 to pilot the program in Bohol
and Samar areas, Philippines. Its preferential status mandates that INFOSERVE should
target the “Bottom-of-the Pyramid” market or the “Un-Served or Under-Served Areas”,
meaning 4th & 5th class municipalities of the country.

Infoserve Systems Corp. (ISC) is a software company presently doing business with
several big banks deploying the following licensed software including the maintenance
thereof:
 CASA/General Ledger System
 Loans System
  Trust System
 Etc.

At present, ISC is the sole marketing unit for the products and services of INFOSERVE.

COMPANY IN : Despite the above-stated business advantages and potentials of INFOSERVE, the
DISTRESS : confluence of various factors such as those listed below, slowly but surely
brought about the serious financial difficulties that the Company is experiencing now:

 Failed Business Model (pricing is focused on “one time-big time” approach);

 Extravagant and High Living Style of the Owners;
 Refusal to Strictly Observe Good Corporate Governance Policies;
 Refusal to Strictly Abide by the Generally Accepted Accounting Practices and
Standards;

(Please See attached Annex “A” for further elaboration.

So much so that it is now a Company in grave financial distress characterized by the

following:

 Unsettled float items in the settlement of its subscriber accounts amounting to

PhP:235.0 Million (these are supposed to be settled by noon of the following day
but are now past due by several days if not weeks);
 Past-Due 3rd Party Loans that are not officially recorded in the company books of
account amounting to PhP: 265.0 Million (bearing interest at 3.0% per month)
 Past Due Trade Payables - (P25-30.0 Million);

OPPORTUNITY : As the saying goes: “One man’s failure could be another man’s opportunity”,
the dire financial situation of INFOSERVE could be a great opportunity for EAD to gain a
foothold of the Philippine Financial Technology Industry.

INFOSERVE is urgently looking for a Lender to provide at least PhP: 600.0 Million in the
form of a short-term loan (say 6 months to 1 year) so it can settle the above obligations
before the BSP gets wind of its present predicament and the possible issuance of a “Cease
and Desist Order” (CDO). As security for the Lender, the owners are willing to sign Deeds
of Assignment of Shares covering 100% of their equity in INFOSERVE and Company B as
well as other appropriate loan documents.

Due to recent developments exerting further pressures on INFOSERVE, the owners are
now willing to discuss the possibility of a “white knight” coming in through equity buy-in.
The principal owners are willing to sell-off a larger part of their equity shares even to the
extent that the “white knight” gains majority ownership.

So what’s in it for the Lender or white knight?

Answers:
For the amount of PhP: SIX HUNDRED MILLION (PhP: 600.0 Million) or roughly US$: 12.0
Million, the Lender can have the following opportunities in its hands:

1. For EAD, the possible full ownership of Infoserve and ISC when the owners fail to
pay-back the P600.0 Million loan. The dire financial situation of INFOSERVE came
about because for the last 10 years, the owners had been trusting that
 investors/lenders based in Hong Kong and Singapore would provide them with clean
funds/loans to the tune of Millions of US Dollars. Until now however, the long-
awaited deal with the investors/lenders have yet to materialize. These are the same
people that the owners are hoping to provide the funds to repay the PhP: 600.0
Million loan being requested now. Therefore, the chances that the PhP600.0 Million
gets repaid in 6 months to 1 year is very samll. The chance that the Lender of the
PhP: 600.0 Million becomes the full owner of INFOSERVE and ISC and all their
business potentials and advantages shall then be most assured because the loan is
secured by Deeds of Assignment over 100% of the shares/equities of INFOSERVE & B.

2. Should EAD decide to come-in through buy-in, EAD can obtain majority ownership of
up to 75% of INFOSERVE’s equity on a “one-on-one” deal (based on INFOSERVE’s
latest audited financial statements) since the owners are no longer in a position to
demand premium on their ownership shares;

3. In both cases, EAD should demand that as part of the terms and conditions, EAD
immediately takes control of operations and treasury functions.

4. Simple adjustment of INFOSERVE’s business model that to this day is focused on the
“One-Time, Big Time” approach should enable EAD to maximize the Company’s
revenue potentials considering that it has a captive market for its ATM connect
package, e-Money Issuer platform and POS capabilities (please see attached
Projected Income Statement and IRR Computation);

5. EAD can therefore gain immediate foothold into the Philippine Financial Technologies
market. With its Affiliate Switch Network (ASN) status with Bancnet, INFOSERVE is in
an enviable position to tap the “bottom of the pyramid” segment of the Financial
Technology Market by partnering with the small banks (rural banks and thrift banks)
in 4th & 5th class municipalities of the country including cooperatives, non-
government organizations and other business establishments. This is pursuant to the
Company’s mandate to serve as vehicle for the BSP’s Total Financial Inclusion
Program to provide basic financial services to the unserved and underserve segment
of the population. Potential revenues from this segment is estimated to be not less
than PhP: 2.927 Billion (or US$:58.50 Million) on the 7th year (please see attached 7-
Year Income Projections).

6. 100% ownership of INFOSERVE and ISC will enable EAD to immediately access the big
Philippine banks and market its Core Financial Technology-related Products and
Services. At the moment, INFOSERVE and ISC Have already established business
linkages with several universal, thrift and rural banks through the deployment and
maintenance of their licensed software (CASA, GL, Loans, Trust) not to mention
INFOSERVE’s ATM connect package, e-Money Issuer program and POS applications.
Such linkages will do well to jump-start the penetration by EAD of the Philippine
market for its other financial technology products and services;

SECURITY & : The Lender (in case of loan) or Investor (in the event of “Equity Buy-In” arrangement
SAFEGUARDS : should insist on the ff. minimum terms and conditions:
1. Loan should be secured by 100% of all equity shares of INFOSERVE INC. and
INFOSERVE SYSTEMS CORP.
2. The term of the loan should be for a maximum of six (6) months only;
3. Finance charge will be subject to negotiations between the Parties;
 4. Investor coming-in via the “Equity Buy-In” arrangement shall insist on a “one-on-
one” deal at the most; no premium for the seller;
5. Lender or investor should immediately take control of the Board of Directors,
company operations and treasury functions;
6. Control of the IT department including source codes of all computer programs,
software and applications owned/used by INFOSERVE;
7. In the case of Lender, implement the Deed of Assignment of Shares in the event
of failure by the owners to pay-back the Loan upon expiry of the terms.
8. Other measures deemed necessary under the circumstances (consult your
lawyer).

DIAGRAM SHOWING INFOSERVE’s ENVIABLE POSITION

IN THE TOTAL FINANCIAL INCLUSION LANDSCAPE OF THE PHILIPPINES
(Meaning the “Bottom of the Pyramid” Sector
Or the “Un-Banked/Under-Banked Segment of the Population)

BANCNET
(The Country’s Sole Network for
ATM & POS Optns.)

One & Only ASN of Bancnet

INFOSERVE Inter-locking COMPANY B

(A Money Business Co.) Directorship (A Software Company)

TOTAL FINANCIAL INCLUSION PROGRAM OF THE BSP

Rural Banks Thrift Banks Cooperatives GO’s/NGO’s Others

THESE SECTORS CAN GIVE INFOSERVE INC. ACCESS TO THE UNSERVED AND UNDER-SERVED MARKET
IN 3RD AND 4TH CLASS MUNICIPALITIES WITH NO LESS THAN PhP: 3.0 Billion potential revenues.
TAPPING THIS MARKET IS ONE OF THE PRIORITY INITIATIVES OF THE Bangko Sentral ng Pilipinas UNDER ITS
TOTAL FINANCIAL INCLUSION PROGRAM.