Document:

Exhibit 10.1

STOCK
PURCHASE AGREEMENT

by and among

BPZ Energy, Inc. and

the Investors Named Herein

Dated May 4, 2007

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STOCK
PURCHASE AGREEMENT

This STOCK
PURCHASE AGREEMENT (this “Agreement”), dated May 4, 2007, is made by and among
BPZ Energy, Inc., a Colorado corporation (the “Company”), and the Investors named on Schedule 1.1 hereto
(the “Investors”).

RECITALS

WHEREAS,  the Company has received from each
Investor a Purchaser Suitability Questionnaire (the “Questionnaire”) relating
to the transactions contemplated in this Agreement, and each Investor has
executed a Confidentiality Agreement relating to the Company’s business and
each Investor acknowledges that he has been given full access by the
Company to all information concerning the business and financial condition,
properties, operations and prospects of the Company that Investor has deemed
relevant for purposes of making the investment contemplated by this Agreement.

WHEREAS, the Company proposes to issue and sell to
Investors, and Investors desire to purchase from the Company, shares of the
Company’s common stock, no par value (the “Common Stock”), on the terms set forth
herein.

AGREEMENT

NOW, THEREFORE,
in consideration of the mutual covenants and agreements set forth herein and
for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:

1.             Purchase

1.1           Purchase and Sale of Stock.  Subject to the terms and conditions of this
Agreement, the Company will issue and sell to each Investor, and each Investor
severally agrees to purchase from the Company, the number of shares of the
Company’s authorized but unissued Common Stock (the “Shares”) set forth with
respect to such Investor on Schedule 1.1 hereto, at a price per share equal to
$5.25.  The closing (the “Closing”) of
the sale of the Shares shall be effected at the offices of the Company on May
4, 2007, or at such other time and place as may be agreed to by the Investors
and the Company (the “Closing Date”).  At
the Closing, subject to the terms and conditions hereof, the Company shall
cause the issuance of the Shares purchased by such Investor from the Company,
against payment of the full amount of such Investor’s aggregate purchase price
by wire transfer of immediately available funds to the Company’s bank account.

1.2           Legends.  All certificates representing the Shares
shall bear the following legend (in addition to any legend required by the blue
sky or securities laws of any state or jurisdiction to the extent such laws are
applicable to the shares represented by the certificate so legended):

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“THE SHARES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS, PROVIDED THAT THE SELLER DELIVERS TO THE
COMPANY AN OPINION OF COUNSEL (WHICH OPINION AND COUNSEL ARE REASONABLY
SATISFACTORY TO THE COMPANY) CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION.”

The legend set forth
above shall be removed and the Company shall issue a certificate without such
legend to the holder of the Shares upon which it is stamped within three
business days of following delivery by Investor to the Company or the Company’s
transfer agent of a certificate representing Shares, if, unless otherwise
required by state securities laws, (i) such Shares are registered for resale
under the Securities Act of 1933, as amended (the “Securities Act”), (ii) in
connection with a sale, assignment or other transfer, such holder provides the
Company with an opinion of counsel, in a generally acceptable form, to the
effect that such sale, assignment or transfer of the Shares may be made without
registration under the applicable requirements of the Securities Act, or (iii)
such holder provides the Company with reasonable assurance that the Shares can
be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated
under the Securities Act.

1.3           Stop Transfer Orders.  All certificates representing the Shares will
be subject to a stop transfer order with the Depository Trust Company or with
the Company’s transfer agent that restricts the transfer of such shares except
in compliance with this Agreement.

2.             Representations and Warranties of the Company.  The Company hereby makes the following
representations and warranties to the Investors:

2.1           Organization,
etc.  The Company is a
corporation, duly organized and validly existing and in good standing under the
laws of the State of Colorado, and is qualified or licensed to do business and
is in good standing as a foreign corporation in each other jurisdictions in
which the conduct of its business or the ownership of property requires such
qualification or licensing, except where failure to be so qualified or licensed
would not have a material adverse effect on the financial condition or
operations of the Company and its Subsidiaries (as defined below), taken as a
whole (for the Company and its Subsidiaries, a “Material Adverse Effect”).  Each company (each, a “Subsidiary”) listed on
Schedule 2.1 hereof is duly
organized and validly existing and in good standing under the laws of the
jurisdiction of its organization, and is qualified or licensed to do business
and is in good standing as a foreign corporation in each other jurisdiction in
which the conduct of its business or the ownership of property requires such
qualification or licensing, except where failure to be so qualified or licensed
would not have a Material Adverse Effect. 
Except for the Subsidiaries, the Company does not own, of record or
beneficially, the securities of any other entity.

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2.2           Authority.  The Company has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder, and such action has been duly authorized by all necessary action of
the Company’s Board of Directors.  The
issuance and sale of the Shares has
been duly authorized and if, as and when issued in accordance with the terms of
this Agreement and delivered to the Investors, the Shares will be duly and
validly issued and outstanding, fully paid and non-assessable and will be free
of any Encumbrance (as defined below) created by the Company, in the Company’s
control, or of which the Company has actual knowledge, other than those imposed
pursuant to this Agreement and securities laws of general application.  As used in this Agreement, “Encumbrance”
shall mean any claim, lien, pledge, option, charge, easement, security
interest, deed of trust, mortgage, right of way, encroachment, private building
or use restriction, conditional sales agreement, encumbrance or other right of
third parties, whether voluntarily incurred or arising by operation of law, and
includes, without limitation, any agreement to give any of the foregoing in the
future, and any contingent sale or other title. 
Except as set forth in Schedule 2.2, the issuance and sale of the Shares
will not be subject to preemptive or other similar rights of any holder of the
Company’s securities.

2.3           Enforceability.  This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding agreement
and obligation of the Company enforceable against it in accordance with its
terms subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect generally relating to or affecting
creditors’ rights.

2.4           No Violation.  Except as set forth on Schedule 2.4, the execution and the
delivery by the Company of this Agreement and the performance by the Company of
its obligations hereunder, including the issuance and sale of the Shares, does
not and will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under (or an event that
with notice or lapse of time would become a default), (iii) result in a
violation of, or (iv) require any authorization, consent or approval not
heretofore obtained pursuant to, (a) any binding written or oral agreement or
instrument including, without limitation, any charter, bylaw, trust instrument,
indenture or evidence of indebtedness, lease, contract or other obligation or
commitment (each, a “Contractual Obligation”) binding upon the Company or any
Subsidiary or any of their respective properties or assets, or (b) any law,
rule, regulation, restriction, order, writ, judgment, award, determination,
injunction or decree of any court or government, or any decision or ruling of
any arbitrator (each, a “Requirement of Law”) binding upon or applicable to the
Company or any Subsidiary or any of their respective properties or assets and
which would have a Material Adverse Effect.

2.5           Litigation.  Except as set forth in Schedule 2.5 or the SEC Reports (as
defined in Section 2.7 below), there are no pending or overtly threatened actions,
claims, orders, decrees, investigations, suits or proceedings by or before any
governmental authority, arbitrator, court or administrative agency which would
have a Material Adverse Effect.

2.6           Capitalization.  The authorized capital stock of the Company
consists of 250,000,000 shares of Common Stock, no par value, 54,497,869 shares
of which have been

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validly issued
and are outstanding as of March 31, 2007, and 25,000,000 shares of preferred
stock, no par value, none of which are issued or outstanding as of March 31,
2007.  Except as set forth on Schedule
2.6, the Company owns 100% of the capital stock of each of the
Subsidiaries.  Except as set forth on Schedule 2.6 hereto, there do not
exist any other authorized or outstanding securities, options, warrants, calls,
commitments, rights to subscribe or other instruments, agreements or rights of
any character, or any preemptive rights, convertible into or exchangeable for,
or requiring or relating to the issuance, transfer or sale of, any shares of capital
stock or other securities of the Company or any Subsidiary.  The
Common Stock is listed on the American Stock Exchange.

2.7           Annual Report; Financial Statements.  Except as qualified by Schedule 2.7, the
Company’s Annual Report on Form 10-K for the year ended December 31, 2006
(including all exhibits and schedules thereto, the “SEC Report”) has been filed
with the SEC and the SEC Report complied in all material respects with the
rules of the SEC applicable to such SEC Report on the date filed with the SEC,
and the SEC Report did not contain, on the date of filing with the SEC, and
does not contain as of the date hereof, and the SEC Report will not contain as
of the Closing Date, any untrue statement of a material fact, or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.   As of the date hereof, except as set forth
in Schedule 2.7, the SEC Report has not been amended.  Except as qualified by Schedule 2.7, all of
the consolidated financial statements included in the SEC Report (the “Company
Financial Statements”):  (i) have been
prepared from and on the basis of, and are in accordance with, the books and
records of the Company and with generally accepted accounting principles
applied on a basis consistent with prior accounting periods; (ii) fairly and
accurately present in all material respects the consolidated financial
condition of the Company as of the date of each such Company Financial
Statement and the results of its operations for the periods therein specified;
and (iii) in the case of the annual financial statements, are accompanied by
the audit opinion of the Company’s independent public accountants.  Except as set forth in Schedule 2.7 or in the Company Financial
Statements, as of the date hereof and as of the Closing Date, the Company has
no liabilities other than (i) liabilities which are reflected or reserved
against in the Company Financial Statements and which remain outstanding and
undischarged as of the date hereof, (ii) liabilities arising in the ordinary
course of business of the Company since December 31, 2006, or (iii) liabilities
which were not required by generally accepted accounting principles to be
reflected or reserved on the Company Financial Statements.  Since December 31, 2006, except as set forth
on Schedule 2.7 hereto, there has not been any event or change which has had or
could reasonably be expected to have a Material Adverse Effect and the Company
has no knowledge of any event or circumstance that would reasonably be expected
to result in such a Material Adverse Effect.

2.8           Absence of Certain Changes.  Since December 31, 2006 (the “Balance Sheet
Date”), except as set forth on Schedule 2.7 hereto, and in the SEC Report,
neither the Company nor any of its Subsidiaries has:

(a) redeemed,
purchased or otherwise acquired directly or indirectly any shares of any class
or series of its capital stock, or any instrument or security which consists of
or includes a right to acquire such shares (other than repurchases of
restricted stock at cost required

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pursuant to agreements
outstanding on the date of this Agreement or entered into after the date of
this Agreement in compliance with the provisions hereof);

(b) paid,
discharged or satisfied any claim, liability or obligation (whether absolute,
accrued, contingent or otherwise) other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities and obligations reflected or reserved against in the
Company Balance Sheet in the SEC Report or incurred in the ordinary course of
business and consistent with past practice since the Balance Sheet Date;

(c) permitted or
allowed any of its material properties or assets (real, personal or mixed,
tangible or intangible) to be subjected to any mortgage, pledge, claim, lien,
security interest, encumbrance, restriction or charge of any kind outside of
the ordinary course of business;

(d) cancelled any
debt or waived any claim or right of substantial value;

(e) sold,
transferred, licensed, leased, pledged, mortgaged or otherwise disposed of any
of its material properties or assets (real, personal or mixed, tangible or
intangible) or any material amount of property or assets, except in the
ordinary course of business;

(f) disposed of or
permitted to lapse any right to the use of any Proprietary Rights (as defined
in Section 2.14 hereof), or disposed of or disclosed to any person or entity,
other than representatives of the Investors and persons subject to a
nondisclosure agreement, any trade secret, formula, process, know-how or other
Proprietary Right not yet a matter of public knowledge;

(g) granted any
material increase or accrual in or accelerated, any benefit or compensation
payable or to become payable to any officer, director, employee or consultant,
including any such increase, accrual or acceleration pursuant to any benefit
plan except in connection with a promotion or job change or any general
increase in the compensation payable or to become payable to officers,
employees or directors in the ordinary course of business, or entered into or
amended in any material way any employment, material consulting, severance,
termination or material benefit plan agreement or arrangement other than in the
ordinary course of business;

(h) declared, paid or set
aside for payment any dividend or other distribution in respect of its capital
stock or redeemed, purchased or otherwise acquired, directly or indirectly, any
shares of capital stock or other securities of the Company or any of its
Subsidiaries;

(i) made any
change in any method of tax or financial statement accounting or accounting
practice that would or would reasonably be expected to result in any material
change in the Company Financial Statements;

(j) paid, loaned
or advanced any amount to, or sold, transferred or leased any material
properties or assets (real, personal or mixed, tangible or intangible) to, or
entered into any

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agreement or arrangement
with, any of its officers or directors or employees or any Affiliate (as
defined in Section 7.1) of any of its officers or directors or employees,
except for directors’ fees and compensation to officers in the ordinary course
of business;

(k) amended its
certificate of incorporation or by-laws or similar organizational documents;

(l) issued, sold,
transferred, pledged, disposed of or encumbered any shares of any class or
series of its capital stock, or securities convertible into or exchangeable
for, or options, warrants, calls, commitments or rights of any kind to acquire,
any shares of any class or series of its capital stock, other than shares of
Common Stock reserved for issuance on the date of this Agreement pursuant to
the Company’s 2005 Long-Term Incentive Compensation Plan, the exercise of any
warrants or options to purchase Common Stock described on Schedule 2.6 or
existing agreements that require the Company to issue shares of Common Stock;

(m) terminated or
materially modified or amended any of its material contracts or waived,
released or assigned any material rights under any material contract or claims,
except in the ordinary course of business and consistent with past practice;

(n) revalued in
any material respect any of its assets, including writing down the value of
inventory or writing-off notes or accounts receivable, other than in the
ordinary course of business consistent with past practice or as required by
GAAP;

(o) adopted a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
of its Subsidiaries; or

(p) agreed,
whether in writing or otherwise, to take any action described in this section.

2.9           Income Tax Returns.  Except as set forth on Schedule 2.9, the Company and the
Subsidiaries have filed all federal and state income tax returns which are
required to be filed, and have paid, or made provision for the payment of, all
taxes which have become due pursuant to said returns or pursuant to any
assessment received by the Company or any Subsidiary, except such taxes, if
any, as are being contested in good faith and as to which adequate reserves
have been provided.  The Company has no
knowledge of any pending assessments or adjustments of the income tax payable
of the Company or its Subsidiaries with respect to any year.

2.10         Permits; Compliance With Law.  The Company and each Subsidiary possesses,
and will hereafter possess, all permits, consents, approvals, franchises and
licenses required and rights to all trademarks, trade names, patents, and
fictitious names, if any, necessary to enable them to conduct the business in
which it is now engaged in compliance with applicable law, except where failure
to do so would not have a Material Adverse Effect.  The Company and each Subsidiary are in compliance
with all federal, state and local laws, regulations and ordinances (“Requirements
of Law”) in the conduct of its business and

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corporate
affairs, except where failure to comply, singly or in the aggregate, would not
have a Material Adverse Effect.

2.11         ERISA. 
Except as set forth on Schedule
2.11, the Company and each Subsidiary is in compliance in all material respects
with any applicable provisions of ERISA; the Company and each Subsidiary has
not violated any provision of any Plan maintained or contributed to by it; no
Reportable Event as defined in ERISA has occurred and is continuing with
respect to any employee benefit plan (“Plan”) initiated by the Company or any
Subsidiary; the Company and each Subsidiary has met its minimum funding
requirements under ERISA with respect to any Plan; and any Plan will be able to
fulfill its benefit obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.  Schedule
2.11 describes each Plan maintained by the Company and each of its
Subsidiaries.

2.12         Contracts.  Schedule
2.12 sets forth a description of each Contractual Obligation not filed as an
exhibit to the SEC Report that provides for payments to or by the Company or
any Subsidiary in excess of $500,000, or is otherwise material to the
operations of the Company or any Subsidiary. 
Except as set forth on Schedule 2.4, neither the Company nor any
Subsidiary is in default on any Contractual Obligation, except for such
defaults which would not have a Material Adverse Effect.

2.13         Environmental Matters.  Except as set forth on Schedule 2.13, since September 10,
2004, the Company and its subsidiaries (including the Subsidiaries) have at all
times been in compliance with all environmental laws and regulations applicable
to the Company’s current business except where the failure to so comply would
not cause a Material Adverse Effect. 
Except as described in the SEC Report or as set forth on Schedule 2.13, to the Company’s
knowledge none of the operations of the Company or any Subsidiary is the
subject of any federal or state investigation evaluating whether any remedial
action involving a material expenditure is needed to respond to a release of
any toxic or hazardous waste or substance into the environment.  Except as set forth on Schedule 2.13, neither
the Company nor any Subsidiary has received notice of any actual or threatened
claim, investigation, proceeding, order or decree in connection with any
release of any toxic or hazardous waste or substance into the environment.

2.14         Trademarks, etc.  The Company and the Subsidiaries own, have
sufficient title to, or have the right to use (or can obtain the right to use
on reasonable commercial terms), all patents, trademarks, service marks, trade
names, copyrights, licenses, trade secrets or other proprietary rights
(collectively, the “Proprietary Rights”) necessary to their business as now
conducted without infringing upon the right of any person.  Except for employee confidentiality
agreements with employees and consultants, there are no outstanding material
options, licenses or agreements relating to intellectual property rights of the
Company or any Subsidiary necessary to their business as now conducted, nor is
the Company or any Subsidiary bound by or a party to any material options,
licenses or agreements with respect to the Proprietary Rights of any other
person or entity.  To the Company’s
knowledge, neither the Company nor any Subsidiary has violated or is in current
violation of, and neither the Company nor any Subsidiary has received any
communications alleging that the Company or any Subsidiary has violated or, by
conducting its business as proposed, would violate, any of

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the Proprietary Rights of any other person or
entity.  The Company and the Subsidiaries
are not aware of any material violation by a third party of any of their
Proprietary Rights necessary to their business as now conducted.

2.15         Employees.  Except as set forth on Schedule 2.15, all employees of the
Company and each Subsidiary are employed “at will” and may be terminated
without payment of severance or incurrence of any other liability of the
Company or the Subsidiaries; no employee of the Company is in violation of any
material term of any employment contract, confidentiality agreement or any
other material Contractual Obligation relating to the right of any such
employee to be employed by the Company or any Subsidiary; and neither the
Company nor any Subsidiary has any employee severance agreement covering any of
its employees.  There are no labor
disputes or union organization activities pending or threatened between the
Company or the Subsidiaries and their employees.

2.16         Title to Properties.  The assets owned or leased by the Company and
its Subsidiaries are all of the assets necessary to conduct the business of the
Company and its Subsidiaries as currently being conducted.  The Company and its Subsidiaries have good
and marketable title to all of the assets they own, real and personal, movable
and immovable, tangible and intangible, free and clear of any charge, claim,
lien, pledge, security interest or other encumbrance, except for: (a) liens for
taxes not yet due and payable, (b) encumbrances described on Schedule 2.16 hereto, or (c) minor
imperfections of title and encumbrances, if any, which (i) are not substantial
in amount, (ii) do not detract from the value of the property subject thereto,
impair the operations of the business of the Company, or the use or license of
certain of the assets of the Company, and (iii) have arisen in the ordinary
course of business consistent with past practice.

2.17         Related Party Transactions.  Except for this Agreement and those contracts
described in the SEC Report or on Schedule
2.17 hereto, no existing Contractual Obligation of the Company or its Subsidiaries
is with or for the direct benefit of (i) any party owning, or formerly owning,
beneficially or of record, directly or indirectly, in excess of five percent
(5%) of the outstanding capital stock of the Company, (ii) any director,
officer or similar representative of the Company, (iii) any natural person
related by blood, adoption or marriage to any party described in (i) or (ii),
or (iii) any entity in which any of the foregoing parties has, directly or
indirectly, at least a five percent (5%) beneficial interest (a “Related Party”).  Without limiting the generality of the
foregoing, no Related Party, directly or indirectly, owns or controls any
material assets or material properties which are used in the Company’s business
and to the actual knowledge of the Company, no Related Party, directly or
indirectly, engages in or has any significant interest in or connection with
any business which is, or has been within the last two years, a competitor,
customer or supplier of the Company or has done business with the Company or
which currently sells or provides products or services which are similar or
related to the products or services sold or provided in connection with the
Business.

2.18         Brokers.  The Company will pay Morgan Keegan &
Company, Inc. (the “Financial Advisor”), contingent upon the successful closing
of a strategic transaction

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(including the
private placement covered by this Agreement), an advisory fee, in cash at
closing equal to 2% of the gross proceeds delivered to the Company at such closing.

2.19         Securities Law Matters.  Except as set forth on Schedule 2.7, since
January 1, 2005, the Company has filed all reports, registration statements,
proxy statements and other materials (including any exhibits and schedules),
together with any amendments required to be made with respect thereto, that
were required to be filed with (i) the SEC under the Securities Act, or the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (ii) any
applicable state securities authorities. 
Subject to the accuracy of the representations and warranties of the
Investors set forth in Section 3, the offer, sale and issuance of the Shares to
the Investors will be exempt from registration under the Securities Act.

2.20         No Anti-Dilution Rights.  Except as set forth on Schedule 2.20, the
transactions contemplated hereby will not trigger any anti-dilution provisions
contained in any existing agreements.

2.21         Full Disclosure.  No representation, warranty, schedule or certificate of the
Company made or delivered pursuant to this Agreement contains or will contain
any untrue statement of fact, or omits or will omit to state a material fact
the absence of which makes such representation, warranty or other statement
misleading, where such misstatement or omission would result in a Material
Adverse Effect.

2.22         Internal Accounting and Disclosure Controls.  The Company and its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.  The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the Exchange Act) that
are effective in ensuring that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the rules and forms of the Commission, including, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions
regarding required disclosure.  Except as
disclosed in the SEC Report, since December 31, 2006, neither the Company nor
any of its Subsidiaries have received any notice or correspondence from any accountant
relating to any material weakness in any part of the system of internal
accounting controls of the Company or any of its Subsidiaries.

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2.23         No Integrated Offering.  None of the Company, its Subsidiaries, any of
their Affiliates, and any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
issuance of any of the Securities under the Securities Act, whether through
integration with prior offerings or otherwise. 
None of the Company, its Subsidiaries, their affiliates and any Person
acting on their behalf will take any action or steps referred to in the
preceding sentence that would require registration of the issuance of any of
the Securities under the Securities Act or cause the offering of the Securities
to be integrated with other offerings for purposes of any such applicable
stockholder approval provisions.

2.24         Manipulation of Price.  The Company has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of any of
the Shares, (ii) other than the Financial Advisor, sold, bid for, purchased, or
paid any compensation for soliciting purchases of, any of the Securities, or
(iii) other than the Financial Advisor, paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.

2.25         Disclosure.  Neither the Company nor any other Person
acting on its behalf has provided any of the Investors or their respective
agents or counsel with any information that constitutes material non-public
information other than concerning the transactions contemplated by this
Agreement or disclosed pursuant to a non-disclosure agreement.  The Company acknowledges that the Purchaser
will rely on the foregoing representations in effecting transactions in
securities of the Company.

3.             Representations and Warranties of Investors.  Each Investor, severally and not jointly,
hereby makes the following representations and warranties as to such Investor:

3.1           Organization.  Investor, if not a natural person, is duly
organized and validly existing and in good standing under the laws of the state
of its organization.

3.2           Authority.  
Investor has the corporate or other authority to execute and deliver
this Agreement and the Questionnaire to which such Investor is a party and to perform its
obligations hereunder.

3.3           No Violation.  The execution and the delivery by Investor of
this Agreement and the Questionnaire, and its purchase of the Shares and the consummation
of the transactions contemplated hereby or to be effected concurrently herewith
do not and will not (a) conflict with or result in a breach of the terms,
conditions or provisions of, (b) constitute a default under, (c) result in a
violation of, or (d) require any authorization, consent or approval not
heretofore obtained pursuant to, any Contractual Obligation or Requirement of
Law to which Investor is a party or is otherwise subject.

3.4           Enforceability.  This Agreement and the Questionnaire
constitute the legal, valid and binding obligation of Investor and is
enforceable against Investor in accordance

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with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect generally relating to or affecting creditors’ rights.

3.5           Investment Intent.  Investor is acquiring the Shares for its own
account for investment and not with a view to, or for resale in connection
with, any “distribution” thereof for purposes of the Securities Act.  Investor is an “accredited investor” as such
term is defined in Regulation D under the Securities Act.  Investor acknowledges that the Shares shall
be “restricted securities” within the meaning of Rule 144 (“Rule 144”) under
the Securities Act, will contain a transfer restriction legend and may only be
resold pursuant to an effective registration statement filed with the SEC under
the Securities Act, or pursuant to Rule 144 or another valid exemption from the
registration requirements of the Act as established by an opinion of counsel
reasonably acceptable to the Company.

3.6           Investigation.  Investor acknowledges that he has been given
full access by the Company to all information concerning the business and
financial condition, properties, operations and prospects of the Company that
Investor has deemed relevant for purposes of making the investment contemplated
by this Agreement.  By reason of Investor’s
knowledge and experience in financial and business matters in general, the
business of the Company and investments of the type contemplated by this Agreement
in particular, Investor is capable of evaluating the merits and risks of making
the investment in the Shares and is able to bear the economic risk of the
investment (including a complete loss of its investment in the Shares).  Subject to the truth and accuracy of the
representations and warranties made by the Company hereunder, Investor has
conducted such investigation as it deems relevant in connection with its
consummation of the transactions contemplated by this Agreement.

3.7           Brokers.  Investor has not agreed to pay or incurred
any obligation in respect of any finder’s fee, brokerage fee or other
commission in connection with the sale of Shares contemplated by this
Agreement.

3.8           Trading
Activities.  Neither the
Investor nor any person acting on its behalf or at its direction has engaged in
any purchase or sale of Common Stock (including without limitation any short
sale, pledge, transfer, establish an open “put equivalent position” within the
meaning of Rule 16a-1(h) under the Exchange Act) after learning about the
transaction contemplated hereby.

4.             Conditions to the Obligations of the Company.  The obligations of the Company to consummate
the transactions contemplated by this Agreement on the Closing Date shall be
subject to the satisfaction of each of the conditions set forth in this Section
4, unless waived by the Company, on or prior to the Closing Date.

4.1           Representations and Warranties.  If this Agreement is not signed on the
Closing Date, the representations and warranties of the Investors set forth in
Section 3 shall be true and correct in all material respects as of the Closing
Date as though made on and as of such date.

 11

4.2           No
Proceedings.  No order,
injunction, decree or other action or legal, administrative, arbitration or
other proceeding by any person other than the Company or investigation by any
governmental agency or authority shall be pending or threatened, challenging or
imposing a material limitation on the execution, delivery or performance of
this Agreement, or the consummation of any of the transactions contemplated
hereby.

4.3           Compliance
with Laws.  The purchase
of the Shares by each Investor hereunder shall be legally permitted by all laws
and regulations to which each Investor or the Company is subject.

4.4           Approval
of Documents.  All
proceedings taken in connection with the transactions contemplated hereby and
all documents incident to such transactions shall be reasonably satisfactory in
form and substance to the Company and its counsel.

4.5           Questionnaire.  Each investor shall have completed and
executed and delivered to the Company a Questionnaire in a manner reasonably
acceptable to the Company.

5.             Conditions to the Obligations of Investors.  The obligations of each Investor to
consummate the transactions under this Agreement on the Closing Date shall be
subject to the satisfaction of each of the conditions set forth in this Section
5, unless waived by each Investor, on or prior to the Closing Date.

5.1           Representations
and Warranties.   If this
Agreement is not signed on the Closing Date, the representations and warranties
of the Company set forth in Section 2 shall be true and correct in all material
respects as of the Closing Date as though made on and as of such date; the
Company shall have performed all obligations and complied with all covenants
required to be performed or complied with by the Company under this Agreement
on or prior to the Closing Date; and each Investor shall have received on the
Closing Date from the Company a certificate or certificates, dated the Closing
Date, to such effect, which certificate or certificates shall be signed by an
authorized officer of the Company.

5.2           No
Proceedings.  No order,
injunction, decree or other action or legal, administrative, arbitration or
other proceeding by any person or investigation by any governmental agency or
authority shall be pending or, to the knowledge of the Company, threatened,
challenging or imposing a material limitation on the execution, delivery or
performance of this Agreement, the consummation of any of the transactions
contemplated thereby or the operation by the Company of its businesses as now
conducted.

5.3           Approval
of Documents.  All
proceedings taken in connection with the transactions contemplated hereby and
all documents incident to such transactions shall be reasonably satisfactory in
form and substance to each Investor and its counsel.

5.4           Compliance
with Laws.  The purchase of
the Shares by each Investor hereunder shall be legally permitted by all laws
and regulations to which each Investor or the Company is subject.

 12
 

5.5           No
Material Adverse Change. 
Except as described in the SEC Reports or in Schedule 2.7, there shall
have been no event that has had or could reasonably be expected to result in a
Material Adverse Effect since December 31, 2006.

5.6           Opinion
of Counsel.  Investor
shall have received an opinion of counsel to the Company in substantially the
form attached as Schedule 5.6 hereto.

6.             Certain Covenants of the Company.

6.1           Listing of Common Stock.  The
Company shall use its reasonable best efforts to cause the Common Stock to
remain listed on the American Stock Exchange. 
The Company shall cause the Shares to be listed or included on
each securities exchange or automated quotation system on which similar
securities issued by the Company are then listed or included.

6.2           Shelf Registration.  The Company shall prepare and file or cause
to be prepared and filed with the SEC, as soon as practicable but in any event
no later than thirty (30) days after the Closing Date (the “Filing Deadline”),
a Registration Statement on Form S-1 (or such other form as the Company is then
eligible to use) for an offering to be made on a delayed or continuous basis
pursuant to Rule 415 of the Securities Act registering the resale from time to
time by the Investors of the Shares pursuant to plans of distribution
reasonably acceptable to the Investors (the “Registration Statement”).  Each Investor agrees to promptly provide to
the Company, in writing, such information as the Company may reasonably request
for inclusion in the Registration Statement. 
The Company shall use its reasonable best efforts to cause the
Registration Statement to be declared effective under the Securities Act no
later than the earlier of (a) sixty (60) days after its filing date or in the
event of SEC review, ninety (90) days from the date of filing and (b) the third
business day following the date on which the Company is notified by the SEC
that the Registration Statement will not be reviewed or is no longer subject to
further review and comments (the “Effectiveness Deadline”), unless upon the
advice of counsel it is advisable not to accelerate the effectiveness of such
Registration Statement, for such reasons including but not limited to, the
Company issues an earnings release or material news or a material event
relating to the Company occurs in which case such third business day shall be
the third business day following the fifteen (15) calendar day period after
such event occurs, and to keep such Registration Statement continuously
effective under the Securities Act until the earlier of (i) the date on which
all Shares covered by the Registration Statement may be sold pursuant to Rule
144(k) as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed to the Company’s transfer agent and to
the Investors, or (ii) such date as all Shares registered on such Registration
Statement have been resold (the earlier to occur of (i) or (ii) is the “Registration
Termination Date”).

(a) If a
Registration Statement ceases to be effective for any reason at any time prior
to the applicable Registration Termination Date, the Company shall use its
reasonable best efforts to reinstate the effectiveness thereof.

 13
 

(b) The Company
shall supplement and amend the Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Registration Statement, if required by the Securities Act or,
to the extent to which the Company does not reasonably object, as requested by
the Investors.

(c) All
Registration Expenses incurred in connection with the registrations pursuant to
this Section 6.2 shall be borne by the Company. “Registration Expenses” shall
mean all expenses incurred by the Company in complying with this Section 6.2
hereof including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company which shall be paid in any event by the Company and
Selling Expenses, as defined hereinafter).  
All Selling Expenses incurred in connection with any registrations
hereunder, shall be borne by the Investors. “Selling Expenses” shall mean all
brokerage and selling commissions applicable to a sale of the Shares pursuant
to the Registration Statement.

(d) The Company
may suspend sales of Shares pursuant to the Registration Statement for a period
of not more than fifteen (15) days during any six (6) month period in the event
it determines in good faith that such Registration Statement contains or may
contain an untrue statement of material fact or omits or may omit to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading; provided that (i) the Company shall immediately notify
the Investors of such suspension and (ii) the Company shall promptly amend such
Registration Statement in order to correct any untrue statement and/or ensure
that such Registration Statement is not misleading; provided further that
subject to the time limitations set forth above, the Company may delay such
amendment if the Company determines that such delay is in the best interest of
the Company in order to avoid premature public announcements of potential
acquisitions or other extraordinary transactions.  At the time the Registration Statement is
declared effective, each Investor shall be named as a selling securityholder in
the Registration Statement and the related prospectus in such a manner as to
permit such Investor to deliver such prospectus to purchasers of Shares in
accordance with applicable law.

(e) The Company
shall promptly furnish to the Investors, upon request and without charge, (A)
any correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement (but shall redact any
material non-public information therefrom), and (B) after the same is prepared
and filed with the SEC, one copy of any Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits.

(f) The Company
shall furnish to the Investors such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in
order to facilitate the disposition of the Shares owned by them.

 14
 

(g) The Company
shall use its reasonable best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Investors,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.

(h) The Company shall
notify immediately each Investor holding Shares covered by such registration
statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;
provided, however, that, subject to Section 6.2(d) the Company shall promptly
amend such Registration Statement in order to correct any untrue statement
and/or ensure that such Registration Statement is not misleading.  The Company shall immediately notify each
Investor holding Shares covered by such Registration Statement (i) when such
registration statement or any post-effective amendment thereto has become
effective (ii) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to a registration
statement or prospectus or for additional information that pertains to the
Investors as selling stockholders or the Plan of Distribution; (iii) of
the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement covering any or all of the Shares or the initiation of
any proceedings for that purpose, including pursuant to Section 8A of the
Securities Act; (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Shares for sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose; (iv) of the
occurrence of any other event that results in the Investors being unable to
sell Shares pursuant to the Registration Statement or related prospectus.

(i) If the Registration
Statement covering the Shares required to be filed by the Company pursuant to
this Section 6.2 is not filed with the Commission by the date that is the
Registration Statement Filing Deadline, then the Company shall make the
payments to the Investors as provided in the next sentence as liquidated
damages and not as a penalty.  If the
Registration Statement covering the Shares required to be filed by the Company
pursuant to this Section 6.2 is not filed with the Commission by the date that
is the Registration Statement Filing Deadline, a one-time amount equal to three
percent (3%) of the purchase price for the Shares shall be paid by the Company
to the Investors.

(j) If the Registration
Statement covering the Shares required to be filed by the Company pursuant to
this Section 6.2 is not declared effective by the Commission by the date that
is the Effectiveness Deadline (an “Initial Date”) then the Company shall make
the payments to the Investors as provided in the next sentence as liquidated
damages and not as a penalty.  If the
Registration Statement covering the Shares required to be filed by the Company
pursuant to this Section 6.2 is not declared effective by the date that is the
Effectiveness Deadline, an amount equal to two percent (2%) (the “Liquidated
Damage Rate”) of the purchase price for the Shares shall be

 15
 

paid by the
Company to the Investors, and an additional amount equal to two percent (2%) of
the purchase price for the Shares shall be paid by the Company to the Investors
in respect of any Computation Date thereafter. 
The amount to be paid by the Company to the Investors pursuant to this
Section 6.2(j) shall begin accruing as of the Effectiveness Deadline (“Initial
Date”) and shall be determined and paid as of each Computation Date (as defined
below) and for each thirty (30)-day period of any subsequent Computation Dates
thereafter, calculated on a pro rata basis to the date on which the
Registration Statement is declared effective by the Commission, (the “Periodic
Amount”).  However, payments pursuant to
this Section 6.2(j) are subject to a cap of ten percent (10%) or five (5)
thirty (30)-day periods.

(k) If the Registration
Statement covering the Shares required to be filed by the Company pursuant to
this Section 6.2 is not declared effective by the Commission by the date that
is thirty (30) days after the date of the fifth (5th), thirty (30) day period (as defined in
Section 6.2 (j) above), then the Company shall make an additional one-time
payment to the Investors equal to five percent (5%) of the purchase price for
the Shares.

(l) If the Company
suspends sales of Shares pursuant to the Registration Statement for a period of
thirty (30) days during any six (6) month period, or forty-five (45) days
during any six (6) month period if the Company is required to file a
post-effective amendment to the Registration Statement to update the prospectus
included therein under applicable SEC rules and regulations, an amount equal to
one percent (1%) of the purchase price for the Shares shall be paid by the Company
to the Investors, and an additional amount equal to one percent (1%) of the
purchase price for the Shares shall be paid by the Company to the Investors if
such suspension lasts an additional 30 days, or in respect of any subsequent
suspension period of thirty (30) days during any six (6) month period.

(m) The amounts payable
under sections 6.2 (i),(j) (k) or (l) above shall be paid by the Company to the
Investors, pro rata, at the option and sole discretion of each Investor, by (i)
wire transfer of immediately available funds within five (5) business days
after the Filing Deadline and each Computation Date or each date triggering
payment pursuant to Section 6.2(l), as the case may be (each a “Measurement
Date”), or (ii) by the issuance of additional Common Stock; the number of
shares to be issued shall be calculated as the Periodic Amount to which each
investor is entitled for each thirty (30)-day computation period, divided
by the lesser of (a) five dollars and twenty-five cents ($5.25) per share and
(b) the closing price of the Common Stock as of the applicable Measurement
Date, provided that such price shall never be below three dollars and fifty
cents ($3.50).

As used in this Section
6.2, “Computation Date” means the date that
is thirty (30) days after the Initial Date and, if the Registration Statement
to be filed by the Company pursuant to this Section 6.2 has not theretofore
been filed with the Commission or declared effective by the Commission, as the
case may be, each date which is thirty (30) days after the previous Computation
Date until such Registration Statement is so filed or declared effective, or
until the liquidated damages limit has been reached, as the case may be.  Notwithstanding the above, if the Registration
Statement covering the Shares required to be filed by the Company pursuant to
this Section 6.2 is not filed with the Commission by the Registration Statement
Filing Deadline, the Company shall be in default of the terms of this Section
6.2, and the Investors shall be entitled to damages as set forth above.

 16
 

6.3           Termination
of Registration Rights. All rights and obligations provided for
in Section 6.2 shall terminate on the date on which the Company has no
obligation to maintain the effectiveness of the Registration Statement; provided
that the rights of any Investor under Section 6.2 shall terminate the earlier
of (i) the date on which all Shares covered by the Registration Statement may
be sold pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed to the Company’s
transfer agent and to the Investors, or (ii) such date as all Shares registered
on such Registration Statement have been resold.

6.4           Reports
Under Securities Exchange Act of 1934. With a view to making
available to the Investors the benefits of Rule 144 promulgated under the
Securities Act (“SEC Rule 144”) and any other rule or regulation of the SEC
that may at any time permit Investors to sell securities of the Company to the
public without registration or pursuant to a Registration Statement, the
Company agrees to:

(a) use its reasonable
best efforts to make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times so long as the Company
remains subject to the periodic reporting requirements under Sections 13 or
15(d) of the Exchange Act;

(b) use its
reasonable best efforts to take such action as is necessary to enable the
Investors to utilize Form S-1 or such other registration statement form as may
be applicable for the sale of their Shares;

(c) use its
reasonable best efforts to file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and

(d) furnish to any
Investor, so long as the Investor owns any Shares, forthwith upon request (i) a
written statement by the Company that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, or that it qualifies
as a registrant whose securities may be resold pursuant to Form S-1 (or such
other form as the Company is then eligible to use), (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Investor of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.

6.5           Lock-up
of Merger Related Earn-out Shares. Under the terms of the Merger
Agreement with Navidec, Inc. (September 10, 2004), the Company committed to
issue various tranches of 9,000,000 shares to the former shareholders of
BPZ-Texas on a contingent earn-out basis if the Company achieves certain
production goals. The remaining tranche of 9,000,000 earn-out shares are
issuable once the Company is entitled to receive as its proportionate share
from gross production from any oil and gas wells owned or operated by the
Company not less than 2,000 barrels of oil per day or its equivalent
(approximately 12 million cubic feet of gas per day) prior to December 28,
2007.  The Company hereby agrees

 17
 

that in the event the above referenced earn-out shares
are issued, such shares will be issued with a restrictive legend stating that
the shares will be locked-up until December 1, 2008, pursuant to the terms of
this Agreement. If the Registration Statement covering the shares required to
be filed by the Company pursuant to Section 6.2 is not declared effective by
the Commission by December 1, 2007, then the lock-up term will be extended to
expire on the date that is one year from the date that the Registration
Statement covering the shares required to be filed by the Company pursuant to
Section 6.2 is declared effective by the Commission.  Anything to the contrary notwithstanding this
lock-up, will automatically expire no later than December 28, 2009.  The Company represents and warrants to the
Investors that each of the former shareholders of BPZ-Texas has agreed to the
foregoing lock-up agreement and legend requirements.  The foregoing lock-up agreement shall not
apply to (i) bona fide gifts, provided the recipient thereof agrees in writing
with the Company to be bound by the terms of this lock-up agreement, or (ii)
dispositions to any trust for the direct or indirect benefit of the undersigned
and/or the immediate family of any shareholder subject to this lock-up
agreement, provided that such trust agrees in writing with the Company to be
bound by the terms of this lock-up agreement. 
For purposes of this paragraph, “immediate family” shall mean any
shareholder subject to this lock-up agreement and the spouse, any lineal
descendent, father, mother, brother, or sister of any shareholder subject to
this lock-up agreement.

6.6           Integration.  The Company shall not, and shall use its best
efforts to ensure that no Subsidiary or affiliate of the Company shall, sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as defined in Section 2 of the Securities Act) that will be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Shares to
the Investors, or that will be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of the American Stock Exchange.

7.             Indemnification.

7.1           Indemnification by the Company.  The
Company will indemnify each Investor, its officers, directors, employees,
partners, affiliates, agents, representatives and legal counsel, and each
person controlling (or deemed controlling) such Investor within the meaning of
the Securities Act, (collectively, the “Investors’ Agents”) against all claims,
losses, damages and liabilities (or actions in respect thereof), joint or
several, arising out of or based on (A) (i) any untrue statement (or alleged
untrue statement) of a material fact contained in the Registration Statement,
any prospectus, offering circular or other similar document or any amendments
or supplements thereto (including any related registration statement and
amendments or supplements thereto, notification or the like) incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made, and will reimburse the
Investors and the Investors’ Agents for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damages, liability or action, as incurred, or (ii) any violation by the Company
of any federal, state or common law rule or regulation applicable to the
Company in connection with any such registration, qualification or compliance,
and will reimburse each Investor, and each Investors’ Agents, for

 18
 

any legal and
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; or (B) any breach of any covenant, agreement,
representation or warranty of the Company in this Agreement.  Notwithstanding the foregoing, the
Company shall not be liable under this Section 7: (a) in any such case
to the extent that any such claim, loss, damage, liability or expense arises
out of or is based on any untrue statement or omission based upon written
information furnished to the Company by an instrument duly executed by such
Investor and stated to be specifically for use therein or furnished in writing
by such Investor to the Company in response to a request by the Company stating
specifically that such information will be used by the Company therein, (b) for any amount paid in settlement of claims
without the Company’s written consent (which consent shall not be unreasonably
withheld), or (c) to the extent that it is finally judicially determined
that such Liabilities resulted primarily from the willful misconduct or bad
faith of such indemnified party; provided, further, that if and to the
extent that such indemnification is held, by final judicial determination to be
unenforceable, in whole or in part, for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of such indemnified Liability.  In connection with the obligation of the
Company to indemnify for expenses as set forth above, if an indemnified party
is reimbursed hereunder for any expenses, such reimbursement of expenses shall
be refunded to the extent it is finally judicially determined that the
Liabilities in question resulted primarily from the willful misconduct or bad
faith of such indemnified party.

7.2           Indemnification by Investors.  Each Investor will severally and not
jointly indemnify the Company, each of its directors and officers, each legal
counsel and independent accountant of the Company, each person who controls the
Company within the meaning of the Securities Act, any underwriter, and each
other Investor, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on (A) any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other similar document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made, and will reimburse
the Company, such directors, and officers, control persons, underwriter and
each other Investor for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, as incurred, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in conformity with
written information furnished in writing to the Company by an instrument duly
executed by such Investor and stated to be specifically for use therein or
furnished by such Investor to the Company in response to a request by the
Company stating specifically that such information will be used by the Company
therein; or (B) any breach of any representation or warranty of such Investor
in this Agreement.  Notwithstanding
the foregoing, the indemnity agreement provided in this Section 7 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the written consent of the Investor, which
consent shall not be unreasonably withheld. In no event shall an Investor’s
indemnification obligation exceed the net proceeds received from its sale of
Shares in such offering.

 19

7.3           Notification; Procedure.

(a)
Each party entitled to indemnification under this Section 7  (the “Indemnified
Party”) shall give notice to the party required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Party has received
written notice of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld). The Indemnified Party may participate in such defense at such party’s
expense; provided, however, that the Indemnifying Party shall bear the expense
of such defense of the Indemnified Party if representation of both parties by
the same counsel would be inappropriate due to actual or potential conflicts of
interest. The failure of any Indemnified Party to give notice within a
reasonable period of time as provided herein shall relieve the Indemnifying
Party of its obligations under this Section
7, but only to the extent that such failure to give notice shall
materially adversely prejudice the Indemnifying Party in the defense of any
such claim or any such litigation. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.

(b) If the
indemnification provided for in this Section
7 is held to be unavailable to an Indemnified Party with respect to any
loss, liability, claim, damage or expense referred to therein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, liability, claim, damage, or expense in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and of the Indemnified Party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage or expense as
well as any other relevant equitable considerations; provided, that in no event
shall any contribution by an Investor under this Section 7 exceed the net proceeds from the offering received by
such Investor. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties’ relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.  The parties
hereto agree that it would not be just and equitable if contribution pursuant
to this Section 7(b) were determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding sentence.

(c) The
obligations of the Company and each Investor under this Section 7 shall survive
the completion of any offering of the Shares in a Registration Statement under
this Section 7, any investigation made by or on behalf of the Indemnified Party
or any officer,

 20
 

director or controlling
Person of such Indemnified Party and will survive the transfer of securities.

(d) Each Investor
shall furnish to the Company such information regarding such Investor and the
distribution proposed by such Investor as the Company may reasonably request in
writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Section 7.

7.4           Registration Rights.  Each Investor agrees that if such Investor
wishes to sell securities pursuant to the Registration Statement, it will do so
in accordance with this Agreement.

8.             Survival of Representations and Warranties.  All representations, warranties and
agreements made by the Company and Investors in this Agreement or in any
certificate or other instrument delivered pursuant hereto shall survive the
Closing and any investigation and discovery by the Company or by Investors, as
the case may be, made at any time with respect thereto.

9.             Miscellaneous Provisions.

9.1           Deliveries.  The Company and Investors hereby covenant and
agree to use their respective reasonable best efforts to perform each of their
obligations hereunder, to deliver all certificates and to satisfy all other
conditions set forth in this Agreement and to close the transactions
contemplated by this Agreement on the Closing Date.

9.2           Successors and Assigns.  This Agreement is executed by, and shall be
binding upon and inure to the benefit of, the parties hereto and each of their
respective successors and assigns; provided, however, that
neither this Agreement nor any right pursuant hereto nor interest herein shall
be assignable except (a) by the Company with the consent of a Majority of the
Investors (as defined in Section 9.9), (b) by the Company in connection with a
merger, consolidation or sale of all or substantially all of its assets, (c) by
an Investor with the prior written consent of the Company or (d) by an Investor
in connection with a sale or other transfer of the Shares.  None of the provisions of this Agreement
shall be for the benefit of or enforceable by any other person.

9.3           Notices.  All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:

if to the Investors at the address set forth on
the signature page hereof:

	
  if to the Company at the following address:

  	
  with a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
  BPZ Energy, Inc.

  	
  Adams and Reese LLP

  	
   

  
	
  580 Westlake Park Blvd., Suite 525

  	
  4400 One Houston Center

  	
   

  
	
  Houston, Texas 77079

  	
  1221 McKinney

  	
   

  
	
  Attn: Chief Executive Officer and President

  	
  Houston, Texas 77010

  	
   

  
	
  Fax: (281) 556-6377

  	
  Attn: Mark W. Coffin

  	
   

  
	
  Attn: Chief Financial Officer

  	
  Fax: (713) 652-5152

  	
   

  

 

 21
 

All
such notices and communications shall be deemed to have been duly given: when
delivered by hand, if personally delivered; when delivered by courier, if
delivered by commercial overnight courier service; five business days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.

9.4           Counterparts.  This Agreement may be executed in any number
of counterparts, and each such counterpart will for all purposes be deemed an
original, and all such counterparts shall constitute one and the same
instrument.

9.5           Governing
Law; Forum.  This
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware applicable to contracts entered into and to
be wholly performed therein.  Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated
hereby shall be brought in the courts of the State of Delaware or of the United
States of America for the District of Delaware and hereby expressly submits to
the personal jurisdiction and venue of such courts for the purposes thereof and
expressly waives any claim of improper venue and any claim that such courts are
an inconvenient forum.  Each party hereby
irrevocably consents to the service of process of any of the aforementioned
courts in any such suit, action or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, to the address set forth in
Section 9.3, such service to become effective 10 days after such mailing.

9.6           Attorneys’
Fees.  If any party should
institute any action to enforce or interpret any term or provision of this
Agreement, the party prevailing in such action, after all appeals have been
exhausted, shall be entitled to its attorneys’ fees, out-of-pocket
disbursements and all other expenses from the non-prevailing party in such
action.

9.7           Entire
Agreement.  This Agreement
(together with all Exhibits and Schedules hereto) constitutes the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior and contemporaneous written and
oral negotiations, discussions, agreements and understandings with respect to
such subject matter.

9.8           Section Headings.  The section and subsection headings contained
in this Agreement are included for convenience only and form no part of the
agreement between the parties.

9.9           Consent
of Investors.  Any term or
condition hereof may be waived or amended by the consent of all Investors who
have purchased the shares hereunder.  

9.10         Interpretation.  Each of the Investors and the Company have
participated in the negotiation and drafting of this Agreement.  Accordingly, each of the parties hereby

 22
 

waives any statutory
provision, judicial precedent or other rule of law to the effect that
contractual ambiguities are to be construed against the party who shall have
drafted the same.

9.11         Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be or become
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement
except to the extent that any provision would clearly be contemplated by the
parties to be conditioned upon the validity and enforceability of such invalid
or prohibited provision.

9.12         Public Announcements.   On or before 8:30 a.m., New York City time,
on the first Business Day following the date of this Agreement, the Company
shall issue a press release describing the terms of the transactions
contemplated by this Agreement but not disclosing in such press release the
names of the Investors or the amount of Shares purchased by each Investor.  In addition, on or before the end of the
second Business Day following the date of this Agreement, the Company shall
file a Current Report on Form 8-K describing the terms of the transactions
contemplated by this Agreement in the form required by the Exchange Act and
attaching this Agreement as an exhibit to such filing (the “8-K Filing”).  From and after the filing of the 8-K Filing
with the Commission, the Investors as a consequence of participating in the
transactions contemplated by this Agreement shall not be in possession of any
material, nonpublic information received from the Company, any of its
Subsidiaries or any of their respective officers, directors, employees or
agents authorized to disclose such information, that is not disclosed in the
8-K Filing.  The Company shall not, and
shall cause each of its Subsidiaries and its and each of their respective
officers, directors, employees and agents, not to, provide the Investors with
any material, nonpublic information regarding the Company or any of its
Subsidiaries from and after the filing of the 8-K Filing with the Commission
without the consent of the Investors.  If
the Investor has, or believes it has, received any such material, nonpublic
information regarding the Company or any of its Subsidiaries prior to the
Closing Date, it shall provide the Company with written notice thereof and the
Company shall within five (5) business days thereafter, make public disclosure
of such material, nonpublic information if permitted under applicable law or
without breach or violation of any agreement, contract or other obligation of
the Company unless the Board of Directors of the Company shall determine that
such disclosure would reasonably be expected to result in a material and adverse
effect on the Company or its business, prospects, finances or properties.  Except for such disclosure as the Company is
advised by counsel is required to be included in documents filed with the
Securities and Exchange Commission or otherwise required by law or by any stock
exchange on which the Company is listed, unless otherwise publicly disclosed by
the Company pursuant to the preceding clause or by the Investor, the Company
shall not use the name of, or make reference to, any Investor or any of its
Affiliates in any press release or in any public manner (including any reports
or filings made by the Company under the Exchange Act) without such Investor's
prior written consent which consent shall not be unreasonably withheld.

9.13         Short
Sales.  Each Investor
agrees with the Company that the Company will be irreparably harmed if the
Investor engages in short sales and similar hedging transactions.

 23
 

Each Investor therefore
agrees that it will not directly or indirectly make or participate in any sale
of the Common Stock, including “short sales” as defined in Rule 200 under
Regulation SHO, whether or not exempt, until the effective date of the
Registration Statement covering the Shares purchased by such Investor
hereunder.  Each Investor will not use
any of the restricted shares acquired pursuant to this Agreement to cover any
short position in the common stock of the Company if doing so would be in
violation of applicable securities laws and otherwise will comply with federal
securities laws in the holding and sale of the Shares.

 24
 

IN
WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective representatives
hereunto duly authorized as of the date first above written.

	
  BPZ ENERGY, INC.,

  	
   

  
	
  a Colorado
  corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Manuel Pablo
  Zúñiga-Pflücker

  	
   

  
	
  President and
  Chief Executive Officer

  	
   

  
	
  580 Westlake
  Park Blvd., Suite 525

  	
   

  
	
  Houston, Texas
  77079

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  INVESTOR

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Title

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 25

Schedules to BPZ Energy, Inc.

Stock Purchase Agreement

Dated
May 4, 2007

Schedule
1.1

Investors

	
  Investor

  	
   

  	
  Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total
  Shares

  	
   

  	
  6,670,000

  	
   

  

 

 1
 

Schedule
2.1

Organization,
etc.

Subsidiaries

1.             BPZ Energy, Inc., a Texas corporation

2.             SMC Ecuador, Inc., a Delaware corporation

3.             BPZ Marine, Inc., a Texas corporation

4.             BPZ Energy International Holdings, LP, a BVI corporation

5.             BPZ Exploracion & Produccion, SRL, a Peruvian
corporation (a)

6.             Empresa Electrica Nueva Esperanza, SRL, a Peruvian
corporation (b)

7.             BPZ Energy Ecuador Cia. Ltda., an Ecuadorian corporation

Branch
Offices

1.             BPZ Energy, Inc., Sucursal Peru, a registered Peruvian
branch office (a)

2.             SMC Ecuador, Inc., Sucursal, a registered Ecuadorian
branch office

Note:

The Company is in the
process of setting up its Organization structure.  The above noted companies are in various
stages of establishment as of the date of this transaction.

(a)           The Company is in the process of
transforming its Peruvian branch (BPZ Energy, Inc., Sucursal Peru) into a
limited liability company (BPZ Exploracion & Produccion, SRL) in Peru.  This company will be the E&P operating
company in Peru.

(b)           This Company will be the Power
Generation operating company in Peru.

 2
 

Schedule
2.2

Authority

Preemptive
Rights

Under its Subscription
Agreement dated December 18, 2006 with the Company, International Finance
Corporation has the right to purchase its pro rata share of any New Securities
which the Company may, from time to time, propose to sell and issue; provided
that this right does not apply to the following: (i) the 6,500,000 shares
issued to International Finance Corporation pursuant to such Subscription
Agreement and any Common Stock issuable upon conversion, exercise or exchange
of Stock Equivalents issued as of December 18, 2006; (ii) Common Stock issued
or issuable in connection with any pro rata stock split or stock dividend of
the Company; (iii) Common Stock or Stock Equivalents issued pursuant to the
acquisition of any Person by the Company by merger, purchase of all or
substantially all of the assets of such Person or other transaction whereby the
Company shall become directly or indirectly the owner of more than 50% of the
voting power of such Person; or (iv) Common Stock issued or issuable under the
Company’s current Long-Term Incentive Compensation Plan, International Finance
Corporation’s pro rata share, for purposes of this right, is the ratio of the
Common Stock and Stock Equivalents owned by it immediately prior to the
issuance of New Securities to all Common Stock and Stock Equivalents
outstanding immediately prior to the issuance of New Securities.

As used in this Schedule
2.2, (i) “New Securities” means Common Stock or Stock Equivalents of the
Company whether now authorized or not, and securities of any type whatsoever
that are, or may become, convertible into, or exchangeable or exercisable for,
Common Stock or Stock Equivalents; (ii) “Person” means any natural person,
corporation, company, partnership, firm, voluntary association, joint venture,
trust, unincorporated organization, Authority or any other entity whether
acting in an individual, fiduciary or other capacity; and (iii) “Stock
Equivalents” mean preference shares, bonds, loans, warrants or other similar
instruments or securities which are convertible into or exercisable or
exchangeable for, or which carry a right to subscribe for or purchase, Common
Stock of the Company convertible into or exercisable or exchangeable for Common
stock, in each case, on an as converted basis.

 3
 

Schedule
2.4

No
Violation

None.

 4
 

Schedule
2.5

Litigation

SEC Inquiry of Navidec

Navidec was advised in February 2004 that the SEC was
conducting an informal inquiry to determine whether Navidec had violated
federal securities laws. Based on the information made available to the
Company, it believes the SEC’s investigation relates, at least in part, to the
restatement of Navidec’s reported earnings for the first and second quarters of
2003. This restatement was reported in Navidec’s Form 10-Q for the third quarter
of 2003 filed on December 11, 2003.

In December 2004, the Company received notice that the SEC
had issued an Order Directing a Private Investigation and Designating Officers
to Take Testimony and would be conducting a formal investigation. Pursuant to
the Merger Agreement, the Company has been indemnified by NFS for the costs of
the SEC investigation, and NFS has borne the costs incurred to date. The
Company is not aware of the future actions, if any, which the SEC intends to
pursue in this matter, but no assurance can be given that the investigation has
been and will be resolved without negative consequences to the Company.

Transfer of Ownership in NFS

On July 8, 2004, Navidec and BPZ-Texas entered into a
Merger Agreement which was consummated on September 10, 2004. The Merger
Agreement provided that all of the pre-merger business operations, assets and
liabilities of Navidec would be transferred to a wholly-owned subsidiary,
Navidec Financial Services, Inc. (“NFS”), followed by the transfer of NFS to the
pre-merger shareholders of record as of September 9, 2004, the day prior to the
consummation of the Merger. See “Business and
Properties—Navidec Merger Transaction,” “Risk
Factors—Risk Relating to the Offering—The transfer of NFS could result in
liability to us because the shares transferred were not registered with the
SEC,” and Note 2 to the Consolidated Financial Statements, included
in this filing, for detailed discussion regarding the Merger.

The Merger Agreement provided that the transfer of all of
the pre-merger business operations, assets and liabilities of NFS was effective
as of September 9, 2004. Accordingly, the Company originally believed that it
had no continuing ownership of NFS and, therefore, did not account for the
post-merger operations of NFS in the presentation of its financial statements.
After receipt of comments from the SEC in connection with its review of the
Company’s registration statement on Form SB-2 originally filed on July 27, 2005
and further review of this issue, the Company concluded it was the record, but
not beneficial, owner of NFS shares, and that any ownership interest was at
most temporary.

 5
 

In part because of difficulty obtaining necessary
information from NFS to clarify the ownership issue, the Company commenced an
action against NFS (the “Action”) on or about February 13, 2006, in District
Court, Arapahoe County, Colorado (the “Court”), seeking dissolution of NFS, the
appointment of a receiver, and access to NFS corporate records. The Company
commenced the Action uncertain whether or when the required spin-off of NFS
shares pursuant to the terms and conditions of the Merger had occurred under
Colorado corporate law. The Company asserted in the Action that it believed it
was a record shareholder of NFS as of the date of the request and had standing
for the relief sought. NFS denied that the Company had standing to act as a
shareholder and asserted that the Company had not been a shareholder of NFS
since September 9, 2004. The Action was settled amongst the parties on May 19,
2006. In connection with the settlement, a Finding of Fact and Conclusions of
Law (the “Order”) was issued by the Court stating that the Company was not a
shareholder of NFS at any time after September 9, 2004.

 6
 

Schedule
2.6

Capitalization

Ownership
of Equity Interest

The Company owns 100% of
the capital stock of each of the Subsidiaries. 
See Schedule 2.1.

Dilutive Securities
In addition to the shares issued and outstanding, the Company has the following potentially dilutive securities.

	
  

  	
   

  	
  March 31,

  	
   

  
	
   

  	
   

  	
  2007

  	
   

  
	
  Stock options outstanding

  	
   

  	
  3,957,000

  	
   

  
	
  Warrants outstanding

  	
   

  	
  250,000

  	
   

  
	
  Shares issuable to consultant for services

  	
   

  	
  —

  	
   

  
	
  Contingent incentive earn-out shares

  	
   

  	
  450,000

  	
   

  
	
  Contingent Merger earn-out shares

  	
   

  	
  9,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total
  potentially dilutive securities

  	
   

  	
  13,657,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Shares available for grant pursuant to Long-Term Incentive
  Compensation Plan

  	
   

  	
  1,156,000

  	
   

  

 

Stock Options Outstanding

In
connection with the Merger, BPZ, as the accounting acquirer, assumed all Navidec stock options outstanding, which were
fully vested on the date of the Merger and expire on September 10,
2007.  Exercise prices on these stock options range from $1.30 to $1.93 per
share.  Under the terms of the Merger
agreement, NFS is entitled to receive all proceeds from the exercise of these
options.  As of March 31, 2007, there
were 171,000 Navidec stock options outstanding.

In
July 2004, the Company granted options to purchase 1,000,000 shares of common
stock at an exercise price of $1.30 per share to the former CEO of Navidec in
connection with his service as a director and financial consultant to the
Company. On the date of the Merger, 500,000 of such stock options became fully
vested. Vesting of the remaining 500,000 stock options is contingent upon the
receipt of additional investment proceeds totaling $6 million, including
proceeds from the exercise of outstanding warrants.  As of the date of this filing, the grantee
has fulfilled his obligation to raise $6,000,000 under the above agreement and
as such, has vested in the remaining 500,000 stock options. These stock options, when vested, expire 10
years from the date of grant.

 7
 

Warrants Outstanding

In connection with the
Merger, BPZ issued warrants to purchase 1,500,000 shares of common stock at an
exercise price of $2.00 per share in connection with an agreement for investor
relations, public relations and other financial advisory services.  Such
warrants expire on July 31, 2006. 
Subsequent to the Merger, NFS conveyed 540,000 of such warrants to third
parties.  As of March 31, 2007, there
were 1,191,500 of such warrants outstanding, of which 810,000 were held by NFS.

For their role as placement agent, in connection with the
private placement of 11,466,000 shares of common stock in July 2005, Morgan
Keegan & Company, Inc. received fully vested warrants to purchase 100,000
shares of the Company’s common stock at an exercise price of $3.00 per share.
Such warrants expire on July 19, 2010.

Additionally, for their financial advisory services, in
connection with the private placement of 4,482,000 shares of common stock in
June 2006, Morgan Keegan & Company, Inc., received fully vested warrants to
purchase 150,000 shares of the Company’s common stock at an exercise price of
$3.00 per share. Such warrants expire on June 30, 2011.

Merger Earn-Out Shares

Under the terms of the
Merger Agreement, the Company committed to issue 18,000,000 shares to the
former shareholders of BPZ-Texas on a contingent earn-out basis if the Company
achieves certain reserve and production goals. The first earn-out target
relating to reserves was achieved in December 2004 and 9,000,000 of the
earn-out shares were issued. The remaining 9,000,000 earn-out shares are
issuable once the Company is entitled to receive as its proportionate share
from gross production from any oil and gas wells owned or operated by the
Company not less than 2,000 barrels of oil per day or its equivalent
(approximately 12 million cubic feet of gas per day) prior to December 28,
2007.

For accounting purposes, the
earn-out arrangement is treated as a stock dividend because the earn-out is
payable to the shareholders of the accounting acquirer, BPZ-Texas. Accordingly,
except for a retroactive increase in the number of common shares outstanding
for all periods presented, no accounting entry is required upon the issuance of
the earn-out shares.

Contingent
Earn-Out Shares

As of March 31, 2007, the Company has an obligation to
issue 450,000 shares of incentive stock awards to two of the Company’s
officers. The incentive stock awards vest and the earn-out shares are issuable
once the Company is entitled to receive as its

 8
 

proportionate share from gross production from any oil and
gas wells owned or operated by the Company not less than 2,000 barrels of oil
per day or its equivalent (approximately 12 million cubic feet of gas per day)
prior to December 28, 2007, the same target applicable to the Merger earn-out
shares (see above).

Long-Term Incentive Compensation
Plan

The Company adopted the BPZ Energy, Inc. Long-Term Incentive Compensation Plan (the “LTIP”) in July 2005.  The LTIP will be administered and managed within the discretion of the compensation committee of the Company or, in the absence of such committee, by the Board of Directors.  Incentives under the LTIP may be granted to eligible employees, directors or consultants in any one or a combination of incentive options, non-statutory stock options, stock appreciation rights, restricted stock grants, stock grants and performance shares.  As of March 31, 2007, the Company had granted restricted stock awards totaling 1,146,500 shares, of which 751,500 remain unvested as of March 31, 2007; had granted 1,697,500 options to purchase shares, to certain employees and board of directors, of which 1,597,500 are unvested as of March 31, 2007; and had 1,156,000 shares of common stock available for the grant of incentives under the LTIP.

Preemptive
Rights

See Schedule 2.2, which
is incorporated herein by reference as if set out in full.

 9
 

Schedule
2.7

Annual
Report; Financial Statements; Absence of Certain Changes

Amended
Financial Statements

On April 24, 2007, the Company filed an amendment to
its Annual Report on Form 10-K for the year ended December 31, 2006 to include
the information required by Part III of said report.  Certain information required by Part III was
to be incorporated by reference to the Company’s definitive proxy statement for
the 2007 Annual Meeting of Shareholders, but this proxy statement will not be
filed within 120 days of the fiscal year ended December 31, 2006 as is required
by the SEC in order for the Company to incorporate by reference such
information in Part III of its Annual Report on Form 10-K.

Absence of Certain Changes

None.

 10

Schedule
2.9

Income
Tax Returns

The legal conflict
between the Company and NFS has been resolved and as a result the Company is in
the final stages of filing appropriate federal income tax returns for the years
ended December 31, 2004 and 2005.  All necessary information has been
accumulated and the IRS forms are in the process of being completed.  The
Company expects to file the forms at the beginning of May 2007 and estimates
that the taxes, penalties and interests assessed will be less than $100,000. 
The assessed tax, penalties and interest is related to SMC Ecuador, Inc., a
wholly owned subsidiary of BPZ Energy, Inc., and its income related to its 10%
non-operated working interest in an oil and gas producing property, Block 2,
located in the southwest region of Ecuador (The Santa Elena Property) during
the respective years.  The Company was unable to file consolidated returns
for the respective years, as it did not elect to do so in a timely manner, and
thus resulted in the Company’s inability to utilize its consolidated NOL to
offset the tax assessment on SMC Ecuador, Inc.

An extension has been
filed for the federal tax return for the year ended December 31, 2006. 
The Company expects to file its 2006 return within the extended time
allowed.  In addition, the Company has elected to file a consolidated
return for the year ended December 31, 2006and as such it is anticipated that
no tax, penalties or interests will be assessed for said period.

All necessary state,
local and foreign taxes have been paid and the appropriate forms have been
filed within the respective jurisdictions.  The Company is currently in
good standing in all taxing jurisdictions in which it is registered.

 11
 

Schedule
2.11

ERISA

ERISA
Compliance

None.

Employee
Benefit Plans

1.  BPZ
Energy, Inc. Long-Term Incentive Compensation Plan

The Company adopted the BPZ Energy, Inc. Long-Term Incentive Compensation Plan (the “LTIP”) in April 2005 and it was approved by the Company’s shareholders in July 2005.  The LTIP will be administered and managed within the discretion of the compensation committee of the Company or, in the absence of such committee, by the Board of Directors.  Incentives under the LTIP may be granted to eligible employees, directors or consultants in any one or a combination of incentive options, non-statutory stock options, stock appreciation rights, restricted stock grants, stock grants and performance shares.

Key
Terms

The
following is a summary of the key provisions of the LTIP:

	
  Plan Term:

  	
   

  	
  April 15, 2005 to April 15, 2015.

  
	
   

  	
   

  	
   

  
	
  Eligible
  Participants:

  	
   

  	
  The Company’s directors, employees and consultants
  and the employees of certain of its affiliates. The Company currently has 25
  employees and four directors who are eligible to participate under the LTIP.

  
	
   

  	
   

  	
   

  
	
  Shares
  Authorized:

  	
   

  	
  4,000,000, subject to adjustment to reflect stock
  splits and similar events. The LTIP provides a further limit of 1,600,000
  shares of the 4,000,000, which may be issued as restricted stock grants,
  stock grants, other stock-based incentives and performance shares.

  
	
   

  	
   

  	
   

  
	
  Award
  Types:

  	
  ·  

  	
  incentive stock options under Section 422 of
  the Internal Revenue Code;

  
	
   

  	
  ·  

  	
  non-statutory stock options not covered under
  Section 422 of the Internal Revenue Code;

  
	
   

  	
  ·  

  	
  stock appreciation rights, granting the recipient
  the right to receive an excess in the fair market value of shares of stock
  over a specified reference price;

  
	
   

  	
  ·  

  	
  restricted stock, which will be nontransferable
  until it vests over time;

  
	
   

  	
  ·  

  	
  qualified performance-based incentives to employees
  who qualify as covered employees within the meaning of Section 162(m) of
  the Internal revenue Code;

  
	
   

  	
  ·  

  	
  unrestricted stock, which will be immediately
  transferable; and

  
	
   

  	
  ·  

  	
  other stock-based incentive awards.

  

 

 12
 

 

	
  

  	
  ·  

  	
  incentive stock
  options under Section 422 of the Internal Revenue Code;

  
	
  Vesting:

  	
   

  	
  To be determined by the compensation committee.
  Awards will generally vest in four years unless otherwise determined in the
  compensation committee’s discretion.

  

 

The
Board may discontinue the LTIP at any time and may amend or revise the terms of
the LTIP as permitted by applicable statute; except that it may not revoke or
alter, in a manner unenforceable to the grantees of any incentives, any
incentives outstanding, nor may the Board amend the LTIP without shareholder
approval where the absence of such approval would cause the LTIP to fail to
comply with Rule 166-3 under the Securities Exchange Act of 1934, or any
other applicable law or regulation.

Vesting
and Exercise of Stock Options

The
exercise price of stock options or stock appreciation rights granted under the
LTIP may not be less than the fair market value of the common stock on the date
of grant. The term of these awards may not be longer than ten years. The
compensation committee will determine at the date of grant when each such award
becomes vested and/or exercisable.

Vesting
of Restricted Stock Awards and Options

The
compensation committee may make the grant, issuance, retention and/or vesting
of restricted stock awards and options contingent upon continued employment (or
engagement) with Company, the passage of time, or such performance criteria and
the level of achievement compared to such criteria as it deems appropriate.

Eligibility
Under Section 162(m)

Awards
may, but need not, include performance criteria that satisfy
Section 162(m) of the Tax Code. To the extent that awards are intended to
qualify as “performance-based compensation” under Section 162(m), the
performance criteria may include the following criteria, either individually,
alternatively or in any combination, applied to either the company as a whole
or to a business unit or subsidiary, either individually, alternatively, or in
any combination, and measured either annually or cumulatively over a period of years,
on an absolute basis or relative to a pre-established target, to previous years’
results or to a designated comparison group, in each case as specified by the
compensation committee in the award:

·                  pre-tax or after-tax net earnings,

·                  sales growth,

·                  operating earnings,

·                  operating cash flow

·                  return on net assets,

·                  return on shareholders’ equity,

·                  return on assets,

·                  return on capital,

·                  stock price grown,

·                  gross or net profit margin,

 13
 

·                  earnings per share,

·                  price per share of stock,

·                  market share, and

·                  such
other performance measures as the compensation committee may determine.

To the
extent that an award under the LTIP is designated as a “performance award,” but
is not intended to qualify as performance-based compensation under
Section 162(m), the performance criteria can include the achievement of
strategic objectives as determined by the Board.

Notwithstanding
satisfaction of any completion of any performance criteria described above, to
the extent specified at the time of grant of an award, the number of shares of
common stock, stock options or other benefits granted, issued, retainable
and/or vested under an award on account of satisfaction of performance criteria
may be reduced by the compensation committee on the basis of such further considerations
as the compensation committee in its sole discretion determines.

Transferability

Awards
granted under the LTIP are not transferable except by will or the laws of
descent and distribution except that the compensation committee may consent to
permit the transfer of a non-qualified stock option. The LTIP specifically
prohibits transfers by an individual for consideration.

Administration

The
compensation committee will administer the LTIP. The compensation committee
will select the Company employees and other participants who receive awards,
determine the number of shares covered thereby, and, subject to the terms and
limitations expressly set forth in the LTIP, establish the terms, conditions
and other provisions of the grants. The compensation committee may interpret
the LTIP and establish, amend and rescind any rules relating to the LTIP.
The compensation committee may delegate to a committee of one or more directors
or to Company officers the ability to grant awards and take certain other actions
with respect to participants who are not executive officers.

Amendments

The Board of Directors may terminate or discontinue
the LTIP at any time and may amend the plan at any time, as permitted by
applicable statutes. However, the Board may not revoke or alter, in a manner
unfavorable to the LTIP’s participants, the terms of any award under the LTIP
then outstanding. The Board of Directors is further restricted from amending
the LTIP without shareholder approval if the absence of such approval would
cause the LTIP to fail to comply with Rule 16b-3 under the Securities
Exchange Act of 1934 or any other applicable law or regulation.

 14
 

Adjustments

In the
event of a stock dividend, recapitalization, stock split, combination of
shares, reorganization, or exchange of Company’s common stock, or any similar
event affecting Company’s common stock, the compensation committee shall adjust
the number and kind of shares available for grant under the LTIP, and subject
to the various limitations set forth in the LTIP, the number and kind of shares
subject to outstanding awards under the LTIP, and the exercise or settlement
price of outstanding stock options and of other awards.

The
impact of a merger or other reorganization of Company on awards granted under
the LTIP shall be specified in the agreement relating to the merger or
reorganization, subject to the limitations and restrictions set forth in the
LTIP. Such agreement may provide for, among other things, assumption of
outstanding awards, accelerated vesting or accelerated expiration of
outstanding awards, or settlement of outstanding awards in cash.

2.  Navidec, Inc.
2004 Stock Option Plan

Subsequent to the
Merger, the Company discontinued the Navidec 2004 Stock Option Plan (the “Navidec
Plan”) and no options were granted under the Navidec Plan subsequent to the
Merger.

 15
 

Schedule
2.12

Contracts

Platform Refurbishment

In
July 2005 (amended in January 2006), the Company signed a service contract with
Tecnomarine S.A.C. of Peru for the refurbishment of the Corvina CX-11X platform.  Total refurbishment costs were approximately
$3.0 million.

Power Plant Engineering Services
Agreement

In August 2005 (amended
February 2006), the Company signed an Engineering Service Agreement with BTEC
Turbines LP (“BTEC”) for approximately $3.8 million, whereby BTEC will provide,
design and engineering services for the Company’s planned 180 megawatt power
plant.

Drilling

In
December 2005, the Company signed a drilling contract with Petrex S.A., a
subsidiary of Saipem SpA of Italy. Under the contract, Petrex S.A. will provide
a platform rig capable of drilling to 16,000 feet and upgrade the rig to meet
the Company’s specifications.  The
Company intends to utilize the rig for the initial development of the Corvina
gas field and may also utilize it for the expected development of the Albacora
oil field, and potential appraisal wells in the Piedra Redonda gas field.  The Company has agreed to pay a $5.5 million
fee to mobilize and upgrade the rig.  In
exchange, the Company will receive a competitive fixed day rate and exclusive
rights to use the rig, at its option, during the two-year period commencing
with delivery of the rig.

Barge Purchase & Towing

In February 2006, the
Company entered in to contracts with four vendors for the purchase of a tender
barge with a 200 ton crane and ancillary equipment, including a smaller 35 ton
crane and additional anchoring and winch systems, and towage of the barge from
Seattle, Washington to Peru.  Such barge
and related equipment will be utilized in the Company’s drilling
operations.  The total cost, including
towage, is approximately $6.5 million.

Oilfield Services

In
addition, the Company contracts with various oilfield service companies such
as: Schlumberger, Weatherford, Smith International, Qmax, Baker Hughes and Tecnomarine
for the various turnkey services needed in its operations such as cementing,
testing, drilling and casing tools, drilling fluids and marine logistic
services.

 16
 

Schedule
2.13

Environmental
Matters

None.

 17
 

Schedule
2.15

Employees

None.

 18
 

Schedule
2.16

Title
to Properties

Encumbrances

None.

 19
 

Schedule
2.17

Related
Party Transactions

None.

 20
 

Schedule
2.20

No
Anti-Dilution Rights

See Schedule 2.2, which
is incorporated herein by reference as if set out in full.

 21
 

Schedule
5.6

Form
of Opinion of Counsel

See attached.

 22

FORM OF LEGAL
OPINION

[ADAMS AND REESE
LETTERHEAD]

May 4, 2007

To the Investors

Listed on Schedule A hereto:

Ladies and
Gentlemen:

This
opinion is furnished to you pursuant to the Stock Purchase Agreement by and
among the purchasers signatory thereto (the “Investors”) and BPZ Energy, Inc.,
a Colorado corporation (the “Company”), dated as of May 4, 2007, (the “Agreement”),
which provides for the issuance and sale by the Company of Common Stock on the
Closing Date.  All terms used herein have
the meanings defined for them in the Agreement unless otherwise defined herein.

We
have acted as counsel for the Company in connection with the offering of Common
Stock to the persons named on Schedule A hereto (the “Investors”).

As
counsel, we have made such legal and factual examinations and inquiries as we
have deemed advisable or necessary for the purpose of rendering this
opinion.  We have examined and are
familiar with the following:

1.                         The
Agreement executed by each Investor;

2.                         The
Purchaser Suitability Questionnaire executed by each Investor;

3.                         A
copy, certified by the Secretary of the Company, of resolutions adopted by the
Board of Directors of the Company on May 4, 2007, authorizing the execution and
delivery of the Agreement;

4.                         A
Certificate of the Secretary of the State of Colorado dated May 4, 2007 as to
the legal existence and good standing of the Company in Colorado;

5.                         A
certificate of the President and Secretary of the Company confirming certain
factual matters for purposes of the opinions expressed below; and

 23
 

6.                         Such other documents and instruments
as we have considered necessary for the purposes of the opinions hereinafter
set forth.

In
our examination of the foregoing, we have assumed the authenticity of all
documents submitted to us as original documents, the conformity to the
originals of all documents submitted to us as copies, the genuineness of
signatures, and the legal capacity of all signatories. We have also relied upon
a certificate or certificates of an official, officer, or authorized representative
of the particular governmental authority, corporation, company, firm or other
person or entity concerned with respect to the factual determinations
underlying the legal conclusions set forth herein. We have not attempted to
verify independently such representations and statements. We have also assumed,
without independent verification, the accuracy of the representations made by
the Investors in the Agreement.

We
have not made any investigation of the laws of any jurisdiction other than the
State of Texas, the federal securities laws of the United States, the Colorado
Business Corporation Act statute (the “Colorado Act”), and we are opining
herein solely with respect to the laws of the State of Texas, and the federal
securities laws of the United States.

The
opinions hereinafter expressed are qualified to the extent that the validity or
enforceability of any of the agreements, documents or obligations referred to
herein may be subject to or affected by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other laws relating to or
affecting the rights of creditors generally, (ii) statutory or decisional law
concerning recourse by creditors to security in the absence of notice and
hearing and (iii) duties and standards imposed on creditors and parties to
contracts, including, without limitation, requirements of good faith,
reasonableness and fair dealing. Furthermore, we express no opinion as to the
availability of any equitable or specific remedy upon any breach of such
documents or any of the agreements, documents or obligations referred to
therein, inasmuch as the availability of such remedies may be subject to the
discretion of a court, nor do we express any opinion herein as to the
enforceability of any of the indemnification or contribution provisions
included in any of the agreements, documents or obligations referred to herein.

We
have assumed that each Investor has full power and authority to execute and
deliver the Agreement between such Investor and the Company and that such
Agreement has been fully executed and delivered by such Investor and is
enforceable against such Investor in accordance with its terms.

For
purposes of our opinions set forth in paragraphs 1 through 3 below as to the
legal existence and good standing of the Company in the State of Colorado, we
have relied solely on the certificates described in paragraphs 4 and 5 above,
respectively, and such opinions are, accordingly, rendered as of the respective
dates of such certificates, with telephonic confirmation of the continuing
accuracy of the certificates as of the Closing Date.

Our
opinions in paragraphs 5 and 7 below are limited in that we express no opinion
with respect to any federal or state securities antifraud laws or fraudulent
transfer laws.

 24
 

Any
reference to “our knowledge”, “knowledge”, “to our attention” or any variation
of any of the foregoing shall mean the conscious awareness of the attorneys in
this firm, who have rendered substantive attention to this transaction, of the
existence or absence of any facts which would contradict our opinions set forth
below. We have not undertaken any independent investigation to determine the
existence or absence of such facts, and no inference as to our knowledge of the
existence or absence of such facts should be drawn from the fact of our
representation of the Company.

Based
upon the foregoing, we are of the opinion that:

1.             The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado.

2.             The Company has all requisite
corporate power and authority to own, lease and use its properties and conduct
the business in which it is engaged as described in the Company’s SEC filings.

3.             The Company has all requisite
corporate power and authority to execute and deliver the Agreement, and to
issue the Common Stock in accordance with and upon the terms and conditions set
forth in the Agreement and to otherwise perform its obligations under the
Agreement.

4.             The Agreements have been duly
authorized, executed and delivered by the Company.

5.             Based in part on, and assuming the
accuracy of, the representations and warranties made by the Company and the
Investors in the Agreements, the offer and sale to the Investors of Common
Stock in the Company was made pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended.

6.             The Common Stock being delivered to
the Investors pursuant to the Agreements have been duly and validly authorized
and, when issued, delivered and paid for as contemplated in the Agreements will
be duly and validly issued, fully paid and non-assessable.

7.             The execution, delivery and
performance of the Agreements by the Company and the consummation by the
Company of the transactions contemplated thereby, including, without
limitation, the issuance of the Common Shares, does not and will not (i) result
in a violation of the Company’s Certificate of Incorporation or By-Laws; (ii)
conflict with, or constitute a material default (or an event that with notice
or lapse of time or both would become a default) under, require a consent
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement to which the Company is a party that is
filed as an exhibit to the Company’s most recent filing on Form 10-K; or (iii)
result in a violation of any federal or state law, rule or regulation or any
rule or regulation of the Trading Market applicable to the Company or by which
any property or asset of the Company is bound or

 25
 

affected, except
for such violations as would not, individually or in the aggregate, have a
material economic effect on the Company.

This
opinion is based upon currently existing statutes, rules, regulations and
judicial decisions, and we disclaim any obligation to advise you of any change
in any of these sources of law or subsequent legal or factual developments
which might affect any matters or opinions set forth herein.

Please
note that we are opining only as to the matters expressly set forth herein, and
no opinion should be inferred as to any other matters. This opinion is solely
for your benefit in connection with transactions described above and may not be
quoted or relied upon by any person or entity or used for any other purpose,
without our prior written consent.  This
letter speaks only as of the date hereof and we have no responsibilities to
update or supplement it after such date.

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Adams and Reese llp

  

 

 26
 

SCHEDULE
A

INVESTORS
OF BPZ ENERGY, INC.

May
4, 2007

	
  Investor

  	
   

  	
  Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total
  Shares

  	
   

  	
  6,670,000

  	
   

  

 

 27Exhibit 10.2

AMENDMENT 2007-1

TO THE

CEPHALON, INC.

2004 EQUITY COMPENSATION
PLAN

WHEREAS,
Cephalon, Inc. (the “Company”) maintains the Cephalon, Inc. 2004 Equity
Compensation Plan (the “2004 Plan”) for the benefit of its eligible employees,
certain consultants and advisors who perform services for the Company, and
non-employee members of the Company’s Board of Directors (the “Board”);

WHEREAS,
pursuant to Section 12(a) of the 2004 Plan, the Board may amend the 2004 Plan
at any time;

WHEREAS,
pursuant to Section 141 of the Delaware General Corporation Law, the Board has
delegated its authority to amend or modify any of the Company’s existing equity
compensation plans, including the 2004 Plan, to the Stock Option and
Compensation Committee of the Board of Directors (the “Committee”), as more
fully described in Section III of the Committee’s charter; and

 WHEREAS,
the Committee desires to amend the 2004 Plan to provide for the mandatory
adjustment to the number of shares of Company Stock available for grant, the
maximum number of shares of Company Stock that any individual participating in
the 2004 Plan may be granted in any year, the number of shares of Company Stock
covering outstanding grants, the kind of shares of Company Stock issued under
the 2004 Plan, and the price per share of share grants in the event of certain
specified equity events.

NOW, THEREFORE, in accordance with the foregoing, the 2004 Plan
shall be amended as follows:

1.             Effective February 8, 2007, Section 3(b) of the 2004
Plan shall be amended in its entirety to read as follows:

“(b)         Adjustments.  If there is any change in the number or kind
of shares of Company Stock outstanding
(i) by reason of a stock dividend, spinoff, recapitalization, stock split, or
combination or exchange of shares, (ii) by reason of a merger, reorganization
or consolidation, (iii) by reason of a reclassification or change in par value,
or (iv) by reason of any other extraordinary or unusual event affecting the
outstanding Company Stock as a class without the Company’s receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company’s payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the maximum number of shares of Company Stock that
any individual participating in the Plan may be granted in any year, the number
of shares covered by outstanding Grants, the kind of shares issued under 

the Plan, and the price per
share of such Grants shall be equitably adjusted by the Committee, in such
manner as the Committee deems appropriate, to reflect any increase or decrease
in the number of, or change in the kind or value of, the issued shares of
Company Stock to preclude, to the extent practicable, the enlargement or
dilution of rights and benefits under the Plan and such outstanding Grants;
provided, however, that any fractional shares resulting from such adjustment
shall be eliminated.  In addition, in the
event of a Change of Control or Corporate Transaction, the provisions of
Section 10 shall apply.  Any adjustments
to outstanding Grants shall be consistent with section 409A or 422 of the Code,
to the extent applicable.  Any
adjustments determined by the Committee shall be final, binding and conclusive.”

2.             As thus amended, the 2004 Plan is hereby ratified,
republished and reconfirmed and said 2004 Plan and this amendment thereto
hereby constitute the 2004 Plan.

IN WITNESS WHEREOF, and as evidence of the adoption of Amendment 2007-1
to the 2004 Plan as set forth herein, the Committee has caused this Amendment
2007-1 to be executed this 8th day of February 2007.

	
  

  	
   

  	
  CEPHALON, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Carl A.
  Savini

  
	
   

  	
   

  	
   

  	
  Carl A. Savini

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, Chief 

  
	
   

  	
   

  	
   

  	
  Administrative Officer

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