Document:

AGREEMENT
      AND PLAN OF MERGER

     

    BY
      AND
      AMONG

     

    PURE
      BIOFUELS CORP.

     

    PURE
      BIOFUELS DEL PERU S.A.C.

     

    INTERPACIFIC
      OIL S.A.C.

     

    LUIS
      GOYZUETA

     

    ALBERTO
      PINTO

     

    PATRICK
      ORLANDO

     

     

    DATED
      AS
      OF DECEMBER 4, 2007

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
      OF
      CONTENTS

     

     

    
      	 	 	
              Page

            
	
              1.

            	
              DEFINITIONS

            	
              1

            
	
              2.

            	
              THE
                MERGER

            	
              3

            
	
              2.1

            	
              The
                Merger

            	
              3

            
	
              2.2

            	
              Closing;
                Effective Time

            	
              4

            
	
              2.3

            	
              Effect
                of the Merger

            	
              4

            
	
              2.4

            	
              Articles
                of Incorporation; Bylaws

            	
              4

            
	
              2.5

            	
              Directors
                and Officers

            	
              4

            
	
              2.6

            	
              Deliveries
                at Closing

            	
              4

            
	
              2.7

            	
              No
                Further Ownership Rights in Target Capital Stock

            	
              5

            
	
              2.8

            	
              Taking
                of Necessary Action; Further Action

            	
              5

            
	
              2.9

            	
              Payments
                at Closing for Expenses

            	
              5

            
	
              3.

            	
              REPRESENTATIONS
                AND WARRANTIES OF TARGET

            	
              5

            
	
              3.1

            	
              Organization,
                Standing and Power

            	
              5

            
	
              3.2

            	
              Authority

            	
              6

            
	
              3.3

            	
              Governmental
                Authorization

            	
              6

            
	
              3.4

            	
              Financial
                Statements; Undisclosed Liabilities

            	
              6

            
	
              3.5

            	
              Capital
                Structure

            	
              7

            
	
              3.6

            	
              Absence
                of Certain Changes

            	
              7

            
	
              3.7

            	
              Litigation

            	
              7

            
	
              3.8

            	
              Intellectual
                Property

            	
              8

            
	
              3.9

            	
              Interested
                Party Transactions

            	
              8

            
	
              3.10

            	
              Minute
                Book

            	
              8

            
	
              3.11

            	
              Material
                Contracts

            	
              8

            
	
              3.12

            	
              Customers
                and Suppliers

            	
              9

            
	
              3.13

            	
              Title
                to Property

            	
              9

            
	
              3.14

            	
              Environmental
                Matters

            	
              9

            
	
              3.15

            	
              Taxes

            	
              10

            
	
              3.16

            	
              Employee
                Matters

            	
              12

            
	
              3.17

            	
              Insurance

            	
              12

            
	
              3.18

            	
              Compliance
                With Laws

            	
              12

            
	
              3.19

            	
              Brokers’
                and Finders’ Fee

            	
              12

            
	
              4.

            	
              REPRESENTATIONS
                AND WARRANTIES OF ACQUIRER AND PARENT

            	
              12

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

      TABLE
        OF
        CONTENTS

      (continued)

    

     

    
      	 	 	
              Page

            
	
              4.1

            	
              Organization,
                Standing and Power

            	
              13

            
	
              4.2

            	
              Authority

            	
              13

            
	
              4.3

            	
              Capital
                Structure

            	
              13

            
	
              4.4

            	
              Acquirer
                Financial Statements

            	
              14

            
	
              4.5

            	
              Parent
                SEC Documents; Financial Statements

            	
              14

            
	
              4.6

            	
              10(b)-5

            	
              15

            
	
              4.7

            	
              Absence
                of Litigation

            	
              15

            
	
              4.8

            	
              Employee
                Relations

            	
              15

            
	
              4.9

            	
              Intellectual
                Property Rights

            	
              15

            
	
              4.10

            	
              Environmental
                Laws

            	
              15

            
	
              4.11

            	
              Title

            	
              16

            
	
              4.12

            	
              Regulatory
                Permits

            	
              16

            
	
              4.13

            	
              Tax
                Status

            	
              16

            
	
              4.14

            	
              Brokerage

            	
              16

            
	
              5.

            	
              CONDUCT
                PRIOR TO THE EFFECTIVE TIME

            	
              16

            
	
              5.1

            	
              Conduct
                of Business of Target

            	
              16

            
	
              5.2

            	
              No
                Solicitation

            	
              19

            
	
              6.

            	
              ADDITIONAL
                AGREEMENTS

            	
              21

            
	
              6.1

            	
              Approval
                of Stockholders

            	
              21

            
	
              6.2

            	
              Access
                to Information

            	
              21

            
	
              6.3

            	
              Letter
                of Intent

            	
              21

            
	
              6.4

            	
              Public
                Disclosure

            	
              21

            
	
              6.5

            	
              Regulatory
                Approval; Further Assurances

            	
              21

            
	
              6.6

            	
              Employee
                Matters

            	
              22

            
	
              6.7

            	
              Expenses

            	
              22

            
	
              6.8

            	
              Amendment
                of Disclosure Schedules

            	
              22

            
	
              7.

            	
              CONDITIONS
                TO THE MERGER

            	
              23

            
	
              7.1

            	
              Conditions
                to Obligations of Each Party to Effect the Merger

            	
              23

            
	
              7.2

            	
              Additional
                Conditions to the Obligations of Acquirer and Parent

            	
              23

            
	
              7.3

            	
              Additional
                Conditions to Obligations of Target

            	
              24

            
	
              8.

            	
              TERMINATION,
                AMENDMENT AND WAIVER

            	
              25

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

      TABLE
        OF
        CONTENTS

      (continued)

    

     

    
      	 	 	
              Page

            
	
              8.1

            	
              Termination

            	
              25

            
	
              8.2

            	
              Effect
                of Termination

            	
              26

            
	
              8.3

            	
              Amendment

            	
              26

            
	
              8.4

            	
              Extension;
                Waiver

            	
              26

            
	
              9.

            	
              INDEMNIFICATION

            	
              26

            
	
              9.1

            	
              Indemnification

            	
              26

            
	
              10.

            	
              GENERAL
                PROVISIONS

            	
              27

            
	
              10.1

            	
              Notices

            	
              27

            
	
              10.2

            	
              Definitions

            	
              28

            
	
              10.3

            	
              Counterparts

            	
              29

            
	
              10.4

            	
              Entire
                Agreement; Nonassignability

            	
              29

            
	
              10.5

            	
              Severability

            	
              29

            
	
              10.6

            	
              Governing
                Law

            	
              29

            
	
              10.7

            	
              Rules
                of Construction

            	
              29

            
	
              10.8

            	
              Enforcement

            	
              29

            
	
              10.9

            	
              Amendment;
                Waiver

            	
              30

            
	 	 	
               

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

      LIST
        OF EXHIBITS

       

    

     

    Exhibit
      A Form
      of
      Opinion

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    AGREEMENT
      AND PLAN OF MERGER

     

    This
      AGREEMENT AND PLAN OF MERGER (the “Agreement”)
      is
      made as of December 4, 2007 (the “Signing
      Date”)
      and
      effective as of August 15, 2007 (the “Effective
      Date”)
      by and
      among Pure Biofuels Corp., a Nevada corporation (“Parent”),
      Pure
      Biofuels del Peru S.A.C, a Peruvian corporation and a 99.9% owned subsidiary
      of
      Parent (“Acquirer”),
      Interpacific Oil S.A.C., a Peruvian corporation (“Target”
(which
      term shall include any subsidiaries of Target as applicable)), Luis Goyzueta
      Angobaldo, Peruvian citizen, identified with DNI No. 10609920; Alberto Pinto
      Rocha, Peruvian citizen, identified with DNI No. 08249574; and Patrick Orlando
      Panizo, Peruvian citizen, identified with Peruvian Passport No. 0552726
      (collectively, the “Target
      Stockholders”).

     

    RECITALS

     

    A.  The
      Board
      of Directors of Parent, and the stockholders of each of Acquirer and Target
      believe it is in the best interests of their respective companies and the Target
      Stockholders that Target and Acquirer combine into a single company through
      the
      statutory merger of Target with and into Acquirer (the “Merger”)
      and,
      in furtherance thereof, have approved the Merger.

     

    B.  Pursuant
      to the Merger, among other things, the outstanding capital stock of Target
      (“Target
      Common Stock”)
      shall
      be converted into the right to receive the Merger Consideration (as defined
      in
      Section 2.7(a)), on the terms and subject to the conditions set forth
      herein.

     

    C.  Acquirer,
      Target and Parent desire to make certain representations and warranties and
      other agreements in connection with the Merger.

     

    NOW,
      THEREFORE, in consideration of the covenants and representations set forth
      herein, and for other good and valuable consideration, the parties agree as
      follows:

     

    1.  DEFINITIONS.
      As used
      in this Agreement, the following terms shall have the following
      meanings:

     

    “Acquirer”
has
      the
      meaning set forth in the introductory paragraph.

     

    “Acquirer
      Disclosure Schedule”
has
      the
      meaning set forth in Section 4.

     

    “Acquirer
      Indemnified Person”
and
      “Acquirer
      Indemnified Persons”
have
      the meanings set forth in Section 9.1(b).

     

    “Acquisition
      Proposal”
has
      the
      meaning set forth in Section 5.2.

     

    “Closing”
has
      the
      meaning set forth in Section 2.2.

     

    “Closing
      Date”
has
      the
      meaning set forth in Section 2.2.

     

    “Code”
shall
      mean the Internal Revenue Code of 1986, as amended from time to time, and the
      regulations promulgated and rulings issued thereunder. Section references to
      the
      Code are to the Code as in effect at the date of this Agreement and any
      subsequent provisions of the Code, amendatory thereof, supplemental thereto
      or
      substituted therefor.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Confidentiality
      Agreement”
has
      the
      meaning set forth in Section 6.3.

     

    “Damages”
has
      the
      meaning set forth in Section 9.1(b).

     

    “Effective
      Date”
has
      the
      meaning set forth in the introductory paragraph.

     

    “Effective
      Time”
has
      the
      meaning set forth in Section 2.2.

     

    “Environmental
      Laws”
has
      the
      meaning set forth in Section 3.14(a)(i).

     

    “ERISA”
shall
      mean the Employee Retirement Income Security Act of 1974, as amended from time
      to time, and the regulations promulgated and rulings issued thereunder. Section
      references to ERISA are to ERISA, as in effect at the date of this Agreement
      and
      any subsequent provisions of ERISA, amendatory thereof, supplemental thereto
      or
      substituted therefor.

     

    “ERISA
      Affiliate”
shall
      mean each person (as defined in Section 3(9) of ERISA) which together with
      any
      of the Credit Parties or would be deemed to be a “single employer” (i) within
      the meaning of Section 414(b), (c), (m) or (o) of the Code or (ii) as a result
      of any of the Credit Parties being or having been a general partner of such
      person.

     

    “Exchange
      Act”
has
      the
      meaning set forth in Section 5.2.

     

    “Exchange
      Ratio”
has
      the
      meaning set forth in Section 6.6.

     

    “Governmental
      Entity”
has
      the
      meaning set forth in Section 3.2.

     

    “Hazardous
      Materials”
has
      the
      meaning set forth in Section 3.14(a)(ii).

     

    “Material”
has
      the
      meaning set forth in Section 10.2.

     

    “Material
      Adverse Effect”
has
      the
      meaning set forth in Section 10.2.

     

    “Material
      Contract”
has
      the
      meaning set forth in Section 3.11.

     

    “Merger”
has
      the
      meaning set forth in Recital A.

     

    “Merger
      Consideration”
has
      the
      meaning set forth in Section 2.7(a).

     

    “Plan”
shall
      mean any “employee benefit plan” as defined in Section 3(3) of ERISA or any
“plan” subject to Section 4975 of the Code.

     

    “Returns”
has
      the
      meaning set forth in Section 3.15(b).

     

    “SEC”
has
      the
      meaning set forth in Section 4.2.

     

    “Signing
      Date”
has
      the
      meaning set forth in the introductory paragraph.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Subsidiary”
has
      the
      meaning set forth in Section 10.2.

     

    “Surviving
      Corporation”
has
      the
      meaning set forth in Section 2.1.

     

    “Target”
has
      the
      meaning set forth in the introductory paragraph. It is duly established will
      be
      liquidated effective as of the Effective Date (September 1, 2007) of the Merger
      agreed by the Target Shareholders and Acquirer.

     

    “Target
      Balance Sheet Date”
has
      the
      meaning set forth in Section 3.6

     

    “Target
      Common Stock”
has
      the
      meaning set forth in Recital B.

     

    “Target
      Disclosure Schedule”
has
      the
      meaning set forth in Section 3.

     

    “Target
      Employee Plans”
has
      the
      meaning set forth in Section 3.16(a).

     

    “Target
      Financial Statements”
has
      the
      meaning set forth in Section 3.4.

     

    “Target
      Indemnified Person”
and
      “Target
      Indemnified Persons”
shall
      have the meaning set forth in Section 9.1(c).

     

    “Target
      Stockholders”
has
      the
      meaning set forth in the introductory paragraph.

     

    “Target’s
      Current Facilities”
has
      the
      meaning set forth in Section 3.14(b).

     

    “Target’s
      Facilities”
has
      the
      meaning set forth in Section 3.14(b).

     

    “Tax”
and
      “Taxes”
have
      the meanings set forth in Section 3.15(a).

     

    “Termination
      Date”
has
      the
      meaning set forth in Section 9.1(a).

     

    2.  THE
      MERGER.

     

    2.1  The
      Merger.
      At the
      Effective Time and subject to and upon the terms and conditions of this
      Agreement and the applicable subsection of Section 344 of the General Law of
      Companies of Peru (“Peru
      Law”),
      Target shall be merged with and into Acquirer, the separate corporate existence
      of Target shall cease and Acquirer shall continue as the surviving corporation
      (the “Surviving
      Corporation”).

     

    2.2  Closing;
      Effective Time.
      The
      closing of the transactions contemplated hereby (the “Closing”)
      shall
      take place as soon as practicable, but no later than two (2) business days,
      after the satisfaction or waiver of each of the conditions set forth in Section
      7 hereof, or at such other time as the parties hereto agree (the “Closing
      Date”).
      The
      Closing shall take place at the offices of Muniz, Ramirez, Perez-Taiman &
Luna-Victoria, or at such other location as the parties hereto agree. On the
      Effective Date, the parties hereto have caused the Merger to be consummated
      by
      filing the requisite documents with the Peruvian Public Registry of Peru, in
      accordance with the relevant provisions of Peru Law (the time of such filing
      being the “Effective
      Time”).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.3  Effect
      of the Merger.
      At the
      Effective Time, the effect of the Merger shall be as provided in this Agreement
      and the applicable provisions of Peru Law. Without limiting the generality
      of
      the foregoing, and subject thereto, at the Effective Time, all the property,
      rights, privileges, powers and franchises of Target and Acquirer shall vest
      in
      the Surviving Corporation.

     

    2.4  Articles
      of Incorporation; Bylaws.

     

    (a)  At
      the
      Effective Time, the Articles of Incorporation of the Surviving Corporation
      shall
      be the Articles of Incorporation of Acquirer as in effect immediately prior
      to
      the Effective Time. 

     

    (b)  At
      the
      Effective Time, the Bylaws of the Surviving Corporation shall be the Bylaws
      of
      Acquirer as in effect immediately prior to the Effective Time , except that
      Article 5 shall be amended to increase the authorized stock of the Surviving
      Corporation to 10,843,400 shares.

     

    2.5  Directors
      and Officers.
      At the
      Effective Time, the officers of Target immediately prior to the Effective Time
      shall cease in their functions and the directors and officers of Acquirer shall
      be the directors and officers of the Surviving Corporation, to serve until
      their
      respective successors are duly elected or appointed and qualified.

     

    2.6  Effect
      on Capital Stock.
      At the
      Effective Time, each share of Target Common Stock issued and outstanding
      immediately prior to the Effective Time Stock as set forth on Schedule
      2.6(a)
      hereto
      shall be exchanged for a number of shares of Acquirer’s Common Stock as set
      forth in Schedule
      2.6(b)
      hereto.

     

    2.7  Deliveries
      at Closing.

     

    (a)  Acquirer
      and Parent Deliveries.
      At the
      Closing, Parent shall repurchase all of the shares received by Target
      Stockholders and Parent shall deliver to Target Stockholders (i) the Merger
      Consideration, (payable to the Target Stockholders as set forth on Schedule
      2.7(a)
      hereto
      (the “Merger Consideration”)) and (ii) the various certificates, instruments and
      documents referred to in Section 7.3 hereof.

     

    (b)  Target
      Deliveries.
      At the
      Closing, Target shall deliver to Acquirer and Parent the various certificates,
      instruments and documents referred to in Section 7.2 hereof. It is duly
      established that new shares certificates in favor of Target Stockholders will
      be
      issued after the registration of the Merger in Peruvian Public
      Registry.

     

    (c)  Transfers
      of Ownership.
      On the
      date of the registration of the Merger with the Peruvian Public Registry, the
      stock transfer books of Target shall be annulled, closed, and delivered to
      the
      Acquirer and there shall be no further registration of transfers of Target
      Common Stock or any other type of security thereafter on the records of Target.
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.8  No
      Further Ownership Rights in Target Capital Stock.
      The
      Merger Consideration delivered at the Closing for exchange of shares of Target
      Common Stock in accordance with the terms hereof shall be deemed to have been
      issued in full satisfaction of all rights pertaining to such shares of Target
      Common Stock, and, within five (5) days of the date of the registration of
      the
      Merger in the Peruvian Public Registry, there shall be no further registration
      of transfers on the records of the Surviving Corporation of shares of Target
      Common Stock which were outstanding immediately prior to the Effective
      Time.

     

    2.9  Taking
      of Necessary Action; Further Action.
      Each of
      Acquirer, Target Stockholders and Parent will take all such reasonable and
      lawful action as may be necessary or desirable in order to effectuate the Merger
      in accordance with this Agreement as promptly as possible. If, at any time
      after
      the Effective Time, any further action is necessary or desirable to carry out
      the purposes of this Agreement and to vest the Surviving Corporation with full
      right, title and possession to all assets, property, rights, privileges, powers
      and franchises of Target and Acquirer, the officers and directors of Target
      and
      Acquirer are fully authorized in the name of their respective corporations
      or
      otherwise to take, and will take, all such lawful and necessary action, so
      long
      as such action is not inconsistent with this Agreement.

     

    2.10  Payments
      at Closing for Expenses.
      As of
      the Closing Date, Acquirer and Target each shall provide sufficient funds to
      enable the consummation of the transactions contemplated by this Agreement
      that
      have not been paid on or prior to the Closing Date (the “Expenses”).

     

    3.  REPRESENTATIONS
      AND WARRANTIES OF TARGET.
      Target
      represents and warrants to Acquirer and Parent that the statements contained
      in
      this Section 3 are true and correct, except as disclosed in a document of even
      date herewith and delivered by Target to Acquirer on the date hereof (the
“Target
      Disclosure Schedule”).

     

    3.1  Organization,
      Standing and Power.
      Target
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of Peru. Target has the corporate power to own its properties and to carry
      on its business as now being conducted and as proposed to be conducted and
      is
      duly qualified to do business and is in good standing in each jurisdiction
      in
      which the failure to be so qualified and in good standing could reasonably
      be
      expected to have a Material Adverse Effect on Target. Target has delivered
      a
      true and correct copy of the Articles of Incorporation and Bylaws or other
      charter documents, as applicable, of Target, each as amended to date, to
      Acquirer. Target is not in violation of any of the provisions of its Articles
      of
      Incorporation or Bylaws. Target does not directly or indirectly own any equity
      or similar interest in, or any interest convertible or exchangeable or
      exercisable for, any equity or similar interest in, any corporation,
      partnership, joint venture or other business association or entity.

    
       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    3.2  Authority.
      Target
      has all requisite corporate power and authority to enter into this Agreement
      and
      to consummate the transactions contemplated hereby. The execution and delivery
      of this Agreement and the consummation of the transactions contemplated hereby
      have been duly authorized by all necessary corporate action on the part of
      Target subject only to the approval of the Merger by Target Stockholders as
      contemplated by Section 7.1(a). The affirmative vote of the holders of all
      of
      the shares of Target’s Common Stock, outstanding on the record date for the
      General Shareholder Meeting relating to this Agreement is the only vote of
      the
      holders of any of Target’s Common Stock necessary to approve this Agreement and
      the transactions contemplated hereby. The Target Stockholders have unanimously
      (a) approved this Agreement and the Merger; (b) determined that in its opinion
      the Merger is in the best interests of the stockholders of Target and is on
      terms that are fair to such stockholders; and (c) recommended that the Target
      Stockholders approve this Agreement and the Merger. This Agreement has been
      duly
      executed and delivered by Target and constitutes the valid and binding
      obligation of Target enforceable against Target in accordance with its terms,
      except that such enforceability may be limited by bankruptcy, insolvency,
      moratorium or other similar laws affecting or relating to creditors’ rights
      generally, and is subject to general principles of equity. The execution and
      delivery of this Agreement by Target does not, and the consummation of the
      transactions contemplated hereby will not, conflict with, or result in any
      violation of, or default under (with or without notice or lapse of time, or
      both), or give rise to a right of termination, cancellation or acceleration
      of
      any material obligation or loss of any material benefit under (a) any provision
      of the Articles of Incorporation or Bylaws of Target, as amended; or (b) any
      mortgage, indenture, lease, contract or other agreement or instrument, permit,
      concession, franchise, license, judgment, order, decree, statute, law,
      ordinance, rule or regulation applicable to Target or any of their properties
      or
      assets, in the case of clause (b), except for such conflicts, violations,
      defaults, rights of termination, cancellation or acceleration as could not
      individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect on Target. No consent, approval, order or authorization of,
      or
      registration, declaration or filing with, any court, administrative agency
      or
      commission or other governmental authority or instrumentality (“Governmental
      Entity”)
      is
      required by or with respect to Target in connection with the execution and
      delivery of this Agreement or the consummation of the transactions contemplated
      hereby, except for (a) the filing with the Peruvian Public Registry of Peru
      as
      provided in Section 2.2 and (b) such other consents, authorizations, filings,
      approvals and registrations which, if not obtained or made, could not be
      reasonably expected to have a Material Adverse Effect on Target and could not
      reasonably be expected to prevent, or materially alter or delay, any of the
      transactions contemplated by this Agreement.

     

    3.3  Governmental
      Authorization.
      Target
      has obtained each Peruvian or foreign governmental consent, license, permit,
      grant, or other authorization of a Governmental Entity (a) pursuant to which
      Target currently operates or holds any interest in any of its properties; or
      (b)
      that is required for the operation of Target’s business or the holding of any
      such interest and all of such authorizations are in full force and effect except
      where the failure to obtain or have any such authorizations could not reasonably
      be expected to have a Material Adverse Effect on Target.

     

    3.4  Financial
      Statements; Undisclosed Liabilities.
      Target
      has delivered to Acquirer its audited financial statements for the fiscal years
      ended December 31, 2005 and 2006, and its unaudited financial statements
      (balance sheet, statement of operations and statement of cash flows) for the
      six
      months ended June 30, 2007 (collectively, the “Target
      Financial Statements”).
      The
      Target Financial Statements have been prepared in accordance with U.S. generally
      accepted accounting principles applied on a consistent basis throughout the
      periods presented and consistent with each other. The Target Financial
      Statements fairly present in all material respects the consolidated financial
      condition, operating results and cash flow of Target as of the dates, and for
      the periods, indicated therein. Except as set forth on the Target Financial
      Statements, Target has no liabilities or obligations.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.5  Capital
      Structure.
      The
      authorized capital stock of Target consists of 10,842,400 shares of Target
      Common Stock each with a nominal value of S/. 1.00. All outstanding shares
      of
      Target Common Stock are duly authorized, validly issued, fully paid and
      non-assessable and are free of any liens or encumbrances other than any liens
      or
      encumbrances created by or imposed upon the holders thereof, and are not subject
      to preemptive rights or rights of first refusal created by statute, if any,
      the
      Articles of Incorporation or Bylaws of Target or any agreement to which Target
      is a party or by which it is bound. Except for the rights created pursuant
      to
      this Agreement and any other rights disclosed in this Section 3.5, there are
      no
      options, warrants, calls, rights, commitments or agreements of any character
      to
      which Target is a party or by which it is bound, obligating Target to issue,
      deliver, sell, repurchase or redeem or cause to be issued, delivered, sold,
      repurchased or redeemed, any shares of Target Common Stock or obligating Target
      to grant, extend, accelerate the vesting of, change the price of, or otherwise
      amend or enter into any such option, warrant, call, right, commitment or
      agreement. There are no other contracts, commitments or agreements relating
      to
      voting, purchase or sale of Target Common Stock (a) between or among Target
      and
      any of its Target Stockholders; and (b) to Target’s knowledge, between or among
      any of Target Stockholders.

     

    3.6  Absence
      of Certain Changes.
      Since
      the date of the latest Target balance sheet delivered to Acquirer hereunder
      (the
“Target
      Balance Sheet Date”),
      Target has conducted its business in the ordinary course consistent with past
      practice and there has not occurred (a) any change, event or condition (whether
      or not covered by insurance) that has resulted in, or could reasonably be
      expected to result in, a Material Adverse Effect on Target; (b) any acquisition,
      sale or transfer of any material asset of Target other than in the ordinary
      course of business and consistent with past practice; (c) any change in
      accounting methods or practices (including any change in depreciation or
      amortization policies or rates) by Target or any revaluation by Target of any
      of
      its assets; (d) any declaration, setting aside, or payment of a dividend or
      other distribution with respect to the shares of Target or any direct or
      indirect redemption, purchase or other acquisition by Target of any of its
      shares of capital stock; (e) any Material Contract entered into by Target,
      other
      than in the ordinary course of business, or any material amendment or
      termination of, or default under, any Material Contract (as defined in Section
      3.11) to which Target is a party or by which it is bound; (f) any amendment
      or
      change to the Articles of Incorporation or Bylaws of Target; or (g) any increase
      in or modification of the compensation or benefits payable or to become payable
      by Target to any of its directors or employees, other than in the ordinary
      course of business consistent with past practice. At the Effective Time, there
      will be no accrued but unpaid dividends on shares of Target’s capital
      stock.

     

    3.7  Litigation.
      There
      is no private or governmental action, suit, proceeding, claim, arbitration
      or
      investigation pending before any Governmental Entity, foreign or domestic,
      or,
      to the knowledge of Target, threatened against Target or any of its properties
      or any of its officers or directors (in their capacities as such) that,
      individually or in the aggregate, could reasonably be expected to have a
      Material Adverse Effect on Target. There is no judgment, decree or order against
      Target, or, to the knowledge of Target, any of its respective directors or
      officers (in their capacities as such), that could prevent, enjoin, or
      materially alter or delay any of the transactions contemplated by this
      Agreement, or that could reasonably be expected to have a Material Adverse
      Effect on Target.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.8  Intellectual
      Property.
      Target
      has no registered or unregistered interest or right to use any patents,
      trademarks, permits, domain names, service marks, trade names, copyrights,
      licenses, franchises, inventions, trade secrets, proprietary information and
      know-how of any type, whether or not written (including, but not limited to,
      rights in computer programs and databases) or formulas, and there is no consent
      or assignment required with respect to any leases, licenses and other rights
      of
      whatever nature, necessary for the present conduct of its business.

     

    3.9  Interested
      Party Transactions.
      Target
      is not indebted to any director, officer, employee or agent of Target (except
      for amounts due as normal salaries and bonuses and in reimbursement of ordinary
      expenses), and no such person is indebted to Target. 

     

    3.10  Minute
      Book.
      The
      minute book of Target contains a materially complete and accurate summary of
      all
      meetings of directors and stockholders or actions by written consent since
      the
      time of incorporation of Target through the date of this Agreement, and reflect
      all transactions referred to in such minutes accurately in all material
      respects.

     

    3.11  Material
      Contracts.
      All of
      Target’s Material Contracts (as defined in this Section 3.11 below) are listed
      in Section 3.11 of the Target Disclosure Schedule. With respect to each Material
      Contract: (a) the Material Contract is legal, valid, binding and enforceable
      and
      in full force and effect with respect to Target, and, to Target’s knowledge, is
      legal, valid, binding, enforceable and in full force and effect with respect
      to
      each other party thereto, in either case subject to the effect of bankruptcy,
      insolvency, moratorium or other similar laws affecting the enforcement of
      creditors’ rights generally and except as the availability of equitable remedies
      may be limited by general principles of equity; (b) the Material Contract will
      continue to be legal, valid, binding and enforceable and in full force and
      effect immediately following the Effective Time in accordance with its terms
      as
      in effect prior to the Effective Time, subject to the effect of bankruptcy,
      insolvency, moratorium or other similar laws affecting the enforcement of
      creditors’ rights generally and except as the availability of equitable remedies
      may be limited by general principles of equity; and (c) neither Target nor,
      to
      Target’s knowledge, any other party is in breach or default, and no event has
      occurred that with notice or lapse of time would constitute a breach or default
      by Target or, to Target’s knowledge, by any such other party, or permit
      termination, modification or acceleration, under such Material Contract, subject
      to such exceptions as could not, individually or in the aggregate, reasonably
      be
      expected to have a Material Adverse Effect on Target. Target is not a party
      to
      any oral contract, agreement or other arrangement. “Material
      Contract”
means
      any contract, agreement or commitment to which Target is a party (a) with
      expected receipts or expenditures in excess of $100,000; (b) evidencing
      indebtedness for borrowed or loaned money of $100,000 or more, including
      guarantees of such indebtedness; or (c) that could reasonably be expected to
      have a Material Adverse Effect on Target if breached by Target in such a manner
      as would (I) permit any other party to cancel or terminate the same (with or
      without notice of passage of time); (II) provide a basis for any other party
      to
      claim money damages (either individually or in the aggregate with all other
      such
      claims under that contract) from Target; or (III) give rise to a right of
      acceleration of any material obligation or loss of any material benefit under
      such Material Contract.

     

    3.12  Customers
      and Suppliers.
      As of
      the date hereof, no customer that individually accounted for more than 10%
      of
      Target’s gross revenues during the 12 month period preceding the date hereof and
      no supplier of Target that individually accounted for more than 10% of Target’s
      purchases during the 12 month period preceding the date hereof has canceled
      or
      otherwise terminated, or made any written threat to Target to cancel or
      otherwise terminate its relationship with Target.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.13  Title
      to Property.
      Target
      has good and marketable title to all of its properties, interests in properties
      and assets, real and personal, reflected in the Target Balance Sheet or acquired
      after the Target Balance Sheet Date (except properties, interests in properties
      and assets sold or otherwise disposed of since the Target Balance Sheet Date
      in
      the ordinary course of business), or with respect to leased properties and
      assets, valid leasehold interests therein, free and clear of all mortgages,
      liens, pledges, charges or encumbrances of any kind or character, except (a)
      the
      lien of current taxes not yet due and payable; (b) such imperfections of title,
      liens and easements as do not and will not materially detract from or interfere
      with the use of the properties subject thereto or affected thereby, or otherwise
      materially impair business operations involving such properties; (c) liens
      securing debt that is reflected on the Target Balance Sheet; and (d) such other
      mortgages, liens, pledges, charges or encumbrances as could not, individually
      or
      in the aggregate, reasonably be expected to have a Material Adverse Effect
      on
      Target. The plants, property and equipment of Target that are used in the
      operations of Target’s business are in all material respects in good operating
      condition and repair, subject to normal wear and tear. All properties used
      in
      the operations of Target are reflected in the Target Balance Sheet to the extent
      required by generally accepted accounting principles. All leases to which Target
      is a party are in full force and effect and are valid, binding and enforceable
      in accordance with their respective terms, except as such enforceability may
      be
      limited by bankruptcy, insolvency, moratorium or other similar laws affecting
      or
      relating to creditors’ rights generally; and general principles of equity,
      regardless of whether asserted in a proceeding in equity or at law. True and
      correct copies of all such leases have been provided to Acquirer. 

     

    3.14  Environmental
      Matters.

     

    (a)  The
      following terms shall be defined as follows:

     

    (i)  “Environmental
      Laws”
shall
      mean any applicable foreign, Peruvian or local governmental laws, statutes,
      ordinances, codes, regulations, rules, policies, permits, licenses,
      certificates, approvals, judgments, decrees, orders, directives, or requirements
      that pertain to the protection of the environment, protection of public health
      and safety, or protection of worker health and safety, or that pertain to the
      handling, use, manufacturing, processing, storage, treatment, transportation,
      discharge, release, emission, disposal, reuse, recycling, or other contact
      or
      involvement with Hazardous Materials (as defined in Section
      3.14(a)(ii)).

     

    (ii)  “Hazardous
      Materials”
shall
      mean any material, chemical, compound, substance, mixture or by-product that
      is
      identified, defined, designated, listed, restricted or otherwise regulated
      under
      Environmental Laws as a “hazardous constituent,” “hazardous substance,”
“hazardous material,” “acutely hazardous material,” “extremely hazardous
      material,” “hazardous waste,” “hazardous waste constituent,” “acutely hazardous
      waste,” “extremely hazardous waste,” “infectious waste,” “medical waste,”
“biomedical waste,” “pollutant,” “toxic pollutant,” “contaminant” or any other
      formulation or terminology intended to classify or identify substances,
      constituents, materials or wastes by reason of properties that are deleterious
      to the environment, natural resources, worker health and safety, or public
      health and safety, including without limitation ignitability, corrosivity,
      reactivity, carcinogenicity, toxicity and reproductive toxicity. The term
“Hazardous Materials” shall include without limitation any “hazardous
      substances” as defined, listed, designated or regulated under Peruvian Law, any
“hazardous wastes” or “solid wastes” as defined, listed, designated or regulated
      under Peruvian Law, any asbestos or asbestos-containing materials, any
      polychlorinated biphenyls, and any petroleum or hydrocarbonic substance,
      fraction, distillate or by-product.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)  To
      its
      knowledge, Target is and has been in compliance with all Environmental Laws
      relating to the properties or facilities owned, leased or occupied by Target
      at
      any time (collectively, “Target’s
      Facilities;”
such
      properties or facilities currently owned, leased or occupied by Target are
      defined herein as “Target’s
      Current Facilities”),
      and
      to Target’s knowledge no discharge, emission, release, leak or spill of
      Hazardous Materials has occurred at any of Target’s Facilities that may or will
      give rise to liability of Target under Environmental Laws. To Target’s
      knowledge, there are no Hazardous Materials (including without limitation
      asbestos) present in the surface waters, structures, groundwaters or soils
      of or
      beneath any of Target’s Current Facilities. To Target’s knowledge, there neither
      are nor have been any aboveground or underground storage tanks for Hazardous
      Materials at Target’s Current Facilities. To Target’s knowledge, no Target
      employee or other person has claimed that Target is liable for alleged injury
      or
      illness resulting from an alleged exposure to a Hazardous Material. No civil,
      criminal or administrative action, proceeding or investigation is pending
      against Target, or, to Target’s knowledge, threatened against Target, with
      respect to Hazardous Materials or Environmental Laws; and Target is not aware
      of
      any facts or circumstances that could form the basis for assertion of a claim
      against Target or that could form the basis for liability of Target, regarding
      Hazardous Materials or regarding actual or potential noncompliance with
      Environmental Laws.

     

    3.15  Taxes.

     

    (a)  As
      used
      in this Agreement, the terms “Tax”
and,
      collectively, “Taxes”
mean
      any and all federal, state and local taxes of any country, assessments and
      other
      governmental charges, duties, impositions and liabilities, including taxes
      based
      upon or measured by gross receipts, income, profits, sales, use and occupation,
      and value added, ad valorem, stamp transfer, franchise, withholding, payroll,
      recapture, employment, excise and property taxes, together with all interest,
      penalties and additions imposed with respect to such amounts and any obligations
      under any agreements or arrangements with any other person with respect to
      such
      amounts and including any liability for taxes of a predecessor
      entity;

     

    (b)  Target
      has prepared and timely filed all returns, estimates, information statements
      and
      reports required to be filed by Target with any taxing authority (“Returns”)
      relating to any and all Taxes concerning or attributable to Target or its
      operations with respect to Taxes for any period ending on or before the Closing
      Date and such Returns are true and correct in all material respects and have
      been completed in accordance with applicable law;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)  Target,
      as of the Effective Time, (i) will have paid all Taxes shown to be payable
      on
      such Returns covered by Section 3.15(a), and (ii) will have withheld with
      respect to its employees all Taxes required to be withheld;

     

    (d)  There
      is
      no material Tax deficiency outstanding or assessed or, to Target’s knowledge,
      proposed against Target that is not reflected as a liability on the Target
      Balance Sheet, nor has Target executed any agreements or waivers extending
      any
      statute of limitations on or extending the period for the assessment or
      collection of any Tax;

     

    (e)  Target
      has no material liabilities for unpaid Taxes that have not been accrued for
      or
      reserved on the Target Balance Sheet, whether asserted or unasserted, contingent
      or otherwise and Target has no knowledge of any basis for the assertion of
      any
      such liability attributable to Target, its assets or operations;

     

    (f)  Target
      is
      not a party to any tax-sharing agreement or similar arrangement with any other
      party, and Target has not assumed any obligation to pay any Tax obligations
      of,
      or with respect to any transaction relating to, any other person or agreed
      to
      indemnify any other person with respect to any Tax;

     

    (g)  Target’s
      Returns have never been audited by a government or taxing authority, nor is
      any
      such audit in process or pending, and Target has not been notified of any
      request for such an audit or other examination;

     

    (h)  Target
      has never been a member of an affiliated group of corporations filing a
      consolidated federal income tax return;

     

    (i)  Target
      has disclosed to Acquirer (i) any Tax exemption, Tax holiday or other
      Tax-sparing arrangement that Target has in any jurisdiction, including the
      nature, amount and lengths of such Tax exemption, Tax holiday or other
      Tax-sparing arrangement; and (ii) any expatriate tax programs or policies
      affecting Target. Target is in compliance in all material respects with all
      terms and conditions required to maintain such Tax exemption, Tax holiday or
      other Tax-sparing arrangement or order of any governmental entity and the
      consummation of the transactions contemplated hereby will not have any adverse
      effect on the continuing validity and effectiveness of any such Tax exemption,
      Tax holiday or other Tax-sparing arrangement or order; and

     

    (j)  Target
      has made available to Acquirer copies of all Returns filed for all periods
      since
      Target’s inception.

     

    3.16  Employee
      Benefit Plans.
      None of
      the Target or any ERISA Affiliate has ever maintained or contributed
      to (or had an obligation to contribute to) any Plan. Except as set forth on
      Schedule 3.16, the Target has never had any employees. Target
      is in full compliance with Peruvian employment and employment benefits
      laws, including without limitation, Law No. 27626 and Supreme Decree No.
      003-2002-TR, and the Target does not engage in illegal or unfair labor
      practices in Peru.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.17  Employee
      Matters.
      To its
      knowledge Target is in compliance with all currently applicable laws and
      regulations respecting terms and conditions of employment, except for such
      noncompliance that could not reasonably be expected to have a Material Adverse
      Effect on Target. There are no proceedings pending or, to Target’s knowledge,
      reasonably expected or threatened, between Target, on the one hand, and any
      or
      all of its current or former employees, on the other hand, which proceedings
      could reasonably be expected to have, a Material Adverse Effect on Target,
      including without limitation any claims for actual or alleged harassment or
      discrimination based on race, national origin, age, sex, sexual orientation,
      religion, disability, or similar tortious conduct, breach of contract, wrongful
      termination, defamation, intentional or negligent infliction of emotional
      distress, interference with contract or interference with actual or prospective
      economic disadvantage. There are no claims pending, or, to Target’s knowledge,
      reasonably expected or threatened, against Target under any workers’
compensation or long-term disability plan or policy. Target has no material
      unsatisfied obligations to any employees, former employees, or qualified
      beneficiaries, or any state law governing health care coverage extension or
      continuation. Target is not a party to any collective bargaining agreement
      or
      other labor union contract, nor does Target know of any activities or
      proceedings of any labor union to organize its employees. To its knowledge
      Target has provided all employees with all wages, benefits, relocation benefits,
      stock options, bonuses and incentives, and all other compensation that became
      due and payable through the date of this Agreement.

     

    3.18  Insurance.
      Target
      has policies of insurance of the type and in amounts that to Target’s knowledge
      are customarily carried by persons conducting businesses or owning assets
      similar to those of Target. There is no material claim pending under any of
      such
      policies as to which coverage has been questioned, denied or disputed by the
      underwriters of such policies. All premiums due and payable under all such
      policies have been paid and Target is otherwise in compliance in all material
      respects with the terms of such policies. Target has no knowledge of any
      threatened termination of, or material premium increase with respect to, any
      of
      such policies.

     

    3.19  Compliance
      With Laws.
      To its
      knowledge, Target has complied with, is not in violation of and has not received
      any notices of violation with respect to, any Peruvian or foreign statute,
      law
      or regulation with respect to the conduct of its business, or the ownership
      or
      operation of its business, except for such violations or failures to comply
      as
      could not reasonably be expected to have a Material Adverse Effect on
      Target.

     

    3.20  Brokers’
      and Finders’ Fee.
      No
      broker, finder or investment banker is entitled to brokerage or finders’ fees or
      agents’ commissions or investment bankers’ fees or any similar charges in
      connection with the Merger, this Agreement or any transaction contemplated
      hereby.

     

    4.  REPRESENTATIONS
      AND WARRANTIES OF ACQUIRER AND PARENT.
      Acquirer and Parent represent and warrant to Target that the statements
      contained in this Section 4 are true and correct, except as disclosed in a
      document of even date herewith and delivered by Acquirer to Target on the date
      hereof (the “Acquirer
      Disclosure Schedule”).

     

    4.1  Organization,
      Standing and Power.
      Each of
      Acquirer and Parent is a corporation duly organized, validly existing and in
      good standing under the laws of Peru and the state of Nevada, respectively.
      Each
      of Acquirer and Parent has the corporate power to own its properties and to
      carry on its business as now being conducted and as proposed to be conducted
      and
      is duly qualified to do business and is in good standing in each jurisdiction
      in
      which the failure to be so qualified and in good standing could reasonably
      be
      expected to have a Material Adverse Effect on Acquirer and Parent. Acquirer
      and
      Parent have delivered or made available a true and correct copy of their
      Certificates of Incorporation and Bylaws or other charter documents, as
      applicable, each as amended to date, to Target. Neither Acquirer nor Parent
      is
      in violation of any of the provisions of their Articles of Incorporation or
      Bylaws.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.2  Authority.
      Acquirer and Parent have all requisite corporate power and authority to enter
      into this Agreement and to consummate the transactions contemplated hereby.
      The
      execution and delivery of this Agreement and the consummation of the
      transactions contemplated hereby have been, or will have been by the Closing,
      duly authorized by all necessary corporate action on the part of Acquirer and
      Parent. This Agreement has been duly executed and delivered by Acquirer and
      Parent and constitutes the valid and binding obligations of Acquirer and Parent
      enforceable against Acquirer and Parent in accordance with its terms, except
      as
      may be limited by bankruptcy, insolvency, reorganization, moratorium or other
      similar laws affecting or relating to creditors’ rights generally, and subject
      to general principles of equity. The execution and delivery of this Agreement
      do
      not, and the consummation of the transactions contemplated hereby will not,
      conflict with, or result in any violation of, or default under (with or without
      notice or lapse of time, or both), or give rise to a right of termination,
      cancellation or acceleration of any material obligation or loss of a material
      benefit under (a) any provision of the Articles of Incorporation or Bylaws
      of
      Acquirer and Parent; or (b) any material mortgage, indenture, lease, contract
      or
      other agreement or instrument, permit, concession, franchise, license, judgment,
      order, decree, statute, law, ordinance, rule or regulation applicable to
      Acquirer or Parent or their properties or assets, except in the case of clause
      (b), except for such conflicts, violations, defaults, rights of termination,
      cancellation or acceleration as could not, individually or in the aggregate,
      reasonably be expected to have a Material Adverse Effect on Acquirer or Parent.
      No consent, approval, order or authorization of or registration, declaration
      or
      filing with any Governmental Entity is required by or with respect to Acquirer
      or Parent in connection with the execution and delivery of this Agreement by
      Acquirer and Parent or the consummation by Acquirer and Parent of the
      transactions contemplated hereby, except for (a) the filing of the requisite
      documents as provided in Section 2.2 in the Peruvian Public Registry; (b) the
      filing of a Form 8-K with the Securities and Exchange Commission (“SEC”),
      if
      required; and (c) such other consents, authorizations, filings, approvals and
      registrations which, if not obtained or made, could not reasonably be expected
      to have a Material Adverse Effect on Acquirer and could not prevent, materially
      alter or delay any of the transactions contemplated by this Agreement.

     

    4.3  Capital
      Structure.
      Immediately prior to the Effective Time, the authorized, issued and outstanding
      capital stock of the Acquirer consists of 1,000 shares of common stock, each
      with a nominal value of S/. 1.00. All of the outstanding shares of capital
      stock
      of the Acquirer are validly issued, fully paid and nonassessable, have been
      issued in compliance with all federal and state Peruvian securities laws, and
      none of such outstanding shares was issued in violation of any preemptive rights
      or similar rights to subscribe for or purchase securities. Except as disclosed
      in Section 4.3 of the Acquirer Disclosure Schedule: (i) none of the Acquirer's
      capital stock is subject to preemptive rights or any other similar rights or
      any
      liens or encumbrances suffered or permitted by the Acquirer; (ii) there are
      no
      outstanding options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, or exercisable or exchangeable for, any capital stock of
      the
      Acquirer or any of its subsidiaries, or contracts, commitments, understandings
      or arrangements by which the Acquirer or any of its subsidiaries is or may
      become bound to issue additional capital stock of the Acquirer or any of its
      subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, or exercisable or exchangeable for, any capital stock of
      the
      Acquirer or any of its subsidiaries; (iii) there are no outstanding debt
      securities, notes, credit agreements, credit facilities or other agreements,
      documents or instruments evidencing indebtedness of the Acquirer or any of
      its
      subsidiaries or by which the Acquirer or any of its subsidiaries is or may
      become bound; (iv) there are no financing statements securing obligations in
      any
      material amounts, either singly or in the aggregate, filed in connection with
      the Acquirer or any of its subsidiaries; (v) there are no outstanding securities
      or instruments of the Acquirer or any of its subsidiaries which contain any
      redemption or similar provisions, and there are no contracts, commitments,
      understandings or arrangements by which the Acquirer or any of its subsidiaries
      is or may become bound to redeem a security of the Acquirer or any of its
      subsidiaries; (vi) there are no securities or instruments containing
      anti-dilution or similar provisions that will be triggered by the issuance
      of
      Acquirer’s Common Stock; and (vii) the Acquirer does not have any stock
      appreciation rights or "phantom stock" plans or agreements or any similar plan
      or agreement. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.4  Acquirer
      Financial Statements.
      Acquirer has delivered to target its audited financial statements for the fiscal
      years ended December 31, 2005 and December 31, 2006, and its unaudited financial
      statements (balance sheet, statement of operations and statement of cash flows)
      on a non-consolidated basis for the six months ended June 30, 2007
      (collectively, the “Acquirer
      Financial Statements”).
      The
      Acquirer Financial Statements have been prepared in accordance with generally
      accepted accounting principles applied on a consistent basis throughout the
      periods presented and consistent with each other. The Acquirer Financial
      Statements fairly present in all material respects the consolidated financial
      condition, operating results and cash flow of Acquirer as of the dates, and
      for
      the periods, indicated therein.

     

    4.5  Parent
      SEC Documents; Financial Statements.
      The
      Parent has filed all reports, schedules, forms, statements and other documents
      required to be filed by it with the SEC under the Securities Exchange Act of
      1934, as amended (the “Exchange
      Act”)
      since
      September 15, 2006, (all of the foregoing filed prior to the date hereof or
      amended after the date hereof and all exhibits included therein and financial
      statements and schedules thereto and documents incorporated by reference
      therein, being hereinafter referred to as the “SEC
      Documents”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Documents prior to the expiration of any such extension.
      As
      of their respective dates, the SEC Documents complied in all material respects
      with the requirements of the Exchange Act and the rules and regulations of
      the
      SEC promulgated thereunder applicable to the SEC Documents, and none of the
      SEC
      Documents, at the time they were filed with the SEC, contained any untrue
      statement of a material fact or omitted to state a material fact required to
      be
      stated therein or necessary in order to make the statements therein, in the
      light of the circumstances under which they were made, not misleading. As of
      their respective dates, the financial statements of the Parent included in
      the
      SEC Documents complied as to form in all material respects with applicable
      accounting requirements and the published rules and regulations of the SEC
      with
      respect thereto. Such financial statements have been prepared in accordance
      with
      generally accepted accounting principles, consistently applied, during the
      periods involved (except (i) as may be otherwise indicated in such financial
      statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may exclude footnotes or may be condensed or
      summary statements) and fairly present in all material respects the financial
      position of the Parent as of the dates thereof and the results of its operations
      and cash flows for the periods then ended (subject, in the case of unaudited
      statements, to normal year-end audit adjustments). 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.6  10(b)-5.
      The SEC
      Documents do not include any untrue statements of material fact, nor do they
      omit to state any material fact required to be stated therein necessary to
      make
      the statements made, in light of the circumstances under which they were made,
      not misleading. 

     

    4.7  Absence
      of Litigation.
      There
      is no action, suit, proceeding, inquiry or investigation before or by any court,
      public board, government agency, self-regulatory organization or body pending
      against or affecting the Acquirer or Parent, the Acquirer’s Common Stock,
      wherein an unfavorable decision, ruling or finding would have a Material Adverse
      Effect. 

     

    4.8  Employee
      Relations.
      Neither
      the Acquirer nor Parent is involved in any labor dispute or, to the knowledge
      of
      the Acquirer or Parent, is any such dispute threatened.

     

    4.9  Intellectual
      Property Rights.
      The
      Acquirer and Parent own or possess adequate rights or licenses to use all
      trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, trade secrets and rights necessary to conduct
      their
      respective businesses as now conducted. The Acquirer and Parent do not have
      any
      knowledge of any infringement by the Acquirer and Parent of trademark, trade
      name rights, patents, patent rights, copyrights, inventions, licenses, service
      names, service marks, service mark registrations, trade secret or other similar
      rights of others, and, to the knowledge of the Acquirer and Parent there is
      no
      claim, action or proceeding being made or brought against, or to the Acquirer
      and Parent’s knowledge, being threatened against, the Acquirer and Parent
      regarding trademark, trade name, patents, patent rights, invention, copyright,
      license, service names, service marks, service mark registrations, trade secret
      or other infringement; and the Acquirer and Parent are unaware of any facts
      or
      circumstances which might give rise to any of the foregoing. 

     

    4.10  Environmental
      Laws.
      Except
      as could not reasonably by expected to have a Material Adverse Effect, to the
      Acquirer and Parent’s knowledge the Acquirer and its subsidiaries are in
      compliance with any and all applicable foreign, federal, state and local laws
      and regulations relating to the protection of human health and safety, the
      environment or hazardous or toxic substances or wastes, pollutants or
      contaminants. The Acquirer has received all permits, licenses or other approvals
      required of them under applicable environmental laws to conduct their respective
      businesses, the lack of which would have a Material Adverse Effect and are
      in
      compliance with all terms and conditions of any such permit, license or
      approval.

     

    4.11  Title.
      All
      real property and facilities owned or held under lease by the Acquirer and
      its
      subsidiaries are held by them under valid, subsisting and enforceable titles
      with such exceptions as are not material and do not interfere with the use
      made
      and proposed to be made of such property and buildings by the Acquirer and
      its
      subsidiaries.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.12  Regulatory
      Permits.
      The
      Acquirer and its subsidiaries possess all material certificates, authorizations
      and permits issued by the appropriate Peruvian or foreign regulatory authorities
      necessary to conduct their respective businesses, and neither the Acquirer
      nor
      any such subsidiary has received any notice of proceedings relating to the
      revocation or modification of any such certificate, authorization or permit.
      

     

    4.13  Tax
      Status.
      The
      Acquirer and each of its subsidiaries has made and filed all federal and state
      income and all other material tax returns, reports and declarations required
      by
      any jurisdiction to which it is subject and (unless and only to the extent
      that
      the Acquirer and each of its subsidiaries has set aside on its books provisions
      reasonably adequate for the payment of all unpaid and unreported taxes) has
      paid
      all taxes and other governmental assessments and charges that are material
      in
      amount, shown or determined to be due on such returns, reports and declarations,
      except those being contested in good faith and has set aside on its books
      provision reasonably adequate for the payment of all taxes for periods
      subsequent to the periods to which such returns, reports or declarations apply.
      There are no unpaid taxes in any material amount claimed to be due by the taxing
      authority of any jurisdiction, and to the Acquirer’s Knowledge there is no basis
      for any such claim. 

     

    4.14  Brokerage.
      No
      broker, agent, finder or other party has been retained in connection with the
      transactions contemplated hereby and that no fee or commission has been agreed
      to by the Acquirer or Parent to be paid for or on account of the transactions
      contemplated hereby. 

     

    5.  CONDUCT
      PRIOR TO THE EFFECTIVE TIME.

     

    5.1  Conduct
      of Business of Target.
      During
      the period from the date of this Agreement and continuing until the earlier
      of
      the termination of this Agreement or the Effective Time, Target agrees (except
      to the extent expressly contemplated by this Agreement or as consented to in
      writing by Acquirer and except as set forth in Section 5.1 of the Target
      Disclosure Schedule): (a) to carry on its business in the usual regular and
      ordinary course in substantially the same manner as heretofore conducted; (b)
      to
      pay its debts and Taxes when due subject (i) to good faith disputes over such
      debts or Taxes; and (ii) to Acquirer’s consent to the filing of material Tax
      Returns, if applicable; (c) to pay or perform other material obligations when
      due; and (d) to use all reasonable efforts to preserve intact its present
      business organizations, keep available the services of its present officers
      and
      key employees and preserve its relationships with material customers, suppliers,
      distributors, licensors, licensees, and others having business dealings with
      it,
      to the end that its goodwill and ongoing businesses shall be unimpaired at
      the
      Effective Time. Target agrees to promptly notify Acquirer of any material event
      or occurrence not in the ordinary course of Target’s business, and of any event
      which could reasonably be expected to have a Material Adverse Effect on Target.
      Without limiting the foregoing, except as expressly contemplated by this
      Agreement or the Target Disclosure Schedule, Target shall not do, cause or
      permit any of the following, without the prior written consent of
      Acquirer:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (a)  Charter
      Documents.
      Cause
      or permit any amendments to its Articles of Incorporation or
      Bylaws;

     

    (b)  Stock
      Option Plans, Etc.
      Accelerate, amend or change the period of exercisability or vesting of options,
      if any, or other rights granted under its stock plans or authorize cash payments
      in exchange for any options or other rights granted under any of such
      plans;

     

    (c)  Intellectual
      Property.
      Transfer to any person or entity any rights to its Intellectual Property other
      than in the ordinary course of business consistent with past
      practice;

     

    (d)  Exclusive
      Rights.
      Enter
      into or amend any agreements pursuant to which any other party is granted
      exclusive marketing or other exclusive rights of any type or scope with respect
      to any of Target Products or Target Intellectual Property;

     

    (e)  Dispositions.
      Sell,
      lease, license or otherwise dispose of or encumber any of its properties or
      assets that are material, individually or in the aggregate, to its business,
      taken as a whole, other than in the ordinary course of business consistent
      with
      past practice;

     

    (f)  Agreements.
      Enter
      into, terminate or amend, in a manner that will adversely affect the business
      of
      Target, (i) any agreement involving the obligation to pay or the right to
      receive $100,000 or more, (ii) any agreement relating to the license, transfer
      or other disposition or acquisition of Intellectual Property rights or rights
      to
      market or sell Target Products or (iii) any other agreement material to the
      business or prospects of Target or that is or would be a Material
      Contract;

     

    (g)  Payment
      of Obligations.
      Pay,
      discharge or satisfy, in an amount in excess of $25,000 in the aggregate, any
      claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
      contingent or otherwise) arising other than in the ordinary course of business,
      other than the payment, discharge or satisfaction of liabilities reflected
      or
      reserved against in the Target Financial Statements and provided that Target
      may
      pay down Indebtedness of any sort with available cash;

     

    (h)  Capital
      Expenditures.
      Make
      any capital expenditures, capital additions or capital improvements, in excess
      of $25,000 in the aggregate, other than in the ordinary course of business
      consistent with past practice and the planned expansion previously agreed to
      by
      the parties;

     

    (i)  Insurance.
      Materially reduce the amount of any material insurance coverage provided by
      existing insurance policies;

     

    (j)  Termination
      or Waiver.
      Terminate or waive any right of substantial value, other than in the ordinary
      course of business;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (k)  Employee
      Benefit Plans; New Hires; Pay Increases.
      Amend
      any Target Employee Plan or adopt any plan that would constitute a Target
      Employee Plan except in order to comply with applicable laws or regulations,
      or
      hire any new officer-level employee, pay any special bonus, special remuneration
      or special noncash benefit (except payments and benefits made pursuant to
      written agreements outstanding on the date hereof), or materially increase
      the
      benefits, salaries or wage rates of its employees, other than in the ordinary
      course of business consistent with past practice;

     

    (l)  Severance
      Arrangements.
      Grant
      or pay any severance or termination pay or benefits (i) to any director or
      officer or (ii) except for payments made pursuant to written agreements
      outstanding on the date hereof and disclosed on the Target Disclosure Schedule,
      to any other employee, provided, that Target may grant and make severance
      payments of any sort if paid from available cash prior to Closing;

     

    (m)  Lawsuits.
      Commence a lawsuit other than (i) for the routine collection of bills, (ii)
      in
      such cases where Target in good faith determines that failure to commence suit
      would result in the material impairment of a valuable aspect of Target’s
      business, provided that it consults with Acquirer prior to the filing of such
      a
      suit or (iii) for a breach of this Agreement;

     

    (n)  Acquisitions.
      Acquire
      or agree to acquire by merging with, or by purchasing a substantial portion
      of
      the stock or assets of, or by any other manner, any business or any corporation,
      partnership, association or other business organization or division thereof
      or
      otherwise acquire or agree to acquire any assets that are material individually
      or in the aggregate, to its business, taken as a whole;

     

    (o)  Taxes.
      Other
      than in the ordinary course of business, make or change any material election
      in
      respect of Taxes, adopt or change any accounting method in respect of Taxes,
      file any material tax Return or any amendment to a material tax Return, enter
      into any closing agreement, settle any material claim or assessment in respect
      of Taxes, or consent to any extension or waiver of the limitation period
      applicable to any material claim or assessment in respect of Taxes;

     

    (p)  Revaluation.
      Revalue
      any of its assets, including without limitation writing down the value of
      inventory or writing off notes or accounts receivable other than in the ordinary
      course of business or as required by changes in generally accepted accounting
      principles; or

     

    (q)  Other.
      Take or
      agree in writing or otherwise to take, any of the actions described in Sections
      (a) through (p) above, or any action that would cause a material breach of
      its
      representations or warranties contained in this Agreement or prevent it from
      materially performing or cause it not to materially perform its covenants
      hereunder.

     

    5.2  No
      Solicitation.

     

    (a)  Target
      shall, immediately cease any discussions, activities or negotiations with any
      other Person or Persons that may be ongoing with respect to any Acquisition
      Proposal and shall not take, or authorize or permit any of its representatives
      to take, any action (1) to solicit, initiate or knowingly encourage or
      facilitate, directly or indirectly, the making or submission of any Acquisition
      Proposal, (2) to enter into any agreement, contract or commitment (or letter of
      intent or similar document) with respect to any Acquisition Proposal, or to
      agree to approve or endorse any Acquisition Proposal or enter into any
      agreement, contract or commitment that would require Target to abandon,
      terminate or fail to consummate the Merger, (3) to initiate or participate
      in
      any way in any discussions or negotiations with, or furnish or disclose any
      information to, any Person (other than Acquirer Parent) in furtherance of any
      proposal that constitutes, or could reasonably be expected to lead to, any
      Acquisition Proposal, or (4) to grant any waiver or release under any
      standstill, confidentiality or similar agreement relating to a possible
      acquisition, merger, business combination or other similar transaction between
      Target and any other Person entered into by Target; provided, that, prior to
      obtaining the approval of the Target Stockholders contemplated by Section 6.1,
      in response to an unsolicited written Acquisition Proposal, Target
      may:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i)  request
      clarifications from, or furnish information to, (but not enter into discussions
      with) any Person which makes such unsolicited Acquisition Proposal if (A) such
      action is taken subject to a confidentiality agreement with Target containing
      customary terms and conditions; and (B) such action is taken solely for the
      purpose of obtaining information reasonably necessary to ascertain whether
      such
      Acquisition Proposal is, or could reasonably be expected to lead to, a Superior
      Proposal; or

     

    (ii)  participate
      in discussions or negotiations with, request clarifications from, or furnish
      information to, any Person which makes such unsolicited Acquisition Proposal
      if
      (A) such action is taken subject to a confidentiality agreement with Target
      containing customary terms and conditions; (B) the Target Stockholders
      reasonably determine in good faith, after consultation with outside nationally
      recognized legal counsel (which may be its current outside legal counsel),
      that
      such Acquisition Proposal is, or could reasonably be expected to result in,
      a
      Superior Proposal; and (C) the Target Stockholders determine in good faith,
      after consultation with outside nationally recognized legal counsel (which
      may
      be its current outside legal counsel), that failure to take such actions would
      be inconsistent with its fiduciary duties under applicable law.

     

    (b)  None
      of
      the Target Stockholders shall (i) withdraw, modify or amend, or publicly propose
      to withdraw, modify or amend, in a manner adverse to Acquirer or Parent, the
      approval, adoption or recommendation, as the case may be, of the Merger, this
      Agreement or any of the other transactions contemplated hereby, (ii) approve
      or
      recommend any Acquisition Proposal, (iii) cause Target to accept such
      Acquisition Proposal and/or enter into any Acquisition Agreement, or (iv)
      resolve to do any of the foregoing; provided, that a Target Stockholder may
      withdraw, modify or amend such recommendation prior to obtaining the approval
      of
      the Target Stockholders contemplated by Section 6.2 if (A) Target has complied
      with its obligations under this Section 5.2, (B) the Target Stockholder
      reasonably determines in good faith, after consultation with outside nationally
      recognized legal counsel (which may be its current outside legal counsel),
      that
      failure to take such actions would be inconsistent with his fiduciary duties
      under applicable law and (C) prior to taking such actions, the Target
      Stockholder shall have given Acquirer at least 48 hours notice of his intention
      to take such action and the opportunity to propose changes to the terms of
      this
      Agreement and the Target Stockholder shall negotiate in good faith with respect
      to such changes.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)  Target
      shall as promptly as practicable (and in any event within 24 hours) advise
      Acquirer of any request for information with respect to any Acquisition Proposal
      or of any Acquisition Proposal, or any inquiry, proposal, discussions or
      negotiation with respect to any Acquisition Proposal, and the terms and
      conditions of such request, Acquisition Proposal, inquiry, proposal, discussion
      or negotiation. Target shall keep Acquirer informed of the status and material
      details (including amendments or proposed amendments) of any such request or
      Acquisition Proposal and keep Acquirer fully informed as to the material details
      of any information requested of or provided by Target and as to the details
      of
      all discussions or negotiations with respect to any such request, Acquisition
      Proposal, inquiry or proposal.

     

    (d)  For
      purposes of this Agreement, the following definitions shall apply:

     

    (i)  “Acquisition
      Agreement”
shall
      mean any letter of intent, agreement in principle, acquisition agreement, stock
      purchase agreement or other similar agreement relating to an Acquisition
      Proposal.

     

    (ii)  “Acquisition
      Proposal”
shall
      mean (a) any proposal or offer (including any proposal to Target Stockholders)
      from any Person or group relating to (i) any direct or indirect acquisition
      or
      purchase of 15% or more of the consolidated assets of Target and its
      Subsidiaries or 15% or more of any class of equity securities of Target or
      any
      of its Subsidiaries in a single transaction or a series of related transactions,
      (ii) any tender offer (including a self-tender offer) or exchange offer that,
      if
      consummated, would result in any Person or group beneficially owning 15% or
      more
      of any class of equity securities of Target or any of its Subsidiaries or (iii)
      any merger, consolidation, business combination, recapitalization, liquidation,
      dissolution or similar transaction involving Target or (b) any public
      announcement by or on behalf of Target, any of its Subsidiaries or any of their
      respective Affiliates (or any of their respective Representatives) or by any
      third party of a proposal, plan or intention to do any of the foregoing or
      any
      agreement to engage in any of the foregoing.

     

    (iii)  “Superior
      Proposal”
shall
      mean a bona fide written proposal or offer made by any Person (other than
      Acquirer or an Affiliate of Acquirer) to acquire, directly or indirectly, (a)
      more than 50% of the shares of any class of equity securities of Target pursuant
      to a tender offer, separately or followed by a merger, (b) all of the shares
      of
      any class of equity securities of Target pursuant to a merger or otherwise
      or
      (c) all or substantially all of the assets of Target and its Subsidiaries,
      (i)
      on terms (taken as a whole) which the Target Stockholders determine in good
      faith, after consultation with a financial advisor of nationally recognized
      reputation, would, if consummated, be more favorable from a financial point
      of
      view to Target or its stockholders (in their capacity as such) than the
      transactions contemplated hereby, (ii) which the Board of Directors determines
      in good faith (after consultation with outside nationally recognized legal
      counsel (which may be its current outside legal counsel) and a financial advisor
      of nationally recognized reputation) is reasonably capable of being consummated
      (taking into account such factors as the Target Stockholders in good faith
      deems
      relevant, including all legal, financial, regulatory and other aspects of such
      proposal (including the terms of any financing, the likelihood of obtaining
      any
      necessary financing in a timely manner and the likelihood that the proposed
      transaction would be consummated) and the identity of the Person making such
      proposal), (iii) which, at the time the Superior Proposal is accepted (if at
      all), is not conditioned on the receipt of any financing and (iv) which is
      not
      made in material violation of any standstill, confidentiality or similar
      agreement entered into by Target or otherwise entered into for the benefit
      of,
      or enforceable by, Target.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    6.  ADDITIONAL
      AGREEMENTS.

     

    6.1  Approval
      of Stockholders.
      Target
      shall promptly after the date hereof take all action necessary in accordance
      with Peru Law and its Articles of Incorporation and Bylaws to obtain the written
      consent of the Target Stockholders approving the Merger as soon as practicable.
      Target shall use its efforts to solicit from Target Stockholders written
      consents in favor of the Merger and shall take all other action necessary or
      advisable to secure the vote or consent of stockholders required to effect
      the
      Merger.

     

    6.2  Access
      to Information.
      Target
      shall afford Acquirer and its accountants, counsel and other representatives,
      reasonable access during normal business hours during the period prior to the
      Effective Time to (i) such of Target’s properties, personnel, books, contracts,
      commitments and records and (ii) all other information concerning the business,
      properties and personnel of Target as agreed upon by Target and
      Acquirer. 

     

    6.3  Public
      Disclosure.
      Unless
      otherwise permitted by this Agreement, Acquirer and Target shall consult with
      each other before issuing any press release or otherwise making any public
      statement or making any other public (or non-confidential) disclosure (whether
      or not in response to an inquiry) regarding the terms of this Agreement and
      the
      transactions contemplated hereby, and neither shall issue any such press release
      or make any such statement or disclosure without the prior approval of the
      other
      (which approval shall not be unreasonably withheld), except as may be required
      by law or by obligations pursuant to any listing agreement with any national
      securities exchange or with OTCBB.

     

    6.4  Piggyback
      Registration Rights.
      If Parent proposes to register any of its common stock or other securities
      under
      the Securities Act in connection with the public offering of such securities
      solely for cash, Parent shall, at such time, promptly give the Target
      Stockholders notice of such registration. Upon the request of the Target
      Stockholders given within twenty (20) days after such notice is given by Parent,
      Parent shall cause to be registered all of the Parent Common Stock that it
      has
      received pursuant to this Agreement that the Target Stockholders have requested
      to be included in such registration, subject to cutback by the managing
      underwriter in an underwritten public offering. Parent shall have the right
      to
      terminate or withdraw any registration initiated by it under this Section 6.4
      before the effective date of such registration, whether or not the Target
      Stockholders have elected to include Parent Common Stock in such
      registration.

     

     

    6.5  Regulatory
      Approval; Further Assurances.

     

    (a)  Each
      party shall use all reasonable efforts to file, as promptly as practicable
      after
      the date of this Agreement, all notices, reports and other documents required
      to
      be filed by such party with any Governmental Entity with respect to the Merger
      and the other transactions contemplated by this Agreement, and to submit
      promptly any additional information requested by any such Governmental Entity.
      Each of Target and Acquirer shall (i) give the other party prompt notice of
      the
      commencement of any legal proceeding by or before any Governmental Entity with
      respect to the Merger or any of the other transactions contemplated by this
      Agreement, (ii) keep the other party informed as to the status of any such
      legal
      proceeding and (iii) promptly inform the other party of any communication to
      or
      from the Governmental Entity regarding the Merger. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)  Acquirer
      and Target shall use all reasonable efforts to take, or cause to be taken,
      all
      actions necessary to effectuate the Merger and make effective the other
      transactions contemplated by this Agreement. Without limiting the generality
      of
      the foregoing, each party to this Agreement shall: (i) make any filings and
      give
      any notices required to be made and given by such party in connection with
      the
      Merger and the other transactions contemplated by this Agreement; (ii) use
      all
      reasonable efforts to obtain any consent required to be obtained (pursuant
      to
      any applicable legal requirement or contract, or otherwise) by such party in
      connection with the Merger or any of the other transactions contemplated by
      this
      Agreement; and (iii) use all reasonable efforts to lift any restraint,
      injunction or other legal bar to the Merger. Each party shall promptly deliver
      to the other a copy of each such filing made, each such notice given and each
      such consent obtained by such party during the period prior to the Effective
      Time. Each party, at the reasonable request of the other party, shall execute
      and deliver such other instruments and do and perform such other acts and things
      as may be necessary or desirable for effecting completely the consummation
      of
      this Agreement and the transactions contemplated hereby.

     

    6.6  Employee
      Matters.

     

    (a)  Acquirer
      shall ensure that, except as set forth in Schedule
      6.6(a),
      all
      persons who were employed by Target immediately preceding the Closing Date,
      including those on vacation, leave of absence or disability (the “Target
      Employees”),
      will
      remain employed in a comparable position on and immediately after the Closing
      Date, at not less than the same base rate of pay. 

     

    (b)  Each
      of
      Acquirer and Parent acknowledges that consummation of the transactions
      contemplated by this Agreement will constitute a change in control of Target
      (to
      the extent such concept is applicable). From and after the Closing, as
      applicable, (i) Acquirer, Parent and Target will honor in accordance with their
      terms all cash bonus plans, stock option, if any, and stock incentive plans,
      if
      any, employment agreements, consulting agreements, change-of-control agreements
      and severance agreements or plans between Target and any officer, director
      or
      employee of Target in effect prior to the Closing Date and (ii) Target shall
      pay
      to the applicable officers and employees listed in Schedule
      6.6(b)
      any
      amounts with respect to such severance obligations that are payable in
      accordance with their terms.

     

    6.7  Expenses.
      If the
      Merger is not consummated and except as otherwise provided herein, all costs
      and
      expenses incurred in connection with this Agreement and the transactions
      contemplated hereby shall be paid by the party incurring such
      expense.

     

    6.8  Amendment
      of Disclosure Schedules.
      From
      time to time prior to the Effective Time, Target may supplement or amend the
      Target Disclosure Schedules in order to make the information set forth therein
      timely, complete and accurate. For purposes of determining the fulfillment
      of
      the condition set forth in Section 7.2(a) as of the Closing, the Target
      Disclosure Schedules shall be deemed to include only that information contained
      therein on the date of this Agreement and shall be deemed to exclude any
      information contained in any subsequent supplement or amendment thereto. For
      purposes of determining the accuracy of the representations and warranties
      contained in Section 3 and the liability of the Target with respect thereto
      under Section 9, the Target Disclosure Schedules shall be deemed to include
      all
      information contained in any supplement or amendment thereto made on or before
      the Closing.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7.  CONDITIONS
      TO THE MERGER.

     

    7.1  Conditions
      to Obligations of Each Party to Effect the Merger.
      The
      respective obligations of each party to this Agreement to consummate and effect
      this Agreement and the transactions contemplated hereby shall be subject to
      the
      satisfaction at or prior to the Effective Time of each of the following
      conditions, any of which may be waived, in writing, by agreement of all the
      parties hereto:

     

    (a)  Stockholder
      Approval.
      This
      Agreement and the Merger shall be approved by the Target Stockholders by the
      requisite vote under Peru Law and Target’s Articles of Incorporation and
      By-Laws.

     

    (b)  No
      Injunctions or Restraints; Illegality.
      No
      temporary restraining order, preliminary or permanent injunction or other order
      issued by any court of competent jurisdiction or other legal or regulatory
      restraint or prohibition preventing the consummation of the Merger shall be
      and
      remain in effect, nor shall any proceeding brought by an administrative agency
      or commission or other governmental authority or instrumentality, domestic
      or
      foreign, seeking any of the foregoing be pending, which could reasonably be
      expected to have a Material Adverse Effect on Acquirer or Parent after the
      Effective Time, nor shall there be any action taken, or any statute, rule,
      regulation or order enacted, entered, enforced or deemed applicable to the
      Merger, which makes the consummation of the Merger illegal.

     

    (c)  Governmental
      Approval.
      Acquirer, Target and Parent shall have timely obtained from each Governmental
      Entity all approvals, waivers and consents, necessary for consummation of or
      in
      connection with the Merger and the several transactions contemplated hereby,
      including such approvals, waivers and consents as may be required under the
      Securities Act and under state blue sky laws, other than filings and approvals
      relating to the Merger or affecting Acquirer’s ownership of Target or any of its
      properties if failure to obtain such approval, waiver or consent could not
      reasonably be expected to have a Material Adverse Effect on Acquirer after
      the
      Effective Time.

     

    7.2  Additional
      Conditions to the Obligations of Acquirer and Parent.
      The
      obligations of Acquirer and Parent to consummate and effect this Agreement
      and
      the transactions contemplated hereby shall be subject to the satisfaction at
      or
      prior to the Effective Time of each of the following conditions, any of which
      may be waived, in writing, by Acquirer:

     

    (a)  Representations,
      Warranties and Covenants.
      The
      representations and warranties of Target in this Agreement shall be true and
      correct in all respects on and as of the date of this Agreement and at and
      as of
      the Closing as though such representations and warranties were made on and
      as of
      such time (except for such representations and warranties that speak
      specifically as of the date hereof or as of another date, which shall be true
      and correct as of such date), disregarding for the purposes of such
      determination any “Material Adverse Effect” or other materiality qualifiers set
      forth in such representations and warranties, except for such failures of such
      representations and warranties to be so true and correct as could not,
      individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect on Target.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)  Performance
      of Obligations.
      Target
      shall have performed and complied in all material respects with all covenants,
      obligations and conditions of this Agreement required to be performed and
      complied with by it as of the Closing.

     

    (c)  Certificate
      of Officers.
      Acquirer and Parent shall have received a certificate executed on behalf of
      Target by the chief executive officer and chief financial officer of Target
      certifying that the conditions set forth in Sections 7.2(a) and 7.2(b) have
      been
      satisfied.

     

    (d)  Third
      Party Consents.
      All
      consents or approvals required to be obtained in connection with the Merger
      and
      the other transactions contemplated by this Agreement shall have been obtained
      and shall be in full force and effect, except where the failure to obtain any
      such consents or approvals could not individually or in the aggregate be
      reasonably expected to have a Material Adverse Effect on Target.

     

    (e)  No
      Governmental Litigation.
      There
      shall not be pending or threatened any legal proceeding in which a Governmental
      Entity is or is threatened to become a party or is otherwise involved, and
      neither Acquirer nor Target shall have received any communication from any
      Governmental Entity in which such Governmental Entity indicates the probability
      of commencing any legal proceeding or taking any other action: (i) challenging
      or seeking to restrain or prohibit the consummation of the Merger; (ii) relating
      to the Merger and seeking to obtain from Acquirer or any of its Subsidiaries,
      or
      Target, any damages or other relief that would be material to Acquirer; (iii)
      seeking to prohibit or limit in any material respect Acquirer’s ability to vote,
      receive dividends with respect to or otherwise exercise ownership rights with
      respect to the stock of Target; or (iv) that would materially and adversely
      affect the right of Acquirer or Target to own the assets or operate the business
      of Target.

     

    (f)  No
      Other Litigation.
      There
      shall not be pending any legal proceeding: (i) challenging or seeking to
      restrain or prohibit the consummation of the Merger or any of the other
      transactions contemplated by this Agreement; (ii) relating to the Merger and
      seeking to obtain from Acquirer or any of its Subsidiaries, or Target, any
      damages or other relief that would be material to Acquirer; (iii) seeking to
      prohibit or limit in any material respect Acquirer’s ability to vote, receive
      dividends with respect to or otherwise exercise ownership rights with respect
      to
      any of Target Common Stock; or (iv) which would affect adversely the right
      of
      Acquirer or Target to own the assets or operate the business of
      Target.

     

    (g)  Opinion.
      Counsel
      for Target shall have delivered to Acquirer an opinion containing the opinions
      in substantially the form attached hereto as Exhibit
      A.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7.3  Additional
      Conditions to Obligations of Target.
      The
      obligations of Target to consummate and effect this Agreement and the
      transactions contemplated hereby shall be subject to the satisfaction at or
      prior to the Effective Time of each of the following conditions, any of which
      may be waived, in writing, by Target:

     

    (a)  Representations,
      Warranties and Covenants.
      The
      representations and warranties of Acquirer and Parent in this Agreement shall
      be
      true and correct in all respects on and as of the date of this Agreement and
      at
      and as of the Closing as though such representations and warranties were made
      on
      and as of such time (except for such representations and warranties that speak
      specifically as of the date hereof or as of another date, which shall be true
      and correct as of such date), disregarding for the purposes of such
      determination any “Material Adverse Effect” or other materiality qualifiers set
      forth in such representations and warranties, except for such failures of such
      representations and warranties to be so true and correct as could not,
      individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect on Acquirer or Parent.

     

    (b)  Performance
      of Obligations.
      Acquirer and Parent shall have performed and complied in all material respects
      with all covenants, obligations and conditions of this Agreement required to
      be
      performed and complied with by them as of the Closing.

     

    (c)  Certificate
      of Officers.
      Target
      shall have received a certificate executed on behalf of Acquirer and Parent
      by
      the chief executive officer and chief financial officer of Acquirer and Parent,
      respectively, certifying that the conditions set forth in Sections 7.3(a) and
      7.3(a) have been satisfied.

     

    8.  TERMINATION,
      AMENDMENT AND WAIVER.

     

    8.1  Termination.
      This
      Agreement may be terminated at any time prior to the Effective Time (with
      respect to Section 8.1(b) through Section 8.1(d), by written notice by the
      terminating party to the other party):

     

    (a)  by
      the
      mutual written consent of Acquirer, Parent and Target;

     

    (b)  by
      either
      Acquirer, Parent or Target if the Merger shall not have been registered in
      the
      Peruvian Public Registry by December 31, 2007, provided,
      however,
      that
      the right to terminate this Agreement under this Section 8.1(b) shall not be
      available to any party whose failure to fulfill any obligation under this
      Agreement has been the cause of or resulted in the failure of the Merger to
      occur on or before such date;

     

    (c)  by
      either
      Acquirer, Parent or Target if a court of competent jurisdiction or other
      Governmental Entity shall have issued a nonappealable final order, decree or
      ruling or taken any other action, in each case having the effect of permanently
      restraining, enjoining or otherwise prohibiting the Merger, unless the party
      relying on such order, decree or ruling or other action has not complied in
      all
      material respects with its obligations under this Agreement; or

     

    (d)  by
      Acquirer, Parent or Target, if there has been a breach of any representation,
      warranty, covenant or agreement on the part of the other party set forth in
      this
      Agreement, which breach (i) causes the conditions set forth in Section 7.1
      or
      7.2 (in the case of termination by Acquirer and Parent) or Section 7.1 or 7.3
      (in the case of termination by Target) not to be satisfied and (ii) shall not
      have been cured within ten (10) business days following receipt by the breaching
      party of written notice of such breach from the other party.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    8.2  Effect
      of Termination.
      In the
      event of termination of this Agreement as provided in Section 8.1, there shall
      be no liability or obligation on the part of Acquirer, Parent or Target, or
      their respective officers, directors, or stockholders, except to the extent
      that
      such termination results from the willful breach by a party of any of its
      representations, warranties or covenants set forth in this Agreement;
provided,
      however,
      that
      the provisions of Sections 6.3, 6.4, 6.7, and 10 shall remain in full force
      and
      effect and survive any termination of this Agreement.

     

    8.3  Amendment.
      This
      Agreement may be amended by the parties hereto, by action taken or authorized
      by
      their respective Boards of Directors. This Agreement may not be amended except
      by an instrument in writing signed on behalf of each of the parties
      hereto.

     

    8.4  Extension;
      Waiver.
      At any
      time prior to the Effective Time, the parties hereto, by action taken or
      authorized by their respective Boards of Directors, may, to the extent legally
      allowed: (i) extend the time for the performance of any of the obligations
      or
      other acts of the other parties hereto; (ii) waive any inaccuracies in the
      representations and warranties contained herein or in any document delivered
      pursuant hereto; and (iii) waive compliance with any of the agreements or
      conditions contained herein. Any agreement on the part of a party hereto to
      any
      such extension or waiver shall be valid only if set forth in a written
      instrument signed on behalf of such party.

     

    9.  INDEMNIFICATION.

     

    9.1  Indemnification.

     

    (a)  Survival
      of Warranties.
      All
      representations and warranties made by Acquirer, Parent or Target herein, or
      in
      any certificate, schedule or exhibit delivered pursuant hereto, shall survive
      the Closing and continue in full force and effect until the second anniversary
      of the Closing Date (the “Termination
      Date”).

     

    (b)  Indemnification
      by Target Stockholders.
      Subject
      to the limitations set forth in this Section 9, Target Stockholders will,
      severally and not jointly, indemnify and hold harmless Acquirer and Parent
      and
      their respective officers, directors, agents, attorneys and employees, and
      each
      person, if any, who controls or may control Acquirer or Parent within the
      meaning of the Securities Act (individually an “Acquirer
      Indemnified Person”
and
      collectively the “Acquirer
      Indemnified Persons”)
      from
      and against any and all Damages (as defined below) arising out of any
      misrepresentation or breach of or default in connection with any of the
      representations, warranties, covenants and agreements given or made by Target
      in
      this Agreement, the Target Disclosure Schedule or any exhibit or schedule to
      this Agreement (excluding any misrepresentations, breaches or defaults (if
      any)
      of which Acquirer or Parent has actual knowledge at the time of Closing) or
      arising out of any liabilities or other obligations of Target that were incurred
      prior to the Effective Date. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)  Indemnification
      by Acquirer.
      Subject
      to the limitations set forth in this Section 9, Acquirer hereby agrees to
      indemnify, defend and hold harmless Target, the Target Stockholders and their
      respective officers, directors, agents, attorneys and employees, and each person
      who controls or may control Target or such Target Stockholders (individually
      a
“Target
      Indemnified Person”
and
      collectively, the “Target
      Indemnified Persons”)
      from
      and against any and all Damages which arising out of any misrepresentation
      or
      breach of or default in connection with any of the representations, warranties,
      covenants and agreements given or made by Acquirer in this Agreement, the
      Acquirer Disclosure Schedule or any exhibit or schedule to this Agreement
      (excluding any misrepresentations, breaches or defaults (if any) of which Target
      has actual knowledge at the time of Closing).

     

    (d)  Threshold
      for Claims.
      The
      maximum aggregate liability of Target for claims by the Acquirer or Parent
      (whether for breach of contract, indemnity or otherwise) under this Agreement
      for breaches of representations, warranties and covenants shall not exceed
      100%
      of the aggregate Merger Consideration paid by Acquirer to Target. 

     

    For
      purposes of this Agreement, “Damages”
means
      any and all demands, claims, payments, obligations, actions or causes of action,
      assessments, losses, liabilities, damages (but excluding incidental, special,
      consequential, exemplary, punitive and similar damages or diminution in value),
      costs and expenses paid or incurred, including without limitation any legal
      or
      other expenses reasonably incurred in connection with investigating or defending
      any claims or actions and all amounts paid in settlement of claims or actions
      in
      accordance with Section 9 hereof.

     

    10.  GENERAL
      PROVISIONS.

     

    10.1  Notices.
      All
      notices and other communications hereunder shall be in writing and shall be
      deemed duly delivered: (i) upon receipt if delivered personally; (ii) three
      (3)
      business days after being mailed by registered or certified mail, postage
      prepaid, return receipt requested; (iii) one (1) business day after it is sent
      by commercial overnight courier service; or (iv) upon transmission if sent
      via
      facsimile with confirmation of receipt to the parties at the following address
      (or at such other address for a party as shall be specified upon like
      notice):

     

    (a)  if
      to
      Acquirer or Parent, to:

    Av.
      Canaval y Moreyra 380 of 402 

    San
      Isidro, Lima

    Peru

    Attention: Luis
      Goyzueta

    Telephone: +511-221-7365

    Facsimile: +511-221-7347

     

    and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    9440
      Little Santa Monica Blvd. 

    Suite
      401

    Beverly
      Hills, Ca 90210

    Attention: Steven
      Magami

    Telephone:  (310)
      402-5901

    Facsimile: (310)
      402-5947

    

     

     

    with
      a
      copy to:

     

    DLA
      Piper
      US LLP

    1251
      Avenue of the Americas

    New
      York,
      New York, 10020

    Attention:
      Daniel I. Goldberg, Esq.

    Fax: 212-884-8466

    Tel: 212-335-4966

     

    (b)  if
      to
      Target, to:

     

    Interpacific
      Oil SAC

    Calle
      Juno Mz. C Lt. 6B

    La
      Campina, Chorrillos

    Lima
      04,
      Perú

    Attention:
      Luis Goyzueta

    Alberto
      Pinto

    Fax: 

    Tel: 

    

    with
      a
      copy to:

     

    Muniz,
      Ramirez, Perez-Taiman & Luna-Victoria 

    Las
      Begonias 475 6to Piso

    Lima
      27,
      Perú

    Attention:
      Jorge Zuniga

    Fax:
      (51-1) 611-7000 

    Tel:
      (51-1) 611-7010

    

     

    (c)  if
      to
      Target Stockholders, to:

     

    Luis
      Goyzueta

    Av.
      La
      Merced 810

    Surco,
      Lima 33

    Perú

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Alberto
      Pinto

    Calle
      Bolívar 472-304

    Lima
      18,
      Perú

    

    Patrick
      Orlando

    Antonio
      Pezet 1506,

    San
      Isidro, Lima 27

    Perú

    

    with
      a
      copy to:

     

    Muniz,
      Ramirez, Perez-Taiman & Luna-Victoria 

    Las
      Begonias 475 6to Piso

    Lima
      27,
      Perú

    Attention:
      Jorge Zuniga

    Fax:
      (51-1) 611-7000 

    Tel:
      (51-1) 611-7010

     

     

    10.2  Definitions.
      In this
      Agreement any reference to any event, change, condition or effect being
“material”
with
      respect to any entity or group of entities means any material event, change,
      condition or effect related to the financial condition, properties, assets
      (including intangible assets), liabilities, business, operations or results
      of
      operations of such entity or group of entities. In this Agreement any reference
      to a “Material
      Adverse Effect”
with
      respect to any entity or group of entities means any event, change or effect
      that is materially adverse to the financial condition, properties, assets,
      liabilities, business, operations or results of operations of such entity and
      its subsidiaries, taken as a whole provided, that no event, changer or effect
      occurring as a result of the following shall be deemed, either alone or in
      combination, to constitute a Material Adverse Effect with respect to any party:
      (i) this Agreement, the transactions contemplated hereby or the announcement
      thereof, (ii) changes in general economic or political conditions or the
      securities markets in general (whether as a result of acts of terrorism, war
      (whether or not declared), armed conflicts or otherwise) or (iii) changes,
      after
      the date of this Agreement, in conditions generally applicable to businesses
      in
      the same or similar industries of Target including, without limitation, (A)
      changes in laws generally applicable to such businesses or industries or (B)
      changes in generally accepted accounting principles as applied in the United
      States on a consistent basis or their application. In this Agreement, any
      reference to Target’s “knowledge”
means
      the actual knowledge without independent investigation of Target’s officers and
      directors. In this Agreement, any reference to Acquirer’s and Parent’s
“knowledge”
means
      the actual knowledge without independent investigation of Acquirer’s and
      Parent’s officers and directors. In this Agreement, an entity shall be deemed to
      be a “Subsidiary”
of
      a
      party if such party directly or indirectly owns, beneficially or of record,
      at
      least 50% of the outstanding equity or financial interests of such
      entity.

     

    10.3  Counterparts.
      This
      Agreement may be executed in one or more counterparts, all of which shall be
      considered one and the same agreement and shall become effective when one or
      more counterparts have been signed by each of the parties and delivered to
      the
      other parties, it being understood that all parties need not sign the same
      counterpart.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    10.4  Entire
      Agreement; Nonassignability.
      This
      Agreement and the documents and instruments and other agreements specifically
      referred to herein or delivered pursuant hereto, including the exhibits and
      schedules hereto, including the Target Disclosure Schedule and the Acquirer
      Disclosure Schedule together constitute the entire agreement among the parties
      with respect to the subject matter hereof and supersede all prior agreements
      and
      understandings, both written and oral, among the parties with respect to the
      subject matter hereof including the letter of intent, dated May 11, 2007, by
      and
      among the parties to this Agreement.

     

    10.5  Severability.
      In the
      event that any provision of this Agreement or the application thereof becomes
      or
      is declared by a court of competent jurisdiction to be illegal, void or
      unenforceable, the remainder of this Agreement will continue in full force
      and
      effect and the application of such provision to other persons or circumstances
      will be interpreted so as reasonably to effect the intent of the parties hereto.
      The parties further agree to replace such void or unenforceable provision of
      this Agreement with a valid and enforceable provision that will achieve, to
      the
      extent possible, the economic, business and other purposes of such void or
      unenforceable provision.

     

    10.6  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of Peru applicable to parties residing in Peru, without regard applicable
      principles of conflicts of law. Each of the parties hereto irrevocably consents
      to the exclusive jurisdiction of any court located within Peru, in connection
      with any matter based upon or arising out of this Agreement or the matters
      contemplated hereby.

     

    10.7  Rules
      of Construction.
      The
      parties hereto agree that they have been represented by counsel during the
      negotiation, preparation and execution of this Agreement and, therefore, waive
      the application of any law, regulation, holding or rule of construction
      providing that ambiguities in an agreement or other document will be construed
      against the party drafting such agreement or document.

     

    10.8  Enforcement.
      Each of
      the parties hereto agrees that irreparable damage would occur and that the
      parties would not have any adequate remedy at law in the event that any of
      the
      provisions of this Agreement were not performed in accordance with their
      specific terms or were otherwise breached. It is accordingly agreed that the
      parties shall be entitled to an injunction or injunctions to prevent breaches
      of
      this Agreement and to enforce specifically the terms and provisions of this
      Agreement in any court located in Peru, this being in addition to any other
      remedy to which they are entitled at law or in equity. In addition, each of
      the
      parties hereto (a) consents to submit itself to the personal jurisdiction of
      any
      court located Peru in the event that any dispute arises out of this Agreement
      or
      any of the transactions contemplated by this Agreement, (b) agrees that it
      will
      not attempt to deny or defeat such personal jurisdiction by motion or other
      request for leave from any such court, (c) agrees that it will not bring any
      action relating to this Agreement or any of the transactions contemplated by
      this Agreement in any court other than a court sitting in Peru and (d) waives
      any right to trial by jury with respect to any claim or proceeding related
      to or
      arising out of this Agreement or any transaction contemplated by this
      Agreement.

     

    10.9  Amendment;
      Waiver.
      Any
      amendment or waiver of any of the terms or conditions of this Agreement must
      be
      in writing and must be duly executed by or on behalf of the party to be charged
      with such waiver. The failure of a party to exercise any of its rights hereunder
      or to insist upon strict adherence to any term or condition hereof on any one
      occasion shall not be construed as a waiver or deprive that party of the right
      thereafter to insist upon strict adherence to the terms and conditions of this
      Agreement at a later date. Further, no waiver of any of the terms and conditions
      of this Agreement shall be deemed to or shall constitute a waiver of any other
      term of condition hereof (whether or not similar).

     

    [Remainder
      of page intentionally left blank.]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, Acquirer, Parent, Target and Target Stockholders have caused
      this Agreement to be executed and delivered by each of them or their respective
      officers thereunto duly authorized, all as of the date first written
      above.

     

    
      	
              PURE
                BIOFUELS CORP.

            
	 
	 
	
              By:

            	
              /s/
                Steven Magami 

            
	 	
              Steven
                Magami

              President

            
	 	 
	 	 
	
              PURE
                BIOFUELS DEL PERU S.A.C.

            
	 
	 
	
              By:

            	
              /s/
                Luis Goyzueta 

            
	 	
              Luis
                Goyzueta

              Managing
                Director

            
	 	 
	 	 
	
              INTERPACIFIC
                OIL S.A.C.

            
	 
	 
	
              By:

            	
              /s/
                Luis Goyzueta 

            
	 	
              Luis
                Goyzueta

              Managing
                Director

            
	 	 
	 	 
	
              INTERPACIFIC
                OIL S.A.C.

            
	 
	 
	
              By:

            	
              /s/
                Alberto Pinto 

            
	 	
              Alberto
                Pinto

              Managing
                Director

            
	 	 
	 	 
	TARGET
              STOCKHOLDERS
	 
	
              /s/
                Luis Goyzueta 

            
	
              LUIS
                GOYZUETA, shareholder of Interpacific Oil S.A.C.

            
	 
	/s/ Alberto
                Pinto
	
              ALBERTO
                PINTO, shareholder of Interpacific Oil S.A.C.

            
	 
	/s/ Patrick
                Orlando
	
              PATRICK
                ORLANDO, shareholder of Interpacific Oil
                S.A.C.

            

    

    

    [Signature
      Page - Merger Agreement between Interpacific Oil S.A.C. and Pure Biofuels
      Corp.]EMPLOYMENT
      SEPARATION AND GENERAL RELEASE AGREEMENT

     

    This
      Employment Separation and General Release Agreement (this “Separation
      Agreement”)
      is
      entered into this seventh day of December, 2007, by and between Nand Gangwani,
      an individual (“Individual”),
      and
      Napster, Inc., a Delaware corporation (the “Company”).

     

    WHEREAS,
      Individual is employed as the Vice President and Chief Financial Officer of
      the
      Company; and

     

    WHEREAS,
      Individual and the Company have mutually agreed to terminate Individual’s
      employment relationship with the Company effective as of December 31, 2007
      (the
“Separation Date”) upon the terms set forth herein;

     

    NOW,
      THEREFORE,
      in
      consideration of the covenants undertaken and the releases contained in this
      Separation Agreement, Individual and the Company agree as follows:

     

    I.
      Resignation.
      Individual’s
      employment by the Company will terminate on the Separation Date. Individual
      hereby irrevocably resigns as an officer, director, employee, member, manager
      and in any other capacity with the Company and each of its affiliates effective
      as of the Separation Date and that, as of the Separation Date, he will hold
      no
      such position with the Company or any of its affiliates. The Company confirms
      that it and each of its affiliates accepts such resignation effective as of
      the
      Separation Date. Individual
      agrees that he has no consulting relationship with the Company or any of its
      affiliates. Individual waives any right or claim to reinstatement as an employee
      of the Company and any affiliate of the Company (if any) by which he is or
      was
      previously employed. Individual acknowledges and agrees that, as of the date
      hereof, he has received all compensation to which he is entitled (including,
      but
      not limited to, any overtime, bonus, commissions, or other wages), reimbursement
      of expenses, and usual benefits (other than his base wages for the current
      pay
      period and his accrued and heretofore unpaid vacation), that he will not be
      entitled to any severance in connection with the termination of his employment
      except as expressly set forth in this Separation Agreement, and that all
      payments due to Individual from the Company and its affiliates after the
      Separation Date shall be determined under this Separation Agreement.
      Until
      the Separation Date, the Company shall continue to pay Individual a base salary
      at the rate currently in effect, but Individual shall not be entitled to any
      other compensation. Individual will also be entitled to reimbursement by the
      Company for his reasonable out-of-pocket expenses through the Separation Date,
      subject to the Company’s current expense reimbursement policies.

     

    II.
      Termination
      of Employment Agreement.
      Effective as of the Separation Date, that certain employment agreement, dated
      as
      of January 29, 2004, by and between Individual and the Company, as amended
      by
      that certain agreement, dated as of November 8, 2006, by and between Individual
      and the Company, is hereby terminated in its entirety.

     

    III.
      Severance.
      The
      Company has granted restricted stock awards to Individual, a portion of which
      awards are outstanding and unvested as of the Separation Date (the “Restricted
      Stock Awards”).
      The
      Restricted Stock Awards shall become fully vested as to 56,250 shares of Company
      common stock subject to such awards (the portion otherwise scheduled to vest
      on
      June 1, 2008) as of the later of (1) the Separation Date, or (2) the date the
      Release set forth in Section V hereof becomes irrevocable by Individual under
      the Age Discrimination in Employment Act of 1967. Any portion of the Restricted
      Stock Awards that do not so vest shall terminate on the Separation Date and
      Individual shall have no further rights with respect thereto or in respect
      thereof. On the Separation Date, the Company shall also pay Individual his
      accrued and theretofore unpaid wages and vacation time.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    IV.
      Stock
      Options.
For
      purposes of clarity, any stock options granted by the Company to Individual
      that
      are not vested on the Separation Date shall terminate on the Separation Date
      and
      any stock options granted by the Company to Individual that are vested on the
      Separation Date shall continue to be exercisable by Individual in accordance
      with the terms and conditions of the applicable awards only for the limited
      post-termination of employment exercise period applicable to those awards as
      determined under the applicable award agreement and plan under which the award
      was granted.

     

    V.
      Release.
      Individual, on behalf of himself, his descendants, dependents, heirs, executors,
      administrators, assigns, and successors, and each of them, hereby covenants
      not
      to sue and fully releases and discharges the Company and each of its parents,
      subsidiaries and affiliates, past and present, as well as its and their
      trustees, directors, officers, members, managers, partners, agents, attorneys,
      insurers, employees, stockholders, representatives, assigns, and successors,
      past and present, and each of them, hereinafter together and collectively
      referred to as the “Releasees,”
with
      respect to and from any and all claims, wages, demands, rights, liens,
      agreements or contracts (written or oral), covenants, actions, suits, causes
      of
      action, obligations, debts, costs, expenses, attorneys’ fees, damages,
      judgments, orders and liabilities of whatever kind or nature in law, equity
      or
      otherwise, whether now known or unknown, suspected or unsuspected, and whether
      or not concealed or hidden (each, a “Claim”),
      which
      he now owns or holds or he has at any time heretofore owned or held or may
      in
      the future hold as against any of said Releasees (including, without limitation,
      any Claim arising out of or in any way connected with Individual’s service as an
      officer, director, employee, member or manager of any Releasee, Individual’s
      separation from his position as an officer, director, employee, manager and/or
      member, as applicable, of any Releasee, or any other transactions, occurrences,
      acts or omissions or any loss, damage or injury whatever), whether known or
      unknown, suspected or unsuspected, resulting from any act or omission by or
      on
      the part of said Releasees, or any of them, committed or omitted prior to the
      date of this Release Agreement including, without limiting the generality of
      the
      foregoing, any Claim under Title VII of the Civil Rights Act of 1964, the Age
      Discrimination in Employment Act of 1967, the Americans with Disabilities Act,
      the Family and Medical Leave Act of 1993, the California Fair Employment and
      Housing Act, the California Family Rights Act, or any other federal, state
      or
      local law, regulation, or ordinance, or any Claim for severance pay, bonus,
      sick
      leave, holiday pay, vacation pay, life insurance, health or medical insurance
      or
      any other fringe benefit, workers’ compensation or disability (the “Release”);
      provided, however, that the foregoing release does not apply to any obligation
      of the Company to Individual pursuant to any of the following: (1) any right
      to
      indemnification that Individual may have pursuant to the Bylaws of the Company,
      its Certificate of Incorporation or under any written indemnification agreement
      with the Company (or any corresponding provision of any subsidiary or affiliate
      of the Company) or applicable state law with respect to any loss, damages or
      expenses (including but not limited to attorneys’ fees to the extent otherwise
      provided) that Individual may in the future incur with respect to his service
      as
      an employee, officer or director of the Company or any of its subsidiaries
      or
      affiliates; (2) with respect to any rights that Individual may have to insurance
      coverage for such losses, damages or expenses under any Company (or subsidiary
      or affiliate) directors and officers liability insurance policy; (3) any rights
      to continued medical or dental coverage that Individual may have under COBRA;
      or
      (4) any rights to payment of benefits that Individual may have under a
      retirement plan sponsored or maintained by the Company that is intended to
      qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended.
      In addition, this Release does not cover any Claim that cannot be so released
      as
      a matter of applicable law. Individual acknowledges and agrees that he has
      received any and all leave and other benefits that he has been and is entitled
      to pursuant to the Family and Medical Leave Act of 1993.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    VI.
      1542
      Waiver. It
      is the
      intention of Individual in executing this Separation Agreement that the same
      shall be effective as a bar to each and every Claim hereinabove specified.
      In
furtherance
      of this
      intention, Individual hereby expressly waives any and all rights and benefits
      conferred upon his by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL
      CODE and expressly consents that this Separation Agreement (including, without
      limitation, the Release set forth above) shall be given full force and effect
      according to each and all of its express terms and provisions, including those
      related to unknown and unsuspected Claims, if any, as well as those relating
      to
      any other Claims hereinabove specified. SECTION 1542 provides:

     

    “A
      GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
      OR
      SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
      WHICH
      IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
      WITH
      THE DEBTOR.”

     

    Individual
      acknowledges that he may hereafter discover Claims or facts in addition to
      or
      different from those which Individual now knows or believes to exist with
      respect to the subject matter of this Separation Agreement and which, if known
      or suspected at the time of executing this Separation Agreement, may have
      materially affected this settlement. Nevertheless, Individual hereby waives
      any
      right, Claim or cause of action that might arise as a result of such different
      or additional Claims or facts. Individual acknowledges that he understands
      the
      significance and consequences of the foregoing Release and such specific waiver
      of SECTION 1542.

     

    VII.
      ADEA
      Waiver.
      Individual expressly acknowledges and agrees that by entering into this
      Separation Agreement, he is waiving any and all rights or claims that he may
      have arising under the Age Discrimination in Employment Act of 1967, as amended
      (“ADEA”),
      which
      have arisen on or before the date of execution of this Separation Agreement.
      Individual further expressly acknowledges and agrees that:

     

    (a)
      In
      return
      for this Separation Agreement, he will receive consideration beyond that which
      he was already entitled to receive before entering into this Separation
      Agreement;

     

    (b)
      He
      is
      hereby advised in writing by this Separation Agreement to consult with an
      attorney before signing this Separation Agreement;

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (c)
      He
      was
      given a copy of this Separation Agreement on December 7, 2007 and informed
      that
      he had twenty-one (21) days within which to consider the Separation Agreement
      and that if he wished to execute this Separation Agreement prior to expiration
      of such 21-day period, he should execute the Acknowledgement and Waiver attached
      hereto as Exhibit
      A;
      

     

    (d)
      Nothing
      in this Separation Agreement prevents or precludes Individual from challenging
      or seeking a determination in good faith of the validity of this waiver under
      the ADEA, nor does it impose any condition precedent, penalties or costs from
      doing so, unless specifically authorized by federal law; and

     

    (e)
      He
      was
      informed that he has seven (7) days following the date of execution of this
      Separation Agreement in which to revoke this Separation Agreement, and this
      Separation Agreement will become null and void if Individual elects revocation
      during that time. Any revocation must be in writing and must be received by
      the
      Company during the seven-day revocation period. In the event that Individual
      exercises his right of revocation, neither the Company nor Individual will
      have
      any obligations under this Separation Agreement.

     

    VIII.
      No
      Transferred Claims.
      Individual warrants and represents that Individual has not heretofore assigned
      or transferred to any person not a party to this Separation Agreement any
      released matter or any part or portion thereof and he shall defend, indemnify
      and hold the Company and each of its affiliates harmless from and against any
      claim (including the payment of attorneys’ fees and costs actually incurred
      whether or not litigation is commenced) based on or in connection with or
      arising out of any such assignment or transfer made, purported or
      claimed.

     

    IX.
      Restrictive
      Covenants.

     

    A.
      Anti-Solicitation.
      Individual promises and agrees that, for a period of one (1) year following
      the
      Separation Date, he will not influence or attempt to influence customers,
      vendors, or business partners of the Company or any of its subsidiaries, either
      directly or indirectly, to divert their business from the Company or any of
      its
      subsidiaries to any individual, partnership, firm, corporation or other entity
      then in competition with the business of the Company or any
      subsidiary.

     

    B.Solicitation
      of Employees.
      Individual promises and agrees that, for a period of one (1) year following
      the
      Separation Date, he will not directly or indirectly solicit any employee of
      the
      Company or any of its subsidiaries to work for any business, individual,
      partnership, firm, corporation, or other entity then in competition with the
      business of the Company or any subsidiary.

     

    C.
      Confidentiality.
      Individual promises and agrees that he will not at any time after the Separation
      Date, unless compelled by lawful process, disclose or use for his own benefit
      or
      purposes or the benefit or purposes of any other person, firm, partnership,
      joint venture, association, corporation or other business organization, entity
      or enterprise (other than the Company and any of its subsidiaries or
      affiliates), any trade secrets, or other confidential data or information
      relating to customers, design programs, costs, marketing, sales activities,
      promotion, credit and financial data, financing methods, or plans of the Company
      or any subsidiary or affiliate of the Company; provided
      that the
      foregoing shall not apply to information which is not unique to the Company
      (or
      subsidiary or affiliate, as applicable) or which is generally known to the
      industry or the public other than as a result of Individual’s breach of this
      covenant. Individual agrees that, to the extent he has not already done so,
      he
      will return to the Company immediately all memoranda, books, papers, plans,
      information, letters and other data, and all copies thereof or therefrom, in
      any
      way relating to the business of the Company or any subsidiary or affiliate
      of
      the Company. Individual further agrees that he has not retained and will not
      retain or use for his account at any time any trade names, trademark or other
      proprietary business designation used or owned in connection with the business
      of the Company or any subsidiary or affiliate of the Company.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    D.
      Non-Disparagement.
      Individual agrees that he will not at any time after the date hereof (i)
      directly or indirectly, make or ratify any statement, public or private, oral
      or
      written, to any person that disparages, either professionally or personally,
      the
      Company, any of its subsidiaries or any of their respective directors, officers,
      employees, stockholders, attorneys, accountants, insurers, agents,
      representatives, assigns, successors, or products, past and present, and each
      of
      them, or (ii) make any statement or engage in any conduct that has the purpose
      or effect of disrupting the business of the Company or any of its subsidiaries.
      The Company agrees that it will not at any time after the date hereof, directly
      or indirectly, make or ratify any statement, public or private, oral or written,
      to any person that disparages, either professionally or personally, Individual.
      Nothing herein shall in any way prohibit either party from disclosing such
      information in a truthful manner as may be required by law, or by judicial
      or
      administrative process or order or the rules of any securities exchange or
      similar self-regulatory organization applicable to such party; provided,
      however, upon receiving any subpoena or order from a court or arbitrator
      requiring such party to testify regarding Individual’s employment with the
      Company or any of its subsidiaries, such party shall provide a copy of such
      subpoena or order to the other party within 72 hours.

     

    E.
      Injunctive
      Relief.
      Individual expressly agrees that the Company will or would suffer irreparable
      injury if he were to breach any of the provisions of this Section IX and that
      the Company would by reason of such conduct be entitled, in addition to any
      other remedies, to injunctive relief. Individual consents and stipulates to
      the
      entry of such injunctive relief prohibiting his from engaging in conduct which
      violates any of the provisions of this Section IX.

     

    X.
      Miscellaneous

     

    A.
      Successors.

     

    (i) This
      Separation Agreement is personal to Individual and shall not, without the prior
      written consent of the Company, be assignable by Individual.

     

    (ii) This
      Separation Agreement shall inure to the benefit of and be binding upon the
      Company and its respective successors and assigns and any such successor or
      assignee shall be deemed substituted for the Company under the terms of this
      Separation Agreement for all purposes. As used herein, “successor” and
“assignee” shall include any person, firm, corporation or other business entity
      which at any time, whether by purchase, merger, acquisition of assets, or
      otherwise, directly or indirectly acquires the ownership of the Company,
      acquires all or substantially all of the Company’s assets, or to which the
      Company assigns this Separation Agreement by operation of law or
      otherwise.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    B.
      Waiver.
      No
      waiver
      of any breach of any term or provision of this Separation Agreement shall be
      construed to be, nor shall be, a waiver of any other breach of this Separation
      Agreement. No waiver shall be binding unless in writing and signed by the party
      waiving the breach.

     

    C.
      Modification.
      This
      Separation Agreement shall not be modified by any oral agreement, either express
      or implied, and all modifications hereof shall be in writing and signed by
      the
      parties hereto.

     

    D.
      Complete
      Agreement.
      This
      Separation Agreement embodies the entire agreement of the parties hereto
      respecting the matters within its scope. This Separation Agreement supersedes
      all prior agreements of the parties hereto on the subject matter hereof. Any
      prior negotiations, correspondence, agreements, proposals, or understandings
      relating to the subject matter hereof shall be deemed to be merged into this
      Separation Agreement and to the extent inconsistent herewith, such negotiations,
      correspondence, agreements, proposals, or understandings shall be deemed to
      be
      of no force or effect. There are no representations, warranties, or agreements,
      whether express or implied, or oral or written, with respect to the subject
      matter hereof, except as set forth herein. Notwithstanding the foregoing, the
      Company’s rights under any confidentiality, trade secret, proprietary
      information, inventions or similar agreement to which Individual was a party
      or
      otherwise bound are not integrated into this Agreement and such rights of the
      Company shall continue in effect.

     

    E.
      Severability.
      In
      the
      event that a court of competent jurisdiction determines that any portion of
      this
      Separation Agreement is in violation of any statute or public policy, then
      only
      the portions of this Separation Agreement which violate such statute or public
      policy shall be stricken, and all portions of this Separation Agreement which
      do
      not violate any statute or public policy shall continue in full force and
      effect. Furthermore, any court order striking any portion of this Separation
      Agreement shall modify the stricken terms as narrowly as possible to give as
      much effect as possible to the intentions of the parties under this Separation
      Agreement.

     

    F.
      Governing
      Law.
      This
      Separation Agreement and the legal relations hereby created between the parties
      hereto shall be governed by and construed under and in accordance with the
      internal laws of the State of California, without regard to conflicts of laws
      principles thereof.

     

    G.
      Legal
      Counsel; Mutual Drafting.
      Each
      party recognizes that this is a legally binding contract and acknowledges and
      agrees that they have had the opportunity to consult with legal counsel of
      their
      choice. Each party has cooperated in the drafting, negotiation and preparation
      of this Separation Agreement. Hence, in any construction to be made of this
      Separation Agreement, the same shall not be construed against either party
      on
      the basis of that party being the drafter of such language. Individual agrees
      and acknowledges that he has read and understands this Separation Agreement,
      is
      entering into it freely and voluntarily, and has been advised to seek counsel
      prior to entering into this Separation Agreement, has had ample opportunity
      to
      do so.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    H.
      Notices.
      All
      notices under this Separation Agreement shall be in writing and shall be either
      personally delivered or mailed postage prepaid, by certified mail, return
      receipt requested:

     

    (a) if
      to the
      Company:

     

    Napster,
      Inc.

    Attention:
      Chief Executive Officer

    9044
      Melrose Ave. 

    Los
      Angeles, CA 90069 

     

    with
      a
      copy to:

     

    Napster,
      Inc.

    Attention:
      General Counsel 

    9044
      Melrose Ave. 

    Los
      Angeles, CA 90069 

     

    (b) if
      to
      Individual:

     

    At
      the
      address on file with the Company

     

    Notice
      shall be effective when personally delivered, or five (5) business days after
      being so mailed. Any party may change its address for purposes of giving future
      notices pursuant to this Agreement by notifying the other party in writing
      of
      such change in address, such notice to be delivered or mailed in accordance
      with
      the foregoing.

     

    I.
      Counterparts.
      This
      Separation Agreement may be executed in any number of counterparts, each of
      which shall be deemed an original and all of which together shall constitute
      one
      and the same instrument.

     

    J.
      Arbitration.
      Any
      controversy arising out of or relating to this Separation Agreement, its
      enforcement or interpretation, or because of an alleged breach, default, or
      misrepresentation in connection with any of its provisions, or any other
      controversy arising out of Individual’s employment or the termination thereof,
      including, but not limited to, any state or federal statutory claims, shall
      be
      submitted to arbitration in Los Angeles County, California, before a sole
      arbitrator selected from Judicial Arbitration and Mediation Services, Inc.,
      Los
      Angeles County, California, or its successor (“JAMS”),
      or if
      JAMS is no longer able to supply the arbitrator, such arbitrator shall be
      selected from the American Arbitration Association, and shall be conducted
      in
      accordance with the provisions of California Code of Civil Procedure §§ 1280 et
      seq. as the exclusive forum for the resolution of such dispute. Pursuant to
      California Code of Civil Procedure § 1281.8, provisional injunctive relief may,
      but need not, be sought by either party to this Separation Agreement in a court
      of law while arbitration proceedings are pending, and any provisional injunctive
      relief granted by such court shall remain effective until the matter is finally
      determined by the Arbitrator. Final resolution of any dispute through
      arbitration may include any remedy or relief which the Arbitrator deems just
      and
      equitable, including any and all remedies provided by applicable state or
      federal statutes. At the conclusion of the arbitration, the Arbitrator shall
      issue a written decision that sets forth the essential findings and conclusions
      upon which the Arbitrator’s award or decision is based. Any award or relief
      granted by the Arbitrator hereunder shall be final and binding on the parties
      hereto and may be enforced by any court of competent jurisdiction. The parties
      acknowledge and agree that they are hereby waiving any rights to trial by jury
      in any action, proceeding or counterclaim brought by either of the parties
      against the other in connection with any matter whatsoever arising out of or
      in
      any way connected with this Separation Agreement or Individual’s employment. The
      parties agree that (i) the Company shall be responsible for payment of the
      forum
      costs of any arbitration hereunder, including the Arbitrator’s fee, in
      connection with any proceeding to enforce the terms of this Separation
      Agreement, and (ii) the Arbitrator shall have discretion, if the Arbitrator
      determines it to be appropriate, to award reasonable attorneys’ fees and costs
      to the party prevailing in any such proceeding.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    K.
      Number
      and Gender.
      Where
      the context requires, the singular shall include the plural, the plural shall
      include the singular, and any gender shall include all other
      genders.

     

    L.
      Headings.
      The
      section headings in this Separation Agreement are for the purpose of convenience
      only and shall not limit or otherwise affect any of the terms
      hereof.

     

    M.
      Taxes.
      The
      Company has the right to withhold from any payment hereunder or under any other
      agreement between the Company and Individual the amount required by law to
      be
      withheld with respect to such payment or other benefits provided to Individual.
      Other than as to such withholding right, Individual shall be solely responsible
      for any taxes due as a result of the payments and benefits received by
      Individual contemplated by this Separation Agreement.

     

    [Remainder
      of page intentionally left blank.]

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    I
      have
      read the foregoing Separation Agreement and I accept and agree to the provisions
      it contains and hereby execute it voluntarily with full understanding of its
      consequences.

     

    EXECUTED
      this 7th day of December, 2007, at Los Angeles County, California.

     

    
      	 	
              “Individual”

            
	 	 
	 	 
	 	
              /s/
                Nand Gangwaini

            
	 	
              Nand
                Gangwani

            

    

    

     

    EXECUTED
      this Seventh day of December, 2007, at Los Angeles County,
      California.

     

     

     

    
       

      
        	 	“Company”
	 	 
	 	
                Napster,
                  Inc.,

                a
                  Delaware corporation

              
	 	 
	 	 
	 	
                /s/
                  Wm.
                  Christopher Gorog 

              
	 	
                By: Chris
                  Gorog

              
	 	Its:  Chairman
                and CEO

      

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

    EXHIBIT
      A

     

    ACKNOWLEDGEMENT
      AND WAIVER

     

    I,
      Nand
      Gangwani, hereby acknowledge that I was given 21 days to consider the foregoing
      Employment Separation and General Release Agreement and voluntarily chose to
      sign the Employment Separation and General Release Agreement prior to the
      expiration of the 21-day period.

     

    I
      declare
      under penalty of perjury under the laws of the state of California, that the
      foregoing is true and correct.

     

    EXECUTED
      this Seventh day of December, 2007, at Los Angeles County,
      California.

     

     

    
      	 	
              /s/
                Nand Gangwaini

            
	 	
              Nand
                Gangwani

            

    

    
 

    
      
        
        

      

      
        A-1

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