Document:

Exhibit 10.3

 

FORM OF CHANGE
IN CONTROL AGREEMENT

 

THIS AGREEMENT, dated as of
the 10th day of March, 2008, is made by and between Red Robin
Gourmet Burgers, Inc., a Delaware corporation (the “Company”) and
                              
(the “Executive”).

 

WHEREAS, the Company
recognizes that it is difficult to attract and retain highly qualified
executives unless a certain degree of security can be offered to such
individuals against organizational and personnel changes which frequently
follow changes in control of a corporation; and

 

WHEREAS, even rumors of
acquisitions or mergers may cause executives to consider major career changes
in an effort to assure financial security for themselves and their families;
and

 

WHEREAS, the Company desires
to assure continuity of management and fair treatment of its executives in the
event of a Change in Control (as defined below) and to allow them to make
critical career decisions without undue time pressure and financial
uncertainty, thereby increasing their willingness to remain with the Company
notwithstanding the outcome of a possible Change in Control transaction; and

 

WHEREAS, the Company
recognizes that its executives will be involved in evaluating or negotiating
any offers, proposals or other transactions which could result in Changes in
Control of the Company and believes that it is in the best interest of the
Company and its stockholders for such executives to be in a position, free from
personal financial and employment considerations, to be able to assess objectively
and pursue aggressively the interests of the Company’s stockholders in making
these evaluations and carrying on such negotiations; and

 

WHEREAS, the Board of
Directors (the “Board”) of the
Company believes it is essential to provide Executive with compensation
arrangements upon a Change in Control that provide Executive with individual
financial security and that are competitive with those of other corporations,
and in order to accomplish these objectives, the Board has caused the Company
to enter into this Agreement.

 

NOW THEREFORE, the parties,
for good and valuable consideration and intending to be legally bound, agree as
follows:

 

1.             Operation and Term of Agreement.  This Agreement shall be effective as of the
date first set forth above.  This Agreement
may be terminated by the Company upon 24 months’ advance written notice to
Executive; provided, however, that after a Change in Control of
the Company during the term of this Agreement, this Agreement shall remain in
effect until all of the obligations of the parties under the Agreement are
satisfied and the Protection Period has expired.  Prior to a Change in Control, this Agreement
shall immediately terminate upon termination of Executive’s employment or upon
Executive’s ceasing to be an officer of the Company.

 

2.             Certain Definitions.  For purposes of this Agreement, the following
words and phrases shall have the following meanings:

 

 

(a)           “Cause” means: (i) Executive’s
continual or deliberate neglect in the performance of Executive’s material duties;
(ii) Executive’s failure to devote substantially all of Executive’s
working time to the business of the Company and its subsidiaries (other than as
expressly permitted in a written employment agreement between the Company and
Executive); (iii) Executive’s willful failure to follow the lawful
directives of the Company’s Chief Executive Officer or Executive’s immediate
supervisor in any material respect; (iv) Executive’s engaging willfully in
misconduct in connection with the performance of any of Executive’s duties,
including, without limitation, falsifying or attempting to falsify documents,
books or records of the Company or its subsidiaries, misappropriating or
attempting to misappropriate funds or other property, or securing or attempting
to secure any personal profit in connection with any transaction entered into
on behalf of the Company or its subsidiaries; (v) the violation by
Executive, in any material respect, of any policy or of any code or standard of
behavior or conduct generally applicable to employees of the Company or its
subsidiaries; (vi) Executive’s breach of the material provisions of this
Agreement or any other non-competition, non-interference, non-disclosure,
confidentiality or other similar agreement executed by Executive with the
Company or any of its subsidiaries or other active disloyalty to the Company or
any of its subsidiaries (including, without limitation, aiding a competitor or
unauthorized disclosure of confidential information); or (vii) Executive’s
engaging in conduct which is reasonably likely to result in material injury to
the reputation of the Company or any of its subsidiaries, including, without
limitation, commission of a felony, fraud, embezzlement or other crime
involving moral turpitude, or sexual harassment.

 

(b)           “Change in Control” means:

 

(i)            The acquisition by
any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act (a “Person”))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of more than 50% or more of either (1) the
then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the
combined voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided,
however, that, for purposes of this definition, the following
acquisitions shall not constitute a Change in Control; (A) any acquisition
directly from the Company, (B) any acquisition by the Company, (C) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any affiliate of the Company or a successor, or (D) any
acquisition by any entity pursuant to a transaction that complies with
subsections (iii)(A), (B) and (C) below;

 

(ii)           A majority of the
individuals who serve on the Board as of the date hereof (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least two-thirds of the directors then comprising the
Incumbent Board (including for these purposes, the new members whose election
or nomination was so approved, without counting the member and his predecessor
twice) shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest 

 

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with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board;

 

(iii)          Consummation of a
reorganization, merger, statutory share exchange or consolidation or similar
corporate transaction involving the Company or any of its Subsidiaries, a sale
or other disposition of all or substantially all of the assets of the Company,
or the acquisition of assets or stock of another entity by the Company or any
of its Subsidiaries (each, a “Business
Combination”), in each case unless, following such Business
Combination, (A) all or substantially all of the individuals and entities
that were the beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such
transaction, owns the Company or all or substantially all of the Company’s
assets directly or through one or more subsidiaries (a “Parent”)) in substantially the same
proportions as their ownership immediately prior to such Business Combination
of the Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any entity
resulting from such Business Combination or a Parent or any employee benefit
plan (or related trust) of the Company or such entity resulting from such
Business Combination or Parent) beneficially owns, directly or indirectly, more
than 50% of, respectively, the then-outstanding shares of common stock of the
entity resulting from such Business Combination or the combined voting power of
the then-outstanding voting securities of such entity, except to the extent
that the ownership in excess of more than 50% existed prior to the Business
Combination, and (C) at least a majority of the members of the board of
directors or trustees of the entity resulting from such Business Combination or
a Parent were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or

 

(iv)          Approval by the
stockholders of the Company of a complete liquidation or dissolution of the
Company.

 

(c)           “Change in Control Date” shall be any date
during the term of this Agreement on which a Change in Control occurs.  Anything in this Agreement to the contrary
notwithstanding, if Executive’s employment or status as an officer with the
Company is terminated within six (6) months before the date on which a
Change in Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken steps
reasonably calculated or intended to effect a Change in Control or (ii) otherwise
arose in connection with or anticipation of a Change in Control, then for all
purposes of this Agreement the “Change in Control Date” shall mean the date
immediately before the date of such termination.

 

(d)           “Code” shall mean the Internal Revenue Code
of 1986, as amended.

 

(e)           “Disability” means a “permanent and total
disability” within the meaning of Section 22(e)(3) of the Code or as
otherwise determined by the Board.  The
Company reserves the right, in good faith, to make the determination of
disability under this Agreement based upon 

 

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information
supplied by Executive and/or his medical personnel, as well as information from
medical personnel (or others) selected by the Company or its insurers.

 

(f)            “Good Reason” means the occurrence of any
of the following after the applicable Change in Control: (i) a reduction
in Executive’s compensation; (ii) a relocation of the Company’s
headquarters to a location more than twenty (20) miles from the location of the
Company’s headquarters immediately prior to the Change in Control Date; (iii) a
significant reduction in the then-effective responsibilities of Executive
without Executive’s prior written consent (for this purpose, if the Company ceases to be a
publicly-traded corporation, Executive will not be deemed to have suffered such
a reduction in the nature and scope of his responsibilities solely because of
the change in the nature and scope thereof resulting from the Company no longer
being publicly-traded); or (iv) any failure by the Company to obtain
the assumption of the obligations contained in this Agreement by any successor
as contemplated in Section 11(c) of this Agreement; provided that
Executive gives written notice to the Company 
of the existence of such a condition within ninety (90) days of the
initial existence of the condition and the Company has at least thirty (30)
days from the date when such notice is provided to cure the condition without
being required to make payments under this Agreement.

 

(g)           “Protection Period” means the period beginning
on the Change in Control Date and ending on the last day of the 18-month period
following the Change in Control Date.

 

(h)           “Subsidiary” means a company 50 percent or
more of the voting securities of which are owned, directly or indirectly, by
the Company.

 

3.             Vesting Upon Change in Control.  If, during the Protection Period, Executive’s
employment is terminated by the Company other than for Cause or Disability or
other than as a result of Executive’s death or if Executive terminates his
employment for Good Reason,  any and all
Common Shares (as defined in Section 4(c)), options, restricted shares or
other forms of securities issued by the Company and beneficially owned by
Executive (whether granted before or after the date of this Agreement) that are
unvested, restricted, or subject to any similar restriction that would
otherwise require continued employment by Executive beyond the Change in
Control Date in order to be vested in the hands of Executive shall vest
automatically and become exercisable, or such restrictions shall lapse.

 

4.             Benefits Upon Termination Within a Protection Period.  If, during the Protection Period, Executive’s
employment is terminated by the Company other than for Cause or Disability or
other than as a result of Executive’s death or if Executive terminates his
employment for Good Reason, the Company shall, subject to Sections 7 and 8,
make the following payments to Executive:

 

(a)           All earned and
determinable, but unpaid, wages and all earned and determinable, but unused,
vacation through the date of Executive’s termination shall be paid to Executive
in a lump sum in cash within ten (10) days after the termination of
Executive’s employment;

 

(b)           A severance amount
equal to one times Executive’s “Annual Compensation” shall be paid to Executive
within ten (10) days after the termination of 

 

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Executive’s
employment, to the extent such amount is less than or equal to two times the
lesser of (i) the sum of Executive’s Annual Compensation during the year
prior to the year that includes the effective date of termination, or (ii) the
maximum amount that may be taken into account under a qualified plan pursuant
to Section 401(a)(17) of the Code ($230,000 in 2008) (“Initial Amount”).  To the extent that the severance amount
pursuant to this Section 4(b) exceeds the Initial Amount, the
severance amount in excess of the Initial Amount shall be paid to Executive on the date that is the earliest of 6 months
after Executive’s “separation from service” within the meaning of IRC Section 409A
(a “Separation from Service”),
Executive’s death, or such other date as will not result in such payment being
subject to additional tax under Section 409A of the Code.  For purposes of this Section 4, “Annual Compensation” shall be an amount
equal to the sum of (i) Executive’s annual base salary from the Company
and its Subsidiaries (including scheduled base salary increases or increases
that are budgeted and approved either by the Compensation Committee of the Board
of Directors or by the Board of Directors of the Company in advance of the
Change in Control Date), annualized for any partial year, in effect immediately
prior to the Change in Control Date; and (ii) the annual bonus amount
earned by Executive for performance in the last completed calendar year prior
to the Change in Control Date for which bonuses have been paid or are payable
(which annual bonus may be in the aggregate if Executive has earned more than
one bonus payment for such calendar year);

 

(c)           Upon surrender by
Executive (which surrender shall be at the sole option of Executive) of his
outstanding options to purchase common shares of the Company (“Common Shares”) granted to Executive by
the Company (the “Outstanding Options”),
an amount in respect of each Outstanding Option (whether vested or not) equal
to the difference between the exercise price of such Outstanding Option and the
fair market value of the Common Shares at the time of such termination (but not
less than the closing price for the Common Shares on NASDAQ, or such other
national stock exchange on which such shares may be listed, on the last trading
day such shares traded prior to the date of termination); and

 

(d)           Upon Executive’s
timely election of continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”),
the Company shall pay, on Executive’s behalf, the portion of premiums of
Executive’s group health insurance, including coverage for your eligible
dependents, that the Company paid immediately prior to the date of termination
(“COBRA Payments”) for the period
that you are entitled to coverage under COBRA, but not to exceed twelve months
(“COBRA Period”).  The Company will pay such COBRA Payments for
Executive’s eligible dependents only for coverage for which those dependents
were enrolled immediately prior to the Date of Termination.  Executive will continue to be required to pay
that portion of the premium of Executive’s health coverage, including coverage
for Executive’s eligible dependents, that Executive was required to pay as an
active employee immediately prior to the date of termination.  Within 30 days following the end of the COBRA
Period, the Company shall pay to Executive in a lump sum an amount equal to the
product of (x) the amount of the COBRA payment paid on Executive’s behalf
for the final month of the COBRA Period and (y) the number of months by
which the Cobra Period was less than twelve.

 

5.             Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or
limit Executive’s continuing or future participation in any benefit, bonus,
incentive, or other plans, practices, policies, or programs provided by the
Company or any of its Subsidiaries and for 

 

5

 

which
Executive may qualify, nor shall anything in this Agreement limit or otherwise
affect such rights as Executive may have under any stock option or other
agreements with the Company or any of its Subsidiaries.  Amounts that are vested benefits or that
Executive is otherwise entitled to receive under any plan, practice, policy, or
program of the Company or any of its Subsidiaries at or subsequent to the date
of termination shall be payable in accordance with such plan, practice, policy,
or program; provided, however, that Executive shall not be
entitled to severance pay, or benefits similar to severance pay, under any
plan, practice, policy, or program generally applicable to employees of the
Company or any of its Subsidiaries.

 

6.             Full Settlement; No Obligation to Seek Other
Employment; Legal Expenses. 
The Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations under this Agreement shall
not be affected by any set-off, counterclaim, recoupment, defense, or other claim,
right, or action that the Company may have against Executive or others.  Executive shall not be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement.  The Company agrees to pay, within five days
following timely written demand by Executive, but no later than the last day of
the third calendar year following the calendar year in which Executive
experiences a Separation from Service, all legal fees and expenses Executive
may reasonably incur as a result of any dispute or contest (regardless of
outcome) by or with the Company or others regarding the validity or
enforceability of, or liability under, any provision of this Agreement;
provided that such legal fees and expenses are incurred on or before the last
day of the second calendar year following the year in which Executive
experienced a Separation from Service. 
In any such action brought by Executive for damages or to enforce any
provisions of this Agreement, he shall be entitled to seek both legal and
equitable relief and remedies, including, without limitation, specific
performance of the Company’s obligations under this Agreement, in Executive’s
sole discretion.

 

7.             Tax-Related Adjustment.

 

(a)           Anything in this
Agreement to the contrary notwithstanding and except as set forth below, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Agreement) (a “Payment”) would be subject to the excise
tax imposed by Code Section 4999 or any interest or penalties are incurred
by Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as
the “Excise Tax”), such Payment
shall be reduced as described below.  If
the Payments are required to be reduced, they shall be reduced only to the
extent required, to prevent the imposition upon Executive of any Excise
Tax.  Executive shall determine which
elements of the Payments shall be reduced to conform to the provisions of this Section 7.  Subject to the provisions of Section 7(b) below,
all other determinations required to be made under this Section 7,
including whether and when a reduction in Payments is required and the
assumptions to be utilized in arriving at such determination, shall be made by
a certified public accounting firm designated by the Board (the “Accounting Firm”) which shall provide
detailed supporting calculations both to the Company and Executive.  If the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control Event, the Board shall appoint another nationally recognized
accounting 

 

6

 

firm
to make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm
shall be borne solely by the Company.

 

(b)           Executive shall take
any position requested by the Company on Executive’s federal income tax returns
with respect to the treatment of the Payment from the Company, the payment of
any Indemnified Amount (as defined below), and the receipt of any refund or
interest paid by the government to Executive as a result of a Contest (as
defined below) (such position, a “Requested
Position”), provided that: (i) the Company shall provide
Executive with an opinion from nationally recognized accounting firm that there
is “substantial authority” for the Requested Position within the meaning of
Code Section 6662, and (ii) the general long term or senior unsecured
corporate credit rating of the Company or its successor is at least BBB- as
rated by Standard & Poors and Baa3 as rated by Moody’s Investor
Services at the time Executive would be required to take a Requested Position
or the Company places in an escrow account or otherwise provides security
reasonably requested by Executive to ensure payment to Executive of the
indemnity amount that could become due to Executive pursuant to the following
sentence.  The Company shall indemnify
Executive for any tax, penalty and interest incurred by Executive as a result
of taking the Requested Position.  The
amount for which Executive is indemnified under the preceding sentence (the “Indemnified Amount”) shall be computed on
an after-tax basis, taking into account any income, Excise or other taxes,
including interest and penalties. 
Executive shall keep the Company informed of all developments in any
audit with respect to a Requested Position. 
Upon payment of the Indemnified Amount, or (if the Indemnified Amount is
not yet payable) upon the Company’s written affirmation, in form and substance
reasonably satisfactory to Executive, of the Company’s obligation to indemnify
Executive with respect to the Requested Position, and provided part (ii) of
the first sentence of this Section 7(b) is satisfied at such time,
the Company shall be entitled, at its sole expense, to control the contest of
any disallowance or proposed disallowance of a Requested Position (a “Contest”), and Executive agrees to
cooperate in connection with a Contest, including, without limitation,
executing powers of attorney and other documents at the reasonable request of
the Company.  The Indemnified Amount
shall be paid to Executive on or before the date that is ten (10) days
prior to the date when Executive is legally required to remit such payment as a
result of the disallowance of a Requested Position.  Following payment by the Company of the
Indemnified Amount, if the Requested Position is sustained by the Internal Revenue
Service or the courts, the Company shall be entitled to any resulting receipt
of interest or refund of taxes, interest and penalties that were properly
attributable to the Indemnified Amount. 
If a Requested Position is sustained in whole or in part in a final
resolution of a Contest, and if the Indemnified Amount therefore exceeds the
amount of taxes, penalties and interest payable by Executive as a result of the
Requested Position (determined on an after-tax basis after taking into account
payments made pursuant to the preceding sentence and this sentence), any such
excess portion of the Indemnified Amount shall be treated as a loan by the
Company to Executive, which loan Executive must repay to the Company together
with interest at the applicable federal rate under Code Section 7872(f)(2);
provided, however, that if at the time the Company is to make such payment, a
loan to Executive would not permitted under the Sarbanes-Oxley Act of 2002, as
amended, because Executive continues to be an officer or director of the
Company, the Company shall pursue such appeal in a manner that does not require
Executive to make such excess payment to the applicable taxing authority.

 

7

 

8.             Code Section 409A Savings Provision.  Notwithstanding anything in this Agreement to
the contrary, the following provisions related to payments treated as deferred
compensation under Code Section 409A shall apply:

 

(a)           If, on the date of
Executive’s Separation from Service, Executive is a “specified employee,”
within the meaning of Sections 409A(a)(2)(A)(i) and 409A(a)(2)(B)(i) of
the Code, and as a result of such Separation from Service Executive would
receive any payment that, absent the application of these provisions, would be
subject to the constructive receipt, interest, and additional tax provisions of
Code Section 409A(a), then any such payment shall be made on the date that
is the earliest of: (i) six (6) months after Executive’s Separation
from Service, (ii) Executive’s date of death, or (iii) such other
earliest date for which such payment will not be subject to such constructive
receipt, interest, and additional tax.

 

(b)           If
Executive would not have a Separation from
Service and, as a result of Executive’s termination of employment, would
receive any payment that, absent the application of this Section 8(b),
would be subject to additional tax imposed pursuant to Section 409A of the
Code, then such payment shall instead be payable on the date that is the
earliest of (i) Executive’s Separation from Service, (ii) the date
Executive becomes disabled (within the meaning of Section 409A(a)(2)(C) of
the Code), (iii) Executive’s death, or (iv) such other
earliest date for which such payment will not be subject to such constructive
receipt, interest, and additional tax.

 

(c)           It is the intention of the parties
that all amounts payable under this Agreement not be subject to the
constructive receipt, interest, and additional tax resulting from the
application of Code Section 409A. 
To the extent such amounts could become subject to such constructive
receipt, interest, and additional tax, the parties shall cooperate to amend
this Agreement with the goal of giving Executive the same or equivalent value
of the benefits described in this Agreement in a manner that does not result in
such constructive receipt, interest, and additional tax.

 

9.             Confidentiality and Nonsolicitation Provisions.

 

(a)           Confidentiality.  Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information,
knowledge, or data relating to the Company or any of its Subsidiaries, and
their respective businesses, obtained by Executive during Executive’s
employment by the Company or any of its Subsidiaries and that has not become
public knowledge (other than by acts of Executive or Executive’s
representatives in violation of this Agreement).  After the date of termination of Executive’s
employment with the Company, Executive shall not, without the prior written
consent of the Company, communicate or divulge any such information, knowledge,
or data to anyone other than the Company and those designated by it.  In no event shall an asserted violation of
the provisions of this Section constitute a basis for deferring or
withholding any amounts otherwise payable to Executive under this Agreement.

 

(b)           Non-Solicitation.
Executive, for the twelve (12) month period immediately following the date of
termination of Executive’s employment, shall not, either on his own account or
jointly with or as a manager, agent, officer, employee, consultant, partner,
joint 

 

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venturer,
owner or shareholder or otherwise on behalf of any other person, firm or
corporation, directly or indirectly solicit or attempt to solicit away from the
Company any of its officers or employees or offer employment to any person who,
on or during the six (6) months immediately preceding the date of such
solicitation or offer, is or was an officer or employee of the Company; provided, however, that (i) a general
solicitation or advertisement to which an employee of the Company responds
shall in no event be deemed to result in a breach of this Section 9(b),
and (ii) it shall not be a violation of this Section 9(b) for
Executive to directly or indirectly solicit the employment of, or to hire, [his][her] current executive assistant.

 

(c)           Survival; Reformation. The provisions of this Section 9
shall survive the termination or expiration of this Agreement and Executive’s
employment with the Company and shall be fully enforceable thereafter.  If it shall be finally determined that any
restriction in this Section 9 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of any state or jurisdiction, it
is the intention of the parties that such restriction may be modified or
amended to render it enforceable to the maximum extent permitted by the law of
that state or jurisdiction.

 

(d)           Remedies;
Equitable Relief.  Should Executive violate the
non-solicitation provisions of Section 9(b), Executive will be obligated
to pay back to the Company all payments received pursuant to this Agreement and
the Company will have no further obligation to pay Executive any payments that
may be remaining due under this Agreement. 
In the event that Executive breaches or threatens to breach any of the
provisions of this Section 9, in addition to and without limiting or
waiving any other remedies available to the Company under this Agreement, in
law or in equity, the Company shall be entitled to immediate injunctive relief
in any court, domestic or foreign, having the capacity to grant such relief, to
restrain such breach or threatened breach and to enforce the provisions of this
Section 9.

 

10.           Successors.

 

(a)           This Agreement is
personal to Executive and without the prior written consent of the Company
shall not be assignable by Executive otherwise than by will or the laws of
descent and distribution.  This Agreement
shall inure to the benefit of and be enforceable by Executive’s legal representatives
or successor(s) in interest. 
Executive may designate a successor (or successors) in interest to
receive any and all amounts due Executive in accordance with this Agreement
should Executive be deceased at any time of payment.  Such designation of successor(s) in
interest shall be made in writing and signed by Executive, and delivered to the
Company pursuant to Section 15(b). 
This Section 11(a) shall not supersede any designation of
beneficiary or successor in interest made by Executive, or separately covered,
under any other plan, practice, policy, or program of the Company.

 

(b)           This Agreement shall
inure to the benefit of and be binding upon the Company and its successors and
assigns.

 

(c)           The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business or
assets of the Company or any successor and without regard to the form of
transaction utilized to acquire the business or assets of the Company, to
assume expressly and agree to perform this Agreement 

 

9

 

in
the same manner and to the same extent that the Company would be required to
perform it if no such succession or parentage had taken place.  As used in this Agreement, “Company” shall mean the Company as defined
above and any successor to its business or assets as aforesaid (and any Parent
of the Company or any successor) that is required by this clause to assume and
agree to perform this Agreement or which otherwise assumes and agrees to
perform this Agreement.

 

11.           Notice of Termination.  Any termination of Executive’s employment by
the Company for Cause or by Executive for Good Reason shall be communicated by
Notice of Termination to the other party given in accordance with Section 15(b) of
this Agreement.  For purposes of this
Agreement, a “Notice of Termination”
means a written notice that (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of Executive’s employment under the provision so indicated, and (iii) if
the date of termination is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than 15 days after
the giving of such notice).

 

12.           Requirements and Benefits if Executive Is Employee of
Subsidiary of Company.  If
Executive is an employee of any Subsidiary of the Company, he shall be entitled
to all of the rights and benefits of this Agreement as though he were an
employee of the Company and the term “Company” shall be deemed to include the
Subsidiary by whom Executive is employed. 
The Company guarantees the performance of its Subsidiary under this
Agreement.

 

13.           Release of Claims.  All payments under this Agreement will be
contingent upon the execution of a Release of Claims by and between Executive
and the Company in the form attached as Appendix A to this Agreement.

 

14.           Miscellaneous.

 

(a)           This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without reference to principles of conflict of laws.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.  In the event of any conflict between this
Agreement and the Company’s 1996 Stock Option Plan, 2000 Management Performance
Common Stock Option Plan, 2002 Stock Incentive Plan, 2004 Performance Incentive
Plan, 2007 Performance Incentive Plan, any incentive plan pursuant to which
Executive has awards outstanding as of the date of this Agreement or any other
incentive plan that is adopted by the Company following the date of this
Agreement, the agreement or plan with the more favorable terms to Executive
shall control for purposes of such conflict. 
This Agreement supersedes all prior oral or written promises or
agreements between the parties related to the subject matter hereof.  This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties or their
respective successors and legal representatives.

 

(b)           All notices and
other communications under this Agreement shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, to the addresses for each party as first
written above or to such other address as either party shall have furnished to
the other in writing in accordance

 

10

 

with
this Section.  Notices and communications
to the Company shall be addressed to the attention of the Company’s Corporate
Secretary.  Notice and communications
shall be effective when actually received by the addressee.

 

(c)           Whenever reference
is made in this Agreement to any specific plan or program of the Company, to
the extent that Executive is not a participant in the plan or program or has no
benefit accrued under it, whether vested or contingent, as of the Change in
Control Date, then such reference shall be null and void, and Executive shall
acquire no additional benefit as a result of such reference.

 

(d)           The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

 

(e)           The Company may
withhold from any amounts payable under this Agreement such Federal, state, or
local taxes as shall be required to be withheld pursuant to any applicable law
or regulation.

 

(f)            Executive’s failure
to insist upon strict compliance with any provision of this Agreement shall not
be deemed to be a waiver of such provision or any other provision.

 

IN
WITNESS WHEREOF, Executive has set his hand to this Agreement and, pursuant to
the authorization from the Board, the Company has caused this Agreement to be
executed as of the day and year first above written.

 

	
   

  	
  RED ROBIN
  GOURMET BURGERS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name]

  

 

11

 

APPENDIX
A

 

FORM OF
GENERAL RELEASE

 

I,
                                      ,
for good and valuable consideration, including the performance by Red Robin
Gourmet Burgers, Inc., a Delaware corporation (the “Company”), of certain obligations under
that certain Change in Control Agreement dated as of March 10, 2008
between myself and the Company (the “Change
in Control Agreement”), do hereby release and forever discharge as
of the date hereof, the Company and all present, future and former
subsidiaries, affiliates, directors, officers, agents, attorneys, insurers,
shareholders, representatives and employees of the Company (including all
subsidiaries, affiliates, directors, officers, agents, attorneys, insurers,
shareholders, partners, representatives and employees thereof), and the successors
and assigns of each of them (collectively, the “Released Parties”) to the extent provided below.

 

1.             Except as
provided in Section 2 below, I knowingly and voluntarily release and
forever discharge the Company and the other Released Parties from any and all
claims, controversies, actions, causes of action, cross-claims, counter-claims,
demands, debts, damages (however styled, including compensatory, liquidated,
punitive or exemplary damages), claims for costs and attorneys’ fees, or
liabilities of any nature whatsoever in law and in equity, both past and
present (from the beginning of the world through the date of this General
Release) and whether known or unknown, suspected, or claimed against the
Company or any of the Released Parties which I, my spouse, or any of my heirs,
executors, administrators, representatives or assigns, have or may have, which
arise out of or are connected with my employment or association with, or my
separation or termination from, the Company (including, but not limited to, any
allegation, claim or violation, arising under: 
Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991, as amended; the Equal Pay Act of 1963, as amended; the
Americans with Disabilities Act of 1990, as amended; the Family and Medical
Leave Act of 1993, as amended; the Civil Rights Act of 1866, as amended; the
Age Discrimination in Employment Act (29 U.S.C. § 621 et seq.),
as amended (“ADEA”), subject to Section 15
below; the Worker Adjustment Retraining and Notification Act, as amended; the
Employee Retirement Income Security Act of 1974, as amended; any applicable
Executive Order Programs; the Fair Labor Standards Act, as amended; or their
state or local counterparts; or under any other federal, state or local civil
or human rights law, or under any other local, state, or federal law,
regulation or ordinance; or under any public policy, contract or tort, or under
common law; or arising under any policies, practices or procedures of the
Company; or any claim for wrongful discharge, breach of contract, infliction of
emotional distress, defamation; or any claim for costs, fees, or other
expenses, including attorneys’ fees incurred in these matters) (all of the
foregoing collectively referred to herein as the “Claims”).  As part of the
release set forth in this Section 1, I fully and forever covenant not to
sue or cause to be sued the Company or any other Released Party with respect to
any Claims.

 

2.             This General
Release shall not relinquish, diminish, or in any way affect (i) any accrued
benefits under the terms of the Change in Control Agreement or any other plans
or programs of the Company which are due to me, (ii) rights for
indemnification as a director, officer or employee of the Company under the
Company’s certificate of incorporation or bylaws for duly approved acts taken
prior to the date of this General Release, subject to the provisions 

 

 

thereof, or (iii) rights under any director &
officer insurance or similar insurance policies in effect prior to the date of
this General Release.

 

3.             I represent
that I have made no assignment or transfer of any Claims, or any other matter
covered by Section 1 above.  I agree
that I will indemnify, defend and hold harmless the Company from any and all
Claims so assigned and transferred.  I
have not been involved in any personal bankruptcy or other insolvency
proceedings at any time since I began my employment with the Company.  No child support orders, garnishment orders,
or other orders requiring that money owed to me by the Company be paid to any
other person are now in effect.

 

4.             In signing
this General Release, I acknowledge and intend that it shall be effective as a
bar to each and every one of the Claims hereinabove mentioned or implied that
are released by me.  I further acknowledge
and agree that my separation from employment with the Company shall not serve
as the basis for any claim or action.  I
agree that this General Release shall be given full force and effect according
to each and all of its express terms and provisions, including those relating
to unknown and unsuspected Claims (notwithstanding any state statute that
expressly limits the effectiveness of a general release of unknown, unsuspected
and unanticipated Claims), if any, as well as those relating to any other Claims
hereinabove mentioned or implied.  I
acknowledge and agree that this waiver is an essential and material term of
this General Release.  I therefore agree
that in the event a Claim is brought seeking damages against me in violation of
the terms of this General Release, or in the event a party should seek to
recover against the other in any Claim brought by a governmental agency on such
party’s behalf, this General Release shall serve as a complete defense to such
Claims.  I further agree that I am not
aware of any pending or threatened charge or complaint of the type described
above as of the execution of this General Release.

 

5.             I agree that,
by my signature below, I hereby resign from all positions, including any board
memberships, related to the Company and its subsidiaries contemporaneously with
the execution of this General Release.

 

6.             I understand
that this General Release embodies the complete agreement and understanding
among the parties with respect to the subject matter hereof and supersedes and preempts
any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.

 

7.             Whenever
possible, each provision of this General Release shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this General Release is held by any court of competent jurisdiction to be
invalid, illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this General Release
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

 

8.             This General
Release shall be binding in all respects upon, and shall inure to the benefit
of, the heirs, successors and assigns of the parties hereto; provided that I
acknowledge that I may not assign my rights under the this General Release
without the prior written consent of the Company.  I agree, upon reasonable request of the
Company, to execute, acknowledge and 

 

 

deliver any additional instrument or documents that may be
reasonably required to carry out the intentions of this General Release.  This General Release may be executed in
counterparts and facsimile signatures shall be originals for all purposes.

 

9.             I agree that
this General Release shall be interpreted and construed in accordance with the
laws of the State of Colorado and that any disputes arising under this General
Release or by any asserted breach of it, or from the employment relationship
between the Company and Executive, shall be litigated in the state or federal
courts in Colorado and I consent to such jurisdiction.

 

10.           [Include if applicable]  I represent that I am over the age
of forty (40).  As part of the release
set forth in Section 1, I knowingly and voluntarily agree to waive any
rights or claims arising out of or relating to the ADEA (the “ADEA Waiver”) and acknowledge that I have
been informed of the following:

 

a.                                       I
represent and acknowledge that I am waiving any and all rights or claims that I
may have arising under the ADEA;

 

b.                                      I
represent and acknowledge that I have been informed of my right to consult with
an attorney regarding these ADEA rights, before executing this General Release;

 

c.                                       I
know and understand that I am not waiving any rights or claims that may arise
after the date this waiver of ADEA rights is executed;

 

d.                                      I
know and understand that in exchange for the waiver of my rights under the
ADEA, I am receiving consideration in addition to any consideration to which I
am already entitled;

 

e.                                       BY
SIGNING THIS GENERAL RELEASE, I REPRESENT AND ACKNOWLEDGE THAT I HAVE BEEN
INVITED AND ADVISED TO CONSULT AN ATTORNEY BEFORE SIGNING THIS DOCUMENT.  I acknowledge and understand that I have been
given a period of at least twenty-one (21) days in which to consider the
terms of the ADEA Waiver provided to me; and

 

f.                                         I
understand that I have the right to revoke this ADEA Waiver contained in this
General Release at any time within seven (7) days after signing this
General Release, by providing written notice to the following address:  Red Robin Gourmet Burgers, Inc., 6312 So
Fiddlers Green Circle, Suite 200, Greenwood Village, CO 80111, Attention:
General Counsel, and that, upon such revocation, this General Release will not
have any further legal force and effect. 
I further understand and agree that this General Release shall not
become effective or enforceable until this seven day revocation period has
expired.

 

 

By signing this General Release, I further represent
and agree that:

 

(i)                                     I
have read it carefully;

 

(ii)                                  I
understand all of its terms and know that I am giving up important rights,
including but not limited to, rights under Title VII of the Civil Rights
Act of 1964, as amended; the Equal Pay Act of 1963, as amended; the Americans
with Disabilities Act of 1990, as amended; and the Employee Retirement Income
Security Act of 1974, as amended;

 

(iii)                               I
voluntarily consent to everything in this General Release;

 

(iv)                              I
have been advised to consult with an attorney before executing this General
Release and I have done so or, after careful reading and consideration I have
chosen not to do so of my own volition;

 

(v)                                 I
have signed this General Release knowingly and voluntarily and with the advice
of any counsel retained to advise me with respect to this General Release;

 

(vi)                              I
agree that the provisions of this General Release may not be amended, waived,
changed or modified except by an instrument in writing signed by an authorized
representative of the Company and by me.

 

	
  DATE:
                                  ,
  20

  	
   

  
	
   

  	
  [Executive]

  

 

Acknowledged and agreed to this
           day of
                              ,

 

	
   

  	
  Red
  Robin Gourmet Burgers, Inc.

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:Exhibit 10.9

 

LAST SENT FILE PERUPETRO

 

	
  NUMBER:

  	
   

  	
  KARDEX:86481

  

 

DRAFT:

 

LICENSE AGREEMENT FOR HYDROCARBON
EXPLORATION AND DEVELOPMENT IN BLOCK XXII

 

BETWEEN

 

PERUPETRO S.A.

 

AND

 

BPZ EXPLORACION & PRODUCCION S.R.L.

 

WITH PARTICIPATION OF

 

BPZ ENERGY INC.

 

AND

 

THE CENTRAL RESERVE BANK OF PERU

 

IN THE CITY OF LIMA, ON THE
TWENTY FIRST DAY OF NOVEMBER OF TWO THOUSAND SEVEN, I, RICARDO FERNANDINI
BARREDA, NOTARY IN AND FOR LIMA, ISSUE THIS DEED WITH THE INTERVENTION OF

 

PURSUANT TO ARTICLE 54,
PARAGRAPH H, OF LAW 26002.  

 

 THERE APPEARED BEFORE ME 

 

PERUPETRO
S.A. WITH SINGLE TAX PAYER REGISTRATION No 20196785044, ADDRESS OF RECORD AT
AVENIDA LUÍS ALDANA No 320, SAN BORJA, LIMA, REPRESENTED BY ITS GENERAL MANAGER
CARLOS EDGAR VIVES SUÁREZ, WHO
DECLARED BEING PERUVIAN, MARRIED, AN ENGINEER, IDENTIFIED WITH NATIONAL
IDENTITY DOCUMENT No 08725702, A VOTER, WITH POWER OF ATTORNEY REGISTERED UNDER
ENTRY C00039 OF ELECTRONIC DOCKET No 00259837, OF THE COMPANY REGISTRY OF LIMA,
AND PURSUANT TO BOARD OF DIRECTORS’ AGREEMENT No 117-2007 DATED SEPTEMBER 27,
2007 AND SUPREME DECREE No
                      PUBLISHED
ON ... OF 2007, SAME WHICH ARE INCLUDED IN THIS DEED. 

 

AND:  

 

BPZ EXPLORACIÓN &
PRODUCCIÓN S.R.L., IDENTIFIED WITH SINGLE TAX PAYER REGISTRATION  No 20503238463, A COMPANY ORGANIZED AND
EXISTING PURSUANT TO THE LAWS OF THE REPUBLIC OF PERU, REGISTERED IN ENTRY
A00001 OF DOCKET N° 11985400 OF THE COMPANY REGISTRY OF LIMA, AND IN ENTRY
A00002 OF DOCKET N° 11328132 OF THE BOOK OF OPERATIONS CONTRACTORS IN THE PUBLIC
HYDROCARBONS REGISTRY, WITH ADDRESS OF RECORD AT  CALLE MANUEL DE FALLA N° 297, DISTRICT OF SAN
BORJA, PROVINCE AND DEPARTMENT OF LIMA, REPRESENTED BY ITS GENERAL MANAGER LUIS RAFAEL ZOEGER NÚÑEZ, WHO DECLARED BEING PERUVIAN,
MARRIED, AN ENGINEER, IDENTIFIED WITH NATIONAL IDENTITY DOCUMENT N° 08212579, A
VOTER, AUTHORIZED BY POWER OF ATTORNEY REGISTERED UNDER ENTRY A00001 OF DOCKET
N° 11985400 OF THE COMPANY REGISTRY OF THE REGISTRY OFFICE OF LIMA. 

 

WITH THE PARTICIPATION
OF:  

 

BPZ ENERGY INC., WITH ADDRESS OF
RECORD AT 580 WEST LAKE PARK BOULEVARD, SUITE 525, TEXAS 77079, UNITED STATES
OF AMERICA, REPRESENTED BY LUIS RAFAEL ZOEGER NÚÑEZ,
WHO DECLARED 

 

 

BEING PERUVIAN, MARRIED, AN
ENGINEER, IDENTIFIED WITH NATIONAL IDENTITY DOCUMENT N° 08212579, A VOTER,
AUTHORIZED BY POWER OF ATTORNEY REGISTERED IN ENTRY A00001 OF DOCKET N°
11992608 OF THE BOOK OF POWERS OF ATTORNEY GRANTED BY ESTABLISHED COMPANIES OR
AFFILIATES ESTABLISHED OVERSEAS OF THE COMPANY REGISTRY OF LIMA. 

AND THE CENTRAL RESERVE BANK OF PERU, IDENTIFIED WITH SINGLE TAX
PAYER REGISTRATION No 20122476309, WITH ADDRESS OF RECORD AT JR. ANTONIO MIRO
QUESADA No 441, LIMA, REPRESENTED BY ITS GENERAL MANAGER, RENZO GUILLERMO ROSSINI MIÑAN, WHO SAID HE
WAS PERUVIAN, MARRIED AN ECONOMIST, IDENTIFIED WITH NATIONAL IDENTITY DOCUMENT
No 08727483, A VOTER, APPOINTED BY BOARD OF DIRECTORS’ AGREEMENT NUMBER No 4059
AND CARLOS AUGUSTO BALLON AVALOS,
WHO DECLAREDVHE WAS PERUVIAN, MARRIED, AN ECONOMIST, IDENTIFIED WITH NATIONAL
IDENTITY DOCUMENT No 08757380, A VOTER, IN HIS POSITION AS INTERNATIONAL
OPERATIONS MANAGER APPOINTED BY BOARD OF DIRECTORS’ AGREEMENT No 3737, BOTH
DULY AUTHORIZED AS REPORTED IN THE LETTER FROM THE BANK’S GENERAL MANAGEMENT
OFFICE No 129-2007-BCRP, DATED OCTOBER 25, 2007, ATTACHED TO THIS PUBLIC DEED,
BOTH WITH ADDRESS OF RECORD AT JR. ANTONIO MIRO QUESADA No 441, LIMA. 

I DECLARE I
VERIFIED THE IDENTIFICATION OF THE PERSONS APPEARING BEFORE ME AND THAT THEY
ACT IN THEIR FULL CAPACITY, WITH FREEDOM AND KNOWLEDGE OF THEIR ACTS, THAT THEY
ARE SKILLED IN THE SPANISH LANGUAGE AND THAT THEY HAVE DELIVERED TO ME A DULY
SIGNED AND AUTHORIZED DRAFT CONTRACT, WHICH I FILED IN THE CORRESPONDING
DOSSIER TO REGISTER IT AS A PUBLIC DEED, AND WHICH READS AS FOLLOWS: 

DRAFT: MR. NOTARY RICARDO FERNANDINI BARREDA, Esq.:  

Please
register in your Public Deed Registry the license contract for the exploration
and development of hydrocarbons in Block 
XXII, entered into by and between, on the one hand PERUPETRO
S.A., identified with RUC N° 20196785044, with address of record at
Avenida Luis Aldana N° 320, District of San Borja, Province and Department of
Lima, represented by its General Manager Carlos Edgar Vives Suárez,
a Peruvian, identified with DNI N° 08725702, with address of record at Av. Luis
Aldana 320, San Borja, with power of attorney registered in Entry C00039 under
Electronic Docket No 00259837 of the Company Registry of Lima, pursuant to
provisions of the PERUPETRO Board of Directors’ Agreement N° 117-2007 dated September 27,
2007, the text of which, Mr. Notary, you will attach hereto.  And, on the other hand, BPZ
EXPLORACIÓN & PRODUCCIÓN S.R.L., identified with RUC N°
20503238463, a company organized and existing pursuant to the laws of the
Republic of Peru, registered in Entry A00001 under Docket N° 11985400 of the
Company Registry of Lima and in Entry A0002 under Docket N° 11328132 of the
Operations Contractors Book of the Public Registry of Hydrocarbons, with
address of record at Calle Manuel de Falla N° 297, District of San Borja,
Province and Department of Lima, represented by its General Manager Luis Rafael Zoeger Núñez, a Peruvian, identified with DNI N°
08212579, authorized by power of attorney registered in Entry A00001 of Docket
N° 11985400 of the Company Registry of Lima; with the participation of BPZ ENERGY INC., with address of record at 580 West Lake
Park Boulevard, Suite 525, Texas 77079, United States of America, 

 

 

represented
by Luis Rafael Zoeger Núñez, a Peruvian,
identified with DNI N° 08212579, authorized by power of attorney registered in
Entry A00001 under Docket N° 11992608 of  the Book of Powers of Attorney
Granted by Established Companies or Affiliates Established Overseas, of the
Company Registry of Lima, and the Central Reserve Bank of
Perú, with address of record at Jr. Antonio Miro Quesada N° 441,
District of Cercado de Lima, Province and Department of Lima, represented by
its officials Renzo Rossini Miñán, a Peruvian,
identified with DNI N° 08727483, in his condition as General Manager appointed
by the Board of Directors’ Agreement N° 4059 dated October 14, 2004 and Carlos Augusto Ballón Avalos, a Peruvian, identified with
DNI N° 08757380, in his condition as Manager for International Operations,
appointed by Board of Directors’ Agreement N° 3737, dated May 21, 1998,
both authorized pursuant to the Bank’s General Management Office letter N°
129-2007-BCRP dated October 25, 2007, which you Mr. notary will
attach hereto, and by Supreme Decree N° XXX-2007-EM, published on XX November,
2007 which approves and authorizes the signing of this Agreement under the
terms and conditions described in the following clauses.

 

LICENCE AGREEMENT FOR
HYDROCARBONS EXPLORATION AND DEVELOPMENT IN BLOCK XXII

 

BETWEEN

 

PERUPETRO S.A.

 

AND

 

BPZ EXPLORACION &
PRODUCCION S.R.L.

 

CONTENTS

 

	
  CLAUSE
  INTRODUCTION

  	
   

  	
  GENERAL

  
	
  CLAUSE
  1

  	
   

  	
  DEFINITIONS

  
	
  CLAUSE
  2

  	
   

  	
  OBJECT
  OF THE CONTRACT

  
	
  CLAUSE
  3

  	
   

  	
  TENURE,
  CONDITIONS AND GUARANTEE

  
	
  CLAUSE
  4

  	
   

  	
  EXPLORATION

  
	
  CLAUSE
  5

  	
   

  	
  DEVELOPMENT

  
	
  CLAUSE
  6

  	
   

  	
  REPORTING AND STUDIES

  
	
  CLAUSE
  7

  	
   

  	
  OVERSIGHT
  COMMITTEE

  
	
  CLAUSE
  8

  	
   

  	
  ROYALTIES
  AND VALUATION

  
	
  CLAUSE
  9

  	
   

  	
  TAXES

  
	
  CLAUSE 10

  	
   

  	
  CUSTOMS
  DUTIES

  
	
  CLAUSE
  11

  	
   

  	
  FINANCIAL
  RIGHTS

  
	
  CLAUSE
  12

  	
   

  	
  LABOR

  
	
  CLAUSE
  13

  	
   

  	
  ENVIRONMENT AND COMMUNITY RELATIONS

  
	
  CLAUSE
  14

  	
   

  	
  HYDROCARBON
  CONSERVATION AND LOSS PREVENTION

  
	
  CLAUSE
  15

  	
   

  	
  TRAINING AND TECHNOLOGY TRANSFER

  
	
  CLAUSE
  16

  	
   

  	
  ASSIGNMENT
  AND PARTNERSHIPS

  
	
  CLAUSE
  17

  	
   

  	
  ACT
  OF GOD AND FORCE MAJEURE

  
	
  CLAUSE
  18

  	
   

  	
  ACCOUNTING

  
	
  CLAUSE
  19

  	
   

  	
  SUNDRIES

  
	
  CLAUSE
  20

  	
   

  	
  NOTIFICATIONS
  AND COMMUNICATIONS

  
	
  CLAUSE
  21

  	
   

  	
  PERUVIAN
  LAW APPLIES AND CONFLICT RESOLUTION

  
	
  CLAUSE
  22

  	
   

  	
  TERMINATION

  
	
  ANNEX
  “A”

  	
   

  	
  DESCRIPTION OF AGREEMENT AREA

  
	
  ANNEX
  “B”

  	
   

  	
  MAP OF AGREEMENT AREA

  

 

 

	
  ANNEX
  “C-1” to “C-5”

  	
   

  	
  WARRANT
  BONDS FOR MINIMUM WORK PROGRAM

  
	
  ANNEX “D”

  	
   

  	
  CORPORATE GUARANTEE

  
	
  ANNEX “E”

  	
   

  	
  ACCOUNTING PROCEDURE

  
	
  ANNEX
  “F”

  	
   

  	
  EXPLORATION WORK UNITS - TABLE OF EQUIVALENCE

  

 

LICENSE AGREEMENT FOR
HYDROCARBONS EXPLORATION AND DEVELOPMENT IN BLOCK XXII

 

BETWEEN

 

PERUPETRO S.A.

 

AND

 

BPZ EXPLORACION &
PRODUCCION S.R.L.

 

PRELIMINARY CLAUSE.- GENERAL 

 

I.          With the participation of PERUPETRO, pursuant to the
powers grated by Law N° 26221 to sign the License Agreement for
Hydrocarbons Exploration and Development in Block XXII. 

 

II.         The “in situ” hydrocarbons are a property of the
State. The property rights over the extracted hydrocarbons are transferred by
PERUPETRO to the Contractor on the day of XXXX pursuant to the provisions in
the Agreement hereto and in Article 8o of Law N° 26221.

The Contractor commits to pay the State through PERUPETRO, the cash
royalties under the conditions and at the time established in the Agreement.

 

III.       Pursuant to Article 12o
of Law N° 26221, this Agreement is governed by Peruvian private law, and is
comprised in the scope of Article 1357o of the Civil Code.

 

IV.       For all purposes related to
and derived from this Agreement, the parties hereto agree that the names of the
clauses do not modify the interpretation of the Agreement’s contents. 

 

V.         All references to the agreement include its annexes;
in case of discrepancy between the annexes and the provisions in the body of
the agreement, the latter will prevail.

 

CLAUSE ONE.- DEFINITIONS 

 

The definitions accepted by the Parties by means of this clause serve
the purpose of providing the meaning required by the terms used in the
Agreement, and such meaning will be the only one accepted for purposes of interpreting
and executing the Agreement, unless otherwise expressly provided by the Parties
in writing.

The terms defined and used in the Agreement, whether in singular or
plural will be capitalized and will bear the following meanings: 

 

1.1                     Affiliate.
Any entity the voting share capital of which is the direct or the
indirect property, to a proportion equal to fifty percent (50%) or more, of
PERUPETRO or the Contractor, or any entity or person who owns directly or
indirectly fifty percent (50%) or more of the voting share capital of PERUPETRO
or the Contractor, or any entity who owns directly or indirectly fifty percent
(50%) or more of the voting share capital of the same shareholder or
shareholders who own, directly or 

 

 

indirectly, fifty percent
(50%) or more of the voting share capital of PERUPETRO or the Contractor.

 

1.2                     Year. A period of
twelve (12) months in the Gregorian Calendar, starting on a specific date. 

 

1.3                     Agreement
Area.  The area described in Annex “A”
hereto and appearing in Annex “B”, called Block XXII, located in the provinces
of Sullana, Paita, Talara and Piura, in Piura Department over a surface area of
three hundred seventy nine hundred forty three eight hundred seventeen
hectares  (369,043.817 ha).  The Agreement Area will be redefined after
excluding the areas released by the Contractor, pursuant to the terms of the
Agreement.  Likewise, when the
exploration results warrant a new Agreement Area configuration, and at the
request of the Contractor, supported by a report addressed to PERUPETRO,
including proposals for working in the new area, and after approval by
PERUPETRO, the Agreement Area may be re-demarcated.  The change will be approved pursuant to
existing law.  Under no circumstance the
new demarcation shall increase the original Agreement’s area.  Should any discrepancies arise between Annex
B and the description in Annex A, Annex A shall prevail. 

 

1.4                     Barrel.  A capacity measurement unit for Controlled
Liquid Hydrocarbons, equivalent to forty two gallons of the United States of
America at sixty degrees Fahrenheit (60° F), at sea level pressure, without
water, mud or other sediments (BS&W).

 

1.5                     Btu.  British thermal unit.  The unit measuring the amount of heat
required to increase temperature one degree Fahrenheit (1° F) of one (1) pound
of water equivalent to 1055.056 joules. 

 

1.6                     Act of
God or Force Majeure.  These terms
include, but are not limited to, fires, tremors, earthquakes, tidal waves,
landslides, avalanches, floods, hurricanes, storms, explosions, unforeseeable
fortuitous, war, guerrillas, terrorist acts, sabotage, civil unrest, blockades,
uncontrollable delays in transportation, strikes, stoppages, inability to
secure the appropriate facilities and authorizations, licenses and permits
issued by competent authorities for the transport of materials, equipment and
services despite having taken the necessary precautions, or any other cause,
similar to or different from those specifically listed here, beyond reasonable
control and that may have not been foreseen or which having been foreseen,
could not be avoided.

 

1.7                     Oversight
Committee.  A body created
by the Parties through which PERUPETRO oversees the compliance with and the
execution of the Agreement and the membership and attributions of which are
established by clause seven. 

 

1.8                     Technical
Conciliation Committee.  A
transitory body created to give an opinion on the discrepancies that may emerge
connected to the Operations, same which will be organized pursuant to heading
21.2 of the Agreement.

 

1.9                     Condensates.
Liquid hydrocarbons created by the condensation of hydrocarbons isolated

 

 

from natural gas by applying
pressure or temperature when the natural gas flowing from the reservoirs is
produced or resulting from one or more compression stages of natural gas. They
remain liquid at atmospheric temperature and pressure. 

 

1.10              Controlled
Condensates. Condensates produced in the Agreement Area and
measured at a Production Control Point. 

 

1.11              Contractor.  BPZ EXPLORACION &
PRODUCCION S.R.L., registered in the Hydrocarbons Public Registry under Docket
No 11328132, Entry A00002 of the Operations Contractors Book.

 

1.12              Agreement.
This agreement, entered into by and between the Parties, which sets
forth the terms and conditions included in this document and its Annexes
including the additional agreements reached by the Parties by virtue of this
document, as amended, pursuant to law.

 

1.13              Development.
 Any activity for the production
of hydrocarbons, including well drilling, completion and deepening, as well the
design, construction and installation of equipment, tanks, storage tanks and
other means and facilities, including the use of artificial production methods
and primary and improved recovery systems in the Agreement Area and outside of
it, as needed.  It includes the
construction of the transportation and storage systems, the facilities at the
Production Control Point, the main pipeline and, if appropriate, primary
distillation plants for the manufacturing of products to be used in the
operations and facilities of the processing plants for treating gas and natural
gas.

 

1.14              Commercial
Discovery.  The discovery of
hydrocarbons reserves that in the opinion of the contractor warrant commercial
development.

 

1.15              Day.  A period of twenty four (24)
hours starting at zero hours (00:00) and ending at twenty four hours (24:00). 

 

1.16              Business
Day.  All days, from Monday to
Friday, excepting days declared totally or partially banking holidays, in the
city of Lima, by the competent authority.

 

1.17              Dollar or
US$. Currency unit of the United States of America. 

 

1.18              Main
Pipeline.  Main pipeline the
Contactor may build and operate and which, starting at the end of the
Transportation and Storage Systems, drives hydrocarbons produced in the
Agreement Area to a third party property pipeline, to a sale or exportation
point or to a production control point, notwithstanding, if required, the
approval provided in heading 2.3.  This
Main Pipeline may include the measurement points connected to the pipeline, the
required storage and shipping areas, smaller pipelines, pumping or compression
stations, communications systems, access and maintenance roads, and any other
facilities that may be necessary and required for transporting hydrocarbons in
a permanent and timely manner, including the design or construction,
maintenance and equipment of all the previously mentioned components.  Access will be granted to any main pipeline
from the beginning of the fifth year starting on the Date of Beginning of
Commercial Extraction. 

 

 

1.19              Exploration.  The planning,
execution and assessment of all types of geological, geophysical, geochemical
and all kind of studies, as well as the drilling of exploration wells and any
other related activities, required for the discovery of hydrocarbons, including
the drilling of confirmation wells to assess the discovered reservoirs. 

 

1.20              Exploitation.  Development and/or Production.

 

1.21              Date of
Beginning of Commercial Extraction.  Date when the
first measurement of hydrocarbons at a Production Control Point was made and
which triggers the payment of the royalty. 
For purposes of this definition, the volume produced for testing or
other purposes specifically accepted by the parties will not be considered. 

 

1.22              Signing
Date.  November 21, 2007, the
date when PERUPETRO and the Contractor signed the Agreement. 

 

1.23              Effective
Date.  Date when the Contractor will
start the operations, to be determined within sixty (60) starting on the
signing date. 

 

1.24              Control.  The actions that pursuant to
legal regulations and technical standards are undertaken by OSINERGMIN
(Organismo Supervisor de la Inversión en Energía y Minería – Supervising Body
for Investments in Energy and Mining) regarding the Exploration and Development
carried out by the Contractor.

 

1.25              Natural
Gas.  A mix of hydrocarbons in gas
state or dissolved with oil at initial reservoir conditions. It includes
associated natural gas and non-associated natural gas. 

 

1.26              Associated
Natural Gas.  Natural gas
produced together with the reservoir’s Liquid Hydrocarbons.

 

1.27              Controlled
Natural Gas. Natural gas produced in the Agreement Area and
measured at a Production Control Point. 

 

1.28              Non-Associated
Natural Gas.  Natural gas that
comes from a reservoir where, under the initial conditions, no liquid hydrocarbons
are present.

 

1.29              Hydrocarbons.  All organic, gas, liquid or
solid compounds, consisting principally of carbon and hydrogen. 

 

1.30              Controlled
Hydrocarbons.  Hydrocarbons
produced in the Agreement Area and measured at a Production Control Point. 

 

1.31              Liquid
Hydrocarbons.  Oil, condensate,
and generally, all hydrocarbons, which at atmosphere temperature and pressure
conditions, are found in liquid state at the measurement site, including
hydrocarbons found in liquid state at a temperature above atmospheric
temperature.

 

1.32              Controlled
Liquid Hydrocarbons.  Liquid
hydrocarbons in the Agreement Area measured at a Production Control Point. 

 

1.33              Law N°
26221.  Single Conformed Text of Law
N° 26221, Organic Hydrocarbons Law, enacted by Supreme Decree N° 042-2005-EM,
as expanded, regulated and amended.

 

1.34              LNG or
Liquid Natural Gas.  Liquid
hydrocarbons obtained from natural gas and made up 

 

 

by ethane, propane, butane and
other heavier hydrocarbons.

 

1.35              Controlled
LNG or Controlled Liquefied Natural Gas. 
Liquefied Natural Gas measured at the Controlled Production Point. 

 

1.36              Month.  A period of time
starting any day of a calendar month that ends the same day of the following
calendar month or, if such day does not exist, on the last day of the former. 

 

1.37              SCF.  One thousand (1000) standard
cubic feet (scf).  One (1) scf is
the volume of gas needed to fill one (1) cubic foot at 14.6959 pound per
inch absolute pressure at the base temperature of sixty degrees Fahrenheit (60
°F). 

 

1.38              Operations.  All exploration and
development operations as well as all other activities subject matter to the
Agreement or related to its execution. 

 

1.39              Parties. PERUPETRO and the
Contractor. 

 

1.40              PERUPETRO.  PERUPETRO S.A., is the
State-owned private law company under the Ministry of Energy and Mines created
by Law N° 26221.

 

1.41              Oil.  Hydrocarbons, which under
initial pressure and temperature reservoir conditions, are found in liquid
condition, and which mostly remain in liquid state under atmospheric conditions;
Condensates, Natural Gas Liquids or Liquefied Natural Gas are not included. 

 

1.42              Controlled
Oil.  Oil produced in the Agreement
Area and measured at the Production Control Point. 

 

1.43              Heavy
Crude.  Liquid hydrocarbons which,
because of their density and viscosity, require using non-conventional
exploitation methods, and the transportation of which, requires heating or
other procedures, excluding mixing with oil produced in the same deposit, which
would result in light crude.

 

1.44              Confirming
well.  A well drilled to confirm
discovered reserves or to delimit a deposit’s area. 

 

1.45              Development
well.  A well drilled for the
production of discovered hydrocarbons.

 

1.46              Exploratory
well.  A well drilled to discover
hydrocarbons reserves or to determine the stratigraphy of a exploration area. 

 

1.47              Production.  All activities performed in or
outside the Agreement Area, as required, for the extraction and handling of
hydrocarbons subject to the Agreement, including the operation and refurbishing
of wells; the installation and operation of equipment, pipes, transportation
and storage systems, Main Pipeline, hydrocarbon treatment and measurement, and
all types of primary and improved recovery measures. 

 

1.48              Production
Control Point.  The place or places
identified by the Contractor within the Agreement Area, or identified outside
such areas through an agreement between the Parties, where the volume
measurements and determination of water and sediment contents and other
measurements are performed to calculate the volume and quality of the
controlled hydrocarbons, pursuant to the AGA, API and ASTM standards are met. 

 

1.49              Reservoir.  Stratum or strata under the
surface which may be part of a deposit under

 

 

production or which has (or
have) proven hydrocarbon production capacity, under a common pressure system
throughout their entire area. 

 

1.50              Transportation
and Storage System.  The set of
pipelines, pumping stations, storage tanks, riverine facilities, delivery
system and roads, and other types of facilities and means required and used for
carrying hydrocarbons produced in the Agreement Area from there to the
Production Control Point, the main pipeline or a third party pipeline,
including the design, construction, maintenance and equipping of all the
abovementioned elements.

 

1.51              Subcontractor.  Any individual or company,
whether national or foreign, hired by the Contractor to provide services
related to the Operations. 

 

1.52              Oversight.  An initiative by PERUPETRO to
verify the Contractor’s compliance with its contract obligations. 

 

1.53              Taxes. Taxes,
contributions and rates, pursuant to the Tax Code. 

 

1.54              Exploration
Work Unit (UTE). A measurement unit for the exploration activities
accepted by the Parties and detailed in the minimum work programs, and which
allows flexibility in executing the commitments made. Its values are
established as a function of the most representative work unit for each
exploration activity (km2, km, m, etc.). 

 

1.55              Life of
the Agreement.  The period
comprised between the Signing Date and the end of the relevant period
established in heading 3.1 of the Agreement. 

 

1.56              Deposit.  Surface under which there
exist one or more reservoirs in production or with proven hydrocarbon
production capacity. 

 

CLAUSE TWO.- PURPOSE OF THE
AGREEMENT. 

 

2.1                     PERUPETRO
authorizes the Contractor to perform the Operations, pursuant to Law N° 26221,
the relevant regulations and the Agreement’s provisions for the shared
objectives of discovering and producing hydrocarbons in the Agreement Area. 

 

2.2                     The Contractor
will hold the ownership rights to the hydrocarbons extracted in the Agreement
Area, pursuant to paragraph  2 above. 

 

2.3                     The Contractor
will perform the Operations pursuant to the provisions included in the
Agreement and will perform them either directly or through subcontractors. For
field operations outside the Agreement Area, PERUPETRO’S approval will be
required. 

 

2.4                     PERUPETRO will
oversee the Operations, pursuant to the law and the Agreement.
OSINERGMIN will be charged with control initiatives, as mandated by law. 

 

2.5                     PERUPETRO
representatives will carry out the oversight at any  time, after
serving the corresponding notice, shall provide proper personal identification,
and be authorized to perform such functions by PERUPETRO. The Contractor will
provide its cooperation within the scope of its Operations so that those
representatives may perform their mission, which will be carried so as not to
interfere with the Operations.  The costs
and expenses of PERUPETRO’s representatives will be paid by PERUPETRO. 

 

2.6                     The Contractor
will provide and be responsible for all technical, economic and

 

 

financial resources required
for executing the Operations. 

 

CLAUSE THREE.- TERM, CONDITIONS
AND GUARANTEE 

 

3.1                     The term for the
hydrocarbons’ exploration phase is seven (7) years which may be expanded
as provided by the Law. This term starts on the effective date, unless such
period may be modified pursuant to other Agreement provisions. The term for the
hydrocarbons development phase is the period remaining after the exploration
phase is completed until completing a period of thirty (30) years starting on
the effective date, unless other Agreement provisions modify such term.  The term for the stage to develop
non-associated natural gas and non-associate natural gas and condensates, will
be the period remaining after the end of the exploration stage and until a
period of forty   (40) years is
completed, starting on the effective date, unless other Agreement provisions
change that term.   

 

3.2                     The exploration
stage is divided into five (5) periods: 

 

	
  Heading

  	
   

  	
  Period

  	
   

  	
  Duration

  
	
  3.2.1

  	
   

  	
  First
  period

  	
   

  	
  Eighteen
  (18) months starting on the effective date.

  
	
  3.2.2

  	
   

  	
  Second
  period

  	
   

  	
  Eighteen
  (18) months starting at the end of the term mentioned in heading 3.2.1.

  
	
  3.2.3

  	
   

  	
  Third period

  	
   

  	
  Eighteen (18) months starting
  at the end of the term mentioned in heading 3.2.2.

  
	
  3.2.4

  	
   

  	
  Fourth
  period

  	
   

  	
  Eighteen
  (18) months starting at the end of the term mentioned in heading 3.2.3.

  
	
  3.2.5

  	
   

  	
  Fifth
  period

  	
   

  	
  Twelve
  (12) months starting at the end of the term mentioned in heading 3.2.4.

  

 

3.3                     During the
exploration  stage, the Contractor may begin
the subsequent period provided it notifies PERUPETRO thirty  (30) days in advance of the ending day for
the stage underway, or its intention to continue with the subsequent stage,
provided the Contractor has not incurred any of the reasons for termination set
forth in heading 22.3.1.  Termination for
such reason(s) will result in the execution of the corresponding warrant
bond. 

 

3.4                     If during any of
these stages described in heading 3.2, the Contractor is prevented, by properly
grounded technical or economic reasons, from concluding the corresponding
minimum work program, such period may be extended for a maximum of six (6) months,
provided PERUPETRO’s approval has been requested at least thirty (30) days
before the end of the period underway, and the reasons supporting the request
have been verified and approved by PERUPETRO. If so, before the end of the
period underway, the Contractor will post a new warrant bond or will extend the
life of the existing one, to cover the new required period, pursuant to the
conditions set forth in heading 3.10. If the awarded extensions consume the
time for the last period of the exploration stage and the Contractor chooses to
continue with it exploration work, the obligations for such period will be met
during an extension of the exploration stage to be agreed upon by the parties,
pursuant to existing regulations. After the

 

 

completion of the minimum work
program for the period underway and within the term established in heading 3.2,
if the extensions described in the preceding paragraph have been exhausted, as
required, and provided the work performed, included drilling at least one
exploration well, the Contractor may ask PERUPETRO to grant an extraordinary
period of six (6) months to examine all the information and findings
gathered until the period underway, and thus prepare a study that will lead to
a decision whether or not to proceed to the next period.  The approvals described in this heading will
be awarded at PERUPETRO’s sole criterion. 

 

3.5                     The exploration
phase may continue at the Contractor’s choice, after the Date of Beginning of
Commercial Extraction until the end of the term fixed for this stage, as
mentioned in heading 3.1. If so, the tax exemption described in heading 10.3
will remain in force until the expiration of the exploration stage, and the
line amortization method described in heading 9.6 will be applied from the Date
of Beginning of Commercial Extraction, as mandated by law. 

 

3.6                     If the Contractor
makes one or more hydrocarbon discoveries during any period of the exploration
stage, which may not be rated as commercial only for reasons of transportation,
it may request a withholding period of up to five (5) years for the
discovered deposit or deposits while the appropriate production transportation
is arranged.  The withholding right will
be subject, at least, to meeting the following requisites: 

 

a)                  The Contractor must demonstrate
to PERUPETRO’s satisfaction that the volumes of hydrocarbons found in the
Agreement Area do not suffice to economically warrant the building of the main
pipeline; 

 

b)                  The combined discoveries in
adjoining areas added to the Contractor’s discoveries are insufficient to
economically warrant the building of a main pipeline; and, 

 

c)                  The Contractor shall
demonstrate, on economic grounds, that the discovery of hydrocarbons cannot be
carried from the Agreement Area to another place for their marketing by no
means of transportation whatsoever.  

 

3.7                     If the Contractor
finds Non-associated Natural Gas or Non-associated Natural Gas or Condensates
during any period of the exploration stage, it may request a withholding period
of up to ten (10) years for the deposit found, while a market is created. 

 

3.8                     If the Contractor
finds oil and Non-associated Natural Gas or Non-associated Natural Gas or
Condensates during any period of the exploration  stage, and the cases described in headings
3.6 and 3.7 occur, the Contractor may request a withholding period for oil and
another one for Non-associated Natural Gas or Non-associated Natural Gas or
Condensates for the purposes described under those headings. 

 

3.9                     The withholding
periods described in headings 3.6 and 3.7 will provide an extension of the
Agreement’s term for period equal to the withholding period granted by
PERUPETRO. The withholding period will be granted in writing. For this purpose,
the Contractor will submit a request to PERUPETRO, enclosing the supporting
documentation

 

 

and a schedule of activities
to be performed. The exploration stage concludes at the beginning of the
withholding period. The development stage starts when a commercial discovery
statement for that period is made. The award of the withholding periods
described in headings 3.6 and 3.7 and their duration will be determined by
PERUPETRO at its sole criterion, without any prejudice to or reduction of the
obligation to undertake the minimum work programs for the period of the
exploration stage underway.

 

3.10             The Contractor
shall guarantee compliance with the minimum work program for each of the
periods of the exploration stage, pursuant to provisions under headings 3.2 and
4.6, by providing a joint and several, unconditional, irrevocable and automatic
warrant bond, without the benefit of excussion to the executed automatically in
Peru, issued by a properly qualified entity of the Peruvian financial system,
and with address of record in Peru, that is acceptable to PERUPETRO.  At the request of PERUPETRO, the Contractor
will replace any warrant bond already posted, and shall post a new warrant bond
within the period of fifteen (15) Business Days after the day when PERUPETRO’s
request was received by the Contractor. 
The amount of the warrant bond for the minimum work period for each of
the periods of the exploration stage appears in Annexes “C-1” to “C-5”, and is
the result of multiplying the equivalent in dollars which for this purpose is
established in Annex “F”, by the number of Exploration Work Units corresponding
to each period, as described in heading 4.6. The warrant bonds will be issued
for each minimum work program in the way described in Annexes “C-1” to “C-5”,
as appropriate.  The warrant bonds for
the minimum work program in each of the periods of the exploration stage, as
provided for in heading 4.6, will be delivered to PERUPETRO before the
beginning of each period; otherwise subheading 22.3.3 shall apply. The warrant
bond corresponding to the minimum work program for the first stage will be
delivered at the Date of Signing.   The
warrant bonds, in case of extensions of the periods corresponding to the
exploration stage, will be replaced or extended by the Contractor before the
beginning of the corresponding extension; otherwise, the approval granted by
PERUPETRO for the extension requested by the Contractor will be null and void.
The warrant bond for the minimum work program of the exploration stage will
remain in full force and effect for a period exceeding by thirty (30) business
days the duration of the former’s life. 
If any of the warrant bonds provided by the Contractor expires during
the established term, the latter shall comply with delivering a new warrant
bond or extending the existing one within fifteen (15) days after the reception
by the Contractor of  PERUPETRO’s
notification. Otherwise, subheading 22.3.3 shall apply.  When the obligation guaranteed by each
warrant bond is complied with, PERUPETRO will immediately proceed to return to
the issuer, through the Contractor, the corresponding warrant bond. The
execution of any warrant bond will have as a consequence the termination of the
Contractor’s obligations to perform the minimum work program, notwithstanding
the enforcement of the provisions included in

 

 

subheading 22.3.1.  

 

3.11              BPZ ENERGY INC.
participates in this Agreement for purposes for providing the corporate
guarantee enclosed herewith as Annex   “D”.
The corporate guarantee will survive as long as the obligations of the
Contractor described in                Annex
“D” remain enforceable. Subheading 22.3.5 will apply if any of the events
foreseen in that heading occurs and the Contractor fails to provide a replacing
guarantee within fifteen (15) business days after the Contractors receives a
PERUPETRO notification requiring such replacement. 

 

CLAUSE
FOUR.- EXPLORATION 

 

4.1                     The Contractor shall
start exploration activities of the effective date.

 

4.2                     The Contractor may
release itself from the entire Agreement Area without any penalty by serving
PERUPERTO notice with advance not under thirty (30) days, provided the minimum
work program for the corresponding period of the exploration stage underway has
been fulfilled. If the Contractor releases itself of the entire Agreement Area,
abandons it or allows the term of the period underway to expire before
fulfilling the corresponding minimum work program, without any technical reason
approved by PERUPETRO, the latter will execute the warrant bond,
notwithstanding the enforcement of provisions included in subheading 22.3.3.  The Contractor may release parts of the
Agreement Area by serving notice to PERUPETRO at least thirty (30) days in
advance, without being subject to any penalty. However, this will not affect or
reduce its obligation to comply with the minimum work program for the period of
the exploration stage underway.  The
Parties will certify and register the portions the Contractor releases through
the Oversight Committee. The Contractor may continue using the surface of the
released areas where it may have built facilities related to the Operations. 

 

4.3                     During the execution
of the Contract, releases will be made as follows: 

 

a)                  At least twenty
percent (20%) of the original Agreement Area at the end of the third period
described in subheading 3.2.3 and at least thirty percent (30%) of the original
Agreement area at the end of the forth period described in subheading 3.2.4. 

 

b)                  At the end of the
fifth period described in subheading 3.2.5, the Contractor will have released
fifty percent (50%) of the original Agreement Area including for this purpose
the release carried out pursuant to paragraph a) above, unless the Contractor
expressly commits to carry out exploration activities pursuant to paragraph c)
below.  

 

c)                  At the end of the
exploration stage, the Contractor may keep the unreleased Agreement Area, and
not included in the provisions of paragraph d) below, for which purpose it
shall drill one (1) exploration well every two (2) years. 

 

d)                  If the Contractor
decides not to continue the exploration works described in paragraph c), or if
such commitments are not met, notwithstanding the enforcement

 

 

of the corresponding contract-base conditions, it will
be allowed to keep only the
deposits discovered and the surrounding five (5) kilometers area to the
limit of the Agreement Area.  

 

4.4                     For purposes of
enforcing heading 4.2, the Agreement Area has been divided into rectangular
plots, to the extent possible, covering twenty thousand hectares (20,000.00 ha)
each and when not possible, covering a different surface area. The areas
subject to contractor release need not be adjacent.  

 

4.5                     Any area released by
the Contractor, including the deposits comprised within it, will return to the
State at no cost to it or to PERUPETRO. 

 

4.6                     The minimum work
program for each of the periods during the exploration stage includes the
following: 

 

	
  Heading

  	
   

  	
  Period

  	
   

  	
  Activity

  
	
  4.6.1

  	
   

  	
  First Period

  	
   

  	
  ·     120 UTEs or

  ·     Purchasing, processing and interpreting 200 kms of 2D Seismic, and

  ·     Geological and
  comprehensive engineering study for the area.

  
	
  4.6.2

  	
   

  	
  Second Period

  	
   

  	
  ·     130 UTEs or

  ·     Drilling one (1) exploration well to a
  minimum depth of 2600 meters.

  
	
  4.6.3

  	
   

  	
  Third Period

  	
   

  	
  ·     130 UTEs or

  ·     Drilling one
  (1) exploration well to a minimum depth of 2600 meters.

  
	
  4.6.4

  	
   

  	
  Forth Period

  	
   

  	
  ·     130 UTEs or

  ·     Drilling one
  (1) exploration well to a minimum depth of 2600 meters.

  
	
  4.6.5

  	
   

  	
  Fifth Period

  	
   

  	
  ·     130 UTE sor

  ·     Drilling one
  (1) exploration well to a minimum depth of 2600 meters.

  

 

To comply with the obligations described in this
heading, the following shall be borne in mind. 

 

a)      For registration of 2D seismic lines, the
corresponding kilometers will be recorded from the point where the initial shot
was made to the point of the final shot of each seismic line. 

For registration of 3D seismic lines, the square
kilometers will be calculated as the surface area covered by the executed
program. 

 

b)      The Exploration Working Units mentioned in this
heading will be calculated pursuant to the table of equivalence attached as
Annex “F” hereto. 

 

c)      For drilling of exploration wells, the exploration
work units that will be accredited for future works will be calculated pursuant
to Annex “F”, based on the difference between the final stage depth and the
depth established in heading 4.7. 

 

d)      Before the beginning of each period of the exploration
stage, the Contractor will send PERUPETRO the program for the planned exploration
activities that will allow

 

 

to meet the number of committed exploration work units
for such period. The Contractor shall report to PERUPETRO any changes to the
content of that program before its execution by providing a supporting
technical report. 

 

4.7       The exploration wells drilled pursuant to the
minimum work program described in heading 4.6, and the Contractor’s compliance
of its performance obligation, will be deemed as completed and  met, respectively, when reaching a minimum
vertical depth (TVD) measured from the rotating table, or a minimum fifty (50)
meters depth within the formation agreed by the Parties before the beginning of
the drilling stage of any exploration well. In addition, if during the drilling
of any exploration well executed in compliance with a minimum work program as
described in heading 4.6, insurmountable problems, whether geologic o
mechanical, are met, the Contractor may request the acknowledgement of its
obligation to drill and shall support its request through a technical report
for  PERUPETRO’s approval. 

 

4.8       If the Contractor chooses to make a commercial
discovery statement, it will send such statement to PERUPETRO and submit within
one hundred eighty (180) days after such statement an Initial Development Plan
to make viable the hydrocarbon’s discovery development, same which shall
include, among others, the following:  

 

a)                  Physical and chemical
characteristics of the discovered hydrocarbon and percent associated product
and impurities. 

 

b)                  Estimated production
profiles during the life of the agreement for the deposit(s). 

 

c)                  The estimated number
of development wells and their corresponding production capacity. 

 

d)                  The Transportation
and Storage Systems and the projected Production Control Points.  

 

e)                  Planned Main
Pipeline, if appropriate.  

 

f)                    Security
measures.  

 

g)                 Preliminary schedule
for all activities to be undertaken. 

 

h)                 Estimated date when
the commercial extraction will begin. 

 

The “Initial Development Plan” shall include the
investments, expenditures and specific costs estimated for developing the
Commercial Discovery as well as any other information the Contractor deems
appropriate.   

 

4.9                     PERUPETRO will
forward to the Contractor its comments about the “Initial Development Plan”
within sixty (60) days after having received it and may object to the Date of
Beginning of Commercial Extraction if it does not seem reasonable.  In case of discrepancy, heading 21.2 will
apply. 

 

4.10              If the Contractor
issues a announcement of commercial discovery, it will be obliged to start
development within one hundred and eighty (180) days after the expiration of
the sixty (60) days mentioned in heading 4.9 of the Agreement. The commercial
discovery will not imply reducing or suspending the obligations of the minimum
work

 

 

program for the period underway.  

 

4.11              The development of
discovered hydrocarbons will take place pursuant to the work programs submitted
by the Contractor to PERUPETRO, and pursuant to provisions in heading 5.3. The
Parties agree that, when appropriate and necessary, the terms for submitting
the “Initial Development Plan” or annual work plans, as appropriate, may be
adjusted, extended or modified.  For this
purpose, the Contractor will submit the necessary proposals to PERUPETRO so
that such adjustments, extensions or modifications may be agreed upon. 

 

4.12              The end of the
exploration stage will not affect the terms and conditions for the procedures
described above that may be underway at the time when such expiration date
arrives.  

 

4.13              Under exceptional
circumstances that make it impossible to comply with the obligations and/or
terms for the period of the minimum work program provided in headings 4.6 and
3.2, respectively, and at request of the Contractor who will submit a
supporting report, the obligations comprised in the minimum work program may be
replaced and the deadlines for same postponed provided PERUPETRO accepts and
approves the Contractor’s request. Under no circumstance whatsoever will such
replacement modify the initial commitment in exploration work units  for the exploration stage and in any way
reduce the Contractor’s obligations.  The
changes accepted and approved by PERUPETRO to the enforcement of the provisions
of the preceding paragraph will lead to the revision of the amounts and terms
of the existing warrant bonds for which purpose, if required, the Parties will
recalculate the amounts of the warrant bonds and the Contractor will comply
with delivering a new warrant bond or extending the existing one until reaching
the new prescribed deadline, pursuant to the requirements set forth in headings
3.4 and 3.10. The exploration work units will also be recalculated for the new area
included.   

 

CLAUSE
FIVE. - DEVELOPMENT 

 

5.1                     The development stage
will start on the next day after the end of the exploration stage provided
during the exploration stage a commercial discovery statement was made.
However, at the Contractor’s choice the development stage may be started in
advance and terminate the exploration stage at the day of beginning of
commercial extraction. In case a withholding period has been granted, the
development stage will start once the commercial discovery statement has been
made. 

 

5.2                     The Contractor will
undertake reasonable initiatives so that the Date of Beginning of Commercial
Extraction will effectively be the date established pursuant to headings 4.8
and 4.9. 

 

5.3                     At least sixty (60)
days before the ending of every calendar year, starting with the filing of the
Initial Development Plan, the Contractor will submit to PERUPETRO, the
following: 

 

a)                  An annual work
program and the detailed budget for revenues, costs, expenses and

 

 

investments for the following calendar
year.  

 

b)      An annual work program and the detailed budget for
revenues, costs, expenses and investments for exploration aimed at identifying
additional reserves, as applicable. 

 

c)                A work program and
the corresponding revenues, costs, expenses and investments estimates for
development and/or production, for the next five calendar days.

The Contractor may adjust or change such programs
through the Oversight Committee. 

 

5.4                     For the execution of
every work program, the Contractor will deploy the equipment and/or methods
that may be necessary or appropriate to assess and follow up the operations. 

 

5.5                     The Contractor is
obliged to develop and undertake the economic recovery of hydrocarbon reserves
in the Agreement Area, pursuant to the programs mentioned in this Clause Five,
same which will be carried out following the technical and economical
principles generally accepted and in use by the international hydrocarbons
industry.   

 

5.6                     The Contractor has
the right to use in its operations the hydrocarbons produced in the Agreement
Area at no cost, same which, however, will not be considered for purposes of
determining the royalties. Such hydrocarbons may be processed in primary
distillation plants belonging to the Contractor to be used exclusively for the
operations.   If the primary distillation
plant is located outside the Agreement Area, the parties will determine the
volume of hydrocarbons to be processed at the plant and the volume of products
obtained to be used as fuel. The balance of such volumes will be considered for
purposes of determining the royalty.  

 

5.7                     The Contractor will
have the right to recover the liquid hydrocarbons from any natural gas produced
in the Agreement Area and extract them at any handling stage of such Natural
Gas.  The liquids so separated will be
considered as condensates for purposes of determining the Contractor’s royalty,
excepting that for economic or operational reasons their gathering may not be
feasible and they may be mixed with oil for controlling them together. 

 

5.8                     Natural gas not used
by the Contractor in the operations pursuant to heading 5.6 may be sold,
reinjected into the reservoir or both by the Contractor. To the extent, the
natural gas is not used, sold or reinjected, the Contractor may fire the gas,
after obtaining the Ministry of Energy and Mines’ approval. 

 

5.9                     When one or more
deposits that may be commercially developed extend continuously from the
Agreement Area to one or more other areas, the Contractor and the contractors
who hold those areas shall reach an agreement to prepare a single development
plan or a common development plan. If no such agreement is reached, the
Ministry of Energy and Mines may decide to submit the divergence to the
Technical Conciliation Committee mentioned in article 32o under Law N° 26221,
the decisions of which will be mandatory for the Parties.  Likewise, when one or more deposits subject
to commercial

 

 

development extend continuously from the Agreement
Area to adjoining areas not allocated to a contractor or that may not be
comprised in negotiations, competitions, deeds or contractor selection, and
there is no limitation as regards environmental protection issues, after
obtaining PERUPETRO approval to the Contractor’s request, those adjoining areas
may be included in the Agreement Area.   

 

5.10              After the drilling of
one (1) well has been concluded, the Contractor will report to PERUPETRO
the date when the well will be tested, if appropriate. The well test shall be
carried out within three (3) months after the end of drilling, excepting
that for technical reasons, the Contractor may require a longer period for the
test. 

 

5.11              PERUPETRO may at any
time inspect and test the measurement equipment and devices used to determine
the volume and the quality of the controlled hydrocarbons.  The equipments and measurement instruments
will be periodically calibrated in compliance with applicable standards.
PERUPETRO representatives may be present.

 

5.12              Before the Date of
Beginning of Commercial Extraction and the determination of the volume and
quality of controlled hydrocarbons, the parties will agree on the corresponding
measurement equipment and procedures. 

 

5.13              Heavy crude produced
in the Agreement Area may be mixed with light crude produced outside the
Agreement Area. Such light crude will me measured and controlled by the Parties
at a measurement point when entering the Agreement Area. The volume of such
hydrocarbons produced outside the Agreement Area will be subtracted from the
volume controlled hydrocarbons produced in the Agreement Area for purposes of
determining the royalties to be paid by the Contractor. 

 

CLAUSE
SIX.- INFORMATION AND STUDIES  

 

6.1                     The Contractor will
keep PERUPETRO timely and permanently informed about the Operations and will provide
the information as set forth  in this
clause, in the applicable regulations and in the form and format PERUPETRO will
determine. Likewise, it will provide information about other natural resources
or archaeological remains found or discovered during the execution of the operations
while the Contract is in force. Technical information, studies, process and
non-process data, as well as the other findings that the Contractor may provide
to PERUPETRO pursuant to this clause, will be of the best possible quality
available to the Contractor. If when obtaining the information and findings,
methods or systems were used that are of a proprietary nature, the Contractor
will not be obligated to disclose such methods or systems when providing the
information.   

 

6.2                     The Contractor shall
provide a copy of the geological, geophysical and reservoir studies related to
the deposits’ development prepared with technical information obtained for the
Agreement Area. The Contractor will also provide any clarification that may be
required by PERUPETRO concerning such studies. 

 

6.3                     The Contractor will
submit to PERUPETRO the information and studies corresponding to its
obligations under the minimum work program before the exploration of each one

 

 

such periods of the exploration stage as set forth in
heading 3.2. In addition, within ninety (90)days after the expiration of each
period of the exploration stage, the Contractor will submit to PERUPETRO a
consolidation report including, as appropriate, the studies and/or
interpretation of the geological, geophysical, geochemical, petrophysical and
reservoir analysis related to the exploration activities undertaken during the
already concluded period and also including those comprised in the
corresponding minimum work program. 

 

6.4                     The Contractor shall
submit to PERUPETRO a “Monthly Production Report” and a “Monthly Revenues and
Expenses Report”. Both reports will be submitted using the forms PERUPETRO will
deliver to the Contractor for such purpose at most thirty (30) days after the
end of each calendar month. 

 

6.5                     The Contractor will
deliver to PERUPETRO a copy of all the information provided to the Central
Reserve Bank of Peru, pursuant to clause 11, and whenever required by  PERUPETRO. 

 

6.6                     Within thirty (30)
days after the end of each calendar month, the Contractor will submit to
PERUPETRO a list of the contracts signed with its subcontractors for such month
and, when so required, shall also deliver a copy of the contracts if so
requested by   PERUPETRO.  

 

6.7                     PERUPETRO or the
Contractor may disclose the information obtained from the Operations without
approval from the other party, under the following circumstances: 

 

a)       When provided to an Affiliate; 

 

b)       Concerning financing or contracting of
insurance, after signing a confidentiality agreement; 

 

c)       If so required by law, regulations or the
decision of a competent authority including, but not limited to, regulations or
decisions from government officials, insurance organizations or stock markets
where the stock of such party or its affiliates may be registered; and,

 

d)       To consultants, accountants, auditors, lenders,
professionals, potential buyers or assignees of the Parties  or the Agreement’s interest-holders as
required by the Operations, after signing a confidentiality agreement.  

 

When the Parties agree to disclose certain
confidential or reserved information to third parties, a statement about the
confidential nature of such information will be made so that such information
will not disseminated by third parties.  

 

6.8                     PERUPETRO has the right
to publish, or otherwise disclose, the geological, scientific and technical
data and reports referred to the areas released by the Contractor. For the
areas under operation, the right mentioned in the preceding paragraph may be
exercised at the end the second year of having received such information or
before, if the parties so agree. 

 

CLAUSE
SEVEN.- OVERSIGHT COMMITTEE 

 

7.1                     The Oversight
Committee will sit three (3) representatives of the Contractor or its

 

 

subordinates and three (3) members of PERUPETRO
or its alternates. A representative of PERUPETRO S.A. will chair the oversight
Committee.  Such Oversight Committee will
be installed and approve its regulation operations within sixty (60) days after
the date of signing.  

 

7.2                     The Oversight Committee
will enjoy the following attributions:   

 

a)                  To exchange and
discuss among its members all the information related to the operations; 

 

b)                  To assess the
exception of the minimum exploration work programs described in heading 4.6; 

 

c)                  To assess the work
plans and programs described in headings 4.8 and 5.3., as well as their
execution; 

 

d)                  To verify the
execution of the operations for which purposes the representatives accredited
before the Oversight Committee may rely on the necessary counseling;

 

e)                  To verify compliance
with all the obligations related to the operations as set forth in the
agreements or to which the parties may agree by virtue of a separate document;
and, 

 

f)                    All other
attributions that may be established in the Agreement or to which the Parties
may agree. 

 

7.3                     The Oversight
Committee will sit whenever requested by the Parties and with the frequency
established by its own regulations. At least one representing member from each
of the parties will be required for the Oversight Committee to be considered in
session. Each of the parties will bear the expenses of their respective members
in the Oversight Committee. 

 

7.4                     If a discrepancy
appears and subsists among the Parties at the Oversight Committee, each such
Party may request the technical or legal opinion it deems appropriate and it
may submit it to the Oversight Committee at an extraordinary meeting. If no
agreement is reached in the extraordinary meeting, the matter will be referred
to the Parties’ General Management Department for resolving the controversy. If
the discrepancy persists, provisions under heading 21.2 will apply. 

 

CLAUSE
EIGHT.- ROYALTIES AND VALUATION 

 

8.1                     The Contractor will
pay the royalty in cash based on the value of Controlled Hydrocarbons measured
at one or more Production Control Points, pursuant to provisions under headings
8.3, 8.4 and 8.5.  In case of loss of
hydrocarbons, provisions under heading 14.2 will apply. 

 

8.2                     For purposes of this
clause, the terms below will have the following meanings: 

 

8.2.1                      Transportation
and storage costs: the cost, in dollars per barrel or dollars per MMBtu, as appropriate
including: 

 

a)         Rate paid to third parties or the Estimated
Rate, expressed in dollars per barrel or dollar per million Btu, as
appropriate, for the necessary transportation and storage of the controlled
hydrocarbons from the

 

 

Production Control Point to the point of sale
or transportation, including storage at that point; and, 

 

b)  The cost of handling
and dispatching, as well as for loading, as appropriate, of controlled
Hydrocarbons to the fixed ship connection clamp or to the facilities needed to
perform the sale. 

 

8.2.2                      Valuation
Period: Fifteen days (fortnight) of a calendar month, in the understanding the
first such fortnight is the period comprised between the first until the
fifteenth day of a calendar month, and the second fortnight is the period
remaining until the end of a calendar month. 
By agreement of the Parties, and to extent allowed by existing regulations,
the valuation period may be extended or reduced.  

 

8.2.3                      Basket
price:
The price expressed in dollar per barrel representing the FOB value at a
Peruvian export port, determined pursuant to heading 8.4.1 and subheading 8.4.3
for Controlled Natural Gas. 

 

8.2.4                      Realized
Price:
The price, expressed in dollars per MMBtu, actually paid or to be paid by a
buyer to the Contractor for the Controlled Natural Gas and which should include
all other components directly derived from the sale of natural gas and the
volume actually delivered of Controlled Natural Gas. For the calculation of the
realized price, the following will not be taken into consideration: 

 

a)         Any payment resulting from the reconciliation
of natural gas volumes contained in the corresponding purchase contracts;
and  

 

b)         The Impuesto General
a las Ventas (Sales Tax), the Impuesto Selectivo al Consumo (Excise Tax), the
Impuesto de Promoción Municipal (Municipal Tax) and/or any other tax levied on
consumption.   

 

8.2.5                      Estimated
Rate: The
cost in dollars per barrel  or dollars per MMBtu, as
appropriate, for the transportation from a Production Control Point to a sale
or export point or to a third party pipeline. This cost will take into
consideration the items, methodology and procedures mentioned in the “Regulations
for Transportation of Hydrocarbons by Pipelines” as amended, or its
successors.   

 

8.2.6                      Value of
Controlled Oil: The product of multiplying the Controlled Oil for a valuation period
times the Basket Price Of Controlled Oil for such period, from which the cost
of transportation and storage if applicable, will be subtracted.

 

8.2.7                      Value of
Controlled Condensates: The product of multiplying the Controlled Condensates
of a Valuation Period times the Basket Price of Controlled Condensates for such
period, from which price the cost of transportation and storage if applicable,
will have been subtracted.

 

8.2.8                    Value of
Controlled Natural Gas Liquids: The product of multiplying the Controlled Natural Gas
Liquids for a Valuation Period times the basket price of

 

 

the Controlled Natural Gas Liquids for that
period, price from which the cost of Transportation and Storage, if applicable
will have been subtracted. 

 

8.2.9                      Value of
Controlled Natural Gas: The product of multiplying the Controlled Natural Gas
in terms of its caloric content in million BTU for a Valuation Period times the
Realized Price for such period, from which price the cost of transportation and
storage, if applicable, will have been subtracted. 

 

8.3                     The Contractor, when
making a commercial discovery statement for hydrocarbons, will choose one of
the two methodologies described in subheadings 
8.3.1 and 8.3.2, after which it will not be allowed to change the
methodology during the life of the Agreement. 

 

8.3.1                      Scale of
Production Method: Pursuant to this methodology, a royalty percentage for Controlled
Liquid Hydrocarbons and Controlled Natural Gas Liquids will be established and
another royalty percentage will be established for the Controlled Natural Gas
for each valuation period, according to the following chart.

 

	
  Controlled Production

  MBCD

  	
   

  	
  Percent royalty (%)

  
	
  < 5

  	
   

  	
  15.00

  
	
  5 – 100

  	
   

  	
  15.00 –
  30.00

  
	
  >100

  	
   

  	
  30.00

  

 

MBDC: Millions of Barrels per Calendar Day

 

When the total average of Controlled Liquid
Hydrocarbons and Controlled Natural Gas Liquids is equal to or lower than 5
MBDC, the 15% royalty will apply. When such average is equal to or higher than
100 MBDC, a 30% royalty will apply. When said average falls between 5 MBDC and
100 MBDC, the royalty percentage to be applied will result from applying a
linear interpolation. The royalty paid by the Contractor for the Controlled
Liquid Hydrocarbons and the Controlled Natural Gas Liquids will be the product
of applying the royalty percentage obtained for such hydrocarbons to the value
of controlled oil, the value of the Controlled Natural Gas Liquids and the
value of the Controlled Condensates, during the corresponding Valuation
Period.  To determine the average in
barrels per day for Controlled Natural Gas, the following equation will be
used: barrels will be equivalent to the volume of Controlled Natural Gas in
standard cubic feet divided by five thousand six hundred twenty six (5,626)
factor. The royalty the Contractor shall pay for the Controlled Natural Gas
will be the product of applying the royalty percentage calculated for such
hydrocarbon to the value of Controlled Natural Gas during the respective
valuation period. 

 

8.3.2                      Economic
Result Method (RRE): Pursuant to this method, the royalty percentage will
be the product of adding the 15% fixed royalty percentage to the variable

 

 

royalty percentage as follows: 

 

RRE              =              15.00
%           +             VR

                               

 

 

Where:

 

VR          :               Variable Royalty % t

 

FR t-1      :               R t-1
 Factor

 

The Variable Royalty will apply when: FR t-1
3 1.15, within the
range of:

 

0%         £             Variable Royalty       £        20%

 

For negative VR, 0% will apply; for VR above 20%, 20%
will apply

 

	
  X t-1:

  	
   

  	
  Revenues corresponding to the annual period
  preceding the time when the Variable Royalty calculation is made. They
  include ìtems applicable to Factor R t-1

  
	
  Y t-1:

  	
   

  	
  Expenses corresponding to the annual period
  preceding the time when the Variable Royalty calculation is made. They
  include items applicable to Factor R t-1

  
	
  R t-1 Factor:

  	
   

  	
  Is the quotient between revenue and expenses from
  the Date of Signing until period t-1, included

  
	
  Period t-1:

  	
   

  	
  Annual period before the time when the variable
  royalty was calculated.

  

 

where:

 

Accumulated revenues:

 

Acum[PFP*(PCP-CTAP)] + Acum[PFC*(PCC-CTAC)] +

Acum[PFG*(PRG-CTAG)] + Acum[PFL*(PCL-CTAL)] +
Acum[OI]

 

	
  PFP

  	
   

  	
  Controlled Oil Production.

  
	
  PCP

  	
   

  	
  Oil Basket Price.

  
	
  CTAP

  	
   

  	
  Oil Transportation and Storage Cost.

  
	
  PFC

  	
   

  	
  Condensate Control Production.

  
	
  PCC

  	
   

  	
  Condensate Basket Price.

  
	
  CTAC

  	
   

  	
  Condensate Transportation and Storage Cost.

  
	
  PFG

  	
   

  	
  Natural Gas Controlled Production.

  
	
  PRG

  	
   

  	
  Natural Gas Realized Price.

  
	
  CTAG

  	
   

  	
  Natural Gas Transportation and Storage Cost.

  
	
  PFL

  	
   

  	
  Natural Gas Liquids Controlled Production.

  
	
  PCL

  	
   

  	
  Natural Gas Liquids Basket Price.

  
	
  CTAL

  	
   

  	
  Natural Gas Liquids Transportation and Storage Cost.

  
	
  OI

  	
   

  	
  Other incomes.

  

 

Accumulated expenses:

 

Acum    (Investment
+ Expenses + Royalties + Other Incomes)

 

Annex E-Accounting Procedures details the revenues and
expenses and the times for the registration the Factor Rt-1,
component. The calculation of the variable royalty percentage will be made
twice yearly, once in January, with information about the revenues and expenses
incurred from January to December of the prior calendar year;

 

 

and again in July with information from July of
the prior calendar year to June of the current calendar year. 

 

8.4                     For purposes of the
Agreement, the price for each class of Controlled Hydrocarbon will be expressed
in dollars per barrel or dollars per million Btu, and will be determined as
follows: 

 

8.4.1                      To determine the
Basket Price of Controlled Oil the following procedure shall apply: 

 

a)         UTE.  At
least ninety (90) days before the Date of Beginning of Hydrocarbon Commercial
Extraction, the Parties will decide the amounts of oil that will be produced in
the Agreement Area. 

 

b)         Within thirty (30) days after the determination
described in the previous paragraph, the Parties will choose an Oil Basket
including a maximum of four (4) crudes with following
characteristics.  

 

1.                          Their quality shall
be similar to that of the oil to be measured at a Production Control Point; 

 

2.                          Their quotations will
appear periodically in “Platt’s Oilgram Price Report” or other source
acceptable to the oil industry and to the Parties; and, 

 

3.                          They will be
competitive in the market(s) where the oil to be measured at a Production
Controlled Point may be sold. 

 

c)         Once the conditions described in the preceding
paragraphs have been met, the Parties will sign a Valuation Agreement
establishing the additional terms and conditions to those described in this
subheading and which may be required for its appropriate enforcement. The
Valuation Agreement will determine the adjustment procedures required for
reasons of quality. The quality adjustments will introduce premiums and/or
penalties for improving and/or degrading the quality of Controlled Oil compared
to the types of oil included in the basket. Likewise, the Valuation Agreement
will determine a given period of existence as well as the frequency with which
the agreed methods and procedures should be reviewed so that, at all times, a
realistic determination of controlled oil prices will be ensured. If any of the
parties, at any time, considers the enforcement of the methods and procedures
established in the Valuation Agreement does not result in a realistic
determination of the FOB value at the Peruvian exportation port for the
Controlled Oil, the Parties may agree to enforce other methods and procedures
that effectively provide such result. 

 

d)         Every six (6) months or before if any of
the Parties so requests, the Parties may review the basket established for Controlled
Oil valuation, and thus ensure that the previously listed conditions continue
to be met. If it is found that any of such conditions no longer applies, the
Parties may

 

 

modify the basket within thirty (30) days after
the date when the basket review started. If that period expires and the Parties
have not reached an agreement about the new basket, the provisions set forth in
subheading 8.4.5 shall apply. If it is found that API (weighted average)
degree, sulphur content or other element used to measure the quality of
Controlled Oil has changed significantly compared to the quality of the basket
components (simple arithmetical average), the Parties will change the basket so
that it will reflect the quality of the Controlled Oil. 

 

e)         In case the future price of one or more of the
types of oil in the basket were quoted in a currency other than the US dollars,
such prices will be converted into dollars at the exchange rate enforced on the
date when each of the referred quotations 
was taken. The exchange rate to be used will be the average of the
exchange rate quoted by Citibank N.A. New York. If quotations from that
organization are not available, the Parties will agree on an appropriate
substitute. 

 

f)           The Basket Price used to calculate the value of
the Controlled Oil for the Valuation Period will be determined as follows: 

 

1.                          For each type of oil
in the basket, the arithmetical average of its published basket will be
determined using quotations for the Valuation Period. Only the days where all
the components of the baskets wee quoted will be considered. It is understood
that if the regular edition of “Platt’s Oilgram Price Report” shows two or more
quotations for the same basket component, the quotation for the date closer to
the publication will be used (“Prompt Market”); and, 

 

2.                          The resulting average
prices calculated following the method above, for each basket component, will
be again averaged out to determine the basket price corresponding to the value
of Controlled Oil.  

 

8.4.2                      To determine the
Basket Price of Controlled Condensates, the guidelines detailed in subheading
8.4.1 will apply, as appropriate. The Parties may agree to the adjustments
needed so the basket price will best reflect the value of the Controlled
Condensates.  

 

8.4.3                      To determine the
Basket Price for Controlled Natural Gas Liquids, the procedure established in
subheading 8.4.1, will be followed, as applicable. The Parties may agree to
certain necessary adjustments so the Basket Price will reflect as best possible
the value of Controlled Natural Gas Liquids. 

 

8.4.4                      The price of
Controlled Natural Gas will be reflected by the Realized Price, which should
reflect the selling price in the domestic market or at an export point within
the national territory, as applicable. The minimum value to be used as Realized
Price will be 0.60 US$ / MMBtu. 

 

8.4.5                      If the Parties cannot
agree on any of the issues described in this heading, the

 

 

provisions in heading 21.2 will apply. 

 

8.5                     Notwithstanding
provisions in paragraph d) under section 2.5 of Annex “E”, Accounting
Procedure, if at any time times the Parties identify a mistake in calculating
the factor  Rt-1 and that a
different Rt-1 should have been applied or that said factor should
have been applied at another time, the corresponding correction will be
introduced retroactively to the time when the error was made and the percent
royalty will be adjusted starting at that period. All adjustments resulting
from the lower payment of a royalty will accrue interest on behalf of the affected
party from the moment when the error was made. Refunds to the Contractor for
the payment of excess royalties will be charged against the balances PERUPETRO
may have to transfer to Treasury.  

 

8.6                     The amount of the
royalty will be calculated for each valuation period. The corresponding payment
will be made in dollars, at the latest in the second business day after the end
of the corresponding fortnight, and PERUPETRO will issue the corresponding
certificate on behalf of the Contractor 
pursuant to law. The volume of Controlled Hydrocarbons for every
fortnight will be supported by the control vouchers PERUPETRO will deliver to
the Contractor after duly signing them, as proof of conformance. 

 

8.7                     On the contrary, if
the Contractor fails to pay PERUPETRO the amount of royalties due, fully or
partially, within the deadline foreseen in heading 8.6, the Contractor will
deliver to PERUPETRO the hydrocarbons it owns and that were extracted from the
Agreement Area in the amount needed to pay the amount due, as well as the
expenses incurred and interests accrued, pursuant to heading 19.6.  

 

CLAUSE
NINE – TAXES 

 

9.1                     The Contractor will
be subject to the ordinary tax regime in force in the Republic of Peru,
including the ordinary tax regime for income tax, as well as the specific
regulations set forth in this respect by Law N° 26221, in force by the date of
signing.  The State, through the Ministry
of Economy and Finance, guarantees the Contractor the benefit of tax stability
during the life of the Agreement, as a result of which the latter will be
subject only to the tax regime in force on the Date Of Signing, pursuant to
provisions in the “Reglamento de la Garantía de la Estabilidad Tributaria y de
las Normas Tributarias de la Ley N° 26221, Ley Orgánica de Hidrocarburos
(Regulations of the Tax and Tax Regulations Stability under Law  26221, Organic Hydrocarbons Law)”, approved
by Supreme Decree N° 32-95-EF, in the “Law regulating stability contracts with
the State under the protection of Sectorial Laws – Law N° 27343” as applicable,
and in the “Updated Law for Hydrocarbons – Law N° 27377”. 

 

9.2                     Export of
hydrocarbons from the Agreement Area made by the Contractor are tax exempted,
including tax exemptions that require an explicit statement. 

 

9.3                     PERUPETRO will pay
the “canon”, “surplus canon” and participation in revenues and

 

 

profits. 

 

9.4                     The Contractor,
pursuant to legal provisions in force, will pay the taxes charged on imports of
goods and services the Contractor may require to perform the Operations, as
required by law. 

 

9.5                     Pursuant to
provisions under article 87 of the Tax Code, the Contractor may carry its books
in dollars and, consequently, the calculation of the basis for  tax payments under his responsibility as well
as the amounts of such taxes and their actual payment, will proceed pursuant to
existing laws. 

 

9.6                     The Contractor will
enforce the linear amortization method over a period of five (5) years
starting on the year of the Date for the Beginning of Commercial Extraction.
This linear amortization will be applied to all exploration and development
expenses and to all investments made by the Contractor starting on the Date of
Signing of the Contract until the Date of Beginning of Commercial Extraction.
It is hereby set forth that the above mentioned amortization period may be
extended, but under no circumstance beyond the term of the Agreement, if
because of reasons related to prices or any other circumstance, agreed by the
Parties, and after applying the linear amortization described in the previous
paragraph, the Contractor’s financial statements yield a negative bottom line
or a fiscal loss that, in the Contractor’s view, it may not be set off for tax
purposes pursuant to tax regulation in force. The extended amortization period
will be reported in advance to the National Superintendence for Tax
Administration. 

 

CLAUSE
TEN – CUSTOMS DUTIES 

 

10.1              The Contractor is
authorized to import on a final or temporary basis, and pursuant to legal
provisions in force, any good it may need for the economical and cost-effective
and efficient execution of the operations. 

 

10.2              The Contractor may
import on a temporary basis, for a period of two (2) years, all the goods
required for its activities and have the corresponding import duties suspended,
including those requiring an express suspension statement. If an additional extension
is needed, the Contractor may request such extension from PERUPETRO for periods
of one year and for a maximum two (2) such periods. PERUPETRO will obtain
the Directorial Resolution from the General Hydrocarbons Bureau. The National
Superintendent for Tax Administration will authorize the extension of the
temporary importation regime based on the mentioned documents. The procedure,
records and guarantees needed to enforce the temporary importation regime will
follow the rules set forth in the General Customs Law, as amended and
regulated. 

 

10.3              The importation of
goods and inputs required by the Contractor during the exploration stage for
exploration activities is exempt from all taxes, including exemptions requiring
an express statement, provided they are also comprised in the list of goods
subject to such benefits, pursuant to provisions in Article 56o of Law N°
26221. The benefit will apply during the entire exploration stage. 

 

 

10.4              The taxes levied on
the importation of goods and inputs required by the Contractor for development
and exploration activities during the development stage will be paid and borne
by the importer. 

 

10.5              PERUPETRO may inspect
the goods imported on either a definitive or temporary basis as provided for in
this clause for the exploration activities during the exploration stage to
certify whether those goods were imported exclusively for the Operations. 

 

10.6              The Contractor shall
periodically report to PERUPETRO the goods and inputs exempted from duties
pursuant to provisions in article 56o of Law N° 26221. The Contractor may not
export back or use for other purposes the goods and inputs described in the
previous paragraph without PERUPETRO’s authorization. After obtaining such
authorization, the Contractor will pay the corresponding taxes, pursuant to
article 57 under Law N° 26221. 

 

CLAUSE
ELEVEN.- FINANCIAL RIGHTS 

 

11.1              State
Guarantee.

 

The Central Reserve Bank of Peru is Party to
this Agreement, pursuant to provisions of Law No 26221 and Legislative Decree
No 668, so as to provide the Contractor the State’s guarantees described in
this clause and pursuant to the legal regulations in force at the Date of
Signing. The guarantees provided by this clause also comprise an eventual
cession, pursuant to the provisions of the Hydrocarbons Law and this Agreement.

 

11.2              Exchange
Rate Regime 

 

The
Central Reserve Bank of Peru, on behalf of the State and pursuant to legal
provisions in force at the date of signing guarantee the Contractor will enjoy
the exchange rate regime in force on the Date of Signing and, consequently, the
Contractor will enjoy the right to the free availability, holding, use and
disposition, both internally and externally, of foreign currency as well as
free conversion of domestic currency into foreign currency in the open exchange
market under terms and conditions set forth in this clause.  In this regard, the Central Reserve Bank of
Peru, on behalf of the State, guarantees the Contractor, pursuant to the legal
regime in force on the Date of Signing, the following: 

 

a)                  Free availability to
the Contractor of up to one hundred percent (100%) of the foreign currency
earned by its exports of Controlled Hydrocarbons, same which may be deposited
directly in its own bank accounts, locally or overseas. 

 

b)                  Free availability and
right to freely convert into foreign currency up to one hundred percent (100%)
of the national currency earned from its sales of Controlled Hydrocarbons in
the domestic market, and the right of deposit directly in its own bank
accounts, locally or overseas, both the foreign and domestic currencies. 

 

c)                  Right to maintain,
control and manage bank accounts in any currency, both locally and overseas,
and to control and freely use those accounts, 
and to freely

 

 

maintain and dispose of abroad the funds
deposited in those accounts without any restriction whatsoever. 

 

d)      Notwithstanding the above, the Contractor has
the right to freely dispose of, distribute, send or withhold abroad without any
restriction whatsoever its net annual profits calculated pursuant to
regulations in force. 

 

11.3              Foreign
Currency Availability and Conversion 

 

It is hereby agreed that the Contractor will
convert currency through financial system entities established in Peru, as
described in paragraph b) under heading 11.2. If the availability of foreign
currency may not be totally or partially served by the above mentioned
entities, the Central Reserve Bank of Peru guarantees that it will provide the
necessary foreign currency. For that purpose, the Contractor will address the
Central Bank in writing and send a photocopy of the response letters received
from not less than three (3) financial system entities reporting their
inability to serve, fully or partially, the Contractor’s foreign currency
requirements.  The letters from the
financial system entities will remain valid for two business days after the
date when they were sent.  Before 11:00 a.m.
of the Business Day after the above described documents were submitted, the
Central Bank will inform the Contractor on the exchange rate to be used for the
required conversion, same which will remain in force provided the Contractor
delivers the matching value in domestic currency for the requested transaction
on the same day.  If, for any reason, the
matching amount is not delivered by the Contractor at the appointed time, the
Central Reserve Bank of Peru will report on the following Business Day, within
the same time restriction, the exchange rate to be used for the conversion if
undertaken on that same day. Notwithstanding the above, if the Central Reserve
Bank of Peru timely certifies said availability cannot be provided fully or
partially by the above mentioned entities, it may notify the Contractor to
deliver to the Central Reserve Bank of Peru the domestic currency in the amount
required to proceed to the currency conversion.

 

11.4              Changes
to the exchange regime 

 

The Central Reserve Bank of Peru, on behalf of
the State, guarantees the regime described in this clause will remain in force
for the benefit of the Contractor during the life of the agreement. If for any
reason, the rates were not longer fixed by supply and demand, the exchange rate
applying to the Contractor will be as follows: 

 

a)                  If a single official
exchange rate was established at one single value for all currency transactions
or foreign currency related transactions, starting on the date of enforcement,
the exchange rate will be that provided for in this agreement. 

 

b)                  If a system of
multiple, differential exchange rates were introduced or if different values
were given to a single exchange rate, the exchange rate to be used for all the
Contractor transactions will be highest foreign currency value.

 

 

11.5              Enforcement
of Other Legal Provisions 

 

The guarantees provided by the Central Reserve
Bank of Peru to the Contractor will remain in force during the life of the
Agreement. The Contractor will have the right to embrace, totally or partially,
as pertinent, the new legal provisions regarding exchange rates or regulations
issued during the life of the Agreement, including those dealing with foreign
currency exchange issues not addressed in this clause, provided they are either
of a general nature or apply to the hydrocarbons industry. Embracing the new
provisions  or regulations will not
affect the guarantees described in this clause, nor the exercise of guarantees
dealing with aspects other than those included in the new provisions or
regulations which the Contractor may have embraced. It is expressly agreed that
the Contractor may, at any time, adopt the guarantees it decided to dismiss on
a temporary basis and that returning to those guarantees does not create any
rights or duties to the Contractor concerning the period during which it
decided to adopt the new provisions or regulations described above.  In addition, it is hereby explained that
adopting such guarantees will not hamper those 
or any other guarantees, nor does it create any additional rights or
duties to the Contractor. The Contractor’s adopting the new legal exchange
provisions or regulations, as well as its decisions to return to the guarantees
it decided to dismiss temporarily, shall be reported in writing to both the
Central Reserve Bank of Peru and PERUPETRO. The provisions under this heading
are established notwithstanding those in the first paragraph under heading
11.4. 

 

11.6              Economic
Reporting 

 

The Contractor will send monthly reports to the
Central Reserve Bank of Peru  relating
its economic activity pursuant to article 74° of the Bank’s Organic law enacted
by Decree Law N° 26123. 

 

CLAUSE
TWELVE.- LABOR 

 

12.1              The Parties agree
that at the end of the fifth year after the Date of Beginning of Commercial
Extraction, the Contractor will have replaced Peruvian personnel of equivalent
professional qualifications for all its current personnel. Exempted from the
above are the foreign personnel filling management positions and those needed
to perform some specialized technical jobs, for the Operations.  The Contractor agrees to train and form the
Peruvian personnel to undertake specialized technical tasks so they may
gradually substitute for the foreign personnel in performing such jobs. 

 

12.2              At the beginning of
Operations and the end of each calendar year, the Contractor will deliver to
PERUPETRO a statistical chart of the personnel under its service who are
performing the Operations, using the form PERUPETRO will deliver to the
Contractor. 

 

CLAUSE
THIRTEEN.- ENVIRONMENTAL PROTECTION AND COMMUNITY RELATIONS 

 

13.1              The Contractor
commits to follow the provisions under the “Environmental Protection
Regulations for Hydrocarbon Activities” enacted by Supreme Decree N°
015-2006-EM as amended, Law N° 28611, the General Environmental Law, as
amended, and all other

 

 

environmental provisions in force, as
applicable. 

 

13.2              The Contractor will
undertake the operations in strict compliance with sustainable development,
conservation and environmental protection guidelines, pursuant to the laws and
regulations concerning environmental protection, Amazon indigenous and peasant
communities, and international treaties ratified by the Peruvian State. In
addition, it will respect the culture, habits, principles and values of such
communities and will maintain harmonious relations with the Peruvian State and
civil society. 

 

13.3              The Contractor will
use the best available methods available from international industry practice,
pursuant to environmental laws and regulations, for prevention and control of
environmental pollution from the Operations; in addition, it will perform the
Operations pursuant to existing regulations on the preservation of biological
diversity, natural resources, and health and safety of its people and its own
workers.  

 

CLAUSE FORTEEN – HYDROCARBON
CONSERVATION AND LOSS PREVENTION 

 

14.1              The Contractor shall
adopt all reasonable measures to prevent the loss or waste of the hydrocarbons
on the surface or in the ground in any possible during the prospecting and
development activities. 

 

14.2              The Contractor will
immediately to PERUPETRO any report surface oil spills in or outside the
Agreement Area, pursuant to legal provisions in force, indicating an estimated
spill volume and the actions taken to remediate the spill. PERUPETRO has the
right to verify the spill volume and analyze the underlying causes.  In case of surface losses in or outside the
Agreement Area before the Production Control Point caused by the Contractor’s
serious negligence or fraud, the loss volume will be valued according to Clause
Eight herein and included in the royalty calculations, notwithstanding
provisions under heading 13.1. In case of losses before the Production Control
Point, occurring under circumstances other than those described in the
preceding paragraph and that result in remedy pay to the Contractor by third
parties, the amount of the received compensation for the lost hydrocarbons,
multiplied by the factor resulting from a division between amount of the
royalty paid for the Controlled Hydrocarbons at the Production Control Point
corresponding to the lost hydrocarbons during the fortnight when the loss
occurred times the value of said Controlled Hydrocarbons calculated pursuant to
heading  8.2  for the same fortnight will be the amount the
Contractor shall pay for the royalty for the lost hydrocarbons, at the latest
on the second business day after such remedy was paid, notwithstanding
provisions under heading 13.1. 

 

CLAUSE
FIFTEEN.- TRAINING AND TECHNOLOGY TRANSFER 

 

15.1              Pursuant to article
29o of Law N° 26221, the Contractor commits to make available to PERUPETRO,
every year during the life of the Agreement, the following amounts:

 

 

	
  Paragraph

  	
   

  	
   

  	
   

  	
  Annual

  Contribution

  (in US$)

  	
   

  
	
  a)

  	
   

  	
  Until the calendar year of the Date Of Beginning Of Commercial
  Extraction.

  	
   

  	
  10,000.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  b)

  	
   

  	
  After the Date Of Beginning Of Commercial Extraction.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Barrels per Day

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  From 

  	
  0

  	
  to

  	
  500

  	
   

  	
  10,000.0

  	
   

  
	
   

  	
   

  	
  From 

  	
  501

  	
  to

  	
  1,000

  	
   

  	
  15,000.0

  	
   

  
	
   

  	
   

  	
  From 

  	
  1,001

  	
  to

  	
  1,500

  	
   

  	
  20,000.0

  	
   

  
	
   

  	
   

  	
  From 

  	
  1,501

  	
  to

  	
  2,500

  	
   

  	
  30,000.0

  	
   

  
	
   

  	
   

  	
  From 

  	
  2,501

  	
  to

  	
  5,000

  	
   

  	
  40,000.0

  	
   

  
	
   

  	
   

  	
  More than 5,000

  	
   

  	
  50,000.0

  	
   

  

 

The first payment will be made on the Date of
Signing in an amount that will be determined by multiplying the annual
contribution corresponding to paragraph a) above plus the fraction resulting
from dividing the number of days before finishing the calendar year underway
plus three hundred sixty five (365). The annual training contribution under
paragraph b) will correspond to the segment of average daily production of
Controlled Hydrocarbons for the prior calendar year. This contribution will be
determined by dividing the total volume of Controlled Hydrocarbons of such year
by the corresponding number of days. To determine the Barrels/Day in case of
controlled natural gas production, the following equation will be used: Barrels
will be equivalent to the volume of natural gas expressed in standard cubic
feet divided by the five thousand six hundred twenty six (5,626) value. The
payments described in this heading, excepting the first payment, will be made
in January each year. Payments may be effected by bank transfer following
PERUPETRO’s instructions in this regard. 

 

15.2              The Contractor will
fulfill all the obligations stated by heading 15.1 by making a deposit for the
account PERUPETRO shall indicate. PERUPETRO will deliver the Contractor a
communication showing conformance of payment within five (5) Business Days
after receiving the contribution. 

 

15.3              Training programs
organized by the Contractor for its own personnel, both in Peru and overseas,
will be reported to PERUPETRO. 

 

15.4              The Contractor
commits, during the development stage and if possible during the exploration
stage, to put in place an internship program for university students that will
provide complementary training pursuant to their respective universities’
requirements and existing law in Peru but without creating any labor relationship
between the Parties. In addition, the Contractor will report such program to
PERUPETRO. 

 

CLAUSE
SIXTEEN – CESSION AND ASSOCIATION 

 

16.1              If the Contractor
enters into an agreement to assign its contract position or to partner with a
third party within the Agreement, it will report such agreement to PERUPETRO.
The letter should include a request to evaluate the potential assignee or third
party who will attach the necessary complementary information for its

 

 

qualification
as an oil company, pursuant to existing regulations. If PERUPETRO grants the
requested qualification, the assignment or association will be performed
through an amendment to the Agreement, pursuant to law. 

 

16.2              After notifying
PERUPETRO, the Contractor may assign its contractual position or associate with
an affiliate, pursuant to law. 

 

16.3              The assignee or third
party will provide al the guarantees and will undertake all the rights,
responsibilities and obligations flowing from the Agreement. 

 

CLAUSE
SEVENTEEN - ACT OF GOD OR FORCE MAJEURE 

 

17.1              Neither of the
Parties may be imputed failure to execute an obligation or for its partial,
late or defective compliance with same during the period while such Party is
affected by an Act of God or Force Majeure, provided it accredits such cause
prevented it from complying. 

 

17.2              The Party affected by
the Act of God or Force Majeure will report it in writing within five (5) days
after such event takes place to the other Party and will document the way in
which such event prevents it from complying with the corresponding
obligation.   The other Party will reply
in writing accepting or rejecting such explanation within fifteen (15) days
after receiving the above letter. 
Failure to respond by the notified Party within the term foreseen will be
construed as an acceptance of the proposed explanation. In case of partial,
late or defective execution of the obligation hampered by the Act of God or
Force Majeure, the obligated party will make its best effort to carry it out so
as to accomplish the objectives expressed jointly by the Parties in the
Agreement and the Parties will continue to undertake their Contract-based
obligations affected in anyway by such event. The Party affected by the Act of
God or Force Majeure will resume its obligations and contract-based conditions
within a reasonable period of time after said cause or causes have been cured,
and it will notify the other party in five(5) days after such cause was
cured. The harmless Party will cooperate with the affected party in its effort.
In cases of strike, stoppages or similar events, neither of the parties
will be allowed to impose the other a solution against its will. 

 

17.3              The period during
which the effect of the Act of God or Force Majeure prevents compliance
with  Contract-based obligations will be
added to the period foreseen to comply with such obligations and, if
appropriate, to the corresponding Agreement and the life of the Agreement.  If the Act of God or Force Majeure affects
the execution of any of the minimum work programs described in heading 4.6, the
warrant bond posted to guarantee such program will remain in full force and
effect and will not be executed during the period while PERUPETRO does not
issue a statement about the cause invoked by the Contractor, and if any discrepancy
shall emerge about the existence of such cause while the discrepancy is
resolved. With that goal in mind, the Contractor will extend or replace such
warrant bond, as appropriate.  Likewise,
as long as PERUPETRO does not make a statement about the reason invoked by the
Contractor or

 

 

while the discrepancy
subsists about the existence of such cause, the period for executing the
minimum work program will be suspended. If PERUPETR accepts the Act of God or
Force Majeure invoked by the Contractor, the latter will resume the execution
of the minimum work program as soon as the effect of the invoked cause ceases. 

 

17.4              PERUPETRO will make
every necessary effort to obtain the assistance or cooperation of the
corresponding document authorities so that the necessary measures will be taken
to ensure the continued and safe implementation and operations of the
activities foreseen in the Agreement.  It
is hereby agreed that when any of the Parties, at its sole criterion,
considered its personnel or its subcontractors’ personnel cannot operate within
the agreement area under appropriate conditions to guarantee their physical
integrity, invoking such situation as an Act of God or Force Majeure, will not
be challenged by the other party. 

 

17.5              If the Contractor is
affected by an Act of God or Force Majeure preventing it for completing the
execution of a minimum work program for a period underway, at the end of twelve
(12) consecutive months starting when such cause emerged the Contractor may
terminate the Agreement, for which purpose it will communicate its decision to
PERUPETRO at least thirty (30) days before releasing the Agreement Area. 

 

17.6              The provisions in
this clause 17 do not apply to the obligations to pay money. 

 

CLAUSE
EIGHTEEN - ACCOUNTING  

 

18.1              The Contractor will
keep its accounting records following the accounting principles and practices
established and accepted in Peru. In addition, it will keep and maintain all
its books, detailed records and documents as may be required to account for and
oversee its activities in Peru and abroad, as related to the purpose of the
Agreement, and for properly documenting its revenues, investments, costs,
expenses and taxes for each fiscal year. Moreover, within one hundred twenty
(120) days starting of the Date of Signing, the Contractor will deliver to
PERUPETRO a copy in Spanish of the Manual of Accounting Procedures it proposes
to record its operations. The “Manual of Accounting Procedures” shall include,
among others, the following: 

 

a)                  The language and currency
for the accounting records; 

 

b)                  Applicable accounting
principles and practices; 

 

c)                  Accounts  structure and plan pursuant to requirements made by the
National Commission for the Supervision of Companies and Securities  (Comisión Nacional Supervisora de Empresas y
Valores - CONASEV); 

 

d)                  Mechanisms to
identify the accounts corresponding to the agreement and other hydrocarbons
agreements, their related activities and other activities; 

 

e)                  Mechanisms to
attribute shared revenues, investments, costs and expenses to the agreement,
other hydrocarbon agreement, related activities and other activities; and, 

 

f)                    Determining the
revenues and expenses accounts, as well as the detailed records needed for
computing the Rt-1 factor, and the detailed procedures described in

 

 

Annex “E” of the Agreement, as appropriate. 

 

18.2              If the “Manual of
Accounting Procedures” includes the items described in paragraph f) above,
within thirty (30) days after having receive it, PERUPETRO will inform the
Contractor of the approved accounting procedures to calculate Rt-1
factor described in that paragraph or alternatively, the suggestions it
proposes to improve and/or expand such procedure. Failure by PERUPETRO to
provide such comment within the abovementioned period will be construed as the
granting of the approval to the procedure described in paragraph f) under
heading 18.1 in every respect. Within the same period of thirty (30) days after
receiving the “Manual of Accounting Procedures”, PERUPETRO may make suggestions
or remarks to improve, expand or delete one or several of the accounting
procedures proposed in the Manual.  All
changes concerning the accounting procedures for the approved Rt-1
factor will be previously proposed to PERUPETRO for approval, following for
that objective the procedure established in the first paragraph under this
heading.  

 

18.3              The Contractor’s
accounting books, financial statements and supporting documents will be made
available to authorized PERUPETRO representatives for verification in the Contractor’s
offices at its address of record, after having been served appropriate notice. 

 

18.4              The Contractor will
keep a record of all its movable and immovable properties used in connection
with the Agreement’s Operations pursuant to the accounting regulations in force
in Peru and international oil industry generally accepted accounting practices.
PERUPETRO may request the Contractor all the information about its properties
whenever it deems appropriate. Likewise, PERUPETRO may request the Contractor to
furnish its schedule of physical inventory-taking of the goods used in its
Operations, segregated by type of property, whether belonging to the Contractor
or third parties, and may request to be allowed to participate in such
inventory-taking, if it so considers appropriate. 

 

18.5              The Contractor will
send, within thirty (30) days after its issuance, a copy of its independent
auditors’ report concerning the Contractor’s financial statement for the prior
economic year. If the Contractor has signed more than one agreement with
PERUPETRO or carries out activities other that those foreseen in the Agreement,
it will carry separate accounting to prepare independent financial statement
for each agreement and/or activity and, therefore, the report prepared by its
independent auditors shall also include the financial statements for each
contract and/or activity.  

 

18.6              The Contractor will
send PERUPETRO, at the latter’s request, the information included in its annual
Income Tax Statement, filed with the National Superintendence of Tax
Administration or its successor. 

 

C.-                    SUNDRIES 

 

19.1              If in one or more
cases any of the Parties fails to invoke or insist on compliance

 

 

with any of the provisions under the Agreement
or to exercise any of the rights awarded under the Agreement, such omission or
failure to insist will not be construed as a waiver of such provision or
rights. 

 

19.2              In executing the
Operations, the Contractor will comply with all the decisions made by competent
authorities in the exercise of their legal mandate.  Likewise, the Contractor commits to honor all
the decisions of competent authorities relating to national defense and
security. 

 

19.3              The Contractor has
the right to freely enter and leave the Agreement Area. 

 

19.4              Pursuant to
legislation in force, the Contractor will have the right to utilize in the
Operations, the water, wood, gravel and other construction materials found
within the Agreement Area with due respect for third parties rights as
appropriate.  

 

19.5              The license to use
technical information concerning the Agreement Area, and other areas, which the
Contractor may wish to purchase from PERUPETRO, will be granted pursuant to
PERUPETRO’S policy for Managing Exploration and Development Technical
Information for which purpose the Parties will sign a Letter of Agreement.

 

19.6              If one of the Parties
fails to pay, within the agreed deadline, the amount due, it will pay following
interest trade starting on the day after the date foreseen for that payment: 

 

a)                  For debts payable
denominated in domestic currency, the applicable rate will be the active rate
in domestic currency (TAMN) for loans with tenure up to three hundred sixty
(360) days as published by the Superintendence for Banking and Insurance
Companies or its successor, and applied over the period elapsed between the due
date and the actual payment date; and, 

 

b)                  For debts denominated
in dollars, and payable in domestic currency or in dollars, the applicable rate
will be the U.S. Prime Rate plus three percent (3%) points published by the
Federal Reserve of the United States of America, applied to the period running
from the due date to the actual date of payment, and in the absence of the
latter rate, the Parties will agree on an appropriate replacement.  

 

19.7              The provisions under
heading 19.6 will apply to all debts between Parties flowing from this
Agreement or any other agreement or transaction between the Parties. By written
agreement between the parties, a different provision may be introduced
concerning the payment of interest. The provisions herein applicable will not
in any way modify the legal rights and resources available to the Parties to
enforce the payment of amounts due.   

 

19.8              In case of national
emergency declared by law, by virtue of which the State is obliged to purchase
hydrocarbons from local producers, such purchase will be made at the prices
resulting from enforcing the valuation mechanisms established by clause eight
and shall be  payable in dollars within
thirty (30) after the delivery has been effected. 

 

 

19.9              Through the Ministry
of Defense and Ministry of Internal Affaire the State will give the Contractor
within the Operations and to the extent possible all necessary security
measures. 

 

19.10       The Contractor will hold PERUPETRO and the
State free, and indemnify them, as appropriate, from any claim, legal action or
other charges, and encumbrances from third parties that may result from the
Operations and the relations the Contractor may enter in connection with the
Agreement and which may flow from any contractual or extra-contractual
relationship, excepting those originating by actions of PERUPETRO itself or the
State. 

 

19.11       The Contractor will freely dispose of the
hydrocarbons to which it is entitled pursuant to the Agreement. 

 

CLAUSE
TWENTY – NOTIFICATIONS AND COMMUNICATIONS 

 

20.1              Every notification or
communication relating to the Agreement will be considered as validly served if
made in writing and delivered against a slip or received by certified mail or
facsimile or other means agreed upon by the parties or addressed to the
addressee during a business day at the following addresses of record:  

 

PERUPETRO:

PERUPETRO S.A.

General Manager

Av. Luis Aldana No 320

Lima 41 - Perú

Fax: 6171801

 

Contractor:

BPZ EXPLORACION &
PRODUCCION S.R.L.

General Manager

Manuel de Falla N° 297

Lima 41 - Perú

Telf. (511) 476-2244 /
476-3276 / 476-9919

Fax:  (511) 225-3289 / 476-7686

 

Corporate Garantor:

BPZ ENERGY INC.

President

580 Westlake Park Blvd., Suite 525

Houston, Texas 77079

Tel:  (281) 556-6200

Fax:  (281)
556-6377

 

20.2              Either of the Parties
has the right to modify the address or the number of facsimile for purposes of
sending notifications and communications by means of a notice sent to the other
Party at least five (5) Business Days before the change takes place.  Provisions included in the first paragraph
under this heading apply also to the 

 

 

corporate guarantor. 

 

CLAUSE TWENTY ONE.- PERUVIAN LAW
APPLIES. CONFLICT RESOLUTION 

 

21.1              Peruvian
Law applies.  This Agreement has
been negotiated, drafted and signed pursuant to legal regulations in force in
Peru and its contents, execution and derived consequences will be governed by
the internal laws and regulations in force in the Republic of Peru. 

 

21.2              Technical
Conciliation Committee.  The Technical Conciliation
Committee will convene within fifteen (15) Business Days after it has been
convoked by any of the Parties and will sit three (3) qualified members
with expertise in the topic to be addressed. Each of the Parties will choose
one (1) member and the third member will be appointed by those members
already designated by the Parties. If either of the Parties fails to designate
its representative within the foreseen period or if the designated members fail
to agree on the third member within the foreseen period or if the Technical
Conciliation Committee fails to issue an opinion within the foreseen period,
either of the Parties may submit the discrepancy for resolution pursuant to
provisions under heading 21.3 under this Agreement. Within sixty (60) days
starting on the Date of Signing, The Parties will agree on the procedure to be
followed by this Committee. The Technical Conciliation Committee’s resolutions
must be issued within thirty (30) days after its inauguration and will be
mandatory until a final arbitration decision, if such procedure is invoked, is
issued. Notwithstanding compliance with the decision issued by the Technical
Conciliation Committee any of the Parties may have recourse to arbitration
pursuant to heading 21.3 within sixty (60) days after the date when the
above-mentioned decision was notified and received. 

 

21.3              Arbitration
agreement. Any litigation, controversy, difference or complaint resulting from or
related to the Agreement, including its interpretation, compliance, termination,
effectiveness or validity, between the Contractor and PERUPETRO, and which
cannot be resolved by mutual agreement between the Parties, will be resolved
through international de jure arbitration pursuant to article 68o of Law N°
26221. The Parties commit to do their best effort to carry the arbitration
proceeding to a successful end and execution. The arbitration will be managed
by the International Center for the Settlement of Investment Related Disputes
(hereafter ICSID) for all issues not foreseen by this clause.  Arbitration will be organized and evolve
pursuant to ICSID arbitration rules in force at the Date of Signing. There
will be three (3) arbitrators, the Parties designating one each, and the
third one being appointed by the Party-designated arbitrators. In finding a
solution to the litigation, controversy, difference or complaint submitted to
arbitration, the arbitrators will enforce the domestic law of the Republic of
Peru. Arbitration may take place at the Permanent Arbitration Tribunal or at any
other appropriate institution, whether public or private, with which the Center
has reached an agreement for that purpose, or at any other venue approved by
the Commission or

 

 

Tribunal after consultation with the Secretary
General. During the arbitration, the Parties will continue to perform their
Contract-derived obligations to the extent possible, including those subject
matter to arbitration. Notwithstanding the above, if the issue under
arbitration concerns compliance with Contract obligations guaranteed by the
warrant bond described in heading 3.10, the respective terms will be suspended
momentarily and such warrant bonds may not be executed but shall be kept
current during the arbitration proceeding. To that end, the Contractor shall
extend or replace such warrant bond as required. The decision will be mandatory
to the Parties and may not be appealed or in any other way challenged,
excepting under the provisions of the Convention for the Settlement for
Disputes Relating to Investments between States and Nationals from Other
States, hereafter the Convention.  The
arbitration decision issued under the Convention will be executed within the
Peruvian territory, pursuant to the regulations in force concerning the execution
of court decisions. The Parties waive their rights to filing diplomatic
complaints. 

 

21.4              This Agreement is
drafted and interpreted in the Spanish language for which reason the Parties
agree this version in the only and official version of same. 

 

CLAUSE
TWENTY SECOND.- TERMINATION 

 

22.1              Agreement termination will be governed by its own
provision, complemented by regulations under Law N° 26221; and for whatever may
not be foreseen in that law, by Civil Code provisions. Excepting those cases
foreseen in heading 22.3, when one of the Parties fails to honor any of its
obligations pursuant to the Agreement for causes other than an Act of God or
Force Majure or other non-imputable causes, the other Party may notify the
former party about that breach and its intent to terminate the Agreement within
sixty days, unless the other non-complying party cures the above-mentioned
breach or demonstrates to the other Party proper cure is underway, within that
period. If the notified party challenges or rejects such breach, the party may
refer the issue to arbitration pursuant to clause twenty one herein within
thirty (30) days after notification was served. If so, the sixty (60) day
period will be suspended until the arbitration decision is notified to the
Party, and the agreement will be terminated, if after confirming the breach,
the defending Party fails to provide cure or to demonstrate before the other
party such cure is underway, within such period. The Agreement may be
terminated before the expiration of the Agreement’s life by express agreement
between the Parties. 

 

22.2              At the termination of
the Agreement, all the parties’ rights and obligations shall sees as specified
in the Agreements while due consideration will be given to the following: 

 

a)                  The rights and
obligations of the parties flowing from this Agreement before such termination
will be honored, including, inter alia, 
the Contractor’s rights to the extracted hydrocarbons and the guarantees
set forth in the Agreement;   and,

 

b)                  In case of breach by
any of the Parties before the termination of any of the

 

 

obligations set forth in the Agreement, said
breach will be cured by the offending Party, excepting obligations which for
their own nature are extinguished when the Agreement itself is terminated.  

 

22.3              The Agreement will be
resolved de jure and without further procedure in the following cases: 

 

22.3.1                       If the Contractor
fails to execute the minimum work program of any period during the exploration
stage after having enjoyed the postponements provided for in heading 3.4, if
applicable, and without an explanation provided to PERUPETRO’s satisfaction,
excepting provisions under headings 4.7 and 4.13.

 

22.3.2                       If at the end of the
exploration stage or the withholding period, whatever happens last, no
announcement of commercial discovery is made. 

 

22.3.3                       In the cases
specified under headings 3.10, 4.2 and 17.5. 

 

22.3.4                       If the Contractor is
declared insolvent, dissolved, liquidated or bankrupt, and the Contractor fails
to serve notice as described in heading 16.1 within fifteen (15) days, identifying
the third party that will take its position in the Agreement.  

 

22.3.5                       If the corporate
guarantee mentioned in heading 3.11 is not in force and the Contractor does not
comply in replacing it within fifteen (15) Business Days being served PERUPETRO’S
notification requiring such replacement, or if the entity that issued the
guarantee described in heading 3.11 was declared insolvent, dissolved,
liquidated or bankrupt and the Contractor fails to consequentially report
PERUPETRO within fifteen (15) business Days after the request made by PERUPETRO
and identify the third party that will provide the corporate guarantee,
provided PERUPETRO evaluates and approves such candidate.

 

22.3.6                       By mandate of an
arbitration decision declaring, in the cases provided for under heading 22.1,
that failure to comply was not cured pursuant to provisions under that heading
or by arbitration decision declaring the termination of the Contract. 

 

22.4              Pursuant to
provisions under article 87 of Law N° 26221, in case of breach by the
Contractor of the provisions concerning environmental issues, OSINERGMIN will
impose the corresponding sanctions and the Ministry of Energy and Mines may
terminate the Agreement, after reporting to OSINERGMIN. 

 

22.5              If the Contractor, or
the entity that provides the guarantee described in heading 3.11, requests
protection against its creditors, PERUPETRO may terminate the Agreement if it
considers its rights under the Agreement are not properly protected.

 

22.6              At the termination of
the Agreement, the Contractor will turn over to the State through PERUPETRO, as
ownership, unless the latter does not require them, with no charge or cost to
it, in good state of repair, maintenance and operation, taking account of
normal wear resulting from normal wear and tear, the properties, power
facilities, campsites, means of communication, pipelines and other production
goods and facilities owned by the Contractor that will allow continuing with
the development operations. In case of joint development of oil, non-associated
natural gas and/or non-associated natural gas condensates at the end of the
term established in heading  3.1 for the
oil development stage, the Contractor will deliver as property to the State,
through PERUPETRO, unless the latter does not require them, without any charge
or cost to the latter, in good state of conservation and operation and taking
into account the normal wear and tear produced by the use of all the goods

 

 

and facilities needed for developing oil that
are not needed for developing non-associated natural gas and/or  non-associated natural gas and
condensates.  The goods and facilities
kept by the Contractor for developing non-associated natural gas and/or
non-associated natural gas or condensates that were also used for developing
oil, although still owned by the Contractor, will be used for that development,
for which purpose the Parties will sign an agreement. If the Contractor has
been using the goods and facilities described in the first paragraph under this
heading and they are not related exclusively to the operations or its
accessories, in other words, they have also been used for operations in other
areas under contracts in force for the exploration and development of
hydrocarbons in Peru, the Contractor will continue to own and utilize such
goods. 

 

22.7              For purposes of the
provisions under heading 22.6, during the last year of life of the Agreement,
the Contractor will provide PERUPETRO all the facilities and will assist it in
whatever may be necessary without interfering with the Operations, so PERUPETRO
can carry out all the acts and enter into all agreements that would allow an
ordered and uninterrupted transition of the Operations underway at the date of
termination of the Agreement.  

 

 

ANNEX “A”

 

DESCRIPTION
OF BLOCK XXII

 

LOCATION

 

Block XXII is located in provinces of Sullana,
Paita, Talara and Piura in Piura Department, and it is demarcated as shown in
Annex “B” pursuant to the following description.

 

REFERENCE POINT

 

Reference Point (R.P.) is the Belco F-a station
located at the Punta Arenas site in Talara District, Province of Talara,
Department of Piura.

 

DEPARTURE
POINT

 

From the Reference Point (R.P.) a distance of
23,438.782 m is measured to the East, then 11,775.863 m south until reaching
Point (59) which is the Departure Point (D.P.) of the Block’s perimeter.

 

BLOCK CONFIGURATION

 

From Point (59) or (P.P.) 8,000.000 m East are
measured in a straight line with Azimuth 90°00’00” until reaching Point (60).

 

From Point (60) 2,000.000 m are measured North
in a straight line with Azimuth 00°00’00” until reaching Point (56).

 

From Point (56) 5,000.000 m are measured East
in a straight line with Azimuth 90°00’00” until reaching Point (58).

 

From Point (58) 3,000.000 m are measured North
in a straight line with Azimuth 00°00’00” until reaching Point (53).

 

From Point (53) 12,957.320 m are measured East
in a straight line with Azimuth 90°00’00” until reaching Point (55).

 

From Point (55) 6,859.550 m are measured North
in a straight line with Azimuth 00°00’00” until reaching Point (44).

 

From Point (44) 10,839.142 m are measured
Northwest in a straight line with Azimuth 304°30’25”20 until reaching Point
(42).

 

From Point (42) 7,067.930 m are measured West
in a straight line with Azimuth 270°00’00” until reaching Point (41).

 

From Point (41) 3,000.000 m are measured North
in a straight line with Azimuth 00°00’00” until reaching Point (33).

 

From Point (33) 8,347.000 m are measured West
in a straight line with Azimuth 270°00’00” until reaching Point (31).

 

From Point (31) 3,822.000 m are measured North
in a straight line with Azimuth 00°00’00” until reaching Point (27).

 

From Point (27) 8,047.000 m are measured East
in a straight line with Azimuth 90°00’00” until reaching Point (28).

 

From Point (28) 4,428.000 m are measured North
in a straight line with Azimuth 00°00’00” 

 

 

until reaching Point (18).

 

From Point (18) 4,000.000 m are measured East
in a straight line with Azimuth 90°00’00” until reaching Point (19).

 

From Point (19) 2,500.000 m are measured North
in a straight line with Azimuth 00°00’00” until reaching Point (15).

 

From Point (15) 6,067.930 m are measured East
in a straight line with Azimuth 90°00’00” until reaching Point (16).

 

From Point (16) 24,148.949 m are measured
Southeast in a straight line with Azimuth 99°45’07”26 until reaching Point
(26).

 

From Point (26) 10,700.000 m are measured North
in a straight line with Azimuth 00°00’00” until reaching Point (13).

 

From Point (13) 19,101.047 m are measured
Northeast in a straight line with Azimuth 53°43’48”13 until reaching Point (3).

 

From Point (3) 4,300.000 m are measured
East in a straight line with Azimuth 90°00’00” until reaching Point (5).

 

From Point (5) 8,415.431 m are measured
Northeast in a straight line with Azimuth 54°58’43”19 until reaching Point (1) or
International Intermediate South Milestone.

 

From Point (1) we continue along the Peru
Ecuador borderline around 63,774.478 m, through the Chorrera, Pulgueras, Ceibo
Quemado, El Salto, Catana, Papaando Pilares, Pilares Alamor Milestone, until
reaching Point (30) or International Chira Alamor Milestone.

 

From Point (30) 18,633.080 m are measured
Southeast in a straight line with Azimuth 228°22’59”40 until reaching Point
(45).

 

From Point (45) 4,657.252 m are measured
Southwest in a straight line with Azimuth 194°55’53”10 until reaching Point
(52).

 

From Point (52) 34,696.721 m are measured
Southeast in a straight line with Azimuth 213°53’46”20  until reaching Point (95).

 

From Point (95) 19,000.000 m are measured South
in a straight line with Azimuth 180°00’00” until reaching Point (103).

 

From Point (103) 28,817.240 m are measured West
in a straight line with Azimuth 270°00’00” until reaching Point (100).

 

From Point (100) 21,762.490 m are measured
North in a straight line with Azimuth 360°00’00” until reaching Point (87).

 

From Point (87) 1,734.631 m are measured
Southwest in a straight line with Azimuth 266°15’41”70 until reaching Point
(86).

 

From Point (86) 1,195.908 m are measured
Southwest in a straight line with Azimuth 255°30’16”30 until reaching Point
(85).

 

From Point (85) 1,156.933 m are measured
Southwest in a straight line with Azimuth 249°48’54”50 until reaching Point
(84).

 

From Point (84) 2,208.385 m are measured
Southwest in a straight line with Azimuth 242°55’56”30 until reaching Point
(83).

 

 

From Point (83) 1,379.331 m are measured
Northwest in a straight line with Azimuth 356°27’11”60 until reaching Point
(82).

 

From Point (82) 1,499.920 m are measured
Northeast in a straight line with Azimuth 28°20’32”39 until reaching Point (81).

 

From Point (81) 768.224 m are measured
Northeast in a straight line with Azimuth 15°02’02”01 until reaching Point
(80).

 

From Point (80) 3,141.192 m are measured
Northwest in a straight line with Azimuth 340°13’51”00 until reaching Point
(79).

 

From Point (79) 5,896.561 m are measured
Southwest in a straight line with Azimuth 241°00’45”57 until reaching Point
(78).

 

From Point (78) 1,851.007 m are measured
Northwest in a straight line with Azimuth 340°39’14”00 until reaching Point
(77).

 

From Point (77) 4,828.030 m are measured North
in a straight line with Azimuth 360°00’00” until reaching Point (72).

 

From Point (72) 1,609.340 m are measured West
in a straight line with Azimuth 270°00’00” until reaching Point (71).

 

From Point (71) 10,582.760 m are measured North
in a straight line with Azimuth 360°00’00” until reaching Point (59) or Point
of Departure (P.D.) thus closing the Block’s perimeter.

 

Borders

 

To the North Block XXV and free areas, to the
East with the Republic of Ecuador and free areas, to the South Blocks XIII and
XXIV, to the west with Blocks XIII, III, IV and free areas.

 

PLOT
DEFINITION

 

Plot
1 surrounded by corner points 1, 2, 7, 6 and 5

 

Plot
2 surrounded by corner points 2, 8 and 7

 

Plot
3 surrounded by corner points 3, 4, 11, 10 and 9

 

Plot
4 surrounded by corner points 4, 5, 6, 12 and 11

 

Plot
5 surrounded by corner points 6, 7, 8, 14 and 12

 

Plot
6 surrounded by corner points 9, 10, 22, 21 and 13

 

Plot
7 surrounded by corner points 10, 11, 23 and 22

 

Plot
8 surrounded by corner points 11, 12, 14, 24 and 23

 

Plot
9 surrounded by corner points 15, 16, 17, 29, 28, 18 and 19

 

Plot
10 surrounded by corner points 27, 28, 32 and 31

 

Plot 11 surrounded by corner points 28, 29, 34,
43, 42, 41, 33 and 32

 

Plot
12 surrounded by corner points 17, 20, 35, 34 and 29

 

Plot
13 surrounded by corner points 20, 25, 36 and 35

 

Plot
14 surrounded by corner points 21, 22, 37, 36, 25 and 26

 

Plot
15 surrounded by corner points 22, 23, 38 and 37

 

Plot
16 surrounded by corner points 23, 24, 39 and 38

 

 

Plot
17 surrounded by corner points 24, 30, 40 and 39

 

Plot
18 surrounded by corner points 34, 35, 47, 46, 44 and 43

 

Plot
19 surrounded by corner points 35, 36, 48 and 47

 

Plot
20 surrounded by corner points 36, 37, 49 and 48

 

Plot
21 surrounded by corner points 37, 38, 50 and 49

 

Plot
22 surrounded by corner points 38, 39, 40, 45, 51 and 50

 

Plot
23 surrounded by corner points 53, 54, 62, 61, 57 and 58

 

Plot
24 surrounded by corner points 46, 47, 63, 62, 54 and 55

 

Plot
25 surrounded by corner points 47, 48, 64 and 63

 

Plot
26 surrounded by corner points 48, 49, 65 and 64

 

Plot
27 surrounded by corner points 49, 50, 51, 52, 66 and 65

 

Plot
28 surrounded by corner points 56, 57, 61, 68, 67, 59 and 60

 

Plot
29 surrounded by corner points 61, 62, 74, 73 and 68

 

Plot
30 surrounded by corner points 62, 63, 75 and 74

 

Plot
31 surrounded by corner points 63, 64, 69, 76 and 75

 

Plot
32 surrounded by corner points 64, 65, 66, 70 and 69

 

Plot 33 surrounded by corner points 67, 68, 73,
86, 85, 84, 83, 82, 81, 80, 79, 78, 77, 72 and 71

 

Plot
34 surrounded by corner points 73, 74, 89, 88, 87 and 86

 

Plot
35 surrounded by corner points 74, 75, 91, 90 and 89

 

Plot
36 surrounded by corner points 75, 76, 93, 92 and 91

 

Plot
37 surrounded by corner points 69, 70, 94, 93 and 76

 

Plot
38 surrounded by corner points 88, 89, 90, 97 and 96

 

Plot
39 surrounded by corner points 90, 91, 92, 98 and 97

 

Plot
40 surrounded by corner points 92, 93, 94, 95, 99 and 98

 

Plot
41 surrounded by corner points 96, 97, 101 and 100

 

Plot
42 surrounded by corner points 97, 98, 102 and 101

 

Plot
43 surrounded by corner points 98, 99, 103 and 102

 

 

LIST OF BLOCK CORNER
COORDINATES

 

	
   

  	
   

  	
  GEOGRAPHIC COORDINATES

  	
   

  	
  U.T.M. FLAT COORDINATE

  
	
  Point

  	
   

  	
  South Latitude

  	
   

  	
  West Latitude

  	
   

  	
  Meters North

  	
   

  	
  Meters East

  
	
  Belco F-a Station (PR)

  	
   

  	
  04°35’31”419

  	
   

  	
  81°17’23”863

  	
   

  	
  9’492,416.313

  	
   

  	
  467,835.968

  
	
  59 (DP)

  	
   

  	
  04°41’55”140

  	
   

  	
  81°04’43”210

  	
   

  	
  9’480,640.450

  	
   

  	
  491,274.750

  
	
  60

  	
   

  	
  04°41’55”160

  	
   

  	
  81°00’23”540

  	
   

  	
  9’480,640.450

  	
   

  	
  499,274.750

  
	
  56

  	
   

  	
  04°40’50”020

  	
   

  	
  81°00’23”540

  	
   

  	
  9’482,640.450

  	
   

  	
  499,274.750

  
	
  58

  	
   

  	
  04°40’50”020

  	
   

  	
  80°57’41”240

  	
   

  	
  9’482,640.450

  	
   

  	
  504,274.750

  
	
  53

  	
   

  	
  04°39’12”310

  	
   

  	
  80°57’41”250

  	
   

  	
  9’485,640.450

  	
   

  	
  504,274.750

  
	
  55

  	
   

  	
  04°39’12”250

  	
   

  	
  80°50’40”690

  	
   

  	
  9’485,640.450

  	
   

  	
  517,232.070

  
	
  44

  	
   

  	
  04°35’28”845

  	
   

  	
  80°50’40”743

  	
   

  	
  9’492,500.000

  	
   

  	
  517,232.070

  
	
  42

  	
   

  	
  04°32’08”911

  	
   

  	
  80°55’30”649

  	
   

  	
  9’498,640.450

  	
   

  	
  508,300.000

  
	
  41

  	
   

  	
  04°32’08”930

  	
   

  	
  80°59’20”010

  	
   

  	
  9’498,640.450

  	
   

  	
  501,232.070

  
	
  33

  	
   

  	
  04°30’31”230

  	
   

  	
  80°59’20”020

  	
   

  	
  9’501,640.450

  	
   

  	
  501,232.070

  
	
  31

  	
   

  	
  04°30’31”211

  	
   

  	
  80°03’50”885

  	
   

  	
  9’501,640.450

  	
   

  	
  492,885.070

  
	
  27

  	
   

  	
  04°28’26”750

  	
   

  	
  80°03’50”870

  	
   

  	
  9’505,462.450

  	
   

  	
  492,885.070

  
	
  28

  	
   

  	
  04°28’26”750

  	
   

  	
  80°59’29”750

  	
   

  	
  9’505,462.450

  	
   

  	
  500,932.070

  
	
  18

  	
   

  	
  04°26’02”540

  	
   

  	
  80°59’29”750

  	
   

  	
  9’509,890.450

  	
   

  	
  500,932.070

  
	
  19

  	
   

  	
  04°26’02”540

  	
   

  	
  80°57’19”960

  	
   

  	
  9’509,890.450

  	
   

  	
  504,932.070

  
	
  15

  	
   

  	
  04°24’41”110

  	
   

  	
  80°57’19”972

  	
   

  	
  9’512,390.450

  	
   

  	
  504,932.070

  
	
  16

  	
   

  	
  04°24’41”091

  	
   

  	
  80°54’03”089

  	
   

  	
  9’512,390.450

  	
   

  	
  511,000.000

  
	
  26

  	
   

  	
  04°26’54”092

  	
   

  	
  80°41’10”811

  	
   

  	
  9’508,300.000

  	
   

  	
  534,800.000

  
	
  13

  	
   

  	
  04°21’05”619

  	
   

  	
  80°41’10”957

  	
   

  	
  9’519,000.000

  	
   

  	
  534,800.000

  
	
  3

  	
   

  	
  04°14’57”370

  	
   

  	
  80°32’51”550

  	
   

  	
  9’530,300.000

  	
   

  	
  550,200.000

  
	
  5

  	
   

  	
  04°14’57”280

  	
   

  	
  80°30’32”060

  	
   

  	
  9’530,300.000

  	
   

  	
  554,500.000

  
	
  1 (Milestone Intermediate South)

  	
   

  	
  04°12’19”840

  	
   

  	
  80°26’48”620

  	
   

  	
  9’535,129.460

  	
   

  	
  561,391.720

  
	
  30 (Chira Alamor Milestone)

  	
   

  	
  04°28’51”470

  	
   

  	
  80°23’09”250

  	
   

  	
  9’504,675.080

  	
   

  	
  568,130.150

  
	
  45

  	
   

  	
  04°35’34”817

  	
   

  	
  80°30’40”985

  	
   

  	
  9’492,300.000

  	
   

  	
  554,200.000

  
	
  52

  	
   

  	
  04°38’01”394

  	
   

  	
  80°31’19”831

  	
   

  	
  9’487,800.000

  	
   

  	
  553,000.000

  
	
  95

  	
   

  	
  04°53’39”690

  	
   

  	
  80°41’47”430

  	
   

  	
  9’459,000.000

  	
   

  	
  533,650.000

  
	
  103

  	
   

  	
  05°03’58”460

  	
   

  	
  80°41’47”150

  	
   

  	
  9’440,000.000

  	
   

  	
  533,650.000

  
	
  100

  	
   

  	
  05°03’58”702

  	
   

  	
  80°57’23”046

  	
   

  	
  9’440,000.000

  	
   

  	
  504,832.760

  
	
  87

  	
   

  	
  04°52’09”960

  	
   

  	
  80°57’23”090

  	
   

  	
  9’461,762.490

  	
   

  	
  504,832.760

  
	
  86

  	
   

  	
  04°52’09”960

  	
   

  	
  80°58’19”290

  	
   

  	
  9’461,649.390

  	
   

  	
  503,101.820

  
	
  85

  	
   

  	
  04°52’23”400

  	
   

  	
  80°58’56”880

  	
   

  	
  9’461,350.050

  	
   

  	
  501,943.980

  
	
  84

  	
   

  	
  04°52’36”400

  	
   

  	
  80°59’32”140

  	
   

  	
  9’460,950.850

  	
   

  	
  500,858.100

  
	
  83

  	
   

  	
  04°53’09”130

  	
   

  	
  81°00’35”980

  	
   

  	
  9’459,945.940

  	
   

  	
  498,891.600

  
	
  82

  	
   

  	
  04°52’24”290

  	
   

  	
  81°00’38”750

  	
   

  	
  9’461,322.630

  	
   

  	
  498,806.270

  
	
  81

  	
   

  	
  04°51’41”300

  	
   

  	
  81°00’15”630

  	
   

  	
  9’462,642.750

  	
   

  	
  499,518.340

  
	
  80

  	
   

  	
  04°51’17”140

  	
   

  	
  81°00’09”160

  	
   

  	
  9’463,384.680

  	
   

  	
  499,717.610

  
	
  79

  	
   

  	
  04°49’40”860

  	
   

  	
  81°00’43”660

  	
   

  	
  9’466,340.740

  	
   

  	
  498,655.160

  
	
  78

  	
   

  	
  04°51’13”920

  	
   

  	
  81°03’31”120

  	
   

  	
  9’463,483.170

  	
   

  	
  493,497.280

  
	
  77

  	
   

  	
  04°50’17”030

  	
   

  	
  81°03’51”020

  	
   

  	
  9’465,229.660

  	
   

  	
  492,884.090

  
	
  72

  	
   

  	
  04°47’39”800

  	
   

  	
  81°03’51”010

  	
   

  	
  9’470,057.690

  	
   

  	
  492,884.090

  
	
  71

  	
   

  	
  04°47’39”800

  	
   

  	
  81°04’43”250

  	
   

  	
  9’470,057.690

  	
   

  	
  491,274.750

  

 

 

LIST OF PLOT CORNER COORDINATES

 

	
  POINT

  	
   

  	
  U.T.M. FLAT COORDINATES

  
	
  1

  	
   

  	
  9’535,129.460 m N

  	
   

  	
  561,391.720 m E

  
	
  2

  	
   

  	
  9’534,096.570 m N

  	
   

  	
  565,605.160 m E

  
	
  3

  	
   

  	
  9’530,300.000 m N

  	
   

  	
  550,200.000 m E

  
	
  4

  	
   

  	
  9’530,300.000 m N

  	
   

  	
  551,274.750 m E

  
	
  5

  	
   

  	
  9’530,300.000 m N

  	
   

  	
  554,500.000 m E

  
	
  6

  	
   

  	
  9’530,300.000 m N

  	
   

  	
  561,672.902 m E

  
	
  7

  	
   

  	
  9’530,300.000 m N

  	
   

  	
  565,605.160 m E

  
	
  8

  	
   

  	
  9’530,300.000 m N

  	
   

  	
  571,872.292 m E

  
	
  9

  	
   

  	
  9’523,750.952 m N

  	
   

  	
  541,274.750 m E

  
	
  10

  	
   

  	
  9’520,000.000 m N

  	
   

  	
  541,274.750 m E

  
	
  11

  	
   

  	
  9’520,000.000 m N

  	
   

  	
  551,274.750 m E

  
	
  12

  	
   

  	
  9’520,000.000 m N

  	
   

  	
  561,672.902 m E

  
	
  13

  	
   

  	
  9’519,000.000 m N

  	
   

  	
  534,800.000 m E

  
	
  14

  	
   

  	
  9’517,610.910 m N

  	
   

  	
  561,672.902 m E

  
	
  15

  	
   

  	
  9’512,390.450 m N

  	
   

  	
  504,932.070 m E

  
	
  16

  	
   

  	
  9’512,390.450 m N

  	
   

  	
  511,000.000 m E

  
	
  17

  	
   

  	
  9’512,126.458 m N

  	
   

  	
  512,536.016 m E

  
	
  18

  	
   

  	
  9’509,890.450 m N

  	
   

  	
  500,932.070 m E

  
	
  19

  	
   

  	
  9’509,890.450 m N

  	
   

  	
  504,932.070 m E

  
	
  20

  	
   

  	
  9’510,624.552 m N

  	
   

  	
  521,274.750 m E

  
	
  21

  	
   

  	
  9’510,000.000 m N

  	
   

  	
  534,800.000 m E

  
	
  22

  	
   

  	
  9’510,000.000 m N

  	
   

  	
  541,274.750 m E

  
	
  23

  	
   

  	
  9’510,000.000 m N

  	
   

  	
  551,274.750 m E

  
	
  24

  	
   

  	
  9’510,000.000 m N

  	
   

  	
  561,460.467 m E

  
	
  25

  	
   

  	
  9’508,905.876 m N

  	
   

  	
  531,274.750 m E

  
	
  26

  	
   

  	
  9’508,300.000 m N

  	
   

  	
  534,800.000 m E

  
	
  27

  	
   

  	
  9’505,462.450 m N

  	
   

  	
  492,885.070 m E

  
	
  28

  	
   

  	
  9’505,462.450 m N

  	
   

  	
  500,932.070 m E

  
	
  29

  	
   

  	
  9’505,462.450 m N

  	
   

  	
  512,536.016 m E

  
	
  30

  	
   

  	
  9’504,675.080 m N

  	
   

  	
  568,130.150 m E

  
	
  31

  	
   

  	
  9’501,640.450 m N

  	
   

  	
  492,885.070 m E

  
	
  32

  	
   

  	
  9’501,640.450 m N

  	
   

  	
  500,932.070 m E

  
	
  33

  	
   

  	
  9’501,640.450 m N

  	
   

  	
  501,232.070 m E

  
	
  34

  	
   

  	
  9’500,000.000 m N

  	
   

  	
  512,536.016 m E

  
	
  35

  	
   

  	
  9’500,000.000 m N

  	
   

  	
  521,274.750 m E

  
	
  36

  	
   

  	
  9’500,000.000 m N

  	
   

  	
  531,274.750 m E

  
	
  37

  	
   

  	
  9’500,000.000 m N

  	
   

  	
  541,274.750 m E

  
	
  38

  	
   

  	
  9’500,000.000 m N

  	
   

  	
  551,274.750 m E

  
	
  39

  	
   

  	
  9’500,000.000 m N

  	
   

  	
  561,460.467 m E

  
	
  40

  	
   

  	
  9’500,000.000 m N

  	
   

  	
  562,867.592 m E

  
	
  41

  	
   

  	
  9’498,640.450 m N

  	
   

  	
  501,232.070 m E

  
	
  42

  	
   

  	
  9’498,640.450 m N

  	
   

  	
  508,300.000 m E

  
	
  43

  	
   

  	
  9’495,728.354 m N

  	
   

  	
  512,536.016 m E

  
	
  44

  	
   

  	
  9’492,500.000 m N

  	
   

  	
  517,232.070 m E

  
	
  45

  	
   

  	
  9’492,300.000 m N

  	
   

  	
  554,200.000 m E

  
	
  46

  	
   

  	
  9’490,000.000 m N

  	
   

  	
  517,232.070 m E

  
	
  47

  	
   

  	
  9’490,000.000 m N

  	
   

  	
  521,274.750 m E

  
	
  48

  	
   

  	
  9’490,000.000 m N

  	
   

  	
  531,274.750 m E

  
	
  49

  	
   

  	
  9’490,000.000 m N

  	
   

  	
  541,274.750 m E

  
	
  50

  	
   

  	
  9’490,000.000 m N

  	
   

  	
  551,274.750 m E

  
	
  51

  	
   

  	
  9’490,000.000 m N

  	
   

  	
  553,586.666 m E

  
	
  52

  	
   

  	
  9’487,800.000 m N

  	
   

  	
  553,000.000 m E

  
	
  53

  	
   

  	
  9’485,640.450 m N

  	
   

  	
  504,274.750 m E

  

 

 

	
  54

  	
   

  	
  9’485,640.450 m N

  	
   

  	
  511,274.750 m E

  
	
  55

  	
   

  	
  9’485,640.450 m N

  	
   

  	
  517,232.070 m E

  
	
  56

  	
   

  	
  9’482,640.450 m N

  	
   

  	
  499,274.750 m E

  
	
  57

  	
   

  	
  9’482,640.450 m N

  	
   

  	
  503,101.820 m E

  
	
  58

  	
   

  	
  9’482,640.450 m N

  	
   

  	
  504,274.750 m E

  
	
  59

  	
   

  	
  9’480,640.450 m N

  	
   

  	
  491,274.750 m E

  
	
  60

  	
   

  	
  9’480,640.450 m N

  	
   

  	
  499,274.750 m E

  
	
  61

  	
   

  	
  9’480,000.000 m N

  	
   

  	
  503,101.820 m E

  
	
  62

  	
   

  	
  9’480,000.000 m N

  	
   

  	
  511,274.750 m E

  
	
  63

  	
   

  	
  9’480,000.000 m N

  	
   

  	
  521,274.750 m E

  
	
  64

  	
   

  	
  9’480,000.000 m N

  	
   

  	
  531,274.750 m E

  
	
  65

  	
   

  	
  9’480,000.000 m N

  	
   

  	
  541,274.750 m E

  
	
  66

  	
   

  	
  9’480,000.000 m N

  	
   

  	
  547,759.375 m E

  
	
  67

  	
   

  	
  9’472,596.678 m N

  	
   

  	
  491,274.750 m E

  
	
  68

  	
   

  	
  9’472,596.678 m N

  	
   

  	
  503,101.820 m E

  
	
  69

  	
   

  	
  9’472,071.665 m N

  	
   

  	
  531,274.750 m E

  
	
  70

  	
   

  	
  9’472,596.678 m N

  	
   

  	
  542,432.525 m E

  
	
  71

  	
   

  	
  9’470,057.690 m N

  	
   

  	
  491,274.750 m E

  
	
  72

  	
   

  	
  9’470,057.690 m N

  	
   

  	
  492,884.090 m E

  
	
  73

  	
   

  	
  9’470,000.000 m N

  	
   

  	
  503,101.820 m E

  
	
  74

  	
   

  	
  9’470,000.000 m N

  	
   

  	
  511,274.750 m E

  
	
  75

  	
   

  	
  9’470,000.000 m N

  	
   

  	
  521,274.750 m E

  
	
  76

  	
   

  	
  9’470,000.000 m N

  	
   

  	
  531,274.750 m E

  
	
  77

  	
   

  	
  9’465,229.660 m N

  	
   

  	
  492,884.090 m E

  
	
  78

  	
   

  	
  9’463,483.170 m N

  	
   

  	
  493,497.280 m E

  
	
  79

  	
   

  	
  9’466,340.740 m N

  	
   

  	
  498,655.160 m E

  
	
  80

  	
   

  	
  9’463,384.680 m N

  	
   

  	
  499,717.610 m E

  
	
  81

  	
   

  	
  9’462,642.750 m N

  	
   

  	
  499,518.340 m E

  
	
  82

  	
   

  	
  9’461,322.630 m N

  	
   

  	
  498,806.270 m E

  
	
  83

  	
   

  	
  9’459,945.940 m N

  	
   

  	
  498,891.600 m E

  
	
  84

  	
   

  	
  9’460,950.850 m N

  	
   

  	
  500,858.100 m E

  
	
  85

  	
   

  	
  9’461,350.050 m N

  	
   

  	
  501,943.980 m E

  
	
  86

  	
   

  	
  9’461,649.390 m N

  	
   

  	
  503,101.820 m E

  
	
  87

  	
   

  	
  9’461,762.490 m N

  	
   

  	
  504,832.760 m E

  
	
  88

  	
   

  	
  9’460,000.000 m N

  	
   

  	
  504,832.760 m E

  
	
  89

  	
   

  	
  9’460,000.000 m N

  	
   

  	
  511,274.750 m E

  
	
  90

  	
   

  	
  9’460,000.000 m N

  	
   

  	
  514,832.760 m E

  
	
  91

  	
   

  	
  9’460,000.000 m N

  	
   

  	
  521,274.750 m E

  
	
  92

  	
   

  	
  9’460,000.000 m N

  	
   

  	
  524,832.760 m E

  
	
  93

  	
   

  	
  9’460,000.000 m N

  	
   

  	
  531,274.750 m E

  
	
  94

  	
   

  	
  9’460,000.000 m N

  	
   

  	
  534,321.875 m E

  
	
  95

  	
   

  	
  9’459,000.000 m N

  	
   

  	
  533,650.000 m E

  
	
  96

  	
   

  	
  9’450,000.000 m N

  	
   

  	
  504,832.760 m E

  
	
  97

  	
   

  	
  9’450,000.000 m N

  	
   

  	
  514,832.760 m E

  
	
  98

  	
   

  	
  9’450,000.000 m N

  	
   

  	
  524,832.760 m E

  
	
  99

  	
   

  	
  9’450,000.000 m N

  	
   

  	
  533,650.000 m E

  
	
  100

  	
   

  	
  9’440,000.000 m N

  	
   

  	
  504,832.760 m E

  
	
  101

  	
   

  	
  9’440,000.000 m N

  	
   

  	
  514,832.760 m E

  
	
  102

  	
   

  	
  9’440,000.000 m N

  	
   

  	
  524,832.760 m E

  
	
  103

  	
   

  	
  9’440,000.000 m N

  	
   

  	
  533,650.000 m E

  

 

 

SURFACE AREAS (Areas by Plots)

 

	
  Plot

  	
   

  	
  Area

  
	
  1

  	
   

  	
  3,849.901 ha

  
	
  2

  	
   

  	
  4,088.664 ha

  
	
  3

  	
   

  	
  7,377.406 ha

  
	
  4

  	
   

  	
  10,710.097 ha

  
	
  5

  	
   

  	
  6,353.606 ha

  
	
  6

  	
   

  	
  7,365.337 ha

  
	
  7

  	
   

  	
  10,000.000 ha

  
	
  8

  	
   

  	
  10,074.517 ha

  
	
  9

  	
   

  	
  7,018.939 ha

  
	
  10

  	
   

  	
  3,075.563 ha

  
	
  11

  	
   

  	
  8,442.996 ha

  
	
  12

  	
   

  	
  9,940.752 ha

  
	
  13

  	
   

  	
  9,765.215 ha

  
	
  14

  	
   

  	
  9,507.501 ha

  
	
  15

  	
   

  	
  10,000.000 ha

  
	
  16

  	
   

  	
  10,185.718 ha

  
	
  17

  	
   

  	
  3,477.534 ha

  
	
  18

  	
   

  	
  6,806.694 ha

  
	
  19

  	
   

  	
  10,000.000 ha

  
	
  20

  	
   

  	
  10,000.000 ha

  
	
  21

  	
   

  	
  10,000.000 ha

  
	
  22

  	
   

  	
  6,191.740 ha

  
	
  23

  	
   

  	
  4,258.021 ha

  
	
  24

  	
   

  	
  7,402.877 ha

  
	
  25

  	
   

  	
  10,000.000 ha

  
	
  26

  	
   

  	
  10,000.000 ha

  
	
  27

  	
   

  	
  9,745.939 ha

  
	
  28

  	
   

  	
  10,278.839 ha

  
	
  29

  	
   

  	
  8,172.930 ha

  
	
  30

  	
   

  	
  10,000.000 ha

  
	
  31

  	
   

  	
  10,000.000 ha

  
	
  32

  	
   

  	
  10,957.909 ha

  
	
  33

  	
   

  	
  9,875.565 ha

  
	
  34

  	
   

  	
  7,877.642 ha

  
	
  35

  	
   

  	
  10,000.000 ha

  
	
  36

  	
   

  	
  10,000.000 ha

  
	
  37

  	
   

  	
  8,573.841 ha

  
	
  38

  	
   

  	
  10,000.000 ha

  
	
  39

  	
   

  	
  10,000.000 ha

  
	
  40

  	
   

  	
  8,850.834 ha

  
	
  41

  	
   

  	
  10,000.000 ha

  
	
  42

  	
   

  	
  10,000.000 ha

  
	
  43

  	
   

  	
  8,817.240 ha

  
	
  Total

  	
   

  	
  369,043.817 ha

  

 

	
  15
  regular plots10,000.000 ha each

  	
   

  	
  150,000.000 ha

  
	
  28
  irregular Plots, various surface areas

  	
   

  	
  219,043.817 ha

  
	
  TOTAL 43 PLOTS

  	
   

  	
  369,043.817 ha

  

 

 

The
coordinates, distances, areas and azimuths described in this annex are based in
the Spheroid International Universal Transversal Mercator (U.T.M.) Projection
System, Zone 17 (Central Meridian 81o00’00”).

 

The
Geodesic Datum is provisional for South America, La Canoa, 1956, located in
Venezuela (PSAD 56).

 

In
case of discrepancy between the U.T.M. and geographic coordinates or between
Distances, Areas and Azimuths, the U.T.M. coordinates will prevail.

 

 

ANNEX “B”

 

MAP OF THE AGREEMENT AREA BLOCK XXII

 

THIS
IS THE MAP OF BLOCK XXII SHOWING THE AREA UNDER THIS LICENSE AGREEMENT FOR THE
EXPLORATION AND DEVELOPMENT OF HYDROCARBONS ENTERED INTO BY AND BETWEEN
PERUPETRO S.A. AND BPZ EXPLORACION &
PRODUCCION S.R.L WHICH, DULY SIGNED BY THE PARTIES, IS ATTACHED TO
THE PUBLIC DEED HEREWITH.

 

ANNEX C-1

 

WARRANT BOND FOR THE FIRST PERIOD
OF THE MINIMUM WORK PROGRAM

 

WARRANT
BOND No

Lima,

Gentlemen,

PERUPETRO
S.A.

 

Gentlemen:

 

Hereby,
we (name of financial system entity) constitute ourselves as joint and several
guarantors of BPZ EXPLORACION & PRODUCCION S.R.L.(hereafter the
Contractor) before PERUPETRO S.A. (hereafter PERUPETRO) for the amount of
$600,000.00 to guarantee the performance of the Contractor’s obligations under
the minimum work program for the first period of the exploration stage, as
described in Clause Four  of the License
Agreement for the Exploration and Development of Hydrocarbons in Block XXII,
signed with PERUPETRO (hereafter the Agreement).

 

The
obligation assumed by (name of financial system entity) under this warrant bond
is limited to pay PERUPETRO the amount of six hundred thousand dollars (US$
600,000.00) as per a request of payment.

 

1. This guarantee is joint and several, without
benefit of excussion, irrevocable, unconditional and to be executed
automatically and paid on demand within its tenure, at  presentation of a notarized letter addressed
by PERUPETRO to  (financial system
entity) requesting the payment of six hundred thousand and 00/100 dollars (US$
600,000.00) and declaring the Contractor has failed to comply fully or
partially with the obligation mentioned above, and enclosing with that letter,
as only support and justification, a certified copy of the notarized letter
addressed by PERUPETRO to the Contractor demanding its compliance with the
abovementioned obligation and notifying it of PERUPETRO’s intention to execute
the warrant bond; said notarized letter sent by PERUPETRO to the Contractor
will have been delivered to the latter at least twenty (20) calendar days
before the date when PERUPETRO files the corresponding payment claim to
(financial system entity).

 

2. This warrant bond will expire at the latest on XXX
unless before that date(financial system entity) receives a letter from
PERUPETRO releasing (financial system entity) and 

 

 

the Contractor from all their responsibilities
attached to this warrant bond, in which case this warrant bond will be
cancelled on the day when said PERUPETRO letter is received.

 

3. All delays on our side to honor this warrant bond
on your behalf will accrue interest equivalent to the foreign currency active
rate (Tasa Activa en Moneda Extranjera – TAMEX, or its successor, paid by
financial system institutions and published by the Superintendence of Banking
and Insurance applicable during the period of delay. The interest will be
calculated starting on the date when the notarized letter sent by PERUPETRO to
(financial system entity) was received. After the expiration or cancellation
date, no complaint will be admitted concerning this warrant bond and (financial
system entity) and the Contractor will be released from all responsibility or
obligation concerning this warrant bond.

 

 

Sincerely,

 

 

(Financial system entity)

 

ANNEX C-2

 

WARRANT BOND FOR THE SECOND
PERIOD OF THE MINIMUM WORK PROGRAM

 

WARRANT
BOND No

Lima,

Messrs.

PERUPETRO
S.A.

 

Gentlemen,

 

Hereby,
we (entity of financial system) constitute ourselves as joint and several
guarantors of BPZ EXPLORACION & PRODUCCION S.R.L.(hereafter the
Contractor) before PERUPETRO S.A. (hereafter PERUPETRO) for the amount of
$650,000.00 to guarantee the performance of the Contractor’s obligations under
the minimum work program for the third period of the exploration phase, as
described in Clause Four  of the License
Agreement for the Exploration and Development of Hydrocarbons in Block XXII,
signed with PERUPETRO (hereafter the Agreement).

 

The
obligation assumed by (name of financial system entity) under this warrant bond
is limited to pay PERUPETRO the amount of six hundred fifty thousand dollars
(US$ 650,000.00) when required.

 

1.
This guarantee is joint and several, without benefit of excussion, irrevocable,
unconditional and to be executed automatically and paid on demand within its
tenure, at presentation of a notarized letter addressed by PERUPETRO to
(financial system entity) requesting the payment of six hundred fifty thousand
and 00/100 dollars (US$ 650,000.00) 

 

 

declaring
the Contractor has failed to comply in full or partially with the obligation
mentioned above, and inclosing with that letter, as only support and
justification, a certified copy of the notarized letter addressed by PERUPETRO
to the Contractor demanding its compliance with the abovementioned obligation
and notifying it of its intention to execute the warrant bond; said notarized
letter sent by PERUPETRO to the Contractor will have been delivered to the
latter at least twenty (20) calendar days before the date when PERUPETRO files
the corresponding payment claim to (financial system entity).

 

2. This warrant bond will expire at the latest on XXX
unless before that date (financial system entity) receives a letter from
PERUPETRO releasing (financial system entity) and the Contractor from all their
responsibilities attached to this warrant bond, in which case this warrant bond
will be cancelled on the day when said PERUPETRO letter is received.

 

3. All delays on our side to honor this warrant bond
on your behalf will accrue interest equivalent to the foreign currency active
rate (Tasa Activa en Moneda Extranjera – TAMEX), or its successor, paid by
financial system institutions and published by the Superintendence of Banking
and Insurance applicable during the period of delay. The interest will be
calculated starting on the date when the notarized letter sent by PERUPETRO to
(financial system entity) was received. After the expiration or cancellation
date, no complaint will be admitted concerning this warrant bond and (financial
system entity) and the Contractor will be released from all responsibility or
obligation concerning this warrant bond.

 

 

Sincerely,

 

 

(Financial system entity)

 

ANNEX C-3

 

WARRANT BOND FOR THE THIRD PERIOD
OF THE MINIMUM WORK PROGRAM

 

WARRANT
BOND No

Lima,

Messrs.

PERUPETRO
S.A.

 

Gentlemen,

 

Hereby,
we (entity of financial system) constitute ourselves as joint and several
guarantors of BPZ EXPLORACION & PRODUCCION S.R.L.(hereafter the
Contractor) before PERUPETRO S.A. (hereafter PERUPETRO) for the amount of
$650,000.00 to guarantee the performance of the Contractor’s obligations under
the minimum work program for the first period of the exploration phase, as
described in Clause Four  of the License
Agreement 

 

 

for
the Exploration and Development of Hydrocarbons in Block XXII, signed with
PERUPETRO (hereafter the Agreement).

 

The
obligation assumed by (name of financial system entity) under this warrant bond
is limited to pay PERUPETRO the amount of six hundred fifty thousand dollars
(US$ 650,000.00) when required.

 

1.
This guarantee is joint and several, without benefit of excussion, irrevocable,
unconditional and to be executed automatically and paid in demand within its
tenure, by submission of a notarized letter addressed by PERUPETRO to
(financial system entity) requesting the payment of six hundred fifty thousand
and 00/100 dollars (US$ 650,000.00) declaring the Contractor has failed to
comply in full or partially with the obligation mentioned above, and enclosing
with that letter, as only support and justification, a certified copy of the
notarized letter addressed by PERUPETRO to the Contractor demanding its compliance
with the abovementioned obligation and notifying it of its intention to execute
the warrant bond; said notarized letter sent by PERUPETRO to the Contractor
will have been delivered to the latter at least twenty (20) calendar days
before the date when PERUPETRO files the corresponding payment claim to
(financial system entity).

 

2. This warrant bond will expire at the latest on XXX
unless before that date (financial system entity) receives a letter from
PERUPETRO releasing (financial system entity) and the Contractor from all their
responsibilities attached to this warrant bond, in which case this warrant bond
will be cancelled on the day of reception when said PERUPETRO letter is
received.

 

3. All delays on our side to honor this warrant bond
on your behalf will accrue interest equivalent to the foreign currency active
rate (Tasa Activa en Moneda Extranjera – TAMEX), or its successor, paid by
financial system institutions and published by the Superintendence of Banking
and Insurance applicable during the period of delay or its successor. The
interest will be calculated starting on the date when the notarized letter sent
by PERUPETRO to (financial system entity) was received. After the expiration or
cancellation date, no complaint will be admitted concerning this warrant bond
and (financial system entity) and the contractor will be released from all
responsibility or obligation concerning this warrant bond.

 

 

Sincerely,

 

 

(Financial system entity)

 

 

ANNEX C-4

 

WARRANT BOND FOR THE FOURTH
PERIOD OF THE MINIMUM WORK PROGRAM

 

WARRANT
BOND No

Lima,

Messrs.

PERUPETRO
S.A.

 

Gentlemen,

 

Hereby,
we (entity of financial system) constitute ourselves as joint and several
guarantors of BPZ EXPLORACION & PRODUCCION S.R.L.(hereafter the
Contractor) before PERUPETRO S.A. (hereafter PERUPETRO) for the amount of
$650,000.00 to guarantee the performance of the Contractor’s obligations under
the minimum work program for the first period of the exploration phase, as
described in Clause Four  of the License
Agreement for the Exploration and Development of Hydrocarbons in Block XXII,
signed with PERUPETRO (hereafter the Agreement).

 

The
obligation assumed by (Name of Financial system entity) under this warrant bond
is limited to pay PERUPETRO the amount of six hundred fifty thousand dollars
(US$ 650,000.00) when required.

 

1.
This guarantee is joint and several, without benefit of excussion, irrevocable,
unconditional and to be executed automatically and paid in demand within its
tenure, by submission of a notarized letter addressed by PERUPETRO to
(financial system entity) requesting the payment of six hundred fifty thousand
and 00/100 dollars (US$ 650,000.00) declaring the Contractor has failed to
comply in full or partially with the obligation mentioned above, and enclosing
with that letter, as only support and justification, a certified copy of the
notarized letter addressed by PERUPETRO to the Contractor demanding its
compliance with the abovementioned obligation and notifying it of its intention
to execute the warrant bond; said notarized letter sent by PERUPETRO to the
Contractor will have been delivered to the latter at least twenty (20) calendar
days before the date when PERUPETRO files the corresponding payment claim to
(financial system entity).

 

2. This warrant bond will expire at the latest on XXX
unless before that date (financial system entity) receives a letter from
PERUPETRO releasing (financial system entity) and the Contractor from all their
responsibilities attached to this warrant bond, in which case this warrant bond
will be cancelled on the day when said PERUPETRO letter is received.

 

3. All delays on our side to honor this warrant bond
on your behalf will accrue interest equivalent to the foreign currency active
rate (Tasa Activa en Moneda Extranjera – TAMEX), or its successor, paid by
financial system institutions and published by the Superintendence of Banking
and Insurance applicable during the period of delay. The interest will be
calculated starting on the date when the notarized letter sent by PERUPETRO to
(financial system entity) was received. After the expiration or cancellation
date, no complaint will be admitted concerning this warrant bond and (financial
system entity) and the Contractor will be released from all responsibility or
obligation concerning this warrant bond.

 

 

Sincerely,

 

 

(Financial system entity)

 

 

ANNEX C-5

 

WARRANT BOND FOR THE FIFTH PERIOD
OF THE MINIMUM WORK PROGRAM

 

WARRANT
BOND No

Lima,

Messrs.

PERUPETRO
S.A.

 

Gentlemen,

 

Hereby,
we (entity of financial system) constitute ourselves as joint and several
guarantors of BPZ EXPLORACION & PRODUCCION S.R.L.(hereafter the
Contractor) before PERUPETRO S.A. (hereafter PERUPETRO) for the amount of
$650,000.00 to guarantee the performance of the Contractor’s obligations under
the minimum work program for the first period of the exploration phase, as
described in Clause Four  of the License
Agreement for the Exploration and Development of Hydrocarbons in Block XXII,
signed with PERUPETRO (hereafter the Agreement).

 

1.
The obligation assumed by (Name of Financial system entity) under this warrant
bond is limited to pay PERUPETRO the amount  of six hundred fifty thousand dollars (US$
650,000.00) when required.

 

This
guarantee is joint and several, without benefit of excussion, irrevocable, unconditional
and to be executed automatically and paid in demand within its life, by
submission of a notarized letter addressed by PERUPETRO to (financial system
entity) requesting the payment of six hundred fifty thousand and 00/100 dollars
(US$ 650,000.00) declaring the Contractor has failed to comply in full or
partially with the obligation mentioned above, and enclosing with that letter,
as only support and justification, a certified copy of the notarized letter
addressed by PERUPETRO to the Contractor demanding its compliance with the
abovementioned obligation and notifying it of its intention to cash the warrant
bond; said notarized letter sent by PERUPETRO to the Contractor will have been
delivered to the latter at least twenty (20) calendar days before the date when
PERUPETRO files the corresponding payment claim to (financial system entity).

 

2. This warrant bond will expire at the latest on XXX
unless before that date (financial system entity) receives a letter from
PERUPETRO releasing (financial system entity) and the Contractor from all their
responsibilities attached to this warrant bond, in which case this warrant bond
will be cancelled on the day when said PERUPETRO letter is received.

 

3. All delays on our side to honor this warrant bond
on your behalf will accrue interest equivalent to the foreign currency active
rate (Tasa Activa en Moneda Extranjera – TAMEX),

 

 

or its successor, paid by financial system
institutions and published by the Superintendence of Banking and Insurance
applicable during the period of delay. The interest will be calculated starting
on the date when the notarized letter sent by PERUPETRO to (financial system
entity) was received. After the expiration or cancellation date, no complaint
will be admitted concerning this warrant bond and (financial system entity) and
the Contractor will be released from all responsibility or obligation
concerning this warrant bond.

 

 

Sincerely,

 

 

(financial system entity)

 

ANNEX D

 

CORPORATE GUARANTEE

 

Messrs.

PERUPETRO S.A.

Av. Luis Aldana 320

Lima 41

PERU

 

By these presents, BPZ ENERGY INC., pursuant to Section 3.11
of the License Agreement for the Exploration and Development of Hydrocarbons in
Block XXII to be signed by PERUPETRO S.A. (“PERUPETRO”) and BPZ EXPLORACION &
PRODUCCION S.R.L., provides a joint and several guarantee before PERUPETRO on
behalf of BPZ EXPLORACION & PRODUCCION S.R.L. that the latter will
honor all its obligations pursuant to the minimum work program described in
heading 4.6 of the Agreement, as well as the execution by BPZ EXPLORACION Y
PRODUCCION S.R.L. of each of the annual development programs, as adjusted or
amended, that may be submitted by BPZ EXPLORACIÓN Y PRODUCCIÓN S.R.L. with
PERUPETRO pursuant to heading 5.3 under the Agreement.

 

This guarantee will survive while BPZ EXPLORACION Y
PRODUCCION S.R.L.’s obligations under the Agreement while BPZ EXPLORACION Y
PRODUCCION S.R.L. may be required. For purposes of this guarantee, BPZ ENERGY
INC. submits to the laws of the Republic of Peru, expressly waives any diplomatic
claim and submits to the arbitration procedure for the solution of
controversies set forth in clause 21 of the Agreement.

 

Yours,

Corporate Guarantor

Legally Authorized Representative.

 

 

ANNEX E

 

ACCOUNTING PROCEDURE

 

1.                                      GENERAL
PROVISIONS

 

OBJECTIVE

 

The objective of this annex is to establish the
accounting regulations and procedures that will allow determining the revenues,
investments, expenses and operating costs of the Contractor for purposes of
calculating Factor Rt-1 mentioned in Clause 8 under the Agreement.

 

DEFINITIONS

 

The words used in this annex have been defined
in Clause One to the Agreement and will have the meaning given to them in that
clause. The accounting terms included in this annex will have the meaning given
to them in the accounting regulations and practices accepted in Peru and in the
international petroleum industry.

 

ACCOUNTING PRINCIPLES

 

a) The Contractor will carry its books pursuant
to the legal regulations in force, the accounting principles and practices
established and accepted in Peru and in the international petroleum industry,
and pursuant to provisions in this accounting procedure.

b) The Manual of Accounting Procedures
mentioned in heading 18.1 of the Agreement will take into account the
provisions detailed in this annex.

 

2.              ACCOUNTING
REGISTRIES, INSPECTION AND ADJUSTMENTS

 

ACCOUNT SYSTEM

For purposes of determining factor Rt-1,
the Contractor will carry a special accounting system to register, in dollars,
the revenues earned and the expenses made, as related to the Agreement’s
operations. This system will comprise two main accounts: the factor Rt-1 revenues
account and the factor Rt-1 expenses account.

 

EXCHANGE RATE

The accounts carried out in domestic currency
at the selling exchange rate in force on the day when the disbursement was made
or the revenue was earned. The transactions made in dollars and the evaluation
of output will be recorded pursuant to provisions under 3.3 of this annex.

 

SUPPORTING DOCUMENTATION

The contractor will keep in its file the original
supporting documents for the charges made against the account for factor Rt-1

 

 

FACTOR Rt-1 ACCOUNT
STATEMENT

 

During the exploration stage, the Contractor
will send, within thirty days after the end of each period, a detailed monthly
statement of the revenues and expenses accounts for factor Rt-1, corresponding to that period.

if the contractor chose to use the method described under heading 8.3.2 to
calculate the royalty, it will submit to PERUPETRO, within thirty (30) days
after the date of statement of commercial discovery, a detailed monthly
statement of the factor  Rt-1  revenues and expenses accounts for the period running
between the last statement submitted until the previous year’s month of July or
December, as appropriate.

Subsequently, the Contractor will send PERUPETRO, within fifteen (15) days
after the end of the month of January and July of every calendar
year, a detailed monthly statement of the factor Rt-1 revenues and
expenses accounts for the prior half-year.

a) Factor Rt-1 Revenue Account
Statement.

The Monthly Revenue Account Statement includes evaluation of the controlled
production for the reporting semester. Additionally, it will include a detailed
and classified record of all transactions for which the Contractor has earned revenues,
including the date when the revenue was actually earned as well as a summary
description of the transaction, number of the accounting voucher, amount in
dollars or in domestic currency and in dollars, if the revenue was earned in
domestic currency, and the corresponding exchange rate.

b) Factor Rt-1 Expenses Account
Statement

The monthly expenses account statement will detail and classify all the
transactions for which the Contractor has made disbursements, including the
dates when such disbursement was actually made, as well as a summary
description of the transaction, number of the accounting voucher, amount in
dollars or in domestic currency and in dollars if the disbursement was made in
domestic currency, and the corresponding exchange rate.

 

ACCOUNTING INSPECTION AND
ADJUSTMENTS

a) The accounting ledgers and the original
supporting  documents for the transactions
described in each account statement will be made available, during business
hours, to the authorized PERUPETRO representatives for their inspection, when
they so require.

The inspection of the accounting books and the supporting documentation will be
performed pursuant to generally accepted auditing principles, including sampling
principles, as required.

b) The factor Rt-1  on account statements will be considered as
accepted if PERUPETRO does not file a non objection in writing within
twenty-four (24)

 

 

months starting on the date when they were filed with
PERUPETRO. 

The Contractor will provide a documented response to PERUPETRO’s remarks within
three (3) months after receiving PERUPETRO’s remarks. PERUPETRO’s remarks
will be deemed as accepted if the Contractor fails to meet the abovementioned
deadline.

 

c)
All discrepancies derived from an accounting inspection must be resolved by the
parties within a maximum period of three (3) months starting on the date
when PERUPETRO received the Contractor’s response. At the expiration of such
deadline, the discrepancy will be submitted to the Oversight Committee to
proceed as set forth in heading 7.3 of the agreement. If the discrepancy
persists, the parties may agree to have it reviewed by an independent auditing
firm acceptable to PERUPETRO, or to proceed pursuant to provisions under
heading 21.3 of the agreement. The arbitration decision or the independent
auditor’s position will be considered as final.      

d)
If as a result of the accounting inspection it were established that in a given
period a different factor Rt-1 should have been used, the
corresponding adjustments will be introduced. All adjustments will accrue
interest pursuant to provisions under heading 8.5 of the agreement.

 

3.     FACTOR Rt-1 REVENUES AND EXPENSES
ACCOUNT

 

REVENUES

 

Revenues will be recognized
and recorded in the factor Rt-1 revenues account, as follows:

 

a)     The valuation of
the hydrocarbons controlled production pursuant to clause 8 of the agreement.

 

b)    The sale of
assets purchased by the contractor for agreement operations, the cost of which
was registered in the factor Rt-1 expenses account.

 

c)     Services rendered
to third parties in which the participating personnel’s salaries and benefits
are recorded in factor Rt-1 expenses account and/or for which goods
are used and the cost of which was recorded in the factor Rt-1 expenses
account.

 

d)    The rental of
goods owned by the contractor, the purchasing cost of which was recorded in the
factor Rt-1 expenses account, or the sub-letting of goods the rent
of which is charged to the factor Rt-1 expenses account.

 

e)     Indemnities from
insurance hired in connection with the agreement’s activities and/or claims for
goods, including insurance indemnities for business interruption. The revenues
earned from hedging contracts are not included.

 

f)     Other revenues
representing credits against charges made in the factor Rt-1 

 

 

expenses account.

 

EXPENSES

 

Starting
on the date of signing, all investments, expenses and operating costs will be
recognized which are properly supported by the corresponding payment voucher.
However, such recognition will be subject to the following restrictions:      

a)     Workers.

 

Wages
and benefits granted to the contractor’s workers who are deployed at the
operations on a permanent or temporary basis. For this purpose, the contractor
shall make available to PERUPETRO S.A., at the latter’s request, the company’s
payroll and hiring policy.

 

Generally,
all salaries and benefits of the operations and administrative personnel hired
by the contractor will be recorded during the execution of the operations and
classified by type of work performed.

 

If
the contractor undertakes activities other than those comprised in the
agreement, the cost of temporary or part time personnel deployed at the operations
will be charged against the expense account pursuant to provisions under
paragraph H of this section 3.2.

 

b)    Affiliate’s Services

 

Services
from affiliates will be charged at competitive rates with third parties’.

 

c)     Materials and Equipment

 

Materials
and equipment bought by the contractor will be recorded in the factor Rt-1
expenses account pursuant to the provisions below:

 

·      Materials and equipment
(Condition A):

 

Condition
A new materials and equipment are those that may be used without any refurbishing
and will be registered at the price appearing in the commercial invoice plus
generally accepted accounting costs, including additional importation costs, if
applicable.

 

·      Used materials and equipment
(Condition B):

 

Condition
B used materials and equipment are those which, although not new, may be used
without any refurbishing and will be posted at 75% of the price quoted for new
materials and equipment on the date of purchase, or at the purchasing price
appearing in the corresponding commercial invoice, whichever is lower.

 

·      Materials and Equipment
(Condition C):

 

Condition
C materials and equipment are those which may be used for their original
function after  proper refurbishing and
will be recorded at 50% and 50% of the price quoted for a similar new material 

 

 

and
equipment, or the purchasing price appearing on the commercial invoice,
whichever is lower.

 

d)    Freight and
Transportation Costs:

 

Travel
expenses for the contractor’s personnel and their relatives, as well as
transportation cost for personal items and household appliances will be
recognized pursuant to the company’s internal policy.

 

When
transporting equipment, materials and supplies for the operations, the
contractor will avoid paying “false freight”. If so, recognition of such
disbursements will be subject to PERUPETRO’s explicit approval in writing.

 

e)     Insurance:                

Premiums
and net insurance costs placed totally or partially with the contractor’s
affiliates will be recognized only to the extent they are charged competitively
compared with insurance companies not related to the contractor.

 

The
payments made for hedging contracts shall not be included.

 

f)     Taxes:       

Only taxes paid relating to activities performed in connection with the
agreement will be recognized.

 

g)    Research
Expenses:               

Research
expenses for developing new equipment, materials, procedures and techniques to
be used in the search, development and production of hydrocarbons, as well as
other improvements, will be recognized after receiving written approval from
PERUPETRO.

 

h)    Proportional
Allocation of General Expenses:  

If
the contractor performs other activities in addition to those foreseen in the
agreement or has signed with PERUPETRO more than one agreement, the cost for
the technical and administrative personnel, administrative office maintenance
expenses, warehouse operation expenses and cost, as well as other indirect
expenses and cost will be charged against the factor Rt-1 expense
account on a proportional basis pursuant to a policy previously proposed by the
contractor and accepted by PERUPETRO.

 

TIME OF REGISTRATION

 

a)     Earnings from the valuation of the controlled
hydrocarbons production for a given calendar month will be posted as revenues
for the calendar month when the hydrocarbons were controlled.

 

b)     Revenues described in paragraphs b), c), d), e) and f)
under section 3.1 of this annex will be charged against the revenues account at
the time when they were actually earned.

 

 

c)     Expenses will be recorded on the date when the
corresponding payment was made.

 

4.     NON RECOGNIZED REVENUES AND EXPENSES

 

NON RECOGNIZED REVENUES

 

For
purposes of calculating factor Rt-1, the following revenues will not
be recognized:

 

a)     Financial
revenues, generally.

 

b)    Revenues earned
for services rendered or sales of goods owned by the contractor made before the
date of signing of the agreement.

 

c)     Revenues earned
for activities not related with the agreement’s operations

 

NON RECOGNIZED EXPENSES

 

For
purposes of calculating factor Rt-1, the disbursements made for the
following items will not be recognized as expenses:

 

a)       Investments,
expenses and costs, incurred by the contractor before the date of signing of
the agreement.

 

b)       Interest expenses
for the loans, including interest on supplier credits.

 

c)       Financial expenses,
generally.

 

d)       Cost incurred for
inventory taken in case of contractor assignment of rights under the agreement.

 

e)       Asset
depreciation and amortization.

 

f)        Amounts paid for
breach of agreement obligations, as well as fines, penalties and indemnities
mandates by authorities, including those resulting from lawsuits.

 

g)       Fines, charges
and adjustments derived from failure to timely pay taxes in force in the
country.

 

h)       Income tax
applicable to the contractor and taxes on profits available to overseas owners,
as applicable.

 

i)        Value added tax
(IGV) and municipal promotion tax, excepting when declared as expenses pursuant
to the Income Tax Law.

 

j)        Donations, in
general, excepting those previously approved by PERUPETRO.

 

k)       Advertising
expenses, excepting those previously approved by PERUPETRO.

 

l)        Hydrocarbon
transportation and marketing costs and expenses beyond the production control
point.

 

m)      Investments on
facilities for the transportation and storage of hydrocarbons produced within
the agreement area beyond the production control point.

 

n)       Other expenses
and investments not related to the operations under the agreement.

 

 

5.     REVISIONS OF ACCOUNTING PROCEDURE

 

The
provisions under this accounting procedure may be modified by agreement of the
parties with a proper indication of the date when they will become effective.

 

 

ANNEX F

 

EXPLORATION WORK UNITS (UTE, IN SPANISH)

 

TABLE OF EQUIVALENCE

 

	
  Activity

  	
   

  	
  UTE

  
	
  Seismic 2D – Km

  	
   

  	
  0.50

  
	
  Seismic 3D – Km2

  	
   

  	
  1.30

  
	
  Reprocessing 2D - Km

  	
   

  	
  0.02

  
	
  Gravimetrics – Km

  	
   

  	
  0.02

  
	
  Magnetometrics – Km

  	
   

  	
  0.02

  
	
  Studies per period

  	
   

  	
  20.00

  
	
  Wells:
  Depth – m

  	
   

  	
   

  
	
  0
  – 1,000

  	
   

  	
  0.045 x m

  
	
  1,001
  – 2,000

  	
   

  	
  0.050 x m

  
	
  2,001
  – 3,000

  	
   

  	
  0.055 x m

  
	
  3,001
  – 4,000

  	
   

  	
  0.065 x m

  
	
  4,001
  and beyond

  	
   

  	
  0.075 x m

  

 

Note.- For purposes of
valuation of the warrant bonds described under heading 3.10, the following
equivalence shall apply: 1 UTE = US$ 5,000.

 

 

Please,
Mr. Notary, add below the corresponding clauses required by law and send
the appropriate notification to the Hydrocarbons Public Registry for
registration of the following.

 

Lima
on the 21st day of November of 2007

 

BY
AND FOR PERUPETRO MR. CARLOS EDGAR VIVES SUÁREZ

 

BY AND FOR BPZ EXPLORACIÓN & PRODUCCIÓN S.R.L. MR. LUIS RAFAEL
ZOEGER NÚÑEZ

 

BY
AND FOR BPZ ENERGY MR. LUIS RAFAEL ZOEGER NÚÑEZ

 

BY AND FOR BANCO
CENTRAL DE RESERVA DEL PERU, MESSERS. RENZO GUILLERMO ROSSINI MIÑAN AND CARLOS
AUGUSTO BALLON AVALOS

 

THIS
DRAFT AGREEMENT WAS AUTHORIZED BY MR. ERNESTO CORDOVA V., ESQUIRE, REGISTERED
IN THE LIMA BAR ASSOCIATION UNDER MEMBER NUMBER 21982.

 

INSERT
NUMBER ONE

 

SUPREME
DECREE

 

INSERT
NUMBER TWO

 

PERUPETRO
AGREEMENT

 

TRANSCRIPTION

 

Know
all men by these presents that at its session No. 18-2007 of September 27th,
2007, the Board of Directors adopted the following agreement.

 

APPROVAL
OF DRAFT AGREEMENT FOR LICENSING THE EXPLORATION AND DEVELOPMENT OF
HYDROCARBONS IN BLOCK XXII.

 

BOARD
OF DIRECTORS AGREEMENT Noo 117-2007

 

San
Borja, September 27th 2007

 

Having
read Memorandum No. CONT-GFCN-1853-2007 dated September 24th, 2007,
requesting the approval of the draft agreement to license the Exploration and
Development of Hydrocarbons in Block XXII and

 

Whereas,

 

The
working committees of PERUPETRO S.A. and BPZ EXPLORACIÓN & PRODUCCIÓN
S.R.L. have reached an agreement about the text of the draft agreement for
Exploration and Development of Hydrocarbons in Block XXII.

 

In
technical and legal report No. GFCN-1832-2007, the PERUPETRO S.A. working
commission determines that, pursuant to its analyses of the legal, contract,
economic and geological considerations, as well as the estimated minimum work
program for the area, the draft agreement for licensing the Exploration and
Development of Hydrocarbons in Block XXII meets the provisions of the single
conformed text of law No. 26221, Organic Hydrocarbons Law, enacted by
Supreme Decree NO. 042-2005-EM, as regulated, and that this draft agreement
should be filed with the general management department to proceed to the
corresponding paper work, as required by law;

 

 

Whereas,
Article 11 of the Single Conformed Text of Law No. 26221, Organic
Hydrocarbons Law, approved by Supreme Decree No. 042-2005-EM, establishes
that agreements will be approved by Supreme Decree signed by the Minister of
Economy and Finance and Energy and Mines within sixty (60) days after starting
the procedures for obtaining their approval before the Ministry of Energy and
Mines, filed by the contracting entity; pursuant to article 44 of PERUPETRO
S.A. corporate by laws, the Board of Directors unanimously hereby

 

AGREES:

 

1.     To approve the
Draft Agreement for Licensing the Exploration and Development of Hydrocarbons
in Block XXII to be signed between PERUPETRO S.A. and BPZ EXPLORACION &
PRODUCCION S.R.L., as well as the Draft Supreme Decree to enact the
abovementioned agreement, both of which documents are attached to this
agreement and are an integral part of same.

 

2.     To send the
Minister of Energy and Mines the draft Supreme Decree and Licensing Agreement
described in paragraph 1 above for their corresponding approval by Supreme
Decree, pursuant to article 11 of the single conformed text of Law No. 26221,
Organic Hydrocarbons Law, enacted by Supreme Decree No. 042-2005-EM.

 

3.     Authorize
PERUPETRO S.A.’s general manager to sign the agreement mentioned in paragraph 1
above once the corresponding Supreme Decree has been enacted.

 

4.     To exempt the
minutes of this Agreement from reading and approval.

 

This
Agreement is sent to you for your information and other related purposes.

 

In
San Borja, on the 27th day of September, 2007

 

SIGNED:
DANIEL SABA DE ANDREA, CHAIRMAN OF THE BOARD, PERUPETRO S.A.

 

SIGNED:
ISABEL TAFUR MARIN, SECRETARY GENERAL

 

INSERT
NUMBER THREE: TRANSCRIPT

 

SUNARP

REGISTRATION
AREA No IX LIMA AREA

LIMA
REGISTRATION AREA

DOCKET
No 00259837

CORPORATIONS REGISTRY

PERUPETRO S.A.

COMPANY REGISTRY

ITEM: APPOINTMENT OF PROXIES

C00039

 

·  By Ministry Decision N° 435-2006-MEM/DM dated 09/08/2006 published
on 09/10/2006 in the El Peruano Official Gazette, it was decided.- 1. To accept the resignation of Dr. JOSE ABRAMOVITZ DELMAR from its
position as member of the Board. 2. To appoint, as from this date, Mr. ALBERTO
QUIMPER HERRERA as member of the Board on behalf of the 

 

 

Ministry of Energy and Mines. 3. To confirm Engineer
GUSTAVO ADOLFO NAVARRO VALDIVIA as member of the Board on behalf of the
Ministry of Energy and Mines.

 

·  By Ministry Decision N° 536-2006-EF/10 dated 09/20/2009 published
on 09/28/2006 in the El Peruano official Gazette, it was decided.- 1. To accept
the resignation of MR.  WILFREDO SALINAS RUIZ – CORNEJO to its
position as member of the board. 2. To appoint, as from this date, MR. JOSE
ABRAMOVITZ DELMAR, as member of the Board on behalf of the Ministry of Economy
and Finance. 3. To ratify Engineer LUIS ENRIQUE ORTIGAS CUNEO as member of the
Board, on behalf of the Ministry of Ministry of Economy and Finance.

 

·  At
Board Meeting of 02/09/2007, the following was agreed: 1. To appoint Mr. CARLOS
EDGAR VIVES SUAREZ (D.N.I. N° 08725702) as General Manager as from on the
02/13/2007. 2. To appoint JOSE EDUARDO CHÁVEZ CÁCERES (D.N.I  N° 09343700) as Special Project, Planning,
Environmental and Community Relations Manager, starting on the 02/13/2007. 3.
To appoint Mr. JOSE ANTONIO COZ CALDERON (D.N.I. N° 07912299) as Contract
Manager as from 02/13/2007. 4. To appoint PEDRO SAMUEL ARCE CHIRINOS (D.N.I. N°
08722832) as Administration Manager as from the day following this agreement.
5. To appoint MILTON UBALDO RODRIGUEZ CORNEJO (D.N.I. N° 09150438) as
Information Technology and Budget Division Head as from the day following this
agreement. 6. To appoint Engineer PEDRO MANUEL ARCE CHIRINOS to Head the Human
Resources and Personnel Development Division. Board of Directors’ Minutes Book
No7, notarized on 01/03/2007 before the Notary by and for Lima Dr. Ricardo
Fernandini Barreda, ESQ. under entry N° 54684 on folios 281 to 327. As
appearing on the certified copy dated 03/01/2007 issued by the same notary
public in the city of LIMA. This title was submitted on 03/01/2007 at 03:48:51
PM under docket

 

N° 2007-00118351 in Logbook (0485).

 

Fee: S/. 224 recorded under vouchers Number
00014319-07 and 00020129-07.- In Lima on March, 29, 2007.

 

SIGNATURES: TOMAS HUMBERTO CERDAN LIMAY

 

PUBLIC REGISTRAR ORLC

 

INSERT NUMBER FOUR: TRANSCRIPT

 

CENTRAL RESERVE BANK OF PERU

GENERAL MANAGER’S OFFICE

LETTER NUMBER No. 129-2007-BCRP

Lima, October 25th, 2007

Mr.

Ronald Egúsquiza S.

General Manager

PERUPETRO S.A.

 

I am pleased to address you concerning your letter
No GGRL-CONT-1 922-2007 about the 

 

 

clause dealing with the financial rights for the
Draft Agreement for Licensing the Exploration and Development of
Hydrocarbons in Block XXII entered into with BPZ EXPLORACIÓN Y PRODUCCIÓN
S.R.L. The CENTRAL RESERVE BANK OF PERU has approved the text of clause 11 of
the Draft Agreement sent to us with your letter, after noticing this text is
similar to the model approved by our board on November 18th,
1993 for licensing contracts to be signed with companies.

 

In
addition, for signing the Clause on Financial Rights included in that
agreement, the undersigned, in my position as General Manager, and Mr. Carlos Ballón Avalos, International
Operations Manager, and in case of impediment by either of us, Mr. Manuel
Monteagudo Valdez, Legal Manager, have been designated to sign said agreement.

 

Yours sincerely,

Renzo Rossini Miñan, General Manager

PERUPETRO S.A. stamp

 

INSERT NUMBER FIVE: TRANSCRIPT

 

CENTRAL RESERVE BANK OF PERU BOARD OF DIRECTOR
MEETING DATED JANUARY 27, 1994, DESCRIBING THE POWERS AWARDED TO THE GENERAL
MANAGER (063-A) MINUTES No 3534. RELEVANT SECTION:

 

CENTRAL
RESERVE BANK OF PERU.

 

GENERAL
SECRETARIAT.

 

HUMBERTO
PEIRANO PORTOCARRERO, SECRETARY GENERAL OF THE CENTRAL RESERVE BANK OF PERU, AS
PER THE POWERS INVESTED UPON HIM BY ARTICLE 31 OF THIS ORGANIZATIONS ORGANIC
LAW, HEREBY CERTIFIES THAT IN MINUTES NUMBER 3534 OF THE BOARD OF DIRECTORS
MEETING HELD ON JANUARY 27, 1994, ATTENDED BY BOARD MEMBERS MARIO TOVAR VELARDE
(CHAIRMAN), HENRY BARCLAY REY DE CASTRO, ALBERTO BENAVIDES DE LA QUINTANA,
SANDRO FUENTES ACURIO, ALFREDO JALILIE AWAPARA AND RAUL OTERO BOSSANO AN
AGREEMENT WAS REACHED AS FOLLOWS:

 

POWERS OF THE GENERAL MANAGER (063-A)

 

THE BOARD OF DIRECTORS AGREED:

 

1-  TO GRANT
THE GENERAL MANAGER THE FOLLOWING POWERS:

 

a.   TO
APPROVE THE FINANCIAL CLAUSES OF PETROLEUM AGREEMENTS ONCE THE BOARD HAS AUTHORIZED
THE CORRESPONDING MODELS

 

IN LIMA, ON SEPTEMBER 16, 1994. SIGNED BY HUMBERTO
PEIRANO PORTOCARRERO, SECRETARY GENERAL OF THE CENTRAL RESERVE BANK OF PERU.

 

INSERT NUMBER SIX: TRANSCRIPT

 

MINUTES OF THE SESSION HELD BY THE BOARD OF
DIRECTORS OF THE CENTRAL RESERVE BANK OF PERU ON MAY 21, 1998, CERTIFYING
THE APPOINTMENT OF MR. CARLOS BALLON AVALOS AS INTERNATIONAL
OPERATIONS MANAGER OF THE CENTRAL RESERVE BANK OF PERU, MINUTES NUMBER 3737.
RELEVANT SECTION.

 

CENTRAL
RESERVE BANK OF PERU.

 

 

GENERAL
SECRETARIAT.

 

HUMBERTO
PEIRANO PORTOCARRERO, SECRETARY GENERAL OF THE CENTRAL RESERVE BANK OF PERU, AS
PER THE POWERS INVESTED UPON HIM BY ARTICLE 31 OF THIS ORGANIZATION’S ORGANIC
LAW, HEREBY CERTIFIES THAT IN MINUTES NUMBER 3737 OF THE BOARD OF DIRECTORS MEETING
PERFORMED ON MAY 21, 1998, ATTENDED BY BOARD MEMBERS SEÑORES GERMAN SUAREZ
CHAVEZ (CHAIRMAN), MARIO TOVAR VELARDE, ALBERTO BENAVIDES DE LA QUINTANA, JORGE
BACA CAMPODONICO, GUILLERMO CASTAÑEDA MUNGI AND GIANFRANCO CASTAGNOLA ZUÑIGA AN
AGREEMENT WAS REACHED AS FOLLOWS:

 

APPOINTMENT OF SENIOR OFFICIALS (ORAL)

 

THE BOARD OF DIRECTORS AGREED:

 

1.  TO APPOINT
MR. JUAN ANTONIO RAMIREZ ANDUEZA AS MANAGER FOR CREDITS AND FINANCIAL
REGULATIONS IN REPLACEMENT OF MISS MARIA ISABEL VALERA LOZA WHO WILL FILL THE
POSITION AS ADVISORS TO THE GENERAL MANAGER.

 

2.  TO PROMOTE
MR. CARLOS BALLON AVALOS TO THE RANK OF MANAGER AND APPOINT HIM AS
INTERNATIONAL OPERATIONS MANAGER.

 

LIMA,
JUNE 3, 1998

 

SIGNED:
HUMBERTO PEIRANO PORTOCARRERO – SECRETARY GENERAL OF THE CENTRAL RESERVE BANK
OF PERU

 

INSERT
NUMBER SEVEN

 

CENTRAL
RESERVE BANK OF PERU

 

GENERAL
SECRETARIAT

 

DEHERA
BRUCE MITRANI, Secretary General of the Central Reserve Bank of Peru, acting
under the powers invested upon her by Article 31 of the Organizations
Organic Law, hereby certifies that in Minutes No 4126 corresponding to the
Board of Directors meeting held on 15th December 2005, attended
by Board Members Oscar Dancourt Masías (Acting Vice-Chairman of the Board),
Kurt Burneo Farfán, Gonzalo García Núñez, Eduardo Iriarte Jiménez, Daniel
Schdlowsky Rosenberg and Mr. Luis Carranza, on leave and not attending,
the Central Reserve Bank of Peru’s Manual of Organizations and Functions was
reconfirmed, and the name of the Legal Bureau was changed to Juridical
Management Department, and in Minutes No 4128, corresponding to the Board of
Directors meeting held on 22nd December 2005, attended by Board
Members Oscar Dancourt Masías (Acting Vice-Chairman of the Board), Kurt Burneo
Farfán, Eduardo Iriarte Jiménez and Daniel Schdlowsky Rosenberg, with Luis
Carranza Ugarte and Gonzalo García Núñez, on leave, Mr. Manuel Monteagudo
Valdez was confirmed, starting on January 1st 2006 as Juridical
Manager.

 

In
addition, I hereby certify that Mr. Manuel Monteagudo Valdez previously
filled the position of head of the Legal Office until December 31 2005 and
that pursuant to the previous agreement, as from January 1, 2005, he will
be acting as Juridical Manager.

 

In
Lima, on August 9, 2006

 

 

Signed
DEHERA BRUCE MITRANI

 

INSERT
NUMBER EIGHT

 

CENTRAL
RESERVE BANK OF PERU

 

GENERAL
SECRETARIAT

 

DEHERA
BRUCE MITRANI, Secretary General of the Central Reserve Bank of Peru, acting
under the powers invested upon her by Article 31 of the Organizations
Organic Law, hereby certifies that in Minutes No 4059 corresponding to the
Board of Directors meeting held on 14th October 2004, attended
by Board Members Javier Silva Ruete (Chairman), Kurt Burneo Farfán, Luís
Carranza Ugarte, Oscar Dancourt Masías and Daniel Schdlowsky Rosenberg an
agreement was reached as follows:

 

·  APPOINTMENT OF GENERAL MANAGER
(ORAL)

 

·  The Board of Directors agreed
to appoint Mr. Renzo Rossini Miñan as General Manager

 

In
Lima on December 22nd, 2004

 

Illegible
Signature

 

C O N C L U S I O N:

 

HAVING THE GRANTORS READ THE
ENTIRE DOCUMENT, THEY CONFIRMED AND DECLARED THAT THEY READ THE MINUTES AGAINST
THE TEXT WHICH ATTACH HERETO, AND SIGNED IT AS PROOF OF THEIR ACCEPTANCE. THIS
DOCUMENT IS TRANSCRIBED IN FOLIOS SERIES B No XXX AND ENDS IN FOLIOS SERIES B
No

 

PARTICIPANTS:
MANUEL MONTEAGUDO VALDEZ, PERUVUIAN, MARRIED, LAWYER, IDENTIFIED WITH NATIONAL
IDENTITY DOCUMENT No 10275927, VOTER, JURIDICAL MANAGER APPOINTED BY BOARD OF
DIRECTORS AGREEMENT No 4128 WHO REPRESENTS THE CENTRAL RESERVE BANK OF PERU
AUTHORIZED BY GENERAL MANAGEMENT DEPARTMENT LETTER No 129-2007-BCRP DATED
OCTOBER 25 2007, ATTACHED HERETO AND WHO SIGNS THE MINUTES AND THE PUBLIC DEED,
BY VIRTUE OF WHICH THE PRESSENCE OF MR. CARLOS AUGUSTO BALLON AVALOS IN THIS
ACT SHALL NOT BE RECORDED IN THESE PRESENTS, THE MINUTES AND FINAL SIGNING OF
THE DRAFT AGREEMENT ENCLOSED HEREWITH, IN WITNESS WHEREOF

 

 

	
   

  	
  By and for PERUPETRO

  
	
  CARLOS EDGAR VIVES SUÁREZ

  SIGNED ON:

  
	
   

  
	
   

  
	
   

  	
  By and for BPZ
  EXPLORACIÓN & PRODUCCIÓN S.R.L.

  
	
  LUIS
  RAFAEL ZOEGER NÚÑEZ

  

 

 

	
  SIGNED ON:

  
	
   

  
	
   

  
	
   

  	
  By and
  for BPZ ENERGY INC.

  
	
   

  
	
  LUIS RAFAEL ZOEGER NÚÑEZ

   

  
	
  SIGNED ON:

  
	
   

  
	
  By and for BANCO CENTRAL DE
  RESERVA DEL PERU

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  RENZO GUILLERMO ROSSINI MIÑAN

  	
   

  	
  ARLOS AUGUSTO BALLON AVALOS

  
	
  SIGNED ON:

  	
   

  	
  SIGNED ON:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  END OF SIGNATURES:

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