Exhibit 10.32

EMPLOYMENT AGREEMENT

This Agreement, effective January 1, 2009, is between Harvest Natural Resources,
Inc. (the “Company”) and Keith L. Head, a resident of Texas (“Employee”), the
terms and conditions of which are as follows:

W I T N E S S E T H :

WHEREAS, the Company and Employee previously entered into an Employment
Agreement dated May 7, 2007 (the “Original Employment Agreement”); and

WHEREAS, Employee and the Company wish to enter into this Agreement in order to
bring Employee’s employment agreement into documentary compliance with section
409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules
and regulations issued thereunder by the Internal Revenue Service and of
Treasury;

NOW THEREFORE, for good and valuable consideration, the sufficiency and receipt
of which are acknowledged, the Company and Employee agree as follows effective
January 1, 2009:

 

1. TERM OF EMPLOYMENT.

Subject to the terms and conditions set forth in this Agreement, the Company
agrees to employ Employee and Employee agrees to be employed by the Company for
the term which started on May 7, 2007, and ends on May 31, 2008. On May 31,
2008, and on each anniversary thereafter (an “Extension Date”) the term of this
Agreement shall automatically be extended for a one-year period unless and until
either party has given written notice to the other at least one year before any
Extension Date that it or he wishes to terminate this Agreement as of such
Extension Date.

 

2. POSITION AND DUTIES.

(a) Position. Subject to annual election by the Company’s Board of Directors,
Employee’s position shall be Vice President, General Counsel and Corporate
Secretary of Harvest Natural Resources, Inc.

(b) Duties and Responsibilities. Employee’s duties and responsibilities
initially shall be those normally associated with Employee’s position, plus any
additional duties and responsibilities the Company initially may assign orally
or in writing to Employee. Employee shall undertake to perform all Employee’s
duties and responsibilities for the Company and its affiliates in good faith and
on a full-time basis and shall at all times act in the course of Employee’s
employment under this Agreement in the best interest of the Company and the
Company’s affiliates.

(c) The Company’s Right to Change Position or Duties. Subject to the terms of
this Agreement, the Company shall have the right, to the extent the Company from
time to time reasonably deems necessary or appropriate, to change Employee’s
position, or to expand or reduce Employee’s duties and responsibilities.

 

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3. COMPENSATION AND BENEFITS.

(a) Base Salary. During the term of this Agreement, Employee’s yearly base
salary shall be not less than $230,000 US, which yearly base salary shall be
payable from the Company’s Houston offices to Employee in accordance with the
Company’s standard payroll practices and policies, and shall be subject to such
withholdings as required by U.S. Federal law and the State of Texas or as
otherwise permissible under such practices or policies. The Company shall
annually review Employee’s base salary.

(b) Annual Bonus. Employee shall be eligible for such annual bonus as may be
determined by the Human Resources Committee of the Company’s Board of Directors
and the Company’s Board of Directors, which bonus shall be based on Employee’s
performance under the guidelines adopted by the Company, the Company’s overall
performance and any special circumstances the Human Resources Committee and the
Company’s Board of Directors deem appropriate. Any such bonus is to be
determined at the discretion of the Company’s Human Resources Committee and the
Company’s Board of Directors. Employee acknowledges that the Company is not
obligated to award him any bonus in any year.

(c) Employee Benefit Plans. Employee shall be eligible to participate in the
employee benefit plans, programs and policies maintained by the Company for
similarly situated employees in accordance with the terms and conditions to
participate in such plans, programs, and policies as in effect from time to
time.

(d) Stock Options and Restricted Stock. Employee has been granted certain stock
options and restricted stock and is eligible for future equity based
compensation awards. Except as provided in Section 4(a), this Agreement neither
increases nor decreases the number of stock options and shares of restricted
stock previously granted, nor does it change the terms under which they were
granted.

(e) Vacation. Employee shall be entitled to four (4) weeks annual vacation.

(f) Expenses. In accordance with and subject to the terms of the Company’s
business expense reimbursement policy, the Company shall pay or reimburse
Employee for all reasonable expenses actually incurred or paid by Employee in
the performance of his services hereunder upon the presentation of expense
statements or vouchers or such other supporting information as the Company may
reasonably require of Employee.

(g) Office Facilities and Services. Employee shall be accorded such benefits and
support services, including without limitation, office facilities,
administrative assistant, communications, and such other perquisites as would
normally be accorded by a corporation of the size and at the stage of
development in the industry in which the Company is, to its Vice President,
General Counsel and Corporate Secretary.

(h) Indemnification. Employee shall be entitled to the benefit of the
indemnification provisions contained in the bylaws of the Company, as the same
may be amended.

 

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4. TERMINATION OF EMPLOYMENT.

(a) Termination By The Company Other Than For Cause Or By Employee For Good
Reason.

(1) The Company shall have the right to terminate Employee’s employment other
than for Cause at any time and Employee shall have the right to quit or resign
for Good Reason at any time.

(2) If (a) the Company or its successors terminate Employee’s employment with
the Company other than (i) for Cause or (ii) pursuant to a notice of termination
delivered in accordance with Section 4(j) of this Agreement or (b) Employee
resigns for Good Reason, then (v) the Company shall pay to Employee an amount
equal to twenty-four (24) months of Employee’s base salary as in effect
immediately before Employee’s termination of employment, (w) the Company shall
pay to Employee an amount equal to twenty-four (24) months of the maximum
contribution the Company may make for Employee under the Company’s 401(k) profit
sharing plan as in effect immediately before Employee’s termination of
employment, (x) any outstanding stock option(s) granted by the Company to
Employee shall become fully vested and shall remain exercisable for twelve
(12) months following Employee’s termination pursuant to this Section 4(a)(2),
or the expiration of the general term(s) of the option(s) specified in the
relevant option agreement(s), whichever is the shorter period, (y) the
restriction period on restricted shares of stock granted by the Company to
Employee will lapse upon the date of Employee’s termination of employment and a
certificate(s) representing such shares will be delivered to Employee within
thirty (30) days after the date of Employee’s termination of employment, and
(z) Employee shall be reimbursed for up to $20,000 of outplacement services with
an outplacement service approved by the Company provided that the expenses for
the outplacement services are reasonable and are incurred no later than the last
day of the second taxable year of Employee in which Employee’s Separation From
Service (as defined below) occurs. The Company shall make such outplacement
services expense reimbursement payments no later than the close of the third
taxable year of Employee following the taxable year of Employee in which
Employee’s Separation From Service occurs. The Company shall make the lump sum
cash payments described in clauses (v) and (w) on the date that is six months
following the date of the Employee’s Separation From Service. For purposes of
this Agreement “Separation From Service” has the meaning ascribed to that term
in section 409A of the Code and the rules and regulations issued thereunder by
the Department of Treasury and the Internal Revenue Service (“Section 409A”).

(3) If the termination or resignation described in Section 4(a)(2) occurs within
730 days after or 240 days before a Change of Control, or if the Company or its
successors terminate Employee’s employment with the Company pursuant to a notice
of termination delivered in accordance with Section 4(j) of this Agreement
within 730 days after or 240 days before a Change of Control, then (s) the
Company shall pay to Employee an amount equal to twenty-four months of
Employee’s base salary as in effect immediately before Employee’s termination of
employment, (t) the Company shall pay to Employee the Bonus Amount (as defined
in Section 4(d)), (u) the Company shall pay to Employee an amount equal to
twenty-four (24) months of the maximum contribution the Company may make for
Employee under the Company’s 401(k) profit sharing plan as in effect immediately
before Employee’s termination of

 

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employment, (v) any outstanding stock option(s) granted by the Company to
Employee shall become fully vested and shall remain exercisable for twelve
(12) months following Employee’s termination of employment, or the expiration of
the general term(s) of the option(s) specified in the relevant original option
agreement(s), whichever is the shorter period, (w) the restriction period on any
outstanding restricted shares of stock granted by the Company to Employee will
lapse upon the date of Employee’s termination of employment and a certificate(s)
representing such shares will be delivered to Employee within thirty (30) days
after the date of Employee’s termination of employment, (x) Employee shall be
reimbursed for up to $20,000 of outplacement services with an outplacement
service approved by the Company, provided that the expenses for the outplacement
services are reasonable and are incurred no later than the last day of the
second taxable year of Employee in which Employee’s Separation From Service
occurs, (y) for a period of twenty-four (24) months following the later to occur
of the date of Employee’s termination of employment or the date of the Change of
Control, the Company shall continue to provide Employee and Employee’s
dependents with the same level of life, disability, accident, dental and health
insurance benefit coverages Employee and Employee’s dependents were receiving
immediately before Employee’s termination of employment, and (z) the Company
shall pay to Employee an additional amount such that the net amount retained by
Employee pursuant to the benefits described in this Section 4(a)(3) after any
excise tax imposed under section 4999 of the Code shall be equal to the amount
that Employee would have received pursuant to such benefits before payment of
any such excise tax. The Company shall make the lump sum cash payments described
in clauses (s),(t) and (u) on the later to occur of (1) the date that is six
months following Employee’s Separation From Service or (2) the date of the
Change of Control. The Company shall make outplacement services reimbursement
payments specified in this Section 4(a)(3) no later than the close of the third
taxable year of Employee following the taxable year of Employee in which
Employee’s Separation From Service occurs. If the dental, accident or health
insurance benefits specified in this Section 4(a)(3) are taxable to the Employee
and are not otherwise exempt from Section 409A the following provisions shall
apply to the reimbursement of such benefits. The benefits eligible for
reimbursement shall be the benefits that were available to the Employee and his
dependents under the provisions of the Company’s group medical, accident and
dental benefits plans as in effect immediately prior to the earlier of
Employee’s Separation From Service or the date on which the Change of Control
occurs. Employee shall be eligible for reimbursement for covered dental,
accident or health insurance expenses incurred during the period commencing on
the later to occur of the termination, resignation or Change of Control and
ending on the date that is 24 months later. The amount of dental, accident and
health insurance expenses eligible for reimbursement during Employee’s taxable
year will not affect the expenses eligible for reimbursement in any other
taxable year (with the exception of applicable lifetime maximums specified in
the plans). The Company shall reimburse an eligible dental, accident and health
insurance expense on or before the last day of Employee’s taxable year following
the taxable year in which the expense was incurred. To the extent that the
dental, accident or health insurance benefits provided to the Employee pursuant
to this Section 4(a)(3) are taxable to the Employee and are not otherwise exempt
from Section 409A, any amounts to which the Employee would otherwise be entitled
under this Section 4(a)(3) during the first six months following the date of the
Employee’s Separation From Service shall be accumulated and paid to the Employee
on the date that is six months following the date of his Separation From
Service. The Employee’s right to reimbursement is not subject to liquidation or
exchange for another benefit. Any tax gross-up payment made pursuant to clause
(z) of this Section 4(a)(3)

 

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shall be made by the Company by the end of the Employee’s taxable year next
following the Employee’s taxable year in which Employee remits the related taxes
to the Internal Revenue Service. Notwithstanding any provision of this Agreement
to the contrary, any amounts to which the Employee would otherwise be entitled
under clause (z) of this Section 4(a)(3) during the first six months following
the date of the Employee’s Separation From Service shall be accumulated and paid
to the Employee on the date that is six months following the date of his
Separation From Service.

(4) Employee shall not be entitled to payments and benefits under
Section 4(a)(2) if he is entitled to payments and benefits under
Section 4(a)(3).

(b) Termination By The Company For Cause Or By Employee Other Than For Good
Reason.

(1) The Company shall have the right to terminate Employee’s employment at any
time for Cause, and Employee shall have the right to quit or resign at any time
other than for Good Reason.

(2) If the Company terminates Employee’s employment for Cause or pursuant to a
notice of termination delivered in accordance with Section 4(j) of this
Agreement that is not delivered within 730 days after or 240 days before a
Change of Control, or Employee quits or resigns other than for Good Reason, the
Company’s only obligation to Employee under this Agreement shall be to pay
Employee’s base salary (including accrued vacation) actually earned up to the
date Employee’s employment terminates.

(c) Termination for Disability or Death.

(1) The Company shall have the right to terminate Employee’s employment on or
after the date Employee has a Disability, and Employee’s employment shall
terminate at Employee’s death.

(2) If Employee’s employment terminates under this Section 4(c), the Company
shall pay Employee or, if Employee dies, Employee’s estate the amount provided
for under Section 4(a)(2)(v) and, in addition, Employee or, if Employee dies,
Employee’s estate shall be entitled to the provisions of Sections 4(a)(2)(w),
(x) and (y) with respect to the Company’s 401(k) profit sharing plan, Employee’s
stock options and Employee’s restricted stock. In the event of the termination
of Employee’s employment due to the death of Employee the cash payments
described in Sections 4(a)(2)(v) and 4(a)(2)(w) shall be made within 30 days
after the date of Employee’s death. In the event of the termination of
Employee’s employment due to the Disability of Employee the cash payments
described in Sections 4(a)(2)(v) and 4(a)(2)(w) shall be made on the date that
is six months following the date of Employee’s Separation From Service.

(d) Bonus Amount. The term “Bonus Amount” means twice the amount of the higher
of (i) the highest annual bonus earned by Employee for the last three fiscal
years ending prior to the termination date, and (ii) (A) the target bonus
percentage as established by the Company’s Board of Directors for the fiscal
year in which the Change of Control occurs, multiplied by (B) Employee’s annual
base salary for that fiscal year (whether or not paid or accrued for the full
year at the time of Employee’s termination or resignation).

 

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(e) Cause. The term “Cause” shall mean (1) Employee’s final conviction of a
felony by a trial court, (2) Employee’s material breach of this Agreement or
(3) Employee’s material violation of any policy or code of conduct of the
Company, all as reasonably determined by the Company.

(f) Good Reason. The term “Good Reason” shall mean any of the following, unless
Employee shall have given his express written consent thereto: (1) a material
breach of the terms and conditions of this Agreement by the Company which
remains uncorrected for thirty (30) days after Employee delivers written notice
of such breach to the Company; (2) failure to maintain or reelect Employee to
the position described in Section 2(a); (3) a significant reduction of
Employee’s duties, position or responsibilities relative to Employee’s duties,
position or responsibilities in effect immediately prior to such reduction,
unless Employee is provided with comparable duties and responsibilities; (4) a
substantial reduction, without good business reasons, of the facilities and
perquisites available to Employee immediately prior to such reduction; (5) a
reduction by the Company of Employee’s monthly base salary in effect immediately
prior to such reduction; (6) the Company fails to continue Employee’s
participation in any bonus, incentive, profit sharing, performance, savings,
retirement or pension policy, plan, program or arrangement on substantially the
same or better basis, both in terms of the amount of benefits provided to
Employee and the level of Employee’s participation, relative to other
participants; (7) the relocation of Employee more than fifty (50) miles from the
location of the Company’s principal office on the date hereof; or (8) the
failure of the Company to obtain a satisfactory agreement from a successor to
assume and agree to perform this Agreement as contemplated by Section 6(d).

(g) Disability. Employee shall have a “Disability” under this Agreement on the
date the Company receives written notice from a physician selected by the
Company that Employee no longer can perform one or more of the essential
functions of Employee’s job even with reasonable accommodation.

(h) Change of Control. A “Change of Control” means the occurrence of any of the
following:

(1) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) (a “Covered
Person”) of beneficial ownership (within the meaning of rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of 50 percent or more of the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the “Voting Securities”);
provided, however, that for purposes of this subsection (1) of this Section 4(h)
the following acquisitions shall not constitute a Change of Control: (i) any
acquisition by the Company, (ii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any entity
controlled by the Company, or (iii) any acquisition by any entity pursuant to a
transaction which complied with clauses (i), (ii) and (iii) of subsection (3) of
this Section 4(h); or

 

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(2) individuals who, as of the date of this Agreement, constitute the board of
directors of the Company (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the board of directors of the Company;
provided, however, that any individual becoming a director after the date of
this Agreement whose election, or nomination for election, by the Company’s
stockholders was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors; or

(3) the consummation of a reorganization, merger or consolidation or sale of the
Company, or a disposition of at least 50 percent of the assets of the Company,
together with its subsidiaries, including goodwill (a “Business Combination”),
provided, however, that for purposes of this subsection (3), a Business
Combination will not constitute a change of control if the following three
requirements are satisfied:

following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Company’s voting securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50 percent of the ownership
interests of the entity resulting from such Business Combination (including,
without limitation, an entity which as a result of such transaction owns the
Company or all or substantially all of the assets of the Company, together with
its subsidiaries, either directly or through one or more subsidiaries or other
affiliated entities) in substantially the same proportions as their ownership
immediately prior to such Business Combination, (ii) no Covered Person
(excluding any employee benefit plan (or related trust) of the Company or its
subsidiaries or such entity resulting from such Business Combination)
beneficially owns, directly or indirectly, 50 percent or more of, respectively,
the ownership interests in the entity resulting from such Business Combination,
except to the extent that such ownership existed prior to the Business
Combination, and (iii) at least a majority of the members of the board of
directors of the entity resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement, or of
the action of the board of directors of the Company, providing for such Business
Combination. For this purpose any individual who becomes a director after the
date of this Agreement, and whose election, or nomination for election, by the
Company’s stockholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors.

 

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(i) Benefits. Employee shall have the right to receive any benefits payable
under the Company’s employee benefits plans, programs and policies (other than
the Company’s Policy for Termination and Separation of Employment (the
“Severance Plan”)) which Employee otherwise has a non-forfeitable right to
receive under the terms of such plans, programs and policies (other than
severance benefits) independent of Employee’s rights under this Agreement upon a
termination of employment in addition to any other benefits under this Section 4
without regard to the reason for such termination of employment. Employee
acknowledges and agrees that until the termination of this Agreement, he shall
not be entitled to participate in the Severance Plan.

(j) Notice of Termination. Any termination by the Company or by Employee for any
reason shall be communicated by a notice of termination to the other party
hereto and shall be given in accordance with Section 6(a). Such notice shall
state the specific termination provision in this Agreement relied upon, and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provision so indicated.

(k) No Mitigation. Employee shall not be required to mitigate the amount of any
severance payment contemplated by this Agreement, nor shall any such payment be
reduced by any earnings that Employee may receive from any other source.

(l) Stock Award Agreements. In the event of a conflict adverse to Employee
between the terms of this Agreement and the terms of any agreement granting
Employee stock options or restricted stock, the terms of this Agreement shall
govern.

 

5. COVENANTS BY EMPLOYEE.

(a) Property of the Company.

(1) Employee covenants and agrees that upon the termination of Employee’s
employment for any reason or, if earlier, upon the Company’s request Employee
shall promptly return all Property which had been entrusted or made available to
Employee by the Company or any of its subsidiaries.

(2) The term “Property” shall mean all records, files, memoranda, reports, price
lists, drawing, plans, sketches, keys, codes, computer hardware and software and
other property of any kind or description prepared, used or possessed by
Employee during Employee’s employment by the Company (and any duplicates of any
such property) together with any and all information, ideas, concepts,
discoveries, and inventions and the like conceived, made, developed or acquired
at any time by Employee individually or with others during Employee’s employment
which relate to the business, products or services of the Company or any of its
subsidiaries.

 

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(b) Trade Secrets.

(1) In consideration for the promises made in Section 5(d) of this Agreement,
the Company promises that it shall provide and make available to Employee
certain confidential, proprietary information and trade secrets.

(2) Employee covenants and agrees that Employee shall hold in a fiduciary
capacity for the benefit of the Company and each of its affiliates, and shall
not directly or indirectly use or disclose, any Trade Secret that Employee may
have acquired pursuant to Section 5(b)(1) above during the term of Employee’s
employment by the Company for so long as such information remains a trade
secret.

(3) The term “Trade Secret” shall mean information, including, but not limited
to, technical or non-technical data, a formula, a patent, a compilation, a
program, a device, a method, a technique, a drawing, a process, financial data,
financial plans, product plans, or that (a) derives economic value, actual or
potential, from not being generally known to, and not being generally readily
ascertainable by proper means by other persons who can obtain economic value
from its disclosures or use and (b) is the subject of reasonable efforts by the
Company and its affiliates to maintain its secrecy.

(4) This Section 5(b) is intended to provide rights to the Company and its
subsidiaries which are in addition to those rights the Company and its
subsidiaries have under the common law or applicable statutes for the protection
of trade secrets.

(c) Confidential Information.

(1) Employee covenants and agrees while employed under this Agreement and
thereafter during the Restricted Period he shall hold in a fiduciary capacity
for the benefit of the Company and each of its affiliates, and shall not
directly or indirectly use or disclose, any of the Company’s or the Company’s
affiliates’ Confidential or Proprietary Information that Employee may have
acquired (whether or not developed or compiled by Employee and whether or not
Employee is authorized to have access to such information) during the term of,
and in the course of, or as a result of Employee’s employment by the Company or
its affiliates.

(2) The term “Confidential or Proprietary Information” shall mean any secret,
confidential or proprietary information of the Company or an affiliate (not
otherwise included in the definition of a Trade Secret under this Agreement)
that has not become generally available to the public by the act of one who has
the right to disclose such information without violation of any right of the
Company or its affiliates.

(d) Non-Competition. During the period of Employee’s employment with the Company
and thereafter during the Restricted Period, Employee covenants and agrees that,
in connection with the business operations and prospective interests of the
Company on the date of Employee’s termination of employment, which prospective
interests are disclosed to Employee prior to or on the date of Employee’s
termination of employment, he shall not, directly or indirectly, own any
interest in, manage, control, participate in, consult with, render services for,
or in any manner engage in any businesses in competition with the Company or
materially adverse to the Company (unless the Company’s Board of Directors shall
have authorized such

 

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activity and the Company shall have consented thereto in writing). Investments
in less than 5% of the outstanding securities of any class of the Company
subject to the reporting requirements of Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended, shall not be prohibited by this
Section. For purposes of this Section 5(d), the term “Company” shall include
Harvest Natural Resources, Inc. and any of its affiliates or subsidiaries or any
company in which it is a minority shareholder or a joint venture partner. For
purposes of this Section 5(d), the term “businesses” shall mean any enterprise,
commercial venture, or project involving oil and gas exploration or production
activities in the same geographic areas as the Company’s activities during the
period of Employee’s employment.

Further, during the period of Employee’s employment with the Company and
thereafter during the Restricted Period, Employee covenants and agrees that he
will not directly or indirectly through another entity induce or otherwise
attempt to influence any employee of the Company to leave the Company’s
employment or in any way interfere with the relationship between the Company and
any employee thereof. Further, Employee will not induce or attempt to induce any
customer, supplier, licensee, joint venture partner, shareholder, licensor or
other business relation of the Company to cease doing business with the Company
or in any way interfere with the relationship between any such customer,
supplier, licensee, joint venture partner, shareholder, licensor or business
relation of the Company.

If (i) pursuant to the arbitration process described in Section 6(c) of this
Agreement (or such other process as to which the Company and Employee may agree
upon in writing), it is determined that Employee has violated the provisions of
this Section 5(d), and (ii) Employee has received a payment from the Company
pursuant to Section 4(a)(2)(v), Section 4(a)(2)(w), Section 4(a)(3)(s),
Section 4(a)(3)(t) or Section 4(a)(3)(u) of this Agreement (the “Lump Sum
Severance Amount”), then, in addition to any other remedies that the Company may
have, Employee shall be obligated, and hereby agrees, to pay the Company, as
liquidated damages, an amount (but not less than zero) equal to the product of
(x) the Lump Sum Severance Amount and (y) a fraction whose numerator is the
excess of twenty-four (24) over the number of calendar months that have elapsed
since the last day of Employee’s termination of employment under Section 4 of
this Agreement and whose denominator is twenty-four (24).

(e) Employment Restriction – Conflict of Interest. Employee covenants and agrees
that he will not receive and has not received any payments, gifts or promises
and Employee will not engage in any employment or business enterprises that in
any way conflict with his service and the interests of the Company or its
affiliates. In addition, Employee agrees to comply with the laws or regulations
of any country, including, without limitation, the United States of America,
having jurisdiction over Employee, the Company or any of the Company’s
subsidiaries.

Employee 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 Employee
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 Employee, the Company or any of the Company’s subsidiaries.

 

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By signing this Agreement, Employee acknowledges that he has not made and will
not make 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 Employee, the Company or any of the Company’s subsidiaries.

(f) Restricted Period. The term “Restricted Period” shall mean the two-year
period which starts on the date Employee’s employment terminates with the
Company without regard to whether such termination comes before or after the end
of the term of this Agreement.

(g) Reasonable and Continuing Obligations. Employee agrees that Employee’s
obligations under this Section 5 are obligations which will continue beyond the
date Employee’s employment terminates and that such obligations are reasonable
and necessary to protect the Company’s legitimate business interests. The
Company additionally shall have the right to take such other action as the
Company deems necessary or appropriate to compel compliance with the provisions
of this Section 5.

 

6. MISCELLANEOUS.

(a) Notices. Notices and all other communications shall be in writing and shall
be deemed to have been duly given when personally delivered or when mailed by
United States registered or certified mail. Notices to the Company shall be sent
to 1177 Enclave Parkway, Suite 300, Houston, Texas 77077. Notices and
communications to Employee shall be sent to Employee’s home address, as
indicated by the records of the Company.

(b) No Waiver. Except for the notice described in Section 4(f), no failure by
either the Company or Employee at any time to give notice of any breach by the
other of, or to require compliance with, any condition or provision of this
Agreement shall be deemed a waiver of any provisions or condition of this
Agreement.

(c) Arbitration and Governing Law. ANY UNRESOLVED DISPUTE OR CONTROVERSY BETWEEN
EMPLOYEE AND THE COMPANY ARISING UNDER OR IN CONNECTION WITH THIS EMPLOYMENT
AGREEMENT SHALL BE SETTLED EXCLUSIVELY BY ARBITRATION, CONDUCTED IN ACCORDANCE
WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT. THE
COMPANY WILL BEAR THE ADMINISTRATIVE COSTS OF ANY ARBITRATION UNDER THIS
EMPLOYMENT AGREEMENT, INCLUDING THE ARBITRATOR’S FEES. THE ARBITRATOR SHALL NOT
HAVE THE AUTHORITY TO ADD TO, DETRACT FROM, OR MODIFY ANY PROVISION HEREOF. THE
ARBITRATOR SHALL HAVE THE AUTHORITY TO ORDER REMEDIES WHICH EMPLOYEE COULD
OBTAIN IN A COURT OF COMPETENT JURISDICTION. A DECISION BY THE ARBITRATOR SHALL
BE IN WRITING AND WILL BE FINAL AND BINDING. JUDGMENT MAY BE ENTERED ON THE
ARBITRATOR’S AWARD IN ANY COURT HAVING JURISDICTION. THE ARBITRATION PROCEEDING
SHALL BE HELD IN HOUSTON, TEXAS, UNITED STATES OF AMERICA. NOTWITHSTANDING THE
FOREGOING, THE COMPANY SHALL BE ENTITLED TO SEEK INJUNCTIVE OR OTHER EQUITABLE
RELIEF FROM ANY COURT OF COMPETENT JURISDICTION, WITHOUT THE NEED TO RESORT TO

 

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ARBITRATION IN THE EVENT THAT EMPLOYEE VIOLATES SECTIONS 5(b), 5(c), 5(d) OR
5(e) OF THIS EMPLOYMENT AGREEMENT. THIS EMPLOYMENT AGREEMENT SHALL IN ALL
RESPECTS BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS.

(d) Assignment by the Company; Meaning of “Company”. This Agreement shall be
binding upon and inure to the benefit of the Company and any successor to all or
substantially all of the business or assets of the Company. The Company may
assign this Agreement to any affiliate or successor, and no such assignment
shall be treated as a termination of Employee’s employment under this Agreement;
provided, however, that in the case of an assignment to an affiliate, the
Company shall not be relieved of its obligations under this Agreement. The
Company will require any successor corporation (whether direct or indirect, and
whether by purchase, merger, consolidation or otherwise) to all or substantially
all of the business or assets of the Company to expressly assume and to agree to
perform this Agreement in the same manner and to the same extent as the Company,
as if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a material breach of this Agreement. As used in this Agreement, “Company”
shall mean the Company as hereinbefore defined and any successor to its business
or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

(e) Assignment by Employee. Employee’s rights and obligations under this
Agreement are personal, and they shall not be assigned or transferred without
the Company’s prior written consent.

(f) Other Agreements. With the exception of the Company’s stock option plans
(and related agreements), restricted stock plan (and related agreements) and
incentive plans, and the guidelines referred to in Section 3(b), this Agreement
replaces and merges any and all previous agreements and understandings regarding
all the terms and conditions of Employee’s employment relationship with the
Company, and this Agreement constitutes the entire agreement of the Company and
Employee with respect to such terms and conditions.

(g) Amendment. No amendment to this Agreement shall be effective unless it is in
writing and signed by the Company and by Employee.

(h) Invalidity. If any provision of this Agreement is held to be invalid,
illegal or otherwise unenforceable, the remaining provisions shall be unaffected
and shall continue in full force and effect, and there shall be deemed
substituted for the provision at issue a valid, legal and enforceable provision
as similar as possible to the provision at issue.

(i) Enforceability by Beneficiaries. This Agreement shall inure to the benefit
of and be enforceable by the parties hereto and their respective heirs, legal or
personal representatives and successors and if Employee should die while any
amount would still be payable to him hereunder if he had continued to live, all
such amounts shall be paid in accordance with the terms of this Agreement to
Employee’s devisee, legatee or other designee or, if there is no such designee,
to his estate.

 

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(j) Reimbursement of Certain Expenses. To the extent Employee shall prevail in
any arbitration proceeding pursuant to Section 6(c) to resolve any dispute or
controversy between Employee and the Company arising under or in connection with
this Agreement, then the Company shall reimburse Employee, or pay on Employee’s
behalf, all of Employee’s reasonable expenses, including without limitation
attorneys’ fees, incurred by Employee in connection with the arbitration. The
amount of such expenses eligible for reimbursement during Employee’s taxable
year will not affect the expenses eligible for reimbursement in any other
taxable year. The Company shall reimburse an eligible expense pursuant to this
Section 6(j) on or before the last day of Employee’s taxable year following the
taxable year in which the expense was incurred. Employee’s right to
reimbursement under this Section 6(j) is not subject to liquidation or exchange
for another benefit. Notwithstanding any provision of this Agreement to the
contrary, any amounts to which the Employee would otherwise be entitled under
this Section 6(j) during the first six months following the date of the
Employee’s Separation From Service shall be accumulated and paid to the Employee
on the date that is six months following the date of his Separation From
Service.

 

7. NOVATION.

This Agreement is a novation to the Original Employment Agreement between the
Company and Employee effective May 7, 2007, which is hereby extinguished. As
consideration for this novation, Employee acknowledges the value of the matters
described in the recitals to this Agreement and the other terms of this
Agreement and agrees that they are adequate to make the novation binding in all
respects.

 

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IN WITNESS WHEREOF, the Company and Employee have executed this Agreement in
multiple originals to be effective as set out above.

 

HARVEST NATURAL RESOURCES, INC.     KEITH L. HEAD By:             James A.
Edmiston         President and Chief Executive Officer       Date:         Date:
   

 

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