Exhibit 10.3
CONSULTING AGREEMENT
G. Michael Morgan
THIS AGREEMENT (which includes any and all exhibits hereto) is made as of
July 9, 2011 (the “Effective Date”) between HARVEST NATURAL RESOURCES, INC. (the
“Company”) and G. Michael Morgan (“Consultant”). In consideration of the
covenants contained herein made by the parties, Company and Consultant agree:
1. SCOPE OF WORK. Consultant shall perform for Company the consulting services
provided for in Exhibit A hereto (the “Services”) and as defined in any
subsequent work orders (see format in Exhibit B). Consultant shall not perform
any Services under this Agreement through third parties without Company’s prior
written consent. Consultant shall perform all Services diligently, in a good and
workmanlike manner, and to the satisfaction of Company.
2. COMPENSATION. Company shall pay the compensation as provided in Exhibit A for
Services performed by Consultant under this Agreement. Except as provided on
Exhibit A, Company is not responsible for reimbursing Consultant for any
expenses incurred in connection with the Services provided by Consultant under
this Agreement. Invoicing and payments hereunder shall be on a monthly basis,
and all invoices shall be accompanied by such supporting data as Company may
reasonably request.
3. TERM. This Agreement shall be effective as of the Effective Date and shall
continue in effect until termination by either party upon thirty (30) days’
prior written notice to the other; provided, however, that the parties recognize
that certain obligations (including without limitation obligations to keep
certain information confidential) are continuing in nature and shall survive the
termination of this Agreement.
4. NON-EXCLUSIVE SERVICES. Subject to the provisions of this Agreement, during
the term of this Agreement, Consultant may represent, perform services for, or
be retained by such additional persons or entities as Consultant deems
appropriate; provided however, that none of such activities shall interfere with
Consultant’s ability to perform its obligations under this Agreement, or
adversely affect the business, operations or financial condition of Harvest or
its affiliates.
5. INDEPENDENT CONTRACTOR. Consultant acknowledges and agrees that, in
performing services pursuant to this Agreement, Consultant shall be serving as
an independent contractor. Consultant agrees that Consultant shall not be
considered an agent acting on behalf of Company and shall have no authority to
bind or commit the Company in any manner.
6. INFORMATION BELONGING TO COMPANY. Consultant shall hold in strict confidence,
and shall not use in competition with Company or any affiliate thereof, any
information of which Consultant becomes aware under or by virtue of this
Agreement which Company deems confidential, or which Company or any affiliate
thereof has agreed to hold confidential, or which, if revealed to a third party,
might reasonably be construed to be contrary to the best interests of Company or
any affiliate thereof. Further, all information developed by Consultant under or
by virtue of this Agreement shall be Company’s property for its use in

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whatever way Company may determine, and all material reflecting such information
shall be turned over to Company upon Company’s request.
7. INFORMATION BELONGING TO OTHER PARTIES. Consultant shall not in any way use,
for the benefit of Company or otherwise, any trade secret belonging to a third
party without specific and proper authorization from the owner of the trade
secret. (“Trade secret” as used here can include scientific, technical,
engineering, financial, economic and any other business and competitive
information in virtually any form.)
8. INSURANCE. Consultant shall, at Consultant’s own expense, maintain in force
no less than the minimum insurance required by applicable law.
9. ETHICS. Consultant accepts the responsibility of proper conduct at all times
with complete honesty and integrity and in a manner which will not create any
compromising situations with respect to Company or any affiliate thereof.
10. CONFLICT OF INTEREST. Consultant covenants and agrees that it will not
receive and has not received any payments, gifts or promises and Consultant will
not engage in any employment or business enterprises in any way conflict with
its ability to provide services for, or conflict with the interests of, the
Company or its affiliates under this Agreement. Consultant shall make all
reasonable efforts consistent with the terms of this Agreement to prevent
occurrences of and eliminate conditions which could result in a conflict with
the best interest of Company or its affiliates. Consultant shall make all
reasonable efforts to prevent conflicts of interest from arising out of
relationships between Consultant, agents or employees of Consultant and agents
or employees of Company or its affiliates. In addition, Consultant agrees to
comply with the laws or regulations of any country, including, without
limitation, the United States of America, having jurisdiction over Consultant or
the Company or its affiliates.
Consultant shall not make any payments, loans, gifts or promises or offers of
payments, loans or gifts, directly or indirectly, to or for the use or benefit
of any official or employee of any government or to any other person if
Consultant knows, or has reason to believe, that any part of such payments,
loans or gifts, or promise or offer, would violate the laws or regulations of
any country, including, without limitation, the United States of America, having
jurisdiction over Consultant or the Company or its affiliates. Consultant’s
efforts shall include the establishment of precautions to prevent Consultant and
its agents and employees, if any, from giving or receiving gifts or
entertainment, other than an ordinary social amenity, or make any payments,
loans or other consideration for the purpose of procuring business or inducing
any person to act contrary to the best interest of Company or its affiliates.
By signing this Agreement, Consultant acknowledges that it has not made any
payments, loans, gifts, promises of payments, loans or gifts to or for the use
or benefit of any official or employee of any government or to any other person
which would violate the laws or regulations of any country, including, without
limitation, the United States of America, having jurisdiction over Consultant or
the Company or its affiliates.

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11. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Texas.
12. TAXES. Consultant shall be solely responsible for the payment wherever
payable of any income taxes or other taxes or contributions based on the
compensation paid to Consultant.
13. AUDITS. Company shall have the right to audit any of Consultant’s books and
records which may be necessary to substantiate any invoices and payments
hereunder (including, but not limited to, receipts, time sheets, payroll and
personnel records, etc) and Consultant agrees to maintain adequate books and
records for such purposes during the term of this Agreement and for a period of
two (2) years thereafter and to make the same available to Company at all
reasonable times and for so long thereafter as there may remain any unresolved
question or dispute regarding any item pertaining thereto.
14. NO WAIVER OF BREACH. No failure by either party to enforce any obligation
under this Agreement shall prejudice that party’s right thereafter to enforce
that or any other obligation unless specifically otherwise stated in writing.
15. NON-ASSIGNABILITY. This Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties.
Consultant shall not assign all or any part of its rights and obligations under
this Agreement without the prior written consent of the Company. The Company
shall have the right to assign its rights and obligations under this Agreement
provided that the Company gives Consultant notice thereof.
16. AFFILIATES. Any affiliate of the Company shall be a third party beneficiary
of this Agreement with full rights of enforcement. The term “affiliate” means
any corporation, partnership, trust or any other person or entity that, to the
extent of at least fifty percent (50%), directly or indirectly, owns or
controls, is owned or controlled by, and/or is under common ownership or control
with Company.
17. BENEFITS. Consultant shall not be entitled to participate in any employee
benefit plans or fringe benefit programs maintained by the Company.
18. NOTICES. Notices shall be in writing, in the English language, given in
person or by prepaid mail, express delivery, or confirmed facsimile
transmission, and effective when received in person or at the address/facsimile
number of the receiving party shown below. Notice given by mail shall be deemed
received 24 hours after being mailed (postage prepaid) to the address of the
receiving party shown below.
19. ENTIRE AGREEMENT. This Agreement represents the complete understanding
between Consultant and the Company and supersedes all prior negotiations,
representations or agreements, either written or oral, and any amendment hereto
must be in writing and signed by both parties. The invalidity of any particular
provision of this Agreement shall not affect the validity of any other provision
and no ambiguity shall be construed against either party on the grounds that
such party caused or should have prevented it.

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20. HEADINGS. The underlined headings used in this Agreement are for
administrative convenience only and shall be completely disregarded for the
purposes of construing and enforcing this Agreement.
     THIS AGREEMENT MAY BE EXECUTED IN IDENTICAL COUNTERPARTS, which shall be
deemed to constitute one and the same agreement.
     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.

             
HARVEST NATURAL RESOURCES, INC.
      G. Michael Morgan    
 
           
 
James A. Edmiston
     
 
G. Michael Morgan    
President and Chief Operating Officer
      Consultant    
1177 Enclave Parkway, Suite 300
      3308 Oak Dale Way    
Houston, Texas 77077
      Seabrook, Texas 77586    

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EXHIBIT A
Services and Remuneration

     
A. SCOPE OF WORK:
  In service of the Company, Consultant will serve on the Board of Shareholders
for Petrodelta, S.A., the Company’s Venezuelan affiliate and represent the best
interests of the Company in that capacity. Additionally, the Consultant will
assist in identifying new oil and gas business opportunities at the discretion
of the Company. Consultant will consult with and assist the Company in the
acquisition, disposition and/or farm ins or outs of oil and gas properties
including participation in negotiations of agreements with private and public
entities.
 
   
 
  It is understood that this will involve:
 
   
 
 
•    Assessment of new business opportunities.
 
   
 
 
•    Working with the Technical Services group in the UK to evaluate and
analysis prospective opportunities.
 
   
 
 
•    Working with the Vice Presidents of Engineering and Business Development
and Eastern Operations in prioritizing and recommending business opportunities.
 
   
 
 
•    Working with the Venezuela Caracas staff to understand and implement
desired results at Petrodelta Board meetings.
 
   
 
  Consultant shall perform the services as detailed in any subsequent work order
and in accordance with this Agreement. The format of the work orders is included
in Exhibit B.

 

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B. COMPENSATION:
  The monthly retainer for consulting services performed under this Agreement
will be $25,000 USD.
 
   
C. EXPENSES:
  Expenses incurred by the consultant in the process of carrying out agreed
consulting services will be repaid by the company, in accordance with the
Company’s policies in effect from time to time; Expenses will be reclaimed on a
monthly basis with the fee invoice and will be supported by receipts. Any
individual expense other than travel and airfare and in excess of $1,500 USD
will have been approved in advance in writing by Company.

 

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EXHIBIT B

     
Work Order
   
Contract Date:
  Work Order No:
Commitment not to exceed
   
Commencement date of Work Order
   
Completion date of this Work Order
   
Scope of Work
   
Scope of Work
   

Resources
Deliverables
Company Representative: Mr. Karl Nesselrode,
Consultant Representative: Mr. G. Michael Morgan
Relevant Attachments

     
For Consultant
  For Company
Signature:
  Signature:
Name:
  Name:
Title:
  Title:
Date:
  Date: