EXHIBIT 10.16

 
 
 
STOCK PURCHASE AGREEMENT

Dated as of February 22, 2009

between

 Mario Octavio Navarro Alvarez and Rafael Isaías Samanez Zacarías
 (“Sellers”)

and

Gulfstream Capital Partners, Ltd.
(“Buyer”)
 
relating to the purchase and sale
 
of
 
95% of the Outstanding Common Stock
 
of
 
Perusat S.A.
 
Dated February 22, 2009
 
 

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TABLE OF CONTENTS

 

   
Page
ARTICLE I 
DEFINITIONS 
 2-6
1.1
Definitions
2-6
1.2
OTHER DEFINITIONS
6
1.3
Langauge
6
     
ARTICLE II
PURCHASE AND SALE
6-7
2.1
Purchase and Sale of the Shares
6
2.2
Purchase Price
7
2.3
Closing Date
7
2.4
Transactions to be Effected at the Closing
7
 
   
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
8-23
3.1
Organization and Good Standing
8
3.2
Capitalization
8-9
3.3
Subsidiaries and Affiliates of the Company.
9
3.4
Authority and Enforceability
9
3.5
No Conflicts; Authorizations
9
3.6
Financial Statements
9
3.7
No Undisclosed Liabilities
10
3.8
Accounts Receivable
10
3.9
Taxes
10
3.10
Compliance with Law
11
3.11
Authorizations
11
3.12
Title to Personal Properties; Leases
12
3.13
Condition of Tangible Assets
12
3.14
Real Property
12-13
3.15
Intellectual Property.
13-16
3.16
Absence of Certain Changes or Events
16-17
3.17
Contracts
17-19
3.18
Litigation.
19

 
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TABLE OF CONTENTS
(CONTINUED)

 

   
 Page
3.19
Employee Benefits
20
3.20
Labor and Employment Matters
20
3.21
Environmental
21
3.22
Insurance
21-22
3.23
Books and Records
22
3.24
Suppliers and Customers
22
3.25
Brokers or Finders
22
3.26
Bank Accounts
23
3.27
Powers of Attorney
23
3.28
Support Services
23
3.29
Completeness of Disclosure
23
   
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
23-24
4.1
Organization and Good Standing
23
4.2
Authority and Enforceability
23
4.3
Brokers or Finders
24
   
 
ARTICLE V
COVENANTS OF SELLERS
24-29
5.1
Conduct of Business
24
5.2
Negative Covenants
24-26
5.3
Access to Information
26
5.4
Resignations
26
5.5
Indebtedness; Release of Liens
26
5.6
Confidentiality
26
5.7
Records Retention
27
5.8
Consents
27
5.9
Notification of Certain Matters
27
5.10
Restrictive Covenants
28
5.11
Insurance
29
5.12
Security Interest
29

 
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TABLE OF CONTENTS
(CONTINUED)

 

   
Page 
ARTICLE VI
COVENANTS OF BUYER AND SELLERS
30-32
6.1
Regulatory Approvals.
30
6.2
Public Announcements
30
6.3
Tax Matters.
30-31
6.4
Employee Matters.
31-32
6.5
Further Assurances
32
6.6
Payment of Debt to Telefónica del Perú S.A.A
32
   
 
ARTICLE VII
CONDITIONS TO CLOSING
32-34
7.1
Conditions to Obligations of Buyer and Sellers
32
7.2
Conditions to Obligation of Buyer
32-34
7.3
Conditions to Obligation of Sellers
34
   
 
ARTICLE VIII
TERMINATION
34-35
8.1
Termination
34-35
8.2
Effect of Termination
35
8.3
Remedies.
35
   
 
ARTICLE IX
INDEMNIFICATION
36-42
9.1
Survival.
36
9.2
Indemnification by Sellers
36-37
9.3
Indemnification by Buyer
37
9.4
Indemnification Procedure for Third Party Claims
38-40
9.5
Indemnification Procedures for Non-Third Party Claims.
40
9.6
Contingent Claims
40
9.7
Effect of Investigation; Waiver.
40
9.8
Tax Indemnification
40-41
9.9
Procedures Relating to Indemnification of Tax Claims
41
9.10
Tax Treatment of Indemnification Payments
41
9.11
Other Rights and Remedies Not Affected
41

 
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TABLE OF CONTENTS
(CONTINUED)
 

   
Page
ARTICLE X
MISCELLANEOUS
42-45
10.1
Notices
42
10.2
Amendments and Waivers
42
10.3
Expenses
43
10.4
Successors and Assigns
43
10.5
Governing Law
43
10.6
Consent to Jurisdiction
43
10.7
Counterparts
43
10.8
Third Party Beneficiaries
44
10.9
Entire Agreement
44
10.10
Captions
44
10.11
Severability
44
10.12
Specific Performance
44
10.13
Interpretation
44-45

 
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STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT, dated as of February 22, 2009 (the "Agreement"),
between:

·             Gulfstream Capital Partners Ltd., a Republic of Seychelles
corporation with offices at Hong Kong, Peoples Republic of China ("Buyer"), and

·             Mario Octavio Navarro Alvarez, identified with Foreign Identity
Card No. 000280774 (together with his spouse Gisella Tsuchikame Nakamoto,
identified with Peruvian Identity Card No. 09387084) (jointly “Navarro”), and
Rafael Isaías Samanez Zacarías, identified with Peruvian Identity Card No.
07967650, (together with his spouse Jesus Margot Magan Guiterrez, identified
with Peruvian Identity Card No. 07554742) (jointly “Samanez”), all of them
domiciled for these purposes at Av. Camino Real 493, Piso 11,San Isidro, Lima,
Peru, (each, individually, is a “Seller” and they are collectively the
“Sellers”).

WHEREAS, Perusat S.A. is a corporation (‘sociedad anónima’) organized and
existing under the laws of the Republic Peru, registered in the Electronic File
No. 00380911 of the Companies’ Registry of Lima, with head office at Av. Camino
Real 493, Piso 11,San Isidro, Lima, Peru ( “Perusat” or the “Company”), which
has issued 13,190,800 (thirteen million one hundred ninety thousand eight
hundred) shares of common stock S/.1.00 (one and 00/100 Peruvian Nuevos Soles)
each; and
 
WHEREAS, Perusat is engaged in the business of providing all type of
telecommunication services. It can also carry out activities of local or long
distance telephones services, land line telephony, mobile phones, IP telephony,
internet, cable television, rental of networks and equipments, data
transmission, commercialization of telecommunication equipments, among others;
 
WHEREAS, Navarro is the holder of record of 12,941,839 shares issued by Perusat,
and Samanez is the holder of record of 248,961 shares issued by Perusat, who
together are the sole beneficial and registered owners of all the outstanding
shares of the common stock of Perusat; and
 
WHEREAS, Navarro desires to sell 12,414,207 of his shares to Buyer, and Samanez
desires to sell 117,053 of his shares to Buyer; and Buyer desires to buy
12,531,260 outstanding shares of common stock of Perusat from Sellers (the
“Shares”), such that the respective ownership of the outstanding shares of
Perusat following the transaction will be Buyer 95%, Navarro 4% and Samanez 1%,
upon the terms and subject to the conditions set forth in this Agreement.
 
NOW, THEREFORE, in consideration of the foregoing premises and the respective
representations and warranties, covenants and agreements contained herein and
the sufficiency of which is hereby acknowledged by the parties, the parties
hereto agree as follows:
 

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ARTICLE I
 
DEFINITIONS
 
1.1 Definitions. When used in this Agreement, the following terms shall have the
meanings assigned to them in this Section 1.1, or in the applicable Section of
this Agreement to which reference is made in this Section 1.1.
 
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such specified Person.
 
“Agreement” means this Stock Purchase Agreement and all schedules, exhibits and
instruments in amendment or confirmation of it.
 
"Authorization" means, with respect to any Person, any order, authorization,
concession, approval, waiver, consent, certificate, license, permit or franchise
or similar authorization of or from any Governmental Entity or similar entity
having jurisdiction over the Person or pursuant to any Law. This term includes
the two telecommunications concessions granted by the Peruvian Government to
Perusat for providing long distance bearer services and local fixed telephony
services.
 
"Benefit Plan" means any "employee benefit plan" as defined in ERISA Section
3(3), including any (a) nonqualified deferred compensation or retirement plan or
arrangement which is an Employee Pension Benefit Plan (as defined in ERISA
Section 3(2)), (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan (as defined in ERISA Section 3(37)), (d)
Employee Welfare Benefit Plan (as defined in ERISA Section 3(1)) or material
fringe benefit plan or program, or (e) stock purchase, stock option, severance
pay, employment, change-in-control, vacation pay, company awards, salary
continuation, sick leave, excess benefit, bonus or other incentive compensation,
life insurance, or other employee benefit plan, contract, program, policy or
other arrangement, whether or not subject to ERISA.
 
“Business Day” means any day of the year, other than a Saturday, Sunday or any
day on which banks are required or authorized to close in Lima, Peru.
 
“Buyer” has the meaning set forth in the preamble to this Agreement.
 
"Common Stock" means the shares of the stock of a corporation, and any other
interest that confers on a Person the right to receive a share of the profits
and losses, or distribution of assets, of the issuing entity.
 
"Charter Documents" means, with respect to any entity, the certificate of
incorporation, the articles of incorporation, by-laws, articles of organization,
limited liability company agreement, partnership agreement, formation agreement,
joint venture agreement or other similar organizational documents of such entity
(in each case, as amended).
 
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"Contract" means any agreement, contract, lease, commitment, arrangement or
understanding, written or oral, including any sales order or purchase order.
 
"Equity Securities" means (a) shares of Common Stock, and (b) options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights or
other Contracts that, directly or indirectly, could require the issuer thereof
to issue, sell or otherwise cause to become outstanding shares of Common Stock.
 
“Environmental Laws” means all applicable Laws and agreements or arrangement
with Governmental Entities and all other statutory requirements relating to
public health or the protection of environment, prevention of pollution,
remediation of contamination or restoration of environmental quality, protection
of human health or the environment (including natural resources), or workplace
health and safety, including all applicable Laws relating to the management,
containment, manufacture, possession, presence, use, processing, generation,
transportation, treatment, storage, disposal, Release, abatement, removal,
remediation or handling of or exposure to any Hazardous Materials, and all
Authorizations issued pursuant to such Laws, agreements, arrangements or
statutory requirements.
 
"ERISA" means the Employee Retirement Income Security Act of 1974 as enacted in
the United States of America.
 
"Final Determination" means a decision, resolution, judgment, decree, award or
other order by any judge, Governmental Entity, arbitrator, arbitration panel or
court of competent jurisdiction, which decision, resolution, judgment, decree,
award or other order has become final after all allowable appeals by either
party to the action have been exhausted or the time for filing such appeals has
expired and is not subject to further review or modification.
 
"Governmental Entity" means any executive, judicial, legislative, political,
regulatory, governmental, public or administrative entity, institution or
organization, autonomous institution, central, regional, provincial, municipal
or local government or authority, municipality, central bank, tax agency, court,
commission, board, bureau, agency or instrumentality of the country, state,
department, province or similar geographic or political circumscription having
jurisdiction over any Person referred to in the context in which such word is
used, including any (i) subdivision or authority of any of the foregoing, (ii)
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the above; and (iii) other
entities and agencies that perform administrative duties, which are authorized
under any applicable Law, to issue or construe rules, decisions, general
regulations or private administrative acts, with binding effect on the parties
subject to the scope thereof.
 
"Grossed-Up Basis" means, when used to describe the basis on which the payment
of a specified sum is to be made, a basis such that the amount of such payment,
after being reduced by the amount of all Taxes imposed on the recipient of such
payment as a result of the receipt or accrual of such payment, will equal the
specified sum.
 
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"Hazardous Substances" means all explosive materials, radioactive materials,
hazardous materials, toxic materials, wastes, chemicals, substances, petroleum,
petroleum by-products and petroleum products (including crude oil or any
fraction thereof), asbestos and asbestos containing materials, pollutant,
contaminant, or product that, because of its hazardous, toxic or other harmful
characteristic, presents a risk or threat to human health, safety, natural
resources or the indoor or outdoor environment, and all other materials,
chemicals and substances that are regulated by, form the basis of liability or
are defined as hazardous, extremely hazardous, toxic or words of similar import,
under any Environmental Law.
 
"Indebtedness" means any of the following: (a) any indebtedness for borrowed
money, (b) any obligations evidenced by bonds, debentures, notes or other
similar instruments, (c) any obligations to pay the deferred purchase price of
property or services, except trade accounts payable and other current
Liabilities arising in the ordinary course of business, (d) any obligations as
lessee under capitalized leases, (e) any indebtedness created or arising under
any conditional sale or other title retention agreement with respect to acquired
property, (f) any obligations, contingent or otherwise, under acceptance credit,
letters of credit or similar facilities, and (g) any guaranty of any of the
foregoing.
 
"Indemnitee" means any Person that is seeking indemnification from an Indemnitor
pursuant to the provisions of this Agreement.
 
"Indemnitor" means any Party hereto from which any Indemnitee is seeking
indemnification pursuant to the provisions of this Agreement.
 
"Knowledge" of Sellers or any similar phrase means, with respect to any fact or
matter, the actual knowledge of the Sellers, together with such knowledge that
the Sellers could be expected to discover after due investigation concerning the
existence of the fact or matter in question.
 
"Law” or “Laws" means any statute, law (including common law), constitution,
treaty, ordinance, code, order, decree, case law, judgment, resolution,
decision, rule, regulation, supreme decree, legislative decree, provision or
principle of any kind that is a part a legal system in force, and any other
binding requirement or determination of any Governmental Entity.
 
"Lien" means any attachment, mortgage, charge, pledge, guaranty, security
interest, garantía mobiliaria, adverse claim, assignment, trust, lien (statutory
or otherwise), title retention agreement or arrangement, restrictive covenant or
other encumbrance of any kind and nature or any other arrangement or condition
which, in substance, secures payment or performance of an obligation.
 
“Material” or “Materially” or “Adversely” or “Material Adverse Change”
or “Material Adverse Effect” means any action, omission or change with a
significant impact or essential to any Person or to the business, operations,
assets, financials, performance of the activities, or fulfillment of the purpose
of any such Person. Any such action, omission or change shall only be considered
to produce a significant impact or to be essential to any such Person if its
effects, consequences or results are likely to imply or involve more than
US$10,000 (Ten Thousand and 00/100 U.S. Dollars). The effects, consequences or
results derived from or arising out of (i) any act or omission by such Person
taken with the prior consent or at the direction of the other Parties hereto; or
(ii) any Act of God or Force Majeure impacting Buyer or Seller, provided that
the effects of the Act of God or Force Majeure event prevent performance of an
obligation under this Agreement, were not foreseeable and could not have been
prevented or diminished by the Party affected by the Act of God or Force
Majeure, shall not be considered within this definition. It also means, when
used in this Agreement with respect to any representation or warranty in this
Agreement, which the breach of said representation results in Damages of more
than US$10,000 (Ten Thousand and 00/100 U.S. Dollars).
 
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"Order" means any award, injunction, judgment, resolution, decision, decree,
order, ruling, subpoena or verdict or other decision issued, promulgated or
entered by or with any Governmental Entity of competent jurisdiction.
 
“Ordinary Course” an action taken by a Person will be deemed to have been taken
in the “Ordinary Course” only if such action is consistent with the usual
customs and practices of the Person and is taken in the ordinary course of the
normal day-to-day operations of the Person.
 
“Parties” means the Sellers and Buyer, collectively.
 
“Party” means any of the Sellers and Buyer, individually.
 
"Person" means any individual, corporation, a partnership, a limited liability
company, a trust, association, legal entity (whether public or private), joint
venture, consortium, an unincorporated association, a Governmental Entity or any
agency, instrumentality or political subdivision of a Governmental Entity, or
any other entity or body, and pronouns that have a similarly extended meaning.
 
“PGAAP” means the accounting principles and practices generally accepted in
Peru, consistently applied.
 
"Pre-Closing Environmental Liabilities" means Liabilities based upon or arising
out of (a) the ownership or operation of the businesses of the Company at any
time on or prior to the Closing, or (b) the ownership, operation or condition of
any real property currently or formerly owned, operated or leased by the Company
at any time on or prior to the Closing, in each case to the extent based upon or
arising out of (i) Environmental Laws, (ii) a failure to obtain, maintain or
comply with any Order or Authorization, (iii) the presence or Release of any
Hazardous Substance at, on or under any real property currently or formerly
owned, operated or leased by the Company at any time on or prior to the Closing
or (iv) the use, generation, storage, transportation, treatment, sale or other
off-site disposal of Hazardous Substances generated by or otherwise used in the
businesses of the Company.
 
"Release" means any depositing, spilling, leaking, pumping, pouring, emitting,
placing, emptying, discharging, injecting, escaping, migrating, abandoning,
leaching, dumping, or disposing of Hazardous Substances into the environment.
 
"Tax" or "Taxes" means any and all taxes, charges and levies of any kind
(including any and all interest, penalties, additions to tax and additional
amounts thereon), or foreign net or gross income, gross receipts, net proceeds,
sales, use, ad valorem, value added, franchise, bank shares, withholding,
payroll, employment, excise, property, deed, stamp, alternative or add-on
minimum, environmental, profits, windfall profits, transaction, license, lease,
service, service use, occupation, severance, energy, unemployment, social
security, workers' compensation, capital, premium, and other taxes, assessments,
customs, duties, fees, levies or other governmental charges of any nature
whatever, whether disputed or not, together with any interest, penalties,
additions to tax, or additional amounts with respect thereto.
 
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"Tax Claim" means any claim with respect to Taxes made by any Taxing Authority
or other Person that, if pursued successfully, could serve as the basis for a
claim for indemnification of a Tax Indemnitee or Sellers under this Agreement.
 
"Tax Indemnitee" means Buyer (including, upon Closing, the Company).
 
"Tax Returns" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
 
"Taxing Authority" means any Governmental Entity having jurisdiction with
respect to any Tax.
 
"Transfer Taxes" means sales, use, transfer, real property transfer, recording,
documentary, stamp, registration and stock transfer taxes and fees.
 
"$" or “US$” means dollars of the United Sates of America.
 
1.2 Other Definitions. Other terms defined in this Agreement and indicated as
such by quotation marks shall have the meaning ascribed thereto next to the
definition, throughout the text hereof.
 
1.3 Language. This Agreement has been entered into in English language and,
notwithstanding any translation thereof, the English language version shall
control the construction and interpretation of this Agreement. All material
communications between the Parties with respect to this Agreement shall be in
English language.
 
ARTICLE II
 
PURCHASE AND SALE
 
2.1 Purchase and Sale of the Shares.
 
(a) Upon the terms and subject to the conditions of this Agreement, at the
Closing, Sellers shall sell to Buyer, and Buyer shall purchase from Sellers, the
Shares free and clear of all Liens except those created pursuant to this
Agreement.
 
(b) The sale of the Shares by Sellers to Buyer includes any other interest
related to the Shares that confers on a Person the right to receive a share of
the profits and losses, or distribution of assets or of other shares of Perusat
and any other interest or right related to the Shares.
 
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2.2 Purchase Price.
 
(a) The Purchase Price of the Shares is US$2,775,000 (two million seven hundred
seventy-five thousand and 00/100 U.S. dollars (the "Purchase Price").
 
(b) The Parties agree that the Purchase Price will be paid as follows:
 
(i) At the Closing Date, Sellers will shall receive from Buyer 1,000,000 (one
million) shares issued by China Tel Group Inc. free and clear of all Liens
except those created pursuant to this Agreement, valued at $2.50 per share,
equivalent to US$2,500,000.00 (two million five hundred thousand and 00/100 U.S.
dollars).
 
(ii) US$275,000 (two hundred seventy-five thousand and 00/100 U.S. dollars) in
cash, paid as follows: (x) US$50,000.00 (fifty thousand and 00/100 U.S. Dollars)
on the Closing Date; (y) US$50,000.00 (fifty thousand and 00/100 U.S. Dollars)
each following quarter commencing June 30, 2009, and (z) a final installment of
$25,000.
 
 (iii) Both the stock portion and the cash portion of the Purchase Price shall
be paid to each Seller in the same ratio representing the percentage holdings of
each Seller in the outstanding stock of Perusat, which is: Navarro 98.11% and
Samanez 1.89%, with all shares of China Tel Group Inc. rounded to the nearest
whole share, and all cash rounded to the nearest dollar.
 
(c) The purchase and sale of the Shares is referred to in this Agreement as the
"Acquisition".
 
2.3 Closing Date. The closing of the Acquisition (the "Closing") shall take
place at the offices of Estudio Oleachea on a date to be specified by the
Parties which shall be no later than Three Business Days after satisfaction (or
waiver as provided herein) of the conditions set forth in Article VII (other
than those conditions that by their nature will be satisfied at the Closing),
unless another time, date and/or place is agreed to by the parties. The date
upon which the Closing occurs is herein referred to as the "Closing Date."
 
2.4 Transactions to be Effected at the Closing.
 
(a) At the Closing, Buyer shall (i) deliver to Sellers stock certificates
representing the ownership of 1,000,000 (one million) shares issued by China Tel
Group Inc. free and clear of all Liens and all documents, instruments or
certificates required to be delivered by Buyer at or prior to the Closing
pursuant to this Agreement, and (ii) pay to Sellers US$50,000 applicable to the
Purchase Price.
 
(b) At the Closing, Sellers shall each deliver to Buyer (i)  stock certificates
for the 12,531,260 shares of Perusat that they own, duly endorsed, (ii) the
Company’s shares registry book in which the entry evidencing the transfer of the
Shares from Sellers to Buyer is included and signed by the general manager of
the Company, (iii) all other documents and instruments necessary to vest in
Buyer all of Sellers' rights, title and interest in and to the Shares, free and
clear of all Liens, and (iv) all other documents, instruments or certificates
required to be delivered by Sellers at or prior to the Closing pursuant to this
Agreement.
 
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ARTICLE III
 
REPRESENTATIONS AND WARRANTIES OF SELLERS
 
Sellers represents and warrants to Buyer as of the date hereof that the
statements contained in this Article III are true and correct.
 
3.1 Organization and Good Standing.
 
(a) The Company is a corporation (‘sociedad anónima’) duly organized, validly
existing and in good standing under the Laws of the Republic of Peru, has all
requisite power to own, lease and operate its properties and to carry on its
business as currently conducted and as proposed to be conducted, and is duly
qualified, licensed or registered to do business.
 
(b) The Company is not in default under its Charter Documents or applicable
Laws.
 
3.2 Capitalization.
 
(a) The Stock of the Company consists of 13,190,800 shares of common stock,
S/.1.00 (one and 00/100 Peruvian Nuevos Soles) par value each. All of the these
shares are duly authorized, validly issued, fully paid and are non-assessable,
and are owned of record and beneficially by Sellers free and clear of all Liens.
Upon transfer of the Shares to Buyer in accordance with the terms of Article II,
Buyer will receive valid title to the Shares, free and clear of all Liens.
 
(b) All of said 13,190,800 shares were issued in compliance with applicable
Laws. None of the 13,190,800 shares was issued in violation of any Law or
Contract to which any Seller or the Company is a party or is subject or in
violation of any preemptive or similar rights of any Person other than the
rights of first refusal set out in article 9 of the bylaws of Perusat to which
the Sellers hereby expressly waive to exercise.
 
(c) Other than the 13,190,800 shares, the Company does not have outstanding any
Equity Securities or any other securities. The Company is not a party or subject
to any Contract obligating the Company to issue any Equity Securities or any
other securities and there is no circumstance or condition that may give rise to
a claim by any Person that such Person is entitled to acquire any securities of
the Company. The Company does not have outstanding any bonds, debentures, notes
or other obligations or debt securities the holders of which have the right to
vote (or convertible into, or exercisable or exchangeable for, securities having
the right to vote) on any matter.
 
(d) The Company does not have outstanding or authorized any stock appreciation,
phantom stock, profit participation, or similar rights.
 
(e) Neither Sellers nor the Company is a party or subject to any stockholder
agreement, voting agreement, voting trust or any other similar arrangement which
has the effect of restricting or limiting the transfer, voting or other rights
associated with the Shares.
 
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(f) There are no obligations, contingent or otherwise, of the Company to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any Person.
 
(g) Each Seller is a holder of record in the shares registry book of the Company
and holds valid title to its respective Shares, as set forth in the WHEREAS to
this Agreement, all of which shares are free and clear of Liens.
 
(h) There is no agreement, arrangement, option, security, right, or commitment
of any kind whatsoever currently in force pertaining to the issue, sale,
purchase, or redemption of the Shares or otherwise affecting the Shares.
 
3.3 Subsidiaries and Affiliates of the Company. The Company does not have any
subsidiary or affiliated companies, and is not a partner in any partnership.
 
3.4 Authority and Enforceability. Sellers have the requisite power and authority
to enter into this Agreement and to consummate the Acquisition. This Agreement
has been duly executed and delivered by Sellers and, assuming due authorization,
execution and delivery by Buyer, constitutes a valid and binding obligation of
Sellers, enforceable against them in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting or relating to creditors' rights
generally, and (b) the availability of injunctive relief and other equitable
remedies.  
 
3.5 No Conflicts; Authorizations
 
(a) The execution and delivery of this Agreement by Sellers do not, and the
performance by Sellers of its obligations hereunder and the consummation by
Sellers of the transactions contemplated hereby (in each case, with or without
the giving of notice or lapse of time, or both), will not, directly or
indirectly, (i) violate the provisions of any of the Charter Documents of the
Company, (ii) violate or constitute a default, an event of default or an event
creating rights of acceleration, termination, cancellation, imposition of
additional obligations or loss of rights, or require a consent to assignment,
under any Contract (A) to which the Company is a party, (B) of which the Company
is a beneficiary or (C) by which the Company or any of its assets is bound,
(iii) violate or conflict with any Law, Authorization or Order applicable to the
Company or give any Governmental Entity or other Person the right to challenge
any of the transactions contemplated by this Agreement or to exercise any
remedy, obtain any relief under or revoke or otherwise modify any rights held
under, any such Law, Authorization or Order, or (iv) result in the creation of
any Liens upon any of the assets owned or used by the Company.
 
(b) No Authorization or Order of, registration, declaration or filing with, or
notice to, any Governmental Entity or other Person is required by or with
respect to the Company in connection with the execution and delivery of this
Agreement and the consummation of the Acquisition; except for the fillings or
notifications that relates solely to the identity of the Buyer or the nature of
the business carried on by the Buyer that need to be made to any Governmental
Entity under the applicable Laws.
 
3.6 Financial Statements. Sellers have delivered to Buyer during due diligence
true and complete copies of the Company's audited financial statements and tax
returns for each of the year 2007, along with other financial records of the
Company. The financial statements and other financial records are true, complete
and correct, are based on the books and records of the Company, fairly present
the financial condition and operations of the Company as of the respective dates
they were prepared for the periods indicated and have been prepared in
accordance with PGAAP.  At the Closing Date, a copy of the 2007 audited
financial statement and the 2007 tax return of the Company shall be attached as
Schedule A to this Agreement.
 
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3.7 No Undisclosed Liabilities. The Company has no liabilities, debts,
obligations or commitments of any nature whatsoever, asserted or unasserted,
known or unknown, absolute or contingent, accrued or unaccrued, matured or
unmatured, determined or determinable or otherwise arising under the applicable
Laws, an Order, Authorization or under any undertaking, arrangement, act or
Contract ("Liabilities").
 
3.8 Accounts Receivable. All accounts receivable of the Company, to the extent
not paid in full by the account debtor prior to the date hereof, are (a) valid
and genuine and have arisen solely out of bona fide sales and deliveries of
goods, performance of services and other business transactions in the Ordinary
Course of business consistent with past practice, (b) not subject to valid
defenses, set-offs or counterclaims, and (c) collectible within 90 days after
billing at the full recorded amount thereof.  
 
3.9 Taxes.
 
(a) The Company has filed or caused to be filed, within the times and within the
manner prescribed by applicable Law, all tax returns and tax reports which are
required to be filed by or with respect to the Company.
 
(b) All taxes, imposts, social securities and other mandatory contributions and
assessments (including interest and penalties) that are required to be paid by
the Company, have been paid or fully provided for in the books and records of
Perusat.
 
(c) The income tax liability of the Company has been reported to the taxing
authorities for all fiscal years to and including its fiscal year ended on
December 31, 2008. No examination of any tax return of the Company is currently
in progress, threatened or pending, there are no outstanding agreements or
waivers extending the statutory period providing for an extension of time with
respect to the assessment or reassessment of Tax or the filing of any tax return
by, or any payment of any Tax by the Company, and there are no actions, audits
or claims now threatened or pending against the Company in respect of Taxes or
any matters under discussion with any Governmental Entity relating to Taxes.
 
(d) The Company has withheld from each payment made by it the amount of all
Taxes and other deductions required to be withheld therefrom, has paid the same
to the proper taxing or other authority within the time prescribed under any
applicable Law and filed all required documents to support the amounts withheld
and/or paid.
 
(e) There is no dispute or claim concerning any liability for Taxes with respect
to the Company for which notice has been provided, or which is asserted or
threatened, or which is otherwise known to the Company or any of the Sellers. No
issues have been raised in any Taxes examination with respect to the Company
which, by application of similar principles, could be expected to result in
liability for Taxes for any other period not so examined. The Company has
delivered to Buyer correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies assessed against or
agreed to by the Company. The Company has not waived (or is subject to a waiver
of) any statute of limitations in respect of Taxes or has agreed to (or is
subject to) any extension of time with respect to a Tax assessment or
deficiency.
 
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3.10 Compliance with Law.
 
(a) The Company has complied in all respects with each, and is not in violation
in any respect of, any applicable Law to which the Company or its business,
operations, assets or properties is or has been subject.
 
(b) No event has occurred and no circumstances exist that (with or without the
passage of time or the giving of notice) may result in a violation of, conflict
with or failure on the part of the Company to comply with, any Law. The Company
has not received notice regarding any violation of, conflict with, or failure to
comply with, any Law.
 
3.11 Authorizations.
 
(a) The Company owns, holds or lawfully uses in the operation of its business
all Authorizations which are necessary for it to conduct its business as
currently conducted or as proposed to be conducted or for the ownership and use
of the assets owned or used by the Company in the conduct of its business free
and clear of all Liens. Such Authorizations are valid and in full force and
effect and none of such Authorizations will be terminated or impaired or become
terminable as a result of the transactions contemplated by this Agreement.
 
(b) No event has occurred and no circumstances exist that (with or without the
passage of time or the giving of notice) may result in a violation of, conflict
with, failure on the part of the Company to comply with the terms of, or the
revocation, withdrawal, termination, cancellation, suspension or modification of
any Authorization. The Company has not received notice regarding any violation
of, conflict with, failure to comply with the terms of, or any revocation,
withdrawal, termination, cancellation, suspension or modification of, any
Authorization. The Company is not in default, nor has the Company received
notice of any claim of default, with respect to any Authorization.
 
(c) No Person other than the Company owns or has any proprietary, financial or
other interest (direct or indirect) in any Authorization which the Company owns
or uses in the operation of its business as currently conducted or as proposed
to be conducted.
 
(d) All dues, fees, rates, Taxes, rights, duties or similar payments to any
Person or Governmental Entity necessary for maintaining the Authorizations as to
carry out the business of the Company have been paid on due time.
 
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3.12 Title to Personal Properties; Leases.
 
(a) During due diligence, the Company has produced to the Buyer a complete and
accurate list of all the personal properties and assets owned, leased or used by
the Company as of the date of this Agreement, specifying whether and by whom
each such asset is owned or leased and, in the case of leased assets, indicating
the parties to, execution dates of and annual payments under, the lease.  At the
Closing Date, the list of personal properties and assets owned will be attached
as Schedule B to this Agreement.
 
(b) With respect to such personal properties and assets, the Company has good
and valid title to all of such properties and assets, free and clear of all
Liens.
 
3.13 Condition of Tangible Assets. All such personal properties and assets are
in good operating condition and repair (subject to normal wear and tear given
the use and age of such assets), are usable in the Ordinary Course of business
and conform to all Laws and Authorizations relating to their construction, use
and operation.
 
3.14 Real Property.
 
(a) The Company does not own any real property, right or interest therein,
except for the rights obtained under the Leases pursuant to which the Company
uses the Leased Real Property.
 
(b) During due diligence, the Seller has produced to the Buyer a complete list
of all real property, rights and interests in real property leased by the
Company (the "Leased Real Property"). The Leased Real Property includes all
rights and interests in real property used in or necessary for the conduct of
the businesses and operations of the Company as currently conducted and as
proposed to be conducted.  At the Closing Date, the list of Leased Real Property
will be attached as Schedule C to this Agreement.
 
(c) With respect to Leased Real Property, the Sellers have delivered to Buyer a
true and complete copy of every lease and sublease pursuant to which the Company
is a party or by which it is bound (each, a "Lease"). The Company has peaceful,
undisturbed and exclusive possession of the Leased Real Property.
 
(d) The uses for which the buildings, facilities and other improvements located
on the Leased Real Property are zoned do not restrict, or impair, the use of the
Leased Real Property for purposes of the businesses of the Company.
 
(e) No Governmental Entity having the power of expropriation or eminent domain
over the Leased Real Property has commenced or, to the Sellers’ Knowledge,
intends to exercise the power of expropriation, eminent domain or a similar
power with respect to all or any part of the Leased Real Property. There are no
pending or, to the Sellers’ Knowledge, threatened condemnation, fire, health,
safety, building, zoning or other land use regulatory proceedings, lawsuits or
administrative actions relating to any portion of the Leased Real Property or
any other matters which do or may adversely affect the current use, occupancy or
value thereof. The Company has not received notice of any pending or threatened
proceedings affecting any portion of the Leased Real Property.
 
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(f) The Leased Real Property and all present uses and operations of the Leased
Real Property comply with all Laws, covenants, conditions, restrictions,
easements, disposition agreements and similar matters affecting the Leased Real
Property. The Leased Real Property and its continued use, occupancy and
operation as used, occupied and operated in the conduct of the businesses of the
Company do not constitute a nonconforming use and is not the subject of a
special use permit under any Law.
 
(g) The Leased Real Property is in suitable condition for the Company's business
as currently conducted and as proposed to be conducted. The Company has good and
valid rights of ingress and egress to and from all Leased Real Property from and
to the public street systems for all usual street, road and utility purposes.
 
(h) No Person other than the Company is in possession of any of the Leased Real
Property or any portion thereof, and there are no leases, subleases, licenses,
concessions or other agreements, written or oral, granting to any Person other
than the Company the right of use or occupancy of the Leased Real Property or
any portion thereof. No easement, utility transmission line or water main
located on the Leased Real Property adversely affects the use of the Leased Real
Property or any improvement on the Leased Real Property.
 
(i) All water, sewer, gas, electric, telephone and drainage facilities, and all
other utilities required by any Law or by the use and operation of the Leased
Real Property in the conduct of the businesses of the Company are installed to
the property lines of the Leased Real Property, are connected pursuant to valid
permits to municipal or public utility services or proper drainage facilities,
are fully operable and are adequate to service the Leased Real Property in the
operation of the businesses of the Company  and to permit compliance with the
requirements of all Laws in the operation thereof. No fact or condition exists
which could result in the termination or material reduction of the current
access from the Leased Real Property to existing roads or to sewer or other
utility services presently serving the Leased Real Property.
 
3.15 Intellectual Property.
 
(a) As used in this Agreement, "Intellectual Property" means: (i) inventions
(whether or not patentable), trade secrets, technical data, databases, customer
lists, designs, tools, methods, processes, technology, ideas, know-how, source
code, product road maps and other proprietary information and materials
("Proprietary Information"); (ii) trademarks and service marks (whether or not
registered), trade names, logos, trade dress, slogans, domain names and other
proprietary indicia and all goodwill associated therewith; (iii) documentation,
advertising copy, marketing materials, web-sites, specifications, mask works,
drawings, graphics, databases, recordings and other works of authorship, whether
or not protected by Copyright; (iv) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, design documents, flow-charts, user manuals and
training materials relating thereto and any translations thereof (collectively,
"Software"); and (v) all forms of legal rights and protections that may be
obtained for, or may pertain to, the Intellectual Property set forth in clauses
(i) through (iv) in any country of the world ("Intellectual Property Rights"),
including all letters patent, patent applications, provisional patents, design
patents, PCT filings, invention disclosures and other rights to inventions or
designs ("Patents"), all registered and unregistered copyrights in both
published and unpublished works ("Copyrights"), all trademarks, service marks,
trade names, logos, slogans, domain names and other proprietary indicia (whether
or not registered) ("Marks"), trade secret rights, mask works, moral rights or
other literary property or authors rights, and all applications, registrations,
issuances, divisions, continuations, renewals, reissuances and extensions of the
foregoing.
 
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(b) At the Closing Date, there shall be attached to this Agreement as Schedule D
a list (by name, owner and, where applicable, registration number and
jurisdiction of registration, application, certification or filing) of all
Intellectual Property that is owned by the Company (whether exclusively, jointly
with another Person or otherwise) ("Owned Intellectual Property"). The Company
owns the entire right, title and interest to all Owned Intellectual Property
free and clear of all Liens.
 
(c) There are no licenses, sublicenses and other agreements ("In-Bound
Licenses") pursuant to which a third party authorizes the Company to use,
practice any rights under, or grant sublicenses with respect to, any
Intellectual Property owned by such third party including the incorporation of
any such Intellectual Property into the Company's products and, with respect to
each In-Bound License, whether the In-Bound License is exclusive or
non-exclusive.
 
(d) There are no licenses, sublicenses and other agreements ("Out-Bound
Licenses") pursuant to which the Company authorizes a third party to use,
practice any rights under, or grant sublicenses with respect to, any Owned
Intellectual Property or pursuant to which the Company grants rights to use or
practice any rights under any Intellectual Property owned by a third party and,
with respect to each Out-Bound License, whether the Out-Bound License is
exclusive or non-exclusive.
 
(e) The Company exclusively owns the entire right, interest and title to all
Intellectual Property that is used in or necessary for the businesses of the
Company as they are currently conducted or proposed to be conducted free and
clear of Liens (including the design, manufacture, license and sale of all
products currently under development or in production) ( the " Company
Intellectual Property"), Company Intellectual Property constitutes all the
Intellectual Property used in or necessary for the operation of the Company's
businesses as they are currently conducted and as proposed to be conducted.
 
(f) All registration, maintenance and renewal fees related to Patents, Marks,
Copyrights and any other certifications, filings or registrations that are owned
by the Company ("Company Registered Items") that are currently due have been
paid and all documents and certificates related to such Company Registered Items
have been filed with the relevant Governmental Entity or other authorities in
the Republic of Peru or foreign jurisdictions, as the case may be, for the
purposes of maintaining such Company Registered Items. All Company Registered
Items are in good standing, held in compliance with all applicable Law and
enforceable by the Company. All Patents that have been issued to the Company are
valid.
 
(g) There are no challenges (or any basis therefore) with respect to the
validity or enforceability of any Company Intellectual Property The Company has
not taken any action or failed to take any action that could reasonably be
expected to result in the abandonment, cancellation, forfeiture, relinquishment,
invalidation, waiver or unenforceability of any Company Intellectual Property.
There are no Registered Items that the Company has abandoned, cancelled,
forfeited or relinquished during the 12 months prior to the date of this
Agreement.
 
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(h) None of the products or services currently or formerly developed
manufactured, sold, distributed, provided, shipped or licensed, by the Company,
or which are currently under development, has infringed or infringes upon, or
otherwise unlawfully used or uses, the Intellectual Property Rights of any third
party.  The Company, by conducting its business as currently conducted or as
proposed to be conducted, has not infringed or infringes upon, or otherwise
unlawfully used or uses, any Intellectual Property Rights of a third party. The
Company has not received any communication alleging that the Company or any of
its respective products, services, activities or operations infringe upon or
otherwise unlawfully use any Intellectual Property Rights of a third party nor,
to the Sellers’ Knowledge, is there any basis therefore. No opposition or Action
has been instituted, or, to the Sellers’ Knowledge, threatened, relating to any
Intellectual Property formerly or currently used by the Company and none of the
Company Intellectual Property is subject to any outstanding Order. To the
Company’s Knowledge, no Person has infringed or is infringing any Intellectual
Property Rights of the Company or has otherwise misappropriated or is otherwise
misappropriating any Company Intellectual Property.
 
(i) With respect to the Company's Proprietary Information, the documentation
relating thereto is current, accurate and sufficient in detail and content to
identify and explain it and to allow its full and proper use without reliance on
the special knowledge or memory of others. The Company has taken commercially
reasonable steps to protect and preserve the confidentiality of all Proprietary
Information owned by the Company that is not covered by an issued Patent.
Without limiting the generality of the foregoing, the Proprietary Information of
the Company (other than Proprietary Information that is covered by an issued
Patent) is not part of the public knowledge and has not been used or divulged
for the benefit of any Person other than the Company. Any receipt or use by, or
disclosure to, a third party of Proprietary Information owned by the Company has
been pursuant to the terms of binding written confidentiality agreement between
the Company and such third party ("Nondisclosure Agreements"). True and complete
copies of the Nondisclosure Agreements and any amendments thereto, have been
provided to Buyer. The Company is, and to the Sellers’ Knowledge, all other
parties thereto are, in compliance with the provisions of the Nondisclosure
Agreements. The Company is in compliance with the terms of all Contracts
pursuant to which a third party has disclosed to, or authorized the Company to
use, Proprietary Information owned by such third party.
 
(j) All current and former employees, consultants, advisors and contractors of
the Company have executed and delivered, and are in compliance with, enforceable
agreements regarding the protection of Proprietary Information and providing
valid written assignments of all Intellectual Property conceived or developed by
such employees, consultants, advisors or contractors in connection with their
services for the Company ("Work Product Agreements"). No current or former
employee, consultant, advisor or contractor or any other Person has any right,
claim or interest to any of the Company Intellectual Property.
 
(k) No employee, consultant, advisor or contractor of the Company has been, is
or will be, by performing services for the Company, in violation of any term of
any employment, invention disclosure or assignment, confidentiality,
non-competition agreement or other restrictive covenant or any Order as a result
of such employee's, consultant's, advisor’s or independent contractor's
employment by the Company or any services rendered by such employee, consultant,
advisor or independent contractor.
 
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(l) All Intellectual Property that has been distributed, sold or licensed to a
third party by the Company that is covered by a warranty conformed to or
conforms to, and performed or performs in accordance with, the representations
and warranties provided with respect to such Intellectual Property by or on
behalf of the Company for the time period during which such representations and
warranties apply.
 
(m) The execution and delivery of this Agreement by the Company does not, and
the consummation of the Acquisition (in each case, with or without the giving of
notice or lapse of time, or both), will not, directly or indirectly, result in
the loss or impairment of any Company Intellectual Property, or give rise to any
right of any third party to terminate or reprice or otherwise renegotiate any of
the Company’s rights to own any of its Intellectual Property or its respective
rights under any Out-Bound License or In-Bound License, nor require the consent
of any Governmental Entity or other third party in respect of any such
Intellectual Property.
 
3.16 Absence of Certain Changes or Events. Since the date of this Agreement
(with respect to the representation and warranty made as of the date of this
Agreement) and to the Closing Date (with respect to the representation and
warranty made as of the Closing Date):
 
(a) there has not been any Material Adverse Change in the condition (financial
or otherwise), operations, prospects or results of operations of the Company
taken as a whole;
 
(b) the Company has not amended or changed its Charter Documents;
 
(c) the Company has not declared, set aside or paid any dividend or other
distribution (whether in cash, stock or property) with respect to any Equity
Security or any other security;
 
(d) the Company has not split, combined or reclassified any Equity Security or
other security, or issued, or authorized for issuance, any Equity Security or
other security;
 
(e) the Company has not altered any term of any outstanding Equity Security or
other security;
 
(f) the Company has not (i) increased or modified the compensation or benefits
payable or to become payable by the Company to any of its current or former
directors, employees, contractors, advisors or consultants, (ii) increased or
modified any bonus, severance, termination, pension, insurance or other employee
benefit plan, payment or arrangement made to, for or with any current or former
directors, employees, contractors, advisors or consultants of the Company, or
(iii) entered into any employment, severance or termination agreement;
 
(g) the Company has not sold, leased, transferred or assigned any property or
assets of the Company;
 
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(h) the Company has not incurred, assumed or guaranteed any Indebtedness;
 
(i) the Company has not created or assumed any Lien on any asset;
 
(j) the Company has not made any loan, advance or capital contribution to, or
investment in, any Person other than advances in the Ordinary Course of business
consistent with past practice;
 
(k) the Company has not entered into any Material Contract;
 
(l) no Material Contract has been modified, (ii) no rights under any Contract
have been waived or accelerated and (iii) no Contract that would be required to
be listed as a Material Contract pursuant to Section 3.17 hereof if such
Contract were in effect on the date hereof has been terminated or cancelled;
 
(m) the Company has not sold, transferred, pledged or assigned, and there has
been no Material reduction in the value of, any Company Intellectual Property;
 
(n) there has not been any labor dispute or proceeding by a labor union or
representative thereof to organize any employees of the Company;
 
(o) there has not been any violation of or conflict with any Law to which the
business, operations, assets or properties of the Company are subject;
 
(p) The Company has not agreed or entered into any arrangement to take any
action which, if taken prior to the date hereof, would have made any
representation or warranty set forth in this Article III untrue or incorrect;
 
(q) there has not been any Material damage, destruction or loss with respect to
the property and assets of the Company, whether or not covered by insurance;
 
 (r) the Company has not made any change in accounting practices;
 
(s) the Company has made not any Tax election, changed its method of Tax
accounting or settled any claim for Taxes; or
 
(t) the Company has not agreed, whether in writing or otherwise, to do any of
the foregoing.
 
3.17 Contracts.
 
(a) At the Closing Date, there shall be attached to this Agreement as Schedule E
a complete and accurate list of each Contract or series of related Contracts to
which the Company is a party or is subject, or by which any of their respective
assets are bound:
 
(i) for the purchase of materials, supplies, goods, services, equipment or other
assets and that involves or would reasonably be expected to involve payments by
the Company of ten thousand and 00/100 dollars ($10,000) or more;
 
(ii) (A) for the sale by the Company of materials, supplies, goods, services,
equipment or other assets, and that involves a specified annual minimum dollar
sales amount by the Company of ten thousand and 00/100 dollars ($10,000) or
more, or (B) pursuant to which the Company has received or expects to receive
payments of more than ten thousand and 00/100 dollars ($10,000) in the year
ended December 31, 2008;
 
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(iii) that requires the Company to purchase its total requirements of any
product or service from a third party or that contains "take or pay" provisions;
 
(iv) that (A) continues over a period of more than six months from the date
hereof or (B) involves payments to or by the Company exceeding ten thousand and
00/100 dollars ($10,000), other than arrangements disclosed pursuant to the
preceding subsections (i) and (ii);
 
(v) that is an employment, consulting, termination or severance Contract, other
than any such Contract that is terminable at-will by the Company without
liability to the Company;
 
(vi) that is a partnership, joint venture, consortium or similar Contract;
 
(vii) that is a distribution, dealer, representative or sales agency Contract;
 
(viii) that is a (A) Lease or (B) Contract for the lease of personal or real
property, and which in either case provides for payments to or by the Company in
any one case of ten thousand and 00/100 dollars ($10,000) or more or more over
the term of the lease;
 
(ix) that provides for the indemnification by the Company of any Person, the
undertaking by the Company to be responsible for damages, or the assumption by
the Company of any Tax, environmental or other Liability;
 
(x) with any Governmental Entity;
 
(xi) that is a note, debenture, bond, equipment trust, letter of credit, loan or
other Contract for Indebtedness or lending of money (other than to employees for
travel expenses in the Ordinary Course of business) or Contract for a line of
credit or guarantee, pledge or undertaking of the Indebtedness of any other
Person;
 
(xii) for a charitable or political contribution in any one case;
 
(xiii) for any capital expenditure or leasehold improvement in any one case in
excess of ten thousand and 00/100 dollars ($10,000);
 
(xiv) that restricts or purports to restrict the right of the Company to engage
in any line of business, acquire any property, develop or distribute any product
or provide any service (including geographic restrictions) or to compete with
any Person or granting any exclusive distribution rights, in any market, field
or territory;
 
(xv) that is an Out-Bound License or an In-Bound License;
 
(xvi) that relates to the acquisition or disposition of any Material business
(whether by merger, sale of stock, sale of assets or otherwise);
 
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(xvii) that is a collective bargaining Contract or other Contract with any labor
organization, union or association;
 
(xviii) that is related to telecommunications services, interconnection or
similar.
 
(xix) that is otherwise Material to the Company as a whole and not previously
disclosed pursuant to this Section 3.17.
 
(b) Each Contract required to be listed in Schedule E (collectively, the
"Material Contracts") is in full force and effect and valid and enforceable in
accordance with its terms.
 
(c) The Company is, and no other party thereto is, in default in the
performance, observance or fulfillment of any obligation, covenant, condition or
other term contained in any Material Contract, and neither the Company has given
or received notice to or from any Person relating to any such alleged or
potential default that has not been cured. No event has occurred which, with or
without the giving of notice or lapse of time, or both, may conflict with or
result in a violation or breach of, or give any Person the right to exercise any
remedy under or accelerate the maturity or performance of, or cancel, terminate
or modify, any Material Contract.
 
(d) The Company has delivered accurate and complete copies of each Material
Contract to Buyer.
 
(e) All Contracts other than Material Contracts to which the Company is a party
or is subject, or by which any of their respective assets are bound
(collectively, the "Minor Contracts"), are in all Material respects valid and
enforceable in accordance with their terms. The Company is not, and no other
party thereto is not, in default in the performance, observance or fulfillment
of any obligation, covenant or condition contained therein, and no event has
occurred which with or without the giving of notice or lapse of time, or both,
would constitute a default thereunder by the Company or any other Person.
 
3.18 Litigation.
 
(a) There is no action, suit or proceeding, claim, arbitration, litigation or
investigation (each, an "Action") (i) pending or, to the Sellers’ Knowledge,
threatened against or which may affect the Company, or (ii) that challenges or
seeks to prevent, enjoin, or otherwise delay the transactions contemplated by
this Agreement or affect the validity, effectiveness or enforceability of this
Agreement or the consummation of the transactions contemplated hereby. No event
has occurred or circumstances exist that may give rise or serve as a basis for
any such Action. There is no Action against any current or former director,
employee, consultant, advisor or independent contractor of the Company with
respect to which the Company has or is reasonably likely to have an
indemnification obligation.
 
(b) There is no unsatisfied judgment, penalty or award against or which may
affect the Company or any of its respective properties or assets. There is no
Order to which the Company or any of their respective properties or assets is
subject.
 
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3.19 Employee Benefits. The Company does not have any Benefit Plans sponsored,
maintained or contributed to or required to be contributed to by the Company for
the benefit of any present or former directors, employees, contractors, advisors
or consultants of the Company.
 
3.20 Labor and Employment Matters.
 
(a) The Company is not a party or subject to any labor union or collective
bargaining agreement.
 
(b) The Company has complied with each, and is not, and has not been, in
violation of any, Law relating to anti-discrimination and equal employment
opportunities and there are, and have been, no violations of any other Law
respecting the hiring, hours, wages, occupational safety and health, employment,
promotion, termination or benefits of any employee or other Person.
 
(c) The Company has paid or properly accrued in the Ordinary Course of business
all wages and compensation due to employees, including all vacations or vacation
pay, holidays or holiday pay, sick days or sick pay, overtime, bonuses and labor
benefits.
 
(d) The Company is not a party to any Contract which restricts the Company from
relocating, closing or terminating any of its operations or facilities or any
portion thereof.
 
(e) The Company has made all payments and met all legal and conventional
obligations to be performed with, for the benefit of, on behalf of, as a result
of the hiring of, and as a result of the dismissal or resignation and final
payment of its employees or any other employee who has worked in the Company in
the past, whether under non-fixed term, part-time, fixed-term of another form of
contract, as well as to such persons subject to the provisions on
pre-professional practices and youth occupational training, on any account,
including but not limited to: remuneration, allocation, bonuses, overtime,
vacation break at such times established by law, life insurance, hazardous work
insurance, contributions to the Private Pension System, contributions to EsSalud
(the Peruvian Social Security), severance payments, profit sharing, withholdings
and/or payment of taxes, final payment and indemnification for dismissal, and
penalties and compensation for termination of contract, and interest, as
applicable.
 
(f) The Company has no outsourcing or labor intermediation contracts or similar
agreement or arrangements currently in force.
 
(g) The Company has no strikes, disputes, stoppages or any other form of
collective suspension of labor of the Company and Sellers reasonably do not
expect that any strike, dispute, stoppage or any other form of collective
suspension will arise.
 
(h) The Company is not and reasonably does not expect to be a party to any
judicial, arbitration or administrative proceedings related to, in connection
with or arising out of, labor matters, and no Order has been issued or Sellers
reasonably expect to be issued against the Company related to, in connection
with or arising out of, labor matters.
 
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3.21 Environmental.
 
(a) none of the real properties currently or formerly owned, leased or used by
the Company or over which the Company has or had charge, management or control
(i) has ever been used by any Person as a licensed landfill or waste disposal
site; or (ii) has ever had asbestos, asbestos-containing materials,
polychlorinated biphenyls ("PCBs"), radioactive substances or aboveground or
underground storage systems, active or abandoned, located on, at or under them;
 
(b) the Company has not sent any Hazardous Substances for recycling, disposal,
treatment or other waste processing outside of any of its facilities;
 
(c) the Company has not been required by any Governmental Entity to (i) alter
any of the real or leased properties of/by the Company in order to be in
compliance with Environmental Laws; or (ii) perform any environmental closure,
decommissioning, rehabilitation, restoration or post-remedial investigations,
on, about, or in connection with any real property currently or formerly owned,
leased or used by the Company;
 
(d) the assets of the Company are capable of, and are not restricted by any
Authorization or Order from, being operated at maximum daily and annual
production levels while remaining in compliance with Environmental Laws;
 
(e) the Company is conducting and has always conducted its business and any past
business in compliance with all applicable Laws (including Environmental Laws)
and, in particular, the Company has not discharged any substances in a manner
that is not in compliance with any applicable laws (including Environmental
Laws);
 
(f) the Company holds or possesses all governmental permits and Authorizations
that are necessary under Environmental Laws to carry on and conduct the business
and operations of the Company as currently conducted;
 
(g) the buildings and fixtures that the Company operate, use or has operated or
used have received proper maintenance and are currently in good operation
conditions, in fulfillment of the Environmental Laws;
 
(h) the Company is not currently in breach of, in default under, or in violation
of any Environmental Law, and is not aware of any circumstances which, with the
passage of time, will cause the Company to be in breach of, in default under, or
in violation of any Environmental Law; and
 
(i) no suit, claim, action, arbitration, legal, administrative or other
proceeding is pending or threatened against the Company with respect to any
environmental matter and no Governmental Entity has imposed fines and/or
sanctions to, and/or has initiated any inspection process on the Company for any
default under, or violation of, any applicable Environmental Law.
 
3.22 Insurance.
 
(a) At the Closing Date, there shall be attached to this Agreement as Schedule F
an accurate and complete list of each insurance policy and fidelity bond which
covers the Company or its respective businesses, properties, assets, directors
or employees (the "Policies"). There are no pending claims under any of such
Policies as to which coverage has been questioned, denied or disputed by the
insurer or in respect of which the insurer has reserved its rights.
 
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(b) There is no self-insurance arrangement by or affecting the Company.
 
(c) All Policies are issued by an insurer that is financially sound and
reputable, are in full force and effect and are enforceable in accordance with
their terms and will continue in full force and effect with respect to the
Company following the Acquisition. Such Policies provide adequate insurance
coverage for the Company and its respective businesses, properties, assets and
employees, and are sufficient for compliance with all Laws and Contracts to
which the Company is a party or by which it is bound.
 
(d) All premiums due under the Policies have been paid in full or, with respect
to premiums not yet due, accrued. The Company has not received a notice of
cancellation of any Policy or of any Material changes that are required in the
conduct of the businesses of the Company as a condition to the continuation of
coverage under, or renewal of, any such Policy. There is no existing default or
event which, with the giving of notice or lapse of time or both, would
constitute a default under any Policy or entitle any insurer to terminate or
cancel any Policy. The Sellers have no Knowledge of any threatened termination
of, or Material premium increase with respect to, any Policy and none of such
Policies provides for retroactive premium adjustments.
 
3.23 Books and Records. The minute books (containing the records of the
meetings, or written consents in lieu of such meetings, of the stockholders and
the board of directors), the stock certificate books, and the stock record books
of the Company are correct and complete, and have been maintained in accordance
with sound business practices. The minute books of the Company contain accurate
and complete records of all meetings, or actions taken by written consent, of
the stockholders and the board of directors of the Company, and no meeting, or
action by written consent in lieu of such meeting, of any such stockholders or
board of directors, has been held for which minutes have not been prepared and
not contained in the minute books. At the Closing, all of the books and records
of the Company will be in the possession of the Company. At the Closing, Sellers
will deliver, or cause to be delivered, to Buyer or its designee all of the
minute books of the Company.
 
3.24 Suppliers and Customers. The relationships of each of the Company with each
such supplier and customer are good commercial working relationships: (a) each
supplier from whom purchases exceeded ten thousand and 00/100 dollars ($10,000)
in the year ended December 31, 2008, (b) each supplier who constitutes a sole
source of supply to the Company, and (c) with respect to the three-year period
ended on the date of this Agreement, each customer that has contributed in
excess of 10% percent of the Company’s revenues on a consolidated basis for such
period. No such supplier or customer has canceled or otherwise terminated, or
threatened to cancel or otherwise terminate, its relationship with the Company.
The Company has not received notice that any such supplier or customer may
cancel or otherwise Materially and Adversely modify its relationship with the
Company or limit its services, supplies or materials to the Company, either as a
result of the Acquisition or otherwise.
 
3.25 Brokers or Finders. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Sellers or the Company.
 
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3.26 Bank Accounts. At the Closing Date, there shall be attached to this
Agreement as Schedule G a list containing the name of each bank, safe deposit
company or other financial institution in which the Company has an account, lock
box or safe deposit box and the names of all persons authorized to draw thereon
or have access thereto.
 
3.27 Powers of Attorney. At the Closing Date, there shall be attached to this
Agreement as Schedule H a list of all outstanding powers of attorney executed by
or on behalf of the Company in favor of any Person. 
 
3.28 Support Services. Sellers provide no support or other services to the
Company.
 
3.29 Completeness of Disclosure. No representation or warranty by Sellers in
this Agreement, and no statement made in the Schedules, or any certificate or
other document furnished or to be furnished to Buyer pursuant hereto, or in
connection with the negotiation, execution or performance of this Agreement,
contains or will at the Closing contain any untrue statement of a Material fact
or omits or will omit to state a Material fact required to be stated herein or
therein or necessary to make any statement herein or therein not misleading.
There are no facts or circumstances that could be expected to have, individually
or in the aggregate, a Material Adverse Effect on the condition (financial or
otherwise), operations, prospects or results of operations of the Company taken
as a whole.
 
ARTICLE IV
 
REPRESENTATIONS AND WARRANTIES OF BUYER
 
Buyer represents and warrants to Sellers that each statement contained in this
Article IV is true and correct as of the date hereof.
 
4.1 Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the Laws of the Republic of
Seychelles, and has all requisite corporate power to own, lease and operate its
properties and to carry on its business as now being conducted.
 
4.2 Authority and Enforceability. Buyer has the requisite power and authority to
enter into this Agreement and to consummate the Acquisition. The execution and
delivery of this Agreement and the consummation of the Acquisition have been
duly authorized by all necessary corporate action on the part of Buyer. This
Agreement has been duly executed and delivered by Buyer and, assuming due
authorization, execution and delivery by Sellers, constitutes the valid and
binding obligation of Buyer, enforceable against it in accordance with its
terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting or
relating to creditors' rights generally, and (b) the availability of injunctive
relief and other equitable remedies.  
 
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4.3 Brokers or Finders.  No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Buyer or any Affiliate of Buyer.
 
ARTICLE V
 
COVENANTS OF SELLERS
 
5.1 Conduct of Business. During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Closing, except with the prior written consent of Buyer, Sellers shall cause the
Company to:
 
(a) maintain its corporate existence, pay its debts and Taxes when due, pay or
perform other obligations when due, and carry on its business in the usual,
regular and ordinary course in a manner consistent with past practice and in
accordance with the provisions of this Agreement and in compliance with all
Laws, Authorizations, Orders and Contracts;
 
(b) use its reasonable best efforts consistent with applicable Laws, past
practices and policies to preserve intact its present business organization,
keep available the services of its present employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, to the end that its goodwill and
ongoing business be substantially unimpaired on the Closing Date;
 
(c) maintain the facilities and assets owned, operated or used by it in the same
state of repair, order and conditions as they are on the date hereof, reasonable
wear and tear excepted;
 
(d) maintain its books and records in accordance with the applicable Law and
past practice, and use its reasonable best efforts to maintain in full force and
effect all Authorizations and Policies;
 
(e) promptly notify Buyer of any event or occurrence not in the Ordinary Course
of business;
 
(f) provide Buyer with a list of actions that must be taken by the Company
within 60 days immediately following the Closing for the purposes of obtaining,
maintaining, perfecting, preserving or renewing any Company Registered Items;
and
 
(g) use its reasonable best efforts to conduct its business in such a manner
that on the Closing Date the representations and warranties of Sellers contained
in this Agreement shall be true and correct, as though such representations and
warranties were made on and as of such date, and Sellers shall use its
reasonable best efforts to cause all of the conditions to the obligations of
Buyer under this Agreement to be satisfied as soon as practicable following the
date hereof.
 
5.2 Negative Covenants. Except as expressly provided in this Agreement, Sellers
shall not permit the Company, without the prior written consent of Buyer, to:
 
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(a) adopt or propose any amendment to the Charter Documents of the Company;
 
(b) declare, set aside or pay any dividend or other distribution (whether in
cash, stock or other property) with respect to any Equity Security or other
security;
 
(c) issue or authorize for issuance any Equity Security or other security, or
make any change in any issued and outstanding Equity Security or other security,
or redeem, purchase or otherwise acquire any Equity Security or other security;
 
(d) (i) modify (A) the compensation or benefits payable or to become payable by
the Company to any of its current or former directors, employees, contractors,
advisors or consultants, or (B) any bonus, severance, termination, pension,
insurance or other employee Benefit Plan, payment or arrangement made to, for or
with any current or former directors, employees, contractors, advisors or
consultants of the Company, or (ii) enter into any employment, severance or
termination agreement;
 
(e) sell, lease, transfer or assign any property or assets of the Company;
 
(f) assume, incur or guarantee any Indebtedness, except for endorsements for
collection in the Ordinary Course of business, or modify the terms of any
existing Indebtedness;
 
(g) mortgage, pledge or permit to become subject to Liens any properties or
assets of the Company;
 
(h) make any loans, advances or capital contributions to, or investments in, any
Person;
 
(i) not cancel any debts or waive any claims or rights of substantial value;
 
(j) (i) amend, modify or terminate, or waive, release or assign any rights
under, any Material Contract, (ii) enter into any Contract which, if in effect
on the date hereof, would have been required to be set forth in the Schedules as
a Material Contract, or (iii) otherwise take any action or engage in any
transaction that is Material to the Company taken as a whole;
 
(k) (i) make any capital expenditure, or commit to make any capital expenditure
which in any one case exceeds one hundred dollars ($100), or (ii) except as
permitted by clause (i), acquire any assets, properties or rights;
 
(l) make any filings or registrations, with any Governmental Entity, except
routine filings and registrations made in the Ordinary Course of business;
 
(m) be party to (i) any merger, acquisition, consolidation, recapitalization,
reorganization, liquidation, dissolution or similar transaction or (ii) any
purchase of all or any substantial portion of the assets or Equity Securities or
other securities of the Company;
 
(n) take any actions outside the Ordinary Course of business;
 
(o) make any changes in its accounting methods, principles or practices;
 
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(p) change its method of Tax accounting or settle any claim relating to Taxes;
 
(q) take any action or omit to do any act which action or omission will cause it
to breach any obligation contained in this Agreement or cause any representation
or warranty of Sellers not to be true and correct as of the Closing Date; or
 
(r) agree or otherwise commit, whether in writing or otherwise, to do any of the
foregoing.
 
5.3 Access to Information. Sellers shall, and shall cause the Company to, afford
to Buyer's officers, directors, employees, accountants, counsel, consultants,
advisors and agents ("Representatives") free and full access to and the right to
inspect, during normal business hours, all of the Leased Real Property,
properties, assets, records, Contracts and other documents related to the
Company, and shall permit them to consult with the officers, employees,
accountants, advisors, counsels and agents of the Sellers for the purpose of
making such investigation of the Company as Buyer shall desire to make. Sellers
shall furnish to Buyer all such documents and copies of documents and records
and information with respect to the Company and copies of any working papers
relating thereto as Buyer may request. Without limiting the foregoing, Sellers
shall permit Buyer and its Representatives to conduct environmental due
diligence of the Company and the Leased Real Property, including the collecting
and analysis of samples of indoor or outdoor air, surface water, groundwater or
surface or subsurface land on, at, in, under or from the Company and the Leased
Real Property.
 
5.4 Resignations. On the Closing Date, Sellers shall cause to be delivered to
Buyer duly signed resignations of all members of the Board of Directors of their
positions as directors of the Company and of all officers of their positions as
officers of the Company. For this purpose, on the Closing Date the Company must
hold a Shareholders’ Meeting in which all the resignations presented by all of
the members of the Board of Directors and officers of the Company will be
accepted.
 
5.5 Indebtedness; Release of Liens.
 
(a) Prior to the Closing Date, all Indebtedness of the Company and any
guarantees of such Indebtedness shall be extinguished.
 
(b) Prior to the Closing Date, the Company shall have caused to be released all
Liens in and upon any of the properties and assets of the Company.
 
5.6 Confidentiality.  
 
(a) From and after the Closing, Sellers will hold, and will use its reasonable
best efforts to cause its respective Representatives to hold, in confidence any
and all information, whether written or oral, concerning the Company, except to
the extent that Sellers can show that such information (a) is in the public
domain through no fault of Sellers or (b) is lawfully acquired by Sellers after
the Closing from sources which are not prohibited from disclosing such
information by a legal, contractual or fiduciary obligation. If Sellers or any
of its Representatives are compelled to disclose any such information by
judicial or administrative process or by other requirements of Law, Sellers
shall promptly notify Buyer in writing and shall disclose only that portion of
such information which Sellers is advised by its counsel in writing is legally
required to be disclosed, provided that Sellers shall exercise its reasonable
best efforts to obtain an appropriate protective order or other reasonable
assurance that confidential treatment will be accorded such information.
 
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5.7 Record Retention Sellers will retain any of its books and records that
relate to the Company in accordance with the Company record retention policies
as presently in effect. During the period commencing on the Closing Date and
ending on the seventh anniversary of the Closing Date, Sellers shall not dispose
of or permit the disposal of any such books and records not required to be
retained under such policies without first giving 60 days' prior written notice
to Buyer offering to surrender the same to Buyer at Buyer's expense.
 
5.8 Consents. Sellers shall cause the Company to obtain all Consents; provided
that no Indebtedness shall be repaid, and no Contract shall be amended nor any
right thereunder be waived, and no money or other consideration shall be
expended, to obtain any such Consent.
 
5.9 Notification of Certain Matters.  
 
(a) Sellers shall give prompt notice to Buyer of (i) any fact, event or
circumstance known to any of them that individually or taken together with all
other facts, events and circumstances known to any of them, has had or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on the condition (financial or otherwise), operations, prospects or
results of operations of the Company taken as a whole, or that would cause or
constitute a breach of any of its representations, warranties, covenants or
agreements contained herein, (ii) any fact, event or circumstance known to any
of them that individually or taken together with all other facts, events and
circumstances known to any of them, has had or is reasonably likely to result in
the failure of any condition precedent to Buyer's obligations, (iii) any notice
or other communication from any third party alleging that the consent of such
third party is or may be required in connection with the Acquisition, (iv) any
notice or other communication from any Governmental Entity in connection with
the Acquisition, or (v) any Actions commenced relating to Sellers, the Company
that, if pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 3.18;  provided however, that (A) the
delivery of any notice pursuant to this Section 5.9 shall not limit or otherwise
affect any remedies available to Buyer or prevent or cure any
misrepresentations, breach of warranty or breach of covenant, and (B) disclosure
by Sellers shall not be deemed to amend or supplement the Schedules or
constitute an exception to any representation or warranty.
 
(b) From the date hereof to and including the Closing Date, the Company shall
provide Buyer with regular management reports on its operations.
 
 
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5.10 Restrictive Covenants.
 
(a) Sellers covenant that, commencing on the Closing Date and ending on the
fifth anniversary of the Closing Date (the "Noncompetition Period"), they shall
not engage in, directly or indirectly, in any capacity, or have any direct or
indirect ownership interest in, or permit the Company's name to be used in
connection with, any business anywhere in any South American country, which is
engaged, either directly or indirectly, in the business of providing all type of
telecommunication services or carrying out activities of local or long distance
telephones services, fixed telephony, mobile phones, IP telephony, internet,
cable television, rental of networks and equipments, data transmission,
commercialization of telecommunication equipments, among others; or providing
services which are competitive with products or equipment leased, marketed, sold
or under development by, or services provided by, the Company (the "Restricted
Business"). It is recognized that the Restricted Business is expected to be
conducted throughout at least the Republic of Peru and that more narrow
geographical limitations of any nature on this non-competition covenant (and the
non-solicitation covenants set forth in Sections 5.10(b) and (c)) are therefore
not appropriate.
 
(b) Sellers covenant that, during the Noncompetition Period, they shall not
directly or indirectly, solicit or entice, or attempt to solicit or entice, any
clients or customers of the Company or potential clients or customers of the
Company for purposes of diverting their business or services from the Company.
 
(c) Sellers covenant that, during the Noncompetition Period, Sellers shall not
solicit the employment or engagement of services of any person who is or was
employed as an employee, contractor, advisor or consultant by the Company during
such period on a full or part-time basis.
 
(d) Sellers acknowledge that the restrictions contained in this Section 5.10 are
reasonable and necessary to protect the legitimate interests of Buyer and
constitute a Material inducement to Buyer to enter into this Agreement and
consummate the Acquisition. Sellers acknowledges that any violation of this
Section 5.10 will result in irreparable injury to Buyer and agrees that Buyer
shall be entitled to preliminary and permanent injunctive relief, without the
necessity of proving actual damages, as well as an equitable accounting of all
earnings, profits and other benefits arising from any violation of this Section
5.10, which rights shall be cumulative and in addition to any other rights or
remedies to which Buyer may be entitled. Without limiting the generality of the
foregoing, the Noncompetition Period shall be extended for an additional period
equal to any period during which either of the Sellers are in breach of their
obligations under this Section 5.10.
 
(e) In the event that any covenant contained in this Section 5.10 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable Law in any jurisdiction, then any court is
expressly empowered to reform such covenant, and such covenant shall be deemed
reformed, in such jurisdiction to the maximum time, geographic, product or
service, or other limitations permitted by applicable Law. The covenants
contained in this Section 5.10 and each provision thereof is severable and
distinct covenants and provisions. The invalidity or unenforceability of any
such covenant or provision as written shall not invalidate or render
unenforceable the remaining covenants or provisions hereof, and any such
invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such covenant or provision in any other jurisdiction.
 
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5.11 Insurance.
 
(a) To the extent that Sellers shall be entitled under the terms and conditions
of "occurrence" based Policies in effect on the date hereof to coverage for
losses suffered by the Company after the Closing arising out of any occurrences
covered by such Policies occurring prior to the Closing, Sellers shall use such
efforts and take such actions to recover such losses on behalf of the Company
pursuant to such Policies as it would use or take in conducting its own business
in the Ordinary Course if such losses were suffered by Sellers, and shall
deliver the proceeds thereby recovered to the Company. In the event of any
dispute regarding the date of any loss or occurrence, the terms of the
applicable Policy shall govern. Sellers shall continue to maintain such
Policies, to the extent they apply on the date hereof to the Company, in full
force and effect (and without any amendment that would be adverse, in any
Material respect, to the Company) with respect to occurrences prior to and
including the Closing. Sellers shall continue to have the Company as a named
insured party under each such Policy with respect to occurrences prior to and
including the Closing.
 
(b) Following the Closing, Buyer shall provide, and shall cause the Company to
provide, Sellers with all records and other information necessary for the
reporting, investigation, negotiation and, if applicable, prosecution of any
claim made by Sellers pursuant to this Section 5.11.
 
5.12 Security Interest.
 
(a) Sellers hereby grant Buyer a security interest on fifty percent (50%) of the
1,000,000 (one million) shares of China Tel Group Inc. (the “Pledged Shares”)
they will receive as consideration for the sale of the Shares in accordance with
Section 2.2 of this Agreement.
 
(b) The pledge on the Pledged Shares will secure each and all of the
representations, warranties, statements, agreements, covenants and obligations
of the Sellers under this Agreement, for which each Seller will be jointly and
severally liable.
 
(c) The Pledged Shares are pledged to the Buyer up to the amount of One Million
One Hundred Twenty-Five Thousand and 00/100 Dollars (US$1,125,000) for a term of
thirty-six (36) months following the Closing Date.
 
(d) Buyer may enforce the security interest and sell all of the Pledged Shares,
or any part thereof, upon breach by any of the Sellers of any of the
representations, warranties, statements, agreements, covenants or obligations of
the Sellers under this Agreement.
 
(e) The Pledged Shares will be released from their security interest immediately
upon expiration of the term set forth in subparagraph (c) hereinabove, provided
that all of the Pledged Shares or any part thereof have not been sold by Buyer
as set out in subparagraph (d) hereinabove.
 
 
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ARTICLE VI
 
COVENANTS OF BUYER AND SELLERS
 
6.1 Regulatory Approvals. Each of Buyer and Sellers shall promptly apply for,
and take all reasonably necessary actions to obtain or make, as applicable, all
Authorizations, Orders, declarations and filings with, and notices to, any
Governmental Entity or other Person required to be obtained or made by it for
the consummation of the Acquisition and the transactions contemplated by this
Agreement.  Each Party shall cooperate with and promptly furnish information to
the other Party necessary in connection with any requirements imposed upon such
other Party in connection with the consummation of the Acquisition. Parties
shall be equally responsible for all filings and other similar fees payable in
connection with such filings, and for any local counsel fees.
 
6.2 Public Announcements. Neither Buyer nor Sellers shall, and Sellers shall
cause the Company not to, issue any press releases or otherwise make any public
statements with respect to the transactions contemplated by this Agreement;
provided that Buyer or Sellers may, without such approval, make such press
releases or other public announcement as it believes are required pursuant to
any listing agreement with any national securities exchange or stock market or
applicable securities Laws, in which case the Party required to make the release
or announcement shall allow the other Party reasonable time to comment on such
release or announcement in advance of such issuance; provided, further, that
each of the parties may make internal announcements to their respective
employees that are consistent with the parties' prior public disclosures
regarding the Acquisition.
 
6.3 Tax Matters.
 
(a) Preparation and Filing of Pre-Closing and Post-Closing Period Tax Returns.
 
(i) Tax Periods Ending on or Before the Closing Date. Buyer shall prepare, or
cause to be prepared, and file, or cause to be filed, all Tax Returns of the
Company for all periods ending on or prior to the Closing Date which are filed
after the Closing Date. Buyer shall permit Sellers to review and comment on each
such Tax Return described in the preceding sentence prior to filing. Sellers
shall pay to Buyer the amount of the Taxes with respect to such Tax Returns
within five days following any demand by Buyer for such payment.
 
(ii) Tax Periods Beginning Before and Ending After the Closing Date. Buyer shall
prepare, or cause to be prepared, and file, or cause to be filed, all Tax
Returns of the Company for Tax periods which begin before the Closing Date and
end after the Closing Date. Sellers shall pay to Buyer, within five days
following any demand by Buyer, with respect to such Tax Returns, an amount equal
to the portion of such Taxes which relates to the portion of such taxable period
ending on the Closing Date (as determined pursuant to Section 6.3(c) hereof).
Buyer shall permit Sellers to review and comment upon such Tax Returns.
 
(b) Cooperation in Filing Tax Returns. Buyer and Sellers shall provide to the
other such cooperation and information, as and to the extent reasonably
requested, in connection with the filing of any Tax Return, amended Tax Return
or claim for refund, determining liability for Taxes or a right to refund of
Taxes, or in conducting any audit, litigation or other proceeding with respect
to Taxes. Such cooperation and information shall include providing copies of all
relevant portions of relevant Tax Returns, together with relevant accompanying
schedules and relevant work papers, relevant documents relating to rulings and
other determinations by Taxing Authorities, and relevant records concerning the
ownership and Tax basis of property, which any such party may possess.  Each
party will retain all Tax Returns, schedules, work papers, and all Material
records and other documents relating to Tax matters, of the Company for the Tax
period first ending after the Closing Date and for all prior Tax periods until
the expiration of the applicable statute of limitations for the Tax periods to
which the Tax Returns and other documents relate. Thereafter, the Party holding
such Tax Returns or other documents may dispose of them. Each Party shall make
its employees, contractors, consultants and advisors reasonably available on a
mutually convenient basis at its cost to provide explanation of any documents or
information so provided.
 
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(c) Carryovers, Refunds, and Related Matters.
 
(i) Any refund of Taxes (including any interest thereon) that relates to the
Company and that is attributable to a post-Closing period shall be the property
of the Company, as applicable, and shall be retained by the Company (or promptly
paid by Sellers to the Company if any such refund (or interest thereon) is
received by any of the Sellers). Without limiting the generality of the
preceding sentence, any such refund or other benefit realized by the Company in
a post-Closing period that results from the carry forward of any Tax attribute
from a pre-Closing period shall be the property of the Company and shall be
retained by the Company.
 
(ii) In the event that the Company (or successor thereto) realizes any item of
loss or credit for Tax purposes for any post-Closing period, the Company may, in
its sole discretion, carry forward such loss or credit.
 
(d) Payment of Taxes and Fees. Sellers shall pay all Transfer Taxes and any
other Taxes arising out of or in connection with the transactions effected
pursuant to this Agreement, and shall indemnify, defend, and hold harmless Buyer
with respect to such Taxes. Sellers shall file all necessary documentation and
Tax Returns with respect to such Taxes.
 
6.4 Employee Matters.
 
(a) Severance. Sellers shall be jointly liable for any severance, separation,
deferred compensation or similar benefits that are payable to any employee of
the Company as a result of the Acquisition. Sellers shall indemnify Buyer for
any claim by any such employees that they are entitled to any such benefits as a
result of the Acquisition.
 
(b) Certain Welfare Benefits Matters. Sellers shall retain joint responsibility
for and continue to pay all medical, life insurance, disability and other
welfare plan expenses and benefits with respect to claims incurred by such
employees or their covered dependents on or prior to the Closing Date. Expenses
and benefits with respect to claims incurred by such employees or their covered
dependents after the Closing Date shall be the responsibility of Buyer, except
if they are the result of, or arise out of, the Company’s breach of the
applicable Laws. For purposes of this paragraph, a claim is deemed incurred when
the services that are the subject of the claim are performed; in the case of
life insurance, when the death occurs; in the case of long-term disability
benefits, when the disability occurs; and, in the case of a hospital stay, when
the employee first enters the hospital.
 

 
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(c) Workers' Compensation. Sellers shall be jointly responsible for all claims
for workers' compensation benefits which are incurred on or prior to the Closing
Date by such employees that are payable under the terms and conditions of the
Company  workers' compensation programs. Buyer's workers compensation programs
shall be responsible for all claims for benefits which are incurred after the
Closing Date by such employees that are payable under the terms and conditions
of Buyer's workers' compensation programs. For purposes of this Section 6.4(c),
a claim for workers' compensation benefits shall be deemed to be incurred when
the event giving rise to the claim occurs (each, a "Workers' Compensation
Event"). If a Workers' Compensation Event occurs over a period both preceding
and following the Closing, the claim shall be the joint responsibility and
liability of Sellers and Buyer and shall be equitably apportioned between
Sellers, on the one hand, and Buyer, on the other hand, based upon the relevant
periods of time that such Workers' Compensation Event transpired preceding and
following the Closing.
 
6.5 Further Assurances. Subject to the terms of this Agreement, each of Buyer
and Sellers shall execute such documents and other instruments and take such
further actions as may be reasonably required to carry out the provisions hereof
and consummate the Acquisition.
 
6.6 Payment of Debt to Telefónica del Perú S.A.A. Within 10 (ten) Business Days
as of the Closing Date, Buyer will pay to Telefónica del Perú S.A.A.
US$100,000.00 (one hundred thousand and 00/100 U.S. dollars) of the current debt
that Perusat has with Telefónica del Perú S.A.A.  Sellers shall use best efforts
to negotiate with Telefónica del Perú S.A.A to defer payment of the remaining
balance due by the Company to Telefónica del Perú S.A.A. a minimum of 90
(ninety) days following the Closing Date without penalty or interests.
 
ARTICLE VII
 
CONDITIONS TO CLOSING
 
7.1 Conditions to Obligations of Buyer and Sellers. The obligations of Buyer and
Sellers to consummate the Acquisition are subject to the satisfaction on or
prior to the Closing Date of the following conditions:
 
(a) No temporary restraining order, preliminary or permanent injunction or other
Order preventing the consummation of the Acquisition shall be in effect. No Law
shall have been enacted or shall be deemed applicable to the Acquisition which
makes the consummation of the Acquisition illegal.
 
7.2 Conditions to Obligation of Buyer. The obligation of Buyer to consummate the
Acquisition is subject to the satisfaction (or waiver by Buyer in its sole
discretion) of the following further conditions, which are for the exclusive
benefit of Buyer:
 
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(a) The representations and warranties of Sellers set forth in this
Agreement shall have been true and correct at and as of the date hereof and
shall be true and correct at and as of the Closing Date as if made at and as of
the Closing Date, and the Sellers shall have executed and delivered or cause to
be delivered a certificate to Buyer to that effect. The receipt of such
certificate at the Closing Date shall not constitute a waiver by Buyer of any of
the representation and warranties of the Sellers which are contained in this
Agreement.
 
(b) Sellers shall have performed or complied with all obligations and covenants
required by this Agreement to be performed or complied by Sellers with at or
prior to the Closing Date, and the Sellers shall have executed and delivered or
cause to be delivered a certificate to Buyer to that effect. The receipt of such
certificate at the Closing Date shall not constitute a waiver by Buyer of any of
the covenants of the Sellers which are contained in this Agreement.
 
(c) There shall have been no Material Adverse Change in the condition (financial
or otherwise), operations, prospects or results of operations of the Company
taken as a whole.
 
(d) No Action shall be pending or threatened before any court, judge,
arbitrator, arbitration panel or other Governmental Entity or other Person (i)
seeking to prevent consummation of any of the transactions contemplated by this
Agreement, (ii) seeking to impose any Material limitation on the right of Buyer
to own the Shares and to control the Company or (iii) seeking to restrain or
prohibit Buyer's ownership or operation of all or any Material portion of the
business or assets of the Company, taken as a whole, or compel Buyer to dispose
of or hold separate all or any Material portion of the business or assets of the
Company, taken as a whole. No such Order shall be in effect.
 
(e) No Law shall have been enacted or shall be deemed applicable to the
Acquisition which has any of the effects set forth in clauses (i) through (iii)
in Section 7.2(d).
 
(f) Sellers shall have obtained the Consent of each Person whose Consent is
required under the Contracts set forth in Section 7.2(g) and shall have provided
evidence of each such Consent in form and substance satisfactory to Buyer.
 
(g) Sellers shall have delivered to Buyer evidence of (i) the release of all
Liens with respect to the property and assets of the Company, (ii) the repayment
of all outstanding Indebtedness of the Company, (iii) the repayment or other
cancellation of all intercompany accounts between Sellers (other than the
Company), on the one hand, and the Company, on the other hand, and (iv) the
release of all guarantees by the Company of any Indebtedness or other obligation
of any third party, including Sellers, in each case in form and substance
satisfactory to Buyer.
 
(h) Sellers shall have delivered to Buyer true and complete copies of all
resolutions adopted by the Board of Directors and/or the Shareholders’
Meeting of the Company in connection with the Acquisition.
 
(i) Sellers shall have delivered to Buyer (i) copies of the Charter Documents of
the Company currently in force, (ii) original stock certificates representing
the ownership of the Shares, duly endorsed, as set forth in Section 2.4(b) of
this Agreement, (iii) all other documents and instruments necessary to vest in
Buyer all of Sellers' rights, title and interest in and to the Shares, free and
clear of all Liens, as set forth in Section 2.4(b) of this Agreement, (iv) duly
signed resignations of all members of the Board of Directors to their positions
as directors of the Company and of all officers to their positions as officers
of the Company, as set fort in Section 5.4 of this Agreement, and (v) all other
documents, instruments or certificates required to be delivered by Sellers at or
prior to the Closing pursuant to this Agreement.
 
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(j) Each Seller shall have delivered to Buyer, or cause to be delivered to
Buyer, an original signed receipt evidencing payment of the Purchase Price.
 
7.3 Conditions to Obligation of Sellers. The obligation of Sellers to consummate
the Acquisition is subject to the satisfaction (or waiver by Sellers in its sole
discretion), of the following further conditions, which are for their exclusive
benefit:
 
(a) The representations and warranties of Buyer set forth in this
Agreement shall have been true and correct at and as of the date hereof and
shall be true and correct at and as of the Closing Date as if made at and as of
the Closing Date, and Buyer shall have executed and delivered or cause to be
delivered a certificate to Sellers to that effect. The receipt of such
certificate at the Closing Date shall not constitute a waiver by the Sellers of
any of the representation and warranties of the Buyer which are contained in
this Agreement.
 
(b) Buyer shall have performed or complied in all Material respects with all
obligations and covenants required by this Agreement to be performed or complied
with by Buyer at or prior to the Closing Date, and Buyer shall have executed and
delivered or cause to be delivered a certificate to Sellers to that effect. The
receipt of such certificate at the Closing Date shall not constitute a waiver by
the Sellers of any of the covenants of the Buyer which are contained in this
Agreement.
 
(c) No Action shall be pending or threatened before any court, judge, arbitrator
or arbitration panel or other Governmental Entity or other Person wherein an
unfavorable Order would (i) prevent consummation of any of the transactions
contemplated by this Agreement or (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation. No such
Order shall be in effect.
 
ARTICLE VIII
 
TERMINATION
 
8.1 Termination.
 
(a) This Agreement may be terminated and the Acquisition abandoned at any time
prior to the Closing:
 
(i) by mutual written consent of Buyer and Sellers;
 
(ii) by Buyer or Sellers if:
 
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(A) the Closing does not occur on or before March 6, 2009 provided that the
right to terminate this Agreement under this clause (ii)(A) shall not be
available to any Party whose breach of a representation, warranty, covenant or
agreement under this Agreement has been the cause of or resulted in the failure
of the Closing to occur on or before such date; or
 
(B) a Governmental Entity shall have issued an Order or taken any other action,
in any case having the effect of restraining, enjoining or otherwise prohibiting
the Acquisition, which Order or other action is final and non-appealable;
 
(iii) by Buyer if:
 
(A) any condition to the obligations of Buyer hereunder becomes incapable of
fulfillment other than as a result of a breach by Buyer of any covenant or
agreement contained in this Agreement, and such condition is not waived by
Buyer; or
 
(B) there has been a breach by Sellers of any representation, warranty, covenant
or agreement contained in this Agreement or Schedules, or if any representation
or warranty of Sellers shall have become untrue, in either case such that the
conditions set forth in Section 7.2(a) or Section 7.2(b) would not be satisfied;
or
 
(iv) by Sellers if:
 
(A) any condition to the obligations of Sellers hereunder becomes incapable of
fulfillment other than as a result of a breach by Sellers of any covenant or
agreement contained in this Agreement, and such condition is not waived by
Sellers; or
 
(B) there has been a breach by Buyer of any representation, warranty, covenant
or agreement contained in this Agreement, or if any representation or warranty
of Buyer shall have become untrue, in either case such that the conditions set
forth in Section 7.3(a) or Section 7.3(b) would not be satisfied.
 
(b) The Party desiring to terminate this Agreement pursuant to Section 8.1(a)
(ii), (iii) or (iv)  shall give written notice of such termination to the other
Party hereto.
 
8.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 8.1, this Agreement shall immediately become null and void
and there shall be no liability or obligation on the part of Buyer or Sellers,
except as set forth in Section 8.3; provided that the provisions of Section 6.2
(Public Announcements) and Section 8.3 (Remedies) and Article X of this
Agreement shall remain in full force and effect and survive any termination of
this Agreement.
 
8.3 Remedies. Any Party terminating this Agreement pursuant to Section 8.1 shall
have the right to recover damages sustained by such Party as a result of any
breach by the other Party of any representation, warranty, covenant or agreement
contained in this Agreement or fraud or willful misrepresentation; provided,
however, that the Party seeking relief is not in breach of any representation,
warranty, covenant or agreement contained in this Agreement under circumstances
which would have permitted the other Party to terminate the Agreement under
Section 8.1.
 
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ARTICLE IX
 
INDEMNIFICATION
 
9.1 Survival.
 
(a) Except as set forth in Section 9.1(b), all representations and warranties
contained in this Agreement, or in any Schedule, certificate or other document
delivered pursuant to this Agreement, shall survive the Closing for a period of
two years.
 
(b) The representations and warranties of Sellers contained in Sections 3.1
(Organization and Good Standing), 3.2 (Capitalization), 3.4 (Authority and
Enforceability), 3.25 (Brokers or Finders), and the representation and
warranties of Buyer contained in Sections 4.1 (Organization and Good Standing),
4.2 (Authority and Enforceability) and 4.3 (Brokers or Finders) shall survive
the Closing indefinitely. The representations and warranties of Sellers
contained in Sections 3.9 (Taxes), 3.19 (Employee Benefits), 3.20 (Labor and
Employment Matters) and 3.21 (Environmental) shall survive the Closing until 90
Business Days after the expira­tion of the applicable statute of limitations
period (after giving effect to any waivers and extensions thereof).
 
(c) The period for which a representation or warranty, covenant or agreement
survives the Closing is referred to herein as the "Applicable Survival Period".
In the event a Notice of Claim for indemnification under Section 9.2 or 9.3 is
given within the Applicable Survival Period, the representation or warranty,
covenant or agreement that is the subject of such indemnification claim (whether
or not formal legal action shall have been commenced based upon such claim)
shall survive with respect to such claim until such claim is finally resolved.
The Indemnitor shall indemnify the Indemnitee for all Losses (subject to the
limitations set forth herein, if applicable) that the Indemnitee may incur in
respect of such claim, regardless of when incurred.
 
9.2 Indemnification by Sellers.
 
(a) Sellers shall jointly and severally indemnify and defend Buyer and its
Affiliates (including, following the Closing, the Company) and their respective
stockholders, members, managers, officers, directors, employees, agents,
successors and assigns (the "Buyer Indemnitees") against, and shall hold them
harmless from, any and all losses, damages, claims (including third party
claims), charges, interest, penalties, Taxes, diminution in value, costs and
expenses (including legal, consultant, accounting and other professional fees,
costs of sampling, testing, investigation, removal, treatment and remediation of
contamination and fees and costs incurred in enforcing rights under this Section
9.2) (collectively, "Losses") resulting from, arising out of, or incurred by any
Buyer Indemnitee in connection with, or otherwise with respect to:
 
(i) the failure of any representation and warranty or other statement by Sellers
contained in this Agreement, the Schedules, or any other document furnished or
to be furnished to Buyer in connection with the transactions contemplated by
this Agreement, to be true and correct in all respects as of the date of this
Agreement or as of the Closing Date;
 
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(ii) any breach of any covenant or agreement of Sellers contained in this
Agreement, the Schedules, or any other document furnished or to be furnished to
Buyer in connection with the transactions contemplated by this Agreement;
 
(iii) any fees, expenses or other payments incurred or owed by Sellers or the
Company to any agent, broker, investment banker or other firm or person retained
or employed by it in connection with the transactions contemplated by this
Agreement;
 
(iv) any Pre-Closing Environmental Liabilities and any Action arising out of or
in connection therewith; provided that (A) this Section 9.2 shall not apply with
respect to any Loss relating to Taxes to the extent that indemnification
payments for such Loss have been made pursuant to Section 9.8, and (B) for
purposes of this Section 9.2, the representations and warranties herein shall be
deemed to have been made without any qualifications as to Knowledge or
materiality and, accordingly, all references herein and therein to "Knowledge,"
"material," "in all material respects" and similar qualifications as to
Knowledge and materiality shall be deemed to be deleted therefrom (except where
any such provision requires disclosure of lists of items of a material nature or
above a specified threshold). Any and all Losses hereunder shall bear interest
from the date incurred until paid at the rate of 8% per annum.
 
(b) Sellers shall not be liable for any Loss or Losses pursuant to Section
9.2(a)(i) ("Buyer Warranty Losses") (i) unless and until the aggregate amount of
all Buyer Warranty Losses incurred by the Buyer Indemnitees exceeds Fifty
Thousand and 00/100 dollars ($50,000), in which event Sellers shall be jointly
liable for all Buyer Warranty Losses from the first dollar; provided that
nothing contained in this Section 9.2(b) shall be deemed to limit or restrict in
any manner any rights or remedies which Buyer has, or might have, at Law, in
equity or otherwise, based on fraud or a willful misrepresentation or willful
breach of warranty hereunder.
 
9.3 Indemnification by Buyer.
 
(a) Buyer shall indemnify and defend Sellers (the "Sellers Indemnitees")
against, and shall hold them harmless from, any and all Losses resulting from,
arising out of, or incurred by any Sellers Indemnitee in connection with, or
otherwise with respect to:
 
(i) the failure of any representation and warranty or other statement by Buyer
contained in this Agreement or any other document furnished or to be furnished
by Buyer to Sellers in connection with the transactions contemplated by this
Agreement, to be true and correct in all respects as of the date of this
Agreement or as of the Closing Date; and
 
(ii) any breach of any covenant or agreement of Buyer contained in this
Agreement or any other document furnished or to be furnished by Buyer to Sellers
in connection with the transactions contemplated by this Agreement.
 
(b) Buyer shall not be liable for any Loss or Losses pursuant to 9.3(a)(i)
("Sellers Warranty Losses") (i) unless and until the aggregate amount of all
Sellers Warranty Losses incurred by the Sellers Indemnitees exceeds Fifty
Thousand and 00/100 dollars ($50,000), in which event Buyer shall be liable for
all Sellers Warranty Losses from the first dollar.
 
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9.4 Indemnification Procedures for Third Party Claims.
 
(a) In the event that an Indemnitee receives notice of the assertion of any
claim or the commencement of any Action by a third party in respect of which
indemnity may be sought under the provisions of this Article IX ("Third Party
Claim"), the Indemnitee shall promptly notify the Indemnitor in writing ("Notice
of Claim") of such Third Party Claim. Failure or delay in notifying the
Indemnitor will not relieve the Indemnitor of any liability it may have to the
Indemnitee, except and only to the extent that such failure or delay causes
actual harm to the Indemnitor with respect to such Third Party Claim. The Notice
of Claim shall set forth the amount, if known, or, if not known, an estimate of
the foreseeable maximum amount of claimed Losses (which estimate shall not be
conclusive of the final amount of such Losses) and a description of the basis
for such Third Party Claim.
 
(b) Subject to the further provisions of this Section 9.4, the Indemnitor will
have 10 (ten) days (or less if the nature of the Third Party Claim requires)
from the date on which the Indemnitor received the Notice of Claim to notify the
Indemnitee that the Indemnitor will assume the defense or prosecution of such
Third Party Claim and any litigation resulting therefrom with counsel of its
choice (reasonably satisfactory to the Indemnitee) and at its sole cost and
expense (a "Third Party Defense"). If the Indemnitor assumes the Third Party
Defense in accordance with the preceding sentence, the Indemnitor shall be
conclusively deemed to have acknowledged that the Third Party Claim is within
the scope of its indemnity obligation hereunder and shall hold the Indemnitee
harmless from and against the full amount of any Losses resulting therefrom
(subject to the terms and conditions of this Agreement). Any Indemnitee shall
have the right to employ separate counsel in any such Third Party Defense and to
participate therein, but the fees and expenses of such counsel shall not be at
the expense of the Indemnitor unless (A) the Indemnitor shall have failed,
within the time after having been notified by the Indemnitee of the exist­ence
of the Third Party Claim as provided in the first sentence of this paragraph
(b), to assume the defense of such Third Party Claim, or (B) the employment of
such counsel has been specifically authorized in writing by the Indemnitor,
which authorization shall not be unreasonably withheld.
 
(c) The Indemnitor will not be entitled to assume the Third Party Defense if:
 
(i) the Third Party Claim seeks, in addition to or in lieu of monetary damages,
any injunctive or other equitable relief (except where non-monetary relief is
merely incidental to a primary claim or claims for monetary damages);
 
(ii) the Third Party Claim relates to or arises in connection with any criminal
proceed­ing, action, indictment, allegation or investigation;
 
(iii) the Third Party Claim relates to or arises in connection with any Action
related to Environmental Laws;
 
(iv) under applicable standards of professional conduct, a conflict on any
significant issue exists between the Indemnitee and the Indemnitor in respect of
the Third Party Claim;
 
(v) the Third Party Claim involves a Material customer or supplier of the
Company;
 
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(vi) the Indemnitee reasonably believes an adverse determination with respect to
the Third Party Claim would be detrimental to or injure the Indemnitee's
reputation or future business prospects;
 
(vii) the Indemnitor has failed or is failing to vigorously prosecute or defend
such Third Party Claim; or
 
(viii) the Indemnitor fails to provide reasonable assurance to the Indemnitee of
its financial capacity to prosecute the Third Party Defense and provide
indemnification in accordance with the provisions of this Agreement.
 
(d) If by reason of the Third Party Claim a Lien, attachment, garnishment or
execution is placed upon any of the property or assets of the Indemnitee, the
Indemnitor, if it desires to exercise its right to assume such Third Party
Defense, must furnish a satisfactory indemnity bond to obtain the prompt release
of such Lien, attachment, garnishment or execution.
 
(e) If the Indemnitor assumes a Third Party Defense, it will take all steps
necessary in the defense, prosecution, or settlement of such claim or litigation
and will hold all Indemnitees harmless from and against all Losses caused by or
arising out of such Third Party Claim. The Indemnitor will not consent to the
entry of any judgment or enter into any settlement except with the written
consent of the Indemnitee; provided that the consent of the Indemnitee shall not
be required if all of the following conditions are met: (i) the terms of the
judgment or proposed settlement include as an unconditional term thereof the
giving to the Indemnitees by the third party of a release of the Indemnitees
from all liability in respect of such Third Party Claim, (ii) there is no
finding or admission of (A) any violation of Law by the Indemnitees (or any
Affiliate thereof), (B) any violation of the rights of any Person and (C) no
effect on any other Action or claims of a similar nature that may be made
against the Indemnitees (or any Affiliate thereof), and (iii) the sole form of
relief is monetary damages which are paid in full by the Indemnitor. The
Indemnitor shall conduct the defense of the Third Party Claim actively and
diligently, and the Indemnitee will provide reasonable cooperation in the
defense of the Third Party Claim. So long as the Indemnitor is reasonably
conducting the Third Party Defense in good faith, the Indemnitee will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnitor
(not to be unreasonably withheld or delayed). Notwithstanding the foregoing, the
Indemnitee shall have the right to pay or settle any such Third Party Claim,
provided that in such event it shall waive any right to indemnity therefore by
the Indemnitor for such claim unless the Indemnitor shall have consented to such
payment or settlement (such consent not to be unreasonably withheld or delayed).
If the Indemnitor is not reasonably conducting the Third Party Defense in good
faith, the Indemnitee shall have the right to consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnitor and the Indemnitor shall
reimburse the Indemnitee promptly for all Losses incurred in connection with
such judgment or settlement.
 
(f) In the event that (i) an Indemnitee gives Notice of Claim to the Indemnitor
and the Indemnitor fails or elects not to assume a Third Party Defense which the
Indemnitor had the right to assume under this Section 9.4 or (ii) the Indemnitor
is not entitled to assume the Third Party Defense pursuant to this Section 9.4,
the Indemnitee shall have the right, with counsel of its choice, to defend,
conduct and control the Third Party Defense, at the sole cost and expense of the
Indemnitor. In each case, the Indemnitee shall conduct the Third Party Defense
actively and diligently, and the Indemnitor will provide reasonable cooperation
in the Third Party Defense. The Indemnitee shall have the right to consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim on such terms as it may deem appropriate; provided, however, that
the amount of any settlement made or entry of any judgment consented to by the
Indemnitee without the consent of the Indemnitor shall not be determinative of
the validity of the claim, except with the consent of the Indemnitor (not to be
unreasonably withheld or delayed). Notwithstanding Section 10.6 hereof, in
connection with any Third Party Claim, the Indemnitor hereby consents to the
nonexclusive jurisdiction of any court in which an Action in respect of a
Third-Party Claim is brought against any Indemnitee for purposes of any claim
that the Indemnitee may have under this Article IX with respect to such Action
or the matters alleged therein and agrees that process may be served on the
Indemnitor with respect to such a claim anywhere in the world. If the Indemnitor
does not elect to assume a Third Party Defense which it has the right to assume
hereunder, the Indemnitee shall have no obligation to do so.
 
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(g) Each Party to this Agreement shall use its commercially reasonable efforts
to cooperate and to cause its employees, contractors, advisors and consultants
to cooperate with and assist the Indemnitee or the Indemnitor, as the case may
be, in connection with any Third Party Defense, including attending conferences,
discovery proceedings, hearings, trials and appeals and furnishing records,
information and testimony, as may reasonably be requested; provided that each
Party shall use its best efforts, in respect of any Third Party Claim of which
it has assumed the defense, to preserve the confidentiality of all confidential
information and the attorney-client and work-product privileges.
 
9.5 Indemnification Procedures for Non-Third Party Claims. In the event of a
claim that does not involve a Third Party Claim being asserted against it, the
Indemnitee shall send a Notice of Claim to the Indemnitor. The Notice of Claim
shall set forth the amount, if known, or, if not known, an estimate of the
foreseeable maximum amount of claimed Losses (which estimate shall not be
conclusive of the final amount of such Losses) and a description of the basis
for such claim. The Indemnitor will have 30 days from receipt of such Notice of
Claim to dispute the claim and will reasonably cooperate and assist the
Indemnitee in determining the validity of the claim for indemnity. If the
Indemnitor does not give notice to the Indemnitee that it disputes such claim
within 30 days after its receipt of the Notice of Claim, the claim specified in
such Notice of Claim will be conclusively deemed a Loss subject to
indemnification hereunder.
 
9.6 Contingent Claims. Nothing herein shall be deemed to prevent an Indemnitee
from making a claim hereunder for potential or contingent claims or demands;
provided that the Notice of Claim sets forth the specific basis for any such
contingent claim to the extent then feasible and the Indemnitee has reasonable
grounds to believe that such a claim may be made.
 
9.7 Effect of Investigation; Waiver.
 
(a) An Indemnitee's right to execute the security interest on the Pledged
Shares, indemnification or other remedies based upon the representations and
warranties and covenants and agreements of the Indemnitor will not be affected
by any investigation or knowledge of the Indemnitee or any waiver by the
Indemnitee of any condition based on the accuracy of any representation or
warranty, or compliance with any covenant or agreement. Such representations and
warranties and covenants and agreements shall not be affected or deemed waived
by reason of the fact that the Indemnitee knew or should have known that any
representation or warranty might be inaccurate or that the Indemnitor failed to
comply with any agreement or covenant. Any investigation by such Party shall be
for its own protection only and shall not affect or impair any right or remedy
hereunder.
 
(b) Sellers acknowledge and agree that, upon and following the Closing, the
Company shall not have any liability or obligation to indemnify, save or hold
harmless or otherwise pay, reimburse or make Sellers whole for or on account of
any indemnification or other claims made by any Buyer Indemnitees hereunder.
Sellers shall have no right of contribution against the Company with respect to
any such indemnification or other claim.
 
9.8 Tax Indemnification.
 
(a) From and after the Closing Date, Sellers shall be jointly responsible for,
shall pay or cause to be paid, and shall jointly indemnify, defend and hold
harmless each Tax Indemnitee against, and reimburse such Tax Indemnitee for, on
a Grossed-Up Basis, any Losses resulting from, arising out of, relating to, in
the nature of, or caused by:
 
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(i) any Tax imposed on or relating to the Company with respect to any
Pre-Closing Period;
 
(ii) any Tax imposed upon or relating to the Company as a transferee or
successor, by contract, or otherwise; and
 
(iii) any Tax arising directly or indirectly from a breach or inaccuracy of a
representation or warranty set forth in Section 3.9.
 
(b) Except as otherwise provided in Section 9.8, payment in full of any amount
due under Section 9.8(a) shall be made to the Tax Indemnitee in immediately
available funds at least five Business Days before the date for payment of the
Taxes to which such payment relates is due. The Tax indemnities contained in
Section 9.8 shall not be subject to any threshold or other limitations contained
in this Agreement.
 
9.9 Procedures Relating to Indemnification of Tax Claims.
 
(a) If any Taxing Authority or other Person asserts a Tax Claim, then the Party
hereto first receiving notice of such Tax Claim promptly shall provide written
notice of such Tax Claim to the other Party hereto; provided that the failure of
Buyer to give such prompt notice to Sellers of any such Tax Claim shall not
relieve Sellers of any of its obligations under this Section 9.9. Such notice
shall specify in reasonable detail the basis for such Tax Claim and shall
include a copy of any relevant correspondence received from the Taxing Authority
or other Person.
 
(b) Sellers shall have the right to defend or prosecute, at its sole cost,
expense and risk, only those Tax Claims with respect to Taxes set forth in
Section 9.8(a). In order to defend or prosecute any such Tax Claim, Sellers
shall notify Buyer that it elects to defend or prosecute such Tax Claim
("Election Notice") within 30 days after (i) the date on which Sellers receives
notice of any such Tax Claim from Buyer (with respect to Tax Claims as to which
Buyer first received notice from a Taxing Authority or any other Person), or
(ii) the date on which Sellers delivered to Buyer notice of any such Tax Claim
(with respect to Tax Claims as to which Sellers first received notice from a
Taxing Authority or any other Person). With respect to any Tax Claim as to which
Sellers has provided an Election Notice to Buyer, Sellers shall defend or
prosecute such Tax Claim by all appropriate proceedings, which proceedings shall
be defended or prosecuted diligently by Sellers to a Final Determination;
provided that Sellers shall not, without the prior written consent of Buyer,
enter into any compromise or settlement of such Tax Claim that would result in
any Tax detriment to any Tax Indemnitee. Sellers shall inform Buyer of all
developments and events relating to such Tax Claim (including providing to Buyer
copies of all written materials relating to such Tax Claim), and Buyer or its
authorized representatives shall be entitled, at the expense of Buyer, to
attend, but not participate in or control, all conferences, meetings and
proceedings relating to such Tax Claim.
 
(c) If, with respect to any Tax Claim, Sellers fails to deliver an Election
Notice to Buyer within the period provided in Section 9.9(b) or fails diligently
to defend or prosecute such Tax Claim to a Final Determination, then Buyer shall
at any time thereafter have the right (but not the obligation) to defend or
prosecute such Tax Claim, at the sole cost, expense and risk of Sellers. Buyer
shall have full control of such defense or prosecution and such proceedings,
including any settlement or compromise thereof. Sellers shall cooperate in good
faith with Buyer and its authorized representatives in order to contest
effectively such Tax Claim. Sellers may attend, but not participate in or
control, any defense, prosecution, settlement, or compromise of any Tax Claim
controlled by Buyer pursuant to this Section 9.9(c), and shall bear its own
costs and expenses with respect thereto. In the case of any Tax Claim that is
defended or prosecuted by Buyer pursuant to this Section 9.9(c), Buyer shall be
entitled upon demand to prompt payment from Sellers for any and all costs and
expenses incurred by Buyer in connection with such defense or prosecution
(including attorneys', accountants', and experts' fees and disbursements,
settlement costs, court costs, and any other costs or expenses for
investigating, defending or prosecuting such Tax Claim), in each case on a
Grossed-Up Basis.
 
9.10 Tax Treatment of Indemnification Payments. Except as otherwise required by
applicable Law, the Parties shall treat any indemnification payment made
hereunder as an adjustment to the Purchase Price.  
 
9.11 Other Rights and Remedies Not Affected. The indemnification rights of the
Parties under this Article IX are independent of and in addition to such rights
and remedies as the Parties may have at Law or in equity or otherwise for any
misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any Party hereto, including the right to seek
specific performance, rescission or restitution, none of which rights or
remedies shall be affected or diminished hereby.
 
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ARTICLE X
 
MISCELLANEOUS
 
10.1 Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given (a) on the date established by the sender as having been
delivered personally, (b) on the date delivered by a private courier as
established by the sender by evidence obtained from the courier, (c) on the date
sent by facsimile, with confirmation of transmission, if sent during normal
business hours of the recipient, if not, then on the next Business Day, or (d)
on the fifth day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such communications, to be valid, must be
addressed as follows:
 
If to Buyer, to:
 
Gulfstream Capital Partner Ltd.
c/o China Tel Group, Inc.
8105 Irvine Center Drive, Suite 800
Irvine, CA  92618 USA
Attn: Kenneth Waggoner

If to Sellers, to:
 
Mario Navarro
Av. Camino Real 493
Piso 11, San Isidro
Lima, Peru
 
or to such other address or to the attention of such Person or Persons as the
recipient party has specified by prior written notice to the sending party (or
in the case of counsel, to such other readily ascertainable business address as
such counsel may hereafter maintain). If more than one method for sending notice
as set forth above is used, the earliest notice date established as set forth
above shall control.
 
10.2 Amendments and Waivers.
 
(a) Any provision of this Agreement may be amended or waived if, and only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective.
 
(b) No failure or delay by any Party in exercising any right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
 
(c) To the maximum extent permitted by Law, (i) no waiver that may be given by a
Party shall be applicable except in the specific instance for which it was given
and (ii) no notice to or demand on one party shall be deemed to be a waiver of
any obligation of such Party or the right of the Party giving such notice or
demand to take further action without notice or demand.
 
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10.3 Expenses. Each Party shall bear its own costs and expenses in connection
with this Agreement and the transactions contemplated by this Agreement,
including all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties, whether or not the Acquisition is
consummated.
 
10.4 Successors and Assigns. This Agreement may not be assigned by either Party
hereto without the prior written consent of the other Party; provided that,
without such consent, Buyer may transfer or assign, in whole or in part or from
time to time, to one or more of its Affiliates, the right to purchase all or a
portion of the Shares, but no such transfer or assignment will relieve Buyer of
its obligations hereunder.  Subject to the foregoing, all of the terms and
provisions of this Agreement shall inure to the benefit of and be binding upon
the Parties hereto and their respective successors and assigns.
 
10.5 Governing Law. This Agreement and the Exhibits and Schedules hereto and
thereto shall be governed by and interpreted and enforced in accordance with the
Laws of the State of California, United States of America, without giving effect
to any choice of Law or conflict of Laws rules or provisions (whether of the
State of California or any other jurisdiction) that would cause the application
of the Laws of any jurisdiction other than the State of California, United
States of America.
 
10.6  Consent to Jurisdiction. Each Party irrevocably submits to the exclusive
jurisdiction of (a) the Orange County Superior Court, State of California,
United States of America, and (b) the United States District Court for Southern
District of California, United States of America, for the purposes of any Action
arising out of this Agreement or any transaction contemplated by this Agreement.
Each Party agrees to commence any such Action either in the Orange County
Superior Court, State of California, United States of America or if such Action
may not be brought in such court for jurisdictional reasons, in the United
States District Court for the Southern District of California, United States of
America. Each Party further agrees that service of any process, summons, notice
or document by registered mail to such Party's respective address set forth
above shall be effective service of process with respect to any matters to which
it has submitted to jurisdiction in this Section 10.6. Each Party irrevocably
and unconditionally waives any objection to the laying of venue of any Action
arising out of this Agreement or the transactions contemplated by this Agreement
in (i) the Orange County Superior Court, State of California, United States of
America, or (ii) the United States District Court for the Southern District of
California, United States of America, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Action brought in any such court has been brought in an inconvenient
forum. Each Party hereby irrevocably waives all right to trial by jury in any
Action (whether based on contract, tort or otherwise) arising out of or relating
to this Agreement or the actions of such Party in the negotiation,
administration, performance and enforcement hereof.
 
10.7  Counterparts. This Agreement may be executed in counterparts, and either
Party hereto may execute any such counterpart, each of which when executed and
delivered shall be deemed to be an original and both of which counterparts taken
together shall constitute but one and the same instrument. This Agreement shall
become effective when each Party hereto shall have received a counterpart hereof
signed by the other Party hereto. The Parties agree that the delivery of this
Agreement may be effected by means of an exchange of facsimile signatures with
original copies to follow by mail or courier service.
 
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10.8  Third Party Beneficiaries. No provision of this Agreement is intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder; except that in the case of Article IX hereof, the other Indemnitees
and their respective heirs, executors, administrators, legal representatives,
successors and assigns, are intended third party beneficiaries of such sections
and shall have the right to enforce such sections in their own names.
 
10.9  Entire Agreement. This Agreement, the Schedules and the documents,
instruments and other agreements specifically referred to herein or delivered
pursuant hereto set forth the entire understanding of the Parties hereto with
respect to the Acquisition. All Schedules referred to herein are intended to be
and hereby are specifically made a part of this Agreement. Any and all previous
agreements and understandings between or among the Parties regarding the subject
matter hereof, whether written or oral, are superseded by this Agreement.
 
10.10  Captions. All captions contained in this Agreement and on the Schedules
are for convenience of reference only, do not form a part of this Agreement and
shall not affect in any way the meaning or interpretation of this Agreement and
of the Schedules.
 
10.11  Severability. Subject to Section 5.10(d), any provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall be ineffective to
the extent of such invalidity or unenforceability without invalidating or
rendering unenforceable the remaining provisions hereof, and any such invalidity
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
 
10.12  Specific Performance. Buyer and Sellers each agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed by them in accordance with the terms hereof and that each
Party shall be entitled to specific performance of the terms hereof, in addition
to any other remedy at Law or equity.
 
10.13  Interpretation.
 
(a) The meaning assigned to each term defined herein shall be equally applicable
to both the singular and the plural forms of such term and vice versa, and words
denoting either gender shall include both genders as the context requires. Where
a word or phrase is defined herein, each of its other grammatical forms shall
have a corresponding meaning.
 
(b) The terms "hereof", "herein" and "herewith" and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as a
whole and not to any particular provision of this Agreement.
 
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(c) When a reference is made in this Agreement to an Article, Section,
paragraph, Exhibit or Schedule, such reference is to an Article, Section,
paragraph, Exhibit or Schedule to this Agreement unless otherwise specified.
 
(d) The word "include", "includes", and "including" when used in this Agreement
shall be deemed to be followed by the words "without limitation", unless
otherwise specified.
 
(e) The phrase “the aggregate of”, “the total of”, “the sum of”, or a phrase of
similar meaning means “the aggregate (or total or sum), without duplication,
of”.
 
(f) In the computation of periods of time from a specified date to a later
specified date , unless otherwise expressly stated, the word “from” means “from
and including” and the words “to” and “until” each mean “to but excluding”.
 
(g) A reference to any Party to this Agreement or any other agreement or
document shall include such Party's predecessors, successors and permitted
assigns.
 
(h) Reference to any Law means such Law as amended, modified, codified, replaced
or reenacted, and all rules and regulations promulgated thereunder.
 
(i) The Parties have participated jointly in the negotiation and drafting of
this Agreement. Any rule of construction or interpretation otherwise requiring
this Agreement to be construed or interpreted against any Party by virtue of the
authorship of this Agreement shall not apply to the construction and
interpretation hereof.
 
(j) All accounting terms used and not defined herein shall have the respective
meanings given to them under PGAAP.
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.
 
 

  BUYER        GULFSTREAM CAPITAL PARTNERS LTD.        By:      /s/ Colin
Tay                           
Colin Tay, its Secretary 
          SELLERS        /s/ Mario Octavio Navarro Álvarez    Mario Octavio
Navarro Álvarez            /s/ Rafael Isaías Samanez Zacarías    Rafael Isaías
Samanez Zacarías            /s/ Gisella Tsuchikame Nakamoto    Gisella
Tsuchikame Nakamoto            /s/ Jesus Margot Magan Gutierrez    Jesus Margot
Magan Gutierrez 

 
 
 
 
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